What are you buying today?

[Sweet]

5 hours ago, John Hjorth said:

We have enchanged about Safran before. I haven't got to it so far, lately because of health issues sucking up my time and my energy [think Maslow] as of lately, but health much better now [morphine isen't exactly a good fuel to running on while investing].

I wasn’t aware you weren’t well John.  I’ll keep you in my prayers.

[Marco Van Basten]

10 hours ago, John Hjorth said:

 

Thank you, @Marco Van Basten,

 

We have enchanged about Safran before. I haven't got to it so far, lately because of health issues sucking up my time and my energy [think Maslow] as of lately, but health much better now [morphine isen't exactly a good fuel to running on while investing].

 

I will still take look at Safran.

 

- - - o 0 o - - -

 

Can you provide a just short pitch for why you are interested and owning GE by now? - Thank you in advance. [ Not much help in the GE topic here on CofB&F by now, I would say, but that may just be me.]

John, very simple thesis:  over the next forty or fifty years, annual volume growth of 3-5%, pricing ahead of inflation, EBIT margin goes from 25% to something closer to Transdigm's 50%.  

[gfp]

More weird action on Fairfax and Fairfax India near the open

 

[thowed]

Crazy.  Well done being on the ball - I'd be tempted to buy more under 2,200.

[Lance]

CME, ICE and TMXXF

 

Thanks

Lance

[CharlesMunger]

Fist time buying puts - some 2027 SOXX. And some FFH, MELI

Edited 6 hours ago by CharlesMunger

[gfp]

I wonder what the statistics are on having to hit on BOTH (1) making money buying an option, and (2) betting against a bull market.

 

Any oddsmakers here?

[Spekulatius]

1 hour ago, gfp said:

I wonder what the statistics are on having to hit on BOTH (1) making money buying an option, and (2) betting against a bull market.

 

Any oddsmakers here?

The odds are not great but payoff is asymmetrical . The Soxx looks very overextended with many crapola stocks mooning.

[KPO]

Add to LEN.B

[Mephistopheles]

4 hours ago, gfp said:

I wonder what the statistics are on having to hit on BOTH (1) making money buying an option, and (2) betting against a bull market.

 

Any oddsmakers here?

 

I trade options routinely and it's easy to make big money as long as you have the cajones. But, to your point I have failed on the latter (shorting the market). I stick with long calls and short puts on stocks that I like

[RichardGibbons]

21 minutes ago, Mephistopheles said:

 

I trade options routinely and it's easy to make big money as long as you have the cajones. But, to your point I have failed on the latter (shorting the market). I stick with long calls and short puts on stocks that I like

 

Yeah, I've had the same experience. I think long puts are particularly difficult for a few reasons.

 

First, volatility skew makes them "overpriced". Second, as they go in the money, the time value gets crushed faster than with calls. Third, when the security trades in "your direction", a 1% move becomes a larger absolute move with a call and a smaller absolute move with a put, which means every additional dollar gets easier with a call, and harder with a put.

 

And finally, related to that last point, calls can rise to the moon, while puts have a maximum gain. So, if you get an extreme move in your favour, the impact with calls can be much higher. (e.g. back in the day, when Fairfax was fighting the shorts, while I sold early, I still made 30x on a small call position. If Fairfax had a roughly equivalent down move, I doubt it would've been even a 10x.)

 

For me, the impact has been that I'll speculate with calls and short puts. But I'll almost never speculate with puts. (In this context for me, speculate means "make a directional bet hoping to get at least a 4x payoff if the stock moves in my direction.")