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Merlin and John welcome back Dr. Richard Ebeling to talk about his recent article about The Follies and Fallacies of Keynesian Economics. The trio also look at the current debt picture in the US and the potential for the “End Game”.



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Selling the put would place $140 in our brokerage account immediately. In return, we would be contractually obligated to buy 100 GLD shares at $114 per share if the option were exercised. We would need to have $11,400 in cash in our account in reserve in case that happened. If (and only if) GLD closed below $114 on the expiration on March 18, then the option would be assigned and the shares would be ours. Our net cost per share would then be $114, minus the $1.40 per share we had received for the puts – a net of $112.60.”Now for the second alternative which is similar but subtly different. In this variation we sell an in the money option put rather than an out of the money one. The effect is to buy the asset at a somewhat higher net cost but still at a discount to current price.

This one has the added bonus of making more money if GLD should soar out of sight than the first method would.Here is how it would work in this case. At the same time as before, instead of selling the $114 put at $1.40, we would have looked for a put at a higher strike price than the $118.36 then-current price. The plan here would be to intentionally have this new put assigned, and in that way acquire the stock. This would happen even if it remained fairly close to the current level and did not pull back all the way to the $114 strike price we were contemplating before. For this purpose, we could have sold the April $119 put for $4.50 per share.Now, if GLD should remain below $119 until the option expiration the shares would be put to us. Our net cost per share would be the $119 that we would have to pay at that time; less the $4.50 that we had already received; for a net of $114.50. That was still a considerable discount compared to the current price of $118.36. We would have a higher probability of acquiring the shares because now they only had to be below $119, not $114 as before.Our upside maximum profit in case the option was not assigned was now higher than with the $114 puts as well.

Because we had collected $4.50 in premium for the put instead of just $1.40, that $4.50 would now be our profit if GLD should zoom higher. If it did, and was above the $119 strike at expiration, then the puts would not be assigned. We would not end up with the GLD shares but we would still get to keep the $4.50 per share that we had received for selling the puts. The trade-off was that with the in the money puts our loss would be greater if GLD should go down instead of up.In summary, here is how the two short put trades stack up. In the captions below, OTM means out of the money option, and ITM means in the money option:




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Australia posted a seasonally adjusted merchandise trade deficit of A$2.937 billion in January, the Australian Bureau of Statistics said on Thursday - a decrease of A$587 million or 17 percent on the deficit in December 2015.



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A day before the release of the closely watched monthly jobs report, the Labor Department released a report on Thursday showing that first-time claims for U.S. unemployment benefits unexpectedly increased in the week ended February 27th.



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2 weeks ago, Larry was on the show talking about a trade he recently opened in Pepsi. He mapped out the trade on air, and talked about the logic behind it. On this show, he shows us the results of the trade, and outlines how he is going to play it going forward. Larry and Merlin also talk about many of the resources available to traders, but free and paid for.



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Employment in the U.S. increased by much more than expected in the month of February, according to a report released by the Labor Department on Friday, although the report also showed a modest drop in employee wages.



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Eurozone consumer prices would barely grow this year damped by the sharp fall in oil prices, prompting the European Central Bank President Mario Draghi to deliver more stimulus than what markets hoped, and policymakers expect euro area interest rates to remain very low for a long period of time as the bank signaled that there were limits to how much they can be reduced.

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Reflecting another steep drop in energy prices, the Labor Department released a report on Tuesday showing a modest decline in producer prices in the month of February. The Labor Department said its producer price index for final demand fell by 0.2 percent in February after inching up by 0.1 percent in January.

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Online Trading Academy teaches our students where the proper areas to buy and sell lie on the charts. Those areas, as you may know, are supply and demand levels. However, there seems to be some confusion among traders as to how to identify the best levels for entering or exiting trades.Remember, we want to buy at strong demand levels where the supply is very thin and prices are likely to rise. We want to sell at supply levels where the supply of stock overwhelms the feeble demand that may be there. Prices will halt and reverse when the current trend no longer has the pressure to sustain itself and the opposite pressure exerts itself.We must focus on how strong the opposing pressure is at those levels. For example, we buy at demand levels because they were turning points in the past. They are levels where prices could not continue to drop and started to rise.

This occurs as the supply is becoming exhausted as sellers dump shares onto the market. Eventually prices become so cheap that willing buyers jump in and support the price. When the demand from these buyers exceeds the existing supply from sellers, prices will rise. We focus on that area as an area of demand where we will buy again in the future.


When we enter into a long trade, we want to buy at the strongest level of demand in order to have a high probability for success. Most traders think incorrectly that all turning points where prices rose will act as demand. We need to be selective in our trading. We want to find the strongest levels of demand for the best trading opportunities. Those strong levels identify themselves in the way that price leaves the level.Think of a glass filled with water. If you grab hold of the glass and it is filled with lukewarm water, you will be able to hold the glass for as long as you’d like. However, if you grab a glass filled with scalding hot water, you are likely to let go of it very quickly. Demand levels work the same way. If prices enter that area and then move sideways or slowly leave the area, there is not strong buying pressure there and it is a weaker demand level. However, if prices barely enter demand and move quickly away, there is strong buying pressure there and you want to use those areas as buying points in the future.




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Reflecting another steep drop in energy prices, the Labor Department released a report on Wednesday showing a modest decrease in U.S. consumer prices in the month of February. The Labor Department said its consumer price index dipped by 0.2 percent in February after coming in unchanged in January.

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