200k New Money
Client comes in sits at your desk. Tells you he just got 200k bonus and doesn't know what to do with it, but doesn't need the money for 10+ years. He is 42. Where do all of you gurus put it with Dow at 7000 ?
Muni bonds in the state of California.
Already did that. It was initially 500k and I sold them all out for 40 cents on the dollar, thanks.
Buy them back at 40 cents on the dollar…
I was going to go 100% gold because the market will never rebound from this.
I still just don’t understand where the 40% payout comes from. I work at EJ and if I do 20k gross I never receive more than 39.5% or $7900. Then they take out 400 for insurance and 700 for qualified expenses. That leaves me with $6800 net or less than 35%. The bottom line is unless you are grossing 25k all the time, which in my region takes usually 5 years, you are getting paid much less than 40%. Then it takes about 5 years beyond the initial 5 to earn back those monthly 5% figures that Jones takes just for you personally to break even at the 40% number you assumed when you started. So at 10 years you are looking great, but still getting killed overall compared to an INDY. Ron 14
I would direct him to a smarter broker.I put him in to the market 100%. I want to hear the bright ideas from all of you gold/cash/“wait until things get better” idiots
Now you can tell him they are a good deal. Just say that the first time you tried it, it didn't work out.Already did that. It was initially 500k and I sold them all out for 40 cents on the dollar, thanks.
So he just got this bonus of $200m, but it was $500m, which you had control over in order to sell out of muni’s? Bonuses are given in muni’s? You are a moron. Work on your little lies next time before coming on this board so you can insult people.
Sam, I was kidding about putting him in Cal Muni’s and then selling them out for 40 cents on the dollar. I was also kidding about the 100 percent gold comment. I was trying to find some honest answers to how people are allocating new money these days. I am going all in to the market, but most seem to think the sky is falling and wont get in.
[quote=Ron 14]
Client comes in sits at your desk. Tells you he just got 200k bonus and doesn't know what to do with it, but doesn't need the money for 10+ years. He is 42. Where do all of you gurus put it with Dow at 7000 ?
[/quote] Ron, should all 42 year old clients with a 200K bonus and a 10 year time horizon invest in the same manner?Yeah, what if he wants a bigger house and a (sale-priced) golf club membership. More cash, more insurance, more fun. Instead of throwing it into VTV.
50% in pimco total return and the rest split among 20 ind stocks, blue chips with killer div yields.
[quote=Ron 14]
Client comes in sits at your desk. Tells you he just got 200k bonus and doesn't know what to do with it, but doesn't need the money for 10+ years. He is 42. Where do all of you gurus put it with Dow at 7000 ?
[/quote] Tough to choose the asset allocation with limited data on the guy (net worth, lifestyle, etc), but I would definitely be DCA'ing into the market over the 12 months, not all at once. That's too much money to risk in this market. We know it will eventually go up from here, but the last thing you want is for the guy to go all-in the day before a 5% drop. If you need the commission today, put it into short-duration funds and DCA into the market.If the market has a huge 50% return this year, how much has the guy lost by DCA into the market? The right answer is only known in hindsite. However, it seems to me that someone invests because they expect the market to go up more than it goes down. With this being the case, DCA is more likely to hurt him than help him.
Would say go to a single “0” roulette wheel in Vegas. Put 99,000 on 1-12; put 99,000 on 13-24; if you win you make 50% on your money. Much better odds than you will have in the market for the nrxt 5 years. Less stress, its over in 30 seconds. You have a 24 out of 37 chance to make 50%. If you lose take the last 2K and go to gentlemens club and have a great couple hours.
1/2 into DOG. 1/2 into DOW. Very limited downside risk.
I would advise him to come work for Edward Jones. The 200k will cushion him in the early years.
Put 50% into a good etf-based annuity. Get one that guarantees to double in 10 years and take the payout. Worried about beneficiaries? Put 50k into a SUL policy. At his age, could probably buy 1-1.5mil. If he doesn’t have a pension, put 10-20% in one of those deferred payout annuities, make it start
at age 65-70, you can get a nice IRR depending on his longevity.
Lots of ways to stay in the market and have some nice numbers for worst-case scenarios.
Two words: lap dances
Instant pleasure, and the karma from the contribution to his community by putting several MILFs through college (this should be a write off)
[quote=OS]Two words: lap dances
Instant pleasure, and the karma from the contribution to his community by putting several MILFs through college (this should be a write off)
[/quote]
I retract my previous statement. Now that I’ve eaten dinner and had a beer, I’m thinking more clearly.
Or better yet. Buy 50 percent ownership I’m a “gentleman’s club”. Set up a buy/sell policy, go fishing together, come back alone. Now you’ve doubled his money and surrounded him with hoes. You don’t have to be a rapper to like those results.
50% diversified commodities but with an oil emphasis. 50% diversified leveraged closed end funds.
or another idea if he is in a high tax bracket or expecting to be, and has beneficiaries slam him into a vul
Put him in a Lincoln ChoicePlus variable annuity. That way, he can take income before 59 1/2 using i4Life without the 10% penalty. The income is gauranteed for the rest of his life, and hopefully this market will rock over those 10 years and give him a mad fat payout.
Oh yeah, and pray that Lincoln stays in business...Ron, this is the best advice you're going to get.Two words: lap dances
Instant pleasure, and the karma from the contribution to his community by putting several MILFs through college (this should be a write off)
Grab a 10 year muni zero, showing right now at 60ish, so there’s 120 spent which will guarantee his original 200 back in 10 years with none of the phantom income tax mess to deal with. Take the other 80 and build whatever you want to with it, knowing you’re bulletproof and can’t loose a penny if he holds the zero to maturity. I’ve used this for years, and I always look like a genius when I do. AGE used to have an actual brochure on it called “Security Plus.” Why I didn’t do it with EVERY body, I’ll never know…
Ahhh...the ethical, and far more tax efficient, alternative to the Equity Indexed Annuity. But then there's that pesky commission issue.Grab a 10 year muni zero, showing right now at 60ish, so there’s 120 spent which will guarantee his original 200 back in 10 years with none of the phantom income tax mess to deal with. Take the other 80 and build whatever you want to with it, knowing you’re bulletproof and can’t loose a penny if he holds the zero to maturity. I’ve used this for years, and I always look like a genius when I do. AGE used to have an actual brochure on it called “Security Plus.” Why I didn’t do it with EVERY body, I’ll never know…
[quote=anonymous]If the market has a huge 50% return this year, how much has the guy lost by DCA into the market? The right answer is only known in hindsite. However, it seems to me that someone invests because they expect the market to go up more than it goes down. With this being the case, DCA is more likely to hurt him than help him.
[/quote] So, ice and anonymous, neither of you beleive in DCAing, or just not right now?I like the insurance ideas listed above. Insure his life, disability and as much retirement income as possible. … I might also keep 100k in short term CDs for emergency purposes, at least if it was me. I know he says his horizon is 10 years, but I’ve seen so many of my clients and prospects get laid off in the past two months without adequate reserves.
[quote=Borker Boy][quote=anonymous]If the market has a huge 50% return this year, how much has the guy lost by DCA into the market? The right answer is only known in hindsite. However, it seems to me that someone invests because they expect the market to go up more than it goes down. With this being the case, DCA is more likely to hurt him than help him.
[/quote] So, ice and anonymous, neither of you beleive in DCAing, or just not right now?[/quote] It has nothing to do with believing or not believing in DCA. I just believe that I can't time the market and it goes up more years than it goes down. Therefore, the best time to invest money is when the person has it. That being said, much of what one should be doing needs to be based upon their risk tolerance and comfort level. For that reason, it is very possible that my advice to this prospect would be to DCA the money into the market. I'm pretty surprised at this whole thread. I think that one of the reasons why so many brokers are struggling right now is that they set themselves up for failure by focusing on picking good investments for their clients. Using this thread as an example, notice that people are talking about what is best for the 200K in new money. Thus, he is getting all sorts of investment advice. How can we have any clue as to what to do with 200K without knowing what the client wants?The point of the initial question, without giving an essay on his entire financial situation, was just to see what advice people are giving on new money in which the only priority is growth. The guy is well to do, home paid off, plenty in bank for emergency, no kids, no wife, great job. I understand the questions that need to be asked. I wanted to see how many guys actually think 100% equities at Dow 7000 is a good idea. The answer is very few, which makes me even more confident in buying now.
Good luck if you go 100% equities. Anymore it's all a crap shoot. You may look good when the market rallies 20%, but it's like snow at 33 degrees...it just doesn't stick. With the Dow in the 6000's now, we haven't even seen the effect of commercial real estate's problems yet. I know the "market" is a forward indicator, but correct me if I'm wrong, based on "historical" P/E ratios, we aren't really that undervalued right now. The Dow closed at 1251.52 on the day I was born. This is nucking futs.The point of the initial question, without giving an essay on his entire financial situation, was just to see what advice people are giving on new money in which the only priority is growth. The guy is well to do, home paid off, plenty in bank for emergency, no kids, no wife, great job. I understand the questions that need to be asked. I wanted to see how many guys actually think 100% equities at Dow 7000 is a good idea. The answer is very few, which makes me even more confident in buying now.
10 years from now if the broader market is still down that will be 22 years of a flat market. I’m going to say it without doing the research but I’m not sure that happened even during The Great Depression. So for me personally 10 year time horizon, already 12 years into this, yeah I’m going equities right now. I might take a tad more conservative approach but I’d definately be all in within the next 2-4 months.
Ron, you forget to tell us in the initial question that growth was his only priority. Does his risk tolerance allow him to try for growth or does he need guarantees?The point of the initial question, without giving an essay on his entire financial situation, was just to see what advice people are giving on new money in which the only priority is growth. The guy is well to do, home paid off, plenty in bank for emergency, no kids, no wife, great job. I understand the questions that need to be asked. I wanted to see how many guys actually think 100% equities at Dow 7000 is a good idea. The answer is very few, which makes me even more confident in buying now.
If he is interested in staying wealthy and keeping all of that money for the long haul...the best advice would be to stay single w/no kidsThe point of the initial question, without giving an essay on his entire financial situation, was just to see what advice people are giving on new money in which the only priority is growth. The guy is well to do, home paid off, plenty in bank for emergency, no kids, no wife, great job. I understand the questions that need to be asked. I wanted to see how many guys actually think 100% equities at Dow 7000 is a good idea. The answer is very few, which makes me even more confident in buying now.
I meant all in with the equity portion. My bad!
Coincidence? I don’t think so.
I sh*t you not, I had a couple just leave my office and they had $200m and change. Said they don't need it for 10 years but don't want to go into the market right now. Too risky. Then next breath talked about how he might want to start putting a little in to the market over time. We talked about muni's as they are in an high tax bracket for some, we talked about going into a couple of index funds over the next couple of months for what they want in the market. We talked about short term cd's for some of it. They were curious about various etf's. Now to combine some other threads. He believes buy and hold is dead! I gues wind3457 was right about all the 200m accounts just lying around out there. He believes we're on our way to a Socialist state![quote=jkl1v1n6]Coincidence? I don’t think so.
I sh*t you not, I had a couple just leave my office and they had $200m and change. Said they don't need it for 10 years but don't want to go into the market right now. Too risky. Then next breath talked about how he might want to start putting a little in to the market over time. We talked about muni's as they are in an high tax bracket for some, we talked about going into a couple of index funds over the next couple of months for what they want in the market. We talked about short term cd's for some of it. They were curious about various etf's. Now to combine some other threads. He believes buy and hold is dead! I gues wind3457 was right about all the 200m accounts just lying around out there. He believes we're on our way to a Socialist state! [/quote] For 200k, he could build himself a nice, fairly lavish bunker, lots of beans and rice, and acquire an extensive arsenal of weapons and ammo. When did the Mayans predict the world would end?I’ve done that before not muni’s but some corps and like 2wheelbeemer said it worked out well. Client was happy. It’s a good idea, we hadn’t decided on anything yet, he wants to think about it, this is where wind3457’s lie gets blown up, but I’m going to call my bond desk and find out what’s available and see if he’d be interested.
Thanks again Ice and BeemerDe nada.
Use your power for good..
"Guarantees to double in 10 years" WTF are you talking about? If Hartford were to go BK, annuity holders will get their investment value, not one penny of the guaranteees. How do you think anything is guaranteed with equity annuities? Because they told you so?Put 50% into a good etf-based annuity. Get one that guarantees to double in 10 years and take the payout. Worried about beneficiaries? Put 50k into a SUL policy. At his age, could probably buy 1-1.5mil. If he doesn’t have a pension, put 10-20% in one of those deferred payout annuities, make it start at age 65-70, you can get a nice IRR depending on his longevity.
Lots of ways to stay in the market and have some nice numbers for worst-case scenarios.
Sorry to be fast and loose with my words fritz.
I assumed people would interpret that as the “double the withdrawal value in 10 years” feature.
I do not use Hartford annuities.
I got two account today, one 500 ish the other 200 ish, both in cash and both will be used to write cash secured puts.
do people still use loaded funds? can’t comprehend why one would buy one…
put 100% in neuberger all cap separate a/c. fully liq and blows away the market 1,3,5,10 years. book some profits when s&p hits 1000 by year end and buy muni cefs with 40% to offset the socialist tax plan for those questioning s&p 1000: at 0% interest rates, market should trade at 20x earnings. that stimulus will contribute to earnings which is now conservatively forecast around $50.i cant believe the fear of good ole equity investing at these prices, reps and clients alike have lost their minds
Just awesome for those who are continuing to buy[quote=Ron 14]i cant believe the fear of good ole equity investing at these prices, reps and clients alike have lost their minds
Just awesome for those who are continuing to buy[/quote] Why cant you believe it? Most people's retirement accounts have been halved if they are lucky. Most brokers, that are managed money drones, are walking around in a daze. I'm not saying don't buy because I am BUT you better know how to hedge before you jump in the fray.Almost every single advisor claims the options portion of the 7 is the hardest. 99.9% of advisors aren’t using them because A. they dont understand them and B. they dont have the time to stare at a screen and make appropriate trades at the right prices because they are meeting with clients and prospecting. If you are lifting bids and offers or placing limit orders you are getting your face ripped off by the professionals on the trading floor. I know this because I stood in the pits for 10 years. Why hedge when you dont need to ? Pick up a Nick Murray book, find a quiet place to read it and stop trying to find fancy ways to create commissions.
Don't know about you but I've been making very good money for my clients doing just that. I was a prop trader before going retail as my wife got pregnant and I needed something a little more stable. SO you were in the pits for ten years and would rather put somebody in a mutual fund or some such??? If you cant properly hedge in this market you are in cash or dead. If you could know beforehand what needed to be hedged and what didn't need hedging you would be the King of Siam. But here you are with the rest of us saying things that are a notch above stupid. . NOW THAT'S FUNNY!!!!! That fact that you suggest people are concocting strategies as if they are simply a fancy way of churning is a REFLECTION OF YOU NOT US. PS I'm 19 months into this gig and am presidents club production. All of my clients were from cold calls and referrals. Funny thing they don't teach at stock broker school... make a lot of money for a millionaire or two and you do well. Make money for the same employing a hedging technique through a market crash will have more business than you can handle. Guess what .... I ALSO GO SHORT !!!! Does that make me the devil in your book?Almost every single advisor claims the options portion of the 7 is the hardest. 99.9% of advisors aren’t using them because A. they dont understand them and B. they dont have the time to stare at a screen and make appropriate trades at the right prices because they are meeting with clients and prospecting. If you are lifting bids and offers or placing limit orders you are getting your face ripped off by the professionals on the trading floor. I know this because I stood in the pits for 10 years. Why hedge when you dont need to ? Pick up a Nick Murray book, find a quiet place to read it and stop trying to find fancy ways to create commissions.
You are not the devil for going short and you are not the devil for doing options.
I guess I will stay old school with my buy and hold and rebalance and reinvest strategy and like a prospect told me today, continue to live in the 1930's.This has been a good thread. I like the zero and invest the rest in equities strategy. I would tend to agree with Ron’s thinking that 10 years from now, you are going to be better off in equities than anything else. My approach has always been tactically allocating portfolios. If I’m going to leave bonds out of the allocation, I’m probably going 20-25% of the portfolio in alternative type of investments like 5% in Gold, 5% Mgd Futures, 5% Multi-Strat Hedge Fund or Mkt Neutral Fund, 5% in MLPs and probably just a straight 5% in the SH (Inverse S&P 500). For a $200k client, you can access all of those investments with either open-end MF, closed-end MF or ETFs. This is not a static allocation which means I will dump that Inverse fund at some point and adjust the overall allocation over time. This type of portfolio probably has a beta compared to the S&P of somewhere in the .50-.60 range and I feel like a 7-8% return of the next 10 years is quite possible. Best part, you are being fare to charge the client 1.25% annual fee for the management of this portfolio and I feel confident that I will be adding value.
Keep in mind, in the past 180 years, whenever the rolling 10 year return on large cap stocks has been this low (4-5 other times), the average return from here 10 years later was 13.5% with the worst 10 year being 7.5% and the best being something like 18%. That includes the Depression time period.
mrclutch, I like that strategy. On one hand I think it makes sense to try “non-traditional” choices but on the other hand I dont want to get caught up in the “this time is different” and overthink things. Ive worked at Jones and a Bank so “non-traditional” investments arent exactly welcomed.
Hell, I’ll agree to the the ten year gig, maybe, but what about those who were on the edge and the asset allocation model blew up? I think one needs to be much more nimble in this brave new world. When you’re down 50% you need a 100% gain to break even. As I’ve said before buy and hold is now buy and hedge. I’ve saved my clients huge amounts of money by shorting against the box the day before earnings. Never mind selling options to get into and out of positions (without a specific agenda buying options is a fools bet). I don’t take a trade unless I have an 85% chance of success. On any one trade that means nothing but in the larger sample that’s 9 out of ten wins, not a bad edge.
What's the best producing asset class in the last decade???????????? TREASURIES Time to rethink things IMHOshow him the sp500 annual returns for the last five years. If he gives you $200k to invest in 2014 he’ll have $172,983, and by the time he retires that should be about $23,946.
To further your thought, since the past is soooo predictive of the future, just show him the returns of the inverse S&P over the last ten years and recomend that.show him the sp500 annual returns for the last five years. If he gives you $200k to invest in 2014 he’ll have $172,983, and by the time he retires that should be about $23,946.
I saw a portfolio from a prospect a couple weeks ago. All AF and Putnam. The usual suspects. CIB, CWGI, EPacG, GFA, Boston, some other Put G&I funds, down (according to client) 50% last year. A cursory look at the funds returns, this is in the ballpark. I think Ice is 100% correct, if you have clients in the situation he described down anywhere close to 50%, you should invite them to leave cause you ain't doin your job.
For the record I didn’t say anything about a person being down that much, none of my clients are even close. My best account that let me and help me do my thing were up 19% from April 08 to Jan 1. My point was just what I said, if your down 50% you need a 100% gain to break even. For those that bought and hid there are plenty of things that are down like that. Lets say I think it’s called investment club of America. I got rid of the equity mutual funds in my accounts at 8000. Didn’t feel good but I’m glad I did now. If I had not there is a very good chance they would be down 50% in the last 12 months.
[quote=Ron 14]
What's the best producing asset class in the last decade???????????? TREASURIES Time to rethink things IMHO[/quote] That is exactly why we dont have to rethink things, Treasuries are not going to go back 2 back as the best producing asset class. [/quote] You rock on with that thought "Treasuries are not going to go back 2 back as the best producing asset class" you sure are able to make assumptions about the future. Same thing with your hedging comments. The only thing I know for certain is I have no idea whatsoever what tomorrow will bring. If you stay with the strategies that have broken even at best over the last decade, good luck. I'll not repeat the mistakes of the past if I can help it. I'm not one of the smartest guys in the world ... thank God. You're the guy that spent ten years in the pits? Sure don't sound like any of the traders I've known.Great! Thanks ! I don’t want to sound like a trader. Traders and advisors are completely different ends of the spectrum. You are trying to do both and that is suicide.
You have an account that was up 19% last year? LOL. If so, you are either extremely lucky or an absolute wizard. If you can continue to beat the index by 50% you will become the greatest investor the world has ever seen. That is comical.[quote=Ron 14]Great! Thanks ! I don’t want to sound like a trader. Traders and advisors are completely different ends of the spectrum. You are trying to do both and that is suicide.
You have an account that was up 19% last year? LOL. If so, you are either extremely lucky or an absolute wizard. If you can continue to beat the index by 50% you will become the greatest investor the world has ever seen. That is comical. [/quote] Certain of my accounts have beaten the S&P by 50%. The ones that are hurting are the ones I sold the "buy and hold" strategy to.Not lucky at all. When the market is tanking I go short by selling calls and shorting against the box. No big mystery. Making money for my clients by trading is suicide?
I bet you just got your CFP Mr. ten years in the pit (huge sarcasm) Here is a tip for you Nostradamus, now I'm selling puts on blue chips.Oh, ok, its that easy, when the market is tanking I just jump on the wave because it is sure to continue down. I cant believe I missed that.
And if you are this good at trading the intraday market movements you should put up your own cash or find a backer and keep the money for yourself. Why prospect and deal with clients and long term goals and all that crap?
[quote=Gaddock]Not lucky at all. When the market is tanking I go short by selling calls and shorting against the box. No big mystery. Making money for my clients by trading is suicide?
I bet you just got your CFP Mr. ten years in the pit (huge sarcasm) Here is a tip for you Nostradamus, now I'm selling puts on blue chips.[/quote] Ron works at Jones. Options are crazy risky voodoo investing. He thinks selling a put is getting cash for a club in your golfbag.If you have the movements pegged you should be selling the highest delta options with the most premium and you should have sold them months ago before time decay took place. You guys are geniuses, so I am sure you sold the SPX March 700 put with large amounts of meat on the bone because you knew we would settle just above it and it would then be worthless. Creating windfalls for your clients and very little for yourself ! LOL !
Thanks Sam that explains it. Here it is ronnie boy, the bottom line. You can call yourself a financial planner or a wealth manager or whatever pretentious bullsh*t you can concoct, you know? like the ten years you spent in the pits, LOL! Me, I'm just a simple securities broker.
You can plan all you want ....IF YOU'RE NOT MAKING MONEY FOR YOUR CLIENTS THE ONLY THING YOU CAN PLAN ON IS POVERTY.
I'm not day trading, I'm swing trading. My average position is about six weeks and makes 2% (ish) by trading around core positions. Again, I don't take a trade unless it has an 85% probability of success. If it's not producing it gets kicked then and there. I study gaming theory, not I'm a shiny egotistical wealth manager 101. I would bet ten to one you have no CLUE what the probabilities of any of your positions are, mr. "ten years in the pits" What's the average hedge ratio on your accounts? mine are under 15 have you ever heard of a hedge ratio? Again douchbag, I'm selling puts on blue chips. Go buy the book called making money for dip sh*ts. Do your clients a favor.[quote=Ron 14]
you should have sold them months ago before time decay took place. [/quote]
You idiot. You want time decay on your side you don't sell them months out, FYI.One last lesson for you, moron. The inverse of the Delta is one measure of the probability of that trade. "selling the highest delta options" gives you the lowest probabilities. Didn't they teach you that in your ten year tenure in the "pits"you should be selling the highest delta options with the most premium
[quote=Gaddock][quote=Ron 14]
you should have sold them months ago before time decay took place. [/quote]
You idiot. You want time decay on your side you don't sell them months out, FYI. [/quote] Yes. Exactly. The time decay wont happen as quickly with an option 6 months out as an option 1 month out, but the overall option price of a Dec 09 15 delta put is much higher than a Jun 09 15 delta put, so why not sell the one with the highest value if the ODDS are in your favor ? Can you understand that you would profit more by selling a put for $15 vs. $1.5 if they are both expiring worthless ?[quote=Ron 14][quote=Gaddock][quote=Ron 14]
you should have sold them months ago before time decay took place. [/quote]
You idiot. You want time decay on your side you don't sell them months out, FYI. [/quote] Yes. Exactly. The time decay wont happen as quickly with an option 6 months out as an option 1 month out, but the overall option price of a Dec 09 15 delta put is much higher than a Jun 09 15 delta put, so why not sell the one with the highest value if the ODDS are in your favor ? Can you understand that you would profit more by selling a put for $15 vs. $1.5 if they are both expiring worthless ?[/quote] Yes but think about RISK. You may get more premium out there but I can sell the same thing 6 times with the strongest time decay and make far more than your 1 sell example. WITH FAR LESS RISK. Not to mention the Greeks begin to distort beyond three months out and are all but worthless 6 months out. Before I take a position; It must be a position that I want in the context of the portfolio, rates an 8, 9 or 10 on my screener and have a stable dividend. 1) the delta must -15 or lower i.e. 85% or better of expiration and less than 90 days out. The shorter the better. 2) Stock must be over a clear area of support 3) the strike price has to be at least 3 standard deviations from the stock price. 4) An active chain that will allow one to roll out if necessary. 5) Any one trade in and of it self is not relevant win loose or draw. 6) If we get assigned we aggressively write calls The probabilities on any one trade mean nothing but over the larger sample nine of ten expire. You can read about my arbitrage trades in what people are buying thread. Schools closed.It is only a matter of time before an expiration week becomes so volatile that it starts your strategy on fire and the price to "roll out" will be so steep that your assessment of risk will be permanently changed.
I guess we will have to wait for your book to come out - Options Swing Trading, Your Ticket to Beating the Index by 50%! Strategies from the Worlds Smartest Investor, Guru Gaddock. For you to assume I was talking about in the money options proves your a goon. In the money options are never even quoted on the exchange floor unless someone is trying to take a large position in the underlying.Which one am I, you clown? Managed money or American Funds? American Funds isn’t even part of the managed money platform at my firm. And no, I am not at Jones, although it was mentioned that I am. I know you were talking about out of the money options, so was I! When I said high delta you assumed I was talking about in the money options and flipped your lid ,like a tough guy as you hide behind your monitor.
You still haven't answered the question ? Why the hell would you not just trade options on your own using these great strategies. Sit at your computer, trade it up for a few hours a day, and head home with all of the profits.“like a tough guy as you hide behind your monitor” What’s your problem sport? all full of piss an vinegar aren’t you. I’m damned sure not hiding from the likes of you. If you feel the need to pursue that line you can PM me with your intentions and I’ll be happy to oblige them.The only assumption I’ve made during this entire conversation is that you’re a yappy little prick that’s been molded by a cookie cutter. You go on with the Ameriprise party line and your clients will love you LOL. This is the last post and time I’ll be wasting on you. If you were not such a bullheaded jackass you may have been able to learn something.
All this coming from a Jones flunky washout....sigh. Had I know that from the start I would have simply patted you on the head and wished you good luck.Read your posts! I’m all full of piss and vinegar? You called my douchbag, idiot, and moron on different occasions just because I disagreed with you. Now I’m at Ameriprise and I flunked out from Jones? LOL. If you live in the Chicago area or will be traveling here soon, please let me know, Ill meet you at the airport. BTW, I live closer to Midway if that helps.
Replies: 20
Views: 931
View Post Wrestling with EJ
Posted: July 15 2008 at 1:34pm Yes, I am failing to pay my bills by selling financial products door to door.
Yep see you in the funny pages. Month 19 in the bizz I grossed over $24k. I’m on track for presidents club in year two.
"Read your posts! I'm all full of piss and vinegar? You called my douchbag, idiot, and moron" If walks like a duck and quacks like a duck he he he The jokes on you flunky. Love and kisses.Wow an internet fight!!!! I am taking bets, current line Gaddock +125.
Thanks Sam but I concede. If this guys skin is so thin that he has to make physical threats, the most certain type of cerebral loss on the Internet, He’ll fail at the bank too. I’ll toss him this one bone as he’s to easy to shoot into tatters.
BUT it's been fun and I hope you all enjoyed the exchange. OK Ronnie boy, you have me running scared, please spare me your wrath. Thanks for the laughs.[quote=Gaddock]Thanks Sam but I concede. If this guys skin is so thin that he has to make physical threats, the most certain type of cerebral loss on the Internet, He’ll fail at the bank too. I’ll toss him this one bone as he’s to easy to shoot into tatters.
BUT it's been fun and I hope you all enjoyed the exchange. OK Ronnie boy, you have me running scared, please spare me your wrath. Thanks for the laughs. [/quote]The guy's skin must also be dark, if he lives near Midway.
And the guru keeps posting away, but will not address the question I have asked numerous times. Obviously, the truth hurts.
Others have thin skin, but you are calling people names when they call you out on the crap you are spewing ? Yeah, I was not making any money selling financial products door to door, I admitted it and started looking elsewhere. I should have done it after my first 6 months at Jones, not 2 years later. I can at least address it with honesty without hiding behind the BS of "my wife got pregnant and I needed a more secure income." Im sure your numbers are great, hell they should be, when you are churning options for 2% rips in their account. I assume you will still believe I got fired from Jones, but they aren't firing anyone, no matter how bad their numbers currently are. Just PM me when your book is coming out.[quote=snaggletooth][quote=Ron 14]The point of the initial question, without giving an essay on his entire financial situation, was just to see what advice people are giving on new money in which the only priority is growth. The guy is well to do, home paid off, plenty in bank for emergency, no kids, no wife, great job. I understand the questions that need to be asked. I wanted to see how many guys actually think 100% equities at Dow 7000 is a good idea. The answer is very few, which makes me even more confident in buying now. [/quote]
This post below by our newest
EIA expert on March 6, the day the S&P 500 traded at an intraday
low of 666.79. (It closed today at about 794.)
Good call snags. Meanwhile just about all of the EIA's you sold in the last 2 weeks are already capped out. See you at Dow 10k.
[quote=HymanRoth]
[/quote]Good call snags. Meanwhile just about all of the EIA's you sold in the last 2 weeks are already capped out. See you at Dow 10k.
[/quote] You realize lots of people buy EIAs as an alternative to other conservative investments and to NOT be exposed to market risk, right?
[quote=HymanRoth]
[quote=snaggletooth][quote=Ron 14]The point of the initial question, without giving an essay on his entire financial situation, was just to see what advice people are giving on new money in which the only priority is growth. The guy is well to do, home paid off, plenty in bank for emergency, no kids, no wife, great job. I understand the questions that need to be asked. I wanted to see how many guys actually think 100% equities at Dow 7000 is a good idea. The answer is very few, which makes me even more confident in buying now. [/quote]
This post below by our newest
EIA expert on March 6, the day the S&P 500 traded at an intraday
low of 666.79. (It closed today at about 794.)
Good call snags. Meanwhile just about all of the EIA's you sold in the last 2 weeks are already capped out. See you at Dow 10k.
[/quote]
And the story continues to play out...where did the S&P close yesterday?
[quote=deekay][quote=HymanRoth]
[/quote]Good call snags. Meanwhile just about all of the EIA's you sold in the last 2 weeks are already capped out. See you at Dow 10k.
[/quote] You realize lots of people buy EIAs as an alternative to other conservative investments and to NOT be exposed to market risk, right?[/quote] Hyman doesn't understand that concept. An index annuity is not a market investment. When you look at historical numbers from real contracts through both bull and bear markets, many people would be happy with the annualized returns without risk for a portion of their money.
[quote=deekay][quote=HymanRoth]
[/quote]Good call snags. Meanwhile just about all of the EIA's you sold in the last 2 weeks are already capped out. See you at Dow 10k.
[/quote] You realize lots of people buy EIAs as an alternative to other conservative investments and to NOT be exposed to market risk, right?[/quote] No, they don't. They buy them because some guy tells them that they can't lose anything in them, but yet can participate in the upside of the market. The only people I've ever seen buy an EIA are gullible people who probably shouldn't be investing in anything other than CDs or Fixed annuities. They never read the fine print. If they did, they'd figure out quickly that their "can't lose" strategy has just cost them a ton. I just reviewed one for a client's husband last week. He's been buying a new one every year for the last 4 years. I asked him what he's going to do for income when he retires in 10 years. At that point there's going to be a 22% surrender penalty on 60% of his money. He won't have any money that's not under some kind of surrender penalty. I ran this little scenario for him: Let's say he has to get to his money in 7 years because he lost his job and he has bills to pay. His annuity today is worth $10,000. 22% surrender, 10% penalty, and (since he doesn't have a job) 15% taxes for fed and state combined. His $10K just turned into $5300. In a fixed annuity he would have paid probably at most a 5% surrender. In a VA, 7% max. So, sure, you don't lose any principle, but man does it hurt to have to hit that money in an emergency. This guy's EIA also orce annuitization if he wants to withdraw. All because he wants to be in the market, but doesn't have the balls to ride it out when things get tough.
You can also get relatively similar returns using a fixed annuity/CD/treasury plus some straight equity exposure for a small portion of portfolio, without the participation caps and surrender penalties.
Exactly and in years when the equities are down you withdrawal only from the fixed portion of the portfolio.You can also get relatively similar returns using a fixed annuity/CD/treasury plus some straight equity exposure for a small portion of portfolio, without the participation caps and surrender penalties.
Can that guarantee 7% or the market if it's higher for the next decade and guarantee 5 or 6 % annual payments for the rest of you and your wife's life even if you draw your account to zero?
Don't think so & I'm not an annuity guy.No it can’t. And there is no guarantee that the insurance company will be around in 10 years to guarantee the annual payments for life.
No guarantee that FDIC coverage will be either or that the sun will shine. I would feel pretty OK about ING, The Hartford, Met, Pru, Trans, JH etc.
You sound more like Suze Orman 14 than a person that is really considering the superior solution.I have no problems with VA’s. I just don’t feel they are appropriate with the market as low as it is. Putting people in them now and charging them for the insurance after the market has declined 50% is like charging a cover 30min before the bar closes. What are you really paying to protect? It has already happened.
their ability to sleep
I think it's appropriate for a person that fits the mold, now as ever. We could go down another 2000 points. Market timing shouldn't be a criteria for getting into a VA. It's suitability. You could also say this is the best time ever to get into one due to the step up. Getting paid based on the 7% or high water mark for those on the edge can be a great advantage and perhaps difference between being poor or comfortable for life. I'm not hung up on fees, I'm a net effect guy. JH gives you another decade of 7% each time you have a step up. Why would the market being down disqualify such a VA? In spite of higher fees considering what you get in good VA's and due to their recent 'arms race' VA's are actuarially a steal and will soon be significantly scaled back in benefits. I think you will never see a better deal on a VA again. And as I said, I'm not an annuity guy but I would not hesitate to use them in the right circumstances. The few that I did present sure do wish they had taken them now. Most of them were buy and hide types that have been HUGELY damaged by the hang in there champ schpeal their other broker (said loosely, more like a kool-aide drinking managed money drone) that had them watch their retirement all but go up in smoke.I have no problems with VA’s. I just don’t feel they are appropriate with the market as low as it is. Putting people in them now and charging them for the insurance after the market has declined 50% is like charging a cover 30min before the bar closes. What are you really paying to protect? It has already happened.
The reason VA's are out there and the reason all of these bells and whistles "look" so good is because THE VA COMPANY WILL BENEFIT IN A BIG WAY. I choose to keep those benefits in the pockets of my clients. Again, no reason to insure a house that has already burned to the ground.
I suspect no matter when or what or why you will always have a reason to not use a VA. Nothing wrong with that. Your clients. I just don't think categorically excluding any product is good practice.
You simply can not create the same animal like many profess they can via some sort of derivative or other product combination.
In the mean time my model is pretty much market neutral. I sure do wish I could put it into a VA contract. I've been waiting years for a firm to come out with a VA contract that acts like a wrap account and lets you trade in it as you see fit. Even called several actuaries to have them consider it and never got an answer.[quote=Ron 14]
The reason VA's are out there and the reason all of these bells and whistles "look" so good is because THE VA COMPANY WILL BENEFIT IN A BIG WAY. I choose to keep those benefits in the pockets of my clients. Again, no reason to insure a house that has already burned to the ground.
[/quote] Why don't you ask your clients what THEY want since it's THEIR money. Using your simple-minded theory of "insuring a house that has already burned to the ground", you obviously would not have bought today's VA's in 2003. Well, had you done so, from 2003 to the peak in 2007, your clients may have locked in their income base at some 75%+- higher than their initial investment. Then, when the market blew up AGAIN, they would have done 7% on top of that in 2008. But, because you so diligently chose, on your clients' behalf to not show them VA's because it was "like paying a cover charge 30 mins before the bar closes", your clients could easily be back at their same levels as 2003 or lower. In my opinion, your problem is that you see things in black and white, like a textbook. This is real-life man. The market goes up and it crashes eventually. This is not the last time the market will crash. You have the chance to allow your clients to lock in their values as the market goes back up and allow them to maximize income from the highest point, because the market WILL recover and it WILL f'ing blow up again.[quote=Ron 14]
The reason VA's are out there and the reason all of these bells and whistles "look" so good is because THE VA COMPANY WILL BENEFIT IN A BIG WAY. I choose to keep those benefits in the pockets of my clients. Again, no reason to insure a house that has already burned to the ground.
[/quote] An interesting analogy. Very cute. Also very wrong. Do you not insure the new house you build just because the chances of it burning down twice are slim? Of course the insurance company benefits - why the hell do they take anybody's money ever? To make a profit for themselves? The same can be said for any company that manufactures any financial product. Why not give your client the choice of taking the insurance or not taking it? Lord knows you don't know what the future holds. Some may buy the extra insurance for the peace of mind it provides. Some may decline it and take on the risk themselves. I mean, it's their money, let them have a say in how it gets utilized.I also hate VAs but conceede snaggs point(with less douche and retard comments)… However the reason I hate VAs is the majority of my clients can live on their pensions(if we can’t lump sum) and SS. So the money they had in their 401k is bonus…
However for some clients if they only have $500K and SS and need $30K a year off of that, I like the VAs for the income rider... in this case good luck taking a 6% income stream off a regular portfolio.. My only concern is moving forward if VA companies start decreasing income riders(say down to 4% then I will have to see if it justifies the extra fees) but as of right now they are ok with me.Annuity accounts are insured up to $100K by state.. So yeah they kind of can...No it can’t. And there is no guarantee that the insurance company will be around in 10 years to guarantee the annual payments for life.
[quote=Spaceman Spiff][quote=deekay][quote=HymanRoth]
[/quote]Good call snags. Meanwhile just about all of the EIA's you sold in the last 2 weeks are already capped out. See you at Dow 10k.
[/quote] You realize lots of people buy EIAs as an alternative to other conservative investments and to NOT be exposed to market risk, right?[/quote] No, they don't. They buy them because some guy tells them that they can't lose anything in them, but yet can participate in the upside of the market. The only people I've ever seen buy an EIA are gullible people who probably shouldn't be investing in anything other than CDs or Fixed annuities. They never read the fine print. If they did, they'd figure out quickly that their "can't lose" strategy has just cost them a ton. I just reviewed one for a client's husband last week. He's been buying a new one every year for the last 4 years. I asked him what he's going to do for income when he retires in 10 years. At that point there's going to be a 22% surrender penalty on 60% of his money. He won't have any money that's not under some kind of surrender penalty. I ran this little scenario for him: Let's say he has to get to his money in 7 years because he lost his job and he has bills to pay. His annuity today is worth $10,000. 22% surrender, 10% penalty, and (since he doesn't have a job) 15% taxes for fed and state combined. His $10K just turned into $5300. In a fixed annuity he would have paid probably at most a 5% surrender. In a VA, 7% max. So, sure, you don't lose any principle, but man does it hurt to have to hit that money in an emergency. This guy's EIA also orce annuitization if he wants to withdraw. All because he wants to be in the market, but doesn't have the balls to ride it out when things get tough. [/quote] Yeah but most of them say you can take 10% out each year, so there would be no reason to liquidate it all and pay surrender fees. I think these are ok for a portion(small) of the money, if you are looking to mimic an absolute return fund that instituions like yale and harvard use. I think these get used wrong by people who throw 100% in with no regard. Also in a side note, easy to bash what you can't sell(EDJ)..
Thanks for the commentary. I never said that I wouldn’t use VA’s and I never said that there weren’t situations in which they make sense. What I am saying is with the market as low as it is why would someone pay 3% in fees to insure their fears and to guarantee themselves the ability to take 5% of their own money out on an annual basis?
[quote=Gaddock]
I suspect no matter when or what or why you will always have a reason to not use a VA. Nothing wrong with that. Your clients. I just don't think categorically excluding any product is good practice.
[/quote] This is great advice. I can point out 15 things that are wrong about 401ks, yet almost everyone in our industry recommend clients put some of their money in them. There are no inheritently good or bad products, but they can be utilized improperly - even the holy grail of retirement planning, the qualified retirement plan.Some will. Some won't. So what? NEXT!Thanks for the commentary. I never said that I wouldn’t use VA’s and I never said that there weren’t situations in which they make sense. What I am saying is with the market as low as it is why would someone pay 3% in fees to insure their fears and to guarantee themselves the ability to take 5% of their own money out on an annual basis?
What do you do instead?Thanks for the commentary. I never said that I wouldn’t use VA’s and I never said that there weren’t situations in which they make sense. What I am saying is with the market as low as it is why would someone pay 3% in fees to insure their fears and to guarantee themselves the ability to take 5% of their own money out on an annual basis?
Hell, Capital Income Builder is paying basically the same dividend at Dow 12k as it is now. You can get that for 1%/yr. Whats the use of the extra fees and the insurance and the step up and all the bells and whistles when you income check is the same even though your account value is down ?
You can't get CAIB for1%/yr though... Secondly, current yield on CAIBX is probably around 5%.. But if the companies they are holding start decreasing their dividend(not out of the question) then the yield will drop. Lots of exposure here too. I don't doubt the fund(although i don't use it).Hell, Capital Income Builder is paying basically the same dividend at Dow 12k as it is now. You can get that for 1%/yr. Whats the use of the extra fees and the insurance and the step up and all the bells and whistles when you income check is the same even though your account value is down ?
Wow. What a great strategy. Where did you learn that...the Mutual Fund Store?Hell, Capital Income Builder is paying basically the same dividend at Dow 12k as it is now. You can get that for 1%/yr. Whats the use of the extra fees and the insurance and the step up and all the bells and whistles when you income check is the same even though your account value is down ?
Next … what would you say to an arbitrage model that has no risk beyond the company paying a special dividend? The best case scenario you get 40% worst case you get 12% (numbers from the last one I did).
In one month Annualize that! I just coded my software to search them out. They come and go fast. Think these trades are good for a few referrals? If you thought yes you're correct.Human nature is weird. Everybody wants to jump in and slam each other about not making money in a quick barrage of posts but not respond to a post about making a lot of money with a 90% + chance of a complete success regardless of the direction and volatility of the market.
If you did the exact opposite on every trade you've made how would you have done? Doesn't that suck? he he he. Me too until I got my head around the concept. Ron 14 asked me why not just trade my own account. The same reason a Dr. doesn't treat himself and or attorneys will tell you those that represent themselves have fools for clients.Come on guys, get real.
Here’s the problem: After 2008 we are ALL looking for the silver bullet (at least most people are). We are looking for things that would make our business/practice better. We are looking at DIFFERENT solutions for people (again, most of us).
Here’s the reality. As much as most of us would like to change, our business has become so unwieldy, that change happens slowly (even if you don’t have a huge practice, it still takes time!). Have you tried teaching the 30 year mutual fund vets about annuities? Have you tried teaching clients about annuities? It’s the same thing. These things are detailed, and difficult to understand at times. Change is difficult.
(This also applies to the majority of us who did not grow up in the trading pits with options–Gaddock, you can talk to us as much as you like about making BIG money, but at some point you have to realize that we–I--are in different positions, have different client bases, have different practice needs. We can’t just jump ship and change the entire direction of our business model overnight, or even over the course of a month).
So seriously, the name calling, finger pointing, e-peen measuring is totally un-needed. I come here to listen and participate in discussions about what others are doing. If someone doesn’t agree with you, let’s hear it (there have been some great posts lately, even this one has a lot of good in it); leave the retard/stupid/asshole/d***s on MySpace.
[quote=Gaddock]Next … what would you say to an arbitrage model that has no risk beyond the company paying a special dividend? The best case scenario you get 40% worst case you get 12% (numbers from the last one I did).
In one month Annualize that! I just coded my software to search them out. They come and go fast. Think these trades are good for a few referrals? If you thought yes you're correct.[/quote] I stand opposed to VA's at this market level and people are all over me. This guy throws this junk in a post and nobody says anything. Unbelievable. And comical.[quote=Ron 14][quote=Gaddock]Next … what would you say to an arbitrage model that has no risk beyond the company paying a special dividend? The best case scenario you get 40% worst case you get 12% (numbers from the last one I did).
In one month Annualize that! I just coded my software to search them out. They come and go fast. Think these trades are good for a few referrals? If you thought yes you're correct.[/quote] I stand opposed to VA's at this market level and people are all over me. This guy throws this junk in a post and nobody says anything. Unbelievable. And comical. [/quote] What's sad and comical is I was ready to tell you exactly how to do it step by step with explanations of the quantifiable risk and why and this is your response LOL People are strange. poor bastard. Me, I would have been drooling over such a post and be a willing participant in learning everything about it I could.[quote=Ron 14]
I stand opposed to VA's at this market level and people are all over me. This guy throws this junk in a post and nobody says anything. Unbelievable. And comical. [/quote] It's cleaned up...sorry. I was a little agitated in that moment in time.Gaddock was going to solve all of our problems and teach us how to lead our clients to wealth through trading with no risk and I opened my mouth and blew it for everyone. I apologize.
Snags I think he was calling my model and its returns “comical junk”
Ron 14 just cant even get your head around the idea one can truly make large returns when you have an edge that is hedged against loss.I’ll still tell you but I don’t think you’ll be able to get your head around it. If you will sober up and want to learn this particular trade I’ll tell you. If you would prefer to be a closed minded kid rock on with yourself.
You can lead a horse to water.I don’t get it dude, if I saw a post like this I would be eating it up with a large spoon … when you grow up and are able to do a 20 minute question and answer session I’ll show you how. I’ll give you and example of my latest trade. You can do the math and or validate what I’m telling you anyway you want and I welcome you, and everybody, to attempt to shoot holes in it. Even though the risk of this model is just about null I still treat it like all the rest. ANY ONE TRADE has a size and scope to it that in the large sample it has no impact on the entire portfolio. The black swan can always open its wings.
They are actually quite common when there is a sharp high vix move as its based on mean reversion, standard deviations (or ATR) and the imbalances that are a result of the same. I like to find lower priced stocks as you can get a huge bang for you buck without having to use any leverage. You have to be nimble and take the "hard side" of the trade first. Once you nail that down the other parts are rather easy and fall right in place.I am interested in Gaddock's model..
OK then … do you have 30 minutes and 100 or your attention?
Yes?? am i reading the question wrong…
OK then … what is your risk when you SELL a put. If you don’t know just say it and I’ll Tell you fast.
The risk is that the stock tanks below the strike price minus what you received.
Example you sell 5 strike price for $1 and the stock goes to $1 you're down $3 per share ... yes? agreed?We on the same page?
Example: I just happen to remeber the correct numbers on this one, It’s a June not an April but the numbers are fresh …
Agreed?Well nothing from the other side, yawn. Why do I even bother to show you such a great trade? I guess karma.
Sorry got hung up with a call from my biggest client(he is in china now)… I have never traded options before so let me recap what I think you said…
I’ll just finish the trade and you can study it and ask questions
Ok that works, because I started at Jones and we couldn’t do options, so learned just enough to pass the 7… so i will have to look up some terms…
Would PMing me be easier?
I understand the idea, but the basics of options are lost on me.. I am looking at some info while reading this.
RISK RISK RISK RISK
The price of the stock is irrelevant. You do these trades in a wrap account unless the trades are above 30 contracts or the client gets hosed by fees. The risk of this trade is the risk of the Short Sale minus dividends or "special dividends" If a special dividend is declared you're paying for it. Agreed? On the same page?? That's the short and dirty. OK Rony lets hear you shoot holes in it, you cant, if you want to make some nice trades that will get you referrals ask a few serious questions. PS I have more and better trades.[quote=Gaddock]The risk is that the stock tanks below the strike price minus what you received
Example you sell 5 strike price for $1 and the stock goes to $1 you're down $3 per share ... yes? agreed?[/quote] Why am I down $3 per share? Told you I know nothing of optionsIf you are buying 100 calls, selling 100 puts and selling 100 shares of stock you are locked in at .54cents, no matter where the settlement is. Why not do just a million of those? FOR YOURSELF. Seriously, if there are sizeable bids and offers at those price without having to chase a leg of the three trades why give that money away.
There are no holes. I just don’t think there are sizable resting bids and offers to consistently do those trades.
If there is, you are gold, and I am opening an options account to trade in between cold calls!
Ron … not everybody is full of sh*t. I do these all the time.
You see there are ways to make money in any market. NOW do you understand why I was being suck a d***? If you think I'm not just a blow hard I can tell you where the holes are and how to quantify those risks. That's a trade with a 98% chance of profitability Pretty good edge eyy.what about my question… Also would you have to scan extensively to find these?
I hear you. I know you don’t believe me, but when I was on the floor trading options on the SPX and NDX there was so much volume and market efficiency in those products that synthetic lock ins were few and far between. The smaller equity pits weren’t things I paid much attention to. Thats a great trade. I still question the size and scope of those type of opportunities. When on the floor it costs 15k just to stand there, you have to be doing a lot of those type of orders.
I developed a program that searches for them on every options chain there is out of Chicago. I’m able to code in anything I want to look for.
[quote=Ron 14]I hear you. I know you don’t believe me, but when I was on the floor trading options on the SPX and NDX there was so much volume and market efficiency in those products that synthetic lock ins were few and far between. The smaller equity pits weren’t things I paid much attention to. Thats a great trade. I still question the size and scope of those type of opportunities. When on the floor it costs 15k just to stand there, you have to be doing a lot of those type of orders.
[/quote] I don't do Madoff type volume, even though there was none he he, depending on the chain I can usually bang out a few hundred contracts.Again Ron, try to shoot holes in it. You wont be able to.
I told you I was an Arbitrage prop trader. There is a very nice ARB for your consideration. I hope you can use it. Bang out some trades like that for rich guys and the referrals flow in. Someday you will thank the guy that was such a d***.Yep .54 min but up to $3 max, not bad. Why not do a million? 1) Liquidity, I'm competing against others for the same trade 2) RISK if some crazy special dividend is X Date while you're short you're paying it. You can load the truck but not risk the house as I said. PLUS there is always another bus.If you are buying 100 calls, selling 100 puts and selling 100 shares of stock you are locked in at .54cents, no matter where the settlement is. Why not do just a million of those? FOR YOURSELF. Seriously, if there are sizeable bids and offers at those price without having to chase a leg of the three trades why give that money away.
Keep in mind one contract is 100 shares. 100 calls = 100 puts x 100 for shares (10.000 shares short, not 100)If you are buying 100 calls, selling 100 puts and selling 100 shares of stock you are locked in at .54cents, no matter where the settlement is. Why not do just a million of those? FOR YOURSELF. Seriously, if there are sizeable bids and offers at those price without having to chase a leg of the three trades why give that money away.
Hey where is the answer to my question…
I can’t do these anyway, but I am interested…
Yep .54 min but up to $3 max, not bad. Why not do a million? 1) Liquidity, I'm competing against others for the same trade 2) RISK if some crazy special dividend is X Date while you're short you're paying it. You can load the truck but not risk the house as I said. PLUS there is always another bus.[/quote] Im assuming the entire package is delta neutral. How do you get the $3 max?[quote=Ron 14]If you are buying 100 calls, selling 100 puts and selling 100 shares of stock you are locked in at .54cents, no matter where the settlement is. Why not do just a million of those? FOR YOURSELF. Seriously, if there are sizeable bids and offers at those price without having to chase a leg of the three trades why give that money away.
Any call is pos on the delta and put is neg on the delta not sure how to answer. $3 max is if the stock goes below the strike price minus the credit received.
What do you think Ron? is Gaddock the jackass you thought? he he he. I don't blame you at all. Many of my trading stories are off the beaten path.
There you have it. When you bring in a huge account I'll accept a bottle of Bookers as tribute. FYI I posted this one but have much better. If anybody has any like edges lets talk.If you are buying calls its long delta, selling puts is also long delta. So you are getting a 2.85 cent credit to buy the 5 strike, synthetically purchasing the stock at 2.15 and selling the actual stock at 2.69 thus a net of .54cents. I don’t know what the multiplier is but if one option contract equals 100 shares at expiration and you buy 1 call, sell 1 put and sell 100 shares the position is delta neutral.
[quote=Ron 14]If you are buying calls its long delta, selling puts is also long delta. So you are getting a 2.85 cent credit to buy the 5 strike, synthetically purchasing the stock at 2.15 and selling the actual stock at 2.69 thus a net of .54cents. I don’t know what the multiplier is but if one option contract equals 100 shares at expiration and you buy 1 call, sell 1 put and sell 100 shares the position is delta neutral. [/quote]
Not quite. Depends upon the relative delta of the put and the call.
Yes quite. If you add the delta of a call and a put of the same strike it will always equal 100 and that is what we are talking about.
My software is ever evolving. I have a team of programmers in India that will create any mad scientist trade I can dream up. I would sell it for enough to retire on. Software aside I don't mind helping people. I'll toss my friends some trades as a vehicle to get large referrals. As I said, one thing they did not teach us but works better than anything I know of, make money for a millionaire during a market crash and get huge referrals.Good example btw Gaddock. If you’re smart, you won’t share your program with anyone.
You are of course speaking of them in the same month I'm sure. I think you are right ... but maybe not. I'll observe the real time Delta next time I see one that's out of whack and report. You have to be quick to get an arb off so I don't analyze it much I just go for the fill.Yes quite. If you add the delta of a call and a put of the same strike it will always equal 100 and that is what we are talking about.
Yes same month. The same strike, same month delta has to equal 100. It is a matter of probabilities. One has to settle in the money. If the call has only a 7% chance of settling in the money, then the put has a 93% chance of settling in the money. One of them has to unless it settles exactly on the strike which is few and far between.
Question is can a anomalous high Vix bump knock that out of whack? If so perhaps it would be something worth searching the chains for. I can search every chain there is in about 15 seconds. If I see any that are + or - 100 I’ll let you know.
Unless it's in the context of an arb or another hedged trade buying options is a suckers bet.AS I said before I don’t take a trade unless I have a minimum 85% probability of success. Most are in the mid 90’s. I cant get my head around why somebody would put on a trade that only has a 5% chance of success not to mention having to pay fees and taxes.
Actually, in a volatile market buying at the money straddles and aggressively hedging the delta is a very profitable trade. If of course you are watching every single move of the underlying and buying stock when it goes below strike and selling the same stock when the underlying rises above.
Gaddock, I agree in most situations buying options is a suckers bet. Especially, if you arent trading a product with many active strikes or if you aren't trading tons of contracts each day.If you will read my rules, back 10 pages, or so on selling puts (same apply to calls) and learn how to properly ‘roll’ a position that needs a little damage control I’m having more than 9 of 10 expirations out of the money. Even if we get the stock it’s because we want it. It’s a huge edge. Again, probabilities on any one trade mean nothing but over the large sample they are spot on. The way I look at it is we are trying to get in a good blue chip at a deep discount, if we dont we get paid for being wrong.
This also makes cash an active asset class. When I back the puts up with cash I'll put the cash in TBills that expire on the third Friday of that month and get a little on top. The question that I'll never get a good answer too is who the hell is willing to take the other side of such a trade?My understanding of the inverse Delta - it's the probability of the underlying stock price expiring AT or OUT OF the money. The price can even meander in and out of the money before expiration. Another little trick for you. If you are a few cents in the money just before 4 pm on expiration day, instead of buying the position back at a ridiculous price or being assigned, simply move it to another account and end up with a short on the stock that you can cover on the open Monday AM.Yes same month. The same strike, same month delta has to equal 100. It is a matter of probabilities. One has to settle in the money. If the call has only a 7% chance of settling in the money, then the put has a 93% chance of settling in the money. One of them has to unless it settles exactly on the strike which is few and far between.
My understanding of the inverse Delta - it's the probability of the underlying stock price expiring AT or OUT OF the money. The price can even meander in and out of the money before expiration. Another little trick for you. If you are a few cents in the money just before 4 pm on expiration day, instead of buying the position back at a ridiculous price or being assigned, simply move it to another account and end up with a short on the stock that you can cover on the open Monday AM.[/quote] Right, because delta is the probability an option expires in the money. The delta changes as the stock price changes and as you get closer to expiration.[quote=Ron 14]Yes same month. The same strike, same month delta has to equal 100. It is a matter of probabilities. One has to settle in the money. If the call has only a 7% chance of settling in the money, then the put has a 93% chance of settling in the money. One of them has to unless it settles exactly on the strike which is few and far between.
Did you see the GM trade?
Yep, thats free money
Hard to believe people are not interested, perhaps you all think I’m full of crap.
Was hoping to exchange good ideas & good trades, please respond if you have any.My only concern would be that anyone placing a bid or offer in any of the options you are trading can see those opportunities and I would think they would act accordingly if that money is out there. There is no free lunch, but maybe those single stock option markets are so ignored that those opportunities are out there.
Maybe. Not sure ‘why’ they are there but they are and I’ll take them. Why would a person take a trade with only 5% probability of success?
They do and there are thousands of them to pick from. Luckily if one is astute and looks for pockets of 'stupidity liquidity' (I'll use that again lol) you can really cash in.Why would that concern you? What would you say another party "they would act accordingly" out of curiosity. I don't think equity option chains for companies like X, GM, C, GE & CBI to name a few would be ignored. I think it's more of a function of finding the anomaly that creates these opportunities and pulling the trigger, I can and do. BUT I had to create the software to do it. I think that might be a little beyond the average rep. I also look for IV spikes that are 3 or more standard deviations away from the 1, 3, 6 & 12 month averages. That brings all sorts of interesting observations / opportunities. Find a spike like that on no news and typically you have found an event some insiders know but hasn't been made public yet. My concern when getting into a trade like this with any size like the 400 contract trade is to get a fill and do it in the proper order getting the hard side first. I do it in parts since anything beyond 100 contracts has to be done on a paper ticket. By the time all that screwing around and the inability to work the order is done, one might get stuck with only half the trade. I do them in 100 increments just for that reason.My only concern would be that anyone placing a bid or offer in any of the options you are trading can see those opportunities and I would think they would act accordingly if that money is out there. There is no free lunch, but maybe those single stock option markets are so ignored that those opportunities are out there.
Ok. That makes more sense. I thought it was more of a rapid fire, all legs are there for the taking and boom - filled. No doubt that its great work on your part and the average rep doesn’t even understand call vs put and you are obviously well beyond that.
Ron, Would you mind telling us what firm you are with? If not I understand the anonymity thing. I signed on with AGE and I’m still here wherever that is. At the end of the day it’s just me an my 15 x 15 office.
chase bank
What kind of business do you do mostly? Again I understand if you don’t want to answer.
managed
What managers do you like the best?
Calamos, Eaton Vance, MFS, American, Franklin, JPMorgan, Thornburg, TRowe
Are you a ‘rookie’ i.e. been in for less than 5 years?
I'm in month 20 but was prop trading before that. New to retail but not the market. You mentioned cold calling in one post. That's how I did it and need to do more. I've been VERY VERY lucky when it comes to prospecting.3 years total, also new to retail but not to market. Started at EJ for 2 1/2 yrs, was doing average but wasn't making any money. Started to research bank programs, liked JPMC because of the freedom and ability to go independent within the bank in future. Bank takes same cut as EJ but I have a team working with me, it was a no brainer in my situation.
3 yrs total in retail, 12 yrs in market
A team … awesome.
I'm 100% on my own. No team, just a bunch of smiling Jackals that don't cut each others throat out of pro courtesy. No help or guidance. I rarely speak with any of the other brokers in our office."Training Support" is an oxymoron. I am VERY good at trading. If I wasn't I would be screwed. I found a millionaire and made a large amount of money. He's now an advocate that has given me huge referrals. If not for that I would be delivering pizzas. The class monthly average in production was in the mid 4k for month 18 (most are toast as nobody can live on 35% of that). I did over 22 large. I think it's incredibly hard to get this gig off the ground but if you do it you have the coolest job in the world for life. In spite of the occasional rant i.e. I find it natural to be a prick and try very hard to curb the negative behavior. I'll cut this rant short and say that I value peoples opinions very much on this BBS so thanks to all for your thoughts.[quote=iceco1d][quote=Gaddock]Are you a ‘rookie’ i.e. been in for less than 5 years?
I'm in month 20 but was prop trading before that. New to retail but not the market. You mentioned cold calling in one post. That's how I did it and need to do more. I've been VERY VERY lucky when it comes to prospecting.[/quote] Funny...the harder you work, the luckier you seem to get, huh? [/quote] That's it ... 25,000 cold calls and you're bound to get a bone here and there.Was doing a IV spike scan and found another trade on a blue chip that is an 8% locked in for an April assignment. I’m not going to hang my hat on it but don’t you think I should bag it with several hundred contracts?
HELL YES I'LL BAG IT!!!!! 8% locked in, in 12 days gives us a annualized return of what ???????[quote=Ron 14]
3 years total, also new to retail but not to market. Started at EJ for 2 1/2 yrs, was doing average but wasn't making any money. Started to research bank programs, liked JPMC because of the freedom and ability to go independent within the bank in future. Bank takes same cut as EJ but I have a team working with me, it was a no brainer in my situation.
[/quote] Not making money after 2.5 years? Got rescued by a team at a bank? You are a hack.Shania - here it is
What the hell?
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