The investment..speculation, out right gambling thread

Parent Cafe
4381

<p>"I bought the jan 19 505-500-495 aapl put butterfly for .87.</p>

<p>(bought 1 505 puts sold 2 500 puts bought 1 495 put.</p>

<p>Makes money if appl closes between 495.87 and 504.13 tomorrow. Max gain at 500. Max gain won’t happen…trading costs to close…</p>

<p>I hope apple closed close enough to 500. I don’t like to look foolish. :)</p>

<p>My ipad froze with 4 minutes to the close. Luckily, my wife was home and I used her computer to close out the butterfly. I wanted to cover the 500 puts so I could be sure what my position was. I think I ended up paying .26 for the 500 puts and I bought the stock in against the 505 puts paying 500.</p>

<p>So, I paid .87 sold for 4.48 in 2 days. My return using a 360 day calendar is 742% annualized.</p>

4382

<p>If I am reading the charts right, it looks like the VIX has not been this low since 2007. If I were a betting man, I would take a short term flier on VXX. But because of my track record with this kind of guess, I’ve given up doing stuff like that.</p>

4383

<p>I was wrong about the percentage made on the butterfly. It was 74,689 percent on an annualized basis. </p>

<p>I think I am going to take an ad out in Barrons. Start a new business. After I work on my arithmetic. :)</p>

4384

<p>dstark adding to your guru reputation. Note how the market is conditioning us to “buy the dip” Every day there is a little pullback and then closes near the high. This is when people start talking about how easy it is to make money in the market. </p>

<p>Nice magnet on AAPL today! Closed at exactly 500.</p>

4385

<p>GOOG magnet too.</p>

4386

<p>Interesting mention on the market dipping and then coming back…</p>

<p>I am a bad guru because I don’t know where the market is going. </p>

<p>I am sure you NJres, and BCEagle91, and doct and others that play the market have seen something and that something clicks, and you end up with a very strong feeling that a stock is going to behave in a certain way. Your brain knows. I was watching apple and my brain said 500 close based on what I have seen all the years. I wish the clicks happened more often. </p>

<p>I told a former trading partner that I played the butterfly. I told him I
was watching the stock and it looked like 500 to me. I had a vision and I did the trade 3 by 6 by 3. </p>

<p>And my friend said, "Are you … Nuts? Why didn’t you do the trade bigger?</p>

<p>I really didn’t have a good answer for him. When you see something, you have to trade it bigger. </p>

<p>I guess my answer is we aren’t the same people we were and we are always changing. I don’t trade like I used to trade. Physically, our
bodies turn over after how many years?
Mentally we change too.</p>

<p>S… Now I buy bonds. Just for public info, I don’t really gamble that
much. I just bought bonds yesterday. Tax free munis that mature in 20 and 30 years. They yield 4.6+ and 4.8+. The bond offering was 6 times oversubscribed, so I did not get my full allotment. </p>

<p>The plus with the bonds are they are tax free and relatively safe. The downside is they have interest rate risk, inflation risk, changing of the tax code risk, and they can be called early. Also, unlike dividend stocks,
interest isn’t going to increase while dividends may.</p>

<p>Bonds? Wth happened to me? Bonds are for old people. :)</p>

<p>“This is when people start talking about how easy it is to make money in the market.”</p>

<p>That bugs me. The volatility bugs me. BCEagle91, thanks for the chart. What a move. I do enjoy selling premium but that game isn’t lucrative right now except in special situations that have risk.</p>

<p>Doct, I guess your ratio puts didn’t work out too well since you did those trades for a debit. My time (calendar) put spread in spy isn’t working too well. I keep selling near week puts against my long march puts, but now the premiums are too low. And there is talk of delaying some of the fiscal issues. That is not good for this trade.</p>

<p>I am not going to mention the spy trade in Barrons. :)</p>

4387

<p>“Doct, I guess your ratio puts didn’t work out too well since you did those trades for a debit.”</p>

<p>For a very small debit - $94. Today I bought 5 each of 3/16 spy 147 - 143 put spread and also sold 5 141 puts for a total cost of $43.54 - worth the cost to me.</p>

4388

<p>That doesn’t cost much.</p>

4389

<p>I was just listening to CNBC - the options action segment. One of the aapl plays was buying a 525 call, selling two 550 calls and buying a 575 call for $3.00 based on the volatility implying a move of 7% in the stock price through earnings.</p>

4390

<p>A butterfly recommendation. Nice.</p>

<p>Jan options?</p>

4391

<p>1/25 options - you had recommended one of those butterflies a week ago.</p>

4392

<p>I like butterflies because they have limited risk. </p>

<p>I like that trade. You make money between 528 and 572. I have no vision on this though. :slight_smile: </p>

<p>Schwab makes it difficult to trade butterflies because you can only enter two legs of an option trade at a time. So there is risk when entering and exiting these butterflies. I don’t
know how etrade’s set up is. Better? Can you enter 3 or 4 legs?</p>

<p>The downside of a butterfly is if the stock makes an incredible move, you aren’t going to participate. If aapl went to 600, you lose 3 bucks. You want the butterfly to match where you think the stock is going. If you think the stock is going to 550 give or take a few points it is a good strategy. The other down side is the 550 premium isn’t going to collapse until the last hour of expiration. Not as big a deal on a 25 point butterfly. On a 5 point butterfly, it can be a big deal.</p>

4393

<p>Another plus…if the stock is 515 to 525 or 585 to 575, with a couple of days to go before expiration, there is a good chance of closing out the trade without losing anything much. </p>

<p>If the stock is 515 or 585 on Thursday morning, maybe I would just close out the trade. Maybe you lose a buck. Probably less.</p>

<p>I don’t know how large the audience is for the option show, but now there is a chance 525 and 575 calls will be slightly overpriced and the 550 calls will be slightly underpriced Monday morning.</p>

4394

<p>Interesting: [Apple</a> Investors ‘Dissatisfied’ With Life? - CNBC](<a href=“http://video.cnbc.com/gallery/?play=1&video=3000141963]Apple”>http://video.cnbc.com/gallery/?play=1&video=3000141963)</p>

4395

<p>Anybody here ever use: [url=&lt;a href=“http://www.simpleallocation.com/]simpleallocation[/url”&gt;http://www.simpleallocation.com/]simpleallocation[/url</a>]</p>

4396

<p>No interest in Dell or Rimm?</p>

4397

<p>Unfortunately, I’ve held a small position in Dell since 1999. Its so small now that I just ignore it.</p>

4398

<p>Yeah…</p>

<p>Dell may get taken over is a private equity deal. I haven’t looked yet. Maybe it already happened. :)</p>

<p>I guess when options expire in a week and the stock market is closed on Monday, premiums can be affected. Duh. Lol I forgot about the stock market being closed today.</p>

4399

<p>I expect to get taken out to the woods on my google position tomorrow and my aapl position on wednesday.</p>

4400

<p>Hopefully, google won’t announce early. :)</p>

<p>I haven’t decided if I will do a tiny butterfly or something else or not for aapl’s earnings. Such a crap shoot now. </p>

<p>Aapl announced a few minutes early on me once. Lost $6,000 in seconds. It was the hft company’s money. Should have been out of the market. The bosses weren’t too happy. :)</p>

<p>I would like to do something in Rimm. I was asleep while Rimm had a big move. That ship might have sailed.</p>