Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: croesus1111 who wrote (29024)	3/21/2005 8:31:36 AM
From: russwinter	Read Replies (2) \| Respond to of 110194

<What's your take on direct shorting vs. put options here?> I use puts whenever possible, but they must be cheap and trade well, and by that I'd say under 18% IV (implied volatility). By and large they are cheap in the active indexes like SPY, RTH, IWM, XLY, XLF, FXI (doesn't trade well yet, but I'm using anyway), and even QQQQ. This IV calculator should be part of your tool kit if you use options. schaeffersresearch.com Homebuilder puts are not cheap, so the strategy would be straight shorts or naked call writes, and I've been doing both. I've been hurt shorting TOL too early. Other lower price puts can be found in names like COF, GS, YELL, GMR, there's a long list. I've tried to stimulate a discussion here on entry points, and ideas, but too little avail. Some good ideas have been forthcoming from this source, Member 9097669 but not much else from this active bearish thread, which rather surprises me. I may start a seperate "shorts and dark side trades only" thread, where generic Epic Bubble discussion is somewhat OT, unless it's tied to specific names and trade ideas. If anyone is interested (and will contribute) let me know by PM. The other strategy I use is selling naked calls in higher IV's (at least 32%, but preferably much higher). That's worked very well in a name like GOOG, where I've now collected the full call premium on at the money call writes for four straight months. SMH has a high IV, so I used that successfully in the March expiration when they tried to do that false break out ramp job several weeks ago. Right now I have naked calls written on PENN, MGG, APOL, and I put one on RIMM Friday. I'd probably rewrite GOOG if it bounced to 185. It's day by day, I have my charts all printed up, look for certain patterns, etc. I don't claim to be brilliant and even lucky at short term trading however, as ultimately I'm just playing for the Big Break.

To: croesus1111 who wrote (29024)	3/21/2005 10:28:40 AM
From: zebra4o1	Respond to of 110194

Croesus, I've have quite a few of those RYL LEAP puts, and I'm getting killed so far - so my opinion is probably not too valuable. But I'm thinking of buying more - averaging down seems to work for me. The problem with these thinly traded options is that they are one way bets. You can't really trade in and out of them. You have to wait for a big move. These are 'swinging for the fences' type bets. Shorting is much more satisfying emotionally. You can get in and out easily, with a nice base hit hopefully. For a LEAP with two years to go, I'm skeptical about just looking at IV to decided wether its expensive or not. Or put another way, just because RYL LEAPS are expensive, doesn't mean they aren't a good value. But is it better to buy near-the-money or far out-of-the money? I tie my brain in knots trying to figure that one out. I've also got some LEAP puts on Ambac - a financial guarantee company (bond insurer). These puts are very cheap! But they were even cheaper a week ago. Ambac used to be one of Doug Noland's bet noires - but nobody seems to talk about it anymore.