LOL!'s Market Timing Newsletter

[papadad111]

Ive saved a chunk so far by selling a pile of my long term hold SPY shares on Friday. I'll mostly likely re-buy if the markets falls another 5%. Ive been wanting to exchange them for VTI anyway.
.

Just curious why the swap to VTI out of SPY? I hold both. VTI doesn't have much volume in pre markets so I hold some spy too.

 

[utrecht]

SPY has a 10 yr return of about 6.85% (before today). VTI has a 10 yr return of about 7.2%. Total Stock market beats SP500.

 

[target2019]

VTI is S&P500 plus extended market VXF. I'll have to get in on this party later in the week...

 

[LOL!]

C'mon folks, tell us about your AMGN and GILD plays.

Closing prices 9/28:

132.24 AMGN
94.80 GILD
104.79 CELG

 

[utrecht]

I have a GILD call calender. Oct/Nov 105. I paid $2.11 and its currently worth $1.72.

 

[Fermion]

C'mon folks, tell us about your AMGN and GILD plays.

Closing prices 9/28:

132.24 AMGN
94.80 GILD
104.79 CELG

One of those times where you just have to wait. They will bounce back just as hard, with 8% up days. You just can't keep a growth stock at PE9 for long, even if your hedge fund has a lot of money.

 

[papadad111]

I actually think GILD trades down to the upper 70s.... Before end of 2015.

Models and earnings are being reset.

Hard to get in the way of strong government intervention ....

 

[Fermion]

I guess if people really think the government is going to put a cap on drug prices. I am really not sure bio can survive a cap, especially for specialized drugs, so essentially the government would be creating death panels for people with a rare disease. I know I would not be investing in a biotech who has to spend 10 billion bringing a drug to market only to find they are limited to $250 a treatment or what have you. I know I would not be the only one not investing.

 

[Running_Man]

C'mon folks, tell us about your AMGN and GILD plays.

Closing prices 9/28:

132.24 AMGN
94.80 GILD
104.79 CELG

I own AMGN, as part of my 23% exposure right now and the company is still cheap, however market momentum is clearly against biotechs right now which does not bode well for the general market at all. However I do believe the AMGN dividend will continue to grow at the rates I expect, if they don't I'll have to look at my holdings at that point.

 

[utrecht]

I decided to look back at the results of all of my weekly SPY trades for this year so here they are. In each case I sold 10 SPY weekly puts. The strike was determined by the VIX

3/9...-$600
3/13...$1750
4/1...$650
4/17...$1000
4/30...$600
5/5...$900
5/12...$950
5/26...$900
6/4...$670
6/8...$1000
6/12...$1250
6/29...$1100
7/7...$1150
7/24...$1030
8/6...$500
8/8...$830
8/19...-$7960
8/24...$2000
8/27...$2320
8/31...$1150
9/4...$560
9/24...$620
9/28...still open

I took a big hit on the one trade when the market tanked but +$12370 so far this year. 22 trades with an avg profit of $562 each trade. Not bad for clicking a button.

 

[Fermion]

Just be careful as you can easily lose it all in one week with a 20% drop in the market. Well, you wouldn't lose anything technically, but being assigned SPY at $187 if it was $170 at the end of the week would be a $17,000 paper loss (I figure you trade about 10 puts).

 

[utrecht]

Of course, but go back into the history of the stock market and tell me how many 20% drops there has been in one week. I also don't make the trade immediately. I wait for what feels like the right time. For instance, when I made the trade yesterday, SPY was already down over 2%. Then I sold the 187 strike for $1.05 when SPY was at 189.05. So I had another 1.6% downside protection to break even, on top of the 2.1% it was already down for the week. So if SPY ends up down 3.7% for the week, I still break even. It just doesn't fall that far very often in 1 week. If it does I will lose money.

You can see from my list that Ive lost money twice out of 22 trades so far. One was a huge loss but its still a very nice profit overall.

Im also hedged with far OOM puts in case of a huge fall.

 

[Fermion]

I do see the big loss in August, but it was followed by two big gains. Was it just that puts were higher priced and you got more for selling 10 those two weeks or did you increase your size to 20 temporarily to try to make up the recent loss?

If you did the later, in order to get the $2000 gains each week instead of your usual $700 to $1000, then there is where the risk is and how I have lost all of my gains in the past (most recently last year where I was up some 60% in the summer then lost most of the gains trying to find the bottom in oil (which had no bottom it turned out) )

 

[utrecht]

I sold the same amount as always. I even went quite a few strikes lower than normal. The VIX was just spiked to ridiculous levels. It was around 50 for one of those trades.

 

[utrecht]

I bought back the weekly puts for $0.90 and a tiny $150 profit. SPY has dropped to 187.60 (from 189.10 when I sold the puts). I don't like my risk / reward as as much from here. I thought the market would have a temporary bounce. I was wrong and still made a small profit. Im out.

 

[LOL!]

Wow, there goes my VXF play. I am thinking of doubling up in the last half-hour here.

Update: OK, did it.

 

[Fermion]

I didn't do much today...sold my 200 shares of AMGN at the market open for the same price I bought it for yesterday then rebought it just now at $132.79 ($4 cheaper). I didn't think much of the pop and I was right.

 

[NW-Bound]

OK, I have not been following biotech stocks, but the low P/E of Gilead looks intriguing.

So, I looked up its financial statements and saw something very interesting. Revenue jumped from $11B in 2013 to $25B in 2014. Income after taxes jumped from $4B to $11B.

This huge 2013/2014 increase was attributed to sales of a highly effective drug called Sovaldi to treat Hepatitis C. Treatments may run as high as $84K/patient. Will political pressure take away all this earning?

 

[Fermion]

NW if you knew the answer to that you could have six houses and three RVs.

My guess is it is all political posturing because it sounds good. At the end of the day though, the price of Harvoni (the new 1 pill a day drug) to cure HCV in as little as 8 weeks is cheap compared to the old way (10% chance of cure, many side effects, over $100,000 treatment for 48 weeks). Alternatively you can go for a liver transplant at $400,000 a pop.

But yeah we could create price controls for drugs. Not sure why we should stop there...cars are pretty expensive...it would be nice if you could buy a new car for $250.

 

[NW-Bound]

I can use 3 RVs (different sizes depending on different sorties), but my 2 existing houses are plenty to maintain.

Anyway, if I were a Hepatitis C patient, I would very much prefer the $84K pill treatment over death or the liver transplant (not just the $400K cost, but it's gonna hurt!). I would even sell some stocks to pay for it myself if I had to. But many people do not have the money (nor want to sell their home), so they want the drug researchers to live like Mother Teresa and donate their life to science, or dedicate themselves to public service like most politicians do and live in poverty.

Oops, strike that last comparison.

 

[LOL!]

Wow, there goes my VXF play. I am thinking of doubling up in the last half-hour here.

Update: OK, did it.

Sold out a moment ago, so unwound this trade which was nicely profitable. However, BND is up as well, so I will not buy it back just yet and just hold the cash instead. BND goes ex-dividend tomorrow, too.

[update] Ack! Sold too soon. But a 4-figure gain is nothing to sneeze at. OK, I am miffed.

 

[papadad111]

What's the real economic cost of trading ?
What's your tax rate ? I suspect you are paying 40 percent of profits to fed and state taxes on these short term trades.

You are bumping up agi - eg, does that impact your obamacare subsidies ?

Any other implicit costs ? Such as the stress when a trade goes haywire. ?

 

[papadad111]

OK, I have not been following biotech stocks, but the low P/E of Gilead looks intriguing.

So, I looked up its financial statements and saw something very interesting. Revenue jumped from $11B in 2013 to $25B in 2014. Income after taxes jumped from $4B to $11B.

This huge 2013/2014 increase was attributed to sales of a highly effective drug called Sovaldi to treat Hepatitis C. Treatments may run as high as $84K/patient. Will political pressure take away all this earning?

I think the fear of what happens in the election will cause this one to trade down. As said, I see 70's in this stock. For the reason you have stated and the pipeline for next new wonder drug being 3- 5 years out.

 

[utrecht]

Just sold next week expiration SPY 195.5 calls (not puts) for $1.10

 

[utrecht]

Just bought a GOOG 600/570 1X2 put back spread while GOOG was at 610.70. It expires Oct23. Its essentially a 600/570 put spread while also selling an equal number of extra 570 puts. It costs nothing.

Max profit is at 570. Break even is all the way down to 550. If Im wrong and GOOG moves up or doesnt drop at all, I lose nothing as everything expires worthless.