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  • Why I'm Shorting VXX Rather Than Buying XIV [View article]
    4) synthetically replicate a short position by selling a call and buying a put(you can utilize all methods across numerous strikes and time periods)
    Nov 11 12:13 PM | Likes Like |Link to Comment
  • Why I'm Shorting VXX Rather Than Buying XIV [View article]
    The stock can be borrowed-see my comment above. Also, if you would simply look at the option chain for VXX, the fact that calls can obviously be sold, is affirmative proof that the underlying can be shorted. If I sell one naked call, I have shorted 100 shares of stock. I can synthetically replicate a short position by selling a call and purchasing a put. Arguably, that's more efficient than borrowing the stock. But, the unequivocal result is that the VXX can be shorted.
    Nov 11 12:09 PM | 1 Like Like |Link to Comment
  • Oh, THAT Italy [View article]
    Dead on. I know several small business owners with long-term successful track records that had existing credit facilities cut or modified. The reserve requirements (ostensibly as a prudent hedge for loan losses) becomes a quaint and curious phenomenon, utterly devoid of any rationality. Silly indeed! Clowns on the left, jesters on the right.
    Nov 11 10:37 AM | 1 Like Like |Link to Comment
  • Dividend Investors: Improve Your Yield-On-Cost [View article]
    The yield on cash will show an exponential improvement by utilizing verticals or spreads. I've seen comparisons with cash-secured puts vs spreads and the difference is astounding. BUT, I gather that many people use IRA accounts that don't offer spreads. The good news is that more retail brokers are doing so to remain competitive.
    Also, I think most people that have commented on this article could move to level lll approval within 6 months or so-if they did the requisite work. Of course, having a large account is very persuasive, but I sense that most here are prudent enough to combine appropriate study and patience. I mention Level lll because the entire set of tools needed for this market becomes available. Level lll is analogous to a state of the art fighter jet. Even Level ll is a WWll relic compared to Llll. The commercial by one of the brokers that shows a movie-star looking guy walking confidently down the street, surrounded by children, is truly a revealing distinction. Or, if you like to fish, Llll approval is tantamount to Marlin fishing with the best boat and equipment. Anything less is equivalent to sitting on a dock, with a cain pole, fishing for minnows. But, we all start at that dock, and that's as it should be.
    Nov 10 10:51 AM | Likes Like |Link to Comment
  • European Policy Makers Don't Understand, But Markets Do [View article]
    The marginal utility of self-deception. But it's customary to stir dull roots with spring rain-to mix memory and desire. After all, tomorrow's another day.
    Nov 10 09:42 AM | Likes Like |Link to Comment
  • Oh, THAT Italy [View article]
    Einstein could never accept the belief of Neils Bohr-that particles existed as probabilities. Bohr tried to explain to Albert that everything in the universe is entangled, even where the separation is millions of miles. All the printing presses are entangled, thus we have a tangled web. The bond spreads, simplistic though they are, represents something of a probability distribution.
    As to money printing, note this from Dickens:
    "France, less favoured on the whole as to matters spiritual than her sister of the shield and strident, rolled with exceeding smoothness down hill, making paper money and spending it....All of these things, and a thousand like them, came to pass in and close upon the dear old year one thousand seven hundred and seventy-five."
    Nov 10 09:03 AM | 1 Like Like |Link to Comment
  • Buying Apple On A Pullback: An Option Strategy [View article]
    If the ATM put spread heads in the wrong direction, you can always short the stock. Or, offset with bear call spreads. I like your idea because , in effect, you insure the greater risk by selling very low risk premium. It's like an insurance agent telling a customer that he'll be happy to insure the teenager's shiny, new Corvette, if he can also insure all the family cars, the home, and add a number of extras. Of course, the family could all 'go walkabout' but the odds favor the agent. And, he prevents an ultimate disaster by re-insuring at a limit that let's him sleep at night.
    This type of strategy is obviously available to more expensive stocks with multiple option strike levels. I set up similar strategies with GOOG, and some other stocks that have similar opportunities. However, I differ somewhat in that I'm always playing a 'what-if' I'm wrong game. As such, I tend to sell a various assortment of call spreads-sometimes mixing and matching ratio backspreads as additional sources of insurance, or income.
    But, all in all, the strategy proposed in the article will be superior to the risk inherent in simply buying the shares and hoping for the best.
    Nov 10 08:08 AM | 1 Like Like |Link to Comment
  • Little Countries, Little Problems; Big Countries, Big Problems [View article]
    "Olympus"-seems the Japanese took the name, but proved to be all too mortal-as you know the HFT's provide 'much needed liquidity'-So maybe they do the work of the gods-or for more likely-the greed demons of hell
    Nov 10 07:13 AM | Likes Like |Link to Comment
  • Why I'm Shorting VXX Rather Than Buying XIV [View article]
    Wilkinson007-there's an excessive opportunity cost with utilizing the XIV-especially if held for any extended time period. If you wanted to use it as a hedge against a predominant short position via bear call spreads against VXX, it might be construed as a quasi-DITM call, with decay operating not on theta basics, but rebalancing costs. You might also pick a nasty down day, and buy at the close, hoping to profit on a quick rebound. I mentioned to someone that has held the XIV for several months (I think prior to the split), and has a basis of $10 or so, that a martingale application might allow an opportunity to escape. They followed this strategy the other day, and caught a decent move up. The averaging down process allowed an out. BUT, this takes a poker-faced perspective, and a trading mentality. Now, if one has a rather large XIV position that is perhaps hopelessly in the red, I would not hesitate to sell a delta neutral share of VXX calls. There is always a way to recover, but creativity and patience are key.
    Nov 10 06:50 AM | Likes Like |Link to Comment
  • Buy These 5 Railroad Stocks Before It's Too Late [View article]
    I was just reviewing some NSC info when I noticed your article. I'll just simply agree with your assessment, and add that this company has extraordinary management. In fact, I was visiting this company's corp office last winter. Despite a horrific snow storm, virtually all employees were at their desks. Of course, they had a spread of catered food that was amazing. Of the numerous companies that I'm familiar with, it doesn't get any better than NSC.
    Nov 9 04:00 PM | 2 Likes Like |Link to Comment
  • Why I'm Shorting VXX Rather Than Buying XIV [View article]
    Ryan, you're right. What I do is sell bear call spreads. The distance in strike prices is a function of where I think the market is headed. There are times, though, in shorting weeklies (options) where I've been assigned the short shares. I will get a call or email from the broker requesting that I cover by some date, or call to make arrangements to borrow. That can be avoided, of course, by rolling over.
    Nov 9 11:56 AM | 1 Like Like |Link to Comment
  • Dividend Investors: Improve Your Yield-On-Cost [View article]
    Sell puts just before dawn. Sell calls when the clouds part, and the sun is shining brightly.
    Nov 9 11:11 AM | Likes Like |Link to Comment
  • A Smart Way To Trade The Groupon IPO Craze [View article]
    And this has been the practice since the Big Bang. But, the retail account can get some shares from their broker. Generally, the caveat is that you don't sell the shares for x period of time. So, some traders swing for the fence once or twice a year. Others will pool resources, sharing unused capacity. And, of course, if a trader makes a big hit, the natural inclination is to pull a 'piggy porker' and short the stock.
    If you missed the most recent pony show, don't worry. Be assured that another train will leave the station.
    Nov 9 11:05 AM | 1 Like Like |Link to Comment
  • Dividend Investors: Improve Your Yield-On-Cost [View article]
    Ignore all hot stock tips. Play the Roadhole as a par-5.
    Nov 9 09:42 AM | Likes Like |Link to Comment
  • Why I'm Shorting VXX Rather Than Buying XIV [View article]
    ***** That's five stars-you're dead on. The implications for strategy are enormous. Too bad XIV doesn't offer options. One can limit VXX short risk by selling bear call spreads. And, of course, the time to do that is just before dawn.
    Nov 9 08:26 AM | 4 Likes Like |Link to Comment