Dow losing almost -1000 Friday .. when will it end? Do we get a V recovery?

[jfn111]

All this attention on Powell reminds me of the following video about Bernanke made at the time of the latter's nomination by George Bush in l2005.

The parody portrayed Glenn Hubbard, then Dean of the Columbia Business School (CBS), as wanting Bernanke's job and envious of him.

I did not know then that it was Hubbard himself in the video, and not a graduate student.

That's great!

 

[NW-Bound]

The market went bananas again. My natural resource stocks gave the whole stash an intraday gain of 0.7% at one point, but petered out at the end to a measly 0.07% at close.

I am slacking off today, and sold only 2 meager covered call contracts.

 

[aja8888]

The market went bananas again. My natural resource stocks gave the whole stash an intraday gain of 0.7% at one point, but petered out at the end to a measly 0.07% at close.

I am slacking off today, and sold only 2 meager covered call contracts.

I did nothing today. I did look, but nothing (calls, puts) interested me. If I'm bored tomorrow, I'll just buy another $25K T bill. At least I'll be productive!

 

[NW-Bound]

Well, I forgot to count 3 more contracts I sold at another brokerage on an account that I do not trade often. So, that's 5 contracts sold today. One was a put to buy back SLB at 40.5, which I just "lost" via a call. Yes, I sold a put, but it's for getting back a stock, not to risk getting new shares to drive up equity AA.

I could not find anything else I wanted to sell. Tech stocks are back in a slump, and I don't sell calls on down days, only puts. And I don't want to sell puts on tech stocks, which I have plenty of.

The stocks that went up, I was reluctant to sell calls as I have a feeling they may go up more. The world is in a sore shortage of lots of stuff: oil, gas, minerals, metals, grains, etc... I don't want to lose these stocks too early to calls getting assigned.

I counted 73 contracts I have outstanding, all expiring this Friday 5/20.

 

[aja8888]

73 contracts, that's almost a full time job! I have three puts expiring (F, INTC, OKE).

 

[NW-Bound]

Well, on a good day I sell 25+ contracts. It takes a bit of time in order to collect $200K to $300K per year on contract premium.

Full time work? Nah. Only a few hours a day, far less than the time I spent at megacorp. And they never paid me as much as that.

And they kept reaching out for me to come back. I politely declined, and did not say what I wanted to: "You can't pay me enough".

 

[NW-Bound]

Hmmm... So how much time do I spend selling options each day?

The market is open only for 6.5 hours/day. During that time, I am not glued to the laptop, but drink coffee, read the news on the Web, get out to my backyard to tend to the garden, eat lunch, go for a walk, take a nap, etc... Maybe I spent 2 to 3 hours on/off watching the market to make trades?

And I don't do this every trading day. I take time off, run errands, do some travel, etc...

 

[aja8888]

Hmmm... So how much time do I spend selling options each day?

The market is open only 6.5 hours. During that time, I am not glued to the laptop, but drink coffee, read the news on the Web, get out to my backyard to tend to the garden, eat lunch, go for a walk, take a nap, etc... Maybe I spent 2 to 3 hours on/off watching the market to make trades?

And I don't do this every trading day. I take time off, run errands, do some travel, etc...

That's not bad. Better than work and if you went back, they would not want you to leave!

I meet with my friends every day for coffee (ROMEO Club), walk the dog a couple of times, do the shopping, play golf once per week, take care of DW (Drs. meds, cleaning house, some yard work, whatever) and spend an hour of so on the market.

Somehow, my days get full.

 

[NW-Bound]

That's not bad. Better than work ...

Moneywise. So far that is. Maybe it has been all luck. I have been an active investor for 25 years, but even longer-tenured money managers had their luck running out.

Anyway, work did not bring me the same money per hour, but it is more satisfying in a different way. I actually designed and built something.

Here, I am just betting that things are not as good nor as bad as the other guys think.

 

[NW-Bound]

Thought I would share the following article by Liz Ann Sonders, Chief Investment Strategist of Schwab.

https://www.schwab.com/resource-center/insights/content/doom-and-gloom-when-will-it-end

Doom and Gloom: When Will it End?

It's been a very rough four-and-a-half months to start the year—the third worst at this point on record for the S&P 500 and the worst since 1970. The S&P 500 has had its longest stretch of lower weekly closes since mid-2011. More than $10 trillion of "paper wealth" (measured via equity market valuation contraction) has been lost since the start of 2022...

The Bloomberg consensus of economists' odds of recession has jumped to 30%, which may not seem high, but it's nearly double the norm of 17% for a group that generally tends to skew quite optimistic about the economy...

Sonders went on to show that the Smart Money and Dumb Money Confidence Indices are quite opposite, with the Smart Money being bullish at the moment. So, do we want to follow the smart or the dumb? Or neither?


The conclusion however is that the market will bounce around for a while yet, with bear market rallies.

Implied volatility indicates a rash of 2% daily moves is likely between now and at least the summer.

I agree with that. Will be selling covered calls whenever I have the chance like last Friday. Will not be selling puts, nor buying stock outright.

 

[NW-Bound]

Market is up good today. I just sold 21 OTM covered calls, mostly for this Friday 5/20, with a couple for 5/27.

I think I have sold plenty of calls, and have never had so many call options outstanding. I am logging off now to prepare to drive to my high-country boondocks home.

Will wait to see how things unfold. I have not had many calls assigned, so if some are this time it will give me a chance to sell put options for a change.

 

[NW-Bound]

I made it to my high-country home. Temperature is 71F, a big cry from the low elevation where it was 107F yesterday.

After having a late lunch, I ran a Quicken update and saw that I am up good today. Quite a few contracts are now in-the-money, or nearly so. If they get assigned, I will try not to complain. With a stock AA of 78% currently, it does not hurt to raise cash level back up a bit.

 

[pb4uski]

I'm curious about how you account for your covered calls and cash covered puts in Quicken. I started to account for each one but was going to end up with a huge security list as each put or call was a separate security, so I dumbed it down and just account for each contract as a miscellaneous income item. Mine is all in a Roth so taxes are not an issue.

 

[NW-Bound]

^^^ I just let Quicken download the option contracts. Quicken does not get the real-time prices, nor the prices at close. It only shows the prices from the last day.

Because I sell thousands of contracts each year, the security list is awfully long. Every week, I go into the security list and select "Hide" for the ones that just expired.

Additionally, when viewing the portfolio, under "Option" I unselect "Show closed lots". This way, I only see the options that have not expired.

When I want to see the cumulative total premium I have collected since tracking with Quicken, under "Group by:" I select "Security Type". This lumps all MFs together, all options together, all stocks together, etc... I make sure the group displays are not expanded, so that Quicken shows only the total value and realized gain/loss of each group of security types. If the displays are expanded, the list of expired options will be very very long when I turned on the "Show closed lots".

Then, I click on "Show closed lots". Quicken then shows the total of all option premiums I have collected. I don't get to see the option premiums for each account, such as my and my wife's IRAs or Roth, only the grand total number of all accounts. This number will get to a 7-digit figure soon in a few months.

I don't do options in taxable accounts. The record keeping would be horrendous.

 

[ncbill]

I made it to my high-country home. Temperature is 71F, a big cry from the low elevation where it was 107F yesterday.

After having a late lunch, I ran a Quicken update and saw that I am up good today. Quite a few contracts are now in-the-money, or nearly so. If they get assigned, I will try not to complain. With a stock AA of 78% currently, it does not hurt to raise cash level back up a bit.

Phoenix to Flagstaff?

Do you have a large solar & battery system up there also?

 

[NW-Bound]

^^^ No, my home is not in Flagstaff, but an unincorporated town at the same high elevation of almost 7,000 ft.

No, I do not have a solar+battery system. I would have if I lived here full-time. It is quite doable, but a solar system here is worthwhile only if I go completely off-grid, because much of my bill is for the connection charge.

And to be completely off-grid, the system must be reliable to need no human oversee, but I am not here most of the time.

 

[NW-Bound]

Back on the stock market, I expected a pull-back, but not a decline larger than the advance yesterday.

The S&P went up 2% one day to drop 4% the next.

Well, I will not get many, if any, of the covered calls assigned this Friday. I get to keep all of my shrinking stocks. Hah!

 

[NW-Bound]

I had some holdings that were in the green early this morning. I took the opportunity to sell 19 OTM covered calls plus 2 OTM puts for $1246 in premium.

Said I would not sell puts, but this is for 2 positions that were in the money with covered calls that were going to get exercised later today. I tried to buy the stocks back with a put at the same price, expiry next Friday.

I acted too hastily. The stocks collapsed along with the market. And unless the market miraculously recovered into the close, the calls will expire unassigned. I still have the stocks, and may have to buy more next Friday.

Oh well. That's how I "buy low".

 

[ERD50]

All this attention on Powell reminds me of the following video about Bernanke, which was made at the time of the latter's nomination by George Bush in 2005.

The parody portrayed Glenn Hubbard, then Dean of the Columbia Business School (CBS), as wanting Bernanke's job and envious of him.

I did not know then that it was Hubbard himself in the video, and not a graduate student.

That was great! Is there a "making of" video? The vocals are really good, could we have had a Fed Chair who could sing that well? I'm assuming they were dubbed in, maybe one of the students was a music minor?

-ERD50

 

[NW-Bound]

If I learn anything more about this 2005 skit, I will share.

Note that back then, the housing bubble had not burst. Greenspan was still regarded as a hero. It was only later that the laissez-faire policy was thought to have contributed to the great financial subprime shenanigan that shook the entire world finance.