Master Income Update -
Thursday, 18 August 2011
Greetings,
We’re witnessing another edition of sheer panic as the market has stayed at “E” grades
for both the Nasdaq and S&P 500 indices (we’re in a continued distribution state out there).
Like I was telling some other friends today, the market quote has never been truer (regarding
stocks or the market):
“You never know how high they can go and you never know how low they can go.”
Also, markets can stay irrational and illogical longer than any of us care to speculate.
When it comes to repositioning and selling new weekly income, I hesitate to do this on a
day like today when a market is falling so fresh.
After all, if we sell at the money premiums right now, today – and the market snaps back
up higher come tomorrow (and if we don’t reposition puts) – the snapback can be a killer.
So right now, I’m hanging out and staying put (no pun intended) -
When I do sell new premium, I’m going to reposition my downside protective puts in my
different positions.
But I’ll mention this on here as we’re now at Thursday and I’ll likely do some of this come
tomorrow/Friday.
Over and out for now.
–P
P.S. Notice how I didn’t spend much time on here on what I personally feel about our
country and economy. a) it depresses me too much to talk about this and how painful the
economy must be for millions out there , and b) it really doesn’t do us much good as
income investors. After all, the market is the market – and we’ll go insane at every turn
trying to affix blame, etc.
Best to deal with reality as it comes, adjust, reposition, etc.
Anyway- hope this finds you well. –P
Master Income Update -
Thursday, 4 August 2011
Good morning,
Let’s talk about a few things on a day like today.
The DOW’s down 300 points and the Nasdaq’s down 80 or 90 at last check.
A few things here:
First and foremost – we buy puts for that rainy day.
Guess what? It’s raining!!
The S&P has been down 9 out of the last 10 trading sessions. A few days back, both
the S&P 500 and Nasdaq dropped below their 200 day moving averages.
Another thing is: the market cycle grades have been shitty for weeks now. Pinned at “E”
or D-, this has been a warning sign as far as going long stocks. But for us on the income
side, these readings help us to tighten our put protection, sell at to in-the-money calls,
and otherwise adjust things for a bearish bent to things.
Another thing to notice is this:
When you get positioned into puts along the way, they are priced at “X”. But when you
enter into periods of the market where fear and blood are running through the streets…
just take a gander at how much extra puts are priced at!!??
Call it X times 1.5.
While our overall account values are down on days like this, we still have our protection
etched in stone…and to boot, the value of that protection rises in an exaggerated way.
Also, we have the weapon of capturing that weekly premium too.
One thing I want to point out today is that a lot of this market action looks like we’re
headed toward a capitulation day. That is, one of those trading days that trades seemingly
an entire month’s worth of action inside of one day.
A day that opens up as a freefall, then a massive amount of buying races in to take the
market higher.
Whew…
It’s insane out there – and imagine being a buy and hold investor!!??
Because of all this noise and uncertainty (and with an unemployment report due out first
thing tomorrow morning), I’m not doing any rolls right now.
I’m just being patient and seeing what could be around the next corner here.
Anyway – wanted to touch base on this crazy day!
Over and out for now, –P
Master Income Update -
Monday, 1 August 2011
Hello there,
Well, last Thursday and Friday were sure awesome for me and my staff..
To meet so many new people and to see some old faces from many years past.
The Salt Lake City seminar was really awesome…and my hat’s off to our special guest
speaker Jeff Augen who flew in from New York and really wowed us all with his expiration
day trading expertise.
Also Karson filled us in on some unique things he does at week’s end (every weekend
now is a trading opportunity, especially on those big name stocks that have expiring
options every single Friday!)
Anyway – my thanks also to my amazing staff who made it all go off without a hitch.
I wanted to take a minute and share some of the most important trade setups and
opportunities we found during the 2 days as a class…
On top of what I’m about to say here – the market’s sure had a roller coaster ride today.
What was going to be a stellar open, some relief and some major buying was fizzled
out almost immediately when a manufacturing report was released (the ISM).
The market is listless as hell -losing a foothold here and there and seeing hazy looking
forward.
So it’s a crappy time to be long and directional out there.
But there ARE companies doing compelling things or else having compelling set-ups.
One such is DECK. The crowd’s reaction to it’s guidance figures was awesome. Also, DECK
has been laying over sideways – and finally snapped out and marked a new 52-week high
right where I like to see it.
In class, we talked about a directional trade to get long…both selling the Sep 105 puts
and buying the Sept 95 calls.
(as I type, DECK is in the green, up, and north of $100 bucks a share while the rest of the
market is down today…that is compelling!)
There are no weeklies with DECK, but the set-up is killer. My angle would be to get in
now as outlined above, let the position grow, and then decide to bring in any income
(sell shorter term calls against the purchased calls) – and add to the position.
We covered how BIDU was at an ideal set-up as well. We talked about the upcoming
stock split on EDU, it’s first stock split ever. And also about LULU that’s already gone
through a split, and how it’s the first one too.
We also talked about AAPL and how well the current calendar bull put spread is working
out on this bad boy.
Another one that was compelling was VPRT, having hit a new 52-week low while we were
sitting there in class. Not to buy yet…but to trade the “sunrise-demise” on it once that
sets up.
Anyway – I hope this finds well today!
Over and out,
–Pirate
