What are you buying today?

[kab60]

Clipper Logistics

[vinod1]

Have been trading BRK and GOOG the past two weeks with good success with about 20% of my cash pile while also establishing a long position. A bottom is a best guess at this point. Near term, the only thing that seems likely to continue is high volatility. Why not use this to your advantage on stocks you would feel comfortable holding?

 

Anyone else on the trading?

 

Yes! Moved a few positions from stock to LEAPS, to free up cash to play the volatility, protect downside in case I am underestimating the severity while also locking in attractive prices if there is a sudden positive catalyst.

 

This strategy has been very profitable in 2008-2009 but then the volatility is so much more at that time. From purely financial perspective, let us hope the volatility lasts for some time.

 

My daily prayer: Lord, I am not asking for a bull market and I am not asking for a bear market, but is it friggin too much to ask for some volatility. (Minus the virus part)

 

Vinod

 

 

[LC]

Have been trading BRK and GOOG the past two weeks with good success with about 20% of my cash pile while also establishing a long position. A bottom is a best guess at this point. Near term, the only thing that seems likely to continue is high volatility. Why not use this to your advantage on stocks you would feel comfortable holding?

 

Anyone else on the trading?

 

Yes! Moved a few positions from stock to LEAPS, to free up cash to play the volatility, protect downside in case I am underestimating the severity while also locking in attractive prices if there is a sudden positive catalyst.

 

This strategy has been very profitable in 2008-2009 but then the volatility is so much more at that time. From purely financial perspective, let us hope the volatility lasts for some time.

 

Vinod

 

Hi vinod,

 

Are you buying LEAPS ATM? I am doing a similar strategy buying deep ITM.

[vinod1]

Have been trading BRK and GOOG the past two weeks with good success with about 20% of my cash pile while also establishing a long position. A bottom is a best guess at this point. Near term, the only thing that seems likely to continue is high volatility. Why not use this to your advantage on stocks you would feel comfortable holding?

 

Anyone else on the trading?

 

Yes! Moved a few positions from stock to LEAPS, to free up cash to play the volatility, protect downside in case I am underestimating the severity while also locking in attractive prices if there is a sudden positive catalyst.

 

This strategy has been very profitable in 2008-2009 but then the volatility is so much more at that time. From purely financial perspective, let us hope the volatility lasts for some time.

 

Vinod

 

Hi vinod,

 

Are you buying LEAPS ATM? I am doing a similar strategy buying deep ITM.

 

Hi LC,

 

Did not fully flush out my strategy. With kids home, too little time to think!

 

But I bought $180 strike out of the money BRK 2022 calls yesterday. Exited long term BRK stock today.

 

Planning to do opportunistic changes as LEAP spreads are pretty high and I have to put in a few bids at different strike prices before something gets executed.

 

Vinod

[LC]

Thanks for sharing (and good luck with the little ones/your sanity  ;D)

[vinod1]

The way I see it serves two purposes

 

1. If we get some extreme tail event and BRK ends up at say $120 for example, a deep in the money LEAP would have resulted in a pretty big loss. Not really protecting me, other than freeing up some cash.

 

2. If market runs away while I am playing trading volatility and have higher cash allocation, the calls would make up for that.

 

Vinod

[Uccmal]

Trying to buy puts on MA, and a couple of others.  The implied volatility is way up.  The cost is more than the other day, when the stock was higher.  Option sellers are expecting a quick reversion right back down.  Todays market rise is in response to the expected stimulus plans.  Once they come out and eveyrone realizes the economy is operating at 70% things may really drop. 

 

I am sitting out Leaps for now until this volatility settles down to a lower level. 

[vinod1]

Trying to buy puts on MA, and a couple of others.  The implied volatility is way up.  The cost is more than the other day, when the stock was higher.  Option sellers are expecting a quick reversion right back down.  Todays market rise is in response to the expected stimulus plans.  Once they come out and eveyrone realizes the economy is operating at 70% things may really drop. 

 

I am sitting out Leaps for now until this volatility settles down to a lower level.

 

Hi Al,

 

Good to see you posting again after a long time!

 

Agree Leaps are expensive, putting in stink bids hoping to get execution, but not much luck.

 

Vinod

[flesh]

2022 calls on wfc, bk, bac. Some bac, bk, oln.

[LC]

The way I see it serves two purposes

 

1. If we get some extreme tail event and BRK ends up at say $120 for example, a deep in the money LEAP would have resulted in a pretty big loss. Not really protecting me, other than freeing up some cash.

 

2. If market runs away while I am playing trading volatility and have higher cash allocation, the calls would make up for that.

 

Vinod

 

I hear what you're saying with (1). Perhaps I should rethink my options. I figure, I'd rather have that intrinsic value stored up. If I buy OOM options it frees up a bit more cash; but my exposure is very conditional.

 

I'm always a bit nervous with OOM options because in the case of (2), it seems like they are only useful if prices run up enough. And you have to sell at the right point  i.e. maximum upwards movement and volatility - do you find these OOM calls have a limited lifespan where you can make decent money? Or do you plan to hold until expiration and count on being right on both direction & timing?

 

You're right on volatility - LEAPs past 2021 were very expensive today.

 

[KJP]

Griffin Industrial Realty

[Gregmal]

The way I see it serves two purposes

 

1. If we get some extreme tail event and BRK ends up at say $120 for example, a deep in the money LEAP would have resulted in a pretty big loss. Not really protecting me, other than freeing up some cash.

 

2. If market runs away while I am playing trading volatility and have higher cash allocation, the calls would make up for that.

 

Vinod

 

I hear what you're saying with (1). Perhaps I should rethink my options. I figure, I'd rather have that intrinsic value stored up. If I buy OOM options it frees up a bit more cash; but my exposure is very conditional.

 

I'm always a bit nervous with OOM options because in the case of (2), it seems like they are only useful if prices run up enough. And you have to sell at the right point  i.e. maximum upwards movement and volatility - do you find these OOM calls have a limited lifespan where you can make decent money? Or do you plan to hold until expiration and count on being right on both direction & timing?

 

You're right on volatility - LEAPs past 2021 were very expensive today.

 

This is a unique subject. Personally, I prefer to cut the stock via deep ITM. How much depends on my confidence and ability to really get under the hood. Being honest with myself this usually eliminates much over the market cap of day $10B. Companies bigger than that, even ones we all know well like BRK pose zero analytical edge and even when they do, have parts that move too quick.

 

If I really like it but am uncertain, I try to use the ITM as a stop loss. Similar to what I did with WFC in January. $45 strike. If it goes below there, I’m out. With stuff I’m dedicated to, you go deep ITM, figure that your margin of safety, and then of, let’s say something extraordinary like this happens, and you find yourself below the strike, you should still have reasonable confidence in valuation and time sorting things out, to load the boat on those same now OTM calls. Example let’s say BRK $150 calls. In the money now, and if they ever go below, you can swing big as OTM

[TwoCitiesCapital]

I hope you guys are taking advantage of this volatility

 

Was able to sell some long-dated calls on Santander today for $2.25 and immediately buy them back for $1.50.

 

Just being patient with limit orders outside of the bid/ask

 

[LC]

I hope you guys are taking advantage of this volatility

 

Was able to sell some long-dated calls on Santander today for $2.25 and immediately buy them back for $1.50.

 

Just being patient with limit orders outside of the bid/ask

 

Trying my best. Sold some short-dated PM calls. Bought a slug at $69/sh a week back; sold 70-strike Apr 3 calls for $1.20; Will look to close out the calls later this week/early next week for 0.20 or less.

[Uccmal]

Everything is so fast moving that its hard to make any reasonably educated decisions. 

 

The problem I have with writing options is the huge amount of margin they use up.  Covered calls would be cheaper but I dont have enough common stock in anything large cap to make it worthwhile putting alot of brain power into. 

 

The other area from my 2008/09 playbook I completely forgot about were Preferred shares.  I just had a look at several sets of Prefs for Enbridge, BCE, and Bam in Canada.  Enbridge in particular has a few series that are yielding 10-11% and are off close to 50% in the last two weeks.  Did people suddenly stop buying oil and gas (rhetorical). BAM and BCE have some yielding near 8-10% and trading down 40% or so.  Did people stop using the internet and making calls?  I may look at picking up a basket of these and sort the garbage out later.  My research department doesn't have the capacity to analyze all the prospectus :-). 

[Guest cherzeca]

Everything is so fast moving that its hard to make any reasonably educated decisions. 

 

The problem I have with writing options is the huge amount of margin they use up.  Covered calls would be cheaper but I dont have enough common stock in anything large cap to make it worthwhile putting alot of brain power into. 

 

The other area from my 2008/09 playbook I completely forgot about were Preferred shares.  I just had a look at several sets of Prefs for Enbridge, BCE, and Bam in Canada.  Enbridge in particular has a few series that are yielding 10-11% and are off close to 50% in the last two weeks.  Did people suddenly stop buying oil and gas (rhetorical). BAM and BCE have some yielding near 8-10% and trading down 40% or so.  Did people stop using the internet and making calls?  I may look at picking up a basket of these and sort the garbage out later.  My research department doesn't have the capacity to analyze all the prospectus :-).

 

I've read guys like Icahn and Tepper are buying some oil patch debt. 

[rb]

I've actually went into this with a large cash holding. Not because I knew a pandemic was coming, but because the numbers didn't make sense for a while and I've stopped buying. So during this time I've been more focused on accumulating holdings as opposed to having fun trading.

 

Right now vol is expensive, so as a value investor I don't wanna buy vol, I wanna sell vol. So here's an idea for those that have some capital on their hands. It's nothing fancy. But find something that you like, you like the price and don't mind holding. Buy the underlying and sell a short dated call on it. If you don't get called you got a subsidy on your purchase. If you do get called then these days you've made a nice penny on the call premium.

[Santayana]

Yep, Buy-Write can be nice approach in a market like this.

[Kaegi2011]

Trying to buy puts on MA, and a couple of others.  The implied volatility is way up.  The cost is more than the other day, when the stock was higher.  Option sellers are expecting a quick reversion right back down.  Todays market rise is in response to the expected stimulus plans.  Once they come out and eveyrone realizes the economy is operating at 70% things may really drop. 

 

I am sitting out Leaps for now until this volatility settles down to a lower level.

 

Agree with this sentiment completely.  I've been trading in and out of SPY $200 strike puts recently and had sold it yesterday.  Today the options opened down at around $3 bucks and basically stayed there all day, despite SPY ramping by ~5% from open til close.  Interesting to see this in real time.

[DTEJD1997]

Yep, Buy-Write can be nice approach in a market like this.

 

I've started doing this and have had some success...one of them was epic in it's execution.

 

I've never seen volatility like this in my 30 years of investing...not even close.

 

The perfect move is to set up your "watch list" of potential candidates ahead of time.  Scan that list frequently, ESPECIALLY on down days.  If a stock is down 30%+ on just general news, BUY.  Wait till the market recovers and position goes back up 30, 50, 80 percent.  Write out o the money covered calls 3-6 months out.  You will have TREMENDOUS upside and will recover a significant portion of your initial capital.

 

WASH, RINSE, REPEAT

 

For example, I bought GES at about $3.80/share.  The next day, the stock goes to 11.  I sell the September 12 calls.  I got back all but $.10/share of my initial purchase price!  I now control GES shares, cost basis of $.10/share.  I get everything up to $12/share.  I also get to redeploy the capital into another position.

 

So if somebody could do this MULTIPLE times, you could control an incredible amount of stock with very little capital.  If somebody could do this 12-16-20 times a year you could get reasonably wealthy.

[HalfMeasure]

Anyone seeing any interesting opportunities in the REIT space they're willing to share?

[kab60]

More AMA Group... Price chart makes one puke, but I think it's a potential 5-10 bagger, and unless I've completely missed something, I think I've rarely seen a selloff as crazy as this one. Might wanna write it up.

[matts]

Griffin Industrial Realty

 

What's your take on their tenant base? I imagine it's quite full of smaller companies since they don't talk about tenants

 

[Uccmal]

Everything is so fast moving that its hard to make any reasonably educated decisions. 

 

The problem I have with writing options is the huge amount of margin they use up.  Covered calls would be cheaper but I dont have enough common stock in anything large cap to make it worthwhile putting alot of brain power into. 

 

The other area from my 2008/09 playbook I completely forgot about were Preferred shares.  I just had a look at several sets of Prefs for Enbridge, BCE, and Bam in Canada.  Enbridge in particular has a few series that are yielding 10-11% and are off close to 50% in the last two weeks.  Did people suddenly stop buying oil and gas (rhetorical). BAM and BCE have some yielding near 8-10% and trading down 40% or so.  Did people stop using the internet and making calls?  I may look at picking up a basket of these and sort the garbage out later.  My research department doesn't have the capacity to analyze all the prospectus :-).

 

I've read guys like Icahn and Tepper are buying some oil patch debt.

 

I followed up on this into the night (the prefs idea).  Turns out many issues that look like a great deal on the surface are not such a great deal.  The companies mentioned have covered their bases quite well, which is I guess why I hold them as common stock.  The best apparent deals have rate resets attached to them.  With interest rates down and likely to stay down for years, they will reset at lower rates. 

 

Most are also perpetual issues that are callable by the companies at par value.  The companies will just keep rolling them over indefinitely.  In a dropping interest rate environment these prefs sell off.  It has the effect of dropping the share price rather than raising it. 

 

In summary, one would only buy these issues for income.  There may actually be permanent capital loss. 

[Uccmal]

Yep, Buy-Write can be nice approach in a market like this.

 

I've started doing this and have had some success...one of them was epic in it's execution.

 

I've never seen volatility like this in my 30 years of investing...not even close.

 

The perfect move is to set up your "watch list" of potential candidates ahead of time.  Scan that list frequently, ESPECIALLY on down days.  If a stock is down 30%+ on just general news, BUY.  Wait till the market recovers and position goes back up 30, 50, 80 percent.  Write out o the money covered calls 3-6 months out.  You will have TREMENDOUS upside and will recover a significant portion of your initial capital.

 

WASH, RINSE, REPEAT

 

For example, I bought GES at about $3.80/share.  The next day, the stock goes to 11.  I sell the September 12 calls.  I got back all but $.10/share of my initial purchase price!  I now control GES shares, cost basis of $.10/share.  I get everything up to $12/share.  I also get to redeploy the capital into another position.

 

So if somebody could do this MULTIPLE times, you could control an incredible amount of stock with very little capital.  If somebody could do this 12-16-20 times a year you could get reasonably wealthy.

 

I have tried this so many times over the years.  The one thing anyone contemplating it needs to be aware of is that at some point you most likely become a long time shareholder awaiting a rebound that can be years out.  Some examples include OBE(PWT), RIM (BBY), most recently WCP(Whitecap Resources)

 

BTW: DTEJD, I have been following your posts for years about Detroit and housing and always get alot out of them, so take the criticism from a place of respect. 

 

Al