We had a resting GTC order filled at our target in the Paid-to-Play portfolio today:

Costco earns its margins before you even whip out your credit card at the checkout counter.

How?

They get paid upfront, selling you an annual "membership" that allows you to shop at Costco. That membership is all margin for Costco. This is how they can afford to sell most of their goods at or just above cost, yet still earn steady, reliable profits. What a concept!

We're gonna steal that concept by getting paid upfront.

We've adjusted a position in the Paid-to-Play portfolio today:

From the Desk of Steve Strazza and Alfonso Depablos

The largest insider buy on today’s list comes in a Form 4 filing by J. Alexander Douglas Jr,, the CEO of Overstock.com Inc $OSTK.

Douglas revealed the acquisition of 11,265 OSTK shares, equivalent to $498,306.

From the Desk of Kimmy Sokoloff

Futures are giddy this morning.

Let's see how $SPY holds on to the 425.50 area.

One of the better indicators of a healthy bull market is when you see Consumer Discretionary stocks (the things we want) outperforming Consumer Staples stocks (the things we need).

The ratio between Discretionary and Staples is one we look at during bull markets, to confirm what the indexes are doing, as well as in bear markets to find divergences that may turn before the indexes themselves (see '08-'09).

This really has been one of the more reliable indicators for many years.

And wouldn't you know it, as pessimism spikes, volatility pops, and the permabears begin to pound their chest again, Discretionaries are putting in higher lows relative to Staples.

This is classic sector rotation we see during healthy market environments:

There are no free lunches on Wall Street and certainly not in options trading. 

It might be sexy to tell people that we’re “options premium sellers” and suggest that all we do is sell naked options that expire worthless – while keeping all the premiums for ourselves. Easy peasy.

But we know that’s not really how it works.

There’s a risk in holding naked short options. Our brokerage houses are keenly aware of these risks – and that’s why they require us to post margin in order to hold these positions. The margin protects the house. Mostly their house, but our houses too.

When a short options position goes against us, our brokerages need to ensure we have adequate buying power in our accounts to close the position and prevent further losses.

But just because we need to post a certain amount of dollars to hold a position doesn’t mean we should calculate our returns off of that number. That number doesn’t mean anything other than the fact that it’s the amount the house needs in order to be comfortable with us being naked short.

If we’re measuring our returns in naked short options trades based on our margin requirement, we’re...

From the Desk of Ian Culley @IanCulley

Borrowing costs are increasing, and US Treasuries are tanking – again. 

Everyone knows it. Even my therapist commented on interest rates and the “terrible” economy.

The 30-year T-bond has hit our initial target. And the 10-year is within striking distance. 

So much for limited downside risk for the bond market. Perhaps the call for a 5.25 print on the 10-year yield by Christmas wasn’t aggressive at all.

But elevated yields aren’t the problem…

And I don’t care about the economy when it comes to market speculation.

Remember, we don’t trade the economy. We trade the markets or – more precisely – price.

Interest rates hung around decade highs earlier this year while the Nasdaq 100 enjoyed its best first half since its inception.

Stocks like it when...

From the Desk of Kimmy Sokoloff

The market started the day trending higher.

Then all the indices completely reversed.

Then they went back up.

It was tough trading.

We've adjusted a position in the Paid-to-Play portfolio today:

From the Desk of Steve Strazza and Alfonso Depablos

The largest insider buy on today’s list comes in a Form 4 filing by Magnolia Capital Fund.

The investment firm revealed the acquisition of 215,565 shares of RE/MAX Holdings $RMAX, equivalent to $2.6 million.

From the Desk of Kimmy Sokoloff

$QQQ pushed past its eight-day moving average.

Now we need to see if the indices have continuation today.