Twitter Day + One

So I now look at the details of yesterday's mistake: when I accidentally bought 300 options at market when I thought I was buying 300 shares of SDS at market.  

My loss of over $500 was the commissions!  On 300 option contracts on the November 8, 2013 (today) 33 puts on SDS.  The options are now quoted at $.60. They were $.14 when I bought and sold.

My commissions on the 300 SDS would have been zero.

Twitter Day -- But Unrelated

So I'm going along buying and selling.  Schwab's StreetSmart Edge is wonderfully set up for this...except THERE IS ONE BIG, BIG FLAW -- when you are on the tab, say, for SDS, or any stock, the tab may be on the OPTIONS page for that "stock."  (Actually SDS is not a stock but an index), NOT THE STOCK PAGE.  So you have the top of the page giving the stock price but the bottom part your curser is on some random option. 

After a successful morning trading, (up $178), having the urge to buy 300 SDS a half hour ago, I see that I was immediately down $750.  WHAAA??? Then I realized I had bought 300 SDS options that expire TOMORROW, AT MARKET --i.e. I got screwed.  I NEVER DO A MARKET ORDER ON OPTIONS.

Now, what does that mean?  SDS is a bet the general market will go down and SDS gives you twice the movement of the S&P 500.  It is the only way to do a negative bet in a stock account, other than buying puts.

A call option on SDS is that on steroids. The direction was correct, but NOT THAT FUCKING LEVERAGED OR LARGE A BET!

Shaking, I call Schwab and have to wait out the recorded crap.  I'm too nervous to get out of the trade myself.  Meanwhile each penny is a lot (for me) up or down. Let's see $.01 x 300 x 100.  Let's see, 300 x 100 is 30,000.  Times .01 = $300.  (Now that I've done it just now it doesn't seem so bad.)

Finally the rep answers and he does the trade.  But there has been little activity in this call strike.  Only 15 go off.  OH GOD, ONLY 285 TO GO. I tell him I can take over and wait it out on my own.  FINALLY there is an uptick and I "only" lose about $500.  SHEEEAT.

Big Day for Interpreting Cramer and P&G Yesterday

When Cramer starts a position in P&G and then loads up twice in one day, this is a big call.  It is a warning about the general market -- the closest he comes without saying so.  It has been years, really, since P&G served as the safety market.  It looks like this is the year, hopefully decade, for Cincinnati.  Everything is coming up roses for this town.

Have I Turned the Corner?

The day Facebook announced its earnings and that it now was making money on ads on mobile, I recognized the trade of a lifetime.  So I even bought in the pre-market for myself and clients, even though FB was up 2 points already.  It worked wonderfully.

So Thursday night I heard Cramer's interview with the head of Salesforce, which had reported earnings that day.  The best presentation I have ever heard.  Again I bought for myself and clients in the pre-market and after CRM was up 2 points.   Another great trade, as CRM continued strong to the end.

Last week too Cramer identified COG as a natural gas play, building, or benefiting from building, a pipeline to New England, previously stuck with propane or heating oil for the residential market, I believe.  That's a theme I have been watching for 35 years, mainly with electricity.  So I bought COG.  It looks strong for a long time although I'm slightly under water after a couple of days..

Microsoft May 18 Calls -- Should be Exercised the Day Before the Ex-Dividend Date

http://investorplace.com/2011/01/options-dividends-exercise/4/ 

Are There "Lessons" While Trading AAPL Options?

Along the same vein as the previous, I jumped into 2 10/05/12 670 AAPL puts this morning @13.20 and got out an hour later without harm.  But what scared me was that I was looking for the right price with enough volume for a fairly narrow spread.  But I had not considered how short in time they were for.  Only 3 days.  So it was a weekly, not even a monthly.  Normally I try for one with at least a month remaining, so as to be able to recover if the underslying stock initially goes the wrong way.

The other theme I had is that usually your first "trade" after a gap is a good one.  But then the inevitable issue comes up "what next."  It's the "what next" that kills you.  Your second or third idea.

Are There "Lessons" While Trading?

OK, I've been disciplined for months now, basically layering selections of Jim Cramer from his charitable trust account.  But there's something about September that brings me down every year.  Something to do with the beautiful weather, I'm sure.

So last week I entered an option trade with 2 October 695 calls of AAPL @ 22 and something.  When it immediately turned south I "traded around" by selling 2 October 715 calls of AAPL @ 12 and something.  But I still was facing a $2000 max loss if things went south.

So, here's the lesson:

1.  Don't jump into option trading after a long time period.  You forget how you can be ripped to shreds without knowing how to get out of it.

Carl Icahn to Chesapeake's Rescue?

More fireworks before Friday 17 calls expire, I hope.

Confessions of a Pattern Day-Trader -- Back From Manila Trading

I've been restricting my blog posts to the profound. Well, I've got one.  Last week on CNBC a hedge fund guru admitted that his holding of Netflix stock required him to avoid ever looking at how it was doing within his portfolio.  Just "don't look at it."

This is the most profound secret to investing.  But you seldom hear this advice on CNBC because CNBC's very business requires that people look at it!

Will the Market Continue...

The age-old question.


The quality of the interviewers and interviewees on CNBC is so much better than in the day.  Pisani is good at the end of the day.  Cramer is always good and when his tone of voice is a certain way, you should do what he's recommending.  His housing call nears this, although if you remember he called the bottom in June of 2010 and was wrong.  He's also not good on natural gas.

El-Erian and Bill Gross are excellent.

Looking at the TV programming at Infiniti while waiting on my car, I realize there are a lot of financial programs other than CNBC.  Same conclusion being in Manila for six weeks recently -- different versions of CNBC, plus Bloomberg.

So Far This Year

So Far This Year


100 FFIV, with selling a January 115 call on same;  $12 unrealized profit

why FFIV? pin-action from Oracle's earnings report


100 American Tower Corp, no hedge:  $392.05 unrealized profit

pin-action from ATT/T Mobile breakup (bought shares in late 2011)


100 Con Ed recently rebought; will sell today: $225.95 unrealized loss
the utility trade is over for the New Year


1 long AAPL February $400 call; 1 short $425 call: unrealized profit $106

a call spread on AAPL is a safe way to bet on AAPL, until it's not


1000 shares AA (Alcoa): $75 unrealized loss

China is shutting down smelters to use the electricity (90% of aluminum is electricity); Alcoa is doing the same; yet the demand for aluminum will remain strong, especially in the US

small realized loss on put spread on GLD:  $25
was going the wrong way on this

The New Year

(c) 2012 F. Bruce Abel

Having lost $11,000 in my trading account in 2011, I feel like a new year gives a blank sheet with ample room for New Year's Resolutions.  As in the past I am reluctant to mess it up.  So far my positions are hedged to some or all extent.  So the daily change in value is small.  Plus, being in Manila so long, I am not at all as rabid about following CNBC in live time as this was impossible due to the time difference.  This is to the good. 

This will be the beginning of my third year of "recent trading" I believe.  I re-opened a Schwab account January, 2009, and I began again after the professional traders/investment managers proved incompetent in the crash of 2008-09.

Lots of action each year with no net profits, with one year at break-even and one year of down $13,000.  In addition to the loss in 2011 mentioned above.

Nevertheless I do not feel badly, (I also have a growing law practice), considering the difficulties everyone has been having with the market.  Yes, a strategy of following Cramer through the whole thing would have recouped from the "losses of 2008-2009," but I didn't have any losses in 2008-2009 as I was not in the market.  My wife, however, was, and her advisors suffered along with the general market with her investments.

My trading account varied from $25,000 (first year) to $50,000, with withdrawals as a safeguard from time to time.

More and more of my trading has been "hedged," using paired trades.  And less of the spur-of-the-moment variety. 

Confessions of a Pattern Day-Trader -- Manila Trading

(c) 2012 F. Bruce Abel

My readers will have noticed that I have not posted, really, for some time.  However, having spent the last six weeks in Manila with daughter Genevieve, and having daughter Becca and her family in Barcelona, I have some peculiar insights into the difficulties and peculiarities of trading when it is day in New York but night in Manila.  Also I joined a start-up investment club in Manila with some highly-educated ADB personnel. Two of which are a husband and wife combination who play at the same level of duplicate bridge that Eunie and I play, and who got us into a delightful game on a Saturday. So most of my posts will be devoted to these circumstantial oddities, for a while.

Mohamed A. El-Erian

This guy works for Bill Gross, the best bond market guru and manager.  Mohamed is brilliant and is interviewed on CNBC when important crises are afoot.


They don’t have six weeks,” said Mohamed A. El-Erian, chief executive of Pimco, the world’s largest bond manager. He said fear had reached the very core of the 17-nation group that uses the euro currency, with the price of insurance on German debt rising substantially this week.




“The light already is flashing yellow,” Mr. El-Erian said. “They can’t allow it to flash red. You have to give people a vision of what you want the euro zone to look like.”

Ten Things

The deeper meaning to my purchase of 1000 BAC the morning Warren Buffet announced his purchase:  it was a day of otherwise huge import in our family, as Doug and Becca and kids were moving to Barcelona.  For me to make such a purchase just before taking them to the airport was "a signature moment."  We'll see if it works out.

Ten Things

Warren Buffet stepped up to the plate on Cramer's Item No. 2 yesterday.  I "bit" for 1000 BAC at near the high of the day and I'm proud of it, although I sold 500 near the low of the day. Jim defended the bullishness of BAC in his opening segment last night, bashing the short-sellers who dumped on the Buffet deal (from the point of view of BAC).  Mainly the Fast Money crowd.

Ten Things

OK, so we had this tremendously up day yesterday and some of Cramer's "Ten Things" started to turn around.  This raises the age-old problem.  Since they all have not turned, is this an opportunity to sell????

Review of Ten Things

1. leaders coming back from vacation; ????
2. banks stopping going down; yes except for BAC, which is Blodget's and everybody else's short sale as a proxy for european banks which cannot be shorted anymore.
3. tech's seasonal slump has to end.  On examination of this one it appears the calendar is the only determinant, as this happens in the last week of September.
must be more mergers and acquisitions;
4.   must be more mergers and acquisitions; not that I heard about yesterday, but I was laser-tagging with Owen and his friends yesterday.
5. must be lower stock and gold prices; yes as to the latter only.  So Cramer is saying "Sell this rally."
6. Europe must step up its game; certainly rumblings out of German principals on this one.
7. Brent crude must go below 100;  no help yesterday.
8. China must stop raising rates;  don't know.  How find out?
9. Europe says we'll stick with a VERSION of the euro, not the euro; stay tuned, not yet.
10. must be some stock leadership.  where was the leadership yesterday?  techs and most banks probably.

Cramer's Good -- Until He's Not

(c) 2010 F. Bruce Abel

Lost another $1100 followng Cramer from last week.  In the teeth of his sweeping "list" of three weeks ago he got edgy to recommend specific buys again and began saying that each bad item in his list of (bat-on-the-shoulder musts) was getting so good that he was taking it off the list.  Then last week he had specific Apple-related stocks that the money managers would "be desperate to load up on before June 30" and other one other that had doubled in the year.  Now in fact it looks like the money managers are desperate not to show any stocks being held June 30th.  We'll see after tomorrow's close.  But I'm out of three stocks I bought, for a loss of $1100.  I switched my Procter July puts into Augusts, but I'm behind on them too, even after this down day today.  But my thinking on Procter is independent from what happened in China or Europe this week.  I'm sticky wicket. (phonetic)

Cramer's gotten too unbalanced.  Maybe he's been away from money management too long.  Or maybe he misses his "princess" or whatever he called his wife when they were (trading) together.  She saved his bacon more than once in a trading crash crisis, by his own admission.

Having said the above, Cramer is still awesome.  Just human, that's all.

Cramer's Mad Money - The Pajama Game (6/17/10) -- Seeking Alpha

(c) 2010 F. Bruce Abel

"Ludicrous." This concept of ludicrous "Pajama" traders is newish with Cramer.  Read further. Wait just a minute! Can he be serious that there are enough of them -- I'm one -- to match the really active hedge funds that are trading off milisecond-actions?

He needs to do a lot more on this topic to fully flesh it out.


Cramer's Mad Money - The Pajama Game (6/17/10) -- Seeking Alpha: "Cramer said the 'pajama game' was responsible; traders who sit at home in their pajamas with their laptops and trade at a furious pace with the wrong information. Double and triple-leveraged ETFs only exacerbate the problem.
Cramer has spoken before about the problem of high frequency trading which now comprises 80% of trades compared to 30% 4 years ago. False information can make unsustainable rallies given the intensity of trades. For instance, traders started buying because the CurrencyShares Euro Trust (FXE) seemed strong, but the euro was stronger only because of bad news on the home front.
It doesn't help to be the voice of reason when trades are made in a flash. Unfortunately, for now at least, the fate of stocks “rests in their ludicrous hands,' said Cramer."

Friedman - - We're All Day-Traders Now

(c) 2010 F. Bruce Abel

Friedman today, in part:

Op-Ed Columnist - In Athens, a Question From Lydia - NYTimes.com: "But that hasn’t been the trend. We’ve become absorbed by shorter and shorter-term thinking — from Wall Street quarterly thinking to politician-24-hour-cable-news-cycle thinking. We’re all day-traders now. We have day-thinking politicians trying to regulate day-trading bankers, all covered by people tweeting on Twitter."