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  • This Doesn't Make Any Sense...Is Ford Motor Dead Money?  [View article]
    F is a perfect stock to utilize option strategies that easily yield double digit returns. To wit, holding LEAP calls while selling 3:1 shorter term calls. The fact that the stock is stuck allows a much higher payoff for collecting option premium.
    If you own several thousand shares, there are many nifty plays that can generate substantial returns.
    Oct 31, 2015. 11:43 AM | 1 Like Like |Link to Comment
  • Being Bearish Is Not An Investment Strategy  [View article]
    My approach is to maximize profit. Labels such as bull, bear, unicorn, trade, invest, gamble, etc have no quantitative rationality.
    In this regard, I seek optimal structures that conform to set probabilities over a given time period. Likewise, terms that incorporate "short-term, "long-term" etc are vague abstractions. Try this on a friend: pull out a piece of paper and ask him to depict a timeline (I label my points 'here' and 'eternity')- now ask him to mark the point where the 'short-run' transforms to the 'long-run'- you'll get arbitrary responses- even if you rephrase the question to relate time to average life-span, you'll likely note differing opinions.
    After a little thought, people generally conclude that the 'long-run' is but a series of 'short-runs'- see, for instance, your old micro-economics text which graphs numerous short-run curves, on a long run average cost curve.
    Oct 29, 2015. 03:01 PM | Likes Like |Link to Comment
  • Homebuilders lower after lame September sales data  [View news story]
    My comments are generally for seasoned traders. It's safer to begin by buying a put option-that way you can't fall off a cliff.
    But you need to study options first.
    The other risk limiting strategy is to utilize what's called a "bear call spread"-selling an option with more premium than the long option used to 'cap' your exposure. Options are superior to ETFs-but again, we have to go to elementary school before we go to high school.
    Generally, when I short homebuilders, I use call spreads. I've been gaming homebuilders for decades now-in good times and bad. The intrinsic thing about residential building is that it's cyclical-more so than any industry I can think of-and like the tide, there is always a discernible ebb and flow. In essence, consistent and redundant constraints are the rule.
    Now, I've long been asked about just buying the dips. In theory, that works as well. BUT, if we ACCOUNT FOR PRESENT VALUE, an optimal move dictates we understand that it's easier to push a rock off a hill than to slowly roll it up the hill. And, since 70% of all options expire worthless, we also incorporate those odds when selling, not buying, options.
    But, again, if you have limited experience with shorting stocks, don't put yourself in a situation that can bite you. Have you ever watched someone milk a venomous snake?
    So, study, learn, observe-and paper trade. Then, and only then, do you start with a very small amount of capital.
    Oct 26, 2015. 06:01 PM | 1 Like Like |Link to Comment
  • Homebuilders lower after lame September sales data  [View news story]
    If you shorted ITB like I suggested (over and over and over again)- you could buy a new house.
    Oct 26, 2015. 11:39 AM | Likes Like |Link to Comment
  • Is The Housing Bubble 2.0 About To Encounter A Pin?  [View article]
    Once again it comes down to location, location, location. Of course, that 'truism' merely begs many more questions. Popular areas generally are popular due to some differential advantage. All major cities can claim one or more destination zip codes, and more people would rather collect sea shells by the shore than pick pickles hundreds of miles inland.
    This has been true since the time of cities. Perhaps, though, we are witnessing new changes, which are created by a combination of economic shifts and demographics. If we fast-forward the aging of the US, for example, and hold constant the decline in median income for wage-earners, it does seem that there will be no Dorothy to opine that 'there's no place like home...'
    The fairly quick results of central planning and federal intervention have widened the wealth gap. Even low mortgage rates have inflated home values, enticing the sheep to measure their lives in monthly payments.
    At the end of the day, we recall that the powerless wizard floated away, content to leave the small and meek in a strange land. Fortunately, Dorothy had a strength of character so that a gentle reminder sufficed to return her home.
    Oct 12, 2015. 05:12 PM | Likes Like |Link to Comment
  • Generation Y: Buying Worthless Degrees Instead Of Houses  [View article]
    The problem with on-line schools is that they don't have college football teams. How can College Game Day schedule a Sat morning at Strayer, etc?
    And what about sororities and cheerleaders?
    A major part of college is learning how to date, drink socially and read Cliffs notes (is there such a thing anymore)?
    Just look at all the fun the kids were having last week when Alabama played Georgia and Florida surprised Ol'Miss.
    Gen Y will inherit their parents' house- why worry about a house anyway? Have you seen the Nat Geo series "Live Free or Die"? So, as Rodney Dangerfield said: stay in school, it's tough out there.
    Oct 7, 2015. 03:47 PM | 5 Likes Like |Link to Comment
  • Sell Deere & Company For These 2 Reasons  [View article]
    Bought puts a few weeks ago when the stock was much higher. I bought the JAN 87 strike. It was ugly for several days, but now a different story.
    Oct 6, 2015. 11:06 PM | 1 Like Like |Link to Comment
  • Strength In Employment And Housing? Both Are Weaker Than You Think  [View article]
    The problem is not found or diagnosed in any economic or financial text. It comes down to character. Men of great character impress and give confidence via wisdom and the highest ethics.
    What we see daily is enormous self- interest, corruption, manipulation, sordid incompetence and the most banal spewing of parsed, political ideology. The amount of degradation over the last thirty years is truly amazing. Just pick a public institution and assess its efficacy over this time. And, what of its constituents?
    Just look at the public schools. Compare the teachers and administrators to the 1950's or 60's. YIKES!
    Recovery? There can never be a "recovery" until we demand more of ourselves and strip away the media delusions. Character is forged in the basic family and nourished by communities. Monolithic financialization and central usurpation of freedom is destructive of individual liberty. Lack of character and diminished ethical standards are a natural derivative. Now, more than ever, we need that "eternal vigilance" that Jefferson declared to be the price of liberty.
    Sep 28, 2015. 10:02 PM | 5 Likes Like |Link to Comment
  • Hedging For Disaster - Now, Are You Ready To Listen?  [View article]
    Great info. As I suggested several weeks ago, I sold 500 JAN TZA 10 strike puts. TNA was in the mid 90's at the time. I admit I was a wee bit early, and had to be patient. But I wiled away the time by selling 250 of the TZA 12 strikes.
    As Blood, Sweat and Tears noted in their trading manual: "what goes up, must come down, spinning wheel got to go round..."
    Sep 28, 2015. 11:13 AM | 1 Like Like |Link to Comment
  • Pending homes sales unexpectedly dip in August  [View news story]
    Well, I'm sure there's some optimism somewhere.
    Yes, I found it- my ITB short up huge.
    Solution to housing is to bring back sub-prime and buyer credits. Or perhaps a real economy that produces real jobs.
    We are in the midst of a recovery, you say.
    Ok- how do you explain declining median income and about 9.5 million more people below poverty vs 2007?
    And our central bank (yet again) postponed a microscopic rate increase, creating one of the greatest timing questions in history. But, I think I figured it out..."she'll be comin' round the mountain when she comes, she'll be comin' round the mountain when she comes, she'll be comin' round the mountain, she'll be comin' round the mountain...."
    Sep 28, 2015. 10:58 AM | 2 Likes Like |Link to Comment
  • Caterpillar cuts guidance, sets job cuts, falls 6%  [View news story]
    Yes- CAT reflects the state of various construction projects, which are in turn related to economic growth. So, it's not just an isolated issue related to mining- that fact, presumably, was known already and reflected in the price.
    Those job cuts are likely to be rather long-term, absent some enormous infrastructure projects. And, that's more lousy news for decent jobs with wages and benefits. The laid-off workers have mortgages and kids in school. Houston, we have a problem lurking behind the facade of 5.1%.
    For an alcoholic to recover, he has to stand up and say: "I am an alcoholic."
    How about some basic honesty from government?
    Sep 24, 2015. 12:14 PM | 5 Likes Like |Link to Comment
  • A Fork In The Road For XIV  [View article]
    Did you mean theta decay?
    The term "beta" isn't a component of the option pricing model. It is, of course, a term applicable to stocks.
    Theta is unique to options, as an option will gradually shed its value. BUT, unlike an option to buy real estate, theta can be 'trumped' by sudden shifts in volatility. Of course, an option to buy a parcel of land could triple in value, if, for instance, an unfavorable zoning decision was over-turned on appeal.
    Your idea, though, which is to buy UVXY puts after a VIX spike, is certainly worthy of consideration. Bear in mind, though, that you have to cover the strike and the premium before gains accrue- and this must happen within a time period.
    What is the most important issue? That relates to expected value over time, and that, in turn, is probabilistic. And again, the option seller has the advantage. It's no small coincidence that large institutions sell options. Or, to frame the issue this way: would you rather own the casino, or feed the slot machines?
    Sep 24, 2015. 11:57 AM | Likes Like |Link to Comment
  • A Fork In The Road For XIV  [View article]
    Yes- selling far OTM calls can be quite lucrative. The variables and equations that comprise the BS model, are...equations. Reality can only be approximated. So, the light at the end of the tunnel could turn out to be a harmless firefly- and not the proverbial 800 pound gorilla. If the early indications suggested placing a bet on the primate, the price of those OTM options surged with gamma- driving the price quite high. As we approach the end of the tunnel, only to discover a harmless insect looking for a mate, the resulting gamma crash, as well as theta decay, will reward the seller with stellar returns.
    If we had martingaled our position at a point in the tunnel, just moments before we observed the firefly, we really juiced our returns.
    So, I like the strategy suggested, and certainly encourage those interested to take a closer look.
    Sep 24, 2015. 11:25 AM | Likes Like |Link to Comment
  • A Fork In The Road For XIV  [View article]
    Seems counter-intuitive, but the idea is to nail the spike. If one accepts the premise that panic/fear always recedes, or even moderates, the strategy is to short volatility at the darkest moment. Likewise, one gets long volatility during the calm, sunny days.
    Every market crisis, without exception, has always moderated. Whether it be October, 1929, Pearl Harbor, bust, financial crisis of 2008- all of these events become compressed memories, and part of cultural lore.
    And, perhaps the most important issue hasn't been discussed. In general, 70% of all options expire worthless. I greatly increase even those odds when I nail a spike. Note that the option seller simply wants to "run out the clock"- not predict future events. Also, establishing an initial position is the opening gambit- there are thousands of ancillary moves available to the chess master- and options strategist.
    So, I see fear ( for lack of a better term) as the time to strike.
    Sep 24, 2015. 10:45 AM | 5 Likes Like |Link to Comment
  • A Fork In The Road For XIV  [View article]
    VXX ETF best for selling calls. Volume results in low bid-ask, easy execution.
    Good luck.
    Sep 22, 2015. 06:14 PM | Likes Like |Link to Comment