Monday, November 24, 2014

20:1 contracts:deliverable: one might ask, is COMEX being cornered?

Is COMEX being cornered?  

 Is "something for nothing" coming to an end this week?

Some other week down the road?

Thought-provoking read.

Thursday, November 6, 2014

Putin Signs Secret Pact to Crush NATO

Putin Signs Secret Pact to Crush NATO

This, plus Paul Craig Roberts piece on Putin:  must reads

"Moral leader of the world" is a shocking phrase for the Russian leader to one raised in the Sputnik era Cold War....shocking all the more to come from a former administration official, but this is a must read piece nonetheless....whether you agree with every word and phrase or not.  Roberts is a bold thinker....and writer....

Monday, October 27, 2014

Sometimes less is more

In an options world, where the lingua franca includes such esoteric terms as condors, butterflies, calendars, split-strike butterflies, double diagonals, etc., a simple stock-with-put seems hopelessly elementary.

Yet it can be an effective strategy, perhaps more so than others that are much more complicated.

Take AAPL, for example.  In the past two+ months, it has gone from the low 90s to the low 100s to the low 90s and back again to the mid 100s.  Those acquirers who included mid-dated puts (say January 2015 or beyond) in early August were provided with the financial stamina to weather the usual Sept-Oct stock market roller coaster ride, not upchuck the stock, and best of all, stand in with a profit (as of late October).

Using round numbers:  On 200 shares of AAPL, bought around 95 in early August, the Jan. 2015 ATM (at-the-money) put was selling for 6.5.  Funds at risk then came to about 6.5 vs. 95.  The return since then, after several round trips from the 90s to the 100s?  The stock advanced to 105.22, so a 10 point gain.  The put declined to 1.11, so a 5+ point loss.  Net gain, 5 points, risking 6.5 or so. 

Something like 75% return on funds at risk.  Derived from +10% or so on AAPL itself.  From a simple strategy that many in options education find too simple to even mention.....

Thursday, September 25, 2014

Consider the Big Picture

Staggering statistic:  U.S. has saved less gold since founding in 1776 than we pay out in interest --- per year.   Read:

How Much Gold Is Really Out There? ...Not Enough!

Friday, August 22, 2014

Puts are very underrated

Puts are very underrated.  The rap on them:  "they're so expensive."

They are.  But like a lot of things in life (not all), the dictum applies:  "you get what you pay for."

If you're persuaded, like some, that the Fed will pave the way to SP 2500, no sweat, you won't feel the need for any costly insurance.  But if the chorus of cautious voices has soaked through your hair, scalp and skull, and is now resident inside your gray matter, and you're like to be able to sleep soundly at night:  consider puts.

Let's take mighty Apple for example.  This past month, with the stock at 95 and change, the Jan. ATM (at-the-money) puts were going for something like 6.50.  (I am doing this, more or less, from memory.)  So, worst case, if Apple went to 0 (how could that happen?), or 50, or 80, max loss is capped at 6.50 (and change).

Let's head north.  Say the stock goes to 200 (how could that happen?).  You're out the insurance tab, and pocket 105.  Not bad.

For your 6.50 put tab, you get a 50something delta, quantified loss level.

What happened next?  Apple went to 100.  The strategist made 5 or so on the stock, lost 2.70 or so on the put, net gain, 2.30 on 6.50 risk, or 35%.   (And if AAPL reaches that magical 125 some pundits talk up, there's still another 25 points to go.....)

Without the put, the risk was 95 on the stock, made 5 on the stock, so 5/95, or 5.2%.

Additionally, will some profit under the belt, there are some adjustment options available, but that's beyond the scope of today's musing.

Leverage.  ROI.  Peace of mind.

Not to mention dividend capture, ability to sell calls (or puts) against, and countless other options machinations.

There's a bit more to this, our method, e.g. fundamentals, timing. options analysis.  For more, give a look to our book, Option Wizard® Trading Method.

In today's world of Putin, Ukraine, ISIS, Ebola --- and the unknown unknown that's coming down the pike next to hit us all on the blind side, puts are very underrated.

I'm just sayin'.........

Wednesday, July 9, 2014

Zacks' Bull Of The Day: Goldcorp - Goldcorp Inc. (NYSE:GG) | Seeking Alpha

Zacks' Bull Of The Day: Goldcorp May Have 10%+ Upside. (NYSE:GG) | Seeking Alpha

................In 2013 production was 2.7 million
ounces. This year GG is looking for 2.95 to 3.1 million ounces and next
year 3.6 to 3.8 million. This outlook has Goldcorp becoming free cash
flow positive in Q4 2014 assuming gold prices at $1200 an ounce.

We have it as a Zacks Rank #1 (Strong Buy) due to recent earnings estimate
revisions over the last 60 days. Four analysts have increased their
estimates for the current year and next year. The revisions have pushed
consensus up from 70 cents per share to 80 for this year.

Last quarter’s earnings surprise came in at 26 cents versus expectations for
14 cents. This firm beat along with the agreement and magnitude of the
revisions by analysts are what give this stock such a strong Zacks Rank.

The Zacks Rank isn’t the only reason why I like the stock at these levels.
The technical chart is very bullish for GG as well. Over the last two
weeks GG has been consolidating just below $28. During the consolidation
the stock has remained firmly above its 40 day exponential moving
average which currently sits down at $25.86.

The stochastics are showing an overbought position currently but that shouldn’t stop anyone
from buying the stock. This indicator can stay overbought for extended
periods of time during rallies. The last big run for the stock took it
from support ant $23 up to the level it trades at today. The next push
upwards will likely approach the 52 week high just above $29. If the
stock can push through that level than the August 2013 high near $32
comes into focus.

Tuesday, May 13, 2014

Recommended reading

TECHNICAL ANALYSIS OF STOCKS AND COMMODITIES, February 2014:  "Static Option Income Strategies:  Do they work?" by Diorgos Siligardos.

Quite a good piece.....

Tuesday, April 1, 2014

No April Fooling for Dr. Marc Faber: "The Old World is Over"


Dr Marc Faber: “The Old World Is Over”

In the gilded ballroom of Hyatt’s Savoy Hotel in Melbourne Australia, Dr Mark Faber was the first speaker at the Port Phillip Publishing, World War D conference. Faber delivered an important message, saying that “The old world order is over”.

Dr Marc Faber is a respected economist and investment guru who predicted the Wall Street Crash in 1987, the Nasdaq crash, the property bubble and the Eurozone and global debt crisis. He is the editor and publisher of the Gloom, Boom & Doom Report and the author of many books including the best selling 'Tomorrow's Gold: Asia's Age of Discovery'.

Faber advised investors to buy gold in 2001 and he is still extremely bullish on gold and silver. He believes that gold will rise in the coming years due to currency debasement.

Money Morning Australia reported on Faber’s address to the conference. “The U.S. reached a peak in prosperity and influence in the world in the 1950s or 1960s,” warned Faber. But since the 1970s the superpower has been locked into a cycle of bubbles, busts and growing debt.

“There are some people who claim to be economists who will tell you debts do not matter,” Faber said but he told the packed ballroom that the real story is very different.

Faber explained the flaw is at the heart of ultra loose monetary policies such as QE. “When you drop dollar bills into the economy…it won’t lift all prices and assets equally at the same time,” he said. In the 1960s and 1970s, extra money flowing through the economy inflated wages; in the early 2000s, money printing inflated tech stocks.

Thus, money printing creates more bubbles. Some assets go up, they overshoot, collapse and cause significant damage. This necessitates, in the view of the U.S. Federal Reserve, more money printing. It is a vicious cycle we’ve seen since the 1970s: every time there is an economic problem, the Fed prints money and creates more distortions and bubbles.

Bernanke’s tenure saw this trend continue, and when it came to assessing the former Fed chairman, Faber didn’t mince his words.

“He’s been a disaster,” Faber warned. Faber pointed out that not only did Bernanke not notice the subprime disaster, he actually denied it existed and even helped create it. “Under his tenure at the Federal Reserve and under his intellectual influence when working for Mr Greenspan, they created the gigantic housing bubble,” Faber said.

At the heart of this expansion in debt, and cycle of bubbles and busts is the reliance of the U.S. economy on consumption. For the last century, policy makers have encouraged consumption on all levels of society including government, and discouraged savings.

But according to Faber, consumption doesn’t create a strong economy. “Wealth doesn’t come from consumerism, it comes from capital spending,” he said.

And the problem for the U.S. economy is that while debt has continued to rise, capital investment hasn’t. In fact, it’s been falling sharply for a long time.

“If we have growing debts, there’s a difference in quality of those debts,” he said. Japan, South Korea and Taiwan used their debts to invest in factories, plants…investments that generate wealth. According to Faber however, the U.S. has just acquired debt to fuel consumption. “Where’s the future income?” he asked.

“We live in a new word. We live in a world where the balance of power has shifted to emerging countries,” said Faber.

One of the most important emerging economies is China. While China’s growth story is well known, Faber gave the audience an important geopolitical sub story.

China’s massive growth triggered massive commodity export booms in emerging economies. China’s real success was exporting the products it produced back to emerging economies. This has created a significant shift in the global economy. Today, exports from China to emerging countries are higher than exports to the U.S. or Europe.

“This is the new world, where the old world is largely bypassed,” said Faber. While most of the media debates whether the U.S. will grow, Faber argues it will have little impact on the world, as China has a greater influence now than the U.S.

Faber is no bull on China however, and warned he would be very careful about investing there. Faber sees conditions at the present time as much worse than many people realise. There are also geopolitical concerns that are often left unexamined.

On geopolitics, Faber warned that the Middle East is a tinderbox and will go up in flames. 

“The Middle East, in my opinion, will go up in flames at some point, that will be an unpleasant event,” predicted Faber in his typically apocalyptic but still understated way.

Punctuated by his usual dry wit, flashes of humour and dire warnings, it was a sober message and Money Morning Australia report that the attentive audience lapped Faber up.

Webinar: Dr Marc Faber On Gold, Silver and Asset Allocation In An Uncertain WorldIn this webinar, Dr Marc Faber will examine opportunities for investors in the uncertain world of today. This Friday only (April 4th), Dr Faber will give insights into his strategies for protecting and growing wealth in 2014 and beyond.

Register today and don't miss this opportunity to hear one of the world's most respected investment experts.

In this webinar, some of the topics covered with Dr Faber include:

Asian Century? - Western collapse or stagnation?
Events in Ukraine - Allocations to precious metals?
How to own precious metals?
Dollar cost average or lump sum?
Take profits/ rebalance or buy and hold for long term?
When to sell?
Favoured asset allocation?
Other investment and business opportunities?

Please join us for Dr Faber’s webinar this Friday, April 4th, 2014, at 0900 GMT.

Sunday, March 16, 2014

Gold to $1600?

Pundits in today's Barrons calling for continued up move in gold, to $1500 to $1600. Or will a settling in the Crimea calm things?

Tuesday, February 18, 2014

Follow up: GG gains 33% Dec 19 2013 to today

Last month we posted a sentiment indicator that showed gold, and gold stocks were universally hated.

Contrarians regard this as a buying opportunity.

Sure enough, Goldcorp, and its kin, rose fairly dramatically from deep, deep discounts in December, 2013.

Some say gold has bottomed, and will rise over time to make new highs.  Others say it's going to 1000 and below.  The game goes on.....

Wednesday, January 22, 2014

Sentiment primer: always darkest just before the dawn

Author Jeff Clark says:  There's only one way to realize these kinds of gains: You must buy when the asset is out of favor. Buying an investment that has already run up is at best chasing momentum and at worst a portfolio wrecker.


In December, the author points out, that "10" above was actually a "0."