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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.

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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.





 
 
 

Zero Hedge

Thomas Piketty's "Sensational" New Book

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by Hunter Lewis via The Mises Economic blog,

This 42 year economist from French academe has written a hot new book: Capital in the Twenty-First Century. The US edition has been published by Harvard University Press and, remarkably, is leading the best seller list, the first time that a Harvard book has done so. A recent review describes Piketty as the man “who exposed capitalism’s fatal flaw.”

So what is this flaw? Supposedly under capitalism the rich get steadily richer in relation to everyone else; inequality gets worse and worse. It is all baked into the cake, unavoid...



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Phil's Favorites

French Telecom Company Does Biggest Junk Bond Sale Ever; Bidding Wars for Junk; AOL Flashback

Courtesy of Mish.

With central bankers globally suppressing interest rates, the such for yield elsewhere is on. One of the places investors have turned is speculative junk bond offerings.

Please consider French Company Does Biggest Junk Bond Sale Ever.
Numericable (NUM), which provides cable and internet service in France and other European markets, sold a record amount of high-yield bonds Wednesday with some priced in dollars and others in euros.

It's sold $7.78 billion and €2.25 billion in notes that yield 5% or more, according to a statement from Altice, the multinational telecom group that owns Numericable. Altice issued $2.9 bill...



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Chart School

Get Ready for Europe to Print

Courtesy of Doug Short.

Summary:

  • Core Eurozone CPI inflation rate falls to 0.70%, a multi-decade low
  • This occurs at a time when the PIGS' average unemployment rate rests near 24%
  • Deflation threat in Europe real as GDP in Europe likely to peak this year
  • European hawks moving towards dovish side of the fence, opening door for more QE
  • Implications: stronger European stock market, stronger USD, weaker commodity prices, stronger global growth

Back in February I laid the groundwork for why we should expect to see the European Central Bank (ECB) massively expand its balance sheet (see article). The case for expecting to see the ECB print is only increasing as core Eurozone inflation is c...



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All About Trends

Mid-Day Update

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

Click here for the full report.




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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Insider Scoop

Yum! Brands Conference Call Highlights; All About China

Courtesy of Benzinga.

Related YUM China Drives Yum! Brands Q1 Earnings - Analyst Blog Market Sentiment Flat Due To A Barrage Of Unimpressive Q1 Earnings Reports - Economic Highlights Rallying Ahead of Earnings (Fox Business)

Yum! Brands (NYSE: YUM) reported its first quarter earnings on April 23, 2014. Shares of the company are down 0.86 percent or $...



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Market Shadows

Soy Numero Uno

Soy Numero Uno

By Paul Price of Market Shadows

Bunge Limited (BG) is the world’s largest processor of soybeans. It is also a major producer of vegetable oils, fertilizer, sugar and bioenergy.

When commodities got hot in 2007-08, Bunge’s EPS shot up and the stock followed, rising 185% in 19 months.

The Great Recession took its toll on operations, dropping EPS to a low of $2.22 in 2009.  Since then profits have recovered.  They ranged from $4.62 - $5.90 in the latest three years. 2014 appears poised for a large increase. Consensus views from multiple sources see BG earning $7.04 - $7.10 this year and then $7.83 - $7.94 in 2015.

...



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Option Review

Casino Stocks LVS, WYNN On The Run Ahead of Earnings

Shares in Las Vegas Sands Corp. (Ticker: LVS) are up sharply today, gaining as much as 5.7% to touch $80.12 and the highest level since April 4th, mirroring gains in shares of resort casino operator Wynn Resorts Ltd. (Ticker: WYNN). The move in Wynn shares appears, at least in part, to follow a big increase in target price from analysts at CLSA who upped their target on the ‘buy’ rated stock to $350 from $250 a share. CLSA also has a ‘buy’ rating on Las Vegas Sands with a $100 price target according to a note from reporter, Janet Freund, on Bloomberg. Both companies are scheduled to report first-quarter earnings after the closing bell on Thursday.

...

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Sabrient

What the Market Wants: Market Poised to Head Higher: 3 Stocks to Consider

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

Courtesy of David Brown, Sabrient Systems and Gradient Analytics

Yesterday, the market continued its winning ways for the fifth consecutive day.  The S&P 500 closed within 1% of its all-time high, and the DJI was even closer to its all-time high.  Healthcare, Energy and Technology led the sectors while Financials, Telecom, and Utilities finished slightly in the red.  All three sectors in the red are typically flight-to-safety stocks, so despite lower than average volume, the market appears poised to make new highs.

Mid-cap Growth led the style/caps last week, up 2.87%, and Small-cap Growth trailed, up 2.22%. This week will bring well over 100 S&P 500 stocks reporting their March quarter earn...



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OpTrader

Swing trading portfolio - Week of April 21st, 2014

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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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 PSW user name and password, or sign up for a free trial.

...

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Digital Currencies

Facebook Takes Life Seriously and Moves To Create Its Own Virtual Currency, Increases UltraCoin Valuation Significantly

Courtesy of ZeroHedge. View original post here.

Submitted by Reggie Middleton.

The Financial Times reports:

[Facebook] The social network is only weeks away from obtaining regulatory approval in Ireland for a service that would allow its users to store money on Facebook and use it to pay and exchange money with others, according to several people involved in the process. 

The authorisation from Ireland’s central bank to become an “e-money” institution would allow ...



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Promotions

See Live Demo Of This Google-Like Trade Algorithm

I just wanted to be sure you saw this.  There’s a ‘live’ training webinar this Thursday, March 27th at Noon or 9:00 pm ET.

If GOOGLE, the NSA, and Steve Jobs all got together in a room with the task of building a tremendously accurate trading algorithm… it wouldn’t just be any ordinary system… it’d be the greatest trading algorithm in the world.

Well, I hate to break it to you though… they never got around to building it, but my friends at Market Tamer did.

Follow this link to register for their training webinar where they’ll demonstrate the tested and proven Algorithm powered by the same technological principles that have made GOOGLE the #1 search engine on the planet!

And get this…had you done nothing b...



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Pharmboy

Here We Go Again - Pharma & Biotechs 2014

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

Ladies and Gentlemen, hobos and tramps,
Cross-eyed mosquitoes, and Bow-legged ants,
I come before you, To stand behind you,
To tell you something, I know nothing about.

And so the circus begins in Union Square, San Francisco for this weeks JP Morgan Healthcare Conference.  Will the momentum from 2013, which carried the S&P Spider Biotech ETF to all time highs, carry on in 2014?  The Biotech ETF beat the S&P by better than 3 points.

As I noted in my previous post, Biotechs Galore - IPOs and More, biotechs were rushing to IPOs so that venture capitalists could unwind their holdings (funds are usually 5-7 years), as well as take advantage of the opportune moment...



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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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