VIP ==> The Spring is Here Winner!

[billyjoe]

Your math is not correct.

Well, that explains it !

--------billyjoe

[skiracer]

Well, that explains it !

--------billyjoe

Throw this into the mix Billyjoe. Ernie and Spike both like it and I don't want to put the horns on the trade for Ernie but I like it to the downside from here to around 90/92 levels. I would make the play if it broke thru 96.50. How does 2 to 1 change the dynamics of the success ratio? I was looking at it as a good short play for 90 range right here. Not saying it will never reach 113.62 but I can see 90/92 before 100 much less 113. The daily looks to me to be getting ready to roll-over from here for a bit.

[billyjoe]

Ski,
You're asking the wrong guy. Mr.Market says my math was faulty in figuring the odds that VIP will go up. I have even less of an idea how to figure the odds that it will decline. Any mathematicians out here?

-------------billyjoe

[New-born baby]

Ski,
You're asking the wrong guy. Mr.Market says my math was faulty in figuring the odds that VIP will go up. I have even less of an idea how to figure the odds that it will decline. Any mathematicians out here?

-------------billyjoe

Your math, Mr. BillyJoe, is defective because you multiplied the two numbers together. The correct formula is (X + Y) divided by the number of factors within the parenthesis. IN other words, you should have it like this: .85 + .85 divided by 2 = .85 chance of success. If you add me in there, and I am only .65 correct on bullish calls, then you would have .85 + .85 + .65 divided by 3, or 78.3% chance of success. Now if you put Skiracer in there, and he's 99% correct on bear calls, and he says VIP stinks up the joint from here on out, then the formula would be . . . . .85 + .85 + .65 + .01 divided by 4, or 58.7% chance VIP makes it to $113.00. Now if you add in Jimmy Eugene Cramer, and since he likes VIP long, and he's proven to be wrong 55% of the time, the formula would look like this: .85 + .85 + .65 + .01 + .45 divided by 5, and now MM has only a 56% chance of success.

Got it?

Now Billy, what's your call?

[billyjoe]

New-born,
When I said "are there any Einstein's out there" I was thinking of you but didn't want to embarrass anybody so no names were mentioned. Thank you.
I'll tell you my prediction when the abacus comes back from the repair shop.
------------billyjoe

[New-born baby]

Throw this into the mix Billyjoe. Ernie and Spike both like it and I don't want to put the horns on the trade for Ernie but I like it to the downside from here to around 90/92 levels. I would make the play if it broke thru 96.50. How does 2 to 1 change the dynamics of the success ratio? I was looking at it as a good short play for 90 range right here. Not saying it will never reach 113.62 but I can see 90/92 before 100 much less 113. The daily looks to me to be getting ready to roll-over from here for a bit.

I can't deny that VIP may retest support before reaching $100. After all, what stock runs straight up to $100 without a pullback, consolidation, or shakeout of the loose holders? But I would say that a return to the support at $95 is a buying opportunity.

[New-born baby]

Don't forget the option chain--and don't forget about the . . .

EARNINGS!!!! DUE OUT APRIL 12.

MM has finally chosen a stock with a real nice option chain. If you are skeered that VIP won't hold its own, you can sell a covered call and insure your investment. A real safe play would be to buy a put and buy a call (with the same expiry and strike), and when earnings come out, VIP should jump one way or another. You simply cover the losing position quickly, and enjoy!

In fact, I can almost guarantee that VIP will pullback on April 10 & 11 in preparation for earnings. Wait to buy your call near the close on April 11.

[Karel]

VIP must have a great chance of going up 15% if both Mr.Market and Spike are in agreement, right? We know based on his last 100 or so picks that Mr.Market up to this date is correct about 85% of the time (probably higher if you can wait a while longer). Let's say just to simplify things that Spike is also correct 85% of the time. According to hypergeometric distribution , you'd multiply .85 X .85 giving a .723 chance of them reaching the 15% gain although we aren't considering a fixed time period. Unfortunately, I must have been sick the day hypergeometric distribution was explained at my school so all I know is what I can read off a google site. What has me puzzled is how if 2 great stock pickers such as Mr.Market and Spike agree on a stock, the odds of it being successful actually are reduced rather than increased at least on paper? Can any of you Einstein's out there explain it simply? Thanks

I didn't know about the hypergeometric distribution, but from what I read on it, it is a) unsuited for what you want to calculate, and b) not what you were calculating anyway.

The HD is for questions like: we have 90 white counters and 10 red ones. What is the chance that in a blind draw of 10 counters we draw 2 red ones?

What you calculated was the combined chance of two independent things to happen, for example the chance to throw anything but a six in two throws. The chance to throw anything but a six is 0.833 (5 in 6), the chance to do this two times in a row is (0.833 * 0.833 =) 0.694.

Now how would we calculate the chance of success for VIP, based on some predictions? I frankly have no idea. I like NBB's weighted average calculation, and I think it is about the best we can do. The problem however is that the predictions are unequal, by which I mean that they are not all formulated as anwers to the question "will VIP gain 15%, yes or no." Combining them (and calculating an average/mean) is therefore very difficult. To give an idea: someone may be 55% right in his bullish calls, but this does not imply that those 55% of his bullish calls reach a 15% gain. And some of the 45% were he was wrong might just reach 15% before the crash.

Regards,

Karel

[New-born baby]

It's all about EARNINGS

EARNINGS!!!! DUE OUT APRIL 12.

MM has finally chosen a stock with a real nice option chain. If you are skeered that VIP won't hold its own, you can sell a covered call and insure your investment. A real safe play would be to buy a put and buy a call (with the same expiry and strike), and when earnings come out, VIP should jump one way or another. You simply cover the losing position quickly, and enjoy!

In fact, I can almost guarantee that VIP will pullback on April 10 & 11 in preparation for earnings. Wait to buy your call near the close on April 11.

I just want to throw this up again so readers may prepare themselves for the sometimes volatile earnings report day.

[skiracer]

Your math, Mr. BillyJoe, is defective because you multiplied the two numbers together. The correct formula is (X + Y) divided by the number of factors within the parenthesis. IN other words, you should have it like this: .85 + .85 divided by 2 = .85 chance of success. If you add me in there, and I am only .65 correct on bullish calls, then you would have .85 + .85 + .65 divided by 3, or 78.3% chance of success. Now if you put Skiracer in there, and he's 99% correct on bear calls, and he says VIP stinks up the joint from here on out, then the formula would be . . . . .85 + .85 + .65 + .01 divided by 4, or 58.7% chance VIP makes it to $113.00. Now if you add in Jimmy Eugene Cramer, and since he likes VIP long, and he's proven to be wrong 55% of the time, the formula would look like this: .85 + .85 + .65 + .01 + .45 divided by 5, and now MM has only a 56% chance of success.

Got it?

NBB,
Geez I wish I could be 99% on bear calls. I'd be rich. NBB, I was wondering if you had taken a look at the option play on BW. The stock that Riverbabe brought up from the Rev Shark. What are you thoughts on the initial play and where do you see BW going from here? Do you still think there is strength in the call?

[New-born baby]

NBB,
Geez I wish I could be 99% on bear calls. I'd be rich. NBB, I was wondering if you had taken a look at the option play on BW. The stock that Riverbabe brought up from the Rev Shark. What are you thoughts on the initial play and where do you see BW going from here? Do you still think there is strength in the call?

Ski,
Let's see . . . PnF tell us that expected target of $48.50 has already been achieved. The weekly chart shows us, according to the Dow Theory, that BW should run to $60.50. Had a tremendous $15 gap up the second week of February. The option chain is not really all that strong. For example, the APR $50 strike is only $2.60, giving you $52.60 for a $51.96 stock right now. Furthermore, the option chain extends only to Sept 2007, so the option chain is very weak, in my view, if one is considering buying the stock and selling a covered call. The stock is really hot, so an entry should be carefully considered. Personally, if I took this one long, it would be at the (yet to happen) retest of the $48 breakout. 1st Target of $53.00; 2nd target $60.00. As for a stop, well I would simply sell calls to protect myself. Spike gives a much better count. Hey, Spike, where's the fuzzy C? I suspect you'll tell us it was at $42.50.

In summary, I think she'll make the $60 target if earnings don't disappoint.

It should be noted that the earnings call is due April 26. A May options straddle gives one an excellent chance to profit. That is the only way I'd play this one.

The straddle I would consider would be the May call and put, in the money at the strike applicable on April 25.

[skiracer]

Ski,
Let's see . . . PnF tell us that expected target of $48.50 has already been achieved. The weekly chart shows us, according to the Dow Theory, that BW should run to $60.50. Had a tremendous $15 gap up the second week of February. The option chain is not really all that strong. For example, the APR $50 strike is only $2.60, giving you $52.60 for a $51.96 stock right now. Furthermore, the option chain extends only to Sept 2007, so the option chain is very weak, in my view, if one is considering buying the stock and selling a covered call. The stock is really hot, so an entry should be carefully considered. Personally, if I took this one long, it would be at the (yet to happen) retest of the $48 breakout. 1st Target of $53.00; 2nd target $60.00. As for a stop, well I would simply sell calls to protect myself. Spike gives a much better count. Hey, Spike, where's the fuzzy C? I suspect you'll tell us it was at $42.50.

In summary, I think she'll make the $60 target if earnings don't disappoint.

It should be noted that the earnings call is due April 26. A May options straddle gives one an excellent chance to profit. That is the only way I'd play this one.

The straddle I would consider would be the May call and put, in the money at the strike applicable on April 25.

So I own the May 50 call from 2.50 entry with 41 days left to expiration. I like the stock to go to 55. Your 60 estimate would be great. Right now my call is in the money by almost 2 points what would you do with the trade?.

[New-born baby]

So I own the May 50 call from 2.50 entry with 41 days left to expiration. I like the stock to go to 55. Your 60 estimate would be great. Right now my call is in the money by almost 2 points what would you do with the trade?.

Ski,
I would think you are a better options trader than I. I am almost afraid to answer you because you might follow my advice, and wind up costing you some money. But here it is anyway:

My thinking is influenced by these factors:
(1) Earnings are coming April 26. April 24 & 25 may be down days for BW in preparation for that event. (2) And you also have the April 20 expiry date for the April calls/puts, and BW will settle at max pain for that date. I just checked the options list at YaHoo! Finance, and the $45 strike is max pain for April. May's MaxPain is $50. (3) Every other week has been a down week for BW in the last six weeks. One could possibly expect BW to pull back this week in keeping with that recent price action. (4) I trade best when I watch the streamer. I watch the price action via a 1 minute chart, and I watch for volume spikes up or down. As mentioned in my previous post, I expect BW to retest the $48-$50 marker.

Now there are the facts; you make the decision. My play would be to watch BW very carefully this week. If she starts to pull back, I am taking my chips off the table and looking to re-enter a straddle near the close on April 25. That's because a $200 profit in the hand is better than a $250 loss. Should BW have a good earnings, or even a bad one, the straddle enables you to profit. That event will tell the tale for BW for May.

Oh, you say you want more info on MaxPain? Sure, just click this link, Ski.

http://www.iqauto.com/cgi-bin/pain.pl

Now remember: I don't always make trading decisions based upon Max Pain Theory. I do expect a shaking South in the market in preparation for expiry, say April 16,17,18. Who knows? Not me, but I am guessing.

[skiracer]

Ski,
I would think you are a better options trader than I. I am almost afraid to answer you because you might follow my advice, and wind up costing you some money. But here it is anyway:

My thinking is influenced by these factors:
(1) Earnings are coming April 26. April 24 & 25 may be down days for BW in preparation for that event. (2) And you also have the April 20 expiry date for the April calls/puts, and BW will settle at max pain for that date. I just checked the options list at YaHoo! Finance, and the $45 strike is max pain for April. May's MaxPain is $50. (3) Every other week has been a down week for BW in the last six weeks. One could possibly expect BW to pull back this week in keeping with that recent price action. (4) I trade best when I watch the streamer. I watch the price action via a 1 minute chart, and I watch for volume spikes up or down. As mentioned in my previous post, I expect BW to retest the $48-$50 marker.

Now there are the facts; you make the decision. My play would be to watch BW very carefully this week. If she starts to pull back, I am taking my chips off the table and looking to re-enter a straddle near the close on April 25. That's because a $200 profit in the hand is better than a $250 loss. Should BW have a good earnings, or even a bad one, the straddle enables you to profit. That event will tell the tale for BW for May.

Oh, you say you want more info on MaxPain? Sure, just click this link, Ski.

http://www.iqauto.com/cgi-bin/pain.pl

Now remember: I don't always make trading decisions based upon Max Pain Theory. I do expect a shaking South in the market in preparation for expiry, say April 16,17,18. Who knows? Not me, but I am guessing.

Well this was a lucky play for me to start with. River brought it to the table and I thought the May 50 call looked like a decent bet to leverage a decent amount of stock with a small amount of cash. I've been patient and still like the trade and am still holdling it. Just trying to get another opinion. I was surprised Friday when it was up .83 at the high of the day and the call didn't make a move up at all and hardly any trades or any volume that day. I was disappointed in that but at least it didn't fall back any either. Just trying to get a concensus. Thanks NB.

[New-born baby]

Well this was a lucky play for me to start with. River brought it to the table and I thought the May 50 call looked like a decent bet to leverage a decent amount of stock with a small amount of cash. I've been patient and still like the trade and am still holdling it. Just trying to get another opinion. I was surprised Friday when it was up .83 at the high of the day and the call didn't make a move up at all and hardly any trades or any volume that day. I was disappointed in that but at least it didn't fall back any either. Just trying to get a concensus. Thanks NB.

You are always welcome, Ski. I hope this thing comes out of the closet Monday screaming higher for you. That would make life easier.