Gregmal

You guys are entering the trade for the wrong reasons then. @boilermaker75 not surprisingly has it down 100% right. I don’t really give a shit whether i own the stock or not, I’m really just selling insurance to folks on stuff that I can deal with owning at that price/valuation. If MO at 41.30 cost does me in, so be it. But I’d wager(as I am) that I either make money on the put sale or can make money from that basis. I don’t care if it gets bought for $50000 a share tomorrow. If it goes to $25 I should’ve been more selective obviously in hindsite, but that’s always a risk in the market anyway. People love to complicate the heck out of things which is what I think is going on here. Every stock can go up or down a lot. That’s not a risk specific to selling puts.

I don’t think I’ve ever felt screwed when a stock goes up that I don’t own. Here you are just committing to buy it at price that’s currently below market. You’re getting paid not to own it. If you like it enough right now you should just be buying it. I mean think about it, how many times do you see folks go “I’ll buy the dip”…”can’t wait to buy more at lower prices”…then the dip comes and they shit their pants and freeze up and do nothing.

Haha I don’t know. If anything I think it’s less. All I remember from 10 years ago is that investing had consequences. A bad earnings miss would cause a 25% haircut. Now just look at big tech. Goog and MSFT crush it and go up 5% and AMZN and NFLX post putrid numbers and are down 2% for a day and then in a week go up 5% too. As a fan of history and with respect for the markets and their inherent cycles….I would take that macro type of psychological driver of the herds into consideration as far as making and planning future investment strategies.

Haha its exactly that. This sort of thing applies to a lot of investing. You really just have to wrap your head around the intended purpose and objective of what you're doing, and then its really easy and for the most part stress free. I have had so many convos with people about selling puts over the years and it always initially came back with some iteration of "yea but if the stock goes down a lot you get screwed"....but then its like....well, you might get screwed, but you get screwed less than if you just bought the shares. And if you arent interesting in owning the shares, why would you short the put? And then theres a eureka! moment.

In either event though you need to define and then come to terms with what you looking to accomplish. If it s a hedge, you arent looking to make money. If its kind of a hedge but also kind of a trade, then thats different too. If it is a straight trade, then thats probably the only scenario where you would fully expect to make money on the trade and you really have to make sure all your ducks are in a row. I say this because it took me a while and a good amount of burnt money to realize this. You can put on trades that look good but have poor odds of working; happens all the time and theres no better example than the classic valuation short. I've generally over the years stopped trading on the short side with the sole purpose of making money. I sometimes outright hedge, but its less frequent. My 2020 P&L, specifically on the L side has some real funny looking stuff. Shorts that went against me 50-100% in a quarter or two. Options that were total losses. But in the context of what they were in place for, they worked, because it let the long side do its thing. Only thing that matters is how the aggregate end total looked, and in that instance, I was quite happy. Where I've been at in 2021 is very similar to the trade @rkbabangmentioned on TSLA. Will it make money? Probably not. Is it even about TSLA? Not really. If shit blows up does it work? Oh hell yea. If shit doesnt blow up is there a chance it still works...maybe, maybe not. But it covers your ass with some high octane fuel. Tickers are really just an opportunity set and even within the tickers there are opportunities within each individual option chain. All of it is just a means to an end...so define what your end is. On the AAL hedge trade for instance, I am still putting it on, but the idea is that I am getting 2+ years worth of protection and with about 5% risked in the form of options thats a negligible annualized drag. But the payouts could be anywhere from 3:1 all the way up to 10:1 or more. If rates rise it will almost certainly work. And if rates dont rise, it could still also work. If the market keeps going up, its probably not going to work. If the market tanks it will work. Different avenues, but multiple avenues to win. But you also have to be OK with losing. Because if you're doing it right, in the aggregate, when you lose on these trades, you are winning on the other stuff which more than offsets itself. Much different than when you just go long something.

Exactly. Too often people model these things in a vacuum. Well if rates go to 6% housing is fucked. However there’s reasons and things that happen that produce a 6% mortgage rate. And a lot of them aren’t wholly negative. Most as I’ve stated is my belief, won’t really matter one way or the other. I’m trying to explain that to a bunch of incompetent homeowners in a community where I am a trustee. They’re outraged dues went up 3% for NTM. And I’m like “1) have you been living under a rock? How much has your gas bill gone up? What about insurance? 2) your fuckin home value increased 35% year over year! Piss off”

It will become a vortex of pain and ultimately a death spiral if rates rise. Air travel won’t even matter. Look at all the money they made this last decade and look why they have to show for it and look at the equity value vs the debt. 1) rates rise a lot, is it easier or harder to refi all that debt? How about more expensive? Market is forward looking and will crush the equity unless debt is rapidly paid down. 2) why would rates rise? Well, for starters, inflation. What’s some of the measures for inflation? rising energy prices and labor issues. Boom and boom. AAL also doesn’t hedge. I’d also point out that to meet increased demand for air travel they’ll have to pay more and hire way more. Which will have to be offset by higher prices which could stem demand. 3) you could also arguably make the case that these are currently priced optimistically given the recovery trade theme and subsequent expectations of massive future demand. So if rates rise, it’s because basically everything that wrecks AAL is happening.

Haha appreciate the kind words. I personally don’t consider myself to be all that good of an investor. Too much ADD. Why wait for 10% annualized returns when every day or week or month there’s stuff doing those types of numbers? Really I just try to make money. As fast and as risk adjustedly reasonable as possible. I am exceptionally good at two things; recognizing patterns and processing a lot of shit real quick and getting out of it what I need to make a quick decision. Specifically with qualitative shit like narratives and risks that either seem to be present/warranted but aren’t or vice versa. But there are significantly better investors than I out there, for sure. I try not to wear a badge one way or the other. Be what you gotta be to make the money.

How about the principal getting lap dances from students at a high school pep rally the other day? Just in general these fuckin sickos need to stop trying to expose kids to sexual stuff. Besides, if kids are anything like they were when I was a kid, they’ll do a good enough job finding plenty of it on their own.

LOL yea I don’t even know what Mongolian growth is or why it exists but all these finance guys do this shit where they get to play Buffett for a day job. But back to his performance, who knows? Someone told me he never even had a real job and was bankrolled by family money straight out of school….again though, what business is it of mine? I don’t care if he worked to earn his money or not… I just like guys who can think outside the box and source ideas or spark new ideas. It’s up to me to see the shots and hit them. So on that note, I have nothing but the highest levels of respect for the dude. And right now, his reads on the market have been lights out.

No idea. I don’t follow it that closely and it doesn’t really matter to me either way. I read a lot and if it makes sense I give it merit. His current numbers just show that he s on point with his reads given the current market dynamics. Generally though my point was that people have this bizarre habit of deciding that “he got one wrong” is reason to reject or cast a fictitious conclusion and when you think about it there is no sense to it. No better example of this than Bill Ackman. Dude is straight money as an investor. There’s few better at picking downright great businesses and outperforming with a simple buy and hold strategy. And yet, there are no shortage of mouth pieces that love to run in and go “yea but what about VRX” or “he s blown up before” or some crap like that. And it’s like ok great, we know he s not perfect. Whew! Otherwise everyone who invests gets stuff right and wrong. It’s just lame to have such a low standard for dismissing things when the reality is “he gets a lot right in a big way and occasionally gets one wrong as well”….I can’t see how this is a reason to write someone with a great mind off. There s literally nobody in the history of investing who hasn’t gotten one wrong. But a lot of times we like to apply “getting one wrong” as a disqualifying trait for the best investors out there…..strange

OTM AAL leap puts edit: its more of a 12-24 month hedge idea. But it should all unfold together. Mountain of debt coming due in 2025. Biggest inputs are labor and oil...both will be the reasons rates would rise. CEO basically levered up buying back stock in 40/50s a few years ago. Bad business to begin with. Lotta ways to win.

Got a few Jan 2022 42.5s for ~$1.2. If I get put the shares it's "good enough". The biz is inflation resistant and basically a royalty/call option on prosperity/wage increases for the poor people.

Grabbed a little more JOE, shorted some MO puts, and laughed a little at AMZN and AAPL.

Honorable mention...RICK

I always like checking out the Starbucks indicator. 1) Does the town/area HAVE a Starbucks. 2) How busy is the store. 3) What kind of cars are typically on line at the drive through? Those will tell you pretty much everything you need to know.

Tangentially my father grew up in various parts of NJ and PA. Settled most of his childhood in Ridgewood/Ho Ho Kus area. Similar to what Eric described, in this area, in the 60/70s...its was fields and open land. Yes, Ridgewood and especially Ho Ho Kus, and even myself, I recall Mahwah NJ being barren in the 90s. Todays its packed and its all expensive suburban homes and a lot of big mansions. Saddle River too, especially so. So having left the area and moved to Tampa a decade ago, my parents are asking me to assist them in finding ANYTHING on a lake with some land with an open mind to pretty much ANYTHING in NJ/NY/PA...and guess what Ive noticed? Basically ANYTHING with a good parcel, waterfront, is now $500k+...even remote stuff in upstate NY or Nowheresville, PA. Crazy.

Trimmed some MSFT, bought some APTS April 2022 $10 calls, added some VIX November $25 calls.

You guys got the gist. Position sizing is everything. No one should be risking more than 5% of their capital on a single idea until they really know what theyre doing. Whereas while you are figuring things out, you can risk 1-2% positions all day long and really its not going to move the needle much either way. If what you are doing is really, really, off base, well...a half sensible investor will get tired of burning their hands on there stove and fix the bad behavior or the flaw in their process. Thats valuable and part of learning. The only way you go broke with sub 5% positions is if you continuously do really dumb shit. Which is way different than just having a few trades go against you. One is part of the game, and the other is the antithesis of it.

But yo, like, he liked tanker stocks that went down and I THINK.....HIS STRATEGY...is risky. These are lifetime returns for some folks LOL.

Some of the best advice I have taken personally, and also heard so many people swear by, is to really reach on your first home. If you're of average or better intellect with corresponding job prospects...go to that point where you're internally like "ehhhh I could do it but eh...its gonna be close/tight"....If you're under 40, and especially 30...pull the trigger. 5-10 years from now you'll either need a bigger house anyway, or if you bought the right one, be totally in the drivers seat, and with a huge equity cushion even if prices go nowhere. And in either event, if you're half successful on your career path, what was a lot of money to you then, at 25 or 35, most definitely shouldn't be a lot of money to you 10 years later in your life/career.

These are great sort of trades. High leverage ways to cover your ass if the music stops. In a certain sense its funny because folks think this is a bad idea because if the music doesnt stop you will certainly lose money. Even if it kinda stops, you can lose money. The most likely outcome is in fact a write-off. And this is true. But how many of those same folks have home insurance? I bet you none of them look at their annual renewal notice and say to themselves "terrible trade John. Just lost 100%. If such as such happens that policy premium is another write off! Doh' and now they want 20% more money for the same contract as last year!?!"...

Thanks my man. No problem. Love helping folks out and when Im not annoying them with politics hopefully allowing them to see investing is not that hard you just have to rejigger the framework sometimes and that you dont need a financial professional in order to take care of yourself. Tangentially, folks too often become infatuated with specific companies, names, tickers, etc. The only thing that matters is the money you stand to make or lose. So for the above, the most likely scenario is you get $50 against a ~$500 stock for a couple years tie up. I'd actually probably move up a year to the 2023 $350s and just take the $35. Then you can either hit it again as those get closer or roll down again for another year. SAM is kinda a quirky stock...its really good value if you get put under $400 and pretty poor value over $500(just my opinion), and either way you know there's buyout upside solely because the big boys are shitty allocators and will pay up for good brands and shelf space, both of which SAM has.

https://nypost.com/2021/10/25/our-brave-new-progressive-world-from-a-to-woke/