Crisis du Jour


KidsEvery time my kids, niece and nephew get together at our house, I have a deeply rooted need to snap a picture.

Always in the same location, always the same pose. My nephew and niece have learned how to position themselves so as to make it difficult for me to PhotoShop them out of the picture.

Seriously, why would I want to look at them everyday?

But they’re very bright and have long ago figured me out. They know that I’m not likely to do it if it takes too much energy, so they choose their positions carefully. They no longer sit next to one another at the ends. As a result, my PhotoShop skills have really waned, whereas had I had the motivation I could have actually expanded those skills significantly.

One of their favorite sayings, always following some lack of common sense action of mine is “Uncle George, you went to Harvard?”

Jokes on them. I’m not really their uncle.

Although the dogs come and go, the kids stay the same, other than the fact that they’re not kids anymore, with the youngest soon to leave her teenage years behind. Sort of like an option’s expiration, only with a much better future.

What made me very happy yesterday, in adddition to the fact that it was the best picture ever in the series and only required a single take, was that my niece requested the photo opportunity. I didn’t have to beg, nor did I need to cajole and I was able to stop payment on the checks.

WIn – win, especially since my bank doesn’t assess me a stop payment fee.

It’s funny how, as you get older, you find yourself spouting the same aphorisms that your parents regaled you with when you were too young to appreciate any one else’s experience. In this case it’s how quickly time passes by.

Someday, I’ll probably assemble the shots taken over the years just to depress myself about the passage of time, but that would take motivation and effort, both in short supply. Instead, I’ll just stare at the gray hairs lining the floor after haircuts.

As quickly as those years seem to have gone, some other things tranpsire so painfully slowly.

Take August, for example. Although nearly each and everyday has been a rollercoaster ride, the kind that I never tire of, as long as the ups and downs are in equal measure, it has just crawled along.

Although the month was filled with happy and sad moments, a graduation and a funeral (I probably dont need to add, “respectively” here), the month still dragged entirely because it happened to be one of those 5 week options cycles.

Man I hate those.

I don’t mind the over-emphasis on the market’s down movements, but what I do mind is that extra week. I mind that even more than the grocery store “special” offering an extra 20% product  in the shampoo bottle, but having to pay 30% more.

Although we have just that one final week to go, I wish it would have ended already. Not to ease the pain, because that really hasn’t been too bad, but to get my hands on more options premiums. I can’t wait for the August contracts to expire. That’s still true even though since this past August still has a chance to be the best options premium month I’ve ever had.

Isn’t volatility wonderful?

With an additional week to sell some options, I’m within reach of my personal monthly best, without worry that an asterisk will need to be placed in my spreedsheet. Having shrivelled genitalia is a small price to pay for all of that income and since I use only generic steriods, my expenses are low.

It all goes to the bottom line.

Once the weekly contracts became more common, I really gravitated to them, now looking increasingly for those opportunities. Unfortunately, some of my favorite stocks, although highly liquid, such as Dow Chemical and DuPont, don’t yet have weekly options, whereas “drek” like Harbin Energy does.

So my trading still comes at a flurry on the first Monday and Tuesday of each cycle and then markedly slows down, other than for the few weeklies. Shares like Freeport McMoran, JP Morgan, Goldman Sachs and others keep the income rolling in through the month, but it’s still heavily concentrated to the cycle’s beginning,

On Monday, I’ll need to replace Caterpillar and Freeport McMoran. At the moment, I’m leaning toward Deere, Chesapeake Energy, Rio Tinto and maybe even Microsoft, which goes ex-dividend on Tuesday. If I’m able to get any of those at just the right prices, meaning right near a strike price, the near the money or in the money options premiums will take the month to new highs.

As I type away, the early reports are of positive opens in Australia and Singapore, but that doesn’t translate very well here, unless there’s something cataclysmic happening. Since most of my remaining August options are still out of the money I’d like to see a nice higher opening, even if it means paying a higher price for the items on my wish list.

As the September cycle approaches, I’m carefully looking at the more favorable premiums as the volatility has risen and wondering whether it’s time to adopt an earlier strategy.

Back during the market bottom in 2008 and 2009, I was actually selling out of the money calls, hoping to capture greater stock capital gains. I could do that since the options premiums, even for the out of the money positions were really very good, owing to that volatility. That strategy was right for the times, but was replaced by an in the money strategy as the market started on its sustained upward climb in 2009.

Given the options, and by that I mean choices, I think that I would rather not go back in time. Even though the grey hairs and the aging kids are making me increasingly forlorn, I think I’d rather stay grey. I’ve learned alot over the years and don’t think I’d want to tarade any of that back.

I think I’d also like to stay with the current in the money strategy. I like it at these higher levels.

The air is actually much better at 12,000 than it was at Dow 11,000 even though the premiums are much sweeter closer and closer to hell.

As the kids are getting older, I know that the photo opportunities are going to get less and less likely. Although I’m sure that if properly motivated I could computer age them appropriately on the exisitng photo collection, that’s probably not as likely to give me the same satisfaction as the reral thing has over the years.

In the meantime, I’ll just have to get my satisfaction from knowing that with each month comes along a new option cycle and some great memories of cycles past

I just wish that time would go by much faster.

Did anyone say Daily Options?




I ended yesterday’s blog with the phrase “metaphor du Jour”

And here we are today and it’s “Crisis du Jour”.

The only thing that I can think of is that I’ve become a Franco-phile ever since the Dominique Strauss-Kahn incident. I won’t tell you if that began as the allegations flew or when the allegations sank.

And I have a soft spot for Szarkozy, too. He’s so far from the US stereotype of a French leader and, of course, he has that Hungarian lineage that has helped to somewhat dampen the bad taste still left over from Esterhazy, more than a century ago.

I only started paying attention to the world economy about 25 years ago or so and unfortunately, my memory has started deteriorating since then, so the recollections may be a bit spotty.

DefauktBut for whatever memory that remains there seems to be a pattern of ever developing world crises and threats of default.

I vaguely remember Brazil and Latin America of the ’80’s. I recall all of the talk about the kind of horrible exposure Citibank had in Brazil’s economic woes. And then there was the IMF, as well, but that’s not real money. I have no clue where their funds come from, but no doubt, now as then, it’s probably disproportionately from the US. I could be wrong about that, but I don’t really care about accuracy. In that way, I’m just like the elected officials discussed a couple of paragraphs below.

Man, but look at Brazil now.

All that had to be done was to simply press the “Default Button” and all was well again.

Then in the late ’90’s it was Russia. Once they started locking up the “oligarchs” and squashing political freedom in the name of democracy things improved substantially, although you do also have to give some credit to $150 oil. They also save a lot of money by rotating the Presidency between just two people.

At this point, my short term memory really gets fuzzy, because the crises started coming more fast and furious over the past decade. In fact, sometimes it’s hard to keep track of which came first, the boom or the bust.

When was it that Ireland was the economic wonder of Europe? Wasn’t Iceland just another way to say paradise? Come on, you really didn’t expect that much from Portugal, did you?

It is getting hard to keep track of all of the players these days. Germany is once again all powerful. I know that much, but we have a succession of Greece, Spain and now Italy to capture our attention.

Oh yeah, and then there’s the United States. Remember just a couple of months ago when S&P scared the b’jeezus out of the markets? Not to mention the fact that there’s all of this talk of US debt default if the ceiling isn’t raised.

For purpose of this blog, I’ll just conveniently forget about our own financial meltdown of 2008.

Years ago there was a movie, “Don’t Raise the Bridge, Lower the River”. Interestingly, the parties in the Jerry Lewis shennagins were Arab and Portugese.

How prescient. But probably reasonable advice, although it probably wouldn’t be a bad idea to do a little of both with this new invention, that I believe is called “compromise”.

As I was watching CNBC over the past couple of days and listening to our elected officials from both sides of the aisle playing loosely with the facts, it occured to me trhat we would be so much better off if the perjury rules that Roger Clemens is facing over his congressional testimony were applied to members of congress.

They should always be under oath. After all, with every public pronouncement, aren’t they just electioneering for votes? These days being a congressman is akin to being a robot whose only skill is to create new identical robots sharing the same skill.

Since it’s all about the re-election, everytime they, shall we say, stretch the truth to fit their needs, they are lying to the electorate.

Perhaps the only one telling the truth, or at least he thinks he is, is Rep. Ron Paul and he’s a lunatic. Now that he’s announced that he won’t be seeking re-election, we’ll see what sort of increasingly unfiltered things spout from his brain.

I think the best way to play all of these crises is to stay in bed or at the very least mute the TV and wonder why there’s so much red rolling by on the ticker.

Another approach is to do what I do when I get very frustrated with a misbehaving software product, app, code or hardware. Just press the “reset” button or go back to “Default” settings.

Sometimes it’s really that easy and spares you from wasting lots of time.

Sure, there’s not that much gratification from giving up rather than struggling through to try and come up with a solution, but after a while, enough is enough and you have to let those costs sink away.

Not that long ago, perhaps two years or so, the “experts” told us that Italian debt was very different from that of must other countries. The distinguishing factor we were told, which made the Italian situation non-explosive was that its debt was predominantly owed to Italian nationals. Very different even from the United States situation, where we are mortagaged to the Chinese, who assumed the landlord position from the Japanese of the ’80’s.

Remember them?

With each day, comes a new crisis and then a new slew of analysts and talking heads who alternate between telling us that it’s either “risk on” or “risk off” trading.

These things really mean nothing to me. Sure I understand the concept, but I could just as easily stand there and make this stuff up and then just as easily change my take on things the next day.

I don’t know if these pundits receive report cards, but if they do, they are probably curved similar to the way weather forecasters are assessed.

On a positive note, yesterday morning the Dow Futures would have had the market opening down 150 points. In the absence of any really tangible news, it all turned around and the market just stayed flat all day.

I started going for pennies again and sold some JP Morgan $41 calls expiring this Friday for $0.25.Not much, but if I get exercised, I’ve already gotten the quarterly dividend and a couple of weekly options premiums on this one. As pointed out in the recent blog, those pennies do add up.

I certainly don’t mind the scratch singles. I don’t have any pride. I don’t even mind getting on base by error.

Unfortunately, I saw no other opportunities today. In the absence of any news known to the greater investing world I marvelled at how Dow Chemical, a sizeable holding, got smacked down 3.5%. Not that I pretend to be a technician, but there certainly wasn’t any technical reason and I doubt it was related to the Italian banking crisis.

No matter. That crisis will be like yesterday’s fish and Dow will bounce back

I think tomorrow, I may try the Spanish economy or maybe even one of the daily specials.

As Groupon and LivingSocial try to distinguish themselves, this may be their next area of opportunity. The Daily Default Deal might be very attractive  to investors. A 24 hour window to buy bonds at great discounts. Unfortunately, the discounts are likely to get even higher after the offer expires on some of these.

But still, the very thought of being able to get laser hair removal and discounted bonds all at the same time is just too great to pass up. The thrill of the Deal du Jour itself may just be the opiate that we need to forget about the Crisis du Jour.

Can’t wait for tomorrow.


CORRECTION: A previous version of this blog post inappropriately referred to Brazil as having defaulted on it’s loans. In fact, during the 1980’s it was Argentina that defaulted, while Brazil approved new lax sodomy laws. Thank you to @Wolfrum for bringing a portion of the correction to my attention.