Fwd: December 11, 2007: Butterflies Are Free - Corn is Not

---------- Forwarded message ----------
From: Leonard Mednick <leonard@irsdehassler.com>
Date: Dec 12, 2007 10:37 AM
Subject: December 11, 2007: Butterflies Are Free - Corn is Not
To: Leonard Mednick <leonard@irsdehassler.com>

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Thanks,
Maximus Mednick
MCT MCSE MCDST A+
San Diego, CA

2007 03 06 NLV Portfolio Year to Date Results

March 6, 2007 Year to Date Results

Commentary

Well that was a breath of fresh air! I mean the markets giving back about
25% of the losses they seized this year. If history is any guide (and it
usually is) the markets will climb back more slowly than when they dropped
in the first place. If we're really lucky, maybe, we'll break even by the
end of the month. That's assuming that what we're seeing is really not the
start of a bear market which could then take anywhere from six months to two
years before normalcy returns. Of course, in the meantime, we'd still have
to survive the markets falling yet more deeply. Hey, didn't I tell you kids
to strap in because it was going to be a bumpy ride?

I came this close to jumping into the market today but then caution overtook
me. I'd like to see a confirmation day tomorrow (with the markets again up
significantly) before I commit any more resources. So today again we found
our self just riding out the storm. It's boring but so is good health too,
when you think about it. <g>

Paper Profits Table

Closed Transactions Table

Put Trading Activity for Today
Generally, we want STO Premiums to be as big as possible and we was BTC
Premiums to be as small as possible. This would give us optimum profits. In
other words, we want to buy low and sell high, but with put writing its
always in reverse order. Note that all Premium, STO, and Profit/Loss Columns
should be multiplied by 100 to get the per contract
numbers and that all positions we enter into will always be for as least two
but probably more contracts per position.

Abbreviations: STO-Sell to Open; BTC-Buy to Close; AROM-Annualized Return on
Margin; S/L Tgt-Stop-Loss Target

Sell to Open (STO)
Symbol Expires Strike Premium BTC Tgt S/L
Tgt Sell By Date
None

Account Balance less Margin available to invest: 50.9%
Account Balance less Margin and Voluntary Reserve requirements available to
invest: 20.9%

Buy to Close (BTC)
Symbol Expires Strike STO BTC
Profit/Loss Days Held AROM
None

Comments or Questions?
If you have any comments or questions, please direct them to Leonard
leonard@irsdehassler.com

Disclaimer:
This is the fine print and is designed to protect me in these litigious
times, and until I get better wording for this disclaimer, you are under
notice that I am not selling my services nor any other product, nor am I
trying to induce you to trade along or independently, with me. I am merely
offering a journal, so to speak, of my portfolio's transactions and results
with the hope that you will glean information and educate yourselves in the
stock market in general and option trading dynamics in particular. Trading
in the stock market and in options involves substantial risk and much money
may be lost. Beginners, especially those with little or no understanding of
the stock market, lose most, if not all of their capital in a relatively
short time. In other words learn from me and my mistakes and if you want to
risk your money in the markets, that's your business and has nothing to do
with me. I am not your representative, broker, advisor or any other type
agent acting in your interests. As a matter of fact, if you want to invest
your money, I recommend you hire your own advisor other than me. I also
reserve the right to cease publishing this missive, or change its publishing
frequency at any time without further notice or liability to you.
Copyright (c) 2007 Leonard Mednick, MBA, CPA (Ret); Managing Member LIME
Holdings LLC

_________________________________________________________________
Don't miss your chance to WIN 10 hours of private jet travel from Microsoft®
Office Live http://clk.atdmt.com/MRT/go/mcrssaub0540002499mrt/direct/01/

2007 03 05 NLV Portfolio Year to Date Results

March 5, 2007 Year to Date Results

Commentary
"Next verse, same as the first. A little bit louder and a little bit worse."

This kiddy doggerel ran through my mind as I watched the DOW run up to 60
points or so plus during the early morning only to close at about 60 points
below the open! More money was lost in the market (I heard that 1 ½ trillion
dollars was lost in the global markets just this past week). That's Trillion
(a thousand billion) with a capital T making the loss equivalent to about 30
times the entire wealth of Bill Gates, the richest man on the planet. And
when you think about it, a trillion and a half dollars is probably in the
neighborhood of the aggregate wealth of all the people in the U. S. gone
Poof in only one week! I'm here to tell you that as a patriotic American, I
did my part contributing to this economic black hole, as well. <sigh>

In between the market high and the low today there were lots and lots of ups
and downs. The financial types call this frequent up, down, and wide price
movement, "volatility" which they equate to a measurement of "risk". The
more frequent and the wider the movement, the higher the volatility and the
higher the risk.

Indeed, each stock, each option, each index etc.; in fact any series of
numbers has a volatility attached to it that can be measured mathematically.
The statisticians call this volatility "Standard Deviation". Volatility is
neither good nor bad, it simply is a property of a series of numbers but it
has some very interesting properties of its own.

First, the higher the volatility, the higher the probability that you can
make a lot of money in an investment, or lose a lot of money. Second, when
you know the volatility of a stock, you can determine the probability with
whatever precision you want as to how much you can probably win or lose on
your investment! We won't go into the math here but if you want more details
on this simply send me an email.

Now if all other things were equal, what you've just learned would be of no
use because on the average you would lose just as much as you won over a
long period of time no matter whether volatility was large or small. But all
other things are not always equal. Some companies have better managers, more
efficient production processes, stronger patents, more creative ad agencies,
and so forth. These factors are descriptively called "the company's
fundamentals". The chances are that if you can identify companies with good
fundamentals, that their volatility would land their stock prices more often
to the upside then to the downside. And there, my friends, is our investment
edge.

When you pick the stocks that give you the edge, the probability is strong
that you will win more often than you lose, and that your average wins will
be higher than your average losses. This brings to mind another doggerel
that I learned playing poker several years later called the Gambler's
Prayer. It went like this: "Dear God, just give me an edge and I'll take
care of the rest." Or maybe it went like this: "Dear God: just let me break
even; I need the money." Or maybe...Awww. Fuggedaboudid! <g>

Paper Profits Table

Closed Transactions Table

Put Trading Activity for Today
Generally, we want STO Premiums to be as big as possible and we was BTC
Premiums to be as small as possible. This would give us
optimum profits. In other words, we want to buy low and sell high, but with
put writing its always in reverse order. Note that all Premium, STO, and
Profit/Loss Columns should be multiplied by 100 to get the per contract
numbers and that all positions we enter into will always be for as least two
but probably more contracts per position.

Abbreviations: STO-Sell to Open; BTC-Buy to Close; AROM-Annualized Return on
Margin; S/L Tgt-Stop-Loss Target

Sell to Open (STO)
Symbol Expires Strike Premium BTC Tgt S/L
Tgt Sell By Date
None

Account Balance less Margin available to invest: 50.9%
Account Balance less Margin and Voluntary Reserve requirements available to
invest: 20.9%

Buy to Close (BTC)
Symbol Expires Strike STO BTC
Profit/Loss Days Held AROM
None

I think now there's a strong chance that the market has spent its energy on
the negative side. All it takes is for people to begin realizing that what
just transpired the past seven days or so has been mainly due to panic. The
fundamentals of the stock market still seem to be on the plus side; nothing
changed significantly since two weeks ago. With this thought in mind,
depending upon how my screens come out and how the market is at about one
hour before closing, tomorrow, I may just jump in again by opening up new
positions and/or closing out old positions in my portfolio.
Comments or Questions?

If you have any comments or questions, please direct them to Leonard
leonard@irsdehassler.com

Disclaimer:
This is the fine print and is designed to protect me in these litigious
times, and until I get better wording for this disclaimer, you are under
notice that I am not selling my services nor any other product, nor am I
trying to induce you to trade along or independently, with me. I am merely
offering a journal, so to speak, of my portfolio's transactions and results
with the hope that you will glean information and educate yourselves in the
stock market in general and option trading dynamics in particular. Trading
in the stock market and in options involves substantial risk and much money
may be lost. Beginners, especially those with little or no understanding of
the stock market, lose most, if not all of their capital in a relatively
short time. In other words learn from me and my mistakes and if you want to
risk your money in the markets, that's your business and has nothing to do
with me. I am not your representative, broker, advisor or any other type
agent acting in your interests. As a matter of fact, if you want to invest
your money, I recommend you hire your own advisor other than me. I also
reserve the right to cease publishing this missive, or change its publishing
frequency at any time without further notice or liability to you.
Copyright © 2007 Leonard Mednick, MBA, CPA (Ret); Managing Member LIME
Holdings LLC

_________________________________________________________________
Don't miss your chance to WIN 10 hours of private jet travel from Microsoft®
Office Live http://clk.atdmt.com/MRT/go/mcrssaub0540002499mrt/direct/01/