Monday, December 3, 2012

NBR offers opportunity for the patient

In our book, Option Wizard® Trading Method, we propose the following:  put fundamentals first to give yourself an edge, then follow with technical analysis for timing purposes, then options analysis.  This sort of approach can do quite well with a mildly undulating stock such as NBR.

With a book value of $20+, NBR trades in a band from about 13 to 16, plus or minus -- thus giving the investor the "margin of safety" that Graham-Dodd-Buffett wisely appropriated for themselves.  With a program of selling puts when the stock declines, even taking delivery, then selling calls as the stock rises, one can do quite well.  How "well" is "well?"  It's not overly difficult to generate 20% or so per year returns, at this rate.  That's 20x what the money markets are paying, without taking an outrageous amount of risk.

Can you lose?  Yes, NBR, like every other stock out there can plummet to levels never dreamed possible.  Could it increase to book value or beyond?  Yes.   Appears one big buyer thinks so, and has put his or her money behind the idea, the real show of faith.

A few days ago, CNBC ran this item (source:  OptionMonster):

Nabors Industries has been holding long-term lows, and one large buyer is positioning for a gradual rebound.

OptionMonster's trade scanners detected the purchase of 5,000 January 2015 20 calls for $1.70 yesterday. The volume dwarfed the strike's open interest of just 53 contracts at the beginning of the day, so this is clearly a new position.

The calls lock in a $20 entry price in the stock in the next 25 months. Those options will increase in value if the shares rise, potentially resulting in significant leverage relative to the underlying shares.

Nabors shares rose 2.9 percent to $14.20 yesterday and has lost 18 percent of its value so far in 2012. The energy driller has managed to stay above its lows from earlier in the year, which could be leading some traders to expect a rally in the belief that it's at support.

Yesterday's call buying dominated option activity the name, which typically sees volume of fewer than 1,200 contracts per session. Calls outnumbered puts by 5 to 1.

—By CNBC Contributor David Russell

That's three years hence for six or so points of move.  Meanwhile, a patient and agnostic posture of selling both puts and calls, either sequentially with overbought/oversold readings, or together, and acquiring stock at lower prices, selling (if called), at higher, may prove profitable.

Many options strategists prefer this approach to "delta-neutral" strategies which are ever-so-appealing on paper and ever-so-difficult to realize profits with in the real world.

Friday, November 2, 2012

MARKET MENTORS

New!   MARKET MENTORS (2012).  Surveys the burgeoning field of market mentors, their methods, strategies, and what their students say. 

 

This is a must read before you plunk down your hard-won cash. This new cottage industry has been taken up by brokers, small companies and one-man shops. 

 

Emphasis on options education, which started some 20 years ago, gained widespread interest some 10 years ago, and grown steadily since then. 

 

This new book surveyed the field initially several years ago, and then again in 2012, to catalog changes. The consummation of hundreds of hours of research, MARKET MENTORS covers some 21 programs whose fees range from free to $25,000, from major brokers and institutions, to one man shops, and all points in between. 

 

Conclusions? As with other professions, there is a vast range of approach from mentor to mentor. While a newcomer to markets and options can benefit from mentoring, the author recommends: study the field, then ask questions. And then be prepared for hard work, lots of it. 

 

Trading is not an easy way to earn money, those who tell you it is should have one mark against them from the outset. This book will put you way ahead of the curve, and save costly errors. More info.  Buy direct ($23.95, includes shipping) from publisher now or Amazon or Kindle ($25.05). 

Sunday, October 7, 2012

Amazon category best seller



Checking our Amazon page we found that our new title is climbing the best seller charts in its category.

Amazon Best Sellers Rank: #179,040 in Books (See Top 100 in Books) 

#63 in Books > Business & Investing > Investing > Options 

We produced it to make a difference to your finances.  Options trading is a competitive business, much more difficult than some convey.  This volume presents the stories of the 10% (or less) who succeed, and exactly what strategies they use.  Also includes information on other aspects of the options world.  Many pay hundreds or thousands for substantially the same information.  Priced right, you pay just $14.95.

More info. While you're there, give a look also to its companion publications, MARKET MENTORS and Option Wizard Trading Method.  The former surveys some 20 firms who teach options and trading, from one man to large brokerages.  We also give free sources of education.   In depth, it weighs in at 300 pages.  The latter presents a directional approach to options trading:  fundamentals, technical analysis, options analysis.  Highly recommended by some of the top figures in the options world.  More......

Wednesday, September 5, 2012

Follow-up gold: 38 days, +4.6%

We posed the question some six weeks ago, "was gold breaking out?"  The technical structure of the market seemed to be saying so.

We said:  Gold still chops, but commercials get "less short" -- is a breakout forthcoming in the fall (when gold is seasonally bullish)?

Here we are, some 38 days hence, Wednesday, September 05, 2012, writing these words to you.  Spot gold crossed 1698 tonight, according to kitco.com, about $76 higher, or 4.6% higher in those 38 days.  More to follow?

Postscript 5:31 AM, Thursday, September 06, 2012:  overnight, gold futures came within a dime of 1715.....

COT

Thursday, August 2, 2012

No QE3 until after Nov. 6 now....

Thoughtful analysis by Gary Dortsch. 

Sideways markets in spite of Iran, Syria, Europe, et al?

Wednesday, August 1, 2012

Gold (still) chops....

Gold still chops, but commercials get "less short" -- is a breakout forthcoming in the fall (when gold is seasonally bullish)?;


39.10 1623.60 7/27/12                 136,245
-4.80 1584.50 7/20/12                 158,819
1.70 1589.30 7/13/12                 152,766
-12.90 1587.60 7/6/12                 166,637
27.80 1600.50 6/29/12                 144,160


Stay tuned...

Monday, July 2, 2012

Gold chops

"Look for higher prices" we proclaimed in our last post, using Option Wizard® Trading Method Gold as our guide, i.e. COT net short (commercials)..

Mea culpa.  We ekked out a higher price, yes, but the real action was chop.


6/29/12 1600.50 27.80      144,160
6/22/12 1572.70 -54.80      163,691
6/15/12 1627.50 32.70      158,790
6/8/12 1594.80 -26.90      156,122
6/1/12 1621.70 48.70      130,709


Prices tend to move higher in the fall season;  perhaps we have another 60 days of "chop" to go here before the stalemate is broken.  The deflationists, however, it should be pointed out, are predicting lower prices.  Just as vehemently, the gold bulls are talking higher.  Hence, the "chop" goes on.....

Friday, June 1, 2012

COT net commercial shorts down to 130,709; gold explodes to upside

Dramatic gold move today (+$62) presaged by usually reliable COT indicator: comm'l net short recent low of 130,000 (i.e. the major producers dampened their selling as gold drifted into 1500s.  Look for higher prices to follow):


1621.70 48.70 6/1/12      130,709
1573.00 -17.20 5/25/12      135,598
1590.20 10.00 5/18/12      138,917
1580.20 -64.50 5/11/12      151,455
1644.70 -19.10 5/4/12      178,003
1663.80 21.00 4/27/12      167,237
1642.80 -14.40 4/20/12      176,091
1657.20 25.20 4/13/12      171,049
1632.00 -37.20 4/6/12      177,464
1669.20 5.50 3/30/12      185,076
1663.70 4.30 3/23/12      166,138
1659.40 -52.90 3/16/12      191,688
1712.30 -0.20 3/9/12      200,208
1712.50 -58.90 3/2/12      245,351
1771.40 48.30 2/24/12      229,302
1723.10 4.20 2/17/12      209,408
1718.90 -6.50 2/10/12      221,072
1725.40 -12.10 2/3/12      209,862
1737.50 70.90 1/27/12      179,768
1666.60 29.40 1/20/12      172,976
1637.20 20.60 1/13/12      166,574
1616.60 51.60 1/6/12      161,843

Friday, May 18, 2012

Commercial net short still lower


                138,917


Gold $10 + from one week ago.
 
Gold bottoming here.  Or so it would appear.

Friday, May 11, 2012

What's next for gold? Here's one indicator

Lowest hedge level by commercials since --- gold was $895, 3 and 1/2 years ago.  Column to farthest right is net commercial contracts short:


-64.50 76.39%       (26,548) 1580.20 5/11/12                 151,455
-19.10 83.59%        10,766 1644.70 5/4/12                 178,003
21.00 85.73%         (8,854) 1663.80 4/27/12                 167,237
-14.40 83.38%          5,042 1642.80 4/20/12                 176,091
25.20 84.99%         (6,415) 1657.20 4/13/12                 171,049
-37.20 82.18%         (7,612) 1632.00 4/6/12                 177,464
5.50 86.33%        18,938 1669.20 3/30/12                 185,076
4.30 85.72%       (25,550) 1663.70 3/23/12                 166,138
-52.90 85.24%         (8,520) 1659.40 3/16/12                 191,688
-0.20 91.14%       (45,143) 1712.30 3/9/12                 200,208
-58.90 91.16%        16,049 1712.50 3/2/12                 245,351
48.30 97.74%        19,894 1771.40 2/24/12                 229,302
4.20 92.35%       (11,664) 1723.10 2/17/12                 209,408
-6.50 91.88%        11,210 1718.90 2/10/12                 221,072
-12.10 92.60%        30,094 1725.40 2/3/12                 209,862
70.90 93.95%          6,792 1737.50 1/27/12                 179,768
29.40 86.04%          6,402 1666.60 1/20/12                 172,976
20.60 82.76%          4,731 1637.20 1/13/12                 166,574
51.60 80.46%         (2,089) 1616.60 1/6/12                 161,843
-40.00 74.70%            (622) 1565.00 12/30/11                 163,932
7.50 79.16%       (21,663) 1605.00 12/23/11                 164,554
-117.50 78.33%       (15,283) 1597.50 12/16/11                 186,217
-30.30 91.44%          7,955 1715.00 12/9/11                 201,500
56.80 94.82%          1,132 1745.30 12/2/11                 193,545
-30.50 88.48%       (11,750) 1688.50 11/25/11                 192,413
-54.00 91.89%          7,228 1719.00 11/18/11                 204,163
24.00 97.92%        14,535 1773.00 11/11/11                 196,935
4.60 95.24%        14,286 1749.00 11/4/11                 182,400
105.70 94.72%          8,961 1744.40 10/28/11                 168,114
-41.30 82.92%         (9,325) 1638.70 10/21/11                 159,153
28.00 87.54%          3,727 1680.00 10/14/11                 168,478
27.20 84.41%         (1,932) 1652.00 10/7/11                 164,751
-22.20 81.37%       (30,945) 1624.80 9/30/11                 166,683
-162.60 83.85%       (12,840) 1647.00 9/23/11                 197,628
-49.80 102.00%       (17,246) 1809.60 9/16/11                 210,468
-22.50 107.56%        10,359 1859.40 9/9/11                 227,714
68.20 110.07%       (13,081) 1881.90 9/2/11                 217,355
-32.70 102.46%       (18,411) 1813.70 8/26/11                 230,436
101.20 106.11%            (359) 1846.40 8/19/11                 248,847
86.90 94.81%       (38,428) 1745.20 8/12/11                 249,206
33.40 85.11%          4,661 1658.30 8/5/11                 287,634
22.50 81.38%        19,159 1624.90 7/29/11                 282,973
8.30 78.87%        19,565 1602.40 7/22/11                 263,814
50.10 77.95%        42,247 1594.10 7/15/11                 244,249
57.70 72.35%         (6,753) 1544.00 7/8/11                 202,002
-13.30 65.91%       (42,492) 1486.30 7/1/11                 208,755
-37.90 67.40%        13,818 1499.60 6/24/11                 251,247
5.00 71.63%       (10,255) 1537.50 6/17/11                 237,429
-9.80 71.07%          7,176 1532.50 6/10/11                 247,684
6.80 72.16%        23,271 1542.30 6/3/11                 240,508
22.00 71.40%        10,288 1535.50 5/27/11                 217,237
19.80 68.95%       (14,632) 1513.50 5/20/11                 206,949
1.00 66.74%       (18,521) 1493.70 5/13/11                 221,581
-73.00 66.63%         (8,892) 1492.70 5/6/11                 240,102
60.70 74.78%       (17,554) 1565.70 4/29/11                 248,994
18.60 68.00%        12,860 1505.00 4/22/11                 266,548
11.50 65.92%         (4,977) 1486.40 4/15/11                 253,688
46.30 64.64%        17,896 1474.90 4/8/11                 258,665
-1.60 59.47%        15,970 1428.60 4/1/11                 240,769
10.50 59.65%          4,645 1430.20 3/25/11                 224,799
0.20 58.48%       (27,310) 1419.70 3/18/11                 220,154
-10.00 58.46%         (3,132) 1419.50 3/11/11                 247,464
20.90 59.57%        18,790 1429.50 3/4/11                 250,596
19.50 57.24%        13,180 1408.60 2/25/11                 231,806
33.20 55.06%          8,715 1389.10 2/18/11                 218,626
7.00 51.36%        16,714 1355.90 2/11/11                 209,911
11.00 50.58%         (4,286) 1348.90 2/4/11                 193,197
-4.00 49.35%         (8,988) 1337.90 1/28/11                 197,483
-17.20 49.79%       (18,593) 1341.90 1/21/11                 206,471
-10.50 51.71%       (29,518) 1359.10 1/14/11                 225,064
-51.60 52.89%         (5,188) 1369.60 1/7/11                 254,582
37.20 58.65%          7,962 1421.20 12/31/10                 259,770
8.50 54.49%       (16,327) 1384.00 12/24/10                 251,808
-11.60 53.54%       (10,538) 1375.50 12/17/10                 268,135
-21.40 54.84%          8,204 1387.10 12/10/10                 278,673
44.50 57.23%          6,576 1408.50 12/3/10                 270,469
11.80 52.26%         (1,015) 1364.00 11/26/10                 263,893
-16.20 50.94%       (26,045) 1352.20 11/19/10                 264,908
-25.80 52.75%        14,341 1368.40 11/12/10                 290,953
36.10 55.63%         (5,823) 1394.20 11/5/10                 276,612
30.40 51.60%       (10,647) 1358.10 10/29/10                 282,435
-39.20 48.21%         (6,940) 1327.70 10/22/10                 293,082
21.00 52.58%             524 1366.90 10/15/10                 300,022
28.50 50.24%         (3,242) 1345.90 10/8/10                 299,498
20.40 47.06%        10,432 1317.40 10/1/10                 302,740
22.70 44.78%            (631) 1297.00 9/24/10                 292,308
27.60 42.25%          5,259 1274.30 9/17/10                 292,939
-1.00 39.17%          3,119 1246.70 9/10/10                 287,680
11.80 39.28%        20,261 1247.70 9/3/10                 284,561
8.40 37.96%        14,730 1235.90 8/27/10                 264,300
12.10 37.02%        18,590 1227.50 8/20/10                 249,570
7.65 35.67%          8,951 1215.40 8/13/10                 230,980
25.65 34.82%         (5,526) 1207.75 8/6/10                 222,029
-6.20 31.96%        11,891 1182.10 7/30/10                 227,555
-2.50 32.65%       (32,684) 1188.30 7/23/10                 215,664
-18.80 32.93%            (794) 1190.80 7/16/10                 248,348
-2.10 35.03%       (40,814) 1209.60 7/9/10                 249,142
-42.70 35.26%          1,040 1211.70 7/2/10                 289,956
-2.60 40.03%          9,972 1254.40 6/25/10                 288,916
30.10 40.32%          5,367 1257.00 6/18/10                 278,944
9.50 36.96%          5,954 1226.90 6/11/10                 273,577
1.40 35.90%            (756) 1217.40 6/4/10                 267,623
39.00 35.74%       (11,365) 1216.00 5/28/10                 268,379
-57.80 31.39%         (2,900) 1177.00 5/21/10                 279,744
25.60 37.84%        11,058 1234.80 5/14/10                 282,644
30.90 34.98%          6,064 1209.20 5/7/10                 271,586
23.10 31.53%          8,126 1178.30 4/30/10                 265,522
19.70 28.95%         (6,088) 1155.20 4/23/10                 257,396
-25.50 26.75%        18,578 1135.50 4/16/10                 263,484
34.00 29.60%        37,215 1161.00 4/9/10                 244,906
19.20 25.80%       (16,132) 1127.00 4/2/10                 207,691
1.20 23.66%       (18,472) 1107.80 3/26/10                 223,823
4.00 23.53%         (9,492) 1106.60 3/19/10                 242,295
-29.40 23.08%             250 1102.60 3/12/10                 251,787
15.30 26.36%        13,493 1132.00 3/5/10                 251,537
-1.00 24.65%        18,166 1116.70 2/26/10                 238,044
26.50 24.77%          6,451 1117.70 2/19/10                 219,878
25.90 21.81%       (31,152) 1091.20 2/12/10                 213,427
-15.30 18.92%         (4,039) 1065.30 2/5/10                 244,579
-11.70 20.63%       (25,029) 1080.60 1/29/10                 248,618
-38.10 21.93%         (8,841) 1092.30 1/22/10                 273,647
-6.20 26.18%          3,937 1130.40 1/15/10                 282,488
41.60 26.88%            (391) 1136.60 1/8/10                 278,551
-9.50 22.23%         (6,723) 1095.00 1/1/10                 278,942
-8.00 23.29%       (18,126) 1104.50 12/25/09                 285,665
-2.50 24.19%          4,605 1112.50 12/18/09                 303,791
-46.40 24.47%         (9,045) 1115.00 12/11/09                 299,186
-5.10 29.64%          2,127 1161.40 12/4/09                 308,231
16.40 30.21%        24,558 1166.50 11/27/09                 306,104
31.60 28.38%         (1,238) 1150.10 11/20/09                 281,546
21.50 24.86%         (1,068) 1118.50 11/13/09                 282,784
50.90 22.46%             373 1097.00 11/6/09                 283,852
-8.60 16.77%       (14,014) 1046.10 10/30/09                 283,479
1.80 17.73%          1,567 1054.70 10/23/09                 297,493
4.90 17.53%        14,062 1052.90 10/16/09                 295,926
44.00 16.99%          6,630 1048.00 10/9/09                 281,864
13.30 12.07%       (12,376) 1004.00 10/2/09                 275,234
-15.30 10.59%          2,949 990.70 9/25/09                 287,610
0.30 12.30%        13,864 1006.00 9/18/09                 284,661
11.60 12.26%        54,089 1005.70 9/11/09                 270,797
38.00 10.97%          5,366 994.10 9/4/09                 216,708
2.20 6.73%          6,797 956.10 8/28/09                 211,342
0.30 6.48%       (18,360) 953.90 8/21/09                 204,545
-2.40 6.45%         (5,288) 953.60 8/14/09                 222,905
2.80 6.72%        25,672 956.00 8/7/09                 228,193
0.90 6.40%         (1,705) 953.20 7/31/09                 202,521
16.60 6.30%        21,939 952.30 7/24/09                 204,226
24.00 4.45%         (9,020) 935.70 7/17/09                 182,287
-20.80 1.77%         (6,511) 911.70 7/10/09                 191,307
-6.10 4.09%          3,388 932.50 7/3/09                 197,818
4.90 4.77%       (12,938) 938.60 6/26/09                 194,430
-5.10 4.23%       (17,679) 933.70 6/19/09                 207,368
-15.50 4.80%         (1,474) 938.80 6/12/09                 225,047
-24.80 6.53%        18,385 954.30 6/5/09                 226,521
22.40 9.29%        25,071 979.10 5/29/09                 208,136
25.50 6.79%        11,885 956.70 5/22/09                 183,065
16.70 3.95%        10,735 931.20 5/15/09                 171,180
29.20 2.08%          7,026 914.50 5/8/09                 160,445
-27.40 -1.18%          3,811 885.30 5/1/09                 153,419
45.90 1.88%         (3,901) 912.70 4/24/09                 149,608
-13.20 -3.24%             286 866.80 4/17/09                 153,509
-14.30 -1.77%       (28,703) 880.00 4/10/09                 153,223
-28.70 -0.17%             637 894.30 4/3/09                 181,926
-29.60 3.03%          5,605 923.00 3/27/09                 181,289
24.50 6.34%          2,833 952.60 3/20/09                 175,684
-10.30 3.60%       (15,550) 928.10 3/13/09                 172,851
-3.80 4.75%         (2,535) 938.40 3/6/09                 188,401
-52.50 5.18%         (5,424) 942.20 2/27/09                 190,936
53.60 11.04%          7,648 994.70 2/20/09                 196,360
30.10 5.05%        11,123 941.10 2/13/09                 188,712
-15.10 1.69%        19,213 911.00 2/6/09                 177,589
30.90 3.38%        19,445 926.10 1/30/09                 158,376
54.20 -0.07%         (2,632) 895.20 1/23/09                 138,931



Closer to a bottom?  Commercials, the ones who tend to "know," are curtailing their sales here.  Doesn't mean we can't go lower here.  We can.  Still........this indicator has proven rather uncanny in times past.