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  • Home Builder Sentiment Declines  [View article]
    "There's no place like home/ There's no place like home/There's no place like home-
    Apparently the 'red dirt of Tara' ain't what it used to be. But there will be another building boom...some day.
    Dec 15, 2015. 12:19 PM | Likes Like |Link to Comment
  • Number Of Banks In The Banking System Continues To Decline In The Third Quarter  [View article]
    "there goes Main Street"? Actually, it was already gone before the chevy got to the levy- payday lenders, pawn shops, hard money guys-and now-crowdfunding sites such as LC, prosper, etc, etc, etc - have moved in to take advantage of what used to be the banking raison d' etre.
    Even business loans are now facilitated via this model. And, there is no going back. Humpty Dumpty Bank is forever broken. "And the clock stopped, never to run again, when the old banker died."
    Dec 15, 2015. 12:07 PM | Likes Like |Link to Comment
  • The Joke's On You If You Are Buying This 'Rally'  [View article]
    "I started a joke, which started the whole world crying..."
    Dec 15, 2015. 11:40 AM | 1 Like Like |Link to Comment
  • The Seasonal Trade On Home Builders Faces Shaky Prospects  [View article]
    I commented a couple of weeks ago that ITB would push thru 28- and that I would aggressively short at that point.
    Bought back short calls for substantial gains.
    Anyone bothering to check my comments will note that I've correctly called this strategy numerous times over the past few years.
    Home builders have unique constraints that pose insurmountable boundaries- irrespective of general economic conditions. This creates what I refer to as an inherent short buffer- and allows one to press the bet accordingly.
    Yes, one can play the game by buying dips, but if you study the price action, the time value of money dictates implementing short strategies with much faster returns. I've used a variety of spreads, such as iron condors, but simply waiting for inflated enthusiasm to waver has proven to be the winner.
    Dec 14, 2015. 12:21 PM | 1 Like Like |Link to Comment
  • Tumbling Tuesday - China Trade Data Adds To The Bear Case  [View article]
    I like spreads on inverse ETFs at price points reflecting 52wk highs on the counter side. Spreads define absolute risk/reward. For instance, I suggested LEAP TZA puts a few months ago when TNA was in the mid-90's. This play alone will produce a merry ho-ho-which will benefit some needy folks and canines.
    I'm generally more comfortable trading oil futures and options (as I started back in the 1980's), and although there is some commonality with natural gas, I just never got the 'rush' that 'black gold' provides. Also, oil has such a fascinating history-the rise of the Standard Oil monopoly, the anti-trust legislation, the emergence of large-scale bribery and payola in Congress, geo-political variables that have shaped the current fabric of modern society-it's a long list of fascinating interrelationships. So from millions of years of chemistry, and the contributions of a vast assortment of extinct species, we witnessed the miracle of the 20th century.
    However, the UNG play makes a lot of sense. It might be worth taking a look at buying the LEAP calls and funding with shorter term puts. This allows the odds of put decay to contribute to the time value of the long calls. In any event, it strikes me as warped that energy slides into oblivion as drones deliver porn videos while we relax knowing we can now eat breakfast all day. I happened to notice that a court jester, appearing on business news this morning, noted that the savings to the consumer (via cheaper gas), would translate into....'drum roll....more optimism and increased retail consumption! By all means, let's have another McFatter Burger with a giant side order of salt-laden frys. Oh yes-more credit for toys! Some kids fully expect to get $1,600 drones. Others just want more video games. Hey folks, here's a novel idea. Why not visit your local humane society and adopt a living member of the cosmos? Chances are some poor animal was given away because the price of gas prevented appropriate care. Now that consumers have been freed from such horrific prices at the pump, why not teach your child that there are rewards and responsibilities that transcend flying a winged box around the neighborhood. And maybe, just maybe, little Josh will learn some real message. Perhaps such an experience will be so instructive as to lessen the odds that Josh returns to your basement 15 years hence.
    Dec 8, 2015. 12:35 PM | 3 Likes Like |Link to Comment
  • The 'Real Stuff' Economy Is Falling Apart  [View article]
    Also, large truck sales are down (reflecting de minimis growth in transport).
    Consumer auto sales have soared due to extended amortization schedules and softer terms.
    As I've stated for years now, the stock market has morphed into a sophisticated penny arcade. It's not totally devoid of correlation to 'fundamentals' but this correlation is a self-fulfilling prophecy linked to memories of the past. In other words, price action at any n time, cannot be explained by financial data.
    The derivatives tactics create a strange volatility-although the current method of interpreting volatility might seem low. Absolute risk is some degrees higher, but more linked to liquidity flow, as opposed to historical negatives.
    A quick illustration would be to look at junk bonds, and determine how or what percent in a given fund are reasonably liquid. There is a 'masking' issue, which can't readily be discerned-until it's too late.
    Dec 4, 2015. 01:22 PM | 2 Likes Like |Link to Comment
  • The Lull Before The Storm- An Ideal Chance To Exit The Casino  [View article]
    I don't concur with the 'casino' analogy-unless the player transcends from said status to casino owner. Casinos win because the odds are stacked in their favor. They have an unequivocal mathematical edge. In looking at my positions this morning, well over 90% of my short options are 'in the green.' This is not unusual-it is my expectation. I have a mathematical edge when I sell options. I will make money regardless of whether the market 'crashes' (however defined), or whether it 'goes to the moon'.
    I agree with Stockman's take on the macro economy. But, the stock market (along with the bond, futures and currency markets), allows one to apply basic game theory strategies such that one's edge is maintained and highly repeatable/predictable. It's always been this way. Just go back and look at history: the Great Depression, WWll, Vietnam, Watergate, etc, etc. When I was a kid, we used to practice jumping under our school desks, as if that would save us from a nuclear attack. Remember the tense moments when Kennedy was negotiating with NK re Cuban blockade?
    The world always has some BIG PROBLEM-and perhaps the current problems will result in much frustration, if not armed conflict. Yet, the odds suggest that humans find some equilibrium that allows the game to continue. Europe lost a third of its population in the mid-1300's to bubonic plague. Many millions have died in various wars. Thousands of children will starve today, in this the 21st century A.D. As Robert Frost noted-"and we, being the ones living, turned to our affairs."
    Dec 2, 2015. 11:36 AM | 6 Likes Like |Link to Comment
  • Lockhart: Ready to move in December  [View news story]
    With a great employment number, housing poised to boom and thousands of folks ready to start small businesses, it seems only natural for interest rates to rise in tandem with the optimism. But why such a tepid increase?
    Dec 2, 2015. 10:35 AM | 2 Likes Like |Link to Comment
  • You Just Got $1 Million, Now What?  [View article]
    When you take on a client in these situations- which can easily happen with professional athletes- let them "blow" a small amount, otherwise most will fall victim to much larger temptations.
    You also need to foster an attitude of 'giving back' via charitable tools. This is part of a larger strategy to "manage the brand." Even Livermore had a trust that prevented him from exhausting his massive winnings.
    And, as a money manager, I think you start with somewhat conservative strategies- of course, the state of the market at the time will dictate much in this regard. Also, you need more interaction than having the accountant send out quarterly reports. But whatever the starting point, the "game" is to preserve and grow.
    Finally, I can't say enough about budgeting. A person with uncontrolled impulses can piss away millions, destroy relationships and ruin their lives. It happens far too often.
    Nov 18, 2015. 11:30 AM | 10 Likes Like |Link to Comment
  • Terrific Tuesday - G20 Fixes Everything  [View article]
    Machines don't live lives of quiet desperation. They don't fall upon the thorns of life and bleed. It's not that 'all news is good news'- a machine can make millions of hedging decisions before your organic body chemistry can impart a rudimentary 'feeling.' And by the time you can contemplate and ruminate, and ponder how your emotions register some sort of urge or motivation to 'do something'-well, the machines are already light years ahead of you. In short, the 'market' of the 20th century exists only as a quaint memory. (Just look at the price action of WTI the last 48hrs.).
    Nov 17, 2015. 11:57 AM | 4 Likes Like |Link to Comment
  • Housing market index comes in below expectations  [View news story]
    So it's only logical that ITB would be up-I just noticed that ITB has, once again, made it to the 27.50 regurgitation mark.
    I went back and examined some old charts-if ITB had been around when Newton set forth his laws of the universe, I'm sure the consistent orbit of homebuilder stocks would have garnered his attention.
    Of course, after 9-11 the second home market exploded. Should one anticipate a repeat? Perhaps-but to a much lesser extent. I plan to short ITB if/when it arrives at 28. I think it better than even money to hit 28, so I'll lay in the first round then.
    As I've indicated numerous times, this is the magical gift horse.
    Nov 17, 2015. 11:31 AM | Likes Like |Link to Comment
  • How This Options Trader Shorts Netflix  [View article]
    The way to think about it is along these lines: if you've caught the initial downdraft of the stock fairly quickly, say with a LEAP put, what are the odds that the stock continues to fall? If the stock is now simply churning, your long put mimics the stock, and will do so for quite some time. In essence, the money has been made. What is the optimal use of the current structure? Selling a weekly or monthly OTM put may be the best tactic- and repeating the strategy until you approach expiration.
    I currently do this with DE, for example, as I bought LEAP 87 puts when the stock was above 90. Of course, 'only the rocks live forever' so expect change at some point.
    Nov 16, 2015. 02:06 PM | Likes Like |Link to Comment
  • How This Options Trader Shorts Netflix  [View article]
    One of the best articles, as well as comments, I've ever read on SA. I respect specific courses of action, along with rationale.
    I like the idea of being prepared to double/ triple down on positions. Most would consider such a move as throwing good money after bad, but if done pursuant to a plan, the odds are actually better.
    One quick thing to consider is where you find your put position deep ITM with months to go, I.e., your put delta is 1, you might look at selling a shorter-term OTM put against the winning long put. Why? Because the now OTM put is priced much higher- due to gamma, etc- and the odds of further accelerative declines in the underlying have likely lessened substantially. So, the value of the long put is stable relative to the decay associated with the short, OTM put.
    Nov 12, 2015. 09:52 PM | 1 Like Like |Link to Comment
  • How Leverage Affects Portfolio Optimization  [View article]
    Way to go!
    Nov 12, 2015. 09:22 PM | Likes Like |Link to Comment
  • Kohl's beats by $0.06, beats on revenue  [View news story]
    My first order of business this morning was to sell KSS calls.
    Nov 12, 2015. 11:50 AM | Likes Like |Link to Comment