backtothebeach

@RedLion have you been able to keep any of these trades going? APO is back close to the initial strike prices, so maybe you could sell nice premiums during the recent volatility?

Respect!

I’d love to hear a story or two of your “colorful” friends … Obviously with changed/anonymized details.

https://finance.yahoo.com/news/why-stocks-swung-nearly-5-170540004.html "Institutions bought more than $10 billion in puts on individual stocks last week, a record for that group and close to the most ever by any cohort of traders, according to Sundial Capital Research. There was circumstantial evidence those wagers paid off in the immediate aftermath of the government’s report on consumer prices, which showed hotter-than-expected inflation. While equity futures sold off, the Cboe Volatility Index, a gauge of market anxiety tied to options on the S&P 500, actually fell, potentially a sign of profit-taking by hedged traders. And as those positions were monetized, that prompted market makers to unwind short positions they had put on to maintain their neutral market stance."

At today's close I have estimated "realtime" BV at $214.26 and the B shares at a P/BV of 1.24.

Here is the whole exchange. She also says “1.5 degrees Celisus” without correcting herself around the 2:40 minute mark…some congresswoman…:

BASF Highly dependent on ever more expensive natural gas. Russia cutting off Nord Stream. All baked in? Didn't Buffett buy some?

Currently I do this: *Open unread content https://thecobf.com/forum/discover/unread/ *Open all the threads I am interested in different tabs *Mark site as read Maybe there is a more efficient way. Do you follow/unfollow topics (can you put topics on ignore?), get notified by email, or use other functions of this forum software?

Lost patience and bought back into Stelco yesterday. At least it was 2% lower.

Without paywall https://www.newsncr.com/business/student-makes-110mn-trading-meme-stock-favourite-bed-bath-beyond/

SPY options are among the most liquid of all, which helps with the bid-ask spread. However it also means that they are usually efficiently priced, the entirety of the option chain being a balanced system of risk and reward (that's how I see it anyway). What would you say is your edge?

BBBY Sep'22 $5 puts.

NAME OF ISSUER US$ 1000 Shares MANAGER APPLE INC 2,792,398 20,424,207 01 02 BANK NEW YORK MELLON CORP 82,978 1,989,411 01 02 BK OF AMERICA CORP 708,251 22,751,400 01 02 CHEVRON CORP NEW 302,880 2,092,000 01 02 CITIGROUP INC 4,093 89,000 01 02 DIAGEO PLC 39,656 227,750 01 02 HP INC 540,109 16,476,783 01 02 MARKEL CORP 5,238 4,050 01 02 US BANCORP DEL 811,261 17,628,443 01 02

Not much love in the market for Fairfax these days ...

Income from operations B$ 8.166, up 19% from a year ago. That's quite impressive.

You mean the market thinks Fairfax will tender the Stelco shares to finance the Atlas takeout, which is positive for Stelco, that's why its price is up? What I don't understand is why anyone that is willing to tender at $35 would not sell as much as they can at market prices above $35, thus keeping the price close to $35. Is it not worth their time because volume is low and a few $100.000 more or less is just a rounding error to them? I'd happily take that job... Admittedly I don't know much about moving huge blocks of shares.

STLCO Betting on a drop towards the tender price range to buy back in. My timing with Stelco has been terrible in general, so I may be wrong.

LOL, I can see your trades on IB. Looking forward to seeing it develop. With unchanged volatility I get this risk graph, with breakevens at $55.33 and $62.09. <<< the biggest risk would be for a big move right after putting on the position <<< before being able to recoup the LEAP premiums by selling weeklies? Exactly, In case of a firm takeover bid and huge move towards the takeover price before August 12, implied volatility would surely be cut at least in half (the red line), with the LEAPS losing most of their time value before you had a chance to recoup it.

In essence it is a double calendar spread, that acts in the short term, when the short options expire, almost the same as a short straddle, because the combined value of the long options does not really change that much unless there are huge moves. Zooming further out you can see that it is a calendar spread: The problem with these trades is that in real life, in realtime, they don't work quite the same as on paper. In the above example, let's say SPY drops to $405 after 2 days, then back to $415 after a week. What do you do at $405, already looking at losses? Do you already roll the options, or do you wait, risking running further into loss territory in a panicky market? Not to mention rare events, like a 10% drop in a week. When those happen, you are again faced with a market call - keep selling the same, now far ITM/OTM strikes for miniscule premiums, or roll them closer to ATM, effectively locking in losses and risking getting whipsawed. In summary, all these short straddle/short premium trades are not as easy in practice, and can be mightily stressful and time consuming for very little reward. Most of the time they work reasonably well for a while, until a rare event wipes out all or most of the accumulated profit.

I'll have a better look and maybe do some modeling later, but already found the catch in his example of a SPY trade with long $305 options and SPY dropping to $92: "The long-term put that I still own at a 305 strike price would have gained more than $213. Given the increased volatility and remaining time value in it, it would probably sell for around $290". A $305 put selling at $290 (predicting a drop of the underlying below $15) ... he is modeling a ~350% implied volatility here, which has never happened for the S&P500. The worst VIX spikes we have seen, in 2020, were to 85%. Even a 100% IV would price the put at only $220, making his calculation fall apart.

About 20 years ago I saw an after-hours market quote where I thought the ask was lower then the bid. Free money! I traded the stock back and forth a few times, going bigger and bigger, each time making about 1%! The bid-ask did not change, either, which got me a bit suspicious. At some point my vision clicked and, although I am not dyslexic, it appears for about 15 minutes I was, mistaking $59.49 for 54.49 or something like that. Each trade I lost about 10%. By the time I was done I had lost $3000-4000, which was at the time 15-20% of everything I had. Shaken to the bones, I called IB, and told them I made a mistake, LOL. (At the time I wasn't laughing). The guy told me he could try to get the trades busted, but gave me little hope it would work. An hour or two later, when I checked the account, they had busted the trades. Crazy relief. And lesson learned, although I got away cheap. In retrospect, they should not have busted the trades.

Yeah, I topped up my long term position at C$671, and when it dropped even further I got annoyed and entered a little trading position at $649.xx, that I just sold at $674. I don't usually day trade like this, but it seemed a good setup. Better lucky than smart I guess.

Apparently this goes way back. Have to respect Pelosi for what she did in 1991 (not 1989):

BRKB back at $300, only 7 weeks later. Low price was $263.71.

And to top it off the economy is not in recession (the technical definition of recession over decades be damned), the economy is "transitioning". Ignorance is strength. https://seekingalpha.com/news/3862969-biden-and-yellen-say-us-economy-is-in-state-of-transition-not-recession