stansberry Alpha newsletter
does anyone know if this is another naked put newsletter again?
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Can’t be naked put because he is talking of buying calls as well.
You get paid immediately, and it’s options so there has to be selling. On CBI he talks of you’ll do well for the next decade in this stock so there has to be an upside bias. Has to be some sort of calendar spread right? with a short front month and a loooong (takes a year to play out) call. But what is the anomaly, can’t figure that. Says it’s not that rare and happens on lots of blue chip stocks.
The strategy is synthetic long stock with 10 to 12 basket of stocks
Sell a put and buy call.it will work on bull market only. He may be using hi volatility to sell the put( hense the alpha).Possible sell front month put and buy out of the money 12 monts call. The problem- you do not have downside protection. Facing debt selling debate in February I do not think that the happy rally will sustain
Bottom line the % return is not achievable.I was with Stransbery letter and he did horrible job in 2012.canceled my subscription for this year.getting to be more educated trader by myself…
I joined a couple of the Stansberry investment letters and have recently been receiving the “Alpha” marketing teaser. As stated above, using the CBI example in the presentation, it would have been more informative to have more clear information, but then, that’s how they get paid. I have learned a great deal of stock market stuff from the Stansberry group, including options strategies, but this one’s a head scratcher for me.
– Kevin
I FEEL “ALPHA” IS A SCAM! The possible profit he talks about does not take into account the 80% you must have to have available if you are required to purchase the stock. I feel it would be much more profitable to buy a good company outright.
I have been trading options for several years and although I have the trading level qualifications for selling naked puts but I haven’t tried them yet. From your comments I assume that a 80% reserve is required for this type of trade.
Depends on the broker — from what I can tell, they all have different margin requirements. In a retirement account (401k, IRA, etc) you have to have 100% cash coverage because margin isn’t allowed. I only use cash-covered puts personally, I’ll take my margin risk elsewhere.
Naked puts are a great strategy buy you have to be willing to take the stock. I’d check with Interactive Brokers, who I use. Their margin requirements are the absolute lowest and so are their commissions. But you will have to be willing to spend some time to learn their trading platform, and if you don’t keep enough margin requirement in your account they will liquidate you in a heartbeat. However, if you check on your account on a daily basis that shouldn’t ever have to happen.
It is doubtful anyone with a moderate amount of money can make much with the Alpha program. I think it is way overpriced for this reason unless you have hundreds of thousands to put into it and don’t mind holding a bunch of stock should the market tank.
(1) of the first 4 recommendations he gave, I was only able to get into 1. Some of these options are thinly traded and if the stock runs up a bit, you will never get the combo pair at the price he recommends.
(2) he quotes large % gains but in terms of dollars, it will likely be very little. Let’s say you have $120,000 you are willing to keep in reserve for this program. Most of his recommendations go out about a year so you would only be able to commit $10,000 a month to this. So with each monthly recommendation, you would need to keep $10,000 on hand to buy the stock at some point should it go down. If it is a $50 stock, that is only 200 shares and you would only be able to trade 2 calls and puts. you will not make much on the premiums with only 2 contracts.
I can’t figure that out either. He is probably just making stuff up to get you to spend $1250 for his newsletter. I wonder if anyone actually bought it that could share?
He is selling naked puts and using proceeds to buy calls in stocks he believes have long term appreciation potential. Same expiration dates and appear to be twelve or more months out. Not exactly revolutionary.
David, Are you stating that “He is selling naked puts….” or are you making an educated guess? Isn’t the act of “selling a put and buying a call” a synthetic long stock position (i.e. but you don’t get any dividends). I would need to review his presentation again, but I am not sure that a “synthetic long” meets all of the criteria that the selling-pitch contains.
I believe like many others here that he is selling naked puts and taking the proceeds and buying out of the money calls 1 year out for less than he took in on the puts so if the calls expire worthless he still has some of the money from the puts and if they stock goes up he has a win on both sides. the higher the stock goes the more he makes and he is giving the call side a year to work out. if he gets put the stock he can then sell a covered call on it or he can close out his position prior to getting put the stock. i am pretty sure that is the deal but what conservative stocks out there have the ability to go up a whole lot to make this work still baffles me. I also think his 100% return is on just the small piece of money he takes in and not on what it might be for example 100 shares of stock. So if INTC would cost $1800 for 100 shares and he sells put and buys call for net credit of $50 cents and the call goes to $1 he says he doubled his money but did he really? $50 on a risk of $1800 is not a double in my book it is 2.7%.
i have the daily wealth trader and would be willing to share some ideas if anyone has another publication that they feel is worthwhile and not one of his bad newsletters. this one may be interesting but he claims he is making money and if he is buy long calls out a year how could that be that they are misplaced?
I think you’ve got it, and it depends on on dependable companies.
I was thinking its probably more like selling a Bull Put spread (sell near-money put for most money, buy cheaper out-of-the-money put for protection), and then using half the received credit to buy an OTM call or Bull Call spread for the upward bias. The “anomaly” is probably just that Puts are more expensive than calls, so you end up selling puts, buying calls, and still pocketing a little premium. Of course, you must use a margin account and tie up some margin for the duration of the trade.
You want to collect the put premium, but want the stock to turn up before the puts go in-the-money. Then cover the puts after they get cheap and just ride the upward move longer-term and let your calls pay you later.
I actually tried out a couple of Stansberry Research newsletters. Some was okay but not worth the bucks. They notoriously label common technics as some highfallutin whamajama that only they know about…like “mind boggling unique approach to instantly get paid and profit immediately 100% of the time, within 15 minutes of enterring a trade”….Wow! What is that?! Duh….sell a put or call. 15 minutes? You better get a new broker. Sure you’re profitable immediately but not necessarily 15 minutes later. So I’m leary that this is anything new. A few of you folks have posted you actually have signed up for this. So morally you feel you can’t give it up?! The anomaly thing gets me…the only thing I can figure is that it is an imbalance in the implied volatilities at current and future expiration dates…any thoughts on this?
The most important task of a news letter business is to ge a sexy high society name like soveriegn society or the oxford club. Some cool looking . Icons to give a feeling of authority helps such a sheild with a Boars head or a group of Greek columns.
I wonder if the soveirn society will later invit you to an “elite inner circle”.
Probably. The invitation will come like this :sice we like you so much we are going to offer you this never before presented opportunity …select few …once in alife time…..
I like gum shoe since it is good entertainment. You may not make money investing but you should have a good time. Hey that gives me an idea ..maybe Beavus and Butthead could start and investment letter .
From what this “junior gumshoe” gleaned, my guess is that he is buying an in-the-money call for $$$$ (i.e. one with nearly all intrinsic value and little extrinsic/time value) , then selling a same-month, higher strike price out-of-the-money call for $$ (i.e. one whose strike price close enough to the stock’s price so as to have significant extrinsic/time value and zero intrinsic value). In his CBI example, I was able to mimic this quite closely. Doing so does cost you some money (i.e. buying the more expensive in-the-money call for $$$$), but you offset some of that by getting about 12 to 25% of that back by selling the out-of-the-money call for $$. Your net risk-to-reward ratio is then in the over-100% range that Porter touts. I am tempted to sign-up and then cancel (forgoing 10%) just to know if I am right.
You want to split the $120? if interested email me at jnksak@comcast.net and i can give you my number and we can talk.
Interesting…but you are still at risk at expiration if the stock goes against you. Maybe I’m remembering the add wrong but I thought it was a risk free strategy. You can do a vertical calendar spread on any stock that has options…I don’t see what the anomaly is…
But yeah, that seems part and parcel for how they do things – a standard strategy and then relabel things to imply somethign new and revolutionary…
In my analysis, there still was risk (and I believe that Porter mentions this). But in a recent example that I ran thru tonight (on a different stock), I found the following “anomalies”:
1.) The risk was limited to the cost of the option, which in this example, was equal to a mere 11% downside from the stock’s current price.
2.) The net cost of the spread was actually below the intrinsic value of the underlying stock (meaning that even if the stock stayed the exact same price for the entire year, I would still pocket a small profit (less commissions)
3.) the profit was “capped” at about 96%, meaning that a small 11% (or higher) upside move in the underlying stock by option expiration, would be all that I needed to practically double my money. NOTE: If I bought the stock, it would need to go up 100% for me to double my money.
Even if I have not “gumshoed” my way into Stansberry’s “ALPHA”, it sure ain’t nothin’ to sneeze at!
Looks interesting. I had to go read the ad again and a couple of things sort of stuck out.
He hints at selling puts when volatility is high – when this flyer hit my in box the vix was under 16 and he may have been guessing at a spike with the fiscal cliff but he also notes that CBI puts and calls are more expensive – so volatility is part of he “anomaly”. He also touts 50 – 100% returns AFTER your initial 15-18% payment. But THE KEY that I think negates your suggestion is that he says you get paid immediately so you would have to be doing a CREDIT spread, not a DEBIT spread. I have no idea how you buy a years worth of time and get paid, with a potential of 50 -110% gain. You have to be buying way out of the money to get that kind of time…and then your risk is going to be significantly more than you suggested. Don’t get me wrong, I like the set up you suggest but it doesn’t seem to match his words.
Terry I am going to have to review the ad again. My take on the “15-18% payment” was not that you would “immediately get paid 15-18%”, but instead that you would “immediately get paid 15-18% of your initial investment”. In other words, buy a $100 call, and “immediately get paid $15-$18 of your $100 by selling a higher-strike call”. For what it is worth, I get the impression that you are the type of person I would thoroughly enjoy having financial strategizing discussions with. Hope you have a great holiday season!
J.P.
That’s funny that you say looks like we could profit from discussing trades…I’ve actually been thinking of trying to get an options “club” together locally but seriously busy. So if you want to: Tearhill@aol.com is how you can reach me. Have been simply buying puts and calls for the last couple of years but have done tons of reading @ CBOE, McMillen, Schaefer, etc and ready to get on to more complex strategies. Send me an e-mail if you want, happy to go over some ideas and receive feedback.
ALL THIS SPECULATION ON THIS ALPHA NEWSLETTER. IF YOUR SPENDING SO MUCH TIME ANALYZING THIS OPTIONS STRATEGY, THEN JUST BUY THE NEWSLETTER TO GET THE STRATEGY. IT WILL ONLY COST YOU $120.00 DOLLARS TO GET IT IF YOU CANCEL IN 90 DAYS.
HOW MUCH IS YOUR TIME WORTH? HOW MUCH TIME HAVE YOU SPENT ANALYZING AND ASSESSING THIS STRATEGY.? A.) FIRST HE HAS THE RIGHT STOCK. THAT SHOULD OFFER YOU SOME SATISFACTION. B.) YOUR NOT GOING TO LOSE MONEY ON THIS STOCK, IT’S GLOBAL WITH MORE CONTRACTS ON THE BOOKS THAT THEY CAN HANDLE. I BOUGHT THE NEWSLETTER AS SOON AS I SAW CBI AS THE UNDERLYING ASSET. YOU WON’T BE SORRY THAT YOU DID THIS ONE. BUT YOU NEED AT LEAST 30K TO INVEST OVER THE NEXT 12 MONTHS SO I GUESS THAT IS WHAT IS STOPPING MOST OF YOU FROM GOING FORWARD. IN MY OPINION IF YOU DON’T HAVE AT LEAST $100K TO WORK WITH YOU SHOULD CONCENTRATE ON INCREASING YOUR INCOME RATHER THAN WORRYING ABOUT A 20% RETURN ON 10K = $2000.00 DIVIDED BY 365 DAYS =$5.47 PER DAY INCOME. THAT’S NOT EVEN LUNCH. IF YOU WANT TO SPLIT THE $1200.0 IN MONTHLY PAYMENTS CALL MY FRIEND DAN OSTROWSKI AT 866-783-4141
Speculation is the point of the entire website, hello? Anybody home? So you can’t figure that out, you can’t figure out the word projection, meanwhile you mock others income and brag of yours? Lie much? Guys that have it aren’t that insecure.
…all while giving and advertisng plug for the Stansberry newsletter? Yeah, I doubt all of that very much.
In Stansberry’s most recent podcast, he half-jokingly said that his business is build around or by people who are not smart enough or talented enough to do investing on their own. If I had more money than time, then all of this “SPECULATION” might NOT be worth it. But for me, this is both a challenge and a learning opportunity. I am sure that most of the other “gumshoes” would agree. BTW, thanks for the info and contact for spreading the payments.
In response to Terry Hillen on December 22,2012.
His attack on my Character and calling me a liar among other insinuations.
I won’t dignify your Lottery Ticket Mentality response or comment.
However I feel calling someone a liar while hiding behind an email is a cowardly act.
Poverty causes anger and frustration which you demonstrated in your response.
I’m sorry for the unfortunate position you are in. I’ll pray for you.
Options are a very complex It takes years to master but the pay off is for a lifetime.
Dr.J Najarian told me it’s like med school, then Internship, then private practice.
Bottom line, Option traders are specialist, no different then a Cardiologist.
This strategy only works with all the right components in place at the right time.
With any surgery their is a margin for error.
BTW CBI is up 13.37% YTD so this recommendation is making money & will continue to.
BTW my sisters name is Terry also. Are you Female or Male.?
I won’t dignify your Lottery Ticket Mentality response or comment.
However I feel calling someone a liar while hiding behind an email is a cowardly act.
Poverty causes anger and frustration which you demonstrated in your response.
I’m sorry for the unfortunate position you are in. I’ll pray for you.
Options are a very complex It takes years to master but the pay off is for a lifetime.
Dr.J Najarian told me it’s like med school, then Internship, then private practice.
Bottom line, Option traders are specialist, no different then a Cardiologist.
This strategy only works with all the right components in place at the right time.
With any surgery their is a margin for error.
BTW CBI is up 13.37% YTD so this recommendation is making money & will continue to
I like your website and will probably join but now is not a good time . Im toying with Porter Stansberry with his new option service and need your help .
Im trying to decipher Porter Stansberrys new option service , Stansberry Alpha . Im not an options guru and I cant get a handle on it. If you can throw any light it would be appreciated.
the alpha has more agressive put/call plays. for example on stocks he expects to go up or stay constant, he would combine a bull spread call with a naked put…and vice versa for a stock he expects to decline
It seems Ken has made the purchase and is carefully sharing. Thank you. Would you suggest the opinion that the knowledge is worth the price of the Alpha for a year?
With all due respect I don’t think that’s it ken. Jeff Clark who publishes the Short Report for Stansberry just sent an e-mail the last 2 days exactly detailing the trade you just describe – a bull call spread with a naked put. For free he gave it away, no amazing mystery and no “anomaly” You can make that trade on any stock with options…you’d have to be a little crazy or have cahones of steel to do the reverse with a naked call, you could go bankrupt and you can loose crazy money on a naked put as well. The entire theory of the bull call w/naked put is to try to get the stock put to you at a reduced price and if it doesn’t hit that you have the spread credit for profit – but that’s a limited profit and there is no magical “anomaly to the thing”. And of course if that’s the whole shebang, why is one of his writers sending it out for free?
Quite the mystery…
What’s next Sherlock?
I think David Stanton ( 12/19/12 ) has it right. My guess is he is selling puts to pay for the calls he buys. This is not a new strategy, option traders have been using this since puts started trading on the CBOE. I don’t think he has to go out 12 months to utilize this method as he wants to take advantage of time decay on the put sale and that doesn’t accelerate until the last month. This is done at a credit so even if the call does not go up the trade is still profjtable and on occasion when there is a big move on the stock the trade makes a handsome profit. The risk is if the trade closes below the put strike and the seller gets assigned the stock. The account must buy the stock and if it is more than the seller has in his/her account they are in seious trouble. In my opinion someone has to have $100,000 or more in their account to make this type of trade. The anomaly is just something he threw in to make you think you need to buy his service which I believe is overpriced.
Good luck to all.
Paul Thomas
Without a doubt.
Look at the Jan ’14 options volume of CBI. It is upnormally high. So I guess he is using selling Jan’14 $40 put and buying jan’14 $50 call.
Their newsletters are reasonable, but the trading services are scam. Even when the make few profitable trades, you won’t be able to execute it as the options prices shoot up even before you receive the email alert. Suspect some insiders making use of the opportunity to make money.
Look at the review of short report to get an idea of the quality the service.
Did anyone see the latest offer for the S&A Resource Report where they talk about Obama and where he makes so much money on some gold program? What is he talking about? Does anyone have this newsletter he is now offering at $39? It seems like every day Stansberry is offering something.
Stansberry is part of the humongous James Dale Davidson empire: They promo fear and greed, sometimes w/ juxtaposing or contradicting teasers.
The anomaly is, according to an email I received from Jeff in Growth Stock Wire today, the stock was fairly flat for a time, months or years, then begins to have “money piling up around the stock in a niche.” – options. He said he follows 3,000 stocks. He MUST be looking for rising volume and open interest in those options and waiting/hoping for a catalyst to get the stock moving, hence the interest in LEAPS. I don’t think I can track rising OI on even a dozen stocks with flat pps. And how flat over what period of time?
$120 for a 3 month look might be reasonable, but do we get only 3 deals to judge by? If 1,000 bit then bailed, they still keep a LOT of money. I’d risk some $ for a look but would want more ‘proof’ than 3 deal for $120.
Steven, was the Obama thing based on gold, or on the royalties from his books? Some newsletter–may have been Stansberry—- sent me a teaser in December about “royalties” using Obama’s tax return entry as the example.
I purchase a number of Porter’s products but not this one. I trade options and like the challenge of figuring out what he’s doing both for the mental exercise and the fun of it. I’ve come up with close to what David estimates he is doing. But, slightly different and I think more accurate.
My difference is that I believe that Porter is selling front month Puts and buying out month Calls. The strategy is a form of a time spread (i.e. Calendar) on an up trending stock. Terry H alludes to this and he is also correct that one should take advantage of higher I.V. when selling; and lower I.V. when selecting the option to buy. Sell the ATM Put (i.e. Most time value) with the highest I.V.
This is a synthetic long but with a twist. Buying the out mouth Call causes the profit curve to turn up steeper than owning the stock alone. It also allows time to work in our favor if the stock should dip towards the Call strike. Not selling calls eliminates dividend risk that comes with shorting them.
If one opened the CBI trade on 12/17/12 by selling the Dec 12 41 Put and buying the Apr 13 50 Call, the trade could be done for a $3 credit based on closing option prices that day. With the price spike in CBI, by 12/20/12 you would have a $170 profit per contract which amounts to a 3.9% Rate of Return. Not bad for 3 days. As I calculate it, risk would only be slightly less than owning the stock outright.
Below are some dates and stats for the above trade up to today. Puts were rolled on the dates shown.
Date Price Trades Credit/c P/L Rate of Return
12/17/12 $41.80 STO Dec 12 41 Put @$.43
BTO Apr 13 50 Call @$30
$.03 Crd $ 3 $170 3.9%
1/20/12 $45.49 STO Jan 45 Put @$1.15 $118 $128 1.5%
1/17/13 $48.79 STO Feb 48 Put @$.98 $216 $320 3.5%
One more wrinkle seems to be that the ex-dividend date for the stock is near, in this case 2 days before, expiration. This could be the “anomaly” Porter identifies. If others have searched for a likely list of other candidate stocks let us know.
Sorry, the table did not paste well. Let’s try that again.
Date Price Trades Credit/c P/L Rate of Return
12/17/12 $41.80 STO Dec 12 41 Put
BTO Apr 13 50 Call $ 3 $170 3.9%
1/20/12 $45.49 STO Jan 45 Put $118 $128 1.5%
1/17/13 $48.79 STO Feb 48 Put $216 $320 3.5%
Yikes! If the moderator can fix the table by adding spaces I’d appreciate it.
Do we have any clear winner to this Tease?
I am interested in the ideas and theory behind Stanberry’s Alpha strategy. I don’t mind paying for the report but $1300 just to educate myself!?!! Also, I do not want and would not use the 12 stock tips Porter is offering. IMO, those who follow promoted ideas are often too late to dinner, or worse… the main dish.
Does anyone know what the Anomaly is? What about a proper name or general description of the strategy to point Irreggulars like myself in the right direction for FREE. If this information is not proprietary, (and I have a strong belief it is not), I would hate myself for buying the Special Report… even if the idea made me as much money as Stansberry & Associates are advertising.
Anyhow, this is my first post and wanted to say a quick thanks. I think Stock Gumshoe is a great forum and the only one I use. I am extremely impressed with all the intelligent minds we have on here, the open minded and diverse POV’s, the exposure to free new investment ideas and most importantly I love watching the team breaking down these challenging Teases . I have never bought a subscription to an investment newsletter and with efforts of all the members here… I will never need to.
Great Job!
I posted some guesses about this strategy in a Friday File for the Irregulars a few weeks ago, my conclusion was that he’s selling year-out puts and using some of the premium you get to buy calls at the same expiration. Following is an excerpt from that Friday File, the full note is here:
I believe his ALPHA strategy is really quite simple, but am open to other ideas. Back in December when I first received this teaser, I played around and came close, but not quite there. Having been a Stansberry subscriber for a number of years, I am familiar with his ideas. CBI was at $41.75 when I ran my exercise. I believe the inefficient market anomaly he is talking about is where ATM calls and puts at the same strike price are out of whack. Efficient market theory says that they should both be nearly the same as the probability of the stock going up or down should be the same. CBI’s were out of whack, My notes are a little sloppy, but here goes: I believe he definitely sells an ATM PUT. He likes to sell puts on great stocks that he wouldn’t mind owning. He likes to say if it goes down a little and you are put the stock, you have your up front payment as a cushion, plus you now own a stock you wanted, at a better price. You can now turn around and sell covered calls against that stock if you choose. This is exactly what Eifrig and Clark do with the few stocks that they are put. Obviously, you wouldn’t implement this strategy on a stock that just had a nice run-up as there is too much risk of a correction or pull-back. This strategy is definitely for stocks you expect to rise over the next year. I think he then buys the ATM CALL. What I tried next was selling a higher strike CALL for additional income. In my example, I sold the 2014 JAN 40 PUT for $4.90 and bought the 2014 JAN 40 CALL for $6.60 and lastly sold the 2014 JAN 45 CALL for $4.40. I had a net DEBIT of $3.30, which based on 20% margin worked out to 39.5% upfront income which I believe at the time was what he was advertising. If the stock is at $45 or better come JAN 2014, you make an additional $500 for another 59.8% or a total of 99.3% return on your 20% or $836 margin. That is pretty close to his 100% in a year. If you can open a margin account and only have to put up 20% to make this trade, it looks like a GREAT deal. For myself, that isn’t possible. I’d like some feedback if people agree or disagree with my guess as to what exactly the ALPHA strategy entails. BTW, I’ve subscribed to many newsletter over the years, and overall I find Stansberry’s the best of the lot, understanding that some are better than others. His is the only one I am aware of that gives a report card on its publications. I respect that. Regards, Joe M.
In the file for Irregulars you wrote that the stock price is $45. Then you wrote: “…So you could, for example, sell a put option on CBI at $35 and get income of about $2.20 for that…” I may be missing something but how could you get 2.20 for a sSell Put that is way out of the money?
I viewed the teaser and then recieved a call from a rep at S&A who inadvertantly told me that the Alpha Strategy is buying OTM Calls and selling OTM Puts. He also said that Eifrig’s strategy involves naked Puts. I decided it was over my head at this time and did not subscribe. But Joe Maestro’s explanation sounds very much like what the caller described to me.
Travis Johnson and Joe Maestro have it right.
Fundamentals of the underling stock has to be a winner to make the returns stated.
First you have to do your home work on the underlining asset CBI.
Chicago Bridge & Iron Company N.V. was founded in 1889. 124 years in business.
I guess I’m showing my old age now.
CBI has the expertise in building the LNG Export terminals and CNG worldwide.
Huge speculation that this is next BOOM in energy industry. With speculation comes greed.
Everybody wants CBI to build their Export terminals. They have more work than they can handle which means great earnings = stock appreciation. No regulators holding up Australia from their huge expansion projects.It’s all about who can deliver first and most.
CBI will be around another 100+ years. Try to get a list of publicly traded companies founded in 1800′s. Their are maybe 10 at most. P&G founded in 1837.My point is these companies made it through the great depression and have had to deal with every disaster. They continue to thrive and survive. That will continue and their stocks will continue to appreciate. Yes this is an extremely bullish strategy and will only work with a stock that will report better than expected earnings. I believe CBI will achieve this because nothing stops these cash rich oil companies from going after more market share of an explosive new niche within the oil industry. This is my final post on CBI Alpha strategy.
I’ve done my homework and made my decision and I’ll live with any consequences if any it will be little. I have a 87% batting average. I look to hit singles not home runs.
God bless