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Jeffrey D. Medwin

Is a BEAR Market for Stocks Continuing ?

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6 minutes ago, artto said:

And that's why you are not quite "getting it" - yet.

 

I said selling (writing) the call.

Ha ha!  I meant selling a call, too.  Just wrote the wrong word.  Certainly, we agree that when you sell a call you give up the opportunity to earn higher returns in those cases where the price of the stock rises above the strike price.

 

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You guys dealing with options and selling short---when I checked to see what I had to submit to Schwab to qualify to deal with options I kind of rebelled after they wanted to know how many pimples I had on my butt. That's after the cars, the houses, pensions, credit cards, shoes, hats, pants, wives, dogs, and everybody you dealt with from the age of 6, etc. Well that's what it seemed like.

JJK

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31 minutes ago, Jeff Matthews said:

Ha ha!  I meant selling a call, too.  Just wrote the wrong word.  Certainly, we agree that when you sell a call you give up the opportunity to earn higher returns in those cases where the price of the stock rises above the strike price.

 

 

(SMILES)

No, we don't. I'll privately message you tomorrow.

 

Right now it's quitin' time for me - listen to music. Have a nice evening  😉

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16 minutes ago, artto said:

 

(SMILES)

No, we don't. I'll privately message you tomorrow.

 

Right now it's quitin' time for me - listen to music. Have a nice evening  😉

Well, I guess we'll just have to disagree.  

 

Anyone interested (which is probably almost nobody here) can Google and quickly find support for my contention.  Here is an example:

 

Quote

It is also remarkable that the above strategy [selling calls] has a markedly negative bias. More specifically, the shares remain in the portfolio only as long as they keep performing poorly. Instead, when they rally, they are called away. Consequently, investors who sell covered calls bear the full market risk of these stocks while they put a cap on their potential profits. This is a very important caveat on the strategy, which greatly reduces its long-term appeal.

 

The underlined statement is what I stated, and it is in fact correct.  We are talking about merely selling calls - nothing more.  If you want to add some other types of transactions to the mix, you are going beyond the scope of the subject.

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2 hours ago, artto said:

 

If the stock pays a dividend it gets more complicated. Lets' not go there right now 🤑


it’s simple... any dividends are his unless the stock is called away (not going to mention ex-divided date and now realize you were probably doing same)

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Jeff I agree that you’re right. But let’s put it this way you own a stock at 100 you write (sell) a call for 125 strike you bring in a dollar a share.  At expiration the stock is at 115. You keep the stock because it’s not called away and you keep the dollar premium per share. you have just now enhanced your rate of return

 

Or what if the stock falls to 95? You still keep the dollar premium and you’ve buffered your downside by the same amount

 

All of that is one reason why I would urge somebody to only sell the call option on half of their position no more or stagger them on different time frames

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I’m in Beaufort South Carolina right now. When I get home I’ll try to post a covered call worksheet then at least somebody has real numbers they can work with if they fill it out

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3 hours ago, artto said:

Options contracts are most commonly written in 100 share amounts. In other words, if you want to write a call option on Microsoft, you have to own Microsoft - 100 shares of it.


you could also write a call (on Microsoft for example) if you owned the 100 shares OR perhaps you owned (bought) another call option on MSFT generally with a lower strike price and same or longer expiration 

 

generally these spreads are done on an index rather than individual stocks because they utilize cash settlement rather than shares

 

i just kept the name the same

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6 minutes ago, Coytee said:

Jeff I agree that you’re right. But let’s put it this way you own a stock at 100 you write (sell) a call for 125 strike you bring in a dollar a share.  At expiration the stock is at 115. You keep the stock because it’s not called away and you keep the dollar premium per share. you have just now enhanced your rate of return

 

Or what if the stock falls to 95? You still keep the dollar premium and you’ve buffered your downside by the same amount

 

All of that is one reason why I would urge somebody to only sell the call option on half of their position no more or stagger them on different time frames

 

All correct.  Despite all of the points we've made collectively, there is nothing here which enhances anyone's ability to forecast.

 

As a real life example, take Jeff Medwin's TVIX shares.  He came here and said he was going into TVIX.  He bought at something like $50.  Within a few weeks, it went to $1,000.  I remain envious, to say the least.  Had he sold calls and made a mere $2 per share, it would hardly be conversation-worthy.

 

 

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7 hours ago, Jeff Matthews said:

As a real life example, take Jeff Medwin's TVIX shares.  He came here and said he was going into TVIX.  He bought at something like $50.  Within a few weeks, it went to $1,000.  I remain envious, to say the least.  Had he sold calls and made a mere $2 per share, it would hardly be conversation-worthy.


Totally correct except if someone had the expectation that he did they wouldn’t have necessarily had sold a call, they would (should have) instead of bought a put and that would have magnifIed their return much more than selling the call, maybe more maybe not as much as having bought what he bought

 

If someone has the expectation of the market movement that he stated then going long would make more sense than going short whether it’s up or down.

 

My opinion the time to be selling calls and puts is when the market is doing its daily Mundane thing Verses getting crushed or soaring 

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7 hours ago, Jeff Matthews said:

 

All correct.  Despite all of the points we've made collectively, there is nothing here which enhances anyone's ability to forecast


If anyone had that ability then we’d all be doing this from our own private islands

 

So as I think I’ve heard it said here we are in violent agreement

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16 hours ago, JJkizak said:

You guys dealing with options and selling short---when I checked to see what I had to submit to Schwab to qualify to deal with options I kind of rebelled after they wanted to know how many pimples I had on my butt. That's after the cars, the houses, pensions, credit cards, shoes, hats, pants, wives, dogs, and everybody you dealt with from the age of 6, etc. Well that's what it seemed like.

JJK

 

JJK, 

 

You need to open a margin account to sell short.

 

There are various intricate financial requirements on different types of options transactions, read the fine print.   That is precisely why I shied away from suggesting to newbies - messing with, and even trying to learn about options.   My February 27,  2020 suggestion :  to buy a Inverse Exchange Traded Fund, or ETF, ( TVIX, etc, there are MANY now a days )  with no more than 5% of one's money,  was a very SIMPLE cash transaction, that ANYONE with a brokerage account in their own name can do, any time.   

 

But this, like any stock purchase, certainly needs to be TIMED well !! This is certainly not for beginners.  It requires very judicious use, constant monitoring.

 

At this point in time, I still really  LIKE the asset allocation of 95% CASH, 5% inverse ETFs, but that is not suitable as any blanket recommendation, its just my personal preference, just as it was in February 2020

 

Artto seems to be mostly in cash also, and he does HIS HOMEWORK !!!

 

When last officially reported, it seems Mr. Warren Buffett has the largest cash position he has ever had, about 130 billion dollars.

 

Fact :  there was very very SMALL volume on this March 2020 sell off, VS:  2008, and other bottoms, so I personally am acting ( for myself ), as though this 2020 market has had NO capitulation.   Which is essentially true !!  This potentially offers, and allows us to prepare now, for what may become a once-in-our-generation's life-time, ( possibly best ) stock market investing opportunity !  Please have patience, cash ......won't go out of style. 

 

 

Jeff Medwin

 

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2 hours ago, Jeffrey D. Medwin said:

When last officially reported, it seems Mr. Warren Buffett has the largest cash position he has ever had, about 130 billion dollars.

While technically true, I have read from various sources that his current cash position is not that much higher than it has been over the entire last decade.  They surmise that he's been waiting for a crash and a good deal for a LONG time now.  So long that Berkshire has significantly underperformed the S & P 500 for the last 10 years.  If I recall correctly.

 

Edit: Which makes sense because he timed it wrong 10 years ago.  Missed a great growth curve.  After he comes to find out just how badly he mistimed it, too much time has passed.  He HAS to double down.  If he plays this strategy LONG, he'll make out one day.  He says he's bullish long term, but he's been playing the opposite strategy for a long time.  I think he knows he blew it and should have ran with the bulls.

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Recently during our pandemic-related volatility, Buffet gobbled up airlines.  Shortly thereafter, he dumped them at a modest loss.  He's been hedging against America for 10 years.  Is there any chance he dumped the airlines to see if he could initiate panic?

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18 hours ago, Jeff Matthews said:

 

All correct.  Despite all of the points we've made collectively, there is nothing here which enhances anyone's ability to forecast.

 

As a real life example, take Jeff Medwin's TVIX shares.  He came here and said he was going into TVIX.  He bought at something like $50.  Within a few weeks, it went to $1,000.  I remain envious, to say the least.  Had he sold calls and made a mere $2 per share, it would hardly be conversation-worthy.

 

 

 

Great.

That's all fine and good Jeff.............except, for one important detail.

 

The security in your example (TVIX), is not an optional-able security. Please. Don't take my word for it. Look up the option chain on TVIX.

 

Also, TVIX is a Short Term instrument. It is not intended for buy and hold or long term investment.

 

To top things off, TVIX is an Exchange Traded Note (ETN) (not an ETF). These are notoriously some of the most poorly constructed instruments one can possibly get their hands on.This one in particular is designed to manage DAILY trading risks. It's not for buy, hold and wait for weeks or a month or more in hopes that the market (eventually) moves the way you expected. I wish J.D.M all the best with his TVIX trade. But time is not on his side.

 

 

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2 hours ago, Jeff Matthews said:

Recently during our pandemic-related volatility, Buffet gobbled up airlines.  Shortly thereafter, he dumped them at a modest loss.  He's been hedging against America for 10 years.  Is there any chance he dumped the airlines to see if he could initiate panic?

Never have I heard a more incoherent interview than one WB did a week or two ago on CNN Business... I had to ask myself, this guy is a Genius?

 

to be fair, I know he's surrounded himself with brain power, but to hear him speak was very disappointing.

 

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On a side note, if you listen carefully to what the fed and the president have been saying over these last couple weeks, you will be keen to learn that there is a SIGNIFICANT shift towards Digital assets... Crypto has been quickly building up momentum and the Shyte is about to hit the fan, mark my words!

 

China itself is releasing it's Digital YUAN this year and it will be a gold back crypto currency. The USA has been moving towards that also.

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1 hour ago, Schu said:

Never have I heard a more incoherent interview than one WB did a week or two ago on CNN Business... I had to ask myself, this guy is a Genius?

 

to be fair, I know he's surrounded himself with brain power, but to hear him speak was very disappointing.

 

----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

 

On a side note, if you listen carefully to what the fed and the president have been saying over these last couple weeks, you will be keen to learn that there is a SIGNIFICANT shift towards Digital assets... Crypto has been quickly building up momentum and the Shyte is about to hit the fan, mark my words!

 

China itself is releasing it's Digital YUAN this year and it will be a gold back crypto currency. The USA has been moving towards that also.

What's the difference between "Digital Assets" and my bank account and retirement savings accounts?  It all seems "digital" enough for me.  The way I spend it (using a credit card) seems pretty "digital," too.  How would any of this change, if at all?

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It changes the financial landscape considerably. 

 

There are several features of going to a fully digital asset, of those features is a decentralized aspect of the currency... the ability to 'bridge' payments between different asset classes and national currencies... blockchain technologies also add immunability to transactions... and I could go on.

 

As a retail end user, you may or may not, notice the effects but at enterprise scale the effects are overwhelmingly advanced and positive. 

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Think of the current financial and payment system as an old physical credit card purchase where the store takes you card, lays it in a machine and places a piece of carbon paper over it and makes an impression of that card as a promise to pay.

 

Now if you think of the new digital currency and block chain technologies as the same financial and payment system as a super computer... and you'll begin to get an idea of what is happening.

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