RM's occasional market calls...

Quote from Daring:

Unless you are expecting a long term consolidation before the plunge, it makes no sense to me, perhaps I'm missing something obvious that was mentioned in the past.
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I understand you are use to dealing with phonies and other pretenders but
You need to understand that Dr.Metal is a real trader who has made millions in the financial markets. You are not talking to another pretend, hindsight, deluded chart reading paper trader like yourself and likely your associates. I would strongly recommend you listen closely to his words rather than spouting off nonsense and continually reinforcing your market ignorance.
 
Quote from marketsurfer:

I understand you are use to dealing with phonies and other pretenders but
You need to understand that Dr.Metal is a real trader who has made millions in the financial markets. You are not talking to another pretend, hindsight, deluded chart reading paper trader like yourself and likely your associates. I would strongly recommend you listen closely to his words rather than spouting off nonsense and continually reinforcing your market ignorance.
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Why, thank you good sir! :D
I probably sounded the same way he does, back when I was young and relatively ignorant.
 
Quote from Rearden Metal:

Why, thank you good sir! :D
I probably sounded the same way he does, back when I was young and relatively ignorant.
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Surf's need for glory (lack of self-esteem) chained him to your long-term call at the wrong moment, so he's sorta paying the piper for that, bleeding all over the place.

The downside of being a visionary type is... you might accumulate casualties. Which might in turn affect your willingness to... be Rearden Metal.

Realistically, as per PTJ, people like surf are always going to get exactly what they seek from the market so you shouldn't feel responsible. As in, calling your hedges and diluting your conviction may not be wise for your own sake.

Tough position to be in if you're both gifted and have a quasi-empathetic or moral compass. It's a lot easier to fly under the radar ;)
 
Quote from Rearden Metal:

OK, I'm gonna cut you some slack and assume that this is the first time you've ever encountered a trader mixing time-frames on one single position, which is a pretty advanced concept after all.

So even though both trade categories are the same basic thing (=ADT bear positions), there are two separate things going on here:

Position#1-Base size: Long time-frame position, holding for eventual plunge due to competition catching up with the company.

Position #2-Additional size, added at top of range: Short time frame position, holding only until the stock drops back down to mid to low end of range. The intention with this additional size is NOT to win the lottery with a plunge to the mid-30's <b>once</b>, but to pick up a buck or so profit <b>many times</b> as the stock is pulled back down into its accustomed range. I am not willing to consistently hold this much size for months. The trade is designed to be taken off after a day or two at most.

The confidence I have in position #1 (that ADT is doooomed) enables me to comfortably put on bonus size with position #2, however these are clearly two separate trades with two separate time frames and two separate profit targets.
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If you are expecting a large plunge, don't see reason for trading the range unless you are expecting consolidation to last a long time, meaning, ride the top of the range to the middle and low (as you say) many times, and if that's the case, why waste "time" premium buying those puts prematurely if you are expecting that consolidation to last ?

As you can see, I have a point.
 
Thanks! ADT current price= $40.85. I already took some off the table at all sorts of prices.

Samsara- You get me, I like that.
Daring- You've got bigger balls than AC/DC (but are probably too young to get the reference). I respect that.
 
RM, thanks for the call! I went to cover at buy limit of 41.50 and got filled at 41.25, very rarely does that happen for me :D ..

In hindsight it’s obviously a bad move because I bought into large selling when I should have held on and waited to cover but ehh I'm not crazy about how over valued this stock is, the recent 8-K is interesting because it seems like there are some accounting tricks going on.

I covered because I see the downside stalling out pretty quickly. This is a company that will bring in $1B FCF and probably have a market cap of $8 B by the end of the year (assumes it stays at 40). I see these numbers attracting value investors so to me shorting something like this is shorting aapl or msft or wu all good shorts but once value investors step in it becomes an attrition war..
 
Up 15% in one account ;) Personally gonna hold this short for a bit.

Also got short gold again yesterday (but not as heavy as ADT).

Only dude I'd take calls from blind, aside from maybe Mav. Everything else I do my own thing only, sticking to my inter-market stuff and a few spreads.

Nice fucking call! It's like an actual work of art to see this unfold.
 
Now that I have another minute to post stuff: Daring, you really do have a point- but maybe not as strong a point as you might think. Time decay isn't all that bad on such distant options, plus the fact that I can't predict the BIG drop as well as I can predict the drop from top of the (former) range down to mid/low range. Regardless, buying naked Jan '14 puts is what I was doing at first, but then I <b>did</b> shift to non-time decay sensitive positions as you saw with that June 48/44 put spread, where time decay actually works in my favor. Bottom line is that those naked long Jan '14 puts were probably not so ideal after all, validating what you just said. As I add size on bounces up, I'll favor other types of ADT bear positions going forward, and not simple long LEAP puts.

P.S. Just looked it up, and that ridiculous 'Big Balls' song actually came out way back in 1976. Which means that <b><i>I</b></i> should be too young to get that reference as well.
 
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