NDX NQ QQQQ QID trading (Bottom Area)

Dear stock market traders and investors, stock blog readers, and followers:

The area of the bottom of NASDAQ-100 is around the corner. The top of volatily is also around the corner. NDX closed at 1648 today (Tuesday). QQQQ closed at 40.50 area, and VXN was at 35%.

The bottom of NDX and QQQQ are estimated at 1600 area, and QQQQ at 39.50 area. For volatilty the top is estimated at around the 38 area.

How to play This? In multiple ways and multiple stages. Now we are in stage one of the revisit of the bottom area. Since the bottom is a process, and Vol. should decline, we would like at first to sell volatility premium while we go slightly long.

At close Today (Tuesday), we sold 42 strike ITM puts on QQQQ (quarterly QQQQ options expiring in a week). They have some very juicy premium. We also sold 43 strike calls early in the day. We have sold (by legging) a straddle with a total premium of around $1.50 The area of profit is wide (from $39.00 to $44.50.

We plan to manage this position as QQQQ moves around.

This position is a small size and is not the full position. A larger size will be initiated in case we hit the 39.50 today (or on Thursday). If the market should a bottom earlier, then it is fine. We should be able to bank on the puts and also on the short volatility as vol. decreases on the way up.

We expect NDX and QQQQ to rise in the morning until around mid-morning. If it does so, we plan to take profits on the short 42 strike puts, and decide from there on selling a lower strike or waiting for the stock to retreat to re-enter the short put at strke 42 or lower.


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We pride ourselves in the accuracy of our market timing, and the information and insight we share with you. For instance, please take a moment to read past posts on this blog which are more of an educational nature.

Do miss the articles the "market timing experiment, and the series of tops and bottom nailing", on the use of options in buying stocks such as AIG, and also one of the early posts in which we focus on the why, and how of: the market timing experiment, and the results we have obtained.

To your profits,


UPDATES THAT WE HAD INCLUDED AS BREAKING NEWS:

Thursday September 25: 1:03PM with NDX at 1704.ish, we are taking off the long NDX position established on Tuesday's close when NDX was at 1650. Profits: 55 NDX points.

Friday September 26: 12:06PM with NDX at 1644, we are taking off the short NDX position. Profits: 60 NDX points.

Credit Crise: How can I (you) buy back my (your) mortgage?

There is something fishy in this credit crisis. Mortgages are supposedly the reason why banking institutions are down. Further it is typically stated that they are worth only 20 to 30 cents on the dollar.

If this were really true, I (and many others I am sure) would love to buy back my personal mortgage which is supposedly trading/worth right now somewhere in the area of 20-30 cents on the dollar. I would even like to buy the mortgages of others.

Here is my challenge to all those financial institutions who supposedly have those loans on their books: Why you do not make them available for purchase by the debters of those mortgages. You will get a price HIGHER than (likely the DOUBLE of) the price at which they are now trading.

If there are worth 20 to 30 cents on the dollar, and peoople like me pay for my mortgage a higher price (double), the financial institutions will be worth double than they are worth in mortgage assets, the credit crisis will be no more as the majority of mortgages will be paid back at DOUBLE the current price, and we will have more liquidity.

Here is my prediction. They WILL NOT accept the solution I propose here, and that would be proof that those mortgages are worth more, and that mortages are just the scapegoat in all of this credit crisis. The real reason would then be somewhere else. (Someone took the money for other reasons, and put things under the rug. What is under the rug has been passed to the mortgages, but the mortgages are just a scapegoat).

Pass around this article folks. Average was fleeced on the way up, on the way down, and now at the bottom. If they do not accept this solution, there is a reason. Are there thiefs and frauds running free in the system?

should I (Can You) Invest in (Buy) AIG?

Readers have posed these two questions among many questions with regard to AIG: Can you buy AIG stock? Should i invest in AIG? We have written multiple articles on this blog explaining ways to decide on this questions in addition to providing information on political leaders who own (have owned to be more precise) AIG stock.

In one decides to be involved, we believe it should be on the long side, and we also believe it should be on a shorter term (therefore not an investment). In addition, we believe that one should hedge the long position by selling upside premium. This can be done either by selling ITM puts, or OTM puts. It may however by better to implement this buy buying stock and selling a call (at same strike where you would have sold the put). This implementation while expensive in commissions, forces one to always be covered, and most importantly if volatility were to rise sharply, some brokers may get you out of your position as these brokers may require as more margin more than what a covered call would require.

Overall, one should decide also on the price level. As we wrote on this blog, $1.25 to $1.50 was an excellent level to get in, but now the stock has risen much higher. We have solve our position, and we will bet involved only if and when stock comes down at a low enough level.

Patience is important in trading (investing) whether in AIG or any other investment vehicle.

BAC-LEH-AIG-Which politicians have stocks in financial companies making news (bank of american (BAC), Merrill Lynch (MER), Lehman Brothers (LEH)), AIG

Which politicians have stocks in financial companies making news (bank of american (BAC), Merrill Lynch (MER), Lehman Brothers (LEH)), AIG. We posed this question in a previous post with regard to AIG. What about the other stocks making headlines BAC, MER, LEH.

Excerpts from the opensecrets society shed some light on this question. It addresses the question of stock ownership as well as campaign contributions, which all important to consider when one think of and assess financial stocks health and future existence.

It appears that the richest members of Congress seem to be the most invested in the companies at the center of the most recent Wall Street shake-up.

Excerpts from opensecrets.org are:

"According to the nonpartisan Center for Responsive Politics, nine lawmakers have between $785,900 and $1.8 million of their own money invested in Merrill Lynch, the brokerage firm that agreed over the weekend to sell itself to Bank of America for $50 billion after facing tens of billions of dollars in losses. Because Bank of America offered to buy the company at a 70 percent premium over the company's closing price on Friday, those who own stock in Merrill Lynch stand to gain from the transaction. Two of the richest members of Congress owned the most stock in the company. Sen. John Kerry (D-Mass.) reported holding between $500,001 and $1 million on his most recent personal financial disclosure, covering 2007, and Sen. Elizabeth Dole (R-N.C.) owned between $250,003 and $601,000 in stock. (Lawmakers disclose their finances in ranges, annually, making it difficult to determine their assets' precise values.)

Merrill's white knight, Bank of America, which, comparatively, seems to be managing just fine in today's sour economy, is a far more popular investment for members of Congress. Fifty-four lawmakers who held stock in the company in 2007, worth between $1.9 million and $5 million, are probably breathing easier, knowing that Bank of America is buying--rather than having to be bought. Rep. Robin Hayes (R-N.C.), another one of the richest members of Congress, owned between $865,004 and $1.8 million in stock in the company, while Rep. Rodney Frelinghuysen (R-N.J.), yet another of the richest lawmakers, owned between $201,004 and $465,000 in stock. Seven lawmakers, led by Kerry, owned stock in both Bank of America and Merrill Lynch." .......


"Of all of the companies facing major transitions, lawmakers owned the most stock in American International Group (AIG), the nation's largest insurer, which has asked the Federal Reserve for emergency funding as it faces financial hardships. Twenty-seven lawmakers owned stock in AIG last year, worth between $6.4 million and $20 million. Hayes was at the top of the list of congressional investors, owning stock worth between $2.8 million and $11.5 million, while Kerry followed with stock valued around $2 million.".....


"Since the 1990 election, Merrill Lynch's PAC and employees have given $14.7 million to federal candidates, parties and committees. The company leans heavily Republican--64 percent of the brokerage's total donations have gone to GOP candidates and committees. All three of its top recipients have been (or still are) presidential hopefuls this election cycle. Republican John McCain received $394,300 from people associated with Merrill Lynch, making the company his top contributor. Democrat Hillary Clinton collected $290,650, and Barack Obama got $229,100. The company's favorite non-presidential candidate is Sen. Charles Schumer (D-N.Y.), a member of both the Senate Banking, Housing and Urban Affairs Committee and the Senate Finance Committee. He has received $226,150 in this election cycle.".....

CONTRIBUTIONS to CAMPAIGNS


" Bank of America's PAC and employees have given $16.6 million, also favoring Republicans, though less sharply. About 54 percent of the company's contributions over time have gone to the GOP. Obama is the top recipient of contributions from employees at Bank of America, with $263,500 in donations. McCain has brought in $177,500, making him the fourth-largest recipient. Sen. Chris Dodd, chair of the Senate banking committee, has collected $144,650, while congressional leaders Nancy Pelosi, Steny Hoyer (both Democrats) and John Boehner (a Republican) are all among the company's top 20 recipients over time.

Lehman Brothers has given $9.2 million through employees and its PAC since 1989, with 54 percent of that going to Democrats. Clinton and Barack Obama top the list of all-time recipients for the company, collecting $410,000 and $395,600 respectively. Schumer hauled in $181,450, while Dodd has collected $165,800. The top recipient of PAC money from Lehman Brothers has been Rep. Mike Castle (R-Del.), a member of the House Financial Services Committee, which has jurisdiction over banking and the securities industry. Castle has collected $38,500 from Lehman's PAC since 1993.

This election cycle, Lehman employees have given about $1.3 million to presidential candidates. Only fellow financial giants Goldman Sachs, Citigroup and Morgan Stanley have given more to the presidential hopefuls this election cycle. Lehman employees have made their firm one of the top contributors to both Obama ($370,500) and John McCain ($117,500) this election cycle. (For a full list of recipients of Lehman contributions, see this post from Friday.) "....
....

Which politicians have stocks in financial stocks such as aig (American International Company)

In the credit crisis involving financial and insurance companies in particular, given the efforts of the government to intervene in the financial system, an interesting questions poses itself: Which politicians have stocks in financial stocks such as aig (American International Company), bank of american (BAC), Merrill Lynch (MER)

According to the opensecrets.org society, we have the following interesting information:

"Of all the companies making headlines this week, AIG has been the most nonpartisan in its contributions, splitting evenly the $9.7 million it has contributed over time. Dodd has racked up the most from AIG, with a total of $281,400, while Schumer takes second with $116,400. McCain and Obama collected $103,000 and $82,600 from AIG, respectively."

Leman stock (LEH) Bankruptcy Insolvency Crisis: Investors Equity Collapsed, but Key Employees Get 2.5 Billion Dollars in Bonuses

This is outrageous: In Leman stock (LEH) Bankruptcy Insolvency Crisis, investors Equity Collapsed (and possibly creditors will get shafted as well), but Key Employees Get 2.5 Billion Dollars in Bonuses. Those key employees should be sued for imcompentence, but instance are the only people banking on this will not risk or sword to their necks. They have no shame, and there seems to be no accountabilities. We should also not forget the non-key employees of Lehman. Another group of people who have been shafted, and thrown to the streets on their own to search for a job.

Some excerpts from UK' Times on this topic follow.

Excerpts from the UK's Times:

Staff at Lehman’s New York office who helped to cause the world’s biggest corporate bankruptcy are to share in a $2.5 billion bonanza.

The bonus, which has been described by London staff as a “scandal” has been pledged by Barclays Capital, the British-based bank that last week acquired Lehman’s American operation and took on 10,000 staff.

The $2.5 billion (£1.4 billion) pot, which has been ring-fenced as part of the acquisition, has caused huge resentment among the 5,000 staff in the firm’s European and Middle Eastern operations who are not guaranteed to be paid after this month...

A Chapter 11 bankruptcy document filed by Lehman Brothers Holdings Inc says that Barclays has identified eight individuals out of the New York staff of 10,000 who are vital to make the deal succeed and a further 200 who are identified as “key”. It is thought that these eight directors will be locked into two-year contracts worth between $10m and $25m a year.

The $2.5 billion had been accrued as part of the contribution to Lehman’s group profits for the first nine months of the year. Barclays said there is no obligation to pay it out but analysts say the competitive pressure to keep key staff means he will have to....

Price Waterhouse Coopers (PWC), the administrator to Lehman’s European operation has demanded that the firm repay £4.4 billion that was transferred from the UK to Lehman’s US holding company just hours before the firm collapsed. This left London with no money to pay staff.

If PWC is successful, the European operation would be Lehman’s third-biggest creditor after Citigroup and Bank of New York. It is thought that PWC will want to look closely at how $2.5 billion had been ring-fenced as part of the deal with Barclays. It will want to know who negotiated the sale and the precise details surrounding who benefited....

The administrator is looking closely at how this cash was transferred. It was an unusally high transfer that raised eyebrows in the London office.

Yesterday Gordon Brown, the prime minister stepped into support PWC’s claim demanding the American division return the £4.4 billion....

The way that Lehman has set aside cash to reward staff has angered politicans. John McFall, chairman of the Treasury select committee, said: “This is socialism for the fat cats. Everyone in financial services recognised that the remuneration system is the cancer on the financial body politic here. Until that is tackled we can’t move on.”

Vince Cable, Liberal Democrat shadow chancellor, said: “This is outrageous and deeply cynical. Part of the problem with Lehman and the other weak investment banks was that they were driven by the bonus culture, which rewarded big deals rather than good deals. It was what destabilised the institutions in the first place. They are being rewarded for having adopted business behaviour that has wrecked their bank.”