S&P Prediction

[whodoyoulike]

Originally Posted by highnote

Thanks. I wish I could make a good prediction for the next 3 to 6 months.

I bought shares in VIXY. It's an ETF that is supposed to track the VIX. I figure if the VIX reached its 4th lowest point since 1990 then it will most likely go up. I'm trying to sell call options against the VIXY shares I own. I have not been able to get a good price for them. So far, I haven't had any takers at my asking price. I figure the downside of the VIXY shares is small and the upside is larger -- asynchronous risk.

When the VIX goes up the market usually goes down. They are inversely related.

I don't have an estimate of how much the market can fall, or even if it will fall.

Interest rates are still historically low. Equities still give good returns with minor risks, although, now the risks are getting bigger and I'm not sure there are going to be enough returns to justify the risks.

It's a conundrum.

I agree because I don't get it.

Thanks for this info. I don't think I was aware of this one. I had found and briefly followed several contrarian indexes (I just wish I knew where I had saved the list so I can see updated). Just 5 years ago this index was 1250 as you probably know which makes it an interesting play if there is a significant adjustment.

I also noticed the same a while back. Uncertain why because I really don't understand it's workings. What are you actually buying with this type of index?

Again, I just don't get it but it's probably because of as you've pointed out. Last year, I randomly selected about 60 stocks and compared them (earnings, revenue, cash etc.) to the Dow 30 and the 60 looked terrible. So, it appeared to me that the market is probably looking better than it really is.

I agree with you on both points.

It's scary but you need to have something in equities.

[highnote]

I bought this ETF: http://www.proshares.com/funds/vixy.html

It looks like the holdings are mainly May and June VIX futures.

My plan is to sell to VIXY September Call options to hedge my long VIXY position.

[whodoyoulike]

Do you know exactly or what these contrarian indexes own?

These futures can not exactly be identified and the futures, the way I understand them change frequently (maybe hourly, or by the day or are they monthly only?). I've never bought any or looked into them.

For example, the S&P 500 index owns stocks in the S&P 500 and you can actually see a listing.

[highnote]

Originally Posted by whodoyoulike

Do you know exactly or what these contrarian indexes own?

Yes. You can find it on yahoo finance or on the proshares website:


Top 2 Holdings (99.95% of Total Assets)


Company Symbol % Assets


Cboe Vix Future 03/22/2017 (Uxh7) N/A 55.21%
Cboe Vix Future 04/19/2017 (Uxj7) N/A 44.74%

[pandy]

Originally Posted by highnote

Thanks. I wish I could make a good prediction for the next 3 to 6 months.

I bought shares in VIXY. It's an ETF that is supposed to track the VIX. I figure if the VIX reached its 4th lowest point since 1990 then it will most likely go up. I'm trying to sell call options against the VIXY shares I own. I have not been able to get a good price for them. So far, I haven't had any takers at my asking price. I figure the downside of the VIXY shares is small and the upside is larger -- asynchronous risk.

When the VIX goes up the market usually goes down. They are inversely related.

I don't have an estimate of how much the market can fall, or even if it will fall.

Interest rates are still historically low. Equities still give good returns with minor risks, although, now the risks are getting bigger and I'm not sure there are going to be enough returns to justify the risks.

It's a conundrum.

And corporate profits are good.

[whodoyoulike]

Originally Posted by whodoyoulike

I agree because I don't get it.

Thanks for this info. I don't think I was aware of this one. I had found and briefly followed several contrarian indexes (I just wish I knew where I had saved the list so I can see updated). Just 5 years ago this index was 1250 as you probably know which makes it an interesting play if there is a significant adjustment.

I also noticed the same a while back. Uncertain why because I really don't understand it's workings. What are you actually buying with this type of index?

Again, I just don't get it but it's probably because of as you've pointed out. Last year, I randomly selected about 60 stocks and compared them (earnings, revenue, cash etc.) to the Dow 30 and the 60 looked terrible. So, it appeared to me that the market is probably looking better than it really is.

I agree with you on both points.

It's scary but you need to have something in equities.

The timing of these finance articles can't be just coincidental since I've been noticing and commenting about them for a while.

Many S&P industries are performing poorly, but outsized gains in tech stocks are making the market look better than the underlying trends reveal, TradingAnalysis.com founder Todd Gordon told CNBC on Tuesday. ...

http://www.cnbc.com/2017/05/16/thank...he-market.html

It's always comforting to see a third party confirming one's evaluations.

[whodoyoulike]

Originally Posted by highnote

Yes. You can find it on yahoo finance or on the proshares website:


Top 2 Holdings (99.95% of Total Assets)


Company Symbol % Assets


Cboe Vix Future 03/22/2017 (Uxh7) N/A 55.21%
Cboe Vix Future 04/19/2017 (Uxj7) N/A 44.74%

But, my point is are these Futures actually assets with long term value because if the price of whatever doesn't meet the amount on the Future's date .... isn't it basically worthless?

Again, I don't and haven't really looked into options trading because .... isn't it really just Gambling with just higher stakes?

For me for the purposes of this discussion, Gambling is buying something perceived by me to have a value at that particular time and then at some future point it doesn't have any value. This applies to horses, BJ, poker and sports wagering.

I prefer certain stocks & bonds because they have value after I've purchased them. In the future maybe not the same but, I always hope it's more. I'm using the word "hope" but it's based on my research and therefore I know it will always have a higher future value.

[highnote]

Options and futures are both contracts, but they have different functions.

They are both valuable when used properly, but can be dangerous because you could lose more than you paid.

When used in certain circumstances they can reduce risk and uncertainty.

I wrote a lot covered call options during the financial crises and got good results with very little risk.

I still write them occasionally, but because the VIX has been so low there has not been much option premium to capture.

Companies in many industries use futures to lock in prices so they have a better estimate of their manufacturing costs.

Options can provide insurance for downside protection of your stocks.

[ReplayRandall]

Originally Posted by highnote

Options can provide insurance for downside protection of your stocks.

Then you'd better "Heavy-up" on your options, the bond market is about to go south thanks to Fed's bond dump off it's balance sheets, stocks will fall right behind......Sign, sign, everywhere a sign.

[highnote]

Eventually the market will go down. Yesterday the S&P hit a new high.

My indicators show no sign of a sell off. Right now I am following the trend.

If I get a sell signal I will post it here.

Low volatility and new highs seem more like a continuation of a bull market than the beginning of a sell off. I have been wrong g before.

[lamboguy]

Originally Posted by highnote

Options and futures are both contracts, but they have different functions.

They are both valuable when used properly, but can be dangerous because you could lose more than you paid.

When used in certain circumstances they can reduce risk and uncertainty.

I wrote a lot covered call options during the financial crises and got good results with very little risk.

I still write them occasionally, but because the VIX has been so low there has not been much option premium to capture.

Companies in many industries use futures to lock in prices so they have a better estimate of their manufacturing costs.

Options can provide insurance for downside protection of your stocks.

i have been writing calls for the last 12 years on RGLD and have only been called away once. i just stopped writing them last year.

[highnote]

Originally Posted by lamboguy

i have been writing calls for the last 12 years on RGLD and have only been called away once. i just stopped writing them last year.

Why did you stop?

I have been wanting to write them on HL but the premiums are too low.

I wrote a bunch back in early 2009 after the crash. I made good profits, but many were called away because stocks were very low in early 2009 and then shot way up.

[whodoyoulike]

Originally Posted by lamboguy

i have been writing calls for the last 12 years on RGLD and have only been called away once. i just stopped writing them last year.

Would you or anyone else care to explain in simple english?

Thanks. The only part I understood was RGLD.

[lamboguy]

Originally Posted by whodoyoulike

Would you or anyone else care to explain in simple english?

Thanks. The only part I understood was RGLD.

i take it you don't do to much option trading.

when you enter the markets you can either go long, short or neutral. when you write a covered call you own the underlying equity.

what i did was sell a call for whatever it sold for on the open market. example if RGLD was priced at $50 and i sold a call that had a strike price of $55 the premium for a certain length of time might be $1. the buyer pays me the $1 and gets the right to purchase my shares at $55 anytime he wants to within the timeframe that i sold him. when i say my shares get called away, it means that one time the price was $56 or more when the option holder exercised his right.

i hope this explains it to you, if not someone else might do a better job.

[highnote]

Originally Posted by whodoyoulike

Would you or anyone else care to explain in simple english?

Thanks. The only part I understood was RGLD.

It is complicated to explain using a phone keyboard. Best thing to do is read as much as you can about options. There is a ton of literature on them.

Start with something like "Options for Dummies".

The strategies range from very simple to very complex. You can hedge. You can use them as insurance. You can speculate. You can get tremendous leverage from them and get returns far greater than owning the stock. You can also lose money.