MAY MARKET THREAD

Vermeer,

I have never allowed myself the ability to sell uncovered nor got the approval to do so. Of course that limits my potential on choices but it also puts a curb on my tendencies if that makes sense.

I really should get full options access, but being a broker during the hay day and see people lose hundreds of thousands selling uncovered, well I just never wanted the temptation.

A bull put spread makes a ton of sense and it looks like today someone was selling the 60s uncovered, 1596 contracts trading today and nothing else in the full spectrum for Sept has traded near that number.

Just out of curiousity, why go so far down and do a spread versus just selling the puts naked? If you are looking at the 45s and 50s, the price is only between 80 cents and a buck..is it worth locking up the capital for that small of return on the credit spread?

  I have not done the above trade either, Wall, and for reasons similar to you own.I just threw it out there to see comments on it.I had similar questions about the necessity of locking up the $$ for the return.

 Anyhoo, just thought it worth the consideration for those so who deal more deeply in options than I do. I tend to be very conservative when it comes to trading, and I can  only claim relatively recent, and decidedly small experience in the options arena.(The one man I know who made fortunes therein really more of a riverboat gambler than anything else, and he really made his bones in commodities,(cotton) an even scarier place to me.)

I only saw that recommendation in passing, on a brief paragraph on DRYS, which I now read anything that passes my way since buying the stock.


 

PS

I don't have 40% of my stuff in any one stock so you are much more the gambler than I when it comes to the market!!! As high as I get is around 5%.. which sometimes saves me, sometimes costs me.

Vermeer,

My comments were made to see what your thinking was and if you had more reasons, a second Q so to speak. I hope it didnt come off in a bad way.



Are you long shares or calls or both?

One comment about the stock..I would like to see the 20 and 50 above the 200 but it isnt so far..which means a fall could be fast and support would be thin. I also am noticing a decrease in volitility which is good, the day swings are lesser and lesser. I also see the bollinger bands are very wide and probably are due for more compression.

I think this all means that the stock will slow in volume, will consolidate, hopefully in smaller day range and digest some of this move..what would be most bullish is the consolidation to be a continuation of the uptrend and allow the 20 and 50 to move over the 200 and the trend to get better footing, right now it looks shaky to me.

My gut says that the stock will selloff on earnings and retrace into the low 80s..part of me wants to take some gains, and I have a mental stop in place if the stock begins to break down..

Just some random thoughts there..

whereismyhat,

Cramer is terrible..when I heard that I wasnt too thrilled. Cramerica dissed DRYS about 20 points ago, which is typical for him..the guy is a tout and he has and will change views on the drop of a hat. Listening to Cramer will harm your investing results and I firmly believe that.

Nice job Gunners...FNM really pushing the market higher, big time reversal on the day, big volume.

Vermeer, you are right..that "gamble" on DRYS was definately biting off more than I wanted..once in a while I see a trade I feel deserves the allocation..not often but at times I feel the opportunity is there and I am willing to take the risk.

This might seem odd but I wouldnt be shocked to see DRYS go red this afternoon, or at least flat to up a little..it isnt trading that great today. I think new money is in and it is showing on the volume and price action.

Listening to Cramer also causes:  High blood pressure, high cholesterol, nervous twitches, muscle spasms, and the possibility of seizures.

  No offense taken at all (or even considered)...half the stuff I throw out here is preliminary, and frankly, I tend to look for reasons opposing anything I consider doing. I am long only stock in DRYS, having cashed out the rest of DSX to add to DRYS...as you mention you have liked DRYS for some time, and I have been buying incrementally.I thought about options, but frankly, did not see anything I liked well enough (I took a couple of option losses early in the year that made me even more conservative than usual in that regard).

 My methods make me react slowly to things. I am up around 9% for the year on the entire portfolio, and consider myself lucky to be so.Lately I have been wondering whether I should cash out by June (sell in May and go away) if I reach double digits, and return around November. The election has a lot of negative possibilities, however, so I might come back buying puts!!!

 PS

As you know, unlike Buffett, I do NOT think we are close to the end of the mess created and only temporarily "solved."

Gunners,

I think he sold STP, or had too tight of a stop. If he is buying other stocks as mentioned above I am sure he is out of the STP.

Anyone else notice the big run that CNQ is on lately?

From 65 to 90 just like DRYS in the same time frame or less.



Vermeer, I understand that..I guess I am more open to risk than some, and at times it sucks and times it is pretty cool.

Speaking of getting stopped out, I managed to stop out my Dad's holdings of MOS at 90 or so (up from 36)...and I see it trading at 126 now...

Vermeer,

That MOS is a monster, ultra crazy trading and it shows that sometimes a stop can kill a profitable position, especially if the stop doesnt take into consideration the beta of the stock. Not saying that is the case but for many high beta stocks, the MMs can swing a stock and take out stops on all sides and whip longs and shorts in both directions.

Yup, had it been my stock I would have stopped at 90 for  1/2 of the holdings, and let the rest ride..which is standard operating procedure for me...but in this case, he simply placed the stop for all. I can't complain about the actual trade (I would if it had been a loss!!) as complaining about a profit of $54 a share is piggish) but I still track MOS and a little bit of me gets hacked that it is still going skywards.

HAT,

You are hopping all over the place and not giving yourself the chance to win on a trade.

EGOV is a bad idea if you ask me. They earned 5 cents a share and sport a 40 PE ratio..I dont care for that trade at all.

Why SAPE?

link

They have MISERABLE margins, trade at big multiples, stock has been range bound for 4 yrs. I wouldnt touch it until it cycled down to 5.50 which has been hit 3-4 times and moved off that area for a decent return.

Think of the best use of your MONEY, not share total. I would rather own 10 shares of a great stock than 1000 shares of a stock which sucks.

Its tough since you might not have the patience but I hope you try to make the best TRADE, not the most shares.

Jeff,

Ride the wave..you know the drill..wide stop in place and let it work.

IPI seems pretty new, not enough info or trend to make me like the stock.

BCSI, not sure I approve of that trade.

Hat

Like Wall says, you are doing something that a lot of people do initially, going in impatiently, and scattered. Focus on at most two or three stocks, at most, and do not have a quick trigger, or else you will get eaten alive by whipsaws and commissions.

 The hardest part of investing, once you have considered all the reasons to buy a stock, is to ask yourself if conditions have fundamentally changed since you committed to that position.If the answer is no, hang with it, but if necessary lay in a stop that will keep you from getting too emotionally involved  in it.

And similar to what Wall says, Buffett remarked that it is better to one 1 % of a diamond is better than 100% of a rhinestone. With low commissions, concentrate of great stocks initially, even if it means one share (I owned one share of BRKB a one point, and it did better than most of the ones I had hundreds of shares in)...not as exciting perhaps, but a gain is always more exciting than a loss.

 

Selling picking up here..

Since 11 it has been straight down and the momentum is picking up to the downside.

Good trade Gunners..

I checked out LEH and they were hitting it pretty strong.

Lets see where they close this..

closed on the lows.  very impressive selloff.  volume was weak all day.  then the S&P went below 1405 and shit hit the fan.  heavy heavy selling