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  1. phil

    SVXY/StJ – Selling the short-term puts works like a charm. 

    FTR/Baron – Did you do the adjustment?

    FTR – This is a tough one as we're miles down but they are going to pay an 0.60 dividend on Dec $14th and that's 10% of the stock price so it's silly not to double down and buy 2,000 more shares for $6.73 ($13,460) and we'll sell 20 of the 2020 $5 calls for $1.90 ($3,800) so that plus the $1,200 we collect on this quarter's dividend means our 2,000 new shares are costing net $8,460 or $4.23/share.  That being the case, we may as well sell 20 of the 2020 $4 puts for $2 ($4,000) and roll the 20 short 2019 $10 puts ($6) to 40 short 2020 $4 puts (60 total).   That drops our net on the new 2,000 shares to $2.23 and we make 100% if called away at $5 and, if they keep paying a $2.40 annual dividend (doubt it) that would be like collecting 27% per quarter in dividends. 

    In that case, we still had 2,000 open shares, so the same 1/2 cover and I'd lock in gains by covering the other 2,000 now with the 2020 $8 calls and letting the new 2,000 get called away for $5 since the main reason to DD was because we were worried FTR was going lower and now it bounced back, so no more worry there.  The same logic applies, you can get more aggressive but we already sold the put for $2 so your net on the new $2,000 was just $2.83 and getting called away at $5 is a $2.17 profit in less than a month – not sure what more you expect out of a trade…

    Effectively, if you get called away and your basis was $15 on the uncovered $2,000, this lowers it by $2.17 to $12.83 and you have 60 2020 $4 puts so, if FTR goes lower, then you have 8,000 shares at $6.21 avg and, if FTR goes higher, then you keep getting your 0.60 dividends and you are even by the end of this year and profitable after that and THEN you can worry about rolling the 20 short 2020 $8 calls.  

    Fed/Mkucs – I think a bigger raise will spook the markets but it's not likely after that CPI report.  No sign of wage pressure either.  If they don't raise rates, the Dollar will drop and that will support the market a bit but, on the whole, I don't see it being a huge boost though Dow 25,000 is so close.

    GE/Yodi – The difference is HOV had exciting premiums to sell.  With GE, for $17.85, you give up an 0.48 dividend and you can sell the 2020 $18 puts for $2.10 and buy the $18 ($2.75)/$22 ($1.30) bull call spread for $1.45 and that's net 0.65 credit so your net entry would be $17.35, not much different than buying the stock so not a big deal to play.  You could sell the $15 puts for $1.20 and drop the net entry in exchange for the credit but still only $4 potential upside and a bit less downside risk.  The low VIX makes these trades a lot less fun. 

    MLPs/QC – Why pick one when you can just go with LNG, who are doing half the exporting?   We liked them at $40 but $48 not too terrible and you can sell the 2020 $42.50 puts for $5.50 and buy the 2020 $42.50 ($13.50)/$52.50 ($7.50) bull call spread at $6 for net 0.50 on the $10 spread.  If you bought 10 of those for $500, you could sell 3 of the Jan $47.50 calls for $1.85 ($555) and that's just 37 days out of 765 you have to sell so paying yourself an almost monthly dividend of 100% on your cash while you wait to see if you get 20x returns.  Seems more exciting than trying to pick an MLP winner just to get a 13% dividend…

    That's a good one for the Watch List!  

    GRE/BDC – Thanks for clarifying.  

    GRE/Jet – Well Greg will take them at an 0.00044 exchange rate as a Membership payment so at least you have that outlet for now.  Biggest transaction today was someone buying 4,239,507 GreenCoins for 0.08479 BitCoins which, at $18,000 is $1,526 seems like 0.00036 to me.  CoinMarketcap says GRE is at 0.00038.  

    GNC/Torquio – Nothing new, just waiting to see what they announce re. restructuring debt but that's going to probably be when they announce next earnings (2/15ish).

    TEVA/Jabob – Pretty much the same restructuring noises that have been going on all month, while it's climbed 35%.  I guess it would be nice if they never, ever pulled back and every day was green but, if you want that, you should buy BitCoins or DIA – not real stocks.   


    TEVA WTF???

    TEVA tease.. DANGIT!

    TEVA down 4% dangit! 

    M WTF? 

    TEVA, FTR, M, GE, GNC none of them seem to want to let the others win the POS FU stock of the year award.


    So, you can continue to be a deer in the headlights or learn to go with the flow on these things.  As noted on GNC in our last review (11/22):

    • GNC – Keep in mind here we are in for net $2.70 unless the stock is under $7.50 in which case we own 12,000 at a $5.10 avg but, either way, we're in the money at $6.45 and it's great for a new trade as the paper loss is gigantic – despite the fact that it's "on track".  
    • GE – NOW we think it's the bottom (waited last month).  Let's buy another 2,000 shares at $18.30 and buy back the 20 short 2019 $25 calls at 0.37 and sell 20 2020 $18 calls for $3.25 so the net cost of our new 2,000 is $15.42.  We have 20 short 2019 $28 puts at $9.80 ($19,600) and let's roll those to 25 short 2020 $25 puts at $7.35 ($18,375).  
    • M – $20 is a great floor and we're well-positioned. 
    • TEVA – Now the 2020s are out so we can roll our 30 2019 $17.50 calls at $1.95 ($5,850) to 40 of the 2020 $12.50 ($5)/20 ($2.50) bull call spread at $2.50 ($10,000) and we'll roll our 30 short 2019 $25 puts at $11.70 ($35,100) to 30 short 2019 $20 puts at $8 ($24,000).  As we initially collected $28,500 on the short puts, our net credit becomes $17,400 or $5.80 per contract so our break-even becomes $14.20.

    Tulips/BDC – Well anything that happened 400 years ago is going to be tricky to document.    I suppose you could compare BitCoins to gold back in 2010, when people lost faith in money and it went from $200 to $4,000 before collapsing.

    Image result for gold bubble

    I'm sure you'll say this time is different because it's a new paradigm, etc. but, at the moment, I'd rather buy /YM or hold onto my 10 /SI longs ($122.74) than own a BitCoin for $18,000.  We can benchmark that and see how things go.  My /SI longs are using $57K in margin so call it 3 BitCoins worth. 

    Fed/Mkucs – Yes, it is what they do but they are entrusted to do it with restraint and, failing to do so, they risk devaluing the currency.  It is necessary to grow the money supply to reflect the growing economy or Dollars would now be worth at least $15.88 (an ounce of silver).  

    Related image

    /CL/Japar – It's been way too tricky to call.  Without an obvious toppy move, I can't get interested in playing it.  $58.50 has been a reliable top, of course and any break below $57.50 is shortable – same line we've been playing since early November but below $57.50 is too iffy for me.

    Oh yeah, we forgot about today's report:

    • EIA Petroleum Inventories: Crude -5.1M barrels vs. -3.8M consensus, -5.6M last week.
    • Gasoline +5.7M barrels vs. +2.5M consensus, +6.8M last week.
    • Distillates -1.4M barrels vs. +1.0M consensus, +1.7M last week.
    • Futures +0.23% to $57.27.

    Build in /RB is a big concern and net/net, not much of a draw.  

    Futures/Japar – No, they are essentially where I want them.  

    Delay/StJ – Well they could ask but I doubt the GOP will see it that way.  

    Crypto/BDC – But you do see that, if we had real, limited supplies of currency – that a crash like we had in 2008 would destroy the global economy.  Without the Fudge Factor of the Central Banksters – a major correction like that would run BitCoins up as much as the markets and housing go down, transferring massive amounts of wealth from non-holders to holders and, since the crypto holders don't employ the non-holders – there would be no way for them to earn it back without taking massive pay cuts and selling their stuff for far less than they paid for it.  

    Go silver!  Already I'm outperforming BitCoin, which si down to $17,200 now.  

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Zero Hedge

Futures Slide As Dollar, Rates Jump Ahead Of "Monster" Treasury Issuance

Courtesy of ZeroHedge. View original post here.

After a week in which stock-trading abruptly algos decided that rising yields are irrelevant at worst, and at best positive for equities, the correlation has again flipped overnight sending Asian shares lower and European share erasing earlier gains as bonds fell around the globe, with the 2Y Treasury yield rising 3bps to 2.23% - highest since September 2008 - and the 10Y briefly as high as 2.93%...


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