Pabst's Blue Ribbon Trades

Quote from Pa(b)st Prime:

I had a horrible day in Corn which I intended to get out of today (before I knew it was going to open up 12 freakin' lower) but I'll talk about Bonds first. I'm obviously thrilled I covered those shorts.

Bernard, my trading in Bonds is built upon 2 premises. One is that 114 will never trade again. Two is that Bonds after a 23 year bull cycle are going to succumb to the pressures of commodity inflation, budget deficits, a weak dollar and competing debt issuance from emerging entities.

I'm not an America is Rome type moonbat (most the world sux, not just us) so I don't oversubscribe to any single bear theory. IMO though there's just enough doubt about the wisdom of tying up depreciating dollars at under 5% for three decades that one is not goofy anticipating the possibility of a concession in price.

Hence the market is 4 years off it's high and has stopped dead in it's tracks at 4.50%. Unfortunately for bears the market has also refused to penetrate 5% after several tries.

I'm well aware there's also a compelling bullish case for Bonds. While the media fixates on the sub-prime mess, a much more serious situation looms in the pension liability crisis caused by prolonged low long bond yields. Most funds are mandated to hold relatively little assets in equities or alternative investments.

An institutional retirement account is a glorified bond fund. When these teachers associations and the like were drawing up charters a couple of decades back they assumed average yields of 6-8%. Those anticipated returns seemed modest given that the long bond spent a decade above 8%. Well now they're hosed.

Also it's impossible to not think about stocks finding a top. What would a break in stocks do to high yield corporates? Those hedgies playing the carry game are short Treasuries against that 9% stuff. Watching them unwind may be unmerciful for a Treasury short.

All that aside, I find little wisdom in covering positions that I believe at the time have further to go.

Being opinionated doesn't hurt traders. Being WRONG hurts traders. The bane though is it's very hard to take profits when your overly biased and very hard to take losses when you're too biased. We all know that. If someone buy's a stock for $7 thinking it's going to a hundred he's not the guy to ask "why didn't you sell off that high at $9.23"?

I once heard a pundit say that for every secretary at MSFT who held her IPO stock to 3mil there were 10 other holders who got out as soon as those MSFT shares equaled a new car or a down payment on a modest home. We also know of dot com owners who went from 3 mil to zero. As traders and believers in randomness there's truly no absolutes.

I guess what I'm saying Bernard is I'm trying to roll the dice and take 10pts out of 40 bonds rather than predict the next turn. And being opinionated makes buying breaks all the more difficult.

My worst trades, my blow out trades-have come by fading a move after taking a pre-mature profit made on the right side of the move. I guarantee you this:70% of the index perma bears on ET who haven't yet blown out will eventually do so by buying the market after the high is in.
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Excellent commentary. I am often fascinated by the inflation/deflation tug of war played out in the bond market.
Any suggestions as to how to understand this better?
 
A quick update.

I haven't trade since early this morning-I'm barely even watching.

Sold 5 ZB at 111.27 and 1@ 111.23

B 1 E6 (EUR) at 135.63 which get's me flat.

S 1 CTN at 48.80 (long 2)

Grains remain the same.

I should pull the plug on some of the Corn but in all honestly I'm kind of shell shocked.
 
I'm in better shape than 12 hours ago but wtf.

The good part is I had a great scalp over night in ZB. I went from short 8 lots to long 2 after 10 buys at 111.21. I then put the 10 back out at 111.27 so I'm still short 8 with a much better basis.

The bad part is not only did I take a nice hit on those 15 CN 4.10 calls I sold y-day but I neglected to do as planned and buy back my short bean calls. Costly error in judgement.

I'm a bit too complacent with my grain trading. Unlike the indices these things gap like no tomorrow and gap n' fill ain't the usual MO.
 
Quote from Pa(b)st Prime:



The good part is I had a great scalp over night in ZB. I went from short 8 lots to long 2 after 10 buys at 111.21. I then put the 10 back out at 111.27 so I'm still short 8 with a much better basis.
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Even if the CPI came out relatively benign, your short is still quite good! Maybe they're thinking about the weak TICS...:p
 
Quote from Bernard111:

Even if the CPI came out relatively benign, your short is still quite good! Maybe they're thinking about the weak TICS...:p
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Tics or TIP's, lol?

I sold another 2 Bonds at 111.09

Yes I am the man. :)

I didn't trade yesterday and since I was quasi-depressed I didn't feel the need to pipe in here.

In Corn I scalped like mad from the long side this morning and made 6k. I sort of took the attitude that if Corn broke again I'd quit on grains and just stay with Bonds. Of course these Bond profits gave me a cushion to get bigger in Corn.

I'm inconsolable over those short Bean calls. I've capped my bean profits quite a bit prematurely. But on the other hand if I wasn't short those calls I probably wouldn't have gotten aggressive in Corn today so it all washes out.

I also added 2 CT bringing my total to 4. I may try to sneak out at a scratch or sell OTM calls against them.

I'll post prices and positions later as I have my platform shut down. I didn't trust myself into the close, lol.
 
S 2 more ZB at 110.31. Short 12 of 'em.

Still long 4 Cotton and 10 covered calls in Corn. My beans are kind of non-existent as they'll be called away from me unless something dramatic happens.
 
Just thinking about how I f***ed myself out of 20k in additional profits by not buying back those Bean calls. It SUCKS looking at my run and seeing 30k in Bean futures open equity cut virtually in half by those S 750 calls. There is such a fine line between glory and gory. Being in a covered call position in a runaway bull is like rolling boxcars in gammon when you're blocked on the 6. Just a fine pair of dice tumbling into the wasteland.

If I'm not careful these Bean calls are going to be a depressing chapter in my life. What if Beans are on a breakout move to $11. (quite possible) What kind of DICK am I going to feel like knowing I had 50,000 bushels called away from me at seven and a half freakin' dollars. I'm a chump.

Obviously when I sold these calls I would have been DELIGHTED to wind up ITM. But times change and winding up behind the curve is death.

I'm making money the same way 90% of traders make money. I'm a bull in a bullish grain market and a bear in a sluggish Bond market. My trading/timing in grains SUX! My bond trading...well for 25 years I've traded Bond futs so my timing and feel are pretty ok. Bottom line: talentless trading is REWARDED by favorable market conditions. Anyone who refuses to acknowledge this is poker or backgammon is delusional......

Over the long haul it's not the play it's the bet. However on any particular trade the play is all it is. Make a stupid bet but a right play, win. Vica versa, lose.
 
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