Comment by phil

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phil
October 22nd, 2014 at 4:53 pm

Cramer/Albo – Human weather vane.  

Learning/Pirate – That's why we strongly recommend paper trading for a few months in the New Member's Guide – it's a lot of stuff to take in, that's why Med students practice on cadavers too and law students do mock trails – this is serious stuff you don't want to screw up when it's real.  If you'd like to review a couple of mistakes after hours we can go through them – good learning experience for all that way.  

Kudlow/Yo – I'd pay to see that show!  

Direction/8800 – I think I have to give today a pass as it was driven by events in Canada (whatever that is) and we held up our obligatory retrace.  But, as Rustle notes, what we really care about is how fast the oversold condition on the NYMO worked off on this small pullback.  If we get a quick move to neutral, then this is likely to be a very minor pause on the way back up but, if we're still oversold after today's action, then we'll look for the full 2% retrace (another day like this, at least).  

YELP/Rustle – Ouch indeed!  

Yelp results top forecasts; shares down on sales outlook

$5Bn for that company – people are on drugs!  

IRBT/Scott – March $28s are about $8.20 and short Dec $33s are $4 with IRBT at $36.  Yes to 25% premium, 25% OF THE PRICE is premium and the rest is intrinsic, in the money.  On the other hand, pretty much 100% of your $28s are in the money so, realistically, if you leave it alone and IRBT goes up from here, you net no less than $5 on the trade or 58%.  If you are going to roll, first look at what is an even roll – so what is $4 in June.  Looks like the $37s.  Rolling the Dec $33s to the June $37s gives you $4 more upside, that seems worth it.  You still have $4 of downside protection but that would only apply if you were Ready, Willing AND ABLE to stop out your March $28s (maybe at $7.50) and leave the short June $37s to burn off, perhaps if IRBT fails the $35 line.  

What you do with the trade very much depends on how flexible you are with the position.  As noted with YHOO, if this were in the $25KP, we'd be limited in our options since we can't support a naked short call in that Portfolio.  In the STP, however, I'd do the Dec-June roll and leave my March calls but offer to roll to the June $29s even, as I'd be willing to give up $1 to not have to mess around with the time difference but, unless I got it, I'd also be happy to be assigned the stock in March and ride into June with my covered caller.  In either case, my plan if IRBT were to fail $35, would be to sell June $30 puts for $4 (now $3) because then, when I cash out my March $28 calls at $7.50, I'd have $11.50 in my pocket and the short June $30 puts and the short June $37 calls and I can certainly live with that and, if IRBT went back over $35, I could buy a call or I could buy the stock for $35 and that would net me into the buy/write at $23.50/26.75 with a call-away at $37 and the stock over $35 (or I wouldn't have been buying it).  

See – simple plan!  

Corp Taxes/JPH – True.  When Liberals talk about the Corporate Tax rate, they certainly don't mean small businesses.  Sounds like your family needs better accountants though – a good tax accountant is worth every penny you pay him (which is why big corporations have armies of them).  

I still favor a 20% VAT on all goods and services.  We have an $18Tn GDP and that would raise $3.6Tn, which is $1.2Tn a year more than we take in taxes now.  There would be no taxes, no Social Security, Medicaid etc – just 20% of every transaction goes to the Government with no deductions and no exceptions.  People who make under $30,000 per family (64M families) would be given $10,000 to more than offset the taxes they pay – that's $640Bn and still leaves us with $3Tn and a MUCH happier bottom 40%.



A VAT would also stop foreign companies from avoiding taxes and US Corps as well.  We have the World's best consumers in the US and people should pay to have access to them!  

Unfortunately, this would put all accountants and tax lawyers out of business, saving consumers and corporations hundreds of Billions a year in fees.   We could also cut the IRS dramatically, another $100Bn a year saved from the Government Budget.  



Fast/Scott – It's been an exciting couple of weeks – I love it when the markets are like this. 

Retiring/Pfehl – Don't worry, I'm only 51 – just looking forward to those Golden Years!