Overlords Investment Conclave [OIC] Recruitment Thread

[malchior]

Somehow the Fed broke FedWire and other backend critical central financial systems. Settlements activity is going to be fun tonight.

Edit: The crypto people are beating their chests about their unbreakable payment system. Let's see them process even a sub-percent of Fed dollar transaction volumes.

[pr0ner]

GME is spiking again today. Shares are back up to close to $80.

It's heading up to $100 and somebody traded 10 million shares at one point. This makes no sense....

Closed at $91.71, is at $107.82 after hours right now.

Oy.

[pr0ner]

Almost $160 now. JFC.

[Zaxxon]

Next you'll tell me they exist in 2021 largely to sell physical copies of videogames...

[RunningMn9]

These are totally healthy and rational markets.

[Carpet_pissr]

These are totally healthy and rational markets.

I think it’s fair to say that GME is not the market. Are there more than even 10 that are being manipulated like this?

[malchior]

These are totally healthy and rational markets.

I think it’s fair to say that GME is not the market. Are there more than even 10 that are being manipulated like this?

Nope - about 10 is right. Also, expanding out to the 'bubble' - it is like 40 stocks as well. There are definitely issues in the markets but they don't look catastrophic at the moment.

[RunningMn9]

I think it’s fair to say that GME is not the market. Are there more than even 10 that are being manipulated like this?

I'm not aware of any definition of irrational market that requires all stocks to be traded irrationally, or subject to outright manipulation like this, right?

If you think it makes sense that the market is currently at an all time high, with no where to go but up, more power to you.

[Carpet_pissr]

I think it’s fair to say that GME is not the market. Are there more than even 10 that are being manipulated like this?

I'm not aware of any definition of irrational market that requires all stocks to be traded irrationally, or subject to outright manipulation like this, right?

If you think it makes sense that the market is currently at an all time high, with no where to go but up, more power to you.

I may have misunderstood - I assumed your comment was directed toward the comments about GME for some reason.

FWIW, I NEVER think the market has nowhere to go but up. Even as a noob, green investor making my first trade, I never believed that. Does anyone?

[RunningMn9]

I may have misunderstood - I assumed your comment was directed toward the comments about GME for some reason.

FWIW, I NEVER think the market has nowhere to go but up. Even as a noob, green investor making my first trade, I never believed that. Does anyone?

What's happening with GME is just a symptom. What's happening with TSLA is a symptom. What's happening in digital "currencies'" is just a symptom. In 2000, there were plenty of stock prices that made sense and weren't part of the irrational exuberance of the dot com bubble. They got hit hard too.

[Carpet_pissr]

I may have misunderstood - I assumed your comment was directed toward the comments about GME for some reason.

FWIW, I NEVER think the market has nowhere to go but up. Even as a noob, green investor making my first trade, I never believed that. Does anyone?

What's happening with GME is just a symptom. What's happening with TSLA is a symptom. What's happening in digital "currencies'" is just a symptom. In 2000, there were plenty of stock prices that made sense and weren't part of the irrational exuberance of the dot com bubble. They got hit hard too.

I would argue that the whole millenial/Robinhood/GME/screw The Man movement is its own thing, unrelated to the overheating (or not) of the market.

[Zaxxon]

That movement certainly isn't helping cool things down, though.

[malchior]

That movement certainly isn't helping cool things down, though.

Definitely. I think the big money is just extracting their "tax" like a pro at a poker table of amateurs. I think the same goes for the 40 or so overheated stocks in the S&P 500. When you look at small and mid-cap stuff it is expensive but not "un-historically high". It is a very uneven 'irrational exuberance' to say the least.

[LordMortis]

I would argue that the whole millenial/Robinhood/GME/screw The Man movement is its own thing, unrelated to the overheating (or not) of the market.

I would like to hear the argument. I think the former and the later are siblings whose parents are 12 years of QE like behavior and the removal of alternatives to put your money to outpace inflation (And some hanky panky with COVID behaviors) and I also think TSLA and Bitcoin are a slightly older blood relatives.

[malchior]

I would argue that the whole millenial/Robinhood/GME/screw The Man movement is its own thing, unrelated to the overheating (or not) of the market.

I would like to hear the argument. I think the former and the later are siblings whose parents are 12 years of QE like behavior and the removal of alternatives (And some hanky panky with COVID behaviors) to put your money to outpace inflation and TSLA and Bitcoin are a slightly older blood relatives.

I agree with him. Hang around WSB for a few days and you can see it isn't homogenous. You pretty much laid out 2 of the big groupings. Your two are the older people who don't have access to anywhere else to invest, and newer kids who don't know what they are doing. I'd add in the 'anarchists' that he is describing. There are some solid analysts in the bunch ringleading certain groups as well. It's a weird mix.

Edit: Quick sentence re-order to make it slightly more logical.

[xwraith]

GME is over $140 in pre-market trading this morning

Just before this whole GME thing started yesterday I legged into a single bear put spread (April 35/60). Depending on what Vega does I'm going to try and close (parts of) it out. Hopefully, I can close out the long put at 60 for a small profit and think about re-buying at a lower IV if possible.

[LordMortis]

I will also add that TINA, Robinhood, and COVID have influenced my behaviors to contribute to overheating. Income funds have burned portions of my savings to the ground. When my savings rates dropped to nothing, I started building CD ladders. When CDs started paying nothing, I stopped building the ladder and started getting too aggressive with securites. Robinhood made this easy because they forced TD to stop taking $7 commissions on trades. COVID gave me more personal access to my portfolio (and initially more time) so I started buying in lots of 100 so I could to options trading.

September of last year happened and I started pulling my money but my 401K has no savings option. "pulling" my money meant putting it in a money market which was losing money every week while the market "only goes up." November rolls around, and I'm back in and active as ever.

WSB influencing my old ass, not so much. I don't have a YOLO stomach, I was burned bad by the housing bubble, I'm too close to retirement, and I'm not smart enough to take advantage.

My biggest problem is that the overheating euphoria saw me trading options on my index fund investments. In November, I'm like "this can't last forever." So my options on the vast portion of the my investments are getting dangerously close to me being forced to let someone else buy them meaning I don't get the money above the call price and I need to pay taxes on the gains of these indexes I have putting buy and hold money in to for the last 7+ years.

[Pyperkub]

Doubled down on PFE at $34.17 despite my earlier statement that I was exclusively building cash and putting it against VTI falling back in to the 190s to buy at 1 or 2 shares at a time... because I'm stupid.

I've had a long term PFE position, and it has not been one I'd put more money in (other than my DRIP). They haven't really replaced loss of exclusivity on Lipitor and Chantix just went off exclusivity as well. They also haven't gotten a vaccine bump.

[LordMortis]

Doubled down on PFE at $34.17 despite my earlier statement that I was exclusively building cash and putting it against VTI falling back in to the 190s to buy at 1 or 2 shares at a time... because I'm stupid.

I've had a long term PFE position, and it has not been one I'd put more money in (other than my DRIP). They haven't really replaced loss of exclusivity on Lipitor and Chantix just went off exclusivity as well. They also haven't gotten a vaccine bump.

I am not likely to triple down but I am likely to hold, which is my default for everything I buy.

[malchior]

Doubled down on PFE at $34.17 despite my earlier statement that I was exclusively building cash and putting it against VTI falling back in to the 190s to buy at 1 or 2 shares at a time... because I'm stupid.

I've had a long term PFE position, and it has not been one I'd put more money in (other than my DRIP). They haven't really replaced loss of exclusivity on Lipitor and Chantix just went off exclusivity as well. They also haven't gotten a vaccine bump.

I am not likely to triple down but I am likely to hold, which is my default for everything I buy.

This is where I am at. I have PFE. Most of that whole sector has traded sideways and underperformed the S&P in the last 4-5 years. They all pay a solid dividend in the same range. So either you basket them or pick one and stick with it. Either approach is probably good enough if it isn't part of some idiotic YOLO play.

[LordMortis]

GME +50% from it's mere $91.

SPX -2.4% because 10 year bond is now 1.6%?

[RunningMn9]

Definitely. I think the big money is just extracting their "tax" like a pro at a poker table of amateurs. I think the same goes for the 40 or so overheated stocks in the S&P 500. When you look at small and mid-cap stuff it is expensive but not "un-historically high". It is a very uneven 'irrational exuberance' to say the least.

When market bubbles pop, the damage has never been limited to the irrationally exuberant stocks/investments. There’s generally an awful lot of collateral damage.

But there’s no reason to keep belaboring this point.

[malchior]

Definitely. I think the big money is just extracting their "tax" like a pro at a poker table of amateurs. I think the same goes for the 40 or so overheated stocks in the S&P 500. When you look at small and mid-cap stuff it is expensive but not "un-historically high". It is a very uneven 'irrational exuberance' to say the least.

When market bubbles pop, the damage has never been limited to the irrationally exuberant stocks/investments. There’s generally an awful lot of collateral damage.

But there’s no reason to keep belaboring this point.

I wouldn't argue otherwise. I'm more talking about a way to look at it where it is more practical to think long-term and recognize it is better to not be in the stocks that are furthest from the mean on the high side (the stonks!? so speak). When the inevitable reversion to mean happens whether it a correction or a bubble or whatever, the excess will be wrung out and those who steered clear will see better trough to trough returns by staying in the middle of the distribution.

Anyway, I get where this comes from but I still think its not a great pattern match. The alignment with 2000 or 2008 is just not there. We are seeing much different problems. The pandemic caused abnormal business cycle and spending patterns domestically and in the business world. It's all different.

[raydude]

It's funny how simple returns that look amazing translate to something a little less so when you convert them to annualized returns.

For example, Amazon, which I bought in 2003. My online account shows a total gain of 14,559%, but that's a simple gain. When I run it through the calculations as shown here:
convert simple returns to annualized returns I get a 34% annualized return.

I'll still take it.

Using the annualized return calculator has also been helpful to see what my duds are. Like Akamai which has given me a lousy 4% annualized return for the past 14 years. So I sold it and bought 41 shares of Disney. Maybe the Mouse will give me better returns.

[LawBeefaroni]

So I sold it and bought 41 shares of Disney. Maybe the Mouse will give me better returns.

When they resume the dividend I'll start buying back in. Love the company but in this market I'm elsewhere.

[raydude]

So I sold it and bought 41 shares of Disney. Maybe the Mouse will give me better returns.

When they resume the dividend I'll start buying back in. Love the company but in this market I'm elsewhere.

Fair enough. I anticipate Disney re-enabling its dividend sometime this year and since I'm a non-timer I'm buying this while I have some free time to dump the laggards in my portfolio.

[xwraith]

*peeks at GME*

What's the line? Something like "the market can stay irrational longer than you can stay solvent"?

[LordMortis]

xwraith (and others)

You post about your strategies/actions that are well beyond my comprehension. So I'm hoping I have a simple question for you. What do you think of spreads when trading options? Specifically to me. I have some covered calls that I placed in starting in October. I thought I placed them obscenely high but I was wrong. So kept buying back and pushing out to higher level so as not not lose money while waiting for things to "normalize". I've been making small change and increasing the buy price at every step but now calls are out May to July, already deep ITM, and costly to buy back if I want to keep (and I do, if nothing else, because they are long positions and I don't want to have to buy back at a higher rate and hold until they become long again). I'm debating taking on more risk, to buy calls at higher price point in my covered call positions further out, taking on the risk of the market finally turning down, and then selling those calls before my existing covered calls approach maturity to help mitigate against this rate gain that defies what I thought I knew well enough before late December happened.

Help me understand risk I may be taking that I'm not smart enough to see until it's too late or talk to me about better options.

Did anyone predict VTI would be up 20% in four months since November and keep going?

Thanks all!

[xwraith]

xwraith (and others)
...
Help me understand risk I may be taking that I'm not smart enough to see until it's too late or talk to me about better options.

Thanks all!

It's a deep subject and I'm far from an expert -- have you seen some of the Tastytrade videos? They do a good job of explaining different option strategies of which spreads are one.

That said a good rule of thumb I've come across about covered calls is to only sell them on stock you don't mind being called away. I don't really worry about defending them to the upside much when I sell them. If the call gets exercised I should have made a profit -- always a good thing! Basically I almost think of it as an abstraction where the stock represent capital and the short call helps define an ROI for the amount of time I'm holding it. If I make a certain percentage over a month or so I'm doing well.

Other then that it's learning to read the Greeks and what they are signalling and figuring out how you want to trade.

I'm also trading options in a cash account -- no margin -- and I haven't done many spreads because I limit the capital I've allocated to option trading. I usually end up legging (ie buy the components one at a time) selling calls near a peak if I have the underlying and waiting for troughs to sell puts. Which works great in a Bull market... but not so much in other conditions.

With GME I've done a couple of things experimentally starting with a Bear put spread, and then transitioning to a kind of calendar spread selling shorter term puts to pay off the long put and reduce risk.

Hope this helps if a bit scattered and disorganized.

[LordMortis]

Thank you for the opinion.

have you seen some of the Tastytrade videos? They do a good job of explaining different option strategies of which spreads are one.

And now I have something to look for tonight.

That said a good rule of thumb I've come across about covered calls is to only sell them on stock you don't mind being called away.

Too late to do anything but learn form my mistake there. In Late/October early November, I thought I put in an insanely high price for stuff I wanted to keep and had no chance of going and convinced (or lied to) myself if it couldn't make 10% in a month I'd take my money and run. These are index ETFs I've been accumulating since 2014 and when the 10% up happened, I convinced (or lied to) myself I could just push it up and out and now I'm making even more money and this insanity can't last, rinse repeat until the buy back to hold price is out of touch and the making even more gets to be very very small ITM and further and further out of touch with the way these indexes are growing as well as further and further from the day I push.

So here I am looking at making a lot of money being taxes a lot of money that I was still growing because on sell calls on stock you don't mind being called away. I didn't picture irrational market being TO THE MOON and that if it got at least out of Earth's lower atmosphere that I'd be not wanting to sell.

If the call gets exercised I should have made a profit -- always a good thing!

I may have to convince myself of that but it's a lot of money (well, to me anyway), a lot of taxes and then I have to figure out what the lot of money that was nest egging in index funds.

I'm also trading options in a cash account -- no margin -- and I haven't done many spreads because I limit the capital I've allocated to option trading.

That's me. Spread might be the wrong word. I don't have the stomach for the kind of risk that would see me selling options on stock I don't own to cover movement on options I sold for stock I do own. That's two 3D Chess against people way smarter than me with way more resources and who treat the market as a game to take my money for me to warrant the risk.

I usually end up legging (ie buy the components one at a time) selling calls near a peak if I have the underlying and waiting for troughs to sell puts

I do not see the day where I touch puts. Again, too 3D Chess for me and the up vs down would make me ill.

[Zaxxon]

That said a good rule of thumb I've come across about covered calls is to only sell them on stock you don't mind being called away.

This is the first and last most-important thing about covered calls. Make peace with this rule before you ever consider dipping toes in (sorry, LM, I know it's too late for you). Sell the calls for a strike where you will be happy to have them called (or would have been happy at the time of call sale). Obviously your feeling may change if the price of the underlying stock skyrockets, but you would have sold at the strike price anyway, right? That's why you sold the call--to lock in some extra cash in case the price does not appreciate to meet your sell-time goal.

I've had shares of TSLA (for example) called away at prices that in retrospect I'd rather have not sold at. But I'm at peace with the decision, as there was no guarantee that the craziness that ensued would happen. I gots me my premium, and I gots me my sale proceeds.

Never, ever use covered calls to get 'free money' on shares that you do not actually want to sell at the strike price, especially in a taxable account where recovering is costly due to tax implications.

[Zaxxon]

I do not see the day where I touch puts. Again, too 3D Chess for me and the up vs down would make me ill.

For me, the only place I would use puts is to recover from a position I sold too early, or one where I want back in but not at today's prices.

To use TSLA as an example again, say I did sell a covered call, the shares did get called away, and I do wish I still had them. Now I've got the proceeds from the call, the proceeds from the sale, and a desire to have those shares back. On a volatile stock like TSLA, I could sell a put for the same price at which I had the shares called away (I have the cash to cover the put since I just sold the shares at that price), net some more option sale premium, and maybe get the shares back at the same price I sold them if the stock continues to whipsaw. Only I'd have netted the option premium from the sold call and now also the sold put.

Obviously this sort of scenario is impacted bigly in a taxable account where having the shares called away results in a hefty tax bill, impacting the strike at which you could sell an ensuing put without putting up additional cash to cover it.

[LordMortis]

Sell the calls for a strike where you will be happy to have them called (or would have been happy at the time of call sale)

And don't lie to yourself...

especially in a taxable account where recovering is costly due to tax implications.

This is where the lesson is really (yet to be) learned. I could probably make peace with going "OK all my ETF are gone at +50% cost. I made money. That's always good" but that's a lot of taxes and a lot of taxes that go from Long to Short if I reinvest, in addition to all the money above and beyond the strike price I set.

Every other covered call, it MONEY if it strikes. And I don't care Long or Short. The index ETF getting struck, striked, stricken... are a lesson in bad judgement I don't want to see come to fruition.

[LordMortis]

To use TSLA as an example again, say I did sell a covered call, the shares did get called away, and I do wish I still had them. Now I've got the proceeds from the call, the proceeds from the sale, and a desire to have those shares back. On a volatile stock like TSLA, I could sell a put for the same price at which I had the shares called away (I have the cash to cover the put since I just sold the shares at that price), net some more option sale premium, and maybe get the shares back at the same price I sold them if the stock continues to whipsaw. Only I'd have netted the option premium from the sold call and now also the sold put.

I read this is the voice of the teacher from Peanuts and go 'nope'.

[Zaxxon]

Probably wise. I myself only did that scenario once, because I don't like tying up that much cash.

[LawBeefaroni]

That's always good" but that's a lot of taxes and a lot of taxes that go from Long to Short if I reinvest, in addition to all the money above and beyond the strike price I set.

Don't let taxes guide your investment decisions unless you have a professional advisor that tells you otherwise. Prepare for any taxed income but don't let taxes handcuff your decision making.




Regarding covered calls, I recently sold some April covered calls on my UMC shares. Shares were around $10 when I sold and $20 calls were going for around $65. No brainer for me. My cost basis is around $4.50 (via exercised $2 calls, funny enough). If someone get them in April, fine with me. If not, I keep $65 per contract.

Don't fall in love with a stock. Or if you do, understand that you don't have to own it all the time.

[LordMortis]

Don't let taxes guide your investment decisions unless you have a professional advisor that tells you otherwise. Prepare for any taxed income but don't let taxes handcuff your decision making.

Really? Can you point me to somewhere that teaches me why this is the case? Taxes guide my decision making a lot. It changes the calculus of what I expect to make and when. As part of the cost of doing business, I but that in my risk tolerance when I am researching where I want to be and where I don't.

Don't fall in love with a stock. Or if you do, understand that you don't have to own it all the time.

I'm not sure how to learn that. I'm not in love with any of my positions but I am very attached to my broad index ETFs, something I really should taken to heart on November, when I decided I wasn't attached to any of these positions "in this market" I should be ecstatic that they're up 30% on four months form their October/November lows and I get most of that when the strike happens but I'm at the point where I realize so I'm sitting on 3 years living expenses in cash, that now needs to be taxed, and once I pay those taxes what do I do with it? I have no tolerance for risk above the indexes. Do I just buy back at inflated prices and consider the tax and missed growth the high (opportunity) cost of my education?

I'm looking for the best of a... good? situation and surely not by continuing down the path I was headed.

Everything else can go because more money is always good. I don't need the most money. But my index ETFs are my rocks. And I kicked them. Stupid.

[Zaxxon]

Don't let taxes guide your investment decisions unless you have a professional advisor that tells you otherwise. Prepare for any taxed income but don't let taxes handcuff your decision making.

Really? Can you point me to somewhere that teaches me why this is the case? Taxes guide my decision making a lot. It changes the calculus of what I expect to make and when. As part of the cost of doing business, I but that in my risk tolerance when I am researching where I want to be and where I don't.

You make what you make. Holding out on a bad investment (or an OK investment that you want to get out of because you have a 'better' one to get into) to avoid paying some taxes is rarely a good move. You may end up paying less taxes, because you brought in fewer gains (and the loss in gains is by definition always greater than the reduction in taxes, because uhh, that's how taxation works).

Now, holding until LT cap gains set in vs selling while it's a short-term holding is something that you would (or at least I do) consider. If the switchover from ST to LT is close. But your primary goal is to make a profit on your investments, not to minimize taxes.

If you have a giant tax bill from selling stocks that you're wanting to sell, that just means you have an even more giant-er pile of profits.

[coopasonic]

If you have a giant tax bill from selling stocks that you're wanting to sell, that just means you have an even more giant-er pile of profits.

Profits that hopefully you didn't invest in hookers and blow because you considered the tax implications of your decisions.

[Zaxxon]

If you have a giant tax bill from selling stocks that you're wanting to sell, that just means you have an even more giant-er pile of profits.

Profits that hopefully you didn't invest in hookers and blow because you considered the tax implications of your decisions.

We don't judge, coop.

At least, not out loud.