Covering High return Balanced Investing Strategies To
Make Money In Up Or Down Markets
A Publication of Princeton Research, Inc. (www.PrincetonResearch.com)
March 20, 2016
Charles Moskowitz Discussion
A Two Way Street……
Week 11 had a small loss for the options only account with only 1 completed trade in the SPY puts. The loss was $276 and that brought the YTD gains back down to a still respectable $2,357. With a market that the talking heads are reminding us are back to even or only slightly ahead, 23% for Q1 is a great result. We are also carrying 1 position in the JPM 4/60 calls with a 40% gain. This speaks directly to the idea of balance since one was clearly a bearish trade while the other was driven by the up market that unfolded again this week.
However, this market will run out of gas….even if it is only for a correction of the gains of the last 4 ½ weeks. I will continue to look for the least expensive way to play for that move. A good friend and fellow trader with whom I share prospective trades lost money 3 times looking for the overbought top in AAPL last summer……costing anywhere from $1 to $1.75 each time. That’s less than 1% on average, but when he was right, the stock declined immediately from 132 to 121 and within weeks to below $100. I would always risk 3% to make 30%.....
The point being that I will continue to own just out of the money SPY puts of short term duration since they tend to be the least expensive, while the sharpness and quickness of the moves lower do not require a longer term to materialize. This is why the balance in our trades look like “short term bearish, longer term bullish. Our position in JPM goes out until the 3rd Friday of April while any new SPY trades will be for 2 weeks or less.
The last subject today is the question of whether or not the Oil has decoupled from the market. There have been days where they don’t really correlate as they did late last year, but the overwhelming issue for me is, has the fundamental picture changed? Clearly the US$ has weakened and the inflation picture has somewhat cooled, but while the market has had both up days and down days without the oil, I don’t believe that the supply side of the equation is even close to being in balance with demand. Oil has slowed and the relative strength in many of the big oil stocks has waned. While it will undoubtedly be cheaper to shop for new reserves from Wall Street rather than drilling, I also expect that there aren’t many big oils with the cash. However, I am still very bullish on APC since they are one of the best with a great portfolio of properties on their books..CAM
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: March 14th;7th; Feb 29th22nd; 15th; 8th; 1st;Jan 25th; 18th; 11th; 4th; Dec 28th;21st;14th; 7th; Nov30th; 23rd; 16th; 9th; 2nd; Oct 26th;19th;12th; 5th
3rd Week expiration When the month is listed without a date
New Trades Options Account:
( 1 ) Buy 8 SPY March 24th 203 Puts @ $ 0.70
( 2 ) Buy 8 XLF April 22 Calls @ $ 0.55
NEW Trades $ 100,000 account :
( 1 ) Buy 16 SPY March 24th 203 Puts @ $ 0.70
( 2 ) Buy 16 XLF April 22 Calls @ $ 0.55
( 3 ) Buy 200 XLF @ $ 22.41
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