Send Message
View as an RSS Feed
  • S&P 2,000 Tuesday- Turnaround Or Turn Down?  [View article]
    Hedging with spreads is an excellent strategy- as is the mindset to catch waves in both directions. And closing a profitable leg, while 're-using' an initial leg is likewise quite savvy.
    This does take some practice, but as one trades options ideas emerge- much like gaining proficiency in chess.
    Here's a simple idea to look at: if I sell a call spread on a mo- mo stock on an uptick and the market is down later in the day, or a couple of days later- I might close the short call for a good gain. Assuming I have a bit of time left on the long call, I can (a) leave it for n time with set profit parameter, (b) sell another call on a spike and hope to repeat/enhance initial gain, or (c) use the long call as part of a new calendar or diagonal spread- or I could short 100 shares of the underlying (possibly selling a put as well). These are the fairly simple ideas- but something to ponder during commercials.
    Jan 5, 2016. 02:38 PM | 1 Like Like |Link to Comment
  • The Next Big Short: The Third Crest Of A Rolling Tsunami  [View article]
    To some extent, the next big short has been with us for several years now- but somewhat disguised. I reference the broken ETFs, such as UVXY, which have returned enormous profits by shorting. And, Chinese Internet stocks (DANG, RENN, etc.) have been great shorts. All commodities and a lot of high yield junk has also been a very profitable short.
    In terms of timing a major market drop, I just think "why bother"? My strategy is to utilize a variety of put ratio back spreads to capture both flash crashes and trending declines. That way, I make a small return even if the event doesn't happen.
    In my early years as a fund manager, I would utilize my financial/accounting background to make 'fundamental' decisions. Over time, I realized that the market is just a bizarre amalgamation of imperfect (and often corrupt) humans. Now I use nothing I learned in college or grad school- there wasn't a course on shorting instruments designed to fleece the average retail guy, or how to spot high frequency moves, or noting when the futures markets were being manipulated. So, I've made a lot of money via shorting the past few years- even in this "bull market".
    Jan 5, 2016. 11:42 AM | 10 Likes Like |Link to Comment
  • Monday Meltdown - China Halts Markets To Stop The Bleeding  [View article]
    So many people, for so many years have been touting the 'remarkable story' of China. What I see as 'remarkable' is the naïve understanding of history. Free enterprise and free markets must be thus so in substance-not just form.
    It is not enough to create superficial constructs by manipulative fiat, and expect deception to supplant the true, organic nourishment necessary to give legitimate birth. That others looking through a prism of myopic self-interest would hail the false prophet as gospel, sought only aggregate complicity to hail the mirage. And by doing so, created a self-fulfilling philosophy-expedient to those embracing the tangled web.
    When in the entire history of mankind have so many millions of recently constructed square feet been erected, only to remain empty? For what purpose? To what end? Build it and they will come?
    Day after day, year after year, the TV intelligentsia gushed and foamed- for it was just a matter of time before millions of Chinese farmers followed Wally and the Beaver to the promised land of suburbia. Why listen to Jim Chanos, who several years ago, spoke the truth?
    Or, one could have listened to Conway Twitty: "It's only make believe..."
    Jan 4, 2016. 12:51 PM | 3 Likes Like |Link to Comment
  • Why All The Gloom And Doom?  [View article]
    "Hello darkness my old friend..."
    Interesting opinions-but if you're not making money today-at least with some calls or protective puts-a revamp of perspective is in order.
    Those that have read my comments the past few years know that I've been short China momo stocks-also, I've repeatedly noted that if Wall Street insists on creating defective ETFs, I'm going to short them to the ends of the Earth.
    If you study history, and really appreciate the long shuffle of humanity, I think you must conclude that, despite the warts, most of us live in safer and more abundant times. Maybe the gloom is just that-too much gluttony. Way too many McburgerWhoppers (with large fries). What if we had to go hunt for our food for the next year? Obesity solved!

    Perhaps the larger issue relates to whether humanity, notwithstanding technological extensions associated with 'gadgets and gizmos', is treading water. Maybe we pause for a century, awaiting some substantive change in our biology, and then our culture.
    But, until humans learn to cope with fear and euphoria, the handful of critical rationalists will collect the dollars that fall so abundantly to the floor.
    Jan 4, 2016. 11:55 AM | 1 Like Like |Link to Comment
  • Wednesday Warning- Put/Call Ratios Go Ballistic Into Year End  [View article]
    Yes- and put spreads add to volume. Still 3:1 is a bit of a head-scratcher.
    Dec 25, 2015. 12:55 PM | Likes Like |Link to Comment
  • Season's Greetings 2015  [View instapost]
    Nat- can you send me one of those pink flamingos? Thanks in advance.
    Dec 25, 2015. 12:35 PM | Likes Like |Link to Comment
  • Chipotle hit again by E. coli report  [View news story]
    I've done well shorting the stock- but bought a few calls today. If there is a news release that suggests the problem has been identified/ resolved- the stock will soar.
    Dec 21, 2015. 09:50 PM | 1 Like Like |Link to Comment
  • Fed Raises Rates Because Of Ongoing U.S. Recovery?  [View article]
    LT- the operative word is "conviction"- with either long puts or calls, one has to be directionally correct within a given time period.
    If I sell an option, I have time decay on my side- so if a stock goes up a little, does nothing, or drops- I win.
    But, yes, you are correct that a rather strong conviction is best served via long puts. Of course, one can buy an ATM put and sell a lower strike put to defray the long put cost.
    Dec 20, 2015. 12:14 PM | 1 Like Like |Link to Comment
  • At the close  [View news story]
    As 2015 began, many folks were giddy about the prospects for small caps and home builders. My suggestion was to short both, as reflected in numerous comments throughout the year.
    For those that piled on TZA, as I suggested when small caps were flying towards the sun, you did well. I've closed most of my shorts as of today- and will look to utilize some of the gains to buy LEAP calls. HOWEVER, I'm in no hurry to get net long. With global derivative debt casting a $500 TRILLION shadow, the world economy is becoming an illusion.
    Dec 18, 2015. 07:23 PM | 1 Like Like |Link to Comment
  • Fed Raises Rates Because Of Ongoing U.S. Recovery?  [View article]
    Better to just short AMZN via bear call spreads. WMT doesn't have near the volatility- making equilibrium very difficult.
    A bear call spread can be selected with very narrow risk/reward, or much larger. One idea is to establish a narrow spread, and add a wider ancillary spread depending on status of first spread. Another idea is to sell a longer-dated OTM call and hedge with a much cheaper near-term long call. Stocks like AMZN are great for a variety of strategies, due to volatility and stock price. Actually, these strategies are not mutually exclusive, and can certainly work in tandem.
    Dec 18, 2015. 07:06 PM | 1 Like Like |Link to Comment
  • Hess CEO sees $60 oil by the end of 2016  [View news story]
    I'll make a fortune if oil just goes to 40 in the next couple of years. Over the short-run though, I think a basic grinding pattern is the best possibility- unless geo-political tensions intervene.
    A very simple play is to buy USO on drops and sell calls on spikes.
    I'm staying away from nat gas though.
    Dec 18, 2015. 06:48 PM | 1 Like Like |Link to Comment
  • Storm Warning  [View article]
    "Derivative portfolio overlays"- those are the words of wisdom in the article. Alas, you won't get that from mutual fund managers, your local stock broker, or your esteemed financial planner.
    Should you seek your own counsel, you might start with elementary collars.
    Dec 15, 2015. 10:51 PM | Likes Like |Link to Comment
  • 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