Taking a bow….Part 2

October 16,2014

Taking a bow can make your back  end a better target !

To be able ( smart / lucky ) to predict what will  happen to the dollar ( 90 days in the future ) in terms of Oil, Gold, Yen, Euro and the 10 year note… is great ! Take a bow.

But, concluding that this means an instant boost to the stock market is a bit more tricky because of all the moving parts which comprise market analysis.  That is why I used the word “SHOULD”  in caps in my last post.

Also as indicated in my last post, I did buy 500 shares of SPY at $197.49 ( todays price  $183.60 – unrealized loss $6,945 ).

It would have been more prudent, and only slightly less bullish ,  to have been paid approximately $2,000 to sell 10 puts ( 1000 shares- $180,000 ) of SPY for assignment to me at $180.

Yesterday, with the Dow down 400 points I did sell for $1,080 ten ( 10 ) December 20th  SPY Puts for assignment to me at $161. And, I’ll follow the market down ,taking bites ( writing options as I go )  till my overall position is rational in terms of the future.

My basic premise remains that with the 10 year note dipping below 2%  investors would rather own the growth and profit  outlook of a JNJ selling for $ 97.62 ( 10 %  below its 52 week high and yielding 2.87% ).

So what is happening to equities ?  Well, it seems that  some investors with a lot trading capital have decided they have waited long enough for a correction.  Using EBOLA, ISIS,  the Ukraine and a weak European economy as sentiment drivers, they have shouted ” fire ” and expect to capitalize on equities being shaken out of weak hands. They are buying Puts and I am selling Puts.

So, nowhere near fully invested, I’m just battening down the  hatches until the storm passes.  Of course, if VTI ends  October below its 200 day moving average, everything goes except option positions which will allow me to be assigned shares at prices I believe hold promise.

Richard Maurice Gore

3 Responses to “Taking a bow….Part 2”

  1. Carlos Benedeti Says:

    Richard, Rick Waters asked me to check out your site… nice…. I am an advisor who manages money tactically and I read a lot of materials like yours. Keep up the good work! Should is a good word!

    Carlos

  2. admin Says:

    Carlos – Thanks for your kind words.

    This is a lot of fun for me and, I can just imagine how much you enjoy getting involved with people’s dreams and aspirations

    Richard ( Gore )

  3. Rick Waters Says:

    Insightful commentary as usual. Seems like you weathered the storm well.

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