White Christmas Portfolio Wrap-Up
by Phil - December 24th, 2011 8:31 am
Merry Christamas!
I know it’s tacky to give cash but, as we closed our original, virtual $25,000 Portfolio early on October 20th and we were miles ahead of our $100,000 goal, we decided to do this bonus portfolio starting with a fresh virtual $15,000 set aside out of our $130,000 – risking 1/2 of the excess profits in an attempt to make 60% more ($10,000) in two months.
We started that Monday, the 24th of October with our GNW spread (which I also discussed on TV that day) and that Friday we put up the official post where, I will remind you, our stated goal was to make a little bonus money for the holidays AND to share some of that money with a worthy cause. I want to thank everyone who chose to donate to the NYC Food Bank, we got some really spectacular donations from some of you and I really appreciate it and I hope you have all gotten into the holiday spirit and helped to support those in need this season – it’s much appreciated and I thank you.
Just as importantly, I very much hope you were able to learn something following this portfolio. We never put much capital at risk, we took quick profits off the table and we worked our way out of most of our losses through rolling and adjusting – letting the trading range do most of the hard work. Most importantly, we had BALANCE – we selected trades in both directions – enjoying the wild ride from the up and down markets.
That strategy, in fact, worked very well!
As of Friday and since our last update on the 16th, when we had $41,465 of realized gains, we closed the following positions:
- 5 SCO Dec $37 puts sold for net $1.90, expired worthless – up $1,900
- 5 FAS Dec $40 puts sold for $2.40, expired worthless – up $1,200
- 10 TNA Dec $41 calls at net $1.50, out at $1.50 – even
- 10 FAS Dec $61 calls sold at net $0 (spread), expired worthless – even
- 10 TLT 12/23 $121 calls sold for net .74 ($740), expired worthless – up $740
- 10 GNW Dec $6 puts sold for .85, expired worthless – up $850
- 10 QQQ 12/16 $56 puts at .57, out at $1.05 – up $480
- 10
…
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DiggMonday Mourning – Good Night Dear Leader
by Phil - December 19th, 2011 7:36 am
Oh, hello Mr. Seoul,
I dropped by
to pick up a reasonStick around while the clown
who is sickdoes the trick of disaster
Asia was in turmoil last night as news of the death of Kim Jong Il hit the wires. South Korea’s Kospi Index fell 3.4%, both the Shanghai and Hang Seng fell more than 2% at their opens but, along with the Nikkei, they all finished strong and down about 1.25%. My comment on the matter to Members at 11:29 last night was:
Meanwhile, Dear Leader has died and that shot the Dollar back to 81 and knocked the futures down half a point. Asia is down more like 2% as no one is please with Jr. taking over in South Korea. I always find that amusing when leaders who are hated die and the markets react negatively – as if the next guy could be worse. Markets just hate uncertainty but China is in charge of N. Korea – I doubt Kim’s son is going to suddenly declare war or whatever it is people are worried about. He’s just 27 and probably not suicidal
If anything (but I’m going to bed), I’d take oil long off the $93 line (/CL), which is where we liked them Friday. Gold already zoomed back to $1,600 and has been rejected there and the Dollar doesn’t look that strong above 81 so far.
So far, my logic is holding up as things have already calmed down and oil topped out at $94.50 at 5:30, for a nice $1,500 per contract gain in less than 6 hours. I find it easier to trade futures off news like that than they are to play during the US Market hours as the moves internationally, still seem to make a little sense while the moves in the US market are often pure nonsense.
Speaking of nonsense, David Fry agrees with me on Treasury rates as we are now falling below what you can get in an FDIC-insured deposit, which I consider the non-panic limit for rates. Unfortunately, we do get plenty of panic at a drop of the hat these days and TLT shorts were our big loser last week but we stuck with them for January, hoping things calm down over the…
White Christmas Portfolio – Month 2
by Phil - December 5th, 2011 7:49 am
What a first month we had!
Oddly enough, when I was last on BNN (I’ll be on again this afternoon), we were just about to start our newest virtual portfolio after closing down this year’s virtual $25,000 Portfolio early as we were way past goal, over $130,000 on the 20th (up 420%). As that portfolio went so well, we decided to play a "White Christmas Portfolio" – as I explained on TV on Oct 24th, which aimed to practice making the same kind of small, aggressive trades, with the aim of turning $15,000 on October 24th into $25,000 by Christmas (66%).
In fact, I gave out our first trade idea, GNW, which was $6.30 during my BNN interview, now $6.47 (up 3%). We discussed the Jan $5/7.50 bull call spread for $1.10, which is now $1.40 and that’s up 27% but, more importantly, your gain playing the option INSTEAD of the stock is .30, vs .17 – that’s almost 100% better gain with NO MORE RISK than buying the stock while requiring less than 20% of the cash commitment (and no margin on just the bullish spread).
Of course, our actual WCP trade idea had another component deemed too confusing for TV – we also sold the short Dec $6 puts for .85 as an offset, which lowered the cash cost of the trade to .35 and those puts are now .20, up another .65 on their own and the net of the entire trade has gone from .35 to $1.20, which is a 242% gain on net. Of course, none of that matters – what matters is that you put a net of $350 into the trade (10 contracts) plus about $600 in margin on the short puts on October 24th and you can cash that trade out today (we elected to cover it on Friday) for $1,200 and that is clearly 242% more cash than you started with on October 24th – the margin requirement is gone, but the cash remains!
With that kind of success on our first trade, it’s not too surprising that the whole portfolio has been doing well. We left off last Wednesday with a balance of $35,540 – far better than we expected to do, obviously, in our first month (up 137%) so we decided it was prudent to get back to cash as we were "too bullish".…
Super Tuesday Committee Failure – So What?
by Phil - November 22nd, 2011 7:43 am
Long live the Debt! In case you are voting in the next election – here are 12 people to get rid of. Much as I may blame one party over another for this failure, they all deserve what’s coming to them for A) Pretending they were going to accomplish something and B) For not now getting up and making very strong statements denouncing the corruption in politics that make it impossible for Congress to do the Nation’s business anymore.
In case you happen to be a Fox News viewer, I will try to keep this VERY simple because, as it turns out, we now have definitive studies that prove Fox News MAKES YOU STUPID. Of course, it is possible that only stupid people watch Fox News but I know many people who think they are smart and watch Fox News so I have to blame Fox News here as do researchers at Farleigh Dickenson University who found "The results show us that there is something about watching Fox News that leads people to do worse on these questions than those who don’t watch any news at all." As I can tell you from raising my own children to be good citizens:
The biggest aid to answering correctly is The Daily Show with Jon Stewart, which leads to a 6-point decrease in identifying the protesters as Republicans, and a 12-point increase in the likelihood of giving the correct answer. "Jon Stewart has not spent a lot of time on some of these issues," said Cassino. "But the results show that when he does talk about something, his viewers pick up a lot more information than they would from other news sources."
Watching Fox News, by the way, led to an 18-point disadvantage (out of 53% of all respondents) in being able to answer questions like "Were Egyptians successful in overthrowing Hosni Mubarak" or "Has the Syrian uprising been successful" but that was a Fox viewer’s area of expertise compared to having a clue of what is going on in American politics other than "Obama sucks." Tied with Daily show viewers for best informed were NPR supporters but, sadly, only 21% of Americans get their news from NPR and only 18% from the Daily Show while 64% list Fox News as one of their frequent news sources.
In another study, World Public Opinion, a project managed by…
White Christmas Portfolio – Goaaaaalll!!!
by Phil - November 19th, 2011 7:31 am
Looks like we’ll be having a green Christmas this year!
Congratulations to all who played along with our latest virtual portfolio as we couldn’t have made 33 better trades in a month as we blasted past our goal for an 89.4% gain, from $15,000 to $28,415 in just 25 days. There’s certainly as much luck as skill in getting this kind of result but, since we’re over a month ahead of schedule and ahead of our $25,000 goal – there’s no reason to shut this down and we’ll see how far we can push things through Christmas – on one condition.
In the last update, I put up a link to our NYC Food Bank, where we are fortunate enough to have arranged for matching donations for the next Million Dollars that comes in. If you should happen to benefit from what you learn following our virtual portfolio – PLEASE take a moment to give something back to the millions who are less fortunate. It doesn’t have to be the Food Bank – all of our communities have needs and you may find it pleasantly surprising at how good it makes you feel to just walk into a local shelter – hand someone a check and say "Happy Holidays."
That’s all you have to do. They may try to hug you (there’s a lot of huggy people working in shelters) but they won’t put you on a list or bug you for money or come to your house – they are just thrilled to make it through a week with enough money to take care of the people who really need it. Please keep that in mind as this is a particularly hard holiday season for charities – as giving has plunged around the country and needs, obviously, have skyrocketed.
Thank you. Now we can get back to our Capitalistic endeavors!
- 2 NFLX Nov $67.50 puts sold for $3 expired worthless – up $600
- 5 DECK Nov $105 calls sold for $6.60 expired worthless – up $3,300
- 5 SCO Nov $45/48 bull call spreads at $1.10 expired worthless – down $1,100
- 20 FAS Nov $11 puts sold for .65 (-$1,300) expired worthless
…
I’m Dreaming of a White Christmas – Portfolio
by Phil - October 29th, 2011 8:35 am
Wow, what a market!
Maybe we closed out our $25,000 Portfolio too early last week, with a virtual gain of $105,000 (420%) for the year, but we still have our Income Portfolio, which was quite bullishly positioned and well ahead of goal as well as positions in our very aggressive September’s Dozen List that are winding down, so we decided to set up this new virtual portfolio with the goal of turning $15,000 in to $25,000 between now and Christmas to have a little extra spending cash for the holidays.
The strategy is the same as the $25,000 Portfolio, which is meant to be the aggressive, "risk" portion of a $250,000 or larger portfolio, utilizing excess margin to our advantage with the goal of making a series of hit and run plays, with the goal of making $1,000 a week for the next 10 weeks. Also like the $25KP, we take our winners off the table and work out our losers as best we can because, above all else, this is an exercise in adjusting and managing short-term positions.
This virtual portfolio will be available to Voyeur Members but trade ideas during chat will have their usual 1-hour delay. Premium members will get the trades with no delay Basic Members also see WCP-related comments with no delay as well. New trade ideas and updates will be copied into the comment section of this post or, assuming I write one, the updates of this post. If you are not a Member yet, now is a good time to join. Check out the subscription page – Our EXAMPLE trade on C closed up 200% and our ENP example returned 137% – not bad for free samples, right?
Our first official trade for the new portfolio was one we discussed on the weekend, GNW, which I added to the main post on Monday (and discussed that afternoon, in part, in my BNN interview). We’re not going to re-hash the logic for every trade here, this is simply a review post to track the trade ideas (and, while we do our best to be as accurate as possible, we do NOT include trading fees, which vary greatly so always take that into account) so we can see how they are doing and discuss how they can be adjusted but, of course, all the live commentary…
Which Way Wednesday – EFSF’d Up Edition
by Phil - October 26th, 2011 8:13 am
QEC (China)?
That’s the word out of Asia this morning as the Hang Seng flipped 360 points higher after Premier Wen Jiabao said economic policy needs to be fine-tuned and asked local governments to check for signs of lending distress. The markets took that thin sauce as sign that monetary easing is on the way. You would think people in China would be happy as minimum wages rose at an annualized 21.7% pace in September and when Wen Jiabao promises a chicken in every pot to his people – they are literally excited about the prospect of actually getting a chicken in their pots!
Shenzhen in China is now matching Hong Kong, paying their workers a lucrative $207 per month (don’t spend it all in one place boys). Beijing is the place to be if you are an hourly worker though, with the minimum hourly rate now a screaming $2 – putting the average Beijing worker just 50 hours a way from buying a square foot of living space in the city.
The rise in minimum wages is in line with China’s efforts to boost spending power and domestic consumption. KPMG says that minimum wage levels in China are four times greater than other places in South and South East Asia. However, it believes China can defend its position because of its productivity and infrastructure – something the US used to be able to do as well, one upon a time, before we allowed our infrastructure to slip into 3rd World status (see "America’s Infrastructure Crisis").
As I mentioned in yesterday’s post, Congress is now in year 3 of ignoring the 2009 report (commissioned by the previous administration) that concluded that this country was on the verge of spiraling into a state of permanent decay if we did not IMMEDIATELY put $400Bn a year into fixing things from the above list. In those 3 years, every single one of those infrastructure bills (which create millions of good jobs that can be filled by our millions of unemployed construction workers) has been filibustered out of the Senate with not one reaching the President’s desk since his initial, inadequate stimulus package.
Even if Europe fixes their mess and China does whatever it is China does to paint their numbers for another few years – it will only serve to swing the spotlight back on this dinosaur of…
Strategists Take To Goldman Weekly Call And Put Options
by Option Review - October 11th, 2011 1:37 pm
Today’s tickers: GS, SNE, INTC & GNW
GS - Goldman Sachs Group, Inc. – Shares in Goldman Sachs staged an intra-session comeback after opening lower on Tuesday. The stock is currently up 1.5% at $97.56 after earlier rising to $98.81, the highest since September 29. Call buyers tackling weekly options on Goldman may profit if the stock extends gains through expiration on Friday. A combined 7,000 calls changed hands at the Oct. ’14 $100 and $105 strikes, topping open interest levels in each case. Buyers are more active than sellers thus far in the session, with traders paying an average premium of $1.17 and $0.29 per contract for the $100 and $105 strike contracts, respectively. Bulls are not alone in populating short-term contracts, however, as demand for weekly puts is growing, as well. The Oct. ’14 $95 strike put is most active, with volume exceeding 3,200 lots against open interest of 808 contracts in early-afternoon trade. Put buyers shelled out an average premium of $1.90 per contract. Investors long the put options profit at expiration if shares in GS drop 4.6% to breach the average breakeven point on the downside at $93.10. JPMorgan Chase & Co. reports earnings on Thursday ahead of the opening bell. Shares in GS may respond in kind to JPM’s report, either to the upside or the downside, as investors search for signals ahead of the banking institution’s own earnings announcement one week from today. Options traders have exchanged more than 50,000 contracts on the stock as of 12:50 pm in New York.
SNE - Sony Corp. – A burst of fresh call activity on Sony Corp today suggests at least one options strategist is positioning for the price of the consumer electronics maker’s shares to rebound during the next several months. Shares in Sony rose 3.25%…
Demand For PepsiCo Options Bubbles Over As Shares Fizzle
by Option Review - July 21st, 2011 5:56 pm
Today’s tickers: PEP, CAKE, GNW & WAG
PEP - PepsiCo, Inc. – Options traders flocked to PepsiCo to initiate bearish stances on the global food, snack and beverage company today, with shares in the Purchase, NY-based Company sliding as much as 5.4% to a session low of $64.79. Shares in the world’s largest snack-food maker fell after the company said profit growth this year will be lower than previously estimated. PepsiCo reported second-quarter earnings of $1.21 a share ahead of the bell this morning, which met average analyst expectations for the quarter. The full-year revision from the company spurred seemingly outright bearish players to its options. Investors appear to be selling calls in the front month, as well as in the September contract, to pocket available premium in the expectation that shares are unlikely to recover in the near term. More than 4,700 now in-the-money calls changed hands at the August $65 strike against paltry previously existing open interest of just 398 contracts. Investors sold the bulk of the options to pocket an average premium of $1.18 a-pop. Call sellers keep the full amount of premium as long as PEP’s shares slip beneath $65.00 by expiration day next month. Bearish sentiment spread to the August $67.5 strike where another 2,000 calls sold for an average premium of $0.38 per contract. Traders also sold the majority of calls exchanged at the September $65 and $67.5 strikes today. PepsiCo put options are on the move, as well. Investors selling some 1,500 of the August $62.5 strike puts at an average premium of $0.30 each appear to expect shares to maintain above that level through August expiration. Implied volatility on PepsiCo is down 6.8% to stand at 13.88% post-earnings.
CAKE - The Cheesecake Factory, Inc. – Options trading patterns on the…
Rumor Mill Sends Traders to Shire Options, Drives Shares to All-Time High
by Option Review - May 11th, 2011 4:02 pm
Today’s tickers: SHPGY, ODP, SKX & GNW
SHPGY - Shire PLC – The maker of Adderall XR and other pharmaceutical products attracted a diverse crowd of bullish options strategists during the session on speculation there are parties interested in acquiring the biopharmaceutical company. Shares in Shire are currently up 2.95% to arrive at an intraday- and new all-time high of $96.00. Plain-vanilla call buyers flocked to front month to position for continued new highs in Shire’s shares ahead of May expiration. Meanwhile, June contract put options provided the medium for a different type of bullish play today. Speculators engaging near-term call options picked up in- and out-of-the-money contracts, purchasing around 500 calls as high as the May $100 strike for an average premium of $0.23 each. Call buyers at the May $100 strike profit at expiration if shares in Shire are trading above $100.23. Investors may also choose to sell the calls ahead of expiration at an advantageous price should takeover chatter continue to bump up the price of the underlying, and perhaps more importantly, options implied volatility. Shire’s overall reading of implied volatility is up 24.5% to stand at 26.59% as of 2:15pm in New York. The options trader targeting put options is positioning to maximize profits on a credit spread should shares in Shire exceed $92.50 through June expiration. It looks like the investor sold approximately 2,400 puts at the June $92.5 strike for a premium of $1.63 each, and purchased roughly the same number of puts at the lower June $85 strike at a premium of $0.45 apiece. The investor pockets a net credit representing maximum potential profits on the spread of $1.18 per contract, and keeps all of it as long as the put options expire worthless at expiration. The risk involved in this type of strategy is not for the faint of heart. Shares in SHPGY could potentially reverse course ahead of expiration. In such a case, the trader starts losing money below a breakeven share price of $91.32. Maximum potential losses on the transaction, while limited to $6.32 per contract, far exceed the net credit received for bearing the risk. However, it seems the investor is willing to tolerate this risk-reward profile…
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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...
Ilene is editor and affiliate program
coordinator for PSW. She manages the Favorites backup site
(