The debt ceiling, sequester and continuing resolution for those interested at Calculated Risk.
Commodity Run Coming? Jason Kim
Uranium information is hard to find. Here is a Bill Powers interview which will cost $0.99 to listen, and I do not think well of Power’s as an analyst! Uranium Sector Update at AMP 2012.
Last week a member inquired about stock options. The investor or speculator seriously interested ought to pursue books and other blogs, as the subject is beyond the scope of Independent Stock Analysis.
My experience with options is the same with stocks. The big money is made in the big moves. Some more organized thoughts:
1) Options are a zero sum game and is played against sharks. Seemingly endless are the strategic possibilities for the market participant.
2) Spreads between the bid and ask are generally quite wide, except on the most liquid of issues and strikes. The house take/vig/rake will get you.
3) At present, option premiums -the implied volatility or time value- as measured by the VIX is quite low. Today’s ultra low interest rate environment and the chase-for-yield are factors. VIX Hits Lowest Level Since June 2007 (Bespoke).
Further, an elevated VIX generally coincides with a down market and is a good time to buy stocks, just at the time covered calls look very tempting.
The ETF for gold stocks, GDX, might be the best product for covered call writing in today’s environment in my opinion.
4) Naked option writers consistently make a little money until blowing up. They are picking up nickles in front of a steamroller.
5) Some swear by covered call writing for income…entire newsletters and many books are devoted to it. I am friends with one active and successful covered call writer…
6) Others believe covered call writing is a sure way to lose your good stocks and be left with only losers. The market environment matters a great deal.
7) Interestingly, covered call writing has the same risk/reward profile as a cash covered naked put.
8) To benefit from black swans, one must be prepared to consistently lose a little money to occasionally make a lot. The whole Nassim Taleb thing…
McMillan’s book “Options as a Strategic Investment” is the industry gold standard on the subject. Buy me lunch and you can borrow my copy. My 2002 edition was $75.00.
Thanks for the question!
