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  • Baby Boomers: LEAP Into Action [View article]
    I have various 'embedded' strategies in place, as I've indicated numerous times. If
    You have time, research put ratio backspreads. Simply stated one sells one or more deep ITM puts, and uses the premium to buy two or more long OTM put options. A serious reversal will cause the extra long puts to (a) quickly hit a total break- even position, and (b) create profit as there are more long puts than short puts.
    If nothing happens, or the market goes higher, it's possible to actually net a small amount.
    Aug 3, 2015. 07:10 PM | Likes Like |Link to Comment
  • Demographics Weigh On The U.S. Homeownership Rate [View article]
    Excellent article. Why?
    A reasoned attempt to offer thoughtful insight on nuanced changes over extended time frames.
    Housing is actually a complex social and cultural phenomenon that tends to elude rigid categories. Education, divorce rates, changes in technology, interest rates, government programs, conspicuous consumption- and more- impact housing decisions. And, of course, changes in median income and employment opportunities permeate all of the above.
    The "future" of housing will be a reflection of these dynamics, and predictions will only be as good as understanding the confluence thereof.
    Aug 3, 2015. 09:30 AM | Likes Like |Link to Comment
  • Baby Boomers: LEAP Into Action [View article]
    Historically, most options have expired worthless. But a more refined question relates to whether an option is ITM, ATM or OTM. And, the distribution of options, and their allocation is relevant. How many index options are traded vs stock?
    No question that selling options- especially OTM options-seems like free money. Well, not free, but similar to the odds related to insurance products.
    Another subtle issue is that thousands of far OTM options are a virtual certainty to expire worthless, but are bought to hedge a short option that is closer to the money. An ATM option has a 50/50 factor to play out, and often requires patience for decay to slowly do its damage. In the meantime, that already highly decayed OTM option is held to protect leverage and risk- so when eventually closed, it is worth zilch. Yet the meat of the profit may be garnered by accepting a 70% gain on the short ATM a few days short of expiration.
    But as to the question of whether to buy LEAP puts, I would say that the odds of a market correction within the next 2 years exceeds the odds of your million dollar house burning to the ground.
    Aug 3, 2015. 08:59 AM | 3 Likes Like |Link to Comment
  • Making Sense Of The China Stock Roller Coaster [View article]
    To understand the market in China you have to understand the people. And to understand the people you have to understand the cultural history. Now you may advance to the first grade.
    Or you might spend an evening with Jesse Livermore.
    Jul 30, 2015. 10:21 AM | Likes Like |Link to Comment
  • U.S. Steel surges despite worse than expected Q2 performance [View news story]
    Suppose stock XYZ (in the horrific commodity business) trades between 48 and 52. If one owns a million shares at 50, the results after any n time (say a couple of years) is lousy.
    But, if another investor owns a million shares, but sells straddles every week-the returns are extraordinary. For instance, just take a look at the income derived from one weekly NUE straddle (just look at option chain and get net from option calculator)-to make it simple suppose each covered call nets 100 and each short put nets 100-for a total of 200. So, if I have 20,000 shares (allowing 20,000/100 covered calls), and sell the same number of ATM puts, I'm netting 20k+20k.
    So, a stock that does nothing can still make an extraordinary return.
    Of course, the reality is that some volatility is needed to maintain option premium amounts. The real world requires a bit more dynamic management, but the financial difference in selling options vs doing nothing is well worth the effort..
    Jul 29, 2015. 04:27 PM | 1 Like Like |Link to Comment
  • The Return Of Deflation? [View article]
    China created a false sense of future expectations by building enormous structures- but with no legitimate demand. Jim Chanos and others noted this at the time, but the masses refused to consider the evidence.
    As a historical paradox, I offer the Marshall Plan as a rejoinder.
    So deflation was disguised, but the masquerade party has encountered the midnight hour, and Cinderella has exited the building. Nonetheless, the gullible pollyannas, with slipper in hand, seek to place the slipper on a foot that never existed. Of course, these are the same folks that ignore the unprecedented drop in median income.
    But, by all means, that .25 increment should be instituted- just to see what happens. I mean, why not give it a go for 72 hours, with the assurance that any short- sighted mistakes can be rectified.
    Jul 28, 2015. 11:28 PM | 3 Likes Like |Link to Comment
  • Don't Take Icahn's High-Yield Concerns Too Seriously [View article]
    Well, need we be reminded of this infamous assurance: "Subprime is contained"?
    Jul 28, 2015. 09:56 PM | Likes Like |Link to Comment
  • Industrials: How Market Illness Spreads [View article]
    Excellent discussion of the 'strange' divergence. It seems that the 'fluff' explodes higher, and the industrial backbone suffers arthritis. In addition to connections with energy and China, which seem plausible on the surface, there are periods when the greater mass of money is transfixed with nothing more than a new story line. To wit, note the 'ink' devoted to social media and the next 'wonder' drug. And, of course, the nod to anything perceived as 'disruptive'-which is superuber and battery powered.
    In other words, it's cool to SHAK to the BABA-and NUE is as old as the bossanova. Although, NUE has been an incredible iron condor performer. AMZN and NFLX are now the brightest stars in the night sky, but they don't operate massive warehouses for raw materials. Nary a heavy piece of equipment can be found at LNKD. No orders to CAT or DE originating from FB.
    Perhaps we find ourselves in the midst of the Great Transformation-a period in human history where we gather around a global campfire, tweet our hellos, sip a SODA, munch a CMG and await our manna from the almighty central planners. "Zero today, zero tomorrow" is our furtive cry, for we know a catch-22 when we see one. After all, that's the NFLX featured movie for the evening. Bon a petit.
    Jul 28, 2015. 05:34 PM | 3 Likes Like |Link to Comment
  • China Meltdown Part II: Now Are You Paying Attention? [View article]
    Sorry to hear of your loss-wish you the best.
    Jul 27, 2015. 11:05 PM | 1 Like Like |Link to Comment
  • Chinese shares slam into reverse; Shanghai -8.5% [View news story]
    I've been short China for a long time- not because of "earnings" or prospects- but rather because China is not an open society.
    And, there is a point in any society where government usurpation of free will results in moral and ethical decay. In theory, if not in reality, any government can make a market a de facto appendage. The game becomes rigged by Big Brother- which is much worse than rigging the World Series by ordinary crooks.
    The 'benevolent' thinking is 'just this one time to calm the masses'- but therein lies the path to addiction.
    Jul 27, 2015. 08:55 AM | 1 Like Like |Link to Comment
  • Are Lower Oil Prices Really A Problem? [View article]
    No sector or selected industry is an island unto itself. Think about ecological systems and the complications inherent in holding one variable constant. One species is not likely to go extinct without subtitles in cause-effect dynamics.
    Jul 26, 2015. 07:25 PM | Likes Like |Link to Comment
  • The New TVA [View article]
    "May the force be with you."
    Well, Kahneman has laid bare the 'farce' of overconfidence. I would stir in a pinch of hypocrisy, a dash of self-righteousness and a heaping helping of cowardly piety.
    "To say the words one truly feels and not the words of one who kneels"- sorry Frank, the corporate culture finds cowardly lions trembling behind their little cubicles. It's not likely that they can "eat it up and spit it out"- no teeth you see.
    We have acquired a distaste of material litter, yet we pollute the fragile gift of reason.
    Jul 26, 2015. 12:49 PM | 1 Like Like |Link to Comment
  • Scorching earnings not quite enough for airline investors [View news story]
    Once again, my iron- clad rule of airline gaming is proven correct. Basically, you can't pack people in a flying sardine can, fly them all over the planet, expose them to terrorism, exotic viruses and hysterical brats without the high probability of a hiccup now and then.
    And, like home builders, the specter of diminishing returns lurks constantly.
    Much easier to game the inevitable.
    Jul 26, 2015. 10:51 AM | Likes Like |Link to Comment
  • Homebuilders in the red as new home buyers go on strike in June [View news story]
    I'm on record as spoon-feeding folks how to short ITB. I'm currently looking at ITB calls expiring today, and admiring my gains.
    I'm all for people having their own home, but over the years I've made a tidy fortune simply shorting homebuilders (and airlines, and Chinese internet stocks).
    Do I ever buy homebuilders? NO.
    The present value/time value of money suggests that one wait and short at the apex.
    Jul 24, 2015. 01:38 PM | 3 Likes Like |Link to Comment
  • Debating Andy Hall - Oil Market Conditions And The Future Of Oil Prices [View article]
    The small shale producer will behave much like the small builder prior to the collapse. As long as a builder continues to build, he remains plugged into a "reward" system. Lenders continue to loan, and cash comes in- allowing him to pay employees and meet covenant rules.
    It seems counter- intuitive at first blush, but to the builder, he's acting in a rational manner.
    It takes a macro convulsion to stop the madness.
    Jul 22, 2015. 07:09 PM | Likes Like |Link to Comment