Slope of Hope Blog Posts

Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.

Cry Havoc

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From time to time, a question will appear in the comments section which is worthy of a response in a post. Havoc left just such a comment (I’ve boldfaced some of it for emphasis):

Questions…. I’ve been watching you trade for about 15 years, and you have made adjustments to your method over that time. Your style has similarities and differences to my own, and I’m curious as to how you honestly feel about the long-dated options-only method. I still am very impressed with your strategy of holding dozens of individual short positions (while I only short the SPX in a couple of ways). You have convinced me of the benefit in a crashing market of the added time it takes to exit all those positions, for example. How do you value the price of the options in your spreadsheet, is it the midpoint of the bid/ask? When you decide to enter, or exit a position, are you entering limit orders to prevent bad fills within these wide spreads? Most importantly, in what ways have you found this style to be better than being actually short the individual stock? I’ve actually started building a portfolio of options that expire in 1/24, and am finding peace of mind with it.

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FOMC Game Plan

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This is a selfish and a selfless post. It is selfish in the respect that I’m hoping to glean some wisdom from the crowd. It is selfless since it’s a decent amount of work to construct this properly, with the hope that some folks might benefit from the problem and its potential solutions.

Let me start with the situation and my assumptions:

  1. I have a substantial portfolio which consists of only cash and 30 bearish equity positions, by way of being long puts that expire no earlier than September and, on most cases, expire much later than that.
  2. I have 20% of my portfolio in cash. The portfolio overall is sporting a 57% profit so far this year.
  3. Over the past few weeks, I saw about 90% of my profits for the year go up in smoke, only to be restored over the course of the past few days (please note: it was not a good feeling, and I’d rather not go there again);
  4. My overarching assumption is that stocks will be MUCH lower at some point this year (prior to October) and, counter-trend rallies be damned, virtually all these puts will be worth much more later, even with time decay.
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My Current Trade (by XerxesTraderGF)

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I have had a bit of writer’s block for a few weeks. I had started to write something on Trade Management, but that was so boring even I almost fell asleep while rereading it. So I figured I would just give a walkthrough of my current trade.

I’ll start off by saying that my overall market bias should be no surprise to many who’ve seen my sporadic comments over the past few months. I am leaning very bearish overall, somewhat for fundamental reasons (economy, inflation, lack of QE, etc.), but really the technical story is following along as well, despite recent market strength. This bounce has taken us right back to the underside of some very long-term overhead resistance. Given the length of time this resistance spans, it is not surprising how much of a fight we are seeing at this level. This could work to my benefit, painful though it may be, as it gives me time for my positions to be “vested” (trade restrictions require all profitable positions be held at least 30 days).

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