BOOM……!!!

Something very significant has happened that has caused MICRON to ask for an emergency continuance of the At Trial.

THE PROBLEM… We don’t yet know what the hell it is.  Rereading many posts that are being reviewed at Investor’s Village RMBS Message Board… most seem to think that either Samsung & Hynix have settled… OR, MICRON wants to settle first…

Everybody up early tomorrow… The BIG show starts tonight or tomorrow morning.

YIKES……!!!

Coach BD

VIX

Though the VIX has gone almost nowhere since we picked it up, we have collected ( cash settlement ) roughly $2.20/Contract in Short premium, all settled in cash through JUN Expiration.

We have a significant amount of additional Short Premium that is potentially 100% collectible after next week’s Expiration.  Roughly another $.80/Contract with a VIX Expiration @ $30 or Lower.

That would have then shaved almost $3.00/Contract off of our Long OCT Calls that we purchased for $8.00/Contract… currently priced @ ~ $7.75/Contract.

Our VIX LT Portfolio Hedges are working nicely once again.  Our VIX positions last year were one of our most profitable positions.

Anyone who would like to learn to trade the VIX as an excellent portfolio hedge please drop me a note.  The VIX trading vehicle is the most dynamic instruments I have found to protect us against the kind of quick, sharp market corrections that we have experienced over the past 12 - 18 Months.

Coach BD

It appears we may have an honest to goodness sustainable uptrend in place here… just in time for summer. While that is usually not “good” news, perhaps this time will be different…

OR, maybe we are seeing the beginnings of another “stealth” rally like the one that began without much fanfare in the summer of 2006 and just kept going UP until those OCT 2007 highs, just before the Big Bear Rollover…

For now, we like this steady action. The NAZ is leading the way strongly, having pierced its 200-Day MA with a nice companion, bull-crosses from the 20 & 40-Day MA’s and within a few days we should also see the 50-Day crossover the 200-Day MA as well.  The NAZ also broke out above its 50-Week MA, opening above it yesterday. This would be a very good sign if the NAZ can keep up this breakout strength through this week.

The S&P is also in good shape and if the NAZ stays strong, the S&P may come along for the ride.  Only the DOW is lagging as it is struggling to breakout above its 200-Day MA.  This could be a key battle for the continuation of this nice, steady rally that has been grinding upward for about 13 weeks now.

If the DOW does manage to BO above its 200-Day MA we will turn to a more aggressive approach on all of our New Entries and Add-Ons, Long Term and Short Term.  Our current position technicals, and most of our Watchlist stocks, are looking very good right now for either.

We may have a nice steady summer rally… wouldn’t that be nice…  Have your dry powder ready everyone, this may be a very fun summer trading season…

Coach BD 

VIX

Time to open new LT Long Portfolio Hedges using our favorite vehicle… the VIX.

We are evaluating the appropriate strikes now and may open an initial position at the close, or we may wait until tomorrow morning.

Will update in a few minutes.

*

3:55 PM Update…

BOUGHT - OCT 25 CALLS @ $7.90 (Debit)

SOLD SHORT (60%) - JUN 35 CALLS @ $1.30 (Credit)

SOLD SHORT (40%) - JUN 32.50 CALLS @ $1.90 (Credit)

We will continue our strategy that was very successful last year of selling premium against our LT VIX Calls, plus adding as appropriate when ST ITM premium gets skewed to the negative with the OTM premium in the positive.  More discussion on this later…

Coach BD

We will begin the process of routine rollouts and adjustments for all of our ST Income Trades and Hedges tomorrow.

We waited a bit longer this cycle just due the fact that we have been waiting to see if this rally can be sustained.  The NAZ has been leading the way… however… the NAZ has now failed to break back above its 200-Day MA for four (4) straight sessions, after a weak BO above it a week ago last Monday.  The NAZ is still holding above its 40-Week MA, which appears to providing support.

Neither the DOW or the S&P have yet to mount any serious challenge to their respective 200-Day MA’s, or to their 40-Week MA’s, though the S&P is now very close but failed to break above it yesterday or today.

Looks like caution is still the watch-word as we approach expiration Friday.

Coach BD 

We are executing routine adjustments and roll-outs of our short income positions from April to May as prices dictate.

We will review all of our adjustments after the close and give you our outlook based on this last hour of today’s trading.

Coach BD

Goodbye February…!!!

Unfortunately this week most decidedly did NOT end on a good note.  The DOW closed the week at its lowest level since OCT 1997…!!!  The S&P closed at its lowest level since APR 1997…!!!  And while the NAZ is not yet getting too close to its NOV 2002 lows, if we see more weakness in the weeks to follow I would imagine those lows will fall like a knife through soft butter.

Most discouraging however was that the DOW accelerated in volume as it passed below its recent lows to the tune of more than 50% over last week and was the highest volume clear down week since the week of OCT 6th…  OUCH…!!! 

It is very ugly out there folks, and where things stand right now, these markets could plunge at any time.  Hopefully this would be the kind of huge panic sell-off that could set the stage for a reliable reversal bottom.  It’s certainly no time to get trigger happy feeling like things can’t get worse.  They can.

So keep your powder dry and wait it out.  We may be nearing the big event we have all been expecting for quite some time.  On any LT Long positions in your portfolios, keep them tightly hedged at or near Neutral… at the very least.  Look at your trends, if some of your winners, like IDCC for example, look like they are rolling over, like IDCC does, tighten up, buy some Puts and manage your LT position as an Income generating trade rather than a LT appreciation trade until the signs, and the trends, turn upward once again.

Patience and Risk Management are the keys for the current conditions.  There aren’t any heroes out there right now, but there is a whole lot of scared BIG MONEY.

Well… there may be one or two heroes out there…  Pretty much everything appears to be going RMBS’s way these days and we could see Settlements and/or Compulsory License Terms from Judge Whyte over the next couple of weeks.  He ordered a final settlement opportunity for RMBS and Hynix on MAR 4th which will take place in Seoul, and he wants to see a settlement on the 9th (I believe).  Otherwise, he will impose the Compulsory Rates on Hynix for all of the newest memory technologies, based on expert testimony heard during the trial, which was fairly compelling for a larger rate (9 - 12%) for the newer memory architectures.  There are a wide berth of opinions, but it appears to be somewhere between 4.25% - 11%… but like everything RMBS, you never know.

Have a great weekend.

Coach BD 

Over the past few days we made several routine adjustments to our remaining LT Long Positions that we decided to holdover through 2009, and in some cases through 2010.

We will publish those over the weekend and update all of the Trade Grids with all of the current positions.

*

RMBS

Primarily we have been concentrating on RMBS, which currently is the only real trading opportunity out there while this downturn continues.

We SOLD all of our ITM ST Hedges on RMBS for profits or BE, save the Spec Call Trades that we purchased on a possible decision by Judge Whyte after Wednesday’s Hearing.  All in all we did very well with the Spec Bear Attack Trades and subsequent hegdes to the upside.

The 7.50/9 Call Spreads we entered yesterday @ $.75 as RMBS made it’s midday reversal were SOLD today for near full value @ $1.45+

We believe it is again another excellent opportunity to make LT Add-Ons or New Entries into RMBS at these levels because Judge Whyte certainly seemed to tip his hand about the upcoming cases and that the Delaware Ruling would have minimal effect on everyone, save perhaps Micron… who is probably going out of business anyway.

From the eyewitness reports, he appeared to be surprised by the ruling but acknowledged that it did have an impact on at least Micron, and scheduled briefs for the end of this month.  He also appeared to make clear that Micron or no Micron, the remaining trials would move forward beginning in Mid-February.  This is very good news indeed.  He delayed for just one week to be briefed on the MM’s arguments about the Delaware decision but seemed to indicate he was moving forward regardless.

Many took that to mean, settle this thing or suffer the consequences.  He appears to want to complete ALL of the trials before him and then send all of the decisions to the CAFC (FED Appeals Court) to be considered together, rather than piecemeal as the Manufacturers would prefer, allowing them to continue their delay tactics for as long as possible.

It doesn’t sound like he’s buying into that delay crap anymore.  More than ever, it appears that all roads lead to RMBS.

Coach BD

Happy New Year…

To all of our incredible Trade Coach Members.  Through one of the most turbulent market years in history we hope you have found true value in our service and approach toward investment and trading education and the critical importance of risk management.

Early next week we will review our performance in detail to highlight the result of effective risk management and the importance of managed hedge trading in markets such as the one we encountered over this past year.

It appears that the trading portfolio we published during this first year will be UP in the neighborhood of 11% vs an overall market decline of between 30 - 40%, with extreme volatility of historical proportions.

One of primary goals for this year was to illustrate clearly that in good markets or bad, protection strategies and managed hedging techniques can indeed keep all investors afloat, and even profitable, during even the worst of market conditions, which we clearly witnessed during 2008.

We are very excited about the prospects in 2009 and feel there are some incredible opportunities to capitalize on what has happened this past year and produce some really exciting results.  Stay tuned for many changes and opportunities that are emerging both in our service and in our portfolios.

We hope everyone has happy and healthy end to 2008, and that your success will be greatly enhanced by the work and education that we have begun over this past year.

Thanks to all of you for your support and belief in the educational principles that we believe are the foundation for all successes in investing and trading endeavors.

Coach BD  

LDK Solar

Below is a discussion on a LT Straddle Strategy based on an inquiry from JoeF.

Coach BD

continue reading "Strategy Discussion - LDK LT Straddle"