On my recent trip to Oregon I met with venture capital investors in NuScale Power, which is trailblazing, the brave new world of ?new? nuclear. Their technology has been pioneered by Dr. Jose Reyes, dean of the School of Engineering at Oregon State University in Corvallis.
This is definitely not your father?s nuclear power plant. The company has applied for design certification with the Nuclear Regulatory Commission for a mini light water reactor with a passive cooling system rated at 45 megawatts. The idea is to site a dozen of these together, which in aggregate can generate 540 Megawatts, little more than half the size of the old 1 gigawatt monsters.
Running a dozen small reactors instead of one big one makes for vastly easier operation and maintenance, as individual units can be brought on and offline as needed. Small size also eliminates the need for gargantuan, expensive containment structures. This power source runs at night, when solar and wind plants are offline. Modular design makes mass production of these units economical.
Once certification, approval, permitting, and construction are complete, we can expect to see the NuScale plants running by 2018. After all, if something similar works in nuclear powered submarines and aircraft carriers, why not in industrial zones on the outskirts of town? For more on NuScale?s innovative efforts visit their website at the following link: ?http://www.nuscalepower.com/ .
https://www.madhedgefundtrader.com/wp-content/uploads/2013/10/NuScale-System-Design.jpg475394Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2013-10-07 01:03:492013-10-07 01:03:49This is Not Your Father?s Nuclear Power Plant
Featured Trade: (OCTOBER 9 GLOBAL STRATEGY WEBINAR), (AN EVENING WITH THE CHINESE INTELLIGENCE SERVICE), (FXI), (CYB), (BIDU), (CHL), (BYDDF), (CHA)
iShares China Large-Cap (FXI)
WisdomTree Chinese Yuan (CYB)
Baidu, Inc. (BIDU)
China Mobile Limited (CHL)
BYD Company Ltd. (BYDDF)
China Telecom Corp. Ltd. (CHA)
Featured Trade: (JOIN THE INVEST LIKE A MONSTER SAN FRANCISCO TRADING CONFERENCE), (THE MAD DAY TRADER?S Q4 TARGETS), (SPY), (QQQ), (TLT), (USO), (UNG), (GLD), (FXY), (FXE), (AN AFTERNOON WITH DR. PAUL EHRLICH), (POT), (MOS), (AGU), (CORN), (WEAT), (SOYB)
SPDR S&P 500 (SPY)
PowerShares QQQ (QQQ)
iShares Barclays 20+ Year Treas Bond (TLT)
United States Oil (USO)
United States Natural Gas (UNG)
NewGold Debentures (GLD)
CurrencyShares Japanese Yen Trust (FXY)
CurrencyShares Euro Trust (FXE)
Potash Corp. of Saskatchewan, Inc. (POT)
The Mosaic Company (MOS)
Agrium Inc. (AGU)
Teucrium Corn (CORN)
Teucrium Wheat (WEAT)
Teucrium Soybean (SOYB)
I am pleased to announce that I will be participating in the Invest like a Monster Trading Conference in San Francisco during October 25-26. The two-day event brings together experts from across the financial landscape that will improve your understanding of markets by a quantum leap and measurably boost your own personal trading performance.
Tickets are available for a bargain $399. If you buy the premium $499 package you will be invited to the Friday 6:00 pm VIP cocktail reception, where you will meet luminaries from the trading world, such as tradeMONSTRS?s Jon and Pete Najarian, Guy Adami, Jeff Mackey, and of course, myself, John Thomas, the Mad Hedge Fund Trader. All in all, it is great value for money, and I?ll personally throw in a ride on the City by the Bay?s storied cable cars for free.
Jon Najarian is the founder of optionMonster, which offers clients a series of custom crafted computer algorithms that give a crucial edge when trading the market. Called Heat Seeker ?, it monitors no less than 180,000 trades a second to give an early warning of large trades that are about to hit the stock, options, and futures markets.
To give you an idea of how much data this is, think of downloading the entire contents of the Library of Congress, about 20 terabytes of data, every 30 minutes. His firm maintains a 10 gigabyte per second conduit that transfers data at 6,000 times the speed of a T-1 line, the fastest such pipe in the civilian world. Jon?s team then distills this ocean of data on his website into the top movers of the day. ?As with the NFL,? says Jon, ?you can?t defend against speed.?
The system catches big hedge funds, pension funds, and mutual funds shifting large positions, giving subscribers a peak at the bullish or bearish tilt of the market. It also offers accurate predictions of imminent moves in single stock and index volatility.
Jon started his career as a linebacker for the Chicago Bears, and I can personally attest that he still has a handshake that?s like a steel vice grip. Maybe it was his brute strength that enabled him to work as a pit trader on the Chicago Board of Options Exchange for 22 years, where he was known by his floor call letters of ?DRJ.? He formed Mercury Trading in 1989 and then sold it to the mega hedge fund, Citadel, in 2004.
Jon developed his patented algorithms for Heat Seeker? with his brother Pete, another NFL player (Tampa Bay Buccaneers and the Minnesota Vikings), who like Jon, is a regular face in the financial media.
In order to register for the conference, please click here. There you will find the conference agenda, bios of the speakers, and a picture of my own ugly mug. I look forward to seeing you there.
https://www.madhedgefundtrader.com/wp-content/uploads/2013/09/Trademonster.jpg379402Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2013-10-03 01:06:102013-10-03 01:06:10Join the ?Invest like a Monster? San Francisco Trading Conference
Jim Parker, The Mad Day Trader, has published his targets for a broad range of asset classes for the fourth quarter of 2013. The numbers are the product of his proprietary model, which he has developed over the past 40 years, and generated one of the most outstanding track records in the business. Ignore Jim?s views at your peril!
Jim says that stocks will bottom in coming weeks and begin a run that will take the S&P 500 (SPY) up to 1,730. Break that with conviction, and the next goal will be 1,780. If NASDAQ breaks 3,240, then we could tack on another 100 points very quickly.
Jim is a died-in-the-wool bear on bonds, and sees the entire fixed income space returning to long term normalized yields. It would be wise to sell every serious rally. It is unlikely that the iShares Barclays 20+ Year Treasury ETF (TLT) will rally from today?s $106.20 to above $114.62. Try to establish shorts and sell premium as close to that number as you can get.
The Japanese yen has correctly been a major focus of the foreign exchange market this year. Jim is a bear here as well. His quarterly pivot for the (FXY) is $98.63, and if we break $97.35, much lower targets beckon. He is modestly positive on the euro (FXE), as long as we maintain above $133.50.
Gold has been hammered this year, tracking the Treasury bond market almost 1:1 to the downside, as ?RISK ON? investors flee towards higher yielding instruments. Don?t expect any relief until we definitively break $1,420 on the upside. Stay away until then.
Jim is also negative on oil as long as we don?t break $104.70-$105.30 in the spot, or $38.18 in the (USO). Jim sees copper as weak and could be hit with another selloff.
The grains have been a graveyard this year for traders, as the largest crops in history have come in better than expected. Play the dead cat bounces, and buy every 8%-10% dump for a quick snap back rally.
While the Diary of a Mad Hedge Fund Trader and its Global Trading Dispatch focus on investment over a one week to six-month time frame, Mad Day Trader will exploit moneymaking opportunities over a ten minute to three-day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points. During normal trading conditions, you should receive two to five market updates and Trade Alerts a day.
As with our existing service, you will receive ticker symbols, entry and exit points, targets, stop losses, and regular real time updates. At the end of each day, a separate short-term model portfolio will be sent to you and posted on the website.
Jim is a 40-year veteran of the financial markets and has long made a living as an independent trader in the pits at the Chicago Mercantile Exchange. He has worked his way up from a junior floor runner, to advisor to some of the world?s largest hedge funds. We are lucky to have him on our team and gain access to his experience, knowledge, and expertise.
I have been following his alerts for the past five years, and his market timing has become an important part of the ?unfair advantage? that I provide readers.
A trading service with this degree of success and sophistication normally costs $20,000 a year. As a client of The Mad Hedge Fund Trader, you can purchase Mad Day Trader alone for $699 per quarter, or $2,000 annually. Or you can buy it as a package together with Global Trading Dispatch, which we call Global Trading Dispatch PRO, for $4,000 per year, a 20% discount to the full retail price...
To learn more about The Mad Day Trader, please visit my website. To subscribe, please click here.
https://www.madhedgefundtrader.com/wp-content/uploads/2013/06/MDT-Logo.jpg198610Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2013-10-03 01:04:562013-10-03 01:04:56The Mad Day Trader?s Q4 Targets
Pack your portfolios with agricultural plays like Potash (POT), Mosaic (MOS), and Agrium (AGU) if Dr. Paul Ehrlich is just partially right about the impending collapse in the world?s food supply. You might even throw in long positions in wheat, corn, soybeans, and rice.
The never dull and often controversial Stanford biology professor told me he expects that global warming is leading to significant changes in world weather patterns that will cause droughts in some of the largest food producing areas, causing massive famines. Food prices will skyrocket, and billions could die. At greatest risk are the big rice producing areas in South Asia, which depend on glacial run off from the Himalayas. If the glaciers melt, this will be gone.
California faces a similar problem if the Sierra snowpack disappears. Rising sea levels displacing 500 million people in low-lying coastal areas is another big problem. One of the 77-year-old professor?s early books ?The Population Bomb? was required reading for me in college in 1970, and I used to drive up from Los Angeles to hear his lectures (followed by the obligatory side trip to the Haight-Ashbury).
Other big risks to the economy are the threat of a third world nuclear war caused by population pressures, and global plagues facilitated by a widespread growth of intercontinental transportation and globalization. And I won?t get into the threat of a giant solar flare frying our electrical grid. ?Super consumption? in the US needs to be reined in where the population is growing the fastest.
If the world adopts an American standard of living, we need four more Earths to supply the needed natural resources. We need to raise the price of all forms of carbon, preferably through taxes, but cap and trade will work too. Population control is the answer to all of these problems, which is best achieved by giving women an education, jobs, and rights, and has already worked well in Europe and Japan.
https://www.madhedgefundtrader.com/wp-content/uploads/2013/10/India-Food.jpg330463Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2013-10-03 01:03:182013-10-03 01:03:18An Afternoon with Dr. Paul Ehrlich
Take a Look at the chart below and you will see that the price of oil is breaking key support. Texas tea has now backed off $13 since the end of August, and lower prices beckon.
It turned out that oil made an initial peak with the Egyptian Army?s ferocious and bloody attack on the Muslim Brotherhood. I hate to sound cynical here, but count the daily bodies in the street, which has been trending down sharply since the 1,000 plus tally. Fewer bodies mean lower oil prices. This broke the back of the fundamentalist opposition movement, which has accounted for the $20 spike in oil prices since June.
We then saw a secondary peak at $112.50 with Secretary of State John Kerry?s harsh reaction to the Syrian gas attack. We were a day away from launching the missiles when the Russians delivered a last ditch compromise peace offering. That firmly put Syria on a back burner for several months at the least. Oil has been falling ever since.
This returns us to the longer-term fundamental trend for oil, which is sideways at best, and down big at worst. The US is flooding the world?s oil markets with energy in all its many forms. The driver here is American fracking technology, which will continue to upend the traditional energy markets for decades to come.
It?s just a matter of time before fracking goes mainstream in Europe, especially in the big coal countries of Germany, Poland, and England. Then they can thumb their noses at Russia, a major gas supplier over the last thirty years. China will follow. You could even frack in the Middle East.
In a crucial news item that wasn?t reported nationally, the California legislature voted down a measure to ban hydraulic fracturing in their state. It was defeated in a democratically controlled body. As the Golden State is the most anti energy state in the country, this gives the state a flashing green light to move forward against environmentalist opposition. There is a ton more of new supply coming. This is what the weakness in the price of natural gas is telling you (UNG).
We also received a new negative for oil this month, the collapse of the emerging market currencies, stock markets, and bonds, especially the Indian rupee. This reduces their international purchasing power in US dollar terms, thus raising the cost of oil in local currency terms. You see, oil is priced in dollars. As the emerging markets have seen the largest growth in demand for oil in recent years, this can only be bad for prices.
In terms of my own trading portfolio, I wanted to have a ?RISK OFF? position, like an oil short, to hedge my existing ?RISK ON? positions. US stock markets could be weak into October, and they will take oil down with them.
The energy inventory figures are another enormous tell, which indicate that the industry is choking on excess supplies. The summer driving season is now a distant memory, and winter has yet to hit. These are grim tidings for oil.
Finally, there is that last resort, the charts. Check out those for the (USO) and oil and it very much looks like we have a classic head and shoulders top in place. That is the straw that breaks the camel?s back.
The only way I am wrong on my oil call is if the Chinese economy is about to take off like a rocket. They are the marginal big swing player in this market. But there is absolutely no sign of that happening in the economic data. If anything, the collapse in emerging markets suggest that conditions in the Middle Kingdom are about to get worse before they get better.
This is not an ideal place to initiate new shorts, unless you are a died-in-the-wool momentum player. But we are only one headline away from more bad news from the Middle East, which would deliver an instant $5 pop in oil prices. That?s what you want to sell into.
I don?t have any brilliant option plays for oil here. So better to play the leveraged short oil ETF?s. Those would include the ProShares Ultra Short DJ-AIG Crude Oil ETF (SCO) and the PowerShares DB Crude Oil Double Short ETN (DTO).
https://www.madhedgefundtrader.com/wp-content/uploads/2013/10/Oil-Swimming.jpg314504Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2013-10-02 01:04:432013-10-02 01:04:43Texas Tea Takes a Dive
There are only 13 days left to the options expiration on October 18. The Mad Hedge Fund Trader?s model trade portfolio has six positions that are deep in-the-money that expire that day. So, it is important that we tread carefully to get the bull benefit.
I received a few emails from readers whose option holdings have already been exercised against them, and have asked me for advice on how best to proceed. So, here we go.
The options traded on US exchanges and referred to in my Trade Alerts are American style, meaning that they can be exercised at any time by the owner. This is in contrast to European style options, which can only be exercised on the expiration day.
The call option spreads that I have been recommending for the past year are composed of a deep out-of-the-money long strike price plus a short portion at a near money strike price.
When stocks have high dividends, there is a chance that the near money option you are short gets exercised against you by the owner. This requires you to deliver the stock equivalent of the option you are short, plus any quarterly dividends that are due. Don?t worry, because your long position perfectly hedges you against this possibility.
You usually get notice of this assignment in an email after the close. You then need to email or call your broker back immediately informing him that you want to exercise your remaining long option position to meet your assigned short position.
This is a gift, as it means that you can realize the entire maximum theoretical profit of for the position without having to take the risk of running it all the way into expiration. You can either keep the cash, or pile on another sort dated option spread position and make even more money.
This should completely close out your position and leave you with a nice profit. This is not an automatic process and requires action on your part!
Assignments are made on a random basis by an exchange computer, and can happen any day. Exercise means the owner of the option that you are short completely loses all of the premium on his call.
Dividends have to be pretty high to make such a move economic, usually at least over 3% on an annual rate. But these days, markets are so efficient that traders, or their machines, will exercise options for a single penny profit.
Surprise assignments create a risk for option spread owners in a couple of ways. If you don?t check your email every day after the close, you might not be aware that you have been assigned. Alternatively, such emails sometimes get lost, or hung up in local servers or spam filters, which occasionally happens to readers of my own letter.
Then, you are left with the long side deep out-of-the-money call alone, which will have a substantially higher margin requirement. This is equivalent to going outright long the stock in large size.
This is a totally unhedged position now, and suddenly, you are playing a totally different game. If the stock then rises, you could be in for a windfall profit. But if it falls, you could take a big hit. Better to completely avoid this situation at all cost and not take the chance. You are probably not set up to do this type of trading.
If you don?t have the cash in your account to cover this, you could get a margin call. If you ignore this call as well, your broker will close out your position at market without your permission.
It could produce some disconcerting communications from your broker. They generally hate issuing margin calls, and could well close your account if it is too small to bother with, as they create regulatory issues.
It order to get belt and braces coverage on this issue, it is best to call your brokers and find out exactly what their assignment policies and procedures are. Believe it or not, some are still in the Stone Age, and have yet to automate the assignment process or give notice by email. An ounce of prevention could be worth a pound of cure here.
Consider all this a cost of doing business, or a frictional execution cost. In-the-money options are still a great strategy. But you should be aware of all the ins and outs to get the most benefit.
Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2013-10-02 01:03:112013-10-02 01:03:11A Special Note on Exercised Options
https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png00Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2013-10-01 01:05:552013-10-01 01:05:55October 1, 2013
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