I neither understand bonds, nor bondage.
Maybe it’s just the fact that I’m not really wired to think in terms of inverse relationships.
Or any relationships for that matter.
Although, maybe if I understood bondage better Sugar Momma would change her opinion about my understanding of relationships.
I do better with correlation. For example, I do understand that over the past couple of months, whenever Federal Reserve Chairman Ben Bernanke has spoken, it was a clear opportunity to make money by buying gold or silver before he spoke. Today was no different.
In the case of bonds (and currencies) I get confused thinking about whether I would want values going up or down. Just way too much thought seems to be necessary. Besides, I still have that belief that bonds are for the feeble and infirm and need to be held for a long time.
I have the attention span of a gnat and maybe the life expectancy, as well, so I really don’t want to be overly involved with anything that’s going to require me learning its name.
It used to be that if you held onto something for a long time, that was a good sign. You held onto winners and cut your losers.
Although I don’t understand inverses, I do just the reverse.
For me, if there’s something sitting in my portfolio for much more than a month or two, there’s a pretty good chance that it’s lost in value, as otherwise the shares would have been assigned away from me.
I’ll likely be holding on to these Barclays Short Term VIX Futures ETN for quite a while, as an example of how my losers and I spend more quality time together than I do with my winners.
They’re like young birds. I set them free, but can’t wait for them to stumble and come back home, like MolyCorp.
It is entirely possible that my progressively enfeebled mind may make me eligible for bond ownership, but not its understanding.
On the other hand, bondage presents me with an entirely different issue. There’s the problem of knowing at what point pain no longer equals pleasure. But to begin with, the whole concept just doesn’t really compute for me.
It was the lack of computing that had me handcuffed this morning and I didn’t enjoy it one bit.
Expecting about 25% of my portfolio to be in cash this morning due to assignments of calls and expiration of puts that I had sold, I was surprised to see far less as I loaded coal into the hopper and fired up the trusty computing station.
I checked my Alerts to see whether some anticipated assignments had never occured, as that was the case with some of my contracts last week.
But sure enough, everythng went through as I had thought.
So I called my “Premier Team” and asked in a polite way “Where the f**k is my money?”
The answer was that I was placed on a 90 day trading restriction, that would prevent me from trading with unsettled funds.
The pragmatic meaning of that was that I would have to wait three days for the trades made as result of share assignment to settle, before the funds would be available for trading.
That felt like a lash across my back.
For your listening pleasure, I refer you to this classic song by Tom Lehrer, “The Masochism Tango.”
Leave it to a Harvard professor of mathematics to understand relationships.
Now I do understand the concept to “Free RIding” having written about it in “Option to Profit,” following such a restriction that was placed on me about 4 years ago, when I was just getting started.
These days I’m pretty attentive to not violating those regulations, sonce I like the opportunity of trading and not waiting.
So when I was told that was the reason, I went through all of my trades for the previous week and couldn’t find a single one that could have made me an SEC trading felon.
These days people occasionally ask me what it is that I do.
When I tell them, invariably the response is “Oh, you’re a day trader.”
I don’t bother trying to correct them, because I ike the aura of being a “bad boy.”
Except that I’m anything but.
It took about 90 minutes for my Premier Team to get back to me with the news that they had made a mistake on my account and that the unsettled funds were available for trading.
As it was, there wasn’t much reason for me to get into an umbrage mode.
With the market following Bernanke up this morning it’s not as if there were any good bargains to be found among my list of “Old Reliables,” and I try very hard not to fall for the mental trap that creates FOMO.
I had my script from this week’s “Weekend Update” to guide me, but as it was, not only was I handcuffed, but the prices weren’t terribly appealing.
Eventually, I did follow through with my entire game plan, with the exception of picking up shares of Dow Chemical. But I still have tomorrow, as the ex-dividend date is on Wednesday. Hopefully it will get to a price that would make it less likely to be assigned away, so that I could pocket the premium and the dividend.
That’s where the piggy part kicks in. I understand the greed part of wanting to get everything I cn out of those shares, but I still don’t get the chains.
We’ll see. I might learn to like it yet.
I bought back Mosaic, but sold the $57.50 calls, despite getting shares at about $58.10. Even factoring in the capital loss on shares, if exercised by this Friday, it would represent a 1.5% return.
With Mosaic reporting earnings on Wednesday and everyone talking up the heavy call volume in the $60+ range, why not think in the reverse?
I also had the opportunity to repurchase the ProShares Energy ETF at much lower than I had the shares assigned just a week ago and without thinking just sold a weekly call on those shares.
I was made not to think. It increasingly suits me and soothes me.
To show that I still retain an open mind, I did venture to the more seedy part of our community this weekend and purchased one of those suits that may be utilized in some of those bondage rituals.
We’ll see whether it soothes me, but I’m still skeptical in that regard.
In the meantime, the handcuffs are off and I’m back to my more conventional existence just sitting, watching and pressing a keyboard button or two.
But, I’d be less than honest if I didn’t admit that I’m somewhat curious as to how I’d change my behaviors if the handcuffs were on.
I wonder what my Premier Team is wearing.