SHLDQ - Sears Holdings Corp

[Luke 532]

luke writing slightly ITM puts, are you risking getting put? or is that the risk you are willing to take as long as the stock is in the low 40s?

 

hy

 

Yes, I'm OK getting put the stock.  The vast majority of the time you can simply roll them forward, collect additional premium, and wait until it expires above the strike.  If you're bullish on a stock the added time can be your friend and you get paid to roll it.  Must use the appropriate size on the trade.

[ScottHall]

The long awaited follow up by Bishop.

 

http://seekingalpha.com/article/1900481-sears-holdings-valuation-part-two-credit-flows-for-subsidiaries-inside-a-permanently-embedded-capital-structure?source=feed

 

I skimmed it.  I don't know exactly what to say.  I am not sure I've seen so many words say so little.  The tone is pedantic and condescending.  The author who I think made a "name" for himself with his first article has seen his hat size expand faster than Barry Bonds' did post 1998.  He now claims to be writing a book (he mentions this it felt like dozens of times, but probably wasn't that much) detailing his Sears analysis. 

 

He says now that he has been working on Sears so long there's much more to be said than a "short" article will permit. So this article focuses solely on the liabilities.  Yet he really doesn't say anything.  He more or less simply rehashes the terms of the various liabilities and "discusses" them, but never adds any insight.  On top of this throughout he misuses terms (always the sign that someone doesn't understand the topic) and concepts.

 

But I guess to really get the full picture one will have to read the book . . . .

 

I agree with Kraven, 100%. I have left a similar comment on his article.

 

Dollars to donuts his book continues with the myth that the value of the non-guarantor subsidiaries is reserved exclusively for shareholders. I've tried to set him straight on this before, and he did not listen then. I suspect the reason he says it's "too complex" for the article is because he does not really understand the situation, but perhaps I am being too harsh.

 

It's a shame that he's put so much time in to this for such a mediocre result.

[bmichaud]

Some NNN lease rates for Little Rock, AR:

 

Chenal Curve Shopping Center

http://www.reescommercial.com/properties/chenal-curve-shopping-center/

 

New Development

21.4K SF

$26.50-$29 NNN/SF

 

Linens 'N Things Property

http://www.reescommercial.com/properties/former-linens-n-things-retail-shopping-center/

 

$7MM sale price

32.8K SF

$17 NNN/SF

8% cap rate on what I assume is the former lease rate

$213/SF

 

Bowman Heights Shopping Center

http://www.reescommercial.com/properties/bowman-heights-shopping-center/

 

41K SF - 10.3K available

Lease rate 15-18.5

[Kraven]

The long awaited follow up by Bishop.

 

http://seekingalpha.com/article/1900481-sears-holdings-valuation-part-two-credit-flows-for-subsidiaries-inside-a-permanently-embedded-capital-structure?source=feed

 

I skimmed it.  I don't know exactly what to say.  I am not sure I've seen so many words say so little.  The tone is pedantic and condescending.  The author who I think made a "name" for himself with his first article has seen his hat size expand faster than Barry Bonds' did post 1998.  He now claims to be writing a book (he mentions this it felt like dozens of times, but probably wasn't that much) detailing his Sears analysis. 

 

He says now that he has been working on Sears so long there's much more to be said than a "short" article will permit. So this article focuses solely on the liabilities.  Yet he really doesn't say anything.  He more or less simply rehashes the terms of the various liabilities and "discusses" them, but never adds any insight.  On top of this throughout he misuses terms (always the sign that someone doesn't understand the topic) and concepts.

 

But I guess to really get the full picture one will have to read the book . . . .

 

I agree with Kraven, 100%. I have left a similar comment on his article.

 

Dollars to donuts his book continues with the myth that the value of the non-guarantor subsidiaries is reserved exclusively for shareholders. I've tried to set him straight on this before, and he did not listen then. I suspect the reason he says it's "too complex" for the article is because he does not really understand the situation, but perhaps I am being too harsh.

 

It's a shame that he's put so much time in to this for such a mediocre result.

 

Yes, exactly.  Your comment on the article was well said too.  It's sad because I think he probably spent tons of times on this yet came up with nothing.  The article (and I assume the book) has tons of filler where he just lists out the basic terms of the debt which he clearly duped from the offering documents (which he seems to believe are operative documents).

 

Agreed that he probably continues with the non-guarantor subs being for the equity.  It's just so wrong.

[enoch01]

The long awaited follow up by Bishop.

 

http://seekingalpha.com/article/1900481-sears-holdings-valuation-part-two-credit-flows-for-subsidiaries-inside-a-permanently-embedded-capital-structure?source=feed

 

That was kind of disappointing given the hype surrounding it.

 

+1

 

I wish I had that time back.

[ERICOPOLY]

luke writing slightly ITM puts, are you risking getting put? or is that the risk you are willing to take as long as the stock is in the low 40s?

 

hy

 

Yes, I'm OK getting put the stock.  The vast majority of the time you can simply roll them forward, collect additional premium, and wait until it expires above the strike.  If you're bullish on a stock the added time can be your friend and you get paid to roll it.  Must use the appropriate size on the trade.

 

 

There are people writing covered calls on SHLD after a runup, and writing cash covered puts after each pullback.

 

I can't help but notice that you'd be making more profit if you instead sold your common after each runup, and bought the common after each pullback.

 

The volatility in the stock is so extreme that the moves to the upside and downside far exceed the profits you are pocketing on these trades.

 

 

[Luke 532]

luke writing slightly ITM puts, are you risking getting put? or is that the risk you are willing to take as long as the stock is in the low 40s?

 

hy

 

Yes, I'm OK getting put the stock.  The vast majority of the time you can simply roll them forward, collect additional premium, and wait until it expires above the strike.  If you're bullish on a stock the added time can be your friend and you get paid to roll it.  Must use the appropriate size on the trade.

 

 

There are people writing covered calls on SHLD after a runup, and writing cash covered puts after each pullback.

 

I can't help but notice that you'd be making more profit if you instead sold your common after each runup, and bought the common after each pullback.

 

The volatility in the stock is so extreme that the moves to the upside and downside far exceed the profits you are pocketing on these trades.

 

True, but there is no way I'm risking my ownership in the company to try and get a little short-term profit.  I'm holding my shares as a business owner, and trading around that position (not touching the shares) to try and add to it/generate income.  As such, I've never (and likely never will) write covered calls against my position in SHLD common.

[ERICOPOLY]

luke writing slightly ITM puts, are you risking getting put? or is that the risk you are willing to take as long as the stock is in the low 40s?

 

hy

 

Yes, I'm OK getting put the stock.  The vast majority of the time you can simply roll them forward, collect additional premium, and wait until it expires above the strike.  If you're bullish on a stock the added time can be your friend and you get paid to roll it.  Must use the appropriate size on the trade.

 

 

There are people writing covered calls on SHLD after a runup, and writing cash covered puts after each pullback.

 

I can't help but notice that you'd be making more profit if you instead sold your common after each runup, and bought the common after each pullback.

 

The volatility in the stock is so extreme that the moves to the upside and downside far exceed the profits you are pocketing on these trades.

 

True, but there is no way I'm risking my ownership in the company to try and get a little short-term profit.  I'm holding my shares as a business owner, and trading around that position (not touching the shares) to try and add to it/generate income.

 

You don't risk ownership in the company if you purchase common instead of your writing these puts.  By definition you get more ownership, not less -- if anything, you are taking on downside risk but not getting the full upside potential.  So given what you are risking, it looks to me as if you are in fact risking ownership in the company if your puts don't get assigned.

 

Somebody else (not you) was commenting that he has been writing covered calls.  So part of the post was directed at him, and part at you, but not both behaviors at the same time per person.

[Luke 532]

 

You don't risk ownership in the company if you purchase common instead of your writing these puts.

 

Yes, of course.  I hold X shares as a business owner that I won't touch.  I also write puts for premium that can be used to acquire more shares upon expiration.  The strategy adds to my ownership, doesn't take away from it.  I don't do one or the other, I do both.

[ERICOPOLY]

 

You don't risk ownership in the company if you purchase common instead of your writing these puts.

 

Yes, of course.  I hold X shares as a business owner that I won't touch.  I also write puts for premium that can be used to acquire more shares upon expiration.  The strategy adds to my ownership, doesn't take away from it.  I don't do one or the other, I do both.

 

Writing a put and not purchasing an offsetting call is owning the downside without owning the upside.

 

The guy who is buying your puts (to hedge his added common) has been kicking your ass at this game.

[Luke 532]

 

You don't risk ownership in the company if you purchase common instead of your writing these puts.

 

Yes, of course.  I hold X shares as a business owner that I won't touch.  I also write puts for premium that can be used to acquire more shares upon expiration.  The strategy adds to my ownership, doesn't take away from it.  I don't do one or the other, I do both.

 

Writing a put and not purchasing an offsetting call is owning the downside without owning the upside.

 

The guy who is buying your puts (to hedge his added common) has been kicking your ass at this game.

 

In previous posts I've mentioned if the stock is in the $60's I can buy a put to protect gains. 

 

It's important to understand the reason I'm doing this... it's to accumulate shares, not to necessarily profit a ton short-term.  All I have to do writing puts is wait until they expire.  That's it.  What's the point of writing a put at the $45 strike for $5, buying a call at the same strike for $4... and the stock is at $45 at expiration?  I would make $1 instead of $5 on just selling the put.  Eric, I understand your point, but the goal of my strategy is to accumulate shares, not make a killing on price movement.  I'm not trying to time the movement of SHLD, all I'm doing is making a bet that the stock eventually at some point in the next few years will trade above the strike price at expiration.  It gets to the time value of options... I don't want to pay premium for it (unless the stock is in the $60's/$70's, etc. to lock in gains), I'd rather sell the time premium.  We just have a different philosophy on it.

[ERICOPOLY]

 

You don't risk ownership in the company if you purchase common instead of your writing these puts.

 

Yes, of course.  I hold X shares as a business owner that I won't touch.  I also write puts for premium that can be used to acquire more shares upon expiration.  The strategy adds to my ownership, doesn't take away from it.  I don't do one or the other, I do both.

 

Writing a put and not purchasing an offsetting call is owning the downside without owning the upside.

 

The guy who is buying your puts (to hedge his added common) has been kicking your ass at this game.

 

In previous posts I've mentioned if the stock is in the $60's I can buy a put to protect gains. 

 

It's important to understand the reason I'm doing this... it's to accumulate shares, not to necessarily profit a ton short-term.  All I have to do writing puts is wait until they expire.  That's it.  What's the point of writing a put at the $45 strike for $5, buying a call at the same strike for $4... and the stock is at $45 at expiration?  I would make $1 instead of $5 on just selling the put.  Eric, I understand your point, but the goal of my strategy is to accumulate shares, not make a killing on price movement.  It gets to the time value of options... I don't want to pay premium for it (unless the stock is in the $60's/$70's, etc. to lock in gains), I'd rather sell the time premium.  We just have a different philosophy on it.

 

I've been writing puts since 2007.  Most of the time, I made a little bit of profit here and there only to get my ass kicked by losing a ton of upside eventually.

 

I once shared your philosophy on it.  Experience has changed my views.

 

And I credit UCCMAL for being a faster learner than I.

[BTShine]

 

You don't risk ownership in the company if you purchase common instead of your writing these puts.

 

Yes, of course.  I hold X shares as a business owner that I won't touch.  I also write puts for premium that can be used to acquire more shares upon expiration.  The strategy adds to my ownership, doesn't take away from it.  I don't do one or the other, I do both.

 

Writing a put and not purchasing an offsetting call is owning the downside without owning the upside.

 

The guy who is buying your puts (to hedge his added common) has been kicking your ass at this game.

 

In previous posts I've mentioned if the stock is in the $60's I can buy a put to protect gains. 

 

It's important to understand the reason I'm doing this... it's to accumulate shares, not to necessarily profit a ton short-term.  All I have to do writing puts is wait until they expire.  That's it.  What's the point of writing a put at the $45 strike for $5, buying a call at the same strike for $4... and the stock is at $45 at expiration?  I would make $1 instead of $5 on just selling the put.  Eric, I understand your point, but the goal of my strategy is to accumulate shares, not make a killing on price movement.  It gets to the time value of options... I don't want to pay premium for it (unless the stock is in the $60's/$70's, etc. to lock in gains), I'd rather sell the time premium.  We just have a different philosophy on it.

 

If I may jump in.  Luke, you seem to be going with two different strategies here. 

 

1)  Buy and hold as many shares of SHLD because it's going much, much higher someday...but, we don't know when.  You don't want to miss when it does go higher.  Rationally, you hold your shares for the days of $100 per share of SHLD.

 

2) Use the volatility, and the either real or perceived trading range to your advantage with trading options for a profit.  This method does not profit from if/when SHLD trades for $100+ per share...but, it comes with all the risk of capital in writing the put.  So, this method only makes sense if SHLD doesn't trade significantly higher.

 

One strategy, if logic is used, means you believe SHLD will trade much higher in the near future (call it next 3 years).  The other strategy means you don't believe SHLD will trade that much higher in the near future.  In my eyes, the two strategies contradict each other.

[Luke 532]

If I may jump in.  Luke, you seem to be going with two different strategies here. 

 

1)  Buy and hold as many shares of SHLD because it's going much, much higher someday...but, we don't know when.  You don't want to miss when it does go higher.  Rationally, you hold your shares for the days of $100 per share of SHLD.

 

2) Use the volatility, and the either real or perceived trading range to your advantage with trading options for a profit.  This method does not profit from if/when SHLD trades for $100+ per share...but, it comes with all the risk of capital in writing the put.  So, this method only makes sense if SHLD doesn't trade significantly higher.

 

One strategy, if logic is used, means you believe SHLD will trade much higher in the near future (call it next 3 years).  The other strategy means you don't believe SHLD will trade that much higher in the near future.  In my eyes, the two strategies contradict each other.

 

You're exactly right!  I don't pretend to have any clue what SHLD stock price will do short-term.  I am obviously bullish long-term.  So, I write puts to collect premium and it pays off handsomely if the stock does nothing or goes up.  Stock goes down and I roll forward for a little extra premium.  The two strategies are not the same as you pointed out, and that's the entire point of why I'm doing it.  Bottom-line is I don't have to be right on direction to accumulate a large amount of additional shares.

[ERICOPOLY]

If I may jump in.  Luke, you seem to be going with two different strategies here. 

 

1)  Buy and hold as many shares of SHLD because it's going much, much higher someday...but, we don't know when.  You don't want to miss when it does go higher.  Rationally, you hold your shares for the days of $100 per share of SHLD.

 

2) Use the volatility, and the either real or perceived trading range to your advantage with trading options for a profit.  This method does not profit from if/when SHLD trades for $100+ per share...but, it comes with all the risk of capital in writing the put.  So, this method only makes sense if SHLD doesn't trade significantly higher.

 

One strategy, if logic is used, means you believe SHLD will trade much higher in the near future (call it next 3 years).  The other strategy means you don't believe SHLD will trade that much higher in the near future.  In my eyes, the two strategies contradict each other.

 

You're exactly right!  I don't pretend to have any clue what SHLD stock price will do short-term.  I am obviously bullish long-term.  So, I write puts to collect premium and it pays off handsomely if the stock does nothing or goes up.  Stock goes down and I roll forward for a little extra premium.  The two strategies are not the same as you pointed out, and that's the entire point of why I'm doing it.  Bottom-line is I don't have to be right on direction to accumulate a large amount of additional shares.

 

Bottom line, you are doing this to make money on the premium.  You are not doing this to accumulate more shares.

 

Get honest with yourself -- can't you accumulate more shares by purchasing the common?  The only difference between the two is the premium.

 

It's like you have the kindest, most beautiful woman sitting at the bar next to you.  She keeps looking at you, and it feels good.  You intend to ask for her number, but you figure it would be a waste to ask her out right now because you estimate you can get a few more minutes of this ego-boosting good feeling of being admired. 

 

She gets a text message that her car has been towed, quickly pays her tab, and hurries out the door.  You don't see her again.  Your excuse was that you were risking nothing, because you got your ego shined for a bit and it was worth the cost of losing her because you intended to get her number if she stayed.

[Luke 532]

 

Bottom line, you are doing this to make money on the premium.  You are not doing this to accumulate more shares.

 

Get honest with yourself -- can't you accumulate more shares by purchasing the common?  The only difference between the two is the premium.

 

Eric, yes, the only way to accumulate more shares is to buy the common.  That's where the premium goes... into more shares.  It's reinvesting the premium into more shares.  That's the entire point.  But we're never going to see eye-to-eye on this so let's just let it go.

[hyten1]

hahaha eric, where do you get these stuff from :)

 

hy

 

 

 

It's like you have the kindest, most beautiful woman sitting at the bar next to you.  She keeps looking at you, and it feels good.  You intend to ask for her number, but you figure it would be a waste to ask her out right now because you estimate you can get a few more minutes of this ego-boosting good feeling of being admired. 

 

She gets a text message that her car has been towed, quickly pays her tab, and hurries out the door.  You don't see her again.  Your excuse was that you were risking nothing, because you got your ego shined for a bit and it was worth the cost of losing her because you intended to get her number if she stayed.

[bmichaud]

If I may jump in.  Luke, you seem to be going with two different strategies here. 

 

1)  Buy and hold as many shares of SHLD because it's going much, much higher someday...but, we don't know when.  You don't want to miss when it does go higher.  Rationally, you hold your shares for the days of $100 per share of SHLD.

 

2) Use the volatility, and the either real or perceived trading range to your advantage with trading options for a profit.  This method does not profit from if/when SHLD trades for $100+ per share...but, it comes with all the risk of capital in writing the put.  So, this method only makes sense if SHLD doesn't trade significantly higher.

 

One strategy, if logic is used, means you believe SHLD will trade much higher in the near future (call it next 3 years).  The other strategy means you don't believe SHLD will trade that much higher in the near future.  In my eyes, the two strategies contradict each other.

 

You're exactly right!  I don't pretend to have any clue what SHLD stock price will do short-term.  I am obviously bullish long-term.  So, I write puts to collect premium and it pays off handsomely if the stock does nothing or goes up.  Stock goes down and I roll forward for a little extra premium.  The two strategies are not the same as you pointed out, and that's the entire point of why I'm doing it.  Bottom-line is I don't have to be right on direction to accumulate a large amount of additional shares.

 

Bottom line, you are doing this to make money on the premium.  You are not doing this to accumulate more shares.

 

Get honest with yourself -- can't you accumulate more shares by purchasing the common?  The only difference between the two is the premium.

 

It's like you have the kindest, most beautiful woman sitting at the bar next to you.  She keeps looking at you, and it feels good.  You intend to ask for her number, but you figure it would be a waste to ask her out right now because you estimate you can get a few more minutes of this ego-boosting good feeling of being admired. 

 

She gets a text message that her car has been towed, quickly pays her tab, and hurries out the door.  You don't see her again.  Your excuse was that you were risking nothing, because you got your ego shined for a bit and it was worth the cost of losing her because you intended to get her number if she stayed.

 

 

But in the case of Luke, he already has a super model by his side, and IF the super model looking at him HAPPENS to stick around, then he has two to go home with....but the alternative of "only" having one isn't a terrible proposition either  8)

[ERICOPOLY]

I think it's more like he's pimping out the second supermodel.

 

He loves her and hopes to marry her one day.  Ahh, no risk to earning a bit of money off of her before the wedding ceremony.  He says it will pay for the cost of the wedding!!!

 

She falls in love with the John and he loses her.

[ERICOPOLY]

You also have the choice of marrying her and then pimping her out. 

 

There are people doing this -- they lend their shares for income.  I wonder how that matches up against the money you are getting for your puts.  They are tightly connected of course -- the high lending fees are responsible for the put/call non-parity.

[nkp007]

Someone needs to tell me where this bar is.

[Luke 532]

Someone needs to tell me where this bar is.

 

;D

[bmichaud]

Someone needs to tell me where this bar is.

 

 

hahahah pretty sure you only can find it if you drive a Tesla  8)

[ERICOPOLY]

Someone needs to tell me where this bar is.

 

 

hahahah pretty sure you only can find it if you drive a Tesla  8)

 

My wife is still teasing me over the stewardess at the Santa Barbara airport.

 

I'm parked curbside with the Tesla right outside the terminal.  My wife's plane has landed and she is waiting for her bags just outside the building where the baggage claim is (the airport is tiny and you can catch a bit of sun while you wait for the bags).

 

So she and I can see each other.

 

This redheaded stewardess from her flight walks right past my wife and is headed for the crosswalk, about 30 feet away" from where I am parked.  She stops and starts wandering over.  "Is that an electric car?  How far can you travel with it?  etc... etc...".

 

My wife's watching the whole thing and I know it.  So it's just funny...  what am I supposed to do in that situation?  I can't say "hey, my wife's getting jealous"...

 

Anyways...

[bmichaud]

"Is that an electric car?  How far can you travel with it?  etc... etc...".

 

And of course by "electric car" and "how far can you travel with it" you are not referring to the Tesla, correct? ...... hahahah