Bear Call Spread
Expectations are to convert into an Iron Condor
Sell the March 55.00 strike call
Buy the March 58.00 strike call
Total credit = 0.70
Monday, February 22, 2010
Tuesday, February 16, 2010
Where does the market go from here?
The article below are the views of Michael Markowski one of my trading associates. While I do believe the market is going lower overall in the coming months, I am not nearly as bearish as he is. I am expecting a 10-15% further decline in the market, he obviously is expecting much worse. There are always companies (stocks) with great value regardless of market conditions. If what he believes actually comes to fruition you will almost certainly be able to get those stocks later at lower prices.
Author: Michael Markowski
Written in the February edition of Equities Magazine.
Feb. 12, 2010 article: “Stocks Poised for Massive Sell Off”
The Euro’s recent steep decline versus the U.S. Dollar, which began in December is very bad new for the U.S. economy, stock market, commodities markets and the price of gold.
Did you know that since the Euro’s inception in 1999, its highs and lows as compared to its exchange rate with the U.S. Dollar have been accurate in predicting every significant rally and sell off in the U.S. stock market?
The Euro’s steep declines versus the U.S. Dollar in the late summer of 2008 and winter of 2009, preceded or precipitated the crashes in the U.S. stock market, which occurred in the Fall of 2008, and the Spring of 2009, respectively. Even the bursting of the dot com bubble in April of 2000 and the ensuing economic downturn in the U.S. can be blamed on a steep 15% decline in the Euro which began on January 3, 2000.
Since the Euro has already declined by 10% and continues to fall I expect that next shoe will soon drop, which will be a sharp sell-off in U.S. stocks. I am advising all of my family and friends to get into an 80% cash position in their stock portfolios, mutual funds and retirement plans.
Author: Michael Markowski
Written in the February edition of Equities Magazine.
Feb. 12, 2010 article: “Stocks Poised for Massive Sell Off”
The Euro’s recent steep decline versus the U.S. Dollar, which began in December is very bad new for the U.S. economy, stock market, commodities markets and the price of gold.
Did you know that since the Euro’s inception in 1999, its highs and lows as compared to its exchange rate with the U.S. Dollar have been accurate in predicting every significant rally and sell off in the U.S. stock market?
The Euro’s steep declines versus the U.S. Dollar in the late summer of 2008 and winter of 2009, preceded or precipitated the crashes in the U.S. stock market, which occurred in the Fall of 2008, and the Spring of 2009, respectively. Even the bursting of the dot com bubble in April of 2000 and the ensuing economic downturn in the U.S. can be blamed on a steep 15% decline in the Euro which began on January 3, 2000.
Since the Euro has already declined by 10% and continues to fall I expect that next shoe will soon drop, which will be a sharp sell-off in U.S. stocks. I am advising all of my family and friends to get into an 80% cash position in their stock portfolios, mutual funds and retirement plans.
Sunday, February 7, 2010
Adobe Systems (ADBE)
Low Risk Option Category
Option Trade
Buy to open: March 34.00 strike calls
Sell to open: March 36.00 strike calls
Limit Debit: 0.50
Max reward: 1.50 (or $150 per spread)
Max risk: 0.50 (or $50 per spread)
Option Trade
Buy to open: March 34.00 strike calls
Sell to open: March 36.00 strike calls
Limit Debit: 0.50
Max reward: 1.50 (or $150 per spread)
Max risk: 0.50 (or $50 per spread)
Compound Returns
Suppose you invest $10,000 into Gregory’s Tequila Company
Ticker Symbol: WORM
The first year, the shares rises 20%
Your investment is now worth $12,000
Based on good performance and incredible management, you hold the stock
In Year 2, the shares appreciate another 20%
Therefore, your $12,000 grows to $14,400
Rather than your shares appreciating an additional $2,000 (20%) like they did in the first year, they appreciate an additional $400, because the $20,000 you gained in the first year grew by 20% too!
If you extrapolate the process out, the numbers can start to get very big as your previous earnings start to provide returns
In fact, $10,000 invested at 20% annually for 25 years would grow to nearly $1,000,000
And that's without adding any money to the investment!
Scenario #1
You have $5,000 starting capital
If you can add $5,000 per year for the next 20 years
Total of your funds invested: $105,000
Compounded at 20% annual return
You would have $1,300,000
Scenario #2
$10,000 starting capital
Add $5,000 per year for the next 20 years
Total of your funds invested: $110,000
Compounded at 25% annual return
You would have over $3,000,000
Scenario #3
$20,000 starting capital
Add $10,000 per year for the next 30 years
Total of your funds invested: $320,000
Compounded at 25% annual return
You would have over $56,000,000
It takes some money to invest
It takes knowledge to get better returns
It takes time to compound
It takes patience!!!
All numbers below are hypothetical (expectations)
Swing stock trades (2-8 days in duration)
Expected returns for each type of stock traded:
Low risk stock trade expected return: +1% to +2%
Medium risk stock trade expected return: +2 to +4%
High risk stock trade expected return: +3 to +7%
Some will grow to become double digit performers!
Position stock trades (2-8 weeks in duration)
Expected returns for each type of stock traded:
Low risk stock trade expected return: +2 to +5%
Medium risk stock trade expected return: +5 to +10%
High risk stock trade expected return: +10 to +20%
Some will grow to become +20% performers!
Expected returns for each type of option traded:
Long Calls & Puts: Average return 20-50% of capital placed into the trade
Covered Call or Naked Put: Average return 5-15% of capital placed into the trade
Collar (Conversion): Average return 30% of capital placed into the trade
Calendar or Diagonal Spread: Average return 30% of money placed into the spread trade
Straddle or Strangle: Average return 30% of money placed into the spread trade
Butterfly or Iron Condor: Average return 50% of capital placed into the trade
Risk Reversal: Average return 30% of money placed into the spread trade
Vertical Spread: Average return 20-50% of capital placed into the trade
Ticker Symbol: WORM
The first year, the shares rises 20%
Your investment is now worth $12,000
Based on good performance and incredible management, you hold the stock
In Year 2, the shares appreciate another 20%
Therefore, your $12,000 grows to $14,400
Rather than your shares appreciating an additional $2,000 (20%) like they did in the first year, they appreciate an additional $400, because the $20,000 you gained in the first year grew by 20% too!
If you extrapolate the process out, the numbers can start to get very big as your previous earnings start to provide returns
In fact, $10,000 invested at 20% annually for 25 years would grow to nearly $1,000,000
And that's without adding any money to the investment!
Scenario #1
You have $5,000 starting capital
If you can add $5,000 per year for the next 20 years
Total of your funds invested: $105,000
Compounded at 20% annual return
You would have $1,300,000
Scenario #2
$10,000 starting capital
Add $5,000 per year for the next 20 years
Total of your funds invested: $110,000
Compounded at 25% annual return
You would have over $3,000,000
Scenario #3
$20,000 starting capital
Add $10,000 per year for the next 30 years
Total of your funds invested: $320,000
Compounded at 25% annual return
You would have over $56,000,000
It takes some money to invest
It takes knowledge to get better returns
It takes time to compound
It takes patience!!!
All numbers below are hypothetical (expectations)
Swing stock trades (2-8 days in duration)
Expected returns for each type of stock traded:
Low risk stock trade expected return: +1% to +2%
Medium risk stock trade expected return: +2 to +4%
High risk stock trade expected return: +3 to +7%
Some will grow to become double digit performers!
Position stock trades (2-8 weeks in duration)
Expected returns for each type of stock traded:
Low risk stock trade expected return: +2 to +5%
Medium risk stock trade expected return: +5 to +10%
High risk stock trade expected return: +10 to +20%
Some will grow to become +20% performers!
Expected returns for each type of option traded:
Long Calls & Puts: Average return 20-50% of capital placed into the trade
Covered Call or Naked Put: Average return 5-15% of capital placed into the trade
Collar (Conversion): Average return 30% of capital placed into the trade
Calendar or Diagonal Spread: Average return 30% of money placed into the spread trade
Straddle or Strangle: Average return 30% of money placed into the spread trade
Butterfly or Iron Condor: Average return 50% of capital placed into the trade
Risk Reversal: Average return 30% of money placed into the spread trade
Vertical Spread: Average return 20-50% of capital placed into the trade
Thursday, February 4, 2010
Exit: Berkshire Hathaway Trade (BRK-B)
The stock was added to the S&P 500 as anticipated. The market looks shaky and I would be very inclined to short aggressively into the market (we just entered GES short). We will get out of the option "risk reversal" trade now.
Buy to close: March 65 strike put
Sell to close: March 75 strike call
Credit: 1.40 per risk reversal traded
We entered this trade at a debit or cost of .20 or $20 per risk reversal traded. We are taking it off and receiving a credit of 1.40 or $140 per risk reversal traded. That is a profit of 1.20 or $120 per risk reversal traded.
The margin requirement in this type of trade is 25% of the value of the underlying stock (roughly $1,750 per risk reversal). Given our margin requirements in the trade, it comes out to a 7% gain on money invested in under two (2) weeks time. To put that in dollar terms, for every $10,000 invested you have a profit of $700 in under two (2) weeks.
Buy to close: March 65 strike put
Sell to close: March 75 strike call
Credit: 1.40 per risk reversal traded
We entered this trade at a debit or cost of .20 or $20 per risk reversal traded. We are taking it off and receiving a credit of 1.40 or $140 per risk reversal traded. That is a profit of 1.20 or $120 per risk reversal traded.
The margin requirement in this type of trade is 25% of the value of the underlying stock (roughly $1,750 per risk reversal). Given our margin requirements in the trade, it comes out to a 7% gain on money invested in under two (2) weeks time. To put that in dollar terms, for every $10,000 invested you have a profit of $700 in under two (2) weeks.
Monday, February 1, 2010
New Trade Idea
Guess (GES)
Stock Trade
Short the stock with a stop-limit 0rder
Stop = 39.44, Limit = 39.35
Place a buy stop above at 41.14
Stock Trade
Short the stock with a stop-limit 0rder
Stop = 39.44, Limit = 39.35
Place a buy stop above at 41.14
