Beating Buy and Hold (thru disciplined speculation)

[drbubb]

More trades... with SLV at $39.29:

 

SOLD Jan$27c at $12.75 x 1,000 (Alt.P#1)

BOT: Oct$38c at $ 2.87 x 1,000 (Alt.P#1)

BOT: Oct$38c at $ 2.87 x 1,000 (Alt.P#2)

 

This brings AltP#2 back up to 10,000 Long (AG-oz and/or SLV-shs)

and leaves AltP#1 at 8,000 Long (AG-oz and/or SLV-shs)*

=== ===

 

I expect further falls in SLV,

But I do not want to deviate for long from my 10,000 long target, and I fell below that when I sold the Sep$34calls (x2,000). I consider Alt.P#2 the "lower risk" portfolio, so I do not want to stay below 10,000 for more than a day or two, and will run at 8,000 Long in Alt.P#1 a few days longer.

 

The best thing for Outperformance would be a steep fall in SLV. Although that

might leave the Oct.$38 calls with little or no value, it would allow me to buy

lower strike calls (or SLV or AG) at lower prices.

 

Let's see if that "window of opportunity" opens within the next 3-4 weeks

 

== ==

*(apologies for an earlier miscounting on the Sep$34c trade)

[drbubb]

With SLV at $40.05...

 

BUY order in on ZSL Sep.$10 calls : BOT at $1.80 (x 3,000)

SOLD: this "newer" position at $2.35 - they expire tomorrow !

 

I still have the "old" position (from $1.15) to unload

 

In edit:

Remaining ZSL $10 Calls sold at $2.50 - perhaps "too early"

(But I more than doubled my money from $1.15.)

 

Note: these ZSL trades are all real trades BTW.

I may have rushed the exit, but the calls do expire tomorrow

 

In edit:

SLV now at: $38.579 / $-1.021 / % Change -2.58%

 

SLV-Jan.$36Calls are: 5.25 - 5.35 ... considering these for AP#1

 

These Jan calls would be a good hold for several months, allowing me to trade more,

in and out, while worrying less about my 10,000 Long Target.

[drbubb]

Latest : 9/16/11 9/09/11 9/02/11 8/26/11 : 8/19/11 : 8/12/11 : 8/05/11 : 7/29/11 :

SLV-- : $39.39 : $40.52 : $42.18 : $40.41 : $41.68 : $38.12 : $37.61 : $38.83 :

Change: - $1.13 : - $1.66 : +$1.77 : -$1.27 : +$3.56 : +$0.51 : -$1.22 : +/- chg.

Silver : $40.67 : $41.43 : $43.26 : $41.72 : $42.93 : $39.07 : $38.33 : $39.89 :

Prem. : +$1.38 : +$0.91 : +$1.08 : +$1.31 : +$1.25 : +$0.95 : +$0.72 : +$1.06 :

ZSL-- : $12.11 : $11.51 : $10.70 : $11.68 : $11.33 : $13.62 : $14.33 : $13.49 :

$62-X : $49.89 : $50.49 : $51.30 : $50.32 : $50.67 : $48.38 : $47.67 : $48.51 :

ZX/slv: 122.7%: 121.9% : 121.6%: 124.5% : 121.6%: 126.9%: 126.7%: 124.9%:

====

DXY--- : $76.54 : $77.20 : $75.25 : $73.81 : $74.24 : $74.56 : $74.54 : $73.75 :

UUP---: $21.74 : $21.91 : $21.22 : $20.96 : $21.03 : $21.11 : $21.22 : $21.03 :

CRB--- : 329.55 : 334.24 : 338.06 : 335.25 : 329.47 : 326.53 : 326.08 : 342.08 :

Rsilver : : 9. ??? : : 9.019 : : 9.389 : : 8.897 : : 9.392 : : 8.704 : : 8.597 : : 8.371 : :

===

Ja.$27c: 12.77 : 13.97 : 15.45 : 13.97 : 15.20 : 11.87 : 11.20 : 12.42 :

Sp.$34c: $5.39 : $6.55 : $8.00 : $8.20 : $6.70 : $7.85 : $4.80 : $4.40 : /5.00/

Oc.$30c: $9.50 : 10.72 : 12.27 : 10.70 : 11.95 : $8.62 : $8.00 : $9.27 :

Oc.$34c: $5.75 : $7.02 : $8.52 : $7.15 : $8.35 : $5.45 /$4.75 /

Oc.$38c: $2.70 : $3.95 / $3.98 /

Ja.$36c: $5.70 :

ATX.v--: $0.85 : $0.80 : $0.79 : $0.90 : $0.91 : $0.90 : $0.93 : $1.00 :

ZSL$10c: Exp'd : $1.65 : $1.00 / $1.15 /

===

Trades this week:

SLD : ZSL Sept.$10 calls : $2.25 x 2,000 = $4,500 (+) Alt.2

BOT : ZSL Sept.$10 calls : $1.80 x 3,000 = $5,400 (-) Alt.2

SLD : SLV Sep.$34c: $6.02 x 2,000 = $12,040 (+) Alt.1

SLD : SLV Sep.$34c: $6.02 x 2,000 = $12,040 (+) Alt.2

BOT : AG-silver phys. $40.97 x 1,000 = $40,970 (-) Alt.2

BOT : SLV Oct.$38c: $2.87 x 1,000 = $ 2,870 (-) Alt.2

BOT : SLV Oct.$38c: $2.87 x 1,000 = $ 2,870 (-) Alt.1

SLD : SLV Jan.$27c: 12.87 x 1,000 = $12,870 (+) Alt.1

SLD : ZSL Sept.$10 calls : $2.35 x 3,000 = $7,050 (+) Alt.2

SLD : ZSL Sept.$10 calls : $2.50 x 2,000 = $5,000 (+) Alt.1

[drbubb]

OUTPERFORMANCE - a decent week. AP#2 held up, despite a small drop in Silver...

 

RECORD

Record :: B&H Portf : Alt.Port #1 : Alt.Port #2 : Average : -Ratio- : -SLV- : -DXY- /--CRB-- real.SLV

 

01 July: --- $337.0 K : - $479.2K : - $465.2 K : $472.2K : 140.1% : $33.00 x74.36 / 3.3671 =# 7.288

08 July: --- $365.4 K : - $508.5K : - $498.1 K : $503.3K : 137.8% : $35.75 x75.08 / 3.4355 =# 7.813

15 July: --- $390.7 K : - $535.8K : - $532.8 K : $534.3K : 136.8% : $38.24 x75.13 / 3.4650 =# 8.291

22 July: --- $401.0 K : - $541.4K : - $539.8 K : $540.6K : 134.8% : $39.07 x74.14 / 3.4793 =# 8.325

29 July: --- $398.9 K : - $539.7K : - $537.1 K : $538.4K : 135.0% : $38.83 x73.75 / 3.4208 =# 8.371

05 Aug: --- $383.3 K : - $534.4K : - $538.9 K : $536.6K : 140.1% : $37.61 x74.54 / 3.2608 =# 8.597

12 Aug: --- $390.7 K : - $536.7K : - $541.9 K : $539.3K : 138.0% : $38.12 x74.56 / 3.2653 =# 8.704

19 Aug: --- $429.3 K : - $558.6K : - $570.4 K : $564.5K : 131.5% : $41.68 x74.24 / 3.2947 =# 9.392

26 Aug: --- $417.2 K : - $546.5K : - $558.1 K : $552.3K : 132.4% : $40.41 x73.81 / 3.3525 =# 8.897

02 Sep: --- $432.6 K : - $560.6K : - $572.8 K : $566.7K : 131.0% : $42.18 x75.25 / 3.3806 =# 9.389

09 Sep: --- $414.3 K : - $544.9K : - $557.2 K : $551.1K : 133.0% : $40.52 x77.20 / 3.3424 =# 9.019

16 Sep: --- $406.7 K : - $539.8K : - $557.3 K : $548.6K : 134.9% : $39.39 x76.64 / 3.2955 =# 9.161

Vs B&H: -- 100.0% - : -- 132.74% : -- 137.04% :

 

At 16 Sept., the average of the two Alt. Portfolios was $141,888 ahead of Buy&Hold.

 

Versus $135,200 ahead at 1 July when the Outperformance was 140.1%,

and $153,343 at 5 Aug., when Silver had fallen to $38.33.

The outperformance came mainly from some good trades on ZSL, and being under-hedged slightly during a dip in the Silver price.

 

See spreadsheet : https://spreadsheets1.google.com/spreadsheet/pub?hl=en_US&hl=en_US&key=0Am5S2YdB2ZxYdC1KcWgxVVpqamJhQl9zRmt2aEhPaUE&single=true&gid=0&output=html

 

As I sold off SLV-$34calls prior to expiry, I have moved back to

a 10,000 oz./SLV shares long position (matching B&H) in AP#2,

but left AP#1 at only 8,000 long, position for further falls in Silver.

[drbubb]

SLV now at: $38.579 / $-1.021 / % Change -2.58%

 

SLV-Jan.$36 Calls are: 5.25 - 5.35 ... considering these for AP#1

I am glad now that I did not buy them, Gold and Silver are taking a bit of a hit today...

 

GLD : $173.27 $-2.7600

% Change -1.57%

SLV : $38.355 $-1.0350

% Change -2.63%

 

SLV-Jan.$36 Calls are: 5.00 - 5.10 (considering placing an order)

 

In edit: ORDER in at $4.60 (day) x 2000

 

LOW for the day was near $38.10, and I reckon the order will fill if

SLV hits $37.50 or $37.60.

 

In Edit:

BOT : SLV Jan.$35C at $5.60 x 2,000

[drbubb]

NEW TRADING IDEA : DBA vs. SLV - an Arbitrage experiment !

"The idea: SLV is too expensive vs. DBA" (...and the CRB)

======================================

 

SLV : $39.18 +$0.53 / +1.37%

DBA : $32.03 / CRB :$323.58 (10.X X DBA)

J$30c $2.80-$3.00 (jan.call $2.90)

Ratio R-1.223 (Ratio to CRB: 0.12??)

ZSL : $12.21 -$0.32 / -2.55%

O$11c $ 1.73

 

Here's my play: An Arb-bet: DBA to outperform SLV : Chart-DBA,gld,slv

 

BOT: DBA.Jan.$30c : $2.90 x 2,000 (- $5,800 : AP#1)

BOT: ZSL. Oct.$11c : $1.73 x 3,000 (- $5,490 : AP#1)

 

Chart of SLV-to-DBA Ratio

 

Chart of SLV-to-CRB Ratio

[drbubb]

BOT: DBA.Jan.$30c : $2.90 x 2,000 (- $5,800 : AP#1)

BOT: ZSL. Oct.$11c : $1.73 x 3,000 (- $5,490 : AP#1)

SOLD: ZSL. Oct.$11c : $3.50 x 1,000 (+ $3,500 : AP#1)

- that's a double in 2 days !

[drbubb]

I am an advantageous position now, thanks to the big drop in Silver

 

My two Alternative portfolios are holding 10,000 longs, but part of those Longs are now represented by Calls which are out-of-the money, thanks to silver's big drop (they were all in the money last week.)

 

I can go in and Buy Silver or SLV below the strike, and lock-in an improvement.

 

Here are the relevant positions, giving me the opportunity:

 

========== : Alt.P#1 : Alt.P#2

Oct.$38calls : 3,000- : 1,000-

 

I will try to buy SLV as follows:

 

AltP#1 : 1,000 at $34.50, 1,000 at $34.20

AltP#2 : 1,000 at $34.30

 

I see SLV falling to or near support at $34.00 in the necxt few days.

 

I may replace these orders with Call orders or even Physical Silver,

if I see a better opportunity.

 

In edit:

The low of the day was $34.51 (!) one penny away from my original target.

 

I raised my bid, and wound up with:

 

BOT: SLV at $34.74 x 1,000 shares = $34,740 (AP#1)

 

And I also:

 

SOLD: ZSL. Oct.$11c : $3.90 x 1,000 (+ $3,900 : AP#1)

 

ZSL closed at $15.02, and the $11 calls at: $4.10-4.30

 

BTW,

The real portfolio in which I do these trades is up about 30%+

in the last two weeks, so the Alt.Portfolios are understating my

real trading performance.

[drbubb]

I will try to buy SLV as follows:

 

AltP#1 : 1,000 at $34.50, 1,000 at $34.20

AltP#2 : 1,000 at $34.30

I cannot buy SLV outside trading hours, so instead I

 

BOT: Physical Silver at $34.80 x 1,000 (= $34,800 : AP#2)

 

Silver subsequently traded down to below $34.50.

[drbubb]

I cannot buy SLV outside trading hours, so instead I

BOT: Physical Silver at $34.80 x 1,000 (= $34,800 : AP#2)

Silver subsequently traded down to below $34.50.

That price is looking "expensive" now.

 

I just traded SLV in "extended market hours" - first time I have traded the Silver etf that way.

 

Here's the actual price I traded:

Status Filled at $31.90

Symbol SLV

Description ISHARES SILVER TR ISHARES

Action Buy

Order Type Limit at $31.90

Time in Force Day

=====

 

That will go into my portfolio as:

 

BOT: SLV - Silver etf at $31.90 x 1,000 (-$31,900 : AP#1)

[drbubb]

Options strategy is being vindicate today,

and so I am briefly changing the title of the thread to:

 

Beating the THE CRAP out of Buy&Hold

Long Bias + no gearing, Options to limit Price Risk

[marceau]

And so voices were heard throughout the land - 'margin call gentlemen'.

[drbubb]

And so voices were heard throughout the land - 'margin call gentlemen'.

Indeed. That must be what is driving this fall, which is why I shall do some buying today

 

$35 looks tasty for october, followed by a rally into xmas

I just bought SLV at $31.90.

That's the equivalent to buying Silver at $33 or lower

 

My $27 forecast looks very possible now

 

In edit:

Now looking at SLV. Jan.$27 calls

 

Price: $6.75-6.90 (mid:$6.82) with SLV at $32.42

LOD: $6.35 versus SLV-LOD: $31.54

[pjohnp]

... and so I am briefly changing the title of the thread to:

 

Beating the THE CRAP out of Buy&Hold ...

 

Hmm. A lowering of tone by the tri-millennium guru himself, with an unpleasant whiff of triumphalism.

 

Some of us here aren't trying to get rich, and we haven't the time or inclination for frequent trading -- what a waste of time that would feel like! Some, like me, have (non-financial) jobs out there, directly helping other people ... and we've families and hobbies that take most of the rest of our time. We just want to stop the system impoverishing us.

 

I've "bought & held" * for many years, thanks largely to this site. You're not "beating the crap" out of me: I only look at my computer every day or two, and I'm out there having a great life.

 

Change your title back!

 

* with just a bit of profit-taking from time to time, transferred to index-linked certificates with a view to eventual house-purchase; I've now got all my money back, and still have enough gold to buy half a house.

[dunker1]

Must admit, does seem rather strange behaviour, the incessant point scoring attitude.

Still, suppose we encounter all sorts in life, particularly on this great expanse called the web.

[drbubb]

And I also:

 

SOLD: ZSL. Oct.$11c : $3.90 x 1,000 (+ $3,900 : AP#1)

 

ZSL closed at $15.02, and the $11 calls at: $4.10-4.30

Today;s drop in Silver has pushed up the value of the ZSL calls,

and I sold the last part of my actual position:

 

======

Status Filled at $6.50

Symbol -ZSL111022C11

Description CALL (ZSL) PROSHARES TR II OCT 22 11 $11 (100 SHS)

Action Sell to Close Call

Order Type Limit at $6.50

======

 

SOLD: ZSL. Oct.$11c : $6.50 x 1,000 (+ $6,500 : AP#1)

 

That's a wonderful return on a Call bought at $1.80 a few days ago.

[drbubb]

Hmm. A lowering of tone by the tri-millennium guru himself, with an unpleasant whiff of triumphalism.

 

Some of us here aren't trying to get rich, and we haven't the time or inclination for frequent trading -- what a waste of time that would feel like! Some, like me, have (non-financial) jobs out there, directly helping other people ... and we've families and hobbies that take most of the rest of our time. We just want to stop the system impoverishing us.

 

I've "bought & held" * for many years, thanks largely to this site. You're not "beating the crap" out of me: I only look at my computer every day or two, and I'm out there having a great life.

 

Change your title back!

 

* with just a bit of profit-taking from time to time, transferred to index-linked certificates with a view to eventual house-purchase; I've now got all my money back, and still have enough gold to buy half a house.

Hey, stuff that comment. What's wrong with a brief and well deserved moment of trumph? I know it will not last long. And besides: I took an incredible amount of nonsense from some people here.

 

("Some, like me, have (non-financial) jobs out there, directly helping other people..." Do I detect a note of moral superiority there? Do you think I am not helping people by sharing my knowledge and trading ideas for FREE here?)

 

If there's no nonsense next time, you will see no temporary title change. (If you like, I can point also out countless examples of similar behaviour on the Gold thread. Have you seen the rockets there? They are often a signal of an imminent trend change.)

 

Is this brief Title change a sign of a possible turn in the markets - Yes, it may be. I constantly analyse my own emotions, and changing the thread title, is another reason that I am turning my position around, and going with the SLV and Silver longs.

 

Having said that, I think a further drop could come after a nice bounce, filling today's big gap down.

[drbubb]

Must admit, does seem rather strange behaviour, the incessant point scoring attitude.

Still, suppose we encounter all sorts in life, particularly on this great expanse called the web.

Take it as a sign of me understanding my own emotion well enough to make a brief joke of it.

 

(I also understand that anyone who complains is probably long, and doesnt like to be reminded of the opportunity loss, and that it might be avoidable by using options. The little moment of triumph might even get a few to take a more serious look at options. And if you do that, and they work for you, then you may thank me later. If I had left the title the same, then maybe some here would have never bothered to visit this thread.)

[drbubb]

I don't think we are going straight down to $27, so I have done something else instead...

My $27 forecast looks very possible now

In edit:

Now looking at SLV. Jan.$27 calls

Price: $6.75-6.90 (mid:$6.82) with SLV at $32.42

LOD: $6.35 versus SLV-LOD: $31.54

In the end I bought a lower strike - in a Real trade:

 

========

Status Filled at $7.95

Symbol -SLV120121C25

Description CALL (SLV) ISHARES SILVER TR JAN 21 12 $25 (100 SHS)

Action Buy to Open Call

Order Type Limit at $7.95

========

 

BOT: SLV-Jan.$25c at $7.95 x 1,000 = ( -$7,950 : AltP#1)

 

Now that I have rebalanced the portfolio, I can return to the non-emotional title.

[drbubb]

From the Silver thread...

Did you buy any gold whilst you were caught up in the bullish atmosphere? If you didn't you weren't really caught up in anything.

 

I would love to see the net performance of Bubb's PM trades since 2008. I doubt he's much further ahead than buy-and-hold, if at all. And if you buy and hold rather than manically trade you can make money in your business or vocation too! So net net you'd be well ahead of Bubb if you bear in mind that trading is his career.

On which assets?

 

The point of the Beating B&H thread is to show:

 

+ You can protect price risk effectively with options

+ There are times when technical indicators give very useful signals

+ Buy and Hold CAN be beat with a disciplined approach

 

I am not gambling. I am using a very careful approach that everyone who wants a core long exposure to metals can learn from.

 

The criticism of it has mostly been mostly ill informed, it doesnt examine what I am truly doing. Which is a pity

[stunlee]

Great thread Dr Bubb, there is lots here for everyone to learn from. I hope that you have made a lot of money these past couple of days.

[drbubb]

Great thread Dr Bubb, there is lots here for everyone to learn from. I hope that you have made a lot of money these past couple of days.

Yeah. I have done okay

But actually my own positions are not so huge.

 

As you will see in the weekend summary, both Alternative Portfolios LOST MONEY

this week. They only gained relative to the B&H portfolio

 

In reality I had a very tiny net short position on Precious metals, with the overall exposure highly hedged.

 

So I will have made a small profit from the drop in Gold and Silver, and lost some money on my Juniors - but not much.

 

THE EXERCISE here is to show how to employ a disciplined approach to options trading

[Chartered Surveyor]

Humility is always the way chaps.

 

Those who blow their owm trumpet is ok yet decorum is what is needed as the 'fundamentals' is what tomorrow will deliver.

[bob monkhouse]

Keep up the good work Bubb!

[drbubb]

Ah... the hideous glory of following a doctrine !

 

Really? My gold from 2001 looks like a pretty good idea to me.

Sinclair has said hundreds of time that volatility will be insane

...He has warned people not to trade but to buy physical.

What foolish inflexibility!

 

"Not trading":

I suggested taking profits, and buying calls instead

 

"Staying with physical Gold"

Madness. If you wanted to stay long - GLD calls were a less risky way to do it.

(You can buy physicals when its cheap, and hold GLD calls when it is expensive)

 

Look at the Beating Buy & Hold portfolio: It is beating Sinclair's inflexible advice by more and more, just as I said it could and would. I stay long, with less risk, but using options and a disciplined non-gambling approach