June 2012 Trading Thread - Page 9

tastychicken2 · 06-13-2012, 07:39 PM

as i said. predicting tomorrow's movement in the market is stupid.

so i don't see any point in saying "i was right. market moved one day"

same goes other way. i don't see any point in bashing someone for getting it wrong for one day.

ffs

Malice's Attorney · 06-13-2012, 10:58 PM

Quote:

Originally Posted by savant111

Question for the community:

Im comfortable enough trading now that I'm going to rollover one of my IRA accounts online to trade.

Apparently you can't short in an IRA account. What are some decent trading securities in a bear market to go long in? I know i could go long TLT or GLD if the timing is right. Are there any inverse ETFs that are less dangerous to trade? HighStakesFan I know you like the inverse ETFs perhaps you can offer your opinion?

I've never traded an option before nor do I really want too as learning to trade securities is hard enough. Is options trading something that is necessary in an IRA account if you want to be active during downtrends?

Also fwiw I'm not totally closed to just sitting out in cash during downtrends if there aren't suitable alternatives. Thanks.

Just follow the trader I do, up 122% in last 18 months

, fairly spendy subscription, but worth it.

savant111 · 06-14-2012, 01:15 AM

Dam Malice that's an impressive return.

Futures are up for some reason, I don't understand.

Was gonna come on here and say I think tomorrow will be the day we drop down hard and retest the low 131 area on the spy, but I guess we'll see. I can't even find a single stock that would be a good buy tomorrow.

Some stocks I could see taken a hit tomorrow CRM, SBUX, and GOOG. Again futures are up so take fwiw (Some random trader talking stocks on a poker forum).

Gl all.

Malice's Attorney · 06-14-2012, 01:28 AM

why would you expect a downtrend right now with the dollar moving down into a dcl? it already got extremely stretched to the upside over the last cycle

seattlelou · 06-14-2012, 02:18 AM

Quote:

Originally Posted by Biesterfield

Can someone give me a quote on long-dated USDHKD ATM call options? I'm exploring if it is feasible to play Bill Ackman's long Hong Kong Dollar trade. Cliffs here

The rates fixed, right?

Biesterfield · 06-14-2012, 02:35 AM

Quote:

Originally Posted by seattlelou

The rates fixed, right?

Not sure what you mean? The rate is fixed between 7.75 and 7.85 but Ackman's whole thesis is that they will need to re-peg to the USD or let the currency float due to a multitude of macro reasons. In which case the HKD will appreciate ~30%. Since the peg has been on since 1985 there has been no volatility and options are priced extremely cheaply at like 80 bps or less which implies vol of like 2%.

I'm trying to find out if I can make this trade with a limited amount of capital (like less than $3k). I believe Ackman made his trades OTC with a bank, then someone was saying you need at least $1million to buy a contract, then someone else implied you can do it for cheaper but you need to open an account with a foreign broker. I was wondering if the more knowledgeable forex or macro guys here can help me or if they have even heard of this trade.

seattlelou · 06-14-2012, 03:00 AM

Sorry I didn't read the link. I have no idea how you can get somebody to make you a price on a tiny call option on something that is likely to expire worthless. I doubt its worth anybodies time if you don't have a significant relationship with a bank already.

Biesterfield · 06-14-2012, 03:13 AM

Well I am wondering if these options actually trade on an exchange at any reasonable volume where I can get in. Also people would be very willing to sell options on something that they think is likely to expire worthless, its the low capital that is the concern.

Unknown Error · 06-14-2012, 09:10 AM

Quote:

Originally Posted by Biesterfield

Not sure what you mean? The rate is fixed between 7.75 and 7.85 but Ackman's whole thesis is that they will need to re-peg to the USD or let the currency float due to a multitude of macro reasons. In which case the HKD will appreciate ~30%. Since the peg has been on since 1985 there has been no volatility and options are priced extremely cheaply at like 80 bps or less which implies vol of like 2%.

I'm trying to find out if I can make this trade with a limited amount of capital (like less than $3k). I believe Ackman made his trades OTC with a bank, then someone was saying you need at least $1million to buy a contract, then someone else implied you can do it for cheaper but you need to open an account with a foreign broker. I was wondering if the more knowledgeable forex or macro guys here can help me or if they have even heard of this trade.

Perhaps that SAXObanks is your best bet for this transaction?
http://www.saxobank.com/trading-products/forex-options
I like Ackman's thesis, however I probably just go short USD/HKD in my Fx account.

NajdorfDefense · 06-14-2012, 04:17 PM

HK has been pegged since 1983. Ackman's thesis is wrong, as I explained to him both in person and via email when we were discussing the history of Asian fx.

Ackman's problem is 2-fold:
1) He fell victim so some good mktg out of DB, it is a good theory, but....
2) It relies upon cherry-picking the starting dates to watch the increase in Azn Fx vs the Dollar post de-valuation in 1997-98 [and 1994-5 for China].

HK is never going to break the peg with the USD. Not for another 5+ years. The CNY is already weakening and the USD has been rallying for a while now. While HKD was pegged to USD the CNY fell from 1.5 to 8.62 in 1994. Just because it is 6.37 now is no reason to get excited. [and 80 bps a year is 5% loss if it doesn't happen by then. 5% of a portfolio is meaningful.]

His thesis that HK needs to re-peg is because the USD is 'too weak,' simply is not true and will become less true in a crisis. People will continue to hide in USD and JPY. If the Euro blows up, you can bet HKD won't de-peg for another 10-20 years. If they didn't do it in the late 90s when they hiked overnight rates to 300% for interbank loans, the stock market dropped 23% and over $200bn was made available to defend the peg, they certainly won't do it now for NO reason.

One of the main reasons HK is the most popular and free biz center in the world is that there is no worries about fx manipulation by the Chinese central bank and the USD is the largest, most freely floating currency in the world.

Ackman is very, very sharp, but he's wrong on this one just like he was on Borders. The fact that the 'price' is 80 bps a year is irrelevant. And, yes, since i traded fx & options for a living I understand the power of structure. 'Low-priced' does not mean 'cheap.' It's cheap for a reason.

Frankly, he should use that money to buy CNY puts. There's a 10x bigger chance their economy is toast than HKD will need to de-peg.

NajdorfDefense · 06-14-2012, 04:23 PM

LOL at people continuing to hold NOK and RIM. Two of the easiest mega-cap shorts ever. Still $10b to go on NOK.

Larry Legend · 06-14-2012, 04:30 PM

I grabbed CPST at .979

may get out first thing in the AM or hold for a week, unsure atm

Biesterfield · 06-14-2012, 04:55 PM

Good stuff NajdorfDefense. How do you know Bill?

tastychicken2 · 06-14-2012, 06:47 PM

Quote:

Originally Posted by Biesterfield

Good stuff NajdorfDefense. How do you know Bill?

he probably does biz w/ ackman or met him at some conference.

anyways, the only thing i learned from the whole HKD presentation situation back when it happened was how low tilson was following him in. i don't think tilson has done fx, especially options on fx in his life.

Biesterfield · 06-14-2012, 06:53 PM

Funny you mention that. I first heard about the trade when I met Tilson on a visit with school. He walked us through the trade (We actually visited Pershing Square too but didn't get to meet Bill). After meeting Tilson I can see why the guy doesn't have the best reputation in the industry, although he is damn convincing and articulate.