Old Dogs

At this point my new 14 month old puppy is neither a puppy, nor new.


But I think we’re already at the point that he’s incapable of learning new tricks.


LaszloI, on the other hand, am certainly not a young pup, as the very gray whiskers will attest, but I’ve learned the art of the Tweet.


My wife and sister would like me to learn the Art of Shaving, as my sister recently gave me a gift from a store by the same name.


I may not know when my unkempt appearance warrants a shave, but I do now know the differences between @, # and $.


So, as a veteran Tweeter, I’ve now posted about 29 times on the first day.


Too much?


The only thing is that I’m not certain if Tweeting is somewhat similar to the sound that a fallen tree makes in the forest. In that case, I may never find out if 29 Tweets was too much., but there were already 15 followers.


So far, I seem to have gotten a number of followers who all appear to share a common characteristic. Based on their profile pictures and poses, I would say that they probably spent significant amounts of time in Eastern European truck stops.


We’ll see.


But another new things was suggested by a past newsletter subscriber, and bless him, a purchaser of the OTP book, who asked why I didn’t include charts and tables in the blog to better illustrate the points.


Mt first thought was that charts and tables aren’t that humorous and they require more work.


Then, I also remembered that my wife told me last night that she was funnier than I was.


Hmmm.


So, today I tweeted that while Goldman Sachs was being further bitch slapped by the Senate, it’s price fell about $4 in the opening minutes. That presented a nice opportunity to pick up shares and sell the $155 call options, that happen to expire tomorrow. The net on the transactions would be about $0.80 per share. Granted, that’s only 0.5%, but still, not bad for less than 2 days, with very little additional risk.


So let’s give it a try. Here’s the chart


GS Chart


You know that I’m not a huge fan of technical analysis, but when a solid company drops like that, without real substantive news, it’s often a good opportunity to jump in.


In this case, the options premiums were:


GS Options premiums


See? I told you these weren’t very funny.



Who knows? Maybe my wife was right. After all, , she did turn out to be right about slavery and heroin.


By the same token, JP Morgan took another hit today as well and I think, represents a good opportunity to pick up shares on the cheap.


Same with Mosaic, but I’ll be damned if I’m going to include more charts today. I’ve seen enough of their somber sorry statistics.


Yeah, let’s see if she’s as able at artful alliteration  as am I.



Now, normally I  wait until the end of the day to compose the blog, but I was so excited by learning the Tweeting trick that I just couldn’t wait any longer.  Were it not for the fact that I have to stay away from salt, I would have shared one of Laszlo’s chicken jerky snacks with him.


But then, I also realized that I should wait to celebrate until I see how that Goldman recommendation works out.


There’s always a new trick to be learned tomorrow.

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Rip Van Winkle

At some point, even Rip Van Winkle wasn’t going to return from that final sleep.


But here I am, 9 months later and not a single blog post.


Not quite the 20 years that Van Winkle allegedly slumbered away, but based on my life expectancy, still, a pretty big portion.


Actually, I dreamt that I wrote a book.


My publicist tells me that while I was gone, people now Tweet and Poke..


And so, he strongly suggests that if I want to push sales of the OTP Book, I need to Tweet and Poke.



So I started slowly. Figuring that I could get into less trouble by Tweeting, until he explained to me what those actually meant.


So now I am @TheAcsMan and I’m being told to get a moniker for all of the friends that I really would rather shun, but now must Poke and be poked.


I spent the day in Hershey, Pennsylvania yesterday. It reminded me a little of the time that Ned Flanders and his kids moved to the town that made the Hummel figurines. It was as idyllic as he had imagined it would be and somehow, it became maddening in its perfection.


Hershey looks idyllic. I wonder?


I spent about 4 hours driving yesterday, but not before making my 2010 SEP-IRA contribution, just in time for taxes.


 Now, with this new piece of change sitting in  the account, readers of the OTP newsletter, or those smart enough to have already purchased the book, and yes, there are some of those, can probably guess what I did.


RIverbed Technology was an old favorite of mine, but I haven’t owned it since about $28.


So now I own it.


In fact, I did something that I don’t usually do, but the money was really burning a hole in my pocket.


I spent the entire amount on RVBD and I bought all of the shares in one chunk.


That in itself wasn’t bad, but as I started my drive, with SmartPhone using the E*Trade app and my netbook logged in to E*Trade, I just  just watched RVBD tumble about $2.


I know, you’re thinking how “uncool” I am, because I don’t have an iPad.


Listen, there are lots of reasons that I’m not cool. Just add that to the list.


OK. I know that there are other readers that are aghast at the safety concerns of being so plugged in while driving.


Eh, what’s life insurance for then?


But it got worse. I had left the house without being able to get my sell order for the $33 April call option executed. Again, a broke a cardinal rule, in that I got hung up over a penny or two between bid and ask.


As I was heading home by 3 PM, things hadn’t gotten better, with the Dow still down over 100 points and RVBD leading the retreat.


So it came as a little surprise that in the after-market, what should I see, but RVBD move up about $5 from its close on an unexpected announcement  a week ahead of earnings.


With the excitement of being able to get a second chance at selling the call options, but now at $35.


With 2 days left until options expirations, I hope my shares get assigned. Then I promise I’ll follow my own rules.


I did take the opportunity to buy back my $80 Mosaic contracts. With a cost basis of about $76.40, I netted about $1.20 on the call contracts. I’m hoping for an upward move tomorrow, as Mosaic came back from down $1 to even, late in the session and then selling $77.50 call options.


That’s what the milking is all about.


Speaking of which, if I was still writing the original Option to Profit Newsletter, I would be putting out a buy signal on Goldman Sachs at $160.15, with the sale of an April 160 call option at a premium of $1.38.


Although I don’t currently own any Google, it announces earnings tomorrow. Older readers may remember some of my Google rants. I personally am very reluctant to pick up shares right before earnings announcement. Fortunately, I don’t have any spare cash right now. But if I did, I would purchase Google at $576 (give or take) and sell a $580 call option at an $11.60 premium.


Google usually acts explosively when they announce earnings, always on the first Thursday or earnings season.


If you look at the historic price action on the few days before earnings are announced, they seem to be in the direction opposite of where Google goes after the announcement.


Most recently, despite a small price climb today, Google’s action has been decidedly negative.


I think it will go up nicely after hours on Thursday. If I’m right, an shares get called, you would have a $1500 profit for 2 days.


Or not.


If I am wrong, Google typically goes down between $30 and $40 and then recovers about 50% or more of the retracement in a week or so. At that point, you would strongly consider selling May Google calls.
I’ve never owned more than 100 shares of Google at a time, but it is a great stock on which to repeatedly sell and then buy back option contracts


If you were a subscriber, you know that I would usually give 4 or 5 short term trades on the Wednesday before expiration, but without the explanations.


I’m too tired to do that, but you know what to look for.


Wake me up in about 19 years. Maybe a gentle poke would be sufficient.

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Collecting Crumbs

 

It’s that time of the month again.

No, I’m not being visited by Aunt Flo, as the euphamism would go, if indeed it were germane.

CrumbsNo, it’s the end of yet another options cycle in just a few short days. Time to see if there are any crumbs left out there just waiting to be taken. And you do have to act quickly, because before you know it those crumbs get smaller and smaller, before they disappear entirely.

I suppose that since I now try to find as many weekly options opportunities as possible, that third Friday of each month has lost a bit of its significance. Now its more or less like any other Friday.

I’ve never had a visit from Aunt Flo, but I can’t imagine that her dropping by on a weekly basis would be very good.

In a way, I guess that’s as sad as when you know that Aunt Flo won’t be visiitng anymore. Fortunately, that single long hair on my chin that popped up after Flo disappeared is obscured by my full beard.

By the same token, most people I know no longer deal in euphamisms, anyway. They get right down to brass tacks, no sense beating around the bloody bush.

Hmm, now I’m not certain if the preceding itself was a euphamism for something, but no matter, I just like using uniquely British adjectives.

Since options premiums keep me afloat, I have a need to trade, but times like these offer the biggest dilemmas. Those times are when I have shares that are at a paper lss and haven’t had option premiums written on them for the most recen sycle, whether weekly or monthly.

Holding on to so many positions that are significantly below their purchase prices, it’s hard to justify trying to optimize options premiums by writng near the money contracts when their assignment would result in meanigful capital losses.

Although I always check my spreadsheets to see how much in accumulated premiums each position has captured, I still have a reluctance to take the loss by selling a near the money option, even when it is mitigated or even fully offset by those premiums.

I’m not beyond rationalizing my actions, though.

But when you see the clock ticking away on the one hand, you also see the possibility of that silver lining in depressed stock prices, or at the very least the lack of support in silver prices, as I sometimes own unhedged shares of an UltraShort Silver ETF.

Will there be some good news coming out of the European Union sending our markets for a nice climb? I sure wouldn’t want to miss out on recouping some of those paper losses, but those crumbs, those 0.5% options premiums, do I really want to leave those on the table?

The answer to those questions are “who knows” and “not really”

The full answer to the latter question is actually “not really, but I don’t want to feel like a schmuck”.

But you do have to eat, you can’t really let pride get in the way. As small as they may be, those crumbs can add up.

And so, in a measured reaction to a meandering day, I often take the opportunity to scrape some last remaining crumbs, by seling options with just a day or two left until their expiration.

I want those premiums, even if their just a matter of pennies.

Pennies count.

The risk you take when taking crumbs, trying to milk every last penny out of an under-performing position is that there will be a wild, completely unexpected explosion to the upside in the hours that remain on the contract.

Opportunities potentially lost. That ends up being the performance metric, but since I don’t harbor regrets, I also rarely learn lessons. You can fool me over and over again as long as those premiums add up and losses have some strategic value in reducing tax liability.

When I did add the crumbs up it was worth the risk, given the reward and the need to be able to feed Laszlo the Dog.

It’s either crumbs or go back to work, not to mention the shriveled carcass of a wiener dog.

Hmmm. Weiner dog.

If anyone reading this is old enough to remember Bob Denver’s character, Maynard G. Krebs, you would know my reaction to the very thought of “work”.

So wherever and whenever you can get those crumbs, get them.

Tomorrow? Who knows what tomorrow brings. New rumors, maybe some actual news, maybe not.

No matter. The week always ends in a few days and a whole new world of opportunities comes along.

And with each week you can hope for the whole loaf and gladly take the crumbs, too.

  

  

 

 

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For Reformed Broker

 

Springsteen in Concert – Buddy Holly’s Rave On

Springsteen in Concert – Not Fade Away/She’s the One/Backstreets – Medley 1977

For Marek Fuchs – Thunder Road (Capitol Theater 1978 version)

And for his visual and funny bone needs, The Marx Brothers:

Duck Soup

Animal Crackers

A Day at the Races

A Night at the Opera

A Night in Casablanca

The Coconuts

Patience. These are large files and may take a while to stream to your mp3 player

 

 

Return to “What Buddy Holly Teaches Us”

 

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