VolAllen
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All things STOCKS
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Velo Vol
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Timing is everything. The builders have been getting beat up for a while with some recovery as some believe the Fed rate increases are over or almost over.
Lower rates really help the first time home buyer.
Will people leave their home with a 3% mortgage to move to another house with a 6%+ rate?
Plenty of homebuilder etfs. You might also look at LOW and other building supply businesses.
Some people are looking to be long the building stocks. I guess that can be said about any stock that is traded though.
Interesting point of view. I live in a new neighborhood. We've probably had 30 houses built over past two years. Maybe 10-12 of those are still on-going...mostly spec houses. However, yesterday, I heard second hand that they probably won't be starting any more spec house in early-2023 until some of the existing ones sell. There are a couple of custom houses planned.
Firebirdparts
Best tackle for his weight the old school ever had
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VolAllen
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Firebirdparts
Best tackle for his weight the old school ever had
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Firebirdparts
Best tackle for his weight the old school ever had
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Just for fun here, let me tell you don't do any of this.
In my Roth, I use high leverage. When the increasing interest rate environment comes, this is a very bad idea, and this is not about that. A basic way to leverage is hold UPRO. UPRO is 3X the movement of SPY and it resets the leverage daily by making new contracts with somebody somewhere every day. The danger here is volatility decay and the results are very path dependent. A second way to do it of course is with borrowed money, which I don't. The third way is to use options or futures contracts. So in my case, I could buy a SPY option with a strike price of about 300 a year out, and that gives you about 4:1 leverage. A spy option like that would cost about $10,000 or some such. I hope that makes sense. A curious part about using options is that they don't experience volatility decay and there's no path dependence. The downside, obviously is they EXPIRE and you're going to lose 100% of your money under the right circumstances.
So here's the tricky part. If you do this, you can sell covered calls expiring tomorrow which depend on this $10,000 call for safety. That is, you can't really lose overall that day if SPY goes way above your sold call. You can't deliver: If you get in real trouble, you would sell the whole position, and again, not at a loss that day because the $10,000 call is going up that day as much as the short call. To get out of this without selling your $10,000 call requires money. If you start reading about this on the internet, you'll find people who claim the broker will save you from your idiocy. I don't believe it. You should see that by 3 pm and I do not. I'm not gonna test it. This is called a "diagonal spread" (diagonal because the strike and the date both differ) and it's also called a "poor man's covered call".
I've done this for a long time. What I have learned is that you generally cannot roll "out & up" with SPY when your sold call gets in the money. You need to stay out of trouble in the first place, diligently. I tried a couple of times to roll out and up without losing any money, and eventually you just get run over. You may have heard of selling naked calls as "pickup up nickels in front of a steamroller." So based on that, I typically look at SPY calls that are worth maybe 25 cents or so. There is plenty of danger at that price. If one gets in the money (like today) I would look to lose $100 now rather than $1000 next week. These are not actually naked, but I do treat them that way rather than to sell that $10,000 call. The bid/ask spreads on those calls are close to a dollar a share, and so I'm reluctant to lose that money.
One thing this tells us, if that's consistently true, is that sustained moves on the SPY ought to be sort of visible. That is in the same sense that "every time I buy a stock it goes down" is clearly telling you something actionable if you can figure it out. I don't know how to recognize them, but I do recognize that the danger should have some signs.
I got lucky last week in that my calls were really up there, and when the big 5% surge hit at the open on the 10th, it really did not blow past my short call, but it was right at the money. I could have (should have) rolled it then, I guess. That is sort of the disaster scenario, where spy went up $20 in a single day. I was hoping for a pullback day on the 11th, but of course we didn't get it. I was forced to roll to today. Would love to see a rest day today, and so far I am getting somewhat. Now, with 5 days of options, I have to re-learn how to do this.
If you wanted to experiment with this, you will find that you need a different strategy, whatever it might be, than selling naked SPY calls that are worth anything. Don't do that. And don't use leverage either.
In my Roth, I use high leverage. When the increasing interest rate environment comes, this is a very bad idea, and this is not about that. A basic way to leverage is hold UPRO. UPRO is 3X the movement of SPY and it resets the leverage daily by making new contracts with somebody somewhere every day. The danger here is volatility decay and the results are very path dependent. A second way to do it of course is with borrowed money, which I don't. The third way is to use options or futures contracts. So in my case, I could buy a SPY option with a strike price of about 300 a year out, and that gives you about 4:1 leverage. A spy option like that would cost about $10,000 or some such. I hope that makes sense. A curious part about using options is that they don't experience volatility decay and there's no path dependence. The downside, obviously is they EXPIRE and you're going to lose 100% of your money under the right circumstances.
So here's the tricky part. If you do this, you can sell covered calls expiring tomorrow which depend on this $10,000 call for safety. That is, you can't really lose overall that day if SPY goes way above your sold call. You can't deliver: If you get in real trouble, you would sell the whole position, and again, not at a loss that day because the $10,000 call is going up that day as much as the short call. To get out of this without selling your $10,000 call requires money. If you start reading about this on the internet, you'll find people who claim the broker will save you from your idiocy. I don't believe it. You should see that by 3 pm and I do not. I'm not gonna test it. This is called a "diagonal spread" (diagonal because the strike and the date both differ) and it's also called a "poor man's covered call".
I've done this for a long time. What I have learned is that you generally cannot roll "out & up" with SPY when your sold call gets in the money. You need to stay out of trouble in the first place, diligently. I tried a couple of times to roll out and up without losing any money, and eventually you just get run over. You may have heard of selling naked calls as "pickup up nickels in front of a steamroller." So based on that, I typically look at SPY calls that are worth maybe 25 cents or so. There is plenty of danger at that price. If one gets in the money (like today) I would look to lose $100 now rather than $1000 next week. These are not actually naked, but I do treat them that way rather than to sell that $10,000 call. The bid/ask spreads on those calls are close to a dollar a share, and so I'm reluctant to lose that money.
One thing this tells us, if that's consistently true, is that sustained moves on the SPY ought to be sort of visible. That is in the same sense that "every time I buy a stock it goes down" is clearly telling you something actionable if you can figure it out. I don't know how to recognize them, but I do recognize that the danger should have some signs.
I got lucky last week in that my calls were really up there, and when the big 5% surge hit at the open on the 10th, it really did not blow past my short call, but it was right at the money. I could have (should have) rolled it then, I guess. That is sort of the disaster scenario, where spy went up $20 in a single day. I was hoping for a pullback day on the 11th, but of course we didn't get it. I was forced to roll to today. Would love to see a rest day today, and so far I am getting somewhat. Now, with 5 days of options, I have to re-learn how to do this.
If you wanted to experiment with this, you will find that you need a different strategy, whatever it might be, than selling naked SPY calls that are worth anything. Don't do that. And don't use leverage either.
Other than first time home buyers individuals will deal with it. More supply of medium and upper priced homes will help. The increase in mortgage rates will slow demand which should slow or reverse the increases. 40 yr is already available.
I don't know that the gov't gets involed with every home loan except for govt loans, i.e. VA, FHA, etc.(there are several).
Banks are audited by the Govt, FDIC, State Govt, and a few low down payment loans might be ok, but not a balance sheet full of them.
When you get right down to it the buyer will be considered more credit worthy with a down payment. Same as always.
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VolAllen
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Thunder Good-Oil
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I like the way you think.
That might be a good play. I can't imagine that it's going up post-earnings. If poor, could drop to $125ish.
Most of them are dropping post-earnings. Their cost has to have vastly increased between July 1 and Sept 30.
They have increased their prices. However, I doubt that it has been fast enough to keep with high fuel, high cost of goods, and expense of labor.
I really like that play if you can short it around $138.50ish
Edit: On the negative side, I do not think their foot traffic has decreased much if any. Simply a matter of whether they have been able to adjust fast enough to keep up with the inflation.
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