Covering High return Balanced Investing Strategies To
Make Money In Up Or Down Markets
A Publication of Princeton Research, Inc. (www.PrincetonResearch.com)
February 29, 2016
Charles Moskowitz Discussion
ANOTHER QUIET WEEK
Week 8 was another quiet one for the options account. We had no closing trades and so the YTD and Funds in use numbers are unchanged. In the larger account we had several good trades that while profitable, were impractical for Options. This was because those trades were in stocks with fairly high volatility and therefore very high options premium. It becomes impractical to buy puts or calls when you are only trading for $1-$3 per share in a $100 stock. If we were to do that by buying an option that has less premium (in the money) we find ourselves in the position of using too much capital and risking a point for point decline if we are wrong on the trade.
On our sole position, BAC March12 calls, we are in at a reasonable price $ .63 and they closed
@ $ .87. The issue for me is that until we get some clarity on the market and interest rates, this one is stuck under some pretty stiff resistance between 12.85 and 13.10. Right now we get almost point for point on the upside, but we are really susceptible to declines right back to the support around $12.25, where these calls trade around $.45.
My contention is that the overall market is up nicely from the double bottom we discussed here last week, but I don’t think we make any meaningful headway until the financials come to the party. If we are to move higher from here we have a clear shot at the 2000 level in the S&P500, but I see no way to do that without the financials participating. Goldman and JPM (with the exception of the Dimon buy) have been lackluster at best. I think that we are more likely to test the multiple closes in the 1920 area before any major headway is to be made.
Another issue for me is politics. We are beginning to get a better view of the field, and it is not pleasant. There are two Democrats who continue to demonize the banks and Wall Street in general and three guys on the other side, who like business but have no real clue on the international stage. This makes the choice the “least bad” actor to lead us. It’s setting up to look like a lose/lose scenario come November. If you note in Mike’s discussion in the Cycles section (page 11)
we are set up for what is usually a seasonal move lower for the markets in the coming weeks. Add “Super Tuesday” to the mix and if things continue to move in the current direction politically I can see a lot of disgusted investors heading to the sidelines at the first sign of weakness that appears. Remember, March comes in like a lion……….CAM
All trades were based on your participation in the texting service to receive updates. Previous closed out trades not listed here may be seen in previous market letters.
DATE PRICE COST PROCEEDS RESULTS
02/18 Bought 6 BAC March 12 Calls 0.63 378
New trades $ 10,000 account...In Texting we have a limited amount of words. In the interest of brevity: OPTIONS ONLY: 1 January , 2 February. The Quantity and Strike Price for each trade is specific. Trading is hypothetical. We may trade weekly options and they are noted: SPY 1/25 147 for SPY Jan 25th 147 Calls or Puts.For questions please call 702 650 3000. Closed out positions are found in previous letters dating back four years: Feb 22nd; 15th; 8th; 1st;Jan 25th; 18th; 11th; 4th; Dec 28th;21st;14th; 7th; Nov30th; 23rd; 16th; 9th; 2nd; Oct 26th;19th;12th; 5th;Sept th;21st;14th;7th;Aug 31st; 24th; etc
New recommendations Options account
( 1 ) Buy 4 FB March 105 Puts @ $ 1.75 ( or better )
( 2 ) Buy 4 SPY March 11th 193.50 Puts @ 1.75
New Stock and Options Recommendations $ 100,000 Account
( 1 ) Buy 8 FB March 105 Puts @ 1.75
( 2 ) Buy 8 SPY March 11th 193.50 Puts @ $ 1.75
Buy 1000 HMY @ $ 2.73
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