It was an isolated incident in which one person was fatally injured when an Uber driverless test vehicle hit a woman crossing he street with her bike. The monitor apparently was not paying attention to what was happening and did not take control of the car. It is a sad incident, but it did point out the fact that if a car is traveling at speeds that can kill, some pedestrian crashes will occur.
Driving has become safer over the last sixty-five years as more protection has been built into cars and unsafe drivers now lose their licenses. In the 1950’s approximately 7 people were killed for every 100 million vehicle-miles traveled. In 2016, the last year that full data is available approximately 1 person was killed for every 100 million vehicle miles driven. With the advent of driverless cars that number is sure to go lower.
So how can greater safety be a problem? Car insurers will be facing a big problem. Currently car insurers haul in roughly $230 billion of premiums per year. However, if driverless cars prove to be as effective as the ones now being tested a great percentage of those premiums will disappear over the next couple of decades. In effect the car insurance industry would be wiped out if the new cars are as safe as experts believe.
Before any tears are shed for GIECO there appears to be a method that will keep the insurers in business. Right now, most of the auto insurance is written on driver’s liability, but when there is no driver you can’t have that to charge rates. However, if there is a crash the most likely culprits will be the manufactures that made the part that failed, and they will be the ones being sued. So as always, the big insurance companies will survive, and we will pay the premium!
Ask Mr. Seifert
I am constantly asked questions about trading and how to exploit certain market factors to insure success. Each week I will answer one of those questions with a short paragraph covering a variety of trading subjects.
Question: What is the best way to initiate a credit spread?
Getting the spread on correctly is important, novice traders blow themselves up trying to get the “edge” on the market makers. Forget about that strategy it won’t work, you are not going to be able to out execute the market makers. There are a couple of choices that will work getting the spread in place. First you can “leg” the spread by buying the long side of the trade first and selling the short leg second. I use this strategy when I have a preference in market direction. I get my limited risk leg on first and then try to sell the credit side with more premium. Second you can set your browser on the site you are using to find out where the spread is trading in the market. You should be able to get filled within a few cents either way once you know where the spread is trading in the live market. The third way is always wrong it is to leg the spread by selling the short option leg first. This is selling a naked option and will eventually cause a big loser. You are not going to beat the wise guys at their game. Eventually the impossible will happen and as soon as you sell the naked option Houston will get 50 inches of rain, and you will take a possible risk of $280 and turn it into $3000! You will then email me and tell me that I don’t know what I am doing, and the risk is much greater than I claim it is. Remember bulls and bears make money in the market, pigs get slaughtered! Don’t be a pig there is plenty of money to be made doing it the right way!
The Wise Guy Report: The View from The Electronic Floor
Interest rates: This week the new Fed Chairman Jerome Powell signaled that he wants to continue a policy of aggressively raising interest rates. The Fed Fund rate was raised to between 1.50% and 1.75%. Fed officials said that they expect that the rate will be raised two or three more times in 2018 and another 3 times in 2019. This is the first time since the housing meltdown that the Fed felt that the economy was strong enough to handle rate increases. So how does this effect your financial future?
If you are borrowing it will influence the amount you pay for a mortgage, car loan, or any consumer loan, but since we are still in the lowest 25 percentile in the last 150 years it is an excellent time to be a borrower. On the other if you are a lender the market is going to need to go higher before you can get any return. When I first got in the business in the late 1970’s the prime rate was 20%, and thirty-year treasury bonds were yielding over 10%. So, before you get excited about the return that you are going to get you need to wait until rates get back at least in the 5% range. I guess the rocket scientists that bought the 100 year 1% bonds are having second thoughts now!
Get Your FREE 2-Week Trial Subscriptions
I offer a FREE 2-Week trial to the various subscription services with no cost or strings attached. Each strategy is explained in a 5-7 page booklet which includes sample weekly recommendations and model portfolios. I doubt that you have ever seen anything like this. During your FREE 2-Week trial, you can paper trade the various strategies and get a feel for the deal without risking a penny. : If your broker doesn’t offer a play money, virtual option trading platform, click on cboe.com/trading-tools/virtual-trading-tools/virtual-trade to access the CBOE site. Simply click on the appropriate tab at the top on the Optionomics’ Home page to access the informative booklets and then sign up for one or all of the weekly subscriptions.
- Bull & Bear Spreads: The nuts and bolts of trading weekly credit spreads.
- The 21st Century Covered Calls: A modern day alternative to the old fashioned covered call strategy.
- The Low Cost Put Hedge: Sleep at night knowing your portfolio is protected for little or no cost.
- Earnings Trades: Trade potential big movers with little or no downside risk.
- The Thursday Special: Coming Soon.
Each Monday morning by 10:00 EST, the plays for the upcoming week plus updated model portfolios for each strategy are posted on the site site. The prices in the reports are Monday morning’s opening prices. In addition, I have a live webinar on Wednesday mornings where I discuss various option strategies, what is happening on the floor and answer any questions that you may have. Don’t worry if you miss the show. They are archived on the site. Sound Good? Good! You can subscribe to one or more of the subscriptions for only $20 per month on a month to month basis with no contract or strings attached. I think you will agree that this is a super offer so give it a try. Click on optionomics@marketedge.com to access the Optionomics LLC web site and get started today doing what the pros do – “Sell Them – Don’t Buy Them’.
Mr. Seifert