Phil's Stock World, Stock Options Trading & Information

Peter D, Just a note of thanks. Eight weeks ago, I entered my first RUT strangles, when the RUT was at 625. Tomorrow, I will let them expire, with the RUT at 625 (give or take). I didn’t care when the RUT went to 650, nor when it dropped to 590. Easiest, no touch money I’ve made in a long time.

- Judahbenhur, Feb 18, 2010

Gel1…..I’ve been here 6 months, mostly watching and learning. Lots of smart people on the site and I’ve learned a lot from Phil and many others. //// Inflan - I have to trump your sentiments regarding the wisdom of the board. I have to thank Phil and the many contruibutors for a 80% profit for 2009. I have learned a lot and am still learning ( even occasionally about political issues - ha! )

- Iflantheman & Gel1, Feb 4, 2010

Just closed out my V put for 50% in 24 hours thanks Phil!

- Humvee, Jan 5, 2010

Phil - I celebrate today, having reached my goal for the year, trading in sync with your education and guidance, of 1 million in profit. I learned a lot, achieved much, and am profoundly grateful. To be honest, when I set the goal I thought it was daunting, as I have for many years been an investor in equities but did very little with options. Learning and doing has for me been a blast! I reached my goal by following Phil’s strategies - lots of Buy/Writes, covered calls on equities , naked put entries for income production. I did it with 2.5 mil and kept 600,000 in cash in case I got in trouble. I concentrated on stocks (many of my own choosing) that had decent dividends and wrote front month calls against (OTM) which has worked well in this market run. 25% of my gain is in dividends and premium selling, with the balance in appreciation.

- Gel1, Sep 16, 2009

Looking over your main themes last week, the \"China may fall first\" and \"if you missed it previously, Thurs am gives you a second chance to short\" were absolutely on target. I had to rely on stop-losses because of my schedule but just those two calls could have been worth a small fortune. Keep it up and I look forward to your new portfolio.

- Ocelli, Aug 18, 2009

Phil Thank you very much, I appreciate your help and wisdom.

- CdsdpDean, Jul 24, 2009

I am a Registered Nurse, so is my wife. We work hard to take care of seven kids that are the joy of our lives. The cost for a basic membership is ALOT from our our monthly budget of spending and saving…but well worth it! Phil has allowed me to really ramp up the savings we put away for our children’s college funds and our retirement.

- David , Jun 6, 2009

I doubled down on our USO June $35 puts on Tuesday afternoon and listened to your posting yesterday and sold 1/2 midday and the rest I sold (luckily) at the top of the market yesterday with the last 1/4 of my contracts at 100% return in less than one day!

- Samlawyer, Jun 4, 2009

Phil, I was so impressed with the personal note in the comments that I went ahead and paid for a months trial of premium that I have been on the fence for awhile about. Just reading the comments makes me already glad for the purchase.

- Smasher, May 28, 2009

I have been with this site since the beginning and i have learned more the past 3 years than the previous 10. Information and great commentary are abound. The traders on the site are second to none and my portfolio has benefited greatly.

- Kustomz, Mar 21, 2009

Beginner's Guide to Options Trading. Free PDF Guide. Where & when to trade, how to prevent stock or option loss and how to make money!

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Free Money Thursday - 130 S&P New Highs Can’t Be Wrong!

by Phil - March 18th, 2010 7:59 am

130 S&P 500 companies hit 52-week highs yesterday.

Things must be even better than I thought in yesterday’s post and there has been a conga line of pom-pom waving analysts on GE/CNBC this morning telling us how UNDER valued everything is because we just don’t see the BIG PICTURE. As Bespoke notes in their chart of the S&P and it’s new highs, you want to see more and more stocks hitting new highs to sustain a rally but my question is - with the market now at 17-month highs and making new highs every day - what’s up with the other 370 stocks?

In an ordinary market, I wouldn’t question it but this is not an ordinary market. 52 weeks ago we were at 666 on the S&P and stocks were making DECADE lows. Here we are with the index up almost 80% off that bottom and we can’t pull a lousy 52-week high from 2/3 of the index??? We’ll be keeping an eye on this indicator to see how things pan out but notice when the market fell - there were no doubts, 80% of the stocks made 52-week lows last fall - not THAT’S a sell-off. That’s the kind of dramatic numbers you expect to see in a dramatic market move - not this wimpy 40% stuff - let’s see some conviction people!

AAPL is convicted - they are up 191% from their lows and AAPL is 15% of the Nasdaq so, all by themselves, AAPL has accounted for 28% of the Nasdaq’s move from 1,265 to 2,389 (89%). TRV is also moving with conviction, up 54% since March and adding 160 much-needed points to the Dow, a great swap for C, who would have only added about 24 had they remained in the index. CSCO replaced GM (because they are soooooo similar) and they too have been a great trade for the Dow, up 100% off the March lows and slapping 104 bonus points on the index.

Ah, now we see how our industrials can do so well despite all the unemployment and lower cap utilization and lack of demand and high commodity input costs - we just shuffle the deck until we find a set of cards that work! Even so, as I’ve pointed out this week, the Dow has been lagging the Nasdaq and the Russell by a wide margin and the NYSE and S&P have been kind of pokey too. The Nasaq can…

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Posted in Uncategorized | 175 Comments »

Ford Rally Fuels Bullish Options Activity

by Phil - March 17th, 2010 4:19 pm

Today’s tickers: F, EEM, DELL, UPS, IYR, JACK, WFC, CLX, SKX & LNC

F - Ford Motor Co. – The automobile manufacturer’s shares are once again trading at a new 52-week high after rallying 4.00% today to $14.02. Upward movement in the price of the underlying stock inspired bullish options trading activity. One investor initiated a plain-vanilla debit call spread to position for continued share price appreciation through expiration in September. The trader bought 5,000 calls at the September $15 strike for a premium of $1.03 per contract, and sold the same number of calls at the higher September $17.5 strike for $0.40 each. The investor paid a net $0.63 per contract for the spread, but could gain as much as $1.87 per contract if Ford’s shares surge 25% over the current price to $17.50 by expiration day. Nearer-term put activity clashes with the bullish move described in the September contract. It looks like investors purchased at least 18,600 put options at the April $13 strike for an average premium of $0.27 apiece. Perhaps put buyers are long shares of the underlying stock and are merely picking up cheap downside protection. But, it could also be the case that traders are buying the puts outright because they expect Ford’s shares to decline ahead of next month’s expiration day. If the latter is true, put-buyers amass profits if shares trade beneath the effective breakeven point on the puts at $12.73 by expiration.

EEM - iShares MSCI Emerging Markets Index ETF – Shares of the EEM, an exchange-traded fund that mirrors the price and yield performance of the MSCI Emerging Markets index, rose 1.55% during the session to $42.24. Despite the move up in share price, one investor employed a total of 60,000 option contracts on the fund to establish a bearish risk reversal in the January 2011 contract. It appears the options player shed 30,000 calls at the January 2011 $48 strike for a premium of $1.60 apiece in order to partially finance the purchase of 30,000 puts at the January 2011 $38 strike for $2.88 each. The net cost of the reversal amounts to $1.28 per contract. The massive size of the position may mean the trader is currently long an equivalent number of underlying shares of the fund. If this is the case, the transaction provides downside protection on that position should the EEM’s share price erode ahead of January expiration. Additionally, the…

Posted in Uncategorized | 1 Comment »

Overnight Trade: This One is in the Bag!

by David Ristau - March 17th, 2010 12:19 pm

I love my clever title for this post. Today, we are going back into the retail sector again to look to make some money. Yesterday, retail was good to us with a pick up of Rue21 Inc. (RUE). Our Buy Pick of the Day was good for 3% as we got in at the beginning of the day at 33.30. The stock quickly picked up momentum as investors got into RUE, hoping that the company would repeat performance like competitors Aeropostale (ARO) and Forever 21 (privately held) were able to turn out this past quarter. Today, the company reported a 68% increase in profit and beat EPS estimates by 20%. We got out at 34.57. Our Short Sale of the Day was in Hovnanian Enterprises Inc. (HOV). We set a short sale range of 4.55 - 4.65. The stock didn’t hit our range until right at the end of the day, and we did not play it. It was unfortunate because it hit a high prior to that around lunchtime at 4.53 and came all the way back to 4.41, which was close to 3% movement. Hopefully some of you were able to get in at the lower entry and make some money.

Overnight Trade of the Day: New York & Co. Inc. (NWY)

Analysis: Retail has been very solid with earnings this quarter. The reflections of holiday shopping’s quarter has been much better than analysts were expecting across the board. This has attracted me to playing a number of retail companies over the past month. For today’s Overnight Trade, we are looking to New York & Co. Inc. (NWY), which is a specialty retailer that features strictly women’s clothing, in the vein of casual to work-oriented fashions. It is in the non-upscale but not cheap area - in line with Ann Taylor (ANN) and Gap (GPS).

I think this stock is a great play because of what I am seeing in other retailers. In the past month, seventeen out of nineteen apparel stores have reported positive earnings beats. The top competitors Ann Taylor reported a 600% and Gap was only a 2%, but it is still a beat. NWY is very similar to these companies, and the similarities between these make me very excited. The retail companies have all done exceptionally well after earnings, with gains up to 15% on the next day. The company has EPS expectations at 0.06, which would be a stellar…

Posted in Uncategorized | 3 Comments »

Wednesday - World Wide Rally Worries Bears

by Phil - March 17th, 2010 8:19 am

17-Month Highs!

Those are the kind of numbers we’re putting up in Europe and Asia and the US is not too far behind, climbing the steep wall that was September of 2008 to race back to those all-time high valuations for pretty much any stock - Banks, Builders, Oil Companies, Miners, Manufacturers, Importers, Exporters, Agriculture, Technology, Consumer Staples, Consumer Cyclicals, Health Care, Biotech… Everything is as great as it has ever been in the markets and our all-time highs are just over the ledge and there seems to be an endless number of people willing to pay more and more money every day for these stocks.

What? I’m not going to say anything. It’s amazing, it’s incredible, it’s fantastic. There’s not a single sector that isn’t on fire. The only major sectors that is are not up at least 48% in the last 12 months are Telco (35%) and Utilities (XLU not shown at up 39%) and three are now up over 100%:

I’m not worried because this kind of stuff happens all the time, doesn’t it? In fact, I see a group of charts like this and I hear the people in what used to be called "the idiot box" but is now called a "home entertainment center" and I’m not going to get on the wrong side of EVERYBODY by badmouthing TV because it looks like I was already wrong about 3D TV as Panasonic says they are SOLD OUT of their $2,990 50-inch plasma TVs and ISuppli is already projecting $20Bn in 3D TV sales in 2011.

So the TV-buying public is clearly not worried because the people on TV tell them how great everyhing is and the markets go up and up and up because, I guess, it turns out we were RIGHT in 2008, when we all got stimulus checks and the market climbed back towards its all-time highs and it’s all those sellers that were wrong with their silly worrying about Bear Stearns, Lehman, Iceland, AIG, the GSE’s, the sub-prime meltdowns, the credit crisis, Trillions of dollars in debt, high commodity prices, hundreds of banks being seized for lack of funds, the almost total loss of the US auto industry and the millions and millions and millions of people who lost their jobs - WHAT FOOLS!

So here we are, back at levels we hit before the Bush stimulus program rallied us to the all-time highs. Maybe Obama can send us all $3,000 for a new 3D TV and then everyone can…

Posted in Uncategorized | 163 Comments »

UnitedHealth Bulls Have a Fever – the Only Prescription is More Call Options

www.interactivebrokers.com

by Andrew Wilkinson - March 16th, 2010 4:20 pm

Today’s tickers: UNH, BZH, WFC, GE, XLB, WMT, BAC, COF, HOG, ETFC & STJ

UNH - UnitedHealth Group, Inc. – Health and well-being company, UnitedHealth Group, commenced the trading session in the red after Goldman Sachs Group removed the firm from its ‘Conviction Buy List’. However, UNH is still rated as a ‘buy’ at Goldman, and the company’s shares recovered this afternoon to stand 0.60% higher at $32.73. A fire-storm of bullish activity descended on UnitedHealth during the middle of the trading day. Investors gobbled up April contract call options perhaps to position for continued bullish movement in the price of the underlying shares. Options players purchased 42,600 call options at the April $34 strike for an average premium of $0.87 per contract. More than 50,000 calls changed hands at that strike, which blows the 4,333 contracts of open interest at that strike right out of the water. Investors long the calls are positioned to amass profits should UNH’s shares rally another 6.5% to breach the breakeven price of $34.87 by April expiration. Wild-and-crazy options activity on the stock lifted the overall reading of options implied volatility 5% to 43.06% as of 2:05 pm (ET).

BZH - Beazer Homes USA, Inc. – Single- and multi-family homebuilding company, Beazer Homes USA, attracted bullish options players today amid a 4.65% rally in its share price to $4.95. Beazer was upgraded to a ‘buy’ rating and a target share price of $6.25 at Citigroup yesterday. Plain-vanilla call buying took place at the near-term March $5.0 strike where investor picked up 2,100 contracts for an average premium of $0.14 apiece. Investors long these contracts are hoping Beazer’s shares rally another 4.25% from the current price to surpass the effective breakeven point at $5.14 ahead of expiration on Friday. Optimism spread to the April $5.0 strike as traders coveted 2,200 calls for an average premium of $0.32 per contract. Call-buyers in the April contract profit if shares jump 8% and trade above the breakeven price of $5.32 by expiration day next month. The surge in investor demand for options on Beazer Homes lifted the overall reading of options implied volatility on the stock 15.8% to 61.92% this afternoon.

WFC - Wells Fargo & Co. – The bank holding company’s shares increased more than 0.65% during the session to $30.09, inspiring bullish options activity on the stock. Investors positioning for a continued rally in the price of the underlying shares purchased nearly…

Phil's Favorites

The Boredom Before the Storm (Time to Buy Volatility)

March 20th, 2010 1:08 am

John's thoughts on the relentless trend higher in stocks, with the languishing VIX.

The Boredom Before the Storm (Time to Buy Volatility)

Courtesy of John Rubino at Dollar Collapse

As eventful as the past few months have been (what with Greece, California, Illinois, Iran, the Lehman Brothers revelations, U.S./China trade friction, and record deficits just about everywhere), you’d think the financial markets would be agitated, to put it mildly. Instead, just about everything is range-bound, and the things that aren’t, like U.S. stocks, are trending slowly, reassuringly, higher. This has taken the VIX, the main measure of fear (i.e. volatility) in the options market down to levels last seen before the ...

Zero Hedge

China's Fragile Economy, Its Housing Bubble, and What It Means To Us: Download

March 20th, 2010 1:41 am

Courtesy of Econophile

As promised, here is the complete article, China's Fragile Economy, Its Housing Bubble, and What It Means To Us, in a downloadable PDF. You can download it, print it out, and read the entire piece at your leisure. The conclusions aren't encouraging, for them or us.

...

more from Tyler

Chart School

Quad Witching Expiration and a Pullback from the Long Term Trend

March 19th, 2010 12:05 pm

Quad Witching Expiration and a Pullback from the Long Term Trend

Courtesy of JESSE'S CAFÉ AMÉRICAIN

The front month on the SP futures has now switched from March to June as a part of the Quad Witching Expiration. (Technically it switched last week, but for charting purposes I made the switch last night.) The June Futures have essentially the same formations as did March, it's just that the earlier months have few trades to mark them. This is the first serious test for US equities since mid-February, as it has been on a spectacular rally streak, no doubt fueled by excess liquidity applied to a selling exhaustion in the funds. Curiously not among corporate...

Trading Goddess

Options and My Patience Expire Today

March 19th, 2010 9:29am

Well now we're officially cashed out!

As I always do before options expiration I reviewed our Buy List, which, this quarter, is a list of 37 stocks we've been playing since late December and, sadly, after reviewing 37 of our favorite investments very carefully this week - I could only conclude that cashing them out was the only decision I could be comfortable with this week. Of 66 trades we had on our 37 stocks, 64 are winners with an average return since 2/8 of 28% - since most of the trades were designed to make 40% for the year - it just seems silly not to take the money and run now, on March 19th.

You are not supposed to have 64 out of 66 winners in 6 weeks, you are not supposed to make 3/4 of what you anticipate for the year in 6 weeks - that is NOT how the markets are supposed to work! When the ma...

Oxen Group Trades

The Oxen Report: Five Keys to Fundamental Day Trading

March 19th, 2010 11:05 am

Identifying the Fundamentals

Stocks move under the influence various factors that we can use to identify stocks that are likely to move 3-5% in a single day. Even t...

The Options Report

By Andrew Wilkinson

Best Buy Option Investors Condone Broker Upgrade in Bullish Action

March 19th, 2010 4:41 pm

Today’s tickers: BBY, DNDN, GLD, BAC, AET, BA & NBR

BBY - Best Buy Co., Inc. – Shares of the world’s largest electronics retailer rallied 2% to $41.25 during the trading session after receiving an upgrade to ‘buy’ from ‘neutral’ at Goldman Sachs Group where analysts increased BBY’s target share price to $47.00 from $44.00. Options traders employed a few different bullish tactics to position for continued upward movement in the price of the underlying stock through expiration in April. Plain-vanilla call buyers targeted the April $44 strike to purchase 5,100 calls for an average premium of $0.55 apiece. These investors stand ready to accrue profits if Best Buy’s share price increases 8% from the current value to exceed the effective breakeven point on the calls at $44.55 by expirati...

Insider Zone

Insiders: March to Exit

March 15th, 2010 6:49 pm

By Ilene

Let's take a look at Insider Buying and Selling over the last week or so. These are screen shots from Finviz - the significant buys against a green background first and significant sells against the pink background second. All the buys fit into my screen shot but the sells did not. Click here to see all the sells.

Note that the largest buy in the group, for KITD was at a price of 9.73 (KITD is currently at 11.54). The buy was part of an Equity Offering rather than an open market purchase. Tuzman Kaleil Isaza's (KITD's Chairman and Chief Exec. Officer) history of buys is http://www.insidercow.com/ more from Insider

OpTrader

Swing trading portfolio - week of March 15th 2010

March 15th, 2010 8:55 am

This post is for live trades and daily comments.

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

- Optrader

...

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March 2010
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8	9	10	11	12	13	14
15	16	17	18	19	20	21
22	23	24	25	26	27	28
29	30	31

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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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