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Friday Morning Markets

[Grain]I thought I got all my complaining off my chest in last night’s article but now I wake up to more nonsense!

Sorry, I’m trying to stay positive but…  Well, come on:

"The days of cheap grain are gone," says Dan Basse, president of AgResource Co., a Chicago commodity forecasting concern.  This year the prices of Illinois corn and soybeans are up 40% and 75%, respectively, from a year ago. Kansas wheat is up 70% or more. And a growing number of economists and agribusiness executives think the run-ups could last as long as a decade, raising the cost of all kinds of food.

American families, which spend 9.9% of their disposable income on food, are facing the fastest-rising food prices in 17 years. The consumer’s cost for everything from yogurt and popcorn to breakfast cereal and fast-food french fries is climbing. In U.S. cities last month, the average retail price of a pound loaf of whole-wheat bread was up 24% from a year ago, according to the Bureau of Labor Statistics. Whole milk hit $3.807 a gallon, up 26%

"We’re in uncharted territory," says Christopher Fraleigh, chief executive of the food and beverage division of Sara Lee Corp., which earlier this month raised its bread prices 5%.  To cope, General Mills is shrinking the size of its breakfast-cereal packages, effectively raising the price per ounce. At a Dominick’s supermarket in suburban Chicago, a 15.6-ounce box of Wheaties recently cost $5.16, more per ounce than the round steak London broil at the meat counter. Grain typically has accounted for a small part of the cost of packaged products like bread and ready-to-eat cereals.

That’s the creeping "shadow inflation" we get at the early stages of an inflationary cycle.  The cereal box is smaller, the restaurant cuts back on bread, the Whopper shrinks, the car has less features, the movie has less special effects…  This is how an economy can collapse all around you and you don’t actually realize it until it’s too late to do anything about it. 

For instance, making fuel out of food is MONUMENTALLY STUPID and is causing more inflation than it cures.  While it’s great for DE, MON, DD and the Midwest farming constituency (big Bush contributors) it is devastating for the rest of the World.  Humanitarian groups are cautioning that their budgets for food aid won’t go nearly as far as they did in the past. Roughly 200 million of the 850 million malnourished people in the world’s poorest nations receive some food assistance. "My major concern is that we will lose ground against hunger," says Josette Sheeran, executive director of the United Nations’ World Food Program.

That’s right, 200M people may starve to death so you can get your Hummer to the 7-11!  The entire global projected production of biofuels for 2030 is less than what the US alone would save in oil if we raised the mileage requirements for cars by 5%…  Madness! 

Madness, like the PCE index today has the government telling us that PCE inflation is up just 0.1%, the PCE Price Index is DOWN 0.1%, Personal income is up 0.3% and Personal Spending is up 0.6%.  Yipee!  People are spending money they don’t have on inflation that doesn’t exist.  You can’t blame the people though, our government is leading by example as Congress approves the 5th increase in public debt since Bush took office, this one for $850Bn.  The good news is we’re keeping it under $10T, with "just" $9.815 Trillion in sanctioned debt.  The $4,000,0000,000 Bush has borrowed so far is costing the US over $200Bn a year in interest alone to float

In another story that strangely headlines on Bloomberg but not the Wall Street Journal, Alan Greenspan said this morning in London that the risk of a US recession is increasing but still "less than 50/50."  “I’m not forecasting that we’re about to get a significant recession in the U.S. or the U.K.,” Greenspan said. “All you can basically know is whether the probabilities are increasing or decreasing.

Asia is deciding whether or not to party on with a mixed market today.  The Nikkei gave back 46 points while the Hang Seng added "just" 77 points to finish the week at 27,142.  Soldiers in Myanmar cracked down on dissenters by swiftly breaking up street gatherings of die-hard activists, occupying key Buddhist monasteries and cutting public Internet access in that country’s interpretation of the Patriot Act.  The Times of London, one of the only Western news organizations with a correspondent in the closed country, reports that without the monks the "marchers had lost a lucky charm. They felt less like crusaders for justice and more like what they resembled — scared, angry kids in T-shirts facing well-drilled troops with automatic weapons."  This is what happens when people get hungry…

We’ve already talked about how China is looking to get their farming population to take their money out from under the mattress and toss it back into the economy and now Japan is following suit, changing the country’s finance regulations to encourage their households (the World’s greatest savers) to play the markets with the $13 Trillion they have locked up in savings accounts.  This is exactly the kind of late-stage party fever that comes near the end.  How near the end are we is the question we all need to wonder about.

Europe is trading down ahead of our open.  Germany’s IKB Deutsche Industriebank, which recently got a bailout, showed their fiscal Q1 profits dropped 67%.  The bank said increasing credit spreads in the latest quarter caused its net loss on financial instruments to widen to €43 million, compared with a loss of €6 million. IKB said the figures are related to a time period before the start of the critical developments at the bank. "Thus the impact of the current crisis is only reflected to a limited extent in the figures for the first quarter," said the bank, which released its earnings report a month and half later than originally planned.  In other words, as Al Jolsen said: "You ain’t heard nothin’ yet!"

Its largest owner, state-owned development bank KfW, subsequently assumed the €8.1 billion liquidity obligation, and also created together with other German banks a risk shield of €3.5 billion to cover possible losses on subprime paper held at the investment vehicle, called Rhineland Funding.  Like I said yesterday, the $2.27 Trillion we lost in housing value will have to show up on someone’s balance sheets – well, here’s 0.1541% of it – just 99.8459% remains to hit the fan!

Despite some very bullish chart signals, we detected a different sort of bull in yesterday’s trading action and covered our positions with the DIA Oct $140 puts at $2.20 – they took a little beating yesterday but, as I said to the members, I’ll sleep a whole lot better on the weekend with them in place.  We’ll find out next week how much of this week’s rally was window dressing – perhaps we will find a reason to party on and take the Dow to new levels but let’s go in with both eyes open as I’m not sure how much more good news we can take!

Have a great weekend,

-Phil

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  1. Gordo

    Morning all, FSLR up at $114, maybe a pop for the solars after yesterdays B.S. is in the works

  2. Gordo

    CY showing signs of recovery in the pre-market as well

  3. BillBigD

    Might be old news but saw that some options chains will go to penny spreads. FCX APPL RIMM OIH are 4 that I play.

  4. Greg

    In case you haven’t seen this yet, the Options Penny Pilot program has expanded today to include another 30+ stocks. Should make it easier to get closer bid/ask spreads and also make using market orders easier during fast moving action. Options trade in penny increments if below $3 and 5 cent increments above $3. QQQQs will trade in penny increments for all coption classes.

    Here is the list: SPY, MO,DNDN,XLF,GM,DIA,NYX, BMY, C, MOT, AMGM, OIH, AAPLO, QCOM, CSCO, RIMM, XLE, T, COP, AMZN, FCX, YHOO

    Added to these which had already been part of the pilot: QQQQ, WFMI, SMH, A, SUNW, AMD, IWM, GE, TXN, FLEX, INTC, MSFT, CAT

  5. Phil

    Sold those extra FSLR Dec $110s for $17 – happy to get paid!

    Penny spreads – on those stocks, that’s funny as they move a dime in a second anyway.

  6. Phil

    Oil sector showing continued strength, probably not a good short for the day but I’ll be shorting some into the close.

    FXI posting ATH, about time with China at 27K

    Let’s watch that S&P 1,530 for the big breakdown as well as the Nas, which looks strong this morning but SOX are still right at 500 and will lead the Nas lower and 2,700 is critical. The dollar is getting crushed in Europe so our market gets cheaper and cheaper.

    VLO taking off and the $70s make a nice mo play, when those stop out it will be time to consider oil puts so I like the $70s at $1.27 with a .25 trailing stop as a mo play. XXX

  7. albo

    Out of SIRF calls. Thanks again, OpTrader.

  8. Loonie

    Nice play on GDX yesterday. Gold shot up over 10 this morning….

  9. MrN

    Woa baby what happen to my EMKR? +5.5% Time to sell more calls against stock?

  10. fotoaddict

    Phil, When is the cutover for the new subscription prices? And if I’m on a quarterly currently, and want the yearly, I assume I cancel the quarterly subscription on paypal itself, and re-signup through your site for the yearly. That yearly would then start when my quarterly was done.. -Peter

  11. mSquare

    TM – Holding 110 Jan09 leaps. Opinions on if this is right time to sell Oct 115/120 Calls against it.

    Currently Oct 115 is $3.60 and Oct 120 is $.90.

    Has anyone had near calls assigned before expiry (when written against LEAPS)?

  12. fotoaddict

    mSquare – it can happen, but is rare.. Chances go up if there’s a dividend payment coming out.. -Peter

  13. chubby

    Phil – to late to enter/has the train left the station on CY?

  14. Phil

    FWLT went nuts, sold the $135 puts for $6.30 to cover my $125 puts, will roll my puts up to $130s for + $1 to cut my risk to $3.50 ($4.80 net basis less $6.30 collected on a $5 spread) if it falls back from $132.

  15. dday97

    OIH- hit my 196 target, out of calls for now

  16. Phil

    Subscriptions change this weekend, we’ll put up a post but you can send Jared a note to convert I think if the timing is off or maybe there’s going to be a time credit on overlaps…

    CY – it usually comes back…

    Giving up on VLO, got weak and I don’t like the market right now. Lots of silly stocks getting sillier it looks like..

  17. MrN

    No one plays EMKR? Smith, solar, less silicon, semiconductor… Now closing iover 7% jump. Upgraded by

  18. B.B. Queen

    Phil , at what price point are we looking on doing a roll on the TSO puts? getting scarily in the money.. sucks to be right as you say.. too much right..

  19. johne

    ASSIGNEMENT
    mSquare & fotoaddict
    I had GE calls assigned against LEAPS last week. I wasn’t paying attention to dividend dates and it seems that the moment the dividend was issued, my calls were assigned. It was a huge shock to see so many shares sitting in my account. I am still a novice, so even though theoretically I knew about assignment, this was my first time to experience it first hand.
    Johne

  20. MrN

    O.K. I’ll try to think like Phil (fat chance for this brain) & say EMKR 7% can’t hold, sell excitement and get over $2 downside protection for next week’s dip.

  21. dday97

    RIMM – starting to like the 09 110′s here, setting up for a sell against for earnings.

  22. MrN

    No mo on VLO? Put time?

  23. bob812many

    foto – I went to the subscription page this morn, signed up for the combo subscription, then I went back and canceled my quarterly. I think I had a 17 day lap.

  24. Phil

    TSO very ugly!

    FXI – rolled my Jan $180s to 2x Nov $178 puts at $10.67, offset with sale of 1/2 $174 puts at $5 XXX

    TSO – holy cow that whole trade is down .30! Really you shouldn’t play these things if you are going to stress out like this. We wanted TSO to go down, and it went down – just a little faster than we thought it would… If you want to duck out now you can roll the Nov $50s to 2x the Jan $45s at $3.70 for + $2 and roll your caller to 2X the Nov $45s for -.50 for a net $1.50 out of pocket to buy yourself $5 in position and a month but he’s still got $1.30 in premium and I’m not giving it to him just because I’m down .30 on the spread…

    EMKR $10 is a very powerful barrier for small stocks.

  25. irished

    Note to Cramer: Drop Dead

    Signed CBAK

  26. Phil

    Speaking of round numbers, RIMM seems to have had a spot of trouble at $100 8-)

    VLO – no, too early, just a loss of momentum made getting out with a .10 loss a good idea. I already have some puts but, if I didn’t, I like the XOM $90 puts for .85 a whole lot!

  27. johne

    Phil-
    2009 GG 30 Leaps
    I have 2009 GG 30 Leaps in the money with a cost basis of $3.83. I purchased them in early August because I felt that GG was (and still is) undervalued. Any suggestions of what you would do?
    johne

  28. B.B. Queen

    Phil, you are absolutely right about TSO… not to mention the time premium we have on him. I wasn’t really stressed, you just mentioned that rolling idea yesterday, so I was wondering when we might do that. With just a nano-size microscopic amount of your experience.. I’m still on the learning side :)

  29. Phil

    ICE is back to where we shorted it yesterday.

    CROX hanging tough.

    Lot’s of stop outs, high flyer profit taking on AMZN, DRYS, OIH plays… make sure you are covered and lighten up on calls, this could turn super ugly!!!

  30. _fab

    Not liking the market action today…

    Out of the AAPL Oct 160c’s for a teensy profit, keeping the 145p’s in the small strangle I had started. It’s a small position but I’m not seeing AAPL going higher today and would rather have cash.

  31. irished

    Hope things turn around. May have to get a real job. Can I post my resume on this site under “broke ex-day trading option fool” category?

  32. Phil

    GG/Any leap – I’d cover with whatever is just in the money, at least for the weekend the FXI drop is very scary, someone expects Asia to gap down Monday and I’ve been predicting a 1,000-point drop since last week so be very cautious.

  33. Demetrius Michael

    Hey guys, what did I miss, why is the market dropping?

  34. Demetrius Michael

    News numbers came out good, what is this? inflation concerns?

  35. Phil

    Irish – which way is turn around?

  36. MrN

    PCLN is headed the right way again – love big red (must be my Nebraska Huskers but I shouldn’t say that b/c last time I heard from all the football teams we’ve beaten in championships over the years & we forgot all about stocks; and things got rougher than a Phil expose of big oil scams!) :)

  37. _fab

    Market dropping – I have this ‘theory’ that whenever it’s dark and gloomy outside, the market’s not doing well… It’s been amazingly consistent recently.

    And so far, it’s gloomy in usually sunny LA…

    Now, let’s see what happens when the sun burns out of the fog.

    (disclaimer: this post was based on the absolute certainty none of the cause/effect relations discussed therein have any validity whatsoever)

  38. vishal

    Phil, did u do the OVEN trade for the 25K? “Intraday” section says

  39. Vijay Ramachandran

    Phil,
    CROX – I have Oct 55′s which i sold for $4.40 ($11.80 now) against Mar 55′s which i bought for $6.38 ($18.15now). What would you suggest as the best roll for my Oct 55′s, Nov 65′s at $7.70 or Oct 60′s at $7.60 for a breakeven? Thanks in advance.

  40. MrN

    Phil if FXI & oil both down what about PTR? I thought of shorting when VLO turned but it’s been so strong I didn’t.

  41. coolkid

    _fab

    i noticed that too.. usually when it rains in the nyc the market stays in red… interesting

  42. dday97

    _fab

    I guess with your theory its lucky you don’t live in Seattle, you’d be a permabear.

  43. Demetrius Michael

    So you are suggesting that the market’s red when either LA or NYC is rainy eh? What if one’s sunny and one’s rain?

  44. _fab

    dday – Haha! I did live in Seattle, but wasn’t too involved in playing the markets then (too much time at work to get that damn 360 out the door) so can’t test the theory.

    Maybe… maybe it’s inverted there! ;)

    Seriously though, it’s a theory in the same vein as BBD’s Erin dresscode fixation (yes, she’s cute)… Although the Erin theory is the more likely plausible one. :)

  45. _fab

    DM – Hmmm… then we get a flat day?!

  46. coolkid

    Dem
    thats when the market does crazy swings :-)

  47. mar

    phil -

    can the dropping FXI also be because markets will be closed there next week?

  48. Demetrius Michael

    I’m guessing short stops added to the momentum of the drop… The volume is so low that a fish could even manipulate the market. I love when traders just put short stops and ditch… Just adds to the irrationality of declines on low volumes.

  49. Demetrius Michael

    lol i love you guys. it’s cool atleast we know what to do when they’re both rain and both sun.

  50. Greg

    Fab: Here is a web link to a guy who forcasts market direction based on gravitational forces: http://www.xyber9.com/Xyber9/Home.aspx

    Interesting, but I am not a subscriber.

  51. coolkid

    Dem

    if it helps the sun just came out in the city.. cloudy since morning…

  52. Demetrius Michael

    There’s (was?) a hedgefund that completely bases their decisions on the way the stars line up, and horoscopes and whatever.

  53. Phil

    FWLT – dropped caller to $130 puts for $2.70 and DD’d my own $125 puts, just hoping to get even but covering myself against a recovery by these guys.

    ANF finally turning down.

    OVEN – no, I think that didn’t fill – would have stopped out yesterday anyway.

    CROX – Well, you see how those worked out? Now you can roll yourself up to 2x the $70s for $9.75 and roll your caller up to 2x the Nov $65s at $7.50. This takes almost all your money off the table (but you’ll need it for margin) and takes him from being $11 in the money with no premium to paying you $6.20 in premiums and totally covers you from all but $2.25 of a downside wipeout. No matter what earnings are, you will gain that $6.20 in premium, which is more than your $5 spread and you have many months to roll him. As long as you don’t go counting all the money you collect as “yours” prematurely, this is a great position. XXX as a new spread

    PTR – I’m alreayd painfully short in the Oct $175 puts, now $4.10 (down 35%)

  54. bigs

    It relation to greg’s post about xyber9. I actually have been a subscriber to it for about 18 months now. His system for the first 16 months called weekly turns with close to 90% accuracy. Sometimes a week before they occurred. The last 2 months though his approach has been completely worthless. After watching for 2 years though, there is definitely something to his system.

  55. Demetrius Michael

    Hmmm okay cool, lets see if it works,

    Buying Q’s calls 1.26. 51 strike

  56. Demetrius Michael

    lol I have no faith in this market. Are we adding DIA puts?

  57. irished

    Well as usual I got myself in trouble by listening to you know who, the two bald guys with pony tails, ex-jocks, whose name I cannot mention, one on fast money and the other on CBOE! They talked about Halo 3 which my son was waiting for. When will I ever learn. I seem to have a unique ability to pay top dollar for everything.

    Note to self:Stupid listen to Phil. Forget the quick pop. Always, Always put stop loss

    I am getting killed in CBAK, down 50 percent, among others. All I see is red (losses) and a small number of greens (profits). Why didn’t I put a stop like I know and you advise? Had doctors appointment and figured I could fix it when I came back. Wrong. There is not much to do other than bite the bullet and sell or DD. Have DD in GME and now only down 38 percent!
    Resume is in the mail
    Let me know if you need a clerk typist or filing.
    I am beyond help Phil. Thanks anyway. Will ask for your assistance when I need it. Now I will just sit and pray.

  58. _fab

    Weather update – Still not sunny, but less gloomy… the sun only rises around 6:30am here, so it might confuse the markets.

    But with the sun coming out in NYC we should start going up then! ;)

    Ok, enough of the unscientific interlude…

  59. Demetrius Michael

    UNH is dieing. Watch the stock, buy more puts if the momentum picks up on the downside again… We might get a retrace here and another lower

  60. fpremjee

    Anyone have any insight on RIO?

  61. Demetrius Michael

    Feel bad for Dow chemical owners hoping that they’ll break that 44-.5 ceiling.

  62. Demetrius Michael

    I like rio if it breaks it’s day high.

  63. Demetrius Michael

    When I say break, I mean break and hold on 10 minute ticks… So the bar / candle closes higher.

    look at EQ on the daily :/… Not fun, yesterday looked like a retrace on the stock… Something’s obviously wrong with that.

  64. Phil

    FXI – hey that’s right, what a rip off those October puts are since there can’t be any motion for a week! Good reaosn to sell more.

    Energy holding up the markets right now, big trouble if they slop. Financials trying to mount a comeback but I wasn’t expecting a huge drop today – it’s Mon-Tues I worry about.

  65. Phil

    “We think a train wrech HAS occured in the credit markets and the stock market is in complete denial” – guy on CNBC. Also says “there’s a run on the dollar.”

    AA crankin’ along in denial.

    JWN doing well (we’re not worried about the rich).

    TAP tapped $100 and looks like it will head down.

    Oil at $83.50 – yipee!

  66. Greg

    Was going to buy some mattress puts EOD for protection to multiple new long positions, bought them now instead. DIA Oct 139 puts.

  67. Demetrius Michael

    How’s the sunshine?… We need a sunshine girl.

  68. bob812many

    I went all cash with exception of DIA puts – I gots have sumption to buy me Weaties with!

  69. Demetrius Michael

    TGT

  70. _fab

    DM – No sunshine yet…

  71. coolkid

    DM
    sun was out for 10 min.. we can’t focus on the 1 min chart..

  72. Demetrius Michael

    Good call bob, staying saucy is key. Right now I’m buying winners, shorting losers… Tiger styles.

  73. johne

    GG ’09 Leap – To Cover or Not?
    If FXI is going down as you suspect, and there is a 1000 point drop — would this not tend to drive gold higher?

  74. Phil

    UNH very tempting at $48, not in a buying mood but I like the Nov $50s.

    X with a nice comeback.

    GOOG cannot be taken down with conventional weapons!

  75. BillBigD

    RIO- I’m Long
    GME- Ran from $40 to $58. Did you buy on Wednesday?
    OII- ATH

  76. doubleclick

    The fun isn’t over in the subprime market(!):

    (Sept 19) The number of borrowers whose mortgage payments jump in the next three months will be the second-highest ever for a quarter, according to Credit Suisse Group, Switzerland’s second-biggest bank. Twenty-seven percent have already missed a payment, said First American LoanPerformance, which owns the largest database of U.S. mortgages.

    From: http://www.bloomberg.com/apps/news?pid=20601103&sid=akOEPec30TR4&

  77. Vijay Ramachandran

    Phil,
    CROX – You are asking me to roll the Oct 55′s to 2x Nov 65′s and Mar 55′s to 2x Mar 70′s, correct? Thanks.

  78. Phil

    GG/FXI drop – it depends on whether it drops due to a currency collapse (ours, not China’s) or if it’s recession fears. Any tightening of Japan monetary policy will pound commodities. When in doubt – sell half! That goes for covers too. I’m long-term bullish on gold and I love GG but that’s a heck of a 2-day run to protect.

    Dollar 77.90!

  79. Phil

    CROX – I’m not asking you to roll it, I’m telling you what I would do! You need to make your own decisions as I am NOT a financial advisor, just an opinionated guy… 8-)

  80. Demetrius Michael

    How’s the fundies on RIO?

  81. Demetrius Michael

    Vijay – Roll CROX.

  82. dday97

    Hey, Cramer is an opinionated guy too!!! Sry, that was a cheap shot.

  83. lindsay

    any reason for FWLT ascent?

  84. Demetrius Michael

    “Bernanke likes Emo. Cut imminent. Dollar going to Zero”

  85. Demetrius Michael

    I love how Qs aren’t doing anything… I’m sell my calls out of that.

  86. Sohrab

    Phil,

    What do you think of FNM? Are we headed south?

  87. johne

    GG/FXI drop
    Ok, thanks for the advice. I sold GG 30 Calls against the ’09 GG 30′s for $1.35.
    Guess I was a bit early, as the market price for those calls is $1.60. What would be your game plan if GG spikes up or down before Oct expiration? I am asking this not because I am trying to make a killing on this trade, but rather I am trying to learn. (also, am trying to earn enough to pay for next years PSW subscription!) ;-)
    Johne

  88. johne

    PHIL – Did you pull the trigger on the XOM $90 puts for .85 ? I too think XOM and the oils are artificially high. It is only a matter of time before they have to come clean…

  89. Sohrab

    I am new to options and learning a lot. A few questions have come up. What software do you use to track breakouts? Or, how do you determine market is reversing? I am with OptionXpress.

  90. cap

    FWLT . up $5 +

    Window dressing ? Looking like a short candidate soon.

  91. Phil

    FWLT – I’d say window dressing. Construction spending was down .2, not down .3 expected but these guys were heading up way before that call came in.

    RIO – great growth model should do well of commodities stay afloat.

    AAPL – rolled APR/Oct $140s to 2x Jan/Nov $140s to improve my coverage to 75% (and put caller out of the money). Roll backs will be easy if we go higher, unnecessary if we go lower.

    ABX crankin’ – let’s go for NEM Nov $47.50s at $1.40, 10 in the $25KP and for bigger portfolios too. XXX

  92. Demetrius Michael

    Hey Sohrab! You should comment more, you’ll learn at an even more accelerated rate. There’s lots of guys here that’ll answer anything you want.

    I don’t use software to track breakouts / etc… I think all technical programed junk is junk. I have one moving average, and sometimes (rarely) use Trix as confirmation.

    Other than a trading platform that gives me click-buy and click-sell, I watch a lot of stocks -individually- for movements.. I sort through about 1000 stocks every hour and look for opportunities. I just throw some ideas up here for some jokes.

  93. cap

    Phil; can you come up w/ a TZOO put play ?

  94. bob812many

    DM I been lookin at them Q’s just sitting there- one of those days- all the big money players have what they need for the EOQ window dressing. Next week or two could get ugly.

    Just my Cramernator!

  95. Demetrius Michael

    ABX is my goldie locks!!! WOO.

  96. CMan

    Phil,
    AAPL is too quiet for a couple of days – do you think it is consolidating for an up move?

  97. Sohrab

    DM,

    Many thanks for your input. I have a hard time following more than 10 stocks. Maybe someday I’ll do the same. I don’t comment because I don’t want to clutter the blog. But I’ll ask more questions.

  98. Phil

    XOM – I did a DD at that price, already have a ton.

    FNM – I wouldn’t touch them, too much Gvmnt messing about.

    GG – ask me when it spikes up or down before Oct expiration. Hypothetical discussions should be saved for the weekends or slow market days…

    Sohrab – also a good weekend discussion.

    MON making new highs.

    FNF covered with $17.50s at .60. Covering pretty much everything into the weekend!

  99. irished

    Phil
    Did not take long for NEM to pop a dollar. Too bad I missed it again. Same old story. You are a man of much influence

  100. Phil

    TZOO – Holy cow! Take the $2.10 for the $22.50s. March $25 calls to cover but I wouldn’t cover unless they break $22.50 if you have the margins for it (you could cover with the March $30s and roll if it crosses for the extra $1.60 rather than put it down up front).

    Nas holding onto 2,700 by a fingernail!

  101. Quarryman

    NEWMONT PURCHASE — Why not AEM? Agnico Eagle

    It’s been hotter.

  102. Yev

    Phil,

    I have the following positions at the moment:
    +APVAH AAPL Jan 140 Call 10 40.61% gain
    +APVAJ AAPL Jan 150 Call 30 9.25% gain
    +APVJI AAPL Oct 145 Call -20 17% loss (sold at 9.80), currently 11.35

    I sold the 145′s when Apple ran up earlier this week, well a day too early :) but its keeping me covered going into next week. Looking at what I have today what are my options if Apple shoots up come Monday?

    Thanks

  103. Arindam

    Phil, did you get in the MET Jan’10 leaps? I don’t see it anywhere in the portfolios.

  104. Demetrius Michael

    Today was my first time playing Q’s and obviously I didn’t make money from them, so I just dropped them…

    I’ve noticed that people play Qs because they’re cheap (price wise) options. But they just don’t move, unless ofcourse Google or Apple pops a billion dollars. But then again, you’ll be better off buying 1 lot of a $20 AAPL option than 10 lots of the Qs.

    Phil plays DIA because they have cheaper options (value wise), but since they’re on lower volume… The price confirmations are weak, making day trading harder.

    SPY has higher volume, and good movements, but the options are expensive (value and price wise).

    Bob you’re right it’s one of those days, but I just can’t wrap my head around what’s going to happen next… I’m more of a fundamentalist, but the market is clearly working on technicals on weaker volume, so I’m playing their game. Sheep ‘n Go, so far, is very profitable.

    Phil believes the market is heading lower next week, but if you look at the weeklies on SPY, you’ll notice that today’s close may dictate next week’s future.

    In terms of news we have a lot of manufacturing data coming out, and nonfarm on friday… Which could change the game entirely. Essentially, we could guess all day whether things will move lower or not, but it doesn’t matter on low volume. Any joe can run this market, especially if he has 1/10th of Phil’s back pocket.

    The only thing I can tell you for certain is that stops are incredibly tight. (Look at the weeklies, 1 week declines = 3 week recoveries). The whole “2 weeks after a rate cute we usually get a decline” theory is crap, because he cut rates when the economy is doing OK… Not when the economy is not ok.

    I really think the high commodity prices were keeping inflation down, but when oil drops to 60… We’re back in inflation mode, which is just problems for the dollar.

  105. Sohrab

    Phil – “FNF covered with $17.50s at .60. Covering pretty much everything into the weekend!”
    Are those calls or puts?

  106. biodieselchris

    today is my retirement portfolio’s 2-year birthday since I started actively managing it, including the use of options.

    Year-over-year performance: 37.6% APY! (and this is my CONSERVATIVE portfolio — but sadly my aggressive portfolio has done much worse)

    Bring on the inflation Phil! Even if the SPY’s 12% APY performance over the same time period is all inflation based, I’ve still got it beat by 25.6%…

  107. Phil

    LOL – rolled my FWLTs up to the 1/2 the $130 puts, those are a pretty good entry at $3.75 but this is one dangerous stock to trade.

    Markets hanging very tough. If the Dow or the S&P can get back over, we may end up with a positive finish after all this fuss.

    AAPL – if it shoots up you can always roll him. The Nov $150s are $12.05 now so that means you can put him $5 off the money for +1 pretty much anytime while your gains will be whatever with still a 60-day advantage.

    MET – yes, the portfolios are updated on weekends, not daily. That’s why theres a date on top.

    Good comments DM!

    FNF/Et al – selling calls against long calls, the puts are generally out of the money so I’m more hoping for a comeback there.

  108. Phil

    Good job BDC!

    POT is smokin’ like people just discovered it!

  109. nonsequitor

    Phil

    Re next week—I appreciate the power of window dressing of for this week ——--I normally would say we drop after this is quarterly manipultaion is done ——
    but aren’t we dealing with a massively inflated money supply that needs to find a home next week—-meaning the first couple days of a new quarter is usually when that money gets put to work——-
    wouldn’t next week be perfect for a thrust through the highs (I will be evantually shorting with both fists next week as I think we are going to get b_tch slapped into the first couple of weeks ) BUt I can’t see them not using that fire power in the beginning of the new quarter—-
    Wanted to know your thoughts on the first couple days of a new quarter and the proximity of the previous highs…

    Thanks

  110. Demetrius Michael

    Liquidity on TZOO is sketch.

    Sohrab – cluttering the blog? Hah with what?… Good questions?… Points of View? The more we communicate, the more depth PSW has. People who think spamming the blog is a bad thing are here just for Phil’s trades… Which is ok i guess, but the day he retires they’re…

  111. djczing

    Dem I dont understand how high commodity prices are keeping inflation down, when high (or increasing) commodity prices /are/ inflation – whether it be dollar-inflation (the printing press effect), suppy/demand inflation (demand oupaces supply driving prices up), import inflation (cost of goods imported increases at the source), or wholesale inflation (these days, probly correlates well with import inflation), or a combination of any of them.

    Personally, I see a big potential for dollar inflation and import inflation, as China is running accelarating inflation and will likely continue as the cost to manufacture goods correctly, pay workers, and control pollution drive prices to manufacture up. The reason for dollar inflation is obvious.

    If Oil comes down to $60, itll be because the dollar is stronger or because the /implied(assumed)/ supply-demand picture has eased. The cost to manufacture and transport goods will ease, and inflation pressures will ease.

    This is my common-guy understanding of inflation — so maybe im wrong (?)

  112. alfamike

    ABX is a sweet thing.

    Greg thanks for the new pennies list. They’re really moving with that program now, big names.

    IBD radar: WNR (IBD #67) trying to put in a pivot point?

    AMX (IBD #75) largest wireless provider in Latin America making a cup and handle. I’m terrible at picking strikes but all the calls are cheaper today.

  113. mSquare

    UNH – Drop makes it tempting. Instead of paying $1.45 for Dec $50 call as Phil says, would it not be ‘better’ to SELL the $45 Jan08 Put (UHBMI) for $1.20?

    Selling Puts could have margin issues etc. but if you are willing to own it for $43.80 ($1.32 lower than 52-week low) then a ‘good’ trade?

  114. Phil

    IRBT was a good cover yesterday

    LOL on MS’s move!

    DE making ATH – man you can just buy whatever CNBC runs a focus on!

    MA flying up.

    One of the Fed govs must have said something doveish – lot’s of things moving.

    EDU breaking $65! We’ve been waiting for that one!

  115. Demetrius Michael

    Hmmm half out at 52wk highs on gold plays.

  116. Stanley Kruger

    Phil,

    Is DD, Double Down?

  117. k1

    Irished- Sorry to hear about your current situation, I’ve been there myself. I strongly recommend you go to the Education tab and read through OptionSage’s postings, particularly the one on Saving Trades. It took me reading it a couple times, and losing money on some poorly-timed entries, before the whole thing came together. But that marked the end of my two money-losing habits and the beginning of my making small incremental gains in my trading.

  118. biodieselchris

    The way it looks to me a large majority of americans could afford to cut out 50% of their daily caloric intake and it would be a good thing. Maybe a 50% run-up in the cost of food will get people to look at what their actually putting into their bodies for a change.

  119. k1

    Is Juliet on today? I was reading in the archives yesterday, and came across this gem:

    juliet
    Posted March 21, 2007 at 11:15 pm | Permalink
    I don’t like Chinese stocks but I can’t help thinking that BIDU might be ready for a run… any opinions much appreciated.
    j

    BIDU closed just over 100 that day, almost at its bottom for the year, and now trades near 300. Hey J, what you lookin’ at today? :-)

  120. djczing

    Chris: hehhe – good point – unfortunately, from what ive seen it costs more to eat healthy !!

    Its a conspiracy I tell ya ;-)

  121. Richard

    AEM – Qman, I like your AEM idea, as well as Phil’s idea for NEM. I bought some AEM Nov 55s and sold the Feb 65s against them, for a debit of .40.

  122. djczing

    Hey Chris – Im curious as to your take on a lil company : NBF

    It seems like the natural winner in the bio-fuel wars, as using our food to produce fuel is completely ridiculous. Id much rather use food biproducts/waste !

  123. rankxerox

    Hey have you seen VIX .. what happened ??

  124. Phil

    ABX new ATH, I don’t know what’s keeping NEM down…

    FSLR on the march again.

    Next week – sure they can go to new highs, if they do we will reposition for it but I’m currently just guarding against the possibility that something will pop this bubble between now and then. What if a bank in Asia or Europe explodes? Then all that money that’s running around would zoom back to US treasuries (at least they know how messed up we are already) and drive a demand for the dollar without driving a demand for stocks. We could see Asia and Europe drop 2% before we even open and we’ll gap down 300 points on the way to a 500-point down day. I’m not saying that will probably happen, but I’d say – given the global credit situation – that is MIGHT happen and I’m not willing to bet $1M that it won’t.

    If the market goes up and 90% of my positions are long calls with shorter calls sold against them, the fact that my caller does well in one of the 12 months he’ll be paying me premiums is the least of my worries in life.

    Just remember, stupid questions don’t mean you’re stupid. What’s stupid is assuming that an inquisitive person would never ask a question that seems stupid – that would mean they’re not really trying to learn, just trying to show off. I always try to teach my kids not to take things for granted, a good example of this is somethng called a “Fair Witness” from a Heinlein book. A Fair Witness was a trained observer with total recall, kind of like a walking stenographer. When they ask her what color a house in the distance is, she answers – “It’s white on this side.” Is it stupid to question the color of the other 3 walls? The difference between things you KNOW and things you ASSUME is pretty much all there is between success and failure in the markets.

    UNH – selling naked puts is not for most but sure, I’d be thrilled to own them for $43.80!

  125. Brainfill

    Adding positions in tech stocks…bought SIGM Jan ’09 (45′s) puts & sold Oct puts (50′s).

  126. Demetrius Michael

    UNH – If it breaks 48, you have support at 47.5, then 46… Then Fibs?… By that point you have all the moving averages above you acting as resistance on the upside… I liked the company, and briefly mentioned it a week (or so) ago for a buy / sell opportunity on the pendant break… It broke lower, I sold, and covered today, made some money.

    I would wait for on an up day to atleast establish a double bar bottom. Like c’mon we’re not bottom fishing when dow’s 13,900?

  127. biodieselchris

    haha djczing that’s a good one ….

    as investors – we evaluate price-performance. Sure McPlastic is cheap, I guess, but “eating healthy is expensive” is totally BS; fake plastic food doesn’t provide any nutritional value. Therefore, for the money you spent, you didn’t actually get anything. I see people gobbling down dorritos and gatorade, that the company provides for free from Costco, at work and it makes me cringe.

    Funny story on free food – last year I planted some tomatoes and they did OK but not spectacular. This year I didn’t plant any tomatoes and the only thing I got was tomatoes, I mean, like 1000s. It must’ve been the seeds from my composting bin or the ones I didn’t pick last year. Anyway, I got pretty sick of tomatoes this summer (and three of my neighbors), organically grown, completely free, no oil used to ship, wonderful vine-ripe tomatoes available at the ready — delightful!

  128. MrN

    NEM – I bought in even though I’m heavy with gold and silver; b/c NEM had a big drop and is lagging most of the miners and it is one the big boys and sheep go to when things become real obvious. At least that’s the story I used to rationalize an addiction to the shiny things!!!

  129. JPL

    GM – what goosed this?

  130. Demetrius Michael

    I concur with Phil, at 43.8. UNH has a lot of value.

  131. jomama

    Phil what are your thoughts on UNH as a long term play at this level or are you waiting for some signal telling you its the bottom? thanx

  132. Phil

    DD is double down, unless we are trading Dupont!

    Juliet has the most amazing timing. I take her picks very seriously.

    Healthy Foods – I wish I had thought of this sooner but WFMI may actually be a buy as the gap between what they charge and what a supermarket charges narrows.

    VIX doesn’t like any drop in the Dow and rises up in anger, what’s interesting at the moment is it isn’t going back down as we recover.

    PKX is a strange loser today. This action makes it look like they are just trying to shake out the bulls and the bears ahead of the weekend.

    CROXXXXXXXX!

  133. Fan

    Phil – you still believe in DD on HBC Oct 90 put at $0.55? Thanks.

    Also, my DIA Oct 138 puts hurting badly (losing premium every day). Rolled them up from 135 puts (pre-FED +300 move). In general should I have stoped out of these (new) puts at -20%, or just not expect to win as it is a hedge? Problem is this ‘hedge’ has cost me as my calls have not preformed lately.

  134. Demetrius Michael

    SIGM – Brainfill, nice call.

    Tech’s not too bad now actually.

    MOT Pinned on the 18.50 resistance. Lowish volume, but I like the play. Oct Mot 18 calls for 90 cents. If it looks like it’ll close under 18.50, sell it at a loss.

  135. Brainfill

    Demetrius M,
    Also eyeing SNDK…chart seems firm; more speculative would be STEC. Do you follow?

  136. MrN

    WFMI “They are still a grocery store aren’t they?” I just thought I’d say it since that’s what I heard everytime I asked down around $40. But you’re right so often I still take your advice over my own! :)

  137. biodieselchris

    DJ
    I look for companies that don’t focus on vegetable oil. It is true in every sense that growing crops to produce fuel is asinine and should be immediately abandoned. It is an inefficient, low technology way to essentially capture solar energy and as Phil pointed out, raising MPG on cars by 5% would be far more beneficial than billions in gov subsidies for soy bean and corn farmers.

    However – what is highly useful is the ability of algea to produce oil in high yield. And algea feeds on crap. So you can produce useful fuel AND do environmental remediation (human waste, farmer run-off ponds), and this I find extremely interesting.

    another remediation tachnology:
    http://www.greenfuelonline.com/technology.html

  138. Loonie

    Phil,

    Have you covered your GDX and BA yet?

  139. djczing

    oh man… I dunno if I could ever get sick of fresh tomatoes or fresh cucumbers — Always had lots of both growing up.

    In terms of dollar/useful calorie you have a point.

    In terms of cost/grocery-load (sustainance for 1 or 2 weeks) it seems to cost more to eat healthy --then again maybe that means how many of the fresh fruits and veggies spoil in the fridge ;-)

    Maybe I should put a garden in the crawl space ! ;-)

    Phil: Being curious and inquisitive is the one thing that pushes back the veil of assumption – the more inquisitive you are, the more granular the picture you can draw due to the level of detail you define in the fabric of things.
    Maybe Deepak Chopra told me that ;-) If there is something you dont know but want to know, its stupid /not/ to ask the question.

    Ill shuddup and let the traders trade.

  140. djczing

    Chris: Chicken fat bay-beee !

  141. biodieselchris

    the subprime mortgage freeze-out and high rate reset is only beginning to be felt.

    I hear seattle sales for this month are down 47% over last year. When the official number gets printed it won’t be pretty.

  142. biodieselchris

    OATS was the play. WFMI is a dog with fleas. I shop at QFC to avoid the hordes of hippies and they offer pretty much the same stuff, just market it differently and watch the hippies flock to you. Sad.

  143. Slimer

    JSDA has been moving nicely, option premiums are low. Anybodt got any ideas? J

  144. mSquare

    UNH – Thanks for opinions on my naked put writing idea. Yes, once in a while it has burnt me for speculative/volatile names (like CLWR/IBN), but worked many times too. Attempt is to bottom-fish and sell the put, sometimes end up owning the stock and if so, write calls against it…

    If I didn’t want to do a naked Put but do like UNH and think it will bounce above 50 by Jan – can someone suggest a good spread (safer than naked put) to buy at today’s prices?

    I think Funds want to get rid of UNH for end of Q3 and will suddenly see value next week (driving it back to 50) if market goes down a bit…

  145. mar

    biodieselchris -

    sorry but i must disagree – wild oats came into our town a number of years ago and from day one it was a flop – whole foods moved in when they closed shop and it’s been very, very sucessful – it’s always busy…

  146. Demetrius Michael

    SNDK – I would buy it on a break higher 55.8. There’s as much downside resistance as upside, more of a breakout play for me. I wouldn’t pre-speculate w/o confirmation on this one.

    STEC – It’s speculative, but has nice upside if it does break higher. Liquidity looks like a big problem though, I would stay out of it. I’m really against being illiquid. That’s how funds collapse, it’s nothing to do with skill.

    I still like your first play as long as it holds the gap.

    nasdaq.com has a crazy analysis that you could further do on the stocks if you want. They’re pretty in depth. Check it out when you’re bored.

  147. irished

    K1
    Thanks for the reply. Will go back to the drawing board again, maybe remedial training is required. Will follow your suggestion. I was doing pretty good but lost it the last 2 days. I personally think it was the glare from the twin bald heads of those 2 pony tailed brothers who cannot be named but from CBOE/fast money. I got a little tooo greedy and saw something that was not there. I did not follow my own investing style. Greed is not good, it kills.
    Be glad when weekend is here.

  148. k1

    biodieselchris- I’d have to dig around for the chart, but I remember reading that the peak for resets of subprime loans occurs next Feb-Mar. That’s when the largest block of newly-issued mortgages hit their first reset point. And then late payments don’t register for a month or two, and foreclosures take a couple more months. So the pig doesn’t hit the middle of the python until summer or so next year. Just in time for the political conventions!

  149. Phil

    Let’s see, we have Crox, Dominos, Yahoo, Bidu, Heelys, Sears – seems like a consumer bet to me.

    RTP at 346! That is going to be one mother of a short if copper ever calms down.

    MOO is moving.

    It’s almost like someone is purposely pushing things into new highs to get some kind of technical print. Watch this weekend and see if there is a lot of press about new highs, that seems like the plan, finishe the week up, have the weekend buzz and sell into the retail onslaught next week (putting on my evil fund manager hat).

    See, here my QQQQ spread is a good example, I sold the Sept $50s against the Dec $50s and my caller buried me going from .81 to $1.50. My calls went from $2.38 to $3.31 so I’m up $5K and I’ll just roll him to the Oct $51s at $1.30, picking up another .60 in premium and improving my downside coverage from 1/3 to 40% and pushing my caller $1 off the money. And this was pretty much a worst case for the call I sold…

    Tomatoes – I find it very funny that something that grows like a weed and is very expensive in the store is planted by almost nobody, even though we eat them all the time. This is all part of the totally wasteful society we have developed, it is a fooliish use of so many resources to ship tomatoes to people who could grow their own with no effort.

    GM – It’s a Dow component, that’s all it takes.

    UNH – now waiting at $43.80, it’s a good put to sell (the $45). They will have some troubles getting going because no one knows what’s going on with health care but I’m pretty sure people are still going to need it, no matter who’s president.

    Pool said there are “tentative” signs of recover but he still sees serious risk, which half of that statement do you think people heard?

  150. cap

    Daily 2 pm oil stock rally in full swing.

  151. windywheel

    Take a look at these numbers from the Mortgage Bankers Association that shows the amount of adjustable-rate mortgages that have or will reset each month in 2007-2008.
    January 2007: $22 billion
    February 2007: $25 billion
    March 2007: $35 billion
    April 2007: $37 billion
    May 2007: $36 billion
    June 2007: $42 billion
    July 2007: $43 billion
    August 2007: $52 billion
    September 2007: $58 billion
    October 2007: $55 billion
    November 2007: $52 billion
    December 2007: $58 billion
    January 2008: $80 billion
    February 2008: $88 billion
    March 2008: $110 billion
    April 2008: $92 billion
    May 2008: $76 billion
    June 2008: $75 billion
    July 2008: $50 billion
    August 2008: $35 billion
    September 2008: $26 billion
    October 2008: $20 billion
    November 2008: $15 billion
    December 2008: $175 billion
    As you can see, the largest portion of mortgage resets is not until next year.
    We have just seen $197 billion of mortgage resets through June. That is less than we will see in February and March 2008.

  152. jomama

    Phil, have you sold against your IMCL leaps or are you still waiting until next week. thanks again.

  153. Demetrius Michael

    With that said you don’t always have to buy the next day all the time… You can watch the stocks intra-day and watch for a break then.. Every night I make a list of about 100 different break out plays that I watch during the next day on the US side…

    They’re too poppy to write on PSW, else I would’ve write them here…and with this 15 second delay between comments, it would be really hard to get good option prices at the times I say things.

  154. biodieselchris

    mar – you are right, however I timed OATS well (7.64 to 18.65) — 144% gain tends to skew you opinion.

    K1 – the reset chart is my background image at work!! :)

  155. Liberated X

    Went to the thinkorswim options class on Wednesday, very good, learned a lot, especially about some of the mistakes I have been making. Between that and Phil’s sight, I feel more confident about looking at the overall picture and not just at one trade (and the problem of getting to greedy with that trade).

    This whole options thing is a big learning curve. I started out in Feb on E*Trade, but later moved over to thinkorswim (and super happy I did). I was prepared to lose some money at the beginning figuring that was just my cost of education. Since losing about $3500+ (out of the $4k I put into this in the beginning) I have made back all of it and now sit at $6k.

    So to the rest of the newer people it can be done!

  156. k1

    Big negative move on USO, XOM dropping, CHK as well. Something just happen? Reuters says “Oil falls as dealers take profits”, but how did they publish that 10 minutes ago when everything was up?

  157. Greg

    BiodieselChris: The first Whole Foods in my town was located in what could well be described as the area “with the most hippies”, and thats why I don’t want to go there to shop. In my neighborhood we have a very successful grocery store that is not part of a big chain, they just try to sell the best quality products available. Emphasis on freshness and high quality, no “organic” lables needed, and the place is packed with normal people. A few of my friends who might want to go to Whole Foods, but don’t like the hippies just arrange with a local farmer to supply them directly with raw milk, eggs and veggies (in season), they take turns driving the 30 mins out to the farm to pick up for each other once or twice a week.

  158. Julie

    Phil,

    I’m still new at this LEAP/Cover stuff, and I’ve been experimenting with CCJ and UTX. So far, in both cases, the callers are starting to outperform the calls. I’m fine with that as long as I’m correctly understanding the process. My UTXJO Oct 75 has a cost basis of 3.17 and currently is 6.1 (-2.93). My VXUAP 2009 Jan 80 has a cost basis of 7.53 and is 10.4 (up 2.87). So the trade is about even. If UTX goes higher, I’ll start going negative.

    My plan is to remain patient, let the premium drop, and just roll the caller into next month once we near October’s expiration and hope that UTX doesn’t fly so high next month. Is that right? or Should I have stopped out these callers after an X% loss?

    Thanks Tons!!

  159. biodieselchris

    where I rent in Seattle – a 4000 SF lot in an urban environment – is not exactly a whole lot of ‘farming’ space. Three fruit trees and a tiny little garden – it’s crazy how much it can pump out.

    http://en.wikipedia.org/wiki/Urban_agriculture

  160. Demetrius Michael

    Yah for sure, if you sell the put with the intent to buy back and reverse… I like that strat, I read about it once, it sounds neat atleast.

    It’s interesting that they’re playing consumers with ISMs being released all next week.

    Tomatoes – I grow tomatoes. .:::Green thumbs up:::. I think Corporations should plant crops or at least grass on top of their buildings in Smog cities. It’ll look cool when planes are flying over… and it’s pretty friendly. If we did that on every building, the earth will still be green!

  161. cap

    What a TZOO scam going on. End of Q Friday takeover rumor.
    Took a shot at some puts.

  162. jeddah62

    SBUX

    wow, it took another 3% hit today. I want to jump into the leaps, but if it breaks below 25.5, it still headed south.

  163. djczing

    Dem: Wow ! from the air NYC would look like a garden !

  164. Demetrius Michael

    Tomatoes – The mafia don or whatever in my area grows tomatoes too. Dead bodies make great fertilizer (it’s a running joke, I think), his tomatoes are awesome though!

  165. Demetrius Michael

    djczing – I know! Won’t that be trendy or what?

  166. k1

    Julie- I’ve been in that place myself, and support you in remaining patient. Since you bought the UTX LEAP, you want the stock to go up over time. The thing to remember when you sell a short call at a lower strike than the long call you hold, your caller has more delta than you do, and so will move up faster than you. This is fine as long as you stick to your business of selling premium and make sure you don’t roll prematurely.

    There are a ton of references to this stuff in the archives, but the thing I’ve found most useful is to keep an eye on how much premium remains in the short call. When that number becomes a small portion of the value that I sold originally, I start looking to roll.

  167. mar

    so greg -

    what exactly is a “hiippie” and “normal people”?

  168. biodieselchris

    http://www.gardenvisit.com/landscape/LIH/landscape_planning/new_york_roof_gardens.htm

    this thread has been hijacked! I hope PSW 2.0 has multiple threads so we can chat about off topic stuff and not feel bad about it.

  169. Seattle

    DIA Puts – If the fundies are manipulating the end of quarter, wouldn’t they wait until at least Wed or Thurs before they initiate the selloff so it doesn’t look to obvious? In my LIMITED experience, the bull run-ups continue for at least 1-2 days into the new quarter before tanking. Im going to take some new insurance but I’ll wait until Tuesday to do so…If I miss the boat, so be it…

    $6000 in monthly publications – Phil, I think it was last weekend that you had a comment about spending $6000 per month on your own financial subscriptions. Is that true? Or did you mean $6000 per year? That’s an enormous number either way, so my curious mind wants to know what sort of stuff you are subscribing to that is so expensive?

  170. MrN

    IMCL Happy 100 – Phil you covered or stopped or riding down?

  171. k1

    Oil stocks I’m following mostly red. SU and BP still holding to the plus side, but not by much. Big red candles on USO 15-min chart.

  172. bob812many

    Sub-prime That looks like a bottom in March 08 to me well until you get to Dec 08 to retest the low’s.

  173. Phil

    Time to cover that TZOO – things are just going nuts!

    DIA puts are insurance but insurance seems pretty pointless in this market. We punched the numbers and that was it but you could see that any excuse would have taken the market up. S&P back at 1,530 seals the deal but I’m not ready to go naked into the weekend.

    Rolled FSLR to 2x Dec $115/Oct $115 to take advantage of silly run (again).

    HBC – hard to believe isn’t it but yes, it’s a play on them being one of the ones who give bad news.

    WFMI – they are still a grocery store but when everything that isn’t moving is being bought, who is a better non-mover than them? Also, they are on the Nas so they benefit from heavy index buying. That’s a good trick for all over the weekend, find some ridiculous 4-letter stocks that have been dead and we’ll look at them as possible plays for Nas 3,00

    GDX – 1/2 covered with $45s (I’m in doubt). BA all covered at $105 (I’m not greedy).

    BDC- don’t confuse us with facts! Just get some more beer and let’s party!

    Rates are creeping up again, money coming out of treasuries and heading to the markets or money simply not coming into treasuries forcing an end-of-day increase in rates offered? This is one of those things that can fall apart with stunning speed.

    Oops it’s 2:25, must be time for FSLR to dump! I’m starting to LOVE these guys!

    Wow, wasn’t FMCN popular just a day or two ago?

    I totally love Whole Foods to shop in. Tina gets pissed at me over the bill but I like so many things there better (steaks are amazing) and we have a super-sized one in Englewood that is the nicest supermarket I’ve ever been in.

    IMCL – biting the bullet but looks pretty grim. At this point I will have to DD and sell which can wait ’till next week.

    UTX – you’re not negative. Keep your eye on the position you’re going to roll him to when his premium runs out. You get to do that 13 more times! Right now he has an insurance value to you in protecting your gains, once you are comfortable that the stock is going up, then you can look at rolling him higher. If you end up way in the money, we’ll find a more complex rolll but let’s wait until next week in case we’re back at 13,500 by Wednesday. Going up is never a problem as you can always roll your caller and yourself – it’s going down without cover that hurts.

  174. alfamike

    Blah market day. Growing gardens on rooftops is a neat idea, it would make cities look a lot nicer. And don’t plants consume carbon dioxide? NYC could be the Hanging Gardens of Babylon of the 21st century.

    NFL Week 4!

    3 for 5 last week, would like to make it 4 for 5. Tricky Raiders upsetting Dolphins (+180 moneyline, good “return” on your bet), home Browns upsetting scoring challenged Ravens (+180 moneyline), resurgent Packers topping QB-less Vikings, lookin good Cowboys manhandling Rams even at -13, and indomitable Colts at -10 lapping the overrated Broncos.

    And that problematic Sunday night game – Eagles with 81/57 pts for/against this season over Giants with 72/97? Have a good weekend everyone.

  175. makemoney

    What time does oil stop trading at the NYMEX, and what general trends do you see going into the close at that time? This is a general question. Do you notice that oil (OIH) generally gets pumped up into the close?
    Thanks.

  176. Jason Treu

    K1--references in the archive, is that in the education section or somewhere else? Thanks.

  177. Sohrab

    Liberated X,

    I started in June with 3K ad no experience. Did good for the first couple of months but August brought me down to 0.5K. I am still learning and hoping that I can recover my $$$$.

  178. djczing

    Seattle:

    Yeah itd be interesting to see a day (thought it might be today) where we see the VIX up and the market up. Judging by volume the last few days id say everyone has balanced and covered and like the rest of us are just waiting to see what sunrise on the new quarter will look like…

  179. Julie

    UTX – Thanks for confirming the plan. That’s what I thought, but since I don’t have the experience yet, I just wanted to double check!

  180. k1

    Jason- yes, once you start digging in the Education section, you will be amazed at how much there is to learn. I’ve been keeping a list of interesting links, both to posts as well as comments, that will be going onto a wiki or something when the new server comes up.

    In the meantime, I can’t recommend strongly enough to other newbies to pick a month and read every single post and comment for that month. Take notes, pull up the charts to see what was going on at the time, follow the trades against the stock movements, and try to understand the tactics.

    This is a little presumptuous of me, but if you need a better focus to handle the volume of trades, tactics, and strategies, or just like case studies, go back to last summer and follow only the GOOG trade. Just the motions of that one position will teach you everything you need to know about the LTP.

  181. Greg

    Green roofs are a big deal now in urban design, they soak up lots of rain water so less run off into the sewer systems. Many older urban areas do not have seperate sewer systems for rain water run off from rooftops and asphalt vs sewage from building’s plumbing systems.

  182. Phil

    Holy Cow – Dollar at 77.70! That’s almost down a full percent in one day!

    Gee, who could have seen that coming?

    Selling puts – every month I sell at least one put of a stock I actually want in the stock portfolio. If I want 500 shares, like UNH, I sell 5 puts. If I get it, great, if I don’t get it, I get $600, unless UNH goes up $1.20 from here, I’m better off anyway. That’s for buying stocks, having nothing to do with the fact that I like the Nov $50s.

    Happy $750 to gold by the way. When it was $249 I told Tina we should put all our cash into gold, she still owes me for that vetoing that one!

    Threads – I like having everything in one place. I know I’m not going to be jumping around… When we don’t have time for nonsense I find people tend not to talk about nonsense….

    $6,000 – no, sadly that’s a monthly subscription total! There are plenty of guys who charge $100s a month and my OPIS alone is over $1,000… It’s funy how they add up.

    Oil stops at 2:35, almost always goes up in last 45 mins – total scam.

    SLB $105 puts for $3.15 for the truly daring. XXX

  183. Demetrius Michael

    Sohrab, you’re working with $500??… You have to make a minimum of 25% a month to cover your subscription costs to Phil. You need atleast 10k to play options. You should just paper trade for 5 months and then take a loan.

    I’m guessing you’re a student, so go to the bank and get a student line of credit. You’ll pay just interest on the loan… On 10k@6%. is 50 bucks a month…. By then you should have enough experience to not lose money.

  184. Andy

    Not sure what is up with FMCN, every Reuters story, is upgraded, out perform, new target of $70 etc, but the things seems to loose about .50 on every new positive announcement..

  185. Greg

    mar: sorry I don’t want to take the bait. I’m a grouchy old conservative so lots of people look like hippies to me. don’t take me too seriously.

  186. Demetrius Michael

    Yah dollar falling… It’s a Mad world… Gary Jules is right… http://www.youtube.com/watch?v=4N3N1MlvVc4

    I’m gone, I need some sleep and food… It’s 5 o’clock somewhere.

    Later boys.
    Cheers.

  187. MrN

    JRCC – Nice lunch hour surprise!! I’ve had a GTC order for March calls since I sold the opening spike Tues. They got filled while the stock was rising & now it’s up 8% mid-day – calls up more but not what I would hope – very poor liquidity but fun to play the extremes with small lots.

  188. John Oh

    general question about LEAPS:when do you decide to go naked just the LEAP? Pretend you sold some calls and bought them back at .05..would you just go sell some more calls with some decent premium? if you think the stock could have a run up would you just go naked? what if the stock actually falls mroe and your LEAPS just lose value without any protection? Thanks! I’m still trying to get a hang of this strategy and all the possible outcomes. So far I’ve learned an amazing amount!

  189. mar

    greg -

    no problem – just couldn’t let that one go…

    oh and for the record – i’m not a “hippie” – totally “normal” :)

    lol

  190. Demetrius Michael

    Phil when you starting your time-machine hedgefund again?

  191. djczing

    Well whos to say what a normal hippie is ?

  192. mSquare

    SBUX – ready to go below $26! Anyone buying?

    The Jan09 $25 Calls Phil had mentioned a couple days ago, are just bid $4.60 ($4.50 is all-time-low for these)

  193. biodieselchris

    I got punished when I first joined PSW. Patience and diligence. It comes back….

    alfa – go easy on the gambling! (and don’t bet against Pittsburgh). I’m just waiting for the feds to make online poker legal again (and take 20% I’m sure!). The UIGEA was an unconstitutional addendum attached to the Safe Ports Act (which passed unanimously) and was a political bone tossed to the fundies who want to control everyone’s “morals” (whatever that is – Ted Haggard, Sen’s. Craig and Vitter, please help me find my moral footing through legislation!)

  194. djczing

    Phil – SLB did seen to be ‘dressing up’ today. Great idea — and risky, yeah. Thou shalt not be short oil over the weekend risk. These last 2 days overall hve been waiting days. Burn that theta !

    With the VIX where it is, a high-vega thing might be good – like a straddle or strangle. Set a VIX stop on the position or something. VIX looks flattish now, and in the 17s, hmmm…

  195. djczing

    Oh – and its Friday – and lest I forget later…

    GO COWBOYS !

  196. _fab

    Weather update – Still no sun here, and seeing how we’re going down, I have a feeling the sun hid itself behind a NYC cloud…

  197. Phil

    Damn, I should have stuck with those WYNN puts!

    When to go naked – there’s no rule. It depends on the stock, the position, when earnings are, how much we made/need to protect or how much we are behind on a position.

    What did I tell you guys yesterday. Casinos pump themselves up so they can sucker people into giving them money. WYNN just came out with a secondary offer at $158, an amount that would have been laughed at 2 weeks ago when they frist broke the ATH at $140 and wouldn’t have even been considered when they tan out of gas at $125 at the beginning of the month. This is a constant, ongoing scam that goes on with absolutely no intervention year after year – it is sickening (does anyone want to start a casino?).

    Hedge Fund is going in the spring unless I can find a Native-American partner to open a casino with.

    Hippies – This is one of my favorite South Park scenes, unfortunately some hippie felt it necessary to comment on the clip: http://www.youtube.com/watch?v=mrMcwy2UnjU

  198. cap

    TZOO: In for 10 Oct and 6 Dec 22.50 puts. Covered w/ 16 Oct 20 puts.
    Also shorted small amount of stock near 25; just covered that.

    No buyout and back below 20 next week.

  199. cap

    Heck, maybe even to $20 today ! LOL.

  200. jeddah62

    kinda weird watching everything pushing down waiting for the dam to break. FSLR almost getting too predictable going up/down everyday.. hopefully another day down for my puts.

    DKS broke a 67 support, so it may be starting a new leg down. I got burned on calls this week so hoping to make it back on puts.

  201. Greg

    Cap: I followed you on the TZOO puts, 10 Oct 20s, already almost a double. Thanks.

  202. Richard

    SLB – Phil, I’m with you on the SLB Oct 105 puts, although my entry was a little higher. I don’t mind holding that one over the weekend.

  203. MrN

    WYNN – No you don’t wish you’d held onto the ones started with. I did. Rolled. Then DD. STill out of the money bad!

  204. bob812many

    Sohrab – Patience is key! And one of my biggest pitfalls. 1st and formost is to preserve capital. 2nd is to identify your stops, 3rd is position sizing aka capital to risk/reward. Then you might still loose money. Read the strategy section. Set daily profit and loss limits, and ask questions! There is an incredible talent pool here-mine it for all its worth……………..ok I’m getting off my soap box now P)

  205. k1

    “College know-it-all hippies” – truly beautiful. I went to school with those guys.

  206. Brainfill

    Phil,
    Speaking of casinos, for LVS…I am looking at buying Jan. ’09 calls 160′s & selling Oct. 140′s. Too risky for casino’s to still shoot up short term?

  207. mSquare

    INFY – Bought (more of) 40 Puts on the cheap. Hope to sell 45 Puts against it next week.

    Indian index at ATH and INFY a big component. Also more US$ depreciates (against Rs.), more INFY sellers. If US markets go down next week, India will back of some (I don’t buy the decoupling theory – especially not for someone like INFY who has 66% of business in USA and probably 75% of contracts denominated in us$.

  208. cap

    Go Packers ! 3-0 baby !

  209. Mr_Sparkle

    Phil,

    I adjusted that crude tracking sheet and added some notes to it. Here’s a link to the updated file. It will track fine up until the November contracts close.

    http://www.box.net/shared/flcze6ay5c

    Something to look at for the weekend. It appears that the front month open interest has peaked. The Monday after this coming one should see the open interest increase as “they” begin to roll those November barrels into December. I think the open-interest chart is going to be a jaw dropper after a couple months of accumulated data points.

  210. Phil

    Well I am VERY pleased with the way we played this day! I won’t feel bad at all picking up those Whole Food steaks….

    Casinos – in the real world casinos are travel stocks and $80 oil would be bad for them but this is stock market fantasy land where real world issues don’t affect companes so as long as reality stays away, it’s a fine play but just be aware that the casinos pump up their stocks, refinance or dillute the shareholders, take the money and buy more and more land at ridiculous prices, rush to develop and sell it before the bottom falls out of the market and that’s how Shelly Adelson became the 3rd richest person on earth (on paper anyway). He owns 65% of LVS stock, if he can raise $10Bn and turn it into real estate, even if it’s only worth $6Bn when he’s done, that’s still a $4Bn gain for him personally.

  211. djczing

    College know-it-all hippies = yuppies ??

  212. Greg

    Packers, who’d have thought they could be 3 – 0 right now. To be honest I am still too emotionally invested in the Brewers last ditch efforts at making the playoffs to get all interested in football. I worked at the ballpark in 1982, the last time the Brewers went to the Series. My boys and I live and die on every pitch these days.

  213. djczing

    Gotta be happy for Favre…

  214. Brian

    Phil, is there still a play to be made for the LVS Put spread in the 25KP? I missed the trade and was wondering if it still good.

  215. Greg

    PS Cap: I could tell you some really funny stories about Bud Selig from my days at the ballpark (1982-1987)

  216. doubleclick

    Phil, I’m sitting naked on some YHOO calls with a big gain (from a 10k trade I’ve bungled):
    5 YHOO April 25s, basis 2.15 (bid now 4.15)

    YHOO’s been on a tear and I’m not sure which cover to sell… the Oct 27.5s or 30s?
    Or I’d be happy just closing the position outright and going 95% cash in my portfolio…

  217. bob812many

    Have a great weekend everyone! Looks like them Saints are back to there old tricks 0-3 whoo dat!

  218. cap

    Greg -

    No connection to Wisconsin other than a lifelong Packer fan.
    Brewers ? That’s rough … didn’t even know they were in playoff contention.
    GL to them.
    Bud Selig doesn’t seem like the type of guy where there could be any funny stories; lay it on me.

    Bonus points to anyone who can score me tickets for 1 game a Lambeau Field this season in Oct or Nov.

  219. cap

    Greg … do you live in Milwaukee (or Wisconsin) ?

  220. Phil

    Thanks Mr. S! That is way cool of you (oops, my hippie-speak comes out!). That open interest chart is a pisser! I have to investigate the rules a little further but please keep the cancelled months on the chart as the key to getting people to understand this is that the traders have NO intention of ever accepting the barrels AND the arguement that they might want to use them is specious as it is not possible for Cushing to process more than 40-50Mb AND if there were an actual crisis, the deliverers have the ability to declare force majeure and cancel the contracts.

    Thus there is no benefit, no purpose whatsoever, to the daily bidding at the NYMEX other than to manipulate the price of crude by creating the impression of supply and demand volatility.

    LVS – we took the Jan/Oct $135 puts and you can still get it as a $6.30 spread, which is less than we paid so it’s still playable. The best time to take a spread like that is when the closer puts are all pumped up from a big dip.

    YHOO – the more ahead you are the more you should consider the closer cover, especailly when you have so much time to roll him. Cash is good too but I like YHOO as long as the Nas doesn’t fall too far apart.

  221. jkman

    hey all just got in, with very little time to spare. we safe to hold for monday?

  222. MrN

    WFMI – since I’m in the greedy stage of moaning missed opportunities on dogs with fleas… Remember the discussion about OSTK & I took a small profit and ran b/c it didn’t make sense. It still doesn’t make sense but $29 is higher than $20 (I’m not quick w/ math but I’m pretty sure on that one.) Same technical service was the one that was pushing JADE which went down by 2x then up by 20%. I still feel like I’m treading water in this market and trying to make sense of stock movement and consistent trades.

  223. Phil

    Safe Monday – I hope you have a cover of some sort.

    There’s not much sense to be made out of this market, that’s the worst part right now – We’ll see if earnings matter very soon…

  224. jkman

    i have next to nothing in play right now so i’m not too worried, just got in too late to look over everything.

  225. Phil

    PEP with new ATH! KO lame, told you so!

    Well, have a really great weekend all. I’ll be around but it’s a beatiful steak and beer kind of day and I’m kind of psyched to go out and enjoy it.

    Have a good weekend,

    - Phil

  226. Mr_Sparkle

    Phil,

    Yeah, no free services seem to retain open interest data. It’s one of the irritating things about tracking option prices and a nagging problem about caller B/E prices. Since I started with options this has seemed very odd to me.

    I plan on keeping the old months in the chart and tables. I’ll just update the thing as each month’s contract closes.

    Also, I did a little digging and it looks like Cushing was going to expand its facilities so it might be able to handle 44M instead of the 40M I’ve seen you refer to. (I can’t recall my source for that though.) This still leaves a bit of a problem of 3M barrels this last month but goes some way to bridging the gap.

  227. dday97

    Have a great weekend everybody, time for a cocktail. And remember, alcohol doesn’t solve any problems, but then again, either does milk.

  228. doubleclick

    Thanks, Phil. I rushed the order in. I’ll spend some of the weekend studying the trade.

  229. Greg

    Cap: I live in Whitefish Bay, a suburb of Milwaukee right on the shore of lake Michigan. Like living in Connecticut but only 5 miles to downtown Milwaukee.

    Bud Selig is a really colorful character, nothing like the image he portrays as Commish which is why I cannot post any of my funny stories on the web where they could get back to him or embarrass him. We got along great!

    Let me know what game you want tickets for and I can see if I can dig some up for you.

    When I worked at the ballpark, the Packers used to play 4 games a year in Milwaukee, and I had three press passes that I would give to my girlfriend (now my wife) and her parents. They were mad when I quit that job. ;-)

  230. jkman

    that was a photo finish with nas 2700

  231. irished

    Phil et al.

    Good weekend and go Yankees/Giants

  232. nav

    Comment on CNBC – “the best September since 1998″ … ha ha ha ha
    Phil – you have CNBC moles (sorry – i mean “analyst/researchers”) reading this website!

  233. cap

    have a good weekend all !

  234. cap

    Greg -

    That would be wonderful.

    Looking at the schedule Oct 14, Nov 11 or Nov 18. Would need 2, maybe 3. probably 2.
    Thinking I would fly to Milwaukee and drive as it is probably easier flight wise.

    I remember when they played in Milwaukee way back when.

    Hey, I am even a shareholder of the Pack (1 share), just like Bud. And number 48,000 + on the season ticket list, if I should live so long.

  235. Richard

    Good week, guys. Take a break this weekend. Busy week next week, I have a feeling. I’m on Texas time, so it’s a little early to pop a top, but I’m looking forward to one in a couple of hours.

  236. Greg

    Cap: If you would email me: pieks2@earthlink.net I will get back to you as soon as I find 2 tickets for you. I can also help you figure out the best way to get there and if you need overnight accomodations. Tell me your preference on dates too, and I will try to get the game you want to attend the most.

    Good weekend to all.

  237. happyTrading

    Weekly wrap on Wang’s World is up! Another wonderful week! Have a great weekend, everyone!

  238. cap

    Thanks Greg … I’ll email you over the weekend.

  239. Demetrius Michael

    Don’t party too hard boys.
    If you’re going to drink and drive, drink Pepsi.

    That April ’08 call was classy.
    Almost a dollar up on the option, the profits on that are becoming very sexy.

    Coke does have better ads though. So nah neh nah nah.
    http://www.youtube.com/watch?v=zfhZfSVuup4

    Coke, Colgate, Tide, Tiger Woods, it’s not my fault that red things are the alpha products.

  240. Rahul

    Can some direct me to where I can find the latest on the new subscription rates for PSW and Wangs Worlds for existing subscribers. Thanks!

  241. denver

    Tom2OC up today.

    http://tom2oc.blogspot.com/

  242. Demetrius Michael

    Who is Tom2OC?

  243. denver

    Tom2oc is a TA guy who was around alot in the early days of Phils. Went his own way ala Zman.

  244. Demetrius Michael

    People always criticize Bank of America.
    I know a lot of you think the whole CFC was a dumb move, so let me set the record straight.

    If CFC does nothing, they get interest on their money.. If it goes up, they can liquidate their stock… And if it bankrupts they own most of the LEAP puts on it to scratch.

    The Risk is Countrywide doing nothing, because what they collect on interest is paying for the LEAPs…. Will it do nothing? Maybe, but the Real estate sector is a hot. There will be movement.

    IF CFC goes bankrupt, analysts will write off the loan in BAC’s Statements for the following Q. You will get downgrades, lower EPS estimates, and BAC would be undervalued for something it risked little in.

  245. Demetrius Michael

    Tom is Zman?

  246. Seattle

    Phil, any more thoughts on IMCL? When you say you will have to “double down and sell”, what specifically are you thinking about? Im currently in the Jan ’08 $40′s at $6.30 (now 4.70), and have sold the Oct $45′s at .80 (now .55).

    Will adjusting this one require a risky diagonal? What sort of possible adjustments are you thinking about? I’d like to plug those possibilities into Excel during this relaxing weekend so I can be ready to act and adjust with a level head next week. Ideas appreciated.

  247. MJ

    LOL. Tom and Z are two different guys.

    Najerians brothers try to act like professional analysts, but these guys just know sh*t about anything. All they look at is momentum, and try to start a lot of total BS rumors, most of which are excellent short opportunities.
    One guy tries to be a biotech analyst on fast money and just makes a fool of himself everytime. These guys have absolutely no background knowledge of any sector, and for that matter ECON 101 :-)

    What more, GE hedge fund is not making enough out of the crook Cramer, pumping stocks after hours. Now they move Fast Money to 5pm, so they can play more after hour games. The only guy worth listening to on CNBC is Herb Greenberg.

    Late night Bloomberg when they have European market analysis is much better. Good to hear their perspective about the US. Other day, there was a discussion on quarterly change in the different world indices and criticized how the DJIA rose like ~4% this quarter while all the other major world indices performed poorly bcos of the US subprime crisis.

  248. Sohrab

    DM,

    I injected another 6K after I joined PSW. I am trying to partially participate in 10KP. Also, I am a little older than being a student. Have managed IT for 9 years, taught in a college for 8 years and have been working in Real Estate/Mortgage for past 3 years. I appreciate your inputs. I am hoping to learn enough to make this my primary income..hahahaha…

  249. Demetrius Michael

    I love bloomberg. It’s also a good way to filter out hedgefunds if you’re rich…
    “Do you have a bloomberg terminal?” > “No, we use…” > “Next!”

    Sohrab – By no means was I trying to offend you.. I type really quickly, and sometimes it might come off as rude… It’s the capital that made me assume. Having $500, and making it a million is a ridiculous goal with PSW costing 100/mth and commissions costing 10/trd…

    I’m doing it with 2k, because I think it’s a hilarious demonstration of luck and savvy. Plus it’s a neat resume app for a hedgefund or to investors.

    “I have an MBA from Warton, Harvard, and a PHD in Engineering from MIT. I’m part of Mensa, and a Olympic swimmer”

    vs

    “I took lint and made it into a million in this industry. The fish needs you to break even.”

    ///

    You have a pretty impressive portfolio Sohrab! It’s really neat going from IT to Real estate. I’m a huge tech head, so IT is my pleasure… PSW is also a perfect place for pretty much everything you need. All I ask is for you to ask questions and give ideas. Traders will comment on them pretty quickly, and if we’re wrong, Phil will set things straight.

    Being a Seeking alpha reader automatically makes you better than 95% of the traders out there… Being in here makes you automatically better than 95% of the seeking alpha readers. Given your position and maturity, this being your primary income is very realistic!

    Glad to have you here!

    Also note that I’m usually blunt and one-sided in my opinions. I usually do this to generate discussions or entice people to furiously respond back calling me an idiot “here are reasons why”. Angry people give better answers, don’t know why. I figure if I was always politically correct, people would never say anything. And that’s just boring.

  250. KHAANNN!!!

    BBD,

    How do you like my new handle?

  251. Sohrab

    DM,

    I didn’t get offended. I read all the comments and enjoy different opinions even if don’t agree with them. It’s a long learning curve and I’m not using my full capabilities right now. I graduated from Oklahoma State as a Computer Engineer and live in California. Looks like you have a diverse background. It’s nice to see that the Elite group wants to lend a helping hand and I gladly take it because arrogance will not pay off but humbleness will.

  252. djczing

    All the fox biz block pumpers are bulls on the market.

    I didnt hear 1 mention of any bad data or low volume.

    Havent watched fast money. Ive always wondered how their record looks or if anyone tracks their picks. I got sick of Dylan Rhadigan’s schtick so gettting another dose of him on fast money is hard to do. Fast money /is/ alot better than Cramer — but thats not saying much.

    Can Fox biz channel succeed where CNNFN failed ?

    Hope everyone is having a great weekend.

  253. MJ

    Didn’t want to spark a political debate :-)

    Maria on Bill Maher http://youtube.com/watch?v=oIpwiAN8zdw Fast forward to 4:21. I bet she will never be back on Bill Maher again :-)

  254. Greg

    Denver: How does one get access to Tom2OC web site? It appears to be an invitation only thing. I like reading his analysis and think he is worth following. Thanks for posting.

  255. MJ

    latest tom2oc’s blog entry
    http://tom2oc.blogspot.com/2007/09/928-eod-crucial-week-next-week.html

    I think the blog usually self destructs itself in couple of days after the most latest post

    Interesting analysis on the current week’s COT report at the end of the post.

  256. Richard

    Thanks for the link, MJ. I missed the show last night. Actually, I’m a big Bill Maher fan. I thought he treated Maria very respectfully, and more with velvet gloves than anything else. Maher can be quite devastating with his point of view and his wit, but I didn’t see any of that in his interview with Maria. Maria, on the other hand seemed to be trying to put a happier face on the economy than I think this economy deserves, but other than that, I thought she did an OK job too in handling Bill.

    My guess is she may become a regular on his show as we continue to focus on economic issues as well as the political issues Bill likes so well. (Bill always likes a pretty face!)

  257. Richard

    Again, thanks MJ for posting tom2oc’s link. I was impressed with his analysis and like his methods. Of course, it’s easy to like someone whom you agree with. Being new to PSW, what is the consensus about tom2oc?

    I know nothing about him other than what I read today. Unfortunately, most of my information in this business is very consumer oriented and I really don’t know who the best players are – or the worst. Obviously I found PSW, but that was more attributable to my good luck than anything else.

    Very eager to learn more.

  258. Phil

    LOL Dday!

    2,700 – we are so primed for a breakdown on Monday if Asia or Europe sell off (Europe really as Asia has holidays).

    Sept 1998 – that is all such BS to look at things that way! It’s a totally arbitrary marking of time and it just so happened that July 28th 1998 was the end of a 1,700-point run to 8,200+, then From 8/1 to 8/30, the marked pulled back to 7,800 and all that September ever did was form a lower high at 8,183 after which the market took a nice tumble all the way back to 7,000 by 10/27. On the whole, 1995-Dec 31st 1999 was a great time to be in the market but there’s very little relevance to those monthly stats (like “sell in may, go away has been terrible advice since 2005).

    October will be very intersting if we are still cranking as that is “Crash Month” where suddenly every one actually remembers 1929 and investors get spooked but also, a very unrelaible thing. As with anything, it’s one of many factors but a part of my mental checklist of possible catalysts if I start hearing and seeing things…

    New subscription rates – I don’t think they’re up yet, we’re still charging the old rates this weekend. I’m going to have a post up tomorrow re. new rates and programs once we rollover.

    Tom2OC – his stuff is great but he doesn’t keep it up all the time.

    Holy cow, I can’t believe I lived so long without tabs in the new Internet Explorer – big improvement in oganizing my windows!

    Speaking of living without things.. I broke down and bought an IPhone – it’s charging now, took all of 5 minutes to buy and 3 minutes to set up (they download your old phone into a USB so you’re totally up and running right away).

    BAC – not worried about them in the slightest, they are too big to really get hurt by much of anything other than a global contraction and even that would present opportunities for them.

    IMCL – I took the $40s expecting some trouble but not this much! But it’s 10 shares in a $100KP so of course we stand ready to double down at $4.30, which would drop the basis to $5.50, just $1.20 down and then we can sell the current $40s, which have $1 in premium for about $2. The Nov $40s have another $1 in premium at $3.25, not that we want to sell those but effecively, iwth a $5.50 base it means our contiued risk would be just $2.25 with the month of December to roll to in between (hopefully it won’t come to that but that’s the general set of contingencies). Assuming we were forced to roll again in December that would place our risk at roughly $1.25 or 1.25% of the portfolio – nothing to stay awake over!

  259. Richard

    One more question, and then I must run (g/f getting cranky at this hour).

    Currently I use TD Ameritrade for my trading accounts. After adding up the commissions I paid over the past few months, I think I need to move my accounts, or at least the options trading account. Executions are spotty as well.

    Does anyone have any suggestions or recommendations about who to use. I’m looking for a good trading platform as well as reasonable executions. And reasonable commissions too, of course.

    Thanks all.

  260. PT

    Richard

    If you are trading only a few contracts at a time then TOS is hard to beat at $1.50 per contract. They have a really good platform that takes a little effort to learn how powerful it really is and they are very trader friendly as well. PSW members get a discount by using the links tab above.

  261. Phil

    If you are experienced, Option House has very good rates for larger volumes but if you have a decent-sized account ($500K I guess), all you have to do is tell your current broker you’re switing to Option House at $10 flat and you’ll be surprised how quickly they will come up with a better program for you.

    Nice rant MJ! Certainly nothing I disagree with…

    Sohrab – the most important thing you need to learn with a smaller account is patience. Overtrading will kill you faster than anything as it’s not just the commissions but the spreads that get you. We’ve spent a net of just $2,415 of our $10KP so far on 6 positions and made just $385 but we’re diversified and mainly in cash which means we’ll live to spend another $2,415 next week, once we see how this set balances out. The next week we will spend another $2,500 and then the option period will end and we’ll see how we did for our first month but this is no get-rich-quick scheme. Charles Dow (of Dow Jones Fame) said: “The man who begins to speculate in stocks with the intention of making a fortune usually goes broke, whereas the man who trades with a view of getting good interest on his money sometimes gets rich.”

    Maria – I’m hearing that mantra a lot. Don’t panic, stay in the markets, have a long-term outlook – this is usually what the roaches say when they are about to jump ship and leave you holding the bag. At least she seems pretty on top of things, it’s a good conversation for her to have for her image where she’s the “expert” rather than the interviewer. Still comes across as a bit of a cheerleader though…

    Tom Web Site – my understanding is there is no actual member site, just that public block that he keeps taking up and down, usually about 48 hrs after he makes the post.

  262. traderdon

    I’ve opened an unfunded account at both Option House and TOS and have been play trading using the virtual $. The trading software at TOS is much more sophisticated and the customer service is hands down the best. I sent Bob Lawson at TOS an email reqesting the reduced rates and he offered to personally assist in training and instruction which really impressed me.
    To make a long story short I have now funded the TOS account and will trading for real next week.
    Don

  263. Demetrius Michael

    Thanks for the vid MJ.

    Cheerleader businesswoman? Is she single?…
    Phil, I need to borrow your G5 and some sandylane reservations… She looks expensive….

  264. Demetrius Michael

    Actually that other CNBC girl looks even more expensive… She’s like the fashion channel.

  265. johne

    I hope you all are having a good weekend. As a novice, I am still trying to figure out how to profit from rolling short calls against an ITM leap. With GG, the price of the stock has increased since I sold the current month’s calls short. So, I have a loss on short call, and a gain on the leap. There remains about $0.99 premium in the short call, which will decay rapidly due to the high delta of current month. So, assumig that I am still long term bullish on GG, when and at what price would be the ideal time to roll the short call to November?

    K1 wrote to Julie: “but the thing I’ve found most useful is to keep an eye on how much premium remains in the short call. When that number becomes a small portion of the value that I sold originally, I start looking to roll.” I think that this applies to me as well.

    If I sold the short the GG Oct 30 call for $1.35, and it is now trading for $1.60, when should consider rolling this?

    Sorry for such a basic question! I have a long way to go to keep up with the people on this board.
    Thanks

  266. Phil

    Forget it DM – T Boone flew her to China on his private jet and only got a peck on the cheek!

    GG – that’s a good quesiton and I’m trying to work out a good general answer to it. Let’s look at it this way. Say you have the Jan/Oct spread (I am totally against spreads of less than 60 days unless you have a very specific reason for them, like earnings or an event you expect to TEMPORARILY tank the stock or it’s in a run that is unsustainable and you are substituting a tight diagonal for a short). Anyway, so the GG Jan $30 is $3.25 ($2.75 premium) and the Oct $30 is $1.60 ($1 premium) and the Nov $30 is $2.35 and the Nov $32.50 is $1.27 ($3.25 premium).

    What is your ideal outcome? It would be great if he ends up at 0 and you end up at $3.25 but, with GG at $30.56 that’s not going to happen so wishing for it won’t help. If we’re still bullish on GG (and, by the way, I have NEM as one of my only naked plays) we can set a stop, let’s say at $1.75 and let it ride, let’s say with a .25 sell-stop. That would cost you, at most, .10 from the current value if you end up reselling at $1.50 so it’s always a good thing to do on a run up.

    As far as when and if to roll. Your caller has $1 in premium and 15 trading days left so he’s losing .0666/day while you have a $2.75 premium and will lose .034/day so, all things being equal (and they’re not because we are ignoring the low implied volatility of your longer contract, not to mention price action) you gain .033 per day. So your average case for a expiration day is a gain of .033×15 = .50.

    The calls you want to roll to will also lose value (again, in a vacuum) and, ideally, we’d like to roll our guy to the $32.50s, which locks in a $2.50 position gain on our caller. Without going into all the math, let’s assume your Oct caller will lose premium twice as fast as your Nov caller so while Oct loses .50, Nov will lose .25 (assuming an upward trajectory of the stock, otherwise Nov will lose much faster being out of position).

    Now there are two possibilities for your Oct caller. Either he contines to gain intrinsic value while he continues to lose premium, in which case you will want to roll to the Nov $32.50s or the stock goes down and he loses premium and his .56 of intrinsic, in which case your long position is in trouble and you either want to get out or protect with the Nov $30s. So, if I wanted to make a plan I would say that I will either stop out of the trade or roll my caller to the Nov $30s if my current caller falls to, say .50 OR I will put in an order right now for a roll to the Nov $32.50 at .25, what I consider a decent price to push my caller $2.50 out of the money.

    Obviously, I wouldn’t want to execute either one of these plays unless I felt it necessary as anything can happen in the next 3 weeks but you should always have a plan like that for every position you hold – I do this all the time but all you ever hear is “Let’s roll to the Nov $32.50s for .25″ as it would be pretty tedious to go over this every time!

  267. Phil

    Oh by the way, whenever you enter any kind of spread and make 20% in a month, anything you do from that point on is pure and stupid greed as I know very few traders who average 240% a year in gains so any time you make 20% in a month it is very likely to improve your overall trading average – but only if you actually cash it in!

    Once you don’t take a 240% gain and move forward in time, you now need another 20% keep up that level, before you risk a certain 20% gain, always think -was I expecting to make 40% on this trade? The amount of money I see people turn down every day is truly stunning, gains are temporary, realized losses are forever!

    While I’m very good at “saving” positions, I see too many people who simply run them into the ground until there is no hope of recovery. When you are down 20%, you have perhaps 4 options, DD, Roll, repostion, sell. When you are down 40% perhaps the roll goes away. When you are down 60% the reposition probably no longer makes sense, when you are down 80% the DD isn’t even an option and, when you are wiped out, it’s too late to sell. This is how people let themselves get boxed into a corner with no way out.

    I get wiped out on positions all the time but no position is ever more than 5% of my portfolio (other than an index cover) and usually the ones I get wiped out on are significantly smaller than that – often small initial entries that go the wrong way too fast and simply aren’t worth saving. The simple fact that you are worried about a position means it’s probably not risk appropriate for your portfolio but that’s a whole other subject that Sage and I went over in our “Smart Portfolio Management” series (probably under the educational tab).

  268. ramana

    How Economy Could Survive Oil At $100 a Barrel – http://tinyurl.com/2vyyff
    Compared to 1980, U.S. Is More Able to Handle Once-Unthinkable Rise

    The world economy has managed, with some indigestion, to swallow the rise of oil prices past $80 a barrel. How well could it survive $100 a barrel? The answer is quite well — so long as several conditions still hold true. The price rise would probably have to be gradual. Inflation couldn’t get so bad as to force big interest-rate hikes. Oil-rich nations would need to pump their profits back into U.S. and European economies.

  269. Phil

    My first IPhone comment – I finally broke down and bought one! This thing kicks ass!

  270. Yev

    Phil, haha, that’s the key people don’t understand (Wall Street doesn’t understand) when you start using Apple products you get addicted to them. Enjoy the iPhone.

  271. k1

    Pointers to Sage’s writings on Smart Portfolio Management-
    http://www.philstockworld.com/members/?p=1144
    http://www.philstockworld.com/members/?p=1158
    http://www.philstockworld.com/members/?p=1185

    Two bonus picks for active minds-
    Sage on Position Management: http://www.philstockworld.com/members/?p=1215
    Golden Rule and Cardinal Sin: http://www.philstockworld.com/members/?p=239

  272. Richard

    Thanks to all for your suggestions about a good options broker and platform. My first stop will be to see what I can negotiate with my current one. If nothing materializes with that (highly possible, given their track record), then I’ll check out the others. At least I have a place to start now.

    BTW, although I’ve been a member for only a week or so, I’ve decided to re-up for a year. You guys are great! This is exactly what I’ve been looking for.

  273. johne

    Phil thanks for the detailed and easy to understand response. You are amazing in how well your trade, teach, and inspire (on top of running a couple of businesses, and being a family man to boot!) Thanks Again. I think that what you wrote is too valuable to let pass by in this weekend post, so I will add it to a comment this week so that others can benefit. I think that I am not the only person struggling with this concept.

    K1 thanks for looking up the links!

    JohnE

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