Well we can try it again....I have gone to a 70% cash position, 16% Long (Mostly China), 14% short (using the usuals) and have opened up december volatility strips on the s&p 500 and Russell 2000....The strips are 3:1 ratio instead of the normal 2:1.... My bias is to the downside and I'm looking to take advanage of a spike in volatility as well as a falling market.... I left some money on the table this month, but the market looks to be getting irrational for the longs and I'm having trouble finding undervalued stocks with significant upside that is not allready priced in... FROM A PREVIOUS POST 11-17-06 03:00 PM Personally I would be selling all spikes and resistance levels for your personal stocks.....We are not in some crazy bull market where everything is moving up... ANYMORE....In fact I can show you about half of the s&p 1500 stocks (Large, Mid and Small) hitting resistance and pulling back over the last month....The pull backs have not been strong and hence the market index goes higher, but they have found tops and only rally on the extremely strong days.....Some broad market indicators suggest that the market has actually begun to correct over the past three trading sessions and I personally have continued to sell into this rally....The profit taking only makes sense to people who were buying in June and July, because they have incredible gains over the past few months...All the while the sheep are pushing their luck still hoping for the incredible gains in stocks that have moved straight up, but forgetting the fundamentals of this 4 year move...Personally I think the smart money manager are slowly getting out of positions at these levels and selling a minority of their positions to the sheep....Bottom line "If you are buying right now and plan on holding the position as an investment and your stock just hit a 26 week high over the last 20 days and is a small to mid cap stock that can't capitalize on a weakening dollar in 2007....Your upside is 12% for a six month holding period and your downside is 35%....Dumb statement I know, but looking at the broad market is the only way to get a grasp of what is going on....DOW @ 13000 is good only if you own some of the 30 companies in the DOW....s&p 500 @ 1400 is great, but what if you just got overweight small cap tech and software right now....Kind of missed the boat if you get my drift...Kind of missed the boat in most sectors if you get what I'm saying....Just be careful out there and own companies that can handle a real downturn in the market....Remember the PONZI story....It will come and it will be just as painful as May and June.....WHY? Global market will tell the tale again.....IE) India, China, Hong Kong, Brazil, Europe, etc....Money Managers are not idiots and having an index move in one direction since JUNE will bring in the profit taking at some point and hear me "loud and clear" when the money starts to flow out of global indexes it will be another panic selling situation across the globe...Some indexes are moving above a 40 degree angle...Can you say bubble?....Anyone who knows anything about index history will say the same story when index's move at this angle "BOOM TO BUST"....If we go another 3 month's top at this rate without any medium size correction....Then BUST some global event will cause this....Good luck getting out the day it happens... Of course once again this is a place where everyone is in and out all day long and nobody cares about longterm outlooks...Most people won't even hold overnight and I understand why...RISK TOLERANCE....It's actually quite smart at this point in the bull market....So go long, go short and follow the trend, but remember paper profits are just paper...Don't spend like it's real until it's realized... $COSTAverageMAN 11-17-06 03:16 PM Think about the big boys? Who sold the NOV. 1400 straddle....Can you say ca-ching....Or manipulation.... Vix near all time low, Monday we go lower is my best guess as they dump out of their positions and start working on their new Dec 1400 straddles (strips would be easier to make profitable) long that they bought for dirt cheap today and it's easy to get the VIX climbing and the market falling when you are dumping stock...I mean Tuesday one Man bought S&P 500 futures with 500 million and a 10:1 leverage and moved the index 14 points by himself....I know he drove it to a level where buy programs kicked in at 1389 but what does that say about efficient markets... edit: 1399.95 @ 3:35pm....Can you say greed!!! $COSTAverageMAN
Yeah, I'm increasing my china bet too. Dec 5th seems to be a bellweather date. Plan to take profits on that after february, will drop down to half where I am now. Holding onto my long india position as well, although I am more eager to get out of that.
Hello All....I hope everyone enjoyed the volatility as much as I....3:1 ratio Strips on the IWM and SPY....I hope my last post may of helped other investors save a little profit and possibly capitalize on a golden opportunity with a volatility play set for a sharp decline in the market.....And if you are really on top of your game you may of even pulled a quick percent or two with a dollar hedge.....The Bank of Switzerland was just the first to pull the trigger recently.....China gave everyone the worries and now you got the dollar hovering around 4 year lows.....The game is follow the leader....1st Cheney puts his 40 mil in Euro Bonds around the 2000 election and Russia proceeds to cut it's dollar exposure by half and the rest is history......The Great Bull Market.....What Wall Street doesn't want anyone to know is? Take the US dollar index daily values and the Closing values of the s&p 500 and put them in excel....Adjust the index for the devaluation in the dollar over the last 4-8 years (your choice pick a starting date...I prefer the dollar high over the last 8 years.....It's more dramatic) and chart your results.....Lets not adjust for Inflation (Gets complicated) and just cancel out the 2.1% annual inflation rate with the 1.7% annual dividend yield average of the s&p 500....Factor in account maintenance or capital gains tax and the Bear was just hibernating recently.... All in All money can be made and lost, but when all the factors are taken in to account the index investors should of just put their money with Cheney and bought those European Bonds!!!! Who would of guessed!!!! Vix from below 10 to 12 could be just the start of things to come.... Well today was a great day and I rarely get to capitalize on a falling market.... $COSTAverageMAN
Good calls. A few weeks ago I entered into some long euro and long jpy positions.. waiting for the jpy carry trade to unwind. Oh combined with usd weakness that will be -beautiful-. tried to buy vix calls on friday, but my limit order was too stingy. oh well.
Cost$- What do you mean by a 3-to-1 ratio strip? Is it long an out of the money call and short 3 more out of the money calls? Can you give an example for the S&P?
Buying 3 December 1400 puts for every 1 1400 december call bought.....Basically a volatility straddle with with extra puts.... a regular strip is buying 2 puts for every call (Bearish volatility play) a regular strap is buying 2 calls for every put (Bullish volatility play) $COSTAverageMAN
NEXT PLAY This sector is picking up nicely and I bet you will here about it more and more as the economy slows.....HEALTHCARE Black Monday gave you a great time to get defensive....HMO's were the first thing that came to mind.... HMOS---(UNH, WLP, HUM, CVH, HNT) From a T/A and fundamental setup have room to run.... ps.HNT has slow growth Steady Charts---AET, CI still just as cheap, but slow growth rates A little pricey----WCG, AGP (risk/reward not really here) HMOS---(smaller ones would be an extreme underweight)(SIE, MGLN, HS, MOH, ASGR) Now the NEXT best part of healthcare in 2007!!!! Hospitals (TRI, HMA, UHS, CYH, LPNT, MDTH, USPI) (Bigger is better and I would weight accordingly) AVOID---THC in my opinion unless you are owning them all Instruments/Supply---- Have had their day in the sun already, but I'm sure you can find some deals, but they may not participate in a tough market....CMED and QDEL may be worth a look soon, SIRO, NHWK, HOLX, KCI, WST and KNDL have been a good one to me... I think I mentioned SIRO in my Journal back in AUG...MR was a great IPO so far...Too many to go through!!!!....You could just play it safe with SYK or LH or ZMH or BAX or ACL..... Drug Distributors---MHS, MDRX, CVS/CMX, WAG (Bought Today)....ESRX if you like volatility....WMT even may be a play here....LDG and RAD for worst of breed ETF---IHF (for healthcare providers), IXJ (for global drugs), PBE (for Biotech), XLV (for the big companies... Good Liquidity), VHT and IYH almost the same as XLV but poor liquidity, Mutual Fund---MFHAX is a favorite here Nursing Homes/Outpatient Care (KND, BKD, HCR, DVA, LNCR, SRZ, ALC, RSCR, GHCI, ODSY, AMED, SUNH, FVE,AVCA) all put in a nice bottom on Tuesday....I would suggest the larger companies, but AVCA trades in the OTC and can really get moving HUMANA still cheap...Closing pennies below the high as the market sold off....My favorite down here $COSTAverageMAN
Happy new year everybody!!!! Just thought I would come back and update the Want To Share Journal....Instead of randomly posting around ET... The healthcare call has had many winners and some losers, but that is the market.....I built a small excel sheet to share the results of my last public sector call....The Excel sheet starts with the closing price of each stock on 11/30/2006 until yesterday.... And to the guy about Cramer....Yea I watch him everyday and listen to his radio show when I have time, but this call on healthcare was implemented in my portfolio around the same time as he was calling it out on TV.... Cramer thanks for the NFLX Short and BBI Long Pair trade BTW...Put on Long ago!!!! (still a good trade after the downgrades today IMHO) I plan on getting 2007 started with a bang and all I can say is Long Oil stocks (Or calls) and short Airliners (In the money Puts)....Put this trade in play today on airlines (after selling all airline positions today and oil stocks were bought on Thursday)... Holding Airliners into earning's season is just plain stupid when they have been the absolute best sector in the market over the last 6 months...Think about it...They are priced to perfection in my opinion and I would much rather hold single multiple oil majors at these levels and ride them into earnings instead.....RISK/REWARD trade for sure....Downside in oil stocks is nothing compared to the downside in Airliners right now.... Any opinions out there on this trade!!!! HIGH RISK.....or......NO BRAINER......Bring on the criticism $COSTAverageMAN