High stakes gold wager


By iwog   Follow   Fri, 9 Sep 2011, 2:48pm   6,592 views   87 comments
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Here's my "investment" for monday. I love the way the odds work out.

Write 30 naked calls for GLD Oct 22 '11 @ $195 (This reflects a gold price of about $2000 per ounce)

Currently these sell for $3.90 so my potential profit will be $11,700.

Potential outcomes

Gold goes down during the 40 days: 100% profit
Gold remains about even during the 40 days: 100% profit
Gold goes up but does not exceed $2000 per ounce: 100% profit
Gold exceeds $2000 by October 22nd, 2011: Stopped out at 100% loss of $11,700

Free money or risky business?

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  1. iwog


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    48   12:26pm Fri 16 Sep 2011   Share   Quote   Permalink   Like   Dislike  

    Reality says

    October 22, 2008: high 74.8, low 66.3, a range of > 12% from the low.

    Do you know what's incredibly fucked up about this? I had to actually check to see if you were telling the truth or not. Well guess what............

    October 22, 2008:

    Open: 74.40
    High: 74.45
    Low: 70.86
    Close: 71.70
    Volume: 23,288,260

    In fact the low for the ENTIRE MONTH OF OCTOBER 2008 was 69.07! Don't you ever get tired of the bullshit?

  2. Reality


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    49   12:34pm Fri 16 Sep 2011   Share   Quote   Permalink   Like   Dislike (1)  

    iwog says

    Reality says

    October 22, 2008: high 74.8, low 66.3, a range of > 12% from the low.

    Do you know what's incredibly fucked up about this? I had to actually check to see if you were telling the truth or not. Well guess what............

    October 22, 2008:

    Open: 74.40

    High: 74.45

    Low: 70.86

    Close: 71.70

    Volume: 23,288,260

    In fact the low for the ENTIRE MONTH OF OCTOBER 2008 was 69.07! Don't you ever get tired of the bullshit?

    http://finance.yahoo.com/echarts?s=GLD+Interactive#chart6:symbol=gld;range=20080714,20081201;indicator=volume;charttype=candlestick;crosshair=on;ohlcvalues=0;logscale=on

    You can hurl all the personal insults back at yourself. No offense taken.

  3. iwog


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    50   12:49pm Fri 16 Sep 2011   Share   Quote   Permalink   Like   Dislike (1)  

    Yahoo is wrong which isn't unusual for a free service.

    Here's the actual intraday chart for 10/22/2008. I'll give you the benefit of the doubt and assume you just trusted yahoo finance. They do not clean up their data for numerous intraday false spikes. They are very frequent and unless your data service fixes them, they screw up the data set.

  4. Reality


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    51   7:46pm Fri 16 Sep 2011   Share   Quote   Permalink   Like   Dislike (1)  

    What about September 17th, 2008, and October 10, 2008?

  5. iwog


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    52   9:13pm Fri 16 Sep 2011   Share   Quote   Permalink   Like (1)   Dislike (1)  

    Reality says

    What about September 17th, 2008, and October 10, 2008?

    You really want to pick this hill to die on? You really think GLD is just like a stock?

    Well it's not. Despite what you think, GLD is not at risk of going bankrupt or gaining 100% on a takeover bid. I'm very happy with my transaction. End.

  6. Reality


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    53   10:19pm Fri 16 Sep 2011   Share   Quote   Permalink   Like   Dislike (1)  

    iwog says

    Reality says

    What about September 17th, 2008, and October 10, 2008?

    You really want to pick this hill to die on? You really think GLD is just like a stock?

    I never said it's just like a stock. It is however just another security . . . contrary to what you explicitly claimed in an earlier post.

    Well it's not. Despite what you think, GLD is not at risk of going bankrupt or gaining 100% on a takeover bid.

    You can say the same for a number of other ETF's, such as SPY.

  7. iwog


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    54   12:28am Sat 17 Sep 2011   Share   Quote   Permalink   Like   Dislike  

    Reality says

    I never said it's just like a stock. It is however just another security . . . contrary to what you explicitly claimed in an earlier post.

    Okay I shouldn't have used the term "security". Does that make you happy? I wasn't trying to make a point about the semantics of Wall Street, in fact it had nothing whatsoever to do with my point. GLD is different and the risk should be evaluated differently. MUCH differently.

    Your claim that

    Reality says

    The capital at risk for each call option is far greater than $4.70x100.

    I think you're totally wrong. I think using a stop loss will limit all potential losses to an amount that does not exceed (significantly) the value of the options. I think that the odds of an overnight gap in the price of GLD exceeding 10% is about the same as the odds of dying in a car wreck during the course of a calendar year. (good luck finding one of those on your charts)

    However should a 10% gap occur, the WORST case scenario would be $20 x 100 minus most of the time premium which would reduce the loss to about $16 x100. Remove the initial $4.70 and you're left with something around $11 or $12 X 100.

    Options aren't nearly as scary as the mother hens would have you believe. Can a stock gap 50% and kill you in an options trade? Yes. Can GLD or SLV do it? No.......at least not the way I'm doing it.

  8. Reality


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    55   5:08am Sat 17 Sep 2011   Share   Quote   Permalink   Like   Dislike (2)  

    iwog says

    GLD is different and the risk should be evaluated differently. MUCH differently.

    Different from what? It's an ETF, just like numerous other ETF's, with risk associated with the underlying alleged asset and risk associated with counter party institutions. In fact, one of the issues is the fact that the idea that every GLD share having corresponding ounce of physical gold behind it can not possibly square with the fact that people (including yourself) can short GLD without any physical gold. There is no way for a buyer of GLD "stock" to know whether he is buying from the GLD asset custodian or from a random short seller of GLD. GLD does have significant open short interest. That ambiguity leads to GLD trading at discount to gold spot price. That existing amorphous discount means GLD can also shoot up when the above-mentioned ambiguity is mitigated. For your information, Eric Sprott's physical silver fund (not SLV) was at one time trading at 20% premium over physical silver spot price itself! GLD and SLV are better thought of as (two among many) tracking stocks for gold and silver prices.

    Reality says

    The capital at risk for each call option is far greater than $4.70x100.

    I think you're totally wrong.

    Perhaps you don't understand what "capital at risk" means either. It's the denominator for calculating return on capital. Regardless what you think, your broker obviously agrees with me on my point quoted above (and you claim "totally wrong"): their margin department is demanding about $40x100 for each call option writing, an order of magnitude more than $4.7x100!

  9. iwog


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    56   10:16am Sat 17 Sep 2011   Share   Quote   Permalink   Like   Dislike  

    Reality says

    Perhaps you don't understand what "capital at risk" means either. It's the denominator for calculating return on capital. Regardless what you think, your broker obviously agrees with me on my point quoted above (and you claim "totally wrong"): their margin department is demanding about $40x100 for each call option writing, an order of magnitude more than $4.7x100!

    Not everyone invests in options like I do. As for everything else, you don't seem to be contradicting anything I've said and seem to just want to argue.

    BTW considering the margin requirement is 20% and not 100%, doesn't this mean that your completely wrong that capital risk is the denominator for calculating return on capital using your own "proof"? I think it does!

  10. Reality


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    57   5:50pm Sat 17 Sep 2011   Share   Quote   Permalink   Like   Dislike (1)  

    iwog says

    Not everyone invests in options like I do. As for everything else, you don't seem to be contradicting anything I've said and seem to just want to argue.

    I posted to this thread only to point out that the return on capital in this method of "investing" (really gambling) is actually much lower than the 49% calculated from the the option value itself . . . for the very simple reason that no broker would allow a conventional individual trader to write options like that without demanding substantially more margin tying up much more capital than the size of the initial premium collected for writing the option.

    BTW considering the margin requirement is 20% and not 100%, doesn't this mean that your completely wrong that capital risk is the denominator for calculating return on capital using your own "proof"? I think it does!

    Good grief, and you hold yourself out as the resident "investment" guru? Here's a simpler set of exercise for you:

    If you invest $10k to get $1k profit, what's the return on capital? Answer: 10%; what's the capital-at-risk? Answer: $10k.

    If you put up only $5k, and borrow the other $5k to get the $1k profit, ignore margin interest payment for now, what's the return on capital? $20%; what's the capital-at-risk? Answer: $5k! Why? because the broker would liquidate your position when the stock drops in half, without waiting for the stock to drop to zero. (The picture is somewhat different in situations where specific securities allow much higher leverage ratio, the trading agreement allows recourse by brokerage, and the trader is dumb enough to have not set up limited liability corporation to fend off recourse at the same time).

    The capital-at-risk / capital requirement for a position is at least the greater of:

    (1) What you are comfortable with;

    (2) What a counter party to your trade execution would demand; since you do not have a floor seat and you are not engaged in private party OTC derivatives, that would be what your broker would demand in margin requirement. That's the money you have to set aside and unavailable for other positions.

    It doesn't matter how risk-holic you are by yourself (i.e. how "safe" you think your position is), the brokerage and regulatory requirement set the bar on how much you need to put up to open and keep the position when you are oblivious to risk. That's the capital that you can no longer use to open alternative positions while the said position is open. That's why it's the denominator in ROI, because it's the basis for calculating opportunity cost. If the trader is more risk-averse than the brokerage; i.e. not using margin or not margin to the full extent allowed, then the denominator is naturally bigger, as befitting his risk-averse profile.

  11. iwog


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    58   7:29pm Sat 17 Sep 2011   Share   Quote   Permalink   Like   Dislike  

    Reality says

    I posted to this thread only to point out that the return on capital in this method of "investing" (really gambling) is actually much lower than the 49% calculated from the the option value itself . . . for the very simple reason that no broker would allow a conventional individual trader to write options like that without demanding substantially more margin tying up much more capital than the size of the initial premium collected for writing the option.

    Wow, what a genius! Do you realize that I covered in glorious detail an extremely detailed explanation of this before you even posted your fictional 50-25% margin guesswork to the thread? Do you understand how absurd you look lecturing me on something I already covered, and doing it WRONG? Nice work there bub.

    Wow......I wonder why you didn't bother reading this?

    Reality says

    Good grief, and you hold yourself out as the resident "investment" guru?

    Oh bullshit. At what point did I ever claim anything other than I was strictly amateur and a gambling one at that. Are you so weak that you have to posture everything with a lie?

    Explain why you would use margin as an argument for capital being at risk, and then abandon your very same argument when I point out that the margin is only 20%?

  12. iwog


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    59   7:31pm Sat 17 Sep 2011   Share   Quote   Permalink   Like   Dislike (1)  

    Reality says

    I bet your broker treated the order as securities requiring 50% margin on the underlying if you are not pattern day trader

    Wrong.

    Reality says

    or 25% of underlying if you are pattern day trader

    Wrong.

    Reality says

    then add volatility calculation and option value on top of that.

    Wrong.

    Reality says

    October 22, 2008: high 74.8, low 66.3, a range of > 12% from the low.

    Wrong.

    Reality says

    You'd have gained 10% already by now if shorting GLD itself from the top.

    The top? Oh that's right, you picked the top back when it was $184. How can we forget the thread you wrote about it.

    $184 to $176 (friday's close) is $8. That's a gain of exactly 4%.

    So guess what..........

    Wrong!

    Are we done here?

  13. Reality


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    60   7:39pm Sat 17 Sep 2011   Share   Quote   Permalink   Like   Dislike (1)  

    iwog says

    Oh bullshit. At what point did I ever claim anything other than I was strictly amateur and a gambling one at that. Are you so weak that you have to posture everything with a lie?

    You explicitly described your gambling as "investment." You are indeed an amateur, given the flimsy grasp you have on basic financial concepts.

    Explain why you would use margin as an argument for capital being at risk, and then abandon your very same argument when I point out that the margin is only 20%?

    "Capital at risk" is a very specific term, not "capital being at risk" or "capital risk" as you mistakenly typed up from time to time. That being said, what "abandon" are you referring to? The "Capital at risk" required for the trade is at least the margin requirement that the broker demands in opening the trade for you. Therefore the capital-at-risk for calculating return on capital, i.e. the denominator, is much greater than $4x100 per contract. When and where did I ever deviate from that line of reasoning? You simply did not understand what "Capital at risk" meant, and launched into a tirade about how in your subjective view the risk is lower. It doesn't matter what your subjective view is. "Capital at risk" is the capital requirement the broker demands from you to open and maintain a position when you are too clueless to impose higher bars on yourself.

  14. iwog


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    61   7:43pm Sat 17 Sep 2011   Share   Quote   Permalink   Like   Dislike  

    Reality says

    You explicitly described your gambling as "investment." You are indeed an amateur, given the flimsy grasp you have on basic financial concepts.

    What does that have to do with you lying about me holding myself out as an investment guru? Care to explain?

    So how come you've given out so much wrong information in this thread and how would I, with my flimsy grasp of basic financial concepts, be capable of calling you out on a mountain of bullshit?

    I explicitly put the word investment in quotes. Do you know what that means?

  15. Reality


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    62   7:59pm Sat 17 Sep 2011   Share   Quote   Permalink   Like   Dislike  

    iwog says

    I bet your broker treated the order as securities requiring 50% margin on the underlying if you are not pattern day trader

    Wrong.

    Reality says

    or 25% of underlying if you are pattern day trader

    Wrong.

    So you are a pattern day trader, and your broker makes a special case to lower the 25%+ requirement to 20%+, big whoop! Still an order of magnitude larger requirement than the 2.2% or so that would be implied by $4 / $180 if one is to calculate capital cost base from the option value alone!

    Reality says

    then add volatility calculation and option value on top of that.

    Wrong.

    What's wrong about that again? Even your own statement indicated that the broker added the option premium (value) back onto the margin requirement. So what they think the GLD volatility warrants a -5% margin requirement compared to the conventional 25% for pattern day traders. So I was off by 25% after being 90% correct!

    October 22, 2008: high 74.8, low 66.3, a range of > 12% from the low.

    Wrong.

    Chart error by a well established and easily commonly accessible charting source, not my mistake. Compared to what? a fool-hardy by newbie option trader that a specific ETF would never fluctuate by more than 10% in a 24hr period?

    The top? Oh that's right, you picked the top back when it was $184. How can we forget the thread you wrote about it.

    $184 to $176 (friday's close) is $8. That's a gain of exactly 4%.

    So guess what..........

    Wrong!

    The low was $173.71 on Friday. A 2:1 leverage would have accomplished more than 10%, more than you can ever dream to accomplish with your current position (profit potential is capped in option writing), and that would be far less risky than the 5:1 leverage that you are undertaking.

  16. iwog


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    63   8:09pm Sat 17 Sep 2011   Share   Quote   Permalink   Like   Dislike  

    Wow, you just don't know when to quit.

    Reality says

    So you are a pattern day trader, and your broker makes a special case to lower the 25%+ requirement to 20%+, big whoop!

    Wrong. That number isn't set by the broker, it's set by the CBOE.

    Reality says

    What's wrong about that again? Even your own statement indicated that the broker added the option premium (value) back onto the margin requirement.

    Wrong. I said the broker SUBTRACTED the options premium back into the margin requirement.

    Reality says

    The low was $173.71 on Friday. A 2:1 leverage would have accomplished more than 10%, more than you can ever dream to accomplish with your current position (profit potential is capped in option writing), and that would be far less risky than the 5:1 leverage that you are undertaking.

    Awesome!! You're now using a perfect trade, bought at the top and sold at the bottom, to illustrate how great a short would have been. (after the fact)

    And you think I'm doing what......spreading misinformation about the value of writing a call option? ROFLOL

  17. Reality


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    64   8:10pm Sat 17 Sep 2011   Share   Quote   Permalink   Like   Dislike  

    iwog says

    What does that have to do with you lying about me holding myself out as an investment guru? Care to explain?

    Given the numerous times that you have elaborated on this forum about your investments, and how "high stakes" they are, one would naturally expect that you are good at it . . .

    So how come you've given out so much wrong information in this thread and how would I, with my flimsy grasp of basic financial concepts, be capable of calling you out on a mountain of bullshit?

    Because the information was not entirely wrong per se. My estimates were 90% correct (in the right order of magnitude when addressing a set of calculations that was in the wrong order of magnitude), but give or take 20% simply because they were estimates. Your specific brokerage has that kind of flexiblity.

    I explicitly put the word investment in quotes. Do you know what that means?

    I'm sure you are just the kind of person who would throw $100,000 around on a random gamble, and brag about refinancing a non-jumbo loan through Amerisave on a primary home . . . while other people thought you were some kind of big shot landlord with large investment property portfolio . . . Things are not adding up, Mr. Office Manager.

  18. iwog


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    65   8:19pm Sat 17 Sep 2011   Share   Quote   Permalink   Like   Dislike  

    Reality says

    Given the numerous times that you have elaborated on this forum about your investments, and how "high stakes" they are, one would naturally expect that you are good at it . . .

    Says who? I post everything real time. If I lose it's obvious and if I win it's obvious. I've never once claimed to be anything other than a layman when it comes to the markets. I have no formal training. But then that's not what you said...........

    Reality says

    Because the information was not entirely wrong per se.

    Wrong. Your information was false and you indicated nothing about making guesses or estimates. In fact nearly everything you've posted was wrong, AND everything you've posted was after I had already explained IN DETAIL what you later incorrectly guessed about.

    Reality says

    I'm sure you are just the kind of person who would throw $100,000 around on a random gamble, and brag about refinancing a non-jumbo loan through Amerisave on a primary home . . . while other people thought you were some kind of big shot landlord with large investment property portfolio . . . Things are not adding up, Mr. Office Manager.

    I was asked to relate my experience with Amerisave by several people on this board. I have no idea why you call it bragging, but I thought I was helping people out.

    I'm probably a fraud. You should stop reading me and go back to watching smurfs.

  19. Reality


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    66   8:21pm Sat 17 Sep 2011   Share   Quote   Permalink   Like   Dislike  

    iwog says

    That number isn't set by the broker, it's set by the CBOE.

    Still marginal difference: 20% vs. 25% whereas I estimated the 25% to show that capital requirement to execute the trade is not 2.2% of underlying!

    I said the broker SUBTRACTED the options premium back into the margin requirement.

    You may want to reparse the sentences/formula again. The value of the option premium increases the margin requirement, not decrease . . . conversely, the increasing margin requirement decreases your available margin in your account.

    You're now using a perfect trade, bought at the top and sold at the bottom, to illustrate how great a short would have been.

    Not really. Do you think GLD has bottomed before October option expiry a month away? About 10% ROI is the maximum you can ever hope to collect with your current position even leveraged at roughly 5:1! If you really believe GLD is going down, a simple short would generate much greater return with less leverage.

  20. Reality


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    67   8:27pm Sat 17 Sep 2011   Share   Quote   Permalink   Like   Dislike  

    iwog says

    Your information was false

    BS. When I estimated 25%, I was trying to disuade people from believing the 2.2% fantasy. So what the actual number is 20%. What's more, after adding back the 2.2% option premium on top of the 20%, the number is even closer to 25%.

    I'm probably a fraud.

    Wouldn't surprise me at all.

  21. Robert LeRoy Parker


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    68   8:31pm Sat 17 Sep 2011   Share   Quote   Permalink   Like   Dislike (1)  

    Iwog,

    This is incredibly risky business you are up to.

    The macro event risk in the market right now could easily send gold shooting past $2000 overnight. Here some gold links you may be interested in:

    http://fofoa.blogspot.com/2009/12/gold-ultimate-un-bubble.html

    http://fofoa.blogspot.com/2009/03/all-paper-is-still-short-position-on.html

  22. iwog


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    69   9:02pm Sat 17 Sep 2011   Share   Quote   Permalink   Like   Dislike  

    Reality says

    BS. When I estimated 25%, I was trying to disuade people from believing the 2.2% fantasy. So what the actual number is 20%. What's more, after adding back the 2.2% option premium on top of the 20%, the number is even closer to 25%.

    When you guessed 25%, you didn't guess 25% you guessed 50%. Why would you guess anyway after I posted the exact numbers? I also corrected you about the options premium. It is subtracted from the margin, not added to it. Please update your knowledge base and do some actual investigation instead of this non-stop quest to be right when you've already been wrong about everything.

    Robert LeRoy Parker says

    This is incredibly risky business you are up to.

    The macro event risk in the market right now could easily send gold shooting past $2000 overnight. Here some gold links you may be interested in:

    I've been begging people to buy gold for about 5 years now. I've spent years on this very board advocating the investment of gold and silver. I'm the biggest gold bug around.

    The problem is that the economic disasters that will eventually take down the world economy are slow motion events, while the hype and speculation that surrounds investing for these events are happening right now.

    Peak oil: It's true, however the oil market was prematurely driven to $147 a barrel in 2008 only to crash back down to $30. (then driven back up near $100)

    Internet commerce will change everything: It's true, however the speculation about this eventuality occurred in the late 1990's while the reality of this is VERY SLOWLY becoming true today.

    Fuel cell hydrogen cars will take over: Maybe true or maybe untrue, but platinum for fuel cells was driven to $2200 per ounce before a single production vehicle rolled off the assembly line.

    You see, if I've learned one thing from investing in my 45 years on this earth, it's that speculative hype is always far ahead of the actual events that caused the speculative hype.

    In short, buy the rumor and sell the news. My belief is that gold is done for now. We have:

    1. parabolic rise from $1500 to $1920. This fits the bubble model pefectly. Platinum went from $1600 to $2200, NASDAQ went from $2800 to $5000, silver went from $30 to $48. The last parabolic rise of any bubble is one of the most consistent aspects.

    2. huge swings caused by billionaires unloading positions in the middle of the night. The last one happened at 1:00am September 6th and took gold from $1920 to $1860 in one single hour. Another larger one happened on 8/29 and took gold from $1850 to $1705.

    3. a double top which may now be putting on the last shoulder.

    4. a gold price which exceeds the platinum price, an event that only happens right before the gold price crashes.

    I'm satisfied this is the top for now. I like gold, I fondle gold, I put gold coins on my cat and take photographs, but for right now I'm a gold bear.

  23. Reality


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    70   9:30pm Sat 17 Sep 2011   Share   Quote   Permalink   Like   Dislike (1)  

    iwog says

    When you guessed 25%, you didn't guess 25% you guessed 50%.

    Does that sentence even make sense?

    Why would you guess anyway after I posted the exact numbers?

    Because I was replying to someone else's post without going through the trouble of reading some of your old posts written before his post. You don't happen to believe everyone should read all your old posts like the bible in a seminary school, do you?

    I also corrected you about the options premium. It is subtracted from the margin, not added to it. Please update your knowledge base and do some actual investigation instead of this non-stop quest to be right when you've already been wrong about everything.

    Here is the direct quote from CBOE:

    Short Call
    Initial Margin Requirement:
    100% of option proceeds plus 20% of underlying security value less out-of-money amount, if any.

    Wrong about everything? Are you serious? That's from some good-for-nothing office manager who doesn't even understand what capital-at-risk is? or how to calculate real return? I was certainly correct in pointing out that the real capital cost is much much higher than 2.2% of the underlying; in that context, giving a rough estimate of 25% of underlying as a way of illustrating the real cost of capital being far more than the 2.2% fantasy was very much correct. The precise number 20% vs. 25% is quite immaterial as that number can be easily adjusted by the regulators at the drop of a hat, and you should have experienced those margin requirement adjustments if you have been in this business for long.

  24. iwog


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    71   10:11pm Sat 17 Sep 2011   Share   Quote   Permalink   Like   Dislike  

    Reality says

    iwog says

    When you guessed 25%, you didn't guess 25% you guessed 50%.

    Does that sentence even make sense?

    Reality says

    I bet your broker treated the order as securities requiring 50% margin on the underlying if you are not pattern day trader, or 25% of underlying if you are pattern day trader

    It just illustrates how much you're making shit up.

    Reality says

    Wrong about everything? Are you serious? That's from some good-for-nothing office manager who doesn't even understand what capital-at-risk is? or how to calculate real return?

    Frustrated much?

  25. uomo_senza_nome


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    72   10:34pm Sat 17 Sep 2011   Share   Quote   Permalink   Like   Dislike (1)  

    iwog says

    You see, if I've learned one thing from investing in my 45 years on this earth, it's that speculative hype is always far ahead of the actual events that caused the speculative hype

    Good post Iwog. Liked how you outlined examples to illustrate the above point.

  26. Reality


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    73   11:12pm Sat 17 Sep 2011   Share   Quote   Permalink   Like   Dislike  

    iwog says

    It just illustrates how much you're making shit up.

    Here's the simple math:

    20% / 2.2% = 9.1

    25% / 20% = 1.2
    50% / 20% = 2.5

    If you have been investing for long enough, you'd know that the crucial point is getting the general direction and outline right. The exact precise details are far less relevant as those regulatory numbers are adjusted from time to time anyway.

    In fact, it goes to show that I didn't even have to look up the current regulations to get the ball park numbers. Whereas you are repeatedly demonstrating your newbie status with your fastidiousness with contemporary details.

    Frustrated much?

    Not after you admitted to being a fraud.

  27. iwog


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    74   5:40am Sun 18 Sep 2011   Share   Quote   Permalink   Like   Dislike  

    You're right. 50% is the same as 20%. My mistake.

  28. Reality


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    75   8:03am Sun 18 Sep 2011   Share   Quote   Permalink   Like   Dislike (1)  

    iwog says

    You're right. 50% is the same as 20%. My mistake.

    50% / 25% is a lot closer to 20% than 2.2% is to 20% when dealing with margin requirements, ROI and other exponential/fractional issues. Don't you have any sense of order of magnitude at all? or used logorithmic charts? ROI over time is an exponentiating concept, not a linear concept. If you have been around long enough, you'd know that the regulatory margin requirement between 50% to 25% and 20% has been changing in the last couple decades. Regardless the exact number, the requirement is an order of magnitude greater than the 2.2% implied by the false ROI/ROC calculation looking at option premium alone without taking margin requirement into account. Your fastidiousness regarding the exact number for current margin requirement goes to show that you are indeed a clueless newbie.

    Shall we call you "wrong about everything" just because you typed up silver was trading at $58 ? (instead of the actual high just below $50) OTOH, your utter unfamiliarity with how to calculate capital-at-risk, or even the very concept of capital-at-risk (referring to it as "capital risk" or "risk of capital"), does cast doubt on your financial acumen.

    Incidentally, what I found suspicious about you regarding the Amerisave incident is not the bragging per se, but the fact that you were taking great pride in refinancing a non-jumbo loan for a primary residence, when your previous writings had given people the impression that you were some kind of landlord with significant real estate portfolio. Refinance one's own dinky little home for crying out loud! In a state of high average home price no less! What kind of men make a living manage their wives' office full time anyway? Does it sound like the kind of person who would have $100+k to throw around on a random bet? unless he is an utter fool or gambling addict. If that's how you carry on your "investment," your wife would do well to have a pre-nup or post-nup in order to separate her own finances from yours.

  29. iwog


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    76   8:31am Sun 18 Sep 2011   Share   Quote   Permalink   Like   Dislike (1)  

    I said you were right, what more do you want? 20% is the same as 50%. I stipulate to the new reality.

    Reality says

    Incidentally, what I found suspicious about you regarding the Amerisave incident is not the bragging per se, but the fact that you were taking great pride in refinancing a non-jumbo loan for a primary residence, when your previous writings had given people the impression that you were some kind of landlord with significant real estate portfolio. Refinance one's own dinky little home for crying out loud! In a state of high average home price no less! What kind of men make a living manage their wives' office full time anyway? Does it sound like the kind of person who would have $100+k to throw around on a random bet? unless he is an utter fool or gambling addict. If that's how you carry on your "investment," your wife would do well to have a pre-nup or post-nup in order to separate her own finances from yours.

    Wow, who pissed in your cornflakes this morning?

    I admit it. I'm an awful person and everything you said is true. I made a mistake in sharing my experience with Amerisave because I thought it might be helpful to other people refinancing. I wont do it again.

  30. Reality


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    77   10:14am Sun 18 Sep 2011   Share   Quote   Permalink   Like   Dislike  

    iwog says

    I admit it. I'm an awful person and everything you said is true. I made a mistake in sharing my experience with Amerisave because I thought it might be helpful to other people refinancing. I wont do it again.

    In other words, you choose not to address the apparent inconsistency in your image as a landlord with significant rental property holding vs. the need to refinance your own dinky little home (as the rate you quoted could only have been available for primary domicile loan below a certain threshold) . . . now you want us to believe that you are throwing $100+k on a random bet (with underlying valued at about $500k). Does it make sense when put together?

  31. iwog


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    78   12:03pm Sun 18 Sep 2011   Share   Quote   Permalink   Like   Dislike  

    Reality says

    In other words, you choose not to address the apparent inconsistency in your image as a landlord with significant rental property holding vs. the need to refinance your own dinky little home (as the rate you quoted could only have been available for primary domicile loan below a certain threshold) . . . now you want us to believe that you are throwing $100+k on a random bet (with underlying valued at about $500k). Does it make sense when put together?

    Well when you put it that way, it doesn't make any sense. I'm quite the scoundrel.

  32. FortWayne


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    79   1:06pm Mon 19 Sep 2011   Share   Quote   Permalink   Like   Dislike (1)  

    I am not sure if I understand it all. You sold someone an option to buy GLD at a certain price (in November).

    What happens if they choose to actually buy GLD at that point, do you have enough cash to cover it to sell at that price?

  33. iwog


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    80   1:49pm Mon 19 Sep 2011   Share   Quote   Permalink   Like   Dislike  

    FortWayne says

    I am not sure if I understand it all. You sold someone an option to buy GLD at a certain price (in November).

    What happens if they choose to actually buy GLD at that point, do you have enough cash to cover it to sell at that price?

    It would never happen. No one is going to buy GLD for $195 if the price on the open market is $173.

  34. KILLERJANE


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    81   3:09pm Mon 19 Sep 2011   Share   Quote   Permalink   Like   Dislike  

    Wow. 'Reality' BITES and 'Iwog' QUACKS. It is better to laugh. I am glad you shared. But I think your gold option/investment play made money? Hope so. I am still puzzled on the result. Did you win?

  35. iwog


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    82   3:12pm Mon 19 Sep 2011   Share   Quote   Permalink   Like   Dislike (1)  

    KILLERJANE says

    Wow. 'Reality' BITES and 'Iwog' QUACKS. It is better to laugh. I am glad you shared. But I think your gold option/investment play made money? Hope so. I am still puzzled on the result. Did you win?


    Thinking saying and doing need to line up.

    So far yeah. The options I wrote have lost about $7500 or half their value. However they don't expire until November, so I can either take half now or get 100% by waiting two more months.

    The risk is that in two months the price of gold recovers and exceeds $2000 at which point I could still lose money..

  36. swebb


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    83   8:06pm Mon 19 Sep 2011   Share   Quote   Permalink   Like   Dislike (1)  

    iwog says

    So far yeah. The options I wrote have lost about $7500 or half their value. However they don't expire until November, so I can either take half now or get 100% by waiting two more months.

    The risk is that in two months the price of gold recovers and exceeds $2000 at which point I could still lose money..

    So if you could wash, rinse, repeat, then taking your gain now would be the better choice, I guess...

    For me it would be hard not to take the gain (and the risk) of the table -- then again I probably wouldn't have taken the risk to begin with. It's fun to live vicariously, though!

  37. uomo_senza_nome


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    84   7:52am Fri 23 Sep 2011   Share   Quote   Permalink   Like   Dislike  

    iwog says

    The risk is that in two months the price of gold recovers and exceeds $2000 at which point I could still lose money..

    iwog, your call is looking better by the day :)

  38. iwog


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    85   9:36am Wed 30 Nov 2011   Share   Quote   Permalink   Like   Dislike (1)  

    The options expired worthless.

    Score one for the duckie!

  39. AJ1201


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    86   8:52am Thu 1 Dec 2011   Share   Quote   Permalink   Like   Dislike (1)  

    congratulations....what brokerage house do you use?

  40. iwog


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    87   8:59am Thu 1 Dec 2011   Share   Quote   Permalink   Like   Dislike (1)  

    E*Trade

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