I want to call a spade a spade!!! ALL the big brokerage firms tell you that they protect your assets. That’s how the employees are told to “hook” the potential clients. Do you think your account really matters to a broker with billions in the market? Unfortunately, we just don’t matter. For a free risk review call me toll free at 888-287-1030.
Have you ever asked a big brokerage house to explain to you how they protect your portfolio so you will understand? You better if you care about your retirement funds. In all the years I’ve been in the financial industry there is one important point I’ve learned. Most brokers talk a big talk and can’t ever truly explain or give examples on how to walk the walk. Here are some of my favorite comments:
We diversify the stocks we choose to give you the best of the best = What a line! Didn’t work in 2008 and the S&P has been flat for 12 years except for the fees you’ve paid them.
We have a special charting system = Everyone looks at the same charts and they see the same past history. There are numerous different isolators but we all look at the same thing. Most important is the simple fact that past performance does not guarantee future success in the market.
We have a special algorithms to choose the best stocks = Have them try to explain it to you or why it works. Calculus is not trading and there always seems to be an excuse.
We do a specialized sector rotation system to rotate in and out of the best funds = It is only my opinion but I think that simply means they put your money in what moves up. Works good until it goes down and the Securities Exchange Commission regulates how many shares the money manager can release to the market.
Final line – Don’t worry it will come back = But how many have not come back? The S&P 500 has just come back to where it was 12 years ago.
I can’t wait for stocks to come back to just break even. I can’t afford in the “new normal” to not make up some of the downward movement. As a money manager it is not the funds fault, the markets fault or some strange reasons fault for not making money. Stocks go up and down. As a money manager I have to make up some of the downward movement to make the portfolio profitable when stocks just come up a bit or at all. It is my fault if the portfolios aren’t making money. I have to trade my own positions with the group to not show preferential treatment or front run clients money to just benefit me. I trade my portfolio just like I trade yours. I know exactly what my positions are doing because yours do the same thing at the same time.
Here is how Hurley Investments will protect your stock positions:
Google was supposed to knock it out of the park when they reported Earnings on Thursday October 19th, 2012. Unfortunately, the poor performance that missed the mark by 500 million, was accidently released during market hours. The stock lost 10% almost immediately. Friday October 20th, 2012 helped the stock lose even more.
The stock position has profits from the entry price of $609.892
For $31.60 I bought the right to sell (long put) GOOG at $750
Total Net Debit = $609.89 + $31.60 = $641.49
With the right to sell @ $750 – $641.49 = $108.51 of locked in profits
To help pay for the long put I sold a short call @ the 800 strike price for $8.70
This means I am obligated to sell GOOG at $800 a share if it trade over $800 by the third Friday in November and someone paid me $8.70 to obligate me to do so.
Total potential profit = $108.51 + $8.70 = $117.21 EVEN if the stock goes to $0
ISRG had good earnings. Let’s see what it looks like and go over the numbers in a “collar trade”.
Bought in a couple of weeks ago at $509.46
Bought a Nov 510 long put for $11.30
New cost basis = $509.46 stock and $11.30 put = $520.76
New risk in the trade = I now own the right to sell @ $510 – $520.76 cost basis = $10.76 of risk per stock share
Sold a short call for $11.30 where I am obligated to sell at $550
Overall risk in trade = New risk $10.76 – $11.30 credit = – $0.54 or the worst I could do is make $0.54 a share. I am in a 100% risk free trade protecting ALL of the total invested capital through and earnings event.
I have been in AAPL for the run up this year. I want to especially protect AAPL through earnings on Thursday 25th October 2012. There are a lot of profits I can’t afford to let evaporate.
Bought AAPL at $452.465 per share on average.
With the stock losing $100 I am worried and will protect the position through earnings. I bought the right to sell AAPL @ $625 per share for $31.15 per share.
Total cost basis = $452.46 stock price + $31.15 put price = 483.61
Risk in trade = Right to sell @ $625 – $483.61 = -$141.39 of locked in profit per share