The investment..speculation, out right gambling thread

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3381

<p>“So how does that work doct?”</p>

<p>Yeah Dstark, as you know there are an infinite number of combinations. Here’s one for jan 2013 - I don’t trust going to 2014. Buy a Jan 121 call for 25.67, buy a jan 146 put = 4.90, sell a jan 136 put = 2.03, sell a june 121 put = 2.82, net cost for protection = 2.82+2.03 - 4.9 = -.05 per share not including transaction costs. Of course can buy 145 or 144 put instead of the 146 and/or sell a jan atm call. Breakeven = 146.67+.05 = 146.72. Rollout the june 121 put to a later month if itm. Instead of buying spy 146.13, its being bought for 25.67 leaving ~121 - to cover the 121 put. Protected to 136 - can get more protection if sell a otm call or accept some loss by buying a lower put than the 146. There’s support at 144, 140, at 138 and 136 - 137.</p>

3382

<p>Ok doct, I have to leave but
I will check that out.</p>

<p>On the face of it,
I don’t think you are as hedged at emm1 wants. Below 136 or so, you are a loser, right.</p>

<p>Have to go.</p>

3383

<p>I had bought 11/17 spy 146 puts = 2.82, sold 142 puts = 1.61 and sold 140 puts = 1.23 total cost = -.02 not including transaction costs for some protection and will roll out the 140 puts if it gets to that. Right now you can buy a 11/17 spy 73 call for 73.24 and a 144 put for 1.86. Breakeven is 146.24+1.86 = 148.10. In this environment it may be worth the protection.</p>

3384

<p>Doct, good luck to you on those trades.</p>

<p>I don’t want to speak for EMM1, but those trades you posted are not interest rate substitutes.</p>

3385

<p>Unemployment: 7.8%, payrolls up 114K. 600K increase in part-time workers, 118K increase in people starting small businesses. Indices are up about 0.5% - maybe party time?</p>

<p>I read an article on the tensions of oil. Increasing US production and slowing global economic growth should bring the price down to about $80/barrel. The things holding it up are tensions in Africa and the Middle East and it appears that OPEC wants it up around $100. I have been out of oil stocks for quite some time but have been holding a large position in PBA which is natural gas, natural gas liquids, shale oil and pipelines and it has been doing well with a 6.5% dividend yield. It’s trading in a channel and I could trade it in the channel but that’s work.</p>

<p>On the tech front, Samsung has guided up expecting about $7.3 billion in earnings for the quarter. They are doing a great job both in making great consumer products and providing the technology for other companies (selling CPUs to Apple made in Austin, Texas, selling high-tech mobile phone and table screens, etc.). Apple is reportedly moving to Taiwan Semi to make their processors; Samsung announced yesterday that they are raising prices on CPUs to Apple, probably to make up for their lawsuit losses.</p>

<p>A bunch of companies asked Taiwan Semi for dedicated production capacity early in 2012 and they were rebuffed. I think that many offered cash investments. It seems that Taiwan Semi is going to sign a deal with Apple and build a dedicated Fab for Apple. I don’t know how long this is going to take to get up and running. Apple does need to get rid of suppliers that are also competitors.</p>

<p>Google is laying off more workers at Motorola despite launching three new phone models. One of those models uses Intel processors but it’s not available in the US. An analysis of the phone compared to its ARM counterpart shows that Intel is equal or slightly better in performance and about 12% better in battery life. A pretty good start for Intel. I’ve talked numbers with many people on Intel moving into the phone and tablet market and it would take a few years for mobile and tablet revenues to have a decent impact on Intel’s revenue and income numbers becase processors are so cheap in that market. Expectations on making a big splash are out to 2014 to 2016.</p>

<p>On Ultrabooks, I would like to believe that those will do well but I have a hard time seeing it in the current economic environment. On trades, I added a little GOOG yesterday and sold my wife’s Encana. That was a long-term hold for me but they got whacked when NG got killed and I wasn’t paying attention. They were later embroiled in a scandal with Chesapeake. I got out with about a 25% loss minus dividends. I need to pay more attention to her stocks. I didn’t find anyplace where I wanted to move the money to though. I considered PBA but it was up about 1.8% yesterday. I think that it still has around a 6.5% yield. I’m looking for a move down to buy more.</p>

<p>I am also thinking of moving more money from AAPL to GOOG but the iPad Mini announcement expected on October 17th has me holding on. I think that device will sell well though it may not be all that great for margins. There are a lot of products out there competing with Apple’s products and some of them are very, very good.</p>

<p>I don’t have any interest in Hewlett-Packard these days. They are in tough shape and seem to be floundering. Whitman says that she need five years to turn things around. That is an eternity in tech terms. Why couldn’t HPQ have come up with the Nexus 7? It’s essentially a piece of commodity hardware that HPQ (and Dell) are supposed to be good at. Why don’t they have a similar model out right now? Amazon is already selling one and Apple will be selling one soon.</p>

3386

<p>Forgot: on INTC, there was a breach of the 61.8% Fibonacci Retracement level which projects to a decline somewhere between $18 and $19. My feeling on Intel is that it’s going to be dead for a while, perhaps a year. I reassess INTC on a weekly basis though.</p>

<p>AMAT is cutting 1,000 to 1,300 employees. They are a leading indicator for the Semi sector and those cuts mean serious demand weakness ahead. I am long the QLDs and the semi situation bothers me. The indices are rising anyways so staying long has worked out but it feels like a wall of worry.</p>

3387

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<p>Adding or subtracting your levered ETF position to match a ratio with the rest of your portfolio will not necessarily reduce decay. In fact, depending on the timing you may increase it. And unless you’re rebalancing at EOD every day, you will see decay.</p>

<p>DocT - Jan 13 options are not LEAPS. Also, you’re not accounting for your first trade properly because it leaves you short gamma from Jan to June. You can’t count the added premium from that duration towards the cost of your trade - it’s like claiming my “hedge” is revenue neutral by selling Mar 140 puts and buying Dec 146 puts. How are you going to hedge the remaining 3 months?</p>

3388

<p>I bought my DD an ultrabook for college. It’s a sweet little machine.</p>

<p>The lightness and thinness are really nice, but I think they are quite a bit overpriced - they need to come down several hundred dollars or more. I read an article that only half as many have been sold as originally projected. </p>

<p>It’s tough to justify spending $800 when $400 gets you the same machine except that it is a pound or two heavier and half an inch thicker.</p>

3389

<p>I understand they’re not leaps - I wouldn’t buy leaps right now because as I mentioned I don’t feel confident about the market that far out. I’m holding the calls only to Jan so I’m not hedging until June. I’m holding a long position until June at 121 - great because I’ll either getted assigned at a pretty good level (18% below where it is today) in the spy or I’ll roll it out if I think its going lower. That being said I wouldn’t do this trade as I don’t trust the market even to Jan 13.</p>

3390

<p>Collectiv…do you trade options?</p>

<p>Do you work for a trading firm?</p>

3391

<p>“it’s like claiming my “hedge” is revenue neutral by selling Mar 140 puts and buying Dec 146 puts. How are you going to hedge the remaining 3 months?”</p>

<p>The interesting thing about options is you can be hedged or for a series of price points or for a certain period of time. </p>

<p>Doct’s trades are not delta neutral. He doesn’t want to be delta neutral. He doesn’t have a perfect hedge on. He is long. Post 3383 for example, I am assuming doct left out the bullish part of the trade. Doct is lowering his breakeven points while keeping his upside. He is increasing his risk on bigger moves to the downside, maybe, but decreasing his
risk on shorter moves.</p>

<p>The selling of the marches against the jans can work. You have volatility
risk. If you do it one jan for one mar…you aren’t delta neutral. Price movement will change your p&l and your deltas. Your deltas at various price points will change over time. When you initially put on the trade, long jan short mar, you are short, and over time you may end up long.</p>

3392

<p>Ok, let’s look at some actual numbers. Over the past 36 months, a portfolio of 80% HYG and 20% SH, rebalanced monthly, gained 18.8% (rebalanced weekly it gains 19.1%). Using spxs, you get an equivalent hedging effect at about 92.5% HYG and 7.5% SPXS. That portfolio, rebalanced weekly, gained 22.3% (although the volatility was slightly greater). So, transaction costs aside, the levered hedge had a slight but clear advantage.</p>

3393

<p>I think that the sales on Ultrabooks was a lot lower than 1/2 projections. The second phase is coming - convertible Ultrabooks where you can detach the screen and use it like a tablet. The thing is that the tablets will be relatively heavy (2.5 pounds). I don’t know how much demand it will create.</p>

<p>I hear you on the cost issue. Is it worth $300 to shave a pound off, half an inch off and lose the optical drive? I think that most people will say that it isn’t.</p>

3394

<p>Emm1, without the hedge, how much were SPY and HYG up over the last 3 years? How much was SH down?</p>

<p>In your example,
You start out with equal dollar amounts of SH and HYG and adjust them every month so they are back to equal dollar amounts at the start of every month?</p>

<p>Let me phrase this better, you start out with 4 times the dollar amount of HYG compared to SH and you adjust this every month so you start every month with the same ratio between the two issues?</p>

<p>You said HYG has a delta of .5 compared to SPY, correct?</p>

3395

<p>"Post 3383 for example, I am assuming doct left out the bullish part of the trade. "</p>

<p>It a partial hedge for my general long positions even though in general I’ve been reducing my long positions lately. The initial surprise I had in first doing trades like 3383 was that early on during the duration of the trade if spy goes up, the profit goes up because the 2 sold puts going up counter the higher purchased put which is decreasing in value which of course changes closer to expiration. </p>

<p>I sold aapl call options yesterday but held onto my put spreads so I’m now effectively short aapl (I guess I shouldn’t have made the comment about Doug Kass being short on aapl). I really don’t want to be short aapl - it can be extremely dangerous and want to get back into aapl very soon - maybe today.</p>

3396

<p>BCeagle - what is going on with aapl - why the big drop? I expected a drop after the rumors of the ipad but I’m a little bit surprised as to what is going on. Could it be that investors are bemoaning the loss of Jobs today and do not feel confident in Cook?</p>

3397

<p>“Let me phrase this better, you start out with 4 times the dollar amount of HYG compared to SH and you adjust this every month so you start every month with the same ratio between the two issues?”</p>

<p>Yes.</p>

<p>Over the past three years, HYG has had a total return of 38.6%, SPY has had a total return of 47.1%, and SH is down 40.3%.</p>

<p>According to the numbers on ETFreplay, HYG/SPY delta ratio is .53. One problem with this hedging strategy is that the ratio is not entirely stable over time.</p>

3398

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<p>Did you see my post earlier this morning? Samsung is preannouncing earnings in the $7.3 billion area and the S3 is doing extremely well. My feeling is that Apple is seeing competition across its product lines - Ultrabooks start shipping later this month, Samsung is introducing the S4 and Apple has had some problems with the iPhone 5 (camera issues, map issues, some scratch and fit and finish problems on certain models). They are still selling like mad from what I can see but Apple is certainly late to the game on a small tablet trailing Google and Amazon.</p>

<p>I exited my AAPL position this morning and added a little to GOOG though I may exit all of my tech positions (QLD, GOOG, ORCL) in the next week or two. I could certainly be wrong but there are a lot of things bugging me on tech and other areas right now and it has been a very, very good year and it’s never bad to just run out the clock.</p>

3399

<p>I just bought aapl around 653.5 - probably a mistake but I’m at least covered down to 645.</p>

3400

<p>Another trader told me that his stop is around $650. This could just be a stop run.</p>

<p>The S&P had a four-day winning streak with the employment report today as the fifth. The close today should be telling - a positive close would result in a lot of good trade setups. Otherwise I think that we return back to the trading-range market funk.</p>