Buy BRKB (sell puts)

Buy BRKB via selling Jan 62.5 puts, stock around 75. I open a January position, am already short Dec 62.5 puts. Logic is the same, chart support plus stock buyback.

Long BRKB, SPY, TBT

Thanksgiving

Radio host Dennis Prager often talks about gratitude being the number one attribute that correlates to happiness. It isn't money, nor status, nor fame, that brings happiness. Plenty of folks have an abundance of any or all of those and still feel empty inside.

Thanksgiving is the holiday of gratitude, a time to count your blessings, to appreciate what you have. Be grateful, bless what you have and it will tend to multiply.

Let me take this post to thank all the readers, especially those that have been reading for several years. May all have a blessed and safe holiday.

4-0 for November and Buy SPY

Four winners, zero losers for the November cycle. All are short puts: BRKB, TLT and two SPY layers.

On Friday early during the trading day, I got filled on a sale of short SPY Dec 102 puts (a bullish move, or at least a bet against a crash). I am already short SPY Dec 99 puts. Going forward I am still clear of GLD, short bonds, cautiously long on stocks.

Long BRKB, SPY, TBT

Buy TBT (sell puts)

Buy TBT (2x inverse bond ETF) via selling Dec 18 puts. With the news background, U.S. bonds are getting a bump up. TBT 18 marks about the top of the bond market rally, though there is the decay in the 2x inverse fund.

I don't have much insight on the stock market smash on Wednesday. Obviously, my most recent sale of SPY puts were at a bad time. Sell a lot of puts, like I do, and it happens. Hopefully, not that often, though.

Long BRKB, SPY, TBT, TLT

Buy SPY (sell puts)

Buy SPY via selling Dec 99 puts. I open a December SPY position, with a low risk, way out of the money sale of puts. Again, there are multiple support levels in between current prices and the strike price. It would take a lot to cut through all that support and there is Thanksgiving and Veterans Day coming up to slow trading and reduce volatility.

This is another order before the open that fills early in the trading day. I don't get near the best price of the day, but by the end of the day, I am in the green.

Long BRKB, SPY, TLT

Buy BRKB (sell puts)

Buy BRKB via selling Dec 62.5 puts. Same arguments as before, chart support and a stock-buyback make a steep decline unlikely. BRKB in the 77 range.

Gold had a huge rally day. I make a bearish post about GLD and wow.

Long BRKB, SPY, TLT

Trading without live quotes and a Bearish GLD chart

Most of the time, I place an order to sell at the bid, or buy at the ask, and most of the time get a fill within seconds. The last few weeks I haven't had access during market hours. This means placing orders before the open. Market orders on options often get the shaft at the open. So I am trying to guess a theoretical option price based on the opening bid and ask indications, and the possible low and high for the day.

Trading without a live bid/ask quote has made me more patient, even more cautious. I haven't tried any spread orders or backratios during this time period.

I can make a quick comment on the GLD chart, it looks about as bearish as I have seen it in recent memory. I remain long term bullish on gold, so am reluctant to short it. Those without that bullish gold bias might take a look at the short side. If I were to take a short position, my choices tend towards a bearish calendar put spread, or a bearish vertical put spread. I dislike straight buying of puts, though there are pluses and minuses to each choice.

Here is the 6 month chart for gold (GLD @170.8 Friday). The modest rally off support, moving into resistance on lower volume looks like a text-book example of a rally ready to fail.

Hulbert: bear market rally

Mark Hulbert on Marketwatch writes about sentiment during this recent rally (link).

>>The unfortunate conclusion is that the Oct. 4 lows are likely to be broken.
<<

Too many stock advisers have been buying into the rally. That is the conundrum of the markets, when too many folks are on one side, the majority often ends up being wrong, especially at the turns.

Buy SPY (sell puts)

I place a limit order before the open to sell SPY Nov 107 puts, and get filled right at the open. I have a hard time seeing a scenario that crashes the stock market below the recent lows before November expiration.

Long BRKB, SPY, TLT

Trick or Treat? (ot: tablet post too)

I haven't been posting much. I was under-invested during this record rally in the stock market. The broad SPY is up about 20% off its lows at 107 in just a few weeks. Many traders missed the bull boat. That huge wall of worry was scaled and the market moved up. Some that missed out are writing angry missives about how it is a trick, that the fundamentals haven't changed. Well, how much did they change to drive the market down to 107?

I also missed this 5% gold rally off the lows, and 9% bond market move lower. I've been writing about October/November as the time to turn bearish on bonds. Looks like I waited too long to pull the trigger on establishing bearish positions (eg: long TBT or short TLT).

I am going to stray into an off topic subject, the buying of gadgets. There is a Best Buy commercial where a guy buys a 3D TV and then see's an ad for a 4D version. So it is with my new tablet, it is Android 3.2 and they just announced version 4.0. A person can always wait. My original plan was to buy one in September, but nothing offered for sale then was compelling enough for me to buy.

My new tablet is an Archos 80 G9 with an 8" screen. It feels like a steep learning curve for Android coming from Windows. Many times I throw up my hands trying to do what seem to me the simplest of things, or irritating bugs. No mouse, no keyboard, make for a very different interface. The main reasons I choose the Archos, are the 8" screen is about the perfect size for me, and the expandability. The 7" tablets are about 40% smaller in square inches, and the Ipads and other 10" tablets are about 30% larger. I made paper cut outs of each size of tablet, and the middle at 8" is the right zone for me. The Archos takes micro SD cards for more memory, and offered 3G expansion with a USB plug in. Unfortunately, I learned too late, that the 3G for the Archos only works in Europe and there are no current plans to have one for the U.S.

AMZN NFLX two horses down

Two of the glamor stocks of this bull market, Amazon AMZN and Netflix NFLX suffered huge declines today. NFLX has been limping along for months now. AMZN was near all time highs.

Amazon saw sales up big. The new Kindle Fire is rumored to cost $10 more than they are selling it for. Estimates are for five million of the units to ship before year end. That's $100 million in sales, causing an immediate net loss of $5 million to the bottom line.

Long term, it will help the company, but the stock was apparently priced too perfection and suffered. I was tempted to sell the Nov 180 puts this morning, thank goodness I did not.

I missed this big rally in gold.

Long BRKB, SPY, TLT

7-1 for October

Seven winners, one loser for the October option cycle. Winners include short puts on GLD, PFF, SPY, TLT (2 strikes) and separate short put backratios on GLD, and SPY. Loser was a SPY vertical put spread. I legged out of the backratios and verticals, so that added more risk. The backratios came in strong, 200% profit on the SPY, 400% on the GLD, basis the initial credit. Before folks get too excited, the margin requirements are a lot bigger than the credit so actual percentage gains on margin put up are not so exciting looking. Still, some good gains.

I am short puts on BRKB, SPY, TLT going forward. For the first time in a long time I don't have a GLD position. I danced close to the flame this cycle, as GLD was in my zone of 154 to 159. I did well to get out with 400%.

Long BRKB, SPY, TLT

Buy SPY (sell puts)

Buy SPY via selling Nov 99 puts. Another order before the open, another fill on the opening dip. Today I had better luck as the market rallied off the lows.

GLD gave me a bit of a scare with a big dip early, before rallying. I am still short Oct 154 puts and the low was in the 158 range. I don't have any November positions on GLD yet. I am skittish. It does not seem to be acting well.

Long BRKB, GLD, PFF, SPY, TLT

Buy BRKB (sell puts)

I place an order to sell BRKB Nov 62.5 puts before the open and it gets filled as the market declines. Unfortunately, the market kept declining. I am light on Nov positions so may add more stock market longs if today's steep decline continues.

BRKB has a buy-back as support.

Long BRKB, GLD, PFF, SPY, TLT

Unwind GLD (sell)

I sell my long GLD Oct 159 puts. This was part of a short put backratio. I am still short 2x GLD Oct 154 puts. I think GLD is headed a bit lower, but time is close to up with one week remaining until expiration to get below 159.

Long GLD, PFF, SPY, TLT

More SPY (buy)

I sell the last of my long SPY puts, the Oct 109 puts that were part of a short backratio 109/104. I remain short batches of SPY puts at much lower strikes 104, 95, 89.

My GLD short put backratio 159/154 is now slight negative delta. Max profit is at 154 on October 21, below 149 and I start taking on water.

Long PFF, SPY, TLT
Neutral GLD

Financial fasting

An off topic post for the weekend. A friend had this book, "The Power to Prosper," by Michelle Singletary. It lays out a 21-day financial fast and I quickly skimmed through it. Be warned that Singletary takes a religious approach, so it may not be for everyone. I won't link it so folks know that I am not getting any kind of kick back or referral fee.

I advocate a healthy, balanced approach to life. Like food fasting, too long or severe a financial fast can do more harm than good. However, like food, the vast majority of Americans could do a bit of financial fasting to reach a more healthy and balanced place in life. The person with the book, said she has done the fast several times after owning the book for a year. Overall, she had extremely positive things to say about the book, and the fasting program.

Other things I tend to advocate include a high savings rate, living below one's means, and being mindful of where a person spends their money. I tend to be a frugal person, and still found many suggestions in the financial fasting program that would be difficult to give up. For example, window shopping, even online window shopping, eating out at all, even cups of coffee, even if the guest of someone else, the giving of gifts and/or greeting cards that cost any money, are some things to give up during the financial fast. I would have a tough time with all those that I listed. One goal is to move away from linking spending or gift giving to happiness and fulfillment and friendships.

More than a few people say that government deficits are primarily a spending problem. I observe this with individuals as well, that focusing on their spending, their lifestyle, can bring a person to a healthier financial place.

One reason that wealth gets concentrated in such a low percentage of the population, is that about half the population spends all the money they make, no matter how much they make. Many go beyond that, and borrow and carry credit card balances and pay an extra 20% for the pleasure of consuming a few months earlier.

I like to do the opposite, do what now seems very old-fashioned, saving up before spending. I do the same with food, I plan to lose some weight ahead of the holidays, so I won't feel as guilty indulging during.

Unwind SPY (buy)

Sell SPY Oct 100 puts, this locks at least a minor loss on the 100/95 vertical put spread. I see little chance that SPY breaks 100 before Oct 21. I flipped to net negative delta (short SPY) because of the way the options moved. This unwinding move brings me back to slight positive SPY delta.

Long GLD, PFF, SPY, TLT

Ritholtz: 5 down months, then what?

Barry Ritholz has an interesting look at what happens to the stock market after five down months in a row (link). This time might be the worst of the worst, but even then -40% after a year is about the worse. For two months out, another -9% is the worst historical case and that was in 1974, one of the worst bear markets ever.

As I often write, corrections, bear markets do happen, however, it is rare where they go straight down.

Even with the data, I certainly wouldn't bet the farm on another -9% and SPY 100 holding. SPY is at the 110 support level right now. So many other markets have broken down, SPY may break down as well. Still, the data is intriguing and I may take a flyer on some new SPY short put backratios (hedged positions that are net long but with an explosive profit at lower price targets).

3rd quarter ends, Amazon Kindle Fire

The 3rd quarter ends with a thud for stocks worldwide. Down about 14% for U.S. stocks (SPY), down about 17% in Europe, 25% for Germany. Gold (GLD) up about 9% for the quarter, U.S. Treasuries soared up with TLT up about 25%, despite the S&P rating down grade.

I am very interested in the new Kindle Fire tablet announced by Amazon, and may purchase one. As for AMZN stock, with a valuation already over $100 billion, that particular tree won't grow to the sky. Apple and ExxonMobil at around $350 billion in market cap are the biggest companies, and can be thought of as a kind of an inhibitor as to how big companies can get. Once companies get that big, they make a lot of enemies, and growth becomes more difficult. Even maintaining streams of revenue can be difficult. So while I think the Kindle Fire is going to be a big seller for AMZN, it is difficult for a big company to have explosive growth.

I was in a decent position for this past week. My max profit is at 154 for GLD (currently 158) and 104 for SPY (currently 113) at October expiration. Bonds are about the only thing going up and I am making some bits of money from being short TLT puts. Of course, it could be better, and the GLD position has seen a huge drawdown as there is still a lot of time premium on my short puts.

For readers wondering why I am posting less, and trading less, it is a matter of time, schedules and priorities. Right now trading and posting are on the back burner and will likely stay there for some time.