Kia Ora Tackle Traders!

So here we are in my favorite country on the planet, or at least of the countries I have visited thus far. New Zealand is indeed unique in flora, fauna, and landscape, however, it is the people of New Zealand that bear the most beauty. They are fun, incredibly kind and hospitable, but above all, honest and humble people. For me it is a win win situation and I couldn’t ask for anything better. Currently I am living out of a camper van in and around Raglan, a surf town on the North Island, and yes, I am making the attempt to learn how to surf—which by the way is incredibly difficult. I can see it taking some time, but Ill get there, eventually. Either way I have been shacking up in local surf camp on the best beach they have to offer and have earned the title: “Big Bad Bobby B, the Bad Maori”… Which is nothing short of hilarious if you know the NZ pop-culture reference.

Another awesome aspect of this place is the coast line north of town. It looks very similar to a particular stretch of Highway One in Northern California between Santa Cruz and Halfmoon Bay, except it is punctuated by tropical forest with temperate ferns and coastal scrub. It’s incredibly unique and breathtaking scenery. And…well, the people here like to have a good time as well, but in a somewhat healthy way. Everyday the town is surfing, hiking, or fishing during the day, no questions asked. Then at night there is a lot going on in town and certain beaches, much of which centers around other camper van people, foreign and domestic. It’s rather fascinating. Now, camper van life is indeed less expensive than, let’s say, the Ritz Carlton… But, then again funding a round the world trip from a single trading account can be tricky from time to time. Thus the camper van approach fills any potential financial gaps a slow week in the market may create for me. So…it’s a necessary evil but its a lifestyle that is actually rather fun and the fact that I can fund all of this rift raft from conservative approaches to stocks and options makes it all that more special… So much I am having one of the best times of my life. I have surfed one wave, climbed one volcano, and have made three lifelong friendships. Not too shabby, aye?

Now, if there are any complaints to wager, the time difference as well as the general lack of internet / phone service has throw a wrench in my gears. It’s much more difficult to manage my positions in the manner I am use to or keep in touch with business dealings in general. In fact, and as a result, I’m trading less than I have ever in my trading career. But what I have found of interest is that although I am trading less, I am almost still making as much as I did before—that, and I am spending less in commissions and more time to explore. Weird how that works. There is a bit of credence to not “over-trading” and “over-analyzing” an account. Which is one of the chief lessons that I have learned in this “trading my way around the world” bit.

First and foremost, staring at a screen doesn’t make the chart do what you want it to do. Nor does it necessarily increase your chances of being efficient and profitable with your money. Sometimes jumping the gun and making quick, and what are often emotional, trading decision can lead to a loss or reduction of overall profit. The simple fact that I cant really chime into the market as easily as I could before (unless I want to be up and at it at 4 A.M.) has inadvertently kept me from making as many rash trades as I use to. And to be honest I am really enjoying it. In short, if the market is bullish I am bullish. And If you think about it you’re merely placing one’s faith and confidence in probability and letting the trade do what it is designed to in such mindsets. Indeed there are drawbacks, such as less time for deliberation and analysis, but that being said sometimes intuition can be equally accurate as the calculator and your lab-coat.

Now, I am not saying I am back to the ole “guessing game”. What I am saying is that there are many different ways at arriving at a conclusion and sometimes when I look at a chart my initial synopsis is the correct synopsis. Its only when I stare at the chart and consistently revisit the screen throughout the day do I second guess myself. This can be problematic, especially if you are emotional about your money; that, or trying to be supremely efficient with it and not capable of such an act. As mentioned before, sometimes you just have to let the trade do what it supposed to do and If anything is to be micromanaged it should be the position sizing of one’s account, first and foremost. Beyond that I’d say trading this lifestyle for the other has been one of the best opportunities I have ever had. So thanks Matt, Tim, Gino, and Noah!

ROBIN HOODS

So, just a little update, I have backed away from a few particulars detailed in prior blogs; namely, AMD and X. I still like them robin hood “selections” but I have lessened my personal volume of trading them. They’re still on the watch-list but they’re not getting much attention from me at the moment. However, I have been filling the gap(s) with larger positions on FCX and /NG. The reasons why? Well, X has tendency to reverse rapidly. Ive already hit my targets during it’s bullish jump so I am just going to let it breath for a bit and let it pull back before reengaging. This could take several months…Or, it could take a week. Or, maybe a day… Lets wait and see.

As for AMD, too much directional conflict going on insofar as poor earnings first dragged it down; but the recent jumps from cryptocurrcies have as well benefited the stock; (*AMD makes chips and processors for cyrptocurrency miners); however, the volatile drops in the crypto market have equally dragged it down. And then there is the technicals… of which I am not liking. So, as one can see, playing AMD is becoming a convoluted play and one that I am not so interested in hyper focusing on. However, that does not mean AMD is off the watch-list, folks. It will still be on the list because I can use AMD to hedge my own crypto currency position in a roundabout way. Indeed the name of the game in Environmental Hedging is to hedge ones contribution of greenhouse gases with environmentally sound products and or investment in clean tech companies, i.e. solar, wind, and so on… And since cryptocurrcies, and, in particular, the mining process itself, are very energy taxing of which most of what is produced comes from coal in China.

I therefore use AMD as a means of acquiring solar shares per Steps 1 and 2 of the system as well as hedging my own personal crypto position, incrementally and environmentally to the best of my ability. Which can only be achieved if I use profits from Step 1 to compound in clean tech (see the targeted stock list) as prescribed in Step 2 of the system. I trade AMD but I do not like how AMD is trading right now. So, I have been supplementing profits with something else in the system. This is important because as stocks assume different personalities your trading approach may change as a result. And as of right now I just don’t like what I am looking at when it comes to AMD, nor do I like it’s attitude if you know what I mean.

X—United States Steel

 

As mentioned I am letting U.S. Steel settle for a bit before I go back after it. I have hit all targets on the stock and have compounded the profits in shares elsewhere. I am waiting for a bullish retracement to come, whenever that may be. Usually such happens are very quick with X so keep an eye out for it.

FCX—Freeport McMorhan

Naked Puts: Well, the explosion in Copper prices as well as Nat Gas has been greatly beneficial for this stock. I will continue to be issuing naked puts as the opportunity presents itself. Furthermore, I see more growth potential for FCX as the company continues to negotiate mining operations in Indonesia. If negotiations go well and favor further mining operations in the island nation I see another jump in price action. Beyond fundamentals, the technicals also look appealing and premium is fairly decent at the moment.

USO—United States Oil Fund

Naked Puts: Premium is fluttering a bit with USO, however, you can find some good sells if you are selling in the money put options. Now, whenever I do do this I am doing with the intention of taking ownership of the ETF. I believe it was about a few months ago I was called out on USO in my Covered Call account. Thus I am trying to get back in to my share position via the use of the Naked Put. This could take several months, especially if Crude continues it’s rise and my contracts continue to finish out of the money. So, in the meantime Ill keep collecting profits from Naked Puts and eventually a bullish retracement will come about and I will be assigned ownership of shares. Since I am going for ownership I am only selling an amount of contracts that fit my portfolio design and corresponding position sizing.

UNG—United States Natural Gas Fund

Naked Puts: Well, this one is back on the list. Finally it has cooled down enough in the northern hemisphere to increase Nat Gas demand and UNG as well had a reverse split. A reverse split is where the fund decreases amount of shares owned and increases overall price of shares…This will often lead to an increase in premium and playability—which was a problem with UNG before the split. So much in fact it was really difficult to cover the stock, let alone issue naked puts. For a bit there the risk did not justify the reward whatsoever. Which is why I was toying around with Nat Gas Futures. Now, this is not to say I will cease to use the futures market, but if you as a trader are not comfortable with futures then UNG can be a good supplement.

TARGETED STOCKS:

FSLR—First Solar

Covered Call: I am liking the set up on FSLR and the recent tariffs on solar by our current administration will assuredly benefit FSLR’s share price. Technicals look great and all is well so far. I am uncovered and anticipating a northernly move from the stock sometime soon. After which Ill lock in some gains via the Covered Call, (hopefully catch a bullish retracement), and repeat the process.

SPWR—Sun Power

 

Covered Call: Well, Sun Power may not stand to benefit as much as FSLR when it come to the newly proposed solar tariffs being that they import a lot of components from China—which is the primary target of the “America First” solar tariff. You can see this in the charts. That being said I do not believe it will be life threatening or anything like that. Ill just be a bit more cautious with the stock than that of FSLR. Overall, Sun Power is a fundamental struggle, but has decent potential to overcome fundamentals since it is one of the most widely used / inexpensive solar companies out there. I still own shares and will continue to own shares—they were free in the first place anyways. As they should be for you as well.

TSLA—Tesla Motors.

I am seeing a northernly jump on this one. Therefore I am uncovered; that, or considering a bull-put on the stock. Indeed Tesla is a debt driven company and as such has some fundamental weaknesses to it. But I do well with the stock myself and ole Elon keeps rolling out new products and meeting production standards / timelines.

Environmental Hedging Week 24—What is Environmental Hedging?

Ok folks… Ill do this from time to time and reiterate the essential aspects of the system for beginners and those who are new to Tackle. The system in and of itself is incredibly simple in concept, however, expansive in implication.

• So, first and foremost, we are using options to acquire money from the major carbon contributors and environmental polluters in the stock and options markets using the Naked Put. (see Robin Hood List)
• Then we compound those profits when we buy free shares of clean tech companies like solar, wind, geothermal, and so on…from the Targeted List. We do so for two primary reasons. One: to expand the business operations of net-positive corporations and, obviously, take money and funding away from the net-negative corporations of the world. Two: we also do so in accordance with the capitalist spirit—to profit, and thus acquire the necessary capital to fund the next step of the system.
• The next step is we take our secondary round of profit, the profits acquired from Covered Calls from the Targeted Stock List. These are things like solar panels, composter(s), electric cars, personal gardens and so on… After which, and after you have reduced your own personal carbon footprint, or at the least, hedged a portion of it, we will continue to compound in clean-tech, for decades with this free money if you will. Eventually, and over time, these compounded positions will be worth an enormous amount of money. Why? Our survival as a species depends on it. So…as this reality sets in and renewables continue to be adopted worldwide the stock value of such corporations will increase as will your overall wealth. This is no different than, let’s say, investing in oil companies in the late 40s and early 50s—of which, by now, would have been a generational wealth play. But also imagine that by doing so you would have acquired free clean-tech products in the process, thus reducing monthly expenses as well as being a responsible member of global society. It doesn’t matter what your political perspective is at the end of the day, nobody is going to argue with free energy, free food, and free transportation in their personal lives.
• We rise, wash, and repeat this process indefinitely, month by month. And further, you ought to make 2-6% from this process, month by month. Now, it could be a slow start depending on you initial account size but this is a compounding system, folks. Therefore it takes time and above all only works if the system is compounded. So, compound compound and… compound!!!

REVIEW:

• Naked Puts on the Robin Hood list at your discretion.
• Use profits from Step 1 and buy shares from the Targeted List.
• Write Covered Calls on Targeted List Stocks (pick one, or pick all of them, doesn’t matter. I personally do one at a time and move on the the next stock after I have acquired more than 100 shares.) With profits from the Covered Call I buy actual products like solar panels and etc…use your imagination. Buy things that are helpful to the environment and things that reduce monthly living expenses over the long term.
• Rinse, Wash, Repeat.

Next week I will go into the System’s overall implications as well as potential impact.

Cheers,

Bob Shannon.