Monday Virtual Portfolio Moves

August 27, 2007

170

Posted August 27, 2007 at 9:57 am | Permalink (Edit)

Selling XOM calls – I’m still in favor of that play, especailly if they run up a bit more. Oil over $71 or even over $70 will lend them support so I’d be careful into inventory but we may have a great shorting opportunity ahead. At $3 I think they make a good sell but you have to be prepared to roll or DD.

PTR already made a nice, shortable move but I’ll wait for Happy to give us the go ahead when he gets out of his calls. Congrats on ONXX Happy – perfect call! Don’t be greedy.. Great going on ACH too, Dragon stuck with that and can say “I told you so” to anyone he wants.

JOYG – already so beaten down, I’m not sure I want to play the downside. Last 2 earnings let to $10 gains and here we have retraced $13 of that $20. I’d rather play the volatility crush by selling 3x $50s for $2.05 against 4x Oct $55s at $1.43, picking up the Octobers first and hoping they run up a bit to test $50 before we sell. I like this as a $10KP play with just the 4 contracts and we abort if we can’t get at least $2.50 for the $50s. XXX

Posted August 27, 2007 at 10:02 am | Permalink (Edit)

Home sales down 9% from last year, Inventories up 5.1% (9.5 month supply = HUGE) and prices are coming down. If we shrug this off that’s good – personally this is not news to me but it’s amazing what kind of obvious crap shocks investors so be careful! August is guaranteed to be worse than these July numbers…

Posted August 27, 2007 at 10:28 am | Permalink (Edit)

FXI – looking for a snapback but it would key off a big down day in our markets, which you really can’t be too sure of until about 3:35 (and even then you may get surprised!). Right now I have the $138 puts which I will roll up today to $145 puts as I really think there will be profit taking at a 20% 10-day gain in the Hang Seng. This is a dangeous play, of course but I don’t have many straight puts so, unless we rally, I’ll take my chances.

Posted August 27, 2007 at 10:49 am | Permalink (Edit)

VIX popped right up with the sell-off this morning so the rubber band is still tight holding the markets up.

Energy market taking a nice hit. COP is slow to give up $80 and might make a nice put as the $80 puts were $3 on Thursday, now $2.95. As $1.75 has been a bit of a floor, I’ll start picking up some if I can get that price but I fully expect to have to double down (happily) into inventories but I don’t want to take a chance of $80 turning into resistance and missing the play.

CVX is still a favorite put for me, again, I’d like to see a run at $90 but for now I’m initiating Oct $80s at $1.

Posted August 27, 2007 at 11:04 am | Permalink (Edit)

GOOG – I think it’s partially supply and demand. There are a LOT of calls and puts written now and that’s depressing prices somewhat. Also, they’ve relatively flatlined since late July but once you get out to October you are back to an earnings play (earnings usually come out pretty much on expiration day).

That’s why the October/Decembers seem so much higher. I’m migrating to Dec $540s, hoping they come down below $20 where I can knock off half by selling the Sept $520s (or $510s on downward mo). I can roll down from there once I establish a position. After Sept expires I can probably get another $10 for the Oct $540s, especially if they announce a firm earnings date inside Oct expiration. This play is an XXX for people who can stick with it but the margin requirement is a stiff $30 per contract if you are selling the $510s.

Posted August 27, 2007 at 11:46 am | Permalink (Edit)

PTR – that’s my signal (thanks Happy) but I’ve decided to naked short the $150s for $3.80, not a play for everyone. I see no reason not to take the Oct $140 puts at $5 as long as you can cover with the $145 puts, now $4.95 if it begins to leg up. XXX

Posted August 27, 2007 at 12:48 pm | Permalink (Edit)

FXI flying up on our recovery. Stopped out and will need to see when/if this thing stops to roll up.

DIS suddenly deciding to grow in leaps and bounds since we gave up on it.

QCOM $40s for .68 XXX

Posted August 27, 2007 at 12:55 pm | Permalink (Edit)

BIDU going nuts! Great call by Happy at 11:06 saying they had room to run (and of course in the earlier set-up).

FRE/FNM NOT doing well. I warned of this some time ago but got bored waiting. This is a bad sign too. FRE Oct $60 puts are $1.60 and FNM Sept $65 puts are $1.60. The danger is someone stepping in and doing something with mortgages but looking at housing action today it doesn’t look good.

Posted August 27, 2007 at 1:17 pm | Permalink (Edit)

DNDN – if you are holding the common and looking to lock gains, you have nothing to lose by selling the $7.50s when you think we have a top. At worst, you can buy them back for perhaps a nickel loss if the stock keeps going. HOWEVER – breaking and holding $8 would be a big deal as that hasn’t happened since early July so “When in doubt, sell half” may apply!

FAF/LFG weak too, BSC getting killed.. Something is hitting the fan folks! I’m looking to add 150 DIA $133 puts at $2 which wil weight me pretty nuetral after today’s calls unless BSC turns around.

Treasury bill auction of $43Bn went well at 4.6% (3 and 6 months) so that’s a boost to liquidity, which will rally the markets so holding off on those DIAs but I thought I’d leave it up there in case we hit a wall at 13.400 again.

Wow, FXI calls up 217% since Thursday, totally nuts… Picking up some $155s as a pre-rolll on $142s. Still wanting to short them but it can’t be done like this.

Posted August 27, 2007 at 1:44 pm | Permalink (Edit)

Thanks Kustomz!

Technical indicators – I’m really a fundamentalist who reads charts (most ignore them) so I am generally projecting an intermediate move in a stock and looking for a signal of a breakout or breakdown to make my buy/sell decisions. GOOG, for example, I’m targeting $525 and waiting for a break over $515 but every time it’s rejected at $515 I sell the $510s for $13+ since it covers me up to my target for the month and I can scalp $2 or 3 on a pullback. This has been flawless logic since I got back! As I write this, I have a sell order on the $510s at $15 tee’d up in case the market weakens again.

Posted August 27, 2007 at 1:52 pm | Permalink (Edit)

FXI – out of the $142s at $14.30, since I have the $155s at $6.80, I’m going to sell the $145s for $12 as they should lose money much faster than me on the way down and probably won’t gain much more on the way up.

Posted August 27, 2007 at 2:53 pm | Permalink (Edit)

FXI – continues to be out of control. Working into a strangle is not a bad idea here but it’s hard to even short them the way they are running. I sold some $150 puts at $7.40 to offset the $145 calls I sold as it was starting to get away but this stock is just too crazy to play right now.

I’m not buying this rally guys, too many pockets of weakness, S&P not responding… Following through with DIA puts as soon as we turn down, not much that will convince me not to cover by EOD.

SNDK because STX is getting into ram drive market (and the Chinese want to buy them) so it’s just destabilizing. The correct move is to spend $1.10 to roll them down to the $52.50s where a 50% recovery will get you .60. A full recovery on a DD at $1.15 will only get you back to $1.80.

Posted August 27, 2007 at 3:51 pm | Permalink (Edit)

FXI – overall I still have to go short. Anything less than another 600-point move will be a huge disappointment and we just blew our levels with great authority. No market moving news ’till Thursday means it will be tough to put a U-turn on the markets and with Bernanke scheduled to speak on Friday any word from the Fed before then will only convince people there IS a reason to panic (and there is!).

Best bet in general is to just let the stops be your guide and get the winners off the table and then we’ll decide how pathetic the losers are.

JOYG – my view is that they are the service sector for mining. Mining is/was hot and they should have no trouble hitting numbers after 2 mises. They are trading near a 2-year low, earnings aren’t until Wednesday and they had a strong run in the morning and now they are skating along the 200 dma trying to break up – pretty much the kind of stock I would take a straight call on if it weren’t for earnings…