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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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Homercles

Homercles 10205

Posted
Posted


You like Bubble guppies, Paw patrol, and PJ masks far more than I do apparently.


Bubble bubble bubble
Guppy guppy guppies

Bubble bubble bubble
Guppy guppy guppies

Bubble
Guppies

Bubble
Guppies

*ba dump dump*
Bubble guppies

*ba dump dump*
Bubble guppies!!!


...actually when it comes to toddler tv, this is my homey
2048x2730-peppa-pig43-jpg-993ea298.jpg
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Wally Fairway

Wally Fairway 5550

Posted
Posted
2 hours ago, Llano Estacado said:

You like Bubble guppies, Paw patrol, and PJ masks far more than I do apparently.

 

 

 

2 hours ago, Prepuce of Doom said:

Fuck Paw Patrol in the goatass. 

 

11 minutes ago, Fudge Nuggets said:

No idea what any of this shit is.

It could be worse, my grandkids love music (if that's what you call it)
 

Quote
 
Baby shark, doo doo doo doo doo doo
Baby shark, doo doo doo doo doo doo
Baby shark, doo doo doo doo doo doo
Baby shark!
Mommy shark, doo doo doo doo doo doo
Mommy shark, doo doo doo doo doo doo
Mommy shark, doo doo doo doo doo doo
Mommy shark!
Daddy shark, doo doo doo doo doo doo
Daddy shark, doo doo doo doo doo doo
Daddy shark, doo doo doo doo doo doo
Daddy shark!
Grandma shark, doo doo doo doo doo doo
Grandma shark, doo doo doo doo doo doo
Grandma shark, doo doo doo doo doo doo
Grandma shark!
Grandpa shark, doo doo doo doo doo doo
Grandpa shark, doo doo doo doo doo doo
Grandpa shark, doo doo doo doo doo doo
Grandpa shark!
Let’s go hunt, doo doo doo doo doo doo
Let’s go hunt, doo doo doo doo doo doo
Let’s go hunt, doo doo doo doo doo doo
Let’s go hunt!
Run away,…
Run away, doo doo doo doo doo doo
Run away, doo doo doo doo doo doo
Run away, doo doo doo doo doo doo
Run away!
Safe at last, doo doo doo doo doo doo
Safe at last, doo doo doo doo doo doo
Safe at last, doo doo doo doo doo doo
It’s the end, doo doo doo doo doo doo
It’s the end, doo doo doo doo doo doo
It’s the end, doo doo doo doo doo doo
It’s the end!
Safe at last!

 

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ChiTownDoc

ChiTownDoc 21154

Posted
Posted

Time to hide my cap gains in opportunity zones but will limp in to the market with a significant amount as well after selling 70% of one of our companies to PE.  Can only imagine the bloodbath if we sold last year. Opportunity Zones didn’t exist and markets were at all time highs.  Better to be lucky than good.  

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happyfunball

happyfunball 481

Posted
Posted
Quote

“The economy has been slowing, but someone forgot to tell the labor markets,” said Jim Baird, chief investment officer for Plante Moran Financial Advisors. “Employers, it would seem, didn’t get the memo from Mr. Market that it’s time to tighten their belts.”

Quote

Job creation ended 2018 on a powerful note, with nonfarm payrolls surging by 312,000 in December though the unemployment rate rose to 3.9 percent.

The jobless rate, which was last higher in June, rose for the right reason as 419,000 new workers entered the workforce and the labor force participation rate increased to 63.1 percent. The participation level was up 0.2 percentage points from November and 0.4 percentage points compared with a year earlier.

 

A broader measure of unemployment that includes discouraged workers and those holding part-time jobs for economic reasons held steady at 7.6 percent.

In addition to the big job gains, wages jumped 3.2 percent from a year ago and 0.4 percent over the previous month. The year-over-year increase is tied with October for the best since April 2009. The average work week rose 0.1 hour to 34.5 hours.

Economists surveyed by Dow Jones had been expecting job growth of just 176,000, though they projected the unemployment rate to fall to 3.6 percent. The wage number also was well above expectations of 3 percent on the year and 0.3 percent from November.

https://www.cnbc.com/2019/01/04/nonfarm-payrolls-december-2018.html

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Wally Fairway

Wally Fairway 5550

Posted
Posted (edited)
48 minutes ago, ChiTownDoc said:

It’s definitely gonna get worse.  But we are probably well into wherever  the bottom ends up.   

I like puts at a discount.  

I'm looking at SPY puts with 14-28 day maturity - around $2, for $240-245 strike price. SPY closed yesterday at $244.21, seems like those are discounted. Considering recent volatility....I'll likely buy some and see what happens. (I'm taking a beating on puts today, but these will be beyond hedging my position, so gamble away)

And it is just putting my chips back on the table for some 1/2/19 puts that I made a little coin on.....laissez les bon temps rouler

Edited by Wally Fairway
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Bozo_Casanova

Bozo_Casanova 26472

Posted
Posted (edited)
On 12/26/2018 at 1:41 PM, Bozo_Casanova said:

So - 5 days later, the market is up, and the price of this option has dropped from open at 9.44, and currently trades (as of this moment) at 6.89. So, if I'm nervous I can buy the put back and keep $20. Or, I can let it ride and let time and movement devalue the put.

But either way - the underlying issue hit $234 on christmas day, so worst case: if the shares were put to me I effectively wound up buying SPY at 233, and it now trades at 240.

 

 

So lets say that I held onto my short put position at $240 from 12/21. If I did, I would go ahead and get out today at 1.35, leaving me with a profit of ~6.65, and I was never out cash. 
If, on the other hand, the shares were put to me at $233 on Christmas eve, I'm going to go ahead and sell a covered call today at $247 for around $8. 

 

I don't trade options actively anymore, but the scenario we're in here is why I sell premium when I do. 

Edited by Bozo_Casanova
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Blotto

Blotto 23523

Posted
Posted

Apple missed their number by a bunch, and while it may be bullshit, Cook didnt hesitate to mention tariffs. As we head into earnings season, it will be interesting to see if Apple is an outlier or not. A consistent stream of missed  earnings is not priced into the market. Add Dotard into the mix and my short term outlook is still negative.

I was much heavier into QQQ puts Q4 than I am now, but I have still have some March puts that I expect will turn profitable again at some point (150 strike).....today was obviously ugly for those.

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ChiTownDoc

ChiTownDoc 21154

Posted
Posted (edited)

Say you like gambling but also invest very long term. Why not dump a significant chunk of your retirement in UPRO or similar?  3x upside on S&P over 25 years?  How does that end up a loss?

 

edit: https://www.google.com/amp/s/seekingalpha.com/amp/article/2986586-what-the-numbers-say-about-long-term-investments-in-leveraged-etfs

 

I was skeptical when a FA of mine railed against this strategy.  Seems it’s not a bad play long term. 

Edit 2:  SSO if UPRO churns your stomach beyond some acceptable threshold. 

Edited by ChiTownDoc
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4thgenhorn

4thgenhorn 38

Posted
Posted
On 1/4/2019 at 11:52 AM, Bozo_Casanova said:

So lets say that I held onto my short put position at $240 from 12/21. If I did, I would go ahead and get out today at 1.35, leaving me with a profit of ~6.65, and I was never out cash. 
If, on the other hand, the shares were put to me at $233 on Christmas eve, I'm going to go ahead and sell a covered call today at $247 for around $8. 

 

I don't trade options actively anymore, but the scenario we're in here is why I sell premium when I do. 

I like the game plan u outlined. I’ve done very similar strategy in the past. But I only sell the puts with money sitting ready to go...which usually means it’s pretty small potatoes as I’m mostly invested already. Covering when >70% of value is gone makes sense, unless u really want the shares bad. 

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4thgenhorn

4thgenhorn 38

Posted
Posted
So I wrote covered calls today on PayPal shares. Here is my model: 
 
price today: 89.8
Date of option: 3/15/2019, 62 days from today
Strike price: $95, 5.4% above today
Contract price: $3.3, 3.7% of today
Outcomes: either I sell the shares on March 15 for a gain of 9.1%, or I keep the 3.7%
 
I can ponder if it was the right decision while getting 16 dances/contract. 
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UT_OB1

UT_OB1 2223

Posted
Posted
2 hours ago, 4thgenhorn said:
So I wrote covered calls today on PayPal shares. Here is my model: 
 
price today: 89.8
Date of option: 3/15/2019, 62 days from today
Strike price: $95, 5.4% above today
Contract price: $3.3, 3.7% of today
Outcomes: either I sell the shares on March 15 for a gain of 9.1%, or I keep the 3.7%
 
I can ponder if it was the right decision while getting 16 dances/contract. 

I know nothing about investing, so educate me here.  How is there not an option where you lose money?  Otherwise everyone would be doing it right?  

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Bozo_Casanova

Bozo_Casanova 26472

Posted
Posted (edited)
9 minutes ago, UT_OB1 said:

I know nothing about investing, so educate me here.  How is there not an option where you lose money?  Otherwise everyone would be doing it right?  

Because a covered call strategy means you own the stock and the option allows you to lock in your profit. You are selling the option to buy it, and in the worse case scenario the price goes higher than the the option, and when you sell the shares you make less money than you would have selling on the open market. 

So in the scenario I outlined above, you sell puts at close just out of the money, and rarely they are put to you, and when they are you sell calls to lower the basis until they are called away, rinse, repeat. 
The risk is that you have to be willing to buy what you sell puts on at the strike price. 

Edited by Bozo_Casanova
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jimmyjazz

jimmyjazz 45962

Posted
Posted
On 1/9/2019 at 4:19 PM, UT_OB1 said:

I know nothing about investing, so educate me here.  How is there not an option where you lose money?  Otherwise everyone would be doing it right?  

There are scenarios where he loses money.  If the stock goes to $0, he loses the entire investment, and offsets a tiny bit of that loss with the money he banked by selling calls.  So, he loses a little bit less than had he not sold the calls.

BUT, he's capped his upside.  If the stock skyrockets, he only pockets the gain locked in by the sold calls.

There is no free lunch.

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Bozo_Casanova

Bozo_Casanova 26472

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Posted
There are scenarios where he loses money.  If the stock goes to $0, he loses the entire investment, and offsets a tiny bit of that loss with the money he banked by selling calls.  So, he loses a little bit less than had he not sold the calls. BUT, he's capped his upside.  If the stock skyrockets, he only pockets the gain locked in by the sold calls.

There is no free lunch.

 

But the stock going to zero is an unlikely event.

Look, you should never sell a naked put at a strike price (minus premium) that you don’t think is a fair price for the underlying issue. And yes, the upside to the strategy is generally limited to the premium on the option, but that’s the point for premium sellers. They aren’t in the speculation business. They are in the insurance business, underwriting risk.

 

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jimmyjazz

jimmyjazz 45962

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Posted
1 hour ago, Bozo_Casanova said:

But the stock going to zero is an unlikely event.

Look, you should never sell a naked put at a strike price (minus premium) that you don’t think is a fair price for the underlying issue. And yes, the upside to the strategy is generally limited to the premium on the option, but that’s the point for premium sellers. They aren’t in the speculation business. They are in the insurance business, underwriting risk.

 

I don't disagree with that -- I was just answering the question about ways to lose money.

The case in point wasn't selling out-of-the-money cash-backed puts, it was selling out-of-the-money calls on stock that was already owned.  (As we know, they are synthetic equivalent strategies for equal strikes and expirations, but that's not what we're talking about.)  In that particular case, I didn't need to use the extreme limit case of the underlying going to $0 -- it would perhaps have been more illustrative if yet less jarring to say "imagine you sold a call for 2% in your pocket but the underlying then dropped 10%".  That can happen, and often does (like it has for the broad market at least twice since September).

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ChiTownDoc

ChiTownDoc 21154

Posted
Posted
On 1/5/2019 at 10:36 PM, ChiTownDoc said:

Say you like gambling but also invest very long term. Why not dump a significant chunk of your retirement in UPRO or similar?  3x upside on S&P over 25 years?  How does that end up a loss?

 

edit: https://www.google.com/amp/s/seekingalpha.com/amp/article/2986586-what-the-numbers-say-about-long-term-investments-in-leveraged-etfs

 

I was skeptical when a FA of mine railed against this strategy.  Seems it’s not a bad play long term. 

Edit 2:  SSO if UPRO churns your stomach beyond some acceptable threshold. 

So I didn’t go crazy but did 500k against advice in UPRO.  Shit is good right now but need to think long term. I’m still gonna celebrate a bit.  

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ChiTownDoc

ChiTownDoc 21154

Posted
Posted (edited)
4 hours ago, happyfunball said:

Waiting for the shutdown to end and even if a nominal agreement with China which will cause a major rally imo. Once that rally occurs, I am moving to cash.

Trump gave huge tax breaks to big corps.  I see this run lasting a while longer. And the pullback to actually come in later 2020.  

Edit:  But im getting 2.5% on cash so it’s tempting if those rates go up.  

Edited by ChiTownDoc
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Wally Fairway

Wally Fairway 5550

Posted
Posted
3 minutes ago, 52-80 said:

could you provide a little bit of color on this jack bogle story

He thought it cost too much, and was mostly ineffective, to have someone manage investments to beat the market. So he started Vanguard Investments, which was the first to offer low cost mutual funds; and now ETF's.
It seems to have caught on over the last 50+ years

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happyfunball

happyfunball 481

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Posted
12 minutes ago, ChiTownDoc said:

Trump gave huge tax breaks to big corps.  I see this run lasting a while longer. And the pullback to actually come in later 2020.  

Edit:  But im getting 2.5% on cash so it’s tempting if those rates go up.  

Not saying the market can't continue to run but there is too much downside risk. I rather be defensive as we are already late in this economic cycle. There are too many economic, financial and political headwinds to stay in equities imo.

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ChiTownDoc

ChiTownDoc 21154

Posted
Posted
5 minutes ago, happyfunball said:

Not saying the market can't continue to run but there is too much downside risk. I rather be defensive as we are already late in this economic cycle. There are too many economic, financial and political headwinds to stay in equities imo.

How old are you?  Imo unless you’re past 50, trying to time shit is too conservative.  Move some to fixed income but to totally pull out then try to time re-entry is a bitch.  

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happyfunball

happyfunball 481

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Posted
1 minute ago, ChiTownDoc said:

How old are you?  Imo unless you’re past 50, trying to time shit is too conservative.  Move some to fixed income but to totally pull out then try to time re-entry is a bitch.  

I should have clarified cash like items (e.g. treasuries)

I am mid-career and day job is in finance (not accounting). 

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