Saturday, February 06, 2010

UNG Calendars

BUY +10 CALENDAR UNG 100 JUL 10/APR 10 10 PUT @.42 LMT

Since this piece of junk has not moved and the skew seems favorable. Will try this calendar spread just to make it move!!! Ha ha hhahahahha.

Do note the perceived range is bewteen 9 and 11
for many months, as shown on the chart. $500 max risk to find out if there's any more in the pot. Profit target 20% after commish. Shorts are in apr so it will be slow going. Alerts set for just below 11 and above 9. If this thing moves toward those two points quickly. Some actions will be required.

Sunday, March 08, 2009

Thursday, December 18, 2008

Big 3 Bailout

Someone sent me this, click on image to enlarge.

Sunday, November 30, 2008

The Great Crash

Here is a comparison (for entertainment only) between the crash of 1929 and 2008. Note how the first leg down so far in 08 bear similarity to 29' in that both crashed about 50% from its high at this point in the calendar year.

In 29' the weekly chart shown climbed back up to the 50% fib level b4 failing again in Apr. of 1930.

The 50% retrace level for modern day dow chart to the right would be about 10800, right at one of the weekly resistant points.

I am also recommending The Great Crash, by John Kenneth Galbraith.
If you are lazy like me, look for the audio version of the book.

Wednesday, November 26, 2008

A tale of a S**tibank employee

Saw this posted in a chat room

The youthful and enthusiastic Chuck moved to Texas and bought a donkey from a farmer for $100. The farmer agreed to deliver the donkey the next day. The next day the farmer drove up and said, Sorry son, but I have some bad news: "the donkey died".

Chuck replied, Well, then just give me my money back. The farmer then said, Can't do that; I have spent it already. Chuck added, Ok, then just bring me the dead donkey. The farmer then asked, What ya gonna do with him? Chuck replied, I'm going to raffle him off. The farmer said, You can't raffle off a dead donkey! Chuck countered, Sure I can. Watch me. I just won't tell anybody he's dead.

A month later, the farmer met up with Chuck and asked, What happened with that dead donkey? Chuck said - I raffled him off. I sold 500 tickets at two dollars apiece and made a profit of $998 while recovering my initial investment of $100.

The farmer asked, Didn't anyone complain? Chuck replied, Just the guy who won. So I gave him his two dollars back.

Chuck went on to work for S**tibank's investment banking unit where he designed and sold packaged product investments including S&P triple-A rated collateralized mortgage obligations, CDOs and CMBSs. They were easy to sell to Morgan Stanley and especially easy to dump at Wachovia and Lehman Brothers. It was all a huge success while it lasted.

Saturday, July 05, 2008

IV behavior observation

Text book implied volatility behavior states:

Stock down, IV up.
Stock up, IV down.

From personal experience, this behavior is more fitting for broad mkt indices
and does not necessarily apply to individual stock options.

Here is an example, RIMM post earnings (earnings out 6/25).
News out, stock gapped down and continued down, yet IV going down.

I see this behavior quite often after any kind of news out on stock options. Even tho stock is down or tanking, the uncertainty and interest in them options fade quickly. Astute traders may be able to pickup some back month vol if this fade is overdone towards buy levels, for a quick vega play.