October Expiration’s commentary on Wins and Losses:

This was an excellent month! A true testament to our winning system…

We wanted to take the time to pat ourselves on the back, and from the numerous emails from our subscribers, we are obviously not alone in our self-praise! This month topped all expectations and we had the biggest gain since we began the service!

The numbers speak for themselves: 15.6% gain for the month! +50% YTD…

However, by far, the bulk of our subscribers are very impressed with how we have also set up the following month’s trades. We can effectively coast through the month, because our positions are relatively hassel free, unless we get some serious gaps in the market! We will probably initiate 1 more position, if our other positions pan out the way we have set them up.

Here is how we ended this month:

CLF:

Cliffs Natural Resources was a victim of the general market girations which plagued many securities last month. Ther was nothing especially wrong with this company which saw it’s stock  price plummet. We were even surprised of how far this security fell ourselves. However, because of our system, e were able to capitalize on this opportunity, and this security gave us the largest percentage gains for the month.

GMCR:

This security was devastated by comments about the integrity of its books, and as a result, was run over by traders shorting this security. Sadly for our subscribers, we were not able to take advantage of the significant drop in the company’s shares. Unfortunately, we had already taken our gains on our winning position and were powerless to watch the security fall at the last stages of the expiration period. Was a nice gain, but could have been 10 times as nice!

VMW:

VMW was an uneventful position which did exactly what we thought it would do. This was a hold from the previous month’s expiration period and we held because the returns were just that good! The position gave us a little scare towards the end, and we decided to close one of the legs. But this was done simply to preserve gains. Had we held this position, we would have still come out unsacved, but we didn’t want to take the chance at it turning into a loser!

We encourage our subscribers to keep the emails coming…

That’s all the commentary for now, till next month’s expiration! This month was a KILLER MONTH!

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With no shortage of news stories, Traders have seen wild, 4-500 point swings on the slightest hints of positive or negative outlooks.  This has forced large institutional investors to sit with tons of cash on the sidelines, because they find themselves influencing these securities by their mere participation in buying and selling. As a result, there is no indication either way, when this rollercoaster ride is going to end.

As traders with the Option Trade Alerts service, this couldn’t be a more perfect storm, because we are less concerned with overall direction, and more with duration and/or price range! Furthermore, unlike these large Institutional Traders, by trading derivatives, we avoid the trappings of influencing the underlying security’s price, thereby enabling the true market forces to prevail.

By using the Option Trade Alerts Service, our subscribers enjoy steady returns; very few and very small draw-downs, and superior capital preservation. We have an exclusive trading method, which solves most of the issues faced by Traders in today’s market!

This month we took a necessary loss to put us back onto firm footing. We saw really serious gaps up and down last month, and we were left with a couple holes that we had to fill. Luckily, with our strategy, these shortcomings are significantly less than other services, who simply didn’t have an answer to the wild swings that we have gone through in the past months.

As a matter of fact we are constantly reminded that we are literally the only service who’s pics actually do better if there are unexpected movements in the market!

Here is how we ended this month:

DECK:

This trade represented the biggest loss to our our portfolio! Unfortunately, there wasn’t a market for the 82.5 Puts, so that we could mitigate the loss by rolling over the position. Had we been able to rollover the position, we would have extended the hold on the entire spread, and been profitable in the following month. But there is no use crying over spilled milk. However, by playing out these positions throughout the last session, we were able to identify a key factor which previously impeded our contingent orders. To wit, together with a new partner that we added this month, we have refined a better contingent order strategy. So we say thanks and godbye to this trade!

GMCR:

This was a particularly dificult security to trade! We were taken on a quick ride to the upside in the previous session, but the security still stayed in our predicted range. This allowed us to take some quick profits on the 110 Calls. We went in again for another round on the 110 Calls, to mitigate the loss on the 115 Calls and also made some money on these Calls. However, we rolled this position to the following month’s expiration to “Leg Into” another Iron Condor for the next expiration month. The 77.5-67.5 Puts expired nicely, so we were 100% profitable on that spread. This trade is still being processed and should be profitable again in the next expiration period.

MCP:

MCP gave us another gift this month! We were simply waiting for this security’s option spreads to expire, and we came out with a profit. This security stayed within our predicted range the whole time, so we simply allowed the time value on the 45-35 Put spread to run out.

That’s all the commentary for now, till next month’s expiration! This month was simple “House-Cleaning!”

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August Expiration’s commentary on Wins and Losses:

After numerous requests, we have resumed our comentary on our wins and losses for the previous month’s expiration.

This was a challenging month to say the least, with wild swings up and down. Many of our contingent orders were triggered. However, we ended this month with some good gains:

CLF:

The entire trade was a drag on our portfolio! We ended the last session with a significant gain on the 70-75 put spread. However, we went in for what looked like another winner on the 90-80 put spread, but got whacked by the market girations. We felt every market bump with this trade and we had some serious ground to make up on our other positions! In hindsight, we were a little upset that we didn’t hold the 80 puts a little longer, but we were just trying to mitigate a loss, and no one could have imagined the market would fall so far.  Most of us were assigned stock at $90, which we in-turn exercised our option contracts to get out of the stock to end the pain.

CMI:

Another drag on our positions came in the form of this CMI position! This security shot up unexpectedly before the market turmoil, and we expected it to remain higher. Then the sideshow bobs and crusty the clowns in washington caused the underlying position to track back much futher than any of the company’s issues supported, and the security tanked. We did make up some ground with the 87.5 puts, by closing out at a significant gain, but we were just shy of breakeven.  We were also assigned on the 97.5 puts and turned arround and sold the position for $95.00.

DECK:

This was a gift! The put rose to such a level, that we could not resist taking profits on this position. There is no reason for the underlying security to be down, other than by association with the entire market, so with all the irrational movements, we felt it best to close this position at this time. We will need to make this up with the put spread this month, but we could not resist taking profits.

MCP:

Another gift! MCP was artificially depressed, and the calls reduced to a level that we were comfortable taking profits. No use tying up capital on a position which has little left to gain! This trade added a little more to our gains for the month.

That’s all the commentary for now, till next month’s expiration! With all the market turmoil, this was still an excellent month!

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S&P lowered the U.S.one level to AA+ while keeping the outlook at “negative” as it becomes less confident Congress will end Bush-era tax cuts or tackle entitlements. The rating may be cut to AA within two years if spending reductions are lower than agreed to, interest rates rise or “new fiscal pressures” result in higher general government debt, the New York-based firm said yesterday.

“The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics,” S&P said in a statement late yesterday after markets closed.

U.S.Response

The U.S.immediately lashed out at S&P after the downgrade, with a Treasury Department spokesman saying the firm’s analysis contains a $2 trillion error. The spokesman, who asked not to be identified by name, didn’t elaborate, saying the mistake speaks for itself.

Moody’s Investors Service and Fitch Ratings affirmed their AAA credit ratings on Aug. 2, the day President Barack Obama signed a bill that ended the debt-ceiling impasse that pushed the Treasury to the edge of default. Moody’s and Fitch also said that downgrades were possible if lawmakers fail to enact debt reduction measures and the economy weakens.

No ‘Surprise’

“This move should not be much of a surprise to markets, though the timing is at a point where market sentiment is fragile after the drop in stocks this week,” said Ajay Rajadhyaksha, the head ofU.S.fixed-income strategy at Barclays Capital inNew York. “What really matters is whether the markets are willing to ‘downgrade’ the U.S.bond market. As this week’s move showed, U.S. Treasuries remain the flight-to-quality asset of choice.”

To read the full article please visit: http://www.bloomberg.com/news/2011-08-06/u-s-credit-rating-cut-by-s-p-for-first-time-on-deficit-reduction-accord.html

Representative Ryan, a Wisconsin Republican and chairman of the Budget Committee, called the spending cuts connected to the debt-ceiling increase “a huge cultural change” for Congress.

After final approval in the Senate the debt-limit measure would be sent to Obama for signing and conclude a months-long battle over raising the $14.3 trillion debt ceiling and reining in government spending.

“It’s hard to believe we are putting our best foot forward with the legislation that comes before us today,” said House Democratic leader Nancy Pelosi of California. “Not one red cent” will come from the wealthiest Americans to cut the deficit, she said. Still, she said she supports the plan because it ends economic uncertainty and prevents cuts in Social Security and Medicare.

Treasuries rose, pushing the yields on 10-year notes to the lowest level since November, as an index showed U.S. manufacturing expanded in July at the slowest pace in two years.  Yields on benchmark 10-year notes fell five basis points, or 0.05 percentage point, to 2.74 percent at 5:02 p.m. in New York, according to Bloomberg Bond Trader prices. The 3.125 percent securities due in May 2021 gained 14/32, or $4.38 per $1,000 face amount, to 103 8/32.

U.S. stocks slumped. The Standard and Poor’s 500 lost 0.4 percent to 1,286.94 at 4:19 p.m. in New York after climbing as much as 1.2 percent earlier. The Dow Jones Industrial Average retreated 10.75 points, or 0.1 percent, to 12,132.49 today after rising 139 points.

JPMorgan’s Jamie Dimon, Goldman Sachs’ Lloyd Blankfein and Bank of America’s Brian Moynihan, among others, said in a letter that an agreement needs to be reached this week.

“A default on our nation’s obligations, or a downgrade of America’s credit rating, would be a tremendous blow to business and investor confidence — raising interest rates for everyone who borrows, undermining the value of the dollar, and roiling stock and bond markets — and, therefore, dramatically worsening our nation’s already difficult economic circumstances,” the letter said.

The letter from the chief executives come as Congress and the White House struggle to broker a deal to raise the country’s $14.3 trillion debt cap before August 2 when the U.S. Treasury will no longer be able to borrow funds to pay all of its bills.

That has raised the spectre of default and businesses from the big banks to manufacturers are alarmed by the potential fallout.

Citigroup’s Vikram Pandit, Metlife Inc’s Steven Kandarian and Morgan Stanley’s James Gorman were also among the chief executives who signed the letter.

The proposal doesn’t mention capital gains and dividends specifically, but the plan’s goals for income tax rates, federal revenue and progressivity likely would require Congress to raise tax rates on investment income, said tax analysts who favor and oppose preferential tax rates on capital gains and dividends.

The proposal, which would lower income tax rates and broaden the tax base, is similar to plans issued over the past year by a bipartisan fiscal commission and the Bipartisan Policy Center. Those plans suggested taxing capital gains and dividends as ordinary income for the first time since 1990.

“You cut marginal tax rates and you still want to have a progressive tax system, you have to tax capital gains,” said Leonard Burman, a professor of public affairs at Syracuse University who helped write the Bipartisan Policy Center’s report.

Individual and corporate income is taxed at a top rate of 35%. Dividends and capital gains on most assets held longer than one year are taxed at 15% under tax laws set to expire at the end of 2012. The 2010 health care law included a new 3.8% tax on capital gains, dividends and other passive income reported by high-income taxpayers; that extra tax is scheduled to take effect in 2013.

The bipartisan proposal, as outlined in a five-page document obtained by Bloomberg News, would require Senate committees to produce legislation that would reduce spending and raise revenue.

The Senate Finance Committee would be instructed to lower tax rates, eliminate the alternative minimum tax and “reform” tax breaks for health care, charitable giving and homeownership.

The outline calls for three individual income tax brackets with a top rate between 23% and 29%. The corporate rate would drop to a single rate of between 23% and 29%. The goal would be to retain the tax system’s current progressivity and keep benefits for low-income workers, such as the earned income tax credit.

To make up the revenue and to offset lowering income tax rates on high earners, lawmakers will look at investment taxation. The congressional Joint Committee on Taxation estimates that preferential tax rates for capital gains and dividends will cost the Treasury $84.2 billion in forgone revenue this year. Eliminating the preference wouldn’t necessarily raise that much money, because capital gains realizations are sensitive to tax rates.

More than 90% of the benefits of the lower tax rate on capital gains go to the top 20% of taxpayers, with almost half of the benefit going to the top 0.1%, according to the Tax Policy Center.

Read more about this article @ http://www.investmentnews.com/article/20110724/REG/307249983

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The long-term rating may be lowered by one or more notches into the AA category in the next three months if S&P concludes Congress and President Barack Obama’s administration haven’t achieved a credible solution to the rising U.S. government debt burden and aren’t likely to achieve one in the foreseeable future, according to a statement today.

“Owing to the dynamics of the political debate on the debt ceiling, there is at least a one-in-two likelihood that we could lower the long-term rating on the U.S. within the next 90 days,” S&P said.

The debt limit’s proximity has left investors unfazed, with the Treasury attracting higher-than-average demand for a third consecutive sale at an auction of 30-year bonds today. Benchmark 10-year note yields were at 2.97 percent at 11:23 a.m. in Tokyo, heading for a second consecutive weekly decline.

The dollar weakened against most major peers after S&P became the second ratings company this week to say it may downgrade the U.S. The dollar fell to $1.4184 per euro as of 11:24 a.m. in Tokyo from $1.4143 in New York. The currency was at 79.11 yen from 79.14 yen.

To read more about this story go to http://www.bloomberg.com/news/2011-07-15/u-s-debt-rating-may-be-cut-by-s-p-on-stalemate-over-plans-to-cut-deficit.html

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The program, which peaked at $80 billion in loans outstanding, was known as the Fed’s single-tranche open-market operations, or ST OMO. It made 28-day loans to units of 19 banks between March 7, 2008, and Dec. 30, 2008., In response to a subsequent Freedom of Information Act request for details, the central bank disclosed borrower names, amounts borrowed and interest rates.

ST OMO is the last known Fed crisis lending program to have its details made public. The central bank resisted previous FOIA requests on emergency lending for more than two years, disclosing details in March of its oldest loan facility, the discount window, only after the U.S. Supreme Court ruled it had to. When Congress mandated the December 2010 release of data on special initiatives the Fed created in its unprecedented $3.5 trillion response to the 2007-2009 collapse in credit markets, ST OMO — an expansion of a longstanding program — wasn’t included.

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