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Monday – Will APPL Earnings Today Keep Bears at Bay?

Am I too bullish?  

I know I've been making a bearish case last week and I know we put out our first bearish list since April this month but, in reviewing October's Overbought Eight for Members this weekend we reviewed the week's picks and I realized that, despite all my griping, we had ended up with 21 bullish trade ideas vs. just 10 bearish ones AND, not only that, but half the bearish bets were quickie trades where we played the drops, like Friday's DIA and QQQQ puts from the morning Alert that didn't even last an hour (but made 300% and 200% respectively, so worthwhile, nonetheless).  

That's not very bearish.  I had said to Members in last Monday's Morning Alert: "The critical test levels above 7.5% are Dow 10,950, S&P 1,160, Nasdaq 2,400, NYSE 7,450 and Russell 690- all green for day 2 and that does put us technically bullish if we hold it, even though it’s a BS, low-volume day." and we did hold those lines on Tuesday's dips to we cashed our first set of shorts and ended up flipping more bullish for the ride up to the 10% lines (Dow 11,220, S&P 1,177, Nas 2,420, NYSE 7,500 and Russell 700), despite out misgivings.  When the technicals are very strong, you have to switch off the fundamental side of your brain and go with the flow.  

It has been ALL about the dollar and, as we mentioned in this week's Stock World Weekly, Trichet gave us the word we expected on Tuesday that knocked the dollar down to new lows against the Euro, Pound and Yen, with the dollar index bottoming out at 76 which should, in theory be strong technical support.  

So, we have strong technical AND fundamental reasons to expect a dollar bounce and we KNOW that a dollar bounce will knock down commodities and we KNOW that a pullback in commodities will knock down the indexes as the energy and metals sector lead us lower.  If we KNOW all this, then we MUST be too bullish, right?

Of course we reached that conclusion on Thursday and this is just a recap as 6 of those 10 bearish trade ideas from last week were from Thursday and Friday with EDZ, QID, QQQQ, SQQQ, QID (again), and DIA all picked short as we tested those 10% lines.  We like to go with the ultras as hedges because we get more bang for the buck, the QQQQ's and DIA's were quickie plays but we do still like our Naked Mattress play on the DIA as well.  As this point, we can (and did) take a defensive long on AAPL as the only thing that will keep the Nasdaq up in the face of a rising dollar is some stunning performance from the stock that is now over 20% of the index.  

So I do think that's bearish enough for now.  Assuming the market brakes work (so far untested) we shouldn't fall too far without a chance to reload and layer our short plays and our longs are so deep in the money at this point that we're already regretting our hedges so it would actually be nice to see a little pullback so we don't feel so silly having picked months worth of long ideas that capped our gains at 20-30% if the Dow held 10,200.  

That is, unfortunately, the nature of the Buy/Write Strategy, we give ourselves a big discount on entry but limit the upside because, MOST YEARS, the market doesn't go up 20%, does it?  That's the downside to hedging, in seeking to guard against big losses, we also end up guarding against big gains in a runaway market.  That's why I was worried last week that we had gotten too bearish but, upon reflection this weekend (see Weekend Reading – Oil's Not Well), I am comfortable with our current mix.   

Over in our Chart School this weekend, Chris Kimble points out that the Nasdaq (remember all our Nasdaq shorts?) is on a Highway to the Danger Zone with the VXN (Nasdaq Volatility Index) completing a bearish wedge (like the Dollar) and the Nasdaq at the way tippy top of its resistance, which may prove futile if AAPL can get over $330 but, even then, it will be up to the rest of the index to provide long-term support.  

Chris also points out that the dollar only has 3% to go before it is 100% bearish and he continues our weekend theme of setting stops on the upside because things can turn from good, to bad to ugly very quickly! 

 Is there a limit to how far Benny and Timmy are willing to go to debase our currency?  Just because 100% of the people are bearish on the Dollar, doesn't mean they are wrong.  If my 8-year old daughter's soccer team was selected to play the Los Angeles Galaxy and 100% of the people in the stadium were betting on the Galaxy, would they be wrong just because they are all on the same side of an obvious bet?  That's one of the great market fallacies that people cling to – that everybody can't be right.  

Yes they can – there are certain facts in the World that are obvious like: Republicans expand Government at a rate of 5 to 7 times more than Democrats do.  Fortunately, there's a chart for that too (thanks to Barry Ritholtz for pointing this one out):

Of course, like profligate Republican spending habits, some people just don't want to accept the facts of painfully obvious market trends either – no matter how much evidence you put in front of them.  This weekend, we discussed the obvious glut of oil but we took the money and ran on Friday's dip because the declining dollar lifts all ships.  Until we ACTUALLY see that trend start to reverse, the fundamentals will be damned.  

While we certainly THINK the dollar will bounce off support here, the question is whether we will have a strong bounce or a weak one.  Much the same as we question whether we will have our expected 2.5% pullback to the 7.5% lines or something a little more harsh.  That will depend on earnings and the dollar and that will depend on what China, Japan and the EU do and much of that will depend on the upcoming G20 meeting next month and then, of course, there's this US Election thing in 2 weeks.

This week, we have Industrial Production at 9:15 and the NAHB Housing Index at 10 to start us of.  Tomorrow we'll see Housing Starts and Building Permits and I'm sure all six remaining construction workers in this country are just going to be very excited about that one.  Wedensday is the MBA Mortgage Applications and they should be well up as record low rates have brought on a wave of refinancing activity.  We also get the Beige Book at 2pm.  Thursday ends a fairly dull data week with the usual 450,000 pink slips but we do get Leading Economic Indicators and the Philly Fed at 10 am and those could both be market movers.  As you can see from the chart, those leading indicators are going to be getting ugly if they are down again.  

Asia was generally off this morning with the Hang Seng dropping 1.2% (288 points) and the Shanghai dropping 0.5% (16 points) and breaking a 7-day winning streak, rejected off the 3,000 mark and finishing the day at 2,955.  The Shanghai was at 3,361 last November so we're not too impressed with 3,000 other than it's a nice recovery off July's 2,350.  Volume has been HUGE on the last 400 points of this run so it is looking hard to sustain.  The Bombay and the Nikkei held fairly flat and it was commodities that led the pullback in Asia as the dollar did hold that 76 line.  

Europe is generally upbeat this morning with the Dax up 0.5% and the FTSE up 0.3% while the CAC is flat but that may be just because France is still on strike and there's no one there to post changes.  The UK is cutting their defense budget, leaving the Falklands vulnerable, but I'm sure Argentina learned their lesson last time they tussled with Great Britain…  Angela Merkel joined the Tea Party this weekend, declaring that multiculturalism in Germany had been a "total failure."  This will be a situation that bears watching as the heart of it is a clash between Germans and Muslim immigrants.

Don't kid yourself – it's all about AAPL this evening.  They either justify having a $300Bn market cap (XOM is the World's largest at $331Bn, GE is $174Bn) or the Nasdaq drops 5% in 3 days – that's pretty much what is likely to happen.  The dollar us like the current our market ships are riding on, giving them a constant push up but that may also reverse if those 97% bears begin to cash out their massive winnings on the support line.   

As I discussed in the Weekend Reading, NYMEX contracts roll over on Wednesday and we do expect selling into the close, possibly we'll get an opportunity to short oil off that $82.50 line in the futures today.  Stay alert – it's going to be another wild week!  

 


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  1. Members
    For those of you that don’t believe this market is manipulated and controlled by our government and their accomplices in the financial institutions read this article.  I don’t know how JR and the rest of the day traders can complete when the deck is so heavily stacked against them.
     
    And for you swing traders.  If you feel safe with your stop losses.  It appears from the article then only ones that are safe are the insiders that have their bad trades reversed while the average Johnny lunchbox looses between 10 and 60 percent when the computers blast past their stops and take away their stocks at penny’s on the dollar.
     
    http://www.philstockworld.com/2010/10/16/inside-the-flash-crash-report/


  2. Trading AAPL:   gel1,maya1……points taken.   I feel a bit more cautious this morning about moving into AAPL than I did last night.  It just keeps pushing upward, and if it misses AT ALL it may be punished severely.  I like your put sale gel1.  I’ll make NO TRADES on AAPL until I’ve watched the market action for awhile. 


  3.  Hey all,

    We have a new position we are looking at for this Monday morning in Direxion Daily Financials Bull ETF (FAS).

    Check it out here.

    Good Investing!


  4. Good morning! 

    Check out dancing monkey Cramer trying to sell the new CNBC heat map as if they invented something.  Their ratings are so in the tank they don’t know what to do with themselves.. 

    The heat map I like to use is Finviz – it gives you a very nice view of the market.   

    Plan for the week is to retest the 7.5% lines but an AAPL miss (UNTHINKABLE!) will take us lower than that.  A big move up in AAPL might test 12.5%, especially on the Nas, which would be 2,475 – which is pretty much where they are.  Currently we are right on those 10% lines at:  

    • Up 10%Dow 11,220, S&P 1,177, Nas 2,420, NYSE 7,500 and Russell 700
    • Up 7.5%: Dow 10,965, S&P 1,146, Nas 2,365, NYSE 7,280 and Russell 672
    • Up 5% (must hold): Dow 10,710, S&P 1,123, Nas 2,310, NYSE 7,140 and Russell 666 

    As usual, it’s all about the RUT 700 line.  The Nas is just going to follow AAPL and we need the S&P to confirm a real move but the RUT has been a great directional indicator.  

    Also good indicators are copper on the $3.80 line ($3.81 this morning) and oil at $82.50, which is the line we’re looking to short the futures at with very tight stops (they hit it earlier, now $82.25 so nickel trailing stop).

    I know I always say it’s a good day to watch and wait and then I throw out trade ideas anyway but it is a good day to watch and wait.  EDZ is my favorite ultra bet (see last week’s chat) as emerging markets are also needing confirmation from AAPL as well as the dollar to stay down.  Any of our downside Q-family plays are nice and I don’t like any thing to the upside but that tune will change tomorrow if AAPL justifies their move. 

    Even though it’s just one stock, the fact that one company can grow like that indicates that others can do it to.  To some extent, we’ll be cynical to see what AAPL cannibalizes from other tech earnings but, so far, it’s a good growth story so we have to respect it.  


  5. First two $5 List trades have gone for 3% and 4% with ENTG and GFIG!


  6. Shorting oil futures at $82.50, Phil you’re talking about the Nov contract, right as people sell to roll to Dec oil futures?  Or did you mean the USO short, using Nov futures as a line?
     
    The magnitudes of these futures contracts are dizzying.  Talk about leverage!


  7. lflan/AAPL
    Besides today’s trades, do you have any thoughts on what one should do if you have owned the underlying equity for a while?
    Take profits here or wait for a jump on earnings like GOOG? Even if you do take profits, its been futile betting against this company since the ipad is doing well. However, Gene Munster says the ipad margins are only 30% vs overall companny margins of 38-39%
    What do you think about selling puts, if AAPL drops after hours, to reduce any damage from the drop in undelying? (assuming of course that you meet the margin requirement)


  8. lflantheman
    Gel 1 and Maya,
    I am holding various AAPL plays short calls covered with long calls such as Jan13 300 long and Jan 11 with 290 c long To protect my plays in case we see a drop tonight I feel like putting a stop loss on the long calls which could be repurchased after the drop if they go further up no harm done. Gel1 to sell a 310 putter could be a bit risky as we only have 8$ to ply with before they ITM?? What you guys say ????


  9.  SONC/Phil
    Any updates on this position?        


  10. Manipulation/Exec – Yet another reason not to use hard stops.  

    IBM making new highs, WYNN up again.  SIGA on a tear.  SNDK moving up.  SONC popping.  

    I forgot to mention C but they were pretty dull and in-line so all good for the 2012 $5 target I think – as long as the sector doesn’t tank and drag them with it.  

    Oil/Jordan – I use the /QM contracts on TOS, they are continuous.  They are very dangerous at $10 per penny per contract so you have to have a very good discipline to trade them.  I’ve gone over it in the past and would be happy to discuss after hours if no on happens to have my old comment to paste.  Basically, they paid a quick .25 and then stopped out and now back to $82.50 can be entered short again on a cross below (so try to catch like $82.45) with a very strict .05 stop.   If, for some reason, they hit $83, same logic on that line but you want to play downside momentum only unless you have some VERY good idea that they are topping.  These trades are often lose $50, lose $50, lose $50, make $250….  

    SONC/Newbie – What position?  We’ve been playing them for over a year.


  11. yodi/AAPL
    I think, if it flops, you are looking at a floor around $275-$278 (flash crash price on Tim Cook rumor day).
    So what are jan $280 puts selling for and worth it or not?


  12.  SONC/Phil
    BTO MAR5c
    STO 7.5c
    STO MAR7.5p


  13. Phil
    Good morning.
    Great wend articles>
    I have not seen such prolific writing from  anyone…where do you get the time from, even if thet is ALL that you do in your life and how do you come up with the cartoons? Some cartoons are re-used, I know but still..


  14. Thanks, Phil, I think I got it.  /NM : these are labeled as Nov 2010 oil minis, but I can pull up the individual months on InteractiveBrokers and see that they already track the Dec 2010 oil.


  15. Monday’s economic calendar:
    10:00 NAHB Housing Market Index
    4:00 PM Geithner: ‘The State of the Economy’

    Notable earnings before Monday’s open: C, HAL, HAS, MMR

    Notable earnings after Monday’s close: AAPL, CCK, IBM, INFN, LNCR, RRC, STLD, VMW

    At the open: Dow +0.02% to 11065. S&P +0.02% to 1176. Nasdaq +0.06% to 2470.
    Treasurys: 30-year +0.57%. 10-yr +0.31%. 5-yr +0.15%.
    Commodities: Crude +0.49% to $82.33. Gold -0.39% to $1366.70.
    Currencies: Euro -0.32% vs. dollar. Yen +0.24%. Pound -0.66%.

    10:00 AM On the hour: Dow +0.42%. 10-yr +0.24%. Euro -0.21% vs. dollar. Crude +0.78% to $82.57. Gold -0.34% to $1367.30.

    Sept. Industrial Production: -0.2% vs. +0.2% expected, +0.2% prior. Capacity utilization 74.7% vs. 74.8% expected, 74.7% prior.

    NAHB Housing Market Index: 16 vs. 13 expected, 13 prior. The measure of homebuilder confidence rose for the first time in five months. All three index components – current sales conditions, sales expectations and traffic of prospective buyers – rose.

    Told you so!  FDIC chief Sheila Bair says regulators haven’t yet gauged the scope of foreclosure improprieties, but that the processing of foreclosure documents without proper review appears to be endemic. Bair added that if foreclosure documentation is largely intact, and the issue is procedural rather than fundamental, she doesn’t expect banks’ exposure to be significant. So far, the Street has taken a similar view.

    Dallas Federal Reserve President Richard Fisher says the Fed can’t help the economy alone, and that there is "ample liquidity" in the market that hasn’t been put to work. Fisher also says the Fed needs the help of fiscal and regulatory authorities if it is to help the U.S. economy grow at a faster pace.

    Pension fund managers continue to shave their exposure to equities as they try to achieve stable returns that more-or-less keep pace with their obligations. Their caution is shifting market influence to high-volume hedge funds, contributing to volatility – and possibly markets’ recent choppiness.

    The euro is lower this morning vs. the dollar after ECB chief Trichet distanced himself over the weekend from Bundesbank chief Weber’s comments that the ECB’s bond-purchase program should be phased out. Trichet’s dovish tone sent the euro to its lowest level since Sept. vs. the yen. Euro recently -0.6% vs. dollar.

    Research firm Zenith Optimedia raises its forecast for 2010 global ad spending – a much-watched barometer of economic confidence – to a stronger than expected +4.8% (from +3.5%), or $450B. U.S. ad spending is seen up 2.2%, to $151.5B, double Zenith’s earlier forecast of +1.1%.

    We’re back babyLuxury spending bounces back to pre-crisis levels, thanks largely to wealthy Americans and nouveau-riche Chinese. According to Bain & Co.’s annual survey, global indulgence spending will surge 10% to $235B in 2010, recovering from a disastrous 8% drop in 2009. U.S. sales will climb 12%, compared with 6% growth in Europe and 22% growth in Asia.

    Johnson Controls (JCI) and Hitachi will team up to produce lithium-ion batteries for use in electric cars and advanced power distribution systems. Demand for lithium-ion batteries is expected to grow sharply in the near future as electric cars and smart grid electricity systems become more widespread. JCI +1.4% premarket.

    EMC (EMC -2.8%) is in “exclusive talks” to acquire Isilon Systems (ISLN +1%) for more than $2B, NY Post reports, quoting a source who says “the deal will be done this year.” Isilon reportedly has hired Frank Quattrone’s Qatalyst Group as an adviser.

    Citigroup (C): Q3 EPS of $0.07 beats by $0.01. Revenue of $20.7B (-10%) vs. $21.15B. Shares +1% premarket. (PR)  Here’s Citigroup’s (C) Q3 investor presentation. After leveling off in late 2009, deposits surged to a new record high of $850B from $814B last quarter (pg. 28). Citi continued to trim its loan loss allowance, down to $43.7B from a peak of $48.7B. (pg. 29). Shares now +2% to $4.03. 

    Halliburton (HAL): Q3 EPS of $0.58 beats by $0.02. Revenue of $4.66B (+30%) vs. $4.63B. Shares -0.3% premarket. (PR)

    Hasbro (HAS): Q3 EPS of $1.09 beats by $0.05. Revenue of $1.31B (+2.7%) vs. $1.29B. (PR)

    McMoRan Exploration Company (MMR): Q3 EPS of -$0.26 misses by $0.01. Revenue of $94.8M (-13.5%) vs. $98.7M. Shares -4% premarket. (PR)

    Royal Philips Electronics (PHG): Q3 net income of €524M vs. consensus of €358M. Sales +1% to €6.2B. "Given the uncertain economic climate and fragile consumer confidence in some of our markets, we take a cautious view on revenue development in the fourth quarter." Shares -5.1% premarket. (PR)


  16. AAPL….In November 300 calls at 24.95.  1/3  position. 


  17. Maya 1
    selling the Jan11 280 putters gives you additional risk on plays. Possible OK.  I am interested to protect my present long calls as the short calls will go down automatically.  I am holding short putters from some time back at 220 and 250 Jan which I rolled up already from 175 and 185


  18. Phil,
    I know your premise of not owning a mtg. – But with the devaluation of the dollar isn’t it a good proposition to own a 30 year mtg. at 4.3% with as little down payment as possible and pay it off with cheaper dollars in the future? Would not this be sort of a TBT hedge also? Thanks


  19. Maya 1 I prefer to look at the putters after tonight, they will have more beef if AAPL drops.


  20. Phil,
     
    TASR @ $4.40.  It looks like it could break out of the summer lows here.


  21. SONC/Newbie – Well, that’s what I was talking about in the post with the buy/writes.  You buy those and generally you wait.  There’s not much to be done about them just because the stock takes off faster than we think.  It’s really a matter of whether or not you have anything better to do with what looks like a $2.20 cash out on the $5/7.50 spread than wait until March to make .30 more as we REALLY don’t think it’s going any lower.  If you can do an ask on a spread price, you can certainly ask for $2.50 or $2.35  - you never know what offer will be accepted.  On the put side, unless you need the margin, there’s not much sense in paying them .30 for a put that’s 30% out of the money.  

    Writing/Maya – Sometimes I just have something to say and it all comes out.  The cartoons are just things I find when I’m poking around, I have a strange memory as I can’t remember anyone’s name (live, on the blog I’m good with names) but I can remember an image I saw 5 years ago while flipping through a newspaper.  I guess that’s the key – I’m very much a print person…  I don’t write like most people, with drafts and such.  I just think until I know what to say and then the hard part is stopping!

    Oil popped right to $83 and NOW the USO puts begin to be a possibility.  USO does have WEEKLY $36 puts at .55, which are not a bad play at $35.87.  At .25 they would be irresistible for a DD and the delta is .50 so at $36.35, on USO the plan would be to buy some of the $36 puts at .25 for sure but it’s still a gamble at .55 as the dollar if fading fast.  For the Futures – still yes to the short off the $83 line with a .05 trailing stop.  

    Mortgage/Jomp – I’ll get back to that as I love this topic. 

    TASR/Button – I still firmly believe that TASR is the growth stock of this decade.  They are a LONG-TERM hold, which is what I said about SIRI at .10 too.  That can be a very annoying long-term but I do love them.  You can just sell the March $4s for $1 and that’s a net $4 entry, a good way to start

    Damn, more bullish plays!  8-)


  22. Phil--I would like to add to my  TASR position--you mean sell the MAR 5 puts for 1.00 right?


  23. Iflan — AAPL did you just bot Nov 300 call today at 24.95 — do you cover it w any short call at all thx


  24. phil- If Bove is correct- big if, we gave up 50 billion in market cap last week with the banks so they should have todays rally ( which should be Ben and Loyd) and 30 billion more to go to the downside


  25. PHIL
    love FINVIZ , especially the bubbls  thanks :)


  26. Good morning Phil.
    What do you think about protecting the AAPL long callers Thanks

    yodi
    October 18th, 2010 at 9:51 am | Permalink  
    lflantheman
    Gel 1 and Maya,
    I am holding various AAPL plays short calls covered with long calls such as Jan13 300 long and Jan 11 with 290 c long To protect my plays in case we see a drop tonight I feel like putting a stop loss on the long calls which could be repurchased after the drop if they go further up no harm done. Gel1 to sell a 310 putter could be a bit risky as we only have 8$ to ply with before they ITM?? What you guys say ????


  27. Only 21% of the people surveyed say they’ve eaten while driving?  Is that even possible?  What do people do at drive-in windows, go home first and then eat?  That makes no sense and it indicates to me how silly these polls are if you are going to take something like that at face value.

    Mortgage/Jomp – OK, let’s say you have $60,000 and you are so worried about inflation you buy a $300,000 home.  Let’s say you were right and the $300,000 home doubles in 7 years (7% per year), back to the ridiculous levels you would think we all learned a lesson about 2 years ago and despite inflation driving up interest rates, and therefore borrowing costs, making your home much more expensive per month.  

    So, ignoring all that, we’ll say your home doubles and you get $600,000 and pay off your $215,000 mortgage and get your $60,000 back.  That’s a $325,000 profit BUT you had to pay your mortgage for 7 years and that’s about $1,500 a month at 6% over 49 months = $73,500 so down to $251,500 and let’s say you paid $30,000 in taxes and $25,000 in utilities and we’ll pretend nothing went wrong or needed to be fixed so that’s a nice profit of $196,500 if all goes well.  Of course, had you taken $60,000 and made 20% a year for 7 years, you’d have $215,000 but there are good tax reasons for some people to go the other way. 

    The problem with the home buying is you are buying a $240,000 obligation and then you’re going to have that $128,500 in expenses over 7 years (almost $20,000 a year) WHETHER YOUR PLAN WORKS OR NOT!  And, as we all painfully learned recently – homes can go down in value too.  Now, using this compound rate calculator, check out what happens when you start with $60,000 and add $20,000 a year and grow it 7 years at 20% – that gives you $525,000.  That’s a profit of $325,000 clean and I would tell you it’s a pretty good bet that if inflation is 7% a year, it would not be a big trick to make 20% a year with our simple option selling strategies.  

    Investing in your primary residence is a good idea as you need to live somewhere anyway so you may as well pay off a home over time and even buying a home that you are SURE you can rent out (and sure means having experience and doing worst-case scenarios) is a good idea, but a home is not a no-brainer investment and certainly not a good idea if you are "counting on" inflation to make your profits.  


  28. yodi…I don’t undestand that position.


  29. writing / Phil – " I don’t write like most people, with drafts and such.  I just think until I know what to say and then the hard part is stopping!" I can see we who volunteered to help edit your book are going to have fun. ;)


  30. TASR/Savi – You are right, it was the March $5 puts that net at $4.   

    Bove/Jthom – It is a big if but we thought last week’s XLF sell was overdone anyway.  My buy premise on XLF was that this Foreclosure thing blows over.  

    Bubbles/Z4 – That is a cool chart.  I don’t use that one much but it is a very nice glance.  Great visual illustration of the 1.25, 2.5 and 5% lines….

    AAPL/Yodi – I think that not taking the money and running at $320 heading into earnings is nuts.  Hows that for clear?  Your 2013 $300s are fine positions but if you made a lot of money on them then lighten up.  Those are $78 and have a .65 delta vs .72 on the Jan $290s but you can roll the $37.70 Jan $290s to 2x the Nov $310s ($19) which have a delta of 59 and you can cover that with 2x the Apr $340s at $21.75 with a delta of .44.  So 2x .15 behind on delta but half your money is off the table and your caller is in $36 of premium rather than being $30 in the money so much less damage to the upside because of your theta advantage and plenty of cash on the side to add more calls and roll if AAPL does get over $330.  

    Editing/Snow – That’s why the editing project is just trying to go through all the crap I’ve already written.  I don’t have the patience to write a whole book from scratch.  

    There’s a sizable "air pocket" beneath risk assets, Pragmatic Capitalist says, with the dollar well oversold and equities overextended on false hopes of a Fed-driven economic recovery. "The market has greatly misinterpreted the current environment and therefore sits at a potentially risky position."

    China shows a willingness to exploit its monopoly position in the production of rare earth elements, and combined with its behavior on other fronts – exchange-rate policy, state subsidies that help firms gain key contracts, pressure on foreign companies to move production – Paul Krugman says it’s "a rogue economic superpower, unwilling to play by the rules," and the rest of us better do something about it.

    J.C. Penney (JCP -3.1%) adopts a poison pill in an effort to ward off hostile takeovers in the wake of Bill Ackman taking a large stake in the company. The one-year plan would kick in if one entity acquires at least 10% of its common stock or if holders of at least that much acquire more.


  31. lflantheman
    Holding long AAPL callers in artificial buy writes. I am concerned about the long callers jan11 290 call long 290 18.77 now 37.80 Jan 13 call bought for 51.50 now 78.27 Jan 13 320 bought for 59.31 now 68.85 Obviously the are coupled with short calllers. My thinking is setting a stop on the long callers will protect against a down turn of AAPL the short callers will automatically follow suit. Your thoughts thks


  32. Phil / Surveys — Yeah, most are garbage. I like to look at who participated. Neilson ratings make me laugh. They should do a survey for the fast food in the fast food line and see what they get. Then do the survey again in a health store on in the subway. It’s crazy how people say things like "can’t argue with the numbers". Perhaps, but you certainly can argue with the methods of collecting the numbers. I’d bet most statiticians can produce data that supports you for anything you can think of.


  33. Anybody, what is the bullish play Phil mentioned on the post?
    Thanks


  34. yodi…see Phil’s comments. 


  35. AAPL is up about 50% for the year here, an interesting spot.  

    Statistics/Rain – Oh absolutely.  I used to do that in my college statistics class, I would as the same questions to two different "statistically significant" groups and get almost opposite results.  It’s all such nonsense and then there’s a whole psychology to how you phrase the question like "Do you approve of Obama’s handling of the economy" or "Do you think the economy is being handled better by Obama" – things far more subtle than that can make the difference between 60/40 one way or the other and the people who are paid to take polls will take them over and over again until the get the results they were looking for!  

    Bullish/Amatta – Which one?  I can just find a current one if you want.  


  36. Phil,
    Thanks for the advice on AAPL but the Jan 11 290 long callers bought for 18.77 now 37.82 are married to Nov 310 short callers sold for 7.43 now 19.10. so if you do something to the longs you have to look at the shorts as well. So if AAPL goes further up the STop will do nothing but if AAPL tanks the long caller is cashed and the short caller will go down automatically.
    thks for your opinion


  37. Survey design/Phil – As Humphrey
    says


  38. Gel 1 I see GE is tanking more while SI is up again by .94 Very interesting, simular companies different countries!


  39. It would seem that even the most famous investor of them all can make very poor emotionally driven investment decisions (just like the other 99.999% of us have at one point)… which ultimately cost him $200 Billion of net worth:
    Warren Buffett: Buying Berkshire Hathaway Was $200 Billion Blunder
    http://www.cnbc.com/id/39710609


  40. "Gold retreats as Fed impact considered" !!? And why isnt oil retreating as well!!? Certainly not demand driven…. Sigh…. Oh wells, guess I should be happy I doubled down and am now even….Phil, I know you like WFR and SPWRA but of the Chinese companies (besides LDK), which ones are your favorites? Was thinking of buying a positing in STP…


  41. bullish – TASR??



  42. Phil, what do you think of a buy write on PFE buying here @ 17.60 and selling the Jan 12 17.50 Cs&Ps for 4.60 ? Thanks


  43. Bullish sign from Delta:

    The global travel rebound has Delta Air Lines (DALadding 1,000 flight attendants, some 425 of which are accepting a recall from their furlough. It’s a 5% increase in attendants, and while pre-Northwest-merger Delta rejected union drives, attendants are voting through Nov. 3 on representation. 

     


  44. PHIL
    RIMM is down today. just past it’s 50 sma  i’m short the stock and up about 200.00 or 4%.  aapl reports today how much of a pop do you  think rimm will get on a good earnings beat from aapl ?
    thank you for your input


  45. Good morning,

     

    IWM   68.14, 68.77, 69.22, 69.94, 70.40, 70.94, and 71.62


  46. z-
    big iphone numbers could be a negative for rimm
    wouldn’t worry about aapl, big issue was rimm it is not that big a mover one way or other, its always been just a better scalp one way or other for me
    fwiw
    good luck
    ps I think aapl will blow away numbers


  47. Wow, today is TRULY a "watch and wait" day for me in the markets.. haven’t been in this mode for a while..


  48. RWVJX 5
    thank you for the input  i’d be shocked if aapl didn’t blow away #’s


  49. Phil,
     
    I was golfing with a real estate lawyer yesterday who was in a quandary over where to put his cash.  He’s afraid of the market and said he was leaning toward TIPs because he feels runaway inflation is coming.  What’s your view of the TIPs.
     
    BTW.  He said he is busy as ever with foreclosures and it seems to be getting worse not better.  I asked him his opinion of the second shoe to drop (commercial real estate) and he said it already has/is but you don’t hear about it because businesses don’t "whine" or draw the media attention like the residential people do.


  50. AAPL…bought Jan 300s.  


  51. Damn JR
     
    You sleeping in this morning???


  52. JRW- good morning- glad you made it to the party!


  53. Pstas
    NZD/USD is totally a Fib technical play… it could take some time to materialize the objective.. The fundamentals were ignored on this one.
     
    On the USD / SGD I closed it out, and however re-entered it this morning, selling at market , with my stop at 1.315, targeting 1.250. I will stick with it this time and let the stops make my decision. This is as you have guesed,  a continuation of the trend play that is fundamentally based. The USD will continue to fall vs the Asian currencies, and the SGD is going to continue its fundamentally driven pattern.I have seen some of these play out over long periods of time. I was short the USD/CAD for three years before I closed it out in 2008 for a 36% gain.


  54.  AAPL/QCOM
    With AAPL -IPHONE hitting the Verizon network in Q1 does anyone have thoughts or play on QCOM?


  55. Crude hits 84 today?


  56. Phil, how would you play the dollar bounce? May be a UUP call spread…?


  57. jromeha- thats okay as long as it hits 78 next week


  58.  Phil -
    Back when XOM was $60/share I bought some in my IRA and covered by selling the Jan12 $57.50 Calls for $9.70.  The calls are only up to $10.80 now… but the shares are up a whopping $6/share.  Already I have made over half of my expected gains.  I like holding XOM (like seeing those dividends)… so I am wondering if if would make sense to buy back the calls (roll them to a higher strike or later date, the 2013′s?) at this point?
    Thanks!
    Frog


  59. yodi / AAPL
    I am a "streaker" by nature, so I accordingly sold naked puts on the earning play.today. I chose the January 320′s, and if the stock goes down tomorrow, I am not worried as it will not stall at my cost basis for long, if assigned – I am slso holding the Jan 300′s and the April 320′s – all short naked puts. The others, I have had for a period of time.


  60. yodi / SI
    The difference is management and of course the German "knowhow".  SI also is handling their financial assets far better, and always have been more conservative, as a company. Personally, I would never hold stock in GE – just do not like the company.


  61. gel1…..I think those will come in nicely.  


  62. AAPL cumulative positions (all Nov’s)
     
    *) 2 x 350 calls at 5.55
    *) 2 x 320/340 bull call spread at net 6.60
    *) 1 x 280 put at 4.97 (bought awhile ago, now 3.25)
    The plan, sell 1 x 350 call and 1 call spread near EOD. Hold the rest.


  63. iflan… Thanks. I am still mostly in cash, so I thoughtI would use the margin for the naked plays.


  64. Nasdaq is almost flat, yet AAPL is up 0.5% and GOOG is up 2%.


  65. Gel- NZD/USD- thanks for the info.
    This is from a daily currency letter I have been following:
    In New Zealand overnight, they saw the latest print of 3rd QTR CPI (consumer inflation), and here, inflation rose by 1.5% in the 3rd QTR. I don’t believe the Reserve Bank of New Zealand (RBNZ) will think that a 1.5% rise in the 3rd QTR is acceptable. The RBNZ will add this to their list of reasons for their next rate hike…
    While this play is based on TA, would not the above work against the trade?

     


  66. Phil…. Are you using  Apple / Chrome when you post on PSW?


  67. Jordan – and MSFT is up 0.7% (I think it’s very close to GOOG composition wise in the Nasdaq)


  68.  Phil, 
    I read on an older post about a current AAPL play… Not sure if it is wise to enter one now or if there is a current bullish play as into earnings … wouldn’t mind owning them but not sure if they are too rich now. 
    Thanks


  69.  Based on Birinyi’s research:
     
    Apple beats 100% of the time (since 2003). 
    It trades up 67% of the time. 
    Trading on the day prior to earnings is not predictive of a gap up or down. 
    Gap up/down averages 6% in either direction, giving us a range of 297-335 if we close at 316 today. 
    The range for gap ups has been 1.42-12.68%.
    The range for gap downs has been similar at 1.5-12.5%
    From open to close post earnings it tends to trade down on average 0.5%, and that occurs about 64% of the time. Otherwise it trades up slightly, about 0-1%. Interestingly, on gap downs the open to close is very similar. 


  70. Drcraig -

    Interesting…thanks!


  71. AAPL/Yodi – Same idea though, push the callers into premium that will expire no matter which way things go.   See you made $20 on Jan calls that have a .72 delta so if AAPL drops $20, you lose about $15.  You caller made $12 and has a lower delta than you (.60) so he’s not even really protecting you to the downside.  There’s really no point to not taking your net off the table ahead of earnings as you have risk but small chance of reward.  You can move your $38 calls to 1.4x the Apri $340s at $21.90 and roll the callers up to 1.4x the Nov $320s if you are bullish or just roll 1/2 up to 1.4 and then you only need to buy 1.2x the Apr $340s.  That’s taking $10 of your profit off the table and leaving yourself with a fairly delta neutral position with a huge time advantage.  

    Yes, Minister/RN – Hey, I love that show!  Haven’t thought of that in years…  

    Buffett/Goldman – Yes, I was listening to that interview.  It’s interesting that his first investment was pretty much a mistake but he worked with what he had and turned it around.  

    Those USO puts are not budging.  Still .45.  

    Solar/Jrom – I don’t get it, I like 3 solar plays but you want to know my "favorite" 4th?  STP is OK, I guess but it would be a toss-up to me with TSL or SOLF.  Actually my "favorite" would have to be RSOL, not because I think they are a good company but because people are willing to give money to a company called "Real Goods Solar" – sounds like something from a package in the dollar store!  

    By the way, I was talking to some international guys over the weekend and they are very much of the midset that, as soon as China does develop a strong internal demand for goods, they are very likely to toss all the foreigners out on their asses anyway.   I thought they made a good point, these are guys I know who are based in Asia and do business here, not vs. vs. and they figure once we lose what little leverage we have with China, that will be that.

    TASR/Morx – Under $4 is a buy for me on TASR.  If it were not for the recession, I think they would be doing well already.  

    Bid Mac/Respa – It certainly points to how low the dollar has gone and that it’s well ahead of realistic price adjustments. 

    PFE/DK – I like them long-term so a good play at net $13/15.25 but I’d rather take a bigger position on the $15 puts and calls at $4.90 for net $12.70/13.85 as the 2x put-to price is your net entry on the $17.50s and your be on the $17.50s is 100% in the money on the lower spread.  You do give up a lot of upside – maybe 1/2 of each?

    Delta/David – Good catch but I wonder how much has to do with shifting deals from the CAL/UAUA merger and others going on?  What we need is an industry overview to figure out what’s up.  Of course PCLN is still $350 so you have to figure someone must be going somewhere.  

    RIMM/Z4 – Well maybe AAPL sales will be so good that RIMM investors will panic!  Seriously, I don’t see RIMM getting a big pop from AAPL earnings outside of an overall boost from the Nas, which is just under some very serious resistance.  Sell some puts to cover if you are worried.  

    And what RWV said! 

    TIPS/Exec – Total scam!  They are based on Government inflation stats which have nothing to do with reality.  I put up a play on SPY and XLF for DD over the weekend as better places to park some long-term money than banks or bonds or TIPS for that matter.  Cash is king until they offer you 15%+ in a CD and THEN you can put it in the bank.  

    QCOM/Newbie – How much of their stuff is in an IPhone?

    UUP/CMS – We liked them from last week.  You can go with the March $23 calls at .50 and sell the March $22 puts for .55 for a .05 credit and whatever UUP gains over $23.  They need a 4% move up in the Dollar to get to $23 but the returns are very nice over that.  

    XOM/SrF – The protection is free at the moment.  If you are super-confident they will hold $60, you can roll up the puts and calls to the next strike about even but the 2012 $57.50 combo still has $5 (35%) premium and are giving you great insurance for a year on your $6 gain.  You can roll to 2013 but you would be doing so with a low VIX to an even lower delta call whereas, if you wait for a downturn, the VIX will increase and the 2012 callers will drop faster than the 2013s, giving you a better roll. 

    Dow volume just getting to 86M at 1pm, very slow after a good start

    Posting/Gel – I post my regular comments in Chrome but now open up 2 IE windows to copy in the news because Chrome just mangles the fonts.  

    AAPL/Amatta – I’m just looking at AAPL as a stock that jumped 17% in a month and thinking that earnings could easily disappoint so, IF YOU MUST PLAY A RISKY STOCK, I’d sell 4 Nov $330 calls for $10 ($4,000) and buy 3 Apr $360s for $15.30 ($4,590) and, obviously, if they don’t take $330 by Nov expirations, you just keep whatever is more than $590 on the longs ($1.97 per share) and, if they go over, you DD on the Apr $360s to make 6 at whatever and then you can roll the callers up to 1.5x Jan whatevers (right now the $370s are $6.30) so you end up in a bullish spread that’s in the money if AAPL goes up and very, VERY happy you weren’t so bullish if they go down.

     Birinyi/DrC  - Nice breakdown.  


  72. Buying the aapl nov 30 calls on the dip here at 24.20, my thought is numbers got to be off the chart, guidance will be conservative, (so ignored as they always do) but if you believe in the appl quarter, numbers have to be huge, not sure what the whisper number is or margins would be the risk part of the trade.
    But numbers have to be obscene , goog shot up 10% and appl has arelady got some of that, but my conservative "guess" would be 10% up on pre-goog bump would be 330 for appl tonight?
    anyone agree? disagree?
    only other scary thing is everyone on the planet looking for huge numbers so trade is crowded
    just got to go with them in this market though


  73. Phil --
    Having a hard time putting on a suitable AAPL position for "good but not blow out" earnings and a "sell the news" day tomorrow.  If I think 340 is out of reach for Friday (on the weeklies), what do you think of something like buying the 360 put and selling the 340, or maybe even 350/340?
    Also, do you think that AAPL is suitable for a Jan 2012 buy/write, which would be (with the 320s) $214/267?


  74.  Phil, you seem to be pushing the idea of renting a home and putting your downpayment cash to work for you elsewhere. That makes sense for me now (I’m young, few major obligations), so renting works for me. In fact, I’m very proud to be living an a very humble apartment in Great Neck now paying *only* $1700/mo in rent! The average "nice" 1 br around here goes for $2500. Suppose I’m successful in building a nice medical practice over the next year, and I want to trade up. No problem, I can get one of those "nice" $2500, or even $3500 1-2 br places in town- but what if I want more? Can you really live in a *nice* neighborhood renting a house these days? Maybe you can, but the houses I see for rent are either not very nice, or way too nice, like Sotheby’s $15-20k/mo nice. 


  75. 11:00 AM On the hour: Dow +0.35%. 10-yr +0.47%. Euro -0.16% vs. dollar. Crude +1.84% to $83.44. Gold -0.05% to $1371.30.

    12:00 PM On the hour: Dow +0.35%. 10-yr +0.46%. Euro -0.1% vs. dollar. Crude +1.81% to $83.41. Gold -0.16% to $1369.80.

    01:00 PM On the hour: Dow +0.39%. 10-yr +0.5%. Euro +0.04% vs. dollar. Crude +2.04% to $83.60. Gold -0.01% to $1371.80.

    MO FREE MONEY!  The Fed buys $6.26B in bonds, of $21.836B offered by dealers, in its latest POMO rollover of proceeds from maturing MBS and agency debt. Treasurys are holding solid gains: the 30-year yield -0.05 to 3.93%; 10-year -0.06 to 2.5%; 5-year -0.07 to 1.12%.

    And who’s paying for it?  The Treasury’s International Capital report shows China remained a net buyer of Treasury securities, increasing holdings by $21.7B, to $868.4B. After gradual cutbacks, it’s the second straight month of net increases by China, the largest foreign holder of Treasurys.

    Atlanta Fed President Dennis Lockhart: Backs more monetary stimulus, from a risk management perspective – "an insurance policy that is prudent to put in place at this time." Sluggish growth and near-zero inflation presents deflation risk that can’t be "blithely dismissed"; but it’s just a risk, not a feature of the economy. Supports a more explicit inflation target.

    Uh-oh, time to buy some new judges!  The Supreme Court won’t hear a challenge from Bank of New York Mellon (BK) of a ruling that says the bank can be sued in connection with its clearing activities for Sentinel Management Group – accused by the CFTC of fraud and rules violations.

    BX still on a CRE shopping spree:  Warehousing giant ProLogis (PLD -2.5%) confirms its sale of a portfolio containing some 180 industry properties, and interests in a hotel and three investment funds, to Blackstone Group (BX) for $1B. With ProLogis trying to pay down debt to recover its credit rating, YTD dispositions of more than $1.6B are ahead of forecasts. 

    A metals market rally isn’t just about gold, ETF Securities says, in noting its physical palladium ETF (PALL) has broken the $500M asset mark, joining its sister platinum fund (PPLT). (Today: palladium -0.5%, platinum +0.1%, silver +0.5%, gold flat.)

    Three lunchtime reads:
    1) Why it’s time to sell Apple
    2) Why a foreclosure moratorium is a bad idea
    3) Superstar stocks of 2010 outrun the market


  76. pstas – NZD
    If they raise their rates, then I do believe it will be positive for the currency, and not good for the play. I follow a morning currency post that usually signals the probability of any interest rate change, and they are usually right. This could definitely be a game changer and a time to set a tight stop, if a rate change is imminent.


  77. I do not believe Apple will disappoint our long plays. Historicially, they have always treated their stockholders with as much affection as the end users of their products. They have trained like "Pavlov’s dog" to expect the reward.


  78.  BIDU doing its thang


  79. Phil
    The anticipated quality of your posts, notwithstanding, I have always been impressed by the "very professional" appearance of your copy, and thus my question regarding the IP you are using. Thanks!


  80.  JR- You think we’re going to start trending at some point today, or do we just go sideways from here to the close? I’ve been having a bit more luck with futures lately. My new thing is $1 trailing stop initially, then narrowing it to $0.50 after the trade is confirmed in my favor. This has done a great job minimizing losses (I often get out at a profit, or even on trades where I was WRONG, provided I used a disciplined entry). It hasn’t seemed to hurt gains much either. 


  81. gel/AAPL…..Sometimes, as in love and life, one must go with  what the heart says, with intuition.  My intuition is that AAPL does not disappoint, and goes up after earnings.   Thus, I’m married to my wife and long AAPL.   Both seem to become more  valuable  with time.     :)


  82.  Phil
    need your help with my GOOG position:
    I have long call spread: Jan12 450/550
    have short caller Jan12 600s (had to roll it there after last jump)
    and short puts: Jan12 400s and Mar11 500s
    what you will recommend?


  83.  Phil
    another position with potential trouble: AAPL
    have long call spread: 1 x Jan12 260/320
    2x short callers Apr 320 (was rolled from Jan300s)
    and 1x short put Nov270s
    had another Jan11 long call spread which I closed couple of days ago because it was deep ITM and got 90% of potential


  84. If Harrahs can play like LVS…its a solid buy:

    Harrah’s, the world’s biggest casino company, plans to head back to public ownership after three privately held years, through an IPO that is reported to seek $575M.



  85.  Phil,
    I trying to give a little investment help to a friend that is very risk averse and has 100k is CDs and literally in the mattress. I thought I would recommend a Mortgage REIT like NLY that provides a nice return by owning only US Government paper. As I understand it, their only real risk is interest rate risk since they lever 7-1 which could drive the share price down totally negating the dividends or worse.  I thought this could be hedged by using part of the investment funds to purchase a bull call spread on TBT to cover a possible 20% decline in the share price. In addition writing the out of the money calls on NLY could provide some further downside protected.  As I run the numbers this barbell scenario would return approximately 7%-8% per year which although not great is far better that cash. Your thoughts?


  86. PFE- Thanks Phil. I like that adjustment to the spread. I actually understood it after I reading it about 3 times. A learning experience!!!!!! Thanks again.


  87. It would surprise no one who remembers me to know that I’m long AAPL as well.  ;-)

    I suspect that we’ll see AAPL’s EPS closer to $4.50 than $4.06.  And frankly I’m thinking $4.75+.

    reinharden
     
    PS:  If a CDMA iPhone shipped with a QCOM part, it wouldn’t be that huge of a deal to QCOM’s top line number.  The most likely near-term scenario would be that AAPL shipped both a CDMA phone and a GSM phone.  If AAPL gathered 10% of the 500 million total CDMA cell users (very unlikely), that’d only be 50 million CDMA phones at less than $20 each.  So $1 billion over probably 5+ years yielding circa $200 million in incremental revenue for QCOM.  But with QCOM already doing $10 billion/year, that’s only a 2% increase in revenue.  The numbers would be somewhat better if AAPL moved the entire phone line to a QCOM part; however, that’s really unlikely to happen before next summer (if at all).  All, of course, IMO.


  88.  reinharden
    thanks for you insight.    


  89. drcraig / direction

    I have no idea, we are in the middle of my range; I am biased to the upside but have no current position.


  90. $1.29 bln reverse repo.  Just to completely confuse everybody.


  91. Phil, I’m looking over my portfolios, and finding it hard to sell any premium when the VIX is this low. Sometimes it’s smarter to lay low.


  92. This week’s Weekly Newsletter for PSW is available here:  

    http://ilene.typepad.com/ourfavorites/phils-stock-world-weekly-newsletter.html

    Any feedback appreciated.  - Ilene


  93.  Illene- I never comment on your posts, but they’re always much appreciated. Thanks!


  94.  AAPL may be breaking out here. Perhaps another 5 point push like we had Friday the last 45 minutes


  95.  Oops I’m an hour ahead of myself


  96. Phil,
    international perspective--3 c’s copper, chile and currency +nz—another view of how things are being distorted by the currency situation--
    i have worked in china on and off for 12 years and i definitely agree with what the people you spoke with said--its already starting to happen--
    over the weekend i meet with an old friend with whom i have worked in chile (extremely successful investment banker/investor from chile) he was the first person asked by the new chilean president to be the chilean ambassador to the usa, so he is a really well connected guy politically as well--this is what he has to say; santiago is now more expensive than most cities in the us which he thinks is "stupid" given how much more the us has to offer--between the price of copper and the collapse of the dollar the chilean economy is really getting skewed--aside from copper the rest of their exports are being hurt badly and the government is looking at both currency and price controls--he manages money for 2 billionaire families and the chilean national pension fund and where he is most interested in putting money to work is usa real estate--he just bought 3 buildings in cambridge, ma for less than he would pay in chile --all fully leased with10% cash on cash returns--
    also just heard from an old friend in new zealand--where i have property that the government is considering banning the sale of land (particularly large parcels) to foreigners in order to stop the chinese from buying up "the whole place"


  97. aapl options are getting some "inflations", options are getting quoted higher this afternoon than they were this morning with the stock at a lower price, going to be a push to get in prior to the close imo


  98. Phil – thanks… your logic behind when to roll out in time makes sense (wait for a downturn)… but – fyi this is my IRA so I usually don’t sell puts (I can, but in this case I didn’t – because it would be more profitable to hold the stock due to the dividend and simply sell calls).  Selling puts counts against my cash (had I sold the $57.50 puts… I would need to keep the money to eventually buy the stock sitting in my account until Jan 2012 – so – I figured it would be better to simply sell covered calls).  With that in mind – I don’t see how you got the $5 of premium.  The $57.50 calls (at ~ 10.80) have:
    (57.50+10.80)-66 = $2.30 premium
     
    The 57.50 puts (which I didn’t sell)… are all premium at $4
     
    That adds up to $6.30 in premium.  Is that correct?  Anyway – like I said… I only sold covered calls so I guess the best strategy would be to hold them for now, and in the event of a downturn VIX will go up and the 2012′s will fall faster than the 2013′s – so I can buy back the ’12s at that point and sell the ’13s – or – do nothing, but that brings me back to the original question… I’m only calculating $2.30 left in premium on those calls… is that right?
     
    Thanks,
    Frog


  99. aapl options are getting some "inflations", options are getting quoted higher this afternoon than they were this morning with the stock at a lower price, going to be a push to get in prior to the close imo
    trading reminds me of goog on thursday


  100. Phil
    What’s the best way in your opinion to play and Apple (in-line) earnings report? Hard to believe that they can continue to significantly beat expectations. Your thoughts would be appreciated.
    dclark41


  101. /CL – nice 35 cent + jam into close…What a crock…


  102.  drcraig – Thank you! (If you or anyone does comment, I try to answer)


  103.  Phil – after messing w/ the numbers some more… I see that if you do the math like this:
     
    The $57.50 calls (at ~ 10.80) have:
    (60+10.80)-66 = $4.80 premium
     
    (using the 60 price paid to purchase the stock rather than the strike price of 57.50 in the equation) I get close to your "$5 in premium"… but I’m still confused about why we would use the stock purchase price in the equation rather than the strike price.  Sorry about these newbie questions – I’m still learning.
     
    Thanks,
    Frog


  104. Newsletter – When it’s out of Beta, can I get a copied email to me every week?


  105. BIDU -- be careful, BIDU reports earnings on Thursday. If they blow out like GOOG, things could get ugly fast on the short side.



  106. I have been asked to speak to Muhtar Kent, CEO of KO tomorrow – anyone have any good ideas for a question (their earnings are in the morning)?  He’ll want to keep things earnings-related I imagine…. 

    AAPL/RWV – Whisper is $4.75, a good .70 over consensus.  Last year was $2.70 and this should put them on track for just about $15 for the Year, this being the last Q for them in their strange reporting cycle.  So $330 is a current p/e of 22 and forward, eveb if we assume they do $20 next year, that’s 16.5 vs 8.5 forward for HPQ, 7.75 forward for RIMM and 19.55 for GOOG.  AMZN and BIDU are in the 40s but we’re short both of them!   I do see $330 with $340 on the outside but, then again, I didn’t really think GOOG would break $600, even though we did do those $700 calls as gambles that paid out huge…  

    AAPL/Esco – I assume that was before the backspread I put up for Amatta above.  That’s about the only way I can see being comfortable right now.   No to the buy/write – they are just too darned high.  AFTER earnings, you’ll at least have a better idea but, either way, not to be goulish but if Jobs dies, where are you with that stock?

    Renting/DrC – I think in this market, waiting and seeing is the best bet however, a bargain is a bargain in any market – keep that in mind.  Also, as I have advised many friends and family over the years – buying a multi-family home and renting out part of it is a fantastic way to build wealth and get a nice home.  It’s a strange market but you can buy some very nice homes that are priced based on cash-flow and, as long as the numbers work with you as the primary tenant, it’s a way that someone in your situation can buy themselves a $1M home and pay that same $2,000 a month out of pocket.  I like multi-family because it’s still one roof to fix and one lawn to mow and one electrician to call with one tax bill to pay and there are tax advantages you can use as your home is an investment property.  Just like anything else, take a long time to look, don’t rush and be ready and, one day, an opportunity will present itself.  Also, if you feel your situation will improve over time, you can plan on taking over another section of the home when you can afford it or moving from a smaller unit to a bigger one.  I don’t know how set you are on Great Neck – if you hit the south side of the island, there are millions of multi-families….

    BIDU/BDC – Shaping up for a good slapdown tomorrow.  Will be nice if AAPL has good earnings and they pop, like they did on GOOG.  AMZN getting up there too.  

    USO WEEKLY $36 puts now .38 – may be as good as it gets for an entry

    Appearance/Gel – That’s just our modified version of WordPress.  I don’t even know how to do all the fancy stuff (there must be 30 formatting/editing buttons I never use) but I think sticking to the 10 or 12 tricks I do know how to use properly keeps it looking "professional."  

    GOOG/Tcha – Doesn’t sound bad to me.  You’ve got $50 in the spread to look forward to and the putters are toast while the extra callers are only $17 in the money.  It’s a pretty simple matter of taking more risk on your $400 putters by rolling them up and applying that cash to the $600 caller to roll them up.  Let’s say you are comfortable with shorting the 2012 $500 puts for +$20, that $20 pays to roll the $600 caller up to the $640s or simply pays the $17 you owe him if they expire up here.  Keep in mind those $600 callers are $75 of premium and $17 of intrinsic (18%) so what is your real motivation for removing your downside protection and paying $75 in premium at this moment?  

    AAPL/Tcha – This one is also fine.  I’d let the earnings play out with the protection and then see what adjustments you need to make.  Again, you are worried about owing money to callers that are nearly 100% premium.  

    Harrah’s/David – They were a favorite play of ours back in the day. 

    NLY/CSl – Well for that percentage, I’d prefer the SPY or XLF plays we discussed this weekend.  Once you enter a trade where you are so paranoid that you are going to bet against yourself, what is the point?  You can buy NLY 2013 $15 calls for $3.20 – that’s just .15 in premium!  You can sell the 2013 $10 puts for $1.20, that’s an entry at $8.80, down about 50% from here.  That puts you in the 2013 $15 calls for net $2 and you can sell 50 of them and collect $6,000 for about $8,500 in margin.  Obligation is, of course, to buy 500 at $10 for $50,000.  Then you can spend net $10,000 on 50 calls and you can then sell 25 Jan $17.50s for .88 ($2,200) and that’s going to be your 7% with plenty of room to roll them along if things go well and not at all bad for a cash+margin commitment of $18,500

    PFE/DK – Great!  The gains are so good, it’s better to take the safer ones.  

    Hey Renharden!  This guy was long AAPL at $85!  Good point on QCOM and, of course, they also probably cannibalize their own sales with 50% of the manufacturers.  

    Smarts/Jbur – I agree.  It’s not always a good time to play.  

    Newsletter/Ilene – Wow, 3 weeks already!  This is starting to look like it’s ready to launch…  What’s really cool is reading it on my IPad – make it look very serious! 8-)

    Copper/Datuu – Speaking of copper, up to $3.86 this afternoon.  Dollar down 1% on the day since we opened.  Good info on Chile, etc. – things are going to get crazy…

    XOM/SrF – I was looking at the puts and the calls together.  When you said you sold $57.50s, I assumed you sold the combo.  Obviously, the strategy is much less effective if you only sell covered calls.  Your number is right on that play. 

    AAPL/RWV – Yeah but it turned out those GOOG calls on Thursday were worth it!

    AAPL/DClark – See play in previous comment. 

    /CL/Jrom – They want to jack up November so they can get relatively cheap rolls to Dec.  We expected this, that’s why we killed the shorts on Friday with the intent to reload today but the Dollar down 1% makes it a more dangerous play.  

    Newsletter/Eph – Ideally, it should be featured every Sunday morning, along with the regular PSW Report.  We’ll be selling the Weekly as a stand-alone subscription and then more if people want the Daily Report and then there will be a Voyeur Membership for looking at delayed chat but no participation, along with Basic and Premium Memberships.  Hopefully this will be a way for us to expand without overburdening chat – which is at a level I’m happy with now.  


  107. Here comes the Aapl stick


  108. 02:00 PM On the hour: Dow +0.49%. 10-yr +0.5%. Euro +0.04% vs. dollar. Crude +1.92% to $83.50. Gold -0.01% to $1371.80.

    03:00 PM On the hour: Dow +0.67%. 10-yr +0.53%. Euro +0.13% vs. dollar. Crude +2.31% to $83.82. Gold +0.03% to $1372.40.

    John Hussman is the latest money manager to slam the notion of further quantitative easing, fearing that it will only inflate a short-term bubble. So while money managers hate QE, academics seem to love it. Why the dichotomy? Joe Weisenthal says it comes down to a fight about taxes.

    Is it really worth thinking about a mortgage mulligan… just canceling the whole market and rebooting? Radical, yes, but radically simple – though the aftershocks of wiping out 70% of GDP might be hard to swallow.

    Its $950B bailout repaid, Lincoln National (LNC) is going long-term bullish on commercial real estate – though finding assets that meet underwriting standards is "very difficult." More than two-thirds of Lincoln’s CRE portfolio as of June 30 had a loan-to-value ratio of less than 65%.

    As speculated, amid near-ideal borrowing costs, Wal-Mart (WMT +0.8%) is pulling the trigger on $5B in bond sales today, in durations ranging from three to 30 years. The deal’s gotten a AA rating from Fitch.  If WMT is pulling the trigger here then they are likely calling a bottom.

    Will Apple (AAPL) have successfully lowballed earnings estimates again – even though its guidance for this quarter was more robust than usual? A roundup of analysts’ expectations for the after-the-close earnings news.

    The future of Saudi Arabia’s oil economy may depend on the outcome of increasing skirmishes between conservative clerics and King Abdullah – who’s pursuing diversification of the economy through shifts away from strict Islamic law, and toward involving women in the workforce.


  109.  jvest:bidu  
    BIDU  do you think they could go higher even after todays pop? Haven’t they risen off GOOG already?  I’m short a couple 105 C weeklies.  thx


  110.  Can UNG go any lower?  This looks close to a bottom (we’re at the 52-week low) on the assumption it will go up a little once winter weather hits — maybe that’s already priced in?


  111. Hey all,

    I have a new Play of the Week in Huntington Bank (HBAN).

    Check it out here!

    Good Investing!


  112. Looking familiar?:

    Barry is starting a great series for those who are interested:

    This is the first of a 5 part series from Mike Konczal, a former financial engineer, is a fellow with theRoosevelt Institute, who also blogs at New Deal 2.0, and is working on financial reform, the 21st century economy, structural unemployment, inequality, risk sharing, consumer access to financial services and more generally what it means to have a social contract in a financialized, post-industrial economy.

    ~~~

    This is a series giving a basic explanation of the current foreclosure fraud crisis: This is Part One. Parts Two, Three, Four, and Five. will all be posted the each day rest of the week at The Big Picture.

    The current wave of foreclosure fraud and the consequences for the economy are difficult to follow. As such, I’m going to write a few posts to simplify what is going on so you can follow stories as they unfold.  This is very 101 level, and will include a reading list of blog posts and articles at each stage to help provide depth.   (Special thanks to Yves Smith and Tom Adams for walking me through much of this.)  Let’s make three charts of the chains involved in the process. The first is what is currently going on with foreclosure fraud (click through for larger).


  113.  YRCWD having a nice 20% move up today on reporting that their Q3 EBITDA is positive and greater then Q2.   Talk about a volatile stock!


  114. Just bought bac at 12.27 on news of resuming forclosures on 10-25
    should run back to 13 area imo
    earnings tomorrow


  115.  Phil – after plugging in the numbers into my spreadsheet to see what affect a roll would have on my XOM position – I determined that I could only gain a fraction of a percentage – meanwhile, destroying the awesome protection I have (down to 47.61 before I get a loss)… if I roll.  Further, if left as is, I can still reap my max gain if XOM finishes at 57.50 or higher in Jan ’12.  I decided not to touch it.  My guess is you probably agree.


  116. Good day all!  TSRX – going to pick up a few hundred shares for an accumulation into them.  No Options unfortunately.


  117.  UNG/Jbak – Sadly, UNG reflects the true demand in the economy.  You can’t manipulate nat gas like you do oil and copper because there is a physical limit of how much gas can be stored in the US at around 3,800Bcf and we’ve been racing up to that level all year – the same as we did last year.  The only real pop we got was in anticipation of hurricanes shutting down production but that didn’t happen and demand is so low that they will have to start shutting down production as we hit storage capacity.  That’s why the gas companies want LNG so much.  LNG will increase the amount of gas that can be stored by 10x and that means they can jack the prices up by sticking gas onto takners and driving them in circles around the ocean, the way they do to oil now.  

    Working Gas in Underground Storage Compared with 5-Year Range

    YRCWD/Lv – They are fun!  Bounced just above our target at $3.50 so not surprising… 

    BAC/RW – I still don’t trust them.  Better off with XLF although they are already up 2% today.   C up 5%, that’s nice too.  

    XOM/SrF – Now THAT is the right way to look at it.  


  118. Phil, ask him if they are planning to reintroduce “new coke”? But seriously, how do they hedge for commidity costs?


  119. iflan / AAPL / Wife
    You, my friend, are a "sage" and a wise one, I will add.. Sometimes it is better to follow your emotions, and throw the charts out the window !


  120.  Phil
    On KO – how are the newer/healhtier drinks doing in the US marketplace? An other product introductions or diversifications coming?


  121. I believe it is quite possible for corporations to continue to improve earnings given the weak dollar which our government has committed everything to maintain. It simply doesnt matter if we have high unemployment or weak earnings growth among the bottom 50%. Heck many of the bottom 50% have not much more than government benefits as income anyway. We have 30% or 50% (pick your number) of the population that functions fully in our country. They will pay more taxes in order to help drag along the rest of the folks.
     
    This is actually bullish for stocks. And AAPL has got to be in the forefront, soon to be the most valuable corporation in the world, making products nobody needs but are being bought hand over fist by the productive 30%. I think we have been on the wrong track here for some time, ignoring the new reality. As never before, our government has committed itself to a massive program of handouts and giveaways and "stimulus". This does not hamper the top 30%, even though it may piss them off.
     
    The stock market is a referendum of corporate profits, and has nothing to do with macroeconomics. I think its time to lighten up the hedges.


  122. Playing AAPL on earnings expectations is very much like watching an NBA championship game.. lots of excitement!


  123. barfinger / Apple
    good post…. their products are OFTEN purchased by those that can not afford them… it is almost a "cult" mentality, much like Nike has been ( brand prominence ) Hey, even the tatoo parlors are blowing out the numbers – another cult driven product. Again, most who get the ink, are really not in a position to afford it.. Only the marketing geniuses have a handle on all this mentality.


  124. Ilene, the newsletter looks awesome.  And I really like how y’all call out the trade ideas in separate boxes to emphasize them.  Very nicely done, very professional.


  125. Ilene,
    I’ve finally checked out the newsletter and I must agree w/ hoss – it is OUTSTANDING :)
    Frog


  126. can somebody post the link to the newsletter, apparently my bookmark is bad….
     
    maybe i need a Mac?


  127. Hedging/Jo – That’s a good one.  I wonder if he’ll know.  Company that big has CFO and a team for all that, maybe even fund advisors.  

    Healthy/Deano – That’s a good one as my complaint when I was talking to their marketing guys last month was that KO fails to push their health segment under the brand.  PEP kicks there asses in developing non-core products to the point where Pepsi is less than 10% of PEP revenues while Coke is still about 1/3 of KO.  

    Speaking of healthy, our wild turkeys are getting huge!  Almost as big as the kids.  We have a flock that patrols our neighborhood and they are hanging in our yard this afternoon, a couple are about  as tall as my 8-year old…    I keep telling the kids they’d better get ready to catch them for Thanksgiving.  

    Earnings/Barf – Sure, as long as the dollar drops 2.5% per month then earnings can go up another 20% next year no problem.  It does matter if other people stop lending our government money – then it all hits the fan very fast and the longer they extend and pretend, the more damaging it is when the bill finally comes due.  AAPL is not making products nobody needs – people "need" phones and computers and AAPL figured out there was a luxury niche that could be filled in the replacement cycle.  Now that computers and phones have come down 90% in price over the last decade, the relatively small expenditure to have a "nice" phone or laptop is worth it to people.  Had AAPL come out with a $1,000 IPhone when most Phones were $199, I doubt it would have been as popular.  Same goes for the IPad – I went to look at laptops the other day and decided it made more sense to get another IPad than to buy a laptop.  That’s the key to AAPL earnings – are their gains simply being taken from their competitor’s sales? 

    Even in the APPL stores, about 75% of the space is for IPad, IPod with the laptops and computers treated like also-rans.  This is very, very different from someone coming up with a truly new product that is adopted by the masses.  

    IBM just came out in-line and is being punished for it.  

    Link/Barf – There is one from me and one from Ilene above. 


  128.  Phil / new subscription fees — I’m sure this is a dead horse by now, but I was surprised to see a 49% increase in my quarterly subscription fee. I’ve missed most of the discussion on this topic…is this normal and was this your intent? I thought longtime members are grandfathered in. Thanks.


  129.  KO #1 — I don’t personally care that much, but you might ask about whether or not the ethanol demand artificially driving up the costs of high fructose corn syrup might make it beneficial to move more of the offerings back to cane or beet sugar.  While providing an opportunity to market to the seemingly corn syrup free crowd.
     KO #2 -- It’d also be interesting to hear whether or not they’ve got a take on the recent noise about banning the purchase of "sugary drinks" for those people receiving food stamps and such.  Tempest in a tea pot or not what with 20% of the population allegedly now living at or below the poverty level.
    reinharden


  130. VMW and IBM: Oh well, I guess they weren’t perfect.


  131.  AAPL $4.64 EPS on $20.34B.
     
    Let the market games begin. ;-)
     
    reinharden


  132. Oof! AAPL isn’t perfect too I guess!


  133. missed the whisper and warned????  that’s not like AAPL!


  134. AAPL "just" $4.64 – that’s not that great with all the insane expectations but spectacular otherwise!  

    I doubt it’s enough to hold up the Nas.  Looks like 4.2M IPads, not 5M, 14.1M IPhones is blowout, overall revenues a whopping $20.4Bn but hard to get a GE valuation with 1/5th their quarterly sales.  Gross margins seem a little off, have to check. 

    Subs/Ajay – I’ll have Greg check on that.  

    Ethanol/Rein – Great question!  I love that angle, thanks.  Also good to ask #2 leading with "With 20% of the population in this country now living below the poverty line, what does Coke plan to do about…."  May be the last time they ask me to speak to the CEO of any company! 

    Wheeeeee and down the futures go!  


  135.  AAPL’s flat! Option sellers win big


  136.  AAPL warned?  What item(s) merit that label?
     
    reinharden


  137. Was AAPL halted?  Because its not moving at all.


  138. It appears iPad sales could have been better…. maybe folks holding back for the Xmas season to pop for the purchase.


  139. BDC – they aren’t trading till 450 PM    


  140. biodiesel, AAPL is halted until 4:50pm LOL


  141.  LOLZ —  oops!


  142. MSFT suddenly down 2.5%…


  143.  AAPL – Top line revenue is definitely good and well above expectations.  And the first $20B quarter in the company’s history.
     
    3.89M computers is definitely heading towards 4M computers, but still short of that landmark.  
     
    iPhone sales, as Phil said, at 14+M are a million above the higher whispers.
     
    Not that many people will care about iPods, but those are also somewhat lighter than whispered.
     
    iPads are well-short of whispers.  So we’ll have to see whether or not they were supply constrained throughout the quarter. Although, anecdotally, it seems like supplies weren’t constrained the last several weeks.
     
    Margins should have taken something of a hit for two reasons.
     
    One, the phone bumpers probably added $5 to $10 cost per unit for the iPhone 4.  It’d be nice if AAPL backed that out as a one-time cost, but we’ll have to see whether or not they did.
     
    Two, the iPad margin should be lower than AAPL’s normal margins *and* lower than they’ll be going forward due to being supply constrained most of the quarter (and therefore there’s higher than normal assembly costs (overtime) and shipping costs (air freight)).  Hopefully those margins will have some headroom.
     
     
    As a long-term investor, I’m quite happy with the quarter.  By the time the market is done thinking about it overnight, they might even like it. ;-)
     
    reinharden


  144.  MS chief software architect steps down. 


  145. I sold the nov 340 calls for 7.85 near the close to hedge my nov 300 calls
    will be interesting to see where this all shakes out when stock opens, but premuims are going to shrink big time on those higher strikes
    I don’t see aapl gappin up on the news that has come out so far,


  146. and here we go…    


  147. Yikes. 


  148. At the close: Dow +0.73% to 11144. S&P +0.72% to 1185. Nasdaq +0.48% to 2481.
    Treasurys: 30-year +0.72%. 10-yr +0.46%. 5-yr +0.23%.
    Commodities: Crude +2.34% to $83.85. Gold +0.24% to $1375.30.
    Currencies: Euro +0.08% vs. dollar. Yen +0.33%. Pound -0.37%.

    Market recap: Financials lifted stocks in the morning after Citigroup’s (C +5.6%) beat, and equities powered out of rangebound trading in the afternoon, finishing close to 2010 highs. Other banks riding the wave: WFC +5.5%, BAC +3%, JPM +2.9%. Crude jumped as the dollar slipped -0.3% against yen, -0.1% against euro. Tech bellwethers Apple (AAPL) and IBM about to report.

    A Fed study finds that yes, just 59% of small businesses wanted credit in June and July, but half of those were denied by banks. A full 75% got "some" or "none" of their request.

    Necessary post-crisis adjustments to real estate and financial services are "largely behind us," Geithner says. Private investment is growing at roughly 10%, and household savings are back at 4-6% of income – making the economy feel weaker than it actually is, he adds.

    Bank of America (BAC +2.7%) says it’s applying new signatures to foreclosures in 23 states and will resubmit to courts by next Monday, meaning that foreclosure sales can resume in November. The bank says it’s found "no cases" of foreclosures that shouldn’t have gone through – and expects delays on fewer than 30,000 foreclosure sales nationwide.

    Apple (AAPL): FQ4 EPS of $4.64 beats by $0.56. Revenue of $20.3B vs. $18.9B. Apple sold 3.9M Macs (+27%); 14.1M iPhones (+91%); 9M iPods (-11%); 4.1M iPads during Q4. Shares halted. (PRApple (AAPL): Sees FQ1 EPS of $4.80 vs. consensus of $5.04. Revenue of $23B vs. consensus of $22.2B.  Some iHubris in Apple’s (AAPL) FQ4 press release: "iPhone sales of 14.1M were up 91% year-over-year, handily beating the 12.1M phones RIM (RIMM) sold in their most recent quarter. We still have a few surprises left for the remainder of this calendar year."

    IBM (IBM): Q3 EPS of $2.82 beats by $0.07. Revenue of $24.3B vs. $24.1B. Shares -2.6% AH. (PR(IBM): Raises full-year EPS guidance to at least $11.40 vs. $11.29 consensus. Gross margin of 45.3% falls short of consensus of 46%. Free cash flow of $3.2B was down $200M year-on-year.

    Infinera Corp (INFN): Q3 EPS of $0.18 beats by $0.09. Revenue of $130M (+56%) vs. $126M. Shares +7% AH. (PR)

    Lincare (LNCR): Q3 EPS of $0.47 in-line. Revenue of $419M (+6.6%) in-line. (PR)

    VMware (VMW): Q3 EPS of $0.39 beats by $0.04. Revenue of $715M (+45.8%) vs. $698M. Shares +2.7% AH. (PR)


  149.  So given AAPL’s forecast of "we expect revenue of about $23 billion and we expect diluted earnings per share of about $4.80" and AAPL’s recent "traditional" 10+% beat on revenue and 40+% beat on earnings, does that mean that we’ll be looking at $25+ billion and $6.70+ for the next quarter? ;-)
     
    reinharden


  150. Both AAPL and IBM had smaller than expected Gross Margins – that sends a chill through the investors…

    Halt/Kinki – That’s totally normal on earnings but about $300 now. 

    MSFT/RN – One of the main software designers is leaving and Ballmer sent out a letter saying "DON’T PANIC," which of course, is a great reason to panic….  

    I think $300 should be considered liking it anyway Rein – $320 was a bit silly.  

    Apple (AAPL) resumes trading, down 5.7% AH after guiding lower for Q1 2011 – expecting EPS of $4.80, significantly lower than consensus of $5.07. (earnings beat)


  151. Man, looking at the futures you can see why we keyed off those Nas shorts!  2.5% drop already, double what the other indexes are giving up.  


  152. I think that after seeing AAPL’s earnings, it wouldn’t be a bad idea to sell some front-month calls (Nov’s expiration) in or around the $330 – $350 range..  since we are toppy in the markets, I don’t think AAPL will exceed that price at the end of November.. thoughts? It’s preferable than selling short puts I believe, unless you want to own AAPL long-term :)


  153.  The last time Apple gapped down with earnings was 7/21/08. The gap was -10.8%. Apple rose from open to close 13.02% the following day. 


  154. The appl and ibm report will bring out the bear hunters tomorrow.
    Wonder if this will be the start of the long overdue downturn, or the dip buyers will be jumping in before 10am?
    will be a good trading day tomorrow- if your on the right side
    to buy the dip or sell the rally now?
    that is the question


  155. My idea on APPL is not to take advantage of the swing tomorrow (mega short-term play) BUT to play it until Nov’s expiration! Do we really think AAPL would hit $330 – $350 in the next 4 weeks??


  156.  Don’t forget that AAPL has product announcements scheduled on Wednesday.  So we likely won’t get a complete volatility collapse until after that.
     
    Jobs is on the call?  Uh oh…
     
    reinharden


  157.  Phil, 
    Is this the nail in the Bull coffin now? Are you finally going to be proven right by Mr. Market? Please say yes..


  158. AAAPL:  Someone bought 13600 shares for 316….now who has the fat fingers.  I still don’t get the pre/aftermarket movement.  Total gamble, sham and moves things around.  Probably be up 100 pts tomorrow just cause they can…and the POMO has not exhausted its funds….


  159. Phil,
     
    I see the talking heads on Fast Money are starting their negitive talk.  Maybe they got the order from their bosses that it was time to scare people again.


  160. The perfect storm = BOJ intervention this evening


  161. Congress spends all moneys, not presidents.


  162. Pharmboy:  In a free money environment like this and after seeing the GOOG jump after its earnings, it was tempting.  But a cursory check on the Risk Analyzer in TOS showed that premiums left almost no upside to any options trades.   Anyone who had the nerve to short AAPL into earnings though had some cajones.


  163. Hahah indeed Kikistyle. Though its "cojones".


  164. Respeja: LOL.  Thank you.  "BALLS" :)


  165. Haha, guys!
    ‘Cojones’ would be BUYING’ the stock just before earnings and then talking about it 3 months out


  166. AAPL… The ‘squeeze" on earnings relative to revenues, might be a result of the weakening dollar vs the strengthening Asian currencies, if not hedged. I believe there are a lot of nervous option players that need to cover their positions. The numbers were good – not  bad, so we will see this stock slowly continue its climb. The Xmas season is still in front of us, and will be good for AAPL, I believe.  My positions are all naked puts for 2011, so I guess patience iwill be a virtue…. as Phil has said so many times… better to sell options than buy ‘em ( in the long haul )


  167.  Hello everyone. I’m the person who has been putting together the Newsletter with Phil and Ilene. Just wanted to take a moment to introduce myself to this forum, and to thank all of you for the kind words of encouragement!
    Best regards,
    Elliott 


  168. I kept my trap shut on apple mania but you should all know that I read weekend other stories. Verizon said it has no plans to sell the iphone or the ipad G3, they will sell the ipad wifi version. Reported in the Jackson Hole Daily!


  169. Gel1
    Too much is being made of ‘margins’, already.
    But, you may be right, about the dollar weakness, although iPad was supposed to shrink margins and the company had guided lower margins at their last earnings call 3 months ago…I mean what else do you expect a company to do?
    They have already walked on water, but the analysts are saying ‘they don’t believe it as the ‘toes got wet’!!!
    Are you selling some more puts in the morning?
    I am curious about flan’s thoughts, though.


  170. Elliott
    Where do I find the newsletter?


  171. Shadow
    Hope you are doing well.
    Verizon WILL sell the 3G iPad. Otherwise, it makes no sense .


  172. It may be just Los Angeles Spanish, but we don’t use the word "cojones’ here – instead we say "huevos". ;)



  173. Maya1
    The report was by verizon to put the actual facts out, they did not say they will not ever but for now it is only the wifi ipad to be used at hot spots. They were very clear that their network could not support  the G3 devices and they are upgrading to G4. I am sorry to report this but I didn’t think ipad sales would disappoint and thought they would hold. I have before tried to explain that verizon was unwilling to deal with apple when they went with ATT because apple was TOO demanding/controling of the terms. Good products control freak CEO.


  174. snow,
    Or, for dramatic effect, we also use "huevos rancheros."


  175. Only my oppinion but the next iphone carrier is Sprint G4 network, small and limited but will with ATT could be quite a power. Verizon may want to sell G4 ipads and iphones later on. Only my theory, no facts to support other than CDMA.


  176. maya / AAPL
    I am not a guy that is good at short term plays, as I believe the success of so many are "a shot in the dark" or strictly gambling efforts based upon "skittish" emotion.. As most will agree, AAPL is one of the most "reliable" plays when it comes to earnings, however I play it with temperence. I know the results will be good, but I do not know how the market will react to the numbers.  So… my positions are bullish, but I sacrifice IMMEDIATE profits for a time hedged play that is targeting the same price, but has 3 or 4 months time to reach that level. All of my plays are sold naked puts with a 3-4 month time frame for expiration.  In the end, with AAPL, I will get my profit – I just have to wait a few months in this case. In the past, when the stock shot up, I closed the next day with the profits. My hedge is time related, and not dollar related.


  177. Elliott….. Congratulations on your  very impressive work…. also on joining a group of very successful people that will have a blessed future. Good Luck!


  178. gel1
    Your on the right side of apple, they will most likely have a great 4th quarter, verizon is going to sell ipads Wally World all lower priced apples, and if the sprint theory works out bingo January earnings exceed expectations, never forget apple never discounts to anyone and Steve is PO’d.
    maya1
    Patience will be rewarded!


  179. I think aapl will be a good buy in the morning
    will probally dd on my nov calls or maybe go out to January for the "safer" play
    still a must own stock for the mutual funds
    have to be a lot of buyers on the sideline waiting for any kind of dip
    I want to own it when they announce their "surprises" for this quarter


  180. Phil/Baby Boomer Effect - According to BlackRock, baby boomers are holding $10 Trillion in assets.  According to the Zero Hedge article you posted today, retail investors own 54% of U.S. corporate equity markets (see chart http://www.zerohedge.com/sites/default/files/images/user5/imageroot/shirakawa/Kostin%20Stock%20Ownership_0.jpg ).  And according to Goldman’s David Kostin in that same Zero Hedge article:
     
    Positive money flow will be needed to expand S&P 500 P/E multiples above its current level of 13.4x, slightly above with its 35-year average. At a minimum a firm bid must exist from the marginal buyer such as hedge funds and retail investors. In our view, the lack of money flow into domestic equities represents the key obstacle to US stocks trading substantially above their long-term average following the 30% P/E multiple expansion in 2009.
    Kostin also states:
    We expect the S&P 500 will rise another 2% to reach our year-end 2010 target of 1200. We anticipate US equities will trade sideways during 1Q 2011 as economic uncertainty remains high. Our revised 12-month price target of 1275 (from 1250)…
     
    ————--
     
    OK here is the question… shall we simply hope those retail investors (aka baby boomers) start gobbling up equities over the next 12 months, and rocket the SP500 up a whopping 7.6% from today’s close to thus reach the new Goldman target of 1275?  All the while dreaming that a unpredictable black swan event of financial significance doesn’t occur over the next 12 months?  Is it even possible to calculate a direction as we continue to be perpetually confused visitors attempting to live in Mr. Bernanke’s (and company) "Unusually Uncertain" universe?  Perhaps it would be less ludicrous if we simply just wait until the QE2 announcement spike before the end of year, and then go all in on a bullish triple ETF and hold for a couple of hours….cash out with a 10% gain ( avoiding the tax increases for 2011), and then place our newfound wealth into a basket of foreign currencies and physical precious metals?  At some point one has to question if the risk, time, and effort are worth the "reward" over the next 12 months…
     


  181. shadowfax…. ya, I’m kinda thinking the same – the earnings were not BAD, so as this plays out the market will take into consideration your thoughts about the 4th quarter, which includes all the Holiday sales. I feel relieved I did not BUY near expiration calls, as I would have been disappointed.


  182. rwvjx5
    I am seriously considering a play on apple for Q4. Sounding more like a grand slam, all we need is a pull back to  maximize the play, can’t wait to hear Plil’s play when the time is right, maybe after election day.


  183. AAPL and IBM …. interesting end to this day. VMW and MSFT too.
     
    AAPL; I zm far from an expert, but this stock has had a huge run (240-318 from end Aug to today).
    In my view, 300 was a reach, and it blasted past.
     
    So yes, with all the exuberance, earnings were a disappointment.
    Ipad sales missed.
    Mac volumes a bit low.
    Ipods being discounted.
    4.75 was the EPS whisper and that missed.
    Margins missed.
    Android devices will challenge AAPL for phones and Ipads and will impact margins in ways that folks are not yet discussing.
     
    So yes, AAPL had great performance, but the stock was priced to perfection and more.
     
    So far, the impact is only to the 300 level, where the stock has been for all of what, a few days ?
    Jeez folks, stop compaining !
     
    I think (i THINK) 318 may be the top in AAPL for a while.
    We’ll see how that plays out.
     
    Next on the chopping block … AMZN and PCLN (IMO).
     
    I was loving the $5 I picked up after hours on my AMZN short.
     
    GL all …..


  184. Cap / AAPL
    OK….now the word is out – Bloomberg announced the reason for the less than stellar sales of the iPad was the inability to get the necessary parts for the inventory needed to match the sales.. Geez, just tyhink wht they could have announced if only their suppliers came through for them…. Oh well, next quarter might be the "blow-out" — I think I’ll build my position, if we see a draw-back on share price, as the sales potential is definitely there for the products !


  185. PHIL.. & Currency People

     I’m curious about others thoughts about RETIREMENT and which currency to SAVE?
     
     For some reason, I’ve been thinking about this a lot lately… Maybe it’s my lack of faith in the US dollar or in the direction the USA is headed. I’m wondering if I should exchange my paycheck for 3 different currencies (ie. Dollar, EURO, Yen). Where my account will be held in that native currency.
     
     My thought is this could be a way to "diversify." Let’s call it protection if the US dollar collapses and I want to travel abroad. I have money in other currency that might be value more than the dollar.
     
     This is just a CONCEPT idea, and I’m really curious IF anyone else has thought about this OR what others do. Thanks!


  186. @iTrade
    More than a concept I have thought of it quite a bit for the last 3 years and as such have exchanged $ for Brazilian Reals, Canadian loonies, yen, and euros. Dabbled in Zlotys, Hungarian, British Pounds,  Norwegian Kroner, and Mexican pesos. 
    If  I had stuck with ALL the above I would be quite a bit better off than trading them back and forth as I have been doing.  
    I can’t think of a reason in the world NOT to diversify.  Right now I hold Canadian loonies in cash, as well as Brazilian Reals and Brazilian CDs thru Everbank for the last two years and so far haven’t lost a cent have decent gains, and the BRL cds pay a generous interest rate, comparatively. They are only available on 90 day terms so you can stay on top of the changes readily if there are any.
    Do it. You will likely have an 80/30 chance of seeing it work out in your favor.  
     
    Further, the Singapore currency is looking very tempting but the bubble over there is some cause for concern. I may do it anyway.  Get a subscription to "International Living" if you don’t already have one.  Big money has already and continues to move into countries that are doing well in the current environment and with the growth possibilties in the U.S. anemic and likely to remain so for a very long time, the ONLY play is to go with countries that are outpacing the U.S. which is too cumbersome, too large to govern.  Gridlock at the political level, voting completely useless since the takeover by lobbyists for one special interest or another, and complete sellout of our elected prostitutes to Lord Blankfein, Jamie Dimon, and  the investment banks and the corporatocracy, we are all on our own.  If you aren’t looking out for yourself, and your family by partly  forsaking the U.S., you aren’t paying attention to that voice inside you that is setting off alarm bells justifiably, you may come to regret it when your turn for retirement comes about. 
    At least 30% in other currencies should be about  right until the other fiats begin to tumble or  untl higher U.S. interest rates dictate a possible move back into the $.


  187. Whuck???  Futures really turning up fast after 1%+ pullback and, since we were up 1% yesterday, they read the whole thing as flat and nothing looks bad to foreign traders – AMAZING!  

    I’m sure it’s just a show to see if the Europeans can be fooled, we’ll see how it stands up to volume.

    Dollar dove 0.25% to help goose things.

    Nails/Novice – It may be the nail in the bear coffin if we hold up on this.  What’s the difference to the S&P 500 if AAPL sold a bazillion Ithings or a gazillion?  Their sales were impressive no matter what so now it’s up to other reports to see if AAPL is taking their market share or making new markets.  We’re still mainly driven by the dollar anyway.

    Fast Money/Exec- Now that we’re just two weeks from the election, I think we may not see a pullback until after.  If AAPL didn’t mark the end of the madness, I’m not sure what will other than the dollar gathering strength but Timmy and Ben are both talking it down every chance they get.  

    Retirement/Itrade – That’s a tough question as it partly depends on which country you want to retire to.  Right now, we think/hope that the dollar is at a relative low to other currencies.  Long-term, I’d favor an exporting, commodity currency like Australia, Norway or Canada and, of course, Canada may end up having to deal with displaced Americans the way we deal with Mexicans so Australia may be the best bet.  Plus, they pay about 10% on long-term CDs (the more you have, the more they pay) in insured deposits and 6.5% in savings accounts, so a very nice place to park money.  Keep in mind though, that moving money now, when the dollar is weak, is playing the currency game as well.  If the dollar is down 15% to AUD this year and you move your money and then it bounces back – you lose 15% relative to the USD.  Of course, had you done that at the beginning of this year and gotten your currency appreciation plus 10% interest, you’d be a genius but who could have predicted Australia would be strong a year ago?  Oh yeah, that was me…..    8-)

    Well the futures look safe enough at the moment with Europe fully recovered and up about 0.25%.  Asia finished up as China had a huge stick into the close as the dollar dove again but the Bombay fell below 20K (that was my market of the year before Australia).  The big leaders were the banks, now thinking they are moving past the foreclosure thing.


  188.  Phil,
    I remember you saying something about collars not made for the new market environment.  I’d like to hear more of your opinion on trading collars.  In the past, I have done collars by buying a put 6 to 8 months out, and then selling slightly OTM calls on a monthly basis to capture premium and pay for the put.  So each month it is an adjustment game to capture premium and maybe a little of the stocks growth.  I am interested in looking at this strategy using weekly options for the calls since their are so many times to sell and high premium compression.  (Like the BIDU trade I threw out there last week.)  I understand this may be an after hours question rather than market time.  Just interested to hear your take.


  189. Phil
    What are the odds aapl plays out like Amzn did on their earnings report?
    some type of product announcement tomorrow? Huge 4th quarter demand for their products?
    a pullback to 300 just rolls it back a couple of days, don’t really think it will take long for the uptrend to resume as
    it is stil a "must own" stock by the mutual funds