Friday, July 9, 2010
7/10/10 Feels Like Rain
How tough is the economy?
My older son has spent weeks looking for a summer job to no avail. Even with personal introductions to managers who are colleagues/acquaintances, it ends up like Buddy Guy trying to warm up the above audience.
Feels like rain alright. Except for the market indexes, which have dealt pain only to bears the past week. 10 days ago it was the 'worst quarter since 2009?' Today it's the 'best week of 2010.'
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David- Which brand of absinthe did you pick up?
ReplyDeleteStock, Options and Collars by J.L. Lord
ReplyDeleteAnyone here ever read this book? It is rather pricey, which is ok, but I rather know it really is worth the money.
http://www.randomwalktrading.com/main/index.php?option=com_content&view=article&id=60:stock-options-and-collars&catid=3:text-books&Itemid=52
Anon- Personally, I think you can find all you need to know about options on the Web.
ReplyDeleteI can't remember the last time I purchased a book, newspaper, magazine, CD, or DVD.
ReplyDeleteGuess I'll join TK at the Equities-Didn't-Dive Bar. He looks like he could the company.
ReplyDeleteCI - I agree with David's assessment on options. I would be a buyer of ITM calls on RIMM if you believe it's going to go up. OTM calls are a fools game. Shit I think options in general are a fools game. I hardly play them anymore. It's hard enough getting a trade right. Throw in time decay and you're sure to lose your mind.
ReplyDeleteMy S&P Forecast from a few weeks ago newSubmitted by teamonfuego (2121 comments) on Fri, 07/09/2010 - 19:35 #65563
ReplyDeleteNot exactly accurate but interesting that the price bounced right where I thought the first level of support would be. I added a new chart with support/trend lines. This is basic stuff but you get the picture. I think the market ultimately tests support around 940 to 950.
http://caracommunity.com/sites/default/files/SnP_062310_0.jpg
http://caracommunity.com/sites/default/files/SnP_070910.jpg
Middle Of The Road....
ReplyDeletehttp://www.youtube.com/watch?v=SPankJ0TytY
"In the middle of the road you see the darndest things
Like fat guys driving 'round in jeeps through the city
Wearing big diamond rings and silk shirts"...
2nd_ave, I picked up French absinthe called "Le Tourment Vert" (The Green Torment): http://absintheology.com/le-tourment-vert.html
ReplyDeleteIt is the cheapest one they have (only $30 for 0.75L), but it is 100 proof and it gives a kick not worse than Nadurra. I had picked up a bottle of this stuff a month ago and have already finished it -- it goes great either straight up or in a cocktail (I mixed it with juice and water).
David/TOF:
ReplyDeletePut: If it fell back to $50.00, then I would like to write a put to buy it. I am comfortable holding for say 6 months.
Call: It it fell back to $50.00, or even if it were to go to say $51.50 I would like to buy a call as a proxy to owning it for the same 6 months. But then again as 2nd says, this market is hard to target. If falls next week to say $51.50, then if in the next 20 days it moves up to anywhere between say $56.85 to $59.00 then I would just sell the call. I don't want to hold any longer than 30 days before expiry. I wouldn't feel comfortable in holding a call in the last 30 days.
I realize that if you step back a bit the trend in RIMM is down. So maybe I am getting emotion into the equation to think I bought a low and hit a home run. And this stock may prove me wrong and fall to $25.00.
CI- A guy I know who used to be a broker only owned stocks if they were put to him. He'd make the majority of his income selling the premium.
ReplyDeleteI know you guys watch financial TV so you're probably way ahead of me(why discuss what everyone already knows, right?) but in case anyone's wondering about AA's earnings report next week and interested in getting ahead of the ball, I offer the following article from Schintzer Steel's recent report.
ReplyDeletehttp://blogs.barrons.com/stockstowatchtoday/2010/06/30/schnitzer-halted-q3-blows-away-estimates-on-surge-in-volume/?mod=yahoobarrons
Since right now I am clearly net long, I want to protect my positions from a very possible market reversal next week. So I just placed a buy stop limit order for 1000 shares of TWM at $22/22.05. The position size is 10X my regular trade size because now it is acting as a hedge for my longs rather than a separate trade.
ReplyDeleteI wish I were awake for the whole trading day on Monday, which would allow me to babysit this large position and make sure that if that order gets triggered but then TWM starts going down, I'll exit that position flat at $22, and will then re-enter it at $22 if TWM starts moving up again, etc.
Maybe I'll wake up at 6:30am on Monday to make sure that the market does not gap down big time, in which case I would have to babysit my position and make sure that the gap down does not get reversed soon after that. If the market opens flat or up, then I go back to sleep until 10am. :)
"Put: If it fell back to $50.00, then I would like to write a put to buy it. I am comfortable holding for say 6 months."
ReplyDeleteCI -- this sounds good. I would write a September put. If my entry is good (the stock just had a major decline), then I usually write slightly in the money puts so as to pocket more premium.
Now let's say RIMM opens flat tomorrow and the options prices don't change. If you buy 1 September $50 call for $6.10, and RIMM makes a move to $58 (your target) in a couple of weeks, then your call will probably be worth around $9, giving you a profit of $300. On the other hand, if RIMM falls to $50 next week, then your call will probably be worth $3, and if you cut your loss at that point, then you'll lose $300.
If you buy 1 September $55 call for $3.45 and RIMM starts going down next week or it stays flat, then you are risking to lose $345, which is comparable to your loss with the previous strategy. On the other hand, if RIMM moves to $58 in a couple of weeks, then your call will probably be worth around $6, giving you a gain of $250. But then, you can keep your call a little longer until RIMM moves to $60, in which case your can sell your call for a $450 gain.
So overall I would say that the above two strategies would give you the same risk/reward factor, assuming that you place a stop under your in-the-money call so as to lose at most 50% of your position.
I have a meeting on Monday afternoon and I would hate to be "slow" during that meeting because of not being able to go back to sleep after I wake up at 6:30am on Monday, especially if TWM never reaches $22 in the morning.
ReplyDelete2nd_ave, Mark: you are always up before the market opens. Can one of you please do me a favor and call me on my cell if TWM hits $22 on Monday morning before 10am? I would REALLY appreciate it. Thanks...
David,
ReplyDeleteI HAVE A DOG NAMED SOLAR (update)
I have a dog named Solar
All he does is lie down and play dead
But in the past couple o' days
He seems to be changing his ways
Looks like he's gettin' ready to roll over (to the upside)
My doggie almost never makes the scene
He prefers to hide under the bed and sleep
But it's lookin' kind of hopeful
and with luck he'll drop a scoopful and
And soon my lawn will be for-Evergreen (solar that is, desert gold, Arizona and Nevada tea...:)
David- No problem. Do you want to know if it hit's in PM trading?
ReplyDeleteWake up sleepy heads!!!...
ReplyDeletehttp://www.youtube.com/watch?v=K_7PwbxcDbs
Thank you David, TOF and MarkW. (re options)
ReplyDeleteHave a great weekend everyone.
Mark, that does sound like a plan. Maybe one day that might be a good plan for me if and when the market is in a long-term uptrend. For now, I will step aside this "skipping rope" market. "Hush-ya, Hush-ya, we all fall down".
The vultures are circling....
ReplyDeleteTalked with MOG yesterday. His Co. and every other oil player are placing stink bids on BP assets. He say's BP will survive, but no where near it's current size/value. New cap to go on this weekend that should capture almost all off the oil. Relief well 5 ft away. Oil showing up in Texas is not from the Horizon. Could be natural seepage.
My mom grew up in Santa Barbara. We would spend some of our summers there visiting. Back then the beaches had tons of oil on them from natural seepage. Never stopped us. We would just use gasoline to clean it off everyday. And I'm fine...
This is why I scour the internet business sites looking for ideas....
ReplyDeleteBusinessinsider.....
http://www.businessinsider.com/dutch-porn-star-if-holland-wins-world-cup-ill-give-blowjobs-to-all-my-twitter-followers-2010-7
Mark, thanks a lot for offering to help me out! I just sent you an e-mail...
ReplyDeleteNo problem. Have a great weekend buddy!
ReplyDeleteDavid- Since I'm off on Monday, I can definitely give you a wake-up call should TWM close in on 22 prior to 6 am.
ReplyDeleteDo you want a call, or a text?
David you lucky guy, no matter what happens Mark's sending over Bobbi Eden for that special wake up call.
ReplyDeleteMark you da man.
MOG on!
Mark- Re the businessinsider link- One would definitely want to be the first in line. After that, it's a toss-up as to whether you'd rather be the 365th in line, or the 365th person to use the stall in a Times Square restroom after the nightly cleaning.
ReplyDelete2nd, btw, I'm sure your right about getting info on the internet on options and things. I guess I just like the feel of a book.
ReplyDeletehttp://www.youtube.com/watch?v=fdhsjTRVPIk
Is Bobbi Eden looking for somebody.....
ReplyDeletehttp://www.youtube.com/watch?v=2Ar76dXfV5g&feature=fvst
The 'best' way to learn about options is to sit down with paper and pencil and draw the hockey stick graphs for yourself. That should nail down the concepts.
ReplyDeleteThen pick a widely-traded option and watch the price action for a day or two.
Last, one should watch the same option over a period of several weeks/months to understand the effects of volatility/time decay. These effects will differ widely for different underlying assets.
What's the MOG outlook for BP share prices?
ReplyDelete2nd- Other than he wouldn't buy it, I don't know. He did buy some CVX/SWN/PXP/XOM on the last dip.
ReplyDeleteT3D- Always looking out for my buddies :)
ReplyDeleteI was watching some Queen/Bowie videos last night.
2nd_ave -- thank you for offering your help as well! I think one call from Mark would be enough for me, and I only need to be alerted if TWM enters the region [22, 22.20] between the open (6:30 PST) and 9:30 PST.
ReplyDeleteI know I'm totally crazy, but there are some real cool imagines of the robots working on the well head right now.
ReplyDeleteCrank it up....
ReplyDeletehttp://www.youtube.com/watch?v=SjMMz6osU4U
The light, the heat....
ReplyDeletehttp://www.youtube.com/watch?v=OoEQREKFQG4
Probably the third best concert I've seen behind the Stones and the Boss.
PAL - Now there's a bullish looking chart...
ReplyDelete