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  1. phil

    Hola people! 

    Futures opening just as crazy high as they closed – ain't no stopping us now.  

    Trade of the Year/Maya – That's a good question because I wanted it to be LB but then LB took off too fast before Thanksgiving and, officially, I switched to HBI.  Both have pulled back a bit and I do like LB better and it was simply a positioning issue.  So the trade we have in the Money Talk Portfolio, when I was on in Sept, was our original LB trade and, since we reset the other portfolio in Dec (before the drop in Retail), we didn't have a chance to get back into either at low prices yet (though we are still hopeful earning will disappoint or the market simply corrects).  

    NAK/Maya – Ouch, that totally sucks! 

    Good quote Naybob.

    Speaking of the Money Talk Portfolio, I'm on the show Wednesday and I've got to write up a review:

    From a $50,000 start we're up 74% to $86,975 in our first year.  These are very much "set and forget" trades as we have never even made an adjustment and they represent trade ideas that were made on just two shows – one in January and one in September.  

    As with many of our Philstockworld trades, we use very little cash for our initial positions, saving that firepower for adjustments if a trade goes south but, when they don't – they can be money-gushers.  These trades, of course, follow our strategy of "Be the House – NOT the Gambler" in which we sell more premium than we buy, giving ourselves a tremendous edge every time we make a trade.  

    AAPL – This is a $30,000 spread that cost us $6,100 in cash to initiate and the margin required on the short puts is $8,541 but worth it as we had very little fear Apple would fail $140 so the risk was deemed low.  Currently, the spread is net $13,550, which is up $7,450 (122%) but we still have another $16,450 left to gain so, even as a new trade, this makes a very nice 12-month return from here.  

    IMAX – IMax has run into trouble recently but we sill love this one as a new trade at essentially the same price we paid for it.  Actually, it's up $175.  As an adjustment, however, we are going to roll the March $18 calls ($1.88) to the Sept $15 ($5.20)/20 ($2.20) bull call spread at $3 for + $1.12 ($2,240) and we'll buy back the short March $22 calls for 0.35 ($700) so $2,940 added to our original $1,250 outlay means we're in the now-wider $10,000 spread for net $4,190 and, if all goes well – we'll have a gain of $5,810 (138%) on the trade's 1-year anniversary if IMAX is over $20 so great for a new trade!  

    LB – Our Trade of the Year for 2018 is miles over track at net $21,050 which is up $17,650 (519%) from our initial cash outlay of $3,400 just 4 months ago!  The maximum payout for this trade, however is $30,000 so this trade, if LB stays over just $40, will pay another us $8,950.  I know it seems boring to "only" make another 50% in 12 months but it's a very safe 50% – and that's worth something, so I'm inclined to hold it as is.  

    WPM – This one was our Trade of the Year for 2017 and it's right on track for a full payout as well.  Our initial outlay was just $2,000 in cash and the short $17 puts are using just $2,563 in margin so a very margin-efficient trade as well.  At the moment, the spread is net $13,700 for a gain of $11,700 (585%) and the maximum value next January is $25,000 if WPM holds $22, which we feel is very likely.  So that's another $13,300 (113%) left to gain from here so no reason to throw this one away either.  

    So there's 4 trades that, even if taken as new, will return another $44,510 between now and next January so a very nice return – even for latecomers.  

    Since we've already made $36,975 in year one and we expect to make another $44,510 in year 2, it makes sense to hedge our positions – just in case the market does tank.  Since we know if it doesn't tank we'll make $44,510 (unless something specifically goes wrong with our picks), we can set some of those gains aside in a hedge.

    SQQQ is the ultra-short Nasdaq ETF that's a 3x inverse of QQQ.  So, if the Nasdaq drops 10%, SQQQ goes up 30% (in theory, it's not perfect).  I'm going to add the following trade as a hedge and WE EXPECT TO LOSE MONEY ON THIS ONE – it's like life insurance, you pay for it but you hope that, each year, it's a waste of money!  

    • Buy 40 SQQQ Sept $16 calls for $2.80 ($11,200)  
    • Sell 40 SQQQ Sept $23 calls for $1.20 ($4,800) 
    • Sell 5 ALK 2020 $60 puts for $8.20 ($4,100) 

    That's net $2,300 and $2,620 in margin (from the short puts) to protect our current $36,975 gains and our potential profits – not a large price to pay and, if the Nasdaq drops 10%, then SQQQ (now $16.25) should climb 30% to $21.12 and put the $16 calls $5.12 in the money for $20,480, so we'd be up $18,180 and the max pay-out on the spread is $28,000 so about $26,000 of downside protection – which is half of what we started with!

    ALK is a stock we feel is very underpriced but you can use any stock you'd REALLY like to buy as an offset on these hedges but, keep in mind, if the market does tank, you REALLY will be buying that stock!

    Now that we have a hedge, let's look for a new spread and I have two catching my eye at the moment:

    GE is the most hated stock in the Dow and the S&P, off about 50% from last year's high as the company has sold of divisions and retooled and now their accounting plan has garnered an SEC investigation which is spooking investors.  As I often say to our Members – "If you're not going to buy low, when are you going to buy?" but there may be more pain ahead so we're just going to dip our toes in the water on this one:

    • Sell 10 GE 2020 $15 puts for $1.95 ($1,950) 
    • Buy 20 GE 2020 $15 calls for $3.60 ($7,200) 
    • Sell 20 GE 2020 $22 calls for $1.10 ($2,200) 

    This one has a $3,050 cash outlay and requires $1,312 in margin for the short puts.  If all goes well and GE is back over $22 in Jan, 2020, this spread will net $14,000 for a gain of $10,950, a 359% return on cash.  While the cash return is a bit less exciting than some of our other trades – we feel very confident GE won't go much lower ($14 should be the worst) so the low risk profile makes up for it.

    Our worst case here is owning 1,000 shares of GE for $15 (the put strike price) plus the $3,050 we laid out would be net $18.05 per share and, at $14, we'd be down $4,050 vs the potential gain of $10,950 and we don't feel the risk is anywhere near as likely as the reward – which is what we consider a good trade at PSW!  

    Finally, we like Barrick Gold (ABX) and consider them very undervalued, especially with gold prices climbing.  ABX also has great option prices so we can be a little aggressive here with the stock at $14.25:

    • Sell 10 ABX 2020 $17 puts for $3.75 ($3,750) 
    • Buy 25 ABX 2020 $13 calls for $3.90 ($9,750) 
    • Sell 25 ABX 2020 $20 calls for $1.55 ($3,875) 

    That puts us in this $17,500 spread for net $2,125 and the upside potential at $20 is $15,375 (723%) and it's aggressive because the strike we chose for the short puts is $17, which is $2.25 HIGHER than ABX is trading for now but we only sold 10 and the margin requirement is $1,830 so a good fit for our $50,000 portfolio (initially).  

    So, with the 3 new trades, we stand to make an additional $26,325 less the $2,300 we expect to lose on the hedge is still plus $24,025 on a $7,475 net cash outlay.  Not a bad way to start a new year!





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Zero Hedge

Only 73% OF Americans Are "Likely To Adhere To The Law"

Courtesy of ZeroHedge. View original post here.

Many factors influence how effectively a government is able to uphold the rule of law and some of them include access to courts, lack of corruption, effective policing and institutional competence.

While some governments are able to combine these efficiently, resulting in strong adherence to the law, Statista's Niall McCarthy notes that others tend to struggle...



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Chart School

Rallies Slow As Semiconductors Tag Resistance

Courtesy of Declan.

Friday saw the indices close near the lows of the day as Semiconductors tagged resistance and its 20-day MA. Supporting technicals offered a mix of bullish and bearish markets but shorts have their opportunity with a stop above 1,334.


The S&P edged a close above the bullish mid-line in stochastics along with a 'buy' in On-Balance-Volume. However, the index also experienced a relative loss against Small Caps as it struggles to attract new buyers.

...

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ValueWalk

Columbia MBA- Greenwald Class: Li Lu (2006)

By Jacob Wolinsky. Originally published at ValueWalk.

Columbia MBA- Greenwald Class: Li Lu (2006)

]]> Get The Full Henry Singleton Series in PDF

Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues

unfortunately what I'm doing today19:17you know I no longer talk about what we19:21own so I pick up a couple of examples of19:23what I owned in the past you know I19:25started this business in late 97 and you19:30know along the...



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Phil's Favorites

The Great Bear Market Of 2018

Courtesy of Lance Roberts, RealInvestmentAdvice.com

The Bear Market Of 2018

Let’s start with where we left off last weekend:

“Currently, we do not know whether the current corrective action is JUST a normal, healthy correction, or the beginning of something bigger.

BUT – this is the expected correction we have been discussing over the last several weeks. It is also something we had planned for by reducing overweight positions and adding a short-hedge to portfolios. 

With the markets on a short-term sell signal (noted by black vertical dashed lines in the chart above,) the current correctional process is underway. But, with the market now oversold on a...



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Digital Currencies

As Bitcoin Nears $11,000, Here's A History Of Its Biggest Ups And Downs

Courtesy of ZeroHedge. View original post here.

The cryptocurrency rebound off Feb 5th's bloodbath lows (below $6,000 for Bitcoin) has been impressive, as a 'mysterious' massive buyer 'bought the dip' and momentum took care of the rest.

With Bitcoin now nearing $11,000 (almost a double off the lows), ...



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Insider Scoop

Walmart, Target Are Susquehanna's Top Picks Ahead Of Retail Earnings Season

Courtesy of Benzinga.

Related WMT Upcoming Earnings: Hurricane Effects Still Trickling Through For Home Depot? Did Walmart Meet It...

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Biotech

What is 'right to try,' and could it help?

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

 

What is 'right to try,' and could it help?

In this March 18, 2011 photo, Cassidy Hempel waved at hospital staff as she was being treated for a rare disorder. Her mother Chris, left, fought to gain permission for an experimental drug. AP Photo/Marcio Jose Sanchez

Morten Wendelbo, Texas A&M University and Timothy Callaghan, ...



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Mapping The Market

The tricks propagandists use to beat science

Via Jean-Luc

How propagandist beat science – they did it for the tobacco industry and now it's in favor of the energy companies:

The tricks propagandists use to beat science

The original tobacco strategy involved several lines of attack. One of these was to fund research that supported the industry and then publish only the results that fit the required narrative. “For instance, in 1954 the TIRC distributed a pamphlet entitled ‘A Scientific Perspective on the Cigarette Controversy’ to nearly 200,000 doctors, journalists, and policy-makers, in which they emphasized favorable research and questioned results supporting the contrary view,” say Weatherall and co, who call this approach biased production.

A second approach promoted independent research that happened to support ...



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Members' Corner

An Interview with David Brin

Our guest David Brin is an astrophysicist, technology consultant, and best-selling author who speaks, writes, and advises on a range of topics including national defense, creativity, and space exploration. He is also a well-known and influential futurist (one of four “World's Best Futurists,” according to The Urban Developer), and it is his ideas on the future, specifically the future of civilization, that I hope to learn about here.   

Ilene: David, you base many of your predictions of the future on a theory of historica...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Promotions

NewsWare: Watch Today's Webinar!

 

We have a great guest at today's webinar!

Bill Olsen from NewsWare will be giving us a fun and lively demonstration of the advantages that real-time news provides. NewsWare is a market intelligence tool for news. In today's data driven markets, it is truly beneficial to have a tool that delivers access to the professional sources where you can obtain the facts in real time.

Join our webinar, free, it's open to all. 

Just click here at 1 pm est and join in!

[For more information on NewsWare, click here. For a list of prices: NewsWar...



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Kimble Charting Solutions

Brazil; Waterfall in prices starting? Impact U.S.?

Courtesy of Chris Kimble.

Below looks at the Brazil ETF (EWZ) over the last decade. The rally over the past year has it facing a critical level, from a Power of the Pattern perspective.

CLICK ON CHART TO ENLARGE

EWZ is facing dual resistance at (1), while in a 9-year down trend of lower highs and lower lows. The counter trend rally over the past 17-months has it testing key falling resistance. Did the counter trend reflation rally just end at dual resistance???

If EWZ b...



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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

Market Shadows >>