Self-directed Investing

Basically -- if my synthetic short moves in my direction I lose money on the long call. Keep the premium on the short call and make money on the long put.

It's no different (as far as the risk graph is concerned) than buying 1000 shares of ABC stock at $50 and buying a Protective Put at the 45 strike - the most you can lose on the stock is $5 (50 -45) and the premium of the put - but on the upside you have to offset the cost of the protective put....

So if the stock goes up - the protective put is worthless. I think of it as insurance. I have it on my plane. I hope I dont need it. I'll spend 1700 this year on my Cirrus insurance. I'll probably lose that 1700 bucks - but I have insurance if something happens.

I just do this with options as it gives me more bang for the buck than doing it with shares of stock. But sometimes I DO Do this with shares of stock.

But I also use portfolio margin - that is a whole other discussion but basically it basis your margin based off of the risk of the whole position. For example my SPY trade the portfolio margin requirements are under 270 per spread. If I were using normal Reg/T margin it would be higher - but have no idea how much - havent used Reg/T in quite some time
 
And of course, understanding how the trade works seems to me to be the easy part. Picking the trades would be the hard part, I'd think.
 
asechrest said:
And of course, understanding how the trade works seems to me to be the easy part. Picking the trades would be the hard part, I'd think.
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Yaeh - well remember cant always pick winners. I do what works for me. I can't pick tops or bottoms. But I do pretty well with identifying trends - lower lows/lower highs or higher highs/higher lows....

The key to making what I do work - is the price of the stock or ETF needs to be above 100 a share - I wouldnt dare try this on a stock like BMY - it HAS TO MOVE.. then I look at the volatility of the stock and options. If I have volatility in an issue that has a higher price and options that are liquid - i'll watch it - sometimes for months to see a trend..

I have positions or had positions (recently) in the following
DIA
SPY
IWM
XLV
XLE
XOM
IBM
CAT
AAPL
CMG
GLD

That should get you started :) I just checked - you can download the ThinkorSwim SiM free - thinkorswim.com

They are ok.. I love the platform but their margin rates suck. I have an account at IB - they have way better PM margin rates but the platform is not nearly as options-freindly as TOS..
 
One other comment about short term trading. Consider also that you are paying capital gains and ordinary income on anything you make. Long term investments avoid capital gains and you get to use the "governments money" to compound your investment by deferring taxes until you sell. Also, some forms of dividends offer the same benefits.
 
Alexb2000 said:
One other comment about short term trading. Consider also that you are paying capital gains and ordinary income on anything you make. Long term investments avoid capital gains and you get to use the "governments money" to compound your investment by deferring taxes until you sell. Also, some forms of dividends offer the same benefits.
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Yaeh - taxes really suck... seriously suck... Was having a fine evening till you brought that up :)
 
EminiTrader said:
Yaeh - taxes really suck... seriously suck... Was having a fine evening till you brought that up :)
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Didn't mean to say that word during happy hour.:)

Since it's already out there, are you changing your investment structure to deal with the changes in capital gains post 2013? Especially that ACA surtax?
 
Hmmm, I'll bet I can do better playing the ponies than most people can on the stock market. It's no different really from what is being talked about here. I can analyze conditions against known reactions and place my bet on my predicted outcome of the reaction under current conditions. I can even hedge my position with big Show bets. It's work, but I can make a steady 30% at it. Once you understand how to handicap, it's not too difficult, but it is tedious and time consuming looking at information and processing it. I had a neighbor in Long Beach who was a pro gambler. We'd fly to Vegas in my plane and he taught me to handicap. Ugg, you're up at 6am with the Racing Form, and you aren't done till 5. Granted there are worse places to spend the day than Caesar's. I never found it fun though except when I found a Trifecta, that was kinda cool since I called it to the old man and he said "impossible, you can't spot a Trifecta" Paid over $16k on a $3 bet. Outside that it was just work; Blackjack is more fun, but it is harder to make money.
 
Henning said:
Hmmm, I'll bet I can do better playing the ponies than most people can on the stock market. It's no different really from what is being talked about here. I can analyze conditions against known reactions and place my bet on my predicted outcome of the reaction under current conditions. I can even hedge my position with big Show bets. It's work, but I can make a steady 30% at it. Once you understand how to handicap, it's not too difficult, but it is tedious and time consuming looking at information and processing it. I had a neighbor in Long Beach who was a pro gambler. We'd fly to Vegas in my plane and he taught me to handicap. Ugg, you're up at 6am with the Racing Form, and you aren't done till 5. Granted there are worse places to spend the day than Caesar's. I never found it fun though except when I found a Trifecta, that was kinda cool since I called it to the old man and he said "impossible, you can't spot a Trifecta" Paid over $16k on a $3 bet. Outside that it was just work; Blackjack is more fun, but it is harder to make money.
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I would love to play blackjack for a living! Fly over to Biloxi or Tampa and kill it. problem is I suck at it :)
 
EminiTrader said:
I would love to play blackjack for a living! Fly over to Biloxi or Tampa and kill it. problem is I suck at it :)
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You, Henning and I will learn card counting. In three months we'll meet for strategy session. In six months we'll make our rounds at the casinos, moving on to the next after we get banned for card counting. We can start down in Ft. Lauderdale and work our way north.

I see millions in our future.
 
txflyer said:
I was under the impression that day trading is not investing.
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My layman's understanding of both would agree. These things are wholly separate in my mind, so I don't want the folks who've helped me here to fear I'm going to blow my life savings on options trading.
 
I was talking to my casino host about Blackjack card counters recently. He was saying that after the book and movie "Bringing down the house" came out groups of people are always trying it. Apparently they are really easy to catch, because they do it exactly like the book describes. Casinos only offer Blackjack (low house advantage) because for every basic strategy player there are 100 drunk numb nuts splitting 10's.
 
asechrest said:
My layman's understanding of both would agree. These things are wholly separate in my mind, so I don't want the folks who've helped me here to fear I'm going to blow my life savings on options trading.
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You should also consider what a company does and produces besides profit when you invest.
 
asechrest said:
You, Henning and I will learn card counting. In three months we'll meet for strategy session. In six months we'll make our rounds at the casinos, moving on to the next after we get banned for card counting. We can start down in Ft. Lauderdale and work our way north.

I see millions in our future.
Click to expand...

Counting cards, especially with shoes, is beyond my skills. Best I can do is track the 10s and aces that have come out. With modern continuous shuffle shoes in use now, it's a fools errand to do even that. The only thing you can really do directly in Blackjack anymore is to play the known hands correctly (12&13 against a 7+ will suck to decide no matter what) and use a progressive betting pattern that resets to minimum bet with each loss. Doing this I can typically hover on my grub stake (10 hands at minimum bet) all night and get a comped room and meal, (comps are calculated by time in play, not money) and have met some interesting people. I do walk away from the table ahead frequently enough, and I never lose more than my grub stake, if I can't win on a 10 hand stake tonight, I won't make money on 100 either.:lol: Grub stake gone and it's time to go to the pool and see if I am luckier there.
 
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Henning said:
Counting cards, especially with shoes, is beyond my skills. Best I can do is track the 10s and aces that have come out. With modern continuous shuffle shoes in use now, it's a fools errand to do even that. The only thing you can really do directly in Blackjack anymore is to play the known hands correctly (12&13 will suck to decide no matter what) and use a progressive betting pattern that resets to minimum bet with each loss. Doing this I can typically hover on my grub stake (10 hands at minimum bet) all night and get a comped room and meal, (comps are calculated by time in play, not money) and have met some interesting people. I do walk away from the table ahead frequently enough, and I never lose more than my grub stake, if I can't win on a 10 hand stake tonight, I won't make money on 100 either.:lol: Grub stake gone and it's time to go to the pool and see if I am luckier there.
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No one ever listens to gambling advise, but based on your post. PLEASE use a basic strategy trainer like I liked. That alone will put you in the top 1% off all blackjack players. There are no tough calls in Blackjack, only mathematical odds.

http://www.hitorstand.net
 
Alexb2000 said:
No one ever listens to gambling advise, but based on your post. PLEASE use a basic strategy trainer like I liked. That alone will put you in the top 1% off all blackjack players. There are no tough calls in Blackjack, only mathematical odds.

http://www.hitorstand.net
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Yep, the odds are against you though. Strategy trainers all teach loosing betting strategies.
 
Henning said:
Hmmm, I'll bet I can do better playing the ponies than most people can on the stock market. It's no different really from what is being talked about here. I can analyze conditions against known reactions and place my bet on my predicted outcome of the reaction under current conditions. I can even hedge my position with big Show bets. It's work, but I can make a steady 30% at it. Once you understand how to handicap, it's not too difficult, but it is tedious and time consuming looking at information and processing it. I had a neighbor in Long Beach who was a pro gambler. We'd fly to Vegas in my plane and he taught me to handicap. Ugg, you're up at 6am with the Racing Form, and you aren't done till 5. Granted there are worse places to spend the day than Caesar's. I never found it fun though except when I found a Trifecta, that was kinda cool since I called it to the old man and he said "impossible, you can't spot a Trifecta" Paid over $16k on a $3 bet. Outside that it was just work; Blackjack is more fun, but it is harder to make money.
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You can't do it from Vegas. You need to be at the track. How else are you gonna see which horse takes a dump in the paddock? :)

My dad owned a string of race horses. He made a small fortune.
 
Sam D said:
You can't do it from Vegas. You need to be at the track. How else are you gonna see which horse takes a dump in the paddock? :)

My dad owned a string of race horses. He made a small fortune.
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The sports book at Caesars had good coverage.;) I used to raise premium hay for race horse guys.
 
Well why dont we do a big fly in near a casino and we'll share stock tips, blackjack and sportsbook tips.. drink all day and have a good time! Quick hop to Tampa or Hollywood - or even biloxi
 
EminiTrader said:
Well why dont we do a big fly in near a casino and we'll share stock tips, blackjack and sportsbook tips.. drink all day and have a good time! Quick hop to Tampa or Hollywood - or even biloxi
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Atlantis? Hard Rock here kinda sucks as a casino.
 
Well i'm in... havent ever flown to the bahamas though... may need to pick you up for your expertise!!
 
Never been to the Bahamas either. But my flying club plane is based at KHWO - North Perry - since I'm in that area most weekends.
 
Well, hell, pick me up too. :D Unless ya'll want to ride in an Archer with a low-time VFR pilot who's never been to the Bahamas. :D
 
So, what is up with CAT? Just peeked at the 6 month chart and that is a bit of a roller coaster.
 
I read Buffet's biography "Snowball", he really isn't a nice guy. He used to shop lift, and treated his wife and kids selfishly.

As for Blackjack, Bryce Carlson's book Blackjack For Blood has a very effective counting system that works well. Only one good single deck game left in all of Las Vegas.

I have been investing on my own for some time and have found Louis Navellier's Bluechip newsletter helpful.

Good Luck!
 
masloki said:
So, what is up with CAT? Just peeked at the 6 month chart and that is a bit of a roller coaster.
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I haven't heard anything specific on the product side that would cause a problem. Most likely since CAT is highly dependent on the mining and minerals sector, and that has been so volatile (China has been playing games, especially with Iron) that this is likely the effect of speculators betting on charts as described above. If you have enough money to speculate with, you can drive this process and take advantage of the people who follow the movement.
 
Sam D said:
My dad owned a string of race horses. He made a small fortune.
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Out of a large one?

My business is buying off the track thoroughbreds with a case of the slows and retraining them for the show ring. I just bought a nice, sound 4yr old that sold at Keeneland for $150k for the princely sum of $3500. Sound, just didn't want to run. Likes to jump though:).

A winner's got to pay off like a slot machine, because kissing frogs is damn expensive. But yeah, it's a lot easier to pick winners at the track. Class shows.

We oughta do a fly in to Saratoga when the race meet is on.
 
Chip Sylverne said:
Out of a large one?

My business is buying off the track thoroughbreds with a case of the slows and retraining them for the show ring. I just bought a nice, sound 4yr old that sold at Keeneland for $150k for the princely sum of $3500. Sound, just didn't want to run. Likes to jump though:).

A winner's got to pay off like a slot machine, because kissing frogs is damn expensive. But yeah, it's a lot easier to pick winners at the track. Class shows.

We oughta do a fly in to Saratoga when the race meet is on.
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Good to see a "slow" horse go to a good home. The one thing I miss about the ranch is being able to go out and smell my horse.
 
Henning said:
Good to see a "slow" horse go to a good home. The one thing I miss about the ranch is being able to go out and smell my horse.
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Let me have your address, I'll send you an old work boot...guaranteed to bring back memories. :D
 
masloki said:
So, what is up with CAT? Just peeked at the 6 month chart and that is a bit of a roller coaster.
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Much of CAT's sales go overseas, making them vulnerable to currency fluctuations, political/tariff spats and regional economic swoons worldwide.
 
Chip Sylverne said:
Out of a large one?

My business is buying off the track thoroughbreds with a case of the slows and retraining them for the show ring. I just bought a nice, sound 4yr old that sold at Keeneland for $150k for the princely sum of $3500. Sound, just didn't want to run. Likes to jump though:).

A winner's got to pay off like a slot machine, because kissing frogs is damn expensive. But yeah, it's a lot easier to pick winners at the track. Class shows.

We oughta do a fly in to Saratoga when the race meet is on.
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Yes! I was waiting for someone to complete that.
 
txflyer said:
I was under the impression that day trading is not investing.
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You can call it what you want, primarily it is a profit generator for the brokerage industry that pays a lot of bills and salaries, builds nice buildings and allows people to wear nice Italian suits.


The "market", for the most part, is efficient. The current price is the value of all publicly known information on a company (or economy, industry, etc..). Sometimes things get out of whack and there are inefficiencies that can be exploited.

We have had a record bull market since Obama got elected, so if you were long stocks, you have the performance of a "genius". Didn't really matter which names, for the most part, as the rising tide lifted all boats.

Even Day Traders, on the Long side, have made money (while generating huge commissions for their brokers).

With front running order routing systems, the brokers have the ability to even beat you to the trade, though they deny it.

There have been studies that show trading and timing is a losing proposition, long term.

In its 2014 Guide to Retirement, JP Morgan Asset Management illustrates what can happen to investor returns when they miss out on these good days.

For instance, if an investor stayed fully invested in the S&P 500 from 1993 to 2013, they would've had a 9.2% annualized return.

However, if trading resulted in them missing just the ten best days during that same period, then those annualized returns would collapse to 5.4%.
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Luigi said:
I read Buffet's biography "Snowball", he really isn't a nice guy. He used to shop lift, and treated his wife and kids selfishly.



Good Luck!
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How old was he when he "shoplift"ed?

And, is leaving his wealth to charity an act of a selfish man?
 
JoseCuervo said:
The "market", for the most part, is efficient. The current price is the value of all publicly known information on a company (or economy, industry, etc..).
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This is what I was taught in school. I no longer believe it to be the case.
 
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