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Monday Monetary Mayhem – What Doesn’t Kill Us, Makes Us Stronger

Is today the day?

I’ve been saying for quite some time that the banks need to step into the confessional box and tell us just how much of the $2 Trillion drop in the value of US housing (so far) they are on the hook for.  So far we’ve had a Billion here, a Billion there but the big boys have so far had their heads firmly in the sand and that means it’s time for a kick in the ass.

Since ostriches are herd animals, we can expect one admission to follow the others as banks would always prefer to say "Yeah, I lost money too" AFTER someone else admits it.  As usual, we have to look to Europe for leadership and we were on top of this story over the weekend (thank you Richard) as ING announced on Saturday that they would take over accounts at NetBank, WHICH WAS SHUT DOWN BY THE US GOVERNMENT FOLLOWING LOSSES ON "SUBPRIME MORTGAGES AND OTHER LOANS."  Gee, wouldn’t you think this should be a more prominent story in the US?  Once again the sharpies at the WSJ seemed to miss this one.

Aside from $2.5Bn worth of people being dumb enough to give their real cash to a virtual bank, it turns out that $109M in 1,500 accounts was in excess of the $100,000 FDIC insurance cap and those people will now stand in line with other creditors now that NetBank has filed for bankruptcy.  For $15M, ING will take on $1.5Bn of NetBank’s insured deposits and will buy out $724M in assets.  While the deposits are a no-brainer, would you trust the assets?  ING has to: Arkadi Kuhlmann, ING Direct chief executive, said his bank stepped in partly to ensure continued consumer confidence in lenders – such as his and NetBank – that conduct all their business on the web and do not operate branches. "This is all about confidence in the market," he said. "Since we are the largest direct bank we were very pleased to assist and help out and hopefully take on these customers who will continue to do business on the internet."

Damn, I love Europeans!  They actually give you their real motives when they do something! 

The next domino to fall in Europe this weekend was UBS, who are writing down $3.4Bn in assets, attributable to hedge fund losses and, of course sub-prime issues.  There has already been a management shake-out and it makes sense for the new guys to put a price tag on the mistakes made by the old guys so they can show you how clever they are when the bank recovers.  We’ve already heard the  bad news from MS (-$1.9Bn), BSC (-$700M) and LEH (-$700M) and today’s US domino is the venerable Citibank, who are pre-announcing (earnings 10/15) a net income dip of 60% from last year due to "dislocations in the mortgage-backed securities and credit markets, and deterioration in the consumer-credit environment."

Included in the third-quarter results will be an estimated $1.4 billion in pretax write-downs on leveraged buyouts it is helping to finance, about $1.3 billion in pretax losses on subprime mortgage-backed securities and some $600 million in pretax losses on fixed-income trading.  In addition, consumer-credit costs will be some $2.6 billion higher on a pretax basis largely due to increased loan-loss reserves.

At the same time, MER, the sole investment bank to report on a calendar basis, said credit-market conditions "have continued to remain challenging in the third quarter," requiring the firm to make "requisite fair valuation adjustments." A Goldman Sachs analyst forecasted that Merrill could have an up to $4 billion write-down for the quarter, more than the combined write-downs of the investment banks which already released their third-quarter results.

These are those annoying fundamentals I keep harping on about!  While the big boys should survive this little debacle, let’s keep in mind that they are not the ones we are worried about.  GS, MER, MS, UBS et al have many sources of revenue and writing down a few billion in bad loans here or there will give them a bad quarter, two at the most.  But what about the hundreds of regional banks, the thousands of local banks and mortgage companies, who may be sitting on hundreds of billions of bad loans.  The fact that they sold them won’t help as there are clawback provisions for bad debts and that will take ages to work through the system.

We’ll keep an eye on bank earnings, especially bellwether WM (10/18), who recently announced 1,000 job cuts and has plans to cut 8% of it’s 50,000 person work force by mid-November (otherwise they qualify for Christmas bonuses) and are sitting on a $215Bn mortgage virtual portfolio, 9.5% of which is classified as subprime.  25% of the entire virtual portfolio is in the ARM category, with the bulk of the resets coming in the next 12 months.  ARMs are potentially more dangerous than sub-prime as sub-prime means the loan was made to "riskier" borrowers while arms are loans that were made to maximize the leverage a person could place on a new home at the top of the market – no bank to date has been forced to address this issue but foreclosers are up triple digits nationwide in a trend that has been accelerating for the past 36 months.

Nationwide there are still $1,300,000,000,000 in sub-prime loans outstanding with $235Bn of that debt in ARMs THAT CAN RESET AS HIGH AS 12%, which could lead to millions of loan foreclosures.  Is it time to pay attention to the man behind the curtain or are we ready to continue to live in the Federal utopia that is the government’s interpretation of the US economy?

This is still a good thing (in this totally topsy-turvy market we’re in) as we needed to hear this and, as I said above, what doesn’t kill us will make us stronger.  If we can maintain our levels off of this move, there might really be something to this rally but lets keep an eye on the XLF, which Happy and I feel is at a critical juncture:

xlf_9_28_07.jpg

The XLF is 8.5C so we can expect a spot of trouble right out of the gate as Citibank flew down to $45 pre-market.  We have the March $47.50s at $2.50 in our Dow virtual portfolio and we will certainly double down or roll (probably roll) down to the $45s this morning as this is a fantastic entry opportunity that will really improve our position.  Other major components of the XLF are BAC (8.4%), AIG (6.5%), JPM (5.8%), WFC (another concern – 4.5%), WB (3.6%) and GS (3.3%).  This is, by the way, why the XLF is not a good independent indicator of Dow direction as (including AXP at 2.6%) 24% of the index is Dow components.  The XLF comprises 19.89% of the S&P 500 and is an excellent leading indicator for the SPY plays.

Asia didn’t know about any of this and the Nikkei was up 60 points today in light trading as Hong Kong and Shanghai enjoyed a holiday.  Trading restarts at the Hang Seng tomorrow but the Shanghai will be closed all week, creating a very interesting money-flow dynamic we’ll have to keep an eye on…  Despite the holiday, China launced the China Investment Corp, their $200Bn fund which is chartered to start throwing around some of the $1.4T they have sitting around before it loses all of its value – this is something we have been watching, and will continue to watch with great interest.

Japanese consumer spending was up 1.6% from last year and industrial output improved 3.4% over July while a survey of Japanese manufacturers found them "upbeat."  Europe is flat despite the bad news from IKB and UBS.  NOK is buying NVT for $8.1Bn (but that’s only in US dollars so no big deal for them!) and GRMN does not like it one bit in pre-market, down about 10% already…

At home we’re going to keep our eyes on the SOX at 500, the XLF at $34.50, the Dow at 13,900, the Nasdaq at 2,700 and the S&P at 1,530.  If we can hold these levels on at least 3 of the 5 indexes, it may be time to lift up some of our covers (perhaps a 25% reduce) as this (bank confessions) was one of the major body blows we were expecting and if the markets can shrug this off, I know more than a few bears who will be throwing in the towel and say "I have no idea what’s going on."

Hoping to sneak in some bad news on a big bad news day, EBAY is taking a $900M (not $1Bn!) impairment charge in addition to the $530M they are paying to finalize the $2.6Bn Skype deal.  If we’re lucky, this may give us a good entry point on EBAY so we’ll keep an eye on them!

It may be time to stop, drop and roll on our IMCL play in the Happy 100 Virtual Portfolio, let’s see how they handle $40.50 as I’d rather DD on the $40s if we can get them for $4.30, then we can consider selling perhaps 1/2 the current $40s to recoup some losses and provide a little downside protection.

Interesting day today – let’s have some fun!

 


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  1. Demetrius Michael

    Morning – Why couldn’t the banks hold out and do a top call when we were over 14,000?… At least we would have some technical floor against a decline. You could milk / manipulate news long enough to prevent any significant drops…. Now I’m definitely going to have fun with this.

  2. BillBigD

    GRMN- showing down $10.50 in pre-market.

  3. Mr_Sparkle

    Phil,

    You’re ahead of the curve again. Daniel Gross at Slate wrote up a piece on the “Inflation? What inflation?” Fed policy.

    http://www.slate.com/id/2174867/nav/tap3/

    The analogy with a cardiologist is nice: “Imagine that a cardiologist told you that aside from the irregular heartbeat, the stratospheric cholesterol count, and a little blockage in your aorta, your core heart functions are just fine. “

  4. raffy

    Phil

    I was asking about my FXI January 175 puts. Should I do what you did i.e roll to Nov 178 puts and sell Oct 174 puts against them? I have 5.
    FWLT, I had OCt 140 puts which I bought for about $18 and sold Sept 125 against them for about $4.
    The Oct 140 went down to $11 so I rolled them to Oct 125. Is it better to roll those to Nov 135 and then sell the 125 against them?
    Thanks, I appreciate your advice

  5. Mr_Sparkle

    BillBigD -

    Is that just on news of Nokia and Navteq or something else?

  6. Demetrius Michael

    There’s no way GRMN is going lower than 104… That’s just ridiculous.

  7. KHAANNN!!!

    I think GRMN is taking a hit because the street is worried about the nok/nav combo. There is some real competition now

  8. Mark

    FSLR going solar thru 120!!

  9. Robert DiAlberto

    When is this thing coming down?????

  10. Demetrius Michael

    GRMN – That’s some extreme volume….. I’m tempted to buy.

  11. KHAANNN!!!

    If thier stock price is pased on future earnings growth, that may be in serious peril. as nokia can make better equipment with addded value (phone capabilities)

  12. Demetrius Michael

    EMC – Going to 52wk high? Maybe this time it’ll break out… I would watch this stock.

  13. dday97

    RIMM red
    GOOG on the go!

  14. Demetrius Michael

    RIO – when will it stop?
    TOL – Nice Long Green candle
    IBM – Getting close to where I want it….

  15. Phil

    FXI – I sold the Oct $174s myself. 3/4 at $5.50

    FWLT – I don’t understand why you rolled in position $140s to out of the money $125s. I’m in the $130 puts about even and I still have hope but not if the market hits all of our levels (see above) and holds them today.

    GRMN – may have been up because people thought they were getting bought, NVT went from $60 to $80 and NVT went from $100 to $120 this month so we’ll probably see $100 on GRMN again as now NOK not only owns a competitor but is no longer a viable customer. On the other hand, this should solidify their relationship with other phone companies so I wouldn’t go shorting them.

    FSLR – incredible!

  16. Demetrius Michael

    CMC – Uptrend?

  17. Mark

    MPEL… once again, kick’n ass while WYNN and LVS take a breather…

  18. ramana

    NOK & NVT deal – will this in any way affect iPhone sales ?

  19. Demetrius Michael

    EMR BABY

  20. Mark

    Is GRMN’s pain SIRF’s gain?

  21. Demetrius Michael

    Out of Pepsi, bored with it… Nice profit though! Thanks phil!

  22. Phil

    FSLR – rolled callers up to $125s and rollled my calls to 1/2 Dec $115 & $120s. Intend to roll callers back down to $120s when they fall back to $4.50-$5. XXX

  23. juliet

    Looking to buy OII.

    j

  24. Phil

    Builders got a GS upgrade to play the “bounce” take that for what it’s worth.

    ISM report is 52, 53 was expected. This is weaker than expected and down from 55.5 in June but a good number as it’s not terrible but also not enought to make the Fed think easing was a mistake.

    10 points from Dow record!

  25. Demetrius Michael

    IBM – I’m buying this, great play over 118.50. Nov 120′s look reasonable.

  26. Demetrius Michael

    GE – What a company, somebody, please tell me they own this.

  27. jkman

    holy cow check out RMBS. can anyone find any news . i cant

  28. dday97

    I own GE

    TASR up about 5%

  29. Demetrius Michael

    Broke 14000! Time to break out the Walker Blue.

    MO – I’m watching this over 70. People still buy Cigs in recessions… Maybe increase their buying? When bread’s like 10 $/loaf and nicotine is an appetite suppressant… It’s a sexy combo..

  30. Mark

    jkman – RMBS:

    Oct. 1 (Bloomberg) — Rambus Inc. won a round in its legal
    tussle with manufacturers of computer memory chips, as the U.S.
    Supreme Court refused to order arbitration of the chip designer’s
    price-fixing claims against Hynix Semiconductor Inc.
    The justices today let stand a California court’s conclusion
    that the case instead should go forward in state court, where
    Rambus is pressing similar claims against Micron Technology Inc.
    and Samsung Electronics Co. The high court rejected an appeal by
    Hynix, the world’s second-largest maker of memory chips.
    Rambus, based in Los Altos, California, says it is seeking
    more than $10 billion for an alleged effort to undermine the
    market for the memory chips the company designed. Rambus settled
    patent and antitrust claims against Infineon Technologies AG in
    2005 for as much as $150 million.
    The antitrust case is part of a multifaceted legal fight
    involving Rambus and the world’s largest makers of memory chips.
    Rambus is appealing a U.S. Federal Trade Commission finding that
    the company used deception to get patents on an industry chip
    standard. The FTC is seeking to limit the royalties Rambus can
    collect from manufacturers on some chips.
    Hynix, based in Ichon, South Korea, in 2005 agreed to pay
    $185 million to settle U.S. criminal price-fixing charges.
    Samsung, the world’s No. 1 maker of memory chips, and Infineon
    also agreed to pay fines, while Micron cooperated with U.S.
    officials in exchange for not being charged.
    The Supreme Court case is Hynix v. Rambus, 06-1681.

  31. Phil

    GE in our dow portfolio, unfortunately covered but the 2010 $45s are still $4.20.

    RMBS same buyout rumor as usual, boosted by the NVT deal (as a deal’s a deal to these guys).

  32. jkman

    ahh thank you mark. this one’s done well for me

  33. raffy

    INTC up 20% from when recommended (Nov 25 @ $1.69)

  34. BillBigD

    OII- welcome to the Party Juliet

  35. MrN

    Juliet – you buy OII? Notice some sells at the low bid shortly after your note

  36. KC

    OII – in on a few Nov calls myself.
    VDSI – BillBigD, you still in? I got out last week when it went over $36.

  37. jkman

    q’s puts are tempting here. other indexes as well

  38. Demetrius Michael

    Oil is so sketch. Driving season is over… The hurricane season is over… Juliet & BBD you’re the reasons why I’m not calling a top on it!

  39. Demetrius Michael

    well add KC to the list then lol

  40. KC

    OII – earnings in a month.

  41. Demetrius Michael

    Why do you think Oil will continue to rise?.. I’ve been burnt shorting oil before, and now’s not the time I’m feeling the need to sheep and go…. Is it the lower dollar?

  42. Demetrius Michael

    Ahhhhhhh, nevermind.

  43. BillBigD

    KC- I pulled my OCT’s off at $2.90 last week. Made about $800. But really thinking it will go back to $37ish. Or so I hope. Still in on Dec.
    MON- anyone taking a look?

  44. Brian

    Phil, I see NFLX in your 25KP but I can’t see when you recommended the trade. Nothing in the Intraday summary. Is it too late to get in?

  45. Demetrius Michael

    AEO – What a short that would’ve been from open.

  46. jkman

    i cant decide on if we close above 14000 if it’ll keep going or will completely tank.

  47. KC

    VDSI – I only had Oct calls, so took last week’s pop over $36 to get out (made a a couple bucks after commish, LOL), but I agree there is potential for it to pop back up, though recent drop as I understand it, is concern about future sales to financial sector, so it might take a bit more time for those concerns to dispell.

  48. Demetrius Michael

    MON – I’m not too sure how long that decline will last… I remember reading how futures declined despite the lower than expected grain reports. It’s recent run was really bullish, sure… But even china lost about 20M acres in the last 10 years (bad for seeding companies, OK)… But as long as consumption exceeds production… I think MON is going higher! Lots of incentives for farmers.

    NYX – Holding pretty well despite things dropping.

  49. Fan

    Phil – I have the Oct DIA 138 puts. Would you rec. I roll to the Oct DIA 140 puts and sell the Oct 136 puts for for about an even roll? Thanks.

  50. MrN

    C- look at those candles! That was not the response I expected.

  51. Demetrius Michael

    C – Wasn’t there something bad with them?

  52. Demetrius Michael

    lol MRN I like your thinking!

  53. Phil

    Taking a hit on my Goog Dec/Oct $550 spread and moving to Jan/Oct $570 spread for $6 out of pocket, worth it to buy a month plus $6 in premium.

    At least GM is going down!
    XOM not too strong either.

  54. Demetrius Michael

    NILE – Very Bullish

  55. KHAANNN!!!

    FWLT is looking toppy

  56. B.B. Queen

    I think there’s a wrong line in the $10KP on the Portfolio page. There’s a second trade on CSCO, which never occurred and doesn’t even make sense.. opened 9/30 , closed 9/28.. (2 days earlier) . Should be remedied.. just a heads up!

  57. jeddah62

    ASD

    Phil, any thoughts on longer term spread play on ASD. Been beaten down pretty hard but looks to have bottomed. Fundies pretty good given they’ve shed Bath fixtures unit and are focusing on commercial air products.

    tnx -Brian

  58. Demetrius Michael

    KHAN! – We Shorting FWLT? I agree with the top call

  59. MrN

    Juliet – OII, It’s time for you to come clean and tell us where you’re getting these calls.

  60. KHAANNN!!!

    DM

    Not me, I just got out of some calls I picked up on FRI. Made enough money from them, going to move on to the next symbol.

  61. Phil

    MON – that’s an interesting dip based on glut of ethanol but glut is a funny word because it doesn’t stop corn prices from being out of control and is no disincentive to farmers to keep planting. I guess the question is how much hard investment MON has made in that market. Loss of acreage not really bad for seeding cos as it increases the need for high-yield crops as natural crops can’t feed the required amount of people per acre.

    NFLX – That’s from the 25th, I can’t remember it either but the spread is about the same as it was so still a good trade.

    JKman – that’s exactly what will probably happen! 8-)

    DIA – depends on what you’re in for as that gives you a $4 max gain and knocks $1 off your entry. I have the $140s and sold 1/2 the $139s against them for $1.42 and my intent is to roll myself to 1/2 the Dec $140s which gives me a net lss of $2.80 per contract 1/2 of which is covered by the $139s I sold (which I am certain to collect the premium on plus $1 of space between us). I will then roll them to Nov if in the money, hopefully pushing them another $1 away from me and, if I collect another $1.40 in premium in November, I’ll be all caught up and still have my position.

    C – LOL, I told you that was a BUYBUYBUY on that dip!

  62. Demetrius Michael

    Women are magical creatures. As all men eventually find out, what they say goes.

  63. jkman

    “thats exactly what will happen”
    keep going or tank?

  64. MrN

    JRCC – Kaching on those calls from Friday & the fun part is I bought and sold them on GTC orders that I didn’t expect to fill and never watched!!

  65. Demetrius Michael

    FWLT – Nevermind on shorting, I wouldn’t touch it either… Bad motions.

  66. Demetrius Michael

    Wow pepsi’s kicking coke’s ass…. I guess it’s a pepsi generation after all… BBDO must think they’re responsible for this, but you’re not… Coke still has better advertisements!! Though I really do like some of the work BBDO does, it’s pretty neat…
    http://www.bbdo.com/

  67. Demetrius Michael

    IBM – Yah you do that retrace, just break all the rules killer, show them who’s boss!

  68. BillBigD

    MON- bought some for fun!
    GRMN- up $2.50 on Jan calls.
    OII- IBD this weekend. ZMAN was on this one at $62.
    MTL and SID keep rocking

  69. Demetrius Michael

    BBD – I’m buying MON too… Rounded bottom like that is so sexy.

  70. Demetrius Michael

    Going for the million 2k portfolio.

    MON – Filled 10 lots Nov 90 call for 2.10…. 2,100 invested + 700 cash.

  71. dday97

    NEM finally got into the game

  72. mSquare

    XOM – Oct 90 Puts now bid $0.75. Is it time to DD?

  73. Phil

    CSCO – I’ll check, that, thanks. I think that was the 1/2 remaining from the first day’s entry. I had to reenter that portfolio over the weekend because I had cleared out the old $10KP but I couldn’t get rid of the old history which is a problem as I like to do an activity report on the smaller accounts rather than just list the opens but that meant I had to open a new account and transfer everything over, hence the date error.

    ASD – I wouldn’t want to short them down here, kind of dangerous to sell against but ’10 $40s seem worth a chance at $5.65, if they go in the money, you’ll have 2 great years of $1 per month sales ahead of you, it’s worth risking .65 to see if it comes in. You could take a chance and sell $35s against it for .80 of immediate premium but you’ll be very sorry if it pops. Actually you remind me that I like RSTO at $3 the options are ridiculous but I’m going to pick some up in the Stock Portfolio at $3.25 with a DD at $3.10 if possible. XXX

    FWLT – very dangerous short, I’m thinking of spending $2 to roll my .80 down $130 puts to the $135 puts but better off rolling to Nov $130s for + $4 and selling some other sucker the $130 puts for $3 I think.

    Back to the well on XOM $90 puts for .80, scary how fast my bid was accepted though!

  74. Demetrius Michael

    ABB – Steady as she goes.

  75. Demetrius Michael

    PBR – Wants to play over 77.

  76. BillBigD

    Demetrius Michael
    Trying to set your record for posts?

  77. Demetrius Michael

    MCD – I’m surprised they haven’t broke their 52wk yet, with global growth and the new chiamerican, this is a really nice play and bet on a break.

  78. jkman

    been playing around with covered calls in the virtual trading. kinda fun. not sure if i got the patience for it though.

  79. Demetrius Michael

    BBD – Today’s the day! I feel it… But I promised to wine and dine this girl later, so… We’ll see.

  80. jkman

    BBD- lol

  81. jeddah62

    ASD – tnx Phil .. I like the ’10 40′s too. will give it a shot.

  82. MrN

    KGC & NEM put in a few good candles while gold decides what to do.

  83. MJ

    TSO cannot make up its mind :-)

    WYNN bought some Jan 09 calls on friday. WYNN seems to follow LVS which is up huge this morning.

    CSCO — the bastards at Barron’s think a forward P/E of 21 is high for a company growing at 17%. Anyways, the current Forward P/E according to yahoo is 18. Don’t know why people pay even a penny to read this BS. Barron’s and WSJ are just full of sh*t.

  84. Demetrius Michael

    MJ do you own a linksys router?

  85. BillBigD

    MR and CMED- China medical stocks ATH

  86. jeddah62

    NOK – starting to move

  87. MJ

    nope, netgear.

    RIMM went positive, at this rate BIDU and GRMN might also go positive :-)

  88. Andrew

    Has anyone ever consistently tried a strategy of selling OTM puts on stocks you want to own anyway, and on those you get assigned on, you then sell OTM covered calls on?

  89. Demetrius Michael

    AAPL – RUN FOREST RUN

  90. Highlander

    phil,

    time to sell the dia 140 puts we bought back last week? i’m down 30%?

  91. KHAANNN!!!

    BBD,

    GO COWBOYS,

    I dont think i ever mentioned to you that my Brother-in-law is a former Cowboy

  92. Phil

    Wowie, look at that market fly!

  93. BillBigD

    APPL- Phil you see any screaming new plays on this one. I did your Aug/OCT 145 then Sept/OCT 145. Just sold free and clear $1200 per contract on the Oct 145. Thanks it was a great trade. Looking at Jan something.

  94. Demetrius Michael

    AAPL – Broke 52wk, it’s going to 180!

    NYX – Hey hey over 8-tay.

  95. mSquare

    Andrew,

    OTM puts – I typically do this. I also recall Phil saying he does this for stocks he wants to own anyway. e.g. We discussed selling UNH Jan 45 Puts for $1.20 on Friday. This is a stock I can own (more of) for mere $43.80. I sold those earlier today for $1.15. I also bough TASR like that for around $13.50 (selling 15 Put) and will probably sell calls against it when others on board do so.

    Another one I was assigned in March was USG and ended up owning it. This is a buffet owned stock – a stock to do with housing but is rallying big today, so trying to sell calls against owned stock.

    I have typically made money using this method. But sometimes it goes way against you – especially volatile ones like CLWR and ones I guess (in retrospect) was too greedy or too quick to sell the Puts…

  96. MrN

    IMCL – This one has turned nasty when everyone else is partying. Time to give up?

  97. _fab

    AAPL – Just (right before the run up) rolled my Oct140/Oct 145 into Jan 150/ 1/2 Oct150 1/2 Nov 150 – those Nov premium are very high (thank you earnings!) so it’s hard not to want some since they’ll deflate while the Oct are for protection and a bit of an upward opening for earnings to roll into the 155′s if wanted.

    The Oct 140/145 vertical was the remain of a Sept/Oct 140 spread I rolled up into Oct to keep covered (wish I hadn’t!) but glad I did make a small profit on the position roll in addition to the profit at expiration.

  98. Phil

    TSO – if it doesn’t bounce soon we’ll have to end up rolling to Jan/Nov $47.50 puts

    DIA puts – as I said before, best to roll back and sell, a little late up 140 but still beter than getting killed.

  99. hari

    I don’t see posts from optiondragon. Anyways, any recommendations for spreads on RIMM for earnings this thursday??

  100. Quarryman

    LOOK AT VMC. It broke through 90.

    “Quarry Stocks Pay!”

  101. eric

    wow, Look at the USO drop!

  102. MrN

    C- Phil, when you have time, when did you make the call to buy the dip on this one? I’m trying to figure out where I’m missing some very important calls. You are consistently right but I often miss important moves.

  103. Andrew

    mSquare- Interesting. I guess like any strategy, stock selection is key.

    Also, I met with USG mananagement in May when I worked on the sell-side. Fantastically run company and they’re managing tough times as well as they can. Investing in local wallboard distributors on the cheap, so when the building market recovers they will have mind boggling earnings power. This is a classic “lifetime holding” Buffet stock- that being said there’s no fundamental upside to this anytime soon, barring a buyout by Buffett or someone else. He has said in the past he’d buy the whole company at $40 per share.

  104. BillBigD

    AGU- slowing pulling out of OCT 45′s bought at $3.90. Juliet did you keep these when we bought together?

  105. Demetrius Michael

    I’m not rolling my DIA, 13800 is a good breakeven point, and if we’re going to 15000, then I don’t mind losing the hedge.

    Phil don’t you think it’s best to day trade the indexes… loss, roll, loss, roll, loss, roll, gain, roll, gain, roll, gain roll… That’s a lot of commissions, OK not that important… But that’s a lot of protection, aren’t you only really betting on the gaps opens anyway?

    I mean you’re a very active trader that knows when the news is coming and how to deal with it… There’s also certain points where you risk/reward selling / buying… It could be more profitable to just intraday them, rather than have a long term perspective on options that move sooo much.

  106. Demetrius Michael

    How often do we get huge news before the market opens? I’m not trying to change your obviously working strategy, I’m just trying to understand it…. I don’t mean to offend in anyway.

  107. BillBigD

    RIO- WOW

  108. alfamike

    5 for 6 with the NFL picks, the Raiders and Browns moneylines were sweet. Remind me to bet against the Eagles the rest of the year. The Patriots are an easy win tonight.

    What’s so great about MON? I look at the 10 wk chart and think, yes, lots of momentum, but also very extended?

    From this weekend’s IBD, I’m liking EMC, ONNN, TNE, and GES for being in strong up trends but not as extended as some of their more volatile selections.

  109. RAVI Shankar

    Hi guys,
    Newbie here. Doing okay so far. Could somone please explain to me how to roll and is the commision less on these rolls. I was thinking of calling my broker to explain it to me but thought get it from the Pro’s here. Thank you

  110. MrN

    C- Reread morning post phil – great call; kick me for skimming over b/c I was watching too many sites!!!!!

  111. richard marble

    msquare –
    I love this strat, but you really have to make sure that you are getting paid for the risk you are assuming. Just because you think you would be happy with ABC at 30.00, does not mean that you are not taking on significant risk. Also, you are tying up capital in margin etc…

  112. RAVI Shankar

    SIRF up big time. Watching it from 17. Was not doing option then and did not want to risk a large amount. Does it still have leg to run.
    Appreciate anyones views on plays for EMC & VMW. Looking for timeframe and strikeprices.

  113. bigs

    EMC & VMW were Changewave picks on friday, which brings big buying pressure but they usually come off hard within a week. I’d give them some time till everyone frontrunning the picks blows out.

  114. Phil

    DIA – as above I like the roll. Harder now 50 points later!

    AAPL – Always sell into the initial excitement. Someone is willing to give you $5.47 for the $155 calls, figure out how to take it! In this particular case I like the Apr $160s for $18.50 as the longer call, that’s a pretty good 3 out of 24 month return.

    IMCL – no I’m going to take one DD before I give up. You’re looking for a lagger to the market, this is sure it!

    Big oil drop, we’ll see if it sticks – just want to get my money back on XOM at this point!

    C call – yes, but noboday seems to read the morning posts! ” The XLF is 8.5% C so we can expect a spot of trouble right out of the gate as Citibank flew down to $45 pre-market. We have the March $47.50s at $2.50 in our Dow portfolio and we will certainly double down or roll (probably roll) down to the $45s this morning as this is a fantastic entry opportunity that will really improve our position.” I know, who the hell listens to that crap I say in the morning… 8-)

  115. mSquare

    Selling Puts to own stock – Most of the success I have had using this (besides first having liked company and fundamentals of it) is to use RSI7 and RS14 to decide when to sell the puts – sort of like what Bill Cara repeatedly advocates on his blog.

    I sold lots Calls against my positions last few days like JNJ, CHK (besides the Jan/Oct spread as for Phil and many others here), NDAQ, WAG – I may come to regret it later but as of now think these stocks are near tops.

    This is ‘slow’ method of making 10-20% and yes it does eat into margins but kind of additional kick of ‘buying things on sale’ (when it works). I am trying to learn here and do better in not having to own the stock at all buy buying Leaps and then selling calls against them – much better strategy in many ways…

  116. BillBigD

    VMW- WAS MY PICK when IPO was announced!

  117. turbo

    This market looks like the Bizzaro world, nothing matter (down is actually up). It is like going to watch a bad movie, just leave you brain at the concession Stand and don’t look for the plot. Just enjoy it.

  118. biodieselchris

    I love homebuilder bounces.

    CTX Nov 25′s for 1.55?

  119. irished

    We read the post but cannot remember crap. I am lucky that I eat the same breakfast otherwise I would forget what I had!! Forget what I had for dinner last night. I know I ate because I seem to get wider with age.

  120. MrN

    C- Phil forgive me. I really do read your posts, archives, strat, education… I missed this one b/c I was out playing lone researcher. I would make a lot more money gluing my eyes to your posts!!! If you believe in IMCL – so do I!

  121. Demetrius Michael

    MON – I can’t believe I’m selling this for 2.30 (Filled)… Things I do for women… Anyways

    2k portfolio up to 3k cash! Slowly but surely.

  122. Demetrius Michael

    Take care guys, I’m out… Not too sure if I beat my record BBD…. Anyways enjoy the rally!…

  123. mSquare

    WAG – Anyone buying it here in the 40s? I think selling is rather overdone…

  124. biodieselchris

    haha ING, I already cleaned that account out…

  125. Jason Treu

    billbigd--
    VMW still looks good here, don’t ya think?

  126. Filmflam

    Hey guys, just hopped on and trying to catch up.

    Phil, if we close up here, are you playing it as a confirmation? Are you covering with DIA puts yet?

    AAPL – still has some room to run, the volatility is less than it was when it broke out last week. Need to get that back up, probably needs to get to 158 to start scaring the 160 holders.

    Thanks,

    M

  127. Filmflam

    and BBD, thanks for the VMW call. Loaded up at on the pullback to 75 and took half off since I was up 136%. Wish I would have been listening to you earlier.

  128. daveo

    Rolling LEAPs – When is a good time to roll ITM LEAPs up to a higher strike? My gut tells me now would be a good time as the ITM LEAP is becoming mostly intrinsic value. I seem to remember a post from way back saying to roll when the time premium

  129. Phil

    Indexes – oh I totally day trade them but I try to only post up siginificant changes in the base otherwise it’s all we’d talk about!

    Huge news – pretty much evey Monday…

    Oil broke $80,you wouldn’t know it from the majors.

    SHLD coming off the mats.

    IMCL – all the BTK is laying around, it’s too risky when you can just buy a random Dow component and make 5% but I think boiotech will pop as people start putting “fun money” into riskier plays.

  130. Seattle

    biodiesel, what’s your take on the Seattle Times article touting biodiesel… Do you use these stations or are you a hard core homebrew type of biodiesel guy?
    http://seattletimes.nwsource.com/html/businesstechnology/2003915502_biofuels01.html

  131. Phil

    By the way, the logic being used – that the banks are finally getting their write-downs out of the way and things will get better now, is the same BS that rallied the builders at the end of last year. I’m not saying you should fight it, just be aware that $2T worth of lost home value will probably translate into more than the $100Bn worth of write-offs we’re going to be seeing at this reporting pace.

  132. BillBigD

    GRMN- looking to buy back those Jan’s I sold earlier

  133. MJ

    BIDU almost positive.

    WYNN 165!

    GS above 220! next stop new 52 week high.

    Bought those MON Jan calls, thank you BBD.

    What the heck, I might even buy some GRMN here.

  134. MrN

    BBD what are you bidding on the GRMN Jan’s

  135. Mark

    Wow, WYNN and LVS up nice… and MPEL up 10% almost…

  136. biodieselchris

    I’m not very hardcore about biodiesel one way or another. (It just happened to be on my mind when I picked my handle for PSW).

    But yeah, for me, mainly because I am a chemist, I enjoy “homebrewing” (I call it laboratory transesterification, but that’s just me), because I enjoy the chem. It’s like a hobby. My wife makes soap. It’s fun and simple. I make about 10 gal’s a month and that gets me about 600 miles which is all I drive really. If I bought it from one of these new bio stations it would largely be like buying gas from RDS for me. In WA you can blend up to 80% mineral diesel and still call it “biodiesel” even though it’s only 20% by volume.

    The article is good though on different fronts. ‘Food’ based fuel is by and large a waste of time, sort of like cutting down trees to heat homes, however it does get people thinking about energy use and fuel in general, and that is a good thing. I think it brings to the forefront when your standing there with the pump in your hand to think – ‘where did this gas come from and what’s the real cost for using it.’

    Phil pointed out auto manufacturers could raise the MPG by 5% (or people drive 5%) and it would produce more oil dependency benefit that all of the biofuel production to date has, so getting people to ‘think about energy’ is probably the article’s biggest asset.

  137. Phil

    RIMM testing $100 again, good time to sell the $100 calls if they blow it.

    They are having lots of trouble getting oil back over $80.

    WFMI is acting like a grocery store.

    EBAY with a nice comeback (also in the morning post).

    DRYS new highs.

    BA creeping back up.

  138. fpremjee

    phil,

    any information to help with RIO?

  139. Mark

    Biodieselchris: read this article the other week… what’s your take on the “hydrogen economy”

    http://www.msnbc.msn.com/id/20920349/site/newsweek/

  140. biodieselchris

    BBD – good pick!

    I’m happy buying it at 70.25 in my ret.

  141. biodieselchris

    so you have European banks (and big ones too), putting a little reality on the radar screen and US firms are upgrading homebuilders?

    Seems a little speculative to me. But I’ve been wrong a lot more lately than right.

  142. Optrader

    DIA-Buying puts with stop at 140.80 for a daytrade.

  143. BillBigD

    MTW-flying

  144. MJ

    Cramer says rally is for real. So be cautious :-)

  145. Optrader

    BIDU-Also buying puts with stop at $290.

  146. carlos

    Phil, I’m planning on selling RIMM Oct 90 calls this week against Mar 90 calls [which I'm also planning on buying this week]. I will close the shorter position on Friday morning [after earnings on Thursday cob] based on the idea that the volatility crush on Friday morning to be greater on the shorter calls than on my Mar 90 position. Does this strategy make sense?

  147. alfamike

    Rally is for real – but keep in mind it’s been rallying for a month lol! So Cramer is only 5 weeks late – he’s never been too down with that whole “technicals” thing.

  148. Arindam

    Phil, I don’t see the MET 70 (Jan 10) or BSC 120 (Jan 10) positions in your LTP? are they somewhere else?

  149. doubleclick

    YHOO flat. Rallied all last month and today the market can’t lift it.

  150. BillBigD

    OPtrader- you got some big ones. Good luck!
    VMW- $89 up $60 on my IPO shares. $$$$$

  151. Mark

    For anyone interested in other’s commentary, here’s one of my favorite “weeklies” to read: Jeff Saut.

    http://www.raymondjamesecm.com/big3_commentary_main.asp?aid=1252&doctype=STRATEGY&file=Saut_Strategy.htm

  152. Phil

    RIO – yet another crazy stock. I don’t think logic is very helpful in this situation…

    RIMM volatility crush – yes, that’s always a good way to play volatile stocks.

    Didn’t Cramer say something about a 1-2% correction?

    GOOG totally out of control!

  153. DM824

    Phil,

    Would T be good to enter now? 42 should be strong support technically.

    Thank you,
    D

  154. Optrader

    BBD-Thanks, but already got stopped-out. Crazy market, no pullback at all. Will try again later, I think I should be able to catch a 40-50 points drop intraday..

  155. DM824

    IRBT is looking to brake 20 again. Should we drop the caller if it does?

  156. Matrix

    1555 on S&P creeping closer. .Phil, think it could be a double top? Looks like this time we might break through it this week. .

  157. Phil

    BSC I rolled to Jan ’09 $130s against the Oct $120s (2X) and I never filled MET.

    All those naked Dow plays turned green…

    Yahoo finance is down.

  158. MJ

    GOOG gone Mad! LOL

  159. Greg

    Hey Mark: I read Jeff Saut every week. Interesting comments today about set up for “downside trap”

  160. Robert Potter

    Phil,today seems to be an aberration of the Valero rule

  161. irished

    PCU is rocking, up 4.32. Copper is king. Remember follow the thieves. What they want badly, I want to invest in (sort of anyway). Sorry just bragging. It is nice to pick a winner sometimes (on my own Phil).
    BA is hot,WMT coming back nice, HXL rebounding. Thanks Phil.
    Phil: Paid for this quarter and probably the yearly fee already (just have to discount some of my bonehead picks)!! Not bad. Soon it will be free advise. My kind of advise!!
    Thanks.

  162. MJ

    damn missed the last 15 min of the oil pump. Probably not worth it now.

  163. biodieselchris

    mark – that article was largely about natural gas but it did touch on hydrogen near the end. Keep in mind natural gas is still carbon positive, you’re just burning CH4 instead of C8H18 (octane). Because it’s already in a gaseous form it mixes more purely with air and therefore produces less side products than an aerosolized octane / air mixture (i.e. – it ‘burns cleaner’).

    So to sum it up I think the essence of the article is a possible future based on an abundant carbon-fuel that would make us independent of oil importing but in terms of net carbon production it is largely identical.

    Today’s fun fact – Dryer sheets are toxic. Don’t use them, or at least find a ‘natural’ substitute.

  164. Phil

    I may be a glutton for punishment but I bought more DIA $140 puts at $1.30 (were $2.20 on Fri). First day of the quarter has a lot of fund buying, volume could be heavier so far and I would think we get at least a little pullback (forgot to switch my brain off today).

    T – you would think so. Very strange that it can’t get going with everyone else going nuts.

    IRBT – not right when it breaks $20, we still have a 5% premium to the stock price, as with everything, I’d really like to get through tomorrow before I decide to dump all my covers and run to 15,000 but, like I said in the morning post which nobody reads, taking 1/4 of the covers off is/was pretty sensible.

    Double Top – If everyone is up near the July high at once and no one breaks out and indexes start failing, that will be a big signal. Oil back over $80 near the close you’ll all be happy to know!

  165. BillBigD

    OIL- Hear comes the pump- oil service moving higher

  166. KHAANNN!!!

    Homer says. . .

    MMMMMM. . . Erin sandwich. .. . gahhhhahahhhhahhhh

  167. MrN

    BBD – Played grmn w/ oct. just to keep me interested in your pick. In 3.7 out on TS @ 4.4 Phil says 20% (not quite) an hour is too good of wages to pass up! Thanks!!! Pretty much same w/ MON but went out farther w/ wider TS I’m still in. :)

  168. BillBigD

    HERE- not Hear Stupid
    PCU- Been pounding the table since Phil went on the PAY-PLAN! AT $55. Up $83 $$$

  169. Phil

    Valero – not really a violation. Group not in agreement means don’t play. Lots of index buying today across the board, my guess is we’re going to see some high flyers picked off at the close. I’m done my extra C’s for now, that was plenty for one day and someone may wake up and downgrade them tomorrow – they are going to have a major miss this Q and guidance will be down – that’s pretty much a given from that pre-release. I’m going to cover the 10 I have left in the DIA folder with the $47.50s at $1.40 XXX

  170. Mark

    Greg – agree completely. It’s sick, been reading his stuff every week for years, and it’s uncanny how accurate his assessements are. I’ve utilized his “stuff stocks” theory since 2004 and made nice money owning stock (like BBD’s material plays… only I’m new to PERSONALLY trading options, so don’t have his massive bank roll :) )

  171. juliet

    Sold half of Dec $80 RIMM calls for 208% gain…heehaw!

    j

  172. MrN

    MON – ts got that one too but 2.1 to 2.75 is… ahhhhh! That helps soothe my greed factor while I watch Phil’s C just keep going.

  173. MJ

    BBD, you should use some emoticons to reflect your ‘pounding the table’ argument. LOL. Missed PCU and NOV. I have decided to just go with the flow using some spec money on these mo players.

    Please continue to post your picks. Thanks.

  174. Mark

    Last 2 cents on Saut: I “believe” his group has returned in excess of 25% / year for the past 10+ years… and that’s just being long stock only…

  175. Phil

    Buyers either slowing down or resting for assault on 14,100, sellers are just scared at this point, shorts are shell-shocked but we often get very good first days of the Q followed by a Tuesday or Wednesday where people can’t imagine what happened to the rally but the way this is going, it looks like little chance of a pullback today.

  176. nav

    In with you on the DIA puts Phil – let’s get that sudden sense of reality and rationality in the market – even if just for a few days …

  177. juliet

    MPEL looking good so far…love it.

    j

  178. makemoney

    Juliet, I’m happy for you!! You make good calls!!

  179. BillBigD

    MBT- up 6.75%

  180. Phil

    CY hitting the roof at $30.

    Woops, here comes more buyers!

  181. Andy

    Phil, agreed with the DIA put, managed to get into the 141 instead of the 140 – let’s see if we get a smaller correction after the initial euphoria

  182. MJ

    out of some CTSH, AAPL calls. Still have quite a few of CTSH and AAPL calls.

  183. mSquare

    Shanghai Equities – Greenspan saying have all hallmarks of a bubble’! Wonder if he is short FXI…

    FXI up $5.80 today (3.25%) – Any interesting Put plays?

  184. Andy

    Already invested 30% in an FXI put, I took a longer view with JAN expiry. down a bit right now, but I have to admit, I can’t really see this holding up forever. 30% of profits taking a contrarian view is sensible to me.

  185. MJ

    at this rate, I will end up at 50% cash in my account today. I am still up 5% in my options account today

  186. MrN

    IMCL – is this it? Started up hesitate at 41 now peeking upward?

  187. Demetrius Michael

    Back – Hope you enjoy those MON profits… Hope you enjoy those good…. yah good.

  188. Brandon WAlker

    I agree on the DIA – bought at 1.30, if it gets down to 1.20 going to buy some more.
    Sold my C calls a few minutes ago with a nice profit.

  189. Brandon WAlker

    And been waiting to get a fill on XOM puts at .65

  190. BillBigD

    Demetrius Michael
    I guess dinner didn’t go all that well. LOL

  191. Max

    Me too Brandon. Got a partial fill so far.

  192. rmyadsk

    I feel the same way on the DIA 140′s. Bought five above $2 late last week and it allowed me to sleep well this weekend, just bought another five at $1.25 and have a limit for another five at $1.20. 14 full trading days in front of this one and if they’re all like this one I’ll gladly sacrifice the insurance…

  193. Demetrius Michael

    Well lunch… No wasn’t worth it lol.

  194. jkman

    BBD- lol…priceless

  195. millions07

    Hi Phil
    any new thoughts about the FWLT 130 puts?
    Thanks

  196. Brian

    My Chinese stocks are out of control. Bought some FXI 174 Nov puts for some protection. Hope I don’t regret it.

  197. jkman

    i’m about to flip a coin on this market. more than likely going to take alot off the table today at close. start fresh tomorrow, but we’ll see. Phil you think we’re safe up this high?

  198. KHAANNN!!!

    DM,

    Maybe she felt like whe couldnt get a word in ;)

  199. KHAANNN!!!

    Brian,

    If you bought fire insurance for your house, and it didnt burn down, you wouldn’t regret that, would you?

  200. Phil

    Greenspan calls China market a bubble.

    AAPL new highs, IBN new highs, EXPE new highs (PCLN gone),

    SHFL finally breaking out.

    FXI – I have Jan / Nov diagonals on them, you can get $10.35 for the $180 puts and pay $18.70 for the Jan $185 puts. If you can roll him to dec for $9 or more, you end up with free puts and current puts that are $20 out of the money are $3.90.

    SYX finally waking up. Airlines all excited.

    IMCL – no such luck…

    FWLT I don’t mind holding. I learned my lesson last time with them, if you’re patient you’ll get a $10 move pretty much either way within a week.

    AAPL running into sellers.

  201. BillBigD

    KHAANNN!!!
    Much better than my joke. LOL

  202. k1

    So anybody interested in VIX calls? Where’s our whale, Dec 30s are 60 cents…

  203. vishal

    SYX moving!!

  204. k1

    Speaking o’ the VIX, we’re up almost 200 on the Dow, 20 on SPX, and VIX is down less than a quarter. Doesn’t that seem like a small response for a big up day?

  205. _fab

    k1 – If anyone sees a VIX whale, let me know… it’s the one which swallowed my treasure chest in August. It’s waiting for some reckoning! :)

  206. k1

    VIX- never mind, percentages are in-line. Sheesh, gotta think before typing.

  207. Demetrius Michael

    Oh yah lets all pick on Demetrius!!! I’m actually more of the quiet listening type… Chicks dig that too!… Chicks don’t dig spilling red wine all over them though…. Note to self.

  208. doubleclick

    Also in on the DIA 140s. I got in on one of the dips though, so basis not so hot. 1.34… back to even now. More interested in holding for a few to several days than daytrading though.

  209. JPL

    DM, BVD, Khannn – you guys are cracking me up – this is priceless – keep it coming.

  210. Phil

    Safe? LOL. I would have thought we were safe if we had gained 50 but 200 seems just strange to me. Bob Pisani says Friday showed record high shorts, a lot of this may be a squeeze.

    Took out my PTR putters actually, this whoe thing seems wrong to me, I want to see what happens and keep some cash handy for some directional plays.

    XOM $90 puts at .65 is an XXX!

    VIX calls are a nice play too, let’s keep an eye out for activity there. That’s why we need the VixDex ™!

  211. Demetrius Michael

    She called me back!…
    Buying GRMN Oct 110s for an uptick tomorrow. Later boys.

  212. _fab

    DM – LOL… if you make a habit of spilling wine on your partner, you might want to consider one of a few things:
    - stick to white wine
    - insist on stemless glasses, bring your own if you must.
    - carry a little sprayer of wine away thingie… it’ll make the spill turn blue-grayish but at least it should wash off.

  213. BillBigD

    Took profits CMI, HOLX, CNH, MON.
    Also some off on PCU and FCX.
    Closing the day.

  214. mSquare

    INFY – Bought Oct 45 Puts on the cheap. They announce earnings on 11th and strong Rs. now and expected may just mean poor guidance. INFY was 46 last Monday!

  215. cap

    In honor of the 4-0 Packers, Cap is now “Pack-Man”, for at least today anyway, and after any win.

    Boy did I make a terrible QQQQ put trade today….. I am completely pissed at myself.

    AHR had a big move until 3 pm, lots of call option activity.

    MCO very strong.

    MER very strong; could have had pre-market for 70.75. missed that, and C also.

    Today’s market completely ridiculous IMO. 1st of month BS.

    XOM … die you scum !

  216. Optrader

    BBD, great trades, congrats!

  217. Pack-Man

    Phil … this comment from your Dow summary is what I was looking at this AM. Didn’t see the DD comment. Threw off my thinking on C.

    C – They are all over Asia and paying a 4% dividend and they have gotten whacked over phantom sub-prime issues. If they fall below $46, we’re out of this one and if they break $47.50 we should be off to the races so let’s go with Mar $47.50s at $2.65 with a stop at $2, where we will wait for the next bottom (maybe $40) and then buy LOTs of leaps.

  218. MJ

    out of WYNN calls. Sold some GS Jan 08 220 leaps. Still have Jan 08 and 09 220 calls in my 401k.
    out of MON day trade, 20% in few hours.

  219. Optrader

    BBD, great trades, congrats! Did not do much myself today. Banked some really good profits on SIRF, had a small loss on DIA puts (which I never re-entered) and a small profit on BIDU puts. I feel like I missed the run today, but it’s ok, the market will be here tomorrow.

  220. Brainfill

    Small position on PHM puts with today’s run-up and I think home sales numbers are due tomorrow, which have a low probability for anything positive.

  221. Brian

    Good point. But buying puts against the chinese sector right now seems like buying fire insurance in a rain forest. These guys seem unstoppable.

  222. Phil

    SU not happy about the drop in oil.

    Citi analyst basically saying that his call on builders was mainly technical on a bounce. He’s making really apples and oranges comparisons using historical data. Maria actually nailed him on being way off base on the fundamentals. I think she’s trying to do an image makeover and be more of a news person.

    A wine sprayer? Do those come in pink? Holy cow Fab – I really can’t see a girl changing her mind about you because you had a wine sprayer (in your purse?) for when you spill the wine on her… 8-) Sake my friend – sake is the answer to everything! If you spill it on something it actually removes stains….

  223. mSquare

    FXI – With Markets in China closed for the week, guess FXI will trade on the ADR prices alone? HK, India and Korea closed Mon-Wed (respectively) too…

  224. _fab

    Phil – Ah but having a wine away sprayer means you are both aware of your defaults AND are prepared to deal with the consequences! ;)

    Must be a win-win in a lopsided universe sort of way…

  225. JPL

    Fab, is there a patent on that thing?

    BBD – great trading, keep those picks coming to the site.

  226. _fab

    And the sprayer is small enough to fit in your jacket’s pocket… Bought one one day I was buying wine, figured it could come in handy although it’s really spending its life on a kitchen shelf.

  227. Phil

    Dow summary – sorry about that but that’s why I overrode the $46 this morning. The original was on the assumption they’d drift to $46, not spike down on news. Always sell into the initial excitement is the cousin to always buy into the initial disappointment (for day traders) but, as I hope you know, I”m out of them now except for the covered play as the certainly shouldn’t have gone UP $1.50 on that news.

    RIMM shorts ended the day well.

    PALM missing and lowers guidance a ton. I wonder if this will be good or bad for RIMM.

  228. _fab

    JPL – Probably… http://www.wineaway.com/

  229. BillBigD

    Optrader-tough to trade over in Europe. Please enjoy some French wine for me. Off for the night. GO Pats!

  230. Richard

    DIA – I’m wth you, DC, on the DIA puts. I DDed on these late today with a slightly worse fill than yours – at 1.36. That brings my average down to 1.83. I’m hoping these things will pay off pretty soon.

    TSO – Also unwound a TSO spread for a buck. Still short those nasty Oct 50 puts though – hoping for quicker decay than what we’ve been seeing on those.

  231. Optrader

    I am 80% cash right now on my ST portfolio. I don’t remember the last time it happened. I just don’t see many plays that I like and not sure I want to follow this breakout until we get a confirmation.
    I only have 3 very small positions right now in this portfolio: AAPL calls, BIDU and SBUX puts.
    Sometimes you just need to be patient until you see some trades you like, where you just have to go get the money. Anyway, I made so much money this summer (thanks to the high volatility and this group), that I don’t really have to trade for the rest of the year, and even next year if I don’t want to :) Great feeling.

  232. John Oh

    hey phil, if you are long leaps and then the stock begins to fall (maybe spike down like C today or just slowly drift down) and you are down like 20% is the best idea just to roll down and maybe even DD if u feel that u are right? when should you be looking to sell calls? should you sell 1/2 after u roll down? that seems like the opposite of “selling into the initial excitement” but it also provides some hedging i guess if the stock continues to slide? thanks! just trying to understand various situations from ur strategies..so far its been a ton of help

  233. 6fingerman

    Phil,
    Quick question on SYX. I jumped the gun and sold the current 20s (.7, now 1.4) against the Dec 20s (1.8, now 2.6). The current 20s only have about .25 in premium. My rationale for the trade was to collect premium, and I’m doing that while my longer call gains on the uptrend. So given that, would it make any sense to roll him up to the current 22.5 (now .2) or out to the Nov 20s (now 2.1)? Doesn’t make much sense so I’m figuring I should just sit with my current spread.

  234. windywheel

    phil,
    i’m trying to learn how to think properly with these spreads and have a question

    you wrote:
    FXI – I have Jan / Nov diagonals on them, you can get $10.35 for the $180 puts and pay $18.70 for the Jan $185 puts. If you can roll him to dec for $9 or more, you end up with free puts and current puts that are $20 out of the money are $3.90.

    why did you choose to go straight to Nov. and skip Oct. on the first round of selling puts?
    current puts going for $3.90 are the oct 174s, which are $10 out of the money, right? what does that figure represent please? is that part of the answer to my first question?

    thanks so much!

  235. Pack-Man

    No apology necessary Phil … I was asleep at the switch on that one; no matter; no position there.

    Optrader … awesome. Proud of you.

  236. Greg

    Optrader: I have 10 SIRF Jan 08 25s and 5 Jan 09 25s (finally just profitable after holding since July). Do you see any reason I should be selling or repositioning yet? The chart shows a clear breakout of the downtrend channel that began early this year. Resistance and 200 DMA around $24, I’ll keep eyes open for trouble. Thanks

  237. Optrader

    Greg, I am out for now. This has just been a crazy run and I prefer to play it ST now. Looks like the move today was just because of the Nokia’s news and rumors they might be the next ones to be bought.
    I sold last week and then bought back at $21, small position, but big profit today. I still like the company LT but it’s moved from $16 to $23 in just one month.

  238. Greg

    Optrader thanks. Congrats on your trading success this year.

  239. Phil

    Wine sprayer seems very Felix Unger to me…

    Chinese stocks – that’s why I like selling calls this week, kind of hard for them to make a significant move with the main market closed so just wastes premium.

    LOL – great attitude Opt. Greed kills, there’s no need to make trades in a silly market – other than the ‘mon back on those XOM $90 puts at .65!

    John – it all depends on the stock. With C I ended up doing a DD because I wasn’t getting a good price on the roll, I didn’t know what I would do until I went to execute the trade and didn’t get my price. The way a lot of traders get beat is they go into their trade screen with only one thing in mind (eg. roll C to $45s) but my Mar $47.50s had already dropped (unfairly I thought) to $2.45, from $3 and the March $45s were still $4, where I had decided not to buy them last week when C was $1 higher. So, since the March calls reflected over 50% of the underlying security’s drop, I doubled up on those. When they gained .80 I sold half to get my basis down .80 (lower than the day’s low) and covered with the current calls as I thought the run was overdone. That’s the story of C, but the key is to know what all your options are and see which one is giving you the best opening for each situation.

    SYX – you protected your gains and you’re collecting a signigicant (percentage-wise) premium, there’s no reason to give that up unless the stock really breaks out. Taking .20 for the $22.50s accomplishes nothing as it gives you no protection and simply exchanges the .20 you owe your current caller for a different .20. When the time is right you’ll roll him to the Nov $20s, which have a .90 premium or up to the Nov $22.50s, which are .77 already and you can use that money to roll yourself back to the Mar $20s, currently $3.40 to give yourself plenty of room for 3 more rolls.

    FXI – It’s a coverage issue, there is too much danger to the upside and the Oct puts don’t give you enough money to cover a nasty gap up that would put you way out of the money yourself. There’s a lot of factors and one of them is I have a very easy roll back to Feb on this position as those options are already up and, with $1 incriments, there are many, many options for repositioning myself and my caller. As I said in the comment, you have a pretty clear line on a free put by your first roll whereas a similar setup of the Jan $185s at $19, selling the Oct $180 puts for $5.75 not so clear cut. Also, a big drop in the FXI, which is what I am looking for, will benefit my caller too much, even though he is $5 further out of the money than I am and that can be dangerous on a big drop. With the Jan/Nov spread, I’m only in for $8 and I have a $5 position advantage so I am unlikely to get hurt even if both of our premiums get crushed on a big dip.

    This has indeed been an epic year!

  240. windywheel

    phil,
    thanks for the explanations, very helpful!

    was emailed this today and couldn’t resist adding to the wine stain conversation as it’s very funny, and many tequillas are clear
    http://vids.myspace.com/index.cfm?fuseaction=vids.individual&videoid=14602803

  241. Demetrius Michael

    Well I just asked for club soda and soaked her with it… Wasn’t classy at all… When a girl asks for wine, next time I’ll be like “no she’ll be having water” instead…. Hah joking, but isn’t sake another drink? Rice wine is dangerous around girls… Bringing a sprayer is asking for trouble, it’s like directly telling them that you’ve done this many times before.

    Epic year? Talk about being fashionably late. Anyways Dow’s going to 15,000, haven’t you heard? Sub-prime was so last week. Been there, done that.

  242. nav

    What are some of the more popular brokers people use for Options Trading? I have etrade/amertitrade and also just signed up for Interactive Brokers – however the webtools with IB are kinda difficult to use.

    Any suggestions? Anybody want to send me a referral – let me know.

  243. k1

    nav- I noticed nobody is replying to you about brokers, but this is a question that gets asked here pretty often. A bunch of people have recently been talking about ThinkorSwim, which has a good deal listed on the links tab up above and seems to be a good service. There are some other brokers in use as well, read up on the links and go with your gut. I personally use Schwab Active Trader, which is adequate but a bit pricey if you’re only trading 1-5 contracts.

  244. nav

    k1 – thanks for the response. I had visited the Links section a while back when I joined this site a month or so ago and was looking for it here as well as the Happy site FAQ etc. – just didn’t look at the obvious place. dohhhhhhhh ME and thanks for your help.

  245. biodieselchris

    GOOG is going to be a wild ride the week of Oct 15-19. I can’t wait….

  246. BillBigD

    Wine sprayer- sounds girly- but the one from linen & things is unbelievable

  247. traderdon

    BBD HeHe

  248. OptionSage

    http://finance.yahoo.com/intlindices?e=asia here we go again!

  249. ramana

    Asia Markets : Tuesday, October 2, 2007

    (The following is from WSJ; please cross check with other sources to confirm. China reopens Oct 8)

    Japan*

    17046.78
    200.82
    1.19%

    Hong Kong*

    28199.75
    1057.28
    3.9%

    DJ Shanghai*

    562.08
    0.00
    0.0%

    S.Korea*

    2014.09
    51.42
    2.62%

    India*

    17328.62
    37.52
    0.22%

    * at close

    Sources: Dow Jones, Reuters

  250. ramana

    Asia & Euro Markets,/b>

    South Korea, Australia Set New Records as Asia Rallies – http://www.cnbc.com/id/21089776
    Asian markets were rallying in the afternoon session Tuesday, with Hong Kong, Australia, Singapore and South Korea in record-breaking territory lifted by financial companies after big banks, including Citigroup, set out their losses from subprime crisis, raising hopes that the worst may be over. South Korea’s KOSPI ended 2.6% higher to a record closing as financials rallied on receding worries about credit market turmoil, while resources stocks such as Korea Zinc soared on strong metal prices.Australia’s S&P/ASX 200 Index hit a new record, closing 1.5% higher. Hong Kong blue chips jumped over 3.3% and China plays leapt 5.7% in a broad rally as hopes were high that the subprime problems had bottomed. The growing inflow of mainland funds into Hong Kong equities also helped the market clear the 28,000 level for the first time, setting a midday turnover record in the process.

    Global Relief Rally Pulls European Stocks Higher – http://www.cnbc.com/id/21093972
    European stocks followed U.S. and Asian markets higher Tuesday on hopes the negative impact of the recent credit crunch was fully priced into the market and the Federal Reserve would continue to cut interest rates.Meanwhile, shares of Credit Suisse and UBS were higher by 3.2% and 4% respectively as investors hoped all the subprime- and credit-related losses for the banks were finally out in the open.

    Oil, Metals & Currencies

    U.S. Dollar Stays Off Record Lows Against Euro – http://www.cnbc.com/id/21089778
    The U.S. dollar held off record lows against the euro on Tuesday ahead of a wave of economic data and central bank meetings. The U.S. currency got a lift the previous session as investors trimmed bets against it while U.S. benchmark equity indexes soared, sending the Dow Jones Industrial Average up to an all-time high. The yen was pressured as the market’s risk appetite remains strong, with investors returning to carry trades in which they borrow low-yielding currencies like the yen to purchase higher-yielding currencies. nvestors are betting that soft U.S. economic data this week including the ISM’s non-manufacturing index and the non-farm payrolls report would prompt the Federal Reserve to further lower interest rates, which would hurt the dollar’s yield advantage.

    Oil Prices Hold at $80 on Economic Concerns – http://www.cnbc.com/id/21089781
    Oil prices were little changed around $80 a barrel on Tuesday, after falling more than $2.50 in two sessions as traders took profits from near-record highs.With an anxious eye on a credit crunch in the United States and Europe that is showing signs of slowing economic growth, some oil investors have pulled back lately, halting the sharp rally that pushed oil prices to a record $83.90 on Sept. 20.

    Gold opens lower in London – Gold bullion opened Tuesday at a bid price of US$735.00 a troy ounce, down from US$746.30 late Monday.

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