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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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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!

 
 

Zero Hedge

G-20 Post Mortem: Hopes, Fears, & Dashed Exepctations

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

We, like Bloomberg's Richard Breslow, were bemused this weekend by the communiques from the wisest men in the room at the G-20 meeting. On one side of their mouths they warned of "excessive risk-taking," in markets noting that there were "mounting economic risks" also. On the other hand, stories continue to print of US equity strength implying optimism over global growth - despite the ongoing collapse in consensus GDP expectations. However, away from this hope and fear, it was the almost coordinated responses of the PBOC (Chinese Finmin Lou Jiwei signaling not to get carried away with stimulus expectations), ECB (Visco saying may not need additional Q...



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Sabrient

Sector Detector: Bulls leverage hopeful news to launch a tepid breakout attempt

Courtesy of Sabrient Systems and Gradient Analytics

Stocks were able to leverage some optimistic news and dovish words from the Fed to take another stab at an upside breakout attempt last week. Although readers have sometimes accused me of being a permabull, I am really a realist, and the reality is that the slogans like “The trend is your friend” and “Don’t fight the Fed” are truisms. And they have worked. Nevertheless, I am still not convinced that we have seen the ultimate lows for this pullback, especially given the weak technical condition of small caps.

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 offer up some actionable trading ideas, including a sector ...



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Phil's Favorites

Strange Bedfellows: To Fight ISIS, US Now Supports Iranian Revolutionary Guard, Other Terror Groups

Courtesy of Mish.

Strange Bedfellows

US Mideast relationships get stranger every day. The US has come to the defense or has given aid to three rather unlikely groups in the past few weeks.

  1. Iranian Revolutionary Guard
  2. Kurdish Workers Party (PKK), which directly supports the YPG, on Washington's list of proscribed terror groups
  3. "Moderates" fighting to overthrow Syrian president Assad. Those moderates just signed a non-agression pact with ISIS

70,000 Kurds Seek Refuge in Turkey

The Guardian reports Kurds Flee into Turkey to Escape Isis Offensive
More than 70,000 Kurds fled from northern Syria into Turkey at the weekend and tens of thousands more are trying to cross...



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OpTrader

Swing trading portfolio - week of September 22nd, 2014

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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Chart School

Daily Market Commentary: Higher Volume Selling, and Bearish Engulfing Pattern in Russell 2000 and Semiconductor Index

Courtesy of Declan.

In day when Alibaba took the headlines, it was left to the Russell 2000 and Semiconductor Index to warn of potential change.

The Russell 2000 experienced a large bearish engulfing pattern, although within the boundaries of the declining channel. There was an undercut of the 200-day MA, which will need to be watched on Monday. Shorts could get aggressive with a stop above 1,164 (and/or declining channel line).


The semiconductor index also experienced a bearish engulfing pattern, which doubled as a 'bull trap'.  This is a decent sho...



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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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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 the latest issue of Stock World Weekly. Enjoy! Please sign in using your PSW user name and password. (Or take a free trial.)

...

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Option Review

IV Implodes On 4-hour YHOO Options As BABA Commences Trading

Investors are dumping shares in Yahoo, sending the stock down 5.0% to $40.08 after shares in Alibaba made their debut on the floor of the NYSE just before midday. Shares in BABA for their part initially traded up to a high of $99.70, a near 47% increase over the IPO price of $68.00. Typically, one would expect put options that are 5% out of the money with roughly 4-hours left to trade to see waning implied volatility. But, at the start of the trading session and ahead of the first trade for BABA, the Sep 19 ’14 40.0 strike put options were trading with 271% volatility or $0.30 per contract amid uncertainty as to how the start of trading for Alibaba would take shape.

...

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Market Shadows

Selling PVD

Selling PVD

Administradora de Fondos de Pensiones Provida S.A. (PVD) shares will not be trading on the NY Stock Exchange after today. Tomorrow, shares will be harder to sell. Strangely, I wasn't able to find information on the internet, but Paul just sent me a copy of the email he received from Interactive Brokers.

We're selling PVD out of the Virtual Portfolio today at $87.18. 

More details:

From: Interactive Brokers   dated July 18, 2014

Holders of AFP Provida S.A. American Depository Receipts (ADR) are advised that the Company has elected to terminate the Deposit Agreement effective 2014-09-18.

As of the te...



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Promotions

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And had you only traded the conservative alerts recommended by the algorithm since inception, you would have experienced portfolio gains of more than 200%!

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When you register for the webinar, you’ll also get instant access to following trading videos:

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Digital Currencies

Making Sense of Bitcoin

Making Sense of Bitcoin

By James Black at International Man

Despite the various opinions on Bitcoin, there is no question as to its ultimate value: its ability to bypass government restrictions, including economic embargoes and capital controls, to transmit quasi-anonymous money to anyone anywhere.

Opinions differ as to what constitutes "money."

The English word "money" derives from the Latin word "moneta," which means to "mint." Historically, "money" was minted in the form of precious metals, most notably gold and silver. Minted metal was considered "money" because it possessed luster, was scarce, and had perceive...



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Pharmboy

Biotechs & Bubbles

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

Well PSW Subscribers....I am still here, barely.  From my last post a few months ago to now, nothing has changed much, but there are a few bargins out there that as investors, should be put on the watch list (again) and if so desired....buy a small amount.

First, the media is on a tear against biotechs/pharma, ripping companies for their drug prices.  Gilead's HepC drug, Sovaldi, is priced at $84K for the 12-week treatment.  Pundits were screaming bloody murder that it was a total rip off, but when one investigates the other drugs out there, and the consequences of not taking Sovaldi vs. another drug combinations, then things become clearer.  For instance, Olysio (JNJ) is about $66,000 for a 12-week treatment, but is approved for fewer types of patients AND...



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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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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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