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  • These Offshore Drillers Will Struggle Over The Next Few Years [View article]
    But, what impact re ETFs that have percentages of all or most? Many, if not most investors, reach for an ETF these days. I used to pair trade companies within sectors in the old days (before ETFs). I don't bother anymore as it's far more lucrative just to trade options on ETFs.
    Of course, earnings reports and significant announcements can obviously make an enormous difference (BP/RIG Gulf crisis-APC a few weeks ago, etc).
    Aug 14 03:29 PM | Likes Like |Link to Comment
  • Why The Federal Reserve Will Never Be Able To Get Out Of QE [View article]
    I don't see inflation unless and until the 3.5 trillion becomes 'real' money for 'real' people. In a scenario with rapidly rising prices, a lot of passive zombies will hit the streets-making the 60's riots look like child's play.
    99.999% (and counting) have no interest whatsoever in the stock market. They are too busy watching "Teen Mom 2", "Honey boo boo", "16 and Pregnant", "Dancing with the Stars" and "Duck Dynasty." (Yikes, I forgot to mention "Dating Naked" "Surviving Naked" and the new one "Naked Housewives of Amsterdam.").
    I agree with the conclusion that the world's central bankers have created a gigantic playpen-always needing shiny new toys to keep the crying at a minimal. But, the children are, of course, rather childish in their expectations and demands-so Puff the Magic Dragon has no statute of limitations.
    Aug 14 01:14 PM | 1 Like Like |Link to Comment
  • Retail Investors About To Get Fleeced Again [View article]
    I think it's the high powered use of leverage and derivatives that 'interfere' with our classic economic, zero-sum perspective. Margin calls and fear thereof, quickly become self-reinforcing-all too human.
    Aug 14 12:55 PM | Likes Like |Link to Comment
  • Baidu, Inc: Greater Than Google, Or Safer To Sell? An Algorithmic Perspective [View article]
    I wrote an article a couple of years ago, using BIDU as an illustration for trading iron condors. I also commented several times about shorting the stock as it fell from 170 or so to under 100. It's not something I've paid particular attention to recently, as there have been a lot of other opportunities. However, an idea would be to sell a couple of bear call spreads, combined with one short put spread. This 2:1 ratio can actually be weighted in several different ways, but it can also be adjusted by buying or shorting the actual stock. One thing I've noticed about BIDU, and frankly all Chinese internet stocks, is that those stocks can drop like an anvil. IF you can catch that drop, you can really push a short position hard until the panic abates. (Actually the subject was in an instablog post of mine-I've only written three so one can readily find it).
    Aug 14 12:48 PM | 2 Likes Like |Link to Comment
  • Signs Of An Approaching Bear Market [View article]
    What I've learned over my lifetime-and I've seen the 'Nifty Fifty', the mini-skirts, the 73-74 recession, the Carter malaise and the double-digit interest rates during Reagan and Volker. I saw the testimony of Baker spook the market in 1987, and so on.
    The mere terms 'bull' and 'bear' are simply popular mythology. Just like the ancient Greeks and Romans believed in mythical characters, so it is that the public today is no wiser.
    I used to be no wiser-when I crawled around in a one-dimensional world. Now, as I've learned from the all-time greats, such as Jesse Livermore and many others-it simply doesn't register that one side of the market is to be preferred. In fact, some of my biggest gains have been on the short side. The more volatile the market, the more opportunity I see.
    If you're fearful of a so-called 'bear' market, you need to root out that fear through enhanced wisdom and understanding. As Willie nelson said...'you can't be a cowboy if your afraid of horses.'
    Aug 14 12:28 PM | 24 Likes Like |Link to Comment
  • BlackBerry And Its Declining Short Interest [View article]
    I suggested BBRY spreads eons ago-specifically buying cheap LEAP puts and gaming the shorter term short put skew. This has rung the register slowly and methodically-in a word, a classic textbook play on low risk/high return utilizing the leverage of options. It's still working. Exciting? No-but very profitable.
    Aug 13 05:56 PM | 4 Likes Like |Link to Comment
  • MBA Mortgage Applications [View news story]
    Not as insane as before a few weeks ago when ITB ran to 26 and beyond. I closed my short too early-but just seems low risk/reward to short at this level. (I'm never long the homebuilders). HOWEVER, it does seem that some derivative sectors are grossly over-valued.
    From a macro perspective, it's extremely troubling that the lowest rates since 1215 (when King John signed off on the Magna Carta which allowed easier access to mortgages), can't create even tepid demand for housing. But, as we all know, the enormous elephant in the room is declining median income and lack of decent jobs. I've looked at mountains of data, and I've yet to find anything remotely positive in this area. I'm talking about 'average' people, with 'average' aspirations and 'average' abilities. Until Joe Average can look in the mirror and feel good about his life and future prospects, home sales will be skewed. Pockets of strength will continue to mislead the myopic pundits, and retirees will continue to flock to Florida.
    Aug 13 10:03 AM | 1 Like Like |Link to Comment
  • SeaWorld tumbles after sales and guidance disappoint [View news story]
    Free the whales!
    Aug 13 09:39 AM | 2 Likes Like |Link to Comment
  • Panic-Induced Volatility: Make It Your Friend And Make 53% Annualized In 16 Days [View article]
    George, the put premium increases-the call premium will decrease. That's how the 'protection' benefits the call writer. The put value and call value will diverge, depending on expiration and strike price. But, volatility can allow for rapid swings in option value-so it's certainly possible to trade this volatility. So, theta is not linear-or straight-line-and proximity to expiration where IV is high will allow numerous trading opportunities. Now, there are times where sustained volatility will increase premium across the board (as in 2008). And, there are cases where seasonality will ramp up IV, and hence the total premium.
    I would add that low volatility creates unique opportunities to sell options. Spreads and ratio-writes work well. Would discuss more but internet connection with SA terrible today.
    Aug 11 10:49 AM | Likes Like |Link to Comment
  • Retail Investors About To Get Fleeced Again [View article]
    As I noted recently, it was the 'professionals' bailing last week. Long behemoths got spooked and didn't buy the dips.
    A lot of my former clients never got back into equities. Most retail interest is still in bonds. Of course, there are quite a few guys that trade a very small portion of their net worth-and they've done quite well.
    The greatest impediment for a retail player is simply not being equipped with all the right tools. It reminds me of the commercial where the golfer has 14 drivers in his bag.
    Aug 11 10:13 AM | 2 Likes Like |Link to Comment
  • Panic-Induced Volatility: Make It Your Friend And Make 53% Annualized In 16 Days [View article]
    I see that options are still widely misunderstood-which is too bad.
    But, here are some very general things to contemplate, which I don't think were mentioned.
    Selling a covered call will do little to 'protect' the paper loss during a sell-off. However, if A and B have identical holdings, and A sells a call and B does nothing, and after that point in time, both A and B hold their portfolios unchanged for an infinite amount of time, A's PV will create a staggering differential. Recall the example of the approximate $26 paid for the island of Manhattan a couple of centuries or so ago. Even a conservative compounding exceeds several billion dollars.
    In teaching some retired school teachers the basics of covered calls, I've noticed a tendency to sell a call at the absolute worst time. If you make a decision to sell a call into the teeth of a down market, you've waited too late. If you select a call that exceeds the basis in your stock or ETF-you've just made another mistake.
    If you want to actually 'protect' your portfolio, you must either buy appropriate puts or collar the position (yes, an inverse ETF might work also).
    Also, I've yet to note that anyone has discussed historical volatility and the impact of selecting a target price for selling a call-nor is much attention paid to selecting expiration/strikes. Rather, I get the impression that most people just sell a covered call at some random point, and then claim that it either works or doesn't work. (Of course, that's how most people make decisions anyway).
    The other problem I've noticed is that some folks buy 100 shares of the most volatile stock they can find-just to locate the option with the most premium. This is just a generic, non-technical list of situations I've actually noticed-so by extrapolation, I strongly suspect that there are many people that fall victim to these same things.
    So, how can we improve?
    First of all, sell your call when the stock is increasing in value-and be prepared to roll it out. The vast majority of calls, unlike puts, are assigned at expiration. If you can't figure out how to roll out, get some help! And, be prepared to roll out numerous times. It's like extending a lease on a rental property-and getting paid for it.
    It's better to own several hundred shares of stock (if you can), thereby allowing a much better call selling strategy. In fact, and this is very important, having the ability to double down, or otherwise use probability in conjunction with the basics of the option pricing formula, will exponentially increase your returns vs a portfolio with 100 shares. This can be a bit complex, but I encourage anyone interested to delve deeper.
    As with any topic or subject matter, a little knowledge can be a dangerous thing-or in this case, one's results will not be optimal.
    Aug 9 12:58 PM | Likes Like |Link to Comment
  • 5 Days Of Fearful Trading Provide ETF Insights [View article]
    To my way of thinking, I just look for the best deal at some moment in time. If your interest rests with shorter-term ETF plays, I was upfront about shorting TZA. I sold TZA calls, adding to the position when TZA spiked. Several people questioned me about the 'wisdom' of that play-but yesterday every option still open expired worthless.
    Here's my quick rationale: (a) liquidity, liquidity and more liquidity (b) the pros caused the downdraft to protect the year (c) retailers were piling into TZA (the end result would stabilize small caps-same folks would bail when they posted some gains) (d)option expiration suggested TNA would be pinned at a higher point, and (e)I was simply prepared to double down until the bears began to cover.
    So, there's a 'how' and a 'why' to these sorts of moves. If you understand the reasons behind the 'why'-and not just the inane media explanations-you can move from being 'foolishly arrogant' to 'serenely confident.' Just in the past few minutes, I've come across numerous references to snorting bulls and snarling bears. All I know is that the lion sleeps tonight.
    Aug 9 12:14 PM | Likes Like |Link to Comment
  • Barron's hangs a "For Sale" sign on Zillow and Trulia [View news story]
    The very simple fact remains that buying a home is not just the most expensive decision a consumer will make-it is so exponentially greater that comparisons with other marketing strategies are virtually meaningless. One doesn't make an impulse decision to buy a home over the internet. A 'purchase' is linked with mortgage factors, plus the required services of a host of local experts-attorneys, inspectors, appraisers, surveyors, etc. There are numerous pitfalls for the unwary, and unlike a Walmart or typical retailer, a buyer can't get their money back if they find a better price-or a boundary line dispute. For these reasons, this is the one predominant "zone" where the middleman will always play a major role.
    Discount brokerage services and internet savvy ideas can only accomplish peripheral or marginal results-at best. Even younger folks, armed with cell phones, laptops, etc. will defer to a local agent-assuming that agent has the requisite experience to link all the key variables together. So, I had absolutely no problem doubling down on my short position when the TRLA/Z was announced. I sometimes think some people want the 'internet' to feed them and tell them what to do. But, when it comes down to substantial sums of money, it's an entirely different mindset. I'm still short for all these reasons, plus a few calls from some annoyed realtors to their senators will spell big problems for this 'merger.'
    Aug 9 11:37 AM | Likes Like |Link to Comment
  • Fear And Loathing On The Marketing Trail, 2014 [View article]
    Well, we all 'strut and fret our hour upon the stage'-some play the knave and the fool, others the mild and meek, some the dramatic-it's impossible to truly recognize and appreciate our biases. As humans, we've studied the great works from Plato to Kant; we have made enormous strides in evolutionary biology, psychology and bio-chemistry. But, to continue from the master: " 'tis a tale told by an idiot, full of sound and fury..Signifying nothing."
    No one has said it better, and perhaps no one ever will. So, we note that the world has changed dramatically since the Industrial Revolution, and in my opinion, political centralization, and by proxy, its various appendages (central banks), are but an obvious byproduct.
    Existential anxiety? Malaise revisited? It's all another chapter in the 'tale.' What character do you want to play?
    Enjoy your writing Ben.
    Aug 8 09:53 AM | 2 Likes Like |Link to Comment
  • More Signs A Market Bottom Is Forming [View article]
    In my world, I don't contemplate tops or bottoms-just regression and probability. Aside from that though, the recent downdraft was initiated by the professional money managers. The behemoth long-only guys suddenly went from buying the dip to protecting the year. I detected a lot of smaller players reaching for those inverse ETFs. In my opinion, the retail player is learning to use available tools to protect themselves from the pros. Of course, the cash balances are the ultimate variable-so, if the big dogs all panic at once....
    Aug 7 11:46 AM | 1 Like Like |Link to Comment