by Option Review - April 9th, 2013 3:13 pm
Today’s tickers: GDX, BX & TXN
by Option Review - April 1st, 2013 1:44 pm
Today’s tickers: EBAY, TXN & THC
by phil - June 29th, 2012 7:47 am
I love it when a plan comes together!
As you know, we took an aggressive, protective short on Wednesday afternoon so it was "wheeeeeee!" on the dip with our prediction of XLF hitting $14 coming in to the penny while our JPM bottom target of $34.75 missing by .10, as we bottomed out at $34.85 before popping back $1 (3%) but, in all fairness, I did say "around $34.75" in the morning – so we knew it wasn't an exact target.
While we bottom-fished all day, I officially called the turn at 2:48, saying to our Members in Chat:
If you want a thrill ride, you can now buy the QQQ next week $61/62 bull call spread for .55 and that should be able to stop out with a .20-25 loss if things go badly tomorrow but make a nice double if the Qs head back up (now $61.58). Note we got wiped out on our this week $63s so not at all a sure thing.
Also, UCO just seems silly at $23.50 with July 4th coming up – I like the July $23/24 bull call spread at .50.
TNA next weekly $47 calls at $2.15 are also fun but those can cost you if things go the wrong way but TNA was $50 2 days ago and $52.50 2 weeks ago so they could make a nice payoff quickly.
Damn, I guess I still think the EU comes through tomorrow….
We didn't have to wait until tomorrow, of course. Someone (who will never be investigated) jumped the gun with a $3.3Bn block purchase of 50,000 S&P E-Mini Futures and that reversed almost all of the day's drop into the close. Then we got word of the expected $120Bn whatever they are calling it from the EU after hours and we got even better news at night as they took various steps to do stuff that I really don't care about because it isn't enough cash and it's going to fail again unless they pump it up by about 3x today.
by phil - July 25th, 2011 8:29 am
This is amazing, isn’t it?
Our "leaders" still can’t work out a debt deal with just 7 days left until the Government shuts down (and we’re already at the end of our bonus time as Treasury has been juggling the books for three months just to allow us this much). I wrote extensively about this over the weekend so we can move on – just as we moved on in Chat yesterday evening when my 6:09 pm Alert to Members was to go long on the Dow Futures (/YM) over the 12,500 line (now 12,543, up $215 per contract), Russell (/TF) at 830 (now 831.80, up $180 per contract) and, of course, shorting oil (/CL) below 99.50 (now $98.97, up $530 per contact) so the winner of the morning is oil! Congrats to all the players with a lovely start to our week!
On the whole, we were just protecting our bearish bets as I remained very grumpy into the weekend on Friday. Those of you who followed our suggestions from Friday’s post were no doubt pleased because, at the time, we were short the Dow Futures at 12,720 and the Russell Futures at 842.60 with $1,100 and 1,260 moves from there to Sunday night’s flip-flop respectively.
We also picked the S&P (/ES) short at 1,346 (now 1,331) and the only one that isn’t working is the Nasdaq (/NQ) – back at the same 2,415 we had in Friday Morning’s Futures. Well, it’s not the only one – gold went over our $1,605 shorting target this morning, after giving us a quick gain on Friday. This is not good for our GLL August $22 calls (.40 on Friday) or our ZSL Sept $11/15 bull call spread at $2, offset with the sale of SLW Sept $44 puts for $1.20 for net .80 on the $4 spread but a nice re-entry opportunity today – if you are still a believer.
We’re more agnostic now. We were bearish into the weekend expecting pretty much what happened – NOTHING, and now we’re waiting to see what actually happens and how the markets react. The Shanghai Composite freaked out this morning and dropped 3% – only saved by the closing bell as the Government moved to shut down counterfeit Apple Stores and bullet trains went off the rails. The Hang Seng wasn’t as worried –…
by phil - April 15th, 2011 8:19 am
Well who’d have thunk it?
The cost of doing business is rising and GOOG happens to be one of those businesses that lacks pricing power as their rates are generally set through an auction process and their users have to VOLUNTEER to pay more money to advertise. Most advertisers on Google are on fixed budgets, like MSM advertisers and Google has done a great job of replicating that model. Why then, should it be surprising if a maturing Google begins to look more like a traditional media outlet than a dot com company with exploding growth?
Don’t get me wrong, we love Google long-term but we did short them as well as BIDU into Google earnings as we felt Google would disappoint enough to spook BIDU investors as well. We’re taking the short money and running and looking for some bullish plays now – the drop from $630 last month to $545 today is plenty of froth blown off the top for us to get long-term interested again. As you can see from the tag cloud of the Conference Call, growth is still there, especially in mobile display ads (Android a bit disappointing) and no major negatives. I’m not going to write a whole thing about GOOG though, there are thousands of people doing that and our Members know well enough where I stand. I’m more interested in examining the bigger picture.
We expected Q1 earnings to be rough and we’ve already seen FDX, NKE, ORCL, RIMM, FAST, FCS and AA struggle so hopefully you don’t have to be hit on the head with another whole week of earnings before you get a little more cautious. Next week we hear from C, HAL, LLY, TXN, BK, GS, INTC, IBM, SYK, USB, VMW and YHOO on Monday and Tuesday and then we’re off to the races with hundreds of companies reporting each week for the rest of the month. Our job in the first few weeks of earnings season is to get a feel for the quarter and, so far, that feeling is rough.
It’s all about inflation, of course and don’t say we didn’t warn you about that one! We went more bearish up at those 100% lines we’ve been watching and now the question really is – how bad was it? Inflation is, after all, our long-term BULLISH premise. We don’t think corporations…
by phil - July 21st, 2010 8:27 am
Wow, what a ride!
Bottoms WERE: Dow 10,200, S&P 1,075, Nas 2,200, NYSE 6,800 and Russell 620. As I said yesterday, "don’t forget there’s a 5% drop to support below these levels).
For now, we’ll be watching the 2.5% lines at Dow 9,945, S&P 1,048, S&P 1,145, NYSE 6,630 and Russell 605.
My working theory is RUT is weakest because they are getting killed by cut-off of unemployment checks. That means that an upside play on the RUT could go very well in case they extend benefits today. I like TNA $37 calls for $3.20 and IWM $63 calls at $1.25. These are risky of course because if the extension is defeated we could go further down so take quick profits off the table on half to make a buffer and make sure you do have some disaster hedges.
We bounced right off those 2.5% lines and got our $3 copper signal at 10:24 so we knew we were good to go as we took those calls plus GOOG, BAC, GS, QQQQ, IBM, TXN, AAPL, WFR and BIIB. Other than BIIB, which is a long-term spread, all of our shopping was done by noon and the rest of the day we just said "Wheeeeeeeeeeeeeee!" as the market went up and up and up – and they haven’t even extended the unemployment benefits yet!
I have been saying we need to keep an eye on copper $3 during this whole market breakdown as $3 copper is NOT the right price for a Global Depression, which is what the market has been pricing in and at 10:24 as copper hit our bull target, I said to Members: "Copper $3! That’s like the little snapping sound when the bear takes the bait in the bear trap." Now we are back testing our "bottoms" which, as I said yesterday, are really the middles of our 5% Rule range but our view of earnings season so far is that we shouldn’t be in the lower end of the range and the recent action, as I summed it up in yesterday’s post, was silly.
by phil - July 20th, 2010 8:13 am
Wheeeee – this is fun!
Well, it’s fun when you have disaster hedges anyway. I already sent out an Alert to Members this morning reminding them that there’s no point in having disaster hedges if you don’t use that money to buy on the dips, though. Yesterday we added downside, leveraged plays on SDS (2) and DXD and our focus short was on NFLX (last week it was MA, and that went very well) along with our usual DIA Mattress play. That shifted us a bit negative as we failed to hold our watch levels and now we are sadly looking all the way down to those low closes of: Dow 9,686, S&P 1,022, Nasdaq 2,081, NYSE 6,434, Russell 590, SOX 332 and Transports 1,905 as a possible re-test if things get really ugly.
On July 3rd I laid out "5 Plays that Make 500% if the Market Falls" and, fortunately, we didn’t need them as we took off on Monday but they are still good plays and a little cheaper now than they were when we last tested our bottoms. If you are not well-protected – I strongly suggest you read this post and at least be ready to initiate a hedge if we can’t turn this morning around. As with most day’s lately – it’s all about copper and the $3 line…
That being said, I do think we will turn this morning around eventually - because IBM is down $7 and the Dow moves about 8 points per $1 of component value so that’s hitting the Dow for 56 points all by itself. IBM’s earnings were great but revs missed, in large part due to currency issues. BRIC revenues were up 22% for the company, despite the crap exchange rate.
TXN got whacked too on their report that profits nearly tripled on a 42% jump in revenues (not kidding). "Demand has continued very solid and very broad-based," said Ron Slaymaker, the company’s vice president of investor relations.
Mr. Slaymaker said the biggest positive surprise in the period was stronger demand from companies that buy industrial equipment, which have rebounded much slower than consumers from the recession. One notable area of weakness, he added, was sales of chips used in cellphones. TI has long been a major supplier to handset-maker Nokia Corp., which in June lowered its second-quarter forecast.
The company reported net income for the period ended
by phil - April 26th, 2010 8:21 am
Pre-Market we’re hearing from BLK, CAT (are we building stuff?), EXP, HTZ, HUM, LO, TUES and TZOO and later we will hear from BSX, CHH, OLN, RSH, RCII, TXN (major) and my "friendbuddypal" Cramer’s TSCM (if they are not delayed). Revenues at The Street have crept back up this year in a recovery that pretty much mirrors the market. The company does pay a nice 2.6% dividend, which works out to a nice $200,000 bonus on Jimmy’s 2.1M shares (6.7% of the company) so you know that bonus will be a priority for the company. Cramer was BUYBUYBUYing his own stock at $2.41 in January but sadly they have no options to hedge… They might make a nice pick-up after earnings if they disappoint and head back to $3 or less.
I’m full of useful information on hundreds of stocks right now because I’ve been researching our new Buy List but I’m not pleased with what I’ve been seeing so far and this week’s tidal wave of earnings, with 1,000 companies reporting means we’re in no hurry to dip our toes in the water. I told Members this morning I should probably be working on a Sell List, as it’s much easier to find companies I want to short than ones I want to buy. Even in the Weekly Wrap-Up, we featured a 1,900% downside hedge on the Russell to offset the 566% plays and other bullish plays we’ve begun to reluctantly take, just so we don’t feel too silly in this runaway market.
If you have never watched Jim Cramer discussing the sleazy, manipulative ways he used to game the markets – you really must take 10 minutes and watch this video, where Jim explains how any immoral bastard with $10M can yank the entire futures market around at will. He prefaces one of his favorite strategies with "this is blatantly illegal but.. I think it’s really important… these are things you MUST do on a day like today and if you are not doing it, maybe you shouldn’t be in the game." Are you playing the game or are you being played?
The biggest game ever played may be unwinding as we speak. Bloomberg reports that foreign-exchange profits from carry trades are disappearing as differences in central bank interest rates fail to increase fast enough to compensate for swings in…
by phil - March 14th, 2010 5:20 am
I’m having writer’s block this weekend.
Usually when I can’t think of what to write it helps me to go over our virtual portfolios so I started this morning reviewing the Buy List but I didn’t get far because it was silly. Of 43 plays on the buy list, 39 are doing well – too well in fact to the point where it’s hard for me, in good conscience, not to say let’s kill the whole thing and get back to cash as we’re up about 20% in 2 months and that’s just ridiculous – most people would call that a good year and go on vacation.
The Buy List was 100% bullish and we did catch a good bottom on our early February entries. I was gung ho bullish then because I felt comfortable that the 10,000 line on the Dow would prevail and that we were good for a run back to the top (10,700), following, more or less, the pattern we had in 2004 (see original post for charts). Well that’s pretty much what’s happened since then but that’s not making me happy because I see no reason we won’t complete that pattern and begin falling off a cliff shortly.
As you all know, I’m not a big fan of TA, or patterns for that matter but the reason I started looking for patterns was to try to get a handle on how long market could really keep going up before falling victim to exhaustion. To me it seemed we weren’t at that point on Feb 6th but now that we’ve put in that big push back up – if we can’t punch up to new highs on all our indexes then I do think it’s time for the markets to take a break.
Clearly I’ve been too bearish for the past couple of weeks and we are now 224 points over 10,400 on the Dow which is where I turned bearish as the January data made me lose faith in our ability to get back to 10,700. I should have stuck to the TA because we’re a lot closer to 10,700 than we are to 10,400. With the Russell and Nasdaq exploding to their own new highs. You can see though, from the above chart, why I do want to wait to see the NYSE, Dow and S&P confirm this move up – it’s not far now!…
by Option Review - January 25th, 2010 4:39 pm
Today’s tickers: IBM, XLF, TXN, XLF, CTXS, EBAY, HAL & FITB
IBM – International Business Machines Corp. – A long-term bullish transaction on IBM suggests one investor is positioning for a significant boost in share price at the computer services firm by expiration in January 2011. IBM’s shares are trading 0.75% higher this afternoon to $126.47. The optimistic trader purchased a ratio call spread on the stock, buying 5,000 calls at the January 2011 $135 strike for an average premium of $6.24 apiece, and selling 10,000 calls at the higher January 2011 $150 strike for a premium of $2.33 each. The net cost of the ratio spread amounts to just $1.58 per contract. Thus, the trader accrues profits if IBM’s shares rally 8% over the current price to surpass the breakeven point at $136.58 by expiration next year. Maximum available profits of $13.42 per contract amass only if shares surge 18.60% to $150.00. IBM’s shares must increase to a new 52-week high in order for the investor to break even on the transaction. The current 52-week high on the stock is $134.25, attained back on January 19, 2010.
XLF – Financial Select Sector SPDR – Option traders continue to initiate bearish strategies on the financial ETF today despite the 0.90% rebound in shares of the underlying to $14.31. Earlier we reported a June $14/$10 ratio put spread, which established downside protection beneath a breakeven share price of $13.30. This afternoon we observed a similar transaction take place. Another pessimistic investor purchased an even larger ratio put spread in the June contract. It looks like this individual bought 27,500 puts at the now in-the-money June $15 strike for an average premium of $1.52 apiece, spread against the sale of 55,000 puts at the lower June $12 strike for about $0.39 each. The net cost of the ratio transaction amounts to $0.74 per contract, and provides downside protection beneath a breakeven share price of $14.26.
TXN – Texas Instruments, Inc. – Chipmaker, Texas Instruments, is scheduled to report fourth-quarter results after the closing bell this afternoon, and although analysts expect the firm to post profits of $0.49 per share on a 19% increase in sales, option traders initiated near-term protective plays. Shares of the semiconductor company are up 1.80% to $23.52 ahead of earnings. One investor established a bearish risk reversal by selling 5,000 calls at the February $24 strike for a…