Friday Virtual Portfolio Moves
by Phil - March 30th, 2007 10:59 am
Just to save time, setting 20% of profit or 20% of total stops on all Apr/May calls right here – I want to get out of a bunch of stuff and I will see where I end up later to see which way I need to cover.
- VLO $65 puts (now $1.35) when VLO gets close to $66
Time to start easing into the mattress plays. We lost Google, Apple about to go red, GS following with the BKX…
GE negative, MSFT barely up, SHLD turned down, SNDK red – SOX to follow…
- DIA Apr $124 puts (DAWPT) at $1.35, .15 trailing stop
- SPY Apr $142 puts (SFBPL) at $1.40, .15 trailing stop
- QQQQ Apr $43 puts (QQQPS) at $1.45, .15 trailing stop
- IWM Apr $80 puts (IOWPB) $1.45, 15 trailing stop
- TSO – second round of $100 puts at $2.05
- (this is 2/10 = 40 in this one for me)
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COP – $70s for .80 for upside protection
Posted March 30, 2007 at 11:34 am Permalink (Edit)
- DIA Apr $123 puts (DAWPS) at $1.25 .15 TStop
- IWM Apr $79 puts (IOWPA) $1.25 stop at $1.50 (.10 trail)
- SPY Apr $141 puts (SFBPK) at $1.40 out around $1.75 (same as yesterday (and the day before), these had the best leverage)
…
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DiggTGIF – EOQ Edition
by Phil - March 30th, 2007 9:30 am
Bye bye Q1 – we will not miss you!
At least I hope we don’t, it would be a shame if we have to look back on this Q as "the good old days" but I am now haunted by the last picture on yesterday’s post.
It’s all about the crops report today and anytime I have an excuse to post my all-time favorite video link I sure will. This time it’s not FCOJ that’s got everybody’s attention but CORN, which we talked about on Tuesday, when George Monbiot pointed out: ""biofuels would set up a competition for food between cars and people. The people would necessarily lose: those who can afford to drive are, by definition, richer than those who are in danger of starvation."
We already know that North Koreans are starving and you may think it can never happen here but, interestingly, under the current administration, our legally mandated 3-year supply of "reserved foodstuffs" has dropped to just 15.7 pounds per person, down from an already paltry 77 pounds in 2003 when the government did what it always does when we reach economic crisis levels – they stop measuring! So we have no idea how close to starvation we are in this country but I know I’ll be visiting Costco this weekend and picking up some soup…
Spending and income were up and inflation was down a bit, so everything is coming up roses this morning (or, more accurately, coming up corn). Corn planting was higher than expected at the expense of soybeans but, on the whole, this should give a boost to the markets. I’m going to be taking the opportunity to follow one of my main rules of investing – "When in doubt, sell half" to lighten up on calls so expect a lot of position paring as I am still gravely in doubt. If I’m wrong, so what? We’ll have cash to buy things next week.
We’re going to also be having a little biotech party today as our CEGE Jan $5 leaps (.45) should get a boost. This was a peripheral play for those of us who couldn’t get in on DNDN where I called for this complicated spread:…
Not So Thrilling Thursday Wrap-Up – Oil Shock!
by Phil - March 29th, 2007 11:46 pm
Dow up 48 points! Woo hoo, party time, excellent…
Dr. Brett would probably know the proper term for this but it seems to me we are suffering from EXTREMELY low expectations, like a torture victim who falls in love with their captors because they don’t beat them quite so hard on Thursdays.
As you can see from the video, like all things on this planet, it all comes back to Kevin Bacon. Much like every other actor in the universe is tied to Kevin Bacon, every stock in our little universe is tied to oil and once again our captors at the NYMEX put the screws to us by driving oil up $1.95 in yesterday’s trading.
Oh, I should specify that the May contract went up $1.95 as 245M barrels changed hands leaving 361Mb scheduled for May delivery, 7Mb LESS than Tuesday, when oil was $4 cheaper. Wow, that demand is just soaring isn’t it? As usual all this ridiculous pumping is being done for your viewing pleasure as somehow the July traders only have $1.30 worth of worry that Iran is going to start WWIII and Oct traders are only willing to pony up .97 and by next December there is just .34 being added to the price of oil so I guess the world will be full of peace and happiness by then.
For the second day in a row, contracts longer than 2009 are heading down in price – apparently we will have taken over Iran by then (although that plan isn’t running quite so smoothly in Iraq is it?). But, just like Patty Hearst, we are willing to do join the party and drink the Kool Aid as the financial media goes on an all-out campaign to tell us that all is well while oil prices climb back to record highs.
Our own GAO jumped on the fear-monger bandwagon yesterday by releasing what some might call an "ill-timed" report (but T. Boone would probably call "perfectly timed") that postulates that IF we were to enter a period of peak oil (the whole concept is subject to debate) THEN the US is poorly prepared.
Well, DUH! Al Gore’s been telling us to start getting prepared since we elected him VP in 1992 and then when we elected him President (by popular vote, which of course doesn’t count) in 2000 before the Supreme Court (the majority…
Thursday Virtual Portfolio Moves
by Phil - March 29th, 2007 6:55 pm
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UNH - Let’s take out the $55 caller for .60
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$10KP - Lets buy 10 UNH $55s for .60
Don’t forget it’s prom day for DNDN. You can buy the stock for $5.22, sell the $5 calls for $1.35 and the $5 puts for $1.55 for a potential gain of $2.68. I think they’ll get the approval and, even if they don’t, the stock is not likely to go to 0 right away but the calls will so you can buy them out and the $5 puts on the news maybe even and take a $2 hit on the stock – it’s not a worst case but it’s the most likely worst case.
- CHK $30.00 puts CHK-PF for .25 as a mo play
- just a craps roll.
Critical failure on SOX, reinitiating mattress plays from yesterday! Same stops!
- DIA Apr $123 puts (DIAPS) at $1.25 stop at at $1.60
- QQQQ Apr $44 puts (QQQPR) DD at .90, .10 trailing stop.
- IWM Apr $79 puts (IOWPA) $1.30 stop at $1.55 (.10 trail)
- SPY Apr $141 puts (SFBPK) at $1.25 out at $1.75 (same as yeserday, these had the best leverage)
- BA – selling the $90s for $2
- $10KP- WCI Jun $22.50 puts need to have $2.25 stop.
…
Thursday Morning
by Phil - March 29th, 2007 9:05 am
Release the T. Boone!
That’s right, whenever they need a Super-Mega Oil Pump they roll out the big guns and no one shoots their mouth off better than that impartial predictor of peak oil – T. Boone Pickens. Mr. T has 59,800 Google pages devoted to his bi-monthly statements that oil will go to $100 – yet EVERY SINGLE TIME he says it, CNBC (Criminal Narrators Boosting Crude) treats it like it’s a story!
Who better to give viewers a "fair and balanced" perspective on energy investing than a man who made $1.6Bn last year on oil and gas plays? Logic would dictate that he probably didn’t make that much money by tying up just a few million dollars in the energy sector so T. Boone is probably the world’s single largest Roach in the Energy Motel yet the wheel him out on CNBC (Criminal Narrators Boosting Crude) whenever they have problems making a technical, like yesterday’s failure to break away from $64.
This is a man who, last April, said $5 a gallon gas would be a good thing for America. What a patriot! A patriot, who, by the way gave $5M in "soft money" to launch "Swift Boat Verterans for Truth" in the last election. Could it be a coincidence that he’s back just when SU, his largest single holding failed to break over $77 after a DB upgrade? Yesterday SU gapped over the descending 200 dma at $75.32 and holding that level is critical to establishing a better chart pattern so keep that in mind as they run his clip 20 or 30 times today. SU MUST have oil over $55 to be competitive with other energy producers, $40 oil would cost that company half it’s market cap at least.
As Options Sage pointed out in comments this morning, what can we really expect from "Financial News" when our regular news is such a joke?
Don’t despair though, the government is cracking down. TXU "may" be fined $210M for manipulating Texas’s electricity market in 2005. Additionally the company is charged with overcharging customers by 4%, adding $80M to their $2.4Bn in profits for 2006. "The $210 million payment recommendation was based on Potomac’s analysis, which found that TXU — the biggest utility in the state by generating plants — submitted bids in excess of its real costs at periods…
Wednesday Wrap-Up
by Phil - March 28th, 2007 10:30 pm
This morning I said: "Today we will be happy to avoid a triple digit Dow drop."
Well aren’t we lucky to finish down just 96.93!
It’s funny, I don’t feel happy though… Perhaps I should have aimed higher or perhaps I was right and we WILL be happy. The mood was very sullen in our member chat today – no one wanted to talk about stocks so we ended up solving the Iran hostage crisis (they’ll be home by Easter). Ben Bernanke had no Easter cheer for Congress as he said "risks to the economy have grown, especially from business investment and housing."
In a very Greenspan-like mastery of Fed doublespeak, Bernanke was able to say that the Fed’s outlook hasn’t changed but the risk of those outlooks being wrong have drastically changed. In other words, we’re not changing our official stance but the forecast isn’t worth the dollars its written on! "We are looking for a bit more flexibility given the uncertainties that we are facing and the risks that are occurring on both sides of our outlook," Bernanke testified.
Ben also gave little hope for the easing everyone was counting on in last week’s "rally" as he said "Our policy is still oriented toward control of inflation which we consider at this time to be the greater risk… Recent inflation readings have been elevated and the scarcity of skilled workers and accelerating labor costs pose a risk to inflation."
What I really objected to was this statement: "Although the turmoil in the subprime mortgage market has created severe financial problems for many individuals and families, the implications of these developments for the housing market as a whole are less clear." Allow me to clear that up for you Ben:
- 10% of all mortgages are sub-prime, affecting about 2M homes.
- Home prices are going down, not up, putting these mortgages "under water."
- 20% of these mortgages are moving to default, and that’s with rates under 7%.
- That’s 400,000 homes that will be empty in about a year.
- The 80% that haven’t defaulted aren’t all doing great, just not bankrupt yet
- If just 1/4 of those people are forced to sell, that’s another 400,000 homes on the market this year
- If doubling the amount of homes available for sale is accompanied by rising rates and tightened lending
…
Wednesday Virtual Portfolio Moves
by Phil - March 28th, 2007 3:15 pm
I’m selling the VLO $65 puts for $1.44 against my $55 puts as a mo play into inventory but I’m only looking to make .20-.30 to offset my loss on the $55s
Oops there goes my poor VLO putter… Taking out 1/2 at $1.20
Mo plays
- TSO $95 puts for $1.90
- XOM $75 puts are a buck
Oops, drawdown is VERY disappointing!!! Totally out of oil calls.
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MSFT $27.50s as mo here .70, .55 stop (.15 tstop).
- GOOG June $490s for $12.85
- sell $470s at no less than $11.25 ($2 trail)
- AAPL – selling the May $100 puts for $7.80
- will buy the May $95 puts for $5 if it goes the wrong way but will wait as long as possible.
- GM – done with $32.50 puts at $1.55
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XTO $55 puts for $1.30, stop at $1.15.
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MRO $100 puts for $1.50, stop at $1.25
Wacky Wednesday Morning
by Phil - March 28th, 2007 8:38 am
Now we get to see what the markets are really made of as we should pretty much test all our levels today.
I think even if Bernanke wants to blow his credibility and tell Congress everything is fine today, the sting of last night’s oil shock and the Beazer investigation will be very hard to shake off. Today we will be happy to avoid a triple digit Dow drop
Andrew Coffey from MN1 just turned me on to an excellent show called Wall Street Warriors, which you can watch online. It’s a great behind the scenes look at the people behind the trades. I especially like the guy who’s proud of the fund he manages that bases investment decisions on the migratory patterns of elephants…
Asian markets are migrating South with the Nikkei and the Hang Seng in triple digit retreat. North Korea has millions of people starving during a food shortage due to a combination of a poor harvest and the fact that other countries have pulled back the bulk (75%) of their aid as our man Kim has done everything he could to make people hate his country. "We are losing the fight against hunger in North Korea", WFP Director Banbury told a news conference. "If donors do not respond to the request, millions of people are going to go hungry."
The rest of Asia is doing quite well as the Asian Development Bank raised it’s overall growth forecast .5% to 7.6% and cut expectations for inflation but that is based on an oil price target of $57, questionable today. "Markets have moved to reprice risks, but calm could yet give way to less settled conditions," ADB President Haruhiko Kuroda said in the publication. "If asset prices get badly punctured and reversals occur, the chill would be widely felt." That has got to be the worst positive spin I’ve ever heard… "With these high growth rates, we’re seeing a surge in housing and equity prices," ADB’s chief economist, Ifzal Ali, said. "We’re seeing fast credit expansion, rising prices of goods, particularly food items." OK, now I think they’re just messing with us – this sounds like an economic report from September 1929!
Europe is flat and dull this morning ahead of the US open but it won’t take much to push those markets off a cliff as well. Bernanke starts speaking near the close…
Tuesday Tear-Down
by Phil - March 27th, 2007 11:07 pm
I’m not sure how much it matters what happened today as so much is happening after hours.
Iran didn’t fire a missile at an American ship. This rumor seems to have started on the NYMEX, either before or after oil futures shot up to $68 in after hours trading. You can tell a market rumor because there is no mention of it anywhere in Google, other than the denial I linked to. Hopefully this is a sign of the desperate height of manipulation and not the beginning of another round of fear mongering that will take us through hurricane season with $100 oil.
Something that is true, and all over Google, is the FBI investigation of Beazer Homes. A spokesman for the FBI’s Charlotte field office, said the inquiry involves "fraud in general" and more specifically is related to corporate, mortgage and investment issues. My older readers will remember BZH as my most hated stock of late 2005 when the darn thing would not go down, prompting me to say on 1/20/06: "BZH is my personal Moby Dick as it refuses to die." As is often the case, we were just a little ahead of ourselves on that one!
The most interesting thing I read today was George Monbiot’s take on Biofuels. This administration is pushing biofuels over conservation, looking to replace 24% of our fuel consumption by 2017 when raising the mileage requirements of passenger cars to 25 mpg would accomplish the same thing in just 18 months. The problem with that plan? No one makes any money from conservation. Monbiot points out that "biofuels would set up a competition for food between cars and people. The people would necessarily lose: those who can afford to drive are, by definition, richer than those who are in danger of starvation."
Gosh it’s always something isn’t it?
Something is bothering consumers as confidence levels dropped to 107.2, down from 111.2 in February and slightly below the 108 that was expected and consumer stocks led the markets lower along with transports which, after tonight, may have good reason to lead the markets lower. As I said just yesterday, the energy markets are now prospering at the expense of the entire economy as they now require a flow of capital that cannot be satisfied outside of crisis spending. Money that flows into energy is being…
Tuesday Virtual Portfolio Moves
by Phil - March 27th, 2007 10:00 am
- $10KP – Selling WCI $22.50 puts for $1 against June puts
- Sorry, I cancelled this one but forgot to post!.
- $10KP – Taking out LEND $7.50 caller for $3 – $10.75 stop (.30 trail) on stock
- MRO $100 puts for $1.45
- $1.25 stops
Posted March 27, 2007 at 11:14 am Permalink (Edit)
- DD on CY Jan ‘09 $22.50s @ 2.20
- DD on AIR Aug $35s for .50
- Out of ICE $125s at $5.35 (long way to go to make up for my losing $155s).
- VLO $65 puts for $2, stop at $1.70 as a mo play.
- XOM $75 puts for $1.10, stop at .95 as a mo play
- $10KP – Selling LEND $7.50s for $3.95
Posted March 27, 2007 at 1:18 pm Permalink (Edit)
- Out of MRO $100 puts at $1.65
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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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