Author Archives: John Kvale CFA, CFP

ODTE Zero Dated To Expire – Advanced Analysis – Zero Date to Expire Options …

The following is a review/behind the curtains look with us, and, is well…. advanced stuff… if you only recall that we spoke of it, we consider it a success, just know we are watching and by no means do you have to teach it…. you have been exposed to something important, but technical that you will likely only see once something has occurred down the road and it may not occur… so no headaches, just a quick read to know what is happening…

As the calendar turned, the goal of a monthly special post was once again desired. Longer time followers, may recall we did a “Back to Basics” multi part series that was met with HUGE applause…. at the beginning of last year 2022.

We even set a special web page (here) and plan on doing a series of 1-2 Minute videos for each subject AND may make a special electronic and paper pamphlet to give pro-bono for those that may find it helpful.

2023 Monthly Series – Advanced Analysis

Rattling around in our head this time, the exact opposite of “Back to Basics” – “Advanced Analysis” – What we are looking at and why!

The thing about this analysis unlike our “Back to Basics” … Our definition of “Advanced Analysis” is fast moving, immediately relevant but behind the scenes of popularity ….and likely not seen in ANY mainstream media or other outlets… Because of this fact, we have no idea of the occurrences … monthly is a goal, but not a promise for obvious reasons…

So here we go-

Our First Part –

M2- What it is and why is it important!

Coded Advanced Analysis – Part 1 of this series, was about the importance of money supply, the massive shrinking of it (even more now, we are still watching) and what effects could come!

ODTE – Zero dated to Expire Options

Options are time dated instruments used to express a desired result upon a directional movement of an asset/investment with a specific time to expiration.

Easy examples include hedging of a security, whereby if it drops in value, your option goes up in a similar value to minimize the net loss of the asset…. there are many more, but this is one of the easiest to understand and very popular.

Historically, options have had maturities of months, quarters and even years. Investors know and understand that as the option gets closer to expiration, the “time value” and value of it goes away.

Meet the new FAD – ODTE – Zero dated to Expire Opions

Just as the title implies, these are hours of options, given they do not even last one day… and they have become extremely popular as of late…. and for all practical matters, are more like gambling than hedging or investing….

Here are the first 10 or so most active options from OIC (Options Industry Council) on Friday February 3, 2023:

SymbolContracts%Calls%PutsDaily Vol%
.SPX294120442.1257.88768.66
.VIX73570369.2230.78855.10
.XSP6862229.4670.54753.68
.RUT5448549.3850.62769.52
.NDX3031542.7857.22736.65
.MXEA447226.8673.141838.18
.MXEF386033.4266.581039.24
.NANOS97125.5474.46426.68
.XND32841.1658.84433.21
.DJX32549.8550.1587.91
.NQX32329.7270.281009.38
.MRUT31817.9282.08596.79

Almost all of these are same day or ODTE options….

Why do we care?

For every options contract that is traded, any contract that cannot be matched to another investor, the dealer must offset/hedge that risk,…. given the massive increase in volumes, dealers are left with no matching investor more and more frequently….

With the sudden popularity of these ODTE’s, some have found they can somewhat control the price of the indexes or whatever they are trading for the day.

Currently players are pushing indexes and others UP, possibly overstating values…. What happens if/when they switch sides, which is easy as pushing a different side of the options?

Very short term, yep, and only a day, yep, but stack multiple days on one another and you can get a large variance of price from reality…. FOR A WHILE!

So now you know, these new popular ODTE’s can cause prices to vary from where they should be….

Have a Great ODTE Analysis Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

When Good News is Bad News … Friday Payroll’s GREAT … But … This Post Jump in Front of Planned …

Had a heavy post for today planned …. about a pretty complicated event occurring in the Capital Markets…just moved it to Wednesday with a bit of travels this week and continued Capital Market movement from a Friday Economic report… wanted to move the later to the front today as it is a bit simpler, but super important as well…

Hang on, both posts this week a bit heavy, but will keep today’s short!

Hot Jobs Numbers Puts Pressure on FED, Rates (short end) and Capital Markets

When GOOD news is bad … it happens in this part of the cycle!

On Friday February 3, 2023 the BLS (Bureau of Labor Statistics) released the “Employment Report” for January 2023…. all about expectations versus actual….

Anyone extrapolating that downward sloping chart – Far Right below. would have certainly NOT EXPECTED that huge January 23 bar… anyone would include all of Wall Street and the FOMC – (Very lagging reading, likely revised, BUT much different from expectations)

New Jobs Expected 190k ACTUAL 571K — Ya ya will be revised, but for now is what Wall Street has…

The good news is from this report lots of jobs and more than expected…. Bad News… Fed may continue to be aggressive in slowing the economy… aka Higher short term rates…

Big move in the 2 Year Treasury, one of the most in sync with Fed rate moves…

Ok… all caught up from last week…be sure to have your coffee before reading Wednesday’s post!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

January 2023 – YES Already One Month Down – Financial Planning and Capital Market Review – Roth Donation – Homestead – Contra Rally reminder – By John Kvale CFA, CFP

Hello and Welcome to our January 2023 … YEP 2023 !!! Financial Planning and Capital Market Update!

If you are too busy to read, feel free to listen as we describe our post and thoughts in friendly podcast audio format as well as Video!

Newbies –

We like to articulate our thoughts and review on a Monthly basis our Financial Planning Tips, Capital Markets thoughts and current events!

Hope you enjoy!

New Laptop – Looks Like the Old One – But not so much!

January 2023 Video – Note New Intro and Theme Music


YouTube

Financial Planning Tip(s)

Give a kid/Young Adult a Roth if they Meet the restrictions

By blending a couple of Tax laws and having at least $6500 in earnings, a young adult may be just the right recipient of a gift, but to a Roth Retirement plan rather than for spending….

Gifts up to $17k per person are free of gift/estate tax issues – blend that with at least the Roth amount of earnings and a donation directly to a Roth can be a super gift, all of which we discuss here in our January post!

Purchase a New Home last Year – Check that Homestead Exemption

In one of our annual reminders, in this post we once again remind those that purchase a new home last year, that if they are in the home as of January 1 in most/many cases, you may be eligible for a Homestead Deduction aka – Property tax savings….

We also updated a large but not complete slew of state related adjustments – thanks Wikipedia!

Capital Market Comments

Watch the Contra Rally – They can be very deceiving!

With a suddenly happy faced Capital Market, we remind ourselves and everyone else Contra Rallies can seem very soothing, but often times their main result is to have you let your guard down and draw one into a sudden overconfident situation… NO biting…

Have a Great Day, Talk to You at the End of February!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

Did You Buy a New Primary Residence Last Year? – Homesteading Your Property – Most States are January 1st Residence Requirement – Possible Property Tax Savings –

Because of the various state rules and regulations, we want to remind you that this post is not meant as a guide, but only as a reminder, if you are in the appropriate state, and in the appropriate situation, you may be able to Homestead your home, saving your property taxes (property tax exemption.)

If you hit up Homestead on your favorite search engine you’re likely going to get an article about moving to the country somewhere and building a log cabin home to retire.

That’s not what this is about.

landscape-3417201__480 homestead

We want to remind those especially that live in Texas who may have moved into a new home on last year on or before January 1st to be sure in Homestead their home in order to have a significant savings on your taxes.

Those living in other states should check their central appraisal district website to see the rules and regulations – this is likely a timely reminder as most just paid the property tax … or are about to pay them.

Not all states offer Homestead exemptions and many states do offer them but do no good because of the tax structure of their states, thereby making it important that you check each situation.

All of the above being said, using our home state of Texas as an example, there is a significant tax savings by homesteading your home.

From Wikipedia

In many states, including Texas once again, there are very special exemptions for those age 65 and it’s likely the January 1 residence date may not apply for those turning age 65. Special tax considerations are given for those 65 and older to school, property, other taxes with frequently freezes in escalations as part of the exemption … In order to qualify, you most likely will need to raise your hand (fill out another form) …notifying your taxing authority of your new tax saving age.

Property tax exemption

A homestead exemption is most often on only a fixed monetary amount, such as the first $50,000 of the assessed value. The remainder is taxed at the normal rate. A home valued at $150,000 would then be taxed on only $100,000 and a home valued at $75,000 would then be taxed on only $25,000.

The exemption is generally intended to turn the property tax into a progressive tax. In some places, the exemption is paid for with a local or state (or equivalent unit) sales tax.

Examples

  • California exempts the first $7,000 of residential homestead from property taxes.
  • Colorado allows a 50% deduction for up to the first $200,000 (equivalent to a $100,000 exemption if the property is valued at $200,000 or above) for seniors (over age 65) who have lived in their property for ten consecutive years.
  • Georgia allows a 1% HEST only in a few counties.
  • Florida‘s homestead exemption allows an exemption of 160 acres outside of a municipality and one-half an acre inside a municipality.[5]
  • Kentucky, for 2019 and 2020, the exemption has been set at $39,300. Once it is approved, homeowners who are 65 or older do not need to reapply for the homestead exemption each year.[6]
  • Louisiana exempts the first $7,500 of residential homestead from local property taxes.[7]
  • Michigan exempts the homeowner from paying the operating millage of local school districts.
  • Mississippi exemption from all ad valorem taxes assessed to property; this is limited to the first $7,500 of the assessed value or $300 of the actual exempted tax dollars.[8]
  • New York‘s School Tax Relief (STAR) program exempts the first $30,000 of a primary home’s assessed value from school district taxes; the exemption is limited to owners with incomes under $500,000. Additional exemptions are available for people over 65 with a limited income. The STAR program applies only to school taxes; no homestead exemption exists for taxes levied by other municipal entities. New York prevents a New York resident claiming this exemption if the New York resident owns property in another state and claims a similar exemption in that other state.
  • Oklahoma allows a $1000 deduction of the assessed valuation, about $75 to $125 of savings per year, if owners file for homestead exemption with the local county clerk.
  • Rhode Island exempts the first 20% of the home value from property taxes.
  • Texas allows a deduction, with additional exemptions available for county taxes, people over 65 and people who are disabled. It also requires school districts to offer a $25,000 exemption (but not other taxing districts, such as cities and counties).[9] Texas further limits the assessment increase on a homestead to 10% of the prior year’s value.

In most cases, there is a deadline for filing your Homestead Exemption, so do not dilly dally around or you may lose that tax savings at the end of this year or early 2024!

Just a friendly reminder to jog your memory, and maybe give you a nice tax savings!

Have a Great “Homesteaded Tax Savings” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
jkfinancialinc
street-cents

Contra Rally Reminder … New Laptop … Cold Friday

In slow downs, things called Contra Rallies occur … we have mentioned this before, here, here and here and as the reminder chart below shows, they can be very large …

We are optimistic at heart but also realists when it comes to economic data and the effects of higher interest rates on the economy. And OH… the rallies can be big as the chart above, again from prior post exhibits.

We will call your attention to Contra Rallies relative the “sharp pullback” during growth times when that chapter finally arrives…not to worry it will…

Technology Dog Years

With a call to our IT folks due to a humming fan in the favorite dear laptop…. an assessment was made that the “Dear Laptop” was nearing the Century mark in computer terms…. With a new one in hand, almost identical to the old but with all the latest platform and security, let the downloading of programs and setting of shortcuts begin….already liking the faster hardware speed, clearer screen and speaker quality – yay

Cold Friday and Weekend

Traveling back over 1200 miles south to a Colder Climate was a bit surprising….But, hey it is a Friday and it is Texas… “If you do not like the weather, just wait a bit, it will change!”

Enjoy your Friday and maybe a Fire if you are near in proximity, and your weekend!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

Top 50 Websites in 2023, From Visual Capitalist … Feeling Well but from the Road!

Good news… the feeling under the weather is much better, still low on stamina but that will pass… other news… On the road most of this week, testing that Stamina comment ..haha

Sure we spoken of this before, but worth a revisit early on in the new year —

Top 50 Big Boy Web Sites of 2023

Thanks again to our buds and Visual Capitalist

Still no idea who Yandex is…and finding YouTube more interesting and a go to for almost everything including most recently product comparison reviews and electrical light switch installation help!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

Give a Kid a Roth … A Donor’s Heads up/Reminder!

A while back we first came across the neat Tax/Retirement/Donation/Savings technique utilizing low/early career income relatives (think young kids/adults) of basically helping them fund a Roth IRA.

Give a Kid a Roth – Blending Tax Techniques to Accomplish

We all know starting early greatly helps our future retirement planning chances… Marry that to tax free growth AND under CURRENT Tax laws, Tax Free withdraws, and we have a neat plan.

Let’s blend some tax techniques and get this accomplished:

In the year 2023 we can give $17k to basically anyone without causing a Gift tax event…. the max for young earnings is $6500 into a Roth this year!

Have a Child/Grandchild/Relative or special young person in your life? If they have at least $6500 in income this year, consider giving them a Roth IRA to help jump start their retirement…. the earlier the better of course.

Kids working at your or a relatives business? Consider funding a Roth with their income… maybe a well earned bonus goes directly into the Roth?

Make sure the young earner does not over save in their Retirement plans – Max into a 401k is $22,500 this year and that includes a Roth contribution… so do not overfund.

Watch the top end of annual earnings as well… from our Tax Page Right here on our Blog

Lastly…the Sizzle —

Just one $6500 Roth for a 15 year old, growing at 8% annually, will be worth a whopping $300k+ at age 65 … do that three times to get to a million… and that is tax free withdrawals at retirement! NICE!

Have a Great “Give a Kid Roth” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

Tax Time Reminders … Friday

It is hard to believe but YES it is already tax time again….. Couple of reminders here

1099’s – think big tax packet that shows all the interest, gains and losses and basis information is generally due February 15, 2023 – This is on a best effort basis and given mail services and reporting by the respective investment companies delivery, can be delayed…

Ahhhh… here is the big date, First Corrected 1099’s are scheduled on March 9, 2023 with the second corrected March 16, 2023….

We would generally ask everyone (you guys know who you are the early filers) to wait until after the Second corrected before filing that return!

Ahhhh,,,today is a Friday and feeling a bit under the weather so will keep this one short! Enjoy your Friday and weekend!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

M2 Turns Negative for the First Time and that’s a Long Time!

There are tons of measuring sticks out there…. almost all of which we look at and follow, at least at one time or another…..

What grabs our attention is when the measuring sticks do unique things….or have never happened before!

M2 – aka Money Supply

According to Investopedia M2 is best described as the following:

M2 is the U.S. Federal Reserve’s estimate of the total money supply including all of the cash people have on hand plus all of the money deposited in checking accounts, savings accounts, and other short-term saving vehicles such as certificates of deposit (CDs). Retirement account balances and time deposits above $100,000 are omitted from M2.

Check out the latest reading of M2

While close in 1994, it stayed positive, for the year 2022… M2 was a negative for the year for the first time ever!

Note also as compared to 1994, the rapid draw down in 2022…

Why are we watching this?

This draw down of money in the system may put pressure on certain risky players i.e. Companies that use Junk or High Yield Debt!

Just a heads up to let you know what we are watching!

Have a Great “M2 Analysis” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

529 to Roth Possible New Rule from Secure Act 2.0 … Long weekend … Friday the 13th!

While researching the afore mentioned Secure Act 2.0 about a week ago… recall this 4200 page monster was released on December 27th, 2022 …

Some talk in the beast is about unused 529’s being able to roll over into a Roth….

This caught the eye/ear and a note was made. A possible use of this came up this week, so further research is needed as there were a ton of hurdles (like a 15 year waiting period, just to name one) to allow this transaction AND we will likely have updates during the year to clarify this possibility.

With a use already a possibility, we wanted to bring this to your attention and let you know we will be doing further research for clarity! yay

Long Weekend

Monday is a Holiday in honor of Martin Luther King day, as such banks, government offices and our office will be closed as well.

Today is a Friday the 13th spooky … enjoy your day and the weekend…talk next week!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents