Monthly Archives: December 2011

 

As a relatively “unsocial” kind of guy, I’ve been very slow to adopt to social media. In fact, it was only at the advice, suggestion and arm twisting by my kids to use social media as a tool to sell books and get people to read this blog, did I reluctantly agree that they may be right.

Ego is an amazing thing.

Over the past 25 years, the only other things that I was slow to adopt was the one time ubiquitous “PDA” and the “mullet.”

Palm, Treo, Handspring. Whatever the names and models were, it’s all a blur, I never went that way although I may someday go for the retro look as nostalgia is due for its next generational comeback.

I’ll think about that after tonight’s Hall and Oates concert.

Today was just another one of those laughable days in the rumor mills. Good thing, because it was an otherwise utterly boring day with no news coming out of the EU and with Herman Cain out of sight.

As trades go, I sold Caterpillar calls, bought some more ProShares UltraSilver ETF and subsequently sold calls and that was all.

Boring.

As much as I took delight in my accurate prediction about retail sales, when it was reported that they were disappointing (in advance of the revised results after Christmas which will indicate that they were better than expected), it was still a tiresome day.

The best rumor and the one that got the most attention was about Netflix.

I own Netflix and have for about a month or so. In that time I’ve sold lots of weekly calls. Sometimes I’ve had the shares assigned and other times not.

Sometimes I’ve bought the shares back and sometimes I haven’t.

This week started with a reduced holding due to an assignment of a portion of my shares, but as luck would have it, the rumor mill started early.

And often.

Monday started with the rumor of a Verizon buyout of Netflix. WIth the market spending most of the day down 2%, Netflix was up about 7% in reaction.

Although I did my obligatory sale of calls, as has been my recent habit, I was a premature speculator and sold the calls a bit too early.

This morning, in the pre-market, the rumors started anew and Netflix surged.

Now if they were as good at streaming speed as the quick fashion in which the stock price gave up the ghost in the pre-open following a suggestion that Verizon was denying any interest in a buyout, they’d have a pretty great product,

The rumors and their rationalizations were fascinating.

Sometime in the past 24 hours the speculation was that Verizon was fueling the rumors to drive up Netflix’s stock price to make it a less attractive take over candidate for anyone else.

This is the kind of rumor that may be referred to as a “conspiracy.”

Interestingly in my area, Verizon FIOS ads still tout the ill conceived and subsequently aborted Netflix pricing plan as a reason to make the switch over to FIOS. It’s not really accurate, but that really doesn’t matter, because it was accurate at one time. For a couple of days, for that matter.

That seems like a better strategy to make it less appealing to anyone else.

Attack their business through that good old American concept of competition. Sure, unfounded rumors are good, too, if you want to cause your opponent to stumble a bit.

But driving up their price?

Then it was a return to the plain vanilla rumor that started it all.

Verizon was planning to buy Netflix.

Although a Verizon spokesperson later said that there were no such talk, many in the investing world believed that the issue was not whether there would be a buyout, but whether anyone would figure out that the holdup was due to both parties being caught up in a Verizon telephone menu loop. All that’s needed is for someone to realize that all they have to do is press “O” to be connected to a buyout specialist.

In the meantime, Netflix was then played to the vest. No one really knowing which way to go.

As a seller of options I like movement because volatility drives up premiums. But once I get those premums, I love stagnation. That may also explain why I haven’t matured one bit after 27 years of marriage.

So while the Netflix story plays out, and my time horizon is only a week at a time, attention was turned to Zynga.

Zynga is one of those social media phenomena that I haven’t adopted.

Best known for its Facebook resident games, especially Farmville, it’s due to come public at the end of this week.

As opposed to most other recent tech and social media IPO’s, Zynga is different in a number of ways.

One is that it is reportedly and surprisingly not a fun place to work. Brain drain is especially expensive when brains are your leading commodity. An unhappy mind is not a creative mind.

What was especially interesting is that in advance of the IPO, one analyst has already come out with a “sell” recommendation based on an “underperform” prediction.

Now I know knothing about Zynga or its products, but I do know that investors are willing to pay for growth opportunity.

Zynga is so heavily tied to Facebook, there’s obviously a liability asociated if Facebook heads in a different direction. Ask any Apple suppliers that have seen the Golden Goose seek better priced vendors.

But really, how much more is Facebook itself going to grow?

How many more new games that set the social media world on fire, especially without cannibalizing its exisiting game base, will Zynga put forward?

Besides, once they’ve seen the next big fad, how are you going to keep them down on the Farmville?

Seems to me that buying Zynga shares is akin to buying out a floppy disk maker about a decade ago.

What Zynga needs is something that will capture the interest of the 1%, like me, who don’t want to get their virtual hands dirty by playing Farmville.

Maybe “Rumorville” is the next logical step. Trade in the green of the farm for the green of the portfolio.

Buy and sell analytical tools, inside information, algorithms and television appearances.

Want to be a talking head? No problem. All you need is the right currency. “Want to be a rainmaker?”

Immunity from prosecution? You can buy it, just like in real life.

I suppose that if you’re on the short end of a rumor it’s not very funny, but that’s the chance you take, especially with all of these momentum stocks bouncing around.

For now, as long as Netflix stays above $65 and trades in a predictable range, I can be a very happy guy.

Maybe even enough so to be a sociable kind of guy, as well.

Nah.

 

Follow me on Facebook and Twitter. Clearly my overt display of anti-social behavior is a cry out to be liked.

 

 

 

 

 

 

“I asked her name, she said blah…blah…blah…she wore 9/10 pants and a very big bra…”

O.K. I’m back…..

My “Any Of You”  thread includes a stock ticker. MGIC Investment Corp, whose ticker is MTG. It is probably my favorite stock of the past two months.

It has formed a chart pattern called a cup and handle.

The “Cup and Handle” was first described by William O’Neill in his 1988 book “How to Make Money with Stocks. It is also the same William O’Neill whose name shows up on my caller ID when someone using his good name is pitching a free no obligation trial leading to a subscription to Investors’ Business Daily.

I need IBD like I need IBS. Just talk of Taco Bell makes that bowel irritable. Yet, yo quiero Taco Bell.

Maybe a nice soothing tea instead.

Anyway, the Cup and Handle represents a bullish continuation pattern.

After the handle is formed and hurries to the resistance line which is predicated by the tops of the shoulders as well as the head….ah “head” one of my favorite words…say it again “head” I will be back in a minute….O.K I’m back…the thrill for all chart watchers occurs “THE BREAKOUT”

Not the OXY 5 breakout where you have to cleanse properly like Jessica Simpson., this is the cash money breakout. Not cashmoney as in the rapper crew….this is DOLLARS AND CENTS….blue skies….no resistance type of breakout. This is what we wait for as we have nurtured the formation of the cup ourselves from early August till early December.

You are in a relationship with the cup.

You watch it go up and down. You tell it where to go.

You get mad at it when it goes down and you give it an “ATTABOY”  when it goes back up.

As you get confirmation of the formation of the handle you realize you have fathered the cup to finality. You have led it down the preconceived path that was destined for your precious cup

Ah, what a proud PAPPA.

As MTG prepares to leave its nest and head for blue skies you realize the hard work it took to get to this point. How many ups and downs did it take to reach the end point? But you needed all the ups to realize the downs and all the downs to realize the ups. Without all this there would be no cup and the handle would have nothing to attach itself to, thus voiding the breakout.

No ups, no downs?

That means no handle and no breakout. All the ups and downs are IMPORTANT….they are VITAL…to complete one’s journey….one cannot be accomplished without the other….

It all boils down to that classic “WHAT GOES UP MUST COME DOWN” unless it has lasted for 4 hours then quickly call a doctor or in my case screw the doctor I am calling 1-800-…or maybe I should just screw the doctor if I am going there any way.

I think I am on to something here.

“You ….you got what I need but you say he’s just a friend…..yeah you say he’s just a friend…oh you…you got”

O.K. I’m back….

Life as a stock is no different than our lives when it comes to ups and downs. Both need the ups and the downs to form the end point. You just do not realize the relevance of the parts at the time of formation but it becomes crystal clear in the end.

As for MTG, I give you a personal thank you for the opportunity to watch you grow from a little $2.16 kid to a $3.78 teenager and looking forward to your $5.26 tenure as an adult.

PAPPA is proud but after $5.26 you are on your own as I need to nuture my other kids.

“The cats in the cradle and the silver spoon…..”

 

I have a very cloudy crystal ball.

The cloudiness is internal and is just reflective of my own degrading and poorly capable neural mechanisms. It just doesn’t know how to deal with data and apply appropriate weightings to streaming information. It also seems to be incapable of consistently recognizing when patterns are likely to reverse.

My crystal ball is also in need of dusting as lots of extraneous factors get in the way of rationally approaching the prediction business. Some of those external factors may be personal baggage, while others just represent the irrational world as it attempts to interpret facts and rumors.

Anyway, my crystal ball is in constant need of dusting.

So I don’t begin to believe that I know what’s going to happen by even the next keystroke. I’m envious of all of those that regularly appear on TV and are able to forecast the future.

I’m especially envious of those that don’t care about the eventual outcome of predictions and who don’t believe in the concept of “report cards.” You can either look at predictions as being purely of entertainment value or as a guide for how to live your life.

I don’t see them in either of those ways.

In a perfectly ordered world simple mathematical principles should help to explain all events; past, present and future.

Maybe that’s the way it is on our newly discovered twin planet, Kepler 22b, the one that they’re calling “super earth,” but it sure isn’t that way here.

Yet mathemeticians, statisticians and physicists are widely sought after by financial firms who clearly believe that the market continues to be a rational place that can be dissected into a collection of equations that cascade with great predictability.

Given that the little guy doesn’t move the needle very much, I can only believe that in a zero sum game the big winners of the day are very similar to the big losers of that same day, in that both place great reliance on high priced objective tools that are used to predict the behavior of a rational market.

I can also surmise that those that win on one day are every bit as likely to lose on the next, as is the opposite true.

Otherwise, we would see the extinction of those that are in the habit of losing and then it would no longer be a zero sum game.

It would be a Charlie Sheen like universe with only winners prowling the markets.

As result, the only logical explanation can be that the crystal ball used by the big boys is every bit as cloudy, but is more capable of moving the needle.

Presumably, trading algorithms can only suffer from cloudiness of design, rather than being subject to dustty conditions, so they have me at an advantage.

The one thing my crystal ball has been good at has been to realize that computer storage media will evolve, leaving older prehistoric forms worthless as the hardware necessary to read the media of yesterday all become extinct.

So before the inevitable would happen I always transferred my files to the latest generation of storage. My old 5 1/4′ floppies gave way to 3 1/2″ less floppy disks, which in turn gave way to CD, then to DVD and then to various USB ported external devices. To my credit, I also foresaw the need to skip the Blu-Ray option.

The other day, while cleaning out a closet in preparation for Phase 2 of our re-carpet process, I discovered a long ago forgotten PC in a closet. It was a tremendously heavy first generation Pentium processor with a 1 gigabyte hard drive and no USB ports.

I remember thinking just how “kick ass” that sweet gig of storage was going to be.

And it was until the world invented music and photos.

In the time before there was art of any sort that computer was all that anyone could have ever needed.

I didn’t dust off that computer, but I did dust off an old statistical analysis program that I used to use back in the days when I actually did “research” and back when my existence may have offered “added value.”

I thought that perhaps a methodoligical approach to data could help my crystal ball see just a bit more clearly.

Luckily, I’d saved the installation disks, which had come on those 3 1/2” floppies onto a CD, in anticipation of the death of the floppy. I even knew where to find that CD, although I hadn’t used the program in about 10 years.

What prompted the need to dust that statistics package off was the desire to see whether there was any correlation between Friday and Monday market closes over the past 6 months.

My semi-casual observation indicated that there was some kind of an association, but I needed more confirmation.

Obviously, the very thought that I would uncover some previously undiscoverd correlation was delusional, as if all of the highly compensated people designing prediction models hadn’t already looked at every single possible relationship imagineable. I mean if someone has looked at variables such as Original conference of Super Bowl winner in a leap year, then days of the week had to be a given.

It’s just that no one ever told me.

Increasingly, it had empirically seemed to me that we were seeing large moves on Fridays which especially puzzled me if those large moves were to the positive side.

WIth all of the uncertainty these days, whatever happened the the adage of not wanting to be long stocks over the weekend?

Take this past Friday, for example. The market ended up just shy of 200 points.

Again.

In fact, we’ve seen 13 triple digit moves on Fridays over the past 31 weeks. 7 of those have been upward moves. Since George Bush declared that he had won a mandate in 2000 with less than 50% of the popular vote, I suppose that you could be justified in saying that 7 out of 13 represented a mandate of some sort.

But as it turned out, no matter how I sliced, diced and transformed the data, the chances of having a big move on Friday is not likely to predicate anything for the coming Monday. What is not likely to happen, though, is seeing a triple digit upward move on Friday followed by an equal move on Monday.

In fact, of the 16 triple digit moves on Monday, only 5 had been preceded by a triple digit Friday.

Too bad.

As the final week of the December options cycle comes to an end, I only need toi replace shares of Green Mountain Coffee Roasters and Netflix, due to assignment.

That means that everything else could benefit from a nice rise on Monday.

What I can predict is that on weeks that I suffer lots of assignments I love seeing Mondays open in a decidedly negative direction so that I could use the newly available cash to pick up bargains.

I can also predict that on those weeks that I don’t have much cash to reinvest I love seeing a strong jump out of the box so that I can sell optins into the strength.

I suppose that represents an algorithm of some sort. I may have to give myself a nice Christmas bonus for that one.

After dusting off the statistics program and evaluating the past 31 weeks of Friday and Monday closing data, creating subsets of triple digit moves on either of those days and then looking at absolute values, as well, I came to the conclusion that nothing really mattered.

“The trend is your friend” has given way to “MoMo” stocks that could just as easily become your worst enemy as your friend.

With all of the talk last week of a stock market melt up, coming fresh off the heels of the same people who the previous week had characterized the market’s move as reflecting a “dead cat bounce,” my inartful analyis says that there’s very little reason to believe that any melt up will happen on Monday.

If I’m wrong, I can always go back to my old profession and at least put that duster to the use for which it was intended.

There was no reason for me to think that while on a cab ride going through the heart of Downtown Nashville on Tuesday, that Dobie Gray would breathe his last breathes on that same day and in that same city.

But that’s exactly what happened on that cool and damp day as I went past the famous Ryman Auditorium and saw endless pedestrians with cowboy hats and guitar cases probably sharing the same hopes and dreams, but unlikely to ever find their way into the major leagues of obituary pages, The New York Times.

Other than introducing the song “The In Crowd”, which was a bigger hit when Ramsey Lewis covered it, you may know him for his continually popular “Drift Away.”

I don’t really know him from any of his other works, but I found it poignant when after today’s closing bell, where the market dropped an additional 100 points in the last 45 minutes, Bob Pisani on CNBC referred to the market as just having “drifted away.”

Maybe Dobie was on his mind.

I’ve been a Bruce Springsteen fan for nearly 40 years and have seen him in concert a number of times and cities over that time. Along with others, I grieved when the Big Man died, but it was clear at a concert in Baltimore a few years ago that the body was a shell, while the talent and dirve were undying.

Dobie Gray just quietly drifted away.

Springsteen is an original and rarely covers other artists.

When he does it’s an indelible stamp for those that typically need no such approval or recognition.

Bob Dylan, Buddy Holly, Elvis and Pete Seeger, of course come to mind.

And Dobie Gray. 

Covering an artists work can be interpreted in two different ways.

For some, it is a sign of laziness and lack of creativity. The fear of relying on your own talents to please the ultimate judges who decide your professional fate. It is often a sign of low confidence and playing it safely.

Or, performing a cover can be the ultimate sign of respect that one artist can pay to another.

Although the cynics will also say that performing a cover version can also be the ultimate expression of self-importance as someone tries to put their own spin on a classic. It also may be an expression of opportunism, as I doubt that Ramsey Lewis covered The In Crowd as a tribute to a then small player, Dobie Gray.

Sometimes you just know a good thing when it comes along and you have to act.

But I’m not the cynical kind, unless you’re talking about life and the people who populate the environment in which the world exists.

No doubt that in Springsteen’s case he didn’t really need to draw on anyone else’s body of work. But when he did, they were doozies. Always respectful and always faithful to the vision of the artist honored.

As with Dobie Gray.

In much the same vein, I know that my approach to investing and trying to make my portfolio grow is the ultimate in laziness.

I buy the same stocks, over and over again. I call the list of stocks that I choose from my list of “Old Reliables”. No doubt that each of them was at some point put on my radar screen by someone on TV.

In all likelihood, I then followed and watched for cyclicality and the size of the reward for selling options.

In the case of Ricky Nelson, who put out the hit “Garden Party” in response to the booing he received at a concert in Madison Square Garden where he didn’t play the “old reliables” and got booed, I also only have to please myself.

No, I’m not talking about some kind of investing self-gratification, but I am talking about investment and gratification. The singles gratify me, even if they come at the expense of the homers.

I gave up on trying to be creative. Not only do I have a bad voice, but I can only barely play the accordian, so I know that I won’t be filling any auditoria on my own.

I gave also up on trying to pick stocks and certainly gave up on trying to time purchases to maximize profits.

I recognized, before it was too late, that I was never going to be anything but a cover artist.

Like some Elvis impersonator, I make believe that I know what I’m doing, but in reality, I don’t.

I knw that and so do you.

I don’t really understand fundamental analysis and that probably explains why I don’t have the patience to even attempt to learn. I probably am subconsciously avoiding putting myself into the situation where I would have to admit that “I just don’t get it.”

Except for the fact that I’m fully and consciously now aware of that denial and avoidance strategy.

But like that aging Elvis impersonator, you can make a comfortable, maybe even a very comfortable living without ever coming up with a single original thought.

So I just copy what I’ve done before and then hedge those totally creative lacking decisions by, wouldn’t you know it. covering.

I cover myself and my holdings because I know what my audience wants.

Sugar Momma and I are that audience and like that immortalized Garden crowd of a generation ago, we want safety but we don’t want boredom.

There’s not much respectful about what I do. It’s predominantly laziness and trying to sense opportunities.

Most of the time those opportunities are just the taken from the sense that everything you see, at least when it comes to the shares of solid companies are just part of a trip up or down a sine curve.

I say “solid companies” because I don’t like to think about micro-economic or industry specific issues. I certainly don’t want to get involved in company specific issues.

Except….

Except when there’s an opportunity. Oh Ramsey Lewis, how you’ve molded me.

I look at opportuinities as being on the speculative spectrum and with speculation comes undue risk, which more often than not dwarfs the chance of reward.

I prefer probability over possibility.

Most of the time.

But lately, there’s been opportunity whenever a Chinese company gets maligned. At least when the darts are being flung by Muddy Waters.

In those cases, there’s been nice opportunity, such as very recently with Focus Media to take positions after the big price hits have occured and the  s**t has cleared the fan.

Even when the accusations may prove to be acuirate, there seems to be a calming period when there’s opportunity to sell puts or buy shares and write covered calls. Just like Ramsey Lewis did, sometimes you take advantage of a good thing when it comes along.

I’m not proud. I don’t mind saying that I know nothing of Focus Media, did no independent research and have no real strategy. I would be happy to toss it out next week, when the options cycle ends.

In the case of Focus Media, which was up today to $21.50, despite the 200 point plunge, I sold puts at $15 and $16, back when the stock was at $16, barely 10 days ago. Since then, I also picked up shares at $20.71 and sold $20 calls.

Wow. That’s all over the place.

Maybe the lack of coherency is a sign of creativity or maybe it’s just a sign of situational opportunism.

Either way, I’m covered.

Today’s drastic drop in the market was related to a slew of disappointments with regard to reaching financial, fiscal and policy agreements by the members of the EU.

Then, a slew of all new and unrecognizable acronyms hit the same fan that everyone had thought the s**t had  already cleared.

But in the meantime, I’m looking at the possibility of buying back some of those shares that were assigned from me just a few days ago, this coming monday.

The shares that drifted away may be drifting back. Too bad Dobie Gray never found the opportunity to record that obvious follow-up tune.

The best part about all of this is that I did nothing. Talk about laziness. I respect the art of laziness as I spend my day resting in the aptly named La-Z-Boy and let the Dobie Grays of the world do the hard work while leaving a legacy behind for the less talented and knowing, as myself, to avail.

As I listen to someone talking about things “going more pear shaped,” it continues to crystallize.

At this point, I’m even too lazy to Google that expression.

 I increasingly realize that I need to stay lazy and avoid cluttering my mind with confounders. I can’t compete with those that are actually trying to move forward. I’ll just happily thrive in their wake and smile on their way down and again when they bob back up.

I’ll stick with the tried and tested lazy man’s way.

Thank you to the Dobie Grays of the world. You’re appreciated for having paved the way.

And for “The Dobie Gray,” you gave the world one of its most hummable songs, which is just the lazy way for us untalented sorts to make it our own.

 

 

I grew up in a household where in my early years English was decidedly a second language.

Even as my parents quickly became fluent in speaking and reading the language of their adopted country, one thing that they didn’t adopt was the use of classically American idiomatic expressions.

Although I’m certain that most such expressions have their counterparts in other cultures, our household, at the very least was idiomatically deprived. Adages were never tossed about as part of casual conversation, nor were parables frequently used to teach life lessons.

Well, other than the obvious “Never let a Cossack into your home while your daughters are there alone.”

In fact, while I did quite well on the SAT exams, I’m certain that what kept me from having an asterisk next to my name was the fact that deciphering the meanings of such expressions as part of a multiple choice exam was somehing beyond my naturalized ability.

The exam was just culturally biased against me and probably even against those that did the actual marauding, raping and pillaging. Those poor Cossacks never stood a chance.

Over the years, though, I’ve learned some of the very basics, although I don’t seek to apply them under any circumstances, except maybe to illustrate a point, almost like what an idiom tries to do.

Silver Lining? Got it, every cloud has one.

Don’t s**t where you sleep? Got that one too. Damn good advice.

But last week I was following a path opposite that advised by another popular expression: “Don’t cry over spilled milk.”

I suppose that in the affluence of America that certainly holds true, but how could you even think to say that in parts of Bangladhesh? Or how can you even remotely suggest that to someone who’s let stock profits disappear into someone else’s pockets?

For them, it’s the end of the world as they know it.

But I get it. It’s done. It’s over. Move on. Sunk costs, etc.

But there I was last week moaning the losses of some favorite stocks as they closed above the strike prices at which I sold their call contracts.

One, which I only passingly mentioned over the past few days was Halliburton.

Halliburton, like my other favorites is such, because it predictably spins off a nice options premium. Unfortunately, it’s not one of my triple threat stocks because it has only a pathetic dividend.

It has the attractive premium because if you’re the type that worries about paper losses, you’ll need the money for antacids. It’s just a little volatile and reacts to news, rumors and politically shifting winds.

You need to have a bit of extra stomach lining when you own Halliburton. You also have to ignore its close association with lots of bad things over the years that may make you question the morality of investing in such a company.

I don’t have those kind of qualms, so Cheney, I’m talking to you. In fact, as much as I love New Orleans, making it a regular vacation spot, I applaud the Food Industry portion of Halliburton for its much maligned effort to engineer self frying fish in the Gulf of Mexico.

After all, that seemed like the natural extension and transfer of volatility from the stock to the fish.

When it comes to Halliburton, “What you don’t know won’t hurt you.”

There’s an adage for every situation.

While busy moaning, a funny thing happened. In fact, it was the sort of thing that I always count on happening and welcome with open arms.

Like now.

Jut 3 days after losing my Halliburton shares at $35 for a final options premium of only $0.28, bringing the total 3 months’ premium to $4.56 in addition to that pathetic dividend, it was time to stop moaning and do something.

That something was to snap up shares of Halliburton as it had come down to $33.50 from more than $37.

Although I did shed some metaphorical tears deep down I knew that I would never have taken profits with Halliburton at $37. I never would have sold my shares because you can’t completely escape your human nature, despite the discipline that you seek to impose.

That’s reasonably logical to assume and as we all know logic is  “the opium of the people.”

With the need to moan and feel badly about a lost opportunity that was never really lost, only repackaged, it was time to moan about another boring day in the markets.

And it really was a boring trading session for most of the day until the final 20 minutes.

That was when a rumor came out of Japan that the through the efforts of the G-20 the IMF was going to be able to float $600 Billion to the EU as part of a lending facility. Of course that would be done through the ECB.

Got it? G-20, IMF, EU and ECB. Not as catchy an idiom as the others, but still obvious in its intent.

Seeking to dispel the thought that there was even an opportunity to be “looking a gift horse in the mouth”, the IMF then denied the rumor and the market which had added 80 points in a couple of minutes then shed half of those in the final two minutes of trading.

Honestly? I don’t know what a gift horse is and none of this really effected me or my shares.

During the course of the day I did have the opportunity to make a few trades, but they seemed to follow in my recent usual pattern.

That pattern, which is one that I’m not very happy about, is to sell call options literally minutes before the underlying stock takes a sharp move upward.

Why would I do that?

Because I’m an idiot who can’t tell the future, even when its only a minute ahead.

Today, it was my turn to sell weekly calls on Goldman Sachs and the beleagured Netflix.

The same happened last week with Green Mountain, Caterpillar, JP Morgan and Halliburton.

There may have been some others, but my mind is beginning to shut down as it needs to make room for more idioms.

Over the past few years I’ve done pretty well trying to collect small option premiums, that I refer to as crumbs, just a couple of days before expiration.

Now, with the growth of weekly options, I do that sort of thing much more than ever. Although there were always instances in which I might have regretted one of those crumb picking expeditions, by and large its been a good strategy..

That is until the milk starting spilling.

All of this is pretty ironic since the primary site from which I sell the Option to Profit book is called Milking Stocks.

With all of the economic uncertainty in Europe it truly amazes me that markets would go up on Fridays and traders would stay long into the weekend.

But see, that’s where logic is misleading.

The problem is taking the contrarian approach would lead you to believe that Fridays would represent opportunities to sell off, and therefore, good opportunities to sell call contracts in anticipation.

But logic would tell you the same.

The intersection of logic and contrarianism can’t exist and they certainly can’t be the same.

Given a recent factoid that I posted last week regarding the decided overall downward bias on Mondays, over the past 6 months, traders still stay long and instead of my crumb picking sold options expiring worthless on Friday, they’re saying goodbye to my portfolio as they transition into some nameless and faceless portfolio.

But there I go. Moaning again.

You don’t have to be lactose intolerant to know that neither the spilling of the milk nor the crying over it are worthwhile endeavors.

In the meantime, every talking head is once again warning of a melt up in stock prices.

Logic or contrarian approach? Which to apply to the consensus opinion?

I’m going to stick with the contrary approach and will look to sell other holdings into any strength that may pop up on Thursday.

I may not be able to “tell a book by its cover,” but I do know that sooner or later I’m bound to guess right.and maybe start to “milk  it for all it’s worth” once again.