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Markets still falling like whoa

Llano Estacado

By Llano Estacado
in Business and Markets

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Eastwood
Eastwood

That's why I'm out. There is no end game, IMO. This has to be fixed outside of the market and I got too nervous about what that entails for retail investors. They will always be last on the list, if o

Rusty Shackelford
Rusty Shackelford
Eastwood
Eastwood

I'm not a financial advisor. This is not financial advise. I don't work in finance. I do not have a degree in finance. Actually, I have a BA and I'm bad at math past Cal I. I won't apologize for the l

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Harrison Stafford

Harrison Stafford 3335

Posted
Posted
2 hours ago, Fudge Nuggets said:

Not so csb, but back around summer 2011 the market took a shit because Greek debt was going to end the world for the 10th time in the last two years so I planned to flip some $TNA on a quick bounce.  Problem is I "fat fingered" the number of shares to buy by a factor of 10x.  The ETF absolutely nosedived right after the buy went through so I was stuck.  Held on to it for over a year and pulled off a 25% gain.

No way I would do that with a short leveraged ETF though.

Are you still in the sub $17 SOXS position?

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Fudge Nuggets

Fudge Nuggets 19208

Posted
Posted (edited)
18 minutes ago, Harrison Stafford said:

Are you still in the sub $17 SOXS position?

Yes, with plans to cash in today.  My target was about 18.50 so I will probably put a stop there at the open and hopefully keep raising it throughout the day.

F' it, I'm out at 18.65.  Good enough for my purposes.

Edited by Fudge Nuggets
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Wally Fairway

Wally Fairway 5569

Posted
Posted
20 hours ago, Murfdogg21 said:

Both under 3

20 hours ago, dcar00 said:

with a 14 to 15 year timeline I'd get in now. but not sure what the surl experts would say.

Get in now, with that timeframe you should be glad you didn't get in in January; but there is risk that while you wait for the bottom that you will miss it and not get in until it is 20% higher.
Dollar cost averaging is a mindless way to avoid making timing decision.

 

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HookEm

HookEm 2467

Posted
Posted

I'm wondering if anyone can give strategies on the cheapest / most effective way to hedge a largely S&P 500 portfolio. I've played around with options over the years, so not a complete novice. I'm wondering if buying out of the money 3x ETF put options would be the cheapest way to hedge.  Any thoughts?

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jimmyjazz

jimmyjazz 45992

Posted
Posted
6 hours ago, HookEm said:

I'm wondering if anyone can give strategies on the cheapest / most effective way to hedge a largely S&P 500 portfolio. I've played around with options over the years, so not a complete novice. I'm wondering if buying out of the money 3x ETF put options would be the cheapest way to hedge.  Any thoughts?

Whenever I've looked at 3X options, they provide no advantage.  This makes sense -- otherwise, there would be an opportunity to arbitrage, at least on an intraday if not interday basis.

Hedging is expensive.  The "best" way I know to do it is a zero cost collar, which sells an out-of-the-money call (maybe 2% above current stock price) to fund the purchase of an out-of-the-money put (say 3% below the current stock price).  There is no free lunch.  You're capping the upside more than you're limiting the downside, at least in most market conditions.  At least it's not coming out of your pocket.

I'm sure there are plenty of more sophisticated ways to hedge besides the above.  You might look into synthetic VIX purchases, which another poster outlined, where a long VIX call and a short VIX put, presumably at the same strike price (but not necessarily), net very limited theta (time) decay and you're positioned to profit off a spike in volatility.  I've never done it, and I have no idea of the net risk.

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LTtxfan

LTtxfan 49304

Posted
Posted (edited)
23 hours ago, 0xdeadbeef said:

This morning I bought about 20 stocks...across a bunch of different sectors.  I was looking for larger companies that were relatively stable for the past 2 years before the crash and who's stock price is now at least 40% off the 52 week high.   If they pay dividends, all the better.      DOW, PRU, BUD, QSR, were some.    If, in 1 year from today, these stocks get back to 65% of their 52 week high, I'll have a great year.  If they get back to 85% of their high, I'll make a fuck ton of money.  I had to resist going any bigger on oil stocks.   

The one that felt like I was putting chips on '00' on a roulette wheel was RUTH.  76% off it's 52 week high. The threshold to make money is so low. Nobody is eating out for the next 3 months, but as long as they stay a float, people will get back to normal.  

The hard part is now keeping my hands off.  Back to the long game.

Note - Not advice. What's right for me may not be right for you. See your proctologist for actual advice. 

   

Tough day... sorry!!

Is MS one of your other stock candidates, and what will it take for DOW to rebound??

Edited by LTtxfan
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4thgenhorn

4thgenhorn 38

Posted
Posted
5 hours ago, jimmyjazz said:

Whenever I've looked at 3X options, they provide no advantage.  This makes sense -- otherwise, there would be an opportunity to arbitrage, at least on an intraday if not interday basis.

Hedging is expensive.  The "best" way I know to do it is a zero cost collar, which sells an out-of-the-money call (maybe 2% above current stock price) to fund the purchase of an out-of-the-money put (say 3% below the current stock price).  There is no free lunch.  You're capping the upside more than you're limiting the downside, at least in most market conditions.  At least it's not coming out of your pocket.

I'm sure there are plenty of more sophisticated ways to hedge besides the above.  You might look into synthetic VIX purchases, which another poster outlined, where a long VIX call and a short VIX put, presumably at the same strike price (but not necessarily), net very limited theta (time) decay and you're positioned to profit off a spike in volatility.  I've never done it, and I have no idea of the net risk.

I’m wouldn’t lowest cost hedge be to sell the equity and adjust your asset allocation?    The only downside would be if you have massive capital gains. 
 

puts are expensive. You really have to limit all upside potential with a zero cost collar like that. 
 

another issue I’ve found with collars or spreads is they are really hard to trade. I’m an amateur, but my models are always built  on holding to expiration. But it’s hard to hold options to expiration. So when you want to unload, even if you guessed right, it’s still hard to make a reasonable amount of $$$$.

 

bottom line: keep it simple stupid, set ur asset allocation and let it ride. Get ready to buy more when we revisit March lows, which should be soon. When everyone is buying more puts on this board, u buy yourself some MSFT. Sell some OOTM covered calls when it has two up days in a row. 

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jimmyjazz

jimmyjazz 45992

Posted
Posted

Yeah, collars seem to be most often used by those who can't sell the underlying, for whatever reason.  (Taxes, exec insider trading restrictions, whatever.)  

I've never found a particularly efficient way to hedge.  I'm sure there are plenty of things I haven't thought of, but it's all beyond my meager skills.

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4thgenhorn

4thgenhorn 38

Posted
Posted
24 minutes ago, jimmyjazz said:

Yeah, collars seem to be most often used by those who can't sell the underlying, for whatever reason.  (Taxes, exec insider trading restrictions, whatever.)  

I've never found a particularly efficient way to hedge.  I'm sure there are plenty of things I haven't thought of, but it's all beyond my meager skills.

I think a lot of the strategies are purely for Pros. My understanding of Pro comp and goal is some thing along lines of: beat SPY or XYZ index fund. So these models pop up that might out perform said comp goal. 
 

individual goal is just to do best as possible and not loose ur ass while working a day job. So different goals. 
 

imho I’d say best hedge strategy, cheapest and simplest, is trailing stop loss or ITM Calls as stock replacement; downside is limited on both, while still providing upside potential. 

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jimmyjazz

jimmyjazz 45992

Posted
Posted

Stop losses will get grabbed by market makers.

ITM calls have the same P/L as the equivalent delta shares + puts at that strike.  Not saying one is better than the other.

@Bozo_Casanova is a big proponent of selling delta and collecting theta.  I think it's one of those "works 90% of the time, can bite you the other 10% of the time" things, but that risk/reward isn't any substasntially different than any other long strategy.  I think it's only short positions where cash on hand can't cover where things can go nuts (short shares, short uncovered calls).  Selling OTM puts with cash to handle it is just shopping at WalMart, that's fine.

 

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4thgenhorn

4thgenhorn 38

Posted
Posted
12 minutes ago, jimmyjazz said:

Stop losses will get grabbed by market makers.

ITM calls have the same P/L as the equivalent delta shares + puts at that strike.  Not saying one is better than the other.

@Bozo_Casanova is a big proponent of selling delta and collecting theta.  I think it's one of those "works 90% of the time, can bite you the other 10% of the time" things, but that risk/reward isn't any substasntially different than any other long strategy.  I think it's only short positions where cash on hand can't cover where things can go nuts (short shares, short uncovered calls).  Selling OTM puts with cash to handle it is just shopping at WalMart, that's fine.

 

Two word: Iron Condor. Your welcome. 

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jimmyjazz

jimmyjazz 45992

Posted
Posted
12 minutes ago, 4thgenhorn said:

Two word: Iron Condor. Your welcome. 

Still defined risk/reward, and no free lunch.  Sell it, collect money 90% of the time, lose 9X 10% of the time (or whatever).  That said, I do know that some people seem to be able to manage that trade better than most, I guess because one typically has a little time before the wings get threatened.

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Hmmm

Hmmm 155

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Posted (edited)

I don't know shit about options but here's a quote from Investopedia about Iron Condor:  "The goal is to profit from low volatility in the underlying asset."  I would guess most on here trading options thrive off high volatility.

Edited by Hmmm
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bluto

bluto 4933

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Posted
Let's test the "it's already priced in the market" theory - unemployment claims rise from to 6.6 million filing claims last week, up slightly from last weeks record setting 3+ million

Texas workforce commission had 1.8M calls in the last ~week or so. Also seen many articles about filing sites crashing so this number still has room to move

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Trey3216

Trey3216 15349

Posted
Posted

In other Fuck China news:

Luckin Coffee -83% on fraud finding

Apr. 02, 2020 9:05 AM ETLKBy: Clark Schultz, SA News Editor4 Comments
  • Luckin Coffee (NASDAQ:LK) craters in premarket trading after the board was made aware that a special committee found that COO Jian Liu and several employees fabricated transactions of as much as $310M.
  • An independent special committee was formed to oversee the internal probe on audit issues.
  • The development is also of interest to Starbucks (NASDAQ:SBUX) with Luckin considered a major challenger in China.
  • LK -82.60% premarket to $4.55.
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Wally Fairway

Wally Fairway 5569

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Posted
15 minutes ago, MonkeyDoughnut said:

I'm trying to figure out how much to discount the unemployment numbers. This time around is different in that if they said the virus was done come May 1st we would see record employment hiring numbers in the following week.

IMO, May 1 is optimistic, Michigan governor is asking for a 10 week extension to "Stay at home order" 

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The People’s Elbow

The People’s Elbow 707

Posted
Posted (edited)
4 hours ago, Wally Fairway said:

Let's test the "it's already priced in the market" theory - unemployment claims rise from to 6.6 million filing claims last week, up slightly from last weeks record setting 3+ million

Indeed, you did provide an example of something that isn’t priced into this market: rational thinking.

Edited by The People’s Elbow
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