Author Topic: What are you buying today?  (Read 1071869 times)

gjangal

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Re: What are you buying today?
« Reply #2670 on: January 11, 2018, 10:23:42 AM »
DSW, BOJA and SAVE. They benefit from tax reductions , but my thesis is that itís not reflected in the price. I am buying this as a basket or cheap stocks. not too heavily into one name


frommi

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Re: What are you buying today?
« Reply #2671 on: January 14, 2018, 12:08:09 AM »
sold a japanese netnet (holding period over), GGP (I don`t expect a bid that is much higher from brookfield and think that SRG offers more value now) and
bought more KDM Shipping, SRG, TSLA puts, KRNT puts, IT puts, ERI puts, SPNS puts, RBA puts and OTEX puts. Reduced net long exposure from 25% to 15%. The puts are based on profitable short screens, so the selection is purely based on financials. (F-Score,Asset growth,Accruals,M-Score)

no_free_lunch

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Re: What are you buying today?
« Reply #2672 on: January 14, 2018, 08:07:42 AM »
sold a japanese netnet (holding period over), GGP (I don`t expect a bid that is much higher from brookfield and think that SRG offers more value now) and
bought more KDM Shipping, SRG, TSLA puts, KRNT puts, IT puts, ERI puts, SPNS puts, RBA puts and OTEX puts. Reduced net long exposure from 25% to 15%. The puts are based on profitable short screens, so the selection is purely based on financials. (F-Score,Asset growth,Accruals,M-Score)

This is great, so much information embedded in your post.  I have been looking for a good set of shorts so I will do some dd on your put names.  Curious what you mean with your japanese netnet, do you have a fixed period of time you will wait before selling?

LightWhale

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Re: What are you buying today?
« Reply #2673 on: January 14, 2018, 08:59:54 AM »
frommi, how far out of the money are you buying the puts?
« Last Edit: January 14, 2018, 09:02:11 AM by LightWhale »

frommi

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Re: What are you buying today?
« Reply #2674 on: January 14, 2018, 10:16:49 AM »
This is great, so much information embedded in your post.  I have been looking for a good set of shorts so I will do some dd on your put names.  Curious what you mean with your japanese netnet, do you have a fixed period of time you will wait before selling?

I sell netnets at NCAV, but after 1 year i reassess the situation and when i find something a lot cheaper i make the switch. I can recommend the short screens that James Montier mentioned in 2008, here is a link: http://www.designs.valueinvestorinsight.com/bonus/bonuscontent/docs/Montier-Shorting.pdf

frommi, how far out of the money are you buying the puts?

I only buy in the money put options where the strike price is 5-20% above the current price. (implied volatility is normally lower on higher strikes). Ideally the implied volatility you pay is lower or equal to the historical volatility of the stock.

kab60

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Re: What are you buying today?
« Reply #2675 on: January 14, 2018, 10:51:23 PM »
I keep coming back to buy more Trip

frommi

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Re: What are you buying today?
« Reply #2676 on: January 16, 2018, 09:19:34 AM »
frommi, how far out of the money are you buying the puts?

I have to say thank you for your question. After thinking about it i realized that i never really questioned my put strike selection, so i did some tests today. Using the probability distribution from Montiers paper i tested it with several strike prices and stocks. I realized that my selection was in some cases flawed and i will change this in the future. In general it looks like it is best to use higher strike prices for puts with high implied volatility(>30%), but with lower imp vola it makes more sense to use ATM (~25-30% impl. vola) or even 10-20% OTM options (20% impl. vola and highly levered stocks). But only if >=1 year put options are available, otherwise i would stick to higher strike prices, this is most equal to direct shorting and has the highest probability to end in the money.

LightWhale

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Re: What are you buying today?
« Reply #2677 on: January 17, 2018, 12:49:39 AM »
Thanks for sharing

frommi

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Re: What are you buying today?
« Reply #2678 on: January 22, 2018, 10:01:19 AM »
Thanks for sharing

I found an even better method. When IV is between 25% and 50% i create a synthetic short with an embedded stop loss by selling ATM call options, buying the same amount of OTM call options and a smaller amount of ATM put options. That way you can have 0$ option premium ticking against you and still have limited downside and >100% upside. And when IV > 50% i sell a very small amount of ATM put options (10% of the calls) in addition to the calls, with IV so high you only lose if the stock goes up by 20% and everything below ends with a profit. And because of the OTM call option your losses are also capped.

writser

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Re: What are you buying today?
« Reply #2679 on: January 23, 2018, 08:01:28 AM »
Small chunk of 6822:hkg.
When you are dead, you do not know you are dead. It's only painful and difficult for others. The same applies when you are stupid.