Cara's Commentary & Community Chat, Mon., Mar. 23, 2009

Jeez Bill, do you sleep?

Have fun today everyone, the most stimulation I can get out of the market is filling the IB formula for a new account opening.

GL Today

edit: Luck, who needs luck today?

Who's lucky enough to be holding FAS through the weekend?

Putting more good money after bad. Yeah, this should turn out real well. (sarcasm)

In the stock market there's an old saying, "losers average losers." That is, average down your overall position by buying more as the stock is dropping in price. It's a strategy to essentially lose all your money, and our government officials have it down pat.

Betting on Geithner's next come out roll...

http://www.theglobeandmail.com/servlet/story/RTGAM...

http://tinyurl.com/czwnxh

Quite possibly the song that has gotten the most play when alone with my thoughts on 280 in the evenings. Beautiful.

Here is the link to Alpha story:
http://seekingalpha.com/article/127201-bernanke-de...
Seems to me that China and other major investors in U.S. are going to be reticent in investing more over here.

http://tinyurl.com/dczphh

http://tinyurl.com/cz6kdy

VB/NYUGrad- This train feels more like the real thing, as the gap up disallows an easy boarding. We'll see.

I am not in a position to determine whether or not this rally is the "real thing". What I do know is, the situation the banks are in is no substitute for a strong banking climate.

My firm opinion regards gold and silver. Gold and silver are going to go up up up. Bill says it and I agree, adjusted for present inflationary realities gold and silver and probably energy too are in the doghouse.

Gold will be a $1200 item by the beginning of summer.

swissrobinson- thanks for the link, made my day.

Guys (VB, when I say guys its a non-masculine 'catch all' call:),

Compaq computers.

They're selling REALLY cheap over here. I remember the brand name from a long time ago. Does it have user cred in North America?

(Now that I'm getting serious with the market every afternoon, I don't want to be giving up my PC to the kids to watch cartoons)

Les.

Les- I appreciate that even more...your handle requires too many keystrokes..

Nuthin's changed...again.

Trailing a 1/3 10 day ATR buy stop.

bsi87,

Nuthin's changed...again.

Trailing a 1/3 10 day ATR buy stop.

...I have a question:

I am wondering do you think the small caps will be under pressure going forward, more so than just short-term?

Thanks for any feedback.

Les,

To the best of my knowledge, COMPAQ is HP's low end stuff. They have a bad reputation among my techno friends.

You might want to review this site before purchasing:

http://tinyurl.com/55zx2

Regards,
BH

Swiss - My Compaq keyboard handles those keystrokes just fine, could call you SR.

Compaq's don't come with optical mice, the keyboards are so-so. Take a look at PC Mag site for ideas. I bought this Compaq last year and it works fine but shoulda gone for a 4-core to handle big video/multimedia chores which gets you Vista 64 bit version.

OOOPS understand you now 2nd.

I thought you were suggesting that my conversation requires too much activity on your keyboard. hehe.

Yes - the name's Les. Les Robinson.

With all the euphoria about the smoke and mirrors announcement by Geithner that the Federal Reserve Bank will formally take over the US Treasury without a democratic vote by the people for the people. Pre Market looks like it is starting to fizzle from this mornings highs. Watch your capital if you have any left in your gambling accounts.

If last week's activity was THE bottom, IMO small caps would be leading as speculative juices come into the They're not.

The 26 week EMA's for all major averages are still in downtrends. If one looks at FAS:FAZ as a paired trade, the FAS was a buy at 2.5 on 3/6. Basically a ST counter rally to the 50 DEMA IMO.

We'll know in the fullness of time.

I agree with bsi...

Been picking up more FAZ

Thanks for the input. Also, what would you have to see with the trendlines you referenced previously to become more bullish on an uptrend (small caps), if in fact your less than bullish, as you could be playing the bear or bull at anytime.

Sharkie,

was thinking the same thing, this could be a push up as it is a grand reflation scheme to privatize gains and socialize losses. It won't work, it will look like it will work but the problem is to big, way to big. This is going to end in pain.
When that moment hits, the vicious bear market will have it's paws swinging down at the market.

Now our economy is trying to shuffle papers again and transfer the treasury wealth to the top of the pyramid. They already got everyone else's...

Still not on the gold bandwagon, yet....

BBY - Price Target Raised from $35 to $40 @ RBC. Outperform Rating.

JNPR - Price Target Lowered from $20 to $18 @ RBC. Outperform Rating.

I got long C right after the housing data at three oh two

if SPX trades above 794.82, buy SDS at market.
if RUT trades above 416.05, buy TZA at market

There you go- "TCFKAs"- The Caraista Formerly Known As swissrobinson.

bought Friday at 11.78, out at 12.38. Shudda set a sell limit at Friday's close + 10 day ATR or 13.29 as it hit 13.88 this AM.

just money mgmt...still bullish

bought FAZ at 27.18
bought SDS at 80.86
bought TZA at 57.22

Any time the averages hit the previous close + 10 day ATR in the first 60 minutes and they're at or near trendline resistance/50 DEMA, I'm interested in fading them.

JMO.

Craig,

There will be eventually fewer buyers of Treasuries.

Especially after the sweetheart deal announced today. Risk 3-5% capital and get 20% of the gains?

Those funds will be able to roll short duration t bills and risk small amounts of capital in the program. Corporate investing will dry up fast too..

Still think the USD will get stronger compared to other anglo currencies... yeah that statement makes no sense but again the vast majority of the public doesn't really have an idea of how bad USD related credit is...
Everyone is saying it should go down, how many times has the herd been right for a sustained period of time?

Watching you closely sharky--got in also but not nearly as nimble as you...at 3.07...still there...nervously.
S

salty- No one was nervous @ 50. I don't know that I'd be nervous @ 3. Is it possible it's a 2-digit stock by late summer? I think so.

Mark- And leisa used to play the opening riff to Twilight Zone. I don't think it's spooky, it's just catching the same market rhythm.

if SPX broke above 829 and hung in there or the 26 week EMA's would flatten out or trade up, I'd become LT bullish.

Right now I'm bearish ST, neutral IT, and bearish LT.

>Caraista

this word pops up often enough by I cannot find a dictionary definition.

Up, down, random. Feels like betting on where a feather sucked into a funnel cloud might land. Even so, I think we're headed out of the funk.

What could go wrong?

Getting back in can be a function of price, or a function of time and events. Maybe I won't get a good chance/reason to get back in. Let's see which way this puppy resolves. My principle is, I will not sit in a stock that is not moving, so when it stopped moving I sold it. And for no less than it's worth right now.

Usually buying after a descending price spike in an otherwise good play is a safer trade as many peoples' indecision has just been resolved, one way or the other.

Caraista = Name taken from Augusto Sandino....no wait, that's Sandinista.

Caraista = followers of the Cara Capital Market and Social Equity Movement.

Don't forget to bring your surfboard!

Did anyone else see on CNBC this am when Erin B said it was possible a mutual fund would be allowed to invest in these Public-Private assets?
Like maybe Pimco would start a TARP-fund and little people could invest in these toxic assets with virtually no risk and all upside?
Haven't seen the details but was intrigued.

P.S. As for Christina Romer - this individual should never be allowed to do a TV interview. I've seen her twice now and she is the most awful spokesperson I've ever seen. Always seems unsure of herself and her answers, lets herself be put into corners, agrees with false premises floated by the interviewer. She's just bad.

Christina Romer got her PhD in economics from MIT.

Not Berkley by a mile....but something happened....

RE:>Caraista = Name taken from Augusto Sandino....no wait, that's Sandinista

haha no relation except for geographical proximity, one would hope...

http://failurestodeliver.com/default.aspx

OldGoat

I liked your setup....did you use CCI crossng below 0 as your exit (8.17)?

bought at 34.29.

The troops have marched over 300 clicks and now we'll see if they can scale Mt. S&P at the lofty 800 meter level.....

We may see a reversal of the normal seasonality of price crash in spring, summer agony, and fall rally with a market sell off in spring, a rotational divestment out of equities and into the deflation trade.

I have two tickets left for the Bruce springsteen concert at San jose on April 1. I sold two over the weekend on ticketsnow.com for 124$ each. I paid 107$ each for these and will sell at cost to the community.

Wife is a big sprinsteen fan but the kids wanted to spend the spring break back home in Mississauga, Ontario so was able to get good flight from SFO to BUF over the wekend.

Let me know if anybody is interested, i have them listed on ticketsnow.com for $129 which is the cheapest price there.

ssv,

yes, interested depending on where the seats are - you can contact me directly if okay with bc.

vb

Put in a bid for FAZ @ 25.66 - right as it started jumping. Hit 26.40 about 12 seconds later.

Quite the spending spree...

Embattled bank JPMorgan Chase, the recipient of $25 billion in TARP funds, is going ahead with a $138 million plan to buy two new luxury corporate jets and build "the premiere corporate aircraft hangar on the eastern seaboard" to house them, ABC News has learned.

According to JPMorgan Chase architects, the new hangar will be built with reclaimed wood, quarry tile and even a "vegetated roof garden."

The Gulfstream 650's are described by the manufacturer as the "fastest," "widest" and "most comfortable" private jet ever with superior cabin amenities, an optional stateroom, and 12 interior designs to choose from.

JPMorgan Says No TARP Money Will Be Used

http://tinyurl.com/c2jsbu

http://www.voteronpaul.com/newsDetail.php?HR-1207-...

I'm seeing a lot of things breaking their old trendlines. DO, NOV, INTC, JPM, WFC, - in fact XLF has broken through pretty dramatically. Now I don't know if this means this will keep going up, but from my understanding, once those trend lines get broken, then we have to start thinking that something serious has changed and it may be time to adjust our strategy. For me, that means no more shorting financials...

Good call on the FAS action, 2nd_ave! About it plunging to $5 on Friday before popping back up to $7 and beyond. I am glad that I was on the FAScinating side with you rather than on the FAZscinating side. :) I am going with my family to Lake Tahoe now, showing my children real snow for the first time. Will be back on Tuesday night, and hopefully FAS will be at $7+ on Wednesday so that I could sell the shares I bought at $5.15 on Friday. Will sell 1/2 of my ERX at $34 and the other 1/2 at $40.

New options months, new straddles for April (will be tracked at http://nexalogic.com/straddles.html)

UCO 9-11 requires a move of under 21%. This is very low for UCO (and likely the move required will be significantly lower since we are just beginning the month). This should be very easy with UCO, but as Bill says, past performance is not an indication of future performance. Note that all UCO straddles and strangles were profitable last options month.

IWM 44-39 requires a move of under 10%.

Not too much confidence in the saviour plan...

Nobel-prize winning economist Paul Krugman said in remarks published on Monday that the latest U.S. Treasury bailout program is nearly certain to fail, triggering a sense of personal despair.

U.S. Treasury Secretary Timothy Geithner on Monday unveiled a plan aimed at persuading private investors to help rid banks up to $1 trillion in toxic assets that that are seen as a roadblock to economic recovery.

"This is more than disappointing," Krugman wrote in The New York Times. ""In fact it fills me with a sense of despair."

"The Geithner scheme would offer a one-way bet: if asset values go up, the investors profit, but if they go down, the investors can walk away from their debt," the Princeton University economist said, citing weekend reports outlining the plan.

"This isn't really about letting markets work. It's just an indirect, disguised way to subsidize purchases of bad assets," he added.

Krugman called it a recycled idea of former Treasury Secretary Henry Paulson, who later abandoned the "cash for trash" proposal.

"But the real problem with this plan is that it won't work," he says, adding that bad loans may be undervalued because there is too much fear in the current climate.

http://tinyurl.com/c58zl6

if this is a 2 digit stock without counting the reverse stock split b summer, i will be very close to being able to not have a day job and just manage my own money. What i am finding is that one really has to watch the markets constantly to manage risk, especially a 10% move either way can equal 10-15% of my salary. Meaning i will eventually get to a point where not managing my money and going to work can cost me more on down days, vs not going to work and managing my risk actively.

Dow up 367. this is nose bleed territory.

I will not chase. I will not chase. I will not....

Citibank comes up with $10B cash, creates a new company CitiJunk.

Using $10B, CitiJunk buys $330B of Citibank's trashiest crap, paying $0.80 on the dollar for it. Wow, who knew there were people out there that thought this was so valuable? Fed & Treasury coughs up the other $320B. CitiJunk is the highest bidder (naturally) and now Citi is happy, it gets $330B off its books. Heck, perhaps it even gets a gain.

Naturally over time (say about 3 months) CitiJunk does poorly. It folds. Poor Citibank, it has to write off its $10B investment in CitiJunk. Tragic when an investment goes so wrong. But who knew that would happen?

And how, pray tell, will they stop this from happening?

It may not be this blatant, but I'm just going to guess the bids for these bad assets will be surprisingly high.

and i guess what are the indicators that differentiate?

Is it # of days with confirmation of accumulation and up days?
Leadership showing in certain sectors?
Above certain moving averages?

Reason i ask is because i think there are still many ingredients still out there for trouble, ie earnings, job outlook, and inflation.

thanks in advance.

Gold was just taken down hard. I guess the buying pressure isn't as heavy late in the day. Or maybe like Bill says, it's going into equities right now.

Went long a small position @ 24

That was totally coincidental!

I am keeping my position small, mainly as a hedge against todays gains in the long-term portfolio. Prepared to add if prices are lower at the close, may close out any gains if we rise back to $26 before close of trading

I guess I'm trying to answer NYU Grad...

To me Mamis' use of the NYSE breadth oscillator is the purest measure of overbought...10 period average of NYSE breadth (advances over declines)

http://stockcharts.com/h-sc/ui?s=%24nyad

Mamis would substitute 'invisible' for type of price, and put in the ten period simple moving average (SMA) and thirty period SMA.

The old adage, "enter in mild times and exit in wild times?"...I'd guess 820 is the next battle zone...and an opening gap reversal (OGRE) would please the traders.

Oops, excuse me, Canada: total of 5 Canadian banks on the list now, up from 0 in 1999!

Hopefully I'll make it all back this week... Closing in fast!!!

also dangerous in this market...what if FAS bounces back into two digits as quickly as it initially fell into single digits?

if you're not already on it...which is why i think the move is real (at least for the ST time frame I'm trading)...maximum frustration is the name of the game, right?

Yes sir. wow.

Interesting take..... from Behind Enemy Lines
----------------------------------------------
I've received several emails with links to Karl Denninger's piece today. Karl is right on the money, but there is something he did not cover. If we allow this plan to move forward, the boys on Wall Street will play another side of this game and reap billions in profits . . . on both sides.

First read Karl's piece - http://market-ticker.denninger.net/

Now consider this.

Part 1 - The slick boys on Wall Street will buy bank and insurance company stock cheap. These are the banks and insurance companies that would have been forced out of business, if Tim the Tax Cheat (T3C) had not come up with this brilliant plan that even Paulson didn't have the guts to pull off. The Wall Street Crooks buy up the stock cheap and load up on options.

Part 2 - Now that they own the bank and insurance company stock on the cheap, they take the trillion dollars from T3C and buy the toxic assets from these banks and insurance companies at insanely inflated prices. Why? Because they want to fill the banks coffers with as much money as possible. This will drive the price of the bank stocks up . . . and the Wall Street Crooks will sell the bank stock and options to the tune of hundreds of billions in profits . . . for themselves.

Part 3 - You might think . . . but what about the losses the Wall Street Crooks are going to suffer from overpaying for the toxic assets? Ah-ha, well that is the beauty of it all. They are only going to suffer very minor losses because T3C is encouraging them to leverage up on these purchases AND go hog wild because T3C is back-stopping their losses and only requiring a pittance of a few pennies on the dollar from them. So the Wall Street Crooks lose a few pennies on the purchase of the toxic assets, but they make billions on the bank stock.

Part 4 - There are two other sides to this. The Wall Street Crooks will also be taking a skim from selling toxic assets to pension funds. This is not the big skim. The big skim is in buying up the equity in the bank stocks that they will pump with our cash. Moreover, guys like Jamie Dimon, Ken Lewis and John Mack will walk away with hundreds of millions in annual bonuses for a "job well done."

Part 5 - So where are the toxic assets. Actually, by the time this has run it's course, the pension funds will be holding what is left of the toxic assets and the Wall Street Crooks will have skimmed off the best assets in the barrel for just pennies on the dollar. They will reap huge profits on these good assets, but the taxpayer will not share in this . . . because the Wall Street Crooks will sell the good stuff off the their buddies and associated companies.

Part 6 - The Wall Street Crooks cash in on the T3C back stop for the losses they will take on the crap they overpaid for to pump up the bank stocks and reward their co-conspirators . . . the bank executives referenced in Part 4. T3C doesn't have the money to pay them off, so we the taxpayer will be the ones left holding the bag. And it will be a bag that our children and our children's children will be saddled with . . . if we don't tear ourselves apart as a country before that.

Part 7 - The banks that will go under or be swallowed up, will be all of the well run banks. These are the guys that will pay the consequences for the bad banks. You see, they will not be able to compete with the bad banks, and the bad banks will now have the money to buy up the small banks and run them into the ground.

Market Update - The market is up 6% as I write this . . . and moving higher. We are short the markets and losing quite a bit of money today. Do we bail out? I think not. I think reality will set in. And if it doesn't, money will not matter. We are just steps away from a complete break down in government. It may take weeks or months, but I still firmly believe the people will rise up in revolt before the end of this summer. Our financial system was all but eviscerated today when T3C decided to turn our fate over to the boys and girls that created the mess we are in. And I close with this . . . not even King Henry was prepared to pull this obscene maneuver. He knew it would end far worse than the 1930's or Japan's lost 20 years. T3C was out of bullets and desperate to make friends with someone.

If the plan holds up, our country will collapse. That might take a year or two, but it is inevitable. That is inevitable, as we are throwing our money at the men that created this disaster. If the plan is pulled, the markets will move lower and I would hope our government allows free markets to work, even if that means painful times. Because the pain we will suffer under the latest plan, is pain we cannot recover from withou grave social unrest.

Government needs to address the problems, not create more. Government needs to go after the Wall Street Crooks, not reward them. Government needs to claw back what they stole, put many of them in jail, regulate the conduct of business and to dish out consequences to those that created the mess . . . instead of the people that are at the wrong end of this social and economic disaster.

There is a simpler attack on this plan:

Citibank buys 250B of BAC"s bad assets. Citi bids $1.00.
BAC buys 250B of Citibank's bad assets. BAC bid $1.00.

Ooops. Losses. Sorry about that guys. Ouch, $12.5B gone.
Oh, but there is this nice offsetting writeup from our $0.80 to $1.00 gain.
Hey, that's $50B gain. Thanks so much!

We're a bunch of relatively disinterested guys on a website.
This plan took us all of a day to break. Ya think maybe HB&B figured this out?

This is so lame it's incredible.

There's no way this launches. This will become apparent way too quickly. But the fallout from the realization this plan simply won't work - and it was the BEST these guys could come up with, should be ... dramatic.

It didn't take anyone here a day to break this plan - this is the same BS non-starter they've tried 4 times now to push as the solution. It's sucked every time and it stinks now.
The Monied Interests are intent on cramming this through. They have incentive to buy high, skim the goodies off the top, then get the taxpayers to buy for the "toxic" assets - exactly like I think you (davefairtex) summarized so well earlier.
Nothing's gonna stop 'em.

I lost track of how much taxpayer money has been thrown at the banks, I think it's around $100 Million-thousand or something like that. I wonder what the estimated economic losses would be from this banking crisis... 401K's are now 101K's and many poor souls have liquidated their accounts altogether. Layoffs and lost production have already cost employers countless Trillions no doubt, not to mention the cost of re-starting closed facilities, many of which are closed never to re-open....

What an utter mess!!! There are a large number of somebodies needing serious jail time.

Vadym,
Employee options are free long term options right? So all the executives have to do is to paint a pretty face for the HB&B stocks using this scheme & they get an opportunity to cash their underwater options & make money. I am risking my money to enter new positions here, while they just use the public money to bail themselves out at no risk.

Si02 - re your above answer to les/swissR - I am confused - I thought you were a straddle buyer. Seems like his Q's assumed you were long the stock and short the straddle/strangle. For example, his first Q sounds like he is concerned that he would own UCO if it went below 9. Can you clarify?

Well, absence of risk in this case is related to the very origin of those options. To protest that, one will have to take an issue with the very matter of paying employees with options. That may be a valid matter but not related to the topic at hand which is:

if we can see clearly the play being constructed and executed before our very eyes, this is something to exploit and turn into positive development for us, as opposite to staying on the other side, losing money and expressing anger over the development which became a negative one only because we chose it to be such.

That's my only point.

davef, note that I am using 9-11s as there is plenty of time. The moves will be higher on strangles as opposed to straddles, they are riskier. The only reason for UCO is because it its very volatile and has violent swings, and it trades at $10, which is the right price for me (as in premiums cost). I just time the entries for when the underlying is at equidistant points from the strike prices (i.e., underlying-put-call of the form 10-10-10, or 10-9-11, or say 8.25-7.50-10). Every single one of them has worked in the past. Eventually they will stop working... Also, volume is fairly low, this is not for big fish. As always, do your DD please. You can view plenty of past examples at http://shockedinvestor.blogspot.com and access the StraddlesCalc tool there.

For anyone who follows for fun, Snakes are supposed to have an unbelievable financial yr.

Here is today's prognosis. I prob should have sold like it told me to:

"You could have a windfall of money from your financial investments. Try to reinvest 50 percent of your profits, and give yourself that nice indulgence you have been craving with the rest of the money. Scented candles or a little aromatherapy can restore your well-being if you feel a little uneasy today."

You are a snake if born
1905, 1917, 1929, 1941, 1953, 1965, 1977, 1989, 2001

Snake Overview for the yr.

"The Snake has an incredibly favorable year ahead. The year of the Ox provides many opportunities for the Snake to fulfill long awaited career goals and achieve more than he/she ever imagined. Your wisdom and patience are tools that prove successful in all aspects of your life. Relationships could be taken to new heights and deep and meaningful friendships are acquired. This year proves to be one of action, the year that all of your planning and waiting pay off for you. The later months prove to be especially successful, tying a year of arduous work into an extremely blissful culmination."

Snake Rating

79% (10 favorable and 2 neutral months)

If you want to see track yours, go to http://tinyurl.com/d5oobp

Disclosure: its just for fun.

Hmm ok now I see why you find them interesting. I especially like the concept of low volume. Its where little minnows can get a meal without having to fight with the big fish. But volume is high enough so the bid/ask spread isn't too bad.

Wow, call volume is ten times put volume on UCO April 10s.

I will have to think more upon this. I think I probably need to go re-read your other posts on exit points so I don't do something dumb. :)

Ummm... that would negate the part "This will drive the price of the bank stocks up . . . and the Wall Street Crooks will sell the bank stock and options to the tune of hundreds of billions in profits . . . for themselves", thus whole debate, no? :)

Corner Stone

You deciphered my hidden message... Good job Sherlock!

:-)

"Ummm... that would negate the part "This will drive the price of the bank stocks up . . . and the Wall Street Crooks will sell the bank stock and options to the tune of hundreds of billions in profits . . . for themselves", thus whole debate, no? :)"

Yes, except for the fact that once publicly traded bank toxic assets are purged, they would once again be able to operate profitably?

Seriously, I'm not attempting to create a circular argument.... so suffice it to say financials are in the clear if Terrific Timmy's plan sails through, bank stocks will benefit? I'm imagining that profits specific to the public-private partnership aren't really for public, aside from expunging toxic assets will simply allow the economy to function (perhaps)?

Shiva, yes IV will affect both prices. This is why I avoided buying last Friday as it was OpEx day and volatility moves higher. But other than that, I find that volatility increases when stocks drop, which means the puts are getting more valuable, and that is a good thing. If we move into a stable oil economy environment, then things will be different and may stop working.

Now I have a horror story about exercise of options. Last Friday I was holding IWM 40 puts, which I thought they were quite out of the money. Well, IWM inched below 40 in the last minute or so, closing that day at 39.98!!! I got the call from my broker this AM. The puts were auto-exercised and I was then short IWM shares. I rushed to cover the short with IWM at 41.14 (it closed today at 43.38). Expensive little exercise. Bottom line is to put all options for sale if you are still holding them on expiration day, no matter how bad they look.

I can remember when Bill was pounding the table on financials heading for a fall back in 2006/07. DJIA 14000/SPY 150/XLF 35 was the was the time to be negative, no?

Now it's 2009. The DJIA, by one measure, hit 1966 levels adjusted for inflation this month. BSC, CFC, WM, LEND, AHM- these companies are gone; bought out or gone under. C, FRE, FNM, BAC, AIG- these giants have been cut 90% or more, trading in fractions or have traded that low.

What more do we want?

I think it's over. I think financials go up from here.

Si02 - I am still trying to understand your long straddle strategy. IWM traded at 41 a month ago, down to 34 about two weeks ago (a long put position was 6 points in the money at that time) and then back to 42 a couple of days ago and then HB&B made the underlying close slightly in the money so they could make you short. Isn't it funny that the call holdouts did not get an exercise. Happens every time.

Can you explain your timing on this trade and if you held them for a month or so, why not roll down your long to book some profit when it was 6 points in the money?

I know, I know, - 20-20 hindsight on my part. I am not trying to be a wise guy, just wondering about your thought process.

By now you know I favor the long stock/short call option or short straddle side of the trade.

bobbyo- LOL. No doubt an entire generation of preachers will be working that angle, in ways creative and not so creative, into sermons for years to come.

Vinod- I'm not going to tell you not to use them. I've used one of Fidelity's trading platforms in the past (Active Pro).

All I know is I make more money with less information. When I'm at home on a day off watching screens, I tend to enter/exit positions too quickly and too often.

When I'm at work, all I have on is a Yahoo Finance link in the tool bar that shows the DJIA more or less in real time, and I keep the tool bar hidden most of the time to avoid being distracted. I click on it from time to time, with the only 'timing' involved being the thought that maybe I should take a look. 80% of the time I come pretty close to predicting what number I'll see, and 20% of the time I'll be surprised. It's the 20% that usually prompts me to enter/exit a position.

We all have our own systems, and keeping it simple works for me. I know you did well with OEX puts/calls using nothing more than your own sense of market rhythm.

2nd
“All I know is I make more money with less information”

I did same; I would like to mention few things about your positive feeling for financial
C/BAC/FAS did not hit high of last week, and WFC just stop at last week high.
FAZ is showing major decay in just one week, and FAZ hits a new low today. It is down 80% in two week and it is a scam (both FAS and FAZ).
Republic has shown strong disapproval of 1 tril toxic plan and may have hard time getting approved from congress.
Also when RIFIN closed @ 528 & FAZ closed at $62.61. Today we are at RIFIN 523 & FAZ $19.20
Looking all of this money to be made in next few days in FAZ if I get in at right price?
i am not talking about trading FAZ, its gambling

NYUGrad - ""You could have a windfall of money from your financial investments. Try to reinvest 50 percent of your profits,"

I'm wondering if by chance you've back-tested this mechanism??? ;)

"using nothing more than your own sense of market rhythm"

Bill's many commentaries on simple, effective trading-techniques and the inspiring anectodes about his Dad's trading has prompted me to look really hard at what has worked for me during the last 2 years. It's just that, 2nd_ave: rhythms. If you are follower of many markets and, yes, the News, and have a rudimentary understanding of the correlations, there's a vast amount of unconscious calculations going on that bubbles-up into a feeling that, for e.g., "the markets are topping here", or "we are due for a rebound", or "I have no idea wtf is going on here and better back-out for a while". That's the "Art" side of the game that Bill referred to recently, I believe.

Locked into a Defined Contribution Pension Plan at work, I have the distinct displeasure of having to deal periodically with our "Advisor", who is no more than a (bad) salesman for his firm. I try to limit my contact with the boor, forcing me to make some really long-range forecasts on the markets, and every time I have to issue an instruction on how to position my money, and ongoing contributions, restricted by "holding periods", penalties, and such, I lose a good night's sleep. History has shown that I'll either get some stupid response reminding me of my "Risk Profile" and that I should "stay the course", or there is some error in the execution of my instructions.

Faced with these hurdles, and the outrageously expensive, underperforming, fund choices, I'm proud to report that since May 2007, I have managed to lose only 4% of the invested funds in my RRSP (like 401K for US residents). Much of the credit is due to the many contributors of this site. Thank you. I've seriously thought about joining the benefits committee and convincing them to fire these Yahoos and transfer our plan over to a low-cost, modern system, but I don't think you would believe the distance there is between the understanding most people have about investing and the level of discourse we have, here, on this Forum. :P

EOM

Bill,

Would that be for Friday night for the party @Italian restaurant? I'll be flying in mid day Sat.

Yes, I suppose history indicates that equities prices are generally under priced during inflationary periods, while they are overpriced during deflationary periods. This is one reason for the big sell off. Put another way, equities are an option on future profits. If the company you are holding makes good profit in a deflationary environment, the price should reflect the reality. Extreme inflation/deflation periods probably aren't good times to hold but more a time to trade.

Mackinaw, what's your take on this?

Good work son, I'm proud of ya'! Maybe I'll call ya' "Patches" from now on...

"I always remembered what my daddy said
With tears in his eyes on his dyin bed
He said, "Patches, I'm depending on you son
I tried to do my best, It's up to you to do the rest"

http://www.lyricsdownload.com/clarence-carter-patc...

Sometimes I felt like I couldn't go on...then one day a strong wind came...every day I had to work the fields...every night I heard my momma pray...only to hear my Daddy say "Patches, I'm depending on you Son, to pull the family through, my Son it's all left up to you".

Lol - you're quite the joker, CP.

http://www.barbneal.com/foghorn.htm

I have to agree with you. There's far too much bad debt currently and so much more coming that even if they launch this program, it will merely be a drop in the bucket. Citi alone has 1 Trillion off balance sheet. Think those are all AAA?

But the fact that we haven't hit the final bottom doesn't mean that this rally won't be very powerful. The strength of the rally will depend on how desperate the banks really are to offload these "assets". The process won't happen overnight and they'll need things to be looking better so the rug doesn't get pulled out from under them before they've made the switch.

So, I believe this could be one of those 50+% rallies which happened during the Great Depression. But, for the long-term there still is far too much debt and overcapacity for it to be clear sailing.

So, I do have some June calls on UYG and some Jan 10 calls on QQQQ as a gamble on a bigger rally than people expect. But I'm still mainly in cash as it seems risk is higher than ever.

Rob.

Probably next stop is S&P 870 or 950 and then the earnings season will start in a few weeks for the downward play

Alright, I'm back, and it appears from the discourse that you have a groupie following now Si02.

It appears from your profile that you are a number cruncher, which I am not, so excuse these basic questions. (You know where the ignore user button is :)

You have bought different numbers of puts and calls so that the amount between the two options are roughly equal. Sorry, the UCO example is a straddle, isn't it (I'm getting confused between the two)

You state that all your straddles and strangles were profitable last month. This assumes then that the increase of value of whichever option the underlying stock is leaning towards is more than the loss on the option that is losing favour. Is this correct?

Or do both increase in value as the expiry date approaches?

I can see from your previous that you buy your options, as opposed to writing. But you said you were stuck holding IWM 40 puts. But if you had bought the option, then you had no obligation to buy the underlying stock. So what's with the auto-exercised purchase?

I ask this last one because I would like to practice 1 options trade at a time when I open an IB account, but do not want my account to be on hook for the purchase of an underlying stock - unless I specifically wish to own it.

I'm using Bill's book to understand, and I see you have the right, but not the obligation to sell when you purchase puts. Did your brokers computer auto-execute a sale of a holding you didn't actually possess?

LEs.

From the article

"In addition to the health benefits, a major reduction in the eating of red meat would probably have a host of other benefits to society, Popkin said: reducing water shortages and pollution, cutting energy consumption, and tamping down greenhouse gas emissions -- all of which are associated with large-scale livestock production. "

Once the govt takes over health care, an addendums like this point the way to the "flatulence tax". Fear of climate change will be used to justify everything.

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