Wednesday Wheee!

Holy cow! Talk about a day going just right… Except Google. Never, ever, ever short Google! Well, at least until next time they are so overbought. I bought 35 current $420 calls to cover my 70 March $270 puts right at the bell because I couldn’t stand to get killed overnight – I’ve never seen anything like this… Anyway, we got everything we could have wished for today! All the indexes held support levels with strength all day, against a Fed increase and a Google crash (albeit temporary, it looks like) this is amazing performance – look out Nikkei, here we come! Oil collapsed, but not over inventory builds like they are telling you in the press. Although the builds just can’t be ignored at this level (there is nowhere left to store the stuff!), there was a much simpler reason oil went down 1.7% today – The dollar went up 1.5%! Why don’t people understand this? Here is a quick read explaining this that I should retitle Dollars for Dummies: http://philstocks.blogspot.com/2005/11/oils-dirty-little-secret.html If you were reading the comments you caught some great intraday trading opportunities – there is nothing better than a day when the market turns like this. I am down to 25% cash today – that is my limit and I hate doing it but I didn’t have anything I wanted to sell! Gold stayed under $570 almost all day and those stocks got hammered (although the dollar rise also caused $7 to be shaved off the price so we may be grabbing gold stocks on sale tomorrow). ===================================== Way back on 1/20 we played a spread on SBUX where we took the $32.50 calls for .50 and the $30 puts for .50 for a play into earnings. Earnings looked pretty good and we should be well in the money with the calls tomorrow! I was worried about my SU puts for a while but it worked out just fine (but not as well as the SUN $90 puts which went from under $1.30 to $1.90 already). TWX has a heck of a nice day with out March $17s ending up just shy of 50% up. I see no reason to sell this but I would expect a pullback to around $18 after this huge run-up so sell it if you need cash as this position is very easy to get back into. BA did save the DOW today, running over the 5% rule in early trading but settling down at the day’s end to a 4.85% gain. I was so mad that I forgot to short CME on Google weakness. This is the strangest trading pair I’ve ever encountered but you need to go with what works… Speaking of trading pairs – PD split today (and jumped up), declared a dividend and announced a new mine would open in Arizona. I was so busy wasting my time with Google I missed the whole thing! ===================================== The intraday saga: If you look at today’s comments you can see the saga of RIMM as it played out today. After being burned on puts last week and calling it up on Monday morning, we were lucky it was on my main screen this morning! I noticed it running up at 12, a little late but early enough to jump in on the $75 calls after I confirmed there was an actual reason (they got a very good patent ruling). I think this story has legs. SMDI, who makes the new WiMax antenna for RIMM, was a logical pair trade and that really took off in the afternoon. I wouldn’t push this one too far though. We caught MSFT just as it turned back up, the March $27.50s picked up 20% in one hour. GENZ got an FDA label approval and rocketed up at the end of day and into the after hours. I have learned to take the money and run on this erratic stock! I decided the IBM March $85 calls were too cheap at .75 based on what happened last 10/17 earnings: http://stockcharts.com/gallery/?ibm BUD was flat and apparently, no one likes a flat BUD. ===================================== By the way, my apologies to wdking and chipper338 as I am just reading their comments from the 30th – I get tons of mail and if I’m having a busy week I get miles behind. Priorities are my kids, my wife, my company, my research, my blog, my email… Wdking asked how can you short a stock (LVS) where insiders hold 91% of the shares? You don’t – shorts are death! Puts, on the other hand, are the greatest tool ever invented! Yes, Uncle Shelly owns almost all of the stock but he’s not running a charity. He is as reluctant to buy at the peaks as anyone else, the trick is to figure out his comfort and discomfort levels and trade around those. Also, see what his pals are doing – SVP Bob Goldstein tossed $2M in shares on 1/18 at $47.50. Don’t forget that Shelly has $15Bn in stock ON PAPER – this is very different from cash as you may have noticed during a margin call… I’m sure he has a few bucks under the mattress but when the stock drops 2% like it did today, you can’t expect him to jump in and buy 300,000 shares to prop it up. That would be taking $15M of his cash to buy stock for $50 when he already has 270M shares for $1. While I am certain he would do what it takes to protect a heavy moving average like $45, if he bought on every dip he would have to pour everything he had into the stock. Quite the opposite, Shelly relentlessly cashed out 15 blocks of 650,000 shares on 9/13 at around $35, setting off a cascading drop in the stock that bottomed it out at $29.20 on 10/13. http://finance.yahoo.com/q/it?s=LVS Think about that before you buy this stock! Chipper wrote that he picked up some VLO $60 puts for $1.50 on Monday and he hit it right at the top! Very nice, I’m sure you are quite pleased with that one… He also got the EBAY $42.50 puts for .75 and picked up 30% on the day trade. He will be happy to know that they are worth 10% less today, even though the stock went down further. Great job not being greedy. The time deterioration kills you with current options!