The Legacy of Woody Guthrie

When I was growing up, Arlo Guthrie was a rebel.

In an era when songs were neatly packaged for radio play and rarely even approached 4 minutes in length, his "Alice's Restaurant" was a beautiful gift for those disk jockeys with Irritable Bowel Syndrome. Prior to that, the first 4+ minute song to regularly receive airplay was "Ode to Billy Joe" in the summer of 1967.

Arlo Guthrie wasn't an accidental rebel. It was in his genes.

His father, Woody Guthrie blazed the trail.

Fascinatingly, despite the off beaten path of his ne-er do well life, Woody Guthrie is best remembered for his stirring songs, such as "This Land is Your Land,"  that sing the praises of America's natural beauty, as well as our own rights as a free people..

But he left behind another legacy.

That was for the passage of the genes necessary for that horribly generative neurological disease, Huntington's Disease, a disease which makes itself known during early adulthood and then eats away at the core of those so cruelly afflicted, until they just wither away to nothingness upon expiration

Huntington's Disease itself is at the core of a great ethical issue and internal personal conflict, as the presence of the gene combination necessary for it to manifest itself as the disease in future years can easily be known long before signs and symptoms appear.

The question facing the heirs of Woody Guthrie is whether they want to know their fate, especially since there is no treatment and certainly no cure.

How do you live your life knowing with  absolute certainty that you will begin a horrible descent? How do you look your own children in the eye knowing that you may have very well passed the same fate onto them?

The dilemma is further heightened when you consider the possibility that the health insurance companies that may pay for the diagnostic testing may conceivably then become the very same companies to deny care on the basis of the insured having a  "pre-exisiting condition."

We were never meant to know the unknown.

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It's a Town Full of Losers

Today's big story was all about Goldman Sachs and the searing New York Times Op-Ed piece "Why I'm Leaving Goldman Sachs."

There was quite a bit of speculation that the Op-Ed's author, Greg Smith, a 12 year  employee and one with some corporate credibility, currently at the London office, was the man behind the snarky Twitter account, GSElevator, that recounts comments allegedly overheard on the Goldman Sachs elevator.

Clearly, he couldn't possibly be the mystery man behind that account, otherwise it would have been called "GSLift."

When I say "currently," I mean that Smith was a Goldman Sach employee as of yesterday. I'm  sure that if the Op-Ed appeared during his planned final few hours on the job, security would have figured out some way to escort him out the window or down the lift shaft.

When you put all of this together with the fact that Smith reportedly won a bronze metal in the Maccabiah Games in Table Tennis, you have the makings of a great John Carter-esque blockbuster.

A couple of things about Goldman Sachs.

I haven't owned shares in about two weeks and missed yesterday's 6% climb after JP Morgan leaked its "Stress Test" results, dividend increase and stock buy-back plans. Goldman Sachs was among a very small handful of stocks that helped lead me out of the morass from a few years ago when I picked up shares at about $85 and aggressively sold covered calls, riding it up and then occasionally down.

I last owned shares and had them assigned at $115, two weeks in a row. I like today's drop, but it's still not enough to entice me to get the shares again.

Nonetheless, I love Goldman Sachs almost as much as I don't love Dick Bove.

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Under the Radar

This Monday morning, which was just a dreary and cold mid-Atlantic day, there wasn't too much to cheer about.

Over the past three years, I've been drafted into the culture of football and now find myself, somewhat uncharacteristically, actually caring about games.

Culture. Football. Talk about oxymorons.

Just a few short years ago my only foray into football would have been to watch about a half's worth of the Super Bowl and take the occasion to excuse the non-stop ingestion of deep fried anything.

I looked at the Super Bowl as being Saturated Fat Sunday.

Now, I even have four pro football games under my belt, although if given the opportunity to go to a game, the weather is still a factor in my decision process, as well as who's going to be singing the National Anthem.

I'm still far from a fanatic. I even turned off the New York Giants game last night during overtime and never even bothered to go down to the basement and turn on the big screen TV to get a more real-life feel.

It's not as if I had to be up early the next morning, it's just that I was probably depressed because Simpsons episodes had been pre-empted in favor of the football game and I'd already seen that eposode of Chappelle about 300 times.

I did take the Baltimore Ravens loss harshly, though, particularly knowing that my kids are big Ravens fans. The manner in which they lost the opportunity to tie the game and force it into overtime was especially hard to accept, as an easy field goal was not as advertised.

The big news this morning was that loss and the resignation of the co-CEO's of Research in Motion and the subsequent appointment of a new CEO.

The two items are not in any way related, but then did become so.

The question of the day on CNBCm tied it all together as they asked who likely got more sleep last night, Billy Cundiff, the Raven's kicker or Thorsten Heins, the new RIMM CEO?

Ordinarily, being named new CEO is a pretty positive thing, unless you're Leo Apotheker.

In this case the market didn't react terribly kindly to the announcement of Heins' ascension, especially since he was considered to be somewhat of an insider who may have also been asleep as the ship was sinking.

Oh, and the accent didn't help either as the prevailing joke was that RIMM hired Leo Apotheker's son.

I don't know what kind of jokes are circulating today regarding Cundiff's miss, but I doubt that there are many. People take their football more seriously thatn they do their stocks.

One was tragic, the other just business going about business.

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Anti-Climactic Much?

The past week was all about superlatives. Best of all, the superlatives were all headed in the right direction.

It really didn't matter that so much of that direction was dictated by rumor after rumor. People who were smart enough to do the stupid thing and not take profits when common sense dictated otherwise were well rewarded on paper.

With the close of trading on Friday we were hearing all kinds of statistics centering around the market's performance this October.

By all accounts we had seen the single best performing month since 1618, or in meteorological terms "ever since records have been kept"

It was that good. You actually had to go back to when Native Americans were occupying Wall Street to have had as good a month as we'd just experienced.

Even the old adage "buy on the rumor and sell on the news" couldn't bring the market down after the rumor of breaking an impasse over the Greek financial crisis came into being.

At least to a degree, as today the Greek Prime Minister announced that the final details of the debt agreement will be put to a referendum. So, that certainly makes it a done deal.

What could possibly go wrong?

But in October jut about everything went right, as long as your standard is that you need at least a 17% gain.

Shorts were reportedly being squeezed, talk of IPO's was beginning to burn up the airwaves and people were clicking on the ads on this site.

That final indicator seems to be a very accurate one. People click on financial related ads when they're feeling good about multiplying the wealth. When the market is going down no one in their right mind clicks on an "Open an E*trade Account" ad.

Even Groupon was looking rehabilitated and in some corners was being compared to LinkedIn, with regard to the reception its IPO would be expected to receive.

 

By some measure, those all may be sufficient to mark a near term market top. And so, today, perhaps befitting the fact that it's Halloween, the market just gave a middle finger to those superlatives and proceeded to lose almost 2.3%.

The diagnoses for the drastic response today came quickly.

“Risk aversion is once again taking hold in markets,” said Brown Brothers Harriman & Co. strategists in a market commentary following this anti-climatic end of the month day.

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Groundhog Day Revisited

Groundhog 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.

Huh?

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.

Invest like TheAcsMan

Option to Profit is available as either an eBook or 300+ paperback. Take a humorous look at a serious topic and learn how to make your portfolio finally go to work for you in bull and bear market environments.

See a sneak preview of Chapter 1.  hoco blogs

More about the book and purchase options. Scroll down and read the Szelhamos Rules blog, updated every weekday.

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Careful what you Wish For

What's in the Szelhamos Portfolio?

There was a time, not that long ago, that a curse would visit me once each month. Sometimes those months had 4 weeks and sometimes those months had 5 weeks.

No this isn't that monthly curse that mothers must instruct their daughters upon, although many would call it a miracle, rather than a curse.

But in my case this was the curse of wishes and hopes.

Now, by my own choice, I've invited that one time monthly curse into my life every week.

The problem with selling call options is that you often find yourself wishing for stock movements that are inconsistent with human hopes and desires.

Unless you're a short seller.

But most normal people want to see an unabated rise in the stock market.

Up, up and away.

Although I'm an inveterate believer in covered call strategies, I certainly understand the flip side, particularly since I've lived through the agony of losing a stock to assignment after an unexpectedly large run-up in price.

My wounds are still fresh from having lost Green Mountain Coffee Roasters at $45 when it shot up to $65.

Did I mention that it was about $80 now? Although the cynic in me believes that there's still another accounting issue on the horizon and it's a much steeper drop from $80, than it was from $35 when Herb Greenberg first caught our attention with the peculiarities of their numbering system.

So when the unthinkable happens, there's only one thing that you can do, since ranting and breath holding isn't very adult-like.

Instead, you wish and hope for the price to fall. That's much more adult like.

Even though you don't really think of it in such terms, what you are really doing is wishing for financial pain to be inflicted on others so that you don't suffer the pain of missed opportunities.

To explain that in terms a child could understand, when you get to the window to order your ice cream cone and are told that they're all out of your favorite flavor, you secretly hope that the person next to you who got the last scoop suddenly drops theirs to the ground below.

Granted, that puts you at odds with everyone else and if your the kind the craves human acceptance, you really don't want to be lumped in with short sellers in the eyes of society, or the type of people that wish to see ice cream cones littering the floor.

Now that there are far more stocks that have weekly options available the wishing and hoping comes far more often and societal scorn just gets heaped on and on.

This week just so happens to be the end of the June options cycle, but these days, the third Friday of the month just doesn't carry the same cache as it once did.

Remember when triple and quadruple witching hours threw the fear of God into even the most hardened of traders?

Those too are just yawners these days.

Lots of people still talk about unusual price swings near the close of trading on options expiration, but really they're just rehashing memories of a time long ago. They can't face the reality of what their high school sweet-heart looks like at the reunion, so instead they remember the good old days, when men were men, screaming buy and sell orders at one another as the seconds were ticking away toward the close of another month's options cycle.

Those days are gone, too. There's not that much screaming anymore. Someone probably wished that away too, tired of all the noise and chaos, and ultimately ushered in electronic trading and settlement.

On Tuesday, after that beautiful day of gains across the board, I looked at where my holdings were standing relative to  their options' strike prices and I saw that I was now on track to lose many of them to assignment if they stayed at those levels.

Granted, I had purchased some of those stocks on Monday, with the express intention of holding the shares for just a few days. But now I had come to think of them as my own and really didn't want to lose them.

I bought Home Depot for the next day dividend. I also bought shares of Transocean, Google and JP Morgan and sold in the money options after they rose beyond their initial purchase prices.

So I did what the god foresaken short sellers do.

I hoped and wished for the market to fall.

Why not just my stocks? Why the whole market?

Because I have a well diversified portfolio. Unfortuntely, as smart as I was to diversify the holdings, I wasn't smart enough to foresee that I'd be at risk for losing most of my shares.

So I hoped for a nice little drop in prices. The key word here was "little".

In my ideal world, prices would drop just to the point that all of the holdings closed just below their strike prices and then we'd do the same thing over again.

Well, I got what I had hoped for, except a whole lot more than hoped for.

I just wasn't being careful.

Even poor Pandora suffered in it's IPO. Imagine pricing $4 above the high end of the expected range and then going as high as 60% above the IPO price, only to end up the day about 9%.

All in all, most people would be happy with with a one day 9% gain, but I don't think that was the case today.

I didn't wish that on Pandora and all the poor folks that got suckered into buying at at pre-debacle prices. The newly issued shares changed hands nearly three times. There are probably some very happy people and lots of very unhappy people.

Since I didn't hold shares in Pandora, I found today's minute by minute trading chart amusing. The rapidity of its fall from $26 was impressive and it just deteriorated through the day.

When the dust settled the day was just a mirror image of Tuesday. This time, it was a sea of red for all of my positions, no different from everyone else out there. Of course, the options sales offset some of those losses, just as they cut some of the gains on Tuesday.

I did get off a single trade yesterday. The same one that I had tried to do on Tuesday. I finally found enough buyers for the Sirius - XM Satellite Radio January 2012 puts that I had wanted to sell.

Puts are another strange universe, again hoping for market setbacks.

Since I sold puts I was actually banking on Sirius' stock price to rise between now and January. Wouldn't you know it, but Sirius actually went up yesterday.

Finally a position that went in the right direction, if only for a day.

So today, I'm hoping for a market climb nearly equivalent to Wednesday's loss.

And then as long as I'm hoping, Friday would just roll over and flatline.

Isn't that an uplifting image? But that's just part of the curse.

The power of hope is pretty amazing. I just wish I could make up my mind and know exactly what I should be wishing for. That would make me a better person, one much more in tune with society.

Nah. Maybe next month.

Invest like TheAcsMan

Option to Profit is available as either an eBook or 300+ paperback. Take a humorous look at a serious topic and learn how to make your portfolio finally go to work for you in bull and bear market environments.

See a sneak preview of Chapter 1.  hoco blogs

More about the book and purchase options. Scroll down and read the Szelhamos Rules blog, updated every weekday.

Find  OTP Book at Amazon, B&N or now you can also Order direct  from publisher. Use 10% Discount Code P4S2ZD8H

  

Something has to Give

Today was actually one of those rare days that I worked.

Although I think that I work just by sitting at home, watching TV and trading stocks and options. In addition to all of those responsibilities, I also screen telephone calls from tele-marketers, as we still have a landline or two.

My wife doesn't use the same lexicon as I do and considers work to be something more honest in nature whereby money is exchanged for services. 

I don't know where she gets these kind of ideas, but I do know better than to disagree.

So today I worked, which was compounded by the fact that I worked on Monday, as well.

The problem, though became apparent as early as Monday, and something really does have to give.

I'm not one of those people who feel that they really need to have it all. I'm not a Cosmo woman. I'm perfectly willing to sacrifice.

But now that my son has convinced me that I need to get with "The Twitter" and revive the blog, all in the name of generating buzz for the OTP book, I barely have time to watch TV or trade stocks.

And now there's this work thing.

Guess which one I'm perfectly happy to give up?

Today was especially difficult to juggle all of these demands, and I'm afraid that my tweeting suffered.

This came as an especially cruel blow, as I was so proud to receive a direct private Tweet from Herb Greenberg, now back at CNBC, and was looking forward to even more recognition from one of the greats.

His one word Tweet to me was "Funny.".

That was good enough for me. I didn't even care if he didn't call me in the morning. His scent on my Droid screen still remained.

Today was one of those days that really deserved lots of attention toward watching the tape and trading on it. After all, how often does the market move up about 200 points from the open and then just stay there?

Not many. But what made it a really good day was that I still had plenty of positions that I had not yet been able to call cover.

That happens even less often.

What was so nice about selling so many contracts today was that it generated enough options premiums that I could use the proceeds to buy even more shares in some of the holdings that weren't moving today.

I was able to pick up more shares in Mosaic, Riverbed Technology and Textron.

And it was that same Textron whose call options I bought back after just having sold them yesterday.

Now, all we need is for Textron to move up a bit more, since it did recover much of its earlier days' loss and then sell new call options.

As my son would probably say after seeing Charlie Sheen on his Violent Torpedo of Truth Tour, "Winning."

But I didn't have much opportunity to Gleet.

That's gloating while you Tweet.

What I did realize is that my wife, who is increasingly more accurately portrayed as my Sugar Momma, needs to step up her game just a bit.

Perhaps a second job.

That would be a very nice good faith move on her part, and one that would certainly be appreciated by me.

I can write these kind of things in this blog, because she has the good sense not to read it, although on certain days I've been known to suggest that she read the days' entry.

Today won't be one of those days.

Since I'm not "working" tomorrow, I plan to juggle all important aspects of my life in their proper proportions.

At the rate that I'm going, I'l have Ashton Kutcher like Twitter numbers in no time and I promise to do it without a backside view of my sugar momma in her granny panties.

I won't pander for numbers.

Tomorrow, I'm hoping for a negative image of today. I'd love to see a market drop in pretty much everything, except for those of my holdings that didn't participate today.

You've got the idea.

Textron, Mosaic, and Riverbed. But add to that list JP Morgan.

And then there are those that didn't participate enough.

Goldman Sachs, British Petroleum and Hewlett Packard.

There may be some others, as well, I just can't remember. My mind has been too drained by working for the man.

Something has to give.

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Old Dogs

At this point my new 14 month old puppy is neither a puppy, nor new.

But I think we’re already at the point that he's incapable of learning new tricks.

I, on the other hand, am certainly not a young pup, as the very gray whiskers will attest, but I've learned the art of the Tweet.

My wife and sister would like me to learn the Art of Shaving, as my sister recently gave me a gift from a store by the same name.

I may not know when my unkempt appearance warrants a shave, but I do now know the differences between @, # and $.

So, as a veteran Tweeter, I've now posted about 29 times on the first day.

Too much?

The only thing is that I'm not certain if Tweeting is somewhat similar to the sound that a fallen tree makes in the forest. In that case, I may never find out if 29 Tweets was too much., but there were already 15 followers.

So far, I seem to have gotten a number of followers who all appear to share a common characteristic. Based on their profile pictures and poses, I would say that they probably spent significant amounts of time in Eastern European truck stops.

We'll see.

But another new things was suggested by a past newsletter subscriber, and bless him, a purchaser of the OTP book, who asked why I didn't include charts and tables in the blog to better illustrate the points.

Mt first thought was that charts and tables aren't that humorous and they require more work.

Then, I also remembered that my wife told me last night that she was funnier than I was.

Hmmm.

So, today I tweeted that while Goldman Sachs was being further bitch slapped by the Senate, it's price fell about $4 in the opening minutes. That presented a nice opportunity to pick up shares and sell the $155 call options, that happen to expire tomorrow. The net on the transactions would be about $0.80 per share. Granted, that's only 0.5%, but still, not bad for less than 2 days, with very little additional risk.

So let's give it a try. Here's the chart

You know that I'm not a huge fan of technical analysis, but when a solid company drops like that, without real substantive news, it's often a good opportunity to jump in.

In this case, the options premiums were:

See? I told you these weren't very funny.

Who knows? Maybe my wife was right. After all, , she did turn out to be right about slavery and heroin.

By the same token, JP Morgan took another hit today as well and I think, represents a good opportunity to pick up shares on the cheap.

Same with Mosaic, but I'll be damned if I'm going to include more charts today. I've seen enough of their somber sorry statistics.

Yeah, let's see if she's as able at artful alliteration  as am I.

Now, normally I  wait until the end of the day to compose the blog, but I was so excited by learning the Tweeting trick that I just couldn't wait any longer.  Were it not for the fact that I have to stay away from salt, I would have shared one of Laszlo's chicken jerky snacks with him.

But then, I also realized that I should wait to celebrate until I see how that Goldman recommendation works out.

There's always a new trick to be learned tomorrow.