Don's Openings Pt. 2

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Thanks for the explaination.

I am using an envelope about twice as big as yours :-)

Also I passed up GM because of the auto numbers, SLB because of crude oil price (come to think of it if I am going to do energy stocks I have to do it regardless of news, as there is news on oil price every single day), retailors because of the retail numbers . . . TXN/MU because of the semi downgrade . . .

I think I am going to take out SLB as I hate to judge "how good/bad this oil price really is" every single day, and narrow my envelope a little and use beta instead to artificially widen the envelop for more volatile stocks.

BTW, do you do any drug stocks? They all have a beta of less than 1, I mean a stock with the volatility of say JNJ with a 0.50 beta I simply feel uncomfortable about doing half the envelope for, if you know what I mean . . .
 
Great explanation of opening order. SPM is the big sp futures contract 9:15 close that you are using? Also, what source do you use for beta on your stocks. Have you pretty much settled on 1% or are you adjusting based on size of gap?

Thanks for your contributions to a great thread

Eric
 
mgkrebs,

Just curious, your previous post listed your wins/losses. You said you made .10 on GM, but you don't show any wins of .10 today. Was GM real or hypothetical?

Thanks
 
Originally posted by Hitman
Thanks for the explaination.

I am using an envelope about twice as big as yours :-)

Also I passed up GM because of the auto numbers, SLB because of crude oil price (come to think of it if I am going to do energy stocks I have to do it regardless of news, as there is news on oil price every single day), retailors because of the retail numbers . . . TXN/MU because of the semi downgrade . . .

I think I am going to take out SLB as I hate to judge "how good/bad this oil price really is" every single day, and narrow my envelope a little and use beta instead to artificially widen the envelop for more volatile stocks.

BTW, do you do any drug stocks? They all have a beta of less than 1, I mean a stock with the volatility of say JNJ with a 0.50 beta I simply feel uncomfortable about doing half the envelope for, if you know what I mean . . .
More...

Hey guys!!! Don't tell Hitman any of the real secrets to this strategy..let's just keep it to ourselves....Thanks...

:-)
 
I have a question regarding envelopes. When you say for example you use a .80 envelope are you talking .8% or just .80 (as in 80 cents)?

Leland
 
Hell, I've only been doing OO's for 3+ weeks. I'm a little surprised at how smoothly it's going.

"SPM is the big sp futures contract 9:15 close that you are using? Also, what source do you use for beta on your stocks. Have you pretty much settled on 1% or are you adjusting based on size of gap? "

I actually don't have a realtime SP quote, I use the ES (e-mini). I will usually use the 9:15 price, but today since it was moving after the 8:30 number I was still adjusting at 9:20. I just use yahoo finance or MSN for beta. If one source says 1.45 and another source says 1.37 or 1.5, it's not going to make any difference in the long run. I haven't made any adjustments to the envelope size.
 
Thanks for the answer.

My question was whether you have any drug stocks or any stocks with a BETA below 1, and if so how do you calculate the fair value via BETA.

I just re-calculated my list with a 0.75% envelope but added BETA as part of the calculation and hopefully tommorrow I will see some action . . .

I dropped all defensive stocks from the list, drugs/energy etc . . .
 
Interesting discussion regarding BETA! However, my impression is that a stocks BETA often does not correlate in regards to the opening print. Take PG or MMM for that matter, both have relatively low BETA but can be all over the place at the opening. At the other hand, stocks like UN with a higher BETA rarely moves much at the opening. I think that it all comes down to what you are comfortable with in the end. For you guys with good nerves try cathing a ride with CAH or CAM at the opening, I'll promise you a thrill. Just a thought to add to the debate here. Good luck!
 
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