What's wrong with buying puts is you don't know what is overbought and you don't know if my analysis is correct. There is no correlation between today's price and tomorrow's. Predicting the future is absurd. There are no closed time-like curves in this universe. You may be able to predict when a move will take place or you may be able to predict the degree of a move, but you'll never be able to predict both. And you need both to be successful at gambling (ahhaha's Stock Market Uncertainty Principle). The Scenario I laid out is simply one of an infinite number of possibilities. It tends to accommodate the current integrated instantaneous money state of the market. Market psychology shapes the time evolution of the wave stochastic process of closed systems like the stock market. When a closed system changes, the change is undulatory because of the continuity equation and conservation constraint. The patterns the chartist attempts to read is the state of the wave. Thus, Elliot Wave Theory. State does not predict future state, State does predict the probability of transformation to a new predictable kind of state. The probabilities are high that we are undergoing a state transformation. Still tells you nothing about how to penny scalp. Just tells you to put the odds in your favor. If you're wrong, you haven't lost a dime and there are always new plays that are better than what you could have had. If you gamble like I explained in my last post, you may win or lose, but it will drain you psychologically and make you unfit for taking a suitable position in the future. Stay out, control yourself, build up tapas, and you'll be in the driver seat when the time is right.
Selling calls is not investing. It's arbitrage. Not very lucrative. I said it's ok, but it will distort your judgement. Don't average down. Average up. NSCP has to do quite a lot before there's an opportunity to average up. There is another possibility. NSCP is inconceivable as a buyout, but I said that before IBM bought LOTS. To this day I believe that was a poor move on their part, but you won't get anyone in that company to admit it. Certainly not Gerstner. You sell calls and the company gets bought, you earn $2 where you could have earned $20. And while you hold these short calls, you're worried that that will occur. Still don't think it will distort your judgement?
When it's time to start buying and averaging up on NSCP, you won't be bullish long term. You'll be regretting you ever bought it in the first place. Take that as the best indication that buying is the way to go. You're close enough to the company for this "contrary opinion" to work. Nothing works as well as a well-designed contrary opinion when the opinion is your own! |
