Usually, when I sell puts, I’m not that enamored of the possibility of taking possession of shares.
Really, all I care about, whether buying shares or selling puts is just how much income I can generate from the position and how much risk is associated with the income production.
When selling puts, I especially like being able to roll them over, just like has been the case recently with Cliffs Natural Resources, where I have some puts that expire next week and that have been rolled over since mid-December, or so.
During that time there were more than a few occasions at which it was looking pretty bleak, but as with most stock positions, if you can wait long enough the good becomes bad and the bad becomes good.
Sometimes, though, it does make sense to take possession. read more
After last Friday’s best gain for the year, the market is less than 0.5% from its all time high level.
When you get to those kinds of markets, one of three things is likely.
There’s plenty of evidence that shows that new highs beget new highs.
There’s also plenty of evidence that shows that new highs make traders nervous and they lead to profit taking.
It’s hard to go onto new highs if others are cashing in their chips.
Then, there’s always the possibility of treading water while most are just trying to see what the next guy is doing.
As all of this is unfolding, there’s reason to believe that the first possibility has already become true.
We tested and then surpassed the 20,000 level and on the way toppled record after record.
Lately, though, we’ve been treading water, but what we really haven’t seen is much in the way of profit taking.
If you were to listen to all of the talking heads, what we’re in store for right now is the Trump Correction that all expect to come after the Trump Rally.
I have no clue, but what I do know is that as I collect more cash, it’s getting harder and harder to find anything that seems worth buying. read more
At a tie that I really want to be conserving cash, I find myself doing odd things.
Saturday night and then again on Sunday, I actually thought about buying options.
In this case, that alone was pretty odd.
What wasn’t odd was that the thought was to buy S&P 500 puts.
They were really pretty inexpensive, reflecting the continuing belief that volatility was extinct and that the market was expecting to go higher and higher.
Well, long story short, I didn’t buy those options.
But I did spend money, even though that’s not so rare.
What was rare is that this morning, before the opening bell, I bought some shares of Under Armour, after it plunged on earnings and the news that its CFO was leaving.
What made that exceptionally rare was that by making that purchase before the opening bell, there was no opportunity to sell calls at the same time.
So that shares sat there naked. read more
Well, for a minute, anyway.
I did close 2 positions today, one for a substantial loss.
That was Joy Global, which for the longest time has been ready to close on a deal to be bought out.
That has really been dead money, but I kept thinking that maybe someone or somebody else would come along and sweeten the offer, especially as the economy was eventually going to improve in China.
But suddenly, there has been a lot of selling of those shares by institutional holders, so I gave up and took the cash.
The same for that EMC spin-off after the buyout from Dell.
That one, at least had a decent profit. read more
There are so many sayings and expressions around the concept of hope.
The most recent, and the one that was identified with a successful Presidential campaign, was “Hope you can believe in.”
“Keep hope alive,” was a rallying point of Jesse Jackson and chanted at some many venues.
“Hope is not a strategy,” is something that’s frequently said when it comes to investments.
For me, I was just hoping to get more trades done today.
I did keep the streak for 2017 alive by making a trade today, but there were so many that I wanted to see made today.
Why that matters is that my 2017 strategy has, thus far, been more of a “hit and run” one.
I want to sell as many calls as I can, especially on non-performing holdings, at whatever strike I can in order to generate some meaningful income revenue.
This week, following the end of the January 2017 option cycle, I have lots of those non-performing positions. read more