Thursday, February 28, 2013

MONEY: blogger re-habilitation challenge

This post I'm hoping with your help (the PF blogging community) will help me (and my family).

What do we want to accomplish?

Well, for pretty much my entire adult life, (aside from my early 20s) I've been in a constant state of denial.  Almost never going for food or drinks, not once taking a real vacation anywhere, and not pretty much not living. So I guess I'm really trying to live a little.

I've been feeling down in the dumps lately.  Partly because the professional situation for me has been dismal as of late.  I've pretty much recorded several of my worst months on record for lack of professional income.

Mind you, I've managed to INCREASE my net-worth during MOST of those months, in spite of my complete lack of gigs.

This will be the first month in the past 6 where my net worth hasn't increased.

So did I mess up?  No, not really.  I did have to buy some forced upgrades as my computer died, and I really do need one to stay in business.  And sadly, no $400 laptop will fill my need.  I need something with enough oompf to be able to handle the TBs of data required.  So I would up spending $1200 for a new NAS (9TB data backup box) and $4500 on the computer.  With any luck, I'll be able to upgrade every 3 years.  Without a computer this beefy I wouldn't be able to deliver any content.  I could still manage my music gigs, but they have been few and far between lately.

So I can hear you shaking your heads...  I have no income, my cash-flow is horribly in the red, my debts have been forced up because of the new computer purchase and here I am talking about vacationing.

So I need suggestions folks... How can I feel better?  I currently feel like crap.  I suspect part of my problem is feeling useless and that 25 years of meticulous training and experience is for naught.

At the same time, I'm providing for my family while (save this month and next) increasing my net worth month after month.

So, what should I do?  HELP!

Monday, February 18, 2013

MONEY: Lets get NAKED!

So, for those of you who have no freakin' clue as to what I mean when I say I'm "writing naked puts."  Then I suppose you could go look it up for yourself. If you're lazy then look no further:

If you read that and are confused I don't blame you  It takes a bit of time to wrap your head around the what, how, why, and who.  (Don't ask who... it won't help you)

So I'm going to boil it down for you in as basic terms as is possible!

The simplest way of looking at PUTS is to think of it as an insurance policy...  An insurance policy for your stocks.  There are those who buy the insurance and there are those who are selling it.

The "strike price" is the price at which your PUT gets triggered.  (ASSIGNED)

The "premium" is how much money is required to either buy or sell this "insurance".

The "expiry" is the date at which this contract will cease to exist.

So, say you purchased shares in company "XYZ" (this is not a real company) for $10 a share.  You liked everything about them, but you have doubts about their future performance because of a panoply of reasons.

You can BUY a PUT option to "insure" your holdings.  So if the stock explodes before your "insurance" has expired then you can PUT your shares to the sucker who sold you the contract for the STRIKE price.  (Minus trading commissions and the assignment fee)

If the stock doesn't explode or just goes sideways never falling to the strike price before the expiry date then what happens?  The contract expires and that's it.  You paid for your insurance and didn't need it.  Your premium went to the person who sold you the PUT.

So... if you're the person SELLING the PUT, then you keep the premium and walk away.  So lets review:  The stock goes up - the option expires, the seller walks away with profit.  The stock goes sideways and again, the seller keeps the premium.  If the stock goes down but doesn't hit the strike, then again the seller keeps the premium.  But if the stock tanks, then the seller is responsible for surrendering the agreed price (the strike price) in exchange for the shares.

Now if you look at an "options table" you'll see it's a bit confusing at first, but you will see the list of strike prices and then the "contract price" (both a bid and an ask).  The numbers are somewhat confusing as they are expressed per share rather than per-contract.  So a contract with a value of $1.00 will cost $100 as each contract represents 100 shares.

The values of these contracts ERRODE over time as a large component of their value is determined by the perceived risk of the underlying position AND how long you're exposed to it.  So the greater amount of time before expiry, the larger the perceived risk and thus the greater the premium.

I hope this helps! 

Stay HUNGRY my friends!

MONEY: Option update Feb 18th.

Family day... My family is sleeping so I'm writing an update!

So what did I do?  Take the money and run?  No... I got greedy.

I got called away as I had expected, but then I almost immediately re-purchased the position and wrote a new call based on my parameters.

But fundamentally my strategy had changed.  I have been trying too hard to hold on to the underlying position.  As I've been closing out my call positions and not letting them ride.

I did make a few bucks when I decided to close out.  And as it turns out, that was the right thing to do anyway.  The underlying position shot up 4% the day after I closed my call.  So more potential profit in my pocket.

So... along comes Friday.  Family day weekend and some holiday I have forgotten to look up in the US too which keeps all North American markets closed.  So I closed out ALL my US ETF positions.

They had done so well for so many weeks in a row on their own.

Seconds after I got order-fill notifications, I got an e-mail from my brokerage saying they had finally processed my option-upgrade form so starting this week I'll be able to trade "naked puts."

This when used as I'm planning to drastically reduces my risk exposure.  Using them as I have planned the market can go up and I'll make money.  The market can go sideways and I'll make money.  The market can go DOWN up to 5% (in a month) and I'LL STILL make money!

If the market goes down more than 5% in my 1-3 week time-frame then I will be out of pocket, but I can control how much I'm out by closing out my positions quickly as soon as they go under water.

I'll keep you posted!

Stay hungry my friends!

Thursday, February 14, 2013


Fowl stuffing.  An old family recipe:

675g loaf of STALE french bread
2 tsp ground sage
2 tsp dried leaf thyme
1 tsp salt
1/2 tsp dried marjoram
1/4 cup butter
2 onions, finely chopped
1 tart apple, peeled and finely chopped
1 pear, peeled and coarsely chopped
4 whole green onions thinly sliced
3 celery stalks (with the leaves) chopped
1/3 cup golden raisins
1/4 cup slivered salmons (optional... for those with nut allergies)

preheat oven to 350F.  Remove crusts from the loaf and cut into 1cm cubes
spread evenly over a cookie sheet and toast gently in the oven.  (10 minutes)
You should have about 4 cups of toasted bread chunks.  Once removed from oven, pour into a LARGE mixing bowl and sprinkle all the dry seasonings over the bread.

In a skillet, melt the butter and sweat down the onions until they soften.  Once they are soft (about 10 minutes) pour the resulting mixture over the bread and mix well.  (I use my hands to toss it)

Ad the rest of the ingredients and continue to toss until the toasted bread starts to moisten.

Store in a zip-lock back in the fridge until ready to stuff your fowl.

YIELD: enough for a 7-9 kg turkey or two 2-4kg ducks or chickens.

Stuff the bird just before roasting.  Cram it in!  If you can't fit it all in the bird, put the reminder in foil and put it in the oven for the last hour of roasting.  This can be served to guests as the lower-fat stuffing.