The second version of Amazon’s electronic book reader is availalbe at a newly reduced price, just $259. The newer versions offers improvements in the following areas:
To buy the new Kindle, just click the image below.
Exchange Traded Funds (ETF’s) can be a great low cost investment vehicle for either short term traders or long term investors. The advantages of ETF’s are:
For short term ETF traders, especially option ETF traders, it is crucial to find active ETF’s with the following characteristics:
It should be a simple task to find ETF’s with the above characteristics. Unfortunately, two of the brokers I checked – OptionsXpress and TradeKing – have no such way to screen by the most active ETF’s. Both have great ETF scanners to screen by performance and other attributes, but neither by most active. Fortunately, I found a link at Schaeffer’s Research to screen by most active. The output of the Schaeffer’s screen is limited to symbol, name, last price, change in price, and volume. Below is a snapshot of the most recent results.
Most Active ETF’s:
To find the most recent management fees on the above ETF”s, see the following:
To find out if the above ETF’s are optionable, check the option chain. Also be sure to verify whether the average BID ASK spread on the options is small enough for your investment style.
To emphasize the importance of using high volume active ETF’s in your own option trading, consider the option chains below of a recent option chain comparison between XLE (Energy ETF, 8th most active ETF) and IEO (iShares oil and gas exploration energy fund). To be clear, the objective and components of XLE and IEO are definitely different. But if all you want is an energy ETF with better BID ASK option spreads, then you may want to consider XLE over IEO because it is more active.
Were you one of the ones that thought the financial collapse would never happen? Did you think Bear Stearns, Lehman Brothers, Washington Mutual, Citibank, and AIG would never collapse? Did you think our national debt would ever approach $12 trillion dollars, with an additional $12 trillion in off balance sheet “bailout obligations”? And do you still think its completely safe to buy California municipal bonds and Federal treasuries?
If you answered YES to any or all of these questions, then perhaps you might be interested in reading This Time is Different – Eight Centuries of Financial Folly, by Carmen Reinhart and Kenneth Rogoff. Industrialized nations quickly forget their debt obligation defaults throughout history. When the authors published a paper on global defaults, they received official letters from around the world of nations denying that they ever defaulted. In the case of Japan, when the authors corrected them with the proof, Japan’s remark was “Well OK, but it was only to our enemies”.
If you are interested in the history of financial crisis’s, currency collapses, and the history of government defaults, then this book is for you.
This Time is Different: Eight Centuries of Financial Folly by Carmen M. Reinhart
Charles Gasparino, on air editor of CNBC, is releasing a new book. The book can be pre-ordered today and will be shipped from Amazon on November 3rd. Just when you thought the world had enough reminders of the financial collapse and widespread corruption, the subject of the book is also wall street greed and government mismanagement.
Click below to pre-order your copy of The Sellout – How Three Decades of Wall Street Greed And Government Mismanagement Destroyed the Global Financial System. Take special note that the title says “destroyed” and not “nearly destroyed”. Goldman Sachs may be proud of their facade message about paying back TARP, but TARP is a tiny drop in the enormous bailout bucket. Goldman and every financial institution in the country is still operating today only because of taxpayer guarantees of their high risk transactions.
The Sellout: How Three Decades of Wall Street Greed and Government Mismanagement Destroyed the Global Financial System by Charles Gasparino
Max Keiser broadcasts his opinion of United States financial firms in the video below, calling it out for what it is – a giant fraud. After trillions of dollars in financial bailouts, the firms are hoarding cash, paying record salaries and bonuses, and hiding trillions in unrealized losses. Don’t be surprised in 2010 when they finally come clean a second time by reporting record losses and beg for more handouts from the American taxpayers.
Part 2 of the video is below:
The stock repair strategy can be used to lower the breakeven point on a previously purchased stock that has dropped in price. Consider an example where you purchase 100 shares of a stock for $110 per share and it drops to $100 per share, for a loss of $10 per share or $1,000. Under normal circumstances, you would need the stock to rally 10% back to the original $110 purchase price just to break even. Using the stock repair strategy allows the trader to lower the break even point by utilizing a ratio option spread.
To explain the strategy, lets find a stock close to $100 per share. Precision Cast Parts (symbol PCP) is an optionable stock that closed today’s session at $99.11. Let’s assume that we purchased 100 shares of PCP for $110, and are now down nearly $1,100. Note the current 52 week high is only $105 so don’t over analyze the example. Let’s just assume we bought it 2 weeks ago for $110.
To utilize the stock repair strategy, the trader would initiate a ratio spread by purchasing (1) at the money option and selling (2) out of the money options. Let’s take a look at the December option chain for PCP.
By doing nothing, the breakeven point of PCP is $110. The stock would need to recover back to the original $110 purchase price for the trader to break even. But consider the changes to the December expiration day breakeven point after adding a December 1:2 ratio spread at the 100/105 strikes.
Note that implementing the ratio spread without owning the stock would result in a naked option leg and unlimited risk. But both of the (2) 105 calls are covered in this scenario due to the fact that we still have the 100 underlying shares. Essentially what you have is a covered call plus a vertical call spread. Consider the following expiration day prices as an example of how the above stock repair strategy example lowers the break even point of the previously purchased stock.
Things to consider when utilizing the stock repair strategy:
For more information on trading and adjusting options positions, check out the following highly recommended book:
The Option Trader Handbook: Strategies and Trade Adjustments (Wiley Trading) by George Jabbour
Hedge fund manager John Paulson began to make enormous derivative bets in 2006 against the largest bubble in history – grossly overpriced real estate. Certainly he was not the only one to see the disaster coming, but he profited the most from it, raking in over $15 billion for his firm, and dwarfing George Soros’s $1 billion currency trade win from 1992. To read more about the greatest trade ever, and John Paulson’s new fortune, place your pre-order for the book below.
The Greatest Trade Ever: The Behind-the-Scenes Story of How John Paulson Defied Wall Street and Made Financial History by Gregory Zuckerman
There are several posts on covered calls at Geldpress, including:
I successfully use covered calls, married puts and collars within my own accounts on a regular basis. My recent trading activity in Mosaic (symbol MOS) will show some examples of covered calls and their adjustments. It is not necessary to keep a covered call on though the expiration date. When the underlying stock within a covered call drops significantly, there will often be an opportunity to buy back the covered call (BUY TO CLOSE) for a modest profit. Buying back the covered call early leaves the shares naked, and fully able to capitalize on a rebound in share price, without the limits of the profit restricting covered call. It is purely a judgement call on exactly when to buy back the calls, but as a general rule consider buying back covered calls early for the following reasons:
A summary of the points regarding the activity above:
The point of the above is only meant to display one such example of trading, rolling and adjusting covered calls, and not to dissect all the other possible trading ideas possible – better or worse. Trading is a judgement call, and the above is a recent history of my own trades and adjustments based on how I felt at the time the trades were made. You are free to have your own opinions.
Disclosure: Still long Mosaic covered calls.
Disclaimer: Trade at your own risk! The above is an example only of recent activity in my own account, and not to be considered an opinion or trading advice of any kind.
For more information on covered calls, please consider purchasing one of the following books:
Covered Calls and LEAPS–A Wealth Option + DVD: A Guide for Generating Extraordinary Monthly Income (Wiley Trading) by Joseph R. Hooper
Covered Call Writing Demystified: Double-Digit Returns on Stocks in a Slower Growth Market for the Conservative Investor by Paul D. Kadavy
The Option Trader Handbook: Strategies and Trade Adjustments (Wiley Trading) by George Jabbour
Ron Paul just released a new book – End The Fed – and it’s already ranked #42 on the Amazon best seller list. Ron Paul is also a major supporter of HR 1207, a bill making its way through congress to perform a full audit of the federal reserve. My copy of the book has just been ordered so I don’t have much to say on it yet. But I continue to support Ron Paul’s push for a leaner and more transparent government. If you feel the same, then click below and buy the book.
End the Fed by Ron Paul
Talk to a mortage lender or bank, or pick up the real estate section of any newspaper, and the opinions are always the same. The best time to buy is NOW, they say. No matter what your persoanl situation is, no matter where you live, no matter what the current interest rates or prices are, it’s always, NOW, NOW, NOW. In reality, there are plenty of great reasons NOT to buy a home, and to continue renting. Beth Kobliner lists several great reasons in her New York Times bestselling book Get a Financial Life – Personal Finance in your Twenties and Thirties.
Among the reasons,
If you are going to rent, there are also tips listed in her book on what every renter needs to know:
Other interesting topics in the same book are:
To find out more, click to buy the book below.
Get a Financial Life: Personal Finance In Your Twenties and Thirties by Beth Kobliner