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Archive for 2005

Trade of the Day – Valero

This is a long trade on my favorite oil stock and it’s tricky to do so we will track it like the Google spread play.

Valero is splitting (don’t know when) which will mean your options will split and your premium will increase substantially.

It’s a great stock with a lot of room to grow and I think this price (as long as oil stays above $55) is still a bargain.

This trade is for AFTER inventory and only if there is a draw down, indicating a change in market direction back to positive for oil.

I’m taking the January ’08 $90s for $31.20, a $19 premium over 2 years.

I’m selling the December $110s when they pass $2 and retrace .25 so as to maximize the premium I’m charging. I do not want this call to go positive on me so I will buy it back for a 50% loss ($3) if I have to because if the stock splits on you, this guy will make out like a bandit and eat up all your profits.

The goal is to sell more than $31 worth of calls before Jan ’08 leaving us with a free (or 2 free $50) $100 call on a stock that has gone up 20x in 10 years.

At the moment, I will only want to sell way out of the money calls, but if the stock turns on us, I will be looking at some more interesting tricks.

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It looks like yesterday’s Trade of The Day #3 is a grand slam! RIMM is getting hammered in the pre-market, now I’m glad I went with my gut and rode out the head fake!

Since I am getting on a plane, I am going to take my huge profit off the table early and reinvest 30% of the profit in some cheap, out of the money calls. If this thing goes it will collapse fast but it also could turn back on a dime with a posive announcement of a deal with NTP (but I doubt it).

It’s hard to call because of the massive move but it looks like I will be exiting my $65 puts for a nice double at $7 and I will look to pick up about the same number of $50 puts for $1.20 so if the stock goes down to $40 I will only be missing $7 of the…
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Happy Thanksgiving

Like any good trader, today is the start of my vacation so I probably won’t be posting again until Tuesday.

The market is kind of wacky around a holiday anyway so it’s a good time to stay out.

The only play I’ll be watching on the way to the airport is oil.

If there is any kind of draw in oil or distillates it will be a surprise and could really goose the industry. The same oil list as yesterday would apply with the Valero Rule being in full effect (VLO was up $3.30 yesterday).

XOM and COP are dragging their heels, they are just not buying into this “oil fad” but, if the price of oil goes up, Valero goes up and the inventory draws down (dollar is declining a bit which will keep oil from dropping much no matter what) then XOM and COP will play catch-up with a big move.

=====================================

Think of gold as an international game of poker with the rich Arabs just sitting down at the table. They did a little buy-in yesterday and now we will give them a chance to win buy giving away some cheap holiday gold. Then we run gold up to a new record, let them get all excited about how easy this game is and, once they are all in, we drop the price and take their cash.

Don’t be too greedy as this is a game for big boys but it will be a lot of fun to watch the action. Perhaps we can figure out how to televise it with celebrity palyers and call it Celebrity Futures Showdown or something.

Have a very happy Thanksgiving,





Keep on Rockin’

The FRK $46.63 call is up to $6, almost a double…

I would strongly suggest a .50 trailing stop here to preserve a $2.20 gain. No sense being greedy, if it pulls back we just wait and reenter when it’s safe.

Update on the Google Spread

Last Friday we were here:

Buy the March ’06 $450 call for $17 // Now at $19.20
Sell the January ’06 $470 for $5 // Now at $5.60+
Buy the March ’06 $360 put for $14 // Now at $14.50

The $360 put peaked out at $17 and we stopped out at $16.3o yesterday for a $2.30 profit.

The $450 never dropped back to $17 (lucky for us) and is now worth $26, a $9 profit!
We can’t sell it though because we have the obligation on the call we sold. The $470 is now worth $8.60, a huge profit for that guy!

At this point we can buy him out and close out, taking the $3 hit to our $11.30 profit or we can wait it out. I’m for waiting it out with tight 10% stops. If our friend ends up in the money, we will always have a $25-35 advantage in the least.

So that’s a nice $8.30 profit on a $28 investment in 2 trading days – not a bad way to hedge!

Tomorrow will be very dicy with lots of optionholders being forced to sell shares they can’t afford but the buying has been intense so I couldn’t tell you which way to play it!





Tuesday Afternoon

Wow! What a day that was.

The lows, the highs…

A few disappointments but nothing I wanted to dump based on a day’s trading. I did exit my long on Genzyme as it was the exact opposite of the umbrellas I mentioned earlier.

Bottom fishing winners: CVC (1%), AGEN (6%), FMTI (1.6%), JAS (1%), FRN (.6%), SGY (1.4%), the only loser was CMRT but one day someone will realize they sell Toyotas too!

Overstock was a disaster! But at least it opened that far down. The December $40s have too much premium ($2.60) for my taste so I never entered.

MRB had an exciting morning but ended flat – I still like this one.

NGS opened way up and stayed there. Chart looks good, not great. A lot will ride on tomorrow’s oil report, not sure what happens to Thursday’s gas report with holiday.

Like I said, all you needed was a monkey and a dartboard to make money on oil today.

MUR really got going with XTO, HAWK, DO and HAL all picking up 4%. BTU also made a good move and the best thing was they had a slow start so we all had plenty of time to buy!

SBUX was rejected at the high so no buy. Long way to go on a pullback.

WFMI might be out of gas.

RIMM has a bit of a GM feel to it. Everyone is scrambling to assure the investors but she’s taking on a lot of water. I pulled the stop so I’m holding on to it with a painful loss. Had I listened to my 10 oclock self I could have saved myself .80 on the option.

Always remember Rule #2: Do as I say, not as I do! One day I will listen to myself.

Even if RIMM settles, the deal looks like it will cost them 2 year’s profits. That’s not good!





Told You So

See, good Fed news!

It was really tough riding today out but now we will be rewarded.

Some Fed members are concerned about “Going to far” and they say there will be a language change “soon!”

Stock party at my house, everyone can come…





Umbrella Stocks

On a blah market day I like to watch the ticker for stocks that can keep you dry when the market starts to rain.

A lot of my favorites are there:

INTC
TXN
UPS
WMT
TWX
VLO
GLW
AAPL
JOE

When your virtual portfolio is down, write down 20 stocks (that you like) that are up that day. Ones that appear on 7 out of 10 lists are excellent ones to balance out your virtual portfolio.





Doubting the Dow

Sometimes I find myself watching the Dow (like today) and hoping it can go up otherwise “the market is in trouble.” Then I kick myself and try to remember how silly this index is in today’s world.

The Dow is made up of some of the worst moving companies in the world. In their search for stability, the Dow has given us consistent lethargy instead. Since the Dow is still the key index that drives all news, people get a very false impression of “what the market is doing” by overemphasizing this index.

We have companies with unions problems aplenty, companies that are generally over 100 years old with most of their growth behind them, companies with hundreds of thousands of employees who are, for the most part, ill suited in today’s rapidly changing business environment.

Some of these companies cancel each other out, like Dupont and Exxon, while others are practically twins: VZ/SBC, Pfizer/Merk, Citigroup/JPM, UTX/BA, P&G/J&J…

If this were your virtual portfolio, you would surely want to swap either Merk of Pfizer with DNA or GENZ. Altria has been in years of litigation and should have gone years ago. Disney, MSFT, IBM, KO and INTC all dominate spaces in such a way that real growth is hardly possible.

I would certainly replace GM with Toyota but I’m sure I would be arrested under some clause in the patriot act. The reality is that Toyota will soon employ more Americans than GM.

So don’t let the Dow get you down but also remember, it has that effect on everyone else. On a day like today when I am hoping for a turnaround, I watch the Nasdaq and the S&P – the Dow is a follower of those stocks, it hasn’t been a leader since the 70′s.

DJIA Components:

SBC – SBC Communications
GM – General Motors
MO – Altria
MRK – Merck
VZ – Verizon
JPM – JP Morgan Chase
C – Citigroup
DD – DuPont
PFE – Pfizer
GE – General Electric
KO – Coca-Cola
HON – Honeywell
XOM – ExxonMobil
BA – Boeing
AA – Alcoa
PG – Procter & Gamble
JNJ – Johnson & Johnson
MMM – 3M
MCD –…
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RIMM Alert – Trade of Day #3 I guess…

Thinkequity just gave a very nasty (and well-deserved) downgrade to RIMM with a plunging target of $45.

Citing the lawsuit (of course) and a crush of new competition, the analyst was just on CNBC yelling abandon ship.

I will be jumping on this one because I was liking the short anyway as it bounced hard off the 50 dma of $67.50 yesterday.

Unfortunately it might open very low so this one will require some finesse, check the comments on this log for a play by play.





Tuesday Musings

CY – looks like today’s the day!

IMAX – finally overcoming the sellers.

SU – I missed this one in my oil picks, goes up and down directly with price of oil

TIVO – people are warming to their new plan. Apparently the Financial Times read my column yesterday and published an almost identical one today!

If you didn’t yesterday, take those housing profits off the table today, rates may go up greater than expected.

I don’t think TWX is actually going to sell AOL. Maybe a partnership with MSFT or GOOG, that might be a win/win if MSFT but GOOG is already a defacto partner so they can only lose. I would think Microsoft wants it more and they are much richer (have you ever won an auction against someone who wants it more than you and is much richer?).

BA will be the clear winner as US airports will not put up with the Airbus 380 on many levels.

Canada Bird Flu scare = BCRX back in play.

If SBUX blows through its high of $32.13 then Buybuybuy (but I told you so on Sunday)

There is a line around the block at NY ToysRUs for the Xbox.

WFMI is looking like its overbought again! I would love for it to fail to test its $152.67 high so I will be watching it closely. It may be out of gas right here though.

XTO is another oil play I like.

There is a rumor that Intel/Micron are already in bed with Apple, this will really rock MU stock if true because it’s all about the future.

I think this is going to be one of those days where the market gains strength all day. I know I’m the only one saying this but I feels it in my bones!





Trade of the Day #2

OMG – I forgot all about BTU!

Every time they get to the low 70s (well, the last 4 times anyway) they bounce back to $80.

The stock did this even as oil was going down, with oil going up I will be buying with great confidence the December $75s for $4.40 (an outrageous $2.80 premium) and looking to get out as the stock hits its 50 dma of $78.75 (but probably with a .50 trailing stop).

Remember the Valero Rule for all energy trades! Should not be an issue today.

MU will also be a good mover today, but we should have gotten it yesterday when the announcement of their partnership with Intel put a knife in SNDK.





 
 
 

All About Trends

Mid-Day Update

Reminder: David is available to chat with Members, comments are found below each post.

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To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Zero Hedge

Why The Mania Is Getting Scary - Central Bankers Are Running A Doomsday Machine

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by David Stockman via Contra Corner blog,

If you need evidence that we are in the midst of a lunatic financial mania, just consider this summary from a Marketwatch commentator as to why markets are ripping higher this morning:

“The dovish comments from both Fed Chairwoman Janet Yellen and People’s Bank of China Governor Zhou Xiaochuan are giving markets a big lift, and in the absence of negative data or news, I imagine this will continue to buoy the markets throughout the session,” Erlam...



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Phil's Favorites

Recovery, Geopolitics and Detergents

Courtesy of The Automatic Earth.


Gottscho-Schleisner Fulton Market pier, view to Manhattan over East River, NY 1934

Increasingly over the past year or so, when people ask me what I do, and that happens a lot on a trip like the one I’m currently on in the world of down under, I find myself not just stating the usual ‘I write about finance and energy’, but adding: ‘it seems to become more and more about geopolitics too’. And it’s by no means just me: a large part of the ‘alternative finance blogosphere’, or whatever you wish to call it, is shifting towards that same orientation.

Not that no-one ever wrote about geopolitics before, but it used to be far less prevalent. Much of that, I think...



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Chart School

RTT browsing latest..

Courtesy of Read the Ticker.

Please review a collection of WWW browsing results.Date Found: Saturday, 14 February 2015, 02:19:38 AM

Click for popup. Clear your browser cache if image is not showing. Comment: Robert Shiller who got the dot-com and housing bubbles right says bonds are next and that’s your gold price spike. www.cnbc.com/...

Date Found: Saturday, 14 February 2015, 02:53:52 AM

Click for popup. Clear your browser cache if image is not showing. Comment: Bill Fleckenstein: Still Not Time to Short the Market - Wait for QE4 - Bill comments that we could easily see another 15-20% correction in the market but that the Fed will either hint at or, more likely, launch Q...



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Sabrient

Sector Detector: Defensive sectors lead hesitant market, but traders honor long-standing bullish support

Courtesy of Sabrient Systems and Gradient Analytics

Last week, the major indexes fell back below round-number thresholds that had taken a lot of effort to eclipse. There has been an ongoing ebb-and-flow of capital between risk-on and risk-off, including high sector correlations, which is far from ideal. But at the end of it all, the S&P 500 found itself right back on top of long-standing support and poised for a bounce, and Monday’s action proved yet again that bulls are determined to defend their long-standing uptrend line.

In this weekly update, I give my view of the current market environment, offer a technical analysis of the S&P 500 chart, review our weekly fundamentals-based SectorCast rankings of the ten U.S. business sectors, and then offer up some actionable trading ideas, including a sector rotation strategy using ETFs and an enh...



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Digital Currencies

Federal Agents Investigating Bitcoin Money Laundering Stole Over $1 Million In Bitcoin

Courtesy of ZeroHedge. View original post here.

This is one of those sad times when The Onion realizes it has badly, and permanently, missed its IPO window.

Just released from the Department of Justice

Former Federal Agents Charged With Bitcoin Money Laundering and Wire Fraud

Agents Were Part of Baltimore’s Silk Road Task Force

Two former federal agents have been charged with wire fraud, money laundering and related offenses for stealing digital currency during their investigation of the Silk Road, an underground black market that al...



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OpTrader

Swing trading portfolio - week of March 30th, 2015

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Promotions

Watch the Phil Davis Special on Money Talk on BNN TV!

Kim Parlee interviews Phil on Money Talk. Be sure to watch the replays if you missed the show live on Wednesday night (it was recorded on Monday). As usual, Phil provides an excellent program packed with macro analysis, important lessons and trading ideas. ~ Ilene

 

The replay is now available on BNN's website. For the three part series, click on the links below. 

Part 1 is here (discussing the macro outlook for the markets) Part 2 is here. (discussing our main trading strategies) Part 3 is here. (reviewing our pick of th...

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Market Shadows

Kimble Charts: South Korea's EWY

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Chris Kimble likes the iShares MSCI South Korea Capped (EWY), but only if it breaks out of a pennant pattern. This South Korean equities ETF has underperformed the S&P 500 by 60% since 2011.

You're probably familiar with its largest holding, Samsung Electronics Co Ltd, and at least several other represented companies such as Hyundai Motor Co and Kia Motors Corp.

...



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Option Review

Cypress Semi Draws Bullish Option Plays

Bullish trades abound in Cypress Semiconductor options today, most notably a massive bull call spread initiated in the July expiry contracts. One strategist appears to have purchased 30,000 of the Jul 16.0 strike calls at a premium of $0.89 each and sold the same number of Jul 19.0 strike calls at a premium of $0.22 apiece. Net premium paid to put on the spread amounts to $0.67 per contract, thus establishing a breakeven share price of $16.67 on the trade. Cypress shares reached a 52-week high of $16.25 back on Friday, March 13th, and would need to rally 4.6% over the current level to exceed the breakeven point of $16.25. The spread generates maximum potential profits of $2.33 per contract in the event that CY shares surge more than 20% in the next four months to reach $19.00 by July expiration. Shar...



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Pharmboy

2015 - Biotech Fever

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

PSW Members - well, what a year for biotechs!   The Biotech Index (IBB) is up a whopping 40%, beating the S&P hands down!  The healthcare sector has had a number of high flying IPOs, and beat the Tech Sector in total nubmer of IPOs in the past 12 months.  What could go wrong?

Phil has given his Secret Santa Inflation Hedges for 2015, and since I have been trying to keep my head above water between work, PSW, and baseball with my boys...it is time that something is put together for PSW on biotechs in 2015.

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Stock World Weekly

Stock World Weekly

Newsletter writers are available to chat with Members regarding topics presented in SWW, comments are found below each post.

Here's this week's Stock World Weekly.

Click here and sign in with your user name and password. 

 

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Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!




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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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