| Author |
Message |
    
Gldndog
Registered Member
Username: Gldndog
Post Number: 608
Registered: 12-2004
| | Posted on Tuesday, August 10, 2010 - 10:53 pm: | 
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I have been looking at DD. Seems the trend is generally up since July.It is also involved in agricultural products. Thought I would try 45 calls, and at 57 cents I purchased the Oct 45 calls this morning.
gldndog |
Miloandbono
Registered Member
Username: Miloandbono
Post Number: 890
Registered: 08-2009
| | Posted on Monday, May 31, 2010 - 10:27 pm: |
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so it sounds like you have always used "Smart". I guess the question now is will you ever fill on any of these trades that are sort of outside the market. Anytime I am surprised by a fill, I usually end up wishing I didn't have it.
My guess is they execute the orders if they think they can break even of better on them. The idea being that they will profit more often than they lose. Maybe it's little bit of a controlled gamble and it's a safer game for them if they have all the exchanges available. Maybe the HFT's are faster than IB and "SMART" helps their odds??? I don't know. Sorry if I'm no help and in left field. |
Public_heel
Moderator
Username: Public_heel
Post Number: 11779
Registered: 12-2003
| | Posted on Monday, May 31, 2010 - 08:40 pm: |
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you understand what they mean by smart routed orders right? Basically, the best price across all the exchanges
I either don't understand it, and/or I don't understand how Smart-routed orders can be exempt from the problem. To set up a Combo, I have to first set up a line for each side. When I do, I always pick SMART (as opposed to picking BATS, CBOE, ISE or PHLX). I don't see what real difference this makes, though. How can they ever guarantee both sides filling?
This would seem to cripple my use of the Combo function. I put lowball orders out and hope someone bites. Since they have to be GTC orders, and i don't know when/if they will fill, I have to ask for all I want, say 100 contracts on each side. But I certainly can't afford for only one side to fill, not least because it is by definition a money-losing situation. |
Miloandbono
Registered Member
Username: Miloandbono
Post Number: 889
Registered: 08-2009
| | Posted on Monday, May 31, 2010 - 07:27 pm: |
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ph - you understand what they mean by smart routed orders right? Basically, the best price across all the exchanges.
I wonder what kind of money they make taking a little piece of the execution? I feel like IB's executions are excellent except I always feel like I'm getting screwed in the S&P500 emini's. I never get an execution if I'm buying on the bid or selling at the offer until the price changes in that direction. Oil is not that way, but it also moves faster so I'm not sure if I would know. |
Miloandbono
Registered Member
Username: Miloandbono
Post Number: 888
Registered: 08-2009
| | Posted on Monday, May 31, 2010 - 07:19 pm: |
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I don't do a lot of combos. When I saw the message my guess was that they had a problem with an order executing and now they are trying to cover there asses for future orders.
I agree, a trigger price and an execution price range could work. |
Public_heel
Moderator
Username: Public_heel
Post Number: 11778
Registered: 12-2003
| | Posted on Monday, May 31, 2010 - 06:14 pm: |
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Milo - I just got this warning from IB.
I'm not quite sure what to make of it.
IB’s policy is to guarantee only Smart-Routed U.S. stock vs. option and option vs. option combination orders.
I really don't see how they can guarantee anything. Since I have a whole lot of GTC orders for 100-contract combos, I'm not taking a chance for now. Changing all quantities to 1 for the time being.
In edit... what they ought to do is have a two-price order. The first price is the trigger, the orders go out when the price differential hits that. The second price is the allowable differential in the executed orders. e.g. "trigger my order when you find a 10-cent differential, but allow a 15-cent differential."
They should also have a minimum execution differential, i.e. the number of shares of one side that can be executed w/o being matched on the other side.
(Message edited by public_heel on May 31, 2010) |
Miloandbono
Registered Member
Username: Miloandbono
Post Number: 569
Registered: 08-2009
| | Posted on Wednesday, March 03, 2010 - 12:26 pm: |
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TLT at $90.83. The 2012 90 calls are $5.50 and the 90 puts are $12. I'm thinking about how I can make the difference.... |
Miloandbono
Registered Member
Username: Miloandbono
Post Number: 566
Registered: 08-2009
| | Posted on Wednesday, March 03, 2010 - 09:41 am: |
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Treasuries - I think I'm going look at covering my TLT short and do the trade with options because of the dividend.
(Message edited by miloandbono on March 03, 2010) |
Miloandbono
Registered Member
Username: Miloandbono
Post Number: 562
Registered: 08-2009
| | Posted on Tuesday, March 02, 2010 - 09:43 am: |
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side note - the 2012 15's have 20k in open interest too. So I may have done the same spread as a large trader. M |
Miloandbono
Registered Member
Username: Miloandbono
Post Number: 561
Registered: 08-2009
| | Posted on Tuesday, March 02, 2010 - 09:39 am: |
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the 2012 20's for MGM open interest is now 20K contracts. It's a little annoying because after I did my spread they started buying these 20's (which I'm short) and the 15's aren't really following in lock step and I'm actually showing a loss in the trade of $300+. |
Miloandbono
Registered Member
Username: Miloandbono
Post Number: 558
Registered: 08-2009
| | Posted on Monday, March 01, 2010 - 01:40 pm: |
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Good questions - I'll have to check the open interest tomorrow. It looks like they are trading at the offer so I'm guessing that they are being bought. I see 2 large trades at $1.65 (near offer) totaling 18k contracts.
No idea why they would do 2012's... I did it because I thought it might take that long. The spread costs less than $1 for a $5 return. We'll see how that goes.
(Message edited by miloandbono on March 01, 2010) |
Public_heel
Moderator
Username: Public_heel
Post Number: 11296
Registered: 12-2003
| | Posted on Monday, March 01, 2010 - 01:17 pm: |
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Maybe they were selling? What happened to the open interest today? It doesn't look that large.
Also, why spend so much on 2012's, which cost three times as much as 2011's?
....and didn't they trade over $3m worth?
(Message edited by public_heel on March 01, 2010) |
Miloandbono
Registered Member
Username: Miloandbono
Post Number: 557
Registered: 08-2009
| | Posted on Monday, March 01, 2010 - 12:42 pm: |
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did a call spread on MGM this morning and just now I noticed someone is buying a lot of 2012 20 calls. Looks like about 20k. My 2012 15's have traded 52 contracts by comparison. Could be a shot in the dark like my play. They probably shelled out $30 - $40,000 this morning. |
Public_heel
Moderator
Username: Public_heel
Post Number: 10972
Registered: 12-2003
| | Posted on Thursday, December 31, 2009 - 10:47 am: |
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I'm modifying my hedging tactics somewhat. I have been, and wish to remain, hedged against drops in the market (SPY) and Oil (USO). Recently, I have been long deep-in-the-money puts, e.g. SPY $120's.
While the premium paid for these is relatively low, the amount of cash tied up is relatively high.
Since I want to be hedged against big drops in the market and in Oil, I've decided to largely switch to way out-of-the-money puts, e.g. SPY $85 puts.
While the cost of these puts is 100% premium, and the chance of 100% loss is very high, I can buy a lot more contracts, and probably will come out better off if the market decides to go back to the March lows... |
Miloandbono
Registered Member
Username: Miloandbono
Post Number: 288
Registered: 08-2009
| | Posted on Wednesday, December 09, 2009 - 01:06 pm: |
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thanks heel! I need to check this out. |
Public_heel
Moderator
Username: Public_heel
Post Number: 10884
Registered: 12-2003
| | Posted on Wednesday, December 09, 2009 - 01:04 pm: |
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there is risk if the GLD falls below 110.
No additional risk, but you might get back less than the $6.30 you put in.
This also depends on volatility. Will the premium on the upcoming year be the same a year from now as it is now? If so, this play would be profitable down almost to $103.
I'm doing a similar "time spread" with USO puts right now. Even though the price of USO has gone up considerably since I initiated the spread, it still looks to be maybe 35% profitable. |
Miloandbono
Registered Member
Username: Miloandbono
Post Number: 287
Registered: 08-2009
| | Posted on Wednesday, December 09, 2009 - 12:03 pm: |
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"Consider this... " - I need to think about that one a little more. If I understand correctly, there is risk if the GLD falls below 110. |
Public_heel
Moderator
Username: Public_heel
Post Number: 10882
Registered: 12-2003
| | Posted on Wednesday, December 09, 2009 - 11:22 am: |
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the calls the calls require no additional funds right?
Just the opposite, as you have the proceeds of selling the calls. |
Public_heel
Moderator
Username: Public_heel
Post Number: 10881
Registered: 12-2003
| | Posted on Wednesday, December 09, 2009 - 11:21 am: |
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Consider this...
Sell 1 Jan 2011 GLD $110 call for $14.80
Buy 1 Jan 2012 GLD $110 call for $21.10
Right now, the premium per day for the Jan 2011 is 36 cents. That implies a premium of $13.14 for the year from Jan 2010 to Jan 2011. The market is assigning a premium of $6.30 to the following year.
If the market were to still assign a $13.14 premium to the upcoming year when the 2011 option expires, that would mean a profit of $6.84, or 108% (96% annualized).
Side benefits of this trade are that there would be no margin reserve, and no possibility to a loss greater than the initial investment of $6.30...
(Message edited by public_heel on December 09, 2009) |
Miloandbono
Registered Member
Username: Miloandbono
Post Number: 286
Registered: 08-2009
| | Posted on Wednesday, December 09, 2009 - 10:57 am: |
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if you own the stock to cover the calls the calls require no additional funds right? |
Public_heel
Moderator
Username: Public_heel
Post Number: 10880
Registered: 12-2003
| | Posted on Wednesday, December 09, 2009 - 10:52 am: |
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No margin on covered calls, which is why you can do them in retirement accounts... |
Miloandbono
Registered Member
Username: Miloandbono
Post Number: 284
Registered: 08-2009
| | Posted on Wednesday, December 09, 2009 - 10:29 am: |
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yes, sorry. thanks!! I don't really look at it that way, but yes. I am trying to use my available fund a little more.
AAPL is pretty juicy.... stock at 192 and the Jan 2011 200 calls at 29.30. I'm not sure how they calculate margin on covered calls. Is it as aggressive? |
Public_heel
Moderator
Username: Public_heel
Post Number: 10879
Registered: 12-2003
| | Posted on Wednesday, December 09, 2009 - 09:46 am: |
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I suppose you mean 2011... that's a 34% annualized return if expiring worthless (and using IB's reserve calculation) |
Miloandbono
Registered Member
Username: Miloandbono
Post Number: 282
Registered: 08-2009
| | Posted on Wednesday, December 09, 2009 - 09:35 am: |
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Sold a few GLD Jan 2010 $100 puts for $7.50 yesterday at the close. |
Miloandbono
Registered Member
Username: Miloandbono
Post Number: 224
Registered: 08-2009
| | Posted on Tuesday, November 10, 2009 - 12:40 pm: |
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ANF - I tend to agree. I worry about how close it is the the recent high and momentum may carry it higher. If you are right you are getting an awesome price. |
Gldndog
Registered Member
Username: Gldndog
Post Number: 566
Registered: 12-2004
| | Posted on Tuesday, November 10, 2009 - 11:47 am: |
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buying puts on ANF
http://finance.yahoo.com/news/Apparel-store-sales-apf-2035242666.html?x=0&.v=1
Going down |
Miloandbono
Registered Member
Username: Miloandbono
Post Number: 74
Registered: 08-2009
| | Posted on Thursday, August 27, 2009 - 10:18 am: |
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Starting to watch AIG puts for a small speculative trade. We are coming up on the 1 year anniversary of the AIG mess. |
Public_heel
Moderator
Username: Public_heel
Post Number: 10258
Registered: 12-2003
| | Posted on Friday, July 24, 2009 - 12:51 pm: |
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I didn't feel right not being short ISRG calls, so I sold a couple October $280's for $2.90.
If it turns out that they'll release earnings before then, I'll reconsider... |
Gldndog
Registered Member
Username: Gldndog
Post Number: 546
Registered: 12-2004
| | Posted on Friday, July 24, 2009 - 11:59 am: |
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PH,
You are a wise man.
GLDNDog |
Public_heel
Moderator
Username: Public_heel
Post Number: 10246
Registered: 12-2003
| | Posted on Thursday, July 23, 2009 - 06:28 pm: |
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No, what I was saying was that I didn't want to hold a short position when they reported, so I made sure it was in options that expired last Friday... |
Gldndog
Registered Member
Username: Gldndog
Post Number: 545
Registered: 12-2004
| | Posted on Thursday, July 23, 2009 - 06:10 pm: |
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PH,
I was in ISRG from 65 - 85 and made some money. I totally forgot about it.
Do I read in your comment that you suspect that ISRG will head down after they report their earnings?
GLDNDog |
Public_heel
Moderator
Username: Public_heel
Post Number: 10241
Registered: 12-2003
| | Posted on Thursday, July 23, 2009 - 11:16 am: |
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Probably a good thing, then, that my short calls at $170 and $180 expired last Friday.
That's not dumb luck, actually, as I made sure I held positions that would expire before earnings. |
Sivleyd
Moderator
Username: Sivleyd
Post Number: 945
Registered: 10-2003
| | Posted on Thursday, July 23, 2009 - 10:55 am: |
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ISRG is back over 200. |
Public_heel
Moderator
Username: Public_heel
Post Number: 10211
Registered: 12-2003
| | Posted on Friday, July 17, 2009 - 02:59 pm: |
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K/N - I assume that's a "cash" account, and you have permission to sell short uncovered calls?
Have you tried putting in an order for a 1:1 spread? If they won't let you do that, you have permission problem. If they'll let you do that, but not a 1:3, then you have a margin problem. |
Killernut
Registered Member
Username: Killernut
Post Number: 5880
Registered: 10-2003
| | Posted on Friday, July 17, 2009 - 01:00 pm: |
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My July RTP 160's are just a few bucks in the money today because they included $22.80 per share in cash so I closed them today at a loss. Luckily I got out when RTP was trading above $144.
Won't try any more spreads until I figure out why TDA won't let me enter those type option plays. |
Gldndog
Registered Member
Username: Gldndog
Post Number: 536
Registered: 12-2004
| | Posted on Thursday, July 16, 2009 - 10:55 am: |
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I purchased Aug FLR 45 puts this morning @ 1.65
I do not think their earning will be that good. |
Public_heel
Moderator
Username: Public_heel
Post Number: 10182
Registered: 12-2003
| | Posted on Friday, July 10, 2009 - 11:30 am: |
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evaluating if that might also be something I wanted to do
I don't think I would do it were I not hedging other positions. That is, if USO rises from here, I'll lose somewhere up to 75%(?) of the premium I've paid, but I will make much more on my long oil positions. |
Sivleyd
Moderator
Username: Sivleyd
Post Number: 938
Registered: 10-2003
| | Posted on Friday, July 10, 2009 - 11:28 am: |
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:-) I was sure your trade was right on the money. I was just correcting your typo (and evaluating if that might also be something I wanted to do.) |
Public_heel
Moderator
Username: Public_heel
Post Number: 10180
Registered: 12-2003
| | Posted on Friday, July 10, 2009 - 11:25 am: |
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Thanks. I can't express how touched and gratified I am that someone's actually reading my posts. |
Sivleyd
Moderator
Username: Sivleyd
Post Number: 937
Registered: 10-2003
| | Posted on Friday, July 10, 2009 - 11:10 am: |
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I think your figures are reversed on this last set. The 2011s cost more than the 2010s. |
Public_heel
Moderator
Username: Public_heel
Post Number: 10179
Registered: 12-2003
| | Posted on Friday, July 10, 2009 - 11:03 am: |
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USO
+20 January 2011 $32 puts at $4.39
-20 January 2010 $32 puts at $6.70
Just repeating what I did with the $35 puts. Partly an attempt to make money, and partly a hedge against my long positions in junior oil producers. |
Public_heel
Moderator
Username: Public_heel
Post Number: 10149
Registered: 12-2003
| | Posted on Tuesday, July 07, 2009 - 10:47 am: |
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USO
+20 January 2011 $35 puts at $7.30
-20 January 2010 $35 puts at $5.00
Basically a bet that the premium for 2011's over 2010's will grow in the next six months. I think that, if oil prices stay about where they are, or a little lower, the premium will double. A significant drop in oil prices will still cause the premium to grow, while a significant rise will not cause it to disappear altogether... |
Public_heel
Moderator
Username: Public_heel
Post Number: 10059
Registered: 12-2003
| | Posted on Friday, June 19, 2009 - 03:52 pm: |
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If you'd been able to short those calls, you'd be losing money today, but instead you're doing quite well. Right now, a $170/$190 1/3 call spread does not look unreasonable. About 35% annualized profit if stock goes down, with additional gains between $170 and $190...
(Message edited by public_heel on June 19, 2009) |
Killernut
Registered Member
Username: Killernut
Post Number: 5864
Registered: 10-2003
| | Posted on Friday, June 19, 2009 - 03:35 pm: |
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I tried setting up a 3:1 July call spread on RTP yesterday but for some reason my ameritrade account will not let me sell short the higher strikes. So I ended up long some Jyly 160 calls.
I really didn't want to be so exposed.
I let them ride today. We'll see what Monday brings. |
Public_heel
Moderator
Username: Public_heel
Post Number: 10058
Registered: 12-2003
| | Posted on Friday, June 19, 2009 - 03:22 pm: |
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I took a modified approach to buying TBT today, by buying 10 January 2011 $31 calls for $25.60, which is only a $2.00 premium for 19 months... |
Gldndog
Registered Member
Username: Gldndog
Post Number: 526
Registered: 12-2004
| | Posted on Tuesday, June 16, 2009 - 01:29 pm: |
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I like your comments. You make a lot of sense. It may be time to get back into those 2011 puts because sentiment changes so quickly.
On another topic, I am now betting that Coca Cola will go over $50.75 by the time the Jul 50 calls expire. |
Public_heel
Moderator
Username: Public_heel
Post Number: 10027
Registered: 12-2003
| | Posted on Tuesday, June 16, 2009 - 12:57 pm: |
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Gldn - I they're Jan 2011, I doubt that time value had much to do with it. I think it was more a matter of sentiment expecting higher bond rates, which peaked last week... |
Gldndog
Registered Member
Username: Gldndog
Post Number: 525
Registered: 12-2004
| | Posted on Tuesday, June 16, 2009 - 12:53 pm: |
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I purchased and sold TLT jan 11 65 puts. The price of these puts are now nearly where I originally purchased them. I sold them for 50% gain. However, my initial purchase of TLT puts happened when TLT was trading at $98.00. Now it is near $92.00. This is time dwindling example of the derivative market.
I hope that I am learning something. |
Gldndog
Registered Member
Username: Gldndog
Post Number: 518
Registered: 12-2004
| | Posted on Monday, June 08, 2009 - 03:56 pm: |
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Nile put options, to purchase, have been very expensive. AT this stage, $30 puts for 2011. are $5.90. Earlier today they were at $7.30 or so. Expensive, yes, but the spread has been wide and only three contracts written at this point.
I am still waiting for another uptick.
Waiting can be good.
gldndog |
Sivleyd
Moderator
Username: Sivleyd
Post Number: 885
Registered: 10-2003
| | Posted on Sunday, May 31, 2009 - 08:33 pm: |
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I think that's another important distinction. If I sold TLT stock short, I'd have to pay out dividends. With the options, there is nothing due. |
Public_heel
Moderator
Username: Public_heel
Post Number: 9961
Registered: 12-2003
| | Posted on Sunday, May 31, 2009 - 05:18 pm: |
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TLT would have to drop 31% to get to your 65 target. TBT would have to rise 70% to get to your 90 strike.
That's the reason why, three weeks ago, I bought puts in TLT instead of calls in TBT. I wonder, though, does it matter that TLT will pay out about 4-5% in dividends during that 19 months? |
Sivleyd
Moderator
Username: Sivleyd
Post Number: 884
Registered: 10-2003
| | Posted on Sunday, May 31, 2009 - 02:53 pm: |
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At current prices, TLT would have to drop 31% to get to your 65 target. TBT would have to rise 70% to get to your 90 strike. TBT is supposed to rise double the inverse. So it seems to me your figures are not matched very well. That would correspond more to an 85 strike. However, over a time span of a year, TBT does not keep up with its target. It might struggle to reach 75-80. Generally, I do expect rates will move up, but I have no idea how soon. If the economy limps along for a few years, there is no rush to raise rates. I will point out that your options will expire in a year and a half. So keep that in mind. The time value portion of the option will dwindle to nothing for sure. |
Public_heel
Moderator
Username: Public_heel
Post Number: 9959
Registered: 12-2003
| | Posted on Sunday, May 31, 2009 - 10:25 am: |
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Gldn - ask Sivleyd about that. I know he's been spending the weekend applying his formidable talents to answering just that question. |
Gldndog
Registered Member
Username: Gldndog
Post Number: 515
Registered: 12-2004
| | Posted on Sunday, May 31, 2009 - 12:52 am: |
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PH,
Very astute on your part.
TBT was down 5.61% on Friday whereas TLT was up 2.58% during the same trading session.
So the equivalent dollar value for Jan 11 TBT calls is around $90.00 for Jan 2011 TLT 65 puts.
Would it not be a smarter move to get into TBT calls as opposed to TLT puts if one perceives the interest rate will go up?
Gldndog. |
Public_heel
Moderator
Username: Public_heel
Post Number: 9955
Registered: 12-2003
| | Posted on Saturday, May 30, 2009 - 07:28 am: |
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Gldn - remember that TBT is the double inverse... |
Gldndog
Registered Member
Username: Gldndog
Post Number: 514
Registered: 12-2004
| | Posted on Saturday, May 30, 2009 - 01:04 am: |
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Thank you all for the informative discussion.
What would be equivillent Jan11 TBT call value to the Jan11 TLT put value.
At this moment,TLT closing price is $94.17; Jan 11 65 put is $2.70 and Jan 11 60 put is 1.90.
TBT Jan 11, closing price is 52.64 and the closest call compared to TLT put prices is Jan 11 120 @ 3.60.
This makes calls for TBT very expensive compared to TLT puts
Gldndog |
Public_heel
Moderator
Username: Public_heel
Post Number: 9952
Registered: 12-2003
| | Posted on Friday, May 29, 2009 - 04:07 pm: |
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When you get it figured out, let me know. I own TLT puts, and it might be better to own TBT calls. |
Sivleyd
Moderator
Username: Sivleyd
Post Number: 881
Registered: 10-2003
| | Posted on Friday, May 29, 2009 - 03:25 pm: |
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I think you are way off on value. BTW, a bond pays interest, not dividends. But that's just terminology. The correct formula uses Present Value calculations with inflation assumptions and more. I would much rather look at a graph to actually SEE how the market handled the bond price during different points of inflation. Consider this. A 5% bond sold at 50 cents on the dollar would actually yield the 10%. You would buy twice as much at half price. Same investment principal. So at maturity, you have twice the original principal maturing - doubling your final return. That gives you way more than 10% yield to maturity. So the bond doesn't have to drop 50% to double the YTM. If you are looking for an 80% drop, I think you will be very disappointed. (right, but not near the magnitude you are counting on.) |
Public_heel
Moderator
Username: Public_heel
Post Number: 9951
Registered: 12-2003
| | Posted on Friday, May 29, 2009 - 03:13 pm: |
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let's say long term rates go back to 10% again, ongoing. How much would I make on my short of TLT? (in your case long TBT?)
You're asking the wrong guy, as I know nothing about bonds. However, I've never been shy about displaying my ignorance, so...
The thirty-year bond is yielding 4.35% right now (I think), so if one bought a bond at $29 and held for 30 years, it would hit $100.
If the bond were yielding 10%, one could buy at $5.80 and reach $100 in 30 years.
IOW, the bond would be priced at 1/5 what it is now, so TLT at 1/5 of today's price, or about $19.
Trouble is, that's not taking dividends into account. How do you do that? Also I don't know what the mix of 20- and 30-year bonds is in that index. |
Sivleyd
Moderator
Username: Sivleyd
Post Number: 880
Registered: 10-2003
| | Posted on Friday, May 29, 2009 - 01:42 pm: |
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Okay, let's say long term rates go back to 10% again, ongoing. How much would I make on my short of TLT? (in your case long TBT?) |
Public_heel
Moderator
Username: Public_heel
Post Number: 9950
Registered: 12-2003
| | Posted on Friday, May 29, 2009 - 01:37 pm: |
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I can't find an index chart, either. Don't see why the yields wouldn't do just as well, though... |
Sivleyd
Moderator
Username: Sivleyd
Post Number: 879
Registered: 10-2003
| | Posted on Friday, May 29, 2009 - 01:31 pm: |
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TLT is an ETF. But it is based on an index, which should go way back. I just can't find a chart of it anywhere. As for the interest rate change, I'm old enough to well remember those numbers. |
Public_heel
Moderator
Username: Public_heel
Post Number: 9949
Registered: 12-2003
| | Posted on Friday, May 29, 2009 - 01:25 pm: |
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I don't think TLT goes back far enough (July 2002) to give a really good range. You could go back further looking at yield, but that would indicate that we're still well below the historical range... |
Sivleyd
Moderator
Username: Sivleyd
Post Number: 878
Registered: 10-2003
| | Posted on Friday, May 29, 2009 - 12:47 pm: |
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I would just like to know what the historical range is. To ignore that seems foolish to me. But even that data is questionable. I have been interested in 1)shorting TLT and 2) some combo of offsetting shorts of TBT and TLT. |
Public_heel
Moderator
Username: Public_heel
Post Number: 9948
Registered: 12-2003
| | Posted on Friday, May 29, 2009 - 11:51 am: |
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but lose value relative to what?
Relative to the things that you have to pay for.
I think that, fundamentally, the Yen and the Euro (the two main components of the $US Index) should be as weak as the $US. Both regions are aging, overcrowded, resource-poor, and export-dependent, with high labor costs.
That doesn't take into account, though, the overhang created by the $US's use as a reserve currency. People around the world have Dollars metaphorically buried in their metaphorical back yards, and those Dollars will be metaphorically coming home to roost, trillions of them.
Anyway, there's been too much emphasis on the $US Index as a realistic measure of value. I think that people will come to despise and ignore it, perhaps even more than it deserves to be despised and ignored.
But, hey, if you think that TLT's slide will be arrested within a historical range, you could always sell a strangle, as options prices are quite high... |
Sivleyd
Moderator
Username: Sivleyd
Post Number: 877
Registered: 10-2003
| | Posted on Friday, May 29, 2009 - 11:22 am: |
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I agree that rates should go up because of recent stimulative policy. The reason I want to go back in time for comparison is because we have had times of much higher interest rates. How much lower was TLT index versus now? That should help me project the situation now. BTW, I don't think the US$ is doomed. It will face inflation pressure, but lose value relative to what? Other countries are having similar problems with recession. There is gold, but how much of your money do you want sitting in gold? And since it has gone up during hard times and low rates and low inflation, do you expect it to continue going up during the opposite scenario also? |
Public_heel
Moderator
Username: Public_heel
Post Number: 9946
Registered: 12-2003
| | Posted on Friday, May 29, 2009 - 11:10 am: |
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Yahoo is not right, at least not realistic. Stockcharts is "right". It shows that TLT has "corrected" back to last summer's levels.
All this talk about "correcting" seems to me to be missing the fundamental point about U.S. bonds. It's not like housing, for example, where we may "correct" back to some multi-decade trendline. The $US is doomed to a huge fall, and the Fed can only suppress long-term rates for so long before changing the $US's fall from huge to catastrophic. |
Sivleyd
Moderator
Username: Sivleyd
Post Number: 876
Registered: 10-2003
| | Posted on Friday, May 29, 2009 - 10:27 am: |
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If Yahoo is right, then the bubble in TLT is already corrected back to before the bailouts. How many years back in actual numbers do we have to go to match another 30% drop from 91? When was it last around 63? |
Public_heel
Moderator
Username: Public_heel
Post Number: 9945
Registered: 12-2003
| | Posted on Friday, May 29, 2009 - 10:26 am: |
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re TLT/TBT - Today and yesterday the market has been nuts. Rates are down, but people are buying gold, oil and commodities hand over fist, as though they assume inflation is coming.
I guess the current narrative is that the Fed will keep rates down, even if - or maybe especially if - that means trashing the $US. |
Public_heel
Moderator
Username: Public_heel
Post Number: 9944
Registered: 12-2003
| | Posted on Friday, May 29, 2009 - 10:22 am: |
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Yahoo has it right as far as the actual prices go. Stockcharts seems to automatically adjust for dividends. I don't even see an option for turning that adjustment off.. |
Sivleyd
Moderator
Username: Sivleyd
Post Number: 875
Registered: 10-2003
| | Posted on Friday, May 29, 2009 - 10:02 am: |
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I suspect the Yahoo chart is just plain wrong. But I'd like to know how? and where is it getting those numbers?
Here is a link that might get you some free charts from charts.com
http://stockcharts.com/?source=overture |
Public_heel
Moderator
Username: Public_heel
Post Number: 9943
Registered: 12-2003
| | Posted on Friday, May 29, 2009 - 09:42 am: |
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TLT has paid about $25 in dividends since June 2003, so that might explain it.
Yahoo charts do not allow for dividends, which makes them pretty useless for something like TLT.
Do you have links to those charts.com charts? Are they free? I'd like to see a chart that takes dividends into account...
(Message edited by public_heel on May 29, 2009) |
Sivleyd
Moderator
Username: Sivleyd
Post Number: 874
Registered: 10-2003
| | Posted on Friday, May 29, 2009 - 08:49 am: |
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TLT question:
For months, I have been looking at Yahoo's graph of TLT. There was obviously a bubble peak around year-end. The only decision, as always, was where to put money to work. Here's the question. The Yahoo graph shows TLT popping up to around 123 at year-end, then losing 25% since then. So we ask "how much farther to drop?" I noticed the range going back to 2003 was 80 to 97. It's already back in that range. I saw a graph today from charts.com showing TLT in the 60-73 range for 2003. That's a huge difference! I was able to go to their site and verify the graph. But then even on charts.com, another TLT percentage graph showed the current price back in the 2003 range. This floors me! What is the difference between these graphs? Is it adjusted for interest payments? What was the real price of TLT in 2003-2004? |
Public_heel
Moderator
Username: Public_heel
Post Number: 9933
Registered: 12-2003
| | Posted on Wednesday, May 27, 2009 - 05:10 pm: |
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Gldn - TBT - what I hear, and what makes sense to me, is that the traditional buyers of 20- and 30-year Treasuries are moving down to 2- to 7-year notes, because they don't trust the stability of the $US.
So while the Fed is buyng 20-years, and pushing the price up, everyone else is selling them - or just not buying as they normally would - thus pushing the price down.
Anyway, the price moves in TBT and TLT today reflect a marked steepening in the yield curve, which could be interpreted as predicting either economic recovery or $US collapse. |
Gldndog
Registered Member
Username: Gldndog
Post Number: 512
Registered: 12-2004
| | Posted on Wednesday, May 27, 2009 - 11:36 am: |
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PH,
I think the intention is to keep the rates down:
http://www.bloomberg.com/apps/news?pid=20601087&sid=azBMwE3puCME&refer=home
That is a lot of buying long term.
Gldndog |
Public_heel
Moderator
Username: Public_heel
Post Number: 9926
Registered: 12-2003
| | Posted on Friday, May 22, 2009 - 03:25 pm: |
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Gldn - One of two things has to happen. Either the rates on U.S. bonds must go way up (driving the price down, and driving TLT down), or the $US must go way down. "Both" could happen, but not "neither". |
Public_heel
Moderator
Username: Public_heel
Post Number: 9924
Registered: 12-2003
| | Posted on Friday, May 22, 2009 - 03:19 pm: |
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Up 16%. They've got 20 months to go, though... |
Gldndog
Registered Member
Username: Gldndog
Post Number: 509
Registered: 12-2004
| | Posted on Friday, May 22, 2009 - 02:21 pm: |
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As of approx noon, May 22, my TLT jan 2011 65 puts are up 28%. I tend to sell when there is a profit since missing the timing with AMZN.
PH, I would bet that your 60 puts are doing just as well, if not better. |
Public_heel
Moderator
Username: Public_heel
Post Number: 9923
Registered: 12-2003
| | Posted on Friday, May 22, 2009 - 11:50 am: |
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DNDN - I'm continually adding to my January 2011 call spreads. I have 21 contracts on each side now, either $15/$30, $20/$35 or $25/$40.
I will probably build it up to around 50 contracts on each side, and then stop. About $20k risked for a potential profit of $50k or so... |
Sivleyd
Moderator
Username: Sivleyd
Post Number: 873
Registered: 10-2003
| | Posted on Friday, May 22, 2009 - 11:48 am: |
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We found pretty good arbs with CFC. It's worth checking into. |
Public_heel
Moderator
Username: Public_heel
Post Number: 9922
Registered: 12-2003
| | Posted on Friday, May 22, 2009 - 11:35 am: |
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Thanks. It's all coming back to me now. I guess it's not a real opportunity, which is no surprise, as it seemed too good.
Unless, that is, there's a good arbed opportunity, which I doubt the pros have left available... |
Sivleyd
Moderator
Username: Sivleyd
Post Number: 872
Registered: 10-2003
| | Posted on Friday, May 22, 2009 - 11:31 am: |
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They are given new symbols. They still represent a position on the old stock, as if it were ready to convert into the new. They are priced accordingly, except for the extremely low volume and high bid/ask. It is a market maker's dream. |
Public_heel
Moderator
Username: Public_heel
Post Number: 9921
Registered: 12-2003
| | Posted on Friday, May 22, 2009 - 11:28 am: |
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OK, so the options really are "converted", as I thought they might be. It's an implicit conversion, though, as they continue to be EQ options, even if EQ no longer exists? |
Sivleyd
Moderator
Username: Sivleyd
Post Number: 871
Registered: 10-2003
| | Posted on Friday, May 22, 2009 - 11:25 am: |
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That's what happened with my Countrywide options after BAC completed the purchase. You sold out before the purchase was completed. I was able to favorably complete the transactions later. I had my positions totally arbed, so I was comfortable waiting. But for non-arbed positions such as 2 short options on the same stock, you would be at complete market risk from the stock with limited option volume and huge bid/ask spreads to exit. |
Public_heel
Moderator
Username: Public_heel
Post Number: 9920
Registered: 12-2003
| | Posted on Friday, May 22, 2009 - 11:17 am: |
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This "special status" sounds like some things we ran into in 2007, but can you give a hypothetical example? |
Sivleyd
Moderator
Username: Sivleyd
Post Number: 870
Registered: 10-2003
| | Posted on Friday, May 22, 2009 - 11:05 am: |
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I suspect the EQ buyout will merely move the trading of those options to special status. It is a stock trade - not a cash purchase. So why would option owners be forced to arbitrarily forfeit their equity interests when the underlying stockholders have not? |
Public_heel
Moderator
Username: Public_heel
Post Number: 9918
Registered: 12-2003
| | Posted on Friday, May 22, 2009 - 10:58 am: |
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As for trading CTL Octobers... those are big premiums, but the trouble would be that it's a position that still has five months to expiration, while the buyout of EQ might happen in a week or two... |
Sivleyd
Moderator
Username: Sivleyd
Post Number: 869
Registered: 10-2003
| | Posted on Friday, May 22, 2009 - 10:58 am: |
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I think you'd have to use the conversion ratio to balance the number of shares of each. |
Public_heel
Moderator
Username: Public_heel
Post Number: 9917
Registered: 12-2003
| | Posted on Friday, May 22, 2009 - 10:55 am: |
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Sell EQ $40's and buy CTL $35's?
You mean in equal quantities, not equal dollars, right? |
Public_heel
Moderator
Username: Public_heel
Post Number: 9916
Registered: 12-2003
| | Posted on Friday, May 22, 2009 - 10:50 am: |
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There may be some kind of auto-conversion of EQ options to CTL options. I've never actually seen that happen, but options contracts can say pretty much anything. Maybe I should check Options Clearing. |
Sivleyd
Moderator
Username: Sivleyd
Post Number: 868
Registered: 10-2003
| | Posted on Friday, May 22, 2009 - 10:22 am: |
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CTL/EQ
This is not an arb play the way you have it set up. The reason I point it out is you have the risk of non-competion plus the risk of acquirer stock movement, which is anything but a stable utility. While I agree that is a big spread and you should do well, I would point out that a similar play is available on CTL options with less risk. The Jan10 options are not trading. But the Oct09 options are, with similar high spreads. The EQ spread which seems so attractive is reflecting the potential price movement of the acquirer stock. I agree that it is a good opportunity.
Have you also considered selling EQ 40 calls and buying CTL 35 calls? |
Public_heel
Moderator
Username: Public_heel
Post Number: 9915
Registered: 12-2003
| | Posted on Friday, May 22, 2009 - 09:55 am: |
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Sivleyd, if you get a chance, could you give me your evaluation of this?
CTL is "buying" EQ in an all-stock deal, 1.37 shares of CTL for each of EQ. S&P just announced EQ's removal from the SP 500 on a date "to be announced". They often do this with takeovers, when they think the closing date is quite soon, but don't know exactly when. I think the deal is still awaiting two state board approvals, having received everything else it needs (including three state approvals a couple of days ago).
The stocks are trading as though the 1.37 deal will happen. The ratio at this moment is 1.36
What I don't understand are the options.
January 2010 $40 calls are bid $3.70, and the puts are bid $5.30. One could sell a call and a put and have a safety range of from $31 to $49, which seems like an awful lot, assuming the closing is quite close, and the deal price hinges on the price of a low-beta stock for a company which is a semi-utility.
FWIW, EQ has a $.69 dividend coming in a couple of weeks, as does CTL. |
Public_heel
Moderator
Username: Public_heel
Post Number: 9910
Registered: 12-2003
| | Posted on Thursday, May 21, 2009 - 02:26 pm: |
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and even more reason for you to cross the border to buy gas... |
