Like most people of my age, I was a fan of Monty Python. I once worked with someone who thought that Monty Python was a real person and for some inexplicable reason kept calling him “Marty”.
Parenthetically, he was also the only person that I ever knew who would watch Monty Python and not be under the influence of anything.
At the time, being a door to door vacuum cleaner sales man it helped to have some other influences in life.
Yesterday, Sugar Momma and I started our drive to South Carolina to attended our youngest son’s graduation from Army Basic Training. She chose my wardrobe for the trip because she didn’t want anyone to be offended by my various tee shirts.
Normally, she tells people that I have some early stage neurolgical disease, not Allzeimer’s, she tells people, and then just makes up a name for something to act as an excuse for my behavior.
Even though I had spent about 95% of my life on a 500 mile stretch of Interstate 95, I clearly wasn’t prepared for the new world below, despite having lived below the Mason-Dixon line for 15 years.
There was a world of Cracker Barrels, Shoneys, Hardees, Bojangles and more. I kept hoping to see a Piggly WIggly but was satisfied with the endless stream of barbecue related billboards that all had some kind of chef hatted hog.
Although I don’t normally eat lunch, Sugar Momma does. She also uses public restrooms. So a few hours into the trip we stopped and ate at a Cracker Barrel.
My first time ever, but how could you not love a place where the waitress asks you “would you like some gratuitous fat with that, sir?” I even snapped a picture of the sign that said “New Fried Bologna Biscuits”.
When it comes to food, I’m fairly conservative. I still can’t understand how someone would destroy fried chicken with gravy. And besides, what gravy? What kind of chicken has gravy?
Grits? I don’t want to know from grits.
Since Sugar Momma likes to drive I just settled in with my laptop plugged into the inverter and fired the modem up and began the day like any other day, while streaming CNBC.
And like most days recently there wasn’t really much to write home about. Just another sea of red, this paricular flow worse than most.
Knowing that I didn’t really have any trades on the horizon my thoughts turned to new strategies. Even though the old strategies have at least cushioned the fall, you can never close your eyes to new and better.
I’m not much for speculation or risk taking, but I also get bored pretty easily doing the same thing day in and day out.
But I’d rather be bored than have kept the portfolio strategy that was in place for the first 25 years of its existence. There’s something very appealing about actually taking profits as opposed to watching paper profits disappear.
In the past few months I’ve slowly devoted a bit more to selling puts and buying various ETF’s and selling calls on those positions.
A few years ago I actually successfully played the ProShares Ultra Dow against the ProShares Ultrashort Dow. I say “successfully” because I didn’t lose money, but I didn’t make much, either.
Back then, I used movements in Goldman Sachs as an indicator of market movement. That actualy worked very well. A change in Goldman’s shares would seemed to very quickly be reflected in the ProShares, but not so quick that a nimble trader couldn’t get in, and more imprtantly, out.
But that was yesterday. And yesterday was a long time ago, as Goldman is anything but a market indicator these days.
One of the other reasons that I abandoned that strategy was due to the relatively thin options market and the wide spread between bid and ask prices. It does you no good to not have a trading market.
But lately I’ve been following the Direxion 3x Dow (FAS) and short Dow (FAZ) and assessing them as part of a variation of that old strategy, sans Goldman. When one goes up the other has to go down and the options move in tangent, but again in opposite directions.
So why nit hold both and sell call options on both?
Since what goes up does go down and eventually back up again, the strategy is based upon accepting losses, taking gains and closing out contracts and then rolling them over, but in the opposite direction.
So for example in this string of down days, while FAZ would climb in value, FAS would drop. That would give the opportunity to close the short call contracts on FAZ, which have quite nice weekly options premiums and then sell call options on the existing position.
In the meantime, there is an options premium gain on the FAZ and perhaps a capital gain on the underlying ETF, as one of the positions ultimately gets assigned.
And when it does, the assumption is that for the next cyxcle, weekly or otherwise, the direction of movement will be opposite of the preceding cycle.
Will it work? Don’t know, but it has looked good on paper. In practice may be a different issue as the challenges presented by greed, fear and envy will exert themselves regardless of how aware I am of their presence.
Although as with every investment there’s a chance for losing your investment, it can’t be any worse than the risk you take with that gravy they seem to pour on everything down here.
I do like the idea of trying something new, especially in bits and pieces. I typically hold about 20 “big boy” positions at any one time and try to evenly proportion them.
The others are my more child-like holdings, like the occasional short put position or the speculative play. Those are always small positions, since I like to balance not being overly greedy with not being overly stupid.
Although I’m equally fond of not having to think very much and this play does involve a little bit of decision making, maybe that will strengthen my weakening cortical matter and allow me to finally pick out minimally offensive tee-shirts on my own.
After these past few days it may not be a bad idea to try something new and different, which brings me to one other road side sign that I saw today:
Osaka Spa – Truck Parking in Back Lot
Based on the clientele that we spotted in the Cracker Barrel I’d be hard pressed to think that there would be anything very authentic in the Osaka Bar in that part of North Carolina.
As part of my decision to exercise good judgment for the foreseeable future, I didn’t investigate that opportunity any further.
If however, that exercise gets too tiring, I may just be in the market for some FAZ and FAS and a nice double helping of fried bologna biscuits.
Pass the gravy, please.
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Copyright 2011 TheAcsMan