Oh I see, it only says what if you bought it. I am so sorry to have misrepresented that you had an entry point or that you recommended or suggested any trade - I guess my perception was clouded by the people who read your column and pointed out to me that you were telling people to stay away from my trade and recommending they do the exact opposite of what we teach at PSW (which is never to be the sucker paying the premiums). I certainly stand corrected...
Have you ever been on TV? They rush from one thing to the next - I would have loved to explore the risk further but they moved on to another topic. Risk was owning SCO at net $30.75 which was, as I did get to mention, around $112 oil. If you think oil is going over $112 - it's not a good trade to get into - if you thought oil was not going to $112, as we did - well, obviously it was a great trade to get into.
I just realized I missed your actual entry point of $3 on those calls - that must be the risk and illusion you were referring to as you paid so much premium there that, even though SCO went totally in the right direction and even though SCO finished at $34.64, you still lost almost 50% at -$1.36 while we were 100% in the money with plenty of room to spare and a break-even 10% lower that!
Options are really great tools when you know how to use them correctly but very, very dangerous when you don't. Be careful out there!
I was only just informed of your critique. Sorry I'm not one of your followers...
I don't know what's off point, I read your article where you take a fill for over 100% more than recommended and then use that to tear down a trade but, on the whole, you did help prevent your readers from making, even using your calculations, a 158% profit in 40 days - so you can call it off point if you want, as I always say, we need our counter-parties!
Also, our premise was based on the very simple Fundamental that oil was not sustainable at $112 (SCO $30), so we felt comfortable being short at that level.
That was, of course, the 2nd consecutive SCO trade on BNN that hit our goals.
Unfortunately, your idea to pay a massive amount of premium for the April $33 calls at $1.45 didn't work out so well because SCO finished at $34.64 so they did make .19, which is a very respectable 13%, but we're fundamental investors who work off price targeting for our option selections so we tend to have a bit more conviction than that for our trades and tying up 1/2 as much cash to make 17x more money in the same time period is worth setting aside a little margin, don't you think?
Aside from the fact that you entered a $75 trade for $155, it did, in fact finish at the full net $400. I was just on BNN Tuesday so I look forward to your analysis of my new trade ideas!
Whipsaw Wednesday: You're Lucky They Don't Charge You To Take Your Money [View article]
I love people who read but don't understand (and thanks Borg for trying to help). I have maybe 1,000 pages of articles detailing how bad an idea QE is and how it is a blatant transfer of wealth from the bottom 99% to the top 1% but none of that seems to sink in for you as you "read me for quite a while."
They do keep telling me I should dumb down my posts on SA because the audience isn't as savvy but I guess I was force to figure out too much Joyce in High School and it was quite the epiphany when I finally did get it - I wouldn't want to deprive you of that!
In case this helps you - it's kind of my job to figure out what the market will do so it doesn't help me to have blind prejudices about what should and should not be done - I expected us to be rescued by QE from one of the usual suspects and we followed through with out plan to cash our shorts into the panic and flip bullish - which is just what I said we'd do in the post above for exactly the reason you are busy complaining about when all I'm trying to do is to help give you an edge against all this BS.
Notice how the market turned right on the Treasury auction? Coincidence? Maybe, but it's always nice when we can predict these "coincidences" in advance, isn't it?
Facebook Friday: Finally Something To Get Excited About? [View article]
That's the one!
My Mom is bad but I ended up sleeping at her friend's house when Mom's was full and I woke up at 2am and she's sitting there still playing that damned game since after dinner - it's scary!
Facebook Friday: Finally Something To Get Excited About? [View article]
Yeah, I wasn't trying to take a serious stand against Social Networking - judging from my Mom and her friends the real criminal is whoever makes that crystals game for the IPad....
On F, the 2014 $10 put is $1.90 at the moment but same concept, we're not so confident the market won't drop 20% that we want to buy F at $10 but we sure don't mind buying it at $8 (in this example, really we won't play F) because, even if they fall to $6 in a 40% drop, then we're happy to DD at $6 and own 2x at net $7, down 14% on the 2x position and we can certainly then sell 2016 $7 calls for $1.50ish to drop our basis to $5.50 with a call away at $7.
Meanwhile. if we are not so lucky as to get 2x of F at $7 or less, then we will console ourselves by keeping the $1.90, which is about 25% of the $8 we committed but 50% of the margin we may have put aside to own it and TOS tells me the net margin on the sale is under $2 so it's a 100% return on margin while you still have $6 in cash left to play with.
The mistake most people make with options is being greedy - if you just use them as simple hedges or for leverage to REDUCE your cash exposure to positions (but without risking more cash than you intended), they can be wonderful tools.
This is from a good article in USNews by the author of Currency Wars which sums it up nicely and applies to all CBs and their pet Banksters: http://bit.ly/JfxbKV
What he does not explain is that J.P. Morgan's "earnings" are actually not earnings but are a form of theft from savers, retirees, and others pursuant to the Federal Reserve's zero interest rate policy.
The Fed has engineered a massive wealth transfer from everyday Americans to large banks. They do this by holding interest rates near zero. Savers get nothing for their hard earned savings. However, banks get free money because they pay almost no interest. Banks then invest the money in Treasury notes and earn the difference. The Fed permits this to rebuild the capital of the banks. The Fed doesn't mind hurting everyday Americans if they can prop up bank capital.
They are now trading below book value but the sector is very out of favor and it will be a long, long time before they come back (and bankruptcy is a possibility in between). We still like them and added today but just be aware of the risks - it's a speculative play at best.
Thanks Subtilisin - We haven't even put in a Buy List for Members yet on the Twice in a Lifetime list as we're not sure we have a bottom (or a top to the VIX) - at the moment, it's just a Watch List with very few we are pulling the trigger on so far and, even then, we're only at a 1x entry in our scales.
As I said above (and all week) - it's 1,360 or bust on the S&P for the week and, so far, it's looking very much like a bust and only Facebook can save us...
That's the point. They are doing a great and highly coincidental job of flushing people out ahead of what is likely to be the biggest IPO of all time. Scam or not, it's very likely FB will set off a buying frenzy in the space and we finish the week off with a bang. If that doesn't happen – I will be very, very bearish but from what I'm hearing and the way they are extending the offer and raising the price – it's way oversubscribed. Also, we have to consider that people are cashing out 1-5% of their holdings to raise cash for FB on Friday – sure it's moronic, but that's what people do.
This morning's note to Members (just the end):
So it's the usual madness this morning and still – there really is nowhere to put your money except Dollars, US Equities and TBills.
We will need a few disaster hedges because, if Facebook does fail – disaster will be a completely inadequate description of what is going to happen next week.
Of course FB could do well but the hyenas could succeed in taking down AAPL and the Nas anyway or possibly JPM could fail and wreck the Global markets or Greece could exit the EU and rip a $500Bn loss through the Financial sector anyway…
Remember the good old days when we used to only worry about Iran closing the Strait of Hormuz? What every happened to those wacky kids anyway?
It is very frustrating when you hear little positives and jackasses like that take the floor (although I see his comments have been removed, which does warm my heart!).
As to TEO - didn't I warn you that Argentina was dangerous because of the connections to Spain? If not, my bad...
CHK is killing everyone and, you know what? So was BP at $26.50 and so was BA at $30 in 2009 and AAPL at $85 - sometimes you have to put your foot down but you can be the greatest trader in the World and, if you don't know how to manage your portfolio - you're still going to get in trouble.
Take the time to learn good Portfolio Management Techniques (something we teach our Members and there are articles about it in our Education Section that may be available for free).
ANR is in the same trouble as all commodities. With nat gas this cheap, there's no reason for anyone who can possibly burn gas to burn coal. Construction is still in the dumps and ships aren't being built and China's electric demand is falling with their economy so coal demand is in the tank and won't recover soon.
The only coal company we like is BTU and we don't like them much at the moment either but we are willing to buy and hold at this level ($25) for the very long-term.
You should be careful though as you're not too diversified betting CHK and ANR at the same time.
By the way, a nice trick for CHK is - let's say you bought it for $18 and you are a dumb-ass who doesn't hedge or cover or enter by selling puts and now CHK is $14. You can sell the stock ($14) and sell the 2014 $10 puts for $3.30 and buy the 2014 $10/20 bull call spread for $4 and that means you are left in the $10 spread that's $4 in the money for net .70 so all CHK has to do is flatline at $14 and you make $3.30 back but you free up $13.30 in cash (using some margin for the short puts) and you get all of the upside to $20 with a max profit of $9.30 less the $4 you lost in the first place is still a respectable $5.30 if CHK gets back to $20, which is way better than you'd do with your $18 basis.
Meanwhile, your worst case to the downside is CHK is put to you at net $10.70, which is 23% lower than it is now so - FOR FREE - you are getting 23% of additional downside protection, drastically lowering your break-even and taking 90% of your cash off the table.
THIS is why people subscribe to Philstockworld - we teach you how to do this stuff!
ROFL! Are you seriously the same bigbaboon57 that said on April 25th, first quoting my statement: http://bit.ly/Jg4xIH
"How can we expect the markets to react when Uncle Ben tells us we're not getting our fix today? They will howl and they will scream and they will have a little tantrum and that's how we're going to play it this morning - taking the opportunity to add to our bearish bets - assuming they survive into the bell. "
And then YOU said:
Well, this was certainly a WRONG call on your part. Ben didn't announce a fix for the markets today, and yet they continued strong into the end. Why don't you write an article with regards to this wrong call on your part and how your "bearish bets" worked out into the end of the day? Oh, I know, when the markets finally correct again, you'll come on and claim all your "bearish bets" paid off big.
ROFL!!!!
That was what 500 Dow points ago? God bless you, man - we need the counterparties but how about get your head out of your ass and listen to someone's opinion other than your own once in a while and maybe you'll learn something.
Oil, Options, Risk And Illusions [View article]
Oil, Options, Risk And Illusions [View article]
I just realized I missed your actual entry point of $3 on those calls - that must be the risk and illusion you were referring to as you paid so much premium there that, even though SCO went totally in the right direction and even though SCO finished at $34.64, you still lost almost 50% at -$1.36 while we were 100% in the money with plenty of room to spare and a break-even 10% lower that!
Options are really great tools when you know how to use them correctly but very, very dangerous when you don't. Be careful out there!
Oil, Options, Risk And Illusions [View article]
I don't know what's off point, I read your article where you take a fill for over 100% more than recommended and then use that to tear down a trade but, on the whole, you did help prevent your readers from making, even using your calculations, a 158% profit in 40 days - so you can call it off point if you want, as I always say, we need our counter-parties!
Also, our premise was based on the very simple Fundamental that oil was not sustainable at $112 (SCO $30), so we felt comfortable being short at that level.
That was, of course, the 2nd consecutive SCO trade on BNN that hit our goals.
Unfortunately, your idea to pay a massive amount of premium for the April $33 calls at $1.45 didn't work out so well because SCO finished at $34.64 so they did make .19, which is a very respectable 13%, but we're fundamental investors who work off price targeting for our option selections so we tend to have a bit more conviction than that for our trades and tying up 1/2 as much cash to make 17x more money in the same time period is worth setting aside a little margin, don't you think?
Thursday Thrust: Enough To Break On Through? [View article]
Oil, Options, Risk And Illusions [View article]
8)
Whipsaw Wednesday: You're Lucky They Don't Charge You To Take Your Money [View article]
They do keep telling me I should dumb down my posts on SA because the audience isn't as savvy but I guess I was force to figure out too much Joyce in High School and it was quite the epiphany when I finally did get it - I wouldn't want to deprive you of that!
In case this helps you - it's kind of my job to figure out what the market will do so it doesn't help me to have blind prejudices about what should and should not be done - I expected us to be rescued by QE from one of the usual suspects and we followed through with out plan to cash our shorts into the panic and flip bullish - which is just what I said we'd do in the post above for exactly the reason you are busy complaining about when all I'm trying to do is to help give you an edge against all this BS.
Notice how the market turned right on the Treasury auction? Coincidence? Maybe, but it's always nice when we can predict these "coincidences" in advance, isn't it?
Facebook Friday: Finally Something To Get Excited About? [View article]
My Mom is bad but I ended up sleeping at her friend's house when Mom's was full and I woke up at 2am and she's sitting there still playing that damned game since after dinner - it's scary!
Facebook Friday: Finally Something To Get Excited About? [View article]
Free-Falling Thursday: Facebook Faces Fatal Friday Follow-Through [View article]
Meanwhile. if we are not so lucky as to get 2x of F at $7 or less, then we will console ourselves by keeping the $1.90, which is about 25% of the $8 we committed but 50% of the margin we may have put aside to own it and TOS tells me the net margin on the sale is under $2 so it's a 100% return on margin while you still have $6 in cash left to play with.
The mistake most people make with options is being greedy - if you just use them as simple hedges or for leverage to REDUCE your cash exposure to positions (but without risking more cash than you intended), they can be wonderful tools.
Which Way Wednesday: Hurts So Good [View article]
What he does not explain is that J.P. Morgan's "earnings" are actually not earnings but are a form of theft from savers, retirees, and others pursuant to the Federal Reserve's zero interest rate policy.
The Fed has engineered a massive wealth transfer from everyday Americans to large banks. They do this by holding interest rates near zero. Savers get nothing for their hard earned savings. However, banks get free money because they pay almost no interest. Banks then invest the money in Treasury notes and earn the difference. The Fed permits this to rebuild the capital of the banks. The Fed doesn't mind hurting everyday Americans if they can prop up bank capital.
Which Way Wednesday: Hurts So Good [View article]
Which Way Wednesday: Hurts So Good [View article]
As I said above (and all week) - it's 1,360 or bust on the S&P for the week and, so far, it's looking very much like a bust and only Facebook can save us...
Which Way Wednesday: Hurts So Good [View article]
That's the point. They are doing a great and highly coincidental job of flushing people out ahead of what is likely to be the biggest IPO of all time. Scam or not, it's very likely FB will set off a buying frenzy in the space and we finish the week off with a bang. If that doesn't happen – I will be very, very bearish but from what I'm hearing and the way they are extending the offer and raising the price – it's way oversubscribed. Also, we have to consider that people are cashing out 1-5% of their holdings to raise cash for FB on Friday – sure it's moronic, but that's what people do.
This morning's note to Members (just the end):
So it's the usual madness this morning and still – there really is nowhere to put your money except Dollars, US Equities and TBills.
We will need a few disaster hedges because, if Facebook does fail – disaster will be a completely inadequate description of what is going to happen next week.
Of course FB could do well but the hyenas could succeed in taking down AAPL and the Nas anyway or possibly JPM could fail and wreck the Global markets or Greece could exit the EU and rip a $500Bn loss through the Financial sector anyway…
Remember the good old days when we used to only worry about Iran closing the Strait of Hormuz? What every happened to those wacky kids anyway?
Which Way Wednesday: Hurts So Good [View article]
It is very frustrating when you hear little positives and jackasses like that take the floor (although I see his comments have been removed, which does warm my heart!).
As to TEO - didn't I warn you that Argentina was dangerous because of the connections to Spain? If not, my bad...
CHK is killing everyone and, you know what? So was BP at $26.50 and so was BA at $30 in 2009 and AAPL at $85 - sometimes you have to put your foot down but you can be the greatest trader in the World and, if you don't know how to manage your portfolio - you're still going to get in trouble.
Take the time to learn good Portfolio Management Techniques (something we teach our Members and there are articles about it in our Education Section that may be available for free).
ANR is in the same trouble as all commodities. With nat gas this cheap, there's no reason for anyone who can possibly burn gas to burn coal. Construction is still in the dumps and ships aren't being built and China's electric demand is falling with their economy so coal demand is in the tank and won't recover soon.
The only coal company we like is BTU and we don't like them much at the moment either but we are willing to buy and hold at this level ($25) for the very long-term.
You should be careful though as you're not too diversified betting CHK and ANR at the same time.
By the way, a nice trick for CHK is - let's say you bought it for $18 and you are a dumb-ass who doesn't hedge or cover or enter by selling puts and now CHK is $14. You can sell the stock ($14) and sell the 2014 $10 puts for $3.30 and buy the 2014 $10/20 bull call spread for $4 and that means you are left in the $10 spread that's $4 in the money for net .70 so all CHK has to do is flatline at $14 and you make $3.30 back but you free up $13.30 in cash (using some margin for the short puts) and you get all of the upside to $20 with a max profit of $9.30 less the $4 you lost in the first place is still a respectable $5.30 if CHK gets back to $20, which is way better than you'd do with your $18 basis.
Meanwhile, your worst case to the downside is CHK is put to you at net $10.70, which is 23% lower than it is now so - FOR FREE - you are getting 23% of additional downside protection, drastically lowering your break-even and taking 90% of your cash off the table.
THIS is why people subscribe to Philstockworld - we teach you how to do this stuff!
Which Way Wednesday: Hurts So Good [View article]
"How can we expect the markets to react when Uncle Ben tells us we're not getting our fix today? They will howl and they will scream and they will have a little tantrum and that's how we're going to play it this morning - taking the opportunity to add to our bearish bets - assuming they survive into the bell. "
And then YOU said:
Well, this was certainly a WRONG call on your part. Ben didn't announce a fix for the markets today, and yet they continued strong into the end. Why don't you write an article with regards to this wrong call on your part and how your "bearish bets" worked out into the end of the day? Oh, I know, when the markets finally correct again, you'll come on and claim all your "bearish bets" paid off big.
ROFL!!!!
That was what 500 Dow points ago? God bless you, man - we need the counterparties but how about get your head out of your ass and listen to someone's opinion other than your own once in a while and maybe you'll learn something.