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Temper Tantrum Tuesday – GOP Wants to Scrap Obamacare Without Replacement

Image result for you'll get nothing and you'll like itYou'll get nothing and like it!  

That is the new GOP plan for your health care as their 3rd attempt at crafting a replacement for Obamacare goes down in flames.  "Republicans should just REPEAL failing ObamaCare now & work on a new Healthcare Plan that will start from a clean slate. Dems will join in!" wrote the Whiner in Chief on Twitter last night.  He was right, I am tired of whining

All this political turmoil (and yes, Russia is still a thing) has not been good for the Dollar, which is down another 0.5% this morning to 94.40 and that is the only thing keeping the indexes afloat at the moment as Europe is down 0.5-1%.  The weak Dollar is also boosting commodites and Brent Oil (/BZ) is at $49.40 while Texas Oil (/CL) is $47.15 and back below the $47 line is a great place to short (with tight stops over) as Ecuador has broken ranks with OPEEC and will be pumping more oil AND, much more important, the EIA projects record US shale output in August that will add another 3.5Mb to our bloated inventories.

I put out a note to our Members this morning to short /ES at 2,457.50 and we're going to review our Member Portfolios and press our hedges as we made RIDICULOUS gains while I was on vacation and we want to lock them in.  In our June 18th Long-Term Portfolio Review, we were at $1,399,805, which was up 180% from our $500,000 start back on 11/26/13 and, as of yesterday's close, we're at $1,639,658 (up 227%).  That is up a RIDICULOUS $239,853, which is up 17% from where we were a month ago and a gain of anoither 48% from our $500,000 principle.  

Not only that, but our Short-Term Portfolio, which we use to hedge our Long-Term Portfolio, also made money.  It was "only" up $17,651 for the month but, when your hedges don't lose money while your long positions do – that's unusual and it's something you should certainly take advantage of the situation and either raise more CASH!!! (have I mentioned how much I like CASH!!! lately), lock in your gains or both.

In our Options Opportunity Portfolio, which is tracked over at Seeking Alpha, is a self-hedging portfolio we started with $100,000 back on Aug 8th of 2015.  As we approach our 2-year anniversary, that portfolio is now up well over 200% as well and we're well ahead of our original goal to make a more modest 5% per month on our positions (it was originally called the 5% Portfolio but that was deemed "too confusing" by SA).  In our 6/18 review, we only made one change – getting more aggressive on Apple (AAPL) on the dip to $140 - and that worked out nicely.  

Before I left for vacation on June 27th, we added 4 new bullish positions to the OOP on CSCO, FNSR, GE and TGT (all of which were noted the next morning in our PSW Report for cheapskate readers) and all but GE are already making progress so we'll want to lock in our new gains in the OOP as well.  Even as I write this, the indexes are turning down for whatever silly reason and already the /ES shorts are up 5 at 2,452.50, which is good for gains of $250 per contract in just over an hour – a good way to start our day and a great example of the advantage you gain when you learn how to use Futures contracts to hedge your positions, rather than twiddling your thumbs waiting for the regular markets to start trading.  

I don't talk about crypto-currencies here but BitCoin has been on a wild ride, falling from $2,555 on the 8th to $1,826 (down 28%) on Sunday and now it's Tuesday and it's back to $2,273, which is up 24% though still a long way back to $2,500 due to the magic of MATH!  We have a Digital Currency section over at PSW, so I won't bore you with details but we're still accumulating those GreenCoins and you can see the volume exploding along with our quick 100% gains (so far).

In fact, PSW will soon be accepting GreenCoins as Membership payments so a good way to give yourself a Member discount is to buy GreenCoin on the dips and pay for your subscription on the rips!  It's a fun experiment in Digital Currency trading AND it's good for the environment as GreenCoins help create carbon credits – that's a currency with a purpose!  

The next step for GreenCoin is to get someone like WFM (soon to be AMZN) to accept them as payments.  Anyone with an environmentally-friendly agenda can use the coins as either straight payments or a form of rewards or discounts and that's why we like them as the future of digital currencies will be customized, purpose-driven currencies like this one.  BioDeiselChris wrote a nice primer on how to by digital currenies HERE.

To me, there's not much sense in investing $2,273 in a single Bitcoin, hoping it will get to $5,000 for not even a double when I could, instead, buy 11,365,000 GreenCoins (or any other up and coming currency) and hope it catches on and goes to a penny, where they'd be worth $113,650 for a 50x gain.  This happens in the Crypto World with alarming regularity among the small plays so think of it as playing roulette – spread some money around and hopefully you pick a winner BUT, keep in mind – it's very easy to lose it all, so fun bets only! 

We're waiting on earnings to make some new calls but those calls are still Members Only during the month of July (any earnings month), so I suggest you subscribe to the PSW Report for the bargain price of 15,000 GreenCoins per day!  

Isn't trading fun? 

Tickers of note:  GBTC, BTSC, COIN, BITCF, SPY, USO


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  1. Pretty incredible that the main opposition to the Senate healthcare plan comes from people who think that it's still too generous to poor people and who want to repeal the taxes on the top 0.1%! 

    With great courage, the GOP has now decided to simply repeal Obamacare which will take effect in 2 years, after the next elections of course and probably cause so much turmoil in the insurance market that the CBO estimated that the individual market will collapse and 32M people will lose their insurance. That's your governing party…

    http://www.motherjones.com/kevin-drum/2017/07/mitch-mcconnell-is-offering-up-a-eulogy-for-trumpcare/

    This is just political theater. The 2015 bill would repeal the funding for Obamacare, which would indeed destroy it. However, all the insurance industry regs would stay around, as would protections for pre-existing conditions. Insurers would still be required to cover all the essential benefits of Obamacare, and people with expensive conditions would all be allowed to sign up for coverage at the same price as anyone else. This combination would destroy the individual insurance market. Every insurer in the country would withdraw, which would affect everyone with individual insurance, not just the folks who got it through Obamacare.


  2. An interesting take on why AI might take over our jobs:

    http://www.motherjones.com/kevin-drum/2017/07/mass-unemployment-starting-in-2025-believe-it/

    Now, I might be wrong. Who knows what the future holds? But although I’ve heard lots of bad arguments about why AI won’t take our jobs away—driverless cars crash sometimes! it’ll be like the Industrial Revolution!—I haven’t heard any good ones. The odds are strong that AI is coming, and that between 2025 and 2055 it will steadily take over every job currently performed by humans.


  3. Good Morning.


  4. It looks like they had a reverse-split on UVXY yesterday but options are not priced properly as far as I can tell. The Jan 19 60 calls at $1.41 don't make sense at all. The call options on the old price are about the same and the underlying instrument is 4x cheaper.


  5. I own august call on SDS and it seems to magically changer to SDS1?????

    Does someone know what happened with SDS…


  6. Millard – Same thing as UVXY, 1/4 reverse split.


  7. Obviously I am a Newbie….what happens to my 30 $12 calls in that situation?


  8. UVXY options back to somewhat normal…. Would have been great to buy some of these calls for $1.50 and sell them for $13 today.


  9. Good morning!  

    John McCain's blood clot was discovered during a routine physical, cost $76,000 to fix – GOP plan would not cover it.

    Big Chart – To the moon, Alice!  

    Related image

    Remember when domestic violence was so funny?

    Repeal/StJ – Total madness.  The good thing is they changed the rules so even a simple Democratic majority in 18 months can quickly move to clean up this mess.  That should be just about the time Trump is officially indicted…

    Jobs/StJ – This is why they are so desperate to cut benefits – 99.9% of the people will need them soon!  

    UVXY/StJ – Yes, pricing got very strange, which sucks as we still have some.

    UVXY's 8th split took place on July 17, 2017. This was a 1 for 4 reverse split, meaning for each 4 shares of UVXY owned pre-split, the shareholder now owned 1 share. For example, a 0.00333333333333333 share position pre-split, became a 0.000833333333333334 share position following the split.

    SDS/Millard – Here's the gist of it.

    SDS's 5th split took place on July 17, 2017. This was a 1 for 4 reverse split, meaning for each 4 shares of SDS owned pre-split, the shareholder now owned 1 share. For example, a 2000 share position pre-split, became a 500 share position following the split.

    UVXY/Millard – I believe you now have 7.5 $48 calls but the old contracts are still there – kind of worthless either way.


  10. Solar stocks are strong today. 

    SPWR up another 8%.  In gap from last August.


  11. CMG – getting interesting at 382 going into earnings…..


  12. From Briefing :

    CMG

    ~Chipotle Mexican Grill: Shares slide to session lows; Hearing some concerns over reports that the company shut down a restaurant in Virginia after complaints of customers getting sick making the rounds.


  13. Albo – interesting, thanks, ….  the aug 18th 340 short putters at about 3 / share…. I'm really tempted


  14. CMG~~ July 21 $370 Puts now trading up 4100% ! ! !

    And no, I didn't buy them.


  15. We already sold CMG puts in the LTP but I sure like those 2019 $350 puts short at $38.50 for a short sale!


  16. No stopping NFLX


  17. no stopping amzn too… dangit!


  18. CMG – More info on suspected food poisoning.  CMG says symptoms no consistent with food poisoning 

    http://www.investors.com/news/here-is-why-chipotles-stock-is-tumbling/?src=A00220&yptr=yahoo


  19. CMG – above post got cut off….

    We are working with health authorities to understand what the cause may be and to resolve the situation as quickly as possible," Jim Marsden, Chipotle's executive director of food safety, said, according to Business Insider. Marsden said the "reported symptoms are consistent with norovirus," which he said does not come from Chipotle's food supply.


  20. Either way, this will not help CMG recover from something they still haven't recovered from.


  21. Wow, new price targets for NFLX over $200 from 3 analysts. Like I said, not courageous enough to short these guys. I love the service, but these prices are ridiculous. No doubt that they do a great job – subscriber increases are phenomenal, but they said that they won't make any real money for years. I guess it's the AMZN model all over again. There is of course a possibility that 10 years from now they have 1B subscriber which would mean $100B in revenues. If content costs them $10B, they would dwarf even AAPL for profits! In which case, they are a great deal at these prices. Highly improbable but it's a good story though.


  22. Phil – CMG – another poster child…. how in the hell does a glorified, overpriced, yuppi-ized, not really good or even remotely authentic (calling them Mexican is as accurate as saying General Tso's Chicken is Chinese, or a Stromboli is Italian) burrito joint have a $11B market cap and it's stock has went to an all time high of $750???

    $4.5B in 2015 annual sales puts them at #12 in the US. (After the sanitary issues their sales are now under $4B per year).  By comparison in 2015 US sales only, #14 KFC $4.3B;  #9 Pizza Hut $5.7B;  and #5 Taco Bell $8.8B giving YUM $19B second only to Mickey D's at $36B.  

    And those are domestic sales only, YUM US stock $73 (they spun off the China operation) and MCD $154. CMG cut in half to $370 and not even worth the IPO price of $44. WTF are people thinking, smoking or are those burritos laced with MkUltra? I need some and Out.


  23. NFLX/Stjean

    Difference between AMZN and NFLX is NFLX has negative free cash flow and a lot of it because they are spending more than they have on content to try and stay ahead of competitors.  Wouldn't short them except by cherry picking long puts here and there but it's a disaster waiting to happen.


  24. NFLX now worth more than TWX which only drops over $5 a share to the bottom line vs .60


  25. you are so old school rustle!!!


  26. Profits are for suckers who buy TWX!


  27. If we think the market can crash this year, you can buy 10 NFLX 170 put, write 10 155 and sell 20 240 calls for December.  Would almost be neutral if you weren't called on it.


  28. AAOI – Up $6  today and 8-fold in the past year.  It was recommended by Jay Deana, a retired semiconductor analyst at $47 in March.  Here is his latest post in SA.

    https://seekingalpha.com/article/4088064-applied-optoelectronics-still-conviction-long-strong-execution-earnings-momentum-means

    Incidentally, he is the same analyst that is recommending QUIK with a $4 target.


  29. A potentially dangerous trend – by Larry McMillan: 

    When $SPX broke down below 2420 last week, and there was a bit of panic selling, the term structure of the $VIX futures (and of the CBOE Volatility Indices)  immediately inverted in the front end, and the futures went to a discount.  That was a bit surprising and certainly premature from a historical perspective.  After all, if the $VIX futures are going to trade at a discount with $VIX at 15, where are they going to be if $VIX explodes to 40 in a real market decline?  

    The reason I’m even bringing this is up is that this type of action could result in a nasty melt-down some day.  If everyone piles in to short $VIX futures at 14, with $VIX at 15, there is going to have to be some eventual panic buying of $VIX futures if the market continues to plunge (and simultaneously, if there is panic buying of $VIX futures, there is going to be panic selling of S&P futures).


  30. Options Opportunity Portfolio Review (OOP):  Our last review was actually June 12th, so a bit more than a month but it was worth the wait as we had a great month, adding another $7,561 (7.5%) to our total, now $325,753 and up 225% coming up on our 2-year anniversary.  Last month, we were worried we were too short and we added 4 new long trades (CSCO, FNSR, GE and TGT) and now it's time to spend a little CASH!!! and boost our hedges.  See – it's all about BALANCE!  

    As noted in the May review, the positions we had had the potential to gain $163,373 over the next 18 months so there's very little we need to play with on the bull side as long as we're on track.  We gained $20,000 in May and another $7,500 here so we're very much on track for our expected $10,000/month but note we still initiate trades at sizes appropriate for a $100,000 portfolio to accommodate new followers.  

    BALANCE is key and yes, as we saw last month, balance doesn't mean you never lose but between balancing our positions and BEING THE HOUSE and selling premium to suckers – we tend to win out over time.  The only adjustment we made last month was buying back 20 of the 60 short AAPL calls.  I can promise more changes this time!   

    • USO – I was just interviewed for Reuters and I told them I think inventories will disappoint so it would be silly for us to not cash in before the go to $0.  
    • CHL – Good for a new entry.
    • IMAX – Sell-off got much worse.  We are on the hook to buy 500 shares at net $27 ($54,000) or take a $3,500 loss or (and this will be the plan) we will roll them along when March or June options are published.  

    • NLY – Raised some more cash and sold off today – I'd love to be assigned at net $9.25! 
    • WTW – Way better than on track.  No reason to take it off the table as we're not at all worried about a 50% pullback.
    • FXP – China's markets are showing signs of stress but no effect on the top 50 yet, which is what FXP tracks.
    • SQQQ – Will tech ever correct?  We have 50 so it will cost us $5,000 to roll the $30 calls ($3.30) to the $27 calls ($4.30) but it buys us $15,000 more protection so worth it!  

    The purpose of our hedges is to lock in our gains, not to "win".  As a rule of thumb, we put about 1/3 of our unrealized long gains into our insurance plays (FXP, SQQQ, TZA) and we HOPE we lose it all, because that means our long plays are doing well.  A key component of this strategy, however, is learning how use our "Be The House - NOT the Gambler" strategy, so you can make money in flat or slightly down markets as well.  

    • TZA – We moved this to a less-aggressive spread than we had but still good for $120,000 if it triggers at $30, though that would be a 33% drop in the Russell so, realistically, it's $60,000 worth of protection we paid $26,000 for (due to losses already incurred).  The current net is only $15,800 so the upside potential at $45 is $44,200 – very reasonable when added to the SQQQ.  Next time we make $15,000, we will spend $5,000 improving our TZA hedges.
    • SVXY – They split 2:1 so now we have 20 spreads at lower prices.  Volatility still doesn't exist in this market but not looking to put more money in at this point (again, let's make more money first).
    • AAPL – We got more bullish last time and AAPL obliged us with a $10 move higher.  We never wanted to be fully covered though, so no intention of doing so and this trade is well on track for now.  
    • AAXN (TASR) – Good for a new position.  I like this because it's independent of the market overall as the long-term story is the adoption of cameras by the police.  
    • ABX – We got a great entry in November but they are still stupidly cheap at $16.27 and this is a $14,000 spread that's currently net $4,340 so $9,660 (225%) upside is still pretty darned good as a new trade (and I said that last time and it's up $145 since then!).  

    • ATI – On track.
    • CDE – On track.
    • CHK – Good for a new trade.  We're counting on hurricane season to shut some production in the gulf and give land-based CHK a nice leg up. 
    • CLF – On track.

    • CSIQ – On track
    • DBA – Huge comeback since I had to say last time: "A bit slow-moving but we still have faith."

    • DIS – In the money already.  
    • EWZ – This one is pretty new and already doing well.
    • FNSR – One of our new ones, good for a new trade. 
    • FTR – We took the loss on the old short puts ($4,000ish) and rolled them to the 2019 $15 puts.   I've been hoping for $12 so we could triple down but, so far, $14ish is holding.  It's only 800 shares so we're taking about saving $1,600 at best and earnings are 8/1 so we need to pull the trigger by then.  Rather than risk forgetting, let's at least buy 400 more right now at $14.32 and we will sell 5 of the 2019 $15 calls for $3.40 ($1,700) so we're netting in for about $10 per new share.

    • GE – Another new one, good for a new trade.
    • GM – Jumped higher and in the money now.  
    • JO – Very nice improvement since last month.  
    • M – Struggling along but I love this position – especially at these prices but I'd sell the $25 puts, not the $30s we sold.  Fortunately, we were not aggressive with the short puts and we can roll 5 short 2019 $30 puts at $9.70 ($4,850) to 8 short 2019 $25 puts at $6.15 ($4,920) about even.  
    • SGYP – We got aggressively long on these and hopefully they are consolidating for a move higher.   

    • SPWR – Over our goal already.  Max payout it $15,000 and the net is currently just $5,775, so plenty more to gain.   The price of those short puts is ridiculous!  
    • SVU – On track and good for a new trade.  
    • TGT – Another new one and already doing great.
    • TWTR – On track (and what a wild ride to get here).  
    • UNG – That's two natural gas trades (CHK) with the same premise.  UNG is on track.
    • WPM – We already cashed out one, this is what's left and on track.  
    • XOM – We were so conservative that we're already 100% in the money and FANTASTIC for a new trade as it pays $5,000 over $80 and the current net is just $2,355 so 100% upside if XOM simply stays over $80.  THAT is what I mean by setting up your trades so you make good money in a flat market (and our break-even is below $75).  

    Notice the theme of these trades – they are OPPORTUNITIES we take advantage of when stocks are too high or, more often, too low and we especially take advantage of extended options premiums and sell them to the kind of suckers who thing things always go up or always go down.  We are simply applying value investing techniques against an inefficient pricing system and, as evidenced in our first two years – that's a pretty good way to play the market!  


  31. 3 GOP Senators oppose moving forward with Obamacare repeal only.  That's dead too.


  32. what and when was the adjustment to FTR???

    I don't remember reading about selling the 15 puts and taking the loss on the old puts (which ones)?


  33. Phil (OOP); regarding a position like DIS where the position cover works (July 105 calls), do you just buy them back (or expire worthless) or would you roll out for another month or two.  Right now the 105 calls are ITM.  Thx


  34. The second part of the table did not paste correctly.  Everything between DIS and SGYP is missing.


  35. Phil – Great reviews.  Thanks. 

    Another question. Just curious, rather than buy FTR stock and sell  the 2019 $15 calls, why not just sell the 2019 $13 puts for about $5.5 for a $7.50 entry and be done with it, since your upside on the stock is limited by covering the stock with the $15 calls.  Or is it so that you can roll ?   Thanks.


  36. OPt Alpha,

    DIS my 2 pennies worth July 105 call has still .42 cents of extrinsic value. DIS is hovering around the 105 mark so I would wait till the last 45 min. Friday and look at it. My position BTW is Jul. call 110 and Jul put 105 same I wait with the put and see how it works out. At the end you still can roll any of these positions.


  37. Sorry, that took a while to get done. 

    NFLX $185 is so ridiculous.  Hopefully it tests $200 so I can short it.   Like StJ – it's just too scary to jump on (again). 

    AMZN earnings not until next Thurs. 

    CMG still falling. 

    NFLX/StJ – Well, it depends what they call a subscriber.  So many non-payers, TWX makes 4x more with the same number of "subscriptions" (though other revenue streams at TWX too).  Also, people don't understand subscription broadcasting because there's very little value in old shows, NFLX isn't building some asset base – this is their regular cost of doing business.  

    CMG/Naybob – Well they should be dropping $500M to the bottom line so $11Bn is not crazy once they are back on track but today's action shows how quickly those tracks can look dangerous.  I like them below $400 as they have good growth and they keep trying to clone a new concept – if they make it one day, then it's a double.  

    Good play Rustle. 

    Ooops, markets turning sour again. 

    AAOI/Albo – Well we went with FNSR, hopefully that one works.

    Fiber – Phil, you are so right about the industry.  It is definitely cyclical.  However, it looks like we're in at least a two year buildout.  This would indicated to me that these stocks have further to go.  Think companies like FNSR, ACIA, LITE, and AAOI are likely to be winners.  Picking the others is more difficult, but there is some thinking that the industry is about to enter a consolidation phase, which could lift all boats.  We'll see if that's the case.  And, of course, a great deal depends on China.

    Repeal/Rustle – Thank goodness, that would have been chaos.  

    FTR/Jabob – Well that was our plan for the split, consider the short puts a new call as that's the current price.  The old puts were the $4 puts, we had sold 20 of them for 0.90 ($1,800) which works out to selling 1.33 of the $60 puts for the same $1,800, of course and those would now be $46 ($4,600) for a $6,120 less the $1,800 collected is $4,320 total loss but they didn't split them that way, they left the old ones but the loss is the same, no matter how you slice it.  TOS lists them at $2.75/3.30 so figure $3.10 x 20 = $6,200 less the $1,800 collected .  See, same no matter what you do – math wins.  

    DIS/Options – If they are in the money, you must buy them back before the close or they'll be assigned.  If they are going worthless, you don't need to do anything as they expire but try not to be wrong about that.  I am not inclined to sell more calls this low in the channel.  Would rather wait for a move up.

    Table/Tangled – Wow, glad someone is paying attention!  I'll fix it right away (you guys will need to refresh). 

    FTR/Albo – Unless they cut the dividend, I want my 10%.  What if, in 2019, the stock is at $25 and the dividend is $2.40?  Then you don't have the stock and you need to spend $20 to catch up wheras I have the stock for net $10 (with a $5 profit if called and 0.90 in dividends for $5.90) and all I have to do is pay whatever to roll the short calls higher and collect two more years of dividends.  


  38. ~~ 
     News from DigiTimes this morning suggests increasing demand for data center ICs.  Should be good for  FNSR and others.

    "Chip demand for data centers to boom in China
     With local governments setting up data centers, chip demand for data centers in China is set to surge, according to industry sources."

    FTR – Thanks.


  39. Phil

    FTR  are there any puts sold ?

     

    Thanks 





  40. 9 charts on how the world sees Trump


  41. Why $5 Billion Of Student Loans May Be Wiped Out


  42. Phil,

    With /NQ over 5850, is that a sign of a broad push higher? /TF and /ES both under


  43. FTR/QC – They are slow but moving.

    Worldwide public cloud spending to reach $128B this year

    • Worldwide spending on public cloud services will reach $128B this year and could reach $266B by 2021, according to IDC.
    • The U.S. will account for over 60% of the 2021 revenues with $163B in sales. Western Europe will come second at $52B and Asia/Pacific third at $25B. 
    • U.S. industries seeing the fastest cloud service spending growth: professional services, media, retail, and telecom with CAGR ranging from 20.9% to 21.5%.
    • SaaS will account for 60% of public cloud spending in 2021 but IaaS and PaaS will grow faster with CAGRs of 30% and 29.7%, respectively. 
    • Cloud ETF: SKYY
    • Crude oil rallies as much as 2% before pulling back, following a Financial Times report that Saudi Arabia is considering cutting crude exports by 1M bbl/day; WTI now +0.6% at $46.29/bbl.
    • The report cites a recent note to clients from Bill Farren-Price, a consultant at Petroleum Policy Intelligence, who said the Saudi move would offset the rise in Libyan and Nigerian supplies.
    • “This is what OPEC has resorted to, export cuts in order to jawbone the market higher,” says iiTRADER chief market strategist Bill Baruch. “We believe that OPEC members are getting restless and instead of this news showing how stable a deal they have, its shows the holes.”
    • Also, Ecuador – one of the smaller OPEC producers – said it would not be able to hold its commitment to lower output by 26K bbl/day.

    CMG Aug $370 calls are $14.30 and were $47 two weeks ago.  Those are a fun way to play for the bounce and you can also, if you are brave, sell the $360 puts for $12.30 to net into the $370s for $2 or CMG for $362 – depending which way it goes. 

    /NQ/Japar – It's certainly a sign not to short the others.  Dow and S&P are down over Financials, mainly – other things are doing well – especially tech. 


  44. Frontier Communications Reaches Connect America Fund Milestone in Nine States 

    Jul 18, 2017 11:55:00 (ET)
     

    40 percent Milestone Reached Well Ahead of Schedule

    NORWALK, Conn.--(BUSINESS WIRE)--July 18, 2017--

    Frontier Communications (NASDAQ:FTR) announced the company has reached a milestone requirement of the Connect America Fund program (CAF) well ahead of schedule. The Federal Communications Commission's (FCC) program rules associated with CAF require companies that accepted the funds to deploy broadband to 40 percent of the eligible locations by the end of 2017. As of June 30(th) , Frontier had reached the 40 percent milestone in nine states: Arizona, Connecticut, Georgia, Montana, New York, North Carolina, Pennsylvania, Washington, and West Virginia.

    Nationally, Frontier now provides broadband to approximately 238,000 households and small businesses in its CAF-eligible areas, and has improved speeds to approximately 746,000 additional locations. The deployments reflect a combination of Frontier capital investment and resources that the FCC has made available through the CAF program. The company is aggressively marketing broadband offerings to households with new access or improved speeds. Simplified broadband offerings and bundled service packages that provide choice and affordable options are available with speeds as fast as 115 Mbps, depending on the distance from Frontier's nearest facilities. Many of the locations newly served receive 25 Mbps and faster.

    "We are very pleased to reach this important milestone," said Mark D. Nielsen, Frontier Executive Vice President and Chief Legal Officer. "The combination of CAF and Frontier's investments have enabled new broadband connections that are vital to closing the digital divide. Every day we see our customers benefiting from the significant economic and educational benefits of broadband connectivity."

    Through its partnership with the FCC, Frontier will turn $332M in annual funding into broadband availability for 774,000 households and business of at least 10 Mbps over the life of the program.


  45. /NQ   5,880 is a 5% move from 5,600.


  46. FU FTR!!!!


  47. Short-Term Portfolio Review (STP):  Our chat update of the STP was back on 6/9 and there were no changes.  At the time we were at $405,515 (up 305%) and now $424,326 (up 324%), mostly because TSLA calmed down.  My comment at the time was:

    TSLA – F them!  Insanely overvalued cult stock.  I will not capitulate!

    We were down $14,000 and now up $12,500 so a nice swing on that position!  AMZN got a bit better, FAS got a lot worse and the hedges are what they are.  We added a LABU spread but that was the only change in a month that led to a $19,000 gain – not bad!  And, of course, we have so much cash that it exceeds the value of the portfolio – which is a good thing with your insurance money.

    • AMZN – Thank goodness we only sold 2 short calls.  Unfortunately, we sold them $124 ago!  Still, the plan was to roll to 2x and earnings are not until next week.  The short July $900s are now $124 and the Jan $1,015s are $80 so we can sell 3 of those for $24,000 to cover most of the $24,800 from buying back the Julys.  We're not terribly more exposed and we gain $115 in strike – we just have to pray it's enough!  
    • FAS – This one went the wrong way on us in a big way.  Still, let's wait for smaller bank earnings before we decide $50 will hold and, keep in mind, this is another hedge we have that shows a $43,275 loss and, if the market tanks and they expire worthless, that's $43,275 more of our cash pile that become unencumbered – maybe we'll use it to buy some bank stocks!  

    • AAPL – This was a short put used to pay for a hedge – working out fine.
    • ABX – Ditto.
    • GOGO – Ditto.
    • SBUX – Ditto.  

    So, around the beginning of the year, we set up our hedges by selling about $25,000 worth of puts.  The logic was that, if the market kept going up, these value plays would very likely go up with it and, if the market went down, then our hedges would pay off and there isn't any stock here we wouldn't mind owning for the net strike.  This is a very simple system and, since we make at least 300% on our hedges – it gave us $75,000 worth of insurance (more likely offset $150,000 worth).  

    That's how we play it.  Once we had our first hedges, we adjusted from there but this is our core strategy for hedging. 

    LABU – That's our new play, already doing nicely.   Our goal here was just to pick up an easy $13,500 profit if all goes well.  LABU was a bit too risky for the OOP as it had already popped but in the STP, we would be able to deal with the adjustments if we have to and, worst case, we don't mind if it ends up in the LTP (ultra-long biotechs), so it's a low-risk way to pick up another $13,500 to put towards our hedges.  

    • SQQQ – Speaking of hedges.  The 15 long calls are leftovers, so ignore them.  Our Jan $440s are hopelessly out of the money so it's time to move those.  That's why we netted such a huge gain this month – we let ourselves get very bullish in the LTP/STP by leaving 100 SQQQs go so far out of the money they barely protected us.   Fortunately, we guessed right but it's like Russian roulette – if you keep on pulling the trigger – you are going to lose eventually.  
    • SQQQ is a 3x hedge so, at $28, it needs to gain $27 (96%) to get to $55 (the short puts) and it would break my heart to pay them 0.75 to buy them back and we have TONS of margin to spare so let's just leave the short calls to die on the vine (stops over $1 on half and $1.50 on the other half) and we'll spend $2.60 ($26,000) to roll the $40s ($1.55) to the $28s ($4.15) and let's hold off selling the $40s (which gets half our money back while leaving a $120,000 upside) and see how earnings go for another week.  

    • TSLA – We were worried enough to sell short puts to cover our losses so let's not look a gift horse in the mouth and buy back the short calls and the short puts and be done with them until earnings (unless they get all feisty again).  
    • TZA – Considering we're up $200K in the LTP this month, we've only spent $26,000 (13%) improving our hedge (adding $120,000 of protection).  The TZA $15s though, are in the money so we don't really need to do anything at the moment.  TZA is also an ultra but, at $16, a 20% drop in the market will only add 60% or about $10 so call this $100,000 worth of protection.  

    So, on the whole, between FAS, SQQQ and TZA, we have roughly $300,000 worth of downside protection if the market drops 20%.  We'll have to keep that in mind when going over our LTP positions.


  48. I didn't even notice last night that TOS switched from the August oil contract /CLQ7 to September /CLU7 because the price spread was so close this time. I also can't remember the last time Phil wasn't calling for a price drop from all the open contacts. So, there are 106506 as of tonight and 2 days left? Add in API saying we had a 1.6+mb build but gasoline fell by almost 5.5 mb and distillates fell 2.88 mb. Crude at Cushing is up, but Saudis are talking production cuts of 1 mb/day and on and on. So, Phil you said you were expecting a draw and I am, as always, wondering if you have been able to sort through all of the information to form an opinion of which way prices are headed short term?


  49. I didn't even notice last night that TOS switched from the August oil contract /CLQ7 to September /CLU7 because the price spread was so close this time. I also can't remember the last time Phil wasn't calling for a price drop from all the open contacts. So, there are 106506 as of tonight and 2 days left? Add in API saying we had a 1.6+mb build but gasoline fell by almost 5.5 mb and distillates fell 2.88 mb. Crude at Cushing is up, but Saudis are talking production cuts of 1 mb/day and on and on. So, Phil you said you were expecting a draw and I am, as always, wondering if you have been able to sort through all of the information to form an opinion of which way prices are headed short term?


  50. IMAX/Phil: There is the Dec 23/28 BCS missing from the OOP.


  51. Phil, M I am not sure in which Port you holding this play, but I hold the Jan19 28/37 BCS still with a short put of 28 hanging in.

    I looked at roling the 28 long to Jan19 20 long at a loss of (4.95 – 1.95) 3.00 even selling a a new Jan 30 caller of say 1.60 and just forgetting the 37 call as it possible never come back to this high.

    On the other hand selling the 28 call for 1.95 and setting a stop to the 38 caller.

    My question is do you really and seriously think this company will ever make it back. I have been buying things at AMZON from a wet ambrella to a dead police man and the service here is just outstanding with followup etc. For no reason they call AMZON the retail killer.

    My wive was looking the other day for some special yarn in a retail shop in Aachen. The material she bought before in a china shop in Spain for 1.90 € a 50 meter roll. The shop in Aachen wanted for the same material .65 cents / meter. I finally bought it at AMZON for 2.45 @ 50 meter roll delivered to the house for free!!! She actually bought 10 rolls in different colors!


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  57. An oil boom is coming sooner than you think


  58. Good morning!

    Have to run to NYC for TV (summer hotel rates are ridiculous), will be back around noon.  

    All looks quiet, indexes generally flat, VIX at new lows so who's worried.

    Oil/Craigs – I see 78,809 contracts and they have today and tomorrow to trade them.  We can assume 18,000 are real and that leaves 60,000 in two days, which they can do standing on their heads (they did 28K since your reading, which we'll assume was one day).  

    API seems bullish but EIA more likely to show a smaller use of gasoline so I doubt we break much higher but Saudis calling for more cuts means it's silly to try to guess which way oil goes so I simply don't waste my time trying to guess and look for possible trades with higher odds of success than a coin flip.  You can't always sort through all the information.

    Image result for the only winning move is not to play

    IMAX/Enfil – Yes, we seem to have missed entering that in the portfolio.  Please remind me this afternoon, when I'm back.

    M/Yodi – I like their real estate holdings as a backstop and yes, there are things that people buy on AMZN and things they don't and the retail stores are simply adjusting their product mix to carry more items AMZN doesn't sell well (clothes are a good one).  Pricing and margins are also issues.  The guys getting really killed by AMZN are people who sell imported goods for high prices, like the thread, or simple things like batteries and parts (rip Radio Shack) that don't require explanation or service.  

    Sears started in 1886, when people had to take their wagons to go 20 miles to the store to get ripped off by the town's only whatever and the 1893 catalog was 196 pages and the next year the catalog was 500 pages and people were forecasting the "death of retail" at the dawn of the 20th century and Sears was so successful doing mail order, that they decided to open their own stores in 1926 and those quickly spread across America.  Now they are dead. 

    AMZN was founded in 1994 and now it's 2017 and the are so successful they are opening their first retail store but, successful as you think they are – it's mostly hype because AMZN sold $135Bn worth of goods and services last year including a lot of Prime Memberships (100M would be $10Bn) and a lot of Web Services (about $10Bn) so actual retail sales are about $120Bn out of $3Tn in the US alone and about $30Tn world-wide.  Even in the US, they are only 3% of all retail.  

    People use them a lot less than you think they do – we just happen to be in the Top 10%, who do use them extensively but real people worry about packages being stolen off their porch and are maxed out on their credit cards and they certainly can't afford $100 for a Prime Membership and AMZN's prices are not even close to WMT's or the Dollar Store, where real people buy most of their necessities.  Still, there's 300M of "them" and 30M of "us" in the US and, though we have 10x more money than them, the spend all of theirs and we don't so they account for about 2/3 of retail sales and even of my 1/3 – I very much doubt we spend even 10% of our shopping money at AMZN which is, wait for it…. 3.3% of all retail.  

    Believing AMZN is going to take over the retail world is about the same as thinking Porsche will take over autos because they make really great cars – there's a lot of factors going into those buying decisions and, even if you think AMZN is clearly THE BEST – that doesn't stop there from being 100 different auto makers and none of them have more than a 10% share of the global market – and they've had 100 years to sort that out!  

    As a smart shopper I can already tell you what will kill AMZN – smarter phones.  Once Siri is smart enough to go to 100 sites to check prices for me every time I buy and match the cost of shipping, delivery dates, etc. and even negotiate with vendors for discounts – what do I need AMZN for?  More to the point – what do vendors need AMZN for once they have their own AI assistants to coordinate orders?  They are a middle man business – eventually, they always get crushed.  


  59. Well Phil great write up on AMZN Thanks. You talk about membership here in Germany as well as in Spain I do not pay any membership. For the great WMT as you know they closed their doors here in Germany possible their concept was wrong or simply could not compete.


  60. Good Morning, coming back from  San Fermin Bull running fest in Pamplona ( remember Hemingway?), great comment about  AMZN Phil!.

    reading about your "european experience" now, will comment in today´s post. 


  61. Adville,

    I was there last year, awesome experience. Did you run?