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Free Money Thursday – Trump Tax Cuts Promise a Chicken in Every Pot

No more death tax!  

Very nice if you are rich enough to have it affect you (estates over $10M with poor tax planning) and it's very important to the GOP's Top 1% donors, who plan on living on through their clones and need to leave all their money to themselves.  Think how annoying it would be if, every 60 years, when you are having you mind transferred to a new clone, you had to pay a tax to transfer your money.  Of course the "death tax" needs to be elimintated but of course you can't tell your bible-thumping base the real reason or they might decide you are a Godless heritic.

We are supposedly 5 years away from Avatar B, where your brain can be transferred from your body and the goal is put you into a machine or a clone over the next few decades.  Well, not you, unless you are one of the ones with millions of Dollars to spend on such nonsense but at least we know that the people who can afford it WILL be able to take it with them and build up such unimaginable wealth over multiple lifetimes that the efforts of you and generations of your mortal family will be like dust in the wind under their immortal gaze.

Speaking of Godless heritics, Oil (/CL) is spiking higher again today as Baghdad cranks up pressure on the Kurds following a controversial independence referendum, with a flight ban and a warning on oil exports, a vital source of income for Iraqi Kurdistan.  Oil already spiked over $50 on news that Turkey was upset with the Kurds but now Iraq is another excuse to jam things up – $52.75 this morning and yes, we're still shorting!  

If you don't trade Futures, you can play the home game with the Ultra-Short ETF (SCO), which is down about $32.50 and we can assume things calm down in a month and go with a November spread like:

  • Buy 10 SCO Nov $32 calls for $2.50 ($2,500)
  • Sell 10 SCO Nov $37 calls for $1.50 ($1,500)

That's just $1,000 on the $5,000 spread and makes $4,000 (400%) if SCO is over $37 in mid-November and it was at $40 at the beginning of the month, when oil was $47.50 so we're looking for a 10% correction in oil between now and Nov 17th (option expiration day).  For those of us who lose money on Oil Futures shorts, rather than stay on the roller-coaster, we can shoot to get even by playing with 1/4 of our loss, rather than letting the whole thing ride with all the current uncertainty.

The same goes for our Russell (/TF) shorts, which also burned us but we can play to get that back with another Ultra-Short spread (TZA) like this:  

  • Buy 50 TZA Nov $12 calls for $1.95 ($9,750)
  • Sell 50 TZA Nov $14 calls for 0.70 ($3,500) 
  • Sell 5 AAPL 2020 $130 puts for $11.20 ($5,600) 

That one is net $650 on the $10,0000 spread that's mostly in the money so the upside potential is $9,350 (1,438%) but you have to wait until 2020 to be clear of the obligation to buy AAPL for $130, which is a 16% discount to the current price.  You can, of course, substitute a short put on any stock you REALLY want to own if it gets cheaper, we have a whole Watch List full of stocks we like when they are cheap in our Portfolio Section.  

Gannett (GCI) is just starting to break higher, GE (GE) is still cheap and we put up a trade for them in yesterday's Report. Limited Brands (LB) is still in contention for our 2018 Trade of the Year but in danger of getting away from us before we officially announce.  Macy's (M) is still cheap, Pitney Bowes (PB) is cheap again, though off the bottom already.  Qualcome (QCOM) is down where we like them, Sealed Air (SEE) is a bargain, SuperValue (SVU) we've discussed as well.  

So that's 7 of our 24 stocks still cheap enough to play while the rest have already blasted higher, like Aflac (AFL) who have done nothing but climb since we picked them on 2/17:

AFL (2/17) - I always forget to buy AFL.  Super-solid company that trades in a channel good enough for the Butterfly Portfolio and should do better as rates tick up (insurance companies have huge reserves they have to keep in "safe" accounts).  They have $102Bn in long-term investments (bonds) that are paying them nothing – a 1% rise in rates drops $1Bn to their bottom line ($2.50/share).  You only have to pay $70.67 for a stock that threw off $6.45/share last year (p/e 11) and though they project flat – flat is just fine when you are returning 9% a year.  They pay a 2.5% ($1.72) dividend while you wait but not worth owning the stock as we can sell the 2019 $65 puts for $5.50 and buy the $60 ($13.50)/70 ($7.10) bull call spread for $6.40 for net 0.90 on the $10 spread that's 100% in the money. 

We're miles in the money on that one and already the 2019 $65 puts are down to $2.03 while the $60/70 spread is $8.75 for net $6.72 and up $5.82 (646%) but that's only on track for our expected $9.10 (1,011%) gain and we have no reason to feel we won't collect it.  That means that, even just picking up the scraps from this trade that our Members already made 646% on since February, you (the cheapskate non-subscriber) can still invest $6.72 and make $3.28 (48.8%) in 16 months if AFL simply remains over $70.  Who says trading is hard.   

As we discussed in yesterday's Live Trading Webinar, these are the kind of long plays we are protecting with our index shorts and oil shorts.  The shorts are INSURANCE to lock in the gains of our long positions and we expect to lose money on the shorts while our "boring" long-term plays mature.  

AFL was the first trade on our buy list, the second was Bristol Meyers, which was added on 3/5:

BMY (3/5) – Last July, BMY took a huge hit because Opdivo (late-stage cancer) failed in trials and the stock collapsed.  On Jan earnings, they missed estimates by 0.03 but earned 0.63 per $60 share so on track for $2.50 and a p/e of 24.  There were, however, still extra expenses as they try to get Opdivo back on track (for wider acceptance – it's already being used for some cancers) and I think their guidance of $3/share will ultimately hold up.  Too bad we missed them at $46, now $57.26 but volatility is good for put prices and we can sell 2019 $50 puts for $5.20 for a net $44.80 entry (below the lows) and that can be paired with the $50 ($11.50)/60 ($6.25) bull call spread at $5.25 so net 0.05 on the $10 spread and ALL BMY has to do to make a $9.95 return (up 19,900% return on you nickel!) is make it back over $60 in two years.  

That one is right at our target and the 2019 $50 puts have dropped to $2.44 while the $50/60 spread is now $6.88 so net $4.44 is up $4.39 (8,780%) which means for each $50 cash you put into this trade, you got back $4,390 already and the good news for the non-Members is that you can still pick up more than a double playing with the scraps we are leaving you on this trade – enjoy!  

Image result for phil davis jill malandrinoWe had 24 bullish trade ideas like those on our Watch List and many of them made it onto our Member Portflios and, in fact, Gilead (GILD), which we just went over on Tuesday, was such a slow-starter off our 2/17 pick that we used it as our first trade in our Nasdaq Portfolio on 4/27, which we discussed live that morning in my interview and subsequently went exactly as we planned it

The simple bull call spread required no margin and 10 units cost us $4,450 with no margin and already the net is at $7,650, which is up $3,200 (72%) with another $2,350 left to gain on what is now a deeply in the money trade.  That's another one where you can pick up our Members' scraps and spend $7,650 for the spread now and still make up to $2,350 (30%) in 16 months.  Of course, I can already see our Members rolling their eyes at "just" 2% monthly gains – it's probably time for us to close this one and find better use of $7,650 – but enjoy our leftovers!  

8:30 Update:  GDP came in stronger than we thought at 3.1%, which is up 0.1% from the previous estimate of Q2.  It was my mistake thinking GDP would go down because it's not Q3, when we have the hurricanes, this is the third revision of Q2 and not the market-shaking report we still expect Q3 to be.  It's not enough to move the needle on the real GDP for the year, which is still languishing at 2.2% and not at all likely to improve when Q3 preliminaries do come out:

So, between no bad economic news and promises of massive tax cuts for Corporations (which should boost earnings) – there's not much reason for the markets to sell off this week.  Everyone has forgotten about Kim Jong Un already – that was so last weekend, right?  As well-noted by Commonwealth's Brad McMillan:

“The proposal is very specific about the good stuff. It’s kind of nebulous about the bad.  It’s a wonderful present to the market, but we’ve got to unwrap it to see what’s really in there.”

The Russell (which we're shorting) blasted up 200 points from 1,150 in November after the election on the assumption that tax cuts would be good for business and then they added 50 more points in December to 1,400 and they drifted back to 1,350 in August but yesterday they came just shy of 1,500 – up 30% since the election.  That must be one MASSIVE tax cut, which is funny – as they only pay net 13% now.  Some of the notes include:

  • Corporate profits are way up, and corporate taxes are way down. In 1952, corporate profits were 5.5 percent of the economy, and corporate taxes were 5.9 percent. Today, corporate profits are 8.5 percent of the economy, and corporate taxes are just 1.9 percent of GDP.
  • Corporations used to contribute $1 out of every $3 in federal revenue. Today, despite very high corporate profitability, it is $1 out of every $9.
  • Many corporations pay an effective tax rate that is one-half (or less) of the official 35 percent tax rate.
  • As of 2015, U.S. corporations had $2.4 trillion in untaxed profits offshore. Another study, looking at S&P 500 companies, found they held $2.1 trillion as of 2014. This roughly five-fold increase from $434 billion in 2005 stems largely from anticipation of a tax holiday.
  • Corporations owe up to $695 billion in U.S. taxes on their $2.4 trillion in offshore profits. Having paid just 6 percent to 10 percent in taxes to foreign governments, they owe between 29 percent and 25 percent in U.S. taxes, based on a 35 percent tax rate with foreign tax credits.

To the extent that the GOP tax plan favors these large corporations over individual citizens, it will never fly.  Trump and his minions are trying to wrap these massive tax cuts in the middle-class flag but that's because there's no actual plan yet for anyone to refute and the writing of such a plan will take months – and can't possibly be voted on in time to alter 2017 and even 2018 is an outside shot and, by next November – the GOP may not have the votes to get anything done.  

In fact, you can't pass tax reform without a budget and our Government hasn't been able to agree on a budget since 2008.  Since that time, we have been operating under a "continuing resolution", which means the 2008 budget is simply extended with 8% annual increases.  That's the reality of what's going on so it's hard to imagine why the Russell is up 30% in less than a year.  If the tax cuts don't return money to their customers – where are the earnings going to come from?

 


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  1. The Russell is behaving like a 3x ETF right now!


  2. Morning, All!

    The webinar replay is up!

    https://youtu.be/IEB7bayO-tU


  3. The markets are behaving like adding $10T in the deficit will grow the economy by $20T! Most of these $10T will end up in the pockets of the top 1% and not in the economy. If we have learned anything from previous tax cuts is that the ROI is generally not that great. But donors need to be rewarded no matter the damage done to the country. And these guys get upset when football players take a knee. Idiots!


  4. Image result for hugh hefner quotes


  5. Phil/retail storefronts in NYC-noticed the same thing.  Also, I take the Harrison PATH every day and noticed several retail stores in the new buildings next to the station failing and changing hands already.  They used eminent domain for that area and the condos/townhomes have largely gone rental and the retailers are struggling too.  Not sure how the hotel is doing. 

    TEVA-seems like they are getting back to their core business and they are getting good multiples for what they are selling. 


  6. Good Morning.


  7. Good Morning, "A chicken in every pot and a car in every garage" Your so 1928 Phil, but it feels like 1929.


  8. Cycles research shows all cycles converging  in October. Last time that happened was 1929. 


  9. Good morning!  

    We'll see if the markets come to their senses this morning.  /ES is a good short below the 2,500 line and, of course, I have my /TFs (12 at 1,471 avg now) and /CL (5 at $51.71) shorts already.  

    Taking a knee/StJ – Look what a great distraction it was over the weekend while the Mueller investigation was heating up and they were once again failing on Health Care.  One thing the GOP is good at is managing the media spotlight.  

    Hotels/Seer – I've noticed the luxury hotels are half empty but charging more to make up for it.  Like the airlines, they just make up fees now.  Restaurants raising prices too – the rich need to get richer so we can afford our lifestyle!  

    1929/Enfil – I wasn't there for that one but it feels a lot like 1999.

    /RB perking up but be careful as oil is weak.  

    Remember, our goal was to make $1,000 so mission accomplished – the rest is greed!  

    Cycles/Mkucs – I just can't believe it's October already!  


  10. Phil……have you heard of UNIT, essentially a REIT tied to the communications industry, specifically WIN.  Anyhow, big drop over the last month or so, to the point where dividend is 15%+ now.  Looked into it a bit and kinda reminds of what you say about the likes of LB, CBI, etc.  Would appreciate your thoughts on it. 



  11. Taking A Knee – To all. It has become a political hotbed but for those of us who have lost loved ones, it is a real issue. My father, an Air Force Academy grad gave his life in service of this country. My cousin, a West Point grad with honors, gave his life in service of this country. If you have ever been on a military base and watched the back of a C40 Transport drop its tail gate and watch an Honor Guard carry the body of a loved one in a casket dropped with the American flag, it's hard to call some of us "idiots".   

    We fly the flag over head as a symbol that we are protected under the flag, yet the bodies of those who gave there lives for those protections are buried beneath the very symbol that we denigrate?  Both side have a say in this issue. Has it come to the point in this country that we can't even give thought to those gave their lives for the freedom to protest? Its not the protest, its the hurt that WE who have lost family feel. Why is that not an issue? 

    I pains me to type this and the tremble is real….


    • Stocks open slightly in the red, pulling back from yesterday's modest advance; S&P and Dow -0.1%, Nasdaq -0.3%.
    • European markets trade mixed, with Germany's DAX +0.3% and France's CAC +0.1% but U.K.'s FTSE -0.1%; in Asia, Japan's Nikkei closed +0.5% while China's Shanghai Composite finished -0.2%.
    • In earnings news, Accenture opens -0.7% despite reporting better-than-expected earnings and revenues, while BlackBerry +13.1% after beating both top and bottom line estimates and issuing above-consensus guidance.
    • WTI crude oil +1% at $52.68/bbl, extending its week-to-date gain to 3.6%; the energy sector (+0.6%) tops early sector leaders and extends its advance for the week to 2.4%.
    • U.S. Treasury prices continue to move lower, sending yields higher for the third session in a row; the benchmark 10-year yield is 2 bps higher at 2.33% while the two-year yield is flat at 1.47%.
    • Still ahead: EIA natural gas inventory, KC Fed manufacturing

    Bloomberg CCI gains in latest read

    • The Bloomberg Consumer Comfort Index jumps a point to 51.6 from 50.6 last week.
    • State of the Economy index rises to 51.8 from 50.7.
    • Personal Finance index shows a gain to 60.1 from 59.0.
    • Buying Climate index improves to 42.8 from 42.1.
    • Businesses and households across the eurozone are now more upbeat about their prospects than at any time in the past decade, an indication that they are undaunted by the prospect of reduced stimulus from the ECB.
    • The European Commission's Economic Sentiment Indicator, which aggregates business and consumer confidence, rose to 113.0 in September from 111.9 in August, to reach its highest level since June 2007.

    • Appearing on CNBC, White House chief economic advisor Gary Cohn calls the 20% corporate tax rate a "bright line test for us … We are not going over."
    • The current rate is 35% and 15% was the GOP hope earlier this year.
    • Previously: Tax plan details begin to leak out (Sept. 27)

    Republicans revise repeal of Obamacare to 2019

    • Despite the near-certainty that most Americans feel "repeal fatigue," Senate Republicans are now promising to repeal the Affordable Care Act by January 2019 when the current session of Congress ends.
    • Predictably, opinions vary on the GOP's new timeline.
    • Senator Bob Corker (R-TN): “Do I think there is a chance of them being successful? I do. I’m not going to necessarily place a wager on it."
    • Senator Chuck Schumer (D-NY): “I understand that, for political purposes, the Republicans don’t ever want to admit that ACA repeal is off the table. They promised it to the American people for seven years but deluded them on what it really meant.”
    • GOP strategist Alex Conant: “To the extent that we can make the healthcare debate about moving to a single payer, that is a positive for Republicans. I would much rather spend my time attacking Bernie Sanders’ plan than defending a repeal-and-replace that never passed.”
    • President Trump has stated his intention to press forward and negotiate with Democrats on healthcare legislation.
    • Source: WSJ
    • Theresa May has threatened a trade war with the U.S. after it slapped punitive tariffs on Bombardier's (OTCQX:BDRAFOTCQX:BDRBF) British-built aircraft.
    • She also warned that Boeing's (NYSE:BA) long-term partnership with the government is being "undermined by this behavior."
    • May has appealed directly to President Trump to intervene in the dispute, which has dented her hopes of signing a post-Brexit free trade deal with the U.S.
    • Venezuela's President Maduro has called on his nation's military leaders to prepare for war against the U.S., stating "the future of humanity cannot be the world of illegal sanctions, of economic persecution."
    • "We need to have rifles, missiles and well-oiled tanks at the ready," he declared, after President Trump said last month he wouldb't rule out a military option in the country.
    • Mexico has opened the possibility that talks to revamp NAFTA were so complex that they could run into 2018.
    • That would be beyond an end-December deadline designed to avoid the country's presidential election campaign which kicks off in March.
    • The next round of NAFTA talks, which will likely deal with "rules of origin," will take place in Washington on Oct. 11-15
    • After eight years in the post, Wolfgang Schaeuble is stepping down as Germany's finance minister to become speaker of the Bundestag.
    • The move will open the way for Chancellor Angela Merkel to offer the post to a coalition ally.
    • Many debt-mired countries in southern Europe are also likely to cheer the departure as Schaeuble was the leading voice for austerity throughout the euro crisis.

     

    • Facebook (NASDAQ:FB), Twitter (NYSE:TWTR), and Google (GOOGGOOGL) executives have been invited to a public hearing of the Senate Intelligence Committee Nov. 1, part of the panel's ongoing probe into Russia's use of social media to influence the U.S. election, Bloomberg reports.
    • Those officials were also invited to an open hearing to be held within the next month by the House Intelligence Committee on the same issue, Bloomberg says.
    • Earlier, a separate committee in the House (the Science and Technology Committee) began asking the three companies to hand over information about possible influence from Russian entities around fracking and fossil fuel issues.

    Longbow Research positive on McDonald's

    • Longbow Research upgrades McDonald's (NYSE:MCD) to a Buy rating after having the restaurant stock set at Neutral.
    • The firm is positive on U.S. trends for McDonald's in Q3.
    • Longbow's price target of $183 reps 19% upside potential for shares.
    • MCD +0.94% premarket to $155.50.

    H&M accelerates shift to digital model

    • Hennes & Mauritz ([HNNMY]], OTCPK:HMRZF) CEO Karl-Johan Persson issued a riveting comment following the company's sales update by noting that he expects online sales to surpass store sales before 2030.
    • The retail giant is increasing its shift to digital and cutting its new store target for this year.
    • "We are continuing to improve the online store and are adding more and faster delivery options, while at the same time further broadening the range of products online," says Persson.
    • H&M's Q3 sales of SEK51.23B came in just a touch short of the consensus estimate of SEK51.24B. The company generated profit of SEK5.02B during the quarter.
    • Shares of H&M are down 5.31% in Stockholm trading.
    • Hennes & Mauritz press release

    This is just a fancy way to deny people coverage:  New measures to fight opioid addiction

    • President Trump's commission on drug addiction has unveiled new measures to stop the opioid epidemic: strategic partnerships and new drug supply limits.
    • It follows a gathering at the White House which included presentations from various invited government officials, businesses and nonprofit organizations.
    • The panel also explored recommending new treatments for pain management without the use of addictive substances.

    Lyft close to selecting IPO adviser

    • LYFT is close to hiring an IPO advisory firm, sources told Reuters, as it prepares to accesscapital beyond its traditional route of private investments.
    • The plans come as Lyft's larger competitor, Uber Technologies, attempts to recover from a range of scandals.
    • In August, new CEO Dara Khosrowshahi set a new tentative timeline for Uber's IPO of between 18 and 36 months.
    • An effort to allow investors to trade digital currencies as easily as U.S. stocks has taken a step backward.
    • Intercontinental Exchange's (NYSE:ICE) NYSE Arca has withdrawn a request from Grayscale Investments to list its Bitcoin Investment Trust (OTCQX:GBTC).
    • The shares currently trade "over the counter" in less formal exchanges, but are nonetheless trading up 508% YTD.

    Toshiba signs $18B deal to sell chip unit

    • Scrambling for funds to stave off a potential delisting, Toshiba (OTCPK:TOSYY) has signed a $17.7B deal to sell its chip unit to a consortium led by Bain Capital.
    • Apple (NASDAQ:AAPL), Dell (NYSE:DVMT), Seagate (NASDAQ:STX), Hoya Corp. (OTCPK:HOCPY) and SK Hynix (OTC:HXSCF) are also included in the group.
    • The sale still faces legal challenges from partner Western Digital (NYSE:WDC), as well as hurdles for antitrust clearance.

    BlackBerry up 8% after Q2 beats and positive guidance

    • BlackBerry (NASDAQ:BBRY) shares are up 8.23% premarket after reporting Q2 revenue and EPS beats. The company reported record adjusted software and services revenue of $196M.
    • FY18 outlook: revenue, $920M to $950M (consensus: $919.53M); software and services revenue, 10% to 15% growth; FCF, positive after accounting for Qualcomm arbitration award net impact. 
    • Product and service revenue: Enterprise software and services, $102M (flat Y/Y); BlackBerry Technology Solutions, $38M (flat); Licensing, IP and other, $56M (+250%); Handheld devices, $16M (-85%); SAF, $37M (-59%). 
    • Customer retention: About 79% of software and services revenue was recurring and BlackBerry had around 3,300 enterprise customer orders in Q2. 
    • Financials: Gross margin was 76% non-GAAP or 74% GAAP compared to 29.3% in last year’s quarter. Cash flow from operations totaled $3M. FCF broke even in Q2 and BlackBerry ended the quarter with $2.5B in cash and equivalents.    
    • Press release    
    • Previously: BlackBerry beats by $0.05, beats on revenue (Sept. 28)

  12. pbrown….I don't think it degrades the lives and service of our great military. I think it shows that hate and bigotry is what those that served have fought for, and we, in this country, should do the same for those that are persecuted for the color of their skin within our borders.


  13. UNIT – Utlyguy, I was looking at this just a few minutes ago. 8-)

    Bought a small position and sold some Feb 12.5 puts.  Stock is yielding 17%.  Went ex-divd today.

    https://seekingalpha.com/article/4109862-uniti-falls-windstream-bondholder-claims-default


  14. Agree Pharmboy……..many of those that take a knee during the anthem have relatives that serve/served in the military or have teammates/teammate relatives who have.  Don't see them kneeling as showing disrespect for the flag at all.  Protest by it's nature is supposed to make people feel uncomfortable.  When MLK was organizing sit-ins, majority of people were against that as well.  When school integration was happening in the South, large opposition against that as well.  But through historically lenses, those activities are know seen as necessary and drove the changes that resulted. 


  15. Albo……….I initiated a small position as well today.  Will look at the put sale as well.  Thanks.


  16. pbrown… it pains me that you see it that way. I agree with pharmboy, this isn't about any disrespect for our troops, no matter how bad the right wants to paint that picture. I have a long military service history in my family too. 


  17. TEVA WTF?



  18. Uhhhh….I thought this site was about options and stocks?


  19. dclark, it is, but thanks to the toddler in chief it's what people are talking about.


  20. It's not that interesting.


  21. Its pretty amazing to me that we have a foreign country which appears to have successfully manipulated our electoral process, encouraged internal conflict (and continues to do so), and we have a President who has done nothing to curtail their efforts. If we're all patriotic, the conversation should not be about who's taking a knee (intended to be a respectful protest), but about what do we then do?


  22. UNIT/Ult – It seems their revenues are about 70% dependent on WIN and WIN is having their own troubles and may not be able to pay down the road.   UNIT puts out a bit too much of their profits in dividends, so they have no ability to pivot away from WIN's business.

     

    That means, either there has to be a dividend cut or they continue to be a one-trick pony where people are catching on to the trick.  After they cut the dividend and people freak out about that – THEN they may be worth a closer look.

    Cannabis/Pstas – If pot were widely legalized it would be great for food and film industries.  Dave and Busters (PLAY) too!  

    I'm kind of liking PLAY, by the way.  I see them renting out part of our local Sears at the mall – a very smart deal for them as I'm sure they are getting the space cheap and it's a prime corner with tons of parking (because SHLD sure doesn't need it for their empty store!).  

    They are not just arcade games, they have a bar and food and generally the places are packed (lots of kids parties too).  At $52.80 they are dropping $2.75 to the bottom line but that's up from $2.10 last year (+30%) so cheap for the growth and they are investing a lot into new locations and they only have 92 so far.  

    No short-term catalyst but worth watching so let's sell 10 of the 2019 $45 puts for $4.35 ($4,350) in the LTP to remind us to keep tabs on them (and pick up our monthly $4K!).  

    Knees/PB – None of those guys set out to "denigrate" the flag or the anthem.  The purpose of kneeling is to call attention to police violence against black people – an issue that is generally ignored.  I imagine they would say you have never been in the hood and watched an ambulance pull up with the blood-spattered corpse of someone you love who was gunned down during a traffic stop.  Here's Eric Reid's take in the Times from the weekend:

    In early 2016, I began paying attention to reports about the incredible number of unarmed black people being killed by the police. The posts on social media deeply disturbed me, but one in particular brought me to tears: the killing of Alton Sterling in my hometown Baton Rouge, La. This could have happened to any of my family members who still live in the area. I felt furious, hurt and hopeless. I wanted to do something, but didn’t know what or how to do it. All I knew for sure is that I wanted it to be as respectful as possible.

    A few weeks later, during preseason, my teammate Colin Kaepernick chose to sit on the bench during the national anthem to protest police brutality. To be honest, I didn’t notice at the time, and neither did the news media. It wasn’t until after our third preseason game on Aug. 26, 2016, that his protest gained national attention, and the backlash against him began.

    That’s when my faith moved me to take action. I looked to James 2:17, which states, “Faith by itself, if it does not have works, is dead.” I knew I needed to stand up for what is right.

    I approached Colin the Saturday before our next game to discuss how I could get involved with the cause but also how we could make a more powerful and positive impact on the social justice movement. We spoke at length about many of the issues that face our community, including systemic oppression against people of color, police brutality and the criminal justice system. We also discussed how we could use our platform, provided to us by being professional athletes in the N.F.L., to speak for those who are voiceless.

    After hours of careful consideration, and even a visit from Nate Boyer, a retired Green Beret and former N.F.L. player, we came to the conclusion that we should kneel, rather than sit, the next day during the anthem as a peaceful protest. We chose to kneel because it’s a respectful gesture. I remember thinking our posture was like a flag flown at half-mast to mark a tragedy.

    Continue reading the main stor

    It baffles me that our protest is still being misconstrued as disrespectful to the country, flag and military personnel. We chose it because it’s exactly the opposite. It has always been my understanding that the brave men and women who fought and died for our country did so to ensure that we could live in a fair and free society, which includes the right to speak out in protest.

    So, the short story is, no one is disrespecting the flag or the troops, that is just political fodder by those who love to sow hate and dissension among the easily-distracted lower class while they murder your children and raid your pensions unchallenged.  

    Maybe you can see why "Liberals" can't seem to understand your point of view.  We read the times, we get alternate perspectives you will never hear from the Conservative media.  These are not black and white issues and you should realize that when you see coaches and owners kneeling with their players – they get it, even if the fans do not.

    Imagine this being your life:

    How dare they protest!  

    Options and stocks/DC – Can't stop life from happening while we work, unfortunately.  


  23. well the SPXS calls I bought yesterday are getting interesting… XLF puts too, and took a stab on TZA calls as well. Perhaps I should have my head examined.


  24. BTW – FWIW – last month I had 15 days of straight futures wins, generally small, but 100-500/day winners. Nevertheless I gave it all back and much more having TF ripped me apart the last week. Done with futures – its not for me.


  25. futures/deano

    you got steamrolled for nickels and dimes.


  26. Rustle – indeed. Been a member for many years now, options have treated me well (finally), but futures – not worth the pain. Just wanted to share my experience for the benefit of others.


  27. futures/deano

    tight mental stop limits are key. 

    Premiums for TSLA next week are like an earnings week.  Delivery numbers come out and a lot riding on it.  If they are not ramping up Model 3 already, stock will test 300, if they have good news, you can see stock back in 360's in a heartbeat.


  28. Phil……..thanks re: UNIT.  Agree there is definitely some hair on it and a dividend cut is likely, though at this price if it's cut in half, still pretty decent.  Initiated a small position today and will see how it goes.


  29. steve scalise – "If it not for…."  

    Just imagine all the Americans finishing that line with 'Affordable Healthcare"

     

    Sleep well Mr. Scalise.


  30. SCO play mentioned earlier by Phil is a no brainer.  Options are so cheap on SCO, plenty of time to have any news to cause oil to go to high 40's and it's a home run play and very little risk.  Was looking at that yesterday to also buy cheap options at 35 or 34 longer term and keep that as a cover on any pop to write options against/


  31. ultguy/albo

    Interesting discourse about the master lease between WIN and UNIT.

    https://seekingalpha.com/article/4108632-6-reasons-15-percent-yielding-stock-strong-buy-largest-holding

    That worst-case scenario is the single biggest overhang for the REIT, because investors understandably, but incorrectly, assume that a Windstream bankruptcy would spell doom for Uniti's cash flow and dividend.

    However, because of how the master lease is structured, there is actually almost no risk to Uniti. That's because the indivisible nature of the contract means that should Windstream file Chapter 11 (restructuring), its creditors would receive nothing unless the telecom continued to operate.

    That in turn requires using Uniti's infrastructure and paying the agreed upon rent.

    And what if Windstream totally liquidates? Well, whoever acquires it (the assets are highly valuable after all) would be required to assume the master lease and keep the rent flowing in full…….


  32. Shorts/Mkucs – I notice that BA is up 45 points since Aug and that's about 350 Dow points from just that stock.  They benefit from the Bombadier thing as well as repatriating their overseas profits and, of course, lower taxes.  

    The Dow is only up 300 points over the same period – ALL BA!  

    Of course, that's no reason to short the Dow because BA is up for good reasons and not likely to reverse but still – indicates things aren't as fantastic as they seem when the other 29 components score -50 during the "rally". 

    Futures/Deano – The setbacks are super-frustrating.  The trick is keeping the losses in proportion to the wins – then you only have to win more often than you lose but that /TF move was crazy.  Unfortunately, crazy things do tend to happen in the Futures with alarming regularity.  

    This is why oil is tumbling:

    • China announces that it will force foreign automakers to start manufacturing electric vehicles in 2019. Though the start date is later than the original timing of 2018, the policy marks a firm commitment from the government to back the EV industry.
    • The directive from Beijing includes gradually escalating point-based quotas for pure EVs, plug-in hybrids and fuel cell-powered cars. The quota will amount to the equivalent of 10% of all vehicles produced initially before being pushed higher over time.
    • "Overall, it provides further support for the EV industry in China. EV sales will continue growing quickly, despite the phase-down in direct subsidies," notes Bloomberg New Energy Finance Colin McKerracher on the development.
    • Major automakers already have joint venture partners in China, but are closely watching to see if direct manufacturing will be allowed in some free trade zones.

    But didn't we know that last week?

    Speadking of futures, /KC starting to make a move:

    /KCH8 bottomed at $131.10 – great price.  Now $132.10 – still good.  

    UNIT/DC – Those are great points in favor of bottom-fishing but I'd still wait for the dividend cut to play out.  Sellers are merciless when dividends get taken away, no matter how silly they were.


  33. a statement in FGP earnings: "Weather for fiscal 2017 was a stunning 18% warmer than normal, and significantly affected our financial results." Well, duh morons.

    I'm an idiot for owning ANYTHING to do with traditional fossil energy. BUt what to do? buy TSLA at 380. Don't think so. I like my Blue Rhino powered gas grill. I'll keep FGP for now, but these climate denying morons need to wake up. That's all I ask.


  34. BA may be indeed a great short — traditionally a very cyclical business


  35. This tax policy will never pass.  Lot of outrage if they kill the real estate tax deduction.  That's a big one for average homeowner.


  36. Phil & DC – Thanks for you inputs.  Only opened a small position in stock & puts.  Occasionally you can lock in very high yields this way.  If not, it's not a big loss.  If they keep paying the dividend, it presents an excellent opportunity to average up and lock in more above average yields.  JMHO..


  37. deano – I share your feeling – unless TF turns down , I am out of the futures business for good


  38. BA / Phil – Bombardier a non-factor.  They don't even have a plane that competes with the C Series.  It was more about making a point which is what has pissed off the British and Canadian government. Frankly as a Canadian taxpayer seeing the billions going to Bombardier over the years with no government guarantees or equity, I am kind of pleased this is blowing up, but a tariff in excess of 200% imposed by the US government is a bit out of line. It will likely lead to Delta cancelling orders for over 100 C series if the tariff stands but the business will then likely go to Embraer who had similar sized planes and to my knowledge doesn't employ Americans while Bombardier has 7,000 US employees. 


  39. TDA question.  Does anyone know why the YTD P/L figure in the thinkorswim software, is different from the actual change in value in my account YTD?  It seems like it isn't counting commissions, even though I could have sworn that it used to.  Even if I include commission costs, I'm still off by $8k.  Any ideas?  


  40. Phil – My apologies for the politics on the board, and I agree with the protests and reason behind. I think both sides should respectfully keep those who volunteer to protect and serve all Americans could kindly find symbols of another nature.

    As to the former and losing loved ones, I lost another cousin a few years back. 7 yrs as an executive in the DOJ. Her life taken doing volunteer work in the southside of Chicago. A stray bullet ripped thru her jugular. I myself do tons of intercity service and have had the privilege of traveling extensively to help those in need. A duty I find richly rewarding. And something I hope all would do, too.

    With the utmost respect to all and no intentions to provoke, so my apologies and the last I will say on this matter. Thank you.


  41. Phil/UNIT

    Hard to argue with your assessment.


  42. Phil, Nat gas inventories must have gone thru the roof for nat gas futures to tumble so much after the big spike at 10:10 am. I did not see any mention of any inventories today…may be I missed it!


  43. PBrown – Russia is winning their asymmetric warfare against the United States and the West. Figuring out how and why this is, and where it might go from here, becomes extremely important for investment related decisions (for example, how NFL protests serve to tear a nation into two warring camps). Your statements are appreciated. Phil can police his boards if he wants, but otherwise, please do not apologize for posting.


  44. how Russia might be winning, or more accurately, how they are currently fighting


  45. bio/

    Well said!


  46. …and greatly appreciated. Thank you.


  47. He's two things I watched recently and i"m going to put them together:

    1) A natgeo special on John Hinckley: (white, rich family) who shot at president Reagan and (eventually) killed James Baker – he's literally out of jail walking around among us.

    2) A 4 year old girl begging to not be shot (black, poor family).

    Well, I'm not going to put these two things together. But you can.


  48. So, an old play that cratered is up today (ZYNE). Cannabis….invest in it for Fragile X.  LOL.  Open label study…which means…it does not matter.

    REV…wow.  Wow.. WOW.  Should have invested in lipstick for all the pigs.


  49. BDC… Walking among us. So is the cop in the video.


  50. REV – yikes, there's a chart that breaks all of the T/A rules huh?

    PLX – out for good. A bad pick for sure.


  51. PLX -- crying


  52. 18%/BDC – Well can't have too many 18% gains in temperature before we're all dead – so why worry about it?  devil

    BA/BDC – Would have been a great short but for the Bombardier tariffs.  219% tariffs tend to hurt sales.  

    The dispute centres on a Boeing complaint that the jets were being dumped in the US at low prices after unfair state subsidies from the UK and Canada had helped Canadian-owned Bombardier win an order for up to 125 aircraft with US airline Delta.

    Boeing's complaint came despite the fact it did not bid for the contracts to supply Delta. A spokeswoman for Bombardier described the proposed duty as “absurd".

    These trade wars can turn very ugly.  They can pick on Bomba because of Brexit – otherwise BA would face retribution from the whole EU.  

    2,500 held up well on /ES – terrible sign for the bears (if any are left alive).  /TF with a pop back up too.

    Tariffs/Stu – That's why they are silly, so many moving parts you hurt as much as you help in most cases. 

    P&L/Palotay – I think it only counts realized losses but hard to say as they keep messing with the formula.

    Well said PB.  We all have to follow our conscience – and remember to respect the choices made by those who are following theirs.  

    /NG/Jasu -Nope, it was actually a smaller build than expected but a good excuse to re-test $3 and throw off the weak hands.

    I do like /NG long at $3, of course but hurricane season is over so may as well play next October (/NGV8) for the duration  It's at $2.96.  

    Now, as a trading plan for a long-term Futures contract:  

    • /NG has ranged up and down from $2.95 to $3.15 this month, that's a $2,000 swing.  
    • /NGV8 has gone from $2.90 to $3.00 so a narrower range, which is fine as we're going for a long-term move.  
    • For the year, /NG has been as low as $2.60 but didn't last long, $2.80 is the real floor so -0.20 is $2,000 per contract to the down side (and it was in late Feb).
    • Knowing that, if you intend to short /NGV8, you have to have a plan.  My plan is to bail if /NG (front month) fails $3 and then see what happens.  If we do spike down to $2.75 on /NGV8, I think I'd start playing that with some conviction, looking to DD at $2.65 and again at $2.35 – but hopefully not as I'd be down about $7K.  
    • If I do DD the 2nd time at $2.35, I'd have 4x at $2.525 and be down about $7K but, on the other hand, a move back to $3.025 would net me $20,000 so that's my risk/reward on the play.

    You have to have a trading plan, know your risks and know what you plan to do while a position moves against you and those risks have to be something you can manage COMFORTABLY – or you should not even consider the first step!  

    Speaking of risks – $51.25 on /CL!  Gotta take that and run for now.  


  53. Phil – I appreciate your comment and wholly agree. Thank you. 


  54. BA is fairly priced at ~130-135 IMO, but we need a market downturn to be successful here (whenever that comes). October can be a very strange month, though I'm giving this run a mean probability of ~13 months (Oct 2017 thru Oct 2018 EOM). This means there's a 50% chance of the downturn coming >13 months out though, so dry powder and scaled hedging / short-speculation plays are imperative (as opposed to gambling on IWM futures).

    I know it's purely BS, but I'm partial to believing October and March are special.

    March 2000: market top

    October 2002: market bottom

    October 2007: market top

    October 2008: market crashes (this was fairly memorable)

    March 2009: market bottom

    October 2017? October 2018? For me, it's worth holding IWM puts now in Oct17, or Nov17's. I mean, you never know… :)


  55. UNIT – As a REIT don't they need to pay out 90% of earnings which should help protect the dividend as long as earnings hold?  Downside risk is more to the Windstream contract risk which has been hammering the stock although opinion strongly suggests they have a strong position.  



  56. Stuman, I have a large position (for me) in UNIT and have read everything I can find, though not the actual note covenants, but it seems that UNIT is in good position there.  But too much bad news, true or not, can take its toll.  Do like the $15 puts.


  57. And today was dividend day; it has reacted well enough.


  58. FIZZ – these guys can't keep La Croix on the shelf!! We would know, we drink 4 of them at least per day… I know it's been up bigly already, obviously, but could it have legs for a double??


  59. jeffdoc: “We have to put a stop to this,” said Lenz. “This is selling a synthetic instrument on top of another synthetic instrument. This is the highest form of speculation.”

    What could go wrong? lol







  60. America’s Cleanest Cities [Infographic]


  61. FU TEVA!!!!!!








  62. Phil/LTP

    when was the last LTP review done? do you have the screenshot of the LTP portfolio?

    thanks and regards


  63. DJ Imax Price Target Cut to $25.00/Share From $26.00 by Credit Suisse 

    Sep 28, 2017 12:02:00 (ET)


  64. BA / Phil – As you pointed out, the EU would have certainly been fighting these tariffs and help Britain but it does show that Brexit will have some side effects yet unforeseen. The UK is dreaming if they think that the US will be jumping in any trade agreement that doesn't benefit US corporations first. And the EU is not showing any kindness either now. Going to be painful. 


  65. Robert Reich is the best.  Wish he was back in a meaningful government role.


  66. Phil – Oil – that Sunni Shiite thing is not going away.  Iran stealthily invading?  Saudi's and Israel stay at home and watch. 

    I tire of religious zealots and their wars, kill em all and let their invisible man sort it out later.  Now back to my totem, May and Festivus poles, some IV, then off to a Led Zeppelin concert and Out.


  67. Rustle – And Steven Moore is an idiot who has never been right on anything related to the economy! Easy picking there.


  68. Phil, what do you think might cause /TF to come back down a bit in the next couple of weeks.  I'm not in futures, but in TNA bear put spreads.  They've worked for me before--as long as i keep repositioning.  But this move since thursday has been crazy.


  69. Cycles/BDC – This time may be different but it feels like 1999.  The bears were right all year while the market doubled – 6 months later, all those gains evaporated and more.  Same stocks, same sales, same economy even – just a change in mood and POOF!  

    UNIT/Stu – Well they COULD put some of that money to work instead of distributing it.  REITs are allowed to invest in growing the business.  Now, it's possible the management, like the article above, feels the money from WIN is solid and may also feel that, at this point in time, buying new lines and towers is overpriced in this market so they'd rather wait for a nice collapse and THEN use their cash-flow to pick up cheap assets but, for now – they'll just distribute what they don't need.   Sounds good, right? 

    Trading/Jeff – I'm pretty sure that scheme is illegal here.  

    FIZZ/BDC – Too fizzy for me.  Nice earnings growth but you have to pay 50x to play now.  At 25x in March I would have liked them more.

    TEVA/Jabob – Well, we had 10 good days.  

    LTP/Pat – I have to put a summary together.  Here's Part 1, Part 2 and Part 3 

    /TF/Lunar – Only earnings disappointment or Nuclear War at this point. Depends what you mean by a bit.  I need 1,470 to get even, that's easy.  1,450 is even possible but below that needs a catalyst.  As I noted this morning, we're up 30% which is a 25% move with a 20% overshoot so the chances for a 4% correction (60 points to 1,440) is pretty good and the chance of a 30-point correction (to 1,470) would be ridiculous only if it doesn't happen before we pop over 1,500.


  70. Man, should have just flipped long on /CL – $51.60 already.  

    Good timing on the exit, at least.  


  71. TUES with a 3 handle.


  72. pop 1500!!! does that mean you will flip long at the dip?  on /TF?


  73. ~~GILD – From Briefing

    Gilead Sciences breaks down to one-month low; COO retired last night; RBC was out positive on the stock this morning but did acknowledge HCV estimates need to come down  (80.14 -3.72)


  74. TEVA short interest as Sept 15 still seems pretty high although it declined. 

    ~~Teva Pharmaceutical Industries Ltd.’s (TEVA) short interest decreased to 42.27 million from the previous level of 45.76 million. Shares were trading at $17.26, in a 52-week range of $15.22 to $49.86.


  75. seer--It is hard to believe TEVA was trading at 50 a year ago…. OUCH!

    I will be dancing if it could just get back to 23!


  76. My  first day today after being in OOP for a year.  Pretty cool.


  77. /TF – I would be shocked if they don't push it to 1,500 for the end of quarter print.  Volume doesn't exist and they are so close….why not just pin it on the close tomorrow


  78. Bite thy tounge Jennings!  :)


  79. Rustle

    SCO no brainer.

    We did this one already on 9/17 as a now brainer 33/39 with a 35 put. Present down 312$.

    Question why do you need a brain to lose money?


  80. More on GILD

    ~~•This morning, RBC reiterated its Outperform rating $91 tgt following meetings with mgmt. They came away not only remaining comfortable with the base HIV business, but feeling more confident in GILD's ability to extract LT growth from their CAR-T/KITE platform and likely additional bolt-on assets — though they believe HCV consensus likely need to come down. With a clear commitment to maintaining/developing leadership in core verticals, they see appreciation potential in an improving story.

    Phil – I covered 1/2 my GILD position on the Sept 7th spike.  Nice profit on the short calls.  Time to sell some puts ?

    Looking at the Feb 75 puts at for a $72 entry.


  81. GILD move today is abnormal… perhaps some end of month/qtr flow – profit taking. 


  82. Learner – As you know tomorrow is the end of the quarter.  Lots of currents; perhaps profit taking and/or window dressing.  Be interesting to see how GILD trades tomorrow.

    I sold a few Feb 75 puts for $2.95.


  83. Hi Phil/BBBY .. I sold the Jan2019 $35 put for $3.70. It is near $12.70 now. Down $9. I was considering rolling to 2xJan 2019 $25 puts to get my $9 back should it rise to just $25. I would appreciate your view of this. Thanks, DM


  84. /TF/Lunar – I'd flip long at 1,400!

    Glad you could join us E.l.

    GILD/Albo – I think a bit of a falling knife at the moment, let them settle down.  Remember, 5% in one day and finishing there means likely follow-through of at least 2.5% more ($77.50) and a strong retrace of a run from $60 to $85 is $6 back to $79 anyway.  So, if you are looking for a bullish sign, look for a strong bounce off the $85/79 drop, which is $2.40 so $81.40 strong, $80.20 weak.

    EOQ/Albo – That's right, be ready for anything. 

    BBBY/DM – Well, keep in mind you are net $31.70 and the stock is at $23.50 so you effectively own it and are waiting to be assigned.  The 2020s will be out soon so you might want to wait, though this is a good price for them as they make at least $2.50/share but I'd want to see another Q of earnings before getting more aggressive.  The 2019 $35 puts are $12.25 at the moment and the Jan $30s are $6.70 and the 2019 $27.50s are $6.40 so it's reasonable to assume that you should be able to roll to 1.5x the 2020 $27.50s to get your $9 back, rather than 2x the 2019 $25s.  On the whole, to me it means there's no harm in waiting.  

    How BBBY’s Valuation Multiple Compares with Its Peers

    How Wall Street Analysts View BBBY Stock after Weak 2Q17 Earnings

    Analysts expected Bed Bath & Beyond to post EPS of $0.95 on revenues of ~$3.0 billion. Also, the company’s 2Q17 SSSG (same-store sales growth) of -2.7% missed the analyst estimate of -0.7%. Looking at a challenging environment, Bed Bath & Beyond’s management has set its 2017 EPS guidance at $3.0, which represents a decline of 34.8% from $4.60 in 2016. 

     

    The lower-than-expected 2Q17 earnings and the weak outlook appears to have made investors skeptical of Bed Bath & Beyond’s future earnings, leading to a fall in its stock price. On September 21, 2017, Bed Bath & Beyond was trading at $22.15, which represents a fall of 17.7% since the announcement of its 2Q17 earnings.


  85. TEVA – Doing calendar verticals here like buy a $15 March call and sell the Dec $17.5 call for $1.91.  Betting the stock doesn't move until after year-end due to tax loss selling.  If it moves up beyond $17.50 in a stable way, will just roll out to the March time-frame. If it goes down through 2017 I can live with that.  Did the same with some 2019 long calls. 


  86. WPM – Was just looking at this and Primero Mining.  Just a heads up that in the next couple of months there will be some news here and I think it will lead to a write-down of assets for San Dimas which is on the WPM books for $138M at WPM, down from $140M in 2016.  Primero was to provide 6 million ounces a year at $4.04 so margin to WPM in the range of $12/ounce so at $16 x 6 million ounces is $96M year.  In the Silver Purchase Agreement annual period ending in August it looks like a shortfall in the range of 1.5M – 2 million ounces delivered by Primero to WPM or call it $18 – $24M in margin.  WPM backed a loan to Primero in the range of $75M – $80M which is due November 23rd so something has to be done by both parties by then.  Primero indicates it needs to renegotiate the Silver Purchase Agreement in order to keep San Dimas operating.  Proven reserves are 11.5 million ounces and probable close to 30 million ounces.  So I see a possible write-down for WPM in this quarter for San Dimas or a significant risk disclosure.  The bigger issue in my mind isn't the write-down but the fact this mine represented 9% of WPM production in 2016 at 6 million+ ounces and it is clearly at risk.  This may lead to volatility in this stock or it might be priced in but I thought this detail was worth sharing.  


  87. Phil – Thanks on GILD.  I may be too early, but will sell more puts 5 points lower if it get there.

    Pharm – I wasn't even aware that GILD had a CAR-T/KITE platform.  Seems to me that if it gets some legs their PE expands greatly.  Any thoughts ?


  88. Albo – GILD just bought KITE for $11B.  Yes, they are expanding their footprint.  They have plenty of cash and I am hoping that they like other companies in IPF and NASH.  :)  They are ahead of Juno and BLCM, but this is a very crowded field.  NVS is right there.


  89. thanks  stuman



  90. FDA OKs continuous blood sugar monitor without finger pricks


  91. Elon Musk wants to fly people around the world in under an hour






  92. Thanks, Pharm. 


  93. Good morning! 

    Silly end of quarter day so not much to trade as it could all unwind next week.

    Mostly things are flatlining, except the VIX, which has collapsed back to 9.50 again.

    Europe is up half a point though, so maybe we'll pop a bit into the open. 

    Primero/Stu – Lots of ongoing issues but, on the whole, Primero is squeezing SLW for better terms, using the strike and such as an excuse.  I agree it's unresolved and SLW may call it a loss while they renegotiate but our spread is 2019 $15/25 with short $17 puts so, if anything, it will be an opportunity to buy back the $25 and roll the $15s to a better position while people panic.

    GILD/Albo – Save some money for ABT, that new blood-sugar monitor is going to be huge. 


  94. phil, did i understand correctly you plan to remain short (will you double down?) even as /TF prints 1500, which many on this board including you think is inevitable.  so you would not go long till we retrace to 1400?