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Sequestration Thursday – Oh the Horror!

Are we there yet?

You would think the media would have learned from the Fiscal Cliff non-event that there's no reason to cry wolf but, unfortunately for an ill-informed citizenry, "WOLF!" = ratings.  In fact, they even have a guy named Wolf giving us the news (but, ironically, he gets no ratings).

It's the end of the month today so, probably, the markets will flat-line but we had our fun yesterday as we jumped right on the bullish bandwagon at 9:42 (we were, as noted in the morning post, already bullish from the previous day) with a bullish play on the Nikkei Futures (/NKD) in our Member Chat at 11,250 (same entry we hit last Thursday, in fact) and those gave us a 200-point ride at $5 per point, per contract for $1,000 gains on the day.  The Nikkei actually tested 11,500 after hours but we were long gone by then.  

We also continue to build into our brand new Income Portfolio, bringing us up to 6 positions in the first two days of our shopping spree.  We also added a nice SQQQ hedge ($35.60 entry) into the close to lock in some of our gains – just because we're bullish doesn't mean we can't be careful! 

The Dow is already over it's previous high so we'll be looking at adding some Dow components today and tomorrow – in case they get away from us.  As the S&P is testing our 10% line, they are the logical index to watch closely and we also have a very clear indicator of when to get out of the short hedge with a small loss if they do pop 1,520 and hold it over the weekend (or if AAPL finally gets going, of course).  

This morning we had another opportunity to go long on Copper (/HG) at $3.565 and Silver (/SI) came back down to $28.85 – exactly where we drew a line in the sand early Tuesday morning in Member Chat, where I called it "the best long of the moment."  As I noted in Tuesday morning's post, the Dollar is under 81.85 (81.69) so it's a no-brainer to make this entry to make some Egg McMuffin money in the morning.  

USO WEEKLY Oil has gotten boring, flat-lining at our old $92.50 target (see Dave Fry chart) but nat gas has fallen back to $3.40 on warmer weather (inventory today at 10:30) and gasoline is back to $3.10 but, as I pointed out last Tuesday – if the average American is driving 10% less than gas "feels" like $2.80, not $3.10 and that explains what seems to be baffling the pundits – why the US consumers aren't crawling into a hole and dying with gasoline over $3.  

As you can see, oil is at a very serious inflection point with only the weak dollar saving it from plunging back to towards last year's low at $77 (the Dollar was 84 then, just 3% higher).  If you want a speculative short on oil, try XOM, who haven't topped $92.50 and are struggling at $90 and were $75 on last year's drop in oil and $65 the year before but the July $80 put is just $1, so a very nice risk/reward profile on those puts!  

I like that one because XOM can go lower even as the rest of the market goes higher but, on the other hand, it's very unlikely to go higher while the market goes lower, which makes it a lovely hedge.  So I think we'll add 10 of them to our virtual $25,000 Portfolios as we'd be happy to press that bet if XOM does pop to $100 as well.  Not that XOM is a bad company but, historically, they tend to correlate well with oil and, in fact, oil is off 15% since last April but XOM is up 5% so we think gravity is on our side here

XOM makes almost the exact same ($40Bn a year) as AAPL and it has almost the same Market Cap ($400Bn) as AAPL so you could say, at this price – that XOM is priced like it's a Tech company.  Or maybe you could say AAPL is priced like an oil company but, of course, AAPL also has $137Bn in cash so they are, in fact, priced much worse than an oil company…  

Lot's of Fed Speak today to finish off the month with Raskin, Fisher and Evans all scheduled to speak but only Raskin (12:30) before the close.  GDP is revised up to 0.1% from -0.1% so not too exciting for Q4's second (not final) estimate and keep in mind that declining inventories were counted as a negative (but they are not if the goods need to be manufactured to be replaced) as was a massive decline in Government Spending, much more than the Seqestration everyone is worried about now.  

Tomorrow we'll get Auto Sales, Personal Income, PMI, Consumer Sentiment, ISM and Construction Spending AND Bernanke speaks at 7pm local time in San Francisco so the hits just keep on coming this week and then next week, it's time to focus on jobs data again so, if we're going to rally – this is the spot, but that's going to be kind of tough with all this Fiscal uncertainty looming (hence the hedges). 

Another problem of Sequestration is it will likely strengthen the Dollar (as we're cutting debt) and you know that that's no good for commodities and equities – at least in the short run.  Hopefully, this is all priced in as I can't imagine who would have thought that the Dems and Reps would actually agree on something in just 3 months of trying.  

On March 27th, a funding measure for US agencies also expires, which is a compromise from the Debt Ceiling extension, which also runs out in mid-May.  So party on markets – it's hard to see how things can get worse now that that asteroid missed us.  Both Bernanke and Drahgi assured us they have plenty of ink and paper left to print money with and Japan has nominated a BOJ Governor who is so doveish, that just his nomination sent the Yen up 1%.

Mr. Kuroda has a Masters in Philosophy of Economics from Oxford so we look forward to hearing what he has to say at the next G7 Finance Minister's meeting.  I'm sure if you put him and Uncle Ben in a room together you can cure Global insomnia forever!  


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  1. mtyyen

    Dear Phil,

    I am a new premiun member.  I like your website and post articles alot.
    Since I am new in the field, please pardon my ignorance. 

    I am interested in your conference in Atlantic City in the near future mentioned in the article, but I could not find the detail info from your site.  Could you please give me a head up?  Thank you very much.

    May I also ask a question about the new 6 positions mentioned  in your post today?  I am trying to follow with small positions to start. Thank you.
     

  2. Savi

    Good Morning
    welcome mtyyen
    regarding the AC conference please e-mail terrapin who is handling this at thegeneral91@gmail.com

  3. stjeanluc

    Oil Lines

    R3 – 94.72
    R2 – 94.04
    R1 – 93.53
    PP – 92.85
    S1 – 92.34
    S2 – 91.66
    S3 – 91.15

    Yesterday's high and low – 93.37 / 92.18

  4. stjeanluc

    Welcome mtyyen!

    I track the portfolios on a Google Doc spreadsheet and the 6 new positions are in the new Income Portfolio which is not setup yet since I update that portfolio on the weekend only. You can access the spreadsheet at:

    https://docs.google.com/spreadsheet/ccc?key=0Anwf9je9MizqdGQzN2NZUjNfdjhrbjFwWlc1eDYtWnc&usp=sharing

    There is a tab for each portfolio there.

  5. 1020

    Good Morning!

  6. phil

    Good morning! 

    Welcome Mtyyen!   In your introductory Email it is suggested that you read the last month's worth of posts and comments.  This is a very good idea as you will see not only all of our recent positions but the conversations that led to them being taken and you'll get to know a lot about who's who as well as seeing me answer many, many questions that you are most likely to ask.  There's a "Phil" tab near the top of the site and you can go through my main posts that way – it's only about 20 per month plus the comments but, if you read that and check your charts to see how things worked out in retrospect – I really do think it's a great way to get up to speed quickly.  Other than that, I love answering stupid questions – just ask anyone….  So fire away.  

  7. yodi

    Phil I posted this question early this morning and this is just a repeat of the same when you have the time thanks
    Phil I like you view on rolling a caller which is ITM and I am chosing my caller on GOOG which we have as well in one of our public port. even lower than mine. I know this is much to early to worry about this one and I am just playing with numbers.
    My normal move is to roll the caller up and sell a putter to compensate for the short fall. But I have seen you move a different path.
    Here we go
    I hold 1 GOOG Apr13 785caller nacket received 22.83 now 36.85 I now much to early to worry about
    but here my excercise.
    roll 1 april 785c to May 820c for cost of 13.00
    sell 1 May 830c for 19.50
    buy 2 vertical Jun 820/835 for 6.15
    to cover the 6 odd $ short fall I sell
    1 jun 700p for 9.90 well above the short fall
    the excercise cost about 1262.00 on margin PM
    your thoughts Thanks

  8. 1020

    Phil/stupid   it's twue.. It's Twue…!  :)

  9. millcreek

    phil,
    after reading your advice to yodi re his xrt i am also trying to work out of some fls calls. 
    at present im short 4 apr 145;s (7.00 now 15.35). 
    based on your post to yodi yesterday, i would like your thoughts on my doing the following.
    buy back the apr 145 X 4 @ 15.50 = -6200
    sell 6 oct 155 @ 14.30 = +8580
    buy 4 oct 160 @ 11.60= – 4640
    sell 4 oct 170 @ 7.30 = +2920
    thats a credit of approx 600 roughly.  or sell only 5 155 and pay approx 800 for the roll………..
    im trying to assimilate the hours and would appreciate your thoughts /counsel when you have a minute.  tks

  10. millcreek

    yodi,
    tks for your questions re xrt as phils answer made me think about my problem with fls………and always getting value from your posts……….

  11. stjeanluc

    Hedges / Phil – I added the SQQQ hedges from yesterday in the portfolios but would it make sense to adapt the number of contracts. With the 25KPA and AAPL Money we are protection large positions. In the 25KPM we have little in play right now so the 20 contracts might be too much. 

  12. Pharmboy

    mtyyen – after your questions…sometimes you get a stoopid answer as well.  Hang in there!

    1020 – 78 fine degrees and a wonderful day on the coast!  Yipee! I wonder how that snow is every where else?

  13. dclark41

    Welcome mtyyen!

  14. Pharmboy

    AC conference – enjoy, now that online gaming is approved by NJ….no one needs to leave their home to travel there.  At least Vegas has 'shows'.

  15. 1020

    Pharm – What's snow?….

  16. 1020

    ….let me google it…. ;)

  17. Gingbaum

    Hey Phil, with JCP getting hammered pre-market – do you think this is a good position to go long?

  18. yodi

    millcreek
    You wellcome I find it very interesting to always learn how other people get out of a problem  and as you see in my question on GOOG above again it will be something to learn for most of us. It looks like most times Phil pulls an other trick (rabit) out of his hat (head)

  19. newt

    LEN/ Yodi: did you get the put filled?

  20. mjjwo9b

    Hi Mtyyen… welcome aboard
    To slake my morbib curiosity need, is there any news on BBY?    

  21. phil

    Thursday's economic calendar:

    8:30 Initial Jobless Claims

    8:30 GDP Q4

    9:45 Bloomberg Consumer Comfort Index

    9:45 Chicago PMI

    10:30 EIA Natural Gas Inventory

    11:00 Kansas City Fed Mfg Survey

    12:30 PM Sarah Bloom Raskin: 'Financial Institutions and Reputational Risk'

    3:00 PM USDA Ag. Prices

    4:30 PM Money Supply

    4:30 PM Fed Balance Sheet

    4:30 PM Fed's Fisher: Economic Outlook

    8:00 PM Fed's Evans: Monetary Policy

    4:44 AM Asian and European shares are mostly higher, helped by renewed expectations about the prospects for continued or increased monetary easing in various part of the world following comments by Ben Bernanke and Mario Draghi, and the nomination of Haruhiko Kuroda as BOJ governor. Japan +2.7%, Hong Kong +2%, China+2.3%, India -1.7%. EU Stoxx 50 +0.3%, London +0.2%, Paris +0.3%, Frankfurt +0.4%, Milan -0.3%, Madrid +0.5%.

    8:00 AM On the hour: S&P +0.11%. 10-yr +0.12%. Euro -0.02% vs. dollar. Crude -0.01% to $92.75. Gold -0.28% to $1591.3.

    8:40 AM Stock futures remain about flat following the 8:30 data. The GDP number was a big miss, but it's from 2012 Q4 and the calendar says its 4 weeks to 2013 Q2. Initial jobless claims is at least somewhat of a coincident indicator and may turn more heads at the Fed than the GDP print. The long bond gives up some gains, but is still a quarter-point higher on the day.

    9:00 AM On the hour: S&P +0.06%. 10-yr +0.1%. Euro -0.13% vs. dollar. Crude +0.06% to $92.81. Gold -0.18% to $1592.8.

    At the open: Dow +1.26% to 14075. S&P +1.27% to 1516. Nasdaq +0.65% to 3182.

    Treasurys: 30-year +0.16%. 10-yr +0.11%. 5-yr +0.05%.

    Commodities: Crude -0.01% to $92.75. Gold -0.17% to $1593.

    Currencies: Euro -0.22% vs. dollar. Yen +0.12%. Pound -0.11%.

    Market preview: U.S. stock futures are slightly mixed following the disappointing second print of Q4 GDP, although at least the economy didn't contract, as previously thought. The S&P Mini is+0.1%. The focus is otherwise on retail plays of various sorts, with J.C. Penney (-15.7%) and Groupon (-29%) crumbling following disastrous Q4 earnings, while Kohl's slips just 2.4%. Sears, though is +3%Later: Chicago PMI, Kansas City Fed Mfg Survey, Fed speak

    GDP Q4 (1st revision): +0.1% vs. +0.5% consensus, -0.1% initial estimate. Q3 GDP was +3.1%.

    Initial Jobless Claims: -22K to 344K vs. 360K consensus, 366K prior (revised). Continuing claims -91K to 3.07M.

    Daily ETF flows show a lot of action in the SPDR Retail ETF (XRT), which added 8.6% to AUM amid a lot of news and movement in the sector yesterday. The VXX - which saw a big run-up in price and interest over the past week – saw assets flee (-15.6%) as stocks rebounded and volatility dropped.

    The AAII Investor Sentiment Survey for the week ended yesterday shows the bulls melted away last week, falling 13.4 points to 28.4%. Bears gained 4.1 points to 36.6%. The survey clearly reflects the knee-jerk response to the perceived-as-hawkish Fed minutes (as captured with Dennis Gartman's classic "Sell" call).

    Dan Fuss – a bond king even if that title is usually reserved for someone else – takes junk bond (HYGJNK) exposure in his Loomis Sayles Bond Fund down to 24% of AUM, its lowest level ever. "The 'don't fight the Fed' mentality … will have to reconcile at some point with the macroeconomic reality that there's more risk in the world than the market is choosing to acknowledge," says DoubleLine's Bonnie Baha, nodding in agreement with Fuss. 

    A screen searching for stocks Warren Buffett (BRK.B) may be interested in turned up 28 names, but only one - ADM - is a current Berkshire holding. Most likely to catch the Oracle's eye from the rest of the list, writes Jack Hough in Barron's, is Sysco (SYY), Cummins (CMI), and Illinois Tool Works (ITW).

    The ECB is "far" away from tightening monetary policy, Mario Draghi told an audience in Munich yesterday, with the bank forecasting that inflation will be significantly lower than its 2% target. Draghi's comments followed swiftly on the heels of Ben Bernanke's dovish statements in the U.S., although ECB Board Members Yves Mersch and Peter Praet warned about leaving the emergency measures in place for too long.

    ECB Masks Crisis as Italy Revives Austerity Debate: Euro Credit. The bond market, aided and abetted by the European Central bank, is letting politicians slide on economic reforms. The drop in Spanish and Italian borrowing costs since the ECB said in September it would support troubled euro members took the heat off governments without tying them to the conditions of the mooted bond-buying program, said Mike Turner, head of strategy at Aberdeen Asset Management Plc. "It's been revealed that the emperor has no clothes," said Turner. 

    Eurozone inflation falls to 2% Y/Y in January, as expected, from 2.2% in December. Core CPI +1.3% vs +1.5% in Dec and consensus of +1.5%. On month, CPI -1% vs +0.4% and -1%. Inflation is now close to the ECB's target and gives strength to Mario Draghi'sforecast that CPI will fall to significantly below 2%. It could even give the bank room to consider a rate cut from 0.75% when it holds a policy meeting next week. (PR)

    German unemployment fell by 3,000 to 2.92M in February vs expectations for the figure to remain unchanged, while the jobless rate held steady at 6.9%. "Investment, spurred by cheap money, is back helping drive the economy after being put on ice in the last quarter," says economist Stefan Kipar

    Compared with the eurozone, the UK economy is not that badBeggars can’t be choosers, and George Osborne – under attack on virtually all sides – must gladly seize on whatever support he can find.

    China May Tighten Liquidity in Short Term, ICBC Says. China's central bank may tighten liquidity in the short term on rising inflation and capital inflow pressure, Industrial and Commercial Bank of China said in a research report published today. China may also raise interest rates if 2H inflation is higher than expected, the report said.

    Baby it's cold outside:  As expected, Shell (RDS.A) has abandoned plans to drill for oil in Alaska's Arctic waters this year. The decision comes after Shell said it will send its two Arctic offshore rigs to Asia for repairs and upgrades following a series of mishaps, including the grounding of the Kulluk drillship in a storm.

    Gas Boom Projected to Grow for DecadesU.S. natural-gas production will accelerate over the next three decades, new research indicates, providing the strongest evidence yet that the energy boom remaking America will last for a generationThe most exhaustive study to date of a key natural-gas field in Texas, combined with related research under way elsewhere, shows that U.S. shale-rock formations will provide a growing source of moderately priced natural gas through 2040, and decline only slowly after that. A report on the Texas field, to be released Thursday, was reviewed by The Wall Street Journal.

    Vale Has Record Quarterly Loss on $5.66 Billion Writedowns. Vale SA (VALE3), the world’s largest iron- ore producer, posted a record quarterly loss after writing down the value of some of its assets. Profit missed analysts’ estimates on an adjusted basis.

    Embraer's winning of a $428M contract to supply planes to the U.S. Air Force will apparently benefit Boeing (BA), which is battling with France's Dassault and Sweden's Saab over a $4B contract to sell 36 fighter jets to the Brazilian Air Force. "This is obviously a very good development for Boeing. It's the best thing that's happened to them in months (in the fighter jet race)," says a Brazilian official. Nothing like a bit of quid pro quo.

    Federal Aviation Administrator Michael Huerta has indicated it will be a while before Boeing's (BA) 787 can return to the air, saying that although the company's proposed modifications to the plane's lithium-ion batteries are comprehensive, they'll require extensive testing and analysis. Earlier today, Boeing presented its plan to Japanese regulators, saying it's a permanent rather than an interim solution. 

    Kentucky-Fried Whatever We Caught Out Back:  Restaurant analysts thinks the next frontier for the industry will be Africa as the Middle East and BRIC nations reach saturation points. Yum Brands' (YUM) is the largest chain in the region by a wide margin with over 900 KFC units, while other restaurant companies are considering expansion opportunities.

    Sturm Ruger(RGR) fourth-quarter sales jump 52 percentGun maker Sturm Ruger Inc reported a 52 percent jump in quarterly sales as people rushed to stock up on firearms amid debates over implementing stricter gun laws, sending its shares up 3 percent after market. 

  22. phil


    Department store shakeup: With another round of quarterly reports in it's clear Kohl's (
    KSS) was unable to pick up as many disgruntled J.C. Penney shoppers as Macy's (M), Dillard's (DDS) or even to a smaller extent Sears (SHLD) and the dollar store group (DG,DLTRFDO). Analysts aren't going easy on the retailer, calling execution by Kohl's management part of the problem.

    Shares of J.C. Penney (JCP) keep sinking, now down16.4% to hit $17.75 in premarket trading. Though Q4 numbers were abysmal, investors looking for some signs of life from the retailer were also disappointed when nothing promising about January or February sales was tipped off by the company. (Previous: earningsconference call)

    Shares of Sears Holdings (SHLD) move up 3.3% premarket after its Q4 report (III) showed more tightening on costs along with a minor bump in sales at Sears stores. With J.C. Penney setting the bar low in the department store sector, Eddie Lampert's plan to keep monetizing assets looks appealing to investors.

    More on Sears Holdings (SHLD) Q4: Domestic same-store sales declined 1.6% with a 0.8% increase at Sears being offset by a 3.7% drop at Kmart. Gross margin rate improved 90 bps Y/Y as the company broadly reduced costs and inventory. Sears says it will churn up an additional $500M in additional liquidity over the next year through the monetization of assets. (PR)

    More on Kohl's (KS)): Comparable store sales rose 1.9% during Q4 with sales coming very late in the period. Gross margin fell 290 bps to 33.3%. The company expects Q1 EPS of $0.55-$0.63 and full-year EPS of $4.15-$4.45. (PR)

    Wal-Mart's (WMT) long-running inventory problems are "getting worse", U.S. CEO Bill Simon has reportedly told an internal meeting. "We run out quickly and the new stuff doesn't come in," said Simon, who's appointed a VP to fix the problem. A Wal-Mart spokesman downplayed Simon's comments, although Californian department manager Evelin Cruz described them "as dead on."

    Barnes & Noble (BKS): Q4 EPS of -$0.18 misses by $0.71. Revenue of $2.2B (-8.8% Y/Y) misses by $0.2B. (PR)  More on Barnes & Noble's (BKS) FQ3: Revenue fell off faster in the Nook segment (-25.9%) than Retail (-10.3%) or College (-1.3%) as the company puts in another disappointing quarter. Digital content sales only increased 6.8% for the period, a mark which fails to live up to the promises for the business. For FY13, comparable bookstore sales are expected to decline in the low- to mid-single digits. A strategic review of Leonard Riggio's offer for the retail business is ongoing. BKS -3.8% premarket. (PR) 

    Dish Network (DISHrips CBS after the network demanded one of its stars from the The Big Bang Theory remove a tweet in which she raved about the Hopper service. The bigger issue: After just tentatively sticking its toe in the water to test the reaction of media giants to its ad-skipping service, the company appears to be in for the long haul after initial courtroom battles have gone its way. 

    Telefonica (TEF): Q4 net profit -82% to €473M, with Venezuela's currency devaluation hurting earnings by €417M. Debt -€5B to to €51.3B, plans to cut debt to €47B in 2013. To pay cash dividend of €0.75 a share. (PR)

    GROUPON(GRPN) GETS DESTROYED AFTER EARNINGS WHIFF.

    Pandora (P-3.5% on news it's capping free mobile listeningat 40 hours/month just a week before its FQ4 report, and amidst widespread concerns about mobile ad rates. The decline comes even as Wells Fargo raises its valuation range to $15-$17 from $11-$13: the firm says checks with ad agencies and radio ad buyers turn up positive sentiment towards the company, and isn't worried about apotential Apple service. 

    Three breakfast reads:
    1) Why Argentina Will Default In 2013 
    2) The Debt Paradox That Everyone Should Be Aware Of 
    3) BlackBerry Shorts Have Little To Gain, Much To Lose

  23. stjeanluc

  24. Burrben

    You really should put this in the main post tomorrow.  Credit to Albo
    Buy the F***ing Dip

  25. stjeanluc

  26. stjeanluc

  27. Burrben

    Phil / Income Port reminders
    From last night : AA and CSCO and AGNC and TASR 
     
    I'd also like to BA in there.

  28. stjeanluc

  29. stjeanluc

    Phil – To make some margin room in that portfolio I would suggest closing the FFIV short call with a 75% win and 50 days to go. I would also close the WMV Apr 105 calls at $0.03. With a delta of 0.01, there is basically no chance that it comes back to us. Other fish in the ocean!

  30. stjeanluc

    Interesting comparisons:

    http://www.bespokeinvest.com/thinkbig/2013/2/27/2013-vs-2012-vs-2011.html

    Where do we go from here?

  31. Burrben

    CHL
    Fyi, from the old income port, I just got a fill on the Jan15 CHL 45P for 3.50.  I didn't get a fill before….

  32. harip

    Phil,
    What is your opinion on EWZ and EWG for IRA account
    thanks

  33. albo

    PANL
    Goldman remains a Buyer of Universal Display following the in-line Q4 report and guidance. The firm expects 2013 growth visibility to improve and said near-term catalysts remain intact. Shares are Buy rated with a $41 price target.

  34. stjeanluc

    This looks my next setup:

  35. phil

    GOOG/Yodi – OK, let's see.  To start, if I'm not selling puts (like FAS), it's because I think the risk of a drop is too high to be worth it. I'm not clear on what your actual position is but I'm guessing you ONLY have the short April $785 caller you sold for $22.83 and who cares what PRICE it is now – what matters is GOOG is $805 so the call is worth $20 if we expire here so the real question is – what is your expected target for GOOG between now and April expirations.  Since GOOG has earnings before expiration (probably the night before) the correct answer is "how the Hell would I know" – and that sucks because it could go up or down 10% very easily and, of course, the options will hold their value much better than normal short sales because they are pumped up on earnings premium.  So, now you see how the entry was a mistake in the first place but that's water under the bridge, right?  

    You have $22.83 in your pocket and, to me, I don't see GOOG dropping 10% so I'd go with 2 Sept $810/860 bull call spreads at $21 to protect your upside and then you can roll the caller ($40) to 2x the March $805s ($11.25 = $22.50), which is about your loss so far.  Whether GOOG goes up or down $10, the premium will burn and then you can sell whatever next weekly calls are $15 and then wash rinse repeat until you are happy with your money.  The idea of the September spread is it puts you well behind earnings so you're not likely to lose your premium unless GOOG has a big dip and THEN you could sell puts and roll down to better strikes and resume call selling.  

    I'm also going to figure out something for the $25KPA position later but I do think GOOG is toppy here at $810ish so I'm not eager to cover until they prove to me they can break and hold it.  

    True/1020 – You mean this?

    FLS/Mill – The only issue there is you're giving yourself very narrow protection.  What are you trying to accomplish?  You sold the $145 calls and they are currently $15 in the money, which is what you were paid for them and the market is right at the top of a channel so all you would be doing is paying your April caller a premium because you're not willing to wait and see if perhaps FLS pulls back and wipes them out.  Look at last around March.  Look at the year before around March.  

    Look at the year before that in April.  Now I would never assume you don't at least study the history of your position before jumping in so I would have to ask you what it is that drastically changed since you sold those calls that makes you want to go through such gymnastics 2 full months before expiration?  Yes, they had great earnings but don't you think, at $160, that it was kind of baked into the cake? 

    Note that they are only meeting expectations each Q.  It's a pretty boring and predictable business on the whole.  A very good one, but not full of surprises.  EPS was a big beat – up 61% from Q1 2012 – but the stock is up 60% from last year's lows too AND, they are not predicting $3.60 for next Q but $2.04 and $8.54 for the year so the Q1 earnings were an anomaly and NOTHING TO EXTRAPOLATE FROM (and I'm tired of putting up that cartoon every day).  So, with 1,200 hours until April expiration, this would be a wonderful time for you to practice PATIENCE until and unless the markets are at new highs and/or FLS is over $165.

    SQQQ/$25KPM, StJ – Like XOM, I like it as a bearish bet at the moment.  If not, then we will buy bullish positions to cover. 

    JCP/Ging – They are a train wreck and other retailers have not been that exciting so I would stay away for now.  Oh, and did I mention the markets look toppy and we officially have sequestration tomorrow? 

    BBY/Mjj – After the bell.  

    CHL/Burr – If you're going to play China, that's the way to do it.  

    EWZ/Harip – I like them as they've had a nice pullback and inflation should lift commodities over time.  EWG is still in Europe and I'd stay away from Europe through the Summer at least.  At $24.70 in an IRA, you can simply pick up the EWG 2015 $21/26 bull calls spread for $3 plus the Jan $27s for .85 and sell the April $25s for .60 which makes the extra calls practically free with just a $2 margin on the spread and the plan, of course, is to use that long combo to sell another .25 per month for 8 more months ($2) and pretty much pay for the whole long spread.  

    Of course, if EWZ takes off on you, you already are +$2 on the bull call spread and the Jan calls are only $2 over the caller so you have no upside worries at all.  So, rather than buying 500 shares of stock for $12,350 and hoping to make $2,500 on a $5 gain (20%) – you can buy 10 of the spreads for net $3,250 and hope to make $5,000 plus additional sales if EWG simply makes it to $26.  Let's do 20 of those in the Income Portfolio as it's a good example of working this kind of play

    Set-up/StJ – I didn't know you were single…

  36. stjeanluc

    IOC / Yodi – You mentioned them yesterday and I know that Phil said that Sam Antar thinks that they are a scam (he would know!) but man the premium in this options is crazy! If you are willing to take a little risk you can get some good money with wide strangles. This morning a Mar 50/95 strangle sells for about $1.50 against $1.50 in PM margin. I know they move a lot, but you get 25% on each side. And enough OI for sure. Crazy stuff….

  37. stjeanluc

    Single / Phil – Or have a very understanding wife!

  38. randers1

    Albo
    Check out UNXL, it is another MOMO-high flyer like PANL.

  39. mjjwo9b

    BBY:  Dug this up from yesterday.  
     
    Tuesday, February 26, 4:48 PM ET
    Best Buy (BBY -3.2%-1.3% AH, adding to the day's losses, after 5 sources tell Reuters Richard Schulze's buyout attempt is in jeopardy thanks to financing issues. Schulze is now said to be focused on a minority investment, one that could a PIPE transaction, but investors are said to remain hesitant. Talks with P-E firms Leonard Green, Cerberus, and TPG have reportedly made little progress. Schulze is facing a Thursday deadline to deliver a buyout proposal. (Feb. 13 WSJ reportUpdate: Best Buy has pushed back its FQ4 report by a day to March 1 to if Schulze makes a bid.

  40. phil

    And what was the difference between early 2012 and early 2011 on StJs chart?  Very obvious from this one:

  41. stjeanluc

    Free money forevah Phil!

  42. albo

    UNXL -Thanks, randers1. UNXL has had quite a move.
    I've been long PANL for several years.  I like their OLED patent portfolio and their relationship with Samsung.  These are the same guys who founded IDCC.

  43. mtyyen

    Thank Phil, Savi, and stjeanlu for answering my questions.
    You are so great.  It is a warm community.

    Nice!!!
    I am still reading the new members' assignments, including last month posts….  But you are very helpful.  Thank a lot.

  44. hemas03

    Burrben/CHL,
    lucky you, my order for that same put did not fill (yet)…

  45. escohen5

    IOC — Yodi — I've been selling premium on IOC, on and off, for a couple of years.  As StJ said, crazy premium.  I approach it very carefully.  When you try and do some research, no help.  Half the people think it's OK (there is some Soros connection somewhere?), and the other half think it's a scam (see above).  

  46. wavecounter

    Phil – On the EWZ Income Port. trade, are you suggesting: ?
         Sell 20 Jan15 26 Calls
          Buy 20 Jan 15 21 Calls
          Buy 20 Jan14 27 Calls
          Sell 20 Aprl13 25 Calls

  47. stjeanluc

    IOC / Esco – I guess that scam fear is what drives the premium crazy high. On the other hand, news like this one is perplexing:

    Reuters reported that Royal Dutch Shell PLC said it is in talks to buy into liquefied natural gas producer InterOil Corp's Papua New Guinea exploration licenses and LNG terminal. 'In Papua New Guinea we have been in discussion with various parties in the country' Shell CFO Simon Henry said in a transcript provided by the Company. InterOil declined comment on the discussions. 

    Why would Shell get involved with a scam company? We'll see. As you caution is warranted when you see this kind of money on the table!

  48. yodi

    stj
    As you now mention IOC as well I let you know how I have been playing this MOMO
    I hold 600 stk since Jan12 playing sometimes 6 month callers further out  again the stock making sure you have a downside protection of 15 to 20% great premium!
    My latest set up is a synthetic play as the stock does not pay any div. and is just there to cover your ass.
    Jan15 vertical 50/65
    paid by a Jan 15 40 p
    against this set I have been selling 1/2 callers latest Jun 70 c for 7.60 now 11.55 well rollable to anything but the normally run worthless.
    As I said not a game for any one but better than playing poker against Phil !!!!! I clocked up about 16K in my small way of playing. Since Jan12

  49. yodi

    Just watching the pope taking off in his limo. There are more red caps walking around than Germany has unemployed people. I wonder where they get the money to feed them all. Could they have a finger in my business in Mexico or the airport in San Juan?????

  50. yodi

    Yesterdays LVS play looking good!!!

  51. escohen5

    IOC — StJ — Yes, that's the problem.  There's always some "big announcement" that the company is about to make, based on some negotiation with this company or that, or the government, or whatever.  The price could go up to 99 (like it did in September) or back down to 40.  Small positions only!

  52. Opesbridge

    Burrben / guns and ammo trade
    Without getting into the issue, I understand how gun people think.  I believed the gun buying was predictable and not ironic.
    When Ruger dropped several percent after the shooting I posted a suggestion to short RGR puts (which I did personally and so far, so good).
    But I agree with Phil those are fleeting events and not good for the Income Portfolio at this point.

  53. yodi

    Phil Thanks for your comments on GOOG looking forward what play you suggest on the official play. I feel even that in my example I am down we still have more than 20$ of premium to burn, so my way watch and see.

  54. terrapin22

    mtyyen / AC conference – send me an email and i will give you the details.  thegeneral91@gmail.com

  55. jabobeast

    Phil—are you surprised that PCLN is almost back to where it was trading before earnings?

  56. Gingbaum

    hey Phil,
     
    whats your thoughts on CVC?  Looks like they got hit hard today, with a huge amount of debt. Looking to take a long position, thoughts?

  57. Burrben

    I want
    Dell 29" monitor
    (asus is coming out with one too)

  58. terrapin22

    PSW Investment Conference at Harrah’s April 27-29.  Only 2 months to go!  We now have 11 members signed up.  The conference link is in Phil’s main post Tuesday morning.  Email me with any questions: thegeneral91@gmail.com.  It sounds like angelcur, mtyyen and jromeha are interested.  
    Craigzooka
    Stjeanluc
    ban2
    jelutuck
    escohen5
    yodi
    terrapin22
    rperi
    qcmike
    savi
    rexx

  59. yodi

    Any one has a good site were to pick up earning dates as TOS, Yahoo and Morningstar does not show earnings dates on GOOG as they do not pay div. Only at yahoo I could fish out that ther last quarter was Dec 12 so asuming Mar 31st. Thank you

  60. Jordan

    Phil, a more abstract question, if I may: suppose you have an option that used to be in the money but due to a sudden move in the stock is now way out of the money.  I am talking an option with time to expire of a month or so left, but it's priced at 5 cents now.  What do you do?  Close it? (I am thinking, I would sell it, if I had no position in it).  On the other hand, I am also debating waiting for a move in the opposite direction to cash out at say 10 cents, if that is even possible given the circumstances.  What's your preference?

  61. phil

    Dollar jumping to 81.96 – keeping a lid on things.  

    Oil and metals falling bit silver and copper had nice runs so no complaints and we'll look for re-entries if Dollar rejected at 82.  Nat gas was about as expected:

    EIA Natural Gas Inventory:  -171bcf. Futures +0.31% to $3.45.

    FAS Money – Now I'm worried we don't get our short calls so let's at least grab $1,000 by selling 5 of the next week $151.50 calls for $2 but we still want to sell the March $150s if they hit $5 as well.  

    AAPL Money – Well, no help from the meeting yesterday but no damage either.  

    $25KPM – We're playing bullish by not covering the Qs, which will make more than the SQQQs lose and IBM is right on track so the balance is the XOM puts that tilts us bearish for the moment.  

    $25KPA – OK, let's do a big review:

    • AAPL – Tempting but not ready to give up on March calls yet. 
    • SQQQ – The short calls are fine and the spread makes me sleep better. 
    • GOOG – OK, what have we done?  We have a $30 spread that's hugely in the money (+3,000) and we have a $100 spread that's also in the money (+23,000) and then we have 6 March $750 callers we sold for $45 (-$3,000) and the 3 June $700s we sold for $52 (-14,400), which is our real problem.  So the real question is, should we just shut this down and make money another way or is GOOG a good place to sell short calls?  
    • I'd like to give them another chance to drop into expirations and I'm not too worried about them going higher as we can add 2015 $800/900 bull call spreads for $40, which gives us lots of headroom and we can simply flip our 6 Jan $700/800 spreads (net $63) to 9 or 12 of those.   So, same as I said to Yodi above – better to let this play out a bit as the 6 short March $750s (now $56) can be rolled to the April $570s (now $50) for little or no money without even adding to it and, if we can roll the short calls up $20 per month then all we're really worried about for the year is that GOOG stays under $900 as we have $160 worth of rolls ahead of us.  Since we can take the April spread as a given at $30, we may as well add 3 of the 2015 $800/900 spreads now and that will be our "roll" when we cash in the Aprils, giving us another $60 of upside protection and THEN we can get more aggressive with the short $700 callers but, for now, they are protecting our longs from a drop quite nicely.  
    • IBM – Steady as she goes.
    • FFIV – StJ is right, may as well clear the spot. 
    • VMW – I agree that the April $105 caller isn't coming back but I'd ask .05 for it just the same.  Otherwise, why bother selling it at all?  At this point, we need VMW to be bought.  Did we really pay net $5.07 for a $2.50 spread?  I'm not sure how that happened.
    • FB – GRPN not helping them today. 
    • EXPE – Behaving itself
    • AKAM – Yawn.

    All in all, not so bad.  

  62. yodi

    terrapin22
    Seeing your list of 27th April I wonder if I can make it in time as a poor Mexican due to US Gov. cuts tomorrow I will be standing in the emigration line for three days!!!!

  63. phil

    Looks like $28.60 is holding up on Silver (/SI) so a good spot to go bullish.  Same with $3.55 on copper.  Dollar currently 81.89 so just make sure it doesn't creep over 89.90 on you. 

  64. stjeanluc

    Earnings / Yodi – Try http://www.earningswhispers.com/

    GOOG – 4/18 but not confirmed.

  65. albo

    yodi – Briefing.com shows GOOG next earnings date as April 28 after the market, but shows that it is uncomfirmed at this point.

  66. stjeanluc

    VMW / Phil – Not a spread now. We used too but we bought back the caller. So now we are left with a long call/short put somewhat synthetic!

  67. stjeanluc

    AAPL / Phil – Of course going nowhere is good for one thing – premium burn….

  68. yodi

    Albo STJ thanks for info on earnings must put them on my desktop regreat do not have as many sceens as you STJ would not know where to look first (8

  69. yodi

    Can any one take AAPL out of the deepfreezer they move less than MSFT

  70. dclark41

    stjean
    I think Phil wanted that XOM trade from this AM.
    "$25KPM – We're playing bullish by not covering the Qs, which will make more than the SQQQs lose and IBM is right on track so the balance is the XOM puts that tilts us bearish for the moment. "

    From the AM post:
    If you want a speculative short on oil, try XOM, who haven't topped $92.50 and are struggling at $90 and were $75 on last year's drop in oil and $65 the year before but the July $80 put is just $1, so a very nice risk/reward profile on those puts!   I like that one because XOM can go lower even as the rest of the market goes higher but, on the other hand, it's very unlikely to go higher while the market goes lower, which makes it a lovely hedge.  So I think we'll add 10 of them to our virtual $25,000 Portfolios as we'd be happy to press that bet if XOM does pop to $100 as well.

  71. phil

    Income Portfolio Additions:  

    AA always fun to buy at $8.50, the 2015 $7 puts and calls can be sold for $2.95 for net $5.55/6.28, which is a whopping $2.22 off the current price (about 25%) and plenty of room to sell calls so let's get 2,000 of those to start and sell 5 of the April $8s for .66 ($330) as they either make good protection or we will roll them to 2x July $9s (now .33).  

    CSCO is a good 20-year hold so $20.80 is a good start and we can sell the 2015 $20 puts and calls for $5.65 for net $15.15/17.58, so about 15% off if put to us and 1,000 longs pays us a dividend of $560 on the $15,150 we lay out, which is a lovely 3.7% while we wait.  I'm not inclined to sell calls yet because, if they break up we'll get more money and if they break down and the VIX goes up, we'll get more money so better to wait and see which way they go.  

    AGNC held $31.35 so right where we wanted them, now $31.76 but that's fine as the 2015 $28 puts can be sold for $5.30 so who needs the dividend and we can sell 10 of those).

    AAPL 2015 $350 puts can be sold for $34.75 and the $350/450 bull call spread is $51.50 so net $16.75 and about $80 of cash and ordinary margin (but a $500K Portfolio should be using PM, of course) makes it worth taking 5 to make $41,650 if AAPL holds $450.  The downside is owning 500 shares of AAPL at net $366.75 for $183,375, which would use up $90K in margin (out of $1M) on the stock and, then, of course, we could cover it with $100 calls and then we're down to around how much cash AAPL will have in the bank by then ($240Bn) in value. 

  72. rperi

    BRK.B – From March of last year, I sold 2014 $70 puts for $4.51 and bought the $75/85 bull call spread for $6.01 for net $1.50 on the $10 spread.  Spread is now $9.48 with the puts at $.75.  Silly to hold through earnings and then through Jan for an additional $127 (15%).  And suggestions for earnings plays or a new play?  They're not cheap right now so probably best to walk away I am certain. Probably just answered my own questions. Thanks Phil!

  73. dclark41

    st.jean
    Just a friendly reminder.

  74. albo

    Oops !  Yodi, briefing also shows April 18, not the 28th.
    Speaking of MSFT being a slow mover, take a look at CSCO & INTC.  Both hit 21, then pulled back.  Talk about two turtles in a race.  Must say that I like them both for moves up this year, tho maybe in the second half.

  75. Burrben

    Darn, so much for buying TASR today at 7.05.  It's up 5% to 7.40.
    I put my orders in though for the 7.05 GTC.  If that fills, then sell the Sept 7.5 straddle…..

  76. stjeanluc

    Thanks Dc… Portfolio update after the close.

  77. wombat

    Phil / SDS
    Thanks ! Makes a lot of sense – I ripped it for the book ( I'm also keeping stuff in a separate doc that we can collaborate on when the time comes )
    Yodi / Earnings 
    I use Yahoo Finance – dont seem to have a problem 
     

  78. stjeanluc

    IOC / Yodi – Looking at it more closely, there is definitely something a little smelly there! Soros bailed out back in November. I would certainly not own the stock as the downside looks serious there. But selling naked calls with this level of premium might be an option (no pun intended). I'll have to look into it!

  79. zeroxzero

    Phil / Super Premium Members — I have a suggestion for you, would require a little more technology which you could supply as part of the new subscription plan:  http://www.ft.com/intl/cms/s/0/422e4e8a-8197-11e2-904c-00144feabdc0.html#axzz2MDNaSJ00
     
    "Telepathic rats solve problems together  
    Study is first use of technology to transmit animals’ thoughts

  80. Burrben

    Phil / TSLA?
    Selling the Jan15 23P, buying the 30-42 Bull Call.  IB is showing a midpoint of 1.17 on the trade.  It was 0.00 a few days ago… 

  81. Burrben

    Yodi / GOOG
    Here are the earnings from LiveVol.  You read the data in "column" format.  The next date isn't confirmed yet…
    GOOG Past Earnings

  82. yodi

    stjeanluc
    IOC Soros bail out at least the stock has gone up considerable but you need to always look at a range between 50 and 75 at least I still think to hold on to the stock I entered at 58 to liquidate my callers They great to roll aswell

  83. jerconn

    Phil – don't look now, but PCLN would have been a good long put yesterday…too bad but I doubt they're going down much further…

  84. dawnr

    GG (goldcorp) short Jan '15 $30 puts at $4.70 worst case you own it for $25.30…it has not seen that price since 2009. (note Gold may still fall so layering in)

  85. phil

    BBY/MJJ – Not spooking people out so far but certainly it's a huge risk into tonight. 

    You're welcome Mtyyen.  

    EWZ/Wave – Yes, the Jan $14 $27s are really there just to cap margin for the IRA (some can't sell naked calls at all) on the original question but I think it's good to track that kind of trade for the IRA people to see how it works out. 

    IOC/StJ – It's not like everything is a scam – it's more the way they do their accounting and shuffle their cash around to make things seem better than they are (according to detractors – I myself have no opinion and just stay away).  That doesn't mean they don't buy and sell legitimate things – it's more the way they book the purchases and sales to possibly artificially inflate the value of the company.   In fact, if you were running a scam, a few legitimate transactions like that to point to are just the ticket to keep things looking legit…  Anyway, Sam told me about them this Summer and I too had trouble getting a clear picture so I just moved on but they dropped from $90 to $50 in the fall and now back to $75 seems more like a bounce than any sort of proof Sam was actually wrong and they're suddenly good for $90 again.  

    Red caps/Yodi – That's what they pass the plate for.  

    Guns/Opes – We loves our guns!  

    GOOG/Yodi – Thanks, a very tricky one. 

    PCLN/Jabob – Not at all.  Just under $700 was the target of our trade and they did better than we thought they'd do in Europe but, apparently, it was already baked in.  

    CVC/Ging – To some extent, I think cable will go extinct over time, stripped down to simply whoever can deliver the web to your home the cheapest.  If they ever get WiMax or something like it working, then what's the point of cable companies at all?  If you can't be sure they'll be in business for 10 more years then their debt will never be repaid and you are investing in a BK company.  That's why I stay out of that space – I'm too much of a futurist to be comfortable with dying tech.  I even worry about VZ Fios, though clearly that has many more years ahead of it than cable. 

    Dell/Burr – Wow, that's cheap.  

    Earnings/Yodi –  I like http://www.earningswhispers.com/ – usually they get the scoop first and they print the rumor (GOOG is 4/18) with the note "not confirmed", which is nice to get a vague idea.

    LOL – and what StJ said!  

    .05/Jordan – Well it depends.  With our VMW call, for example, there's pretty much no possible way they don't expire worthless in April so I'm happy to get .05 to at least pay the commissions off but below that is insulting and I'd rather keep it. If it were the AAPL tomorrow $475s, now .05, I might want to hang on as AAPL could move $30 in a day but if it were the PCLN tomorrow $730s, I might want to sell the  $700s for .50 as I super-doubt they break it tomorrow so why not collect the .50 instead of .05?  In other words, there's no such thing as generic.  

    3 days/Yodi – You have to fly to the border, make a run for the fence, then take a flight up from Texas – much faster.  

    VMW/StJ – Ah, very messy. 

    AAPL/Yodi – Today doesn't count (pinning).  

    XOM/DC – I just think it didn't make this update yet.  

    BRK.B/Rperi – Man did those guys get away.  I was liking them whenever they were about $85 but not cheap now.  I'd keep the short puts (unless you need the margin) and cash the spread but hard to get excited about t new play here.  The don't even have good premiums to sell, which is what keeps them out of the Income Portfolio even though I do love them. 

    TASR/Burr – They are very up and down, maybe we get lucky on another pullback. 

    You're welcome Wombat.  Thanks for keeping notes.  

    IOC/StJ – I don't think people realize I spend a lot of money taking people out to dinner to find out things like that!  Sam and I could have saved Soros a bundle on that one. 

    Telepathic rats/ZZ – Great, and before I was just worried about being wiped out by robots…

    TSLA/Burr – What's the question?  Not so strange that it changed.   Momentum was down, is now not as down.  

    PCLN/Jerconn – Walk away before they hurt you!

    GG/Dawn – Good price but ABX in same spot is better deal. 

  86. Jbur

    CSCO/Phil:  
    Nice trade you put up for the Income Portfolio. Also, what do you think about The Jan15 20/25 Bull Call for $1.80, selling the Jan15 20 put for $2.89? So net $0.90  credit on the spread? It obviously caps the upside, but not a bad trade.

  87. yodi

    Phil 3 days I like that one just have to keep an eye out for the dogs!!!

  88. dawnr

    Phil, on GG I have been playing that one for a couple years so feel comfortable with it…but see what you mean on ABX.  thanks for looking

  89. Savi

    Phil--EWZ or EWG—--just making sure as the  numbers match EWG --thanks

  90. stjeanluc

    Chicago PMI inside numbers:

    http://www.bespokeinvest.com/thinkbig/2013/2/28/chicago-pmi-surprises-to-the-upside.html

    Looking good…

  91. stjeanluc

    Phil – Sent you an email yesterday about the portfolios.

  92. stjeanluc

    Quote of the day:

    Jeff J. Lin, “Much is made of genius and talent, but the foundation of any life where you get to realize your ambitions is simply being able to out-last everyone through the tough, crappy times — whether through sheer determination, a strong support network, or simply a lack of options.”  (Jeff J. Lin  via @firstadopter )

  93. stjeanluc

    Some Buffett-like stocks:

    http://alphanow.thomsonreuters.com/2013/02/idea-of-the-week-three-bend-it-like-buffett-stocks/

    We’ll focus on three names from this list: Hershey (HSY.N), Parker Hannifin (PH.N) and Rockwell Automation (ROK.N). Each of these possesses not only all the characteristics that make it potentially of interest to Warren Buffett, but also some other characteristics that might make them of interest to investors. Clearly, Warren Buffett chooses stocks that he believes will outperform the market in the future, but it is worth noting that each of these three has outpaced the S&P 500 (in terms of total return) over the last decade, a performance that may well be linked to the characteristics we have identified.

    Unfortunately, no LEAPS for ROK as they look interesting.

  94. livingfull

    Hello Phil…..no I am not deceased.  None stop traveling.  Off to Port of Rotterdam next month.  Home for a rest.  West Coast shipping update.  For what it is worth, piece of the puzzel.  San Francisco had the busiest Jan since 2007…ship count wise.  Feb in Long Beach failry good…normally worst month of the year.  For the first time in 7 years we see the beginnings of an uptick in ships/cargo on the West coast.  Two months does not necessarily make a trend but not insiginificant that it is the first two months of uptick in many years.  May be something to watch.  be very interested to see the rail use count from the west coast.  Although may be tough to discern from the significant increase in oil movements on rail.  Maybe the first signs of real industrial recovery in many years…..final first quater data will be the true indicator.  I keep following the threads in my travels.  So up to date portfolio wise protecting gains….and thanks again for that!

  95. Turning1

    Phil what do you think of Sony with Playstation 4 coming out soon? My kids and their friends are all excited about it and cant wait to buy Playstation 4 when it comes out.

  96. Amalfi

    You guys should read this… what a riot!!!

    http://moneymorning.com/ob-article/jim-rogers-major-crash-ahead.php

  97. qcmike

    stjeanluc 
     
    Thank you for keeping up with the portfolio
    Question:  how do you use LEAPS?
     
    Thanks

  98. albo

    I added a small BCS on AAPL.  I'm probably wrong, but I think that AAPL will soon make some meaningful moves to return cash to shareholders, just not on David Einhorn's schedule.  To have announced at the annual meeting would have seemed to be reacting to Einhorn.  Also think the disappointment following the annual meeting and "hype" and then "dis" by Kass is now behind us.  Doesn't seem like expectations can go much lower for the stock.  May not move up right away, but I think Phil's right about the 1-2 year outlook.  Keeping some powder dry in case AAPL disappoints, or in case we get the much advertised correction.  Just my 2 cents.

  99. jromeha

    Phil- your favorite hedge still sqqq? Also, assuming you love apple here?was thinking of buying the EOM March weekly $430 call for 23.30 and sell weekly against it to lower cost basis…. Thoughts. Thx

  100. millcreek

    phil…………once again ……tks……..im going to keep trying../ learning………

  101. Burrben

    Phil / EWZ or EWG
    I think you need to clarify which ETF you are making this trade on.
    EWZ is the Ishares Brazil and is trading at $55.x
    EWG is the Ishares Germany and is trading at $24.x
    In the post you say you want to stay away from Europe, but you list strike prices for the EWG the ETF in Europe.  I think you want to put on a bull call spread on EWZ, but then the strikes would be in the 50's.  
    Anyway, can you do a repost of the correct trade in the Income Port?
     
     
    EWZ/Harip – I like them as they've had a nice pullback and inflation should lift commodities over time.  EWG is still in Europe and I'd stay away from Europe through the Summer at least.  At $24.70 in an IRA, you can simply pick up the EWG 2015 $21/26 bull calls spread for $3 plus the Jan $27s for .85 and sell the April $25s for .60 which makes the extra calls practically free with just a $2 margin on the spread and the plan, of course, is to use that long combo to sell another .25 per month for 8 more months ($2) and pretty much pay for the whole long spread.  
    Of course, if EWZ takes off on you, you already are +$2 on the bull call spread and the Jan calls are only $2 over the caller so you have no upside worries at all.  So, rather than buying 500 shares of stock for $12,350 and hoping to make $2,500 on a $5 gain (20%) – you can buy 10 of the spreads for net $3,250 and hope to make $5,000 plus additional sales if EWG simply makes it to $26.  Let's do 20 of those in the Income Portfolio as it's a good example of working this kind of play

  102. Burrben

    Phil / TSLA
    The question is; Is that the spread that you want in the new Income Port as the offical trade, or something different?

  103. Amalfi

    More doom and gloom… STAY CALM!
    http://moneymappress.com/pro/Pyramid0712MMR2YShort40.php

  104. stjeanluc

    LEAPS / Qcmike – We use LEAPS mostly in the Income Portfolio. Phil sells long dated Puts (Jan 2015) and sometimes uses the proceed to buy a Bull Call Spread. In my IRA I use them as the anchor for diagonals – buying deep ITM money LEAPS calls (Jan 15) and selling short dated calls against them since I can't sell naked puts in there. 

  105. wavecounter

    Phil / Additional Income Portfolio question.  As there were several trade recomendation under the "Income Portfolio", are we distinguishing trades from the "old" to the "new" income portfolio(s)?

  106. Jordan

    Thanks Phil, that's helpful.

  107. stjeanluc

    Income / Wave – All the recommendations from this week will go in the new portfolio which I have not setup yet.

  108. Opesbridge

    guns / Phil
    Very cute video!  For an opposing view see http://www.youtube.com/watch?feature=player_embedded&v=JM72klOt0jk

  109. zeroxzero

    Stj / J. Lin:  He should have put "liquidity" first on his list, rather than leave it off entirely.  I'm guessing he's not speaking from experience.

  110. stjeanluc

    Quote / Zero – Obviously not a complete recipe list to life. We have had that discussion before – luck has to be on that list as well!

  111. albo

    HLF- Halted.

  112. albo

    Two candidates by ICAHN to be added to board.

  113. phil

    CSCO/Jbur – Nothing wrong with that either.  CSCO does pay a small dividend so I thought the extra $1 was worth picking up over 2 years, especially when the goal is safety in the Income Portfolio, but either is a good alternative. 

    ABX/Dawn – A long-standing favorite.  Something like $220Bn worth of proven reserves (140M ounces) for a $30Bn cap means you can't go too far wrong with a long-term hold.  

    EWZ/Savi – EWZ is the one I like. 

    Email/StJ – I saw it but it took more than 30 seconds to answer so I put it in my "ToDo" box.  Will get back to you later.  Good Buffet list. 

    Yen falling hard – 92.69, Nikkei up to 11,615, Dollar 81.90, Euro $1.3087, Pound $1.5174.

    Hey Living!  How's the World looking?  Glad all is well and thanks for ship update.  

    SNE/Turning – I think it's a shrinking market.  Kids may be excited about it but it's all about phones, no one wants to be platform-restricted for very long.  My girls are totally off that whole thing but they drool over phones at the mall.  Jackie saves up for case after case and Maddie sits on her bed with a laptop, Ipad and phone all doing different things at the same time – how's a playstation going to compete with that.  I think that's something that the PC and Console game guys don't get – they are too demanding of attention and kids like to pay a little attention to several things rather than a lot of attention to one thing.  Jackie likes to sit at my desk when I'm done with work because she can open Twitter and FB and 2 skypes and play a game and watch videos while she's chatting with everyone.  If I made her go to the living room to play with the Wii – she'd consider it a punishment.  

    Rogers/Amalfi – Don't forget he packed up and moved to China 5 years ago on the same premise.  I guess he's still trying to make those losses back. 

    AAPL/Albo – No matter how many times I look for bargains, AAPL just keeps hitting the top of the list.  

    SQQQ/Jrom – As I noted, it's because we're AAPL-heavy but SDS is good too.  As to short-term AAPL plays – unless AAPL makes a move to a resistance point, I don't have any desire to just gamble on them.  

    No problem Mill – it's a two step process – mastering the tools and then learning which tool to use when.  

    EWZ/Burr – Oh no, now I see what's wrong.  I was looking at EWG's prices.  We certainly have to amend that trade then:  

    For EWZ in the Income Portfolio, it's the 2015 $50/60 bull call spread at $5, selling the $47 puts for $4 and that's $1 on the $10 spread that's $5 in the money.  The Jan $63s can be bought for $1 to knock down margin requirement (important for IRA like Harip had) and we can buy 5 of the longs and sell 5 April $56 calls for $1.10 ($550) and, in this case, we're in for net $450 cash and about $4,500 in margin with a $9,000 upside plus subsequent sales – not bad!  

    TSLA/Burr – For the Income Portfolio, I like the 20 2015 $30/45 bull call spreads at $6, selling 10 $28 puts for $6 for net $2.75 per long ($5,500) plus $9K of ordinary margin to make up to $20,000 at $45.  We can sell 8 April $36 calls for $1.25 for $1,000 more as well

    Picks/Wave – Any picks now are for the NEW Income Portfolio.  The old one is static and locked away.  

    And what StJ said. 

    Opposing view/Ron – Nowhere near as funny and also not at all true.  This is a brand new myth being spun (and very effectively) by the NRA.  Don't worry though – Ann Coulter has your back on this topic!  

    HLF – Poor Ackman…

  114. angelcur

    Yod/Cardinals Thinking that stuffing fingers into businesses is not generally the drop zone for these (DISIN)genuflectionistas

  115. Burrben

    History of the Federal Reserve
    Wow!  I was browsing around on YouTube today, and I just had no idea how the Federal Reserve actually ISN'T a Govt Agency, and instead was created by the richest people in the world at a secret meeting on Jeckyl Island.  I had no idea who the Rothschild's were or how the chairmen is elected.  Holy mother of all conspiricies!
    I can't believe that Kenndy was assinated after he signed a exec order to dismantle the fed…
    If you are interested, here are a few links:
    http://en.wikipedia.org/wiki/History_of_the_Federal_Reserve_System
    http://www.youtube.com/watch?v=HBe3metBJFA

  116. wombat

    Phil // AA
    I like this call but can break up the language for me – I'm a bit confused.
    AA always fun to buy at $8.50, the 2015 $7 puts and calls can be sold for $2.95 for net $5.55/6.28, which is a whopping $2.22 off the current price (about 25%) and plenty of room to sell calls so let's get 2,000 of those to start and sell 5 of the April $8s for .66 ($330) as they either make good protection or we will roll them to 2x July $9s (now .33).
    So, you're buying 2000 shares @ $8.50
    Selling Jan15 $7 Puts for $0.75 AND selling Jan15 $7 Calls for $2.26 for rough net of $3
    Then also selling the April $8 Calls @ $.68  ( for immediate protection and possible DD Roll to July 9's )
    Can someone advise me how to most efficiently place this in TOS ? I see the a similar setup again and again.
    This is a great learning trade ==
    Thanks — ///

     

  117. wavecounter

    Phil – Still confused on the EWZ trades & the quantities. Is this correct:

  118. livingfull

    Phil…. in Rome and Barcelona.  Inbetween protests you can hardly walk down the street. Everyone out and buying.   Can hardly get into a shop or restaurant.  Taxis non stop…trains full…hotels full…flights full…restaurants full  I asked the cab driver in Rome what's up…thought the EU was in crisis.  'We're Italian not European' he says 'we let tomorrow take care of itself.  Tonite we go out to dinner" 

  119. yodi

    womb
    first set up to buy the stock on trade tap than click on single order and than click first trgs seq than you place your vertical in the trade tap where you see single in the tradetap click vertical after you placed the 2nd order you reset the vertical to single again and you place the april call. with all you need to place limit orders so you get not fill market.
    But all this will take a bit of practic so I would first play on paper trade to see what happens as once you have set up all your orders you click confirm and send after that if you platform is set up OK you finally can click send hope this helps but you will not learn this from today till tomorrow!!!!!!!!!!!!!!!!!!!!1

  120. wavecounter

    Phil – Still confused on the EWZ trade & quantities.  Is this correct..?
    Sell 5 Jan15 60 Calls
    Buy 5 Jan15 50 Calls
    Sell 5 Jan15 47 Puts
    Buy 5 Jan14 63 Calls
    Sell 5 Apr13 56 Calls

  121. yodi

    womb looking at all this if you want to place a real order phone up the trade desk and go through with them it will be much easier

  122. zeroxzero

    Phil:  CCJ?
     
    "Economics and Water Security Drive Nuclear Power Push in Middle East
    Feb 28, 2013 04:15 am
    Acquiring potable water resources and maximizing the value of oil and gas resources are the two most salient reasons for the push toward nuclear power generation in the Middle East."

  123. Savi

    Burr—thx for making the ewc/ewj question clear—my shorthand was awful--sorry Phil

  124. Burrben

    wavecounter – EWZ
    If you are trading in a IRA, then yes it's correct.  It will lower the margin requirements.  That is what this leg is for:
    Buy 5 Jan14 63 Calls
    If you are trading with Portfolio Margin, then you don't need that leg.  It's a standard short put, long bull call spread, short front month call.

  125. wombat

    Yodi – thanks bud./
    I did phone up the trade desk and walked through it. They actually recommended a straddle on the right click and then you can get your net. Very Cool 
    I just wanted to make sure I was understanding the trade thoroughly before I went forward 
    Sounds like yes.
    Thanks !!

  126. yodi

    Phil PCLN I know you dumbed the play but I am still holding the full trade and I noticed some where today you told some one to get out and don't mess with it. My question is what do we do with the Apr vertical 710/750 do we sell further weeklies against it or close it down? TIA

  127. wavecounter

    Burrben – OK.  Thanks

  128. Turning1

    Good question Yodi. Got rid of my weekly today and still holding the Apr vertical 710/750.

  129. rperi

    So here comes the Sequester.  Got our hedges in place.  What else is there left to do?  Do we really believe a downturn may be priced in at this point? 

  130. yodi

    Turn PCLN well I think the weeklies are toast they will not I think  go up an other 13$ by tomorrow but that chance I will take . Question is do we make more money out of this or lose on the long call ??

  131. albo

    HPQ – Comeback stock of the year so far.  Up over 40% since Jan 1.  Guessing not too many still in it by the lack of cheering.  Good call, Phil !

  132. phil

    Fed/Burr – There's a book called "The Creature from Jekyll Island" – very good. 

    AA/Wombat – Buy the stock for $8.50, sell the $7 puts and the $7 calls for a total of $2.95.  See "How to Buy a Stock for a 15-20% Discount" by a well-known financial writer for more on this strategy.  There are three legs, buy the stock, sell the short straddle and sell short calls or, see yesterday's notes on legging in. 

    Good idea with Yodi – TOS has excellent helpers – especially if you bother them after hours when they're not rushed.

    EWZ/Wave – Yes, that's correct as I don't want to over-commit at $50. 

    Italians/Living – Now that's an attitude I can agree with!  

    CCJ/ZZ – Sure, that and the rampant proliferation of nuclear weapons makes CCJ a lock for growth.  

    Thanks Burr.

    PCLN/Yodi – I meant don't mess with it from scratch.  The other one, just let the caller expire and you're done. Depends on if you think it's worthwhile to sell again but it's always going to be a dangerous stock to sell calls against so we're back to take the money and run being the rational choice.  

    Dollar over 82 dinging equities and commodities.  Oil way down at $91.93, gold way back to $1,578, silver $28.48, copper $3.548, nat gas holding up $3.485 and gasoline $3.107 and maybe a nice long into the weekend – as usual but tricky with Dollar over the line. 

    Meanwhile, markets generally strong but volume dead at 61M on the Dow with 10 mins left. 

  133. Turning1

    Yodi
    I bought the weekly back for $300. Why take the chance.

  134. phil

    Sequester/Rperi – Anything can happen tomorrow or Monday but, if we get past Monday I think we're free and clear. 

    HPQ/Albo – I tend to lose interest once my main goal is met and we're safely on the way.  Not that I don't like them anymore but they are no longer exciting at $20 other than a long-term hold.  Congrats on it though, I am proud of that one.  

    Speaking of PCLN, my Mom just told me she got a great flight on JBLU from West Palm Beach to Westchester, NY on PCLN – not a place I'd usually think of flying but just as close as Newark and way less crowded.  You know that thing is everywhere if my Mom is using it to book trips!  

  135. yodi

    Turn well there you got Phils answer I prefer to buy back callers under .05 with no comission! So we will see. At the same time as PCLN goes up my long call is going up as well!!!

  136. albo

    SD – Reports after the close; could be interesting conference call in the AM, given CHK's disappointing sale in the Mississippi Lime area.

  137. rpme

    Less volume than yesterday and the day before.

  138. phil

    Transports right on 6,000 line.  We used to say 5,000 was very bullish.  

    VIX 15.30, TLT $118.50 and I'm tempted to go long there again.  

    Dollar 82.07 and poor AAPL back to $441.  

    Notable earnings after Thursday’s close: AIRMALALSK,BIDCLNECPNOCRMDECKDRHENDP

    GPSGXPHTGC,JOEKOGKYAKMCPMDRMDVNMENTMTZMXWLNGD,NOGOPTROVTI

    PANWRNDYRSTSDSLXPSONSSPLK,SSRITEGTESOUHSWRXTEXYOKU

  139. yodi

    Re. PCLN Just waited for AAPL to go up all day just .05 cents but down 3.17 again

  140. scottmi

    YPF – damn. i've been rehabilitating an old position and was up over $1000 in the black. now, back to just barely over even, not counting the time.

  141. zeroxzero

    I'm confused.  At the close, I bought AA March 8 2013 $8 calls for $ 0.54.  It was trading at $8.52.  So I get to buy calls with a duration of 8 calendar days / six trading days on an $$8.52 stock for $0.02?   Is that some kind of anomaly, do I simply not understand weekly options, or am I totally missing something?  It moved down 2 cents in the last 5 minutes, btw.

  142. partha

    Anyone here in ISRG – it dropped like a brick in the last 5min of trading – now at 520~ AH

  143. Canuck

    FB – what was that move in the last few minutes??

  144. stjeanluc

    AAPL / Phil – There was that article about a month ago who pointed out that AAPL's problem was a lack of buyers because it had been such a crowded trade. To a certain extent, it's still probably true. Checking back 6 months ago, you could not find a fund that didn't have AAPL in their holdings. I am guessing most of these guys have their fills now and don't want to add to their positions. I don't see another explanation right now – not valuation, obviously not profitability no matter what the margins will be. Yes, growth will probably slow down but as I pointed out before you can't grow and $500B company 50% a year – pretty quickly you own the world! But valuation is compelling now unless you already have your AAPL allocation.

  145. stjeanluc

    And keep in mind, a lot of people are fully (or near fully invested) now. Very few funds keep 50% cash on the sideline so they can't really jump into any opportunity.

  146. stjeanluc

    ISRG / Partha – No news right now. Really strange!

  147. stjeanluc

    ISRG – Look at the weekly 520 puts: $0.15 at 3:55, $11.40 at the close. That's what 10,000%. You could almost keep up with inflation in Zimbabwe.

  148. stjeanluc

    Here you go:

     

    Intuitive Surgical Inc. (ISRG), the provider of robots used in surgery, is being probed by U.S. regulators over the safety of its products.

    The regulators have asked surgeons at key hospitals to list any complications they may have seen with Intuitive’s robots, which cost $1.5 million each and were used last year in almost a half-million procedures. The doctors were also surveyed on which surgeries the robots might be most and least suited for, and asked to discuss their training, according to copies of the survey obtained by Bloomberg News.

  149. scottmi

    FB/Canuck – looks like FB gave some money to MSFT form some old/outdated web tracking tech. really pretty funny.

  150. scottmi

    DECK – nice pop AH!

  151. Burrben

    Zero / AA calls
    I don't really see anything wrong here.  You paid 0.02 of premium for the call that expires tomorrow.  The put is trading at 0.00×0.01, so put/call parity is maintained.  The delta of the option is 1, so actually I would say you over paid by 0.01.
    Here's a snap shot of my montage:
    http://imm.io/XJ5q

  152. terrapin22

    PSW AC Conference April 27-29 at Harrah's – Our block of 5 rooms is full now and we got a great deal at $279/$65 for sat/sun.  I will look into increasing our block but the financial risk is on me again if not filled and the rates will be higher most likely so not sure it's worth it. Current rates at the waterfront are $359/129 for sat/sun and at harrah's main buildling $299/$119.  Several members booked through the hotel website directly at a discount and the others used priceline (sorry Jabo!) or other third party sites.  So if you are thinking of coming to the conference I would book soon.  If you book directly through the harrah's website, I can bring you into the new block if we expand it and the rate is cheaper than what you got.  Thanks.  

  153. Burrben

    Zero / AA Calls
    Ignore that, I see you said Mar 8.  I'll look into it further.

  154. flkass

    Burrben/Zero / AA calls
    It doesn't expire tomorrow, it's still 6 trading days ahead (March 8). So the call price presumes that AA will not move above $8.54

  155. zeroxzero

    Burrben:  Thanks for your attention.  Here's the cut and paste from my trading page.  I can't believe it isn't my own misunderstanding somehow — it would make much more sense if it expired tomorrow — but the black letters on the page say "March 8", so I dunno.  I doubt I've made any groundbreaking discovery, I just need my confusion explained away.
     

    -AA
    130308
    C8

    CALL (AA) ALCOA INC MAR 08 13 $8 (100 SHS) (Margin)

  156. zeroxzero

    flkass:  If it's true, it seems like a lot of risk for some seller to take for .02 — I must be misunderstanding something.

  157. phil

    YPF/Scott – Not really a shocker on that one. 

    AA/ZZ – That happens sometimes with cheap stocks and no events planned.  It didn't move down really, the bid is .52 and the ask is .55 and your broker just gives you the worst case as a balance.  

    Alcoa Once Again Named Most Admired Metals Company in the World

    ISRG/Parthat – FEDERAL PROBE!!!

    [US] regulators have asked surgeons at key hospitals to list any complications they may have seen with Intuitive’s robots, which cost $1.5 million each and were used last year in almost 500,000 procedures. The doctors were also surveyed on which surgeries the robots might be most and least suited for, and asked to discuss their training, according to copies of the survey obtained by Bloomberg News.

    Could be a nice opportunity for us to get back into an old favorite.  Depending on what's real and what's not with this "probe".  

    BBY seems inconclusive so far. 

    FB/Canuck – They are buying Atlas Ads from MSFT, considered a good deal for them.  

    AAPL/StJ – Sometimes, a stock gets so low that you can't not buy.  I wouldn't be surprised to see Berkshire finally add it at this point.  At $414Bn with $137Bn in cash, they are $277Bn away from having more cash than cap and they add over $40Bn a year so 6 years away from that magic number.  So, essentially, AAPL pays back 15% per year in cash to what you invest – that's massive.  If they dropped 50% in returns, it would still be fantastic.  This is the same logic we used in finding stocks like HOV or SVU or SIRI (was .11!) or HPQ – who knows why people turn sour on things but they do and if they want to be irrational, there's not much you can do about it but accumulate your shares and wait PATIENTLY for sanity to return.  

  158. phil

    AA/ZZ – They go ex-dividend on the 6th so the calls have a .10 handicap!  

  159. stjeanluc

    AAPL / Phil – One more reason to always keep cash… Of course, with options you don't need to be fully invested to return 10% a year which is what most people would be happy with. So we always have cash ready for good opportunities. But that's not the case with everybody!

  160. wombat

    jfawcett // TOS
    thanks for the workspaces – i'm out of the country this week, but i'll check them out when I return
    thanks again //

  161. scottmi

    Federal Reserve – a concise Austrian review of the Fed's 2012 operations.

  162. partha

    Phil – ISRG – any point in bottom fishing – or wait for clarity ?

  163. scottmi

    GD – M.A.V.s.. our gateway to Minority Report.
    http://www.youtube.com/watch?feature=player_embedded&v=VwKWJLC6BwU

  164. Burrben

    Ok, this is just amazing.  I feel like I woke up from the Matrix.  I never knew any of this.  They are worth est 500 Trillion!
    World Banking exposed and the Rothschilds
     
    I feel like recruiting a team of ex-seals/delta force/etc, and start getting into some of their castles, etc.  I'm just stunned.

  165. rj_jarboe

    I was looking over the EWZ trade, noticing nearly all of the volume in 2015 today was probably PSW members. Then I noticed the 5000 puts at the $50 strike that traded today. Which one of you guys put that one on :)

  166. zeroxzero

    Burrben, Sensei  -  I appreciate the answers.   Ex-dividend — ah, these devilish markets!!  Another datum to file away — 10,000 hours indeed!  I guess with all the bots cruising in the zone, it's a fairly efficient set up, with no one likely to hand over free money to the dumb but lucky. And hope, as we should all know by now, is not a strategy.  But you never know about luck!!

  167. dawnr

    Phil, I like the SQQQ idea for my Roth.  Being new here not sure how you play it?  Do you use 2015 short puts, shorter term puts, bull call spreads or some other strategy? Trying to keep up with all you guys but somehow missed the idea when it hit the tape originally… 
    also, on your strategy where you sell long dated puts and then use some of the cash to do a bull call spread…for the newbie, can you tell me on the bull call spread are you using this play to make sure you capture the upside (in case price never gets to your strike and you want to go long)?  I guess it makes for a 'free trade' …is that the right way to look at it?
    Lastly, are you using technicals to time your entries?  Sometimes I look at the charts and feel yes, it may be 'cheap' but based on trend and other factors it has more room.  Maybe this is the trader in me and not the investor.  Welcome your thoughts on this…as example felt this way on AGNC idea.  Just Dec it hit the $28 range and current price seems a bit rich to me…Don't ,mean to be difficult, more trying to understand.
    Thanks, Dawn

  168. zeroxzero

    Burrben:  With all due respect, that video is just vile nonsense, just more anti-Semitic claptrap in the vein of the Protocols of the Elders of Zion.  500 Trillion??  That would take a lot of compounding — and given that 6 million Jews were killed  in France, Austria, Germany, Denmark, the Netherlands and elsewhere in Europe just 60 years ago, and the Rothschilds had many assets confiscated in Austria and elsewhere during the war, the math doesn't add up.  While Rothschilds themselves escaped being killed in the holocaust, their businesses now exist on a much smaller scale than in the 18th and 19th centuries, when they did in fact make loans to various governments, and did in fact pair with Morgan in backing the U.S. currency with gold during the Panic of 1893 in exchange for government bonds. 
     
    There are many branches of the family, and collectively they are still very wealthy, But consider that 1 Trillion U.S.Dollars is equal to 1,000 Billion.  Hence you are saying that the Rothschilds have a net worth of 500,000 Billion Dollars — 500 Trillion.  The entire GDP of the U.S. [est. 2012] is 15,600 Billion, or 15.6 Trillion.  Hence that video is claiming that the Rothschild family has a NET WORTH equal to 32 X the entire Gross Domestic Product of the United States. I dunno, dude, you'd think that kind of wealth would be hard to keep secret, but I guess you never know!

  169. stjeanluc

  170. Burrben

    Zero –  Yeah I really can't comment on that, it does seem nuts and a crazy amount of $$.  The video though illustrates how Central Banking was created, and how the elite control the system.  I guess I'm just so stunned since no one ever taught this to me, and I'm 40.
    Granted I make it a point to never follow politics…..   for me, it's a real eye opener.

  171. scotbraze

    PCLN/Yodi – for what it's worth, option – calc dot com shows option pain of $675 (which can hardly be used to predict the future) but it's nice to know 'they' win < $700, so there's a good chance of all being well, and as you said, the long position improves otherwise.  Also skewed with more putters to hurt, as is the case on AAPL with $450 option pain.  So in both cases, below that gives them plenty of premium to take.

  172. phil

    Good morning!

    Dollar up 0.3% and Futures down 0.2% and it's funny to hear all the theories on TV about why the markets are lower.  Japan is, of course up but pundits are baffled by that too.   I don't get it – are these people worried that they would be out of a job if they simply said "Sequestration is a form of debt reduction, which strengthens the Dollar and relatively lowers the price of equities and commodities vs. the Dollar."  I mean really, just say that and move on to another topic – would that be so hard?

    Oil got hammered, all the way down to $90.97 (and a good long on /CL for a Friday over the $91 line), gold not so bad at $1,566, Silver attractive again on the $28 line (/SI) and copper also good at $3.48 (/HG) but you have to be very happy with quick moves on all of the Futures and watch out for the Dollar over 80.30.  Nat gas testing $3.50 from below and gasoline also a good long off the $3.08 line on a Friday (/RB).

  173. phil

    Good summary Scott:

    The Fed can stave off inflation only as long as the banking system does not make use of its fresh reserves…  If the economy improves, the banking sector will increasingly loan out its reserves and bring inflationary pressure to prices. If the economy does not improve, the Fed will not be able to unload the low-quality assets on its balance sheet, and thus the inflationary pressures will remain. The so-called win-win solution to the crisis has become a lose-lose scenario.

    That's how I see it too – inflation is inevitable (and not entirely undesirable), just a question of when.
    ISRG/Partha – Have to wait until we understand what exactly this probe is and how it could impact ISRG.  There's a very good chance this is merely an attack on the company as they have been sued and called unsafe before so now there is an official FDA probe but, if they end up deciding the risks are acceptable (and they are as the surgery itself is so radically superior for patient outcomes), then this could really backfire on the bears in an Ackmanesque kind of way (my new term for bearish raiders who have a scheme blow up in their face). 

     
    The surveys were sent to hospitals that belong to a product safety network overseen by the FDA. What the agency is trying to determine is whether a rise seen in incident reports sent to the agency are “a true reflection of problems” with the robots, or the result of other issues, said Synim Rivers, an agency spokeswoman, in an e-mail. “It is difficult to know why the reports have increased,” she said.  Incident reports are sent to the agency by patients, medical professionals and companies. They “can contain incomplete, inaccurate, duplicative and unverified information,” Rivers said.
     
    While the number of adverse-event reports to the FDA is small compared with the total number of procedures, the agency’s reporting system has in the past served as an early warning system on concerns about medical-device safety.  “One of the risks is that the FDA could recall parts of the product or certain instruments, or somehow put restrictions on certain surgeries,” said Michael Matson, an analyst with Mizuho Securities USA in New York. “But I don’t think that’s very likely.”  A rise in adverse events isn’t necessarily alarming because the number of surgeries done with the robot has been growing rapidly, said Matson, who is based in New York and has a buy recommendation on Intuitive.

    So, very tempting to go long on this news and maybe we'll find some over-priced puts but I'm hoping for a 20% drop, not a 10% drop but this "news" really doesn't merit it and I wouldn't be surprised to see a very quick recovery off yesterday's dip. 
    MAV/Scott – Cool, scary stuff.  Those annoying bugs in your home may actually be bugs.  Oh well, at least that settles the gun control debate – now it's robot control you have to worry about.  
    Matrix/Burr – Don't believe everything you read. $500Tn – PLEASE!  Do the match, not even remotely possible.  Rothchilds real and powerful but have become the bogeyman for anti-semites for generations – the original "Jew bankers."  If you want reality, there's a fairly well-balanced article on them in Wikipedia.  
    EWZ/Rj – Yep, 5,000 is a lot – I could have sworn I said 5… 8) 
    AA/ZZ – If something seems too good to be true – assume it is.  

    SQQQ/Dawn – Always keep in mind that ultra-ETFs decay over time so you don't really want to go very long on them.  Our recent SQQQ trade was simply to guard against a near-term pullback off the Sequestration, not a major hedge.  In our old Income Portfolio, we were using TZA as it has gotten so low, the risk of it going lower had minimized so we were comfortable with the July bull call spread and you can still pick up the $10/15 bull call spread for $1 and you can offset that with selling a put on something you really would like to own if the market falls 20%, like ISRG 2015 $300 puts at $13 and you can sell 8 of those for $10,400 and buy 100 of the spreads for $10,000 and you have $50,000 worth of protection through July but, of course, you have to REALLY want to own 800 shares of ISRG at $300 (now $510).  Another way to play it is JUST take the spread and consider it insurance that you expect to lose (so make sure you expect to gain much more than $10K in a flat or up market) and then it's a simple cost of doing business AND, if the market goes up a lot – you can roll it long before it's worthless or sell some puts (the TZA Jan $7 puts are .30 and the Jan $9 puts are $1.20 so if you can sell the $7 puts for $1 on a dip – that's not a bad deal).  
    Also, of course, any of our new Income Portfolio short put plays make nice offsets too. 

    So yes, a "free" trade is exactly how you look at it when you have the margin to support the insurance.  As StJ said, we tend to stay half cash because we know how to make far more than 10% on our money so margin is not (and should not) be an issue.  I may not WANT ISRG at the moment in my $1,000,000 portfolio but, if some fool wants to sell it to me for $300 a share – I'll be happy to buy $240,000 worth of it (12% of my margin) and make it a significant holding.  If I never get that bargain, then I had free insurance and no ISRG and the net margin on the short puts is really about $30K so I would plan on needing $100K to cover it long-term (assuming a drop to $400 along the way) and then, if it actually does drop to $400 and I decide I must get out, I'd lose about $20 per put ($16,000) and my insurance would no longer be cheap but it's also not going to destroy my Portfolio and, of course, I still have $224,000 worth of that allocation to go bargain-hunting with.
    One thing that makes your decisions easier over time is getting the confidence that it's very easy to make back $16,000 with $224,000 worth of buying power so we take the theoretical 100% loss on the short puts and move on.  

    Speaking of moving on – Dollar up and Futures down some more – obviously, commodity bets are off as Dollar now 82.40. 

  174. jomptien

    Phil/AAPL, I have March 435/425 BPS selling 435 put.The 435 were sold for 2.77, now 7.10. Should I roll this now or wait-looks like the pre mkt price is below 440. Thinking of rolling to April 415's for around .80 credit. Wait or roll?
     One of the best things I learned from you is patience, now a little thin here. Thanks

  175. phil

    Technicals/Dawn – As a fundamentalist, I could care less what the technicals are in making a buying decision but they are useful for timing entries and guessing a good entry price.  I "use" technicals because over 90% of the sheeple do so it would be silly to ignore them since the simple act of so many people following them makes them true but, on occasion, I am more than happy to ignore them – especially when I'm worried that an opportunity, like selling puts on ISRG or AAPL, may be reversed and never seen again.  When we scale into positions, we have so much leeway to make a mistake – it's not that important to perfectly time an entry.  That's another thing that will both free you up and relax you once you get used to it.  

    Going back to ISRG – So we sell the 2015 $300 puts for $13 and net in at $287, which is nearly 50% off the current price but, if ISRG actually drops $300 by January, then we could assume that the 2015 $300 puts would be about the same as the Jan $500 puts ($58) but those can be rolled to 2x the 2015 $370 puts ($28) so figure we could roll our 2015 $300 puts to 2x the 2016 $150 puts and our net entry would be about $145 on 1,600 shares ($232,000) and then, EVEN IF ISRG drops all the way to $145 and we get assigned, we're only going to sell the 2017 $120 puts and calls for (using V now to check approximate prices as it's $158) $50 and then we're in ISRG for net $95/108 with a "worst case" being that we end up with 3,200 shares of ISRG at net $108 ($345,000).  So, the bottom line is – if you aren't going to be HAPPY to own 4 shares of ISRG at $108 down the road – why on Earth would you sell a $300 put for $13 (net $287) now?  

    Keeping in mind that ISRG is at $500 now and we're talking about near-bankruptcy at $108 – it's not too likely and that's the whole trick – avoid picking stocks that you can even remotely imagine being out of business in 10 years and also – try to steer clear of stocks that have even the tiniest chance of suddenly dropping 40% (as we can handle gradual drops just fine) and you will do just fine.  Also, note that we're not even accounting for selling calls or buying puts or hedges in this example – this is just a very simple allocation system to scale into a position over time.  

    And what ZZ said re. Rothchilds.  Of course, if you HAD that kind of wealth, then you would be exactly the kind of person who could keep it secret but the interest on $500Tn alone, even at 2%, would be $10Tn so it would drain 15% of the World's GDP just to keep your assets in the bank and, if you were so evil as to attempt to make a 4% profit on your money one year – you would collapse the Global economy.  So – just silliness for people who neither understand math or finance but love to have someone to hate.  

    This one is much more accurate:

  176. Burrben

    This is pretty cool.  The impact of News Reading Algo's and the Chicago PMI yesterday
     
    I love nanex research

  177. phil

    Big Chart – Should get another drop test today.  Will be bullish if we avoid last week's lows.  

    Judge/Diamond – Nice payback.  Shame on AAPL for not playing just as dirty. 

    AAPL/Jomp – A bull put spread?  I hate those things.  Well, you have 2 weeks and I guess you have a profit on your long $425 puts (now $4) but, of course, it's nothing like the loss on the short $435 puts you sold.  I think I'd give it the weekend but the proper thing to do is take the money on the long $425s and then you have a short, naked $435 putter who is still all premium and you have about $7 in your pocket so unless you think AAPL will finish below $428 in two weeks – the best thing to do is wait and see what happens, rather than giving your short putter another month to burn you – just because he's "close". 

    News algos/Burr – Yep, we'll all be obsolete in about 10 years so enjoy it while you can.  

    Woops, Dollar rejected at $82.40, now 82.35.  Gold a nice play at $1,570 (/YG) and still Silver $28 (/SI) and still copper $3.48 and gasoline $3.08.  82.35 is the on/off switch for the bull bets, as are those support lines.  

  178. 8800

    In your great ISRG put discussion (7:43 AM); what does using "v" to check prices mean?
    Thanks

  179. phil

    V = Visa.  In other words, it's an abstract to think about what I can sell ISRG puts and calls for if ISRG were to drop to $150ish so I find another stock that's actually at $150 and figure those puts and calls give me a pretty good indication of what I can expect to get for a 2-year spread.  

  180. dawnr

    Phil, 
    thank you for the thorough response(s).  I joined this group last week to take my education to the next level. the school i am involved with very good at calling out levels but very little live trading and little help in managing a position going against you.  
     
    I like the combo of knowing where the major levels are coupled with your approach to getting in. learned alot this week.
    thank you!

  181. phil

    You're very welcome Dawn.  

  182. yodi

    GOOG down 3$ AAPL down 7$ quite funny

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