Six Figure Investing - Latest Comments

Re: The beginning of the end for mutual funds

vance3h — Sat, 28 Jan 2012 12:57:20 -0000

Hi Nate,Thanks. I think we are still looking for a good metaphor to explain the ETF share creation / redemption process. People do understand buying and selling stocks, but in-kind transfers aren’t part of our normal day-to-day transactions. Perhaps making change is the closest thing.
– Vance

Re: The beginning of the end for mutual funds

vance3h — Sat, 28 Jan 2012 12:56:00 -0000

Hi Steve, Yes, I did do a VXX / XIV comparison: http://sixfigureinvesting.com/... I think these static pair combinations in general are fraught with problems. Pitting daily resetting funds, with their path dependencies, against funds that have variable leverage (e.g., IVOP), or strong mean reversion tendencies (VXX), and then mixing in contango/backwardation factors looks like an unprofitable mess to me. VelocityShares has done some very interesting work with mixes of 2X long plus a daily resetting inverse (http://tinyurl.com/7aaxz6p). I suspect they will productize this soon. It uses multiple resetting portfolios to address the path dependency problems. The other option I like is Barclays' XVZ, which dynamically selects the mix of long/short investments based on the VIX/VXV.

- Vance

Re: The beginning of the end for mutual funds

vance3h — Sat, 28 Jan 2012 12:40:18 -0000

Hi Steve,
Thanks for pointing this out. My commenting system got flaky for a while when I did the latest Wordpress upgrades. I have reposted my comment, but basically I noted that while the volumes are low on GASZ/OILZ their bid/ask spreads tend to be very reasonable.

- Vance

Re: Betting on contango with OILZ and GASZ

vance3h — Sat, 28 Jan 2012 12:33:42 -0000

Hi Steve,
GASZ doesn't get a lot of volume, but the spreads are decent/good. Currently the bid/ask spread is 28.40/28.41.

-- Vance

Re: The beginning of the end for mutual funds

Steve — Sat, 28 Jan 2012 08:43:50 -0000

Vance,

By the way, I see that you made a reply to my comment on the GASZ/OILZ thread, but I am having trouble seeing it.

Re: The beginning of the end for mutual funds

Steve — Sat, 28 Jan 2012 08:42:38 -0000

Hi Vance,

I believe that you did an earlier post on going short both VXX and XIV. I see that TVIX, VXX, VXZ, TVIZ, XIV and ZIV were all down for 2011 and wondered whether you had considered and tested other combinations of shorts for these. Given the inverse relationship of XIV and ZIV with the others, at first it seems like there would be a good method. However, I think in reality a trending VIX would blow the trade out of the water.

Re: The beginning of the end for mutual funds

Kirk Nathaniel — Fri, 27 Jan 2012 07:01:05 -0000

Well put on the note about investors eventually coming over for greed. Less fees and really a more simple, consumer driven vehicle that IS easy to understand once you get some basic education will lead more people to ETF's. I would still stay away from the inverse ones though :)

Re: Free option charts

Bry — Wed, 18 Jan 2012 16:12:52 -0000

Really good information. Thanks!

Re: Betting on contango with OILZ and GASZ

Steve — Sat, 14 Jan 2012 09:47:35 -0000

Oil hasn't been in strong contango lately. So, not much of surprise there. GASZ might be a decent idea, but the volume on these is non-existent.

Re: Review of StreetSmart Edge

Jheffner — Fri, 13 Jan 2012 22:21:48 -0000

fed up with streetmart pro, is tradestation or ib a better option?

Re: Barclays XVZ as a market hedge—backtest to 2004

Steve — Sun, 08 Jan 2012 09:42:19 -0000

Obviously a good VIX-based hedge that doesn't get killed when the S&P is flat or rising would be a fantastic tool. Any additional commentary you post about this would be greatly appreciated. XVZ has certainly performed great as a hedge over the time it has been around, but it is nice to see how these products work over longer times and in different conditions before putting any money on them and of course you want to at least think about how they would perform in more extreme market conditions (2008-2009, flash crash, late 90's market, etc.).

Re: SPY dividend capture—December 2011

Vance3h — Thu, 05 Jan 2012 01:53:18 -0000

Hi Evan,
Your biggest challenge might be getting a good bid price on ITM options. The prices tend to be really bad right before ex-dividend.

-- Vance

Re: SPY dividend capture—December 2011

Evanliberman — Wed, 04 Jan 2012 13:23:36 -0000

Really like this trade, and very good, thorough explanation.
This would be an interesting trade in Israeli index options.

Re: iShare and SPDR dividend history

Vance — Thu, 29 Dec 2011 22:59:38 -0000

Hi Michael,
Funny! The posted SPDR data "only" goes out to 8 digits for that distribution. The additional 6 seems to be some sort of erroneous contribution from Excel. I pasted the SPDR data into Excel and then transferred to the google spreadsheet after some trimming. The google stuff choked when I tried pasting that much data (5900 rows) directly. I added a round function to trim things down to a reasonable length.

-- Vance

Re: iShare and SPDR dividend history

Michael Kelly — Thu, 29 Dec 2011 21:24:59 -0000

I love this. Thank you for doing it.

I do have a question, though. Does the Sep 2011 SPY dividend really go out to 14 decimal places?

Re: Looks like a gold bubble

vance3h — Thu, 25 Aug 2011 00:22:10 -0000

test

Re: Looks like a gold bubble

vance3h — Thu, 25 Aug 2011 00:21:45 -0000

test

Re: How to go long on the VIX index

vance3h — Thu, 26 Aug 2010 23:50:39 -0000

You can't trade the VIX directly. You can trade VIX options, which are based on VIX futures, or VXX / VXZ and their options--which are based on a two month rolling mix of VIX futures. See my "popular posts" section on the right side of my blog for more info.

Re: SPY covered call with protective puts

Vance3h — Tue, 17 Aug 2010 00:39:49 -0000

Hi Mike, Very good point. ITM calls can provide lots of downside protection. However I am wondering about your 15.5% yield calculation. If you get .05 premium on an net investment of $12 that is 0.4167% per month. If you do this 12 times a year that gives 5%. With GE's $0.12 quarterly dividend your options are almost certain to be called, so you won't get to add the dividend to your yield. What am I missing? You can probably get a couple more cents premium by beating the spread with a combo order, but that's still quite a ways from 15.5%.

Re: SPY covered call with protective puts

Mike — Mon, 16 Aug 2010 12:09:16 -0000

I disagree with your opening statement that covered calls suffer from a lack of downside protection. It all depends on what strike you choose. There are many attractive in-the-money covered calls that offer 20%+ downside protection.
For example, right now you can buy GE at 15.45 and sell a Sep 12 call for 3.50. That's 23% downside protection. Factor in the dividend that goes ex-div Sep 16 and you have an annualized return if called (and if flat) of 15.5%. Not a world record setting rate of return, but for something that has 23% of protection not bad at all.
MikeS
http://www.borntosell.com
covered call investment tools

Re: Crossover

Vance1yh — Mon, 02 Aug 2010 23:03:59 -0000

Test

Re: How to go long on the VIX index

sam — Fri, 09 Jul 2010 17:56:07 -0000

Is trading the Vix like trading a stock or does it expire like an option

Re: 2004 vs 2010 —what about the yield curve?

Heidi N — Mon, 28 Jun 2010 11:48:27 -0000

Great graphs!

Re: Dividend capture with covered calls—too hot, too cold, or just right!

dividendium — Fri, 16 Apr 2010 18:57:56 -0000

The strategy you describe here is very close to the Inflatable Dividends strategy on my website.

It basically looks for the highest annualized return on covered call dividend capture trades expiring at the upcoming expiration date. The daily data lists out how many days until expiration and how many days until ex-dividend for each possible trade.

There's a 60-day free trial.

http://www.dividendium.com/Pre...

Re: Capturing dividends with covered calls—are you ready?

Brian — Thu, 08 Apr 2010 19:38:25 -0000

The January 27, 2010 State Of The Union Speech outlined that 1.5 million new jobs will be created in 2010 and that job creation is the Democrats number one priority in 2010. The U.S. exports are projected to double in five years and add another two million jobs over this time frame. The U.S. financial system was on the "verge of collapse" when President Obama took office and positive GDP numbers and a 78% increase in the S&P 500 index transpired since the March 2009 lows. Unemployment benefits were extended or increased for more than eighteen million Americans, health insurance was made less expensive for 65% of families who get their coverage through COBRA and twenty-five difference tax cuts were passed. Ninety-five percent of working families experienced tax cuts. Taxes were also cut for first-time homebuyers, for eight million Americans paying for college and for parents trying to care for their children. Two million Americans are working due to the steps that the Democrats took. These include over 200000 in construction and energy, 300000 teachers and tens of thousands of police officers, firefighters, correctional officers and first responders. Community banks will be giving small businesses over $30 billion in new loans and a new business tax credit will be implemented. A $10000 tax credit for four years of college, a near doubling of the child tax credit and an expansion of the tax credit to establish a nest egg will be implemented. Obesity in the U.S. is being challenged and government spending will be frozen for three years starting in 2011. Based on these and other positive economic reports that have been released since the time of the January 27th State Of The Union Address, it is not surprising that investors are not apprehensive about investing in the U.S. stock market. A S&P 500 index level of 1250 and a VIX reading below sixteen may occur by May. The major U.S. stock market indexes are displaying a Yes we can, yes we can, yes we can attitude to the ability of the bullish stock market conditions to continue.
Writing out-of-the money put options on stocks and/or E.T.F.'s (as compared to writing covered call options) may be a more profitable strategy to implement once a minor correction in the major U.S. stock markets occur.