Monthly Archives: August 2011

 

 

For most of my professional life I worked fairly hard, never taking the typical route nor career plan, based on my education and training. Had I taken the typical route I could have retired long ago as I’ve always believed that there is a limit to how much anyone needs.

If my kids were younger and they would pose me with the question “Daddy, what do you do?”, I have no idea what I would say to them.

“Daddy sits on the La-Z-Boy. Sometimes Daddy presses the “ENTER” key on the keyboard. Then sometimes Daddy transfers money from Mr. E*Trade to Daddy’s bank so that I can buy cigarettes for you little cute boys to play with,” is how I envision my response would have been 15-20 years ago.

Although my kids knew what I did for a living when they were younger, there was really no reason for them to understand what I really did, especially since I also traveled quite a bit for work. Luckily, they didn’t ask many questions, oterwise I’d have to kill them.

That may seem harsh, but there’s a lot at stake.

Having a second family will do that. Since my Sugar Momma doesn’t read this blog, I can say that with reasonable impunity. Unfortunately, that second family didn’t come with many benefits, as all they did was pre-warm my rental car and make certain that I always got the same hotel suite each week, although at the time, that seemed pretty risque.

The best thing my other family ever did for me was making certain that when I arrived back home to pick uyp my car from the airport lot, it was always cleared of snow and ice. 

How sweet was that? I tell you the guys at the Key West International Airport Park and Fly were the best.

As many hours as I put in, they were still nowhere near the number of hours that Szelhamos toiled away. Although he was proud of the income that I was making I always felt somewhat guilty that I could make more in about  2 weeks than he could make in a full year. No one shovelled out his car, either, although in later years, it was actually his car that I left in the airport lot.

To use the 1964 TV barometer mentioned in previous blog posts, in a great year, Szelhamos could buy a new TV every week. 

During the 7 year phase that I flew twice a week and would see the same faces lined up in the Southwest queue I often wondered whether I should get one of those wrinkle free logo shirts. I often thought about creating the most bizarre little shirt pocket level logo and some oddball corporate slogan and web address. In hindsight, I can’t really understand why I never did so, other than the fact that it would have required some minimal effort.

I eschewed conversation so I never burst into spontaneous word exchange, but I was often on the receiving end. I guess I just have that kind of face or perhaps salesman have either a need to talk or just like to talk. EIther way the familiar faces would always ask me what I did and who I worked for.

I would just make careers up on the spot and at that time, my memory was pretty good, so that I would remember to whom I said what. Regardless of the story, I was always a lone wolf, never working for “The Man”.

On those occasional memory lapses, I clearly had just moved on to a new area of consulting expertise. Whenever someone asked me for a business card, I would tell them that I accepted new clients only by referral from exisiting clients that were on the approved list.

The inference was pretty clear. “You’re not on the list”.

There was no need for business cards. I almost felt like I was running my own personal Studio 54, except for a lot less drugs, sex and music. But I did get tiny bags of honey roasted peanuts and a complimentary soft drink.

Some of those guys even believed that my Southwest Airlines seat was designated First Class.

Which gets me to today.

My kids are grown. One is doing his own stock investing and, if the IPO market stays strong, will be well ahead of where I was at his age. In fact, I’d have to get a new indicator to replace the Color TV measure, as the Y axis couldn’t extend far enough to do service to my own earnings.

The other is in college and has both an entrepreneurial streak and a need to serve, as he just finished Army Basic Training and will be heading back for specialty training following the upcoming academic year. In itself, service is not a road to riches, but he will have many other interests to support his choices.

These days, I set a bad example for each of them, as I sit at home on most days my head askance staring at the monitor and my eyeballs awkwardly pivoted to also glimpse the TV. I’m afraid to look, but I think I’m getting La-Z-Boy sores on my backside.

What do you do, Daddy?

It’s almost embarrassing to say that I simply sit and wait for an opportunity.

On days that opportunity doesn’t come, we don’t eat, said the lion to his cubs. Of course, my cubs are moved out so that’s really not too much of a concern.

But before the shame and guilt gets too far along, there comes a day like yesterday, when driving my oldest son to his home, he asked me about this months’ options trading.

Unlike Sugar Momma, he reads the blog and knows that I’m in the hunt for a monthly options premium record, which I didn’t reach on Wednesday, either.

He’s stunned at how much is generated out of this La-Z-Boy, regardless of whether the market is up or down.

That also led him to  observe that he’d never met anyone at the stage and satus in life that I currently enjoy, who is driving around such a loud piece of shit car.

I smiled.

Mostly because I couldn’t hear him over the noise.

So Wednesday just turned out to be another in a series of big swings, all occuring in the absence of any kind of noise. Since I had sold in the money calls recently on Deere, I was happy to see it take an early price hit. Maybe it did so in sympathy will Dell’s disappointing earnings. Dell, Deere? DELL or DE, seriously, how much different could they be?

For me, not very, as I tend to stay reasonably agnostic as to industry or sector. SUre, I know what they both do, but don’t really care. I have experience with both and that’s all that counts. In Dell’s case, it is one of the few stocks that I’ve bought that didn’t make money for me, either through capital gains or options premiums.

I bought Dell about 4 years ago after its first ever disappointing earnings releae. Back then it was about $35 and I thought I had gotten a great price. After three months I got my first lesson in the meaning of  the expression “value trap”.

I swore that I would never but Dell again. I’m not a very forgiving fellow.

Deere on the other hand has rewarded me over and over, both on the stock and on the options premiums.

I know Deere will go back up. Dell? Maybe they should merge with Yahoo!. Then I’d only need to stay away from the single entity Ya-hell! instead of both of those dogs.

During the course of a typical month I find myself a;\lternating between hoping for up days and hoping for down days, all in the name of managing the covered calls and minimizing opportunity costs. With two days left in this options cycle I now am hoping for a sustained rise across the board. Most of my covered options are going to expire, so I’d love to see capital gains, at least on paper, complimenting the realized gains on the options premiums.

Next time, if my kids ask me what I do for a living, it’s probably reasonable to say that I sit around hoping for things to happen.

If only there was a Viagra-like solution, although looking at a screen filled with green just might have the same effect., except that I won’t need to seel medical attention after 8 hours.

If I’m lucky enough toi be around, I’d love to see the day that my own granchildren would ask their fathers the same question.

I hope that their answers are simple and to the point.

“I don’t really do much. I just watch stocks go up and down and cash in on other people’s greed, fera and envy”.

Now how sweet would that be?

 

 

 Trade like TheAcsMan

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See a sneak preview of Chapter 1. 

More about the book and purchase options. Scroll down and read the Szelhamos Rules blog, updated every weekday.

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Life is filled with difficult decisions. Fortunately it is also filled with “no-brainers”.

I don’t live in one of those open primary states, so I won’t get a chance to vote against Rick Perry.

That’s probably a good thing for the nation, as my track record for voting in Presidential elections is pretty abysmal. Not the voting itself, I always exercise that civic duty, but rather the outcomes. SInce 1972, I’ve only correctly selected a winning candidate 3 times. Based on that kind of history, a vote against Perry, would likley indicate a Perry victory.

If you’re an astute reader, you would have known that’s not voting for Perry would have been one of life’s “no-brainer” decisions. Given that a scant two years ago he was spouting the merits of Texas secession from the Union, it’s a little difficult to fathom how he could be running for the Republican nomination for the Presidency of all 50 states.

The fascinating thing about that is if he had been successful in his original endeavor, we would now be making fun of Haley Barbour, Republican Governor of Mississippi, for basing his international expertise on being able to see the Independent States of Texas from his bedroom window.

Perry’s very recent rant on the Chairman of the Federal Reserve, Ben Bernanke, and suggestion that his “printing money” would likely be dealt with harshly back in Texas, indicates that Texas might have been a hostile neighbor under a Texas President Perry.

Amazing that Perry would call the “printing of money” treasonous, but not talk of secession. Although he did have a Sarah Palin moment and briefly referred to the action as “treacherous”.

Given how Perry appears to handle himself, I would think that he remains mired in “concrete operations”, probably thinking, incorrectly that Bernanke is usurping the authority of the Treasury to print money. Surely, you’ve noticed Geithner’s ink-stained thumbs. Presidential hopefuls need to have those kind of observational skills.

One has to wonder just how cowboy-like Perry would be behaving if he had not been Governor of Texas during the energy boom. My guess is that he should be kissing the feet of the Saudis, Iranian mullahs and Chavez. He should probably also give a wink and a nod to the money printers who showered Texas with the economic stimulus dollars that he was against, but happily accepted credit for when job creating projects got underway.

So, that’s not a difficult decision.

What I’m mulling now is my next step.

On the investing end, I am literally a single trade away from having my best options premium income month ever. I still have shares in ProShares UltraShort Silver, which I picked up yesterday, as well as some Goldman Sachs and PowerShares QQQ that do not have calls written upon them. At this point, I’m 0.4% away from that all time high, so There’s still a chance that in the remaining 3 days I can catch just the right premium.

That would be a good feeling, especially during this tumultuous option cycle.

Deciding whether to accept any price just for the sake of besting the previous “record month” is also a no-brainer.

Absolutely. How many records do you have?

But the real difficult decision revolves around my everyday life and how to deal with the volatility.

For example, during a 2 minute stretch in Tuesday’s trading, after the market had erased a triple digit loss, and was then down just 2 points, it proceeded to drop 75 points.

Root cause? What else. I was away from my La-Z-Boy perch.

They can see you through that TV monitor, you know.

So the big decision, and a difficult one it is, is whether to change my diet by significantly decreasing fiber, or getting a TV and computer monitor installed in the bathroom. So what if they can see through that monitor. I have no pride when it comes to protecting the portfolio.

If I were the kind that enjoyed puns, I could make a comment like “There’s nothing like placing a bid from the bidet”, but that would be as sophomoric as it would be heavenly.

On the flip side, you could be “getting your ask while wiping your ass”, but then that’s really stretching the bounds of civility.

Obviously, there are other alternatives. I’m certainly old and lazy enough for “Depends” or I could customize the La-Z-Boy.

Once again, I have no pride. After all, I write this blog.

I suppose it would be much easier if I had some algorithms to make the decisions for me.

What’s truly amazing is that now it looks as if we’re in an environment that one algorithm is likely to trip someone else’s algorithm into action. While some tripped algorithms maybe complimentary, others may act in contrast. In essence a single tripped algorithm is a simple yes or no decision, but the cascading algorithms may represent some rudimentary form of artificial intelligence, that kind that seems confused and results in bouncing around aimlessly.

As these software generated decisions are being made, I increasingly take comfort in the fact that I no longer need to make my own decisions. I can reasonably be assured that whatever unseen force caused the random “movement du jour” will be counter-balanced by some other unseen force at some point.

The need to depend less and less on brain activity appeals to me. All decisions would be devoid of thought in a perfect world. In fact, in a perfect world, there would be no need for decisions of any kind.

Based on my inability to negotiate a close in the bid-ask gap on some earlier trade attempts to break that all important monthly record, I know that such a perfect world doesn’t exist in the market place.

So today will be like any other day.

I’ve once again decided not to campaign fund raise for Rick Perry.

 

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My Sugar Momma keeps complaining that I tell the same stories over and over again.

My Sugar Momma keeps complaining that I tell the same stories over and over again.

Get the idea?

There are a lot of things that change after more than a quarter a century of marriage. Reflexive laughter at a spouse’s stories and jokes is but one of them. The others will be discussed in my adults only webpage section exclusively for annual plan paid subscribers. I don’t play blue for non-paying audiences.

So it should come as no surprise that the most difficult thing to do with a blog is to find inspiration and new material day in and day out. That’s especially true since I’ve made a habit of recycling stocks as I do stories. I rarely add a new one, maybe one new stock each month.

Thankfully, my short term memory is shot, so it’s always new and fresh, as are the stories and anecdotes. That also explains how I can watch Comedy Central. The only things that seem familiar are the nightly news stories and the market’s volatility.

Seen all of those before.

After all, why should I traipse into new territory? It’s not like I’ve been married to everyone for 25+ years. And why stray from the stocks that got you to the party? Do you really think I’m going to watch that new Paul Reiser sit-com? I didn’t even watch the one that ran for 10 years.

Today, my inspiration, for what it’s worth, came from Paul Kedrosky. I don’t really know if he has any discernible skills, but based on his Tweets, he is intellectually far flung, yet there seems to be a coherent and unifying thesis behind it all.

By the way, the annual plan subscribers will see the previous paragraph as : “Paul Kedrosky…..he is intellectually well hung…”, so there’s still time to sign up.

Borrowing from Rodney Dangerfield’s classic “Back to School” movie, as Sam Kinison is yelling the day’s lesson at him “Yeah, Kedrosky really has a unifying thesis. What that is, I have no clue”.

Even though I’ve now repeated the following phrase about a dozen times to myself and it still sounds derogatory, it’s not meant to be so. To me, “Kedrosky is like a Renaissance Man’s savant”. He may or may not have a readily identifiable and focused skill, but he is skilled across a broad canvases’ broad canvas..

Anyway, in a brief Twitter dialogue he used the phrase of today’s blog title. I asked for his permission and he said he had hundreds more. Actually, he said that he had hundreds more from where that came from, perhaps implying that they may have been purloined.

Look, have you ever seen the images that I use to illustrate the daily blog’s theme? Do you think I really care if it was purloined, borrowed or rendered?

“Wasted Optimism”. What a perfect expression.

I suppose that as an investor, or trader, everytime you purchase a stock and it fails to perform to your expectations, that becomes an instance of wasted optimism. Entrepreneurs and venture capitalists probably have boundless optimism and rarely look backward.

But I’d like to think that in his depth of thought, Kedrosky intended more.

Just 10 days ago you certainly would not have wasted your optimism by hoping that after an S&P downgrade of US debt the S&P 500 would be right back to its baseline.

That wouldn’t be optimism. That would be stupidity, or perhaps well placed contarianism. Regardless, you would have been considered certifiable and would have had a great deal of difficulty getting anyone to buy into your optimism. Imagine trying to transfer your enthusiasm to get retail customers to buy stocks at such a time.

A few days ago I characterized myself as a cynic and short term pessimist, but long term optimist.

I don’t really know what that means, but I’ve believed that for years, despite the lack of internal consistency.

When I was younger, after my first investing experience, I was convinced that I would be retired by age 30. That kind of short term optimism was unwarranted and didn’t really work out as I’d envisioned.

Now, my long term horizon and short term outlook are beginning to converge. Not because I’ve undergone some intrinsic change in outlook, but because the clock keeps ticking.

Now, I’d like to think that I can retire sometime before death. Even though I don’t work anymore, I look at the trading thing as my job. It would be great to hand that to my kids, once their parole officer finds them.

So in the meantime, I take my long term optimism and short term pessimism and just throw money at stocks and hope something makes sense. Long stocks, short calls. Long ultrashort ETF’s, short on their calls, Long volatility index, short the call. What was that unifying hypothesis?

Today, I had the luxury of some cash as my shares of Caterpillar and Freeport McMoran were assigned. On my wish list were Deere, Chesapeake Energy, Microsoft, Rio Tinto and something else that I can’t recall.

See the problem?

I am utterly convinced that by the time I meet my maker the market will have carried me to great riches. That’s the optimist in me, even though the outcome is predicated somewhat on my death. That part is a bit of a downer.

This week? Eh, not so much.Not entirely convinced we’re getting there without a stop, despite Monday’s glorious market.

Despite the nice sustained climb in the markets from mid-week last week and on, I purchased Deere, Chesepeake Energy and more Freeport McMoran in the morning with the expectation that they would go down by week’s end.

So with the optimistic sense that I was right about the pessimistic trend for the week, I sold a $75 option of Deere, purchased at $76 for $2.50 in the hope that it would be called away from me after trades close on Friday.

I did the same with Freeport, buying shares at $45.75 and selling the August $45 call option for $1.63. I did the same with Freeport last week. Same idea, maybe even the same shares in some sort of market recycling phenomenon, hopefully with the same outcome.

But in a show of short term optimism, I sold by Chesapeake calls at the $32 level, having picked up shares at $31.75 and receiving $0.60 for the contracts.

Go crazy.

I often think back to Alan Greenspan’s famous and oft repeated comment about “unbridled enthusiasm”.

No wait, that was Seinfeld. I think Greenspan said “irrational exuberance”. I always get the two confused. I think Greenspan was the guy with big ears and glasses. Seinfeld was the one married to Andrea Mitchell.

Both though make a statement about optimism. Llike calling someone a “savant” those statements may be disparaging, even if that’s not the intention.

My guess is that Greenspan meant to be disparaging. Seinfeld? Definitely disparaging.

Me? Again, not so much.

Optimism and pessimism are just parts of the sine curve that we keep cycling through in the markets. Lately, I hear many more people talking about “rho” or the correlation between events. Whether my optimism is well correlated with a rising market is irrelevant to me, as I am only optimistic that stocks will churn in one neighborhood, then move on to another neighborhood and just churn some more before moving on again and again.

Once you start getting so many people focusing on something, like correlation statistics, its bound to be passe. With everyone having their hands on the same data and interpreting it similarly that can only mean a decidedly opposite outcome.

Of that I’m certainly optimisitc. Long term. Short term.

And if I’m wrong, I won’t be next time around.

 

Option to Profit – Make your Portfolio Work for You.

Now available at Amazon and other retailers

Option to Profit is available as either an eBook or 300+ paperback. Take a humorous look at a serious topic and learn how to make your portfolio finally go to work for you.

See a sneak preview of Chapter 1.  noco

More about the book and purchase options. Scroll down and read the Szelhamos Rules blog, updated every weekday.

Now you can Order direct  from publisher. Use 10% Discount Code P4S2ZD8H

 

  

 

Every time my kids, niece and nephew get together at our house, I have a deeply rooted need to snap a picture.

Always in the same location, always the same pose. My nephew and niece have learned how to position themselves so as to make it difficult for me to PhotoShop them out of the picture.

Seriously, why would I want to look at them everyday?

But they’re very bright and have long ago figured me out. They know that I’m not likely to do it if it takes too much energy, so they choose their positions carefully. They no longer sit next to one another at the ends. As a result, my PhotoShop skills have really waned due to disuse, whereas had I had the motivation I could have actually expanded those skills significantly.

One of their favorite sayings, always following some lack of common sense action of mine is “Uncle George, you went to Harvard?”

Jokes on them. I’m not really their uncle.

Although the dogs come and go, the kids stay the same, other than the fact that they’re not kids anymore, with the youngest soon to leave her teenage years behind. Sort of like an option’s expiration, only with a much better future.

What made me very happy yesterday, in adddition to the fact that it was the best picture ever in the series and only required a single take, was that my niece requested the photo opportunity. I didn’t have to beg, nor did I need to cajole and I was able to stop payment on the checks.

WIn – win, especially since my bank doesn’t assess me a stop payment fee.

It’s funny how, as you get older, you find yourself spouting the same aphorisms that your parents regaled you with when you were too young to appreciate any one else’s experience. In this case it’s how quickly time passes by.

Someday, I’ll probably assemble the shots taken over the years just to depress myself about the passage of time, but that would take motivation and effort, both in short supply. Instead, I’ll just stare at the gray hairs lining the floor after haircuts.

As quickly as those years seem to have gone, some other things tranpsire so painfully slowly.

Take August, for example. Although nearly each and everyday has been a rollercoaster ride, the kind that I never tire of, as long as the ups and downs are in equal measure, it has just crawled along.

Although the month was filled with happy and sad moments, a graduation and a funeral (I probably dont need to add, “respectively” here), the month still dragged entirely because it happened to be one of those 5 week options cycles.

Man I hate those.

I don’t mind the over-emphasis on the market’s down movements, but what I do mind is that extra week. I mind that even more than the grocery store “special” offering an extra 20% product  in the shampoo bottle, but having to pay 30% more.

Although we have just that one final week to go, I wish it would have ended already. Not to ease the pain, because that really hasn’t been too bad, but to get my hands on more options premiums. I can’t wait for the August contracts to expire. That’s still true even though since this past August still has a chance to be the best options premium month I’ve ever had.

Isn’t volatility wonderful?

With an additional week to sell some options, I’m within reach of my personal monthly best, without worry that an asterisk will need to be placed in my spreedsheet. Having shrivelled genitalia is a small price to pay for all of that income and since I use only generic steriods, my expenses are low.

It all goes to the bottom line.

Once the weekly contracts became more common, I really gravitated to them, now looking increasingly for those opportunities. Unfortunately, some of my favorite stocks, although highly liquid, such as Dow Chemical and DuPont, don’t yet have weekly options, whereas “drek” like Harbin Energy does.

So my trading still comes at a flurry on the first Monday and Tuesday of each cycle and then markedly slows down, other than for the few weeklies. Shares like Freeport McMoran, JP Morgan, Goldman Sachs and others keep the income rolling in through the month, but it’s still heavily concentrated to the cycle’s beginning,

On Monday, I’ll need to replace Caterpillar and Freeport McMoran. At the moment, I’m leaning toward Deere, Chesapeake Energy, Rio Tinto and maybe even Microsoft, which goes ex-dividend on Tuesday. If I’m able to get any of those at just the right prices, meaning right near a strike price, the near the money or in the money options premiums will take the month to new highs.

As I type away, the early reports are of positive opens in Australia and Singapore, but that doesn’t translate very well here, unless there’s something cataclysmic happening. Since most of my remaining August options are still out of the money I’d like to see a nice higher opening, even if it means paying a higher price for the items on my wish list.

As the September cycle approaches, I’m carefully looking at the more favorable premiums as the volatility has risen and wondering whether it’s time to adopt an earlier strategy.

Back during the market bottom in 2008 and 2009, I was actually selling out of the money calls, hoping to capture greater stock capital gains. I could do that since the options premiums, even for the out of the money positions were really very good, owing to that volatility. That strategy was right for the times, but was replaced by an in the money strategy as the market started on its sustained upward climb in 2009.

Given the options, and by that I mean choices, I think that I would rather not go back in time. Even though the grey hairs and the aging kids are making me increasingly forlorn, I think I’d rather stay gray. I’ve learned alot over the years and don’t think I’d want to tarade any of that back.

I think I’d also like to stay with the current in the money strategy. I like it at these higher levels.

The air is actually much better at 12,000 than it was at Dow 11,000 even though the premiums are much sweeter closer and closer to hell.

As the kids are getting older, I know that the photo opportunities are going to get less and less likely. Although I’m sure that if properly motivated I could computer age them appropriately on the exisitng photo collection, that’s probably not as likely to give me the same satisfaction as the real thing has over the years.

In the meantime, I’ll just have to get my satisfaction from knowing that with each month comes along a new option cycle and some great memories of cycles past

I just wish that time would go by much faster.

Did anyone say Daily Options? How about grandchildren?

 

Option to Profit – Make your Portfolio Work for You.

Now available at Amazon and other retailers

Option to Profit is available as either an eBook or 300+ paperback. Take a humorous look at a serious topic and learn how to make your portfolio finally go to work for you.

See a sneak preview of Chapter 1.  noco

More about the book and purchase options. Scroll down and read the Szelhamos Rules blog, updated every weekday.

Now you can Order direct  from publisher. Use 10% Discount Code P4S2ZD8H

 

  

 

Study after reputable study indicates and continually confirms just one thing. An absolute and universal truth that ultimately forms the foundation of so many things that we do.

Size does matter.

Additionally studies also validate the concept that “Stupid is as stupid does”, sometimes referred to as “The Gump Principle” in academic circles.

Despite the denial that we all go through, size is everything. Bigger, better and more. It’s all about size. Don’t be swayed by the girth argument. You want girth? Find yourself a steroid juiced linebacker and then get back to me.

As an aside, before you try to point out what appears to be an exception to that rule, the short ugly guy in sweat pants with the babes hanging off each arm? It’s the size of the bankroll. That usually trumps everything else or every figurative shortcoming.

Depending on your perspective, you can have a sliding scale on what constitutes appropriate size, however.

Take yesterday afternoon. After a big drop it looked as if the Jamie Dimon effect was being to take hold. He spoke in calm, reassuring and upbeat tones about what the American economy has going for it.

In the interview background, in otherwise scenic Monterey, California was a Chase Bank ATM. High magnification video indicated that 40% of customers attempting to withdraw cash were greeted with insufficient funds notices. The sight of them kicking the machine really didn’t require high power magnification.

Luckily CNBC has that 7 second audio delay that MSNBC forgot to use.

As Dimon spoke, the market picked up about 200 points. Granted it was still down 150, but by comparison, with a new persepctive on size, down 150 seemed minscule.

Down 150 is the new up 25. What used to elicit a shriek of disbelief of orgasmic frenzy levels now barely even gets a “meh”.

We are still talking about stocks, right?

As I awoke Wednesday morning I discovered that I had some unexpected cash sitting in my account. Someone had exercised some of the now deep in the money ProShares Ultrashort VIX ETF that I owned.

That’s where the Gump Principle comes in and did so from both sides.

For starters, in hindsight, I shouldn’t have sold those calls. I left lots of money on the table as the volatility index has been on a tear as the market has been plumbing new depths. Even more so, as the ETF was levereged.

So idiot that I can be, I made my 10% return on shares and options for the 3 weeks of holding, but it could have been much more.

Based on the past 2 weeks, even much, much more wouldn’t have been nearly enough to be enough.

But I wondered about the guy that actually exercised the option. Why? Why do it, especially with more than a week remaining and no divdend to be captured? If you want to lock in profit, why not sell the option instead of shelling out the cash and then presumabaly selling the shares?

My guess is that there was a breakdown in the perfection of options pricing so that purchasing the shares resulted in perhaps a lower yield, but greater gains.

That would mean either an idiot on the ask side or the bid side of that proposed transaction. Maybe both, so good luck getting them together to make a market. Greed is a form of stupidity.

In an exercise of my own greed, I quickly used the proceeds and snapped up some more shares of down-beaten DuPont, which goes ex-dividend on Thursday.

The numbers were small, but right now anything looks good. Purchased at $54.45, then a $0.41 dividend and a $1.12 options premium for 7 trading days. That’s the best I could do right now, but from my perspective it’s a big deal. It’s especially a big deal if this most recent plunge follows the same playbook as that in 2009. At that time I loaded up on high yielding quality companies and kept my fingers crossed, while selling 5% and 10% out of the money calls. In that way, I accepted less income in anticipation and hopes of greater capital gains.

So let’s review.

Monday we were down 600, Tueday up 450 and Wednesday down 520.

To put it into a personal standardized perspective, while pointing out the disequilibrium, on Monday I Iost 220 Color TV’s, while on Tueday I was given 146 and Wednesday I returned 100. (Don’t understand? See Some Things Don’t Get Old)

To me, that’s actually a very positive trend. How’s that for a warped perspective? And one that’s pretty stupid, too.

But the reason that I see it as a good trend is that the simple math always dictates that it requires more effort to recover from a drop than it does to actually drop.

Think of that concept as being no different from gravitational forces. As I get older that analogy is much more apropos as I gaze into a full length mirror. You know, they really should make bras for those things.

For example, let’s take numbers ripped from the headlines. When the Dow falls 2000 points from the 12,719 level to 10,719 in one month , that’s a 15.7% drop. However, from that level it takes an 18.7% gain to get back to the summit.

But in my case despite seeing the market give back Tuesday’s gain and then nearly another 20% on top of that, I was still left with 46 Color TV’s.

Wow. See what I mean. Down 150 is the new up 25.

It’s all in the perspective and being stupid enough to accept that perspective. That’s a winning combination, or as we know in the aftermath of the Charlie Sheen debacle, “Winning is the new losing”. It’s the kind of denial and re-definition of standards that still makes it so profitable to deluge the world with penis extender e-mails. Want and believe enough and you can convince yourself of anything.

Now, if only I could figure out a way to re-monetize those TV’s and buy some gold, or at least those gold clad Buffalo nickels, that are priced at a gold equivalent of $20,000 per ounce.

That’ll show the world who’s stupid.