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Posts Tagged ‘MFE’

Troubling Tuesday – Bears and Bears and Bears, Oh My!

 

 

"I will not fear
Fear is the mind killer,
Fear is the little death
That brings total Oblivion
I will permit my fear to pass
Over me and through me
And where it has gone
I will turn the inner eye
Nothing will be there
Only I will remain."

 

That is the Bene Gesserit incantation for bravery from Frank Herbert’s "Dune," one of my favorite books.  When the markets turn nasty on us it is time to get analytical, not emotional and we need to let our fear pass over us as we step back and evaluate the situation with fresh eyes, and a calm mind

Above is a chart of our major indexes and their year-to-date performance.  As we tested our -5% lines last week, we added a fresh round of Disaster Hedges, a series of trade ideas that can make 500% or more if the market falls further and in an afternoon Alert to Members yesterday, we added another SDS hedge with a 400% upside.  Having some high-reward hedges in your virtual portfolio allows you to set aside just 2% to protect your entire virtual portfolio against a 10% drop in the markets.  10% is A LOT for the markets to fall and, of course, now that they have brakes on the market, we can always add more hedges along the way down.  Should the market fall "just" 5%, we STILL make 10% on our hedges and that nets our virtual portfolio (in this example) UP 5% on a 5% drop in the market.  If our bullish plays were also hedged with covers – then so much the better! 

Most importantly, having a balanced virtual portfolio with hedges allows you to play the market WITHOUT FEAR.  Warren Buffett famously advises investors to "Be greedy when others are fearful" and our own PSW Rule #1 is "Always sell into the initial excitement," which doesn’t mean always buy but we look for opportunities to sell fear (naked puts) on a dip, the same way we sell our own positions into spikes up that we consider overdone. 

In last week’s "Disaster" article, I wondered if we were in the panic/capitulation part of the above chart and,
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POMO Thursday – Bernanke Serves Up Another Round

Today we get another round of Permanent Open Market Operations.

POMOs are the Fed’s way of creating additional bank reserves to finance asset purchases and loans for it’s Primary Dealers (the Gang of 12 or, as David Fry calls them, Da Boyz).   GS and Co. then turn around and use this money to fuel their bots to buy equities and we believe we saw a little test run of those programs a couple of times this week as we had very irrational, sharp rallies for no particular reason and I had commented to Members, during chat, that it looked like some Bot testing

Note that in David’s picture, Bernanke is still playing the role of the generous bartender he played in the hit video "Hayek vs. Keynes – An Economic Smackdown."  Note this all ends badly for Keynes but WHAT A PARTY! 

We made 3 aggressive upside spreads looking for a big finish for the week in yesterday morning’s Alert to Members on SSO, QLD and DDM.  Fortunately our timing was good as my call to look for a run once we got past the 10:30 oil inventory report was on the money but then we were very disappointed by the size of the sell-off in the afternoon – even though we were short at that point (we can root for the bulls while betting against them).  It’s all about jobs this morning and we need to see less the 450,000 pink slips handed out in the past week to get a little more aggressive.

SPY 5 MINUTE CHART

My prediction in the morning was:  "We should get our bottoms with the crude inventories at 10:30 so no hurry on bullish plays, most likely.  Selling XOM $60 puts for $1 or more (now .47) on a dip today is a nice play into expirations as you can always roll them along."  The XOM puts topped out at .63, so no luck there, but the action (see Davids chart) was right on the money for us:

We took a long play on USO at the bottom that did well (and we took money and ran) and we flipped back to bearish at 1:41 with put plays on IWM and DIA that did nicely into the close.  As I had said in the morning post – blissful agnosticism! 

8:30 Update:  500,000 jobs lost last week!  Ouch!!!  Looks like we should have held onto those puts because this is going…
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Energy Options Strangle Play Delivers the Goods for Investor

www.interactivebrokers.com

Today’s tickers: XLE, MFE, FITB, SLM, XHB, F, INTC & XLF

XLE – Shares of the energy fund are higher by about 1% to $48.35. We observed one energetic option investor who appears to have purchased to close an 8,000-lot strangle today, that was originally established back on May 8, 2009. It looks as though the strangle was originally sold for a gross premium of between 3.58 and 4.22 through the sale of 8,000 puts at the June 47 strike price and the sale of 8,000 calls at the June 53 strike. Today the investor bought back the position for a total of 31 cents per contract. Thus, this individual is left with net gains of between 3.27 and 3.91 each by closing out the position today. The trader has reeled in minimum profits of $2,616,000 or maximum profits of $3,128,000. – Energy Select Sector SPDR

MFE – The security technology company appeared on our ‘hot by options volume’ market scanner this afternoon amid a more than 4% rally in shares to $41.86. Bullish investors hoping for continued upward movement in the price of the underlying looked to get long of calls in the near-term July contract. Traders picked up more than 3,500 call options at the July 45 strike price for an average premium of 22 cents apiece. McAfee shares would need to climb higher by approximately 8% in order for individuals who are now long the calls to breakeven at a price of $45.22 by expiration. Option implied volatility on MFE has risen throughout the trading day from a low of 31% to the current reading of nearly 35%. – McAfee Inc.

FITB – The Ohio-based bank holding company has experienced a modest rally in shares by about 1.5% to $7.05. FITB caught our attention amid a call-to-put ratio of more than 18-to-1, suggesting bullish activity on the stock. Upon further investigation, it appears that today’s activity is the work of an investor initiating a calendar spread in the expectation of continued bullish movement in the stock through expiration in November. It looks as though this individual sold 10,000 calls at the August 9.0 strike price for a premium of 20 cents apiece and then spread the sale against the purchase of 10,000 calls at the November 9.0 strike price for 63 cents per contract. The net cost of the bullish stance amounts to 43 cents and
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Market Shadows

Kimble Charts: Utilities

Kimble Charts: Utilities

By Ilene

Chris Kimble shared his chart of the Utilities Select Sector SPDR ETF, XLU, with us.

The one month performance inset shows XLU’s uninspiring performance compared to every other ETF on the list. However, the rather steep bullish falling wedge pattern says that it may be time for a bounce.

[Click on chart to enlarge]

Chris likes XLU for a short-term bounce off the 200 day moving average at $44. One way to play this setup is to buy the XLU outright. Chris suggests a 3% stop loss on the shares.

Another bullish play is to use options in a strategy designed by Phil:

1. Buy the XL...



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Zero Hedge

One Last Look At The Real Economy Before It Implodes - Part 1

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by Brandon Smith via Alt-Market.com,

We are only two months into 2015, and it has already proven to be the most volatile year for the economic environment since 2008-2009. We have seen oil markets collapsing by about 50 percent in the span of a few months (just as the Federal Reserve announced the end of QE3, indicating fiat money was used to hide falling demand), the Baltic Dry Index losing 30 percent since the beginning of the year, the Swiss currency surprise, the Greeks threatening EU exit (and now Greek citizens threatening violent protests with the new four-mo...



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Insider Scoop

Analysts On Dicks Sporting Goods: 'Pain Mostly Behind Us'

Courtesy of Benzinga.

Related DKS Benzinga's Top Downgrades Needham Downgrades Dick's Sporting Goods To Hold DICK's Sporting Q4 Earnings Beat on Growth Strategies - Analyst Blog (Zacks)

Dicks Sporting Goods Inc (NYSE: DKS) faces pressure from winter weather and a West Coast port slowdown, but troubles from its golf...



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Phil's Favorites

Ukraine Bans Gold Transactions Over $125, Currency Derivatives and Interbank Purchases Exceeding $10,000; Update on Black Market Rates in Ukraine

Courtesy of Mish.

Today the National Bank of Ukraine announced new capital controls on currency transactions. All Interbank Transactions Over $10,000 are Banned.
The national Bank of Ukraine has expanded the list of administrative restrictions for stabilization of the hryvnia, in particular, completely prohibiting the withdrawal of foreign dividends and limiting the purchase of foreign currency on the domestic markets.

Resolution No. 160 is effective from March 4, 2015 and is valid until June 3, 2015.

Previously, prohibitions did not target dividends on securities that are traded on stock exchanges.

The NBU has also introduced limits on the balance of banks' operations on the interbank ...



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Chart School

Close to an Inflection point for S&P

Courtesy of Declan.

A second day of losses brought markets closer to support, and a potential decision point.

The S&P tagged support at 2094 and the 20-day MA at 2090. Bulls will need to step up to the plate tomorrow if such key support is to hold. Lose 2093 and 2064 comes into play. Volume climbed today to register as distribution.


The Nasdaq was little changed. It was able to rally in late afternoon trading as it hugged the 10% envelope (relative to the 200-day MA.   The 20-day MA is looking like a logical next test, but if it was to do this, it would give up today's low without much question. Bulls need to be careful not to buy the dip too early. At least the inde...

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All About Trends

Mid-Day Update

Reminder: David 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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Sabrient

Sector Detector: Stocks break out again but may be running on fumes

Courtesy of Sabrient Systems and Gradient Analytics

Despite low trading volume, a strong dollar, mixed economic and earnings reports, paralyzing weather conditions throughout much of the U.S., and ominous global news events, stocks continue to march ever higher. The world remains on edge about potential Black Swan events from the likes of Russia, Greece, or ISIS (or lone wolf extremists). Moreover, the economic recovery of the U.S. may be feeling the pull of the proverbial ball-and-chain from the rest of the world’s economies. Nevertheless, awash in investable cash, global investors see few choices better than U.S. equities.

In this weekly update, I give my view of the current market environment, offer a technical analysis of the S&P 500 chart, review our weekly fundamentals-based SectorCast rankings of the ten U.S. business sectors, and then ...



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OpTrader

Swing trading portfolio - week of March 2nd, 2015

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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Digital Currencies

MyCoin Exchange Disappears with Up To $387 Million, Reports Claim

Follow up from yesterday's Just the latest Bitcoin scam.

Hong Kong's MyCoin Disappears With Up To $387 Million, Reports Claim By  

Reports are emerging from Hong Kong that local bitcoin exchange MyCoin has shut its doors, taking with it possibly as much as HK$3bn ($386.9m) in investor funds.

If true, the supposed losses are a staggering amount, although this estimate is based on the company's own earlier claims that it served 3,000 clients who had invested HK$1m ($129,000) each.

...



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Pharmboy

2015 - Biotech Fever

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

PSW Members - well, what a year for biotechs!   The Biotech Index (IBB) is up a whopping 40%, beating the S&P hands down!  The healthcare sector has had a number of high flying IPOs, and beat the Tech Sector in total nubmer of IPOs in the past 12 months.  What could go wrong?

Phil has given his Secret Santa Inflation Hedges for 2015, and since I have been trying to keep my head above water between work, PSW, and baseball with my boys...it is time that something is put together for PSW on biotechs in 2015.

Cancer and fibrosis remain two of the hottest areas for VC backed biotechs to invest their monies.  A number of companies have gone IPO which have drugs/technologies that fight cancer, includin...



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Stock World Weekly

Stock World Weekly

Newsletter writers are available to chat with Members regarding topics presented in SWW, comments are found below each post.

Here's this week's Stock World Weekly.

Click here and sign in with your user name and password. 

 

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Option Review

SPX Call Spread Eyes Fresh Record Highs By Year End

Stocks got off to a rocky start on the first trading day in December, with the S&P 500 Index slipping just below 2050 on Monday. Based on one large bullish SPX options trade executed on Wednesday, however, such price action is not likely to break the trend of strong gains observed in the benchmark index since mid-October. It looks like one options market participant purchased 25,000 of the 31Dec’14 2105/2115 call spreads at a net premium of $2.70 each. The trade cost $6.75mm to put on, and represents the maximum potential loss on the position should the 2105 calls expire worthless at the end of December. The call spread could reap profits of as much as $7.30 per spread, or $18.25mm, in the event that the SPX ends the year above 2115. The index would need to rally 2.0% over the current level...



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Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!




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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.

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