As a retired stockbroker from a major Canadian brokerage firm, I can tell you I would never had access to these type of trade ideas, especially the hedges.
Just closed out a July TZA 40/45 call spread today for a 271% gain in less than a month. I would have normally let that run but yesterday Phil commented to another member something to the effect that "you put down a $1 for a $5 upside, now that you are up 250% you have $2.5 in and you are hoping for a double."
Just closed out a USO July $38 put that Phil suggested yesterday for a 49% one day gain.
thanks for the DNDN recommendation last week phil. that was moneeeee….
Market manipulation…. One of the things I've gained from this site is the concept of market manipulation. I never thought it was so prevalent, but now I know it is. I actually consider its effect when I make trades. Several days ago, when AAPL was moving toward 220 I sold 210 calls. My reasoning was that they will probably pin this month at 210. They came in big time as the stock moved ever closer to 210. I agree with Phil's comment that one of the things we need to do is find out what they are manipulating, and how, and hitch a ride. They are doing this with several equities. I've actually seen one article describing several equities that were being manipulated to pin at expiration each month, and describing how it was done, and of course Phil has described it well. In some ways it's easier to figure this out than it is a ‘normal' market behavior, and thus easier to make money in certain equities.
Thank you Nantucket. It is hard to be a complete beginner in the market with this complicated, fast moving, and very advanced group. Phil is the Great One, but the membership is absolutely amazing! Had I known this ahead I would probably log in as "awe struck" everyday.
Every time I read Mr. Davis' market analyses and reports about his super profitable trades I feel admiration mixed with envy for the overall brilliance of this man, intellectual and verbal, his extraordinary savvy in the exotic art of options and, last not least, his moral passion with which he writes, even if in passing, about the darker aspects of capitalism.
Phil - Another excellent teaching article - when you write like that it blows me away. Thank you!
I had the ideas from earlier articles but what I didn't have was enough understanding. The familiarity of ideas through repetition, re-working, revision - over time - the variation, the pulling out of implications - it all contributes to understanding and mostly thats on the student - but a good teacher (worth their weight in gold) makes understanding a pleasure.
I wanted to learn about trading options because it makes my brain feel better - fitter, healthier. Actually mostly it makes me happy to think about the trade and trading options.
You are a good teacher and I know that or I wouldn't value the subscription the way I do. It pays for itself through the pleasure of understanding alone.
hil, I hit my targets for the year in my 401K (thanks in no small part to your site), so I cashed out of all positions a couple of weeks ago. Feels good... I'm conservative with this money –looking for 2% per month, which i've been able to do… thx.
Phil, you are the man. My positions in ABX and CLF are up massively this year, and doing very nicely with USO and UNG. TSR is another winner. Just waiting for the TSLA short now!
Rookie IRA Investor
Peter D: great write-up for Short Strangles, Part 1, looking forward to Part 2, particularly the adjustment part.
Phil - FAS - I dont know whether to be happier I averaged down and sold calls or that I got myself out of FAZ the other day…thanks for that help
You are doing a fantastic job. I think most of us our very well balanced and consequently have learned how to manage through these ever so short declines in the market without panic.
Blessings, ALL: So we have completed two months of 2015. So far it has been a good ride with my PSW all short put portfolio showing a 15.73% gain with $83K in profits harvested in 2015.
Have been a member for about 6 months or there abouts. Signed up for a quarter at first and then for a year. To me, and it's only my opinion, it's an investment and I have made the membership fees back many times over on the strategy advice. Since joining and implementing the strategy of buy/writes and hedges I have cut my portfolio losses for the year and have a really good chance of going positive this year. If I would have continued down the road I was on, I would still have been fumbling around without a strategy and completely inept in what I was doing. I feel now the strategy is working and I am far more comfortable with the risks I am taking. I still have a lot to learn but I feel the fees have been one of the best investments I have made. The returns have been fantastic. Still have problems with the politics but hey nobody is perfect
Phil// Cashing out of my LT holdings have been going on for over two weeks. However, I have elected not to cash all of the holdings including my AAPL, Jan 16 Short Puts at $470 and $480. Plus, I am being opportunistic in selectively putting on those positions for beat down stocks by selling 2016 Puts. That said, YTD harvested profits now stand at $135k on a current account balance of $683K or a 19.81% YTD return. Thanks for your expertise in teaching me how to be patient, be the banker, but also not being greedy, cashing out and harvesting profits.
I traded with Phil for approximately three years, and consistently averaged 80% returns yearly... some of which was due to my skills as a trader, but much was a direct result of what I learned as a member of Phil's site.... both from Phil, and the many talented traders that hang out there. Phil... if you are reading along... thanks, again for the approximately $ 3 mil I made tagging along with you.... in order to make you feel good for the work you did... I gave the government 50% of it all, so you made your contribution....
As a fellow "low-end" investor I like Phil's Buy/Write strategy on solid stocks. Before I came here I loved to try to "figure things out" with very little success "TRYING TO FIGURE THINGS OUT"! I traded too much and fell in love with stocks that "should have done" what they didn't do. Now a majority of my accounts are in Buy/Writes suggested here or cash (waiting for a better time for more Buy/Writes). I use 15-20% of my total holding to short term trade and hedge. This is manageable with my full time job as a business owner. I have found Phil's system a more discipline way to achieve the returns I want without relying on my ability (more like inability to "figure things out").
Phil…..You have absolutely NAILED IT! This is not a bull market, nor is it a bear market. It is a Rangeish market, and it's going to stay that way for a long time (the latter is my prediction. I love the word. What I love more is the fact that I've found someone with some investing intelligence greater than mine who can assist me in playing this type of market. Your description today of how it's playing out is right on. I predict some media ‘guru' will steal your word and your description within the next few days and we'll all get to read about what ‘they' discovered about this market. Thanks Phil!
Oil – thanks Phil,
got in late at 0.53 on the 38p today, set a sell for 0.75 and took the dog for a walk – 70% gain and more than enough $$ to buy dog food. TZA Aug 35/40 BCS – closed out for a 100% gain in under a month – thanks again for introducing me to these trades.
I am not a user of phil's site now, but was for a couple years. His advice and information is excellent. Perhaps even better, you get access to real-time trades of additional traders on his site (OptTrader, etc) and the other members who post what they are buying and selling. Overall, its a very valuable information tool. Expensive, but paid for itself many times over. I did not renew my membership because I switched jobs and did not have time to trade nearly as much.
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.
Your discussion during your web seminar on SPX and SDS today was great. It really let me see how you look at the numbers and use the 5% rule to see where inflection points occur and what the bands look like. This was incredibly helpful. I actually sold out of my small short position at a good profit ( which was more a bet on a short term fluctuation rather than a hedge after listening to you) and will look more deeply at my portfolio and how to hedge it. In addition your view on hedging was also very helpful looking at the leverage you can get w/ a small spread, and protect portfolio against a big move against me. Thank you for your sharing this. Very helpful.
By the way thank you Phil for the DNDN idea. 3x till this morning and will 4x my small investment by next OE THANKS !!!!
Phil - I'm with you just little bit longer than a month and you can not imagine how happy I am now, and not just because my P/L improved ( and I'm sure that it will be even better), but I found that the worst thing in trader's carrier is a LONELINESS. Here I found so many bright good guys, I looked for this service for years.
THANK YOU AND TAKE GOOD CARE OF YOURSELF BECAUSE I PLAN TO STAY HERE AND RIDE THIS CREASY MARKET WITH YOU FOR ANOTHER 20-30 YEARS
Phil – great calls this past week, esp. friday and monday. in the old days I would have let Prechter et al scare me into trimming my longs and going short at just the wrong time. your feel for the markets is Tiger-esque. CHK, HOV, BX, TLT and XLF are big winners for me today. My biggest up day in a long time. Thanks!
PHIL: The most important lesson I have learned is how to hedge using SQQQ, SDS and TZA. A big thanks.
Phil: I cleaned up today. A rather stark contrast to my untutored performance April/May 2009, after I had written to you to explain how wrong-headed your bearishness was. Many thanks.
I ran into someone once who played on the Bulls with Jordan for quite a few years. He was asked what he had learned from playing with MJ for so long. He smiled and said "Give him the ball."
New members – a word of advice: you should check out the track record of Phil's last few trades of the year, and what the return would be if you just rolled all the gains into the next years trade of the year. Remember – trade of the year is one he's virtually sure of, and he rarely misses on those
Phil, thanks for the webinar and options subject…I wasn't shown as attending but I was there for most of it. Your memory amazes me, your speed on the computer amazes me, your math skills blow me away. coke
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!
thank you for the thorough response(s). I joined this group last week to take my education to the next level. the school i am involved with very good at calling out levels but very little live trading and little help in managing a position going against you.
I like the combo of knowing where the major levels are coupled with your approach to getting in. learned a lot this week.
Theory: the dumb money (that’s us) has left the party leaving the bots (smart money) to pass the stocks back and forth between themselves. And to mix metaphors, the bots act like a herd all pretty much stampeding one way or another. While retail investors seek not to get trampled another time. – Ilene
The stock market has turned into a schizophrenic herd of sheep. Correlations have entirely converged in recent months as money simply flows from bullish to bearish depending on the current mood of our bi-polar friend. Jeff Saut of Raymond James says it is in large part due to the small investor throwing in the towel:
“The chart on page 3 shows the correlation of S&P 500 stocks to the S&P 500 Index. Studying the chart one finds that the correlation from September 2009 through early May 2010 ranged between 55 – 65. However, following the May 6th “flash crash” the correlation leaps to ~78 and eventually ~82, which is indeed the highest correlation since the 1987 crash. So what caused this fairly rare event? In my opinion it is because the retail investor – disgusted with high-frequency trading, dark pools, trading huddles, inter-market sweep orders, etc. – simply left the game, leaving the “pros” to trade among themselves. Obviously, when the alleged “dumb money” left the party correlation had to rise. Adding to the situation has been Exchange-Traded Funds (ETFs). To wit, when volume increases in say the Powershares Consumer Discretionary ETF (PEZ/$21.08), that ETF automatically goes in and buys ALL 60 of the mid-cap stocks within the fund. Plainly, that causes correlation to rise.”
I think it’s even simpler than that. This is classic herd mentality. The entire herd is either all grazing or all running scared at the same. Currently, the herd is grazing happily with not a care in the world. But don’t be fooled – when something spooks them you’ll get trampled if you don’t run with them…..
In today’s segment of bull versus bear we pit a bullish Jeff Saut against an ultra bearish Nouriel Roubini. Mr. Saut, who helps oversee $235B at Raymond James, says there is not a whole lot of downside to U.S. stocks and that there is a “bubble in pessimism”. Roubini, on the other hand, believes we are on the verge of a double dip.
Interesting commentary from Jeff Saut, Chief Equity Strategist at Raymond James this morning on the old investment saying “sell in May and go away.” Mr. Saut believes investors should be selling before May in anticipation of what other investors might do:
“Obviously we have modified that old axiom this morning given our statement – “Don’t wait for May to go away!” Nevertheless, despite having been too soon’ly cautious since S&P 1150 – 1160, which is tantamount to being wrong, we are “stepping up” our cautionary counsel this week.”
Saut’s cautious tone is driven by a series of technical and sentiment factors that are often followed by weaker market action:
“Our increased caution is driven by a number of metrics. To wit, preliminary data suggests last Friday was the first 90% Downside Day since February, our sentiment gauges are back to as bullish as they were in 1987 (read that bearishly), the CBOE equity put/call ratio is at 0.32, for its heaviest “call volume” relative to “put volume” since August of 2000, stocks are the most overbought since the rally began in March 2009, some of the leading stocks are not responding to good news, Thursday was session 34 in the “buying stampede” that began on February 26th (rarely do such skeins last more than 30 sessions), we’ve gotten that peak-a-boo “look” into the long envisioned target zone of 1200 – 1250, volatility is back to the complacent 2008 levels, and the list goes on.”
But that doesn’t mean Saut is turning full-blown bearish. He still sees upside in the market following a near-term correction:
“As for the ‘here and now,’ we are increasingly cautious, believing a near-term “top” in the equity markets has been registered. Longer-term, we remain bullish, thinking the profit-cycle recovery is alive and well. To that point, it’s worth considering that bottom-up operating earnings peaked in 2007 at ~$91 per share for the S&P 500 (SPX/1192.13). And, except for Japan, price-to-peak earnings power (PPE) has always made new highs, cycle after cycle. Again, as the good folks at GaveKal note, ‘Except during the bubble years of 1997 – 2001, the PPE for the SPX has fluctuated in a range of 10x to 20x (peak earnings);
Raymond James strategist Jeff Saut continues to present a cautious tone in his first research note of the year
Last Monday we wrote, "As we enter the New Year, we are once again turning cautious because the Treasury market is breaking down (higher rates) and the U.S. dollar is rallying. . . . Therefore, we think it prudent to ‘bank’ some trading profits and hedge some investment positions as we approach the new year."
Moreover, one of the lessons we have learned is that the beginning of a new year is often punctuated with head fakes, both on the upside as well as the downside. One of the greatest upside head fakes was in January 1973 when in the first two weeks of that year the DJIA rallied to a new all-time high of 1051.70 before sliding ~20%. While we are clearly not predicting that, what we have indeed experienced since the March "lows" is the second greatest percentage rally (69%), adjusted for time (nine months), since the 1933 rally. Following that 1933 explosion of 116% in just five months came a pretty decent downside correction. Since we tend to be "odds players," prudence suggests some caution is again warranted.
“we think the upside should continue to be driven by ‘game theory,’ which suggests that the under-invested institutional portfolio managers have to buy stocks into year-end driven by their under-performance, their subsequent ‘bonus risk’, and ultimately their ‘job risk.’ Verily, many of the portfolio managers we know remain under extreme pressure to commit their outsized cash positions in an attempt to ‘catch up’ to their benchmarks between now and year-end (see the nearby Credit Suisse institutional cash versus retail cash on the sidelines chart).”
“As the S&P 500 traded out to new reaction ‘highs’ in the first part of last week we heard a cacophony of crybabies. First was Meredith Whiney, banking analyst now turned strategist, who stated, ‘I have not been this bearish in over a year!’ One-upping her was Nouriel Roubini who exclaimed, ‘The worst is yet to come’….Despite such cantankerous cries, we have indeed entered the strongest seasonality of the year and we remain constructive. As the sagacious Bespoke Investment Group writes, “Since 1941, the Dow has averaged a gain of 0.50% in the week before Thanksgiving.” That said, we would not like to see the S&P 500 break below 1083. And speaking of breaking down, the Japanese stock market is breaking down and we are close to ‘uncle points’ on those recommendations.”
How does Saut recommend playing the year-end rally? Saut has been mindful of the recent divergence between large caps and small caps. He believes the trend will continue as breadth narrows and investors reallocate capital from the best performers to a bit of more defensive posture. This means large caps will outperform. In particular, he likes pharma stocks:
Hayden Capital commentary for the third quarter ended September 30, 2016. Hayden Capital is a long-biased investment firm that takes concentrated positions in market-leading companies. The hedge fund generally hold 6-15 core positions, and believe the best indication of a quality, “compounder”-type company is one that has a long-runway to invest capital internally at attractive rates of return.
We keep getting surprise Oil Inventory reports each week for the last 6 weeks, it seems we are in slight deficit right now, which is unusual for this time of year. We are headed to $60 a barrel regardless of OPEC nonsense.
With all the surprising and/or disturbing things going on – Brexit, China’s soaring debt, US/Russia/China saber rattling, the, um, unique US presidential race, the cyber attack that shut down big parts of the US Internet – you’d think that an unsettled world would be reflected in skittish financial markets.
Instead we’re getting the opposite, with stock price movements becoming more and more placid as the year goes on. The following chart shows the volatility index (VIX) for ...
Under Armour was a wonderful stock to own from 2009 to the summer of 2015, as it rallied nearly 1,500%. No wonder UA had become a darling of wall street and investors alike. Over the past year, if one has been long UA, its not been such a darling of a year, as UA has declined nearly 30%.
Over at Philstockworld... High Finance for Real People - Fun and Profits...
Phil – "long-term rates are suddenly ticking up as bond buyers have lost faith that the Central Banksters will be able to keep a lid on inflation"More so a rebirth of hope for much needed monetary flows in the form of "dollars" and some form of economic recovery rising in the distance. Good luck there.
By now those rogue bond traders should know the power of the dark side and all the carnage which that widow makers trade has left in its wake. J...
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There is a reason no Berkshire Hathaway investor chides Buffett when the company has a bad quarter. It’s because Buffett has so thoroughly convinced his investors that it’s pointless to try to navigate around 90-day intervals. He’s done that by writing incredibly lucid letters to investors for the last 50 years, communicating in easy-to-understand language at annual meetings, and speaking on TV in ways that someone with no investing experience can grasp.
Yes, Buffett runs an amazing investment company. But he also runs an amazing investor company. One of the most underappreciated part of his s...
I was so pleased yesterday by the announcement that I have joined the Research team at GoldCore as it meant that I could finally start talking about it and was back in a role that lets me indulge in my passion by researching and geeking out on all things gold, silver and money.
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Epizyme was founded in 2007, and trying to create drugs to treat patient's cancer by focusing on genetically-linked differences between normal and cancer cells. Cancer areas of focus include leukemia, Non-Hodgkin's lymphoma and breast cancer. One of the Epizme cofounders, H. Robert Horvitz, won the Nobel Prize in Medicine in 2002 for "discoveries concerning genetic regulation of organ development and programmed cell death."
Before discussing the drug targets of Epizyme, understanding epigenetics is crucial to comprehend the company's goals.
Genetic components are the DNA sequences that are 'inherited.' Some of these genes are stronger than others in their expression (e.g., eye color). Yet, some genes turn on or off due to external factors (environmental), and it is und...
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