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TARPless Tuesday – WFC Joins the Exodus

Wells Fargo (WFC) is repaying their $25Bn TARP loan.

That makes WFC the last of the big boys to be done with the emergency loan program, just one year after it started.  At this point $161Bn of the $245Bn lent out will be repaid with WFC raising $10.4Bn in a stock sale to get out from under the government’s thumb - just in time to pay out the Christmas bonuses.  I won’t go off on a rant about how stupid it is for the banks to borrow and dilute in order to pay big bonuses and further punish shareholders by reducing earnings – it won’t matter anyway, any bank but C that announces they are done with TARP gets a nice boost as it indicates they can go back to raping and pillaging as usual in 2010.

It’s good that we can label this bailout a success because that way Congress won’t waste time approving the next one in March when CRE fails (oops, that’s supposed to be a secret).  The banks were anxious to get out from under Government oversight as soon as their pay practices were called into question.  Perhaps WFC was the last to pay us back as they "only" have 62 employees who got bonuses over $1M last year with just 7 employees putting more then $3M in bonus money under the tree.  That’s nothing compared to C, who had 738 employees who would consider anything less than $1M a pay cut and you would think GS would be the leader with 983 Million Dollar bonus babies last year but they got nothing on JPM, where 1,626 Employees got 7-figure bonus checks. 

 Of course, GS beats JPM on a bonus per employee basis by a wide margin but that’s because JPM actually does own a bank while Goldman only pretends they are a bank when they have their hand out for government aid:

So move along folks, nothing to see here – all is well…  You can tell by the sound bytes that even Obama is disgusted by this BS, particularly since the banks aren’t lending and, in fact, are putting more money into their foreclosure and litigation departments to really put the screws to the consumers who hold what may be flippable properties for the banks.  After a record-setting 1.5M personal bankruptcies were filed in 2009 it looks like we’re on track to beat that in 2010 by as much as 30% as the banks pull even further back on consumer credit, making it impossible for consumers to extend or refinance their debts (you know, the way the banks were able to under TARP).  It was Thomas Jefferson himself who warned us over 200 years ago, saying:

"If the American people ever allow the banking system to control their money, first by inflation, then by deflation; their children will one day wake up homeless on the continent their fathers conquered." 

Thomas Jefferson would be mortified at what has become of our country.  My bearish outlook is partially based on the very cynical view that we are heading into stage two of the banks’ property siezure cycle.  We had our inflation where first the banks lent money on homes and collected huge fees.  Then the banks directly and indirectly speculated in commodiities and drove those prices sky high, making it impossible for homeowners to pay the banks their mortgages and eat at the same time.  The banks sieze properties and write the losses off on the people, crash the housing market and then start throwing more people out of their homes so that the banks can once again own the land at the beginning of the next up cycle (which pretty much starts whenever they decide it does), where they can sell at amazing proifts. 

This won’t be the first time this has happened, this happens over and over again in every country since the Magna Carte first forced the nobles to give land to the peasants and the nobles quickly figured out they could bleed the peasants dry in new and exciting ways by forcing them to buy high and sell low over and over again.  This was so much more fun than simply charging rents that the concept of individual land ownership caught on Word-wide, exchanging old-fashioned slavery for modern wage slavery, where people are convinced that paying off a $200,000 mortgage at $1,200 a month for 30 years is a good idea even though the borrower ends up paying $232,000 in interest (at 6%) plus all the taxes and upkeep on the property.  If, at some point, the peasants should fail to pay – all the better as the the nobles take the property back (keeping fees, deposits and interest paid by the ousted peasant) and patiently wait (as they are playing a long game) for the next cycle to sell high into.  If the peasant does manage to pay off the house – that’s fine with the bank too because another one will buy it and the bank will collect ANOTHER $232,000 in interest ON THE SAME PROPERTY – they never had a scam like that going when they kept the land to themselves

Yes, Capitalism at it’s finest is playing out right in front of us – these are very exciting times indeed!  It’s not just individuals who can’t get loans, small businesses and corporations with less than A-grade paper are getting foreclosure notices as well as banks are pulling credit and just saying no to all requests for extensions and modifications.  In Europe the situation is reaching crisis levels – all this despite the Trillions of Dollars and Euros in aid that has been given to the banks in 2009 that was meant to allow them to make these loans.  Instead, the banks are taking their 0% government money and putting it into 3% government bonds.   Better to make a 2.5% spread on $50Bn borrowed ($1.25Bn) with "safe" government bonds than lend it to homeowners and businesses with questionable assets and repayment abilities.  If you were a banker and wanted to protect your $1M bonus this year – what would you be doing with it?

Hong Kong fell 1.25% this morning on property concerns as the Communists are starting to get concerned about the damage that is being caused by property speculators.  The Chinese government will target “excessive” property price increases in some cities, the state-owned Xinhua News Agency said.  China’s property prices climbed last month at the fastest pace since July 2008, adding to concern that record lending may fuel unsustainable asset-price increases. The State Council said last week the government will re-impose a sales tax on homes sold within five years, after cutting the period to two years in January. 

China faces “increased difficulties” in maintaining growth in domestic consumption, the nation’s top economic planning agency said.  A recovery in external demand is “difficult,” the National Development and Reform Commission said on its Web site today, citing Vice Chairman Du Ying. The nation’s economic recovery “is not yet solid,” the agency known as NDRC said.  The country still faces a “very challenging” international environment and “the domestic problems it is confronted with are also complicated,” Du said in the statement today. “The potential risks in the fiscal and financial sectors can’t be underestimated,” Du said.  

Meanwhile Japan’s small businesses, the employers of 70 percent of the workforce, signaled that the economy’s export-led revival is too weak to spur spending by companies and consumers. An index of sentiment at small manufacturers will worsen to minus 42 in March from December’s minus 40, the Bank of Japan’s quarterly Tankan survey showed yesterday.  Large companies plan to cut spending 13.8 percent in the year ending March 2010, the second-worst projection on record.  “Even though exports are recovering, companies are still cutting costs and hiring, weighing on domestic demand,” said Hiroshi Shiraishi, an economist at BNP Paribas in Tokyo. “It’s unavoidable that the recovery will stall in the second quarter of next year.”  The Nikkei flatlined today at 10,100, still below our 10,200 target.

Germany is similarly dragging Europe down with their ZEW Investor Confidence Survey, which declined for the 3rd consecutive month to 50.4 from 51.1 in November.  The Greek crisis is weighing heavily on investors’ minds over in Europe, even though the MSM in the US likes to pretend it’s a non-issue (as they did with Iceland and the run on British Banks when I made a big deal out of them last year).  Also, Airline losses in 2010 will total $5.6 billion, 47 percent wider than an earlier forecast, as oil prices rise while carriers compete for passengers with lower fares, the International Air Transport Association said.  Europe is down about 1% with both the  DAX (5,750) and the FTSE (5,250) once again testing our target levels together. 

British consumer prices jumped 1.9% in November, also on higher fuel prices and is very close to violating the 2% mark that mandates action by the BOE.  Our own producer prices jumped 1.8%, more than double the 0.8% that was expected for November by the usual "experts" as commodity prices are speculated out of control but the producers are unable to pass ANY of the increased costs down to the US consumers, who are completely tapped out.  “Competition is brutal,” said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc., a New York forecasting firm, who forecast producer prices would rise 1.2 percent. “If somebody raises their prices, someone else won’t. We’re squarely in the disinflationary camp. There is way too much spare capacity.”    

Factories in the New York region expanded in December less than anticipated, indicating manufacturing may provide less of thrust for the economy in coming months, figures from the Fed Bank of New York also showed today. The bank’s general economic gauge, known as the Empire State Index, fell to a five-month low of 2.6 from 23.5 in November, way off the 21 expected by economists surveyed.  Industrial Production (0.8%) and Cap Utilization (71.3%) were both better news but nothing more exciting than a rounding error.  That’s it for Data today – we have Building Permits and Housing Starts tomorrow along with the CPI and the Fed Statement at 2:15 so lots of fun ahead!

OPEC optimistically raised their 2010 demand forecast by 70,000 barrels a day, which is 0.07% higher but that should be enough to get oil back over $70 (up 1%) because oil bulls are idiots.  That is, by the way, 70,000 barrels up after dropping 1,900,000 barrels a day this year so "only" a drop of 1,830,000 barrels a day less than 2008 in 2010 – Woo hoo! 

Needless to say, we’re still pretty bearish but mostly watching with cash on the sidelines, looking for good spots to deploy some capital but happy to wait out the end of the year if this market continues to act like it has been the past two weeks.

 


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  1. jromeha

    Does anyone know what happened to AIB? Looking for news but Im not seeing any, down 12% premarket….

  2. samz3700

    Banks are not lending to small business -
    Wife is an M.D. – usually love to give loans to M.D.s – citi did not want to renew her line of credit and then cut it in half -
    customers for 20 years – i
    So stupid – you think they are getting our business in the future – not that they care with all this gov. money to speculate with

  3. raulsm

     
    Empire State Mfg Survey crashed to 2.55, why isn’t this market tanking badly?

     

    Released on 12/15/2009 8:30:00 AM For December, 2009

     
    Prior
    Consensus
    Consensus Range
    Actual

    General Business Conditions Index – Level
    23.51 
    25.0 
    15.6  to 27.0 
    2.55 

  4. llorens

    Phil – what do you think about C or TRA for short term plays (day trade or through the week)?  C to bounce up closer to $4 and TRA since it just lost ~30% due to their rejection of the takeover bid by CF?

  5. ssdirk

    Peter – Last night you said you liked the Feb RUT 480/680 short strangle a 200 point spread which is 11.6% up from here and 21% down from here.  So it looks like you favor a move down more than a move up.  Am I right in assuming that Portfolio Margin allows you to take wider spreads (less risk) and sell more in order to acheive your goal?  I am seeing that without it selling the number I need (with a wide spread) to make my desired % doesn’t leave me with much room for other trades.

  6. llorens

    One more:  TSTR
    Overdue for another run up for no reason? Seems that the public has forgotten about their partnership announcement with AT&T to produce/market a satellite hybrid phone.

  7. ssdirk

    Pharm – BEAT is up 20% pre market.  Any news?

  8. Cap

    COF — rising credit card delinquencies and charge offs …. this Has to Be a short here !

  9. samz3700

    Dollar Index  breaking through 77

  10. Pharmboy

    BEAT/ss – can’t find anything but a conference call for today. Have to go listen to it. Have been hunkered down with them waiting for something like this to move the stock.  C what I can find out.

  11. Phil

    AIB/Jrom – The lend to Greeks.  You have to ride out the fear and panic in Europe this month but, of course, they could be panicking for good reason…

    Banks/Samz – I see it everywhere.  I have so many old clients calling me looking for lending sources – same story every time – banks won’t give you anything, even with collateral to put up. 

    Empire/Raul – Hey, not up 50 in the morning IS crashing for this market.

    Exact same level comments as yesterday:

    Our major highs were:  Dow 10,549, S&P 1,127, Nas 2,242, NYSE 7,380 and Russell 615 and we have quite a long way to go to get there. 

    I’m still more inclined to look downward at: Dow 10,250, S&P 1,100, Nasdaq 2,187, NYSE 7,200 and Russell 600 and we already have it on the NYSE so let’s say 2 of them would be very bad and 3 would be very, very bad.  This is the same comment I made last Monday so not exactly brain surgery to watch these levels very closely.

    We’ll see if oil can hold $70 and $1,130 would be a break back up for gold.  Copper is all over the place but silver failing $17 would be a very big deal (now $17.39) so we’ll keep an eye on that. 

    Can all this TARP repayment get the XLF over 14.50?  If not – how pathetic. 

  12. yodi

    Good morning Phil,
    I still have a question of yesterday open pls assist ,thanks
     
    yodi
    December 14th, 2009 at 2:58 pm | Permalink  
    Hi Phil Sorry I am not clear on the LFC trade The 46$ I think are actually  meaning 16.00 . buy rolling to the 2012 jan 50p I get a credit of .10 possible. the 50p 2012  trades for 4.70 to 5.20 do not understand the $31 the rest is OK thnks  
    Phil
    December 14th, 2009 at 2:10 pm | Permalink  
    LFC/Yodi – That’s a good one!  It doesn’t sound like you are protecting yourself though as just selling puts is just adding risk in a sell-off.  They don’t pay a dividend so you can just take $46 off the table by switching to the 2012 $50s at $31.  Then you can sell Apr $80 calls for $5.30 and you don’t need to change the puts or you can get aggressive and roll to the July $67.50 puts at about even (you can always roll back) and you have loads of time to sell and roll with just $26 left in play.
    yodi
    December 14th, 2009 at 1:04 pm | Permalink  
    Hi Phil
    I have done very well with China life Ins. LFC actually started with them at 40.00 now trading 77.00 sold some time ago the 60 put 2011 for 16.21 now 4.85 what would you do as I am thinking of rolling the 60 put 2011 to the 70p for an other credit of 3.95 tks

  13. Peter D

    ssdirk, you are correct on Portfolio Margin.  Without it, the profit target should be 2.5 times less than 6%, which is 2.4%.

  14. ssdirk

    Thanks Peter.  I need to call TDA and possibly switch to TOS.

  15. Phil

    C/LLorens – I’m planning on a DD of the 2011 $5 calls at .38 but, other than that, I have no interest in C.  Don’t forget these TARP exits are not only dillutive but they take many Billions out of the banks’ hands and that’s less money they have to make money with next year.  I like C because they are still so beaten down but I wouldn’t play any bank that’s way up on a good run.    TRA is probably fairly priced at $35 and you should give a little time for the people who ran them up on takeover speculation to get out.   TSTR I know nothing about, I’m not even sure they are a company – more like an idea for a company with all expenses and no sales while you wait for them to actually do something with your money.  Even if the T deal is real, MOT and a dozen other companies have lost billions on satellite phones – a very rough business model. 

    COF/Cap – LOL, let me know when you capitulate – THEN I’ll go short.   They are ridiculous but what can you do?  Hopefully, the reckoning is finally here.

    77/Samz – That should be the magic number if they hold it. If we can take 77 into the overnights the squeeze can begin in Asia. 

    LFC/Yodi – What I would do is take the money off the table and move to the spread I outlined.  What is your question otherwise?

  16. samz3700

    Phil -
    Could I use mattress strategy with EFA – have long term international fund holding I would like to protect – funds help up better than index – mainstay  and artisan int. – so thinking mattress could actually be a money maker if they outperform index in downturn – thougths?
    Our friend with the charts noted a demark 9 on eem – those edz calls might start looking really good if things go south -
    anyone know what’s up with the dollar – is it Europe looking weak?

  17. judahbenhur

    Peter D, Though you had written extensively about it, I hadn’t appreciated the impact of PM on the short strangle/put verticals until I started running the numbers for myself.  Especially in the cases where you want to add protection, or take advantage of movement in the market.  It surprised me when I started calling around to brokers, how little PM is used or understood, other than at TOS.  Do I understand it correctly that when you add Put verticals, the PM calculation leads to a reduction in the margin requirement, while in a maintenance margin account, the verticals will increase the margin required or at best leave it unchanged?  I agree with SS’s sentiment that it seems hard to make one’s profit target without PM.

  18. bord

    Phil,
     
    Is there a shorting opportunity with BBY, if so how to play it?

  19. ssdirk

    JRW – you have any TNA/TZA plays to share?  Levels to key on?

  20. JRW III

    ss / TNA
    Over $61.10 is a buy ( not over night ).The push is on right now !

  21. ssdirk

    JRW – Thanks.

  22. Peter D

    judah, adding Put verticals would reduce margin requirement for the downside, but would not help the margin on the upside.  This works as downside is when the VIX goes up, rapidly increasing the margin for short Puts.  The Put verticals would act as a counter balance to the increased margin, buying time and providing options for adjustments if needed.

  23. Phil

    Polluting stocks are doing well as Climate conference has deteriorated into a load of bickering, name calling and finger pointing.  A big group of small, developing nations walked out yesterday, saying they were disgusted by both US and China’s nonsense so great for OIH today but I still think the talks ultimately accomplish something (otherwise we are so screwed in 20 years). 

    Mattress/Samz – You can use a Dow mattress to protect anything, as long as you feel it would move somewhat in sync with your exposure.  If you have EFA though, I’d sell the June $55 calls for $4 and the June $50 puts for $2.50 so you are collecting 12% over 6 months with nice protection and the put sale is going to be below the 200 dma and $45 should hold (and you can always pick up some EDZ hedges, just in case).  On the dollar, Greece going down is like Lousiana going down for us – it’s not VITAL to our economy but you never know who it’s going to affect so they are all being cautious.

    Oil at $71 already, up 2% on a 0.7% increase in outlook.  No way they survive a dollar rally if we get one. 

    BBY/Bord – If they had gone UP today on those margins, then yes but they do have a nice boost in sales and long-term I still like them so not a short I’d go after.  They may catch a downgrade and test $40 but that would be a good entry point. 

    More free moneyResults of $75B, 28-Day TAF Auction: Fed sells $46B to 102 bidders for a bid/cover ratio of 0.61 – stronger than the 0.41 and 0.53 ratios seen in the previous two 28-day auctions.

    Meanwhile, less cheap money for TreasuryOct. International Capital Flow: Net foreign purchases of long-term securities $20.7B vs. $37.1B expected and $40.7B in Sept. Private foreign investors bought $28.8B, official institutions another $14.6B, while U.S. residents purchased $22.7B of long-term foreign securities.

    The government needs to implement tax hikes and spending cuts by 2012 in order to keep debt at a manageable 60% of GDP by 2018, or face possible panic in financial markets, the Peterson-Pew Commission on Budget Reform said in a report. A loss in investor confidence could drive down the dollar and force interest rates higher, resulting in a sharp decrease in the country’s standard of living. "We will be less free if we don’t tackle this," panel says.

    Some analysts aren’t sure Citigroup (C) can survive absent a government safety net. "Letting Bank of America repay its TARP funds was ridiculous, but letting Citi out is even more problematic," one says.

    Capital One Financial (COF) reports increases in delinquencies and chargeoff levels for U.S. credit-card customers. Chargeoffs – credit-card debt the company doesn’t believe it will be able to collect – rose to 9.6% in November from 9.04% in October; 30-day delinquencies rose to 5.87% from 5.72%. Auto financing was a bright spot: chargeoffs declined to 3.67% from 4.32%. COF -1% premarket.

    Sources say Austria’s central bank put the country’s top cooperative bank and No. 4 bank, Oesterreichische Volksbanken, on a watchlist and told it to find a new strategy. The report fuelled concerns that European banks are in a fragile state, sending the euro to a 2.5-month low. A bank spokesman called the report inaccurate, and said the bank is at no risk of nationalization.

    Redbook Chain Store Sales: -5.1% M/M vs. -5.2% last week. Y/Y +1.3% vs. +1.2% prior. Sales growth at discount stores continued to be strongest in basic consumables, food, toys and electronics. Online shopping remained strong.

    And the buyers snap us back up!  All the CC companies, even COF are flying.  MA up huge!  HOT is making year’s highs, Ags performing well but very uniform indexes (all down about 0.2%) indicates program buying with just 31M Dow shares traded at 10:20. 

    GS somehow held up the open of WFC until just now and only released it once they got the rest of the market moving up – so funny!

  24. Phil

    EWJ $10 calls for .05 are a fun play (EWJ at $9.89) as a strong dollar could pop Japan

  25. judahbenhur

    Peter, Thanks. What has occurred to me is that with PM, you have more flexibility, more time to make adjustments, which in turn reduces the overall risk of the strategy.  At any rate, I’m looking at Feb, starting with the SPX and only after I set up my account with TOS. 

  26. JRW III

    ss / TNA
    Over $61.24 on IWM $0.15 trailing stop, no resistance to $ 62.24.

  27. oncmed

    Phil, im thinkn of selling XOM 70 puts here for entry along w/ some callers…..your thoughts on entry here? TIA

  28. 1020

    Good Morning!  C is at its 200 on the daily chart and 50 week on the weekly.  fwiw……

  29. ssdirk

    Peter – I have the following RUT Jan wild play:  500/650 short strangle and 550/560 put vertical.  The RUT has moved up 20+ points up since I initiated it.  Should I adjust anything?

  30. jcmcn5

    phil,   i’ve been away for a couple of days.  are we still short the dec oil 155 calls? or have we rolled them?

  31. allen060

    C: Phil, I still have the C positions left over from the old 100KP.
    - Short 15 Dec puts
    - Long 10 March 4 calls
    - Long 20 Jan 2011  5 calls
    I kept waiting for a bounce that never came to exit. Any suggestions?

  32. ssdirk

    JRW – Great TNA play.

  33. Phil

    Gang of 12 cheerleader of the day:   Merrill Lynch is bullish on 2010: "We believe the global economy will gather momentum in 2010. We think that the unprecedented mix of near-zero interest rates and high budget deficits will engineer an economic recovery that is real and sustainable… We believe that the world economy will perform far better than the economic consensus would indicate."

    Meanwhile, Moody’s says it expects 2010 will be a tumultuous one for sovereign risk. Among 2010′s more ominous themes: an extremely painful debt overhang; potential social unrest; and significant "exit risk" for governments trying to withdraw fiscal stimulii. "2010 will at best see a ‘normalization’ and at worst a severe tightening in government financing conditions," firm says. (via)

    RIMM hitting $64!

    Nasdaq just jumped 1% in 30 mins – that’s amazing.

    Volume coming up on 11 am is still low-range, under $50M program trading so not too surprising overall. 

    XOM/Oncmed – Very dangerous but fine if you REALLY want to own XOM.

    C/1020 – Don’t forget this is WITH Jim Cramer’s sheeply BUYBUYBUYing today.

    What is with these tiny little premiums.  I know it’s Tues before expiration but I went to see if I could sell IBM $130 puts and they are just .70 with IBM at $129.80.  Way too risky for .70, I was thinking $2 at least. 

    Oil/Jcm – What are Dec $155 oil calls?

    C/Allen – We can only retreat from that position, back to the 2011 $5s and just hope Cramer is right and C comes back.  I assume those are 15 Dec $5 puts and those I would roll to 2x the March $4 puts, now .61 or 1.5x the 2011 $4 puts, now $1.  Only time will heal this bank.

  34. Peter D

    ssdirk/RUT – what was your basis?   The spread I have is still profitable, but the Delta is getting more negative with the surge.  The 650 caller is still under control for another $10 move in the RUT, the 500 putter can be rolled to 530 for $1 credit.  We’d give up 5% downside cushion, but still have 15% cushion left.  These are the kind of decisions that we should make on our own, as it looks statistically safe to do so.  We’d get whiplashed if the market drops 15% in the next 4 weeks, but we know how to deal with it then.  If the market keeps going up, in 2 weeks, the putters would be killed again, then we can buy back the 500 or 530 putters, plus selling off the 560 long Put, and thus shorting the 550 PUT.  That’s another $1-2 profit as long as the 650 strike holds.  Although it’s a crazy play, it provides plenty of flexibilty!

  35. JRW III

    ss / TNA
    Always be on watch for a change in market sentiment, but if you are’nt right on top of it, the trailing stop should work well enough.

  36. Phil

    MA Jan $240 puts at $4.50.  If MA breaks over $250, Dec $250 puts can be sold for $2.50 (now $2.90).  If those go in the money ($247.50), they can be rolled to the Jan $230 puts to create a vertical but, ideally, we are playing for a rejection off $250 to hold the naked Jan $240 puts.

  37. 1020

    Phil/Moody’s   Moody’s statement seams in line with PSW’s view….. M.L.’s…..OUT IN FREEKING LEFT FIELD!!!!!  :)

  38. bgbigelow

    Anybody have thoughts on entering GILD on this pullback.  I know its really rangy and people like it.  Would you enter here or wait until the 44 range?

  39. Highlander

    phil,
    wsj reports aapl having big problems with it new large screen imac both delivery and out of box broken display units!

  40. pstas

    LYG- just checked with my broker re: affect of rights offering. There will be a cash dividend payment on 12/18 of $1.42/share. Ex date was Monday.

  41. kustomz

    For those of you interested in 787 first flight heres a link, should start in 20 minutes

    http://787firstflight.newairplane.com/ffindex.html

  42. alsos

    Phil
    Can you suggest a way to play the MA short without being naked?

  43. Phil

    IMac/High – I heard that and that’s going to cost them but I don’t think it will be a major effect overall.  It’s one model with some (and who knows how many) cracked screens so they have to re-design the shipping boxes and some people will buy other Macs and some people will wait 2 weeks. 

    LYG/Pstas – Thanks.

    ZION heading down fast – not usually a good sign for the market. 

    Adding IYT spread to $100KP – Jan $72/Dec $75 put spread for net .40 (only if I get that price), leaving the $74 puts to hopefully cash out even but, if not, pick up the premium from the $75 puts.  Oops, no I’m not because their damn spread trader won’t let me but that’s the cover I’d make if I could!

  44. Phil

    787/Kustomz – Thanks, hopefully it goes better than Airbus did!

    MA/Alsos – It’s only net $6 to do the Jan $260 ($14.40)/$250 ($8.40) bear put spread and, if you are brave, you can pick up $3 first for shorting the Dec $250 puts at $3 but I’m happier with the naked puts.

  45. Cap

    Man, somebody needs to shoot the REIT sector in the head.  VNO hit 70.65 today.  SLG over 50.
    This is of course ridiculous.

  46. gel1

    Phil
    You mentioned pollution stocks… here is a great one that I have been doing well with – RINO. They are a Chinese company that specializes in cleaning up coal mines – desulpherizing mostly. The usage of coal in China is growing rapidly with no indication a change of direction is in the cards. China is placing a lot of emphasis on cleaning up the air they breathe, and thiis company is a leader in this effort. FWIW

  47. jomama

    bgbig – I bought back GILD callers for a nice profit and added to my leaps.  Aids is becoming a chronic disease which means people will be on rx longer – plus they have some of the tamiflu action.  GILD continues to have juicy front month premiums in 1$ increments – what’s not to love>

  48. kustomz

    Theres a A380 stuck in NY with "technical problem" with a fuel tank

    This administration is spinning the web along with GS, someone remind TG its a Gov sponsored economy and that if we dont spend there is no TAX revenue…he’s going against everything Obama is spewing on TV 6 times a day!

  49. harip

    Phil,
    Your opinion about fslr diagonal jan 145 calls vs selling dec 140 calls for a net 2.3$
    thanks

  50. Pharmboy

    GILD/bgbid – leg in slowly, as they may pull back a bit more.  The stock is getting hit from the failure of their pulmonary hypertension drug (from Myogen purchase).  This was not their biggie in this arena, and is a hard treatment group.  Again, leg slowly as they are very range bound for now.

  51. gel1

    My CAL strategy is now complete – having sold the stock a few days ago on the big up day – sold the short calls today on their big up day. Made profit on all plays, including the short puts that have expired worthless. Will consider repeating the scenario when Phil says "time to buy". By the way, Phil, thanks for recommending to "take the money & run" the other day.

  52. Phil

    RINO/Gel – Sounds good, I’ll look into that one.

    "Well, I appreciate you guys calling in," Obama said yesterday, referring to three conspicuously absent attendees at his big-bank gathering (Blankfein, Mack, Parsons). That awkward moment speaks volumes "about how the balance of power between Wall Street and Washington has shifted again, back in Wall Street’s favor." – That is total BS, I hope Obama tells them to shove it next time they are in trouble (like that would ever happen).

    This can’t be good: The FDIC votes to raise its 2010 operating budget to $4B, $2.5B of which is to be used for managing bank shutdowns – nearly double the $1.3B for that purpose this year. The agency will use funds to add more than 1,600 staffers to help unwind failed banks.

    Nor this:  Curious why banks now put weeks-long holds on travelers checks, or refuse to accept them outright? Counterparty risk.

    Sector ETF strength: Solar– KWT +2.5%. Oil Services– OIH +1.8%. Gasoline– UGA +1.4%. Heating Oil– UHN +1.3%. Oil– USO +1.2%.
    Sector ETF weakness: Biotech– BBH -1.4%. Commercial Banks– KBE -1.4%. Gold Miners– GDX -1%. Financials– XLF -0.8%. Utilities– XLU -0.7%

    Dow leaders: HD +1%. DD +0.9%. DIS +0.7%. MMM +0.7%. HPQ +0.6%.
    Dow laggards: BAC -2.1%. JPM -1.6%. PG -1.2%. T -1.2%.

  53. chaps

    Phil:
     
    Nice play on RUT yesterday. Thanks.

  54. hextra8

    Phil,
    HELP! I have AAPL Jan 170 puts. I’m really underwater on this one. What should I do? I’m a newbie so be gentle!
    Thanks.

  55. kustomz

    On that 787 link dont forget to enable ATC (top left hand corner) this way you can listen to the instruction’s from the tower to the pilots

    TC just incredible, screams of desperation

  56. cwan120

    Hi, pstas,
    I just answered your private email.  I am sorry that it took so long.

  57. stevenparker

    This 787 website is cool! Hope we get audio, so we can hear the wonderful Rolls Royce Roar :)

  58. cwan120

    Hi, Peter D,
    I saw your answer last night to my question regarding the Jan 1040/1030 put verticals.  The idea of 1-2 weeks before OpEx selling the longs and letting the shorts to expire is really great!
    Thanks!

  59. jcmcn5

    phil,   i’ve been away for a couple of days.  are we still short the dec oil 155 calls? or have we rolled them?

  60. Phil

    Long on the RUT was the way to go yesterday, they are the strongest of the group, now at 612. 

    FSLR/Harip – I’m no fan of FSLR but from a premium capturing perspective, it’s a nice play.

    CAL/Gel – Yes, sometimes it does work out and most times it’s much more relaxing. 

    RUT/Chaps – Yeah, that’s perfect so far, IWM too.

    AAPL/Hexra – LOL.  You bet against our beloved AAPL and now you seek help?   Basically, you are just screwed but it would help to know what your entry was so we can figure out what you need to get even.

    Oil/JCM – What are oil $155 calls?  Do you mean OIH? 

  61. jcmcn5

    sorry about the double post.  I meant the OIH Dec. 115 calls.  Did we short them as part of the FCX play — we got out of FCX even, but don’t remember seeing anything about covering or rolling the OIH.

  62. hextra8

    Phil,
    My entry on the AAPL Jan 170 puts was $5.65. How do I get even?
    Appreciate your help.

  63. raulsm

    Boeing’s Dreamliner first flight is today in 15 mins, live webcast: http://787firstflight.newairplane.com/ffindex.html
    Either way BA might move.

  64. Grant

    I am not getting anything from the Boeing feed.  Is anyone getting it now?  Has it started?

  65. cwan120

    What’s LYG doing?  They are penny stock, and then pay out huge dividends to make their stock price even lower.  What does the dividend pay out accomplish?  Strange.

  66. concreata

    Phil – IYT – what is status of yesterday’s short DEC 75 call – is the put vertical in addition to this?
    Adding IYT spread to $100KP – Jan $72/Dec $75 put spread for net .40 (only if I get that price), leaving the $74 puts to hopefully cash out even but, if not, pick up the premium from the $75 puts.  Oops, no I’m not because their damn spread trader won’t let me but that’s the cover I’d make if I could!

  67. samz3700

    Phil -
    EFA – I don’t own it – own mutual funds with a lower beta than EFA -
    Thanks I think I like that strangle on EFA anyway!
    Might do a little mattress and a little strangle – wait that sounds bad

  68. kustomz

    Grant it just started

  69. Phil

    OIH/JCM – We sold those Thurs at $2.05 and they made over 20% that day.  It’s very important you read and follow the strategy section as I can’t follow up on every trade for you.  If you are still in them, it’s fine as the original plan was to roll them along to the Jan $120 calls if Dec fails and the jan $120s are $3.50 so it’s another $1.50 in your pocket even if you do have to roll them up $5 to Jan but, hopefully, oil pulls back along with OIH on tomorrow’s oil report.  

    Speaking of FCX - Nice chance to pick up the Jan $75 puts for $2.20, they were over $3 last week.

  70. aclend

    Phil,
    I’m looking to get into VZ and T. No current exposure. I was thinking selling naked puts to take possession and then sell covered calls against it. Your thoughts?

  71. b1ll

    Phil do you like TXN at about a buck lower than when najarian was pumping them last week, and is 12.50 ish a possible first entry in WFR, thanks

  72. kustomz

    787 will be flying towards LA, as long as the plane remains air worthy :-)
    I’m so excited!!!

  73. Phil

    AAPL/Hextra – Ouch!  I’m bullish on AAPL so it’s very hard for me to advise you on how to short them but, if you are going to pursue it, a reasonable way to go is DD at $1.20 to drop your avg basis to $3.50 and sell the $190 puts for $4.55 and spend an extra $1 to roll yourself to the Jan $195 puts at $6.60, which puts you in a $5 bear put spread for net $4.50 and just hope you get your money back (AAPL below $190).

    LYG/Cwan – LYG is an ancient company and many wealthy, titled people derive much of their annual income from those dividends so they will damn well pay dividends whenever possible.  This isn’t really a dividend, it’s a dillutive rights issue to raise capital and that gives you a partial cash-out.  England is taxing all their bonuses anyway so there’s no point in them having profits this year. 

    IYT/Concreata – The put is shot, I don’t even think we can get a dime back so we either take a dive or they are screwed (my fault as I had meant to cash them out Friday but forgot).  So the spread is to shift to the Jan spread and hopefully get our .49 back if the Dec $75 puts expire worthless.  

    Notice that Zuckerman owns BXP AND the Daily News.  It’s so nice when you can control the media that reports on the health of your industry isn’t it?  Although I must say that Zuckerman has always been the most honest of all REIT owners over the past couple of years.   

    Mattress and Strangle/Samz – Sounds like something David Caruso would be investigating…

    VZ,T/Ac – Look at the daily charts.  Might be best to give them a chance to retract first.  Sell into a nice drop, maybe assume VZ holds $30 and T holds $25. 

    TXN/B1 – I like TXN at $22.50 and you may see it if you are patient or you can do a buy/write with Apr $24 puts and calls.  WFR I like down here for sure.  Buying WFR for $12.50 and selling the Apr $12 calls for $1.85 and the Apr $11 puts for .85 is net $9.80/10.40 with a nice 20% upside or a 20% discount if put to you. 

    HOW IS THIS BEING IGNORED???  NAHB Housing Market Index: -1 to 16, its lowest point since June, in what’s "shaping up to be a bumpy recovery period for the housing market." Sales expectations for the next six months declined two points to 26. Current sales conditions slipped one to 16. Buyer traffic remained steady at 13.

    The regulator of Fannie Mae (FNM) and Freddie Mac (FRE) may seek an increase to their $400B lifeline before year’s end, sources say. The two GSEs may get a lowered dividend payment on Treasury borrowings as well – the payment of about $5B each is more than earnings, and adds to their Treasury draws.

    And even more aid for banks: Along with a vote to ramp up its budget to deal with bank failures, the FDIC agrees it will give big banks a six-month reprieve (and maybe longer) on capital cushions required to support the flood of securities coming back onto balance sheets due to new accounting rules.

    Merry Christmas!  A New York Times/CBS News poll focuses on the trauma of the newly unemployed: Almost half have suffered from depression or anxiety; 40% of parents notice behavioral changes in their children; 25% say they’ve lost their home or been threatened with foreclosure or eviction.

  74. gel1

    acelend/VZ
    I follow your strategy quite often. I usually go out a ways,as the premium income is more attractive to me when weighing the risk – ie more time for the plan to play out. You will miss the opportunity to collect dividends close in, however the premium income will more than offset that missed opportunity

  75. samz3700

    I don’t know why the Dems and Obama don’t claw back some of the 12B AIG payment that GS received from the Treasury – headed by Hank Paulson – we now own 80% of the company thanks to him – while he took a giant shit on shareholders – Gel if you want to rant about socialism – why don’t you take a look at that one – that’s socialism.
    GS was paid full face value for CDS that were worth far less than that – would your life insurer suddenly pay you the full face value of your life insurance – even if the policy was not worth it – only with a gun to their heads -
    If Obama started an investigation into that – Llyod B that little jerk might bother showing up in D.C. -
    Conflict of interest claims en.wikipedia.org/wiki/Henry_Paulson
    Goldman Sachs benefit from AIG bailout was recently estimated as USD 12.9 billion and GS was the largest recipient of the public funds from AIG.[32]

  76. 1020

    787 – THATS what this country is about. :)

  77. stevenparker

    Who is ranting about socialism? Can’t we just agree that we need government and private enterprise both?
    Hey that 787 looks beautiful even with its socialist engines part funded by the british taxpayer :P

  78. Grant

    I hope the first flight is smoother than BA today.  It has been too long since Americans have seen anything significant to show off our technical prowess.  Lets see if it gets more than 10 seconds on the evening news tonight.  It may be many years before NASA has anything new to replace the shuttle to be proud of. 

  79. 1020

    Stevenparker/787    I’ll agree with that. :)

  80. kustomz

    Whoa whoa comrades, can we not enjoy this moment without bickering about our socialist republics good will towards one and all and praise the unions for all the hard work they’ve done in bringing BA to its knees…power to the people!!

    The data collected is a ? mark at the moment, lets hope there are no gremlins lurking.

  81. Phil

    Here is an oil BULL’s PowerPoint telling conference attendees that DESPITE Peak Oil being real, higher oil prices are unsustainable in current economy. 

    AIG/Samz – Don’t forget the first bailout document Paulson had Congress sign was the one absolving him from all criminal prosecution OR EVEN INVESTIGATION in conjunction with the BS he was pulling from the White House lawn. 

    Socialism/Steve – I’ve given up on Socialism.  At this point I think anarchy is the only sensible solution

  82. Phil

  83. lynn2long

    Phil, is Allen’s trade a put bull calendar spread trade? It is like a put spread but with diff expiration and also with 2 long instead of one. (I am re-reading the Sage book on spread trades). And with your comment/response to him, you are reluctantly bullish on it. Your advise is to buy back the 15 Dec $5 put and sell 30 Mar $4 put or sell 2011 $4 put? (I know you told me to master the buy/put concept first but i want to find examples) And what is the benefit of such trade.

    C: Phil, I still have the C positions left over from the old 100KP.
    – Short 15 Dec puts
    – Long 10 March 4 calls
    – Long 20 Jan 2011  5 calls
    I kept waiting for a bounce that never came to exit. Any suggestions?

    C/Allen – We can only retreat from that position, back to the 2011 $5s and just hope Cramer is right and C comes back.  I assume those are 15 Dec $5 puts and those I would roll to 2x the March $4 puts, now .61 or 1.5x the 2011 $4 puts, now $1.  Only time will heal this bank.

  84. lynn2long

    Phil, was Allen’s trade a put (bull) calendar spread? (i know u told me to focus on buy/write first) but I am re-reading Spread trades and want to find some examples) except that Allens have 2 calls instead of one mentioned in Sage book. Fr ur response, ur not reluctantly bullish. u r asking Allen to buy back the 15 Dec $5 put and sell 30 Mar $4 put or sell 20 2011 $4 put? what is the worse and that can happen to this trade?

    C: Phil, I still have the C positions left over from the old 100KP.
    – Short 15 Dec puts
    – Long 10 March 4 calls
    – Long 20 Jan 2011  5 calls
    I kept waiting for a bounce that never came to exit. Any suggestions?
    C/Allen – We can only retreat from that position, back to the 2011 $5s and just hope Cramer is right and C comes back.  I assume those are 15 Dec $5 puts and those I would roll to 2x the March $4 puts, now .61 or 1.5x the 2011 $4 puts, now $1.  Only time will heal this bank

  85. lynn2long

    ooops, sorry for repost, I didnt see it when refreshing so I thought it didnt go thru.

  86. dflam

    Hi Phil : I saw your WFR trade above. I bought the stock at $13.30 & sold Jan .$12.50 puts for $1.25 ( now $.75 ) and sold Jan$14 Calls for $.50 (now $.25 ) in an IRA account that required 100 % cash against the put.Would I be better off rolling to the April puts & calls you mentioned above for more premium,or am I better waiting for the existing Jan puts & calls to expire since the premium declines the most  in the last 30days.However u answer, I would appreciate your rationale for my future guidance. thank you for your input.
    dflam

  87. Phil

    C/Lynn – That was not a spread, just a series of trades taken on C as it moved.  I’m reluctantly sitting on the bullish postiion despite the fact that C looks like crap since we invested in them but we knew it was a long-term play when we started working into it.   Yet another reason I don’t think much of this rally as it’s not taking the financials with it at all.  My idea for adjustments was to roll the put (putting off the damages and keeping the money collected) and consolidate long calls at 2011 $5s and then just wait and hope we aren’t wrong to stick with it.  Similarly, our DD on the 2011 $5s at .38 triggered today.  I thought Cramer was going to ruin it for me but patience paid off and I got my price. 

    WFR/Dflam – No sense in you paying a premium to buy them back.  As a fresh sell it’s easier to take the longer money but you are looking fine where you are although maybe you want to roll the caller if you get a good price as he’s pretty much done anyway. 

    Wow, they are working oil hard around $71 but can’t hold it with 10 mins left to NYMEX close. 

    Volume super-low 101M at 2:22 so stick into close would be super easy. 

  88. qcmike

    Phil
     
    Based on the GDP estimates   should we have an investment for the top four counties?
    Any  thoughts?
    Thanks

  89. nolsrul

    Phil,
    how is the volume looking so far?

  90. gel1

    BA… what difference does it make today whether the test goes well or not. They cannot deliver any until FAA approval, which is at least one year away. The financial impact will not be relevant to BA for at least 18 months, and it is conjecture anyway at this point…. so my recommendation is to invest elsewhere during this period, make your profits and do not worry in the interim what the hell BA is doing to better their balance sheet.

  91. gel1

    Phil
    The best play I made this year was PSW. Will renew my membership tonight. I opted for the membership that restricts political commentary and messaging while enjoying adult beverages. (my weakness anyway) Looking for the same trading profit percentages next year, but will have an advantage from the compounding, and much better skills acquired from you and the many skilled PSW co-pilots. Thanks!

  92. samz3700

    Sorry to the board for the rant – lost a good chunk of retirement money in AIG – sometimes I snap over GS and Paulson

  93. Kwan

    Phil – I sold BSX Feb 8 puts that I’m up 50% on. Is it worth rolling to the 9s to pick up another .40 or do you think should just leave it. The premium erosion alone should get earn me another .20 assuming it doesn’t tank between now and expiration.

  94. llorens

    Phil – really nice call on MA today. I rode it down from $249 as you suggested with trailing stops – stopped out when it crossed back up over $246.

  95. samz3700

    Phil -
    Still going naked on DIA?

  96. jomama

     phil, what are your thoughts about the risk/reward on selling jan 2012 50 puts  XTO for 8.5 or 9$.  deal should close before summer?

  97. ssdirk

    GE trying to goose the market….."The worst of the financial crisis is behind us."  Really!?!  Shameless pumpers.

  98. Phil

    CS halted over something.  Some sort of tax investigation.

    Also, CNBC said something about credit card charge-offs going from 8% to 10% last month.  10%??? 

    Mortgage originations will drop 16% next year, as both a tax credit and Fed purchases of MBS end, reports Keefe, Bruyette & Woods. Lending will drop to $1.6T from $1.9T: "We do not expect the government to attempt to boost refinance activity further, primarily because there are limited options available to do so."

    GDP/QC – No because those numbers only look impressive to us, they are not even in-line for the others except China and I don’t believe that one anyway. 

    Thanks Gel – Nice commercial!  8-)

    BSX/Kwan – My theory is sell when they are falling, not when they are up.  Just let these expire and, next time they have a nice dip, sell more puts.  People make the mistake of thinking they have to own something consecutively but, even with a stock you love, it’s OK to buy low and sell high. 

    MA/Llorens – That’s the way to do it!

    Nas has given up all but 4 points of that insane 16-point spike run I commented on this morning.  This is the nature of the manipulation – huge, ridiculous run-ups on low volume followed by selling all day long. 

    DIA/Samz – I hate it but still naked.  Nothing has changed since that idiotic pump on Monday morning, right?

    XTO/Jo – Should close in Feb but the risk is oil falls below $60 and XOMs stock falls and then everyone decides they overpaid for XTO, causing them to fall more and XOM refuses to renegotiate the all stock deal and XTO finds itself back at $40.  Other than that, it should work. 

  99. Pharmboy

    XTO/Jo – it is an all stock deal, so the options will move over to XOMs options (some derivative thereof).  SGP options moved to MRKs on their purchase.  Just be careful there, as they do not expire worthless….FWIW

  100. jomama

     thanks phil, i may buy some xto may 40 puts as a hedge.  i like that risk reward.  takes less margin as well :)

  101. lynn2long

    Phil,sorry I don’t follow your response below well. would you mind doing the calculations how he can get $20M if GLD at 130.  the bull spread I read about is buy at the money call and sell out of money short call (so I thought that was the only way to do it). So here with GLD, are you saying you are buying $101 call and selling $110 call (which month? Feb 2010 calls as in the original trade? probably not Dec as its expiring)? and then finance it by selling 2012 $90 puts? How do I come up with $20M
    At this moment, I looked at the Feb 101/110 bull call spread cost $10.7-4.65=6.05 -7.45 (bid of 2012 $90 put)=1.4 credit per share.
    Max upside if put to him at $101 is $9/share + 1.4 credit —--is this right?
    if he executed the gain after putting to him at $101 and selling at 110, what to do with the 2011 $90 put as it will be naked put?
    what’s the max loss? (I am just thinking out as the book taught to calculate the max gain and loss etc)
    I’d appreciate you illuminate me on this trade. I find this interesting. But I am too new to be able to see your &20M gain at a glance.
    ——————
    "GLD/Lynn – If GLD falls below $110 and the person takes no action, then they have GLD put to them at $110 per share x 965.000 shares = $106,150,000.  It’s a very aggressive and, in my opinion, very foolish bet – arrogantly assuming there is no way they are wrong and, rather than hedging, doubling the delta on his 100% upside bet on GLD to about $1 so every dollar drop in GLD costs this guy about $1M.  Let’s say this guy thinks GLD goes to $130 and he makes $20M.  He could have bought $25M of the $101/110 bull call spread at $5.85 and that would make about $20M at $110 and he could offset $4.50 of that selling the $110 puts but I’d sell the 2012 $90 puts."

  102. Phil

    GE say 2010 revenue will be down 5%.  Environment challenging but improving.  I suppose if down 5% includes losing NBC then that’s pretty good. 

    JP Morgan Chase fell 2.7% after it wrote off 8.81% of credit-card loans in November, up from 8.02% in October. Bank of America is off 2.8% after writing off 13% of loans – a lower percentage than the previous month but still the highest rate of any major card issuer.  Writing off 13% of loans???  That is nuts!

    Credit Suisse (CS) likely to pay $536M in a settlement with authorities relating to dollar payments made to sanctioned parties. Shares have resumed trading after being halted, now down 2.9%.

  103. lynn2long

    Also, what if the share never drop to $101 and never got put to him?

  104. judahbenhur

    Cwan, You mentioned the other day that TOS gives you a quiz when applying for PM?

  105. jomama

     thanks pharm – will take it off after a 20 to 30% gain – i am expecting some huge XOM pump jobs.  "only dow component without a big run"  "great management" etc…etc….

  106. Pharmboy

    For less risk, I am going to try selling the 48/43 C/P GILD Jan10 strangle for 1.02.  Won’t mind owning them at 43, as that is ~5% down from here.

  107. Pharmboy

    RF pulling back nicely….MS – move to 25 by Jan expiration??  (My ‘insider’ tells me so).  I think gold gets CRUSHED over the holidays barring an attack on Iran (just a feeling).

  108. Phil

    GLD/Lynn – Ignore the puts, I mentioned that as an option but my play (if I were messing around with $200M just buying GLD) would be to just take the vertical and roll it and sell puts only if it didn’t work out.  The key is buying $25M of the spread and making 50% to get the $12.5M (not $20M, you need $40M to make $20M) profit simply from a close above $110 (paying $9 per $6 invested) , I could care less about the put sale but the play we were discussing had a put sale so I mentioned it (not knowing I would have to dissect everything I mentioned at the time).  As to what if the shares never drop to $101 - you are not understanding the trade.   It’s a call spread.  You own the $101 calls and sold the $110 calls to offset the cost to $5.85.  That makes your break-even point $106.85 so ANYTHING lower than that is a loss on the spread.  Once GLD goes over $110, you cannot make more money because you sold the caller and will owe him all gains above that line.  Call spreads are simply a way to by an at the money or in the money option and offset the premium by selling a higher call.   It is a VERY directional bet and has little room for adjustment. 

    Oh yeah, now we’re fallin’! 

  109. Pharmboy

    ARRY signs a deal with AMGN.  Nice move for them as they were out of $$$$….now, let’s see their MEK cancer program succeed.  That will be more $$$.  I still think a Japanese pharma buys them.

  110. ssdirk

    I love a negative stick!!

  111. pstas

    Phil,
    CSCO- I am a long term holder w/basis in the 9′s and remain bullish . Would like to take some off and re-deploy. Suggestions?
    Perhaps  Jan 11  spread?

  112. Pharmboy

    ARIA is selling more stock to raise $$$.  Nice move after releasing positive data on their mTOR inhibitor for cancer.  Now, let’s see if MRK steps in and buys them.  Not so soon, but in the coming months.  Gonna see what the placement price is, but good be a good time on this pullback to leg into a few shares….buying again here for 2.25.

  113. stevenparker

    Hi Phil, folks, am sitting on some short Jan 12.5 puts in WFR sold for 1.10 now .70
    I am considering raising cash at this point and looking to close these for +.40
    A question I like to ask sometimes, am I overtrading?

  114. chaps

    ssdirk:
    I love a negative stick!!
     
    Technically, it’s known as a carrot.

  115. nolsrul

    Anyone else having incredibliy slow order fills today?

  116. Pharmboy

    Wow, I am getting caught up. PFE boost dividend closer to rivals (18c foe Q1…so 88c for the year = 4.8%).  I’d still short them….for an entry point, as their LT earnings are all Liptor.  Do they need some Viagra….!!!

  117. samz3700

    How does an SPY 111 call expiring on Friday still have over 60 cents of premium? Easy roll to end of month

  118. lynn2long

    hm…sorry to make u dissect the trade, but i really like to know. So the max gain will be 3.15/share but there is not max loss. This trade means I have to be bullish on gold. If GLD keep falling, (according to Sage option book) u can turn it into  bear call by selling at the money call…. if not, how should one exit such a trade?

  119. Pharmboy

    OOPs, 72c = 3.9% for PFE.  Still short ‘em.

  120. mrmocha

    Sorry guys, I played for the stick at 3:30 so there won’t be one.

  121. ssdirk

    Thank You Mrmocha.  I like the looks of that inverted bathtub curve on the 15min RUT chart.

  122. nolsrul

    As they say at the craps table "Color coming in".

  123. kustomz

    GS under 160 and you can go full bear

  124. drumkeerin

    dear phil
    Re RIMM (earning thursday) Does buying the Jan 70C and 60 P and selling the sky high premiums Dec 65s make sense?

  125. drumkeerin

    dear phil
    Re RIMM (earning thursday) Does buying the Jan 70C and 60 P and selling the sky high premiums Dec 65s make sense?

  126. ssdirk

    JRW are you catching the ride on TZA now.  If so, I am going to refer to you as "Money".

  127. llorens

    mocha very funny. Not ha ha funny….just funny. I got out of my two positions today with trailing stops at ~2pm to avoid the headless chicken square dance that usually is the last hour of trading.

  128. jimmyv

    1/2 cover or naked into tomorrow?

  129. mrmocha

    llorens – "headless chicken square dance" – I like that.  However, I think your description is applicable the more than just the last hour, how about the last two months!

  130. doro165

    Thinking of doing a buy/write on CAL stock $17.55  Jan 17.5 C/P for $2.50
     
    Is there a better play?

  131. kustomz

    Going long C AMZN BBY, Cramers says…

    thanks to antidepressants im happy no matter what happens

  132. lynn2long

    Phil, sorry I never should’ve said having shares put to him at $101. I was confused with the call spread having a put as it was in the original trade selling put at $110.
    So what if I do sell Feb call and put at $110, receiving $9.2 credit, (as in ur buy/write) and I literally have the shares put to me at $100.8/share and then sell more calls to bring down the cost or if it rises back to $110, I’d sell it for a gain of 9.2/share?

  133. stevenparker

    doro – careful with CAL it has had such a run up and is a long way above it’s short term averages. If it were my money I would be waiting for an entry closer to 14, and putting my money somewhere else if I didn’t get it.

  134. Phil

    CSCO/Pstas – There’s no dividend issue so no major reason to hold the stock at $23.50.  I would just cash out and go for the 2012 $25s at $3.75 and you can sell 1/2 the Apr $25s for .87, which brings you down to net $3.35.  Do that 4 times and you are down to $2.20 for net $27.50 in 2012 and if you don’t think they’ll do better than that by 2012 (up 10% a year) then just cash out and walk away now.  

    WFR/Steve – Taking profits is not overtrading and if it’s taking up margin you need – then all the more reason to take the profits early.  It’s right on the money and we’re short-term bearish so not a bad one to kill.

    Fills/Nols – There’s no volume, that’s why.  Even now there’s very litte volume but it’s all down.

    SPY/Samz – Those plays are the best on expiration week as long as you don’t mind the rolling.

    GLD/Lynn – You can’t possibly lose more than $5.85 unless you sell the puts, that’s you limit.  The nice thing about verticals is you can generally get out without too much damage when the trend breaks as long as you don’t let it go too long. 

    Mr M, as usual is a more powerful market force than all the GS trade-bots! 

    RIMM/Drum - There’s a better than 50% chance you get blown out to the upside I think.  Expectations are low and if they are getting anything like the kind of numbers AAPL has been putting up in phone sales, there will be a huge surge.  I’d go with the March $70/Dec $65 at net $1.75, March $55 puts/Jan $60 puts at net .25.  You have Jan and Feb to roll the winning side to and probably keep 1/2 the losing March side so as long as you are willing to add a little if you have to, it can be a nice spread no matter what happens and amazing if they flatline.

    DIA/Jimmy – Still naked but 1/2 cover of $105 puts at $1 isn’t the worst thing to do if you are more conservative.

    CAL/Doro - You’re not really getting paid enough to buy the stock, may as well just sell the put and see if you get assigned, then you can do a buy/write from a lower stock basis. 

    LOL Kustomz!

  135. yodi

    Phil refering to MA it would have been nice you would have said this morning BUY THE JAN 240P FOR ABOUT 4.50 OR SO.
    I did not undertsand your interpretation and did nothing one could have sold the option this afternoon again for possible for up to 6.00 I guess It takes time to understand the lingua as i said before you know what you want but sometimes taugh to understand by many

  136. ssdirk

    This is a must see.  Posted from Denninger’s site.  It is Dylan Ratigan reaming the snot out of some rep.
    http://market-ticker.denninger.net/archives/1732-Dylan-Ratigan-Reams-Ed-Perlmutter.html

  137. kustomz

    ssdirk, no wonder they got him off CNBC…he would be executed if this were China for spreading propaganda…..is anyone even listening? Thanks for the link

     
    GDP really, even in the face of all the Government borrowing around the world…really? Name one company thats making a serious investment here in the US. You’d have to be off your over payed CEO rocker.

    I say no way Jose! Its a mathematical improbability unless the Fed gives every man woman and child on earth a gift card. Someone try and put a finger on how much money has been borrowed the past 10 months by troubled countries banks and companies. There simply isn’t enough money for expansion in the face of declining demand while inflation continues to rise in sectors that determine consumer spending.

    Someone i know tried to build a table here in the States, plastic with a aluminum box and a plexiglass top. Simple, guess what he couldn’t find anyone here to do the job. Guess where hes making the tables, that’s right in China.
    Its a joke and im frankly getting sick of hearing the contrary.

    The last time the markets were at such a disconnect was in 2007 and we all know what happened in 2008. Its a smoke screen to give the people of this country back some hope of a recovery and to go xmas shopping. I have not held a trade for longer than a few hours the past month, im forced to question the logic every single day and im getting tired of being on edge every second of the trading day. My biggest fear is getting stuck in a position and kicking myself for the next 12 months.

    We are being set up for the fall in 2010 IMHO…back to my finger biting

  138. Pharmboy

    Kus – praise Holy Almighty Tarzan….U go!!! 

  139. cwan120

    TOS PM / Judah:
    Yes, there is a one-page open-book test.  Contact TOS and tell them you want to apply for PM.  They’ll send you all the materials, including the test.  The test is not really that hard.  But you have to do your homework.  If you need some help, free tutoring is one of the PSW membership benefits.

  140. concreata

    Phil – FXP – I hold long DEC$8 Call  – bought last Nov at 48cents, now .26cents. With 4 days to expiration, I would expect price to be higher since FXP closed at $8.16 today. If FXP stays above $8.00 by exp, I naively assumed the trade would be breakeven or better – true?

  141. Phil

    Saved by the bell!

    GLD/Lynn – Now you’ve lost me.  Are you talking about naked selling the Feb $110 puts and calls for $9.20?  That is freakishly dangerous for one thing as you can get burned on either end and GLD moved $10 in the first two weeks of Dec AND in the last 2 weeks of Nov AND in the first two weeks of Nov AND in the first 2 weeks of Oct AND in 3 weeks in Sept….  So you are betting a stock that has moved $10 or more 5 times in 3 months will not move $10 in the next 10 weeks???  There’s a very good reason we rarely do naked straddles, especially with volatile $100 stocks. 

    MA/Yodi – First of all, it is NOT my position to tell you to buy stocks.  These are trade ideas and you may try them or not try them but I do not tell you to buy things.  If you want me to manage your money – I have a hedge fund – this is not it.  If my statement "MA Jan $240 puts at $4.50" is too complex for you to understand, then you certainly shouldn’t be putting $450 into the trade and if you don’t have an investing premise of your own that allows you to look at the chart and see that MA looks toppy and decide FOR YOURSELF that you think the MA Jan $240 puts at $4.50 might make an attractive additon to your balanced portfolio – THEN YOU SHOULD NOT BE MAKING THE TRADE ANYWAY.  Are we clear?

    Dylan/SS – That guy is my hero now!  I love that he told CNBC to drop dead because he didn’t want to play their game anymore and he found a place where he can be a real newsman for financial.  I love at about 1:15 he flat out says to Perlmutter "You are lying" – that is THE BEST!  Maybe there is a place for me on TV…  He’s great, Ed starts to evade a question and he cuts him off and says "that has nothing to do with it" and then he rephrases the question and demands an answer – I would so watch this show in prime time….

    FXP/Concreata – The closer you get to expiration the more premium will fall off and all you will get is what little (if any) difference there is between the close of FXP and $8.  That’s why we sell the $8 puts – that same premium decay works in our favor as we near the close.  Alwyas try to sell premium, not buy it.  As a rule of thumb, you never want to be in a front-month call or put during expiration week except as a momentum trade. 

    FOMC preview: Fed Chairman Ben Bernanke responded to written questions from Sen. Jim Bunning by saying "resource slack is now substantial" and that he expects the maintenance of low inflation ahead.

    House Majority Leader Steny Hoyer says the body is discussing reviving Glass-Steagall, the law repealed in 1999 that barred bank holding companies from owning other financial firms. Hoyer voted for repeal in ’99 and "maybe that was a mistake."

    More credit-card default and late-payment reports: JPMorgan Chase (JPM -2.2%): defaults up to 8.8%, delinquencies fall to 4.9%; BofA (BAC -2.9%): defaults down to 13%, delinquencies up to 7.69%; Citigroup (C -3.8%): defaults up to 10.29%, delinquencies up to 5.81%. Discover (DFS -2.7%): defaults up to 8.98%; delinquencies down to 5.65%.

    Year-to-date Dow leader American Express (AXP -0.9%) is the only one of six card issuers today reporting drops in both credit-card defaults and delinquencies. Write-offs fell for the seventh straight month, to 7.6%; delinquencies slipped to 3.9% from 4.1%. Earlier, Capital One (COF -2.5%) reported increases in both defaults and delinquencies.   Remember last year when AXP was aggressively terminating small business accounts – this is the pay-off for them!

  142. pstas

    This just in from Washington, DC: The Supreme Court has ruled there will be no Nativity scene this year in the nation’s capital. The ruling was not based on any religious principle, however. The problem stems from the inability of Nativity organizers to locate three wise men anywhere in the city. The search for a virgin likewise was difficult.
    On the other hand, there has been no problem finding enough donkeys to fill the stables.

  143. concreata

    Phil – RIMM - Hold short JAN 60 Call, Long JAN 65 Call – slight loss currently. What would you suggest to balance off their bearish vertical for tomorrow.

  144. pstas

    Here is a question from the TOS open book test for portfolio margining. I have been corresponding with Cwan and we arrive at 2 different answers. So, all you trivia buffs and technocrats out there, what say you?

    The following positions belong in the same "security class" or "product group" as  a long position in MSFT,
    EXCEPT:
    a. Short put with the obligation to purchase MSFT shares.
    b. Short calls with the obligation to sell MSFT shares.
    c. Long position in the  QQQQ, tracking the NASDAQ 100 Index, of which MSFT is a major component.
    d. Long LEAPS options on MSFT.
    e. Long position in MSFT preferred shares.
     

  145. Pharmboy

    pstas…..LMAO on that one!

  146. kustomz

    pstas, finally a good laugh outside of watching CNBC…thank you

    Me Tarzan you Jane, unless you want to be cheetah, o wait tigers got dibs on that one…..ungawa!!!!

  147. kustomz

    That Dylan Ratigan video needs to be emailed to everyone that you know with a note to email it to everyone they know. Show MSNC that this subject is being taken seriously and we want more exposure on the subject.

  148. Cap

    BTW; these BS sticks are pissing me off.
     
    Someone is now circulating a back test that sez when S&P futures down >0.5% day b4 Fed mtg; the day of Fed mtg is up 11 / 11 times avg. 2.1%.
     
    Here’s to down 2% tomorrow !!

  149. lynn2long

    Here I tried again, Phil
    About the GLD trade: if I am bullish on GLD. I would buy 100 share of GLD at $110, then sell a call and put option. How do one decide on whcih month to sell. I see Mar put and call is higher credit than Feb, about  $11 vs $9 credit.
    1 if by expiration, GLD is higher than $110, I sold at $110 and kept the credit
    2 if by expiration, GLD is lower than $110, I got assigned another 100 share at $110, but then I can sell more calls against it?
    3 then if I am still even more bullish, I can buy back the calls (cheaper due to decay), and sell the shares?

  150. Cap

    Mortgage originations will drop 16% next year, as both a tax credit and Fed purchases of MBS end, reports Keefe, Bruyette & Woods. Lending will drop to $1.6T from $1.9T: "We do not expect the government to attempt to boost refinance activity further, primarily because there are limited options available to do so."
     
    And Obama met w/ bankers yesterday for what purpose exactly ??
     
    Just another photo op to give the appearance of doing something …

  151. Cap

    kustomz:  your 4:06 rant … I am with you buddy !

  152. lynn2long

    Hi Phil,
    I saw you’re a bit upset by Yodi about MA. I am not trying to take sides.
    But maybe it makes better understanding between your services and subscribers: I came here thinking I can follow some smart ppl who knows how to trade/invest in this market. I really don’t mind blindly following buy/sell instruction as long as in the end, I have a gain in long term yr over yr, as I believe you know it better than I.
    After reading all these foreign languages, I thought maybe this is some insider talk and ready to take off. Fortunately, I was encouraged by ppl here to help a rather dumb me, so I tried to re-schedule myself upon realization that I NEED TO LEARN the language etc first. (and I decide however long this takes, I have to learn)
    I did jump into some stupid directional trades (due to the bearish tone here) which I never mentioned here since it was stupid of me and also I don’t want you to think that I blame anyone here (as it was my own decision). So now I reside to not trade at all but just read here and learn as much as I can, even tho I still wonder by the minute if I can handle this or am I going into something even more dangerous. If I don’t want to continue like last yr buy high sell low, I need to "find" better ways. So I do need to learn no matter how hard.
    But sometimes I do wish in some way, this can be a service that gives out buy/sell signal—-of course its still at our own risk to follow or not (even if u do tell us to buy or sell) as it is ultimately our decision. It would really help. Will I still try to learn what’s the reason behind all the trades, of course I will but at a slower pace as I have a peace of mind that someone who’s a smart guru in the know giving the instruction.
    I am a nurse by training, I can tell a patient how to take care of herself and how to take medicine and exactly what medicine at what time to eat, but I cannot take it for her or force it into her month, esp once she’s discharged home. And I can teach a diabetic patient to inject insulin, and I teach her how to and how much and how to measure blood sugar level first etc. If she refused to take it and risk her life, I am not to blame. But I do have to tell her this is the way to take it if you want to live.
    I don’t know, I sometimes wonder why everyone is here since they know what they are doing and they can decide for themselves what to trade already. I wonder if this is a chat that ppl come telling others what they r trading and its up to u to follow or not. Is my feeling true about this service? I am too new to judge. I am encouraged because everyone who comes here wants to come even if they r so smart. So maybe I should be patient so some day I can really trade and make money, (of course I will take the advices to read the books recommended first now as I feel more stupid whenever I get things mixed up, not your fault, its jsut learning takes time and each person is different). Other times, i just told myself, forget about the money I lost and move on, work and save, holding cash in bank as I don’t want to lose money like last yr. Other times, I feel responsible to trade it back since there will be tuition to be paid someday. (if you are wondering why I lost so much money, its not me, its my spouse, but I dont want to blame him, he lost his job and the lack of security prompted him to. And he’s since found his job back and working very hard to keep it).
    I still don’t own a home in California, cuz I was always worrying about the mortgage payment with housing so expensive. So this yr, finally after my husband got back a job (lucky him, thank God), I put 2 different short sale offfer, none of them has worked out, cuz the banks sold the paper and now no one knows who’s responsible and so we waited and waited, even tho they were on the market 400+ days when we put our offer planning to put 20%down. Then almost everyday I got a call fr someone who left a message telling me that the govt is going to help homeowner cut their payment in half…so I should call 1-800-xxx-xxxx. I am so frustrated, sometimes my son told me, mom, you should have bought the house on 0 down and if we are in trouble the govt will help us out. Well, how do you teach your son to be responsible when friends around him are picked up in Benz. I have it up to here and sometimes I want to leave the country!
    Thanks for your patience in reading this.

  153. chaps

    pstas:
     
    Test question: I think the answer is c. I took that TOS test about two months ago. I came up with that answer by reading through all the PM literature they sent to me. Don’t know if I’m right, but I passed, and I think you’re only allowed like two wrong answers.
     
    That question, and some of the other questions, are not too swift IMO.
     
    There’s one where they talk about "change in variance", or something to that effect. I asked them to clarify what "change in variance" meant and got some amusing responses. (As far I can tell, they meant variance. The change part was redundant.)

  154. lynn2long

    What about this TOS test? what’s PM? Will I be subject to it if I use their service?

  155. cwan120

    Lynn,
    That’s a test only if you apply for Portfolio Margin (PM).  You need to have minimum $125,000 equity in your account, and then you need to pass that test.  The purpose of PM is to allow you to trade much larger positions in options.  They want to test you because you are subject to higher risk.
    You can safely ignore this discussion.

  156. stevenparker

    ssdirk – that’s hilarious thanks for the link. I said a year ago when we were first hearing about regulation of this market that "end user" would be the sticking point. There is no way to differentiate logical end users from investment banks. Who is an end user of oil? Do I have to take delivery. OK I’ll rent a tanker. Now what? hahahaha. What a joke.

  157. tchayipov

    Dylan Ratigan/
    at which channel he works now?

  158. chaps

    lynn:
     
    I’m sure Phil will respond to you. As you may be aware, Phil usually maintains a portfolio for those you don’t want to take on as much individual responsibility for trades. Beyond the portfolio, a lot of what goes on here during the day is Phil throwing out trade ideas. If you pick up on those (versus following the portfolio), you need to take responsibility for the trade. In other words, Phil throws out lots of ideas, and he’s not going to track them and give people buy-sell signals on all those ideas.
     
    The portfolio is a good way to see how Phil’s philosophy in action. It’s concrete, and he makes the buy-sell decisions.

  159. cwan120

    Lynn, I can answer your question on GLD buy/write:
    "1 if by expiration, GLD is higher than $110, I sold at $110 and kept the credit" – Yes, you are right here.
    "2 if by expiration, GLD is lower than $110, I got assigned another 100 share at $110, but then I can sell more calls against it?" – Yes, you are right here.
    "3 then if I am still even more bullish, I can buy back the calls (cheaper due to decay), and sell the shares?" Not quite.
     
    If you sold calls and the underlying stock goes up quite a bit, the price of your call option goes up quite a bit, too, and most likely more than the price you sold for.  So, if you want to buy back, you have to pay more than you sold for.  So, you are back to your (1) above, "1 if by expiration, GLD is higher than $110, I sold at $110 and kept the credit".
     
    This is something you have to accept: By selling the puts and calls, you reduce your risk, because your cost of GLD is reduced by the amount of credit you got from selling the puts and calls.  But you also limit your up side.  The calls you sold means you agreed to sell your shares to the caller at the call strike price.
     
    "But what if GLD goes up to $10,000 after the buy/write?"  Well, you wait until the expiration date, and let your shares be called away.  Be happy and MOVE ON TO ANOTHER OPPORTUNITY!  You are happy because GLD could have gone down!

  160. chaps

    Tchay:
     
    Radigan: MSNBC

  161. tchayipov

    pstas/
    I think correct answer is E

  162. tchayipov

    preferred shares like bonds, they are not correlated with price of common shares

  163. Cap

    MSNBC – Is that a real channel  ? 
     
    :wink:

  164. tchayipov

    thanx chaps,
    is it mean than we can see him only online?

  165. cwan120

    Lynn,
    I forget to mention one thing: You don’t see Phil recommending buy/writes lately because the market is so high that he is waiting for a correction.  When the market comes down to a reasonable level, you’ll see more actions.
    The only way to make money in any market is buy low and sell high.  The market is too high now.  That’s why we are not buying right now.
    So, I suggested a few days ago that, if you have the time, read old posts a few months back.  If you find some trades, try to find historical data and see how those trades worked, and whether they made money or not.

  166. gel1

    pstas/Washington DC…. A good day laughing is always equal to a good day trading That is humor at the best!

  167. Peter D

    pstas, the my answer is also c.  What answer do you have in mind?  If you have 3 or more incorrect answers (I think 2 incorrect would pass), TOS would tell you to try again.  I’m not sure how many times they’d let you flung the test though.

  168. lynn2long

    thanks cwan120 , so is it wise to sell call and put further out, as it seems the longer term the option being sold, the higher the credit amount? Is there any way to decide which option to sell? Is it a rule that u sell the at the money (meaning u buy GLD at $110 and thus selling the option at $110 strike)? I do sometimes see Phil sharing some that’s different strike eg the WFR this morning:
    "WFR I like down here for sure.  Buying WFR for $12.50 and selling the Apr $12 calls for $1.85 and the Apr $11 puts for .85 is net $9.80/10.40 with a nice 20% upside or a 20% discount if put to you. "

  169. tchayipov

    Peter, my answer is E. Interesting what Phil think about it:)))

  170. Peter D

    tchayipov, in one of my PM applications, I put E as the answer, and it was wrong!  Who would have thought.  C went through fine.

  171. lynn2long

    old post: I will try but looking for them needs not that easy. The reason I try to learn with the live example here is then I can look at the option chain to check price  and calculate real time to see if I am understanding the trade. I can’t do that in the older post so I didn’t realize I actually misunderstand what was being said,
     
    Like Tchay pointed out to me on my inquiry on one of the trades Phil mentioned, then I realized I do not understand it right thus calculate wrong. I can’t do that with old post, hope u understand what I mean.

  172. kustomz

    Look at Cramers show ….SKS depending on European tourists and their strong Euro while Americans merely window shop wishing they could buy something. WTF is going on here, does anyone else see something dangerously wrong here? He’s pumping GOOG and trapping the retail investors at or near the top….good job Cramer. Then again let the sheeple get slaughtered. If no one takes out SKS im willing to bet they go BK by the end of next year.

    Now their defending bankers!!! I just threw up in my mouth.

    NEW YORK (MarketWatch) --  (SKS said on Thursday that same-store sales at the firm fell 26.1% in November. The firm said total sales fell to $245.1 million in November, from $327.3 million last year. Analysts polled by Thomson Reuters had expected Saks’ same-store sales to fall 20.8%

    So much for that strong Euro saving em….."6 bucks and change, you be the judge" thanks for the ringing endorsement Cramer

  173. lynn2long

    whenever u do a buy/write, do u always have to wait till expiration? can u modify it, and will phil usually modify when its turned more -ve or bullish etc

  174. tchayipov

    Peter,
    did they tell you which questions was wrong??

  175. cwan120

    Lynn, RE which month of puts/calls to sell.
    That’s a great question.  I’m not experienced enough to answer that.  I’m interested in hearing what Phil has to say on that one.

  176. tchayipov

    Lynn,
    let me add some to discussion of Phil’s ideas:
    first of all, your portfolio should be balanced ( mean you have to have long and short positions)
    for example, if Phill give new trading idea, first I check how this trade change balance of my portfolio and deside follow it or not.
    right now I have perfectly balanced portfolio ( 60 bearish and 40% bullish) so if Phil posts new short idea, I stay away

  177. Peter D

    tchayipov, Yes, they did tell which one was wrong.  I’m not sure if they are still doing that now.
     
    lynn, with ThinkOrSwim, they have all the historical option pricing in the Analyze/Thinkback Tab, so you can look back to a date in the past and do the analysis in your own leisure time!

  178. stevenparker

    whenever u do a buy/write, do u always have to wait till expiration? can u modify it, and will phil usually modify when its turned more -ve or bullish etc
     
    Lynn I struggle with this topic and sought advice only today on wfr, so I thought I’d comment.
    Let’s say you entered a position which could make at most $1000 in 30 days, and on day 3 it is already showing a $999 profit. Would you wait the rest of the month, taking ongoing risk in the market, for the remaining $1? Of course not that would be silly. You’d close it and be super happy!
    What about if it is showing $1 profit on day 3, would you close it? Of course not it won’t even pay your commissions.
     
    So we need a guide and here is mine
    - in the first half of time to expiration, close any transaction at 60% potential profit.
    - in the second half of time to expiration, close any transaction at 75% potential profit.
    - in the last week before expiration, close any transaction at 80% potential profit
    - by 3 days before expiration, close out any profitable transaction.
    While obviously with experience you can show flexibility, achieving these unrealised profits and then letting them subsequently slip away from you would be unfortunate.
    The key to this is in realizing you are in a position to make a profit, you are not in a position to be in it for a set length of time.
    Obviously "closing out" can include rolling out for further month(s) if that is your decision.
     
    Nobody ever made a loss by taking a profit!
     
    I will let others deal with the awkward topic of loss making positions :)

  179. lynn2long

    see, from what i read, i kinda know naked put and call is dangerous just like Phil commented on one of my GLD selling put and call only.
    But what makes me ask that question was the first time I asked about buy/write was a trade on WFR where Phil said "you can initiate ownership by just selling naked Jan $12.5 put for $1.15" couple wks ago, which gave me a lot of confusion at the moment. and Tchay explained to me that its one of the 2 ways to initiate ownership….
    Now see if I understand right, selling both naked call and put is dangerous, but if u like a stock, u can initiate ownership by selling the put first, since worst is its never assigned to u, and u get to keep the credit. Or it did decline and u initiate ownership.
    Actually, do u have always have to wait till expiration to get the put assigned or u get assigned whenever the stock reached the strike price? Do u always get assigned automatically at expiration or u have to do something to get the shares? once assigned u can sell it at anytime as u please., Or you can sell a call as a covered call? after u have sold a call, u cant sell the shares, otherwise u have a naked call?

  180. Cap

    someone ought to write a book called "The Idiot’s Guide to Jim Cramer and Mad Money".

  181. tchayipov

    Peter,
    I’m trying now to get PM and ask them to set it up for now on my paper account. WOW my margin requirement dropped from 80k to 35k – it is great
    also I checked some straddle plays, WOW, now I understand how you make stable 6-10% per month

  182. lynn2long

    I can testify, my husband was listening to it and buying buying, then selling when the CEO said he’s buying last yr and then he finally sold at $7 when someone on CNBC told him S&P going to 400 when it was at 700. Thats our buy high sell low with CNBC cramer/fast money. Now I turned them off, and actually reading here and all those stuff about options with them is too difficult. Inexperienced , we fell prey to them, they all seemed to know what they r talking about on TV, unlike here, then now I like what I learn, "what if I am wrong" way to trading
    thank you all for not laughing at me after sharing. I am going to get dinner ready

  183. stevenparker

    Lynn, you are unlikely to get assigned if the sold put has more than a few cents in time value left. The reason being people can sell the put and reveive more money than exercising it. Exercising only gives you the intrinsic value (the amount the put is in the money). Selling gives you the intrinsic value AND any remaining premium.
    You are most likely to be assigned a sold put early on a dividend paying stock where the dividend is greater than the remaining time value in the option.

  184. kustomz

    Cramers too greedy, he’d opt to write that one himself.

    Why in the world would Dylan Ratigan have shamed ex gov Elliot Spritzer sitting beside him on the show. Baffling, unless he’s a plant to take some credibility away from DR i cant see the logic. I think DR has proven he doesn’t need a side show midget side kick to make the show entertaining, BBQ and charred politicians is entertainment enough if you ask me.

     

  185. cwan120

    Hi, Peter D,
    Do you mind if you share some of your previous SPX/RUT trades that required adjustments?  (which options, when you initiated at what price, and what adjustments you had to make, etc)
    Frankly, I’m scared to death on these monster babies.  So, I’d appreciate it if you can share with us some of your experiences.  Thanks!

  186. Phil

    GLD/Lynn – There is no one answer for that.  How bullish are you?  Are you sure you don’t mind being assigned another 100 shares at the put strike you sell?  At $11,000 per contract, you’d better be very, very sure you love gold long-term.  What is your goal?  How much are you trying to make?  How long do you intend to hold it?  You seem very fixated on GLD, which is a trade I hate on the bull side right now and, as I keep saying over and over and over again, I do not like the risk/reward of the trade.  You are right about steps 1 and 2 but think of the repercussions of #2.  If GLD falls to $90 and you bought at $110 and sold Jan $110 puts and calls for $6, then you were in for net $104/107 and you will end up having another round of GLD put to you at $110 and you will own 200 shares for an average of $107 or $21,400 worth of GLD with GLD at $90 (worth $18,000) so you are down $3,400.

    That is not a terrible thing from a percentage basis but is it manageable in your porfolio?  If it’s not, you shouldn’t even consider being in this trade.  How much can you possible make on this trade?  Just $600 at $110 if you are called away.  Are there better ways to make $600 than tying up $21,400 for a month?  If so, no matter how much you LOVE GLD, then this is not a good trade. 

    There are no sure things.  You will win trades and you will lose trades but the key is to manage your risk as best you can and keep a sensible balance in your porfolio so you can cash in some winners and reposition some losers, no matter which way the market goes.  If I want to make $600 being long on gold for the next month I would rather buy 4 UGL Apr $40 calls for $9.50 ($3,800) and sell 4 Jan $50s for $1.60 ($640).  UGL is currently at $47.25 so my long calls have $2.25 in premium over 4 months so I expect they will lose about .50 of that premium per month.  The delta of the long calls is .77 so if UGL does get to $50, I can expect to gain about 2.5 x .77 or $1.92 ($768) so I am comfortable with my upside and the $1.60 I’m collecting from my caller more than covers my expected decay for the month.  I could, if all goes well, make about $1,000 (the extra $400 I collect from the caller plus the $700 I collect up to $50). 

    THAT is the bullish way to play gold for Jan.  Since you can collect $1,000 rather than $600 on a small move up, I’d even say that you can start with just 2 contracts and aim for $500.  That way, if the trade goes against you, you can easily Double down or roll or whatever and stay with it (if you are so inclined).  With just 2 contracts, you can’t gain more than about $500 but your max possible risk drops to about $1,600.  This is how you should use options, not to increase risk but to DECREASE it.

    Fizbo/Cap – They are now in our chart school too.  I like those guys.

    Learning/Lynn – I’m upset with Yodi because it is the same thing week after week and month after month and I am NOT here to make trades for people I am here to teach, learn and discuss. 
    There are hundreds of sites that will hold your hand and feed you trades and the only problem is – they suck.  In as much as this is a class it is a class with beginning, middle and graduate students and even visiting professors like Peter D, who teaches me as much as I teach him. 
    You and Yodi may wish for the entire class to be taught at your level and you may insist on having all discussion aimed to your understanding but it’s not much fun for the rest of us and I, as the teacher, have made a decision that this will not be a non-stop remedial options class.   If that is not to your liking then, again, there are dozens of people who will promise to teach you options but most of them also suck.  This is not my problem just because I don’t.

    If I want to learn to sing Opera, I can go to an intro to opera class like a normal person and practice and practice and practice.  Of course I may want Pavoratti to teach me and I may even sign up for a master’s class at the Met and I can stand there on stage with all the other people who didn’t cut corners and practiced for years just because I paid to be there.   I can then decide that I don’t give a damn what they hope to get out of the class but I will stop Pavoratti every 5 minutes and say "What do you mean by a high note?"  "Explain Intermezzo – You are a bad teacher because you said Intermezzzo and I don’t know that word’  "What’s a Baritone – What’s the difference between a baritone and a tenor and please give me examples and sing each way and make sure you write the words down for me so I know what you are saying"  "I read Opera for Dummies and they say a Bass Baritone is the proper way to say it so when you say Baritone it confuses me." "What’s this about Soprano and Mezzo-Soprano?" "No I don’t think I am either of them but please stop and explain the differences and give me some examples."  "In fact, here’s my IPod – you listen to these samples and tell me what’s going on in each scene in case I want to listen to them on my own later."  After about 10 questions, Pavarati is frustrated, the class is over and no one learned anything including me….

    When I spend all day answering questions how is it you think I have time to read and study the markets?  Do you think I have a secret list of trade ideas that I hold to the side?  You say you are a nurse – what would you do if you were assisting on heart surgery and there was one nurse there who was brand new and kept asking the surgeon to stop and explain what he was doing every step of the way?  YOU need to be realistic about my time and the time of the other members and I have expectations of you.  Read, study, learn, practice.  Ask questions at APPROPRIATE times – asking for complex fantasy trades to be fully explained in the middle of the day is simply bad manners – towards me and everyone else on this board. 

    We have a fantastick group of traders here (many of them started out knowing as little as you) and I really, enjoy being here most days and we are happy to have you, Yodi and whoever else wants to join us and learn from us but when you begin to become a time sink to the group and demand that we change what we do to accomodate your needs, the answer is no.  We are here to trade, discuss trading, the markets and trade ideas and so many people here make fantastic contributions I couldn’t even list them.  Many of those people are also willing to help you out once in a while and that’s great but that is not what they are here for so don’t take excess advantage of it.  Like nursing, trading is a profession and if you would be insulted that someone thinks they can learn your job and replace you in 90 days – imagine how those of us who have been doing this for decades feel when you want the quick and easy answers so you can make money without doing the work. 

    So practice, practice, practice if you want to stick it out and open up a paper trading account to try some of my trade ideas or follow the $100KP and ask questions about that any time as we have many, many people who are interested in those postions (and every buy and sell is clearly Emailed to you – that should even make Yodi happy) so it makes more sense for us to discuss those trades as they move forward in time and evolve.  After a while, you will hopefully identify the kinds of trades you are going to be comfortable playing in your own porfolio and you can get back in the saddle but just make sure you are ready first. 

    Test/Pstas, Chaps  – C would seem right from the context of PM because I could see how all would have a MSFT root and thus the net deltas would offset and be calculated into PM but not the Qs.  E is, of course, the second choice and it really never occured to me that preferreds would be included in the PM calculation but I don’t see why not.  

    Old posts/Lynn – Click on the Phil tab above and scroll back a month.  Look for bold trade ideas that have Dec or longer expirations and then look up the options and look at the chart of the stock for the month and see what worked and what didn’t and think about how you would have handled the trade along the way. 

    Balance/Tcha – Very good anwser

    WFR/Lynn – The difference is my expectation of movement and risk.   You risk far more naked selling GLD to collect $9 than WFR to collect $1.50.  Also, the plan was not to JUST be naked but to buy WFR stock to cover if it broke $13 (it didn’t). 

    PM/Tcha – It totally rocks but be careful, those margins creep up on you in a major market correction.

  187. cwan120

    Lynn,
    Once you sell puts, you have no control of when you will be assigned.  The guy who bought the puts, on the other hand, has the right to exercise the contract at any time before expiration.
    After the expiration date, then it depends on whether the puts are ITM or OTM.  If it is OTM, then nothing happens.  If it is ITM, then you are obliged to buy the stock at the strike price.  This process (after expiration) is automatically done by the exchanges.

  188. Peter D

    Hi cwan, that’s a big ask.  For the past 2 months, most of my adjustments are highlighted in painful details in PSW already.  There are some greedy ones (and more risky) that I didn’t share which turned out well because the market was flat.  I also have a Short Strangle portfolio on WSS (Wallstreet Survivor) that is up 5% since 10/14.  Unfortunately, there is a WSS software bug that prevent you guys from looking at it – I already ask them to look at it.  You can see the moves there in the future.  Sorry, it’s just too much effort to dig into the past, especially when my portfolios are up over 105-135% this year, I’m kinda lazy to look back.

  189. chaps

    Tchay/MSNBC:
     
    It’s a "cable channel" in the States on TV. Virtually everyone in the States has cable or satellite (which gives you the cable channels.) I’m totally out of my league on what you have in Canada. I’d look over the MSNBC web site.

  190. cwan120

    RE the test question for PM:
    My answer is different than all of yours.  My answer is (b).  My reasoning is:
    If you look carefully, (b) is the only one that goes the opposite direction of MSFT.  QQQQ contains MSFT as a *MAJOR* component, says (c), which means QQQQ is in general moving in the same direction as MSFT.  Preferred may not move much, but still, it moves in the same direction.  So, from the point of view of calculating margins, (b) is negative and all others are positive.
    Perhaps pstas, after you pass the test, can ask TOS what the correct answer to this question is.

  191. tchayipov

    thanx Chaps,
    unfortunately Canadian satellite doesn’t have this channel, shoot I like this guy

  192. tchayipov

    Phil/ PM
    thanx for advise, yes I understand danger of it, and always will stay 30-40% in cash,( but 30-40% in cash with PM like 120% loaded without it:)))

  193. stevenparker

    Cwan, I hope b is incorrect, because it shows tight correlation with anything with an MSFT root. It is the correlation that matters not the direction. Indeed holding both a +ve and -ve in the same account reduces the risk of you defaulting, and therefore should be encouraged not penalised by the margining scheme.

  194. lynn2long

    Phil, thank you for responding and I can’t believe u said this:
    "You and Yodi may wish for the entire class to be taught at your level and you may insist on having all discussion aimed to your understanding but it’s not much fun for the rest of us"
    1, i never  ]wish for that entire class be taught at my level (actually i never expected to be taught, i was only honestly sharing how unexpectedly I joined something that do not give me buy and sell—it was my mistake) when realize everyone is asking questions and I do ponder so many ppl are asking Phil REAL trading questions, should I even bother as mine is not really about trades (I suppose trades are more urgent) and I feel bad if I am in the way. (I am here more than a month, i was just totally silent at first) I asked more the last few days cuz I felt market is slower
    2, I did not insist on discussion aimed at my understanding
    3 i am not here for fun. I have millions things I need to do, just like u.
    4, I do understand ur busy and am trying as much only to ask those question after i thought them out ,.. and I did try to limit myself to ask AFTER market close TILL LATELY after a few members actually didnt seem to mind and jumped in to clarify and I actually learned from them
    5. well good to know how u feel about my questions, I will try not to ask again. maybe I should not subscribe afterall till i can read more about options.
    6 I was only trying to communicate that it would be nice to know if you have a recommendation instead of reading thru all the things (most i dun understand for now) when I saw Yodi kinda telling u how she missed the trade. (I really dun see that trade being sent in emails.
    7, mostly I want to thank you for explaining over and over, i can see you try to make me understand. (and I realize sometimes I worded my  questions not good enuf esp for u, so its mostly my fault.
    8 I DO understand these question kept u busy. And I started to think, how come u dun just send out buy and sell instead of having them ask u one buy one taking so much of ur effort.
    9 of course i am the last one to give a solution here. I am sorry that my sharing upset u even more.
    10., I am not blaming u . just wishing it can be easier. if ur telling me theres no easier way to learn but read and practice,. its ok. My sharing about how a nurse give instruction is just so maybe u can just instruct what to do without having to understand how insulin is being made. anyway, i guess this service demands one to know more before coming here.
    11 sorry that I am just a nurse and not a professor who can give u insights

  195. lynn2long

    thank you Peter D for sharing how to look at the old trades. i really didnt know that with TOS

  196. pstas

    Test- my initial answer was c but now , not so sure. It all depends on what (see the question) is meant by "security class" or "product group". Choice c., in my opinion would be the only security w/o a direct connection to MSFT. However, the answer could be e.-preferred shares because all the others are options/derivatives of MSFT?
    I could not find any definition referring to security class or product group.

  197. lynn2long

    Phil the more I read about it, the more I feel you  misunderstood my intention.
    I never said you are a bad teacher as you mentioned there. Never. I applaud u for wanting to have members trade intelligently with you here, rather than spoon feed.
    I really don’t mean to offend. I shouldnt have said anything because I am not even up to the level as Yodi. You have a very good service here, very personal and honest.
    Anyway, have a good evening, and I will learn to stay away here till I am more ready.

  198. tchayipov

    pstas
    how I understand security class or product group, it is any positions which can hedge each other, this is why I think that E is most logical answer because you can hedge MSFT with QQQQ but defenetly can not do it with MSFT preferred shares, but Peter said that it was his choice at the first atempt but it was not correct

  199. Phil

    Insights/Lynn - That is where you are wrong.  You can give us insights because you have a profession and a unique perspective on an aspect of the market that many of us don’t see.  The problem is you can’t give us insights unless you understand what it is we are looking for and you won’t understand that if all you ever do is show up to collect the day’s trade idea (and again, follow the $100KP with those Alerts and then you don’t have to do anything kind of thinking at all).  

    You say you never expected to be taught but then you said you made trades that didn’t work and it sounds like you didn’t read the strategy section and set stops nor did you listen to me when you first came here and I told you that buying out of the money calls was the worst way to play options and that you should stick to hedged strategies when you were ready to start nor did you read the Strategy Section or the New Members guide, both of which say you should paper trade for a month and read at least a months worth of posts before you get started.  I can’t make you learn and if you are not interested in the trade ideas as I present them then we’re not going to have a productive relationship. 

    Skipping your list to number 6, you are trying to communicate to me (so my fault I guess) that it would be nice to know if I have a recommendation instead of reading through all the things (I assume all the dull stuff I say) and you justify this comment by saying that Yodi missed the MA trade, which was actually in bold letters in a comment all by itself at 11:09 saying the following:

    MA Jan $240 puts at $4.50.  If MA breaks over $250, Dec $250 puts can be sold for $2.50 (now $2.90).  If those go in the money ($247.50), they can be rolled to the Jan $230 puts to create a vertical but, ideally, we are playing for a rejection off $250 to hold the naked Jan $240 puts.

    Before that, at 11:02, I had made one of those boring, non-trade idea comments about how volume was still in the low-range which, if you could pain yourself to sit through the discussions we have all the time, means that we don’t put much credence in the move up and feell it could be easily reversed.  

    Prior to that, at 10:21, in another one of those informative comments that weren’t feeding you anyting, I said:

    And the buyers snap us back up!  All the CC companies, even COF are flying.  MA up huge!  HOT is making year’s highs, Ags performing well but very uniform indexes (all down about 0.2%) indicates program buying with just 31M Dow shares traded at 10:20.

    Woops, there’s that MA again.  How annoying, it would be so much easier if I just picked trade ideas out of a hat, rather than watching them and giving background commentarty prior to making a trade decision 45 minutes after I begin watching something, right?

    Even that 10:22 comment didn’t come out of think air because Cap had commented at 9:35 that COF showed "rising credit card delinquencies and charge offs" and that he thought it would be a good short (and he was 100% right), to which I replied at 9:55:

    COF/Cap – LOL, let me know when you capitulate – THEN I’ll go short.   They are ridiculous but what can you do?  Hopefully, the reckoning is finally here.

    That is what set me off looking at the various CC companies where, one hour and fourteen minutes later, I decided I felt strongly enough about the MA put to make it a bold trade idea which, apparently, wasn’t clear enough for Yodi, who didn’t ask a single question about it between 11:09 and 12:00, when it bounced along the top and gave everyone who wanted an entry opportunity, but instead chose to accuse me, at 3:58, of not being clear enough and costing him a profit opportunity – a position that you decided to jump on and support. 

    Oh wait – I missed one.  At 11:30, Alsos said "Can you suggest a way to play the MA short without being naked?"  Now how he could possibly have picked up on my ridiculously subtle MA play, I’ll never know but he caught me so at 11:40 (with MA STILL up at the same highs) I replied:

    MA/Alsos – It’s only net $6 to do the Jan $260 ($14.40)/$250 ($8.40) bear put spread and, if you are brave, you can pick up $3 first for shorting the Dec $250 puts at $3 but I’m happier with the naked puts.

    Can you perhaps understand where my frustration is coming from?  Good, solid back and forth conversations with people exchanging ideas leads us to solid trading opportunities during the day.  Most people following that thread from Cap’s comment on would have seen my MA call as a clear as a bell signal to execute the trade we’d been looking at since the open but only for those who go to the trouble to understand WHY we are trading things and what we are looking for. 

    I am looking for members who will one day contribute to these conversations.  Jomama works in a hospital and his contributions to our conversations on ISRG helped us decide to back them at the bottom in what became one of our best trades of the year.  Everyone has something to contribute once they learn the basics and understand what it is we do here.  You can choose the difficult path of learning to manage positions, hedge your risks and become a value investor who utilized options for leverage and protection or you can sit around waiting for trades to drop in your lap and pray you don’t misplay them.  I can’t make that choice for you but I can choose the tone I want to set for this site and, generally, you can consider it a graduate-school level course where we allow freshmen to listen in and even ask questions and, sometimes, we are even happy to teach the basics.  But don’t expect us to turn this into options 101 while you catch up – it’s not fair to everyone else. 

    I’m now reading your last comment.  I’m not offended – it’s very hard to offend me as I’m from New York but I can be offending sometimes without meaning to be and for that, I’m sorry but you and Yodi just happened to come together today to remind me to remind members why we are here, and that is to build a trading COMMUNITY where people SHARE ideas – this is not Phil’s sermon on the mount (although I do tend to preach).   If I just wanted to talk and hand out trades I’d have joined up with Option Monster last year but I like the back and forth of this environment and working with people month after month as we get to learn each other’s strengths and weaknesses – something that makes us all better traders.

    Working together as a team, we have 1,000 eyes on the market and we pull together market news and information and distil it down to an actionable trade idea faster than any trading house on Wall Street.  That’s because we learn from each other and work as a team and that’s something I will keep striving for every day and not everyone here is going to make the cut but a lot of people here have been here for years and we’ve seen 1,000 people come and go and a few hundred people stay – so far, so good I think…

  200. judahbenhur

    Pstas, In its rulemaking several years ago on whether to permit Portfolio Margin, the SEC stated that a "security [options] class" refers to all securities [options] covering the same underlying instrument, and the term "product group" means two or more portfolios of the same type for which it has been determined that a percentage of offsetting profits may be applied to losses at the same valuation point. 
    I think the question, poorly worded that it may be, goes to the heart of the portfolio margin calculation, in which long and short contracts including underlying instruments and related instruments are grouped by security class, each security class group being a "portfolio".  For each portfolio, theoretical gains and losses are calculated for each position and offset against each other to derive the required margin. 
    I haven’t taken the test, so I don’t know the answer, but logically it would seem to me that C is not as relevant to the calculation of margin in a portfolio that includes a long position in MSFT. 

  201. judahbenhur

    Pstas, I should add that my first instinct was the same as Tchay’s--e--since I considered QQQQ to be a related instrument to MSFT, but I was then influenced by Peter’s comment that it could not be e. 

  202. tchayipov

    Phil
    I’m with you just little bit longer than a month and you can not imagine how happier I’m now, and not just because my P/L improve ( and I’m sure that it will be even better), but I found that the worst thing in trader’s carrier is a LONELINESS. Here I found so many bright good guys, I looked for this service for years.
    THANK YOU AND TAKE GOOD CARE OF YOURSELF BECAUSE I PLAN TO STAY HERE AND RIDE THIS CREASY MARKET WITH YOU FOR ANOTHER 20-30 YEARS

  203. deano

     For those who are uncertain if our government is too involved in our lives:
    New York City wants to "keep people excited" about safe sex, and is sponsoring a contest for the design of the wrapper for the city’s next official condom. The city health department is inviting the public to submit suggestions for a special limited-edition design. The winning art will be featured on several hundred thousand official condom wrappers. Officials say the artwork must not be raunchy and can’t include copyrighted or trademarked images. No Empire State Building images, please. Entries are due by Jan. 22. The winning design will be selected by online voting. The mayor’s office gives away more than 40 million of the free condoms a year.

     
     

  204. cwan120

    Hi, Peter,
    I missed your 7:41pm comment.  Thank you so much anyway.
    You are right.  The market hadn’t made a big sudden move lately.  That’s the kind of moves I worry about.  We’ll preserve our ammunition, make sure we have enough bullets when we really need them, and learn as we go along.

  205. Cap

    I lean towards b) but the question and the answers are somewhat confusing; it could also be c).
    b) b/c a short sale is much diff than a long position
    c) the problem w/ c) is that it is an index; so even if MSFT is 10% of the index; its not the same as being 100% long, even though the direction is the same.
     
    Its just not a well worded question; and the choices for answers aren’t much better. 

  206. Cap

    Even that 10:22 comment didn’t come out of think air because Cap had commented at 9:35 that COF showed "rising credit card delinquencies and charge offs" and that he thought it would be a good short (and he was 100% right), to which I replied at 9:55:

    COF/Cap – LOL, let me know when you capitulate – THEN I’ll go short.   They are ridiculous but what can you do?  Hopefully, the reckoning is finally here.

    Hah !  I missed that 9:55 comment.  And, no, did not capitulate.  It should have been down more today, however.

  207. cwan120

    Hi, Judah,
    Can you decipher
    "the term "product group" means two or more portfolios of the same type for which it has been determined that a percentage of offsetting profits may be applied to losses at the same valuation point."
     
    I’d like to propose that we turn this discussion into an opportunity to gain a little insight into what the hell PM is so that we don’t abuse it.  The other day, Peter likened PM to a Farrari.  We don’t have to know every little detail in order to drive Farrari.  But a little knowledge will certainly enhance the enjoyment.

  208. Cap

    Deano, clearly an Obama condom design is the obvious choice !  I recommend any painting from the site badpaintingsofbarackobama.com.
    Some, however, will treasure a special PSW NYC condom !

  209. lynn2long

    Phil,
    haha, I live in New York before and I didn’t like it.
    Honestly, I really did NOT expect to be taught WHEN I signed up. Truth be told,  I also didn’t read members stuff and just thought I found a good place to trade with so  I jumped right in in order to reverse the loss my husband made. ANd I repeat: I already said is not your fault. My point I wanted to tell is that I didn’t try to blame or come here take advantage other’s sincere kindness. OF course I realized how dumb that was and totally ignorant of me at a new trading service—something a professional trader like you would find hard to comprehend.
    I certainly did’nt come during the day to read these comment section when I first joined, because my schedule didn’t allow me to. (So yes, I am worse than a freshman!)
    Then I started wanting to make time as I realized how wrong I was, so I started making time to read the option book, literally word by word, section after section, then I came here to read, realizing I forgot what it was in the book and so back and forth and the I started to notice trade ideas and started to want to know what is a mattress and what is a buy/write.
    So in a way this is a forced learning and it is good. (something I am still not sure about myself) That’s all I can say about my own journey.
    I DID NOT know this is not a place for beginner’s to ask questions till NOW when you shared this openly, I didnt know the purpose of this comment section is for each to share insights and inputs.  This is your service, of course you can set the tone of how you want it run. In the meantime, I am also one, who the nurse in me, like to help others than being helped and also kept wondering if I am in the way (even now when I am writing this) wasting others space and time. So I DO NOT MEANT to take advantage of others. Like I said, I did hesitate for a while about my questions as they are not trade ideas but basic stuff but the sincere kindness of everyone calm my uneasy-ness. So it makes me want to thank all who have been patient and putting up with me all the more now. 
    If you asked me why I took up Jodi’s and communicate to you with the MA trade (even tho I didn’t read anything about it as I decided not to trade for now and just come whenever I can and try to pick up whatever I can) which I really have no business talking about as I paid no attention to it at all today.  It is cuz when I was here, reading all that stuff I didnt understand, my secret wish is if there is a trade that others can simply tell me and I just do it….how good it will be.
    I know you don’t like that. But like it or not, I think maybe its time for me to leave for a while now, as I need to take care of my kids that I’ve been ignoring more and more, during my shift/days off, in order to read and catch up. And the stuff that I need to attend to besides learning trading, work and family. I can’t possibly catch up day in and day out and be intelligently asking about trades fast enough till I can spend more time on those option books. I apologize if I made it sounded like I am so important or things had to be my way. I dealt with demanding nasty patients sometimes that I wish they’d just see things from our angle to be a little bit more understanding.
    A sincerely thank you to all of you who has helped me, put up with me esp in inappropriate time.  I think this is a very dedicated service and Phil, we may not agree for now, and not understand each other’s frustration. But I respect you a lot and the dedication to guide and talk ppl out of stupid trade that they cannot see. Take care of yourself as Tchay said, a lot of ppl need you here because it is so hard not to lose money (esp now that there are more manipulation than ever before).Remember when you are ill and yo still show up helping each one.  I am not giving up, I just hope that I can be more appropriate if I can devote the time to learn and be nice to all around me.
    Lynn

  210. yodi

    Hi Phil,
    I did not realize that my comment would develop in such a storm. I can understand your frustration and I admire your work you put in to this site, it is excellent. There are only two words missing in your Vocabulary is BUY or SELL. Regretfully I entered late in to the conversation about MA and I should have read the material than even and old guy like myself would have seen that MA was in for a drop. The same like the other day you recommended FDX well understood and thanks I made some good profits.
     If my statement "MA Jan $240 puts at $4.50" is too complex for you to understand, then you certainly shouldn’t be putting $450 into the trade and if you don’t
    The difference between myself and Lynn is she needs to learn the basic of option trading. I have been trading good and bad options for 15years and I paid for learning the basic. The problem with me is to understand your NY slang English is not my mother’s tong and if I would speak my home dialect with you, I guess you would not understand it either.
    Look at this fellow  Andrew Wilkinson he writes about the daily option trades even a blind man can understand it.
    I am sorry to say this again but use the two words above more often in you explanations and you save yourself a lot of repeats. To my observation there are more than two people having difficulties reading through your recommendations,
    they only do not like to be pulled up in front of the desk.
    I admire your work and the time you put in to all this as well as the knowledge you show but to transmit it, is an other thing.

  211. tchayipov

    LYNN,
    I understand that it is hard for begginers to follow Phill, if you have any help with options101 you always can call me(I hope you will understand my terrible russian accent) and believe me that it is not hard to make 30-50% per year trading (very coservitively) options doesn’t matter is market up or down

  212. lynn2long

    Thank you for such an offer, Tchayipov. I have a good friend from Ukraine and we keep having to repeat ourselves to communicate cuz I have my own accent too.

  213. Peter D

    tchayipov/PM, yes, as Phil and you said, PM is like having 600 horse power in a Ferrari.  As long as we are not reckless, we are going to do very well.  Imagine selling SPX Feb 800 PUT and 1240 CALL for $3.15.  10 contracts for every $100k, that’s a 3.15% return for 2 months, but most of it could come next month as the same Jan spread is $0.55.  We are trying to maximize our profit by staking out the short 900 PUT and 1210-1225 CALL.  Those spreads are $6.8 to $8.2.  We can also sell the RUT Feb 430 PUT for $1.4 (30% downside cushion), and the initial margin is $0 for PM, but can grow to $43 per contract if RUT is at 430 (PM margin for RUT is 10% max, versus 8% for SPX).  Again, 2-3% a month is fairly attainable most of the time, 6% requires some work.

  214. kustomz

    Put this site in your fav, its chock full of info and breaks down retail sales
    http://www.economagic.com/cenret.htm#USRet_NSA

    China sent us lots of junk that we wont be buying
    China’s overseas shipments slid 1.2 percent in November, the smallest drop in 13 months.
    http://www.bloomberg.com/apps/news?pid=20601080&sid=adzA6dNUeP30

    Almost all makers select Nvidia’s T20 solution for MID phone manufacturing, the sources added.
    http://www.digitimes.com/news/a20091216PD210.html

    Microsoft says outside vendor responsible for copied Plurk code; shuts down Juku
    http://www.digitimes.com/news/a20091216PR200.html

    ============================================================================
    Max Wang, Taipei; Yvonne Yu, DIGITIMES [Wednesday 16 December 2009]
    The current downward trend in prices for notebook panels is expected to stabilize for a while in January, as panel makers are shifting more capacity to the monitor segment due to better pricing, according to industry sources.
    Monitor panel prices have stabilized recently due to improved demand and low inventory levels in the channels, prompting panel makers to roll out more for the monitor segment, the sources noted.

    ====================================================

     
    Supply of high-density NAND flash memory will fall short of demand in 2010, as suppliers’ overall output has not been increased substantially to keep up with the potential growth in demand for smartphone applications, according to sources at memory makers. Despite this shortage, the sources estimated prices for low-density parts based on mature processes will be slashed significantly next year.
    Though the outlook for NAND flash is rosy in 2010, the sources pointed out major chip suppliers are still reluctant to spend on expanding capacity. They tend to boost production through migration to more advanced process geometries. However, increases of this scale will not be sufficient if the market for high-end phones heats up more, according to the sources.
    As a result of tight supply, major NAND flash producers are giving supply priority to new products from system vendors, prompting downstream module makers and distributors to move to diversify their upstream suppliers, the sources indicated.
    With more chipmakers gearing up to expand shipments of high-density chips using 30nm-class processes next year, the suppliers’ ability to lower production costs for the high-density segment will set off a major price erosion for low-density ones used in entry-level USB drives and flash cards, according to the sources.
    Panel makers mostly use 5G lines to produce notebook and monitor panels. That means devoting more capacity to the monitor segment will result in a decline in production for the notebook segment, and help stabilize notebook panel prices, the sources added.
    Current notebook panel prices range from US$61-80, while monitor panel prices are between US$74-92, according to DisplaySearch data.
    ====================================================================
     
    Arima Communications aims to ship 14-16 million handsets in 2010, up 16-33% from 12 million units for 2009, thanks to orders from LG Electronics and Sony Ericsson, sources at handset component makers quoted an internal estimate of Arima as indicating.
    Arima shipped a total of 10.86 million handsets in the first 11 months of 2009 and is expected to ship another one million units in December, the source added. Arima had previously projected to ship 13 million handsets in 2009.
    Sony Ericsson, which reduced its orders substantially to Arima for the most part of 2009, has recently placed orders for 2-3 models of its Walkman-series lineup to Arima, noted the sources, indicating that one model will be shipped in April-May 2010 and another touch-enabled model in July-August.
    Being a major production partner for LG’s feature phones, Arima also aims to land orders for smartphones from the Korea-based handset vendor in 2010, said the sources.
    In other news, another Taiwan-based ODM handset maker, Compal Communications, shipped a total of 13.2 million handsets in the first three quarters of 2009 and is expected to ship another 4-4.5 million units in the fourth quarter, noted the source

    ==========================================================================

     
    Taiwan’s smartphone IC shipments reached 116.97 million units in the third quarter of 2009, up 30.9% sequentially, and market value amounted to US$613.7 million, up 32.0% sequentially, according to Taipei-based Market Intelligence & Consulting Institute (MIC). In the third quarter of 2009, sales of the Apple iPhone 3GS far exceeded expectations, and sales are expected to reach 10 million in the fourth quarter of 2009. iPhone chip suppliers have benefited from this development. Furthermore, other terminal vendors made advance procurements to prepare for the peak season in the fourth quarter.
    Regarding baseband and RF transceivers, CDMA (including EVDO) market volume in the third quarter reached 1.39 million units, accounting for 10.4% of the total, as several new models of HTC (Hero, Desire) were officially launched by US operators Verizon and Sprint and as the Palm Pre continued shipments. Terminal products using EDGE chips are gradually retreating from the market mainstream. However, due to shipments of the EDGE version mini 3i series, manufactured by Foxconn and aimed at the Chinese market, EDGE chip market volume grew to 562,000 units in the third quarter, and its share of the total amounted to 4.2%. HSPA share fell to 85.1%, but HSPA chip market volume still reached 11.37 million units, a new high.
    As for suppliers’ market shares, smartphones of Taiwan manufacturers still mainly adopt baseband and RF transceivers of Infineon, which benefited from the Apple iPhone series, and Qualcomm.
    Regarding power amplifiers (PAs), Taiwan smartphone PA chip market volume in the third quarter of 2009 reached 48.59 million units. TriQuint still had the largest market share in this segment, as it is a main supplier of 2G PAs for HTC and 3G PAs for Apple.
    As for application processors (APs), "Samsung is currently the largest supplier in the market, as it supplies for the Apple iPhone series models," said MIC industry analyst Edward Lin. "However, TI, which has exited from the baseband business and now focuses on AP development, has rolled out the OMAP 3430 series, which adopts the Cortex A8 architecture and features a clock speed of 1GHz. This offers processor options other than Qualcomm, enabling terminal vendors to pair together different communications systems, and it has been well received by many brand-name vendors, such as HTC, Palm etc. As a result, TI’s share in the Taiwanese smartphone AP market increased in the third quarter of 2009."

  215. kustomz

    Foreigners purchased $20.7 billion more in assets than they sold in October, down from a $40.7 billion increase in September, the U.S. Treasury Department reported Tuesday.
    China, the largest holder of U.S. Treasury securities, maintained its holdings at $798.9 billion in October.

    The U.S. deficit hit an all-time high of $1.42 trillion for the 2009 budget year, and the administration is projecting it will climb even higher to $1.5 trillion in the current budget year.

    Japan, the second largest holder of Treasury securities, had a total of $746.5 billion in October, down slightly from September’s $751.5 billion.
    The Treasury securities held by the United Kingdom dropped to $230.7 billion, from $249.3 billion, while the holdings of Hong Kong rose to $142 billion, from $132.2 billion.
    Treasury securities held by oil exporting countries totaled $188.4 billion, up slightly from $185.3 billion in September. Russia’s holdings totaled $122.5 billion, little changed from September’s $121.8 billion.

  216. kustomz

    U.S. gave up billions in tax money in deal for Citigroup’s bailout repayment
    http://www.washingtonpost.com/wp-dyn/content/article/2009/12/15/AR2009121504534.html

     
    Executives on state’s business climate: It’s in trouble
    By Susan Todd/The Star-Ledger
    December 16, 2009, 12:30AM
    New Jersey’s economy and business environment got poor grades yesterday from top executives who operate companies across the state.
    The executives expressed overwhelming dissatisfaction with the level of taxes the government imposes on companies. Many said the conditions were not ideal for company expansions, and most said the state’s economy had gotten worse during the past year.
    http://www.nj.com/business/index.ssf/2009/12/executives_on_states_business.html

  217. kustomz

    Steroids frowned upon more that hookers
     
    Tiger Woods link to Canadian drugs probe doc Anthony Galea
     

    By Derek Lawrenson Golf Correspondent
    Last updated at 1:32 AM on 16th December 2009
    Canadian doctor Anthony Galea, who helped Tiger Woods recover from knee surgery last year, is being investigated by the FBI on suspicion of supplying athletes with performance-enhancing drugs.
     
    Just when the disgraced golfer’s advisors thought matters could not get worse, they found his name linked in the New York Times on Tuesday with Galea, who was arrested after a medicine bag belonging to him was found to contain Human Growth Hormone and Actovegin, a drug extracted from calf’s blood.
     
    Galea’s unnamed assistant, who was carrying the bag, was stopped on the United States-Canada border, and is said to be co-operating with authorities. Using, selling or importing Actovegin is illegal in America.

    Read more: http://www.dailymail.co.uk/sport/golf/article-1236186/Tiger-Woods-link-Canadian-drugs-probe-doc-Anthony-Galea.html#ixzz0Zphpb5NU
     

  218. kustomz

    (RTTNews) - Major reports due for release on Wednesday include UK labor market statistics and inflation data from the Eurozone.

    The release of the Flash Purchasing Managers’ Index reports for major European economies is set to start at 3:00 am ET. The first one expected to hit the wires is the Flash French PMI for both manufacturing and service sectors. The manufacturing PMI is expected to rise to 54.7 in December from 54.4 in November, while the services PMI is expected to drop to 60 from 60.9.

    At 3:00 am ET, Hungary’s Central Statistical Office is scheduled to release wage data for October. Average gross wages are forecast to rise 0.7% year-on-year, matching the previous month’s growth rate. The unemployment report is also due at the same time. Economists expect the unemployment rate to rise to 10.6% in November from 10.4% in the previous month. Consumer confidence data is due from the Turkish Statistical Institute at the same time.

    Thereafter, the Flash German PMI report is due at 3:30 am ET. Economists expect the German manufacturing PMI to rise to 52.6 from 52.4, while the services PMI is seen at 51.9, up from 51.4.

    The Swedish central bank is set to announce its interest rate decision at 3:30 am ET. On October 22, the Executive Board of the Riksbank had maintained the repo rate at a record low of 0.25%.

     

    At 4:00 am ET, Eurozone’s Flash PMI report is due. The manufacturing PMI is expected to stand at 51.5 in December compared to 51.2 in November, while the services PMI is forecast to edge up to 53.2 from 53.

    Elsewhere, revised consumer price inflation figures are due from the Italian statistical office ISTAT. The consumer price index is forecast to rise by 0.7% on a yearly basis and by 0.1% on a monthly basis in November, confirming preliminary figures. Consumer price data is also due from the Austrian statistical office.

    At 4:30 am ET, labor market statistics are due from the United Kingdom. The ILO unemployment rate is forecast to rise modestly to 7.9% in three months to October. The number of people claiming Jobseeker’s Allowance benefit is seen at 12,500 in November compared to 12,900 in October. The average earnings index, including bonus is expected to rise 1.2% year-on-year in the three months to October period.

    At 5:00 am ET, Eurostat is scheduled to issue final harmonized consumer price figures for November. Eurozone annual inflation stood at 0.6% in November. Economists expect the statistical office to confirm the flash estimate released on November 30. On a monthly basis, inflation is seen at 0.2%.

     

  219. balancenv

     Folks,
    Some preliminary results are out for my simulation of Peter’s SPX strangle strategy.  I had to learned Visual Basic for Access, what a pain! 
     
    Approach:

    Data is from ivolatility.com, SPX option price (closing only) from 2001 to present. The data is not very clean especially for 01′s so my simulation runs from 2002 to present.
     
    For each expiration date, use the friday 6 weeks before the expiration date to be the ‘add entry’ date, i.e., initiate the strangle contract as:
    10 contracts, of P/C -/+ 10% of the closing price of that date. Right now I have not implemented the Margin requirement (PM or not) so ignore the margin requirement for now. 
    There is no adjustment at all, just let the contract runs thru expiration. For each month’s contract, take the Thur. closing price of SPX (since there’s no Open data from ivolatility) as the settlement price and calculate the ‘Loss’ if the settlement price falls outside of the strangle. 
     
    The result is shown here 
     

    where Premium graph is the monthly contract premium. If you compare to the VIX chart, then you’ll really appreciate Peter’s comments of "Now VIX is low so I am going to ….". During the 05-06 Bull runs where VIX averaging <15, the monthly strangle premium sometimes goes as low as a little over 1K! --> We have to do come up with additional supplemental income strategy if things get stable and VIX goes down to the teens!! 
     
    Loss graph is the monthly loss calculated at the expiration date. Again this is with no adjustment at all, completely mechanical. As you can see, one month if ‘mis-hap’ will wipe out months of ‘hard work’, as the case of 6/02, and during the crazy time of last year. 
    Out of 94 iterations, only 8 with losses and 5 are due to Put and 3 are for Call. 
     
    P/L graph is self explaining. During 08, we have two cases of single month loss over 100,000!! 
     

    In summary, from 2002 to present (9 yrs, including Dec/09 since the Dec contact bracket is 960/1180), the total P/L is $338,650! Assuming the portfolio starts with 100,000 cash, we have 3.4 fold, as compared to roughly even for SPX performance!
     
    I have not have the time to play with various variations, like P is -15% instead of -10% but with the framework in place, it will be fun to try various strategies or add in some adjustment intelligence. As stated previously, I would like to try Peter’s SPX crazy play (buying put spread for protection) to see if that saves the raining days. 
     
    Feel free to make suggestions to the trading strategies and I will put them in, in sequence, of course.
     
    With this, comments on additional strategies (supplemental or not) ‘bull markets with stable VIX’ are also welcome. 6 weeks to make 1K is BAD!
     

  220. balancenv

     Of course, the ‘to do’ list also includes PM requirement calculation so we don’t get blown out during tough time. I start to remember how fun programming is.. 

  221. samz3700

    Phil – any thought on the futures pump off of Europe pmi data?

  222. Phil

    Good morning!

    Yet another super-pump in the futures back to yesterday’s highs so we’ll see if this one holds.   This isn’t so much about the PMI in Europe as it is about the ECB lending $141Bn to banks at record low rates.  FREE MONEY!!!

    Also there have been a ton of positive statements about the economy and outlook etc from the usual suspects in the Gang of 12. 

    I look at something like this and I see all this effort being made to pump up the markets yet they can’t even hold Monday’s futures high and it makes me think they are in deep trouble on the whole. 

    What happened is Asia sold off and something had to be done before China failed 21,500 so suddenly a bunch of good things happened at 3am with everyone getting up early to make positive statements.  Rumors in Europe are the Fed will say the US economy is improving but they will keep rates at 0 for a very long time anyway - MORE FREE MONEY!

  223. barfinger

    balance: Interesting result. I have actually traded this strategy since 2001, and if you *cough* forget about Sept 2001 and Oct 2001 (both huge losers) it can be said that my results conform closely to your model.
    I have tried variants of the simple strangle, of course, and all added something and subtracted something. I believe that if you are a skillful trader there are considerable improvements to be made. I am always pulling the trigger at exactly the wrong time (and yes, I believe trading skill is a personal trait) so I devised a strategy that had no exit – in which I set up new strangles around the original edge strike whenever the original was breached. There is a more complicated, daily-trading version of this that I found quite exciting. All I can say is that you write, say, the 1110 calls and the 1105 calls for Jan, letting the winner ride and cutting the loser when the contract price goes $7 against you. Or you can close the winner when it goes $10 positive. You can set up a trade a day. You operate at least more than 2 weeks away from expiry. It takes advantage of the fact that you are selling HUGE pure premium on both sides and on average, you win 63% of the time. I modeled it and then traded it for a couple of months. It proved too consuming for me, but it works.

  224. pstas

    BRK/B- split vote 1/20/10
     
    NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
    January 20, 2010
    TO THE SHAREHOLDERS:
    Notice is hereby given that a Special Meeting of the Shareholders of Berkshire Hathaway Inc. (the
    “Corporation”) will be held at Holland Performing Arts Center, 13th and Douglas Streets, Omaha, Nebraska, on
    January 20, 2010 at 9:30 a.m. for the following purposes:
    1. To approve an amendment to the Corporation’s existing Restated Certificate of Incorporation, as
    amended (the “Current Certificate”), to effect a 50-for-1 stock split of the Corporation’s Class B
    Common Stock, while maintaining the current economic and voting relationship between the
    Corporation’s Class B Common Stock and the Corporation’s Class A Common Stock.

  225. ssdirk

    Balance – great job on the data.  Thanks for your efforts.

  226. Peter D

    balance, that’s a great simulation!  Thank you.  The Jun (or was it Jul 2002) was a bummer.   It’s interesting that we would have got $80k credit from the +/-10% short strangle in Sep 2008, and no loss for that month.  Then a big loss in Oct 2008.  I’m trying to figure out if there is some early warning indicators such as Sep 08 when the premium jumped, and thus we need to be further OTM on the PUT side.  This study confirmed my analysis that the losers can be large, but the long term Expectancy of these trades are positive.  With adjustments, this scheme can work well.

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