I bought 1600 Delcath (DCTH) for the Port this morning at $10.21. I turned around and sold 10 March 2011 $11 calls against them for $1 each. That leaves me 600 extra shares to sell calls later. I suspect once the FDA formally accepts their recent NDA the share price will tack on an extra $1 or two, and I will sell calls against those extra 600 shares at that time.
I still have $24,363.91 in cash so I'm still looking up and down the aisles right now. Although I have some stocks in mind nothing is terribly cheap in my mind right now, so I'll try to be patient.
Happy New Year!
Regards,
Trond
Thursday, December 30, 2010
Thursday, December 23, 2010
Port24 update and Happy Holidays!
December options expiration was last Friday, and based on the closing prices, I had ALTH and NBIX called away from me.
I now have something like $39K available to buy more stock – look for a post next week to utilize these funds.
Merry Christmas and happy holidays to all!
Regards,
Trond
I now have something like $39K available to buy more stock – look for a post next week to utilize these funds.
Merry Christmas and happy holidays to all!
Regards,
Trond
Tuesday, December 14, 2010
Macro thoughts - Denninger on profit margins
Karl Denninger writes a blog called the Market Ticker. He is quite a bear recently on the economy as-a-whole, as well as a believer in "The Bezzle" - a theory where he says the government is basically lying its butt off regarding how bad off things are, in order to 1) keep peace and 2) keep things the way they are. Without delving too much in the bezzle, I'll simply say he pulls in some good data to support his positions; he's a muckraker in the style of ZeroHedge.
This post quite convincingly argues that profit margins in Q4 will NOT be as good as projected.
http://market-ticker.org/akcs-www?post=174922
...
The two "gotchas" in here are gasoline, which has had gross sales down even though gas prices are up, and dining and drinking, which were down despite the holiday season during the Black Friday weekend when they should have been up due to all the people shopping.
The problem remains cost-push. I've noted that restaurants have been sneakily-increasing prices. They're pulling add-ons into ala-carte (e.g. sides that used to be included with the main course) and ratcheting up prices a bit. Gasoline has been on a tear comparatively, yet gross spend on gasoline is down. This strongly implies that we've reached the point where price influences behavior.
The PPI was also out this morning and confirmed:
The Producer Price Index for Finished Goods rose 0.8 percent in November, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This increase followed a 0.4-percent advance in both October and September. At the earlier stages of processing, prices received by manufacturers of intermediate goods climbed 1.1 percent in November, and the crude goods index moved up 0.6 percent.
Great. More than 9% annualized. But there is no inflation, right?
And where is it? Food and energy, as I've been talking about.
...[graph]
That's nice. Now extend that 1% monthly change in foods out a year. More-importantly, look at the prices in energy - straight up since August. That's all about The Fed and it's BS QE2 games.
Worse is the crude goods price change less food and energy - core:
...[graph]
These changes are ridiculous on a 12-month basis. Ex-food and energy they're even worse, as there have been some substantial negative numbers there. I have discussed the problem with these input costs extensively - there is no pricing power to pass them through the chain of production, as is shown by the much lower escalation in intermediate goods.
This means margin collapse folks.
Betting that it won't show up in final profit numbers is flat-out insane.
These costs have to show up somewhere. If you can't pass through costs to the consumer then you have to eat it, and ultimately this results in margin - and profit - collapse.
This post quite convincingly argues that profit margins in Q4 will NOT be as good as projected.
http://market-ticker.org/akcs-www?post=174922
...
The two "gotchas" in here are gasoline, which has had gross sales down even though gas prices are up, and dining and drinking, which were down despite the holiday season during the Black Friday weekend when they should have been up due to all the people shopping.
The problem remains cost-push. I've noted that restaurants have been sneakily-increasing prices. They're pulling add-ons into ala-carte (e.g. sides that used to be included with the main course) and ratcheting up prices a bit. Gasoline has been on a tear comparatively, yet gross spend on gasoline is down. This strongly implies that we've reached the point where price influences behavior.
The PPI was also out this morning and confirmed:
The Producer Price Index for Finished Goods rose 0.8 percent in November, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This increase followed a 0.4-percent advance in both October and September. At the earlier stages of processing, prices received by manufacturers of intermediate goods climbed 1.1 percent in November, and the crude goods index moved up 0.6 percent.
Great. More than 9% annualized. But there is no inflation, right?
And where is it? Food and energy, as I've been talking about.
...[graph]
That's nice. Now extend that 1% monthly change in foods out a year. More-importantly, look at the prices in energy - straight up since August. That's all about The Fed and it's BS QE2 games.
Worse is the crude goods price change less food and energy - core:
...[graph]
These changes are ridiculous on a 12-month basis. Ex-food and energy they're even worse, as there have been some substantial negative numbers there. I have discussed the problem with these input costs extensively - there is no pricing power to pass them through the chain of production, as is shown by the much lower escalation in intermediate goods.
This means margin collapse folks.
Betting that it won't show up in final profit numbers is flat-out insane.
These costs have to show up somewhere. If you can't pass through costs to the consumer then you have to eat it, and ultimately this results in margin - and profit - collapse.
Monday, December 13, 2010
Musical Chairs in your Portfolio
I think everyone should think long and hard about what they will do in their accounts if we do see a nasty market downturn. And keep in mind, it may not necessarily be "sell and wait it out" OR "hold everything and wait it out".
Remember that most of the stocks I'm into here are VERY high beta. That means whatever the "normal" market return is, my returns are at a higher multiple. If and when the markets are doing well, say a 1% return on the day, I may see a 1.5 to a 2% return. However, when the market goes down 15%, what is the Portfolio 24 going to do?
I personally have to really think about this because I do not have any new cash going into my accounts. When I want to buy something, I have to sell something else first. And when everything is "on sale" (i.e. going to crap) everything I want to sell has already gone down, too.
I am looking at the general market .... shrugging off everything from wars to state secret leaks, to Mastercard getting hacked and hedge funds liquidating, to tax breaks being maintained in the face of nearly unsurmountable deficits, to North Korea making waves, to Christmas spending being crazy in the light of our unemployment.... and ask "when the music is going to stop"?
Make sure you have a chair, is all I'm saying.
Regards,
Trond
Remember that most of the stocks I'm into here are VERY high beta. That means whatever the "normal" market return is, my returns are at a higher multiple. If and when the markets are doing well, say a 1% return on the day, I may see a 1.5 to a 2% return. However, when the market goes down 15%, what is the Portfolio 24 going to do?
I personally have to really think about this because I do not have any new cash going into my accounts. When I want to buy something, I have to sell something else first. And when everything is "on sale" (i.e. going to crap) everything I want to sell has already gone down, too.
I am looking at the general market .... shrugging off everything from wars to state secret leaks, to Mastercard getting hacked and hedge funds liquidating, to tax breaks being maintained in the face of nearly unsurmountable deficits, to North Korea making waves, to Christmas spending being crazy in the light of our unemployment.... and ask "when the music is going to stop"?
Make sure you have a chair, is all I'm saying.
Regards,
Trond
Monday, December 6, 2010
Port 24 overhaul
Well, just like you need to monitor a mutual fund for "style drift", I am looking at the Port 24 with a hard eye today.
Not only have I drifted from my intended methodology (buy and sell covered calls for income) but I have neglected the actual portfolio quite shockingly in the last two years. I still have nearly a 10% annualized return (vs.4.3% on the Nasdaq and -3.3% on the S&P) but that is nowhere near what I intend.
So, I have sold CLSN, VICL, PZG, and MNKD today at 2.70, 1.80, 1.80, and 6.55 respectively. Either they are too low for decent covered call premium (VICL), or are too close or too far from their PDUFA dates (MNKD, CLSN), or don't offer options (PZG).
I bought 600 CLDA at $17.78 and sold 6 Jan11 $17.50s for $2.10 each.
Also, 2500 ALTH at $4, selling the December $4s for $0.20.
Bought 7000 each of NNVC and LXRX at $1.34 and $1.39 respectively. This is slightly a style drift in that they do not offer options, but at these values I want some, akin to my PZG buy, which worked out quite nicely.
I also sold options on the following:
DNDN, 4 Jan11 $41s at $1.01
ELN, 16 Jan 11 $6 at $0.25
20 NBIX Dec10 $8s at $0.20
25 SGMO Jan11 $6s at $0.30
and 70 ONTY, Jan11 $4 at $0.25.
This leads me to the following Port (still with $13,761.42 in cash)
2000 NBIX (20)
1600 ELN (16)
400 DNDN (4)
2500 SGMO (25)
600 CLDA (6)
7000 NNVC (0)
7000 LXRX (0)
2500 ALTH (25)
7000 ONTY (70)
With the cash raised from the covered calls, this brings me to a 30.5% return, or 11.9% annualized.
Regards,
Trond
Not only have I drifted from my intended methodology (buy and sell covered calls for income) but I have neglected the actual portfolio quite shockingly in the last two years. I still have nearly a 10% annualized return (vs.4.3% on the Nasdaq and -3.3% on the S&P) but that is nowhere near what I intend.
So, I have sold CLSN, VICL, PZG, and MNKD today at 2.70, 1.80, 1.80, and 6.55 respectively. Either they are too low for decent covered call premium (VICL), or are too close or too far from their PDUFA dates (MNKD, CLSN), or don't offer options (PZG).
I bought 600 CLDA at $17.78 and sold 6 Jan11 $17.50s for $2.10 each.
Also, 2500 ALTH at $4, selling the December $4s for $0.20.
Bought 7000 each of NNVC and LXRX at $1.34 and $1.39 respectively. This is slightly a style drift in that they do not offer options, but at these values I want some, akin to my PZG buy, which worked out quite nicely.
I also sold options on the following:
DNDN, 4 Jan11 $41s at $1.01
ELN, 16 Jan 11 $6 at $0.25
20 NBIX Dec10 $8s at $0.20
25 SGMO Jan11 $6s at $0.30
and 70 ONTY, Jan11 $4 at $0.25.
This leads me to the following Port (still with $13,761.42 in cash)
2000 NBIX (20)
1600 ELN (16)
400 DNDN (4)
2500 SGMO (25)
600 CLDA (6)
7000 NNVC (0)
7000 LXRX (0)
2500 ALTH (25)
7000 ONTY (70)
With the cash raised from the covered calls, this brings me to a 30.5% return, or 11.9% annualized.
Regards,
Trond
Subscribe to:
Posts (Atom)
