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Thrill is Gone Thursday – Rally Tired or Just Resting?

EU leaders are meeting in Brussels today and tomorrow

For anyone who's been paying attention for the last two years – that's usually not a good thing and, as we noted yesterday, it was a strong Euro and a weak Dollar that was driving our little rally.  The Dollar bottomed out at 79 and the Euro topped out at $1.314 and the Euro's strength sent the Yen back up to 79.30 to the Dollar (weaker) and that led to a 2% Nikkei rally last night.  As you can see from the chart on the right, the S&P for the week is 1% behind UK and Germany and 2.5% behind France and Italy (+4%) and Spain (+7%) – so we have a lot of catching up to do if this rally is real and sustainable

Still, I sent out an Alert to Members early this morning noting that the Global Markets were holding up well as of 6am and that was encouraging.  Yesterday we discussed taking advantage of the run-up in the Russell to make a TZA hedge to lock in some of our gains (see main post) but we still haven't covered XLF (target $16.50 – see Dave Fry's chart) and we're still bullish on AAPL as well.  We cashed that ISRG play, as planned for $9 on the spreads (200x = $1,800), spending .30 x 200 ($60) to buy back the callers so that, with the $200 we were paid to take the position is just short of our $2,000 goal at net $1,960 – not bad for a day's "work".  

In Member Chat this morning, we discussed GOOG's outlook for earnings this evening and decided they were more likely topping than popping so we have that risk to the Nasdaq for tomorrow.  IBM was an 80-point drag on the Dow yesterday but it did manage to finish flat and advancers led decliners on the NYSE by 2:1 so the conditions are still there for a rally and hopefully what we have here a a pause that refreshes and not a triple top from the mid-September highs.  

The Nasdaq and the Russell are, in fact, in downtrending channels and, for the Nasdaq, their fate rests on GOOG tonight and AAPL next Thursday – but it's still a long way back to the highs at 3,200.  

As you can see from the Big Chart – the Dow still needs to prove itself over 13,600 and the great shame of it is that it should have popped right over yesterday, if not for IBMs $10 drop that sucked 80 points out of the index, which finished the day at 13,557.  In Dow news this morning, VZ was in-line but TRV knocked it out of the park with a .61 per share beat of $1.61 expected (38%) and Revenues were also a 10% beat.  Already TRV is up 2% pre-market but, unfortunately, it's only a $72 stock so it won't have the impact IBM did yesterday.  

TRV is in the XLF as well so we may get our $16.50 this morning as MS also did a nice job and USB caught an upgrade this morning after yesterday's earnings so, on the whole, there is no reason for the market not to keep the upward momentum going.  TRV is up 20% this year and is responsible for 120 of the Dow's 1,250-point gain.

8:30 Update:  Oops, we got some terrible unemployment numbers with 388,000 people losing their jobs last week vs. 365K expected and last week's 342,000 but the number includes a holiday (Columbus Day) and those 3-day weekends can cause serious distortions.  Still, it gave the Futures a little love-tap lower and, since it's the Appleconomy, that's 388,000 less IPhone customers this week and AAPL took a quick dip all the way back to $636, where we'll be happy to press it if we get that price at the open. 

Our friends at SVU put in a good report this morning and are up to $2.25 pre-market.  This is one of our favorite cheap stocks with a $415M market cap, which just happens to be the exact same as the amount of free cash flow they generated in the first 3 quarters of this year.  Although the headline number is a loss of .52 per share, it's pretty much all non-cash impairment charges and write-downs that don't stop cash from pouring to the bottom line.  They've refinanced $1.65Bn in debt and are reducing overall debt by $450M – all part of the reason we doubled down on their recent dip in our Income Portfolio, which only needs SVU to hit $2.50 to realize some very serious gains.  There's also rumors of a potential buy-out, maybe it will be discussed at the 10am CC.  

We liked NLY yesterday as a new trade idea (see morning post) and that trade is still playable and this morning Compass Point upgraded CMO based on it's $13.35 book value and $12.48 price so I think we're on the right track calling a bottom in the REIT sector.   

ALU is another stock we picked up on the dip and they are popping as well as they announce 5,500 job cuts to save $1.6Bn and, for a change, they are almost all foreign jobs being cut.  Our break-even on ALU is way down at 0.635 – also in our Income Portfolio so contgrats to all who played that one!  

As we expected, oil is collapsing today, now $91.31 (9am) as the pressure mounts to get out of those November contracts, which close on Monday.  We shorted yesterday, as planned, off the $92.50 line and then our re-shorting line was $92, which they were kind enough to cross this morning.  We're not expecting a huge dip as there were only 85,000 contracts left open on the NYMEX (down from over 400,000 at one point) and we figure they can leave 20,000 for delivery (20Mb) so 65,000 contracts to roll or cancel over 3 trading days is probably not enough to get us below $90 so, if anything, we'll be looking for an opportunity to go long around there – once we see enough contracts rolled out. 

Gasoline is falling too, down to $2.72 so Jack Welch can add that to his list of conspiracies as that's sure to cheer the consumers up this weekend.  Now, unfortunately, the Euro has failed $1.31 and the Dollar is poking back to 79.25 and that's knocking our futures down across the board

Overall, we're not going to be too worried by Dollar-induced index weakness.  XOM and CVX won't like the $1.50 dip in oil and that's a drag on the Dow but those will turn around once they roll those oil contracts and IBM should be done being a drag and, overall, we're right in-line with our September 25th review of the Dow components and that means 14,000 is still in sight but we can't afford any more IBMs as the rest of the component earnings come in.


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  1. stjeanluc

    Oil Lines

    R3 – 94.38
    R2 – 93.61
    R1 – 93.08
    PP – 92.31
    S1 – 91.78
    S2 – 91.01
    S3 – 90.48

    Yesterday's high and low – 92.85 / 91.55

  2. gandhjo

    AAPL down 7 pre-market. Any news?

  3. jelutuck

    SVU up another 10% this morning on a break-even earnings report.

  4. stocksandbondage

    Good Morning Phil,
    My premise is that BAC gets above $10 and stays there this time based upon the beta chase that's underway thanks to Q Infinity and to under performing fund managers.  I'm not so confident about 2013, so I bought 90 BAC Jan 10s at $.40 a few weeks ago.  I covered them with the Oct 10s at $.07 so my net is down to $.33  I would like to pull as much out of them as possible and maybe even get a free play on the Jan 10s or get enough out of them to get a Jan 10-11 spread for free. 
    I bought another 160 of the Jan 10s for $.38 when earnings turned out to be not too bad and sold 90 of the Dec 10s for $.27 as a replacement for the expiring Oct 10s.  Assuming that we don't get over $10 by tomorrow I will have 250 of the Jan 10s covered by 90 of the Dec 10s.  What do you think of selling the Dec 10s?  It seems to be trying to thread a pretty small needle, but I liked taking in so much premium, reducing my net on the Dec-Jan spread to $.06
    Should I look to sell weeklies today or tomorrow on some or all of the uncovered position? 
    Humbly trying to learn how to fish instead of asking to be given another fish.  Thanks in advance for your advice.

  5. Pharmboy

  6. 1020

    Good Morning!

  7. Opesbridge

    Good Morning Everyone

  8. lflantheman

    Good Morning!
    grandho….AAPL down premarket….news is they lost a tablet copyright appeal against Samsung.
    chasw….1:45 a.m. yesterday query….do I agree with the "AAPL to $1,000" article posted by Phil at 5:30 yesterday……..well, maybe not to  $1,000.   But certainly up from here.   I believe that exactly one year from now AAPL will be between $750 and $900.   That's close enough for me to make some pretty profitable plays between now and then.   

  9. neverworkagain

    GOOG:  Phil, I see your GOOG play this morning (the two offsetting call and put spreads) is essentially a butterfly with a 755 center.  Conceptually I can see that by doing it in two spreads it makes it more intuitive for managing or rolling the losing side. I trade quite a few butterflies and almost always treat them as a combined trade, and like you say, target just a quick 10-20%.  But I'm just curious to know why you don't call it, trade it, like a butterfly.  Thanks.

  10. gandhjo

    Thanks Lflan!

  11. stjeanluc

    Wheeeeee on oil!

  12. lflantheman

    Here's a trading idea, and Phil, perhaps you could comment specifically on this………Looks to me like AAPL and AMZN are both reporting on Oct 25th.  This might be a nice opportunity for a 'paired trade'.   I'm thinking playing them both long.  Both are likely to move up post-earnings, which would make your day.  If one of two went the other way, then protected.   Very unlikely, I think, that they both drop post-earnings.   Especially AMZN, which drives us all crazy moving up on every whim. 

  13. neetcorp

    Good Morning!
    With bearish seasonal bias kicking in Today through Monday, we'll see if this week's gains can hold
    Like your ideal, lflantheman.

  14. Pharmboy

    Someone asked last night about big pharma and selling puts for a starter position.  I advocate 1/5 or 1/4 put selling for a starter position.  I want to get through the elections first…that will be a determinant on how well we 'recover', although the stock market says we have recovered….

    My list would be BMY, MRK, GSK & TEVA.  Higher beta would be CELG, BIIB, and GILD.  Real risk would be SGEN, CLDX, CRIS, PLX & YMI (yes, 1020…I still like them).

  15. neetcorp

    PHIL,
    Sale SVU or hold?

  16. Opesbridge

    Phil,
    Is the NLY trade still something you like for the Income Portfolio? We noticed that the premium is a bit higher this morning. :)

  17. 1020

    Pharm – I'm hold'n and add'n…… :)

  18. 1020

    Pharm – I love the irony of CRIS as a "real risk"……… ;)

  19. stjeanluc

  20. stjeanluc

  21. stjeanluc

    AAPL – Net $29.94 excluding positions currently opened
    AMZN – Net $13.63

    Might make sense to buy back the 650 covers on AAPL now up 85%

  22. 1020

    What a mess. I'm sure this is what everyone had in mind when signing up……
    http://finance.yahoo.com/news/merkel-seeks-more-eu-budget-112014421.html

  23. stjeanluc

  24. phil

    Good morning!  

    NOK earnings not good and that does not bode well for MSFT as NOK is their main phone seller.  

    AAPL with a silly spike down but already bouncing – let's buy back the $650 callers for .75 in the $25KPs as we can only make .75 in two days and it's stopping us from selling next week for much more money.  For some reason, next week calls aren't up in TOS yet.  

    Dollar 79.20, oil $91.44, gold $1,745.  

    We still need to take back 3,100 on the Nas but 840 is holding on the RUT and 13,500 is in no immediate danger on the Dow and the S&P is way up at 1,457 and the NYSE at 8,433 is 33 off the danger zone – not so bad, so far….

    If you want to play GOOG and/or AAPL bullish for earnings – how about the QLD Nov $59/60 bull call spread at $.55?  QLD is at $59.52 and, if GOOG or AAPL do well, there should be no trouble getting to and holding $60 for an 82% gain.  A nice offset to that trade is selling the MSFT Nov $28 puts for .28 as I doubt MSFT drops 10% on earnings (and you can always roll them).  That drops the net to .37 on the $1 spread.

  25. stjeanluc

    Goldman downgrades STJ from a Buy to Neutral – I have my own symbol now? And what I have down to merit a downgrade. I am certainly not neutral….

  26. Opesbridge

    Re: AAPL. Weeklies now up in TOS.

  27. Pharmboy

    CRIS – yes….still lots in the pipe, with a drug on the market which gives them enough money to pay their execs……I think of CRIS as ARIA, but much earlier one.  ARIA has a lot riding on ponatinib.CRIS has CUDC-101 is the lead drug candidate from Curis’ network-targeted cancer programs and is designed to inhibit epidermal growth factor receptor (EGFR), epidermal growth factor 2 (Her2) and histone deacetylase (HDAC).  Very early….but very interesting….

  28. newt

    StJ: Great article post (NYMag)- Thanks.

  29. dclark41

    stjean:
    Who will you fire to rectify the problem? :)

  30. williex

    STJ
     
    You should be honored.  When GS downgrades they usually mean accumulate.

  31. stjeanluc

    Mid-week update for the Strangles portfolio:

    Over $20K…. Great job there. 

  32. 1020

    I knew NKE was full of crap when explaining why they terminated their relationship with Armstrong…..
    http://finance.yahoo.com/blogs/daily-ticker/real-reason-nike-canned-lance-armstrong-nothing-doping-170100399.html

  33. kinkistyle

    Latest AAII Investor Sentiment Survey:
     
    Bullish: 28.7%
    Neutral: 26.8%
    Bearish: 44.5%
     
    Thats pretty darn bearish for only a few points off the highs.

  34. stjeanluc

    Lots of big movers reporting tonight:

    GOOG – They move about 6.5% on average. At the current price, it would be a $50 move on either side. The Oct 755 straddle pays about $40 so it doesn't look to be pricing an average move. As we said before, options have memory and the last 2 earning reports, GOOG moved only between 3 and 4% so the options are pricing a similar move this time. But the 2 times before that, they moved more than 7% so it's still possible! 

    SNDK – They move by over 11% on average. That would be over $4.50 based on today's price. The Oct 44 straddle pays about $3.30 so not overpriced it looks like. The last time, they missed but opened up almost 12%. The time before, they also missed and opened lower by 14% so they can be all over the place.

    Other big movers are TZOO (almost 15%), ATHN (over 10%), HWAY (almost 11%) but their volume makes it hard to make a play.

  35. stjeanluc

    Forgot to post the crude oil situation yesterday and it was not bullish:

    http://www.bespokeinvest.com/thinkbig/2012/10/17/crude-oil-and-gasoline-inventories-rise-more-than-expected.html

    And this morning is a good indication on where we are going…

  36. stjeanluc

    Is the consumer making a comeback?

    http://www.businessinsider.com/consumer-comeback-2012-10

    Some bullish indicators there. Of course, there is also an election going on now….

  37. phil

    Oil bounced off $91.25 so far but stopping at $91.50 for now.  

    AAPL – VZ mentioned "supply constraints" impacting their Sept sales of IPhone 5s.  How this is a negative for AAPL – I do not know.  VZ activated 3.1M IPhones in one week and that was "constrained".  Figure T did at least that many, probably more and then S and others had it too and that's BEFORE the AAPL store's numbers.  Oh no – sell AAPL – sheesh!  Also, the patent thing is now blowing back.  Oddly, it was never taken as a positive in the first place but now, any bad news is a negative:

     

    The court upheld a previous decision that said Samsung's Galaxy tablet did not infringe upon Apple's patents. It said there were similarities between the two devices but that Samsung had not infringed Apple's design, in part because its products were "not as cool".

    The US company was instructed to run newspaper and online adverts admitting that the Korean company did not copy the iPad. The judge said these notices must be in a font size no smaller than Arial 14.

    BAC/Stocksand – You're buying more premium than you're selling so I don't like it.  A one-month spread like that is trying to thread a needle as you need some very Goldilocks events to occur in order for it to pay off.  When you buy a $10 call for .40 and BAC is at $9.50, you paid .90 in premium for 90 days so you lose .01 per day no matter what and any finish below $10.40 is a loss.  You could buy the Jan $7.50s for $2.12 and that's net $9.62 so spending $1.92 more saves you .80 in premium and now you can sell the Dec $10s for .30 and you drop your basis to $9.32 and you make .68 at $10, which is 37% vs needing $11 (+10%) to make your max.60 but only if the price and timing on your short calls cooperates.  

    Good Philly Fed and Leading Indicators, as expected:  

    October Philly Fed Business Outlook: +5.7 vs. +0.5 expected, -1.9 previous.

    Sep. Leading Indicators: Leading Index +0.6% to 95.9vs. +0.2% expected, -0.1% prior. Coincident Index +0.2% vs. +0.1% prior. Lagging Index +0.1% vs. +0.2% prior

  38. jasu1

    LFLAN,
    AAPL Jan 2013 620 BTO at $48.5….. I know you are in the position, My question is would you enter a new position here, of do you recommend a Feb 2013 620 trade. Do you see further weakness/selling
    Thanks 

  39. stjeanluc

    Speaking of election, the consumer might take a hit if Romney is elected:

    http://www.motherjones.com/kevin-drum/2012/10/here-it-worlds-simplest-tax-analysis

    Is this still too complicated? The colorful graph on the right should make everything clear. Romney is $257 billion short, and the rest of his plan (eliminating the estate tax, eliminating investment taxes for middle-income earners, lowering the corporate tax rate) just makes things even worse. One way or another, Romney has a whole slug of revenue he needs to make up. His plan just doesn't add up.

    Either the deficit grows and I imagine interest rates would have to go up, or everybody's taxes (except the job creators of course) have to go up to make up the difference and that combined with spending cuts would put a brake on growth.

  40. palotay

    Phil, I believe they activated 3.1million total iPhones in the quarter, not in one week. They dai they sold 650,000 iPhone 5's in that week before the end of the quarter. 

  41. stjeanluc

    VZ-AAPL / Phil – I always find it interesting that VZ and T never have any commercials using the iPhones. Always Android phones. I guess the iPhones don't need ads, but also VZ and T don't make as much on the phones and iPhone users consumer more bandwidth and that's not good for them either. Kind of a love-hate relationship there.

  42. jr_mints

    Pharm, what strike do you like for next week's GLD calls?

  43. jomptien

    Selling 2 Fri AAPL 625 puts for .82, already sold 2 before a little lower – seems safe if you got margin

  44. williex

    STJ
     
    Saw a T commercial just the other day with the iphone

  45. phil

    AAPL/Never – I hardly do butterflies so I simply forgot to label it that.  

    AAPLZN/Lflan – Well I like the pair trade but long AAPL, short AMZN, which is what we have in the $25KP and yes, so far it would have been better going opposite that.  

    Does anyone have weeklies yet?  I was kind of counting on them to make adjustments but not showing up in TOS. 

    Nice list Pharm.  

    SVU/Neet – Depends what kind of play you have.  I like them for $2.50 at least by the end of the year.  

    All down volume so far but light volume with 22M on the Dow at 10:21 so easily reversible.  

    NLY/Opes – Sure, it's a great long-term hold with the dividend.  

    Europe/1020 – What a disaster those people are.  

    STJ/StJ – Soon they'll station a man in your bedroom to rate your performance.  

    AAPL/Opes – Thanks!   Oops, I'm still not seeing them.  

    NKE/1020 – They've got a lot invested in that LiveStrong brand.  They may cut Lance but will likely keep the stuff. 

    Sentiment/Kinki – That's a lot of bears!  

    Earnings/StJ – I think it's easier to play the ones where they are overpriced to the average move.

    Oil chart still crazy StJ.  Nice bullish set of consumer charts.  

    IPhones/Palotay – 3M for the Quarter sounds low but you are right, that may be all IPhones, not just the 5s.  

    Telcos/StJ – At $100 a month for contracts, I don't think they hate the phones.  The subsidize about 1/2 of an $800 phone but bind you to $2,400 in payments.  50M customers would be $120Bn less $20Bn for the phones is still $100Bn – you can add a lot of bandwidth for that price.  

    AAPL/Jomp – Good idea.  

  46. 1020

    Phil/NKE  Yes, it's a good cause…..

  47. yodi

    Phil AAPL weeklies are up on TOS But worried to sell weekly calls of AAPL during the reporting week what are your thoughts

  48. rainman

    Phil / weeklies — available and traded at Fidelity

  49. stjeanluc

    Earnings / Phil – It has been hard to find overpriced options this time. Maybe a combination of low VIX and fewer huge misses. Tough to say. But we keep on fishing.

  50. yodi

    AAPL weekly 675 selling for 5.00 but to cover 35 points for AAPL in this coming week will be nothing!

  51. Burrben

    Obamacare if Obama wins
    If anyone understands it, can you answer a question?  
    What will happen to the people who don't have a W2 or 1099, but make their living trading and pay capgains, but live in a 0 income tax state like NV and who don't currently have healthcare since they reside out of the country.  Will they be forced to pay into Obamacare somehow, and do they have medical coverage now?
    PS: I'm not looking to start a flame war or debate, just interested in the answer.

  52. jabobeast

    THEFT, SHAKER BOULEVARD: Someone stole a campaign sign that proclaimed support for President Obama. The culprit also left a note in the resident’s mail box listing reasons votes should not be cast for the president.

  53. jabobeast

    Flips—busted!!!

  54. sank1

    AAPL Weeklies / Phil,
    I'm seeing them on tos. Not sure if a logout and login will help.

  55. rperi

    NLY – I have been a long-term investor for them with a basis that I have whittled down to $13.13.  I currently do not have any open option positions, but was thinking of selling the Jan 15 $13 calls and puts for $4.95 to reduce my net, but the dividends have been nice and I don't necessarily want to be called away.  On the other hand, reducing my net to $8.18 and being called away for a 37% profit is nice too. Would love your take on this Phil.  I own

  56. stocksandbondage

    Thanks for the lesson Phil.  What you said makes really good sense.  

  57. yodi

    rperi
    I am as well a long time holder of NLY. Looking at your Jan15 play I feel the 13 call has only 3 cents of extrinsic value and surely could be called. I would look at the 15p and 15 call as the call has at least a .33 cents of extr. value my two cents.

  58. Pharmboy

    GLDs – 172s…..

  59. qcmike

    Phil
    MDLZ Mondelez International Inc the spin off from Kraft,
    What do you think of this as a long term stock?
    Is there a guideline for entering a position on a new issue??
    Would you do a buy write using the Dec 27 call and puts?
    Thanks

  60. Burrben

    NLY
    I bought the stock at 16.05 today and sold the Jan15 13 Strangle for $4.95 as Phil suggessted.  My Avg price on the sold calls is $3.08.  Since they have a div, how do you figure out if you have a chance of getting called away?   

  61. Burrben

    Yodi / ECA
    Our play is doing good, although my Nov 24 calls I sold are almost ITM.  Have you been adding to the position?

  62. Inkarri19

    Morning All – Has anyone looked at the White Wave IPO?  If so, any info/thoughts would be greatly appreciated.  Thank you.

  63. palotay

    Phil/AAPL – Verizon only activated 2,000,000 iphones last quarter (when Apple missed), so 3,100,000 iphones this quarter is a good sign.

  64. ksone88

    Phil/CHK – CHK has been a great play for me several times now. It has run up a lot over the last few days . Sold half for a nice 100%. Any thoughts on a it. I know it is a favorite.

  65. phil

    AAPL/Yodi – You don't HAVE to keep them open for earnings – just some protection over weekend.  As it is, I'm looking at selling the $660 calls for $9 and that pays for us to roll down to the $640s – which is a reasonable trade-off.  

    Obamacare/Burr – I don't know what the rules are for something like that.   

    Weeklies/Sank – I see them now. 

    NLY/Rperi – Really you need to know if I think knocking 37% off your basis is better than risking it naked?   You can always roll to 2017s at higher strikes later and don't forget the dividends – what's not to like?  The only problem, as Yodi notes, is you may get called by the $13 caller if he has no premium so maybe the $15s make more sense.  

    Your welcome Stocksand. 

    Oil back to $92 already. 

    Dollar 79.20.

    XLF $16.35!  

    MDLZ/QC – It's tricky to value at this stage so I stay away until there are earnings.  

    Nice turn-around in progress.  Sell-off was a bit silly anyway.  Need AAPL to agree.  

    NLY/Burr – If they are up by the day before dividend, figure your caller has a good reason to call you away as he paid net $16 with the $3 call and there's .50 to collect so just be ready for it and simply rebuy the stock if he buys it from you or you can buy back the caller and sell the $15s instead a week before dividends (or whatever caller has some premium they might not want to lose).  

    White Wave/Ink – I don't follow them. 

    Phones/Palotay – Thanks for comparative figures.  

    CHK/Ksone – I agree with the profit taking even though, relatively, they are still cheap.  It's a volatile stock and you never know but $25-27 is a very fair price for them, I think.  

    Wake up AAPL! 

  66. yodi

    Burrben
    ECA This play is doing very well though I must say I rolled the last short calls in Aug to Jan13 Sold the 23c for 1.80 now 2.07.
    In all all looking good. Sleepy play!

  67. rpme

    Wild ride on PII today, mis-played it twice and still up…oh well.

  68. yodi

    Phil AAPL I feel the will be in the green again by EOD So would you sell the weekly callers today TIA

  69. scottmi

    AAPL/yodi – "you trade what you believe" (Van Tharp). why do you feel AAPL will be green again by EOD?

  70. rainman

    ink / WWAV  — They're locking out the shares of the current DF holders for 180 days after the IPO.  I'd wait until that comes and goes before buying but it does look like it has a lot of potential.  I've had a long term hold in DF and got into it for the alternate dairy products.

  71. Inkarri19

    THanks DF.  Their financials look fine and it seems like they have the alternate dairy product cornered to a great extent. 

  72. Inkarri19

    Rain – I was looking at the IPO as I might be able to indicate an interest in IPO shares.  They are saying it might price at $14-$16.

  73. Inkarri19

    I meant thanks Rain.

  74. rainman

    Burrben / NLY — Usually happens if the extrinsic value is less than the dividend.

  75. Pharmboy

    NUVA….March 13 12.5 Ps STO for 1.30…..if you can…just a few, as I will initiate a spread on them after earnings….

  76. jabobeast

    goog?

  77. cdel360

    WTF GOOG??

  78. yodi

    scottmi
    AAPL green at EOD I look at the past couple of days and it looks to me there is a great daily gamble going on with this stock,
    so I think by day end they will run out of fire power and we might see 640 645 again.

  79. jabobeast

    earnings out on GOOG….WOW

  80. phil

    AAPL/$25KP, Yodi – We have to at least 1/2 cover ahead of GOOG earnings.  If they disappoint, the Nas can go ugly tomorrow.  GOOG is flat today – hopefully not because people know something.  The next weeklies are paying such a huge premium, it's silly not to sell them anyway.  

    Philly Fed/StJ – Chart doesn't make it look so great.  

    Holy Crap – someone just started dumping GOOG!  

    $25KP – Let's buy back the DIA $136 puts that we sold, now .75.

    $25KP – Let's sell 6 AAPL tomorrow $630 calls for $8.30 – we'll roll them later.  

     

  81. phil

    WFT?   GOOG released earnings with a huge miss!  Missed earnings by $1.62 at $9.03, revenues missed too – stock still going down.  

  82. BertII

    someone playing games with goog

  83. kustomz

    I think GOOG is playing games, the early release is BS! The whole market is full of schit. Take about being totally mispriced.

  84. yodi

    GOOG down 55$

  85. yodi

    Phil Shall we sell put at GOOG

  86. phil

    Son of a bitch, I wanted to roll AMZN too before GOOG tonight.  This is such BS.  

    AAPL holding up well so far but a lot of people need to digest this.  FB taking a big hit.  

    IBM at $195, still dragging the Dow. 

    GOOG settling down around $700.   Nov $790/755 bear put spread now $35 and $720/755 bull call spread at $8 so $43 off the $41.60 entry and, of course, the move would be to cash the bear spread and buy back the caller ($3.50) and hope for a recovery.  

  87. cdel360

    GOOG/Phil – Can you elaborate on how to properly manage the GOOG trade from this AM?  I am not in it with real money but am very interested what you would do next…I had max loss calculated at $850  – and that is with a total loss of premium on the call side…looks like you can still get for the BCS for about $1.  Take the loss, or roll, etc?

  88. 1020

    GOOG – Just a couple of billionaires having fun.
     
    I'd bet Page and Brin are yucking it up……

  89. cdel360

    never mind, you beat me to it…although I do not see anywhere near $3.50 left in the BCS…10 min ago I saw $1, now my options quote screen has gone all wonky and showing 0s across the board

  90. phil

    GOOG/Yodi – Way too complex earnings to make a snap decision.  Miss was huge and, as I said yesterday, they overdid the run-up into earnings and the 200 dma is way down at $632 so if they don't take the 50 back at $711 – that's possibly the next stop.  

     

    The company founded by Larry Page and Sergey Brin earned $9.03 per share in the third quarter, well below the consensus estimate that called for an EPS of $10.63; GAAP EPS came in at $6.53.

    Search giant Google also missed its revenue number, which came in at $11.3 billion, excluding traffic acquisition costs, according toTrade the News.  Wall Street expected Google to deliver $11.9 billion in sales.

    Paid clicks increased 33% year-over-year, while cost per click fell 15%.  Google’s international revenue hit $6.1 billion, representing 53% of total revenue, compared with 54% in the second quarter.

    Google-owned web site advertising revenues grew 15% to $7.7 billion.  The all-important traffic acquisition cost (TAC) number ticked up to $2.77 billion, from $2.2 billion.

  91. kinkistyle

    This was a genuine flash crash in GOOG and no circuit breakers until 20 minutes later.  Nice system they got going there.

  92. jasu1

    Phil,
    Does this mean they take AAPL up to help the NAZDAQ?

  93. williex

    As goog supposed to anounce midday?

  94. phil

    GOOG/Cdel – I hope the above was clear.  The bear spread gets cashed at full $35, leaving $6.60 of total exposure and then we buy back the caller for $3.50 so now $10.10 paid for the Nov $720 calls are all that's left.  The Nov $720s are now $7 but the $700s can be sold for $15 and then the $720s can be rolled down to the $680s (now $23) about even and then you are in a Nov $680/700 bull call spread for net $11ish although I'm only pointing that out as an escape as I'd rather take a chance with the naked $720s and give GOOG a chance to explain themselves on the CC although I must say, simply releasing the earnings this early indicates extreme incompetence in the organization.

    Glad we sold those $630s – AAPL $632. 

    AAPL/Jasu – They'd better do something – that was a real confidence killer.  

    GOOG/Willie – No, not at all.  This is very messed up. 

  95. Inkarri19

    Williex – AH I believe.

  96. jabobeast

    gooble gobble google gobble…
     
    so rediculous!~
     
    FU GOOG!!!

  97. rainman

    ink / WWAV — I don't know how to value the IPO vs DF shares.  It would seem to me that the IPO is raising money for the current shareholders since only 20% of WWAV will be IPO'd while  the other 80% will be distributed to the current DF holders. 

  98. rdn4evr

    Wow, trading halted on Goog..
    Phil, question on two potential shorts -
    FDX is back to $94, higher than before they announced things suck, but they've run up because they announced Job Cuts.
    Also VNO would be my favorite REIT to short because they own ToysrUs; they just caught an upgrade because "if they achieve their business plan they might underperform less" – or words to that effect.

  99. snow

    GOOG/Jabob – wait…..you were on the bull side of GOOG?

  100. rainman

    Funny email subject line: GOOG, MSFT, AMD Set To Report After The Close – Get Enhanced Earnings Coverage and Insight Now!  8)

  101. jerconn

    PHil – it happened so fast couldn't sell the $630 AAPL calls anywhere near $8, they're now down around $5…any play left to maybe sell the $625 tomorrow calls, or AAPL too likely to bounce up now?

  102. sank1

    Long term GOOG Play / Phil,
    Thoughts please on the Jan 2014 $700/800 Bull Call Spread selling calls along the way.
    Bought the BCS at $49.50. Sold the Oct $775 Call at $9.70, and just bought it back at $0.40.
    Would you persist with this trade, selling calls and getting ourselves a "free" spread, or would you exit the trade at this time? The BCS is down to $35.00, of course offset by the $9.30 profit that has been cashed in.
    Reason I ask is your comment about the 200 dma being all the way down at $632. Thanks.

  103. phil

    FB $19 again.  Funny how it never occurred to people that with GOOG, FB, ZNGA, LNKD – all competing for eyeballs, that it begins to cost more money to capture those eyeballs for everyone and, since there's a massive increase in available ad space, the amount people are willing to pay to advertise goes down.  You would think this is obvious but people seem shocked that the laws of supply and demand apply to the Internet.  

    FDX/Rdn – That's not a question.  FDX may have been wrong in their outlook although it was a global outlook, not a US one but I think we were at a dead bottom when they made their views and sentiment going forward was very weak.  So, if the question is do I like them short – no I do not.  VNO I used to like shorting also but $82 not so expensive – I'd be patient and give them a chance to at least test $85 again.  

    How long is this thing halted?  Oh, CNBC says it's a T1 halt (company requested) – the plot thickens! 

  104. sank1

    GOOG halted trading??

  105. williex

    Speaking as a long time CPA, GOOG's CFO needs to be fired. 

  106. Burrben

    Google (GOOG) said in a statement, "Earlier this morning RR Donnelley, the financial printer, informed us that they had filed our draft 8K earnings statement without authorization. We have ceased trading on NASDAQ while we work to finalize the document. Once it's finalized we will release our earnings, resume trading on NASDAQ and hold our earnings call as normal at 1:30PST.

  107. rainman

    williex — perhaps they were hacked?

  108. phil

    PCLN took a nice dive.  AMZN $244.  

    GOOG says draft of SEC filing was mistakenly released – not sure if that's going to change anything.  

    XLF doesn't seem to care about all this tech nonsense…

    AAPL/Jercon – At the moment, I'm considering buying them back.  This stuff doesn't affect AAPL in reality and we're going to roll to next weeklies later anyway.  Oops, now they are $6.70 – changes by the second.  

    Buyers seem to have re-grouped and are coming back in.  Let's buy back those AAPL $630s for $7 in the $25KP – just in case things head higher. 

     

     

  109. rainman

    Oh, I see, Donnelley is the hack :)    RRD followed GOOG down.

  110. phil

    PCLN took a nice dive.  AMZN $244.  

    GOOG says draft of SEC filing was mistakenly released – not sure if that's going to change anything.  

    XLF doesn't seem to care about all this tech nonsense…

    AAPL/Jercon – At the moment, I'm considering buying them back.  This stuff doesn't affect AAPL in reality and we're going to roll to next weeklies later anyway.  Oops, now they are $6.70 – changes by the second.  

    Buyers seem to have re-grouped and are coming back in.  Let's buy back those AAPL $630s for $7 – just in case things head higher. 

    Let's also re-cover the DIA puts by selling 20 DIA tomorrow $135 puts for .33

  111. cdel360

    Moving on…anyone have a good risk/reward setup for another MoMo this afternoon (probably :) CMG?

  112. rainman

    New highs seems out of whack:
     

    Issues
    NYSE
    Nasdaq
    NYSE MKT

    Advances
    1,547
    871
    151

    Declines
    1,444
    1,467
    226

    Unchanged
    102
    102
    28

    Issues at
     
     
     

    New Highs
    184
    84
    10

    New Lows
    6
    24
    5

  113. Burrben

    At 11:25:58 in 1 second, someone bot 118 $GOOG Dec 675 puts — highest number for the day

  114. stjeanluc

    GOOG / Phil – Turns out that the options were really underpricing this earning move! 

    There is a Fib line at $687 (38.2% retracement) and it seems that we might settle around here for now. It seemed to have held back in September. The next line (50%) is at $663.

  115. zeroxzero

     I'm kinda surprised everyone seems so surprised at the Google miss.  I have no real insight into Google revenue generation, but I cancelled all my Google accounts a month ago when I repeatedly caught them tracking me all over the world, lying about their "you can opt out of various information accumulation Google does" in their Google + service, and a host of other privacy-invading practices designed to squeeze more money out of their information traffic.  Good old sleepy Microsoft [MSN] is much more straight-up, no privacy invasion, no secret sauce info company for email and the like, perhaps to their earnings detriment, but Google's famed "Do no evil" motto is pure hypocrisy, and I've been trying to find info/search avenues to work around them for over a month now.  My angry two cents.

  116. cslanson2

    Phil,
    CMG also is scheduled to report after the close today. With the shares at approximately $285.00 the $315-$255 Short Strangle that expires tomorrow can be sold for around $6.00.  By my calculation, the shares could drop or rise 12% without causing a loss so even if they pulled a GOOG the trade would make 3% more or less. Anything worse we roll to a longer date. Your thoughts?

  117. Pharmboy

    3 min SPY chart, beautiful H&S…target 145ish….

  118. zeroxzero

    And, by pure coincidence, look what just show up on FT!! 
     
    "EU regulators have demanded that Google substantially change its controversial privacy policies or risk fines, a move that threatens to slow the US search giant’s introduction of new products and advertising schemes in Europe.   European privacy watchdogs said a probe led by the French regulator CNIL showed that Google failed to provide users with adequate information about how their personal data were being used across the US group’s different platforms."

  119. stjeanluc

    CMG / csl – These guys move more than 8% on average after their earning reports so you have to take that into account. That could be around $25 on either side – so figure a range of $260 to $310.

  120. phil

    That was strange, first time I hit that comment it didn't come out, now it's there twice.  

    AAPL/$25KP – So our Nov $660s are now $13.80 and we can sell next week $650s for $11.50 and that pays for us to roll down to the Nov $635s ($24.80) and then we're in a $15 spread with a time advantage and I like that over the weekend but, before earnings, I'm likely to want to uncover a bit.  For the moment, let's watch and see what happens, AAPL had a knee-jerk reaction to GOOG and still may come back to $640.

    GOOG/Sank – I think $800 may be a bit ambitious now.   So you net into the spread at about $41 and it's now about $30.  The spreads are crazy at the moment so I'd offer $40 for the callers and offer to sell the calls for $80 and whichever fills first allows you to make the next move to reposition.  If you get $80 for the $700s, then $40 more will put you in the $620s and you can pick up that $40 by selling the $700s to someone else for $80 – then you sacrifice $20 of upside but now you have a clear $40 advantage to your callers and you can sell with more confidence.  

    CMG earnings play/Cdel – How about selling 5 next weekly $270 puts for $7.80 ($3,900) and buying 4 Nov $250 puts for $7.70 ($3,080) as a slightly bullish play on CMG?   I like that enough to do a set in both $25KPs.  

    New highs/Rain – Seems right as we're so near the tops.  

    GOOG/StJ – Could be because of the halt. 

    GOOG/ZZ – I'm not surprised they missed and it sure wasn't because people are smart enough to realize how their privacy is being raped by GOOG.  Look how many people have business models to monetize eyeballs now – that's all there is to it.  Their demand makes our eyeballs more valuable to their TAC goes up and the fact that the supply of ad space on the web had expanded considerably has made me less willing to pay for anyone's particular eyeball.  That's why GOOG is so desperate to diversify out of that game – it's a dead end.  

    CMG/Csl – I'm more bullish than that but it's a fine idea for a trade.  I don't think they move up too much, more that I think that $280 is low enough to hold.  

    Privacy/ZZ – Thank goodness there are some countries that actually attempt to protect their citizens.  

    AAPL testing $632 – we're going to have to cover if they fail that.  

  121. neverworkagain

    GOOG: It is hilarious that the top of their 8K said "PENDING LARRY QUOTE".  You just can't make it up. In lieu of what just happened, I'm guessing Larry's quote might be changing.  I have a couple suggestions:  "WTF?" or maybe "You're Fired!"

  122. Pharmboy

    :)   YMI…..

  123. phil

    USO next week $34.50 puts at .66 – 20 in the $25KPs.  Oil pumping to $93 into NYMEX close but could be back at $90 any time.  Worth a shot.  

  124. BruceE

    Thanks for your comments this morning Phil.  I sold my long GOOG position based on your outlook and I feel like I just dodged a huge bullet.  Let me know when it's time to get back in.  

  125. 1020

    YMI – Let's get thru 1.73 before we put on the party hats……. ;)

  126. phil

    $25KP – Let's sell 7 AMZN next week $235 puts for $6.10, they were $4 this morning.  We're not going to roll yet but that's the plan.  

  127. zipla

    APPL/Phil
    I'm holding 5 APPLJan 13 690s in an IRA account.
    What's the sensible roll down and cover at this point.
    TIA

  128. Pharmboy

    Well, there you go 1020…my 100 shares and 1.73 it is…..

  129. Pharmboy

    Can they do it?

  130. ksone88

    Phil/USO- oil up possibly because transcanada pipeline to be closed for 3 days due to an "anomaly".

  131. biodieselchris

    Oh man I was going to pick up 5 GOOG 700 puts today and they leak earnings somehow. Crappola, there goes $12.75 * 500. That's $6k I really coulda used to short AAPL!!!!  :( :( :(
     
    And look at PCLN as well! Phil was right – they were a great short after rebounding to 650.

  132. jomptien

    I sold Fridays weekly puts for .82 and another round earlier for .62. Getting whacked here, a good sell now I think. Next week if it fails 628 or so I will roll to selling the Jan 400 puts for 2.45, can keep rolling up for credits longer

  133. livingfull

    Yodi…Phil    NLY    Not to distract from GOOG mess….    The call options are so cheap on NLY.  Jan '14 $17 C 48 cents…..Jan '15 $17 C 57 cents?  Ask?  On the leaps would we not sell the puts and buy the long calls?  At this price point?  Just curious. 

  134. biodieselchris

    Positions where I'm way up and still LOVE:
     
    HPQ Jan14 10 puts
    XLF Mar13 17 calls
    CHK Jan13 21 calls
    AONE

  135. phil

    Pending Larry/Never – I don't care what it says on the cover – wouldn't you think it would be kind of obvious that they shouldn't be releasing earnings in the middle of the day?  I know that, you know that – this is their job!  How seriously pathetic does your system have to be to have people handle this and think it's OK to file something in the middle of a trading day?  

    You're welcome Bruce.  We're going to have to take a very careful look at their earnings but I don't think this is a one-time thing – I think GOOG's long-term prospects need to be examined, along with the whole social media space that runs on an advertising model.  Long-long term, I think GOOG will be fine but expectations for ad revenues are simply ahead of reality.  More likely, the SOCL group will be the one the downgrade police go after.    

    AAPL/Zip – You held them a bit long, didn't you?  At $17.80 the Jan $690s can be rolled to the 2014 $595/$635 bull call spread at $19 and then you have $21 upside at $635 (110%) and plenty of time for AAPL to move up. 

    Oil/Ksone – It's that time of the month when they always try to engineer some sort of disaster to keep the prices up while they sell.  Last month, it was the war with Iran that was starting any minute. 

    Here's what's killing the markets again – nice timing JPM: 

     The "fiscal cliff" will knock 1% off GDP growth in 2013, says JPMorgan, up from a previous estimate of just a 0.5% hit. The team believes the 2% payroll tax reduction Americans have enjoyed the past 2 years is a goner, and will reduce household disposable income by $125B in 2013.

  136. 1020

    Pharm – If they can escape the clutches of an obviously, agitated bear and leap across the canyon, in a single bound…..
     
    Then…maybe….. :)

  137. biodieselchris

    PCLN and AAPL Oct calls are in order, just in case we get some bouncy bounce today and into tomorrow.

  138. 1020

    GOOG – The only thing I'm not happy about is that they did not wait until 1465 on the ES, to "announce" the news…… :(

  139. stjeanluc

    2% payroll / Phil – Yes, but that's just for 99% of the population. The top 1% will see a 20% reduction in their taxes. Shouldn't that drive GDP higher?   :-)

    Oh, and losing that 2% payroll cut would not count as a tax hike if Romney is elected BTW! Ending tax cuts is a tax hike only when the Dems are in the White House and applies to the bottom 99%. It's a deficit reduction when the GOP rules.

  140. dclark41

    Phil/AAPL:
    Do the roll and cover?

  141. phil

    Dollar back to 79.42 – up 0.5% on the day and the indexes are down half a point so not too much real weakness here.  

    I think the Nas selling is way over-done and the QQQ tomorrow $66 calls are $1.20 with .20 in premium so let's risk $250 and buy 10 in the $25KPs with a stop at .95.  

     

  142. biodieselchris

    With GOOG halted and AAPL/PCLN being taken to the woodshed, this feels kinda like a surreal moment …. something might give here. But if it doesn't I'm in Oct calls on AAPL and PCLN for a bounce. 
     
    C'mere sticky sticky!

  143. jomptien

    On my prior post the better way would be to roll to next week 600 puts for 7.30, many rolls after this – rolling to next weeklies I think is best – what do you think Phil?

  144. yodi

    livingfull
    NLY You find selling calls on stock paying 12% div. is always very little. But buying calls in this case on a rising stock earnings I think 10/30 isnot a good thing as the stock will drop after earnings and you are the sucker holding the call.
    Better wait till after earnings and sell puts if you really like the stock. We discussed this just earlier on. It is a play you set and forget about.

  145. yodi

    Sorry after the flop on GOOG no green Apples today but I must say holding very well so far.

  146. biodieselchris

    So I take it GOOG is halted for the rest of the day to protect the MM's?
     
    Funny, they didn't do that with QCOR….

  147. Inkarri19

    Reading headlines of a Greek debt buyback scheme?  I wonder if they ever reflect on how stupid some of these ideas sound. 

  148. williex

    biodeisel
     
    I think I will join you for a stick.  seems like solid support at 631.73..  Would not take much to start a push up

  149. biodieselchris

    Phil, why not go in the QQQ 68 calls for a nickel and ride high tomorrow when the bounce goes over 1.1% :)

  150. phil

    GOOG/BDC – You would have been happy with those! 

    AAPL/Jomp – You can always roll. 

    NLY/Living – With high dividend stocks, the calls are cheap because the dividend pay-out is priced in.  There are funds who do nothing else but play them for assignments.  Essentially, each Q, the stock will give back .50 of it's gains and, at $16, that's 3.1%.  Where was this stock 18 months ago?  $15.74.  Where is it now?  $16.09. There's nothing magical about these calls – they are no more likely to pay off than any other.  Don't fool yourself into thinking that options are mis-priced – they almost never are…

    AONE/BDC – You are up?  Must be shorts unless you just bought them. 

    Payroll/StJ – No because the top 1% only spend a small portion of their income, the rest is added to the mass of their wealth and that creates a gravity field that sucks money out of the rest of the economy.  Its the bottom 99% who tend to spend what they get and what they get is screwed at 99% get 2% less so the 1% can get 20% more.  See – fair AND balanced!  

    AAPL/DC – I'd rather not at the moment.  I think the selling was overdone so I want to give AAPL until the last minute to make a comeback.  

    AAPL?/Jomp – Now I'm really confused.  What do you have and what price did you pay?

    Now the "official" GOOG release – numbers are the same but with some extra spin.  Don't know why AAPL is upset ($631.20) – I just think they are trying to shake people out as the volume is very low but all down.  

    GOOG resumes trading at 3:20 – this will be fun!  

  151. zeroxzero

    Headhunting/chip wars — Samsung loses a round to Apple: http://blogs.wsj.com/digits/2012/10/11/chip-design-luminary-leaves-samsung-for-apple/

  152. Inkarri19

    Hearing KO to buy back $18.9B in shares.

  153. zipla

    Damn. I misunderstood the APPL roll and cover and went ahead and did it — not realizing I should wait.
    Now in 10 Nov 635 and with the 10 Oct 26 650 covers.
    Should I leave it and roll the covers later.
    TIA

  154. ban2

    Phil
    Mr. D Kass also suggesting Oct.19   QQQ  $67/$67.50 BullCS for .25 based on an expected bounce from GOOG

  155. 1020

    Maybe the play is the NQ….

  156. jomptien

    Phil/ AAPL , I sold 2 Friday 625 puts for .62 and 2 more for .82, now 1.53.
    Thinking tomorrow rolling to next weeks 600's – is that a good plan? Thanks

  157. jomptien

    I should have said, not rolling tomorrow but wait till next week to roll the puts

  158. williex

    Well no stick today so i'm out
    at least amzn is coming back

  159. jerconn

    Wow, put in an order for GOOG tomorrow 700 calls for $1.00.  They executed at .75, now $3.90…wish I could do that more often…

  160. jomptien

    GOOG opened now and AAPL looks like its trading tick for tick with them

  161. phil

    TLT has gone right back down, below $120 now.  No one wants bonds, I think the bottom-fishers are gathering up their cash.  

    Greece/Ink – If they had any shame it never would have gone this far in the first place.  

    QQQ/BDC – It's fun for speculation but if we pop into the close, I'd rather get the cash now.  

    AMZN going up, PCLN going up – not AAPL…

    Chips/ZZ – That's going to be going on for a while as everyone tries to make chips for themselves. 

    KO/Ink – Wow, that's over 10%.  CEOs a smart guy, sounds like KO is way too cheap then. 

    AAPL/Zip – At the moment, you are better off.  I'd buy back 3 covers, just to leave yourself a little upside room.  

    QQQ/Ban – It's a good play.  

    AAPL/Jomp – Why roll, it's all premium?  Now it shows more premium but it's still way out of the money.  I'd roll tomorrow if you have to but not likely you will.  

    Finally AAPL wakes up.  GOOG found buyers – good for our Nas play.  

  162. lflantheman

    Couple of comments….This GOOG early earnings release may not be what it first appears to be…..poor management.  As a sometime cynic, I'm thinking a lot of money may have been made here.  Had GOOG released the same results at EOD the response may have been more muted.  Time will tell, as the SEC looks for a possible rat in the woodshed.  As to AAPL…..I don't think this has anything to do with AAPL.   I remain long and far out. 

  163. biodieselchris

    PCLN 585 call, 3 contracts in at 1.70 and 1 out at 3.50. Still holding 1 for 3:59 PM and 1 more for tomorrow's bounce.

  164. biodieselchris

    AONE – yeah I mentioned on the day they crashed I got in 10,000 @ 0.064 and I wasn't comfortable with my position sizing so I took some off at 0.074 and holding the rest for after the election, if they make it that long. The theory is Obama won't let them get sold off to the Chinese for pennies. The company has $460M in assets and something like $370M in debt, so they actually have a book value of 50 cents as long as the gov't forgives what they are owed and then they can be sold to Johnson Controls and it keeps the tech hanging out inside the US instead of going to China.
     
    Obviously, this is still just a gamble.

  165. ethan2012

    Phil, as a new trade, i was thinking about appl Oct26 bull call spread 645/655 (or 640/650). best case return is 100%. if aapl is not up till earning i'll cash out the short leg and leave the long leg through earning. if the spread makes money before earning i'll cash out the whole spread (and maybe place a new long for earning). what's your opinion on this? thanks,

  166. phil

    Unfortunately, I have a meeting right after the bell so won't get to hear GOOG's CC until later but seems like this is a good floor ($690).  

    GOOG/Jerconn – Well played.  

    Tick for tick/Jomp – I wish. 

    Far out/Lflan – I am baffled at what possible logic would take AAPL down on GOOG's earnings.  IBM maybe, INTC maybe, but GOOG?  

    PCLN/BDC – Very nice. 

    GOOG tomorrow $720s at $1.15 are a fun gamble – out by the close. 

  167. biodieselchris

    Those America-hating socialist pigs over at JPM have figured out what we've known all along — 2% in every Joe Sixpack laborer's paycheck makes a big difference in building a healthy economy. What's next they'll say we should raise taxes on the wealthy?
     
    Maybe I can sell them my Trickle-Up Economic Theory whitepaper before I submit it to the Laurate counsel for my economics Nobel. I'll call it the "Frowner Curve," just to take the inverse relationship to it's logical limit….

  168. scottmi

    AAPL/phil – great lessons today in rolling down and paying for rolls with front week calls. i am improving my posiiton through all this!

  169. yodi

    AAPL down on  GOOG earnings It is just the follow the sheep GOOG is a over 600$ stock so is AAPL so the herd got a fright thinking the same could happen to AAPL so all ran for the exit. My two cents

  170. shadowfax

    GOOG
    Zeroxzero you did the right thing I stopped everything Google years ago, I have the same feelings about the spyiphone. So the issues is really ads are not adding to bottom line. What next, GPM, and listen to the shadow? Most people have no money!
    GOOG is up about 30%, don't expect a fast recovery, this is only 8% now. 50% would be another 7%.

  171. kustomz

    Shocked we held ES 1447, blew right through on the 9th.

  172. Pharmboy

    AMZN – StJ – is that position down 50% or so, even though the $240s are up 35%?

  173. phil

    AONE/BDC – Reasonable gamble.  In the very least, I would imagine the Administration is shaking the trees to find a buyer.  

    AAPL/Ethan – Clearly it's very risky.  AAPL simply does not want to go up no matter what's going on around it.  We rolled out to Nov for a reason in the $25KP and even that has been a nightmare so playing for a target next week is a straight up gamble – it pays 100% because you can lose 100% just as easily.  I do think AAPL goes up on earnings but, if it doesn't, that trade is worth zero.  

    The Nobel is in the bag BDC. 

    GOOG with epic fail at $700.  AAPL at $635. 

    AAPL/Scott – Glad to hear it.  

    Sheep/Yodi – Good point.  

    AAPL $25KP – We have to make a cover so let's sell 4 next week $640s for $15 – it's another $6K back and they can be rolled to 2x the $660s ($7.30) and $6,000 is enough for us to roll to the $645s (+ $6) but will be more than enough if AAPL goes lower so it's good coverage in these uncertain times.

    Don't forget that by the time AAPL has earnings, the next week weeklies will be out so we can do the roll before earnings and still have a 2-week advantage.  

  174. phil

    $25KP – QQQ $66s at $1.36 is up .16 and no sense in risking it as we're already bullish on the Dow for tomorrow.  

  175. phil

    Keep in mind, when you sell a $640 call for $15, you have a $655 short strike and we can assume we'll be able to roll up another $10 the following week so this is not a heavy cover.  It would just be foolish not to cover when we'll want the money for rolling if AAPL goes lower.  

    MSFT can put a nail in this coffin of a market if they miss.  

    IBM down another $6 today (48 Dow points). 

    Gotta run, will catch up later.

  176. kinkistyle

    Imp.Vol. in BBY Nov options skewing to the upside: http://livevol.blogspot.com/2012/10/bby.html

  177. shadowfax

    IWM dumped after the close.

  178. biodieselchris

    oops – forgot to get some CMG puts and now it's too late!

  179. Inkarri19

    There goes an MSFT miss

  180. shadowfax

    biodiesel
    I am allowed to do options for about 15 to 20 minutes after the close

  181. kustomz

    MSFT beat

  182. stjeanluc

    AMZN / Pharm – You mean in the 25KP? I am tracking the net based on all the rolls and sales we have had. The net on the Nov 240 puts is then $13.63. Same with AAPL. We have had so many trades that it's tough to keep up though. 

  183. revtodd64

    GOOG – I got out of the short call at $2 and the put spread at 33.10.  Holding the $720 call for now waiting for a recovery.  For now I'm only down about $400 for the trade, and a decent chance to get back to break even.  Holding tomorrow's $68 QQQ I got for .05 for fun.
     
    I normally only do long-term trades, and don't have time to monitor things during the day.  Entered GOOG butterfly just for fun.  Lots of adrenal rush, but I always make more money with less drama on the long term plays.  

  184. stjeanluc

    And wheeee on CMG! 

  185. jabobeast

    CMG…drek

  186. kinkistyle

    Wow, Einhorn really nailed it on CMG.

  187. stjeanluc

    CMG now down 10% AH. Worse than average!

  188. Inkarri19

    Seems like it was kind of obvious on CMG.  I mean food prices have been going up and their margins would've reflected that.

  189. zeroxzero

    And wheeee on MSFT!!

  190. Pharmboy

    AMZN/StJ – thx.  Yes.

  191. Inkarri19

    Wait, did MSFT miss or beat?  CNBC says beat but WSJ says miss.

  192. neetcorp

    Microsoft (MSFT)
    Revenue  $17.4 billion, yielding EPS of 65.
    Analysts on average had been modeling $16.5 billion and 56 cents a share.
    Windows & Windows Live” division posted a 33% drop in revenue, including the deferral of Windows revenue. Excluding that item, division sales were down 9%.

  193. scottmi

    MSFT – well they didn't blow any doors off.. I guess it's down to AAPL now to save the world (again).

  194. Inkarri19

    Italy raises record $23B in auction directed towards domestic retail investors and in the process acquires almost all necessary funds needed for the rest of the year.  I guess the world is saved.

  195. stjeanluc

    Unless CMG pulls back, that's going to be painful on the 25KP! 

  196. stjeanluc

    Here is a pivot table on the 25KP closed positions:

    Not much luck with AMZN and AAPL so far! This doesn't take into account the opened positions. That would improve AMZN by about $2K but AAPL would take another $5.5K hit. Keep on selling premium….

  197. Peter D

    Just checking in and missed all the GOOG excitement with all day meetings.  Thanks, stjeanluc, for the update of the virtual short strangle portfolio!  Wow, over $20k already?  The timing of that last batch of sells was very lucky.  We'll also say goodbye to the October index options tomorrow morning, giving us more margin to play.

  198. phil

    Wow, $257 on CMG!  That's going to be a pain but we sold the $270 puts for $7.80 and $257 is $13 and, of course, the Nov $250 puts will gain a bit too but wow, they are doing worse than I imagined.  

    AAPL still around $632, MSFT still $29 – not too terrible.  SNDK did well – that's going to confuse the SOX.  MRVL not so much.  COF nice numbers.  AMD good enough.  

    GOOG Laptop/Kustomz – Not clear what O/S it's running but wow, for $249 – all it needs to do is read EMail and have a web connection and it's going to be a winner.  

    CMG/Ink – I got fooled by YUM and MCD giving good reports.  CMG was already down to $285 from $415 (31%) and their forward p/e of 25 would have been fine except they seem to have stopped growing – that's what's killing them, and rightly so.

    Pivot table/StJ – Thanks, good way to look at things. 

    Tomorrow's going to be a fun expiration day. 

  199. stjeanluc

    GOOG Laptop / Phil – It runs their Google Chrome O/S. Very lightweight and you end up running most of your apps from the cloud anyway. As you point out, it's most of what you need when you travel…

  200. stjeanluc

    And these guys are worried about voter fraud:

    http://talkingpointsmemo.com/archives/2012/10/well_what_do_we_have_here.php

    A man working for a company hired by the Virginia Republican Party to register voters has been arrested and charged with destroying voter registration forms after he was spotted this week throwing the forms into a dumpster at a shopping center in Harrisonburg.

    The only 2 case in the last couple of weeks have been GOP guys! Idiots.

  201. stjeanluc

    This is probably going to end well!

    http://www.businessinsider.com/new-etn-offers-offers-retail-investors-16x-leverage-to-mortgages-2012-10

    The ETN, called the ETRACS Monthly Pay 2x Leveraged Mortgage REIT, offers double the return of the Market Vectors Global Mortgage REITs Index – itself an investment vehicle 8x leveraged to mortgage-backed securities.

    So, in effect, if you're bullish on mortgage-backed securities, you could use this product to lever up 16 times.

    Nothing like leverage on top of leverage to lower the risk!How about we start options on options next!

  202. stjeanluc

    The same pattern seems to be repeating – 3 or 4 big days up and then a correction. Tomorrow could be a down day and could be messy with OpEx. 

    NASDAQ struggling to punch through the 50 DMA and obviously AAPL and GOOG are not helping now! Looks like MSFT will also open lower so tech is the problem child now!

  203. shadowfax

    STJ
    Options on options, sounds logical but to make them work we need a lottery to buy them. That way education benifits by the rip off. That could balance the budget after the 20% tax cuts.

  204. shadowfax

    Only one problem to work out, the optional options by lottery must be limited to less than a year so they balance the budget after we eliminat all capital gains and esate taxes. The GOP will then compromise for sure or they may have a little problem to work out.

  205. lflantheman

     stjeanluc…….Peter D's spreadsheet shows 20k profit.  Is he doing well?  How would I know?  What did he start with?   50k?  A million?   How much is margined (at risk) at this time?  Same with the other portfolios.  I hate to bug you about these 'details' , but unless you know where and when a portfolio started, and how much is at risk, you cannot know whether the investments are doing well, or not.  All you can say is that the portfolio has made money, or it has not.   I hate to be a stickler for details, but I think it's important to know these simple data points about any portfolio.      

  206. neetcorp

     stjeanluc,
    You used to post all portfolios we practiced here everyday. It's very handy. Thanks.
    Please let me know where I can view the portfolios if not too much trouble.

  207. Peter D

    Hey lflan, we'll start selling AAPL options in the virtual short strangle portfolio soon.  That would throw you in a loop!

  208. stjeanluc

    Portfolios / lflan – Peter could probably answer better than I will but I think that he reserves $500K of margin in case he needs to roll. But so far, he has not had to use that much as Peter usually picks some far OTM strikes looking more for safety than high returns. I think that he has very different goals than the other portfolios – income while preserving the capital and a smoother equity curve. It's a more laid back portfolio.

    It's a good idea to have different investment strategies I think so that members can pick what matches their investment needs. Actually, I would think that the Strangles portfolio is a good match for the other portfolios. Steady income on one side and a small portion allocated to a more risky strategy. And in the case of the MoMo portfolio – high rewards thanks to you!

  209. Peter D

    Thanks, stjeanluc, for the precise answer!  Let me add that each virtual portfolio has a start date, which is posted every time the portfolio is updated.

  210. diamond

    Apple Opening Massive New Beijing Retail Store – Mac Rumors
    (scroll down and look at the Android store "across the road")
     
    More pics:
    China’s Largest Apple Store in Beijing Wangfujing – M.I.C. Gadget

  211. diamond

    October 19, 1987 …

  212. lancep50

    Where were you when the market crashed?
    I had just completed my first college investment class the previous summer and lost the investment competition to a guy who traded options.  I had no skin in the game at the time but it ignited a lifelong interest in options and the market.

  213. kinkistyle

    AAPL stores/diamond:  Oh, the Chinese were way ahead of them.  They already opened a bunch of fake Apple Stores that looked completely authentic.

  214. lflantheman

    stjeanluc…thanks.  Peter D….good job!   Let's short strangle some AAPL! (after earnings). 

  215. jasu1

    Phil, Lflan
    Looks like the Tech earnings are coming in disappointing. So, what is the probability that Apple disappoints too. Is this recent slide in AAPL indicative of what is to come or are these opex games being played on the sheeple(me). thanks

  216. Burrben

    AAPL in the 25KP.  Wow, that is a lot of work to be down 5K.  

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