Weekly Wrap Up - Double Up or Double Top?
by Phil - October 10th, 2009 8:37 am
Not such a good week!
Last week was FANTASTIC and we had 28 winning trades out of 36 with an average gain of 42% on the winners and an average loss of 12% on the losers - now THAT’s A GOOD WEEK. We were stopped out of most of our bearish trades on Monday but we took a lot of new ones, which I’ll get into later… Of course, since we are rangish and play both ends, the good news is we still had our "losers" and puts that we sold on long positions and those turned into huge winners in just 5 days:
- AA at $13.30, out at $15 - up 12.7%
- AAPL Jan $165 puts sold for $7.40, now $4.70 - up 36%
- BAC Oct $17 puts sold for .97, now .28 - up 71%
- DIA Nov $92 calls at $5.40, now $7.30 - up 35%
- MHP 2011 $25 puts sold for $5.20, now 5.10 - up 2%
- RIMM March $100 calls at $1.45, now $1.25, down 13.7%
So, of the 6 that were not working last week, 5 are winners this week. As I mentioned at the end of last week’s wrap up, we were more than satisfied with our 5% drop that week and we did expect a bit of a bounce but we made the mistake of thinking The 250 points we gained by Tuesday morning was the end of it, but here we are at the end of the week, another 100 points higher and right back where we started from when we shorted into the rally in mid September.
Last weekend we were at a great point in our range as all our put plays had just paid off, this will be an interesting contrast as we have serious problems with our new short plays and we have a little less conviction than we had in mid September that we will get our correction - not after such a sharp turn off the 5% line this week. Nonetheless, we did stay 55% bearish into the weekend overall - still playing for our range. But, I’m getting ahead of myself, so let’s go back to Monday and see how we got here….
Monday Market Manipulation - Goldman’s CIT Bonanza
I was not at all pleased with the scam GS was running on CIT and neither were many in the press but their attention span lasted all of 24 hours as the markets mysteriously began to take off, neatly drawing people’s attention elsewhere….
Our concern over falling tax…
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$100,000 Portfolio Update - Week 5
by Phil - October 4th, 2009 8:28 am
Well this has been annoying…
After 30 days of trading our current portfolio value is just $100,454.39 as we took quite a setback when we sold naked calls ahead of the move up. Fortunately, we didn’t lose our cool and rode it out. In fact, we only made one trade in the past two weeks so there hasn’t been much to report and there still isn’t but the end of our first month is a good time for an update. Of course, we do have a lot of outstanding October Premium to collect so the next two weeks are when we make our real money…
We still have $92,315 in cash so plenty of buying power should we choose to deploy it but we are sticking with our plan of scaling into the postions we have, which means we’re letting them run out through October 16th expirations and we’ll see if we finally get the bargains we’ve been waiting for to set up our longer term bull plays. For now, in this VERY conservative, low-touch portfolio, we’ve been following Warren Buffett’s Investing Rule #1: Don’t lose money!
| Description | Price Paid | Last Price | Qty | Market Value | Margin Req. | Profit Loss | % |
|---|---|---|---|---|---|---|---|
| AIG CALL 40 Oct 09 | $6.30 | $5.50 | -1 | $550.00 | $1,196.20 | $80.00 | 12.70% |
| On target with AIG at $43.40, this is typical of our outstanding sales with the VIX so high - we just have to wait. | |||||||
| AMZN CALL 90 Oct 09 | $3.60 | $2.80 | -10 | $2,800.00 | $16,127.50 | $800.00 | 22.22% |
| We wouldn’t do this play if we needed the margin but a nice $2,800 to collect if AMZN stays below $90 | |||||||
| BAC CALL 10 Jan 11 | $8.60 | $7.50 | 5 | $3,750.00 | $0.00 | -$550.00 | -12.79% |
| BAC CALL 17 Oct 09 | $1.27 | $0.43 | -5 | $215.00 | $1,110.50 | $420.00 | 66.14% |
| BAC PUT 17 Oct 09 | $0.97 | $1.09 | -5 | $545.00 | $1,770.50 | -$60.00 | -12.37% |
| BAC PUT 20 Jan 11 | $5.45 | $6.30 | 5 | $3,150.00 | $0.00 | $425.00 | 15.60% |
| Drifting right around our $17 target is perfect. If they get cheaper, we buy more! | |||||||
| C CALL 4 Mar 10 | $1.30 | $1.09 | 10 | $1,090.00 | $0.00 | -$210.00 | -16.15% |
| C PUT 4 Dec 09 | $0.46 | $0.32 | -10 | $320.00 | $720.00 | $140.00 | 30.43% |
| C PUT 5 Oct 09 | $0.52 | $0.57 | -5 | $285.00 | $624.00 | -$25.00 | -9.62% |
| We DO want to own C long-term so no big deal but needs to be watched closely if they head lower still. | |||||||
| CROX CALL 4 Mar 10 | $3.70 | $2.99 | 5 | $1,495.00 | $0.00 | -$355.00 | -19.19% |
| CROX CALL 7 Oct 09 | $0.50 | $0.13 | -5 | $65.00 | $112.75 | $185.00 | 74.00% |
| CROX PUT 7 Oct 09 | $0.90 | $0.80 | -5 | $400.00 | $862.75 | $50.00 | 11.11% |
| A bit low - shame we never filled the long put or this would be perfect (same with C). | |||||||
| Description | Price Paid | Last Price | Qty | Market Value | Margin Req. | Profit Loss | % |
|---|---|---|---|---|---|---|---|
| GE CALL 16 Oct 09 | $1.29 | $0.34 | -20 | $680.00 | $4,008.00 | $1,900.00 | 73.64% |
| GE PUT 16 Oct 09 | $0.88 | $0.99 | -10 | $990.00 | $3,294.00 | -$110.00 | -12.50% |
| We need a .50 stop on the $16 calls and for .10 we buy them out this week. We’re fine with GE put to us net $15.12. | |||||||
| LZB - Stock | $9.21 | $7.97 | 500 | $3,985.00 | $0.00 | -$620.00 | -13.46% |
| LZB CALL 7.5 Jan 10 | $2.70 | $1.40 | -5 | $700.00 | $0.00 | $650.00 | 48.15% |
| LZB PUT 7.5 Jan 10 | $1.15 | $1.10 | -5 | $550.00 | $925.00 | $25.00 | 4.35% |
| Right on target to get called away so no change. | |||||||
| MHP PUT 25 Oct 09 | $0.80 | $1.25 | -5 | $625.00 | $2,471.50 | -$225.00 | -56.25% |
| We actually want this stock so not worried at all. | |||||||
| PSQ CALL 50 Jan 10 | $3.05 | $2.50 | 10 | $2,500.00 | $0.00 | -$545.00 | -17.90% |
| These are doing their job… |
|||||||
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Weekly Wrap-Up, How to Make Money in a Down Market
by Phil - October 3rd, 2009 8:27 am
Wow. what a fantastic week!
Well, not for the markets but for us as we totally nailed it. It’s hard to believe that it was just two weeks ago, on Monday, the 21st, after I posted the "Wrong Way Weekly Wrap-Up" as the Dow rose from 9,600 to 9,800, that I had to apologize to members, saying: "I’m sorry because I don’t like being bearish - I’m an optimistic guy usually but I can’t just sit here and tell people what they want to hear. It’s just too irresponsible not to be cautious here. We make plenty of bullish picks but I maintain a very wary outlook until we get some real fundamental improvements."
That’s the funny thing about fundamentals, they don’t matter until they do - and then they matter a lot. It’s funny how I get labeled a perma bear when I’m shorting the market at the top and a perma bull when I’m buying the maket at the bottom. Gee, I always thought that’s what you’re supposed to do but it turns out that few people have the patience to work a market trading range and I don’t blame them, I blame the mainstream media, who encourage this destructive herd mentality to investing that culminates in Jim Cramer and his sound-board, where all the complexities of the market are supposed to boil down to either BUYBUYBUY or SELLSELLSELL.
It makes me seem downright wishy-washy when I said to members on the 21st: "I don’t have all the answers, but I do have a lot of questions - too many to get comfortable buying at these levels." On the whole, as I explained in detail way back in late July, I am neither bullish nor bearish, I am Rangeish. Yes, it’s a made-up word and I have to make it up because no other analysts these days seem to believe the market can go up AND down, everyone seems compelled to stick to one or the other AND THEY DO IT TO THE DETRIMENT OF THEIR READERS - I WILL NOT DO IT!
There are strong stocks and there are weak stocks and I can’t believe I even have to write this out but the best strategy is to short weak stocks and ETFs that have gone too high and buy strong stocks and ETFs that have gone too low. As I explained in my LiveStock appearance back on March 6th (when I was called a "perma-bull" for calling a bottom), the market is like a huge tanker being pulled by individual stocks that are like tugboats. If all the…
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Weekly Wrap-Up - The Return of Fundamentals?
by Phil - September 27th, 2009 8:23 am
Fundamentals don’t matter, until they do - then they matter a lot…
We had a fantastic week because we stuck to the fundamentals and stayed short - even though it was a very painful path to follow. In last week’s wrap-up, facing the never-ending market climb on low volume I had said "I am trying to get bullish, really I am," and I was trying to find bullish plays for members - but we still ended up bearish for the week with a lot of bearish plays being added and thank goodness as it gave us a fantastic week this week!
Just following the plays I mentioned in last week’s wrap-up would have been great as we had SKF bullish at $21 (now $26), DIA bearish at $98 (now $96.74), FAZ bullish at $16 (now $22.12), OIH bearish at $120 (now $114.75), SRS bullish at $8.50 (now $9.93) - and those were just from Thursday and Friday, last week was very active and very successful. I had been quoting Samuel Jackson to highlight my difficulty joining the bullish analysts and I closed last week’s comments by saying: "It really is hard to be the shepherd in this market as I see wolves everywhere, waiting to pounce on the flock as the mainstream media leads them off to slaughter. Or maybe (hopefully) I’m just being paranoid and everything’s fine…"
Monday I led off the week with my concerns about the spread of the flu, as the season is upon us. That gave us 4 bullish (but hedged) plays on SVA, BCRX and CAH (2), none of which are performing so far so all of which are still good entries, especially CAH who got whacked by a DB downgrade on Thursday yet paid back $1Bn in debt on Friday and still look very good long-term.
I had an early look at the G20s "Framework for Sustainable and Balanced Growth," and our conclusion was that, although a good plan, it sure wasn’t something the markets should be all pumped up about as stability was not going to grow us into the bullish valuations that our stocks had already risen to. I warned members that the media was misinterpreting/misrepresenting this report saying: "You can bet though, that "THEY" are acting on this information and they will be SELLSELLSELLING, as they did on Friday afternoon even as the MSM pump-monkeys continue to tell you to BUYBUYBUY as if, not only has the economy fully recovered - but $70 oil, a…
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Friday - If Our Goods Are Not Durable, Our Markets Won’t Be Either
by Phil - September 25th, 2009 8:25 am
mhp,We have our Durable Goods report for August today at 10am.
There are many indications that Durable Goods may miss the high expectations of a 1.2% increase, especially the anticipated 0.7% mark ex-autos (Cash for Clunkers) and, no matter what, it will be a far cry from the 5.1% increase we posted in July, when the car-buying frenzy began. We’ve been discussing shipping issues - unless they have found a way to have major appliances walk to your home on their own, there simply isn’t enough shipping and trucking activity to support a big number. Also, the GDP report, retail sales report, consumer surveys and BBY earnings all indicated that people were just not all hyped up about getting a new washing machine this year.
It was a strong July Durable Goods report that launched this leg of the rally on September 2nd. We at Philstockworld, who actually read the damn reports, noticed that virtually the ENTIRE gain for the month of July was due to a MASSIVE 107% increase in aircraft orders for the month but apparently none of the other analysts seemed to care and those same analysts will be shocked today when pretty much the exact same thing happens as happens after every other major spike in durable goods. I don’t have to tell you, we have a chart:
See - this stuff isn’t hard… How many times in the past two years have we had two big up months in a row? Zero (0). How many times have we had reversals that were as large or larger than the prior positive month? Five (5). If I were a betting man (and we are, since we play the markets), I’d have to put my money on a miss, contrary to the 26 "expert" analysts polled by Bloomberg who forecast more growth. I could be wrong - gosh, I hope I’m wrong because that would be great for our economy - but after a 10% move up in the markets since our last Durable Goods report, I think I’ll error on the side of caution. WHR makes a fun short here as you can buy the Jan $80 calls for $3.10 and sell the Nov $75 calls for $3 so it’s net .10 on the spread and, if WHR doesn’t gain almost 10% by November expirations, whatever value left in your Jan calls over .10 is your profit.
Also bothering me this morning, is news from the Financial Times, which indicates…
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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
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