SHIT!!!!!

T_BONE is winning as I post

8832 for next week

8782 - don't bother with the calculator, that's 50 pts lower than kendricks

Ben 8750

Ldvee 8782 - don't bother with the calculator, that's 50 pts lower than kendricks

Kendricks 8832 for next week


T_BONE won, BFD!!!

What happened to the 50 point rule???

Ah Ben's never been to good with numbers.

8732

Fuck you guys

Kendricks 8832 for next week

Ldvee 8782 - don't bother with the calculator, that's 50 pts lower than kendricks

Ben Fuck you guys 8732

Good news, T_Bone will not win this week.

Ben on the winning track today!!

I closed out all of the non-covered call trades I had open today, taking profits on GADZ and FSII, and closing out the others for a small loss or near break even.

What's pretty funny is, for all these trades I have been in and out of since the beginning of April, I made a little over $300 net profit. For the total amount risked, I potentially could have made more on one successful covered call trade, for only a tiny fraction of the work, and with less chance of losing money.

Ah, the ironies....

We have had a nice couple of months in the market and even the cheap penny stocks have moved up. I am not saying you didn't use good judgment in your stock picks, but I am saying the market climate has been very beneficial to all investors.

I and my clients have also done well over the past 8-10 weeks in the market, particularly we have done well on the financial stocks: FPTB, NYB, FNM (a home run), AIG, ALL, FNF, GE, etc.

I guess what I am saying is that if you didn't make money in March and April-May, perhaps another strategy should be considered.

Well, if you won't say it, I will. Much of the judgment in this flurry of trading activity I engaged in was not very good.

As I mentioned before, I still have most of my funds in covered call trades, but set aside about 10g to try some more active trading with. For the number of trades I made, I do not think that a 3% gain is very good. I spread myself too thin, got out of some trades too quickly (EELN and WINS, for example), entered some trades that were fundamentally unsound, etc.

The end result of this is that much of the profits made in the good trades get eaten up by whipsawing and commissions, and you never really get ahead.

This is why I had to close all of these trades that I had open. I need to rethink my strategy and regroup. First, I am not going to enter any trades unless I have sound fundamental and technical reasons to do so. I will not chase trades, but will only enter on well defined entry points, with a clear exit strategy.

Because I will be in fewer trades, and will only be in trades that are based upon clearer thinking (instead of gambling instinct), I will be able to devote a larger percentage of my account to each one. Since I will not be chasing rockets that have already taken off, I will be able to do this more safely.

Of course, unless and until I am able to do this type of trading much more effectively, the bulk of my account will remain in covered call trades.

Forgot to say earlier.

I think the market has had a nice run, but will probably either flatten out for a few months and even a good possibility that it will come back down at least 5-6 percent.

In the money calls is what I am doing and trying not to get too greedy.

Kendricks,

I feel day trading is the road to disaster for most, if not all traders. As you have observed, you have to be right allot and the return for the risk is just not worth it.

If you really want to enhance the risk of investing, start day trading on margin.

I had a client (still a client) who margined approximately $250,000 up to $1,400,000 in about a year when the biotech stocks were going through the roof. I think 1998 and 1999. Every trade he did was unsolicited and as he made money he kept leveraging higher. At one point he could have paid off his margin account of about $1 million and probably netted a million dollars after taxes. I even sent him several letters warning him how risky his trading strategy was in the market (CYA letters).

When the biotech market started unraveling he lost everything including his original $250,000 and in fact had to write a check to my firm for approx. $7000.

He deserved what he received, but I still felt very sorry for the guy. Incidently this guy is no dummy. He has a Phd. in BioChemistry

Jesus Fuck. Why the hell would someone with over a million dollars in profits in their account still be trading on margin? Amazing...

"Why the hell would someone with over a million dollars in profits in their account still be trading on margin?"

I know why, and it's more complicated than simple greed. What happens is when your dreams come true, you conjure up new dreams, something that's out of reach at the moment, but IF ONLY.......

Your old dreams are suddenly not good enough, you start imagining more.

I'm speaking from experience. It's happened to me with both money and women. The money loss I deeply regret, women, well fuck 'em, good riddance to the ones I've lost, and hello to the new rentals in my future.

I can understand still trading with over a million in profits, but - ON MARGIN????

Definitely a bad move.

Trading stocks for some people can be as addictive as sex, OK OK maybe not that addictive, bur at least as addictive as gambling.

Ldvee is right on the money regarding many people reach their financial goal and just are not satisfied. They always want more, no matter what they have achived financially.

Ben won this week and picks Dow 8500 for next week

8574 for my non-margin using ass.

Look at MCDT and USG for covered call trades.

Geeezzz,

I said 8500 this week, but i didn't mean in one day.

Well, this week it is only me and Ben. People seem to be losing interest.

I wish interest was all that I was losing, just call me ole "buy high sell low".

On more upbeat note, I did a 2AM AB bombing run Sat morning and had the most pornographic BBBJTC ever. Didn't get her name, she said I looked like Richard Burton (yeah right baby) so I just called her Liz. She was pretty smashed and said she is now worried about babies growing in her throat. Not that good looking, I insisted she leave the bar and the hotel ahead of me. She was fun tho.

Since I'm in late, I'll pick the impossible.

DOW 8700!!

Ldvee DOW 8700!!

Kendricks 8574 for my non-margin using ass.

Ben won this week and picks Dow 8500 for next week

I won a few bucks paying poker last night, and pondered the parallels bewteen poker and trading while I was playing.

To beat either game, you have to conquer the urge to want to be in every pot. You cannot get upset when you fold a hand, and then the miracle card comes that would have won that pot for you.

Waiting until conditions are favorable is paramount. Then, you can enter boldly with the odds in your favor, but still be ready to get out as cheaply as possible when all goes wrong. If you gamble too much, you will win some and lose some, and the rake (commissions) will eat up any modest profits which may be made, even if you are luckier than average.

The game is rigged against the player who is controlled by his emotions. Discipline and sound strategy must overcome natural urges, or success is impossible.

Most important to winning: when a winning streak is ending, you must be willing to pick up your chips and walk away from the table, before you have given all of your winnings back to the other players.

Kendricks,

"The game is rigged against the player who is controlled by his emotions. Discipline and sound strategy must overcome natural urges, or success is impossible. "

Words to live by.

Just sold the June 30 calls on Home Depot:

Options Account
Home Depot
Price
Date Description Price Per Share

11-12-02 Bought 400 Shares HD $10,896.00 $27.24

11-18-02 Sold 4 Dec. 27 1/2 Calls ($886.00) ($2.22)

11-18-02 Net Cost Per Share $10,010.00 $25.03

Options Expired

12-11-03 Dividend ($24.00) ($0.06)

12-11-03 Net Cost Per Share $9,986.00

3-11-03 Dividend ($24.00) ($0.06)

3-11-03 Net Cost Per Share $9,962.00 $24.91

5-20-03 Sold 4 June 30 Calls ($542.00) ($1.36)

5-20-03 Net Cost Per Share $9,420.00 $23.55



If Shares Are Called on June 20, 2003

Net Profit From Stock $919.00
Net Profit From Options $1,476.00
Net Profit $2,395.00
Percent Return 218 Days 25.42%
Annual Percent Return 41.99%

My original cost was $27.24 a share and I have now lowered my risk/break even to $23.55. I have a feeling that HD will be below $30 by June 20, but either way I like the position I have created for myself on this stock.

Hell, I may have to buy Sugar Pie another car.

Nice HD history. I'm thinking about buying SGDE on a breakout above 10.25. The stock looks good all around, and poised to move higher. What do you think?

I like sgde and wish I had bought it last year when I heard about it some where??? I don't remember where I heard about it.

Good fundementals and also the technicals look good.

I am just concerned about the over all market right now.

What do you think about MIK and selling the June 32 1/2 calls?

Just did this trade:


Options Account
Michaels Stores

5-21-03 Bought 500 Shares MIK $16,314.00 $32.63

5-21-03 Sold 5 June 32 1/2 Calls ($934.00) ($1.87)

5-21-03 Net Cost Per Share $15,380.00 $30.76



If Shares Are Called on Oct. 18, 2002

Net Profit From Stock ($164.00)
Net Profit From Options and Dividends $934.00
Net Profit $770.00
Percent Return 29 Days 5.01%
Annual Percent Return 62.15%

Nice trade. 5% is pretty good for a month's profit, and it looks like a good stock - it's balance sheet and earnings growth are both great. It's chart looks like it could move either way from here, but it also appears that it will have no problem reaching 32.5 again, if it does slip.

Here is a nice trade I made on Monday:

USG

Bought 1200 shares @ 12.05 $14,460
Sold 12 June 10 calls @ 2.9 ($3,480)

Net cost $10,980

Profit if assigned: $1,020

Percentage gain (5 weeks) 9.3%
Annualized gain 96.7%

(Message edited by kendricks on May 21, 2003)

My order to buy SGDE was triggered this morning.

I urge anyone reading this to go to http://www.sportsmansguide.com/ and buy some stuff.

SGDE has a nice website. In fact two websites. I really like that stock.

My only hang up is that I have taken investment advice only once on this board and I SURE wish I had ignored the source.

USG looks like a great winner(nice downside protection), but I am concerned about all the asbestos lawsuits. It looks like the Feds are trying to resolve this problem but who the hell knows what is going to happen. Fucking lawyers.

Also, isn't USG in bankrupcy?

It's a god damn good thing USG had all of that downside protection. It had a big stumble this morning, but seems to have stabilized just under 10. 9.15 is my break even point, so hopefully I will be ok on it. The chapter 11 was originally filed almost 2 years ago, so I didn't consider it significant for a covered call trade with that much downside protection. Do you disagree?

I'd like to see SGDE make a nice run from here. This stock fits all of my criteria that I look for in long trades - solid book value, profitable company, earnings growth, price momentum, and a break out above recent highs. Unless I am completely full of shit, SGDE at 10.30 should have a high probability of turning a nice profit in the relatively short term future.

I have noticed that there is usually a good/bad reason why a premium is very high (out of the ordinary) on a stock.

Sometimes people who follow the stock are willing to pay a high premium to buy the call on the expectation that it is moving up from a recent down turn. Sometimes the stocks just continue to tumble as they really do have significant problems that will not go away.

I had no idea that USG had dropped this morning when I made my earlier comments, but do think the company is going to have major problems staying in business if the government does not come out with a bailout regarding asbestos.

HAL has the same problem, but they have already made a side deal for over 4 billion to settle their 350,000 claimants. HAL may back out of their deal if government steps in to settle this mess.

How would you do if you just bailed and bought back the calls and sold the stock right now?

I would get assraped if I bought the calls back right now. The ask is 1.85, and the stock is selling for 10.20. I would have to give back my $1,000 profit, plus another $900. The stock would have to close at less than 8.35 next expiration day for this to turn out to be a good move.

How about buying more and average down? If you like it at $12,05, you must love it at $10.

Trying to be funny, but not funny when you are losing money.

I guess just ride it out, but I noticed it got as low as $8.35 today. Today and tomorrow could be very rocky for all these asbestos related companies.

I think Bush is going to really push to get these law suits settled as allot of large companies are going to go bankrupt with huge loss of jobs if they don't get this settled.

Whats interesting about these lawsuits is the U.S. Navy would probably have the biggest liability if you could sue the U.S. government

Well, I'm not losing money yet. If it firms up where it is, I will still make my full profit on it. I think it is worth the risk to ride it out.

There is a theory regarding stocks that they will generally come back and fill a gap. Usually within 30 days. Earlier today it looked like it was going to have a large gap, but it seems to be recovering.

If it trades above or near $10 on June 20, you have a classic example of why call writing protects your downside.


Bueno Suerte

They protect your backside, too. It would be pretty funny to buy a stock that drops 16% over a month, and still make a 9% profit on the deal. Hopefully that's the way it works out.

Kendricks wins the Dow this week. Lets hope he wins the USG on June 20.

Ben picks 8800 for next week in honor of this stupid tax bill that pasted the senate this week.

Ben, Kendricks

I don't know why but I just don't get the options game. I read what you guys write, and I've read about options elsewhere, but I find it mystifying. Maybe we could meet up in San Diego for dinner some evening, on me, and we could discuss it. For me it's an area where a dialogue is required. I need it explained and to be able to ask questions. And La Tropa is the wrong venue.

On a zona note. Oh man, this weekend was one of extreme excess. I have an insatiable appetite for latinas. Yikes!!!! I still amaze myself after all these years of hunting, or being hunted. Whatever.

It is la vida loca.

8750 para mi.

Options (Puts and Calls) are one of these things that once you understand are really quite simple.

Buying a Call gives you the right to buy someones stock at an agreeded upon price sometime in the future. Its a contract between a buyer and a seller.

Selling a Call contract entitles you to receive money (a premium) for agreeing to selling your stock in the future at a predetermined price.

You don't have to own the stock to sell a Call option, but it is a very risky strategy. They use the term a naked call for selling Calls without owning the stock..

Buying a Put simple means I can pay someone a premium/money for the right to Put/ sell them stock in the future at a predetermined price.

Selling a Put means I receive money for agreeing to buy a stock at a predetermined price during a future time period.

I mean it doesn't get any simpler than that!!!

Next class we will talk about Spreads.

I'll go for 8850 this week.

Go USG and SGDE.

I haven't done anything with spreads, although I do understand the concept. Do you often do spreads, Ben? If so, under what circumstances do you think they are worthwhile?

Dow 8700

Ben thanks,

I'll print your definitions and think about what they mean and how to apply these contracts.

I have to admit that after reading the definitions and then "I mean it doesn't get any simpler than that!!!" made me think of the case where you say "rocket science is where stuff shoots out the bottom and the rocket goes up. It's easy." Yeah, true but maybe there's some finer, more complicated angles to work out before you try it.

You get what I mean.

Here's a newbie question. Since they all involve setting the terms now for a transaction in the future, and there's four types, and stocks either go up or down, which 2 do you use if you think the stock will be up and which 2 if you think the stock will be down at the future date? Also do options make sense if the stock is flat-lining?

T_Bone Dow 8700

Ldvee 8750 para mi.

Ben picks 8800 for next week in honor of the stupid tax bill that passed the senate this week.

Kendricks I'll go for 8850 this week.

If you think a stock will go up, you could buy a call, buy the stock and sell a call, or sell a put. Of these, the safest and most conservative is buying the stock and selling a call (covered call writing). Buying a call is gambling that it will shoot up dramatically prior to the expiration of the call, and is not something I personally recommend (although there are certainly those who disagree).

Look at my post and Ben's posts of May 20 and 21 for examples of covered call writing.