This is because money flows out of the bond market to the stock market (i.e. people SELL their bonds).

When people SELL bonds, the Government (or bond issuer) has to attract buyers again. To do this, they have to RAISE Yields. Hence, Yields have an inverse relationship with bond prices.

Now, Is this the ONLY REASON bond prices go down (when the stock market is surging)?

No – The second reason is, if people have LOWERED their trust of the bond issuer. In that case too, they will SELL their bonds.

So – the trick is finding out WHY EXACTLY are bond prices falling (YIELDS RISING?)

The post Why Bond Prices go Down – Prices versus Yields appeared first on Anuj Varma, Hands-On Technology Architect, Clean Air Activist.

MSTR is a runaway train. Once that stock starts going, it is hard to catch it. So – how does one still purchase it a lower price?

Write a PUT option!

Put sellers (writers) have an obligation to buy the underlying stock at the strike price. The put seller must have either enough cash in their account or margin capacity to buy the stock from the put buyer. 

This works if you ACTUALLY WANT TO BUY the stock at a LOWER price. Keep in mind that in the bull trend, this may never happen. So – you still win though – by pocketing the premium (which is yours as long as the stock stays above the strike price).

Put sellers generally expect the underlying stock to remain flat or move higher. Put sellers make a bullish bet on the underlying stock and/or want to generate income.  

Stock FALLS BELOW THE strike Price?

If the stock declines below the strike price before expiration, the option is “in the money.” The seller will be put the stock and must buy it at the strike price. 

Stock STAYS ABOVE THE strike Price?

If the stock stays at the strike price or above it, the put is “out of the money,” so the put seller pockets the premium. (Note – you can keep continuing this strategy – by writing another put on the stock, to generate  more income). 

Bull Market Comfort

In a bull market, stocks like the one above (MSTR) seem to follow an almost uninterrupted uptrend. This is good for a PUT writer who wants to a) Get some income b) Catch the stock at a lower price , if it does ever fall.

Note that this sense of comfort does not exist in an overall BEAR market.

Covered Calls to generate income?

If one owns the underlying stock, one can also generate income by writing a CALL – a covered call – which is COVERED by your underlying asset. This means that if the stock ever reaches the strike price of your call option, you WILL have to give up your stock. Still – in a bull market, the chances of the stock falling enough to get to your strike price (pick a LOW strike price), is considerably low. Hence, this strategy works too (for income generation). Personally, I am averse giving up ANY good stock in a BULL market, so I stick to the first option (WRITING a PUT).

The post Selling a put option in a BULL market – with Microstrategy (MSTR) as an example appeared first on Anuj Varma, Hands-On Technology Architect, Clean Air Activist.

Short Interest – is the actual number of shares shorted compared to the total float. Expressed as a ratio.

What is considered a HIGH short interest?

Anything above a 10% is a HIGH short interest.

What is the short interest number of days to cover?

The average number of days it takes for short sellers to repurchase borrowed securities in the open market. The ratio is calculated by dividing the total number of shorted shares of a stock by the average daily trading volume.

E.g. – (Dec 2023, SOFI)

• Short Interest ratio is 14.6 % – very high
• Days to cover – 3.5 – in other words, it will take almost 4 days for short stock holders to buy back their shares on the open market. The higher this is, the more the potential for a short squeeze.

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Several tech giants have figured out how to make money in a high interest rate environment. These companies have so called ‘royalty ‘ revenues. e.g. Universal Music has royalty revenue. Google and facebook (Meta) too have royalty revenues – as their ad platforms keep running and generating cash – no matter what the macro environment is.

Such companies do well in high risk macro environments.

My own portfolio

While I agree with the thinking behind this (I forgot the gentleman on CNBC that I saw promoting this). these stocks still grow at far too slow a pace for my own portfolio.  I prefer slightly higher risk and higher growth stocks. My top picks for the 2023 environment are the fintech companies SOFI and AFRM. I also like MRNA – which has potential well beyond the upcoming flu/covid combo vaccine.

The post Stocks to own in a high interest rate macro environment appeared first on Anuj Varma, Hands-On Technology Architect, Clean Air Activist.

Only days where your body (and breath) is in sync with the Universe, should be a trading day.

How does one get one’s body in Sync with the Universe?

The correct Yoga – even 10 minutes – done at the appropriate time each morning, can get your body in synch to start a trading day.

Is that it? Just do yoga and then start trading?

There are two variations of the ‘Yoga to get the body in synch with the Universe…’. The first technique relies on the visualization of ‘floating on a lazy river’. This, I refer to, as a PASSIVE synchronization with the Universe.

There is an ACTIVE version of this. Think, instead of simply floating along the lazy river, of doing a gentle, breast stroke. Here, you are in control of your direction and movement, as opposed to the passive floating visualization.

This latter frame of mind / visualization is what you need to try and attain for a productive trading day. A trading day will require action to be taken at certain times – the only thing is – that if you are in sync with the Universe, you will know which action to take when.

aDoesn’t the market control the price? What does my state of mind have to do with it?

Incorrect. The market does not control the price. YOU do.  When you are in synch with the Universe, YOUR thoughts are more powerful than the entire market at large. YOU dictate the price movement. Takes a little getting used to – but essentially, the Universe is working WITH you, alongside you. So – if thousands of new buyers suddenly enter the market, that’s the Universe bringing them in, to assist with YOUR directional movement.

You said that not every day is a trading day. Why can I not do my yoga and get in sync every day – and make every day a trading day?

You can try. There’s nothing stopping you from attempting that. In reality, only a few individuals, in the entire history of mindfulness, were able to get centered and stay centered, at will.

Along with yogic practices, it take proper diet and sleeping practices as well.

How long do I have to maintain this ‘Synched with the Universe – Trading state of mind’?

As long as you can. Often, it needs to span across days. You may make a trade on monday, that doesn’t yield your target price till the following monday. It is on you to keep and retain that state of mind each morning when you awake.

Okay. Say I feel in sync with the Universe. How do I know that? And what do I do next?

The trick is to stay with your breath. Stay with your breath – and BLOCK ALL INCOMING Thoughts. Incoming thoughts will typically be those that throw you off your mindset.

Coffee helps me stay focused and alert. Isn’t that helpful?

The type of attentiveness that results from coffee is the exact anti-thesis of mindfulness. Coffee is to mindfulness what a wrecking ball is to a building.

If you DO need a mental alertness boost, opt for tea  of some sort.

The Belief System of a winner – using Mindful Trading

Think of your past victories – think of how often you were right about a particular stock / crypto / trade. Even if you sold early or late – and missed out on the gains – the fact that you picked a winner, should be part of your consciousness. You only pick winners. You are incapable of picking losing stocks!

Summary

Mindful trading is like mindful anything – it just works. Since you keep emotions out of it – and extraneous thoughts out of it. Try being a mindful trader for a few trading sessions and see if it works for you. You DO need to have the pre-requisites of being able to do simple yoga to get your body movements in synch with the Universe. That’s about the only pre-requisite – apart from being able to actively BLOCK thoughts during a trading session.

Tips on Actual Trading

Volume is king. If you see volume, but not quite at the target you were hoping for, just wait. Price always follows volume. Especially if the float is low.

70% of all volume is in the first and last hour of trading. However, with some trending / hot stocks – 1:30 EST (right after lunch) is also a high volume slot.

Always buy (CALL) options contracts when your favorite stock is SINKING (not when it is rising). And vice versa (buy PUTS when your stock is rising – not when it is falling).

The post Trading Secrets of a Mindful Trader appeared first on Anuj Varma, Hands-On Technology Architect, Clean Air Activist.

See if the options (on a date near the event) has a) HIGH VOLUME (compared to open interest) and b) High Implied Volatility

See examples of High Options Volume compared to open interest below

That’s what you need in the  option.

High Implied Volatility means that the price fluctuates a lot – which increases the amount of UPSIDE, when writing calls (or puts).  Low implied volatility means the stock price stays around the average more often.

Strategy – At Expiration, the market price can be one of 4 things.

Below your average price – No Loss. Profit = Premium

Above your Average price but Below the strike price – No Loss, Profit = Premium

Between the strike price + option premium price – No Loss. Even if exercised, we still made the option premium.

Above the strike price + option premium price –> Result- No Loss, but we just limited the amount of profit, by selling our underlying stock too early.

Summary – Regardless of the market price, you make your option premium. 

The only ‘loss’ is the loss of additional profit, IF the price exceeds Strike Price + Premium Price

The post How to find option trades appeared first on Anuj Varma, Hands-On Technology Architect, Clean Air Activist.

Trailing Stop Orders are a good way for your stop loss order to track the stock price (say 5% Below current stock price is where you want to sell).

What confused me was that there was a STOP price text field and a LIMIT price text field, in addition to the Quantity text Field.

The STOP price is where the sell is triggered – but not necessarily filled. The LIMIT price is where the stock is actually SOLD.

So say you want to sell 100 shares (quantity) with a STOP PRICE of 3 and a LIMIT price of 2.9. The actual price at which it will be sold will be 2.9

Trailing Stop Limit Order

This has two additional fields called ‘Trailing’ and ‘Limit Offset’

E.g. Stock Price $3

Trailing Stop  $0.1

Limit Offset $0.05

The trailing is when the stop loss order is ACTIVATED (but not filled). In our example, at 2.9, the stop loss order will be activated. However, if it falls below 2.85 (the limit offset), then NO ACTION WILL BE TAKEN.

What you are saying is – if it falls below 2.9, I wanna sell it – UNLESS, it falls below 2.85. THEN, I want to keep holding it.

The post Trailing Stop Loss Orders appeared first on Anuj Varma, Hands-On Technology Architect, Clean Air Activist.

You cannot leave the virtual currency transaction question unanswered. You must check either the “Yes” box or the “No” box.

A transaction involving virtual currency does not include holding virtual currency in a wallet or account, or the transfer of virtual currency from one wallet or account that you own or control to another that you own or control. If that’s all that happened last year, check the “No” box.

When to Check YES

The 2021 Form 1040 instructions clarify that virtual currency transactions for which you should check the “Yes” box include but are not limited to:

(1) the receipt of virtual currency as payment for goods or services that you provided; (2) the receipt or transfer of virtual currency for free that does not qualify as a bona fide gift under the federal tax rules; (3) the receipt of new virtual currency as a result of mining and staking activities; (4) the receipt of virtual currency as a result of a hard fork; (5) an exchange of virtual currency for property, goods, or services; (6) an exchange/trade of virtual currency for another virtual currency; (7) a sale of virtual currency; and (8) any other disposition of a financial interest in virtual currency.

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This should be obvious. Total number of shares that have been shorted. This number is never exact  – and is only reported every 15 days.

Short Ratio

Is just the ratio of total shares shorted to total float

Short Interest

Looks at options data. Put/ Call ratio specifically. If the puts are higher than the calls, this ratio can exceed 1. For me, a 0.5 Put / Call  ratio signals bearish sentiment (half the public believes this stock will go down)

Yahoo Finance –> Statistics Tab

e.g. BABA Short Ratio is shown in Yahoo Statistics below

The post Total Shares Short vs. Short Ratio vs. Short Interest appeared first on Anuj Varma, Hands-On Technology Architect, Clean Air Activist.

Sell Stop Order (Regular Stop)

Here, the price is going UP – and you want to dispose of the stock once a target price is reached. This is not a stop LOSS order – since your position is not in loss. Your position is gaining, as the stock rises,  but you would like  to lock in your gains (at the stop price) and get out.

Sell Stop Limit Order (also known as Stop LOSS order)

Here, the price is going DOWN – and you want to limit your losses and sell at the stop (aka stop loss) price. However, you can put a LIMIT price – BELOW your stop price – at which point you want to cancel this order. The intent is – once the stock reaches THAAAT low, you might as well hold on to it. It is slightly confusing to see TWO prices instead of one on the order.

Hope that helps clarify STOP SELL and STOP LIMIT SELL orders.

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