Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!

Which Way Wednesday?

Et tu, Intel!  Then fall, Nasdaq.

 

It's looking pretty dire for the Nasdaq as first SYMC, then RACK, the SOX and now even INTC all take a stab at it.  Will the Nasdaq die a death of 1,000 cuts?  It's really just the top 100 we care about but there's a lot of pressure mounting on Apple, IBM and MOT to give us a brighter vision of the future of tech than we've gotten so far this week.

As I said last week, we need Nasdaq leadership to guide that commodity money off the sidelines and into something new – I'm not sure that the industrials will be up to the job.  Like the Roman senate, the analysts are all too willing to take down the Nasdaq just as it's breaking out but they have no clear plan for a successor!  Without a hot sector – the markets, like Rome, will crumble.

Asian markets weathered Intels storm fairly well yesterday, also working hard to shake off falling commodity sectors.  The BOJ backed off raising their rates for this session, a bit of a surprise that rallied the real-estate sector over there (you'd be amazed at what kind of house you can get with a 1.5% mortgage!).  We had a Bugs Bunny rush back into steel, real-estate and construction with banks giving up some ground as there is not much margin to be made on 0% interest.

Europe is trading flat ahead of our open and their timing couldn't have been worse for Intel as the EU is recommending formal charges against INTC for not playing nice with AMD.  As we know from Microsoft's monopoly case, the EU's bark is worse than it's bite but never underestimate investors' fear of a barking dog.

Back home we got some good news from JPM, who are still cranking out profits at a record pace with a 50% increase in investment banking revenues.  That perked up the DOW pre-marked, which includes JPM as a component.  Still, I'm going to be watching the downside today as anything up is obviously good:

Hopefully we won't be shocked by the PPI this morning but the expectations are very low (.5%/.2%), perhaps unrealistically low as the last report was 2%/1.3%(ex food & energy).  After the NY Mfg. Index was a bust yesterday, no one is expecting much from the Industrial Production report but we also get the Redbook Sales Index, which better perk up!  The whole thing is subject to change at 2pm when the Fed puts out the Beige Book so we might have a fun day playing diamonds, SPYs and Qs!

[Photo]

Our man T Boone is back!  He's drawing a line in the sand at $48 and is still predicting we get back to $70 this year.  Since there is a real dearth of barrels under contract at $56 or less for the rest of the year – I once again challenge Mr. T to put his money where his pump is and pick up just 50,000 December $56 contacts - what's $2.8Bn to him when it's a "guaranteed" $3.5Bn return in 11 months?

According to the WSJ: Another factor aggravating oil's decline has been heavy selling related to various hedging deals. In a conference call Friday, Goldman Sachs analysts told clients that financial firms have been aggressively selling oil to keep losses from growing on deals they struck in recent months with companies seeking to hedge themselves against falling prices.

Well T Boone went 0 for 12 against me in monthly oil targets for 2006 – best of luck to him in 2007!  Word on the street is he lost $600M last year on oil plays but made up for it by shorting natural gas to the tune of $1.8Bn so he's still got plenty to teach me on that front!

We'll be testing my $50.79 target again this morning for oil as OPEC has told the US energy roaches they are on their own this time.  OPEC has, at best, one more tightening move to make and they can't afford to have it fizzle or we'll be back at $40 in no time so they are going to grin and bear it, hoping the market will find a bottom without them.

I really thought we'd get some sort of bounce this morning but it's not looking that way so it looks like we'll see what $49.50 looks like on the downside.  $52.10 is our new, upper danger zone but let's see if $50.79 can firm up as a ceiling rather than a floor (isn't it amazing we are even able to say this so soon!).  It will be too bad if oil goes into free fall and we find ourselves light on shorts but let's get through inventory before we go betting the farm on it!

The dollar may have come too far too fast and I'm not sure it has the energy to break 85.5 but the PPI/CPI numbers and the Fed report may prove me wrong.  We'll get our first indicator shortly…

8:30 – PPI up .9% (highish) but the core PPI is a very tame .2% (in-line) but they've adjusted December up – bad for the markets!  This is a mild dollar booster.

Gold will continue to do whatever the dollar doesn't but whichever way it breaks will give us a pretty good idea of the rest of the month.  It is possible that oil collapsing below $50 will trigger a sell-off in gold and a flight to the relative safety of the dollar which will push oil further down and make US stocks look on fire to foreign investors as our balance of trade with Asia improves due to the new exchange rate.  It could happen!

==========================================================

Lots of fun in earnings season already:

LEN had a bigger loss than expected (50%), also on write-offs.  It would be nice if they disclosed what percentage they are writing off as there is no way to tell if it's a one-time event or the first of many but my suspicion is that, if they sell $15Bn worth of homes this year, that would imply $3Bn worth of land and we could assume they have 3 years worth of land ($9Bn) so $300M amounts to a 3% write-off, which hardly seems like enough of an adjustment to me…

Be careful as LEN and othe builders will trade up as the CEO said "IF the current environment of strong employment, low interest rates and a healthy economy continues, AND the market for new homes demonstrates traditional seasonal improvement, we will meet or exceed our 2006 earnings of $3.69 per share."  That's a pretty big IF and AND but the housing bulls are jumping all over that statement and ignoring a terrible quarterly report!

MCD logged a 7.2% rise in global sales, although the stock is already on fire, it may still have a long way to go with those kinds of gains.

SNE/ERIC said Q4 profits more than tripled as sales of high-end phones blew past analysts expectations.  "Sony Ericsson is pretty much in a sweet spot right now. They have cool, attractive models supported by cool, attractive brands," said Neil Mawston, associate director in the wireless practice of consultancy Strategy Analytics."  Yeah, that IPhone will never sell…

In the oil sector:

All the oil companies are approacing a short-term oversold condition but, if this breaks down without a bounce, there is very little support against another 10% correction.  We need to keep in mind that options expire on Friday and all sorts of shenanigans may go on between now and then.

We are going to add TESOF tou our Valero group as they are ahead of the curve (they design drilling equipment)  and a breakdown below $17.50 signals a long-term breakdown in the sector.

CHK and BTU also need to be watched closely for signs of a real collapse.  CHK may just be held above $27.50 into expiration while BTU is having a lot of trouble getting back above $40.

No new plays today as we need to mind the ones we have!

Be careful out there,

- Phil

 


Do you know someone who would benefit from this information? We can send your friend a strictly confidential, one-time email telling them about this information. Your privacy and your friend's privacy is your business... no spam! Click here and tell a friend!



Comments (reverse order)


    You must be logged in to make a comment.
    You can sign up for a membership or log in

    Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

    Click here to see some testimonials from our members!


  1. Phil,
    Was was traveling yesterday, but the new format is great. Wish I hadn’t missed the Goog Spread.
    Teach me from being lazy and not lugging my computer around. 4 hour delay in LAX. Ouch!


  2. Phil,
    LEN is up $1.29 premarket. Is this similar to Centex yesterday. Good put candidate perhaps? Or is the anticipatation of an increase in earnings in 2007 enought to propel this stock higher?

    Thanks,
    SafetyDance


  3. ERIC great Q giving a lift to MOT


  4. Phil, are you going to hold the LEN puts?


  5. For the most part, I’ll be focused on AAPL today. What a surprise. I want to unwind at least half of my AAPL positions before earnings just because it’d be foolish to give up everything if I’m wrong.

    INTC – Perhaps Kramerz and my views differ because of timescale. I’m looking for something that indicates a possible entry point with a relatively long time horizon. http://intc.bloggingstocks.com/2007/01/17/intels-results-on-too-horrific-q1-2007-may-be-a-low-point/ mirrors my perspective although I’m a bit more enthusiastic than they perhaps because I still work with people who build thousands of computers a year for their customers and while two or three years ago it was all AMD all the time, now it’s almost always all INTC all the time.

    In something of a surprise to me, ASML (a semiconductor equipment & materials (SEM)) had an excellent quarter. Up 6% in the premarket. LRCX reports after hours and plays in the same market (although personally I still expect the SEM guys to not have great quarters because they’ve already had several. If they have another, it’ll actually be pretty bullish long-term.

    C reports on Friday and I’ll try and find some time to think about that beforehand as well. I already hold Jan 08 on C and I think they’ll be working hard to improve their performance in 2007, so there should be some upside there if they succeed. If they don’t make progress by the midpoint of the year, I think the CEO gets tossed which would probably be good for 5% on its own at the moment.

    JPM should help push $BKX which means that with AAPL likely on the prowl, we just have to get GOOG moving in order to have Tom2OC’s indicators in full-throated roar. Possibly tough with INTC’s results, but we’ll see.

    AMR and LUV, if you ask me, did fine in tough market conditions and should now do better with the reduction in fuel. Phil’s touched upon this previously.

    Even in this extended rally, there are companies crawling out of the woodwork reporting good results on showing that they’re turning things around. Which hopefully will extend the rally. But it’s still early in earnings season…

    reinharden


  6. LEN – Yes! I’m liking the Feb $50 puts as I wouldn’t mind a DD on them if it goes higher but I’m not taking it as I have enough builder puts that are being crushed by the irrational exuberance.

    ===================================================

    LEN – Never bail into the initial excitement! The Aug $45s are in no immediate danger and probably won’t even drop enough to be worth adding to…


  7. phil what would you advise?
    Buy my 22.5 Feb INTC caller at .2 (sold at .6) or let it run to expiration and risk (low) a run up to 22.5


  8. INTC at the 5% rule already!

    Looking for a chance to take out my AA caller, hopefully .30 or less.

    MSFT up .15 – what do they see?

    THINKING ABOUT (NOT DOING) Offering $2 to take out my GOOG $510 caller // Offering $6 to take out the $500 caller

    DHI – looking to DD on Feb $25 puts for .40 XXX

    Valero rule says get out! There will almost certainly be pain if you hold so only do so if you like it!


  9. IPG – Sold half my remaining IPGAV @ 1.45 (entry was $0.30 back on 11/14). Hope I wasn’t the only one on that ride.

    If IPG breaks beneath $13.85, I’ll likely sell the rest.

    reinharden


  10. phil-are you getting out on yesterday’s tso puts based on vlo rule?


  11. INTC – why give him .20? He’s not in the money at .20 until $22.70 and think how happy you’d be if it came back that far! That being said I’m pretty sure you can buy him out for a nickel but still not worth it…


  12. INTC – oops, you said Feb…. That’s different! Give it a while, sort of set a stop to buy him out at .25, maybe drop that number a nickel as the stock drops…

    TSO – no as it was only a day one entry (1/10th of a position) so I’m going to be happy to DD (which only brings me to 2/10) at $1.10-$1.20, waiting to see if oil breaks $51 and, more importantly, if it slips below $50.79.


  13. RHT – I don’t know who they pissed off last year, but it seems to be everyone. First, it was ORCL offering RHT technical support. Then it was NOVL+MSFT selling and supporting a competing Linux. Now SUNW announces that they’ll be undercutting providing RHT technical support.

    reinharden


  14. Of course selling for a tax loss will buy that time for a value trade, there are other stocks offering much more insight and potential upside than INTC. I dont see the need to beat a dead horse.

    Beating a dead horse is an idiom which means a particular request or line of conversation is already foreclosed, mooted, or otherwise resolved, and any attempt to continue it is futile. In British English, the phrase is usually rendered as flogging a dead horse


  15. Hmm, looks like I was wrong about IPGAV, while I could have sworn I got back a sold, the order was still open. Since I don’t have time to bother with IPG and I’ve got bigger fish to fry today, I’m switching to selling it all at $1.40 (as before, entry was $0.30 back on 11/14).

    And frankly IPG is too thinly traded to wait any longer…

    reinharden


  16. MOT Wondering if the street will react to MOT earnings the same way it did to INTC? even if they make/exceed their “new” numbers?


  17. Could you imagine buying some RACK January 30 Puts yestserday at 10 cents. . This morning worth 9 bucks. . .Incredible. .


  18. RHAT’s mistake was to start making money – got everyone’s attention!

    =======================================

    PTR gettiing clobbered!

    Possibly a good time to pick up some put postions in oil as long as you are prepared to DD and maybe again!


  19. MA making all time highs!
    Happy Trading CROX busting through 51


  20. MOT green .27? I don’t understand, what do these green numbers mean on Motorola? I’m not sure I’ve ever seen that with this stock….


  21. Phil,
    Can you clarify this: Valero rule says get out! There will almost certainly be pain if you hold so only do so if you like it!
    is this all oil puts, regardless of exp. date?


  22. Damn, should have gone with my instincts on Goog!


  23. Anyone every heard the phrase, “Beating a dead cat [bounce]” If not, I would like to introduce that to the trading vernacular. Definition: Aggressively buying a bounce that is clearly temporary.


  24. I liked this one from a technical formation last week, formed a nice cup formation at this time.


  25. MOT, all about ERIC and TA, with better market conditions MOT could have hit 18.50+ earlier. Near term resistance of 18.30 has become near term support here. If AAPL goes green we may have a decent day.


  26. VRule – ah yes to all puts but if you aren’t willing to hold through a tough time why are you buying long contracts in the first place – nothing goes straight up or down.

    I’m personally not selling any oil puts at the moment – $52.10 is a long way away and I dumped plenty yesterday but some people hold on too long so I’ve decided to warn people. Actually I called it on the nose yesterday afternoon when I said that was the bottom on the bounce from $50.79, now we will probably bounce around here through inventories.


  27. Looks like XLE puts are going to have to wait until next week to start paying off. There is some seriously money going into holding up that ETF until Friday. Look at the intraday volume that was needed to get that back up to the 9dma. I would bet it is probably from the same schmucks that sold 132,000 Jan55 puts.


  28. Sorry, I didn’t type CROX. .that is what I was referring to with the cup and handle forming


  29. Hey phil, i’m just wondering about SIRI…..Is it worth buying the Jun $5 for .30 ?????


  30. Continuing to unwind. 40% of my remaining MSFT MSQAK (acquired various date, up 178% overall). I think that was most recently added to in Oct through Dec. With, as I recall, much debate in some quarters.

    AAPL – recovering nicely from it’s earlier lows. $BKX disappointing, a little surprising to me that JPM turned negative. BAC and C currently flattish to mildly negative. Looks like overall we’re still looking for direction. So, thus far, INTC hasn’t killed us.

    reinharden


  31. John,
    I am right with ya! Bought options when stock was at 47 and change!


  32. Just missed AAPL Jan100′s for 1.05, may get another chance. Anything under $1 today on those is good for VERY funny money.


  33. WCI down about 7% from yesterday’s high! LEN may suffer a similar fate.

    I can’t believe Intel didn’t think of that: “If the market improves and if there’s a chip shortage and if the economy is strong and if our input costs don’t go up and we continue to have no competition – then we will have a great year!” INTC would be at $25 right now!

    =====================================

    Oil’s been heading down fast since the NYMEX actually opened.

    SLB was the last group member to confirm the turn and it’s a big one!


  34. Phil, just a couple of things i need some plays on….

    Which is the best SIRI play?
    Which is the best INTC play?
    Which is the best AAPL play? Is it worth buying the calls today into earnings??


  35. “VRule – ah yes to all puts but if you aren’t willing to hold through a tough time why are you buying long contracts in the first place – nothing goes straight up or down.”

    that’s where I was confused, since the puts I have left are a few months out and there’s not that many, so it might not be worth bothering to sell them — that was the question, thanks.


  36. PBR and SU now RED.
    Phil are you looking at some more PTR puts?


  37. That TSO upgrade was a pretty risky bet given the precarious pricing of oil and products. Up over 2% and we have yet to get the $50 test which means it continues to lurk in the shadows as a very real possibility. If we get the test I think TSO’s morning gains which were made on light volume and very quickly will be the first to go.

    The energy stocks have the same problem. They’re discounting a test and bounce off of $50 oil that hasn’t happened yet.


  38. Rein,

    Regarding the MSFT-NOVL agreement, have a look at this: http://tinyurl.com/37xlvz

    It looks like there’s a few bumps to smooth out if that venture is to accomplish anything beyond creating a press release.

    Jon


  39. JOSB on a nice roll – 3% today

    DD on KBH Feb $45 puts for .45 XXX


  40. INTC Apr 22.5′s at .65 seemed like a buy to me….fingers X’d


  41. GE – Is GE starting to resemble something breaking out of a flag or pennant formation? Or, if you’re into P&F charts, you might like: http://stockcharts.com/charts/gallery.html?ge

    I mention SYNA again although I’ve not had time to go dig more deeply into it. As I said earlier, it’s either in the iPhone or will benefit from competitors attempting to match the iPhone by using Synaptics Onyx technology. See http://www.synaptics.com/onyx/

    reinharden


  42. Good morning all!

    BillBigD,
    Good for you on MA and CROX. I didn’t get in on them. FFIV moving again. Looking for entry point.

    GOOG
    Going up!

    RIMM
    Will it find support at 124.5?

    YRCW
    I’m liking this stock! GO!!


  43. MSFT-NOVL – I personally think that the entire agreement was purely FUD on the part of MSFT. They pay a small (for MSFT) fee to freeze the Linux market for a little bit longer. At this juncture, MSFT will do just about anything they can to slow down Ubuntu which is actually threatening to displace them on consumer desktops in much of the developing world.

    Similarly, it makes people think that Linux is more expensive than it needs to be on the server side. If you want to use Linux without being sued, you’ve got to buy it from NOVL. ORCL wouldn’t be supporting RHT if lots of people weren’t deploying ORCL SQL products on it. And MSFT wouldn’t be trying to slow that down if they didn’t have their own Microsoft SQL Server product to sell instead.

    Anyway, now to make some time to go read that link…

    reinharden


  44. ICE
    BillBigD, are you still in it? looks like it’s thinking about making a run up again.


  45. Guest on CNBC says HES should go lower! Good for our Puts!


  46. karmcon – INTC Apr 22.5 @ 0.7 or so. ’cause, you know, I should bought more money where my mouth is. Frankly, I’d like to be a little further out in time, but I’ve not yet had time to track down a spot I really like.

    In the Apr earnings report, INTC will suffer from reduced margin due to start up costs associated with ramping 45 nm production (although they’re forecasting margin will still be around 49% even then). INTC plans for 70% of this costs to be in the first half of the year. So margins will likely improve in the 3Q and 4Q. Also remember that Cal Q1 and Cal Q2 are seasonally week for the semis. That’s already factored into INTC’s guidance, but Cal Q1 is more likely to show progress towards the goals than breakout numbers.

    On the other hand, we’ll shortly get more information about actual marketshare for Cal Q4 2006. Which, if I’m right about INTC taking marketshare back from AMD, will likely get back much of today’s hit.

    Anyway, as I’ve now said too many times, for INTC a lot of the point of 2007 will be eroding AMD and bleeding AMD of their surplus capital. No new fabs for AMD without substantial debt or major partners. ;-)

    reinharden


  47. LEN

    87% owned by institutions. Surely pressuring management to repurchase shares.
    If these funds all bailed at once – look out below!

    Agree with Phil, looking at Feb 50 puts as a low risk play against today’s nonsense.
    Trying to snatch up a few at 0.85 …


  48. My account with OptionsX just activated, logeed on no streaming quote feed? Anyone else having trouble?


  49. My optionsxpress account is working perfectly this morning.


  50. When you first log on, go to the very bottom on the mini feed. There is a small link that says “streaming quotes”. They also have live help.


  51. SIRI – just buy it and sell puts when appropriate – .20 a month on a $4 stock is a lot of money! If you get called away, so what? You could drip it for safety (buy 1/12 of a full position each month so you roughly pay the avg for the year).

    INTC – have to wait it out, then maybe a Jan ’09 leap and a lot of patience!

    AAPL – The Feb $100s for $3.70 and selling the Jan $95s for $3.60. Your risk is the $1.30 between $95 and $100 through Friday minus whatever premium you will still get for having an extra month. It only costs you a dime and if Apple tops out around $95 to the end of the week it could be a $1.50+ return. XXX

    ==========================================

    Ilene – I hope you mean it’s clear now! As long as oil doesn’t go over $52.10, I’m not even concerned but they will pump the stocks for all they’re worth and we may have to DD or change brackets at a certain point. I just went through this with LVS and finally got back to even today.

    =============================================

    PTR – no, I’ve still got half of the Feb $130 puts and, since my basis is -$4, I’m pretty comfortable at $121 for now!

    SU, on the other hand could be a major winner and I still endorse the Feb $65 puts we have for $1 (up .07 from a DD basis) this one is a definate roller but oil cracking into the $40s will freak this stock out. Then, when SU goes down, nat gas will dive like a stone as the tar sand producers are the biggest consumers of natural gas in north america! If they fail $72.50 again the puts might make a nice pick-up.

    The dollar was rejected from 85.5 again and gold is bouncing and that’s holding oil up today (if you can call down .30 being held up).

    =================================================

    The precarious pricing of oil products! Holy alliteration Zman, you’re right! 8-)

    =================================================

    CNBC says Feb options expire today??? Z – is that right? They could be in for a nasty afternoon sell-off if that’s true but then we can expect a massive pump job on the March contracts tomorrow.


  52. Bought KBH FEB45 Puts for .45 here.


  53. I was out for a couple of days

    Just got back and see the nionsense in the oil sector continue.

    Crude is down again, yet TSO is up like a tech stock in 1999. What’s going on?


  54. Rein, I think most of the selling in INTC right now is the “fear factor” reported in the media. At 7am I heard a radio report saying INTC’s earnings were down 39% this quarter!

    I expect a lil pop if VISTA really exists and is released (I saw the demo from CES and the lil 3D buildings that popped up for the “get directions” feature were downright reminicent of the Flight Simulator graphics from the 80′s!!)

    Ramp up to 45 nm not a concern to me as 90-100% of those costs are capitalized.
    Typically amortization/depreciation wont begin until a product able to be sold is created so margin erosion shouldnt be an issue


  55. am out of oil puts since yesterday
    any hot recomendations for like right now?


  56. LEN

    OK, I’ll pay 0.90 for those Feb 50 puts … c’mon, please? :)


  57. P – Nope. Crude on 1/22; nat gas on 1/29.

    Soccer – TSO caught an upgrade from FBR this am. Guess their west coast differentials are treating them all right on the cracks. Gasoline in shorter supply in Ca than in rest of the country. I say give it a day and it’ll realign with the group’s direction (whichever way that is!)


  58. GLW
    Any solid reason for a 3.7% slide?


  59. Much as I love INTC – it is only being held up by the 5% rule.

    ===================================

    SYNA – I’d rather wait until 1/25 earnings as they’re not going to be able to say they provide IPod guts and they need 25% grouth just to make the quarter (which they should get).

    ===================================

    RIMM – I can’t believe my putter is in the money!

    ======================================

    Wow! They are about to vote to give Chavez the power to rule by decree. That means he’s effectively the King and can bypass congress to do whatever he wants! This will be interesting…


  60. Oops posted in the wrong posting…reposting here.

    #####

    FWIW, I’m not sure that I agree with Lehman’s on RAM prices (Samsung and , although I do agree on FLASH prices. I’d say that MU is probably a better private equity play than a company performance play: 2.1B net cash, 8.4B EV, 1.78B EBITDA. That’d support a lot more debt than the current 568M.

    Which is why MU is on my list to go hunting for a longer term position after the Jan options expiration…

    By the by, Samsung is the #1 manufactuer of RAM. QI (Qimonda) is #2 (and nobody has heard of them). After it’s diversification into FLASH, MU has fallen to #4 in RAM. [I think Hynix i #3, but I don’t remember for sure…]

    If a lot of people upgrade to Vista, they’ll be buying more RAM soon thereafter. ;-)

    reinharden


  61. FXI
    Phil,
    Sell the Jan 106′s for 1.5?
    Thanks,
    JB


  62. Chavez’ oil minister said they’ll be going for a minimum of 60% working interest in the Orinoco Belt heavy oil projects. That rule by decree just accelerates his ability to “make it so”. XOM will be in the Hague over this as that’s a flip from their current position and outright thievery.

    This is somewhat positive for oil prices since the guy couldn’t run a Jiffy Lube let alone a major oil state.


  63. LEN

    Feb-50 put

    Looks like I let this trade get away from me, by trying to save a nickel!

    Darn it!


  64. Phil, I am 19 years old. I just made a good amount of money off my aapl calls. I have one question though. Where is the best place to get news about the oil/energy sector?


  65. Happy Trading,
    Bought a little ICE this morning on the MER upgrade. Only have a 20% play as I did get a little shaken on Cramer’s sell sell last week.


  66. Prof,
    I got 5 Len Feb 50 puts at .95 so I should keep em?
    B


  67. Jon -

    MSFT-NOVL – I just read the article, pleased to see that it mirrors what I say (although they’re using different data points). Thanks for the pointer.

    reinharden


  68. Ryan, many of us swear by starting our energy day at http://zmann.wordpress.com/

    reinharden


  69. LEN taking a dive!

    ============================

    FBR upgraded to “outperform” by FBR. Outperforming refiners will not be a big trick this year! Interestingly, FBR downgraed them on 12/18 (at $72 – I kid you not) citing: “a slowing demand, oversupply and other factors.”

    Analyst Jacques Rousseau cut his rating on Holly and Tesoro to “Market Perform” from “Outperform.” He noted each stock has climbed about 25 percent since the beginning of October.

    “Additionally, we are lowering our 2007 margin forecasts, earnings estimates, and target prices for the refiners due to our view that average demand growth should be more than offset by rising supply, which will be aided by a 40 percent increase in ethanol capacity,” wrote Rousseau.

    Slowing demand, seasonal issues and rising refined oil inventories, combined with increased demand of ethanol as an alternative fuel, are likely to pressure oil prices ahead, the analyst wrote.”

    At the time, oil was trading at $65 and now the same firm issues an upgrade??? I would say it’s a scam but I can’t even figure out this scam…. Other than looking like idiots – what do they have to gain?

    ===========================================

    GLW, just dropping with the Nas but that’s why I sold the Feb $20s, seemed like they weren’t going to get past it anytime soon.

    ==========================================

    =============================


  70. Wow in 1 hour period VLO up 100% (was up .5, now 1.0+


  71. New to the site, LEN Lennar on conf call I (51.13 +1.41) -Update-

    They have not yet seen improvement to market conditions to date. They note that seasonally, this is a slow time for the indutry. They believe that the next 6 months of year should bring more credible reading as to where mkt is heading. Co continues to look very short term. They also continue to expect balance sheet improvement going into 2007. They are maintaining very low inventory levels. As they look ahead to 2007, they have set a goal of achieving flat earnings at $3.69 a share. They “put forth a goal at this point and not guidance” as they have in the past. What nonsense this morning, russm


  72. Reinharden- Thank You.


  73. Rein – interesting that you mentioned Ubuntu. I’ve recently installed it on my computers and am pretty happy with it. BTW, that’s 9 copies of vista that MSFT won’t be selling.


  74. LEN

    LL: “sell into the early excitement”

    Phil’s trading strategy for entering positions as a “contrarian” is really good!
    I copied it below for fellow newbie traders.

    Oh well, maybe I can still get some Feb 50 puts for a buck, but that’s my final offer!

    /////////////////////////

    B,

    I’d love to have them at 0.95. But, I’m no expert on options!
    All I know is that today’s rally is REALLY overdone!


  75. It connected – thanks


  76. From Phil’s Strategy section,

    Entering a position:

    I do not generally enter a position when it is moving the wrong direction or if the market/sector is moving the wrong direction. I rarely take a full position right away. Generally, out of the list I share with you, I look for ones that go the WRONG way and then (after I check news and other factors to make sure my assumptions weren’t wrong) see if there is an opportunity to jump in as a contrarian, getting my options cheaper than I planned.


  77. Phil – Re TSO. A month is an eternity for an energy analyst to not have a buy on a stock. I’m sure they checked him into some sort of Sellers Anonymous or other 12 step programs for non bullish oil analysts!

    I’m backdated and up to date on the public site by the way.


  78. LEN,

    Well, bought those Feb 50 puts for 1.00
    At least the calculations will be easy!

    B and others, note that this is play money for me.
    Trying to learn about options and Phil’s trading strategies.
    Best way is to have skin in the game.

    Off to work now, will check back later.


  79. TSO up more than $2 today after being up $2 yesterday.

    I’m speechless


  80. If EBAY blows past 30.50 we’ve got a real winner on our hands.


  81. LEN

    One more note

    5% rule may be in play here

    When LEN is at up +5% for the day, the Feb 50 put has been selling for between 0.90 – 1.00

    This may indicate a good entry point, since LEN is unlikely to go higher for the day.
    At least, one would hope …

    Phil, how am I doing on your trading rules?


  82. FXI – good idea! No harm in selling the Jan $107s for $1, has to go to $108 to cost us money and we are already way ahead on the underlying. XXX

    =======================================

    LEN – nope, it’s coming back. Better to save a nickel 20 times than chase 20 bad plays!

    =======================================

    Ryan, very cool. My biggest regret is not starting a good 401K in college, it would be an extra million now… I think the best place to “learn” about oil is blogging. Zman rules and I link to off the front page and there are lots of other people out there who talk energy. News is one thing but being able to learn how to interpret the BS is what you really need to learn.

    ==========================================

    LEN $50 puts – down a dime and you’re worried already? That means you bought too much. Just lighten up if you’re not comfortable, that way you can DD if it goes against you (providing there’s no good reason for it).

    ============================================

    NYSE and RUT positive, S&P positive – total SOX and Nasdaq led disaster today!


  83. lars – I consider Ubuntu the single greatest threat to Microsoft’s desktop dominance. If Ubuntu can continue it’s current rate of development, it’d pass the Grandmother test in another 18 months or so. Right now, it requires a clueful Grandmother to use it out of the box; but by then I expect that any Grandmother could use it for email, web, and MSFT office style documents. A few years after that, Microsoft Windows stands a substantial risk of being “FireFox’d”. ;-)

    What’s really fun with Ubuntu is throwing WINE or CrossOver on it and running a reasonable collection of Windows applications *without* a Windows install. You don’t get all of the Windows, but the list you get is growing everyday and a fair number of games are already on that list.

    My primary laptop, an Apple MacBook Pro, boots MacOS X, Ubuntu, and Windows XP at the moment. But I mostly run Ubuntu (and a few other Linux’s) and Windows under emulation using a product called Parallels (which, alas, requires a Windows install). But this allows me to operate in nearly every environment that my clients do from a single laptop.

    Anyhow. MSFT isn’t going anywhere for awhile. Nor is AAPL. And regardless of the operating system, it’s all but certain to be running a processor from AMD or INTC. And increasingly, on a hard drive from STX (oh, okay, or WDC or Fujitsu or Hitachi). And for the next few years, probably with a graphics card from NVDA (or less likely AMD).

    reinharden


  84. Phil- Thank You. I appreciate that.


  85. Phil, if you’re going to call me a daytrader for calling GOOG’s move yesterday a meltdown, what do I call you for calling the NASDAQ a disaster? It’s off 0.26%!

    That’s flattish to me.

    reinharden


  86. Phil,
    Are you hanging on to your XOM Feb 70 puts? Down 25% today.
    W


  87. CAT – hello phil – what did you do to CAT.. it is moving in style !


  88. AAPL is likely to break one way or the other in the next little bit. It’s been stuck around 96 to $96.10 since 11′sh and is running into trend lines on both the 1 day and 3 day charts.

    If you’re a day trader… ;-)

    reinharden


  89. Anyone ever watch “WallStreet Warriors” on InHD? Interesting show as they follow bout 5 people in different levels of day trading and/or M&A. I love the Russian guy, Wall Street wouldnt hire em with a degree from Russia and so he drove a cab and started on his own. Now multi millionare, but very humble and appreciative of the USA and its opportunities.


  90. Thanks Russm – good to know!

    Thanks Prof – good advice by that Phil guy! ;-)

    5% rule – almost right – it’s a logical pause point but, if it breaks it like INTC just did – watch out! The most important thing about the 5% rule is that a 1% pullback off it is meaningless – that’s key. When you get to 5% at EOD, you have a pretty good idea the next day won’t go well (or will go well on the upside).

    One thing I’ve noticed with oil is that the more 5% moves something makes, the more the 2.5% marks start to firm up. I think that is because you now have people who called tops or bottoms at varios 5% levels and as they overlay each other, the 2.5% points start to become equilibrium… Isn’t math fun!

    Great Z – I’ll get that fixed up later!


  91. Ryan – Phil is exactly right – interpretation is key. My morning comments can now be found here:

    http://www.philstockworld.com/zman/

    For a more detailed discussion on energy as well as lots of cool charts and graphs check out:

    Shameless plug: http://zmann.wordpress.com/


  92. rein if you were playing just the aapl earnings today which side of the trade(s) would you be on?


  93. STX looks like it’s about to take out it’s last 9 months high of $27.33. Been stuck just beneath there forever today…

    reinharden


  94. If I were going in naked to AAPL with no other considerations, I’d be long.

    reinharden


  95. Nasdaq – you’ve got me there but I mean in that it’s singlehandedly destroying what should be a nice moon shot for the market. It’s the single engine failure that can spin this whole ship out of control so the correct phrase is “disaster in the making.” It’s kind of like going 100 miles an hour and one of your tires looks like it’s about to blow out – call it what you will but you’d better watch yourself around the turns!

    ===========================================

    XOM – these are rolls of rolls of rolls so I’m looking forward to DD when they are down 1/2. As I said this morning and yesterday – holding on is not for the feint of heart at this point.

    ============================================

    CAT – well I bought out my caller so that gave them the all-clear to take it back up! What “THEY” do is bring it back up to $60 so we can catch all the Feb callers now, then they let it pull back again. Also, the positive builder move in Japan (and now here) is great for CAT.

    ============================================

    Yes – Dow positive! Hold on to your hats kids, this is going to be wild coming into the beige book at 2!

    ==============================================

    Oil backing off $51.50 – beware close of Europe pump.

    ===============================================

    Now I am taking out my Google callers! XXX

    ===============================================

    Nat gas collapsing on chart – down .28, almost 5%!

    CHK Feb $27.50 puts for .60 are nice XXX

    ==============================================

    LOL Rein!

    ==============================================


  96. STX – need some Feb plays to encapsulate it’s Jan 23 earnings report.

    Now that it’s broken through the 9 month high…

    reinharden


  97. Does anyone have a contrarian view on the effect of AAPL price after earnings. With so much Open Interest on January options, perhaps the stock won’t move much at least until Friday or a quick swing pre-market.

    Here is a list of calls for Jan with Open Interest

    90′s ~ 90K
    95′s ~ 86K
    100′s ~ 112K
    105′s ~ 29K


  98. Truly mad, mad money thrown at STXAY (Jan 07 $27.50) for $0.20 [don't try this in the home game...]. Now looking for something in February.

    reinharden


  99. Is it just me, or does anybody else think right now the Big Boys are propping up the markets with light-volume during lunchtime?

    Hope I am wrong!

    John


  100. Yev, what are the AAPL Put’s open interest?

    You need to compare and contrast to truly encapsulate the market sentiment.

    reinharden


  101. NICE day for ICE and CME. Took some off on MA


  102. Commercial real estate is so hot that almost bankrupt MLS is being bought by BAM for a 20% premium!

    =============================================

    AAPL – you can spread the Feb $100 calls for $3.30 with with Feb $90 puts for $2.10 and hope for a 10% move in the stock but I wouldn’t take a naked Apple position, there are just too many people who will be looking for any reason to take them down.

    ==============================================

    OOPS – should have taken ECA rather than CHK! Not going to chase it now…

    ==============================================

    STX – I will be very surprised if they break $27.50 before Friday.


  103. According to Cramer’s latest Real Money blog:
    “There’s a quiet bull market going on right now in retail….To me, this move could have legs. That’s because nobody’s behind it. That’s the best kind of move. Most of the analysts I talk to in this group just don’t believe the move can be sustained.

    I believe they’re wrong. These moves are happening in a vacuum and you don’t get the earnings reports until the end of reporting season. By that point, it might be too late.

    Find your fave now. You know mine’s Sears. But Costco’s a strong No. 2. J.C. Penney is still in a secular advance, and Saks could still sell itself. ”

    Do we think there is something to this? Any trades we should look at?


  104. By the by, I’m selling STXAX (STX Jan $22.5, to be sold at $4.80 or $4.90, acquired back on 10/26 (hope ya’ll played as well), up ~200%) in order to pay for the STXAY and whatever I get in February…

    AAPL’s back on the trendline.

    reinharden


  105. Someone need to tell CTX and LEN>>>>Sales of new and existing homes will continue their slide this year, due largely to investors pulling out of the housing market, mortgage-finance company Fannie Mae said Wednesday. In an economic and housing outlook, Fannie Mae said sales of new homes are expected to drop by 7.1% in 2007, while sales of existing homes are expected to drop 8.1% this year. Fannie economists said the projected sales for 2007 would be the lowest since 2002. The two-year drop in sales during 2006 and 2007, the economists said, would be the largest since the 1989-1991 housing downturn.


  106. Phil
    I took earlier my Feb INTC caller thanks
    great call on CAT -took out caller afew days ago and bought feb 60 calls… thanks

    Now looking at taking my SNDK Feb 45 caller at 2.2 (sold at 3.3)? makes sense or not?


  107. Phil,

    Any DIA play now that we’ve broken/playing around 12600?
    Still have those DIA Jun 124 calls to sell against.


  108. Phil, I don’t *expect* STX to break $27.50, especially not by $0.20. But in my risk/reward category, it’s acceptable. Especially as it allowed me to roll out of the $22.50′s without fear. And I just got $4.90 instead of $4.80, so that paid for half anyway. ;-)

    Still looking for February’s STX play.

    reinharden


  109. Rein, sorry here it is

    My concern is so much optimism, same thing as last year. Although the uncertainty of Intel transition is gone, the sky is clearer, but is all this optimism already built in. Everyone is screaming 100, I feel like dejavu.

    Here is a list of Jan with Open Interest

    Calls
    80′s ~ 57K
    85′s ~ 64K
    90’s ~ 90K
    95’s ~ 86K
    100’s ~ 112K
    105’s ~ 29K

    Puts
    80′s ~ 77K
    85′s ~ 70K
    90’s ~ 70K
    95’s ~ 44K
    100’s ~ 16K
    105’s ~ 1K


  110. BTW, AAPL just broke beneath the trendline…although the volume is pretty anemic. But be careful…

    reinharden


  111. Phil, definitely clearer, maybe mostly clear, but I like to leave room for more questions just in case.


  112. MOT up $0.46 !!


  113. Oil stocks are a breed apart……whole sector I follow all red for 8-9 ticks then all green for 8-9??


  114. Retail – never chase a Cramer pump!

    ======================================

    SNDK – until I see something from the SOX, I’d rather have the protection.

    =======================================

    DIA – I have June calls and puts, waiting for the Jans to expire, then waiting to see which way the wind blows next week.

    ========================================

    STX – oh as a roll – I can’t believe you didn’t do that sooner!

    =========================================

    LVS looks like someone splashed some cold water on it!

    I have to consider selling the Feb $95 puts for $2.05 against my March $95s ($3.10) since I am still down $1.05 on my March $85s and they act as sort of a pre-roll if the stock tanks. The only bad part is that it limits my upside, which I still strongly believe in…


  115. Phil,

    What do we do with the HPQ Feb 45 calls (In at .55 on Tuesday)? DD?


  116. CTX – higher than yesterday’s stupid spike! I like the Feb $50s for .85. XXX


  117. AAPL – http://www.iqauto.com/cgi-bin/pain.pl says MaxPain is back around $75/$80. Gulp. Good thing I don’t believe in MaxPain.

    There is a lot of enthusiasm. And Apple historically guides low in their fiscal Q2 (Cal Q1) because it’s seasonally weak.

    So there’s definitely risk.

    I’ve laid out my AAPL case (endlessly some would say) and while I’m as confident as I can be in my analysis, it’s all just analysis. If any of the gathered facts are wrong the entire thesis could be wrong. And heck, my analysis in and of itself could be wrong. At the end of the day, everybody’s got to make up their own minds and do their own thing.

    Also consider that, this year, I’ve already made enough off of AAPL to not need to work for another year. So, if I’m wrong, it’s not going to hurt me that much. In other words, my AAPL plays have already paid for themselves. Nevertheless, I’m tightening my positions so that the risk/reward ratios make sense to me.

    Phil’s a lot better at conservative, profitable plays than I am. His suggestions are likely the more logical for most people.

    On the other hand, you’ve got to remember, I was asked a pretty explicit question.
    “rein if you were playing just the aapl earnings today which side of the trade(s) would you be on?”

    If I had a $1000 with which to speculate and I could afford to lose it, I’d definitely be long. If I were investing (aka capital preservation is a paramount consideration), I’d have to look hard at Phil’s suggestion.

    reinharden


  118. HPQ – I don’t generally DD on a roll (unless its an oil put!) the idea of a roll is to protect your profits from the earlier position, doubling down defeats that purpose by putting your money back at risk. Also, the idea is to DD the same number of contracts for 1/2 your original investment (when the contract loses 1/2). That way you are in for a price that’s 25% less than you originally liked it at and down 25% – if that isn’t going to make you comfortable, you should be getting out.

    It’s easy to say you still love something when it’s down 20-30% but if you still love it when it’s down 50% – then that is true love and you can make a commitment with an open walllet…


  119. Look at todays BA chart. NUTS!!


  120. Jeff and I have been out of commission because of an econometrics final exam (I’d rather read this blog over again 1000 times rather than study for an hour)….what’s the play on INTC and AMD. Long/short pairs trade?


  121. Happy Trading,
    Saw this on Phil’s sister site. Apha
    Notable Calls submits: Couple of conflicting notes on Intercontinental Exchange (NYSE:ICE):

    - Wachovia is downgrading shares of ICE stock to Market Perform from Outperform rated. Firm believes that the stock is now adequately priced versus being undervalued when they first launched coverage of the company on November 26th.

    While they are not calling for a reversal of the positive fundamental trends, they believe that the stock is priced with high expectations which could disappoint and lead the stock down in the near term. Wachovia believes that investors have priced the stock for immediate high volume enhancement of NYBOT and continued hyper growth in the OTC business. Thus it is difficult for them to recommend investors invest fresh capital into the story at these levels.

    Firm is raising their 2007 and 2008 estimates to $3.37 and $4.50 per share to account for full accretion of the NYBOT deal and also more robust oil futures trading. They believe the shares should trade between $135-140, or 29-30x 2008 earnings estimate.

    - Goldman Sachs believes the market continues to underestimate the growth potential in ICE’s volumes and see 28% of upside in the shares to firm’s new DCF-derived 12-month price target of $165 (30x ’08E EPS). They expect the electronification of the NYMEX, ICE OTC, and NYBOT markets to continue to drive upside to volume estimates and propel strong year-over-year growth. GS’ new 2008 EPS of $5.50 is 43% above consensus and 10% above the next highest estimate. They believe the risk reward trade-off remains favorable on ICE with a 2:1 ratio of upside to downside based on bull case 2008 EPS of $7.00 and bear case EPS of $3.85.

    The Street remains overly conservative on volume growth, in firm’s view, and they expect significant earnings revisions in the coming months. Though they believe many investors already focus on the more constructive Street estimates (between $4.50 and $5.00), the firm expects that an elevated consensus number will reduce the risk of downside in investor’s minds and provide further impetus to capture the skewed upside optionality of such high volume growth rates. They expect their price target to be achieved within the next 12 months.

    Notablecalls: While WACH’s downgrade will likely knock the stock down, I think GSCO’s comments may help it to rebound. I’d go as far as to say that GSCO’s comments trump WACH’s dg.


  122. STX Roll – Phil, I have to admit that I don’t roll as often or as quickly as I should. But, as I also had STX (the stock) in my long-term portfolio (and thus sufficient exposure for the long-term) and as I was disappointed with STX’s failure to advance back in December, I decided to simply hold the Jan $22.50′s longer to see if it’d take another shot at the Dec highs. But with STX’s volume a touch below average, I’m thinking that I’m going to hold off on the Feb’s a day or two.

    AAPL – Now well below the trendline with somewhat increasing volume on the minute-by-minute chart.

    reinharden


  123. Hey Phil, what’s the impact on the DJIA today with INTC being down 5%? Talk about prohibiting takeoff!

    reinharden


  124. There is often panic selling into Apple’s earnings.


  125. The Dow is weighted, if you can believe it, soley on the stock price of the component, it has nothing to do with market cap. So the .32 rise in XOM at $72 would offset the entire $1.20 drop in INTC.

    See: http://usmarket.seekingalpha.com/article/18041


  126. BillBigD,

    Thanks for the info on ICE!


  127. STX – Well, drats, since somebody showed up wanting STX with some volume, I went ahead and picked up the STXBE (STX, Feb 25). About $0.30 to $0.35 time premium at the moment. I may add the Feb $27.50′s closer to earnings.

    reinharden


  128. STX hit 27.50 – just for a moment.


  129. DJIA/INTC/XOM – I guess I keep blocking that lunacy from my head. Although I remember it every time someone talks about adding BRK.A to the Dow Jones. ;-)

    reinharden


  130. Why no suggested Intel puts since it looks as though the news will continue to be negative?

    BBI now at $6.60


  131. SINA
    Something has to be going on, right? This thing might get a 10 point jump one morning when the news comes out.


  132. Karl – Kramerz and I have agreed to disagree about INTC. ;-)

    But the short version is whether this is an overreaction to a reasonable quarter in bad conditions and therefore a bottom or whether, as you say, the beginning of more bad news.

    Probably too early to say.

    reinharden


  133. Phil
    why not play INTC as income producer?
    buy now Jan 08 22.5 calls and sell against thru out the year when stock recovers?


  134. OII remains the bounciest oil play – we need to keep that in mind next time we are looking for a cover play.


  135. AAPL – The one day price chart on QAAAB (AAPL Jan $110) is pretty hilarious. The market can’t quite figure out how scared it is of the earnings report.

    Perhaps a (short-term?) bottom at $95.63? Perhaps a positive as it was higher than the earlier bottom back at $95.52?

    If I were thinking about playing AAPL long, I’d think about a partial position round about now.

    reinharden


  136. AAPL – hello phil just wondering why we cannot buy some AAPL JAN Puts instead of Feb puts as insurance
    for any possible sell-off.


  137. also looking at stx. like to see it break $27.50 on big volume. looking at feb. calls. good looking chart.


  138. INTC – timing is everything with an income play. If you buy it now you risk a further sell-off (and if you don’t think that can happen I’ll sell you my 3 rounds of Microsoft calls from April May and June of last year) and you get the least possible money from your caller as the sentiment is very negative.

    When the tide turns, you just need to pick a good entry point as the close month sentiment picks up much faster than the leaps so you take advantage of a larger time value spread. Picking the right price point is key too. That’s why, for example, I bought out my BA Jan caller but am still waiting to sell the Febs, I can afford to wait for a bounce and, if I don’t get it, I can always bite the bullet.

    You’re the one with time on your side – use it to your advantage. Think of your own experiences and how pinned down by expiration dates the close callers get and how desperate they are to buy and sell before something gets away from them – that’s what you use to your advantage when you’re the leap holder.


  139. Prof,
    LEN
    I only use money I can afford to lose and I am willing to pay for (too often…) my lessons. Thanks Rein for adding the letter designation to your call/puts.
    B


  140. STX snuck a tick across at $27.50… ;-)

    reinharden


  141. AAPL – the Jan puts will be worth 0 the second it opens tomorrow, even if it’s negative until the stock crosses and puts them in the money. So if Apple flatlines at $95 after earnings (a possibility that wipes out all Jan option holders) then your $95 put will be worth 0 while the Feb $90 put will still fetch $2. If Apple goes down to $90, then your $95 put will be $5 but I’ll bet the Feb $90 put won’t be too far behind it.

    If Apple goes up to $100, the Feb $90 might still fetch a buck – obviously, not the Jan…

    When you are buying an insurance policy, it is nice if it has some residual value!


  142. Nice comeback for RIMM at least for now.


  143. anyone have any resources for charting individual options not just underlying symbols? I have yet to find anything.


  144. STX – here’s an interesting play.

    You can buy the Mar $27.50 for $1.45 and sell the Jan $27.50 for .20 (maybe .25). Then, on Monday, you can sell the Feb $27.50 for $1 or more (assuming it stays around here).

    If it goes down, you can DD or roll to March. If it goes up, you pay the Jan fair value -.20 premium or roll him to Feb for nothing out of pocket. XXX


  145. Phil – when you bought out your Google Jan510 caller did you execute your next leg – selling the Feb510 or are you holding out for a better price?


  146. Phil,

    “CTX – higher than yesterday’s stupid spike! I like the Feb $50s for .85. ” YOUR comment from today’s portfolio page. From context I have construed when you don’t say put or call that you mean call, but this one seems to make more sense if it is a put. Can you elaborate, please?

    Thanks,
    N


  147. AAPL may be consolidating to the upside through a downward trendline from this morning’s high.

    Not, mind you, that I advocate day trading.

    In any case, AAPL is definitely getting squeezed into a flag/pennant formation. If it doesn’t break to the upside, we could be in for some subsequent unpleasantness. Although there’s lots of theoretical small support levels just underneath the current price.

    reinharden


  148. RIMM nice bounce.

    j


  149. AAPL – thanks phil. Now I know why I was NOT making money with earnings plays. I will blindly follow your feb puts. wish me good luck :)


  150. Ivan, I can chart options on TradeStation.


  151. What’s a matter UPL? No go on a go-go day. Maybe someone noticed nat gas is off 4% today.


  152. RIMM
    Going green! I think the smart shorts have covered. Let’s see if smart bulls can get a squeeze going.


  153. DJIA just lost 12600… :-(

    reinharden


  154. Phil, have the oii feb35puts. should I dd on these? I believe earnings are at the end of the month.


  155. Phil, I like the STX Jan/Feb/Mar play. Brilliant.

    Alas, I have some positions in conflict with it that would cause my broker a conniption fit. But it’s a lovely thing.

    You probably need to write a FAQ entry somewhere explaining how the increase in price in the underlying issue will lead to an increase in volatility and that a longer-term option will benefit disproportionately to a shorter-term option and thus you can make money on the longer-term option even if you have to buy out the shorter-term option. Usually.

    That took me a while to wrap my head around when i first encountered it. And it’s still somewhat counter-intuitive to me.

    reinharden


  156. Ivan,

    Who’s your broker ? I use IB for my charts and you can get decent displays. But even free E*TRADE will let you chart the option symbol AGAINST the underlying… here’s QAAAP (AAPL Jan 80C)

    https://www.etrade.wallst.com/v1/stocks/charts/charts.asp?symbol=QAAAP&rsO=new

    Curious — How would YOU use the option chart without the underlying ?


  157. I use ameritrade – have been with them before i got into options.


  158. STX – earnings on 1/23 – i assume this adds to enticement of the play


  159. RIMM, what a nauseating stock to own!

    ==========================================

    Charting options – I use options express but I get little out of options charts as they are thinly traded and tend to spike for no discernable reason

    ==========================================

    Huge super mega oil pump underway. Dollar down ahead of beige book, oil at $51.72 (up .50)

    ============================================

    My usual oil site isn’t working but NYMEX direct shows 122K contracts remain open for Feb delivery. I think they are trying to test $51.79 again but if today is really the last day, I don’t see how they can sustain it.

    March is up to 348Mb – a real lot. April stands at 84M but June is already 93M at $53.69

    Since March is $51.96 that is likely to be the upper possible close for Feb because what fool would take delivery in Feb when they could get it in March for the same price (unless they thought there was no way they could get $51.96 for it at retail in March… hmm).

    Contango (the spreads between the months) is down to .40, it was $1 at the beginning of the month.

    Take a look at this page if it lets you in – a very grim view of the March contract, about to go live:

    http://www.nymex.com/lsco_fut_condet.aspx?product=CL&month=Mar&cmonth=H&year=7&currPrev=C

    I think CNBC is wrong about the settlement day being today – NYMEX rules are:

    “Trading terminates at the close of business on the third business day prior to the 25th calendar day of the month preceding the delivery month. If the 25th calendar day of the month is a non-business day, trading shall cease on the third business day prior to the business day preceding the 25th calendar day.”

    That seems to me like Monday could still be under this contract but CNBC has been saying all day that today is the termination date – very strange since they are standing right on the NYMEX floor and you would think someone there would know…


  160. Phil,

    Look at upper right hand corner of this graph. Feb crude expires 1/22/07.

    http://tinyurl.com/37mtd6


  161. The FCC just said that they could not approve a SIRI/XMSR merger under current rules.


  162. Phil,

    My oil quote shows thusly @14:02 ET, note Last Trade Day:

    Symbol Last Change $ Change Open High Low Volume Open Interest Date LTD
    CLG07 51.40 +0.19 $190.00 50.95 51.85 50.60 276095 121879 01/17/07 01/22/07


  163. Goog – holding for a better price (hopefully not foolishly!).

    =============================================

    CTX – oops – yes I meant puts! Thanks, I do mess up sometimes…

    =============================================

    LOL Angar – I hope it’s for the better. In the valley of the blind, the one eyed shall be king I guess…

    ===============================================

    RIMM – I still refuse to give my putter .90! He’s going to have to earn it…

    ================================================

    OII/any oil – I’m not touching them until inventory tomorrow. Let it play out. Take the XOM Feb $72.50 calls for $1.90 if you are worried about losing more. But there’s very possibly going to be a run up into inventory tomorrow and who knows what kind of shenanigans after. We have 30 days for this nonsense to play out on the Febs and doubling down can also mean taking another play in a different bracket (like I did with LVS – now way ahead).

    Had I not been patient and waited to be well and truly screwed on my March $85 puts, I would not have had the money to buy the now very far ahead March $95 puts.


  164. Painfully dull but at least we’re not in the pattern of what’s high drifts higher and what’s low drifts higher too.

    I’m amazed at how much direction the rest of the stocks take from XOM. Their volume is huge today (almost 22 mm with 2 hours to go). They report 2/1 and they’ve almost gotta warn before then. Again, virtually no change in estimates over the last 90 days so unless they do something completely different than the rest of the majors it’s gotta happen.


  165. Beige Book Comments. .Any thoughts? From the minutes it looks like they realize economy is slowing down, might rally here, but could be a headfake. .


  166. Crude 1/22 – right, that I can believe. I thought Friday but Monday makes sense – CNBC got me worried today – the weather girl (or whatever her training is) is standing right on the NYMEX floor surrounded by 300 traders saying that today is very active because the contract rolls today and nobody questioned her all day!

    Like I said to Ryan, it’s not about getting the news, it’s about realizing that the people giving you the news don’t know any more about it than you do.

    ============================================

    FCC is unlikely to do anything that would make Howard Stern happy. I think an arguement could be made that this is none of their business though. Perhaps one would be forced to give up a broadcast liscense.

    SIRI and XMSR in a power dive over that statement though!

    ============================================

    Beige book had very low inflation look ahead, we could be gearing up for a nice rally if the big boys come through for us.

    ============================================

    Steve Balmer, the man who created the Zune is dissing the IPhone on CNBC!


  167. Phil, like that stx play. Thanks. By the way earnings are 1/23.


  168. Think it was Clear Channel and the Cox sisters not the FCC making that decision lol


  169. Phil, I get it now, CL Feb _options_ expire today. Just looked at my commodities quote side…


  170. AWH SHUCKS REIN, guess i cant see the forest through all those trees!
    TIMBER!!!!

    INTC is a sit and wait situation, if you can move the stock by all means, if you choose to buy and sit on the stock then by all means. I would advise anyone to listen to the CC and if you come away with positive sentiment towards INTC then by all means.
    I choose by battles carefully, some say well i look at the coming quarters and see the light, well then by all means buy it now.

    The over exuberance that i witnessed yesterday toward INTC just because they have the technology upper hand is disturbing. It shows me a lack of respect towards markets that do have the power to dictate stock price.
    By all means be the rebel, this just shows me the lack of maturity and patients to trade a troubled stock. AGAIN HERE WE ARE BEATING THAT DEAD HORSE.


  171. Phil, would you long QQQQ at this point if I do not have any position in tech at the moment? Thanks


  172. Rein,

    When you say

    “You probably need to write a FAQ entry somewhere explaining how the increase in price in the underlying issue will lead to an increase in volatility and that a longer-term option will benefit disproportionately to a shorter-term option and thus you can make money on the longer-term option even if you have to buy out the shorter-term option. Usually.”

    Isn’t this just what delta tells you? Or am I missing something? (which is the usual explanation)

    Now, personally, I prefer gamma… ;)


  173. Wow – if you want to see option pinning in action, check out Ebay jamming back to $30!


  174. LEN

    Trying to DD at 0.90 for Feb 50 puts

    Last trade 0.93 – sellers are stubborn!


  175. 12,600 is uncharted territory and i would be most careful in taking any news positions. I would compare it to being a foreigner in a foreign land, may look like a nice neighborhood, but at any moment someone can come along club you and take your wallet.


  176. LVS cutting in loses in 1/2


  177. HPQ looks like its pretty much set its course for the day. any chance you think it will bounce back any today? also how great do you think IBM’s earnings will directly effect HPQ. thanks to all who input


  178. Phil, thanks CHKP very nice!

    j


  179. AAPL – Where dose it open in the am, any guesses?


  180. The long QQQQ is a good tangential Apple play as we can assume Apple will jam the Nasdaq higher if things go well. Intel might actually be done going down by tomorrow but who knows what Google is planning. On the whole, it’s very dangerous right now to try to guess what will happen this week.

    CPI will bang the markets tomorrow and should be lower than expected due to nice fuel drop.

    No one is liking an oil recovery except oil stocks, it’s up $1.05 at $52.25 in one of the biggest pumps we’ve had in ages, possibly the biggest on a percentage basis! Let’s remember this is now testing the $52.10 danger zone and we close in just a few minutes.


  181. JK looking at the 5 day chart there is support here from the 16th, i would expect a close in the 42.60 range seeing how it broke to the downside at that price this will become short term (this days) resistance good luck


  182. My own opinion on the INTC battle is quite simply that Intel are pefrectly positioned to pound AMD into the ground this year. For that reason (and Vista) I shall be going into the Jan08 when the time is right.
    TBH my only real worry for them is that I highly suspect WiMax to be a complete failure – a total write-off.


  183. Gamma, not to pick on anybody, but if you noticed, yesterday someone asked what the float is. I figure that Phil has a wide variety of customers of various levels of knowledge. And when he suggests something like the STX play, for some, that’s likely a confusing play and it might be worth having a single place to point them to learn how and why it works.

    reinharden


  184. Phil, ready to jump in on dhi feb 25 puts. Chart scares me a little- 50/200 crossover and macd crossover.


  185. Does this mean not to take CHK

    OOPS – should have taken ECA rather than CHK! Not going to chase it now…

    CHK Feb $27.50 puts for .60 are nice XXX


  186. Rein, are you hot on STX as an earnings play? Is it going up cause somebody knows something or just good ole fundies?


  187. GOOG now down $4.50


  188. Lots of nervousness out there. Hope we get a EOD rally. Nasdaq needs to hold.


  189. Kustomz, I’ve said it before and I’ll say it again, I start by figuring out what the companies going to do. INTC, so far as I can tell, did exactly what I predicted. The stock, on the other hand, responded negatively.

    You might recall that I was speculating the Jan calls because I thought INTC would beat. And they did on both the revenue and the profits. You might also recall that I’ve advocated INTC as a longer-term play throughout as the short-term was less clear. I don’t pretend that I can predict with absolute certainty what the stock market will do from day to day.

    I advise everybody to listen to the conference calls, read the quarterly reports, read the annual reports, read the analysts reports, read what the enthusiasts say, read what the technical magazines say, read what the mass media says. Wade through it all and come to your own conclusions. Figure out that semis are a capital intensive business and are cyclical in their very nature. One of the major tricks to semis is figuring out when they’re peaking and when they’re bottoming.

    While you seem committed to dismissing INTC’s performance last quarter to “exuberance” on my part, the facts remains: margin was up sequentially, units were up sequentially, revenue was higher than expectations, and profits were higher than expectations. The 45 nm rollout is on schedule and there are no substantial technical challenges on INTC’s roadmap. This will result in a reduction in costs and an increase in margins and profitability in 2H of 2007. I’m pretty sure that’s what I said beforehand. As to “patience”, I suggested looking at Jan 08. I probably even suggested starting a partial position beforehand.

    Is INTC the stock down today? Yep. Has anything changed to make me believe that INTC the company is having a problem? Nope.

    AMD, on the other hand, is clearly having some serious issues. And I wonder if your apparent issue with my on INTC has more to do with my views on AMD.

    Nevertheless, it’s clear from the conference call that INTC is executing on plan. I’d call 2H 2006 troubled. I’d call right now “on course”. And it’s the transition from troubled to just fine that allows us to make money. Especially when, as I contend is the case today, the market gets it wrong. ;-)

    reinharden

    PS: I ended on “the market gets it wrong” just to be annoying. ;-)


  190. j-o-h, Is that a gut feeling or based on reading? First time I have seen s1 with that position and am curious. From some of the tech head blogs I occasionally peruse to make me feel very inept, I have read just the opposite.


  191. AAPL total panic or info leak?


  192. AAPL – Digger, I’ve all kinds of answers to where AAPL lands. My exuberant ones [;-)] go beyond $110. My depressing ones as low as $80′sh. I can’t make sense of the analysts’ numbers. And they’ve access to more data than me, so that concerns me.

    Early reports from NPD (second hand since I don’t get the real data from them) said that 55% of iPod sales for the year occurred in cal Q4. See http://www.earningsalert.com/2007/01/earnings-preview-apple-aapl.html

    Here’s my problem with that data. Cal Q1 through Cal Q3 accounted for 25+ million iPod sales. Which would require *at least* 25 million more iPod sales in Q4 in order for Q4 to be 55% of annual sales. But the analysts are sticking with 16 million and change.

    Personally I think http://blackfriarsinc.com/blog/index.html is closer to the truth than the analysts. But I’ve been wrong before.

    And, as we’re all too often reminded, you can get every number right and still have the stock go the other way. ;-)

    reinharden


  193. GOOG
    Time to pick up some more Feb calls!


  194. look @ GOOG, drop it like its hot.


  195. I advise everybody to listen to the conference calls, read the quarterly reports, read the annual reports, read the analysts reports, read what the enthusiasts say, read what the technical magazines say, read what the mass media says. Wade through it all and come to your own conclusions. Figure out that semis are a capital intensive business and are cyclical in their very nature. One of the major tricks to semis is figuring out when they’re peaking and when they’re bottoming.

    REIN THATS A LOT OF READING WHERE WILL WE FIND THE TIME TO TRADE?


  196. CHK – no it just means I should have done ECA – very similar company that dove right when I did the CHK trade. In the end ECA recovered more than CHK so go figure…

    ========================================

    Rally looking doubtful, levels are breaking down. It’s all up to Apple and IBM to save the markets but oh boy can they doom them too!

    =========================================

    Taking GLW as a stock to own – selling Feb $20s for .70 against, heck of an income play I think XXX


  197. GAOX kicked in out of TXN position


  198. reinharden,

    Easy, pardner. ;)

    If you’re writing a FAQ answer that is the very definition of delta, I just think it would be helpful to mention the term – especially if you’re writing for a wide spectrum of users.

    Thanks,
    gamma


  199. what do you mean U’re buying GLW stock?


  200. I own some stock, but I can wait until tomorrow to decide whether to buy more. IMHO, if it is good news, it will run for a while, on it’s way to 150. If it is bad news, I can watch it fall and drift for awhile and THEN buy, because I still see it going up. I switched to Mac a year ago, and I won’t go back.

    Unfortunately, I have learned the expensive way NOT to play with options the day before earnings. At least, that is what works for me.

    That being said, GO APPL!

    K


  201. STX – Sqroot, I like STX as an earnings play, as a momentum play, as a January rally play, and as a Vista rally play. I also like them fundamentally over the longer-term as they should outperform the computer market. And due to their merger with Maxtor they now have enhanced pricing power. Fujitsu and Hitachi aren’t focused enough since their hard drive plays are just one of many divisions in huge conglomerates. WDC lacks scale to compete effectively in the longer-term. That having been said, Q4 2006 was not a great time to be in the computer market.

    That having been said, I liked STX a lot more when I first got them in Oct 2005 at half the current price. Nowadays the trailing PE ratio is getting ahead of the performance of the company (although the forward PE is still under 11). But the analysts are still mostly neutral to tepid on it…which means it’s probably got some room to be upgraded if it performs.

    And remember, I was able to roll Jan 22.5′s forward and up so the play is free for me. Although with the break through prior resistance today, I’d likely have played Feb anyway.

    reinharden


  202. I guess I should have had more faith that google would make a move to shake out the callers….

    Now I have to wait to sell as I missed my chance. Big bump on my March $470 puts though!


  203. Kustomz – All that reading is why I envy Tom2OC and his purely technical approach. Alas, I’m not that great at technical and far better at fundamentals. So I’m stuck with the reading. ;-)

    reinharden


  204. Gamma, I think Greek letters just scare people. ;-)

    reinharden


  205. GOOG – Yeah, Phil, I know. That wasn’t a melt-down either. ;-)

    reinharden


  206. GLW – there are these things called stocks and (I hear) some people buy them rather than options. They give you a share of the company in the form of something called a “certificate.” 8-)

    Any other questions??


  207. Phil do you think it is too early to DD HPQ Feb calls? Thanks.

    j


  208. HAHA oh yes I have a few Jiffy Lube of those

    Anyhow how about OXPS?? Down 2% now
    what was that play again?


  209. GLW Are you serious PHIL!! Would you like to share your inspiration as to why with us?


  210. WiMax – Don’t write WiMax off. It has a market application. What it probably isn’t is “the next WiFi”.

    What it is, by the by, is like the first protocol to be certified as a 4G protocol by the IMT or ITM or whatever that stupid standards body is called.

    See also http://www.asteriskvoipnews.com/wimax/how_to_invest_in_wimax.html

    All things considered, it’s likely 2008 before WiMax sees any serious traction. Although Sprint has just started Motorola rolling out a network in Chicago. But I don’t think they turn anything on until H2 2007.

    WiMax is tricky for a lot of technical reasons. But, in theory, you really could provide full coverage of the US for about 1/10 of the cost using WiMax versus normal cellular technologies. But a lot of that has to do with spectrum and power levels. And if you’re using power for range, you’re killing the batteries on your clients. Which would be your phones and laptops.

    Right this second, WiMax is best for fixed point-to-point or point-to-multipoint applications. In another year or so, it’ll be much better for mobile applications.

    reinharden


  211. GLW – Phil likes ‘em because they make most of the glass for the various and sundry LCD panels soon to be permeating our lives.

    I pretty much agree and believe that we’re also on the cusp of a possible fiber replacement cycle or fiber installation cycle (aka FIOS).

    reinharden


  212. HPQ – yes, it’s not even down enough to bother yet.

    ========================================

    OXPS – oops I never took that one, good thing at this point. Chart broke down, I’d rather wait and buy it on the way up than try to rescue it here.

    =========================================

    Out of PTR Feb $130 puts at $8.80 – too far ahead to risk with all the other oil plays going against!


  213. I think the greeks are not that hard, really. My favorite is the little-known “oopsilon” which, when used, causes the options buyer to break into a sweat while screaming “OMG I must buy these calls NOW!!!” only to see the price drop 60% one nanosecond after the order is confirmed.

    Next week, my lecture will cover the greek symbol, “crappa.” Closely related to beta, yet different in some subtle and intriguing ways.


  214. ADM huge downgrade – Feb $30 puts for $.80 as a risky gamble. XXX


  215. “OXPS – oops I never took that one, good thing at this point. Chart broke down, I’d rather wait and buy it on the way up than try to rescue it here.”

    Well I did.


  216. Yes thank you REIN, but Phil is a connoisseur of fine options, why the change to the actual buying of stock?


  217. AAPL – And were I tempted to play long, I’d probably finish my position around here. ;-)

    reinharden


  218. Hi Phils,
    Except for GLW, do you collect or recommend any other company’s”certificate” for long term? LOL…. but seriously (It is for my wife’s account)…..


  219. GLW – Buy the stock, sell the calls/puts against it until the stock responds. That’d be my theory…

    reinharden


  220. Turbo, the opposite sex may not have the same definition as you. I suggest exploring the Isle of Mann (no pun intended) for my investment accounts lol


  221. If anyone wants to roll the dice:

    TJX says customer information stolen from computer system.
    The full extent of the theft is not yet known.


  222. Take this for manipulation … 3 downgrades on CSCO just 2 days before expiration. CSCO results out around Feb 6th. CSCO now below the 50 DMA also. Anyone has doubts if it will be pegged to 27.50 on friday?

    There is nothing anyone can do, the WS crooks rule this market.


  223. ADM – OK, now I have time to say why. They say the rise in corn is going to destroy ethanol margins, especially with collapsing fuel prices.


  224. GLW
    trouble with the math
    so cash out $19K say to purchase 1,000 shares
    then sell 10 contracts for .7 every month for $700
    repeat every month
    is that it?


  225. Need I say: And now we wait. ;-)

    reinharden


  226. i know someone already said this, but any last guesses on aapl. my guess is its gonna be 100+ tomorrow open. but you’re not gonna see me betting on it


  227. Write down 97.6 for me….really dont have a clue, but it is a good radio station here!


  228. You wanna guess or a wish? I’d like $110 for just a few minutes.

    My hopeful guess if $102′sh.

    My fear is below $95. ;-)

    reinharden


  229. Random AAPL rumor (as I read the rumor pages while awaiting numbers) – AAPL to unveil Beatles iPod/iTunes ad during Super Bowl (Feb 4?).

    reinharden


  230. I am really enjoying this suspense.. silence before storm :)


  231. large aapl order crossing at 95.08…


  232. In this particular instance, I can’t say that I enjoy it. My resting pulse is 60′sh. Right now it’s 90′sh. Print the dang numbers so I can get on with the celebration or the heart attack. ;-)

    reinhardeh


  233. “reinhardeh”

    See, I can’t even spell my nickname right. ;-)

    reinharden


  234. what does this nickname mean if anything?

    by the way sneaked in feb dia 125 puts during last few minutes
    AAPL red GOOG red BKX red…. Tom2OC….


  235. REIN karmas a bitch! You gotta laugh, people posting Jobs arrested on the Yahoo boards. Desperation


  236. Hey reinharden alias reinhardeh – How often your resting pulse will go to 90′sh.. Get ready for celebration in few minutes !! Thank for all your detailed posts and I am learning a lot from you and phil. Kudos to both of you.


  237. I am guessing that they are debating whether or not to announce stock split .. hence the delay :)


  238. Digger – sorry on OXPS but there’s nothing actually wrong with it… I didn’t take it because it spiked up in the morning, got away from me and then made an ugly reversal that didn’t look very attractive.

    Not every set-up that looks good in the morning still works once the market opens to be careful. I do have some general rules under the strategy section but that whole sector got whacked today on pricing concerns so even good earnings may not allay concerns.

    =================================================

    Buying stock, the worse the market is, the more likely I am to hold some actual shares and just sell options until things get better. It keeps the cash working without (I hope) too much risk.

    As stock plays I also like MOT but when I say I like them, I mean as steady monthly purchases until they take off, not lump sum buys at these prices because they still might fall more in a poor market.

    And I’m only interested because I can sell options every month for a nice 2-5% monthly income, which means I don’t mind if it dips some more during the year.

    SIRI is a great one as long as it stays around $4 as you can sell the $4 calls for .25 – do that ever month for 2 years and you’ve paid for the stock!

    ===============================================

    When the heck is Apple earnings? We have way too much riding on this, I should have covered with QQQQ puts….

    ==================================================


  239. In a fit of despair, I glanced at the Yahoo boards. I couldn’t take it. ;-)

    Reinharden. Well, long, long ago, my great-great-grandfather left the Heidelberg school of music in Germany and moved to, of all places, Morrilton, Arkansas to be, of all things, a traveling piano tuner for the local churches. Anyway, his surname was Reinhardt and I always liked it. And being a geek, I adopted it as a Dungeons and Dragons name and later a “hacker” name. How silly is that? ;-)

    reinharden


  240. AAPL conference call is 5 PM ET. I could see them stretching the release a long time just to annoy me. ;-)

    reinharden


  241. Feel like am married again…..alwalys waiting


  242. Obviously, only by walking away will I get numbers. Back in a few.

    reinharden


  243. Kein silly
    Sehr schon!!


  244. well somebody knows somthing AH at 94.6
    my DIA puts may become handy tomorrow….


  245. btw kust….karm is mark in reverse, comprendes? lol


  246. GLW – yes thats $8,400 a year in income (your actual results may vary).

    The point is, even if it only works for one month, it is worth your while on an annualized basis.

    ===============================================

    Apple – well as I bet they would hit $80-85 after earnings and seem to be off by a mile, I’ll keep my mouth shut but that was my guess back on the 8th when I initiated the Apple play – those Feb $80s only cost $4.85 back then!

    Don’t forget we hedged the Feb $80s because, at the time, we were very unsure they would make $80….


  247. aapl net 1 bill


  248. AAPL halted.

    j


  249. 1q sales 7.11 bil


  250. Apple® today announced financial results for its fiscal 2007 first quarter ended December 30, 2006. The Company posted record revenue of $7.1 billion and record net quarterly profit of $1.0 billion, or $1.14 per diluted share. These results compare to revenue of $5.7 billion and net quarterly profit of $565 million, or $.65 per diluted share, in the year-ago quarter. Gross margin was 31.2 percent, up from 27.2 percent in the year-ago quarter. International sales accounted for 42 percent of the quarter’s revenue.


  251. Apple Reports First Quarter Results
    Wednesday January 17, 4:30 pm ET
    Revenue Exceeds $7 Billion; Record Profit of $1 Billion

    CUPERTINO, Calif., Jan. 17 /PRNewswire-FirstCall/ — Apple® today announced financial results for its fiscal 2007 first quarter ended December 30, 2006. The Company posted record revenue of $7.1 billion and record net quarterly profit of $1.0 billion, or $1.14 per diluted share. These results compare to revenue of $5.7 billion and net quarterly profit of $565 million, or $.65 per diluted share, in the year-ago quarter. Gross margin was 31.2 percent, up from 27.2 percent in the year-ago quarter. International sales accounted for 42 percent of the quarter’s revenue.


  252. Gosh I feel so uncreative with my screen name all of a sudden!

    So anyway – 10 days ago we mostly thought we would be thrilled if Apple could break $90 again and here we are worrying about $100.

    I became convinced it was going up from the huge effort that was made to take it down. Someone wants these shares very badly it seems. Aside from my conspiracy theory I think mac sales are way up, I think IPod sales are a new record and ITunes too and the IPhone looks like a hit.


  253. AAPL Halted?


  254. Why is trading at a time like this halted?


  255. “Looking ahead to the second fiscal quarter of 2007, we expect revenue of $4.8 to $4.9 billion and earnings per diluted share of $.54 to $.56.”

    We’ll have to see how that goes over…

    reinharden


  256. lol Phil


  257. Karmcon i hope you do not think that karma is a bitch line was geared towards you,
    heres the definition and it was meant for Steve Jobs in a joking manner
    Karma is a sum of all that an individual has done, is currently doing and will do. The results or “fruits” of actions are called karma-phala. Karma is not about retribution, vengeance, punishment or reward. Karma simply deals with what is. The effects of all deeds actively create past, present and future experiences, thus making one responsible for one’s own life, and the pain and joy it brings to others. In religions that incorporate reincarnation, karma extends through one’s present life and all past and future lives as well, sorry for the cunfusion


  258. So the ipod kings are also the kings of upod (underpromise overdeliver). Hopefully the street will see that in the guidance..


  259. First call only 4 cents higher than AAPL 2nd qtr est and Jobs n Co always seems to sandbag any earnings estimate


  260. It is just amazing how CNBC is trying to downplay Apple’s numbers. $1.14 is truly amazing and they are focusing on slow Mac sales blablabla…This has been going on for the last couple of weeks. What is their agenda here?


  261. Apple set to resume trading at 16:50 ET Briefing.com


  262. Revenue – $7.1 – 11% above expectations of $6.4B
    Profits – $1.14 – *46%* above expectations of $0.78

    Mac units – 1.606 million. I’m disappointed in that number
    iPod units – 21.066 million. I think consensus was 16.4 or 16.7. In either case, 28% or 26% better than expectations.

    But I’m concerned that the forecast will be considered weak and that the Mac number will be considered weak.

    But one would hope a 46% beat on profits would compensate somewhat…

    reinharden


  263. looks like second Q will be a miss for AAPL


  264. Actually I did but took no offense…..interesting post there….maybe i’ll add an “a” in my sn now


  265. Uh-oh – guidance is way low! Mac sales are a disappointment, just 1.6M – very, very surprising but IPod sales are through the roof. Expectations were .78 so $1.14 was beyond a blowout and Apple always guides way low.

    Mac shipments are up 28% vs. 31% expected, that is literally the only weak spot on the report that I see.

    They generated $1.75Bn in cash for the Q(4) and have $11.9Bn in cash now.

    Guidance at $4.8Bn and .55/share, although “low” is against last Q1s $4.3Bn and earnings of $410M (.43/share). So thats a 20% increase in net for a company with a forward p/e of 27.

    I hope they do sell off tomorrow, I want to buy out my callers!


  266. testing new name


  267. AAPL –

    One has to like the year-over-year numbers for portable CPUs, 65% units, 79% revenues. That means that in addition to increasing volume, they increased ASP. As is reflected in the margin increase.

    reinharden


  268. And away she goes! Thank goodness I have those naked calls!


  269. qqqq is creaping up in AH. could be an indication of higher aapl


  270. AAPL extended Hours: Last 98.94 Change +3.99 (+4.20%)


  271. away she goes is right


  272. Looks good AAPL! Congrats to us all longs!

    j


  273. AAPL i think they like the news

    Karmcon sure am glad we cleared that up, please know that in no way would i write anything offensive to anyone on this board no matter what the circumstance. I find that showing respect when posting on a forum such as this shows true character and that’s all i have been shown.
    KUSTOMZ


  274. Well we dodged a real Nadaq bullet there guys! Qs are trading up AH even though the weak Mac sales make me very worried about that whole end of the buisness because I KNOW they gained market share so I have to think the market shrank!

    Now I know why Balmer sounded scared in that interview, these guys make MSFT look pretty foolish and do still present a legitimate threat to MSFT. They make stuff people like and are happy to pay for – how many companies can do that?

    They’ve neatly positioned the stock so that $100 is the 5% rule and will be a very tough nut to crack into expiration but I think they’ll get love letters from magazines over the weekend which should kick them over.


  275. now lets hope bernanke helps cooperates with aapl tomorrow to make for a very nice day. speaking of… who knows the time of the speech. i think i remember hearing 10am et.


  276. AAPL – Enough classical music. Start the danged conference call. Say something encouraging. I want $100+ this week, not next. ;-)

    reinharden


  277. almost a good buying opportunity…


  278. Just to be a killjoy, the Doomsday clock has been advanced
    http://seattlepi.nwsource.com/national/1103AP_Britain_Doomsday_Clock.html

    One hopes *that* isn’t a market moving event.

    reinharden


  279. AAPL all over the board. Showing $96.00


  280. am listening to cc now….just started


  281. Curious to see what the reaction to INTC will be regarding AAPL news.
    Enjoy folks and hope the CC sends her up to 105!


  282. AAPL – Good to here that there’s no inventory overhang on Macs. Nice to be below inventory plan.

    reinharden


  283. Hello everybody
    I am a new member. Can somebody post the audio link for aapl cc/


  284. reinharden-i’ve never heard of that doomsday clock before. thanks for the link. interesting little read. btw i noticed the seattlepi… you reside in the good ole evergreen state by any chance?


  285. Stephen W. Hawking, the renowned cosmologist and mathematician, told The Associated Press that global warming has eclipsed other threats to the planet, such as terrorism.

    I do not admire many but this man is an inspiration!
    REIN may i add your timing is lousy. ;)


  286. AAPL – Looks like iPod ASP dropped from $178 Q4 2006 to $162 Q1 2007.

    Hmm…that analyst nearly got it right. But they obviously got the percentage of iPod Shuffle wrong in their analysis.

    reinharden


  287. Thanx Ryan.


  288. Amazing their effective tax rate is only 32% for such an intl company….some smart tax people there


  289. Optrader-
    You hit the nail on the head. What IS BSNBC’s agenda concerning AApl? We al ready know their agenda concerning oil but what is the wild hair they have up their arse concerning AApl? Must be a Steve Jobs thing. As far as guidance, AApl ALWAYS guides low, so I wouldn’t let that concern me. The Mac sales are troublesome, but we won’t have an answer there until HPQ reoprts. No that’s not a typo. To me, CNBC is BSNBC.
    d


  290. jkman – Actually I live outside Washington, DC. Although my girlfriend lives “inside the Beltway” and thus I spend way too much time inside that thing.

    reinharden


  291. Speaking of CNBC’s agenda: Larry Kudlow just opened his show with “Steve Jobs – should he be above the Law?”

    Wow, it’s like an emergency smear job! And check out Cramer’s Street.com article:

    Don’t Buy Apple’s One-Trick iPhone Pony: http://us.rd.yahoo.com/finance/external/tsmfe/SIG=126ik4sd7/*http://www.thestreet.com/_yahoo/newsanalysis/investing/10332933.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA

    It would do best for you Apple fans to ignore the AH trading because this is beyond odd. I could understand it not going up more than a point or two on the low guidance but someone is trying to actually take it LOWER than the close. That’s nuts! What possible number would have made them happy?

    It doesn’t matter that they guided Q2 lower by .05 when they just beat Q1 by .36 – it kind of evens out!

    Still with 85,000 Jan $95 calls open and another 112K Jan $100s open representing 20M shares outstanding, all it takes is one disreputable option seller to try to jam the AH trading down so they can get out tomorrow morning as cheaply as possible. That’s not even to mention the 30M shares that have sold contracts that are so in the money they have no chance at all.

    Don’t forget – the Apple shareholder that sold you a $80 call for $4 is getting called away at $80 whether Apple is at $100 or $80.05. What if they are a fund and are forced to maintain a position in Apple? That’s a $16 per share loss when they have to rebuy!

    So be on the lookout for shenanigans….


  292. on our apple jan 95/feb 100 play, what do u anticipate it does tomorrow @ 98?


  293. Phil,

    Have a look at January 2005, Apple also had amazing 1st Q, and stock did not do much until next few weeks. This could be about options for this week.


  294. AAPL – US computer market growth 3%. Yech! AAPL US computer market growth 31%. Nice.

    reinharden


  295. Jkman – too bad you’re just getting into the doomsday clock here in the last 5 minutes! ;-)

    See, last year’s Q1 had an extra week, there’s your missing Macs because they aren’t Xmas gifts, they just get purchased in a normal cycle.

    Oh nooooooooooooooooooooooo did he actually say gross margin may be driven down??? That’s bad!


  296. AAPL – I’ll admit that it’s true, but Mr. Cook has gotten much better at spinning the numbers. To paraphrase, sequential sales were up relative to our expectations that they’d be down. And, to be fair, last year’s sequential numbers were about the same versus a one week longer fiscal Q1. So arguably, to maintain the same sequential is the equivalent of a 7% upside. And even better if you back out the 50k units sold to two institutions.

    Wow…that’s hard to wrap my head around. ;-)

    reinharden


  297. Suspect int’l growth mostly in IPods vs. Mac’s


  298. Does anyone know what kind of volume has moved AH?


  299. AAPL – Actually, they’ve explicitly talked about international growth in Mac sales and increasing the market share by fairly substantial numbers (“substantial” being my word).

    I’d have to check the transcript for the exact numbers but I believe it was 20 to 30 basis points in Europe.

    reinharden


  300. $95/100 play. We have to wait until morning. First Japan has a go at it, then Europe, then the US pre-market. Anything below $95 is totally great for that posiiton (well, maybe not $60 – but you get the idea!).

    Meanwhile on CNBC: APPLE OPTIONS CONTROVERSY with the former SEC Deputy something who’s got it in for Jobs and another guy who says Jobs is guilty but putting him in jail will cost the company $20Bn in value so let the crook stay – very fair and balanced!

    SEC Guy (former): Martha Stewart, Ken Lay and Steve Jobs – the filings they’ve made raise questions!

    Fudging the date, phantom board meeting, replacing grant with options that were more favorable… This has to be tracked down!

    There is a criminal investigation going on right now!

    And, of course, while this is going on, they are scrolling AAPL – $2.68 across the screen in red letter…


  301. Volume looks like 12M shares (if you can believe AH numbers, sometimes they are just last minute orders that fill at 4:01).


  302. Phil, Rein

    Based on the earnings today, what is Apple worth share wise from the fundamental perspective?


  303. Yev, that’ll take way too much math to come up with a real answer.

    If you assume a constant PE ratio of ~40 (where it’s currently at), the easiest thing is just to ad the $0.36 beat, multiply by 40, and add it to the previous number of ~$95 to arrive around $109. But that’s truly overly simplistic and assumes that the company was previously priced based upon fundamentals. Which obvious it isn’t.

    Everybody has to take the current numbers home and plug them into their equations and take AAPL’s guidance and plug it into their models and then take their best guess at how it all falls forward once the iPhone ships.

    But I’d probably look for a few analyst upgrades Thursday and Friday since we now know that Q1 was $1.14 instead of $0.78.

    reinharden


  304. Rein,

    Vis-a-vis earlier comments about being held below 95 into expiration, maybe analysts wait until Monday. . .

    N


  305. I would have to give them closer to $4 a share in ’08 which means conservatively (very) $100 per share. You could justify $150 a share if you assume strong IPhone sales and that’s dropping p/e into the $20s, which is pretty low with that kind of growth.

    Don’t forget they’re sitting on $12Bn in cash and their stock is like gold so they can buy Yahoo if they want to.

    Ah well, I have to go – let me know if anything exciting happens…


  306. nltd – Waiting until Monday is definitely a risk. As is the fact that several have just upgraded AAPL because of the MacWorld announcements and they might not want to have to say that they weren’t right so soon.

    Usually the day after the earnings is good for two or three upgrades/downgrades.

    Fiscal Q2/Calendar Q1 is usually AAPL’s weakest quarter.

    But AAPL also usually has a couple of announcements following MacWorld. That’s part of what makes this quarter so much fun. MacWorld, earnings, and then a couple of Tuesday product releases.

    And this year, it’s possible (I believe probable) that they’ll have some Beatle’s thing going on this quarter. Possibly at the Super Bowl.

    We should see Quad Core Mac Pros relatively shortly. We should see a release date for Leopard, iLife ’07, and iWork ’07 in the coming quarter (were I Steve Jobs, I’d start the media blitz shortly after Vista’s consumer release so that Vista has had time to settle in).

    I’d hope that AAPL announces when they’ve shipped their 100 millionth iPod. Although without a substantial refresh, that’s probably going to be in Calendar Q2 since they’re at 88M now and they’re unlikely to sell 12 million this quarter. But it’ll probably make the April quarter more fun.

    Anyhow, as kustomz reminds me with INTC, I don’t get to set the price, the market does. ;-)

    reinharden


  307. FYI

    at a closing price of $94.10 and

    2007 earnings of:

    Q1: 1.14
    Q2: 0.60 (estimate, unrevised)
    Q3: 0.66 (estimate, unrevised)
    Q4: 0.75 (estimate, unrevised)

    the new current P/E for AAPL is 29.87
    (data from E*Trade)


  308. im wondering if phil didnt mean $4 a share in ’07 rather than ’08………any thoughts


  309. AAPL
    It traded as high as $99.48 AH. Is that accurate? Looks like more option expiration manipulation to me. Let’s see what happens tomorrow and how Asian market takes it. Glad I wasn’t greedy and took 1/2 off the table yesterday.

    Nasdaq
    I still think that the techs are not done rallying. All that money from oils and materials need to go somewhere, and for couple of weeks, it looked like they are coming into techs. We needed a rest and we got 2 days of it. Techs won’t rally without its champions, and AAPL is one of them. I know this sounds a little crazy, but, Nasdaq’s next stop could be between 2800 and 2900!

    I’ll be looking to buy tomorrow morning!

    AAPL
    Already coming back!


  310. RE: SNDK et al
    I didn’t know that Vista can use usb sticks for extra high-speed swap space. That’s cool!

    Vista also has a number of performance enhancers. SuperFetch tracks frequently used programs and preloads them. ReadyBoost lets you use flash memory on a high-speed USB drive as a supplemental swap file (this can be substantially faster than a spinning hard drive). ReadyDrive supports hybrid hard drives with built-in flash-memory caches.

    http://www.pcmag.com/article2/0,1895,2074565,00.asp


  311. Sorry, I didn’t mean that $99.48 looked like options expiration manipulation. I meant the trades that took it down.


  312. Jkman – too bad you’re just getting into the doomsday clock here in the last 5 minutes!
    now thats funny!!

    Phils got me looking into GLW as a stock to own.

    Rein without your insight i would have never sold INTC, for that i say thanks. On a serious note your stance on AAPL is, was right on if i would have taken your history with AAPL into account and payed heed to your advice I would have made more on that particular trade, but i was too hasty in that circumstance and welcome your views anytime.


  313. Reinharden,

    Ich nehme an dass Sie Deutscher Sind.. Enjoy your posts.

    Phil,

    Love your blog, man there is a lot of good information here. . I still have a learn to learn in terms of Options. . .


  314. anyone caught cnbc fast money
    nice prediction ABOUT CORRECTION FOR TOMORROW
    trigger bernanke


  315. Hey Phil, just reading some other articles as well….What da ya think about CVTX Feb 15 calls and FCX Feb 50 puts??


  316. Thoughts on IEDU since they just bought think or swim for 340 mil?

    http://biz.yahoo.com/ap/070117/investools_acquisition.html?.v=1

    anyone seen one of their infomercials?


  317. You guys have much bigger cojones than I do buying Jan options….Learned the hard way and am typically a lil further out, although I did seem to sell many way too early.


  318. $4 a share – I meant in ’08! Projections for ’07, which this was the first and biggest quarter of, are for $2.80 – probably now $3. There is no way they do $4 this year unless they double Mac sales but by next Xmas (Q1 ’08), they will be selling IPhones to everyone in America, 50% more Macs, 3Bn ITunes and who knows how many ITV set-ups plush whatever else Jobs has up his sleeve over the next 12 months.

    That’s something a lot of people don’t get about Apple, because they have a funny year, with Q1 being most people’s Q4, it adds a lot more weight to their next year’s earnings than most companies.

    ==================================================

    Thanks John!

    ==================================================

    CVTX – not a chance do I buy someone losing $62M a quarter with a market cap of 800M! They are serial dilluters, having sold $120M in stock this year on top of $202M last year which I find interesting as they have $278M in Short-term Investments and another $81M in cash.

    They have $47M in payables and another $399M in debt which they seem to only pay interest on while the top management draws $3M in salary and quite a bit of stock, which they sell on a regular basis.

    While sales are picking up, they are probably a couple of years from break-even, even if everything goes perfectly for them but any snag in approvals or less than expected demand and this company could evaportate in a puff of smoke.

    That’s not to say they can’t be played though! Since people are crazy enough to pay .85 for the .75 out of the money Feb $15s, you can buy the Jan ’08 $15s for $4.40 and sell against it for a nice 20% monthly return. It’s dicey the first month as either a spike up or a spike down can hurt you but once you sell the second month, this becomes a nice little income producer, as long as people keep believing in it.

    FCX, as long as copper keeps going down, they are a great play but gold going up concerns me.

    ==============================================

    IEDU – $140M in revenues!!! Holy cow, I must be undercharging!

    How can they not be making money, it’s a web-site and seminars?

    They are really an eyeball play, I really can’t imagine what they do with $140M but something there is just out of control, they don’t even have debt but they do have a mysterious “Other Current Laibilities” of $141M that started the year at $72 which is a major red flag to me.

    $608M cap for this company makes CVTX look like a great deal!

    I’m a subscriber to their basic service by the way, I like their charts and company data presentation but they are quite the high-pessure “education” mill!

    =================================================

    Longer is better Karm – don’t let anyone tell you different. Don’t forget I advocate play money only in short-term options with the real money at work in the long-term portfolio.