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Terrific Tuesday – Apple (AAPL) Tests $160 Again

The bull is back! 

Well, it never left but it paused for a day and that's something, right?  As is often the case when the markets need a lift, Apple (AAPL) is getting a boost and, since it's in the Dow, the $10 run this month has added 85 of the Dow's 1,000 points but, in the S&P 500, AAPL is a whopping 4% of the S&P 500's weight so the 6.66% run from $150 to $160 adds 0.25% to the S&P, which is up 100 points (4%) over that time.  In the Nasdaq, fuggedaboutit, as AAPL is closing in on 15% of the Nasdaq's total weight so adding 1% to the index all by itself from that run while the entire index is up 4% so 25% of the move comes from AAPL and probably another 25% from AAPL suppliers!  

Boosting some of the key components in an index through upgrades, M&A rumors or straight-up buying of the stocks is a great way to mask selling by Fund Managers and Banksters when they don't want to scare off the Retail Investors while they move to CASH!!! (have I mentioned how much I love CASH!!! lately?).  Yesterday, for example, the Nasdaq finished up but 1,514 stocks declined while only 1,370 advanced in the index.  A falling Advance/Decline Line is one of the things we watch for if there's going to be a correction, so we'll be keeping an eye on it during earnings but nothing to worry about… yet.

Meanwhile, it's earnings season and yesterday we got a beat from Schwab (SCHW) and SONC (SONC) although the latter blamed the hurricanes for any shortfalls.  KMG (KMG) and Netflix (NFLX) missed but Netflix was immediately forgiven by rabid fans, who are happily paying the 10% rate hike which will, hopefully, compensate for their profligate spending.  NFLX did add 4.5M new subscribers and, at $13/month, that's $702M/yr in new revenues added in just one quarter – not bad!  Unfortunately, they have also increased content spending by $1Bn/yr ($8Bn now) – so we'll see how things go for them but the bottom line is they burned $465M in cash last Q – not good.  

None of that stops the company from commanding a price ($203) that is 250 TIMES what they earn 0.80 – and even that is assuming all goes well.  We think it may be time to short NFLX again because this is all the "good" news baked in and the price hike is here and 250 times earnings is a lot.  Revenues were $8.8Bn last year and we've got the subscriber growth and the rate hike so let's go crazy and say $11Bn next year but their are buring over $2Bn in cash-flow for the year so $2Bn more revenues only stops the bleeding – if everything goes perfectly.  We're thinking it might not.

It's tough to pick a top in a momentum stock but we'll see how it goes today and look for a simple put, perhaps the 2019 $170 put if we can pick it up for $10 as NFLX moves higher – that would be a fun one to hold through next Qs earnings.  We don't actually need the stock to fall below $170, the puts have a delta of 0.25, so they gain 0.25 for each $1 NFLX drops so we make $2.50 (25%) on a $10 drop back to $193 and we can take that and run if we think $190 will hold – which will depend on why it's down (other than people not being idiots and paying 250x what a company earns - that ship has sailed!).  

Speaking of sailing, back in July we told you we were playing the Cryptocurrency game with GreenCoin and, at the time, they were trading at 0.000000012 Bitcoins.  Recently they hit 0.00000158 Bitcoins for a 10-bagger but have now calmed down back to a double at 0.00000025 and, as I reminded our Members in our Live Chat Room this morning:

We came in at 0.00000012 and it's been as high as 0.00000158, which is a 10-bagger so I REALLY hope people took half off the table with at least a double so they have a free ride from here.  Even yesterday's settlement is still a double from where we started and that's the way you have to play these small coins – buy in a low channel and then sell half on a spike up so you no longer worry about the fluctuations.  

It's actually a lot better in Dollars, of course, as BitCoins have doubled since July as well!  If you want to learn more about GreenCoin and other Cryptocurrencies, follow the links from that July post.  We also played GRNBF, which is the "bank" for GreenCoinX (no relation, oddly enough) and that one is another 10-bagger on the Penny Stock market (which we usually avoid but that's all there is in Crypto).   

I don't advocate chasing either but we'll be hunting for the next new and exciting bargain as King Bitcoin tests the $6,000 mark and it's fun to think about how pissed off Jamie Dimon is every morning when he sees that in the papers!  Dimon has a new ally though, Nobel Prize-Winning Economist Robert Shiller is calling BitCoin a "fad" and, by extension, the whole Cryptocurrency marketplace but he says he'll still play it "because I know I can sell it and get out of it" – that's our kind of investor!  

Notice every chart we have this morning is going up and up and up so it's bubbles, bubbles everywhere yet we reiterated our Russell (/TF) shorts just under 1,515 in yesterday morning's Live Chat Room and we'll be sticking with those and this morning we added a short on Oil Futures (/CL) at the $52 line (with tight stops above).  We'll see how earnings go this morning but Goldman Sachs (GS) already knocked it out of the park with a 25% beat that should send them up to $250 – and that's only 20 times their earnings!  

It's a little early to make predictions but I love earnings season – it gives you a chance to read the tea leaves.  For example, despite beat by GS and MS, both showed significant declines in trading revenues which means purer trading houses like SCHW and others are not likely to do as well when they report.  The Big Banks are likely to put a top in the index (XLF) as they report early and then we may start seeing some misses which makes the Ultra-Short Financial ETF (FAZ) and interesting play at $13.80 and the November $13 calls are only 0.95 so just 0.15 in premium to take a stab at some misses from the Banks is a fun play to start us off. 

It's going to be a very interesting earnings season because SOMETHING is wrong with this picture and either it's the US is over 50% ahead of itself or the rest of the World has a lot of catching up to do – we'll have to wait and see:

 


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  1. There might be change of perception going on and that won't help with the tax cuts:

    http://www.eschatonblog.com/2017/10/aspiration-interrupted.html

    I am completely making this up, but I do think once upon a time the basic story of "Americans want rich people to have their taxes cuts because they think they'll be rich one day" had…some truth to it. A little bit, anyway. 

    I don't think it does anymore. It's what happens when .1%ers get greedy and don't just screw the poors and the middle class but also the not-quite-rich-enough, too. It's tough to be merely a 10%er.


  2. Good Morning,

    Phil, I have some butterfly adjustments to make with the upcoming Oct 20 expiration.

    What would be your recommended Jan plays for …

    1) PG (currently sold $90 calls, $92.50 puts Oct expiry – )

    2) CTSH ($72.50 Oct puts are expiring)

    PFE and MSFT for January expirations.

    Will it be better to wait for earnings from these companies before initiating new positions? 

    I am inclined to just sell OTM calls and wait on the puts. 

    Your thoughts much appreciated.

    Thanks,


  3. Turns out that the average citizen would be OK with a carbon tax as long as it's used to fight climate change:

    https://www.vox.com/energy-and-environment/2017/10/13/16468318/americans-willing-to-pay-climate-change


  4. Good Morning.


  5. Looks like NFLX already down, so is oil.  I have to getup earlier here in Phoenix


  6. Here is some perspective on bankruptcies for M, TEVA, FTR (IMAX is not rated).  M and TEVA are the last tier of investment grade (Baa3) before high yield (junk or below investment grade).  M has a stable outlook and TEVA a negative outlook.   It's highly unusual for a firm to go from that level to bankruptcy.  A downgrade to below investment grade would result in a strong bid for the company's debt given the amount of debt (size=liquidity) and the performance and financial ratios of the comparables in the index (especially at that level).  In other words, theses companies will have ready access to credit at rates that may not be too much more than their current rates (ultimately).  It's not likely they will stay below investment grade forever given the various strategic options they have, ability to generate cash and stated preference for an investment grade rating.

    FTR is rated four notches below M and TEVA at B2, but has a negative outlook.  The credit markets seem to expect a downgrade, but believe the company will stabilize at the lower level.   Definitely riskier than M and TEVA from a credit perspective, but hardly a foregone conclusion.  Still improving cash generation as the company pays down debt, but the missteps in the integration of the acquisition, previous lack of execution and customer attrition are disappointing.  Most should be behind them now and it's not likely they lose all their customers, but this is likely to be a protracted recovery and cutting the dividend further to pay down debt faster would be the prudent thing to do (especially given the percentage of variable rate debt).


  7. NFLX

    WELL, THE STOCK IS DOWN!

    If you believe it will stay below $210 by Friday, the $210 calls can be sold for $0.75

    If you are wrong, worst case is to put a stop on the trade somewhere


  8. TSLA fell 30 points the week before earnings last quarter.  Then rebounded hard.  Looks like it's a little more solid now but I doubt this earnings period they will be pulling a rabbit out of a hat.  Think you might see some selling a few days before earnings next week.  Will probably being hyping the semi truck that won't be coming out for years to deflect from Model 3 shortfall, bad revs and losses and high cash burn for qtr.


  9. Phil/Greencoin.

    If I put $1000in greencoins now (buying BTC worth of $1000 and then immediately converting them to Greencoins) and bitcoin falls 50%. What is the impact on the greencoin? somehow I am not able to get around this.

    thanks and regards


  10. Good morning!

    These morning pops are fading fast this week.  

    Big Chart – Encouraging rejection on the RUT but means nothing if the others are out in space though, of course, the NYSE is still in the red and that's the realest index we have.  

    Perception/StJ – When I was a kid, people used to leave my neighborhood or my school because they got better jobs or moved to better places.  Now the people who are moving out of my neighborhood are usually ones that can no longer afford to be there and are "downsizing" their lives.  When upward mobility begins to die, so does the American Dream and that can quickly turn into a nightmare for those who think the staus quo can't change.  I think that's why the kids are into rap – at it's core, it's saying "F the American dream" – that's the message that rings true to them.

    Butterfly/Learner – I'll do the portfolio shortly and feel free if you still have questions after.  

    Early/Baron – It's a bit of a pattern that we short oil into expirations if they have a lot of open contracts.  I would have shorted yesterday but I was hoping for higher run to get a better entry.  

    Good summary Seer, thanks.  Good point, I often like to buy into companies that are cutting dividends when it's a wise long-term move that tanks the stock.  

    NFLX/Maya – Not enough reward for the risk for me.  

    By the way Maya and anyone else interested in our Hedge Fund, Greg and Doug will be sending out paperwork in about a week to people who were signed up properly as qualified investors AND committed.  Contact Greg at Philstockworld dot com if you think we might have missed you (ie, you haven't heard from us recently).

    TSLA/Rustle – All I know is I went to check out the Model X and they'll lease me one for $1,100/month, which is just $39,600 for 3 years for the "$140,000" car.  It's such BS because they book a $140,000 sale from people who wouldn't ever give them $140,000 in exchange for my $3,300 (first, last, deposit) payment.  In 3 years, will they be able to get $100,000 for a used one or will they finally take the loss?

    Tesla Announces New 2-Year Lease Deal For Model S 60 From $593 …

    That's their "$80,000" car.  And it's their own financing – no bank would ever agree to their insane residual values.  

    GS down?  That's odd.  There's really not much else they could have done.  

    GreenCoin/Pat – Well, all the cryptos tend to move with BTC so maybe down but then the lower value of BTC could raise the exchange for GRE but it's all SILLY, so don't take it seriously.  If $1,000 is how much you would throw on a craps table to see if you double or lose it – then GRE is for you but, if $1,000 matters to you – don't play with any Cryptocurrencies as they are volatile, dangerous and possibly worthless as well.  Ultimately, if BitCoin collapses, the whole system will likely collapse with it but, if Bitcoin succeeds, then these tag-along currencies can easily be 10-baggers so, for me, the reward outweighs the risk and that's better odds than I have at craps – so I'm happy to play.  


  11. TSLA/Phil

    I think they are a company playing for the now and hoping a for a miracle in 2 years.  They think they can just raise cash forever and so far that strategy has worked.  TSLA most profitable product is stock.


  12. Phil/GRE,

    btw (by the way :-) ) this link is not working somehow

    http://www.philstockworld.com/2017/04/24/bdcs-crypto-corner/

    regards


  13. Phil, quick question on rolling (or not) a short call…

    I have the following position on IBM, i think it was a smaller version of one you put in a portfolio about a month ago:

    +Sold 5 Jan 2020 $120 puts 

    -Bought 10 Jan 2020 $140 calls

    +Sold 5 Jan 2020 $160 calls

    and then i sold an additional 5 Jan 2018 $150 Calls, shorter term calls that i plan to either rinse and repeat or roll if IBM is over 150 nearer to expiration. 

    Just looking for general advice on the roll of the shorter term short calls. Currently IBM still under 150 so id say we're on track for the expire/rinse and repeat route. But i know IBM reports earnings tonight, I was thinking i'll just wait and see how earnings pan out and then decide what to do, if IBM moves down theres a greater likelihood of those $150's expiring worthless. If they have good earnings IBM could likely move those 150s into the money, in which case I'll roll them out or out and up. 

    Does that sound about right? is there anything else i should be taking into account prior to the earnings release? If IBM does move above 150 is there a benefit to rolling sooner or waiting until closer to expiration to roll? 

    any general advice or tips for best ways to deal with short call around earnings would be much appreciated (i've got a full cover so nothing too bad can happen). 

    Thanks


  14. Phil, Oil popped at the open so got in, happy now.


  15. pat I can walk you through anything to do with crypto (or anyone else) – just email me at biodieselchris at gmail dot com. A couple of really big Red Flags which Phil already pointed out:

    Crypto is 100% risk. I would know. I lost 6.5 bitcoins in the "mt gox" fiasco in 2013. THERE WILL BE MORE FIASCOS. You are at the beginning of the beginning and these coins are more like nerds' gaming tokens, more so than "real assets." So don't put anything into them you don't really want to lose. "Craps money" is a very good way to put it.

    A good strategy may be to diversify. Once you have the ability to buy "altcoins" (i.e, you've bought some bitcoin and have opened a crypto trading site like Bittrex), the altcoin world is your oyster. My suggestion here continues to be to diversify greatly. How I do this, is I peruse this list, maybe going out to page 3 through 5, where there are coins with market caps of <$1 to $10M (i.e., still kinda "small"). For $1000 you could buy 50 of them with about $20 each. If one "pulls a hundred bagger," which is very possible, you've got $2k to show for it regardless of the value of the other 49 plays. On the list, you can click on the coin and follow the links to the announcement (usually on bitcointalk forum), see if they have active FB and twitter feeds, and a website that describes the project. Then like anything else you ask yourself, how believable is it, does it look like it's bringing some new and interesting value-add tot he world, etc, etc.

    The greencoin foundation ended their activities due to lack of funding (bills were due). The coin goes on of course because that's simply how these things work.

    From 2012 through 2016 altcoins, which are generically defined as everything except bitcoin, were Dogs with Fleas. Litecoin for example shot up to $50 when bitcoin first "went big" (Nov. 2013) and then died, hitting single dollar values until 2017 when altcoins went on a massive run (litecoin is now over $60 again – they were one of the first "altcoins"). Expect long periods where you simply hold and nothing really happens. Ethereum is all the rage these days and it didn't even exist until July 2014 (when bitcoin was already $600 and in the news), and it came into 2017 at $8 and now it's over $300. Just like with stocks: simply because you are "now in" doesn't mean "something will happen." We all know this frustrating feeling but it's so true!

    The point is, me, you, or anyone, just never ever know what's going to happen tomorrow or in a year. Nobody. The Feds could take over Solarcoin and it could go to $12 each. Tomorrow. Or the Eurozone, or the University of Tulane. It could happen (solarcoin is run by a non-profit foundation that pays 1 coin to solar producers for each MWh generated). Or it might go to $0.00. It could happen. (and so on and so forth).



  16. bitcoins/bio

    OUCH! 6.5 bitcoins is a nice chunk of change now.


  17. Phil,

    How do you feel about miners these days?  Not in CDE, but if you had choice, would you add to existing ABX or WPM, or diversify to CDE?  Thanks.


  18. Did I miss the dip?


  19. Rustle – yeah, I remember at the time it was in the neighborhood of $4-6k.

    IBM chose to partner with Stellar (XLM). I never really got into Stellar unfortunately (there's just so many!) but they doubled on the news last week. With this kind of corporate backing it could be a stabilizing and legitimizing force. I'm expecting to see more of these public/private blockchain partnerships as well. There are a number of reasons for this. If anyone is interested I will detail it.

    It's now at $600M market cap, and with the flagship bitcoin at $100B, there's 100x potential — again not probable, just plausible!






  20. Phil / idea - do you want to put together a crypto holding entity?


  21. Phil, Would you please take a look at the pricing on WSM, looks like there ought to be something there to play.


  22. BDC/GRE,

    Yes I will send an email to you. Thank you for providing your inputs and the red flags.

    regards


  23. TSLA/Rustle – Good point!  

    Link/Pat – I'll have Greg check it out.  

    IBM/Crs – Well IBM is not at $150 so there's not really an issue, is there?  It's only a 1/2 sale and the Jan $150s are now $3.10 and the March $160s are $1.40, so there's your 2x roll or the June $165s are $1.70 and by then you are in the money on the 2020 spread and you're fully covered anyway, so why are you worried at all?  If you think it's too tight and you are bullish, buy back 2 of the 5 covers and then you are more bullish into earnings.  If you have the ability to buy 10 of the $160/180 spreads after the short $150s go in the money, then I wouldn't worry about it as is.  

    I like IBM into earnings, by the way, you can sell the 2020 $130 puts for $12 to net in for $118 and leave it at that or you can add the 2020 $130 ($22)/$160 ($9.25) bull call spread at $12.75 to net 0.75 on the $30 spread with $29.25 (3,900%) upside potential if IBM gains 10% in two years and your worst case is owning IBM at net $130.75.

    Oil/Baron – Good job.  I decided, long ago, not to sweat the Futures plays I "miss" when I'm sleeping.  There's always another one and you trade a lot better when you are happy and alert.

    Miners/Baron – I think gold and silver still have a good run in them but it's taking forever for inflation to kick in.  I would always go ABX first, as long as they are in the teens.  WPM is very cheap down here too.

     

    Entity/BDC – Could be fun.  How about a call with Greg and I after hours one day or weekend morning?

    Image result for the entity

    WSM/Baron – That's an old favorite of ours.  I have been slow to get back in, even though they are back where we entered (and out as they got to $80) since I really don't like Pottery Barn but I do still like the company, making a barely growing $300M with a $4.3Bn market cap at $50.50, what's not to love? 

    Anyway, we don't pay retail for the stock so we can add it back to the LTP:

    • Sell 10 WSM 2020 $40 puts for $5.40 ($5,400) 
    • Buy 20 WSM 2020 $47.50 calls for $9.20 ($18,400) 
    • Sell 20 WSM 2020 $57.50 calls for $6 ($12,000) 

    That's net $1,000 on the $20,000 spread that's $5,000 in the money at $50 so the upside is $19,000 (1,900%) at $57.50 in 2 years and the downside is being a long-term owner of WSM at $41 (20% off).  Not a bad worst case!  

    We'll do the same trade with 1/2 as many in the OOP:

    • Sell 5 WSM 2020 $40 puts for $5.40 ($2,700) 
    • Buy 10 WSM 2020 $47.50 calls for $9.20 ($9,200) 
    • Sell 10 WSM 2020 $57.50 calls for $6 ($6,000) 

    That's net $500 on the $10,000 spread that's $2,500 in the money at $50 so the upside is $9,500 (1,900%) at $57.50 in 2 years and the downside is being a long-term owner of WSM at $41 (20% off).  Not a bad worst case!


  24. Hi All – here is bdchris's post on cryptocurrencies/greencoin: 

    http://www.philstockworld.com/2017/10/17/bdcs-crypto-corner-2/


  25. Crs.

    Just looking at your IBM play I must say Phil did give a very mild and soft comment.

    Looking at your 2020 so called BCS you spent money on 10 calls and sold only 5 short calls.

    This I would only do if I expected IBM would go up very fast in a short time. Meaning I could sell another 5 calls for a better price. You did not give the value of your 2020 call sale. But you can sell another 5 calls to make it a real BCS.

    Now to the half Jan 18 150 caller. Why would you even dream of rolling a call of Dec 100 % OTM with full premium?

    I have plays like this every day and I wait for the cherry caller in your case the Dec 150 caller until every drop of premium has been drained out of the option. You just have to watch that the premium left in the option excides any immediate div. payment. With other words if the premium in the option is say .90 cents and the before staying div. of the stock is 1.00 than you can count on it that you will be called for no matter which month you sold the half caller.


  26. Thanks for the info Yodi, wasn't really considering rolling right now while OTM was more wondering, if earnings are good and the stock pops what is the best course of action to roll from there. 

    But your point makes a lot of sense to wait for the premium to drain out of the option before rolling. 

    Thanks!


  27. Phil/HMY

    Is this trade still good to enter at the current prices

    HMY
    Sell 20 2019 $2 puts for 0.55 ($1,100) 
    ? Buy 50 2019 $1.50 calls for 0.65 ($3,000) 
    ? Sell 50 2019 $2.50 calls for 0.35 ($1,750)

    Having a small size portfolio I want to pick good small price stocks.

    thanks and Regards


  28. Butterfly Portfolio Update:  $375,074 is up $3,900 and that's a bit disappointing as we got more aggressive and we're not going to push our luck anymore, so we'll make sure we have good covers and lock in our gains into what may, finally, be a bit of a pullback between now and early Nov.

    We only have a dozen positions, we don't make a lot of adjustments, there's very little variation in the monthly returns and, in 4 years, we're up 274%.  All we are doing here is Being the House – NOT the Gambler and selling as much premium as we can as often as we can but that doesn't mean ALL the time – we still pick our spots and try to take advantage of moves within the trading channels – that's the difference between making 20% a year and 40% a year. 

    • AAPL – The run to $160 is hurting our short $155 calls but, fortunately a partial sale and, of course, we are well ahead because we SOLD PREMIUM like smart investors should always be doing, right?  Earnings are 11/2 and I'm a bit afraid of getting blown out so we're just going to roll out to 30 short Jan $160 calls at $7.  Why?  Because the Nov $160s are only $4.20 and if AAPL pops 10% ($15) to $175, we'll owe the same $15 to either so selling the longer $160s will hurt us less on the upside and help us more to the downside.  We've cut back to a 1/2 sale so we're good for a 2x roll and the April $180s are $350 and that's getting close to $1Tn – so I think at least a pause by then – no matter how many phones they sell.  
    • COST – We missed selling calls when they were over $165 two weeks ago – that was silly.  Now we wait again.
    • CTSH – The Oct $70 short calls are $3.68 in the money but they got rejected at $75 with earnings on 11/1 so I still think it's good protection.  Let's roll to the Jan $70 calls at $5.30 so we have good downside protection and, if we're wrong and they pop $75, we can always DD on the long position, which is a bullish $65-80 spread at net $4.60, so plenty of upside there too.  
    • DIS -  Still languishing near the bottom of the range and I'm not inclined to sell calls here – I'm more tempted to DD on the longs but let's wait for earnings and see what happens.

    GIS – Another low one I'd rather wait for than sell short calls.  

    • IBM – Our newest position.  
    • MSFT – Miles above our short Oct $67.50 calls but they are covered by 2019 $62.50 calls so all we have to do is roll up in strike and make more money.  The Oct $67.50s we sold for $6.48 are now $9.85 and the Jan $70s are $8 so costs us $1.85 to gain $2.50 in strike.  I think we'll do that roll for now and see how earnings go.  We can always add more longs and do a 2x roll but MSFT seems a bit stretched here.  
    • PG – We made a little money on the short Oct $87.50 calls and I still want that protection with earnings on Friday and it's a partial cover so let's wait and see how they announce.  If we get lucky, they go worthless and we pick up a quick $5,000 and, if not, we add more longs and roll.

    • TGT -  I think they are priced way too low here ($60) with earnings mid-Nov.  Jan $62.50 calls are $1.70 and they are hardly worth selling so let's wait and see how the month goes.  
    • TXN – Took off like a rocket and, sadly, we sold the Oct $77.50 calls for "only" $8.15.  Now they are $16.30 so here we do need to add more longs.  Let's cash in the 20 2019 $72.50/82.50 bull call spread at $7.75 ($15,500) and buy 40 of the 2020 $80 ($18.75)/$95 ($10.75) bull call spreads at $8 ($32,000) and roll the 20 short Oct $77.50 calls at $16.30 ($32,600) to 30 short Jan $85 calls at $9.75 ($29,250) and we can also buy back the 10 short 2019 $65 puts for $1.55 as they serve no purpose and sell 10 of the 2020 $75 puts for $5.70 ($5,700) and only 10 because my heart isn't really in the short put sale but also we don't turn down an easy $5,000, do we?  

    • VLO – Our short Jan $70 calls have hurt us a bit but we were generally bullish, so all is well.  As we want to lock in these huge gains, we'll roll the 10 short Jan $70 calls at $8.10 ($8,100) to 15 short March $72.50 calls at $6.85 ($10,275) so we are moving our short callers up in strike AND collecting more money at the same time and we still haven't sold a full cover.  
    • WMT – This one is very painful as they made a huge pop this month.  The Oct $72.50 calls are now $13.30 with earnings on 11/16 I don't want to roll to Nov so let's roll to the Jan $77.50 calls at $8.95 so that will cost us $4.35 but we sold the Oct calls for $8 so we effectively sold the Jan $77.50s for $3.65.  
    • WYNN – Just under the $150 line and, fortunately, we sold the Jan $130 calls for $16, so not too much damage.  I think they've gotten ahead of themselves so we'll wait for early Nov earnings to see what's actually going on.

    As usual, very easy adjustments and we only do them once a month (other than adding IBM), so it's a very low-touch portfolio that makes good, reliable money!  


  29. LOL – Trump comes out and announces Dow 23,000.  This is getting surreal.  


  30. Thanks Ilene.  

    LOL Yodi – am I getting soft?  angel

    Wheee, 1,500 finally breaks on /TF!  

    Oil bouncing back – done on those shorts at $51.25 but a fun dip and back in short at $52 if it bounces that high.  

    HMY/Pat – HMY is $1.77 and you risk owning 2,000 at $2 ($4,000) + the $150 you put in is $2.075 if assigned vs a potential $5,000 return (nice upside!) at $2.50 if all goes well.  You might want to consider instead selling the 10 $2.50 puts for $1,000, which only adds $100 to the net cash but reduces your ownership requirement (and margin) from $4,150 to $2,750 and, if the stock is at $1, your 20 $2 puts would be a $2,150 loss while the 10 $2.50 puts would be a $1,750 loss but then you could add 1,000 at $1 for $2,750 on 2,000 ($1.375) and sell $1 calls for about 0.50 and all will be well(er).  

    Trump just called Dems obstructionists 5 times in the same sentence.  


  31. Baron – "How do you feel about miners these days?"

    They are a bit of a sore spot, mostly mouthy, loud, obnoxious and misbehaved, they should be seen and not heard. The parents that let them run wild and over parent them with anxiety ridden bubble wrapping are to blame. But this is nothing new and has spawned the self entitlement generation from which we suffer. Say what? You meant Miners? Oh! This and Out.


  32. Phil – Your not getting soft. Cogent commentary viz. balance and timing are everything.  Dumber than a bag of dicks – Marc Faber foaming about liberal "hypocrites" who condemned the Taliban when they blew up the world's two largest standing Buddhas, but now want to remove statues of "honourable" people. And now this…

    "And thank God white people populated America, and not the blacks. Otherwise, the US would look like Zimbabwe, which it might look like one day anyway, but at least America enjoyed 200 years in the economic and political sun under a white majority."  – Dr. Doom

    Michael Richards much? Faber probably thinks that commissioning a statue of Hitler in downtown Jerusalem might fly too. What the fuck do these mental midgets suffer from? Spirochetes gnaw on on their brain much? Time for my IV and Out.


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  39. AAPL/phil, i have some uncovered 2019 long $140 calls--what would suggest covering them with, going into earnings.  bought them at $23.25, now ~$29.25.  thanks.


  40. Phil – RB – Any plays right now?



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  42. TEVA – sold Nov $15 puts for .95 in IRA.  ~74% annualized return on full margin ($1500 per contract) if they expire. Happy to have more put to me at $15 and/or roll out for more credit if stays weak.  


  43. Hi Phil

    I currently have IMAX Mar18 17/22 BCS done at 2.95/3.60.  A net credit since the long call was done when imax was about 17 and covered when it was close to 22. Should I just hold on to this or make any adjustments? 

    Thanks


  44. Sorry, I don't speak analyeze.

     

    Netflix: Ugly sweaters can’t cover up cringe-worthy cash burn — Wedbush  (198.48 -4.20)

    10/17/2017, 12:13:37 PM ET

    Wedbush raises their NFLX tgt to $93 from $88, reiterates Underperform. Firm notes that notwithstanding its recent price increases, they expect Netflix to burn cash to fund content acquisition for many years. International profits may remain elusive due to competition for content and subs, and the price increases could cause a deceleration in subscriber growth. Negative FCF makes DCF valuation impossible. They believe that Netflix's valuation is unwarranted given the potential for sustained decelerating domestic growth coupled with consistently elusive international profitability and heightened competition.


  45. Faber/Naybob – What a way to retire!  That guy was a captain of industry at one time.   

    AAPL/Lunar – I would roll the 2019 $140s ($29.20) to 2x the 2020 $140 ($35.35)/$180 ($17.40) bull call spreads at $17.95 so $35.90 is $6.70 out of pocket but now you make 2x up to $180 and then you can do 1/3 call sales like Jan $165s at $5, which lowers your longs by $1.65 on your net $29.95 investment so a quarterly "dividend" of 5.5% while you wait means you'll collect back $13.20 (44%) per long just from doing out of the money 1/3 sales.  That's the way I'd go.  

    /RB/Bulls – It's been too crazy to call.  I made last week's call after they had simply run up too far on Thursday but that was only good for a penny – hardly worth the risk.  Oil short back at $52 is a better play – I hope!  

    TEVA/Scott – Gotta root for Schultz to get things going:

    Incoming Teva Pharm CEO Schultz to start by month end -newspaper

    Image result for schultz! animated gif klink

    IMAX/RS – Well, disappointing downturn but good movie season coming.  The March $22s are $1.50 and that's up a lot so I'd look to first buy those back and, if $20 breaks, then you can sell the $20s ($2.40) and use the money to roll the $17s (now $4.30) to the $15s (now $6) or maybe out to a longer month if it doesn't happen too soon.  And, of course, there are $18 puts you can already sell for $1 – maybe you can sell the $17 puts for $1 (now 0.70) if we get a dip.  And, of course, if you think IMAX is going below $17, you could just take off the $4.30 now, which is most of the spread's potential, and put a stop on the short $22s at $2 instead so your worst case is $2.30 off the table.  I have more faith than that.  

    NFLX/Baron – They are burning a bunch of cash, about $2.5Bn/yr though with the revenue raise and subscriber growth, should be less than $1Bn next year but that's still a lot.  Their "profits" come from calling their productions an "asset" though they are completely unproven assets mainly running on a single network, that they also own.  On the whole, it's a big money-wash which makes Discounted Cash Flow Valuations pointless.  

    As I've pointed out many times – NFLX's valuation is based on the assumption that they can keep adding subscribers and keep raising fees but TWX has been in that business since the early 80s and there is, in fact, a limit to both.  There is really no different to what TWX does or what NFLX does, only NFLX distributes on the Internet and TWX distributes on cable.  $8Bn a year is a stunning amount to spend on content.  The most expensive TV shows are $2M/hr for 25 episodes so $50M/yr is a lot and NFLX could have 160 of those.  Is that a good thing or a really stupid thing?   Here's a list of top 43 NFLX shows and here's a list of 25 top HBO shows (TWX has other channels too) - we report, you decide!  


  46. Phi/NFLX,

    I was being facetious re Wedbush; no need to point things out to me multiple times; I'm usually paying attention.  Back to butterfly portfolio.  I assume IBM is good for a new trade, though I guess will wait for earnings,.  Any others good for new trade?  Thanks.


  47. movies — surprised no one commented on Blade Runner 2…I've not seen it yet, but plan to go next week


  48. Blade Runner 2049 – pretty good sci-fi, much better than most remakes. Solid storyline, decent acting. A couple flaws which require some suspension of disbelief (Harrison Ford looks too old to take a punch IMHO). Well worth the night out. Saw it in IMAX which was excellent.


  49. Butterfly/Baron – They are all good for new trades as we're always repositioning but, if you want to add a new one, just ask and I'll tell you where I'd go if entering as new.  

    Blade Runner/Latch – I have to re-watch the old one first.  I will see it but I've heard a lot of negatives.  Thor is coming too – those I like.  

    Thanks Deano – looking more forward to it now.  


  50. Wow!   Check out the Decliners to Advancers in number and volume – yet all but /TF were green today (NYSE negative too).  What a BS market!  

     

    IBM beats (as always) but revenues continue to decline (4 consecutive years).  Up just a bit.


  51. XLF down .5% too. No telling when this bubble pops, but small caps usually lead the way… futures should be interesting in the morning. 


  52. A/D Phil. Yes, but way more new highs than new lows. Seems like a market that reflects our economy--the top 10% are doing way better than the bottom 90%!




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  60. Does anyone have an opinion on XRX?   Perhaps, an armchair trade?  

    The competitors (hpq, caj) are trending up in what analyst are saying is a down industry.  Xerox spun off their BPO services (Conduent) division at the first of the year.   While their revenues have dropped year after year, they restructured and continue to maintain their profit margins.  They have initiated a three-year Strategic Transformation program which is expected to deliver cost savings of at least $1.5 billion over a three year period.   Thoughts???   Thank you in advance.

     

    Long /NGZ17 @ 3.078 (it is like a broken slot machine)

    Short /CLZ17  @ 52.35 (in it to win it, but very tight stops) 


  61. Phil. Can you recap your current futures positions and what looks interesting?


  62. Good morning!  

    Had an early meeting, so a bit behind.

    Big pop in the Futures on news of a NAFTA talk extension, which is ridiculous because NAFTA never spooked the market in the first place (unless this IS what the market looks like spooked!). 

    /CL back at $52 and still a fun short but dangerous into inventories (I have 2 short) 

    A/D/Jet – Well keep in mind that, when you are a mile above your 52 week lows – you're not going to make many new lows, are you?   You just don't want to see new highs dropping (no matter what the ratio) and new lows gaining but the new highs dropping comes way before you see substantial new lows.

    XRX/Grass – Turnaround story maybe but declining earnings and growing losses for past 3 years have kept people away.  I think they are a bargain at this price but I've been waiting for 2020 puts to come out so we can sell them.  The 2019 $30 puts are only $2.90, not really worth the effort.   And yes, isn't /NG the best trade ever?  

    Futures/Latch – Long 4 /NGH8 at $3.193, Short 2 /CLX7 at $51.98 and short 10 /TF at 1,502.10.


  63. Grass XRX Well printers are still been used at most places. Even that the div only shows .25 per quarter, but only for the last two quarters. Before .06$!!!!

    On the Apr 18 33/32 strangle you get 3.81 and my calculator says a combined monthly return of 2.15 %

    You just need to have a bit of confidence to buy the stock. For me not a stable Div.


  64. DOG – volume really up today… gambling on a retracement