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When should we get greedy?

Investment discussion for beginners. Why you should invest your money, get help getting started
TheMotorcycleBoy
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Re: When should we get greedy?

#299918

Postby TheMotorcycleBoy » April 11th, 2020, 4:34 pm

tjh290633 wrote:
TheMotorcycleBoy wrote:We on TLF used to have a member (called "SentimentRules") here who unfortunately posted far too obsessively and was generally derided by many.

He turned up on ADVFN on various boards, but got universally filtered by most of the participants. He has obviously moved on elsewhere, where he wasn't talking to himself.

TJH

Poor chap. I do think his "Never trust anyone" statement, makes a bit of sense in the investment world, though. In other words, the buck stops with yourself.

Matt

TUK020
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Re: When should we get greedy?

#299924

Postby TUK020 » April 11th, 2020, 4:58 pm

TheMotorcycleBoy wrote:
JDot wrote:
TheMotorcycleBoy wrote:There's no such thing as a free lunch.

Matt


Thanks Matt

Point noted!

Hi JDot,

Sorry I shouldn't have fobbed you off like that. What I should have said is that there are loads of articles like that. You have to be very careful in what you read and listen to. I had a very quick at it, and the only thing that was clear to me is that obviously the owners of the site and author have an agenda and that is to make $$$ from the advertising space at the side of the text.

We on TLF used to have a member (called "SentimentRules") here who unfortunately posted far too obsessively and was generally derided by many. Personally I found the derision a little nasty - but anyway people are people aren't they. However, in my opinion he has actually a fairly shrewd guy. A remember there was a post of his, and he was, I can't quite remember, either giving advice or sharing his investment philosophy. Anyway one thing he said which resonated in me, was "Never trust anyone". My take from that is always do you own research and only buy something for which you have a strong conviction. So regards those ETFs - I really know nowt, but presumably your broker/platform provider will have some pukka information on them, or maybe "MorningStar" has likewise. Also I note that on this place we have A Passive Investing board on which ppl chat about ETFs and other such. My advice would be for you to pick one or two ETFs that you like and perhaps post a well worded topic up there and see if anyone else has additional knowledge.

A couple of other investment idioms which I have picked up from folk here, which you might find interesting, and I'll share, are:

From GoSeigen, I don't remember his exact words but it was essentially "Balance risk and reward". That is, there's no free lunch, or that a strong return will/might imply a high risk. GS said this in the context of these mini-bonds Mel and I had spotted that offered, IDK, 7%-10% annual return. However, after further consideration I realised that there was considerable risk associated, i.e. money tied up for 3-5 years, no FSCS, fly-by-night firm etc. So given the risk 40% return would have been more appropriate!!

From TJH: "the time to buy is now". Now I don't take that as meaning, spend all your money now, but rather the importance of realising that i) the highs and lows of today will even out/disappear over a long enough time frame and ii) timing the market is futile/impossible/stressful.

Anyway, apologies for my earlier flippancy. All I can suggest is that you take time figuring out an investment strategy that suits you, do plenty of research (try to find pukka onlines sites, or at least search for countering arguments when you see something that seems "too good to be true") and if you have specific question (e.g. shares, bonds, ITs, ETS, analysis etc.) try to write a really concise thread and post to the right board on the site. If are stuck on "which board?" then post to the Biscuit Bar first to ask for posting/board advice.

HTH, Matt


Another poster who got a lot of flack on TMF was Munroman, however he did post some gems, amongst them:

There are only a few rules in finance.
Markets are volatile, get used to it.
No one really knows what is going on, so join the club.
Dividends keep companies a bit more honest.
Compound interest works.
Diversification reduces risk.


You could say that the free lunches are:
- diversification
- compound interest
- dividends
all of which are at the core of HYP

BobGe
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Re: When should we get greedy?

#300004

Postby BobGe » April 12th, 2020, 4:01 am

tjh290633 wrote:
TheMotorcycleBoy wrote:We on TLF used to have a member (called "SentimentRules") here who unfortunately posted far too obsessively and was generally derided by many.

He turned up on ADVFN on various boards, but got universally filtered by most of the participants. He has obviously moved on elsewhere, where he wasn't talking to himself.TJH

Still there, plus an alias or two.

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Re: When should we get greedy?

#302715

Postby GoSeigen » April 23rd, 2020, 3:43 pm

GoSeigen wrote:
GoSeigen wrote:
bungeejumper wrote:What the heck, I'm probably 30 years older than you. :lol: Can't afford to go large on once-in-a-generation trades. Good luck, and maybe we'll compare notes in the autumn?


I'd very much like to compare notes later but will probably forget -- so maybe not that much younger than you... (have similar issues watering the compost heap too!)


I'm trying to use options trades as a discipline to avoid trading too early in the underlying. Can't say I've made much on the options over the past couple of years, but it's educational and entertaining.

The Sep straddles I opened recently would in most circumstances immediately start losing money. Two days later they've barely moved, with VIX still high and an inverted term structure. So I've doubled the position today, may add more if the trade keeps moving favourably.


This position is still practically at break-even and VIX still elevated with inverted term structure. Earlier this week I increased exposure with some Dec S&P straddles. The plan is to write shorter-dated and/or OTM options against the position when the term structure normalises, or close my S&P short futures if and when there's another severe market drop.

GS


Sep and Dec straddles are comfortably in profit, the S&P term structure is now roughly flat so I have cautiously started writing Jun straddles against the long Sep and Dec positions.

GS

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Re: When should we get greedy?

#304160

Postby GoSeigen » April 29th, 2020, 3:06 pm

GoSeigen wrote:
GoSeigen wrote:
GoSeigen wrote:
I'd very much like to compare notes later but will probably forget -- so maybe not that much younger than you... (have similar issues watering the compost heap too!)


I'm trying to use options trades as a discipline to avoid trading too early in the underlying. Can't say I've made much on the options over the past couple of years, but it's educational and entertaining.

The Sep straddles I opened recently would in most circumstances immediately start losing money. Two days later they've barely moved, with VIX still high and an inverted term structure. So I've doubled the position today, may add more if the trade keeps moving favourably.


This position is still practically at break-even and VIX still elevated with inverted term structure. Earlier this week I increased exposure with some Dec S&P straddles. The plan is to write shorter-dated and/or OTM options against the position when the term structure normalises, or close my S&P short futures if and when there's another severe market drop.

GS


Sep and Dec straddles are comfortably in profit, the S&P term structure is now roughly flat so I have cautiously started writing Jun straddles against the long Sep and Dec positions.

GS


Options curve still busy righting itself. I continue to write options. Today wrote a few S&P Dec 2300 puts and 3225 calls.

GS

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Re: When should we get greedy?

#304223

Postby johnhemming » April 29th, 2020, 6:24 pm

GoSeigen wrote:Options curve still busy righting itself. I continue to write options. Today wrote a few S&P Dec 2300 puts and 3225 calls.

I don't have the time to follow the options markets. What sort of price do these things write at?

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Re: When should we get greedy?

#304284

Postby GoSeigen » April 29th, 2020, 9:49 pm

johnhemming wrote:
GoSeigen wrote:Options curve still busy righting itself. I continue to write options. Today wrote a few S&P Dec 2300 puts and 3225 calls.

I don't have the time to follow the options markets. What sort of price do these things write at?


I took just under $100 per leg, so I lose on the trade if SPX falls more than 28% or rises more than 18%. Potential gain is about 3% of notional value, or 60% of margin posted.

GS

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Re: When should we get greedy?

#306741

Postby TheMotorcycleBoy » May 8th, 2020, 3:01 pm

GoSeigen wrote:
GoSeigen wrote:
GoSeigen wrote:
This position is still practically at break-even and VIX still elevated with inverted term structure. Earlier this week I increased exposure with some Dec S&P straddles. The plan is to write shorter-dated and/or OTM options against the position when the term structure normalises, or close my S&P short futures if and when there's another severe market drop.

GS


Sep and Dec straddles are comfortably in profit, the S&P term structure is now roughly flat so I have cautiously started writing Jun straddles against the long Sep and Dec positions.

GS


Options curve still busy righting itself. I continue to write options. Today wrote a few S&P Dec 2300 puts and 3225 calls.

GS

Purely out of curiousity, GS. But when "you" write options, who do you trade them with? I can't it figure out.....it's like....surely because you synthesised them yourself, how can the buyer price them?

Matt

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Re: When should we get greedy?

#306743

Postby Lootman » May 8th, 2020, 3:11 pm

TheMotorcycleBoy wrote:Purely out of curiousity, GS. But when "you" write options, who do you trade them with? I can't it figure out.....it's like....surely because you synthesised them yourself, how can the buyer price them?

He doesn't literally "write" or create those options. It's just a term for selling options contracts rather than buying them. They are exchange-traded and therefore are standardised, making them relatively easy to value.

He never sees who is on the other side of his trades, any more than you do when you buy or sell a share. Your counterparty is the exchange.

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Re: When should we get greedy?

#306747

Postby TUK020 » May 8th, 2020, 3:38 pm

GoSeigen wrote:
Sep and Dec straddles are comfortably in profit, the S&P term structure is now roughly flat so I have cautiously started writing Jun straddles against the long Sep and Dec positions.

GS


When I first read "Sep Straddles" I thought it sounded like a nasty bacterial infection one picked up horseriding

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Re: When should we get greedy?

#306856

Postby GoSeigen » May 9th, 2020, 7:34 am

Lootman wrote:
TheMotorcycleBoy wrote:Purely out of curiousity, GS. But when "you" write options, who do you trade them with? I can't it figure out.....it's like....surely because you synthesised them yourself, how can the buyer price them?

He doesn't literally "write" or create those options. It's just a term for selling options contracts rather than buying them.


This.

Personally, I just access options through a spreadbetting company, so there's actually the additional bucket-shop risk, but the pricing and principle is the same -- all the trades being cash settled of course. I think the market leader for directly accessing options is www.interactivebrokers.com but I haven't used them.

GS

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Re: When should we get greedy?

#306864

Postby johnhemming » May 9th, 2020, 8:50 am

https://www.bloomberg.com/news/articles ... uge-losses

To be fair to interactive brokers they did refund the below zero losses.

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Re: When should we get greedy?

#308404

Postby GoSeigen » May 13th, 2020, 8:07 pm

GoSeigen wrote:Options curve still busy righting itself. I continue to write options. Today wrote a few S&P Dec 2300 puts and 3225 calls.


Crazy, I know, but with just 1.5 days' trading left S&P May options are priced the same as they normally would be four weeks from expiration so I've taken a short May strangle today.

15% return on the posted margin in two days if the S&P opens between 2800 and 2825 on Friday. Loss if it's above 2870 or below 2660.


Get the pillory ready!

EDIT: A bit more context on this trade: I'm already short two ITM May puts, so if the index falls hard I won't mind too much. I'm also short a May ATM call, if I didn't put on the above trade I'd be tempted to close this call to avoid pin risk and forfeit all that lovely time value. OTH if the index rises much I'll be happy to open short futures against the ITM puts when they expire, leaving a hedge in place against my long share porfolio.

GS

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Re: When should we get greedy?

#308409

Postby Dod101 » May 13th, 2020, 8:22 pm

GoSeigen wrote:[
Crazy, I know, but with just 1.5 days' trading left S&P May options are priced the same as they normally would be four weeks from expiration so I've taken a short May strangle today


Sounds nasty. Seriously though does this have something to do with Theresa?

Dod

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Re: When should we get greedy?

#308892

Postby GoSeigen » May 15th, 2020, 2:41 pm

GoSeigen wrote:
GoSeigen wrote:Options curve still busy righting itself. I continue to write options. Today wrote a few S&P Dec 2300 puts and 3225 calls.


Crazy, I know, but with just 1.5 days' trading left S&P May options are priced the same as they normally would be four weeks from expiration so I've taken a short May strangle today.

15% return on the posted margin in two days if the S&P opens between 2800 and 2825 on Friday. Loss if it's above 2870 or below 2660.


Turned out okay in the end. Haven't seen the contract note yet but I think the S&P opened around 2825 so close to maximum profit on that two-day trade.

At the open I rolled the short ITM call positions into a short June ATM contract taking 100 of premium.

GS

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Re: When should we get greedy?

#309052

Postby ADrunkenMarcus » May 16th, 2020, 10:27 am

JDot wrote:With the recent market falls, funds and shares are offering high dividend yields and low price to earnings ratios. When do we know when the best time to pull the trigger is, and buy buy buy?


Ask me in ten years!

But, for now, I am happy that I fed money into my portfolio in late March and into April - increasing my portfolio size by almost 11%. I also added substantial funds into the market in 2009 and 2011 - those turned out well. I expect 2020 will turn out well in the future, too.

Best wishes

Mark.

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Re: When should we get greedy?

#310262

Postby GoSeigen » May 20th, 2020, 2:18 pm

GoSeigen wrote:
GoSeigen wrote:
GoSeigen wrote:Options curve still busy righting itself. I continue to write options. Today wrote a few S&P Dec 2300 puts and 3225 calls.


Crazy, I know, but with just 1.5 days' trading left S&P May options are priced the same as they normally would be four weeks from expiration so I've taken a short May strangle today.

15% return on the posted margin in two days if the S&P opens between 2800 and 2825 on Friday. Loss if it's above 2870 or below 2660.


Turned out okay in the end. Haven't seen the contract note yet but I think the S&P opened around 2825 so close to maximum profit on that two-day trade.

At the open I rolled the short ITM call positions into a short June ATM contract taking 100 of premium.

GS


Still selling volatility, a few more added this week. VIX remains above 30 and S&P has been trading in a range for more than a month now. Personally am leveraged long UK stocks and still buying but don't know whether this market is going up or down so happy to keep trading the options.

GS

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Re: When should we get greedy?

#315431

Postby GoSeigen » June 5th, 2020, 9:48 am

GoSeigen wrote:
GoSeigen wrote:
GoSeigen wrote:
Crazy, I know, but with just 1.5 days' trading left S&P May options are priced the same as they normally would be four weeks from expiration so I've taken a short May strangle today.

15% return on the posted margin in two days if the S&P opens between 2800 and 2825 on Friday. Loss if it's above 2870 or below 2660.


Turned out okay in the end. Haven't seen the contract note yet but I think the S&P opened around 2825 so close to maximum profit on that two-day trade.

At the open I rolled the short ITM call positions into a short June ATM contract taking 100 of premium.

GS


Still selling volatility, a few more added this week. VIX remains above 30 and S&P has been trading in a range for more than a month now. Personally am leveraged long UK stocks and still buying but don't know whether this market is going up or down so happy to keep trading the options.

GS


Well, the S&P has strongly broken out of its range. FTSE is following the US skyward. The VIX has finally decided to drift back to normal (but still elevated) levels and the Put-Call ratio is strongly in favour of calls. My short straddles are under water for now, but the call leg of a long SEP straddle I bought right back in March is finally in profit (the put leg was closed out long ago).

This all has prompted me to take a first tentative short call writing just a few ATM (3150) Aug S&P calls. Will add if the market continues making new highs, but also will be looking to close the put legs of the short straddles to free up margin. No point doing it too soon though because their value is dropping rapidly.

GS

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Re: When should we get greedy?

#317708

Postby GoSeigen » June 11th, 2020, 7:50 pm

GoSeigen wrote:
GoSeigen wrote:
GoSeigen wrote:
Turned out okay in the end. Haven't seen the contract note yet but I think the S&P opened around 2825 so close to maximum profit on that two-day trade.

At the open I rolled the short ITM call positions into a short June ATM contract taking 100 of premium.

GS


Still selling volatility, a few more added this week. VIX remains above 30 and S&P has been trading in a range for more than a month now. Personally am leveraged long UK stocks and still buying but don't know whether this market is going up or down so happy to keep trading the options.

GS


Well, the S&P has strongly broken out of its range. FTSE is following the US skyward. The VIX has finally decided to drift back to normal (but still elevated) levels and the Put-Call ratio is strongly in favour of calls. My short straddles are under water for now, but the call leg of a long SEP straddle I bought right back in March is finally in profit (the put leg was closed out long ago).

This all has prompted me to take a first tentative short call writing just a few ATM (3150) Aug S&P calls. Will add if the market continues making new highs, but also will be looking to close the put legs of the short straddles to free up margin. No point doing it too soon though because their value is dropping rapidly.

GS


Having closed most of the put legs on my short straddles I started the week very heavily short (mostly Jun) calls with strikes all the way down to 2800. Today's falls are welcome as the Jun contracts will rapidly lose value and I can close them out or let them expire next Friday. 2825 or lower next Friday would be ideal...

Opened a long Dec straddle today as the vol curve inverted.

GS

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Re: When should we get greedy?

#317940

Postby Pipsmum » June 12th, 2020, 3:38 pm

GoSeigen wrote:Having closed most of the put legs on my short straddles I started the week very heavily short (mostly Jun) calls with strikes all the way down to 2800. Today's falls are welcome as the Jun contracts will rapidly lose value and I can close them out or let them expire next Friday. 2825 or lower next Friday would be ideal...

Opened a long Dec straddle today as the vol curve inverted.

GS


I so wish I truly understood what you are meaning. It's like hearing another language. I'll have to go and try to learn.


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