market speculation for October

[Scanner]

I don't know. . .maybe because they saw the retirement account, where all of my money is sitting.

I don't get it all. . .a commodities future to me is much more easier to understand than this put call and covered call and stuff.

Maybe they only let you make so much money in your retirement account because it's tax free accumulated earnings. Maybe the gov't sees all the potential for untaxed gains.

[gambler2075]

Just to test the waters, I only purchased 100 contracts of jan 22 calls at 27.50 for $0.46 (so about $4700 with commisions).

MSFT down ~60 cents from the close, will be interesting to see what the Jan 11 27.5 calls will be worth tomorrow. They were trading at 58c on the bid and 60c on the ask, but will almost certainly take a hit tomorrow... I'd expect they open somewhere around 23-25c, so you will only have lost about 1/2 of your 4K$

g

[KTP]

MSFT down ~60 cents from the close, will be interesting to see what the Jan 11 27.5 calls will be worth tomorrow. They were trading at 58c on the bid and 60c on the ask, but will almost certainly take a hit tomorrow... I'd expect they open somewhere around 23-25c, so you will only have lost about 1/2 of your 4K$

g

Well this morning I had made $880 of the $4k, but I don't count that or the "loss" expected tommorow morning since the calls are good until jan 21.

This was the dip I had mentioned before, if you read my post from this morning. I was expecting this and may use it tommorow to purchase some actual microsoft stock at bargain basement prices (if it drops down below 25). I still expect 30+ by Christmas.

[gambler2075]

Well this morning I had made $880 of the $4k, but I don't count that or the "loss" expected tommorow morning since the calls are good until jan 21.

This was the dip I had mentioned before, if you read my post from this morning. I was expecting this and may use it tommorow to purchase some actual microsoft stock at bargain basement prices (if it drops down below 25). I still expect 30+ by Christmas.

Why not buy calls? If you are so sure this goes to 30 by Christmas, then the 30$ Jan 2011 calls are an absolute steal, no?

How certain are you that this goes to 30$ by Christmas?

g

[KTP]

Why not buy calls? If you are so sure this goes to 30 by Christmas, then the 30$ Jan 2011 calls are an absolute steal, no?

How certain are you that this goes to 30$ by Christmas?

g

certain enough to bet $4K. not certain enough to bet $31K.

the whole market could collapse to dow 7000 in november, gold could go to $2000 or drop down to $800...everything nowadays is really hard to be certain about.

Apple money will now move into Microsoft by people looking for quick gains. I expect this to happen sometime tuesday through thursday. Monday will probably be a down day for Apple, IBM and Microsoft. Certainly Ray's departure didn't help matters...those are the typical little monkeywrenches that microsoft always throws at it's investors.

[KTP]

Such strength this morning. Whole market down and msft still holding above $25. Apple has also bounced back from the 6% loss in after hours to under 2% down. This shows there is a lot of money just waiting to jump on tech. I am still hoping for a dip to $24 today, but it may not happen.

[gambler2075]

I am actually surprised Mr. Softy held over 25 today. Calls didn't really take as bad of a beating as I thought. Maybe you are right in your 30$ prediction, although I wouldn't go the option route for that.

g

[gambler2075]

As far as the overall markets go, as a contrarian, this runup to 11K is ridiculous... I do believe that people investing in the broader markets will get killed when the markets pull back. Yet I am not confident enough to just load up on inverse ETFs and come back in 6 months. I do expect we pull back to Dow 10K over the next month or 2, and retail who bought in at 11K capitulates.

But, like I said, I am not confident enough in that thesis to just go short. Fortunately, my multi-week biopharma swing trades don't really care what the overall market is doing, but just what the underlying science is. SPEX didn't care, CHTP didn't care, and all the other ones I played in the past 5 years. So, I will just sit here with my current few biopharma picks and see what happens.

g

[KTP]

I also think there will be a pullback to 9k or 10k, but I am crossing fingers it does not happen until march 2011 or so. Microsoft will not see 30 in december if the Dow is 9k.

Really though, if you take the view that gold is fairly valued at $1300+ an ounce, then Dow 11,000 seems pretty cheap actually. We were at Dow 14,000 with gold much cheaper. I tend to view tech stocks (and your biopharms) as a type of commodity. The products and patents will tend to increase in value along with inflation (if gold is being valued so high because there is a fear of significant future inflation). Think about it...if inflation roars to 6% do you really think Merck is not going to raise the price of their drugs accordingly?

I don't know how it should all calculate out, but I could see people justifying Dow 15,000 in a couple of years...

[gambler2075]

I also think there will be a pullback to 9k or 10k, but I am crossing fingers it does not happen until march 2011 or so. Microsoft will not see 30 in december if the Dow is 9k.

Really though, if you take the view that gold is fairly valued at $1300+ an ounce, then Dow 11,000 seems pretty cheap actually. We were at Dow 14,000 with gold much cheaper. I tend to view tech stocks (and your biopharms) as a type of commodity. The products and patents will tend to increase in value along with inflation (if gold is being valued so high because there is a fear of significant future inflation). Think about it...if inflation roars to 6% do you really think Merck is not going to raise the price of their drugs accordingly?

I don't know how it should all calculate out, but I could see people justifying Dow 15,000 in a couple of years...

I think 9K is way too low... remember that the notional value of a dollar is much less, so Dow 11K now is not the same as DOW 11K when oil was half the current price. At that time, each individual dollar was worth much more.

As far as my precciiiooouussssssss biopharma plays, remember that I am not really playing them as an investor. What I really am doing is playing sentiment swings, from when people hate the stock, to when they shift their view to love it. So I don't really care that any of them actually makes a useful product, as that is far, far off in the future. All I care about are the fairly predictable swings from abject panic and capitulation to overwhelming greed. And that cycle tends to take a few weeks to months but is far more powerful (and changes much more quickly) than the overall market.

I am going to call THE bottom at 9965 before the new year. we will see how wrong I am (probably very)

g

[KTP]

All I care about are the fairly predictable swings from abject panic and capitulation to overwhelming greed. And that cycle tends to take a few weeks to months but is far more powerful (and changes much more quickly) than the overall market.
g

But wait...this same type of cycle is exactly what I am predicting for microsoft stock. Current sentiment is very anti mr. softie. They don't have a shiny new dust collector, I mean I-pad, instead they make 60+ billion in earnings with a lot of behind the scenes stuff (hint, it is not windows 7 or xbox) and have a foward PE of less than 10!

My prediction is the money is going to start to flow out of apple and google speculators over the next month and flow into microsoft. I think apple has had it's run up for awhile, now it is mr. softies turn. Even IBM was at a 52 week high.

The really lame thing is I will probably scare myself into selling for a small profit at $26.5 next week before earnings, and then I will be wrong about december and microsoft will hit $33.

[gambler2075]

But wait...this same type of cycle is exactly what I am predicting for microsoft stock.

The really lame thing is I will probably scare myself into selling for a small profit at $26.5 next week before earnings, and then I will be wrong about december and microsoft will hit $33.

Hehe, isn't this was makes market speculation fun?

And the more right you are the more money you make.

But there is a reason I speculate in the biopharmas. For one, I find it actually a fun puzzle to really understand the science and see how the analysts are intentionally misleading retail investors... But more importantly, I play volatility in the biopharmas because that is where the greatest sentiment swings are. In comparison, the bellwether tech stocks are so borrrrrringg

g

[Scanner]

Well, after reading covered calls and covered puts, I can't really make heads or tails of it.

To me, it seems more like a hedging strategy than a speculating strategy. . .which is fine if you want to hedge, I guess.

I only have about 75K in my retirement, 35K is locked into silver, which has a bottom on it and I would say there is a 50/50 chance I could see activating this bottom in the next 90 days. If silver stays flat or rises, well, then I raise the bottom, that's all. When it activates, I'll be sitting on that cash.

I will probably redeploy the money elsewhere for awhile and sit on the sidelines with precious metals. It's been a good ride thusfar and I certainly have made a 60-80% return on that part of portfolio in 4 years.

That being said, the exchange BA and I had (and I hope I didn't offend him) along with my research into options trading left me rethinking how I want or should speculate with 5-10% of my portfolio.

Perhaps a microcap stock (maybe a silver mining stock?) as I go more traditional with portfolio. For now, I don't see much to be had in doing "covered puts" or "covered calls" as it hedges against the stock I already own. Like I said, I am not interested in hedging.

Perhaps $7500 on a microcap and then the rest to be deployed in a "vanilla" fashion (stocks, bonds, small amount of preciouis metals)

Thanks for all the thought.

[KTP]

Craaap. Now Morgan Stanley is recommending buying Jan call options on microsoft.

Buy Microsoft Call Options on Sales Gains, Morgan Stanley Says - Bloomberg

You know how this goes...as soon as the big boys recommend something, it is usually a bad investment.

[ea1776]

Microsoft.... my bearish view

But wait...this same type of cycle is exactly what I am predicting for microsoft stock. Current sentiment is very anti mr. softie. They don't have a shiny new dust collector, I mean I-pad, instead they make 60+ billion in earnings with a lot of behind the scenes stuff (hint, it is not windows 7 or xbox) and have a foward PE of less than 10!

Your MSFT predictions may work out, but since a few years ago, I've been bearish on MSFT. A large portion of their income came from the Office Suite, which is getting a ton of pressure from free alternatives from Google and open source options. They are not very good at innovating and are scrambling to keep up with Google/Apple, especially in the mobile space (which is pretty much the fastest growing "information sector"). Have you ever read / listened to interviews with MSFT's CEO? I read one in the Wall Street Journal a few weeks ago and he sounded very defensive and short in his answers, like he lacked confidence in their market position. If I remember correctly, he even had to give up some bonuses for poor performance in their mobile investments.

I think MSFT may make you some cash, but there are a lot better investments out there IMHO. And I'd bet that investing in a DOW index fund outperforms MSFT over a 15 year period (and certainly a lot less risky).

You may notice that MSFT pays a 2.5% dividend yield and Apple/Google pay $0.00. You might look and say "this makes MSFT a superior investment choice". But I see it as them not knowing what to do with the extra cash on hand so they distribute it to shareholders. AAPL and GOOG use their retained earnings and reinvest them for innovation or buying companies that give them an edge. Just my take.