Although it’s highly likely that my post sedation delerium would turn out a daily entry far more coherent than usual, I turned to the kindness of guest bloggers to preclude the chance of typing out some long held family secret.
Today’s guest blogger, Tony Vahl, may be known to many as the co-founder of the popular DailySkew.com, no stranger to an irreverent look at events pretending to be serious. An accountant by day, he finds the time to put numbers aside and focuses on letters and punctuation marks to the delight of his readership. Follow Tony on Twitter and help support a life giving cause
I am not an Options Trader. Never traded options in my life. I hope some personal eyewitness testimony will suffice.
I come at this as someone who saw the Housing Bubble bursting back in 2006, and felt like a lone wolf crying in the wilderness. Smiling real estate salesman kept telling me at the time, “Don’t worry. The market will hold firm. After
all, this is Florida.”
Don’t worry. Be happy. What could go wrong?
Two years later, I was told, “Buying a home now is like trying to catch a falling knife.” This time they were right. Even a broken clock is right twice a day. A $120k home I purchased four years ago is now worth half that. Unexpected medical bills have put an employed individual in a stable career and his family on the brink of foreclosure.
Anyway, since I’m not a trader, I figured I’d share with you what I’m seeing on the ground. What I see is change. Not just loose change.
I’m seeing stores going out business. Take Payless Shoe Stores (TIcker PSS), for example. They just can’t compete with Zappos, now wholly owned by Amazon.
Isn’t it funny that Zappos has an issue with the security of the credit cards of their customers after Payless announces store closings? It’s too late. It’s like that scene in Star Trek II, when Khan started the Genesis Wave. He hit the “Commit” button, and then there was no stopping it. You couldn’t even switch stations, the force was that powerful.
Once you’re in danger of losing your credit card number you had on Zappos, you’re stuck. There’s no turning back. All you can do is wait for the fallout and wonder where it will land. Just like the falling space debris that seems to becoming a regular occurence. There’s not much you can do besides hoping that it doesn’t land on your head.
Here’s the thing about change. We humans resist it. We do not like change. We want things to stay the same, but that’s just not happening.
If you’re among those resistant to change you can probably take some solace in knowing that the fact that it’s not happening won’t change.
I look at President Obama’s Hope and Change campaign from 2008 as an incomplete sentence. I think what he really meant to say was, “Let’s hope we can deal with all the change that’s coming.” Or, “I hope the pace of change slows down.”
That’s real hope, to deal with all the change.
Over the past year, I’ve noticed the aisles have become bigger at Wal-Mart. While this may be ascetically pleasing (I know, Wal-Mart and ascetics is an oxymoron), I see the wider aisles and think, “Less products.”
There are shortages on occasion. They are minor. You can shrug your shoulders and move on, but sometimes you just can’t find a specific product. You’ll run to Target, Publix, Walgreens, Dollar Tree, and you still can’t find it. It’s
like there’s been a run on Borax or your favorite sliced ham.
It’s like just-in-time delivery has become we’ll-get-it-to-you-when-we-have-time.
I was reading a blog post by Jeff Jarvis written at Davos, where he was attending the World Economic Forum’s “1% camp.” He concluded that with technology, you’ll see greater efficiency but fewer jobs. So, the question becomes what are people going to be doing for a living? I feel like this argument has been going on for awhile, but the pace of change has quickened.
Fewer jobs, jobless recovery, better economy, but the average Joe is not necessarily feel it.
Of course, I would argue there are plenty of new opportunities. For example, in the publishing industry, authors are skipping the traditional route and going straight to Kindle with their missives. If the masses like it, the author is
rewarded. No middle man.
It’s a brave new world. If you can build an audience, you can bypass the system.
Traditional jobs might be disappearing, but opportunities abound.
What does this mean for the Options trader? No clue, directly. Indirectly, I suppose this is like taking the temperature of a patient and using that data as a guide for how to proceed. The good doctors now how to read the thermometer,
and the good trader knows how to read the change.
TheAcsMan Comments while strung out on something:
I can’t begin to wonder how Borax and ham ended up in the same thought process, but it will bother me until my dying day. No explanation will ever suffice, that is until I bothered to look up the association. It’s almost enough to make me sign up for “Kosher Camp.”
The wider aisles at Wal-Mart line of thought got me wondering whether you “Ascetics” or “esthetics.” was actually the intent. Knowing the author’s sense of “skew,” I could make a case for both being oxymorons in the Wal-Mart universe.
Personally, I think the wider aisles are there to accommodate fatter shoppers, but to mask paucity of supply with the appearance of plenty may be a plausible explanation.
The argument about technolgy and jobs has been going around for at least 50 years. The initial position was that technology, robotics, automation etc.. would never threaten jobs.
People being people, they repsond to external events. Family sizes will get even smaller if economics dictates that be a prudent thing to do. Eventually the work force contracts, as does the unemployment rate. Supply and demand is one of the very few inviolate things in the universe. You just have to live long enough to ride out the cycle.
What does this all mean for options traders? The first clue comes from the interpretation of the 2008 Presidential campaign theme of “Hope and change.”
“I hope the pace of change slows down,” is an expression of the inherent calculus behind options pricing. A rate of change is a derivative, as are options. There is no tangible product. Just as hope is etheral, so too is an options contract.
I always think of the AIr Supply song from a generation ago when trading options.
“Making Money out of Nothing at All.”
The point is that change, just as pointed out, is always coming. In the world of stocks and options, you can count on change, you just can’t count on its direction at any moment in time. But, you can count on its bi-directional nature.
So you really don’t have to know how to read the thermometer to proceed. You just have to know that there’s change and its coming at you. Be prepared for it and the fat shopper plowing down the aisle for that last package of sale priced sliced ham.
A good lesson for life in general.
|Recent Trades||Security||Type||Action||Type||January 30, 2012||XLF||Option||STO||Weekly|
|January 30, 2012||XLF||Stock||Buy|
|January 30, 2012||MS||Option||STO||Weekly|
|January 30, 2012||FMCN||Option||STO||Monthly|
|January 30, 2012||FMCN||Stock||Added|
|January 30, 2012||GS||Option||STO||Weekly|
|January 30, 2012||GS||Stock||Buy|
|January 30, 2012||HAL||Option||STO||Weekly|
|January 30, 2012||HAL||Stock||Buy|
|January 20, 2012||MOS||Stock||Buy|
|January 30, 2012||V||Option||STO||Weekly|
|January 30, 2012||V||Stock||Buy|
|January 30, 2012||RVBD||Option||STO||Monthly|
|January 30, 2012||RVBD||Stock||Added|
|January 28, 2012||HAL||Option||Assigned||Weekly|
|January 28, 2012||GMCR||Option||Assigned||Weekly|
|January 28, 2012||AAPL||Option||Asigned||Weekly|
|January 28, 2012||MS||Option||Assigned||Weekly|
|January 28, 2012||MOS||Option||Assigned||Weekly|
|January 28, 2012||V||Option||Assigned||Weekly|
|January 28, 2012||BP||Option||Expired||Weekly|
|January 28, 2012||AXP||Option||Expired||Weekly|
|January 28, 2012||GOOG||Option||STO||Weekly|
|January 28, 2012||DE||Option||Expired||Weekly|
|January 28, 2012||NFLX||Option||Expired||Weekly|
|January 27, 2012||RVBD||Option||STO||Monthly|
|January 27, 2012||RVBD||Stock||Bought|
|January 26, 2012||FMCN||Option||STO||Monthly|
|January 26, 2012||FMCN||Stock||Added|
|January 26, 2012||MS||Option||STO*||Weekly|
|January 26, 2012||MS||Stock||Added|
|January 25, 2012||ZSL||Option||STO||Monthly|
|January 25, 2012||AXP||Option||STO||Weekly||January 25, 2012||ZSL||Stock||Added|
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