As those of you who read the post on Wake Up Calls can tell, I’ve been around the block a couple of times. Enough times, in fact to be pretty clear about the 99% of the world I don’t understand well enough to be an expert.
I freely admit what I don’t know. I don’t know the oil and gas exploration and development business. (I don’t understand the intricacies of neurophysiology, either.)
That doesn’t stop me from investing in those areas. I do try to find an edge that I understand better than the average bear to help my return. In this case, it’s the volatility.
I do know volatility markets, and with the bullish stance of some of the well-respected posters and analysts, I have no problem taking a bullish hedged position in this stock, selling options into that volatility. If the bull run continues, I’ll be out with an effective annual return in the 90%+ neighborhood. Works for me.
Face it, guys — the market is speaking that the bull case is stronger, and my faith in some of the analysis over the years from one of your favorite bullish posters led me to take my bullish position Thanksgiving week.
I’m nicely in the green on my position, which has limited upside (90% per annum return is the limit on the March options, and 15% in just three weeks for the Decembers). To be fair, if the music stopped (options came due) today, Barry would also be in the green, because he sold puts against his short.
In fact, we’ll both make money if the stock settles anywhere between 48 and 78 at options closing in March, which is the point of hedging, after all.
Barry also sold volatility with his bearish position. He repeated some of what he’s heard from experts he trusts, and he’s expressed an investment opinion.
Will the bulls or the bears be proven right eventually? Of course.
Will the hedgers be able to make money, both bull and bear? I think yes.
Having said that, I do want to say that this little avocation, the Mind On Money blog, is not going to be the place for anything remotely resembling personal attacks. There are plenty of places you can do that to your heart’s content.
If you want to call it censorship, so be it. If you want to vent privately via the blowback page, have at it. For all but the seriously threatening types, I’ll try to respond personally.
I can take disagreement (on the facts or the conclusions) all day long, as long as you can avoid being disagreeable.
Note: range of profit for our respective positions changed due to Barry’s greater upside protection, and to me counting the profit already taken on my bullish position, now invested in AHR lottery tickets.