In May this year, fearing that Putin may go crazy with weapons of mass destruction in Ukraine, I decided to stay away from investing. I was right, but for wrong reasons. I would file it under ‘got lucky’ column. So on October 27th, when Facebook (called META nowadays!) fell by more than 25% and lost about 80 Billion$ in market cap, I thought I would sell some puts. I sold Oct 28th $95 puts. Thankfully, META stayed above $95 and I got to keep the premium. But by Nov 3rd, it fell to $88. I’m watching it carefully even as it reaches $113 on Nov 11th. I’ll make a decision about buying some this week. Facebook fell from $350 to $88! AMZN fell to $85 from $188 and GOOGL to $83 from $151.
The indices I watch SPY, QQQ, and FAS are at interesting levels – they are approaching pre-Covid levels but not there yet. Does this mean these indices won’t go down further? No. They may. Also, interest rates are coming down a bit. So I have decided to carefully and sold the following puts.
Sold 20 TQQQ June 17, $21 Puts – $0.71
Sold 20 FAS June 17, $60 Puts – $0.72
Why $21 strike price for TQQQ? That was the price it was selling in Dec 2019! I’m willing to buy TQQQ at $21.
Why $60 strike price for FAS? That’s was the price it was selling in Oct 2017! I’m willing to buy FAS at $60!
I’m willing to buy TQQQ at $21 and FAS at $60! Remember my discussion on time travel? But why June 17th? Travelling to mother India on 16th! Let’s see how these trades pan out. Good luck!
“Employers view frequent job-hopping negatively,” said our invited speaker in my class today. She suggested that students avoid short-term thinking in career planning. As she was explaining, I realized that short-term thinking is ubiquitous. Could the ‘same day delivery’ service be making us ‘take one day at a time’ people? Later, I asked a friend who prefers to trade than invest long-term, his views on this topic, he made an interesting statement:
When CEOs manage by quarterly earnings, technologies/business models change rapidly, Netflix stock loses 30% and Twitter gains 25% in one day, and cryptocurrencies challenge the currencies issued by governments, you want me to think long-term! Are you breathing Oxygen or snuffing paint?
His response was valid. My friend thrives on volatility, especially as a trader, in daily and hourly volatility. However, does frequent job-hopping by employees send a signal to future employers? Employers are more likely to perceive job-hopping negatively, and understandably so. I recommend that those changing jobs often learn to articulate the reason for switching jobs often. For instance, moving from one job to another in pursuit of learning opportunities and not merely for a few extra bucks is understandable. But employees must be able to document what they learned and how it will help future employers.
About my friend’s question about breathing Oxygen or not, nowadays in many cities in California, it does feel like I’m sniffing paint when I’m outdoors. That’s on a good day!
Mr. Ashutosh Garg addesses how the quality of business education may be improved by inviting practitioners to the classrooms. A global corporate executive, serial founder, and a CEO advisor, he discusses his experience as a visiting faculty to schools around the world in a recent interview. I invited him to address my audience at a Faculty Development Program.
I stayed away from the market in Dec and Jan. Here are my trades for Feb. I’m not sure what’s going to happen in Ukraine. So going to stay in cash and away from investing till end of June.
Sold 5 puts – FAS strike price 110 for Feb 4th – $450 – Expired.
Sold 3 puts – FAS strike price 120 for Feb 11th – $390 – Expired.
Sold 5 calls – FAS strike price 130 for Feb 18th – $2000 – Expired.
Sold 5 puts – FAS strike price 85 for Feb 18th – $950 – Expired.
Sold 5 puts – TQQQ strike price 35 for Feb 18th – $700 – Expired.
Sold 20 puts – SPXL strike price 70 for Feb 18th – $1400 – Expired.
Please install R and R-Studio before you try Google Vision APIs.
Here is the code I used in R to demonstrate Google Vision APIs. Remember to install R, R studio, and other libraries first.
# library(rjson) # to get credentials for Google Cloud Console
creds = fromJSON(file=’C:/Downloads/credentials.json’) # Retrieve Credentials file from cloud console
options(“googleAuthR.client_id” = creds$installed$client_id)
options(“googleAuthR.client_secret” = creds$installed$client_secret)
options(“googleAuthR.scopes.selected” = c(“https://www.googleapis.com/auth/cloud-platform”))
imagePath <- “C:/Downloads/Taj.jpg”
imagePaths = imagePath,
# feature = “FACE_DETECTION”,
feature = “LANDMARK_DETECTION”,
maxNumResults = 7
imagePath <- “C:/Downloads/CarsAndDog.jpg”
imagePaths = imagePath,
# feature = “LABEL_DETECTION”,
maxNumResults = 10
Back to selling naked puts! But traded on FAS for fun. Here are my trades for Dec.
Bought 200 FAS at $124.00 and sold at $126.60.
Sold 10, Jan 22, TQQQ 60 puts for $1.70 & Bought it back at $0.03. Any idea why?
Sold 10, Jan 22, RIVN 70 puts for $3.30 (too attractive to pass)
Sold 10, Jan 22, RIVN 55 puts for $1.45 (too attractive to pass)
Sold 10, Jan 22, PTON 35 puts for $1.40 (just experimenting)
First, I closed all my October trades on Nov 4th and booked my profits though the options were expiring in Jan. Why? I don’t trade on margin. I don’t want to go long either. So, back to selling naked puts! Here are my trades for Nov.
Sold 10, Jan 22, SPXL 70 puts for $0.90
Sold 10, Jan 22, RIVN 70 puts for $3.30
Sold 10, Jan 22, RIVN 55 puts for $1.45
Sold 10, Jan 22, PTON 35 puts for $1.40
Per popular request, I’ll be posting my monthly trades hereafter. Though the request was for weekly posts, I’ll start with monthly for now. I traded only naked puts last month and here they are. Guess how much capital I need if all the puts are exercised? Guess how much profit I would make if none is exercised?
Sold 10, Jan 22, FAS 65 puts for $2.22
Sold 10, Jan 22, TQQQ 60 puts for $1.70
Sold 5, Jan 22 TQQQ 65 puts for $2.05
Sold 5, Jan 22 TQQQ 70 puts for $1.65
Sold 5, Jan 22 TQQQ 70 puts for $1.34
Any idea why Jan 22 TQQQ 70 puts were sold at different prices?
Trevor Milton, the founder of Nikola, a EV manufacturer lied “nearly about all aspects of the business” acording to the U.S. Attorney’s Office in Manhattan. Did the SPAC that took Nikola public drop the ball and cause this debacle? Would the traditional vetting process have eliminated this quagmire? Prosecutors say, “To make it appear the truck prototype was driving, it was towed to the top of a hill and then rolled down to the bottom.” Click the images below and read on….
Remember our lengthy discussion on negative interest rates in the Fintech class? In these unusual times, so many truisms about finance are becoming untrue. In Denmark, a country with a long history of negative interest rates, the central bank announced 20 year home mortgages at a fixed interest rate of zero percent. A 20 year, $100,000 mortgage at 3% APR would cost a homeowner $33,000.00 in interest. But this begs many important questions. Will the rental market be impacted badly? Will home prices not appreciate? Click on the image below to read further.
I said in the class I will explain how options differ from SPAC. Here it is.
SPAC (Special Purpose Acquisition Company) is a shell corporation with no current business operation but has identified/is identifying potential targets for acquisition/merger. Upon completing the M/A, the SPAC goes public and those who invested in the SPAC get IPO shares allotted by the company. Whereas options are contracts between two parties (the company is not involved) either to buy or sell shares at a particular price within a specific period. The shared are moved from one investor to another if the options are exercised. SPAC issue warrants to the investors to begin with. To read more about SPAC click on the image below.
In the class I discussed that while creating hosted platforms that bring demand and supply together to transact, entrepreneurs may restrict their roles solely to developing the platform and hosting it, to functioning exclusively as Subject Matter Experts who hire third party software developers, or to acting as both SMEs and software developers. Which option an entrepreneur picks depends on his/her background and other exogenous and endogenous factors. I agree it may be argued that certain types have inherent disadvantages/disadvantages and that’s up for discussion. Click the image below to download the slides I used in the class. Hope you had some takeaways and points to ponder from this class. I admire your entrepreneurial drive and enthusiasm. I didn’t spend much time on monetizing APIs and if you have questions, please contact me in my Stanford email ID.
Remember our discussion on how call and put volumes are used by some investors to measure sentiments? Investors who buy ‘out-of-the-money’ call options anticipate the underlying stock price to spike. Recenly Softbank bought $4B worth call options on its holdings AMZN and MSFT. Many investor interpret this move as a buy signal on these equities and this may have led to spike in prices. This ends up escalating the valuation of these companies even though the underlying business models don’t justify these levels of valuation. Click on the image below to read an interesting article on this topic.
It’s here finally! It has been my dream that a reputed school in India offer an online undergrad degree in Computer Science and now IIT-M is doing it. Now it’s open to all. Well, almost to all. I wish IIT-M opened it to all, not solely to those who completed 12th grade! I see a big demand for this course and wish IIT-M success. This is going to open doors to so many poor, bright students. Please send me your views to my Stanford email ID.
WeWork was valued at $47 Billion in January 2019. In April 2020, it’s valued at $2.9 Billion. CNBC also reported ” Prior to the IPO filing, the coworking-space company was expected to seek a valuation as high as $100 billion”. Imagine that! As I said valuation is an art and a science. Looks like I should have said “foresic science”! Read on by clicking the image below and send me your views to my Stanford email ID.
Something bizarre happened on April 20th! Yes, some oil futures contracts went negative and it has never happened.
What does a negative oil price mean? Drillers have extracted oil from the ground and they are out of storage capacity. So they would pay wholesale buyers money to take the oil off their hands. Imagine that! We discussed negative interest rates in the class and I explained that it’s like charging you storage/safe-keeping for your money. This is a similar scenario. This can lead to another problem. In our PE and CEO 2030 classes we discussed how when the underlying price of the collateralized assets crash may lead lenders ‘calling the loans’. The Loan Calling is an industry jargon that describes a demand by the lender for loan repayment even though it’s not due. Those companies that used their oil in the ground as a collateral may be receiving Loan Calls since the collateral has lost value due to crash in oil prices. Click the following article and send me your views to my Stanford email ID.
The heading in one of my slides was ‘How to take over a country peacefully?’. My answer was ‘by taking over the vital companies in that country’. I hope you remember that discussion in the PE/CEO 2030 class. The COVID situation may make scuh scenarios a reality. India is addressing this issue. Please read on. As usual send your views to my Stanford email ID.
In our Entrepreneurship class, we discussed how long one can wait to obtain funding and the factors influencing the timing. In the following piece, a founder is discussing how his decision not to prioritize funding cost him heavily. Please read the part about what to and what not to outsource especially. Click on the image below. As usual please send your comments to my Stanford email ID.
Remember our discussion on how low interest rates are PE friendly and PEs use them? This bloomberg opinion piece concluded “Using cheap debt to pay themselves dividends isn’t such a savvy investment model after all”. Please click the image below to read the full article. It addresses so many points we discussed in the class.
Remember in the CEO-2030 class I discussed how companies that save cash for a rainy day can make go bargain hunting? I also discussed why ‘resource allocation and deployment’ must be taught as an elective. Here is an example of how cash comes handy. Click on the URL below.
Private Equity firms have more than 1$ Trillion in cash! This could be the beginning of a once in a lifetime investment opportunity for those in waiting. Remember the discussion in the CEO-2030 class how the 2007 financial crisis opened up opportunities for acquistions and thus a spike in demand for new CEOs? CNBC had an intetresting article on this topic. Please click the image below. Should companies take PE’s money or not? Do they even have an option? What if the PE firms go hostile? I’m interested in what you have to say on this.
Should large corporations assume that governments have their back? I said in the class that when interest rates are low, companies take on debt and often put it to good use. Remember our discussion on overdoing it? Some aspects of what we discussed are addressed in this CNBC article. Click the image below to read further.
These articles in Bloomberg and CNN discuss how the airlines in the US spent their free cash flow to buy back their shares. It raises so many points we discussed in the class. But, did the money really disappear? Where did all the money go? CNN reports “The Big Four Airlines, according to Baldwin’s office, spent $42.5 billion on buybacks between 2014 and 2019. That nearly matches $50 billion the industry is now asking for”. What a coicidence! I Would like to hear from those who disagreed with me. Click on the images below.
In PE class we discussed how PEs can play both a positive and potentially negative role. I couldn’t play this video in full. Please click on the link below to watch it in full.
The slides I used in this presentation can be downloaded from the links below. Please credit appropriate authors when you reuse the content. As usual, if you have questions, please contact me through my Stanford email id.
I have addressed this in detail in the CEO-2030 lecture. Read on!