LOL!'s Market Timing Newsletter

[Fermion]

Are you ready to pony up $19,000 for every $100 of profit on those puts? To me the return is just to meager for the risk and money, unless you are willing to go on margin if we spiked down to $180 and you were assigned a ton of shares.

 

[utrecht]

Are you ready to pony up $19,000 for every $100 of profit on those puts? To me the return is just to meager for the risk and money, unless you are willing to go on margin if we spiked down to $180 and you were assigned a ton of shares.

Risking $19,000 for every $100 of profit? Really? You think SPY is going to Zero?

My break even is 191.35 which is a 4% drop for the week. I think the odds of falling that far are low. If we spiked down to 180 I would lose $1135 per put, but the odds of that are low. That's more than a 10% drop in a week. If I did this every week and SPY dropped that far once every 11 weeks I would break even. How often does SPY drop more than 10%? You and I both know its a hell of a lot less than once every 11 weeks.

 

[Fermion]

Risking $19,000 for every $100 of profit? Really? You think SPY is going to Zero?

My break even is 191.35 which is a 4% drop for the week. I think the odds of falling that far are low. If we spiked down to 180 I would lose $1135 per put, but the odds of that are low. That's more than a 10% drop in a week. If I did this every week and SPY dropped that far once every 11 weeks I would break even. How often does SPY drop more than 10%? You and I both know its a hell of a lot less than once every 11 weeks.

Yes, but it does happen occasionally. I am not saying it is a problem, but for me to get excited about selling $1 puts, I would want to sell at least 10 of them. Technically you need $190,000 in cash to cover this. Realistically the most you might lose is $10,000 or so if it dropped to $180 and stayed there long term.

 

[utrecht]

I actually did sell 10 of them and I need $190,000 in cash or $40,000 in what OptionsHouse calls margin buying power. I don't need any cash in my account at all. Just the collateral from my other holdings.

Back of the envelope calculations say this:
SPY moves up, stays flat or even drops 3% to 192.5 and I make $1150.
SPY drops below 192.50 and I still make money down to 191.35
Below 191.35 I start losing money
If it drops to 180 I lose $11350.

So I have a 10-1 max loss to max profit scenario and my max profit includes up to a 3% drop in SPY (on top of the 1% it was already down today when I made the trade).

I like my odds on the trade or I wouldn't have made it. So far SPY dropped a tad since I made the trade and I have made $230. I already made 20% of the max profit with a tad of a drop in SPY. This is a winning trade long term no matter what happens this time. Some people would say its break even long term if the options are priced correctly, and I guess thats true, but I dont think we will see nearly as much volatility as we did the last 2 weeks which means the options are priced higher than I think they should be.

 

[LOL!]

OK, I said I was going back to waiting, but something dramatic happened. So I submitted an order to buy VTIAX (Vanguard Total Int'l Stock Index) a moment ago which will execute at today's closing NAV which should be down more than 3% from yesterday.

I want this to be a short-term foray into overweighting a little bit, so tomorrow I will sell an equivalent amount of an international fund in an IRA or 401(k) if the ETF share class goes up tomorrow for a small gain. If things go down tomorrow, I don't know what I will do.

 

[Fermion]

I actually did sell 10 of them and I need $190,000 in cash or $40,000 in what OptionsHouse calls margin buying power. I don't need any cash in my account at all. Just the collateral from my other holdings.

Back of the envelope calculations say this:
SPY moves up, stays flat or even drops 3% to 192.5 and I make $1150.
SPY drops below 192.50 and I still make money down to 191.35
Below 191.35 I start losing money
If it drops to 180 I lose $11350.

So I have a 10-1 max loss to max profit scenario and my max profit includes up to a 3% drop in SPY (on top of the 1% it was already down today when I made the trade).

I like my odds on the trade or I wouldn't have made it. So far SPY dropped a tad since I made the trade and I have made $230. I already made 20% of the max profit with a tad of a drop in SPY. This is a winning trade long term no matter what happens this time. Some people would say its break even long term if the options are priced correctly, and I guess thats true, but I dont think we will see nearly as much volatility as we did the last 2 weeks which means the options are priced higher than I think they should be.

Not going to beat you up because I have lost money today too (just bought Gilead again at $102 and it is already $101) but the weekly SPY puts you sold are now in the money. It is a crazy market though and maybe SPY will be back above $191 by Friday (heck, or even in the last minutes today)

 

[utrecht]

Yeah, the position took a substantial hit today but its a long week. SPY could drop a little more the rest of the week without me losing any money on the position. My 2 put calendar spreads on AAPL and WYNN just about made up for the today's loss on the SPY puts though. They are up over 40% so far in just 3 days.

I also opened a Call calendar spread today on Google. Its a Sep/Oct 620 call spread that I paid $12.30 for when GOOG was ta $600. I expect at least a short term pop in GOOG over the next week or two.

 

[clifp]

I wrote some 180 Oct Puts today, it looks like a missed $.25 a contract. If we get another 50 or 100 points down,I'll probably buy back some of the calls I wrote earlier.

 

[LOL!]

[…]
I want this to be a short-term foray into overweighting a little bit, so tomorrow I will sell an equivalent amount of an international fund in an IRA or 401(k) if the ETF share class goes up tomorrow for a small gain. If things go down tomorrow, I don't know what I will do.

EFA is trading up about 1.6% before the market opens, so I will try an experiment. I've submitted a small order to sell VEU before the market opens. I just want to see what the opening cross will do for this order. Later on, I will sell several hundred shares of VEU to unwind the purchase of VTIAX yesterday.

I expect to have made at least 1.5% in this 17+ hour trade.

[update] Opening cross for VEU was 43.93, so nice!
[update2] Sold rest of desired amounts and bought some BND with the proceeds. Back to waiting patiently for easy opportunities while losing money.

 

[utrecht]

EFA is trading up about 1.6% before the market opens, so I will try an experiment. I've submitted a small order to sell VEU before the market opens. I just want to see what the opening cross will do for this order. Later on, I will sell several hundred shares of VEU to unwind the purchase of VTIAX yesterday.

I expect to have made at least 1.5% in this 17+ hour trade.

[update] Opening cross for VEU was 43.93, so nice!
[update2] Sold rest of desired amounts and bought some BND with the proceeds. Back to waiting patiently for easy opportunities while losing money.

Details please? What do you mean by "opening cross"?

 

[LOL!]

Opening Cross Definition | Investopedia

It is the price that the exchange calculates for all orders submitted before the market opens. They try to [-]be[/-] look fair. See the definition and use google for more info.

Normally, one would not want to submit a market order when the market is closed, but I have found some exceptions for the things I want to do. At the moment VEU is trading down a little less than 1% from where I sold, so I am happy about today's sales.

As for details, VEU closed at 43.18 yesterday when I bought VTIAX, so selling VEU at 43.93 is a gain of (43.93-43.18)/43.18 of 1.73%.

So it is almost like the reverse of tax-loss harvesting: Instead of booking a loss by exchanging similar funds, I booked a gain and all the while (except overnight) I kept my asset allocation the same.

The BND I bought is trading up from the price I paid, too.

 

[NW-Bound]

Back to waiting patiently for easy opportunities while losing money.

Yes, in a down market like this, all I can do is to try to make some bitty money with some short term trades, which is nothing compared to the loss. I just sold an ultrashort (2x) bear biotech fund.

I bought it at the wrong time (too early), and have waited patiently to make 10%. Just a few hundred shares, so the gain is minuscule compared to the other losses. I only want to prove to myself that no sector is immune in a bear market.

 

[NW-Bound]

For a short-term play, a couple of days ago I bought a leveraged ETF indexed to the S&P, which moves at 3X the speed of the latter. I did not time it well, and it is just now in the positive. I will let it stay for a while.

Now that I have finished the shade structure for my wife's beloved tree, she will accompany me to head up to our high-country home to get a reprieve from the heat. Again, no Internet access up there, so I trust posters here to safeguard the market, to step in to buy as necessary so it will not drop.

I will be back next week. Have a nice Labor Day, my friends, whether you time the market or just counting time in the market.

 

[Running_Man]

Since this is a market timing thread I predict with market at 1969 on S&P500 it is down here rest of day and market closes down over 30 S&P point (under 1919)

 

[NW-Bound]

Ugh! I thought I was done with trading, but took a quick look at the market and decided that sitting out of the market for several days with something as volatile as this leveraged bet would be too risky.

So, I just sold some for a few hundred bucks of gain, and wrote a call on the rest. If the market dropped again, the call premium will offset the loss.

OK, I am off for real this time. Need to go out to pack the car.

 

[utrecht]

Not going to beat you up because I have lost money today too (just bought Gilead again at $102 and it is already $101) but the weekly SPY puts you sold are now in the money. It is a crazy market though and maybe SPY will be back above $191 by Friday (heck, or even in the last minutes today)

Like I said, its a long weak. My weekly SPY 192.5 puts will expire worthless tomorrow leaving me with the entire $1150 premium unless SPY drops more than 1.5% tomorrow. It has to drop more than 2.1% for me to lose any money.

 

[Mulligan]

Like I said, its a long weak. My weekly SPY 192.5 puts will expire worthless tomorrow leaving me with the entire $1150 premium unless SPY drops more than 1.5% tomorrow. It has to drop more than 2.1% for me to lose any money.

I have enjoyed this thread, and my post has nothing to do with your investing strategy; but between this and the NFL thread it got me thinking about my Dad. He thinks gambling on sports is a moral wrong and doesn't approve that I partake. Yet he has no problem with this type of investing. I have never quite figured out how he has separated the two neatly into "right" and "wrong".


Sent from my iPad using Tapatalk

 

[Fermion]

Like I said, its a long weak. My weekly SPY 192.5 puts will expire worthless tomorrow leaving me with the entire $1150 premium unless SPY drops more than 1.5% tomorrow. It has to drop more than 2.1% for me to lose any money.

I have been messing around with Gilead this week, playing with the $90 Jan 2016 calls to magnify the swings. I bought 10 at $15.40, sold them at $16.50, watched it climb to $17.10, then fall back to $15.40 where I bought again, then sold at $16.10, watched it fall back to $15.30, bought again there, should have sold 30 minutes before the market closed at $16 but instead held and watched them fall back to $15.30. This is picking up pennies (well, hundred dollar bills) in front of a steam roller though if we get a real crash.

 

[utrecht]

They're both basically just a person attempting to make money, while risking money, by predicting the outcome of a situation. Why some people think it's fine as it relates to stocks and options but heinous and illegal in a lot of places when it relates to sports is beyond me.

That brings me to poker. I can play poker legally in a casino in something like 35 states but I cant play poker on the internet while living in those same states. You cant make this stuff up.

 

[utrecht]

I have been messing around with Gilead this week, playing with the $90 Jan 2016 calls to magnify the swings. I bought 10 at $15.40, sold them at $16.50, watched it climb to $17.10, then fall back to $15.40 where I bought again, then sold at $16.10, watched it fall back to $15.30, bought again there, should have sold 30 minutes before the market closed at $16 but instead held and watched them fall back to $15.30. This is picking up pennies (well, hundred dollar bills) in front of a steam roller though if we get a real crash.

I've done that before with a stock that was bouncing up and down regularly but I would rather do it by buying and selling puts instead of calls. With puts, if there is some huge sudden crash while you have the trade open, you'll make a killing.

 

[Fermion]

I've done that before with a stock that was bouncing up and down regularly but I would rather do it by buying and selling puts instead of calls. With puts, if there is some huge sudden crash while you have the trade open, you'll make a killing.

I only do it with stocks where I think the general trend will go one way or the other. With Gilead, I am pretty sure the general trend will be to rise from here toward next earnings. Not 100% sure of course, anything could happen, but the likely outcome for a company spending 15B on buybacks with a PE of 11 and FWD PE of 9 is it will go up in the long run. I made a few bucks buying puts on Netflix, and probably should have stuck with that, but the problem is I like Netflix. I felt bad buying puts and then sitting down to watch the next killer original content series they had.

 

[RAE]

Since this is a market timing thread I predict with market at 1969 on S&P500 it is down here rest of day and market closes down over 30 S&P point (under 1919)

Well, you got the direction right, but it ended a little higher than you thought it would (1951). Just out of curiosity, Running_Man, why did you feel that the market would drop this afternoon? Any thoughts for where this market goes from here? It seems to me that the risk/reward ratio for this market right now is pretty darn high. I would not be surprised to see the S&P 500 lower than it is right now in a couple months.

 

[Running_Man]

Well, you got the direction right, but it ended a little higher than you thought it would (1951). Just out of curiosity, Running_Man, why did you feel that the market would drop this afternoon? Any thoughts for where this market goes from here? It seems to me that the risk/reward ratio for this market right now is pretty darn high. I would not be surprised to see the S&P 500 lower than it is right now in a couple months.

There are so many money managers sure the "correction" is over and patting themselves on the back for having endured that I am assuming this is a larger correction, more in line with the start of what the CAPE is forecasting as in the other thread. If that was so, then the rally was off the drop of Monday and needed to start falling again before it passed Monday's high of 1980, once the market dropped a little bit from the daily high of 1975, I thought that was probably it, tomorrow should be interesting.

 

[utrecht]

Well, you got the direction right, but it ended a little higher than you thought it would (1951). Just out of curiosity, Running_Man, why did you feel that the market would drop this afternoon? Any thoughts for where this market goes from here? It seems to me that the risk/reward ratio for this market right now is pretty darn high. I would not be surprised to see the S&P 500 lower than it is right now in a couple months.

The prediction that the market would fizzle out was correct but the amount was WAY off. Off by 1.5% over a time period of a few hours is pretty big. Of course you made a bold prediction so I'll give you some margin of error.

 

[Fermion]

utrecht, looks like we both lose today. I think Gilead will be down under $100 and your puts may get assigned to you on SPY. Not sure what payroll numbers would have made an up market..maybe none. Should have shorted Netflix