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  • Has Deceleration Returned To Home Prices? [View article]
    I have consistently advocated shorting ITB (not XHB) at 27.50 and doubling down at increments above that point. All one has to do is scan my comments on the subject.
    What confuses people ( I guess) is that there are geographical pockets of high performance. But, remember that one can drown in a stream with an average depth of 6 inches. Further, there are tectonic changes, which are easy to gloss over, but refuse to go away. One of the obvious is that an economy can't sound the clarion call of recovery where median income has declined from post-war levels. Despite the lollipop and rainbow purveyors of the evening news, one can move all the deck chairs from the boiler room up to the top deck, but the gaping hole is still gushing water.
    Jul 3, 2015. 01:33 PM | 1 Like Like |Link to Comment
  • Why I Think World Acceptance Will Go Bankrupt [View article]
    The mere fact that loan sharking lite has proliferated is an indictment against the economy as it is. If an average citizen can't go to an average bank with the reasonable expectation of being treated in a professional manner, what conclusions can we derive as to the current state of the economy?
    When I was 16 years old, I set up a checking and savings account in one of those big marble, high-ceiling, museum looking banks-I even got a car loan, and repaid the loan ($16/week).
    When traditional education and values are discounted as 'so yesterday' we can expect extended battles between the cobra and the mongoose.
    Jul 3, 2015. 12:51 PM | Likes Like |Link to Comment
  • Guts of jobs report weaker than the headlnes [View news story]
    Our government is so astute with its central planning that I'm confident that by July 4th, 2018 the unemployment rate will be the same percentage as the 30 year bond.
    The economy, of course, will continue to 'recover', hell will freeze over and political correctness will be an amendment to the US Constitution. Brave New World indeed.
    Jul 2, 2015. 03:27 PM | 3 Likes Like |Link to Comment
  • Volatility Surges 35% On Grexit Fears: It's Time To (Start) Shorting The VIX [View article]
    Well, I closed the shorts when the market opened on my 'don't be a little piggy' philosophy. Now, I'm using iron condors to 'trap' volatility within a bottle-that's the 'time in a bottle' concept.
    Rationale: Volatility fluctuates at this point as it seeks a slightly higher equilibrium. Option premium rich enough for time decay gains.
    I agree with TBT referenced above-all you need to know is how low will rates go?
    And, this game will never get away-I use TBT short put spreads with width a function of recent price. Monday, for instance, was a day for wide spreads (again, rates can't drop below zilch). Furthermore, it's easy to roll the short puts out, or take assignment and sell calls-or just double down (or both).
    Some of you seem to be waiting for ebola and avian flu to mutate into some kind of conjoined DNA strand before you short volatility. You don't have to plunge into the deep end of the pool-just get in the wading pool and put on your water wings.
    Jul 1, 2015. 01:05 PM | 4 Likes Like |Link to Comment
  • Whipsaw Wednesday: Greece Up, China Down [View article]
    China should let Steve and Sheldon operate their stock market for them.
    Jul 1, 2015. 10:32 AM | Likes Like |Link to Comment
  • Volatility Surges 35% On Grexit Fears: It's Time To (Start) Shorting The VIX [View article]
    Sold UVXY calls before close on Monday- did the DD ( double down) Tuesday morning. Futures indicate large gains.
    I don't know what's easier- shorting volatility or buying NFLX on dips.
    Jul 1, 2015. 08:49 AM | Likes Like |Link to Comment
  • Partying Like It Is 2007 [View article]
    I think the game will continue, only the players will come and go.
    Jun 29, 2015. 06:50 PM | 2 Likes Like |Link to Comment
  • Greece threatens to sue Europe [View news story]
    "Consult how we may henceforth most offend
    Our enemy, our own loss how repair,
    How overcome this dire calamity,
    What reinforcement we may gain from hope,
    If not, what resolution from despair."

    Paradise Lost
    John Milton
    Jun 29, 2015. 06:43 PM | 2 Likes Like |Link to Comment
  • Is All Hell About To Break Loose? [View article]
    For quite a while now I've suggested using put ratio back spreads as a low risk play for an event like Greece. Today was the big payoff.
    Now consider call ratio back spreads to profit from a rebound.
    Don't just wait to pick a bottom- that's much too difficult AND you give up the present value of the gains derived from playing the down draft.
    If this is new to you, just try a very small SPY position- selling one in the money call to buy two or more long calls. A sharp rebound will be profitable, and a continued drop in the market will be marginally profitable. A very small uptick in the market might create a very small or marginal loss- much depends on the set up.
    Jun 29, 2015. 06:32 PM | Likes Like |Link to Comment
  • Adoption Of VXUP As A Hedging Instrument Could Transform Investment Management [View article]
    Good point about time decay (synthetic time decay) with basic puts or contango infested ETFs.
    Here's another facet to think about, and it might appeal to some. If I sell a put spread on VXX or UVXY, e.g., (and I'm thinking more of LEAP positions) I know the exact amount of possible premium I could collect, and I put time decay on my side. A downside long put caps risk, but I don't really concern myself with that because I'm making far more money on the long portfolio. The disadvantage is that a drastic drop in the market isn't totally insured, but then again, don't the brave step in and average down? But wouldn't it have been better to have simply bought the long put? Perhaps-but when do most people exercise their long puts? At the first sign of adversity or when the put returns 500%? And as to the brave souls that want to average down, why not sell one or more puts well below the 500% gainer? Now, you either keep the 500% gainer thru expiration or make a faster return on the otm puts (while the first long one remains entrenched in the money).
    Jun 27, 2015. 01:41 PM | Likes Like |Link to Comment
  • Are HFTs Responsible For Low Market Volatility? [View article]
    And another area to examine is the extraordinary number of inverse and leveraged ETFs over the past few years. Consider the number of transactions required to balance this zoo. This is Newton's law on massive steroids.
    Suppose that everyone on the planet that has an account decided to take a course on delta neutral trading-or just decided to create nothing but a gigantic LEAP iron condor on the SPY, and simply let it play out.
    Frankly, a lot of my 'trading' these days is to just set up offsetting spreads and collect option premium. At inception, the downside is simply that I don't lose. The challenge is quite Bayesian: make simple adjustments which change the odds to conform with revised observations.
    Machines seek to optimize a decision; most of our fellow humans would prefer to gamble and speculate. And so, a big question is simply how much capital is under the control of mini-max regret, delta neutral, fully hedged philosophers vs. gamblers, speculators and adrenaline junkies? To the extent most capital is managed by the former, we should also expect less volatility.
    Jun 27, 2015. 01:01 PM | 6 Likes Like |Link to Comment
  • Are HFTs Responsible For Low Market Volatility? [View article]
    To some extent, we can examine the age-old question of 'pinning' at options expiration. Absent some extraordinary macro event on a Friday afternoon, the market will flat-line. Part of my thinking is that the advent of weekly options and the increase in sophistication of trading methodology should logically result in less volatility.
    What would happen if all market decisions were entrusted to super computers? In other words, if human emotion were totally eliminated, would these machines not reach an equilibrium quite rapidly? And having found that relative tranquility, how could volatility ever return? After all, 'volatility' is a function of human ignorance, compounded by irrational reactions. There is no question but that the market as we've known it for a mere couple of centuries or so will morph into a sterile calculus. It's been said that the market 'hates uncertainty.' Well, one might as well declare that they despise their human frailties. Be careful what you wish for-too late methinks.
    Jun 27, 2015. 12:19 PM | 2 Likes Like |Link to Comment
  • The U.S. Economy Is Shrinking [View article]
    The best of the best tend to be macro traders. But managing money is like picking the best golf swing. It's matching innate talent and ability to creativity and one's unique perception.
    I tend to set up trades that resemble a 'tug-of-war' between two equal sides. I just want to earn rental income by leasing out the rope. I don't really care which side wins-and there's always another game.
    Some folks like to 'pick winners' like TSLA or NFLX-some like to stay with old-fashioned dividend payers-and maybe sell some calls to enhance yield. Trend followers go long and short-depending on their longer term perspective.
    We've been in a very unique era where shorting volatility has been like shooting fish in a barrel. I still can't believe how easy it's been-and continues to be.
    For the past few days, I've been shorting current interest rates-and so have many others. In fact, why was the market down today? A logical construct would be to simply pair discounted cash flow with current equity yields. (Of course, one can look at China and do a little head scratching as to rationality). But, then there's always some sector or part of the world that momentarily hears a different drummer-and therein lies a skewed opportunity.
    Jun 26, 2015. 07:15 PM | Likes Like |Link to Comment
  • Wynn Resorts: Set To Double By 2018 [View article]
    I've been a long-time Steve Wynn fan. I had the opportunity to dine at the table next to him in Vegas several years ago. Our two tables were the only ones being served that night. He was incredibly gracious and he had his mother with him. Coincidentally, I flew my mom out and she was with me as well.
    I always have WYNN on my screen, and I find that I'm always pulling for him, which is extraordinarily rare for me.
    I think the stock gets a little lower, but nothing wrong with selling LEAP puts, and averaging in. Gambling is not going away, folks. One can invent all the battery operated cars, remedy various medical diseases and so forth, but human nature ain't changing any time soon.
    Jun 26, 2015. 06:56 PM | 8 Likes Like |Link to Comment
  • The Paint's Starting To Chip At Sherwin Williams [View article]
    That debt-service coverage ratio would violate a lot of loan covenants. I recall that 1.4 used to be somewhat of a benchmark-certainly for smaller caps. I also watch WHR, and they have taken a small hit recently-despite the enormous horn-blowing from housing imps.
    Jun 25, 2015. 04:49 PM | Likes Like |Link to Comment