Tuesday, October 30, 2012

Benefits Of Deep In The Money Options

Regardless of what options you are buying, the deeper in the money the better. There are a couple of reasons why this is the case. One simple reason why is that  the time value attached to each option is lower for deeper in the money options. Another reason why is that it provides extra cover intrinsic value wise if the trade does not do what was planned.

Analysis of the recent trades at Trading Futures ETF Options blog has shown that one of the reasons for the sale of the option is due to its time value decay. Minimizing it by buying deeper in the money calls seems to be an appropriate action. Trades might be able to last longer and become more profitable if the time value did not decrease at such a high rate.

Wednesday, October 3, 2012

Who Gets Credit For Business Success?

There has been a debate recently as to who deserves credit for building a successful business. On one side, you have people who say the founders or the person in charge of the business is worthy of the accolades. The other side says the community as a whole deserves the credit. Even though both deserve much credit, each deserve a different type. In the paragraphs below, an attempt will be made to explain that it is the community that deserves the overall credit for building a successful business while at the same time very specific credit should go to the owner or person in charge. 

Have you ever been to a business dinner and heard the person in charge say:"This business' success could not have been done without your hard work!"? This pretty much is a clear admission that the success of the business does not lie with them alone. That is not to say that they do not deserve some form of credit. The founder of a business has ideas and a plan for a business. They find the initial materials, labor, partners, and customers to run the business. They provide the initial motivation for a successful business. But there comes a point where the idea and business responsibilities outgrow the abilities of a few human beings. Even when the person is still in charge, a successful business is still run in a way that far outweighs the individual's talents. There just isn't enough time for one person to run a successful business on their own. Some of the credit that should go (and normally does) to the owners are a proportional share of the financial rewards. They also are given credit for the idea of the business by being interviewed and shown in the press. Most individuals that are successful with a business idea and plan are looked to to comment or help on building other similar businesses. 

That brings us to the community, and how much credit it deserves for a successful business. To understand how important the community is in a business' life, some questions need to be answered. Does the company have other employees? Are there other shareholders? Have there been ideas proposed for the business that did not come from the owner? Did the company ever need financing? Does the company have customers? Do public service institutions help the business along the way? If the answer to these questions is yes, then you get the idea of how important the community is to a successful business. 

The reason that there are issues with where credit is deserved is due to the egos of the relevant parties. Some individuals that put so much of their lives into an idea but doesn't get full credit sometimes get hurt. Some communities also need to understand that without the appropriate credit given to the individual, ideas do not end up being realized. There needs to be a mix so that the most important thing happens; making the idea come to fruition. 

There are many impactful parts to a successful business. Credit is to be shown to all in different styles and measures. A successful business cannot be successful without both the individual and the community. Many good ideas have not taken off due to the lack of credit given to either the individual or the community. Let's make sure that as individuals we accept acknowledge the community's help in bringing success to the idea. As well, we as a community need to recognize how courageous and awesome people who stick their necks out in presenting and planning a successful business really are. 

Friday, September 28, 2012

Usine Different Charts For Trade Support

Some of the success in trading for Sell The Call and Trading Futures ETF Options has been because the analysis includes multiple charts from multiple time frames. Looking at charts in both the short term and the long term to support a trade has been instrumental in trading success.

For example, Trading Futures ETF Options recently made profitable short term options trades in USO, PIN, IAU, and FXC. Both short-term charts as well as long term charts were used in determining if the trade should be made. Daily charts as well as weekly charts were used. Using the longer term charts gives support for the short term. Looking at longer term charts has also kept Sell The Call and Trading Futures ETF Options from making a bad trade.

Please look at multiple charts when using charts to determine whether or not a trade is acceptable. It should assist in not only making a profit on a trade, but could keep you from making a bad trade.


Monday, August 6, 2012

The Case For Refinancing (For The Banks Too)

It would be great if the housing market could find a spark. What is out there that can move the market?

Time To Release The Refinancing Hounds

Could refinancing be the spark needed to get the housing market and the general economy moving again? The case for this has to be made. Here are some reasons why in the medium to long term, it should help everyone involved in the cycle:

-          Homeowners – There are many homeowners that have proven their worth by still paying on mortgages.

-          Businesses – Everything connected to housing would benefit from this type of move. Builders would see more activity. Local governments could start seeing higher tax revenue. Families could start living in their own homes.   

-          Banks – Most homeowners have shown that even though they will not be able to refinance their loans, they have not walked out on them.  The ones that couldn’t are already out of the system. The banks should take advantage of this loyalty. The amount of money received right away from the fees will at this point outweigh the loss of revenue over the next 25 years. Some banks that are not as tied to trading for profits as others could use this to boost current period revenue.

The How To Plan

-          First, target all homeowners that are consistent with their payments and are within a certain percentage (maybe 2-5) of the current requirements for refinancing.

-          Offer them a standard refi program with a penalty fee worth the thirty year Net Present Value of the reduced value of the home. 

-          Another option is to attach an annual fee to the mortgage if the Net Present Value of the reduced value is too high.   

Monday, April 30, 2012

Income Gap Hindering Trading Volumes

Recently, there has been a decent amount of coverage on the lack of volume within the trading markets. The consensus theory is that there is a lot of money sitting on the sidelines waiting for the right moment to invest. The conversation also suggests that the money is not yet invested because there is a lack of regulation direction. That probably is correct. But does the income gap have a part in this equation?

The fact that the rich have more to invest in the stock market and don't even while balance sheets and profits have never been better should be an indication that something is amiss. The extra money being made by the rich is going into safer instruments (i.e. bonds) than stocks because the money doesn't need to be invested at a level of risk normally associated with equities. Combine this with a growing number of families that lack the income to invest, and you might have lower volumes.

Having a lower volume right now is not good. But when the rich don't need to and the rest can't, what else is supposed to happen?

Saturday, April 28, 2012

Investor vs. Labor Part II - Who are the investors?

This is part II of a series being done on the topic of Investor vs. Labor. Part 1 of the series introduced the topic and can be found here. This post will focus primarily on how labor is a large part of the investing community. You may have heard your company's CEO make a statement such as "We are trying to maximize shareholder value." That is one of the most popular statements made by CEO's today. But that begs the question "Who are your shareholders?". The answer might surprise you.

The largest shareholders of Fortune 500 companies outside of company executives tend to be retirement funds representing the country's labor force. If you are to look at the largest retirement funds that regularly invest their money, you will find most are workers pension funds or mutual funds that are packed with retirement dollars. If you research most Hedge Funds, you will find the bulk of their capital comes from workers retirement packages also. Union pension fund investments into the stock market are in the billions each year. If you go to MSN Money, you can type in a stock and see that clearly worker retirement funds are the major investor in the stock.  

Workers with blue collar salaries depend on the stock market for their retirement more than white collar executives because they have to. White collar salaried workers are able to take risk off the table and invest in safer instruments due to their higher salary. Blue collar workers do not have that luxury.

When a CEO makes that statement " We are trying to maximize shareholder value.", make sure it isn't preceded or followed by the statement "That is why we keep worker costs down.". If it is, he or she needs to find out who the company's shareholders actually are.

Thursday, April 26, 2012

Silicon Valley The New VC Capital?

How powerful is Silicon Valley becoming in the financial industry? By the looks of VC firms Google Ventures and Andreesen Horowitz, Kleiner Perkins, Sequoia Capital, and others, the verdict is at the very least becoming stronger. There is a Fast Company article posted here that discusses Google Ventures and how models of finance are changing.  New York finally has some competition when it comes to financing deals.

Tuesday, April 24, 2012

Investor vs. Labor

There is a big elephant in the economic room right now. It is the topic of finding a good return for investors while demanding a livable wage for workers. Finding a general middle ground on this issue is going to be paramount if the global economy is going to run smoothly. One optimistic view is that there are many in the global economy that are on both sides of the issue. It is this group that are both workers and are also investors that can lead the economy into both a prosperous and livable wage earning future.

Future posts will focus on how different entities are affecting this process. They include corporations, labor groups, lobbyists for both corporations and labor groups, the financial industry, government, and retirement plans. If there are any other groups not mentioned in this post or future posts, please feel free to comment.

This thread hopefully will get the conversation moving in a direction that allows for a decent return on investments as well as a livable wage for all who participate in this economy.  

Monday, April 9, 2012

New Deals (Micosoft/AOL, Facebook/Instagram)

The deal market might be sparked to move with Facebook buying Instagram. See the New York Times story here. Instagram is barely three years old. But its competitive advantages in the photo sharing area was just too much for Facebook.

Also, Microsoft paid over one billion dollars for some of AOL's patents. Read the New York Times story here. This deal is a reminder of how important intellectual property can be when running a business.

As there haven't been many deals lately, this might get the money moving a little bit. Balance sheets are full of cash and there needs to be something done with the cash.

Friday, January 6, 2012

Pension fund Blacklists Walmart

The following Huffingtonpost article reports that there is a Dutch pension fund that is blacklisting Walmart from its investments. The power of the pension is now starting to be seen and felt.

Thursday, January 5, 2012

Pepsi laying off employees to please investors

There was a story from Reuters regarding Pepsi cutting 4000 jobs along with making cuts to the company's pension and 401K programs. The reason given is to be able to save their earnings numbers.

This is exactly the kind of short sightedness that get corporations into bigger trouble. Most companies that let Wall Street analysts dictate their business plans by making sure the earnings numbers come first need new management.

In this particular case, there is wonderment over the economic cost benefit analysis over layoffs versus management bonus' being decreased. It is surprising that Pepsi can feel that cutting pension and 401K matching programs to employees that need them works out better than cutting the enormous bonus packages that are relatively not needed to top executives. This action should show that Pepsi is not deserving of pension investment dollars.