Groundhog Day Revisited

Groundhog DayGroundhog Day, the Bill Murray movie, is reportedly the most played movie on television and basic cable. I know that I’ve done my fair share of viewing that movie over the years, first starting with it’s original theatrical release and then seeing it ad nauseum during that bizarre commuting phase of my life, spent in many a hotel room.

Given the movie’s storyline, it’s only appropriate that the movie keeps getting repeated.

If you’re one of those very few people that hasn’t seen the movie, or just doesn’t know the story, you’ve likely spent the greater part of your life in Slovakia, focusing on far more important things than light romantic comedies taking place in obscure Pennsylvania towns, starring a now obscure actress.

You certainly wouldn’t understand the connection between Groundhog Day and unending repeating, or as I like to call it; “Life”.

Personally, I don’t understand thow I could have two consecutive days when a Pennsylvania city is mentioned in my blog.

Some things just are out of your control.

I can’t really tell you how the Groundhog Day movie ends. It’s not that I don’t wanty to spoil it for you, it’s just that I don’t remember, but I do remember all of the intervening details.

In the movie the predictabilty of reliving each day first proves to be maddening, almost driving the Bill Murray character to the brink of suicide, until he realizes that he can step out of the pre-deteremined actions of his character.

Ah, now it’s coming back to me.

Only when he realizes that he can capitalize on the mundane and predictable, does he realize the key to his happiness. To top it off, he brings out the best in those around him, as well. As soon as he starts behaving in a manner that conflicts with the expected reality, he changes everyone’s reality.

For some people, in the market’s after hours, today was as if the movie featured Google.

Talk about a replay.

Google came out with great earnings after the closing bell and shot up about 9%. That’s not much of a surprise. They always come out with great earnings and then fall prey to the spin.

Google has a habit of making big moves on its earnings reports that in absolute dollars are magnified by its $500 per share price. It did precisely the same last quarter, making its move to $600, before heading down back below $500 just a short 2 weeks ago.

Unfortunately, you just can’t predict in which directions those moves are going to be. Although I don’t currently hold any shares, I have in the past and have been blown away by some of the downdrafts in price, even after great earnings reports. Hedges helped soften the falls, but dampened the rises.

It goes both ways.

On the other hand, even though you can’t predict direction, you sure can predict that there will be movement.

Today I felt as if I were in my own personal Groundhog Day scene.

It was just another day that happened to have JP Morgan report its earnings as part of the ordinary landscape.

I’ve owned JP Morgan on and off for about 2 years and have especially been going through my own personal Groundhog Day with the shares ever since the weekly options became available.

On Monday I added onto my position and sold $32 calls, for nearly a 3% premium.

As it just seems to do on a predictable basis it went up and then down. They don’t need to report earnings to make significant price movements. The only difference was that today at least there was something going on that could be called a reason for the move.

Everyone was expecting disappointing numbers, which of course is why share price went up admirably from Monday through Wednesday.

Of course?

As luck would have it, it went down sharply today and is now below the strike price, with expiration on Friday. Why ot went down when everyone was expecting bad news and why it first went up in advance of the expected bad news earnings?

Yeah, as if that scene’s never been played out before.

You just have to get used to it and go with it.

I could do these kind of weekly trades every week.

In fact, I do.

On the other hand, the ProShares UltraShort Silver doesn’t come with a weekly ETF, but it really doesn’t matter. Silver goes up big on one day and goes down big the next.

I sell the call options, buy them back, sell them again, buy them back again.

You get the idea.

The share price of the ETF is virtually unchanged from where I bought it, but that volatility brings a great premium. Actually, whereas I usually sell near the money options, the volatility and resultant premiums for this ETF were so nice, that I’ve been selling well out of the money options, balanced with some at the money options, so that I could benefit from the stock’s capital gains, receive options premiums with less risk of being assigned and also receive heightened premiums that are very responsive to the stocks moves.


Today, for example, with silver falling and the ETF share price rising, when it hit $14, I sold $16 calls expiring next Friday for $0.34 per share net. That’s on top of the $0.62 and $0.57 per share netted the past 2 weeks on those same shares.

But I also sold some $14 calls on Monday, when the share price was $14 for a $1.19 premium.

The last month’s options cycle was the same.

And the one before that?

The same.

I guess that’s why some people like annuities. They’re so predictable, just like groundhogs.

As an investment, I’d rather not have an annuity, but I don’t mind if my shares throw off predictable options income and start annuitizing themselves.

Now if life really was like portrayed in Groundhog Day, I would certainly banish my lack of nerve that popped up yesterday and I would have sold calls on Sallie Mae and Mosaic.

As it turned out, Sallie Mae gave up most of the gain that it made on Wednesday.

Mosaic on the othre hand went up a bit more, but each day that no new rumors pop up is just another day of lost opportunities to bank some premiums.

But, the one thing I know is that the opportunity will return and I’ll never tire of doing the same thing over and over.

As opposed to the personal hell that Bill Murray found himself in until he found the key to navigating through hell, I feel as if I’m in heaven.

What may be going on is that the market represents the inverse of the Groundhog Day experience.

While everything changes around you, the best way to thrive is to keep doing the same thing.

Inertia is a terrible thing to waste.


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