Tuesday, September 22, 2015

SF Problems - Rent

The number boggle my mind!  I mean seriously unreal.  I'm going to use big round numbers to simplify this and it will give me a buffer if I overshoot.  According to SFGate there is no affordable housing.  The median rent price is currently $3530.(

For my study I'm going to used $2500 and this is generous considering many people are sharing giant apartments like communal/dorm rooms.  And lets say it includes all the necessities like utilities, cable, and even throw in parking because that's usually about another $200.  That means the entry level tech employee has to be making at least $60,000 a year.  Times are good but they're not that good.

But OK lets say they do make $60,000 a year.  We haven't even included food and entertainment!  I'd say an average drink at a respectable lounge is no less than 10 bucks.  On average people will have about 5 drinks on a weekend night (oh man I haven't even included happy that's what margin of error is for). So for the weekend you spend about $100-150...just on drinks.  That's about $7,200 a year, we'll say an even $10,000 to include food.

That so far means a total of $70,000 a year for rent, nights out to drink/eat.  I haven't even included Uber expenses, STUDENT DEBT (watch this its great, clothes, dating, insurances.  This is insane.....

Sunday, August 23, 2015

Almost 3 years as a full time trader...this is my experience

Almost three years into full time trading and I'm still a little surprised I've lasted this long. So here's what I've learned.....

Everything from my first post is still valid ( Your ego, emotions, your hopes and dreams will constantly toy with your trading. But what I've learned through time is they slowly get suppressed. The urge to always need to put on a trade slowly diminishes. The need to constantly be right becomes less important. All that matters is your P/L. Once you see your account dwindle you'll hit a point where you quit or slap yourself in the face and say stop fighting the market, trade your plan.

I wrote on the wall "trade what you see, not what you think", and ingrained into my head. I may think raising interest rate and cutting off QE will collapse the market (and I think it's still valid) it takes a long time for these effects to take place in the market. Crashes doesn't happen in one day. Even 1987 recovered relatively quickly. These things take time and there will be plenty of dead cats along the way.

I grew up dreaming of becoming a world famous investor. Not trader, but investor like Warren Buffett. You're taught buy low sell high, buy value, long term investing is the way to go. This may work for some people but it wasn't something that fit my personality. There's many ways to get from point A to point B in this world, people just take the road that best suits them and sometimes it might take a bit longer than others. I slowly realized fundamentals didn't fit me. I was more visual. I understood price movements, support/resistance, changes in trends by the patterns that are forming. In school your taught to read the 10K/Q, analyze the cash flow, look for any accounting discrepancies, watch for EPS manipulation, make sure they're not doing funny things with accounts receivables....list goes on. But the fact of the matter is I know I'm not going to be smarter than the team of accountants these guys hire to find these errors/frauds. So I had to find another way and analyzing price made so much more sense to me.

If you're still reading here's a list of things that I've learned and would do differently.

1. Don't put a time limit on success. When I started out I gave myself a 1 year deadline. Could you imagine with roughly 220 trading days in a year you have only that allotted amount of time to prove to yourself you can do this for the rest of your life? It was quite foolish. The clock is ticking everyday and you already have enough pressure trading you don't need a timer ticking down.

2. Changing my LinkedIn profile. I just changed my LinkedIn profile to Independent trader/investor this year. Yes, it took me 2 years to change my status! And this is why I wish I changed my profile sooner. Your mental state of mind has to be on point at all times when you're trading. Changing your profile puts it out to the world. You have to believe you're a trader and you can't be ashamed to tell the world that. If you have one toe out that door, you've pretty much already given up.

3. Fear/anxiety I hope this goes away, but I have to face the reality that it might not. Jerry rice was once asked what drives him and he said fear( Fear of failing, fear of losing everything he's built. Fear is usually a percieved as a negative but for me I've slowly learned to embrace it. It keeps me on my toes, it humbles me. Fear helps you look at things from a very different perspective. You have to find that fine balance and to this day I'm still working on it. All I can say is you find that balance through confidence.

4. Confidence..... This is by far the hardest thing to achieve. It's such an important aspect of trading and in life that can make or break you. It could be the one key trait that dictates success and failure. Now here's the thing with confidence, it can come at anytime, but you either have it or you don't. I will tell you that I don't have it (yet). There's the saying out there that you can "fake it till you make it". I'm NOT the fake it till you make it type of person, because I'm ultimately just lying to myself. This won't be sustainable because you can only put up an act for so long. I will tell you these three years I wonder how I've powered through this constant beating on my emotions. I've blown up my trading account. And once again this is based on my personality, when I blew up my account that's when I said what the hell am I doing, you have a plan, why aren't you following it?! I like to think that I thrive being under the gun. I need that pressure to click me into the right mindset. You know back in high school when your parents say don't to it you're going to get in trouble. Yeah I was always the type to do it, get in trouble and learn from it. I made the mistakes that I told myself I would never do. I'd read the books of famous traders who have almost all blown up their accounts and I said that won't be me. Hahaha well, I guess I'm just like everyone else.

So here's what this all means. For me I'm still building up my confidence and I'm happy to say that each month I'm getting more and more of it. I'm getting more confidence because I told myself to quit fucking around. You admit that you're wrong, you analyze and work to figure out what you're doing wrong and you force yourself to make a change. I'm happy to say the past couple months have been some of my best trading months thus far and it's because I told myself adapt or do something else.

I also like to remind myself. There's a saying that you don't turn your back to the ocean and I believe that's the same case with trading. That moment you get cocky, overconfident those are the times you get burned the most.

5. Support. I can't tell you how important it is to have a support team. I grew up in a middle/upper middle class family. My parents were immigrants from Hong Kong and built an amazing life for me and my siblings. It's inspirational, it was a huge driver for me. I'm not going to lie I grew up very fortunate. It's been three hard difficult years and my parents still have my back in this don't see many Asian families that would support this risky occupation! Luckily they're quite liberal. Take the negative people out of your life, distance yourself from people that refer to your career as funemployment. These people are a distraction from your goals.

6. Sacrifices. Before trading for myself I had a great paying job, I went to Vegas almost every 3-4 months, traveled when I wanted to, bought what I wanted to buy. Now, I don't think I've been to Vegas for over 2 years now, last vacation was over 2 years ago. Dating has never been harder (lol San Francisco is a pricey place). I've passed up on bachelor parties and weddings. Maintaining a decent wardrobe is difficult. I know, boo hoo I could be starving, homeless, in bad health, but the realities is your changing you life to see the bigger picture is hard and it takes time. This isn't easy, it's a tough pill to swallow. But when your in the business of moving money around you need money to make money and the bigger my account grows the faster I can compound it.

You'll see your friends getting married and have kids, go on vacations. It will get to you mentally and all I can really say is how bad do you want it. You can go back to corporate world which is fine or power through and get the job done. I believe it's called grit.

There's a lot more I can say about full time trading but this is a lot to stomach. As I write this I feel like Doogie Howser. The reality is I don't know if I'll succeed as a full time trader. My account could blow up just because I broke my rules and thought I'm bigger than the market. And there would only be one person to blame....myself. You have a choice to work hard and persevere or give up. Everyone has a breaking point, I'm luckily haven't hit that yet.

Sorry for the poor grammar and run on sentences....I'm a trader not a world class writer. Let me know what you think about this post



Wednesday, July 29, 2015

Why I bought Weekly Puts on $WFM

Here are the reasons I'm trading WFM earnings.  I'm using weekly puts for a pure ER play and have a specific risk.  Earnings results are pretty much a 50/50 coin flip but how much it goes is completely up to the market.'s why I'm bearish on WFM ahead of the call.

1.WFM has a lot of competition from boutique groceries stores, Trader Joes, $SFM $TFM, and not to mention $KR the Safeways etc.  Not to mention the farmers markets are big in cities likes SF.  Restaurants are focusing on local providers for their produce.  It supports the local community.  I believe consumers are feeling the same way.  There's just a lot of options for consumers.

2. WFM is an expensive store!!!  Maybe it's because the CEO admitted to overcharging customers. (  You know what happens to consumer loyalty when we find out we're getting screwed.  Boycotts and social media frenzy.

3. Tech Services.  If you have the check book to shop at WFM I'm assuming you're a middle class to upper class citizen.  If you live in a big city like San Francisco.  Tech is disrupting the dining and grocery shopping industry.  You have Blue Apron where they send you all the ingredients to cook your meals.  Prepared food like Munchery is sent to your home.  Not to mention the dozens of food delivery services from a click of a button.

4.  The company is struggling.  In 2014 CEO lowers guidance ( You can see this H/S pattern here w/ the earnings snap.  They're scrambling to keep up with competition and provide cheaper alternatives ( This might be the only catalyst for the bulls that they become optimistic about the future of 365.

But I wouldn't trade WFM unless the technicals lined up w/ my thesis.  So heres what I see on the charts.  Keep in mind this is a Monthly view.  You can see we're on long term 40 support so investors may not give this up very easily.  But what I like is there's big head/shoulders pattern forming.

Why I bought the weekly calls instead of something further out?  This is a pure price movement play. May 2014 ER dropped 15%, October pop was 8-10% move, May 2015 was also a 10% move.

Currently options are pricing in a 3pt move on the July weekly, and I think we can exceed that if street doesn't like their expectations/guidance.  I think if street doesn't like what they hear then we go as low as July 2014 of $36.  If it is good then up to $47 also 200d/top of gap.  These are best/worst case scenarios.  So we're talking a 6pt move in either direction, not 3.  In reality I should be buying a straddle but with my points above I think my risk reward is best served on the down side.

Let me know what you think.

Sunday, July 26, 2015

Bears let me save you money on LNKD Earnings

LinkedIn's Earnings is this week on the 30th after market and it looks very interesting from the technical perspective just because its sooo f'ed up!  But I like this because there's so many opportunities from an option perspective if you pick the right one.  However I don't play earnings, and I don't know enough about options.  So I'll leave it to you to decide.

Here's the possible scenarios I see.

Going over some of the current earnings results show they are mixed because its all about expectations (GOOGL AMZN vs AAPL).  Sure the company had a great quarter, one of the best, but it either guided down (BIIB) or it just wasn't impressive enough (AAPL).  Fact of the matter is you don't know who will or will not meet expectations.

I have no idea what LNKD's numbers well be or whether or not they'll meet expectations.  But I do have a pretty good idea what people will be paying if they do beat and what they'll do if they miss.

I'm guessing a 25pt move in either direction (spread:50).  Based on Fridays 225 close we can either gap up to 250 creating another nasty gap up or we can gap down to 200 where we've seen support in May and Oct/Nov 2014.  I find it really hard to believe LNKD can pull a GOOGL AMZN and go beyond 25pts (10%) especially after their last ER performance. (GOOGL AMZN both gapped up 15%+.)  Also its July5 (weeklys) pricing in about 28pt move with 129% IV.

So if we do beat it creates another short term gap up and you'll probably run into resistance around 250-270 area and you'll lose a lot of money.

If we gap down, sure you lost that 25pt move but it creates a better Risk/Reward versus an earnings GAMBLE.  We'd create head and shoulders on the weekly and there's a good chance it will bounce around 200 before it rolls over some more w/ possible 150-40 downside.

Anything is possible right now, there's opportunity for the bulls but I think the bears have the most options.  For me I will be waiting for AFTER earnings although I've very tempted to sell 225 straddles ;)

Saturday, June 27, 2015

This time is different and....

This time in the stock market is different and it can end in a very good or very bad way.  First off, I say this because I've noticed something in this rally that hasn't been seen in any past major rally in the last 40 years....See if you can spot it?

If you haven't noticed the difference I'll give you a hint, it has nothing to do with prices or all time highs.  I has to do with trading volume.  FYI, this is the best data I could get so the accuracy of these charts can be questionable.

There's a lot of reasons why trading volumes could be so low.  You'll hear institutions are using more derivatives (options/futures).  It could be that investors are still scared and have their cash on the side lines. Maybe it's just the new norm...

But considering we've had the largest share buyback in history you would think these big players would be pushing up stock volumes ( So what gives? I really don't know.  Maybe they're arranging deals with large institutions who want to get rid of shares so it's not done in the open market.  But something is definitely off.

There is one more thing to consider as well.  We've never experienced a fiscal stimulus to this extreme.  The trillions of dollars the FED has spent on QE.  The massive debt the US has on their books.  We've never had interest rates this low for so long. TYX, TNX, FVX all show this

While the SPX has done's not a coincidence

You know how people say that they don't like shorting stocks because there's limited profitability.  Well with rates we've hit the bottom.  And sure some will say that's not true, rates can go to negative.  Well guys, the only countries that have negative rates are in Europe and we know how well that is going.....Why do you think trading volumes are so low?

Tuesday, January 27, 2015

The Big Picture Doesn't look as Bright

One thing I've notice with people in my generation, "millennials", is that we get tunnel vision and want instant gratification.  And many times we lose sight of the bigger picture because it is hard switching gears and changing your play book that's working.  For the past several years buying the dip has paid off, but like all good things they come to an end.  (For the bulls, I'm not calling the top right now).

I'm a day/swing trader but I always find that it helps to understand the environment that we're in and when things can change instantly.  For instance, I haven't paid this much attention to oil until I realized it was in the 70s!  At that point you're thinking no way can it go lower, but look at it now in the 40s.  In hindsight we'll find out if oil was in a bubble.  But when you see this unusual movement it makes me wonder what other things have I missed.  And it looks like I've missed a lot!

Margin Balance hasn't made a new high in almost a year

Equity Markets usually lag but see no sight of slowing down besides NYA and IWM having a volatile few months

IBB is the most speculative sector out there and these parabolic movement always come to a fast and crashing end.  But no signs of a slow down yet.

With all this chop in the market the beginning of this year I would NOT be surprised to see much more volatility, buying the dips failing, and nothing like the "easy money" environment (take it with a grain of salt) we've seen the past 3 years. 

Monday, August 25, 2014

Fundamental Trade: Short Tiffany & Co. (TIF)

NOTE:  My trading strategy is based on risk management and technical analysis.  I will rarely trade earnings unless I have a strong fundamental "belief" that my idea will play out.  I will use options to limit my downside risk with the understanding that it takes time for these ideas to play out.  When I try to time the market with a fundamental idea it's a coin flip but it can pay off like my King Entertainment (KING) trade.

Disclaimer:  I'm not an advisor or certified in anyway.  These are my thoughts and opinion so make sure you do your homework and trade accordingly.

So why short Tiffany & Co (TIF) while it's clearly in a bull trend?

I have no experience buying jewelry and by looking at my calendar this past year I've had over 8 weddings.  These are signs to be bullish on jewelry, especially with all the new money from IPOs and all time highs in the stock market.  They also increased their dividend by 12% which also helps with the appreciation.  However there is an overall theme going on during this earnings season.  High end luxury retail has been getting crushed.  Take a look at some names: JWM, BID, COH, KATE, KORS, RL. Granted most of the products these stores sell don't compare to a diamond ring but it does show a good picture of the overall sentiment.  Also take a look at the S&P Global Luxury Index.  As S&P500 makes new highs this index looks like it could roll over.

But the main catalyst I have to short TIF is CHINA.  For the past year China has been cracking down on corruption, money laundering, miss use of government funds that even the cognac makers are feeling the pinch!  If you've ever done business in China you know nothing will slow them down from drinking!

Another segment in the luxury space that has benefited from China are the casinos: LVS, WYNN, MPEL, MGM.  However since the beginning of the year they have been huge under performers compared to the overall market.  And why is that?  Because of reforms in China.  People are pulling money out of China as fast as possible buying up properties in the US and Canada.

If you look at TIF's last earnings the majority of the growth came from Asia.  Now, the only fundamental risk I can think of to send TIF sales to the upside is if these people in China are buying jewelry as a way to move their money out of the country.  It is a possibility, but I don't know the rules or what type of loop holes they can get around it, its only a theory.

Overall Sentiment?
Wall Street sentiment as always is bullish.  There is only one analyst that has given any warning and that is Christian Buss from Credit Suisse.  With the markets euphoric state, any miss in the top/bottom line or guidance will send this stock crashing.

My Targets:
A slight miss I'm targeting 95-96.  A big miss I expect a gap fill around 90-92 creating an island pattern.  The risk to the upside is around 103-105.  I will likely buy JAN15 95 or 97.5 PUTs today or tomorrow before earnings.  I'm buying JAN15 because if it does become a miss trade, I can sell some puts to see if the trade will work out later this year.

(Disclaimer: I am currently short LVS and KATE)