Fabulous Thursday Wrap-Up

November 8, 2007

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Phil, i think you’re amazing! how do you call things so precisely, it confounds me!

Thank you so much for helping me learn how to be involved in options properly, as opposed to the haphazard way i was doing it before i joined your world. Today was stressful in assessing and rolling and hitting against balance limits, but it was also one of the strongest days i’ve ever had. when everyone else is flipping out, i’m smiling.

This comes from someone who was flipping out a couple of months ago. You’re the greatest, thank you! – Windywheel (11/8)

Phil, your advice last week regarding taking gains on some AAPL calls and repositioning was spot on!

"AAPL leaps – that’s madness, take the money and buy some ‘10 $190s and get some sleep! Those are $56 and you can sell the Dec $190s for $10 so that’s close to 1/2 off the table on the $150s and if you collect that premium just 4 more times you have a free play that’s likely to generate another $100 before you’re done. Of course you should keep track and stop out of the trade if you drop to net $40 but roll or whatever to your heart’s content while risking only a small portion of the profits. Congrats!"

AAPL rallied and I wasn’t able to get that trade last week, but I cashed out my gains and waited patiently and I was able to execute it this Tuesday. Wow! With the last 2 days movement, it’s a great example of the value of having a caller when a stock goes down.

Thanx again for your excellent ongoing market analysis AND prescriptive advice. – Chix0r (11/8)

Thank you Phil for teaching me the importance of covering and selling into strength. Everyday this week, I earned more money than the day before. – FilmFan (11/8)

Thanks Phil, Optrader and all – I had a 25% gain on total virtual portfolio TODAY while staying 50% cash. – Greg (11/8)

Needless to say we had a fantastic day!

The calls were seriously so spot on all day that it's not even worth detailing them as we went into the day with a short bias, had a plan to stop out our callers, it worked perfectly and we went long at the dead bottom and made absolutely crazy amounts of money. The key calls were:

10:19: "AUY – I sold the $15s but I’m way ahead. Will stop them out of course, stopping out all callers (that are up 50%) down here if they retrace, no sense being greedy. XXX"
10:42: "Holy cow, I keep wanting to cover that naked GOOG put in the $25KP and it keeps going down! Have to buy $690 puts for $22 for Frankengoogle. XXX"
11:24: "GOOG just bouncing off 2 day 5% rule so don’t get cocky with it!"
12:01: "This doesn’t look healthy at all – make sure you are well covered!"
12:42: "Reason for sell off – just all the stuff we’ve been ignoring for 6 months. CSCO saying orders from financials are down makes people freak out that banks losing Billions means there may be other cutbacks — DUH!"
1:10: "If terror is part of this sell-off then we really want to take an upside hedge for tomorrow."
1:23: "Rolled my Jan apple $170s to current Apple $160s, hoping for a quick bounce. XXX"
1:30: "I’m feeling good about the bottom call here, selling the GOOG Dec $710 puts for (ROFL) $50 to complete that leg and going DD on the $730 calls at $23 looking for GOOG to come back. That’s 2s in the $25KP FrankenGoogle. XXX"
1:31: "I would now endorse very timid buying of ’09s on fun things like AAPL, GOOG, ISRG that are in the money as long as you are willing to roll down if we fail again. XXX"
1:33: "Oh sorry, out of all DIA puts, loading on DIA $132 calls at $1.90 XXX Stop at $1.75 and taking a nap if we turn down again!"
2:14: "DIA overnight – we want to end up in a strangle, probably 3/2 weighted down."
2:34: "I still feel bullish. I can’t find anything worth selling but I’m scared to buy. Sticking with my guys GOOG, APPL, ISRG, BSC, GS, INTC Jan $25s!, FDX holding $100 nicely, AXP at $55, BA back at $95 is a gift…"
2:36: "I have to say don’t panic here. What the hell else are they going to say? The Fed just said we’re screwed, Congress just called the Fed incompetent, terrorists are bombing malls and planes, China is down on the dollar, Bush is still President… How can things get worse?"
2:41: "Man are they cutting it close at 13,100! We have a triple test here at 1,450, 13,100 and 2,650 – if we fail that then bet it all on red!"
2:59: "Put plays! NO!!! My guys are companies I love and am buying the ’09s on. AIG too. Whatever is just off the money for the most part. Oh good, here we go!"
3:31: "Woo hoo! Ride em cowboys! BG making a move – heck everythings making a move, where’s my dart board?"
3:35: "Oh, on a less pleasant note – we do need to cover with DIA puts before the close, don’t wait too long the $133 puts are the best play at the moment and you want to make the offer as we top out. 13,300 should be upside resistance. XXX I don’t think tomorrow will be bad but I won’t bet my profits on it."
3:36: "Triple test the other way at 1,475, 13,300, 2,700 – if we break that I’ll be a lot more relaxed."
3:39: "Cashed Apple at $19.25!"
3:58: "Things turning weaker, gotta cover!"

This was a very active day, in very stark contrast to yesterday, where we spent the day debating global warming! Why the major difference? Because yesterday we had a sell-off that was going exactly according to plan and today we got our drop to my 13,100 target and were expecting a bounce but the resistance at 13,300 that came at the end made us feel there may be more downside to come.

Bernanke was all doom and gloom in Congress and Ron Paul sums it up very nicely in this video (thanks Jack!). Paul has a figure that our money supply is growing at 20% a year! If that's true, it is growing at a pace 17% faster than our GDP and, one way or another, that will be inflation! The look on Bernanke's face tells it all, Paul has called him out on his ridiculous policy that is putting a Fed in a monetary quagmire with no end in sight.

The dollar took a weak bounce but still finished at an all-time low, gold finished right at $837 after touching $847, just warming up for its run at $900 and, very likely, $1,000. Oil finished the day down a dollar at $95.46 and soon it will occur to domestic energy companies that it doesn't help them if oil is at $100 if they are getting paid in dollars as the majority of their costs are in appreciating currencies.

As predicted by me so long ago I forgot, natural gas storage is at an all-time high and if the demand picture doesn't work out the way energy traders are projecting, companies like ECA, CHK and COP will get hit very hard. Tomorrow is going to be a tricky day but we are well covered to the downside just in case.