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$15,000 Thursday – BitCoin Blasts to New Highs

S&P 500 Priced in BitCoin from www.PhilStockWorld.comThank goodness we still have our BitCoins!

We may have cashed out of the market but you'll have to pry our BitCoins out of our cold, dead fingers.  No, only kidding, this is silly too – we can't wait to sell – we're using tight stops now.  PSW Investments bought their BitCoins for $600 each two years ago, so it's a nice gain and we should lock it in – the cash will make a nice Christmas gift for our partners.  We still have our GreenCoins (GRE) though and we're accumulating more of those because each BitCoin's worth of those we bought is now worth $24,525 at 0.000327, so GreenCoins are doing 50% better for us than BitCoin – and they are far earlier in the run-up cycle.  

Of course, in order to buy a GreenCoin you need a BitCoin and then you have to go to the CoinExchange (where it's ranked 93rd) and trade the BitCoins for Greencoins.  0.000327 is up 0.000107 (48.6%) since we discussed Greencoin LAST WEEK – how's that for a good tip?  It's still below the 0.00044 that PSW is GUARANTEEING we will exchange them for as payment for Annual Memberships this month (see our weekend post).  That's one of the reasons BitCoins are exploding in value – you can't buy any other CryptoCurrency without first buying a BitCoin so millions of speculators are holding BitCoins in their wallets (like us, frankly), simply because they were using them to buy other coins and ended up with some change. 

That "change" is now worth a fortune – as BitCoin passes $250Bn in valuation.  As we discussed in yesterday's Live Trading Webinar, BitCoin is sucking a lot of money out of commodities – as the same investors that were buying gold, silver, copper, etc. have plowed enough money into BitCoin to buy all but the top 12 stocks on the S&P 500.  

We actually picked up some Silver Futures (/SI) as they fell back to $15.85 and that's down $2.15 (12%) since September and our 5% Rule™ says that's a 10% drop with a 20% overshoot and, while that's no guarantee of a bottom (real support comes at $15.50) – it's worth a poke down here as we don't expect the Dollar to pop 94 very easily and Gold (/YG) is testing $1,250, which is good support on the yellow side.  

That's right, we're out of our stocks but that doesn't mean we aren't trading Futures and, in fact, just yesterday we sent out a BULLISH Top Trade Alert on the Ultra-Long Russell ETF (TNA) – just in case we're going to miss more of the rally (though we super-doubt it).  My note to our Members was:

Speaking of hedges.  TNA is the ultra-long Russell ETF at $67.87, well off the highs at $73.50.  If you think you will regret going to CASH!!! then you can take an upside hedge using something like this, which will give you great gains if the rally continues (or Santa Clause comes to town).

Just like any play, a bull call spread will keep you from losing too much and the longer spreads have a lower net delta and that means you won't get too burned on the downside.  So, for example, we are cashing in the OOP (the SA people voted yes too) at $300,000ish and usually we make about $10,000/month so, if we think we'll miss out $20,000 in gains during December and Jan, we can:

  • Buy 20 TNA April $60 calls for $12 ($24,000) 
  • Sell 20 TNA April $70 calls for $6.50 ($13,000) 
  • Sell 3 TSLA April $330 calls for $19 ($5,700) 

The net cost of the trade is $5,300 and it returns $20,000 if TNA is simply over $70 in April so you'll capture $14,700 (277%) in profits if all goes well.  If not, unless TSLA has a major rally, you will only lose $5,300 at most but, more likely, you'll be able to salvage half of that by closing out the bull spread if the market is heading lower – as we expect it will.  

You can, of course, use anything to offset the bull spread but I feel pretty good about shorting Tesla (TSLA), rally or no rally!  

So all we need to do is take $5,300 (1.5%) of the $340,000 we're cashing in and, if we were wrong and the market goes higher, we'll still make $14,700.  If not – we'll be thrilled that we took our $340,000 off the table, right?  We're starting a brand new Options Opportunity Portfolio at Seeking Alpha on January 2nd with a $100,000 base – the same as we started back on Aug 8th, 2015 with the one we just cashed for $340,000 (up 240%).  

I was just looking back at our very first trade in the OOP and, oddly enough, it was the Gold ETF (GLD) with the following trade idea:

GLD finished at $109.21 on Sept 18th, 2015 (expiration day) and that meant the $104 calls were worth $5.21 and we owed $3.21 back to the short $106 caller so we netted $2 per option contract and we had 20 blocks of 100 (2,000) for $4,000 back on our net $2,000 for a 100% gain on our first trade.  That's always a good sign, right?  

That's all we do over at PSW – we read the news, look at the macros, find undervalued positions and then construct a sensible options spread to leverage our CASH!!!, which we now have tons of on the sideline.  Can't wait for next year!  

 


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  1. Good Morning.



  2. Looks like a new market for QCOM:

    https://arstechnica.com/gadgets/2017/12/hp-asus-announce-first-windows-10-arm-pcs-20-hour-battery-life-gigabit-lte/

    The Asus laptop boasts 22 hours of battery life or 30 days of standby, along with LTE that can run at gigabit speeds. HP's tablet offers a 12.3 inch, 1920×1280 screen, 20 hours of battery life or 29 days of standby, and a removable keyboard-cover and stylus. Both systems use the Snapdragon 835 processor and X16 LTE modem, with HP offering up to 8GB RAM and 256GB storage to go with it.

    That's some battery life – much better than Intlel x86 CPU. Not great for gaming, but nicely portable and always connected. Still bullish in the long run especially with all the M&A talks!


  3. Besides Bitcoins here is a more down to earth little exercise in my way of thinking.

    DIS. In my option plays I hold at present a Jan 18 100 cherry call which is quoted before today’s opening at 5.95.

    So here is my workout possible good for some of you to think over.

    100 plus 5.95 (present Jan 18 100 option price) = 105.95. Present stock price is 105.60. You might say well still .35 cents of premium no rush!

    Now DIS is reporting tomorrow. The stock can go up or down, but the present div. is .84 cents.

    So I deduct from the above 105.95 – .84 which gives me 105.11. As you can see with the stock trading at 105.60 I am more than 100% ITM. So even that my caller is due only in Jan. it can be called from anyone who bought the Jan 18 100 call option. Even if the stock will drop .84 cents tomorrow, it is better for me to roll the Jan 100 option today to March 105 option, as both, Jan and March option have a higher value today than possible on a stock drop tomorrow. Having rolled today will secure a higher March premium even that I am paying as well more for the Jan 18 option today but I do avoid assignment.

    Just my way of thinking you might like to differ.


  4. Didn't know that fracking is actually not that profitable if at all:

    http://www.motherjones.com/kevin-drum/2017/12/fracking-is-a-huge-american-money-pit/

    One factor sapping profits is that many shale producers paid extravagantly to lease land for drilling in places such as the Permian Basin in Texas and New Mexico. Many operators drop out those land-acquisition costs from the break-even-price calculations they tout to shareholders. While most shale operators claim they have hundreds, if not thousands, of well locations they say can muster a 10% profit margin or more, the number of in-the-money wells is far smaller when costs for land, pipelines and other infrastructure and overhead is factored in.


  5. And finally, only a few steps away from a banana republic:

    http://www.motherjones.com/kevin-drum/2017/12/don-jr-refuses-to-disclose-russia-conversation-with-father/

    Donald Trump Jr. on Wednesday cited attorney-client privilege to avoid telling lawmakers about a conversation he had with his father, President Donald Trump, after news broke this summer that the younger Trump — and top campaign brass — had met with Russia-connected individuals in Trump Tower during the 2016 campaign. 

    They keep asserting new privileges that don't exist. Neither is a lawyer and even if one was present, once a there is a witness to a discussion with your lawyer, the privilege disappears. Unless you are Trump I guess. Jeff Sessions claimed that his talks with Trump are privileged as well. He is not Trump's attorney, he is the country's attorney. It's insane…

    Our country is being run as if the mafia won the presidency last year. There are still plenty of guardrails around to keep us from becoming, once and for all, a banana republic with nuclear weapons, but for how long? Do we really have to spend the next three years praying every day that the guardrails can hold up just a little bit longer?


  6. Market down, VXX down.  I gotta get a new gig.


  7. Phil - As for Rep Al Green's Articles of Impeachment… given the yet to be revealed compelling evidence which has been uncovered against T-Rump, forcing a vote on impeachment before investigators complete their work, is premature and will undermine any future impeachment efforts.  Take advantageous position, get a comfortable relaxed grip, leisurely take aim, and wait till the target moves into the crosshairs before calmly pulling the trigger.  As it only leads to mistakes, never chase the target and Out.


  8. Phil: UNG low In the channel 


  9. Good morning! 

    $15,543 now is up 20% for the Day on BitCoin – quite the frenzy. 

    Bitcoin update: $0000 – $1000: 1789 days *** $6000- $7000: 13 days $7000- $8000: 14 days $8000- $9000: 9 days $9000-$10000: 2 days $10000-$11000: 1 day $11000-$12000: 6 days $12,000-$13,000: 17 hours $13,000-$14,000: 4 hours $14,000-$15,000: 10 hours $15,000-$16,000: 5 hours

    Greg tells me we also have 2.3 BitCoin Cash from the fork, and now those are worth about $3,000 – they just give money to rich people these days!  

    Meanwhile, $70M worth was just stolen (hacked) from a mining company.  Make that $84M….  Steam, a video game company that was accepting BitCoin, just stopped – too volatile they say.  67M monthly players who, since April 2016, have been using BitCoin to buy stuff on their system. 

    That's why the valuations are such nonsense – so many people are simply holding these things and not trying to sell them – there isn't really $250Bn to support the price if people start selling – it's just the old car lot model I often us to illustrate bubble behavior:

    Submitted on 2013/10/31 at 1:04 pm

    It goes back to my car lot example.  The global GDP is $60Tn and it's growing at 3% (not even) so $1.8Tn new Dollars are available each year for "stuff" – whether it's stocks or bonds or cars or planes – that's what we generate in a year above last year.  

    So, let's say you have a town with 100 people and have $10,000,000 ($100,000 each) but need about $50,000 to live (average home/expenses) and have and average of $50,000 of disposable income and, at the end of the year they average $3,000 more from raises.

    I have a car lot with 100 identical VW Beetles and price them at $25,000 and 10 people buy them for $250,000 so I raise my price to $30,000 and 8 perople buy them for $240,000 and then I raise my price to $35,000 and 7 people still buy them for $245,000 so I'm doing well and I still have 75 cars left and my PRICE is $35,000 so my market cap (the total of all of my stock of cars at the current price) is $2.65M – even more than the $2.5M I started with and all I did was sell 25 actual cars.  

    That's how the market works.  Now, a guy who wants to buy my car lot can look at it several ways:

    Since I raised my PRICE (same cars) for 3 consecutive months, he can extrapolate that I can keep doing that for 9 more and, at the end of the year, I'll be selling VW Beetles for $80,000 each and the inventory of the remaining 35 cars (assuming 40 more sold)  would be worth $2.8M plus cash flow of about $2.2M – what could go wrong then buying my dealership for $2.65M or even $3-4M?  This is the way TSLA is valued – for perfection based on a very small amount of base data extrapolated to infinity.  

    This model also doesn't take into account that people in the town only have $50,000 of disposable income (your forgot that, didn't you?) so they CAN'T buy $80,000 cars.  That then puts a cap on how much I can charge and, even then, will people be willing to spend 100% of their disposable income on a car?   

    So a more realistic investor would take note of the fact that sales are dropping at higher prices and MAYBE I'll get $35,000 for my other 75 cars but, at 7 cars a month, I'll barely sell them all this year.  Now it's already hard to justify paying $2.65M for my inventory, isn't it?  

    This is where GMCR and SODA begin to fall apart.   It's very easy to sell ANYTHING that costs less than $100 to 10% of the top 10% (14M wage earners so 1.4M customers).  The spend $100 to go to the movies with the kids and $100 for dinner so, if you say you have a cool coffee machine or soda maker (things they do all the time) for $100 – it's an impulse buy for them.  

    That's another factor in the car model – we assume everyone in the town makes the same $100,000 but, in reality, they don't.  In fact, the distribution of wealth looks like this:

    So one guy in my town makes $3.5M and the next 19 guys share $5M ($263,000 each) and the next 20 make $1M ($50,000 each) and the next 20 make $500,000 ($25,000 each) and the bottom 60 share about $100,000 ($1,666 each).  That's what wealth distribution is like in America!  

    Back to the car model then:  In REALITY, what I've done is sold the minimum number of cars (Tesla's, Soda Machines, Coffee Makers) to the 20 people who could afford them but the people buying my stock for $2.6M believe I can somehow sell 20 more cars for $35,000 (at least) to 20 more people, even though their total income is $50,000.  

    Ah – this is where lease financing kicks in, right?  And that is what we do, we saddle the next 20% with incredible amounts of debt so they can pay the inflated prices that were caused by people 10x richer than they are competing for the same goods and services.  Once we get that next 20% to pay up (charging them interest that eventually creates a situation in which they spend the rest of their lives working for money-lenders), then we've sold 40 cars (or shares of stock) that were originally $25,000 for $35,000 and we even delude ourselves into thinking the other 60 cars are "worth" $35,000 so we tend to sit on them until we find a buyer, right? 

    But what happens if the people who bought the VWs (stock) decide they don't want them anymore?  They then begin competing with me to make sales and we still have a very limited market of people who can actually afford them and proper price discovery can bring things down hard and very, very fast.  This is what happened in 2008, when disposable income collapsed and people wanted to sell their "valuable" stock positions.

    So we have a lot of money flowing to the top 1% who are leveraging it up with margin and buying tons and tons of stocks on the belief that there will always be a greater fool to buy it for more money later.  This kind of stuff works until it doesn't and that's why we have bubbles and that's why bubbles pop.  In 1999, I told people that paying $100 for YHOO was crazy but it went up 200% from there.  Sure a month later they were at $50 and a few months later $8 and clearly they were never worth $50, let alone $100 but that doesn't mean you couldn't punch it up there for a short while.  

    When you have a low-volume market like this, you can sustain those crazy high prices for ages – only when something comes along to spark volume do you begin to get real price discovery.  

    GMCR ended up being bought by KO in 2016 after falling 66% from their highs.  

    Big Chart – Little pullback but indexes flipped right up this morning.

    /NGV8 diviing to $2.80!   That's a DD for me so 4 at $2.84 now.


  10. Bitcoin- Full page ad in the National Post today, back page no less saying "It doesn't take a genius to buy bitcoin"  Actually it is touting buying bitcoin through http://www.einstein.exchange with your visa or mastercard.  


  11. Maybe the VXX being down was the tell the markets would pop


  12. QCOM/StJ – 22 hours is fantastic but that's standby, how long does it last on a plane?  

    DIS/Yodi – That's a good way to play for income.  

    Fracking/StJ – Lots of idiots speculating in fracking while a few savvy operators make 90% of the money.

    Privileges/StJ – What, father/son conversations aren't privileged?  Clearly your lawyer needs a more sinister, cartoonish mustache!  

    Related image

      Gig/Baron – Don't mess with the VIX – it be CRAZY!

    Impeach/Naybob – Yeah, I don't get it either and I'm pretty good at politics.  

    UNG/Den – GMTA!  If you want to play UNG here ($5.55) instead of /NGV8 at $2.80, I'd go this way:

    • Buy 50 UNG 2020 $4 calls for $2.05 ($10,250)
    • Sell 50 UNG 2019 $5 calls for $1.25 ($6,250)
    • Sell 25 UNG 2020 $5 puts for 0.70 ($3,500) 

    That's net $500 on the $5,000 spread but you have a year to roll the short calls so hopefully a $10,000 spread if all goes well (the 2020 $6 cals are $1) and worst case is owning 2,500 UNG at $5 + $500 ($13,000).   If we had a portfolio, I'd put this in it!  

    Nasdaq still failing 6,300.


  13. Phil/UNG

    To get $3500 from the sold puts, it would require you to sell 50 not 25.  


  14. Cars… I fix my old one (cuz I can) and invest the 50k in PSW trades… crazy, huh?

    Or just keep it in cash… Phil likes cash. :)


  15. PHil,

    Where would you take another poke at /SI? 15.75 with tight stop?


  16. Standby / Phil – No, no, 22 hours is actual usage time. Standby is 30 days! We are getting a full day out batteries with these systems.














  17. wow bitcoin almost 17000, yesterday was 12500

    ?????


  18. bitcoin crashes I remember:

    30 to 2, June 2011 to Oct 2011

    15 to 5, August 2012

    260 to 125, May 2013 to Oct 2013

    1000 to 200, Nov 2013 to Sept 2015 ("the long trough")

    today 17000??? to xxxx???? Hopefully we see a big crash and get BTC out of the news, maybe spend a couple of years at ~2000-5000 before pushing up another 20X. During this time some real work can get done. 


  19. Digital currency exchange NiceHash says bitcoin worth nearly $64 million hacked








  20. Phil

    Trying to get even on JO

    What do you think of selling naked calls

    Also, what do you thinker of this article

    Thanks

    The Coffee Cash Cow

    https://seekingalpha.com/article/4126730-coffee-cash-cow


  21. Well, after reading the news I decided there's no reason for the market to be higher but the Dow beat me to it.  /NQ is a good short at 6,325 (weak bounce line) and /TF below 1,520 is good too – both with tight stops above.

    /KC spiked much lower, $123.60 on /KCH8 – not sure why yet.


  22. OK we are officially in a bubble. 18,620

    https://bitcoinwisdom.com/markets/coinbase/btcusd


  23. 19340


  24. UNG/DC – Sorry, I changed my mind and got mixed up.  Net would be $2,250, not $500.  Still a good profit if it works out.

    /SI/Japar – Well the big support is $15.50 but no way to know when it will turn up so you can lose a penny every nickle but I'd wait for the 0.10s to cross.  

    22 hrs/StJ – Well that is cool then!  

    BitCoins/BDC – What's the most you had at one time?  $18,620 – is this where you're going to draw the line?  blush

    JO/QC – I don't know, /KC just tanked.  I guess that SA article (and what's behind it) is spooking traders but it's also just a seasonal thing as we bottom out into the end of most years.

    I'm raising our stop on BitCoin to $17,500 (up from $14,000 this morning).


  25. Qc Mike in general selling naked calls is like smoking on the deck of an oil tanker


  26. CNBC makes a good point, this kind of movement in BitCoin means BitCoin Futures will have to have MASSIVE margins on them;

    The BitCoin exchanges are making a fortune as they used to charge what seemed an insignificant 1% transaction fee but 1% is now $175 per transaction!  Once again, Being the House is the way to go!  


  27. Phil – "Of course, in order to buy a GreenCoin you need a BitCoin"

    And there you have it, limited supply, manufactured need. And now your moment of branding Zen…  

    The abridged rules are:  1. manufacture want and need, disdain conformity, define common enemies, agent provocateur.  2. establish the name, create controversy, initially be hated by a majority in order to appeal to a rabid minority. 3. sell the swindle, use the media whores to your advantage, fake news, stunts, create chaos.  4. do not give it away, limit supply. 5. cash from the chaos, greed rules, swindle the swindlers.  6. be an event and experience, unique, must have, must see, seemingly the only game in town. 7. cultivate hatred, it's your greatest asset, more chaos, more cash. 8. diversify, reach out to the masses. 9. take civilization to the barbarians, manifest your destiny upon that majority. 10. deny everything, rinse, keep spinning and repeat.  

    And never forget… Our culture has become a notion of boredom that is bought and sold, where change is an elusive commodity and nothing really happens, except that people will become more and more terrified of tomorrow.

    This Bitcoin – Trump Suck-cess 101 class is dismissed. Time for my IV and Out.


  28. Bitcoin / Phil – One of the reasons that Steam stopped accepting Bitcoin. First is volatility of course, but second is the transaction fees. It got to be over $20 which is ridiculous if you spend only $50 for a video game. 


  29. Phil – I had 50 at one point. Seems so long ago. Whittling away 0.1 here, 0.1 there, losses in exchanges like MtGox and of course, in 2014 a big 30 or so "invested" in the GreenCoin project. Lot's of fun and life lessons, but there you have it. 


  30. No way you could have predicted it, BDC.  I was just curious.  You did nail the concept years ago, back below $100 so mega-kudos to you on that!  


  31. Al Franken is resigning


  32. yodi 

     

    NO SMOKING  thanks



  33. Franken / Albo – I wonder if Roy Moore will face the same pressure from his party that Franken felt if he is elected!


  34. Got my butt kicked by /SI now getting killed by /KC…and /NG

    Touch day 


  35. LOL, so much for the indexes turning down – blasted right up again.  Must be using BitCoins:

    I wonder if IBM and GOOGL are having Watson and Deep Mind mining BitCoins?  There's 5M left to get – that's like $100Bn now.


  36. Might be right Phil:

    https://gizmodo.com/alphazero-annihilates-world-s-best-chess-bot-after-just-1821081928

    A few months after demonstrating its dominance over the game of Go, DeepMind’s AlphaZero AI has trounced the world’s top-ranked chess engine—and it did so without any prior knowledge of the game and after just four hours of self-training.

    AlphaZero is now the most dominant chess playing entity on the planet. In a one-on-one tournament against Stockfish 8, the reigning computer chess champion, the DeepMind-built system didn’t lose a single game, winning or drawing all of the 100 matches played.

    After all, it became the world best chess player with only 4 hours of training. What else can that system learn?


  37. Futures/Japar – Yeah, I'm riding it out with this BitCoin mania distorting things.  I don't see any reason to dump out of Coffee, though down $10K now.  /SI I've long learned to be patient with.  

    /RB taking off again.    At least my /CL longs are working.


  38. STJ – I don't know.  He should have pulled out of the race.  We can only hope he gets defeated.


  39. Can't build Model 3 fast enough but already has 140 trucks pre-ordered:

    https://jalopnik.com/every-company-that-has-pre-ordered-a-tesla-semi-to-date-1821082785

    All told, by that count, Tesla has at least 140 semis pre-ordered. The automaker hasn’t officially released a reservation count.


  40. 15000 again. Wild ride!


  41. I bet you he he gets greeted with open arms Albo!


  42. In high school we were the dominant chess team each year. No idea why, but we won NJ state 3/4 years I was there.  I played 4th and 5th boards, so not the best on my team. Still, the last time I played I took $100 from a guy who played for West Point.  So bring on Big Blue, or Real Steel, or whatever you got.


  43. DeepMind will take a bitcoin from you Baron!


  44. STJ – I kinda doubt he gets elected.  Remember he's running in the Bible Belt.


  45. My wife's hairdresser bought 2 bitcoins last week.  That should tell you its a bubble.  The way I look at it, its just another reason to buy ABX


  46. JO – oh how low will JO go?  


  47. FWIW

    ~~ Omega Advisors' Leon Cooperman says the market is reasonably/fully valued — not overvalued; gives some stock picks .

    Cooperman: Conditions for a big decline aren't present; the economy is gaining momentum. The recent rotation is healthy. There still a lot of stocks that are attractive relative to the S&P 500.

    Stocks: He likes AMCX, SHPG, UAL, MSFT, FDC, GOOGL
     


  48. ABX? Gold has a been a waste of money since the 1970's.


  49. FDC,  someone just bought 13,000 Jan'19 $20 calls.  must have been someone who read Cooperman's article


  50. Bio, I'm not buying ABX for the gold, just for their ability to make a profit mining it.



  51. oh yeah, I own ABX too. I had AUY and HMY too but dumped HMY (forget why tho)

    Good call!


  52. UVXY, no argument there.  By the way, thanks a heap for pointing out Brave. It works good on a phone too.


  53. Waiting.. waiting.. looking.. waiting.. looking.. waiting…


  54. and studying.. and reviewing


  55. What Else/StJ – No job is safe.  

    TSLA/StJ – What a joke, the company is all pre-orders, no deliveries for 2 years now.  

    LOL Baron – Challenge accepted…  You can drop my $100 off on the way to Armonk.

    Related image

    Hairdresser/Stock – Well she just make about $10,000 in a week!  

    JO/Scott – Coffee will be free and SBUX will make 100% profit margins.

    ABX/BDC – Great time to get in.  

    And what Stock said.  

    /NQ right at 6,325 – testing.  

    /TF back under 1,520 again.  

    Even TEVA got a stick.  It's just one huge bot buying the markets. 


  56. TCEHY – tested it's 50dma yesterday if you like to BTFD. 


  57. Yeah, but where is the Dow priced in bitcoin?


  58. Damn, everybody wants a piece of chess playing prowess.  OK, I'll even take black, and tell  you I am fond of the French defense.  It's not like we have much better to do these days, and I'm tired of hearing about "asscoin."


  59. That's a double top head and shoulders on the Q's, like a 2-headed ogre.


  60. The Bitcoin existential question I propose --who is the greater fool, the Bitcoin buyer or the Bitcoin accepting vendor?


  61. With all the Bitcoins We need to have a look at FTR. As expected buyers running for the div. 12/14.

    Stock is at 9.15 up 4% in one day, and I am looking at the Dec.15 8 caller, which is 100% ITM. We do expect the stock will drop by at least .60 so even than we still over the 8 caller. I am trying to roll to May 8 call but very hard to fill if you do not wish to give up to much. Phil might have some productive thoughts on this matter before day's end. Thanks


  62. Phil,

    When you said you’ve learned to be patient with /SI, does that mean you’re still on it or you keep going in with tight stops and then get in again if you get stopped out.

    I struggle with when to stop out and when to double down 


  63. StJL – "After all, it became the world best chess player with only 4 hours of training. What else can that system learn?"

    Task it in attempting to solve what the best expert cryptologist's and supercomputers at the NSA, FBI, CIA and multiple international agencies have not been able to solve for 50 years:

    Z 340, Z 13 and Z 32… AKA The Zodiac Killer Ciphers.   Who knows? Out.


  64. P.S. For our members who read my comments on DIS this morning I did roll as mentioned to get out of firing line!


  65. UNG/Phil  Didn't we stop playing that one because of the decay?  Seems like a 2020 long call would not be a good idea.


  66. Phil--what is your opinion on gold? I know you like ABX here. Is part of the reason you like it here is because you believe gold will reverse soon?


  67. Stocky – "My wife's hairdresser bought 2 bitcoins last week.  That should tell you its a bubble."

    You know it's time to sell when shoeshine boys give you stock tips. This bull market is over. – Joe Kennedy 1928


  68. F as well did quite a good jump, sky is the limit!!!!


  69. payment providers can make a bitcoin-accepting vendor agnostic to the coin itself. A user spends the coin, the 3rd party payment processor deposits USD into the vendor account, generally charging less in fees than credit card transactions. The vendor benefits by a) allowing for these newly minted bitcoin millionaires to spend money with them, and b) at the very least saving on expenses and fees.

    Sort of weird looking to find why "fool" applies here. There's certainly other scenarios where I would apply it. Like being a non-owner all of these years, as an example, despite the obviousness of the potential upside.


  70. Yodi, with those FTR callers, you'll certainly get exercised and end up short the stock (or called away if you own the stock) so you'll never see any gain.


  71. jelutuck, If you roll you will not get called and if you hold the stock you will get the div.

    In my port the stock is a real pup and I just try to make the best of it under the circumstances.


  72. stockbern/brave – oh cool I will try it on my iphone. There's a secure pairing protocol that's supposedly easy to use in settings, did you sync your account that way?

    If you go to Settings -> Payments, you can see which sites (green checkmark) are going to get the share of the (currently) ~$5.xx monthly payout… so far only two in my list, coinmarketcap.com and duckduckgo.com (default search engine I'm using). Lot's of room for more content providers to sign up!!

    I'm going to start a website and sign up. I'll post the details in here and provide feedback on the progress on Brave hits too…


  73. Phil/ Real Estate Hedge - Do you have any ideas for a way to hedge property values, just in case they see significant declines due to the Republican tax bill?  I'm holding over $5M in real estate in California, and would be interested in spending a bit of money to insure against a dip.  Let me know.  Thanks.


  74. Steam. I bought $25 using my BTC from Coinbase. Cost $3.75. Did it for a trial. I sold some BTC to buy GRE and am waiting for instructions on where to send it to PSW for next years subscription 


  75. Latch You bought steam? (steem?).


  76. BDC – Gold has a been a waste of money since the 1970's.

    Perspective or retrospective?

    1972 $44 per ounce

    1980 $850 

    8 years = 1800% return = 225% annual avg.

    1999 $250

    2006 $1790 

    7 years = 616% return = 88% annual

    Nice runs for one playing those cycles. The numbers speak to hardly being a "waste of money since the 1970's" which some of us survived for better or worse. As for the 60's, I was in Haight Ashbury, but I don't remember much. Just sayin and out.  


  77. Naybob – Did you inhale ?

    Just wondering. 8-)


  78. Palo – "Real Estate Value Hedge"

    One could utilize CME Metro Area Housing Index Futures.  Downside, no volume, low liquidity. See this example.


  79. Albo – Did you inhale?

    Unlike William Jefferson Clinton, I DID and still do, on both counts that is.  Out.


  80. QQQ/Baron – Just looks like the normal, rangy, up pattern to me:

    Vendors/Pstas – Well that's the thing, there's no legitimate price discovery because goods and services are not priced in BitCoins.  The dollar is relatively stable because it's constantly being tested against a broad market of things it can be exchanged for.  BitCoins are almost purely speculative instruments at the moment.   That being said, we're happy to accept GreenCoins – they are no less speculative but 100 miles down the curve from BitCoin.

    FTR/Yodi – We discussed this the other day.  I like the May 8th caller for cover.  If you are worried about being called away at $8 now (though that was the point just a few days ago), the May $8s are $1.50 and the Jan $10s are $1.30 so that's a good roll.  You can't regret that you covered just because the stock went up.  If you have 100% confidence you will be called away at $8, then doubling down now at $9.12 and selling the 2020 $8 calls for $2.20 makes perfect sense. You'll get double the dividend, be called away 1/2 at $8 and left with the other half (your original amount) with a $10 cover.  

    Our original thought was that the premium from the $8s were are good as the dividend and you'd be protected from a drop that was "sure" to come ex-dividend.  If you still believe that, let it happen and wait for the drop to re-buy.  

    /SI/Japar – As I say, over and over again – I'm working and can't sit here starting at Futures contracts, so I tend to play with more conviction, where I simply add more long on the way down.  If it wasn't for being asked 5 times a day what I'm doing, I could go a week without looking at them.  I get into a contract when I think it went too far one way or another and sometimes I'm right right away and sometimes it takes a while, but I'm usually right – so I don't worry about what happens while I wait.  Oh, and by waiting I mean weeks, easily, not hours!  

    See, silver has a nice floor at $15 so, if it goes that low, I'll probably end up with 10 or more of them long at about $15.50 and then I will wait a few ticks (one week per tick) for a run to $17 or maybe even $20, where I'll have a nice winner.  SLW became our stock of the Year last November, when we had a nice dip to $15.50 and then we blasted up to $18 in the spring.  Hopefully, something like that happens again.

    UNG/Jet – Turns out the decay wasn't that terrible.  

    So UNG was $6.50 on March 1st when Nat Gas was $2.75 and it only just recently dumped out and I think that's more a factor of money coming out of the ETF than it is the decay.  I'd say it loses about 0.50/yr so the trick is to take a profit off the table next time we get near $7.50 (which is what we did the first time we played them).  

    Gold/Jabob – I think BitCoin is sucking the energy out of gold and that will eventually reverse or calm down.  BitCoin and Gold are both alternate stores of wealth and BitCoin is much more exciting to own at the moment.  Gold always has cycles but the CBs are pushing for more inflation as their stated goal – it will happen eventually. 

    As with Silver above though – there's no particular catalyst – it's simply low enough where I like to start accumulating.  

    3rd Parties/BDC – But you have to find a 3rd party that will accept a BitCoin as payment.   How can they do that when the price isn't fixed and goes up and down 20% in a day?  They have to pay the merchants in real dollars – what if they end up 10% short for the day due to fluctuations?  

    Property Hedge/Palotay – WLH has a lot of California exposure,  KBH too – they are based in LA.   KBH is toppy anyway with a much higher p/e than WLH but WLH has more direct exposure and is much smaller (so they get in trouble more easily).

    On the other hand, WLH calls only go out to May but you can sell some May $30 calls for $2.60 or, if you want to be braver, the May $25 calls for $5.50.  

    With KBH, they have 2020s but I'd just sell the 2019 $30s for $4.70 and pick up April $33 ($3.80)/$30 ($2.05) bear put spreads for $1.75 so you can sell 30 of the short calls for $14,100 and buy 100 of the bear spreads for $17,500 and that's net $3,400 cash for $30,000 of downside protection.  If KBH goes higher, you can always pick up the 2020 $27 ($8)/$35 ($4.50) bull call spreads at $3.50 ($35,000) to cover – only as many as reflects how nervous you are, of course.  

    Remember, you'd only be losing on these if your property values are doing well (most likely).

    Naybob's Futures idea is good too, but I've never dabbled in them myself. 

    Instructions/Latch – Did you contact Greg?

    70s/Naybob – Dime bags were $10.  Should have saved those and opened a pot shop where they are now getting $300/ounce.  That's 1,000% gains!  I stopped smoking when I had kids (first time there was a child emergency when I was high was the last time I smoked) but I'm sure I would have stopped because of the prices otherwise!  

    /RB back at $1.70! 


  81. FNSR is up today, but reports after the close when anything can happen.


  82. Phil and PSW team, I'm summarizing some random posts I've made in the past two weeks that might help you.

    Every day sometime around an hour before close I buy /YM, then close it either at the formal market close or in the after-hour when I think it's peaked; I take it off the table before the hour break.  /NQ is not as reliable for this, I presume YM must be easier to manipulate (Phil?).

    Every Wednesday late night or Thursday morning I buy /RB and close it near Friday's market close.

    Both of these tricks have an 80% win rate over the past few weeks. Both can be wild rides so you have to have a strong stomach and decide when/if to give up.  If you have limited means like me, paper trade such things for a few weeks on ToS to find the patterns and be disciplined. There are probably a lot of other patterns out there as well, please post them if you find them. I'm a software guy and someday I plan to sit down and write a bot that figures out what the other bots are doing 8) 


  83. I have a question about Bitcoin, Green Coin and such. Is there an electronic trail of one's transactions?  Say I got lucky and made a nice bundle trading bitcoin, is anyone snooping around to collect taxes?  Could a taxing agency go back and find my activity?


  84. Phil, any idea why the Nikkei went nuts the last two days?  If we turn down tomorrow (do we ever turn down?) that might be the best short…


  85. Stockbern… trail… maybe not, but would you take that chance? There's going to be too much profit to ignore, they will find a way.


  86. Stockbern:  Bitcoin/Coinbase

    IRS is now requiring Coinbase to turn over personal info on many people that have made a significant amount of money.  The court ruling was this week.


  87. Nothing sure but death and Taxes


  88. Death and taxes… why do you think they let us live? You can eat a few lambs, but you shear the sheep.


  89. Regarding the gold lagging due to people buying bitcoin instead of gold….

    Would this really have a noticeable effect? What % of people are buying bitcoin instead of gold? Also, doesn't gold have a massive real market (i.e. used in production of real goods etc…) that can't really be impacted by the move to bitcoin? 

    Even if a couple billion went into bitcoin instead of gold would that have a significant impact on the gold commodity price???

    Just wondering if the "gold falling due to people buying bitcoin instead" is a real factor or more of a headline or theory? Not sure if there if any sort of basic Phil math that can be done to see if it makes sense. Im open to the idea but just skeptical at this point…


  90. Phil/T

    I am thinking of selling the stock and buying a 2019 BCS 30/37  for about 4.35.  This is for an IRA acount. What do you think?


  91. 70s/Phil. As I recall an ounce was $30 back then, but the pot is significantly better now. One hit of modern top shelf herb is enough for a nice high. A gram (about $15) will last a long time for the casual connoisseur. 


  92. crs, perception is everything, and it's seen as a store of value. It's hot… attracting the attention of some who buy gold… if you can rationalize it's safe (I don't) then it will draw some volume from gold, and prices are set on the margins. It has to be having some effect. Besides, someone is now getting wildly rich! Some will think only a fool doesn't jump on… and they're born every minute.


  93. ztennis not knowing much about the IRA besides not being allowed to sell naked options, T pays a div. of 5.4% and even just selling the covered call (armchair trade) OR if starting a BCS I would go for the Jan 20.


  94. Bots/MrM – I like the idea but many have tried that approach.  I just have my simple 5% Rule.  Yes, /YM is very easy to manipulate as you just need to pop any stock $1 and it adds 8.5 points to the Dow and, globally, the Dow is still what traders look at – so it gives you the most bang for your buck by miles.

    Coins/Stock – No matter what they say about privacy, I would certainly assume they'll figure it out and tax you.  Huge penalties for non-disclosure if you are caught after the fact. 

    /NKD/Mr M – Sure, they are just trying to catch up.  BOJ's winding down QE and that halted their rally but now that it's over with, they are maybe turning back up if we keep going.

    Don't forget /NKD loves a strong Dollar.

    Coinbase/Lala – Ha, I thought so, thanks.

    LOL Mkucs.  Or, should I say, bahhhhhh.

    Gold/Crs – Well $240Bn flowed into BitCoin – that's quite a lot in a year.  The net money flows for gold tend to be less than $10 MILLION on any given day but then there's futures, ETFs etc. too.  Still, $240Bn flowing FROM somewhere into BitCoin means a lot of something elses have massive outflows.

    Gold does have a floor, put in by industrial use as well as a floor put in by cost of mining (about $1,050) – just like oil can't really go below $40 or wells begin shutting down and balancing out the supply.  

    Feel free to research it but my take is it's the same kind of people opting, in 2017, to divert a portion of their gold/silver speculative firepower to something else that's rare and shiny (in the pictures, anyway).

    T/Zten – Makes sense as it's $6.18 in the money so you'll do better on the spread than the stock up to $37 (sans dividend) and certainly no worse in a sell-off.  

    Potency/Jet – I have heard but have not tested.  

    How is the Dow suddenly up 71 at the close?  It was up 40 just a minute ago?  

    Well, another crazy day bites the dust…


  95. BitCoin up for the day, now capped at $267Bn, which is up about $40Bn for the day on about $5Bn worth of transactions.  How does $5Bn worth of buys and sells add $40Bn in market cap?  See car lot model above – total disaster at some point…


  96. Speaking of bubbles:

    Neiman Marcus Christmas Gift Guide – I'll take the blue Rolls. 


  97. Price: $50 for one; $50,000 for 250   weird price scaling for the origami


  98. Stick works again. Looks like a bump at tomorrow's open too… then who knows? I bought a 2 day option on the IWM yesterday afternoon looking for a bounce at support, selling just looked exhausted. Almost got to 100% (my goal) today and do believe we will see it tomorrow. Buy the dip still in force… rolling over is a process, Christmas is coming and hope springs eternal. We will test the high (and probably fail) IMO. Plenty are planning to sell in Jan, I'm sure. The smart ones will beat the rush.


  99. Blue rolls, will bake you some with blue flour. Anything for you Phil!


  100. I'm going to miss Franken in the senate. If only Jon Stewart would run… Just imagine. :)

    P.S.  You want some blue butter for those rolls? I can do that…


  101. I'd prefer George Carlin over Jon.


  102. So do I Latch, but I think you have to be alive to run… God rest his soul.


  103. muck, playing Carlin's videos with the White House 'green screen' would probably suffice for half the country. Someone is going to present a  Max Headroom candidate for the House one day and win.


  104. I am a newbie and trade on Etrade..

    don't know about /RB,/YM,/NQ…Can someone direct me to a timer and tell me how I trade them?


  105. DIS/Yodi - Appreciate your thoughts on DIS and how you walked through the trade setup with the math.  Easy to follow and while I have not settled into my own strategy yet, it is nice to read how others are doing it.

    Coins/MrM-  As stated above, be careful, they are watching everyone.  IRS

    "Coinbase boasts nearly 6 million customers, but according to a government filing, fewer than 1,000 US citizens have reported cryptocurrency holdings on their taxes."


  106. MrM – I am doing something similar with Futures, except I am in Asia. So, during the night between 2-3AM, the markets tend to move like clockwork most nights.  Not ready to share my findings, as I am still unsure.  As a fellow IT guy (systems analyst), I am starting to see trends in the markets/charts as well, but not sure what to make of it.  Every time I think I got it right – I get a wake-up call.  But, if I had to pick one favorite, it is /NG.  But, really… i should be studying options much more.  

    Futures/Millard – I am a newbie too, be very careful with /RB, /YM, /NQ… it is a wild ride sometimes.  I use ThinkOrSwim (TOS) to trade futures.  I do know, (recently went through the process) you have to be approved to trade futures via your brokerage.  I believe eTrade offers you the ability to trade futures.  Not sure what a timer is…   


  107. MrM – I should have added, the markets move at a snail's pace at night, but easier for me to put a few feelers out and take little wins (under $100-$300).  





  108. China just launched the world’s first electric cargo ship






  109. Even for the Very Rich, More Money Brings Happiness



  110. Saudi Crown Prince Was Behind Record Bid for a Leonardo


  111. Donald Trump’s increasingly weird endgame


  112. Bitcoin’s Wildest Rise Yet: 40% in 40 Hours





  113. Following yesterday’s T question by ztennis I did have a closer look at the scenario of his Jan 19 30/37 BCS against an armchair trade.

    Looking at the stock’s performance over the last year Dec. 15 / Jan. 16 of 30$ Nov 17 32.75 and today Dec. 17 36.17. Taking in to consideration that we could have a drop over the next year between 10 and 20%. So we looking at 32.55 and 28.93.

    Here I do not even wish to look at the 20% drop only at the 10% drop.

    Looking at Jan. 19 at a stock price of 37$ or above the BCS will return 7$

    Let us say the man has to sell 500 shares and receives at today’s value 18,058.00 with that he can buy say 42 (rounded) BCS. 18,058.00 / cost of BCS 4.35/100 = 41.57 so we say 42 BCS.

    At Jan 19 stock at 37 or above you will receive 7.00 x 4200 = 29,400.00 less your capital outlay of 4.35 x 4200 = 18,270.00, so you pocketing 11,130.00. Do not forget your total cash return at 37 is 29,400.00 for my calculation below!!!

    Looking at the worse situation at Jan 19 the stock has dropped to 34.30, to my oracle calculation you have lost all of your capital outlay of 18,270.00 and you still further down 200.00.

    The gain would be great the loss is disastrous.

    Now to my armchair trade.

    Again I now hold 500 shares at 36.17 = 18,085.00. Not hiding much behind the bush being Jan19 at 34.30 my shares are worth 17,150.00, against the BCS of nothing! With other words my capital loss is 935.00.

    However here my armchair trade. I sell against my 500 shares 5 Jan 19 37 call options at 2.10.

    The combined monthly income div. plus call option is .32 cents per month / 30 days x 409 days x 500 shares giving me combined a nicery 2,181.00.

    My question Jan 19 the stock being at 34.30, sitting in my armchair, what do I hold in my hand?

    Stock at 17,150.00 plus combined div. and call option value 2,181.00 = 19,331.00 against the BCS of nothing. I can even still buy a Cuban cigar and smoke it!

    You might still say well at Jan 19 my 30 call still has value. Yes you paid 6.45 look at Jan 17 30 call 2.20, not even taking the difference between now 36.17 and possible 34.30 estimated in to consideration, plus you got from your Jan 19 37 caller 2.10 so you hold 4.30 against your pay out of 6.45 a loss of 2.15 x 42 x100 = 9,030.00

    Please correct me if I am wrong or I can blow circles with my cigar.

    I hate to tell you I still would stick my neck out and sell a Jan 19 33 put for 2.14 giving me a combined return of .48 cents a month or 3.272.00.


  114. Yodi, if the cost of 30/37 bcs is 4.35, isn’t breakeven stock price 34.35?


  115. Good morning! 

    Oil punching up over $57.50 and /RB $1.716, that Friday trade is still reliable.  

    It's going to snow in NYC this weekend – that should put traders in an /NG buying mood.

    /NG still barely off $2.80 at $2.825 but any progress is nice and /SI back to $15.85 after that scary dip.

    /YG is still the safer play above the $1,250 line with tight stops.  

    /KC still way down on no good reason I've seen:

    This one was odd:

    That's a huge move for cotton.

    Speaking of huge moves, /NKD up about 1,000 points since Wednesday.  

    And here's why:

    Dow rejected at 24,300 so far:

    Most likely there will be some selling in the afternoon since it's been a scary week and some people are going to want to lighten up.


  116. Mike break even. I chose the 34.30 for my break even at Jan 19 but taking 34.35 is also OK depends if and when you get the BCS for 4.35. However at this point where the stock price is 34.35 you have lost all money for which you purchased the BCS. So 4.35 x 42 x 100 18270.00 Even if the stock goes down to 30 you can only lose what you put in. However if you sold say a 33 put you can go down as much as 32.80 for break even. My calculator works in increment of .10 and calculated to the 12th of Jan. 19 and not to the 17th. So there might be a very small discrepancy.