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Thinking About It Thursday

Apple is still trading down pre-market (6am)!

 

They beat earnings by .36 (48%) but that somehow isn't enough to get people excited.  Cramer made a bearish call on tech in general yesterday, especially cell phones, handheld products, storage stocks, semiconductors and software (I guess that leaves just cappuccino machines and treadmills).

He did give his blessing to our holdings of AAPL, HPQ, GOOG and MSFT as well as CSCO, which we just dumped and LVLT, which I disagree with until they pull back to the $5s.

I think it may be just a little premature to write off tech just yet, although I warned yesterday morning that the ides of March are nigh, I still think we are too near escape velocity to cancel our moon shot after just one orbital pass.

Not to pick on Cramer but seriously, the man just spent Tuesday morning telling people this is the year of the Nasdaq and then a day later, he reads my headline and changes his opinion 180 degrees – Jim, don't take me so literally!  I'm cautious but I haven't thrown in the towel just yet…

Both the PPI and the Fed Beige book indicated the economy is still moving along nicely and I strongly believe the entire tech cycle is being dragged down by the delayed Vista launch.  While a late winter will dampen enthusiasm, I think an early spring will get CEOs to whip out their checkbooks and pump up IT spending sooner than expected as you tend to want to get your year into focus before you start thinking about summer vacations.

As with yesterday, the Asian markets shrugged off our lackluster performance and turned in some very nice numbers with the Nikkei climbing another 109 points back near the ATH at 17,370 while the Hang Seng added another 212 points to finish at 20,277.

I jumped the gun yesterday as I should have said, there will be no way the BOJ raises rates tomorrow when I said "The BOJ backed off raising their rates for this session."  Sometimes I'm so sure something is going to happen I think it's already news!  As I said to someone yesterday, the problem with being a fundamentalist is sometimes it takes the markets some time to catch up with you…

China put a NASTY profit-tax on real-estate profits which developers and hurt the banks, which will keep the FXI in check despite strong gains from CHL and manufacturers.  I am still loving the Chinese leaders as they move towards a deal with the IEA (Europe's EIA, only not a as much a covert pumping operation like our energy agency has become) to "increase the transparency of China's plans for its strategic petroleum reserves (in order to) ease uncertainty and volatility in global energy markets."

 

Europe is practicing the old adage that "slow and steady wins the race" as the DAX and the CAC continue to grind higher in small steps most days.  With the US indices pushing up against the 20% rule, we can see why Cramer's getting nervous (look what happened at the 10% rule in May!) but we're not going to get off a train every time it pulls into a station until we're sure it's turning around.

This will be an easy market watching morning for me as nothing really happened yesterday so I just have to repaste yesterday's levels:

8:30 update:  The CPI is in-line, housing starts are up 4.5% (but that's because it's warm, no other reason) and jobless claims are down 5% – certainly no reason to abandon ship on the markets!  We may get a "fear of Fed" pullback but, on the whole, these are great numbers…  Don't forget Bernanke speaks today.

One thing we held onto yesterday was most of our oil puts as we did not believe in that "rally" at all!  Not being fools we did take our big winners off the table but we were content to let our longer plays ride a bit and we'll see how that inventory report works out today!

Let's keep an eye on our $52.10 mark and see if they can hold it through the report at 10:30, if they can't, we need to have our list ready for some new entries and DD opportunities!  Remember, with 3 days of trading and just 30-40M barrels to get rid of, shenanigans can again be played at the NYMEX.

CNBC is already pushing it as hard as they can, saying that "this COULD make 2 out of the past 3 days that oil prices are rising."  Are these people for real???  This DOES make 999 out of the past 1,000 days that this "news" service has serviced only the oil interests in this country at the expense of the viewers who look to them for reliable information.

Sharon (the CNBC weather girl/energy expert) says we could have a volatile day and they (Platts) are predicting a 1.5Mb draw in crude  with a 1.95Mb draw in gasoline and a 1.45Mb build in distillates.  The call for a build of that magnitude in the middle of the winter is unheard of but what really cracks me up is the additon of the second decimal point to projections that Platts routinely misses by well over a million barrels!

For more on energy, check out Zman's new section on our main site, witch is in Beta this week!

Today could be the day that traders finally give up and realize I've been right since August - THE FED IS NOT GOING TO EASE RATES!  Aside from the fact that the economy is too strong, the will of the White House to reign in spending is too weak and it will take quite a while for the Dems to get a handle on things.  While Bush's plan to send 15% more troops to save the 130,000 that are currently trapped in a quagmire is very unlikely to solve anything, it certainly will cost an additional $50Bn per year while ensuring that we keep spending $300Bn a year on the Iraqi war (or occupation or nation building or whatever that thing that we're doing is being called).

Since we are determined to stay the course in order to insure whatever it is we're trying to insure this week, it means we need to borrow another $100Bn this month and next month and the month after that.  Just see how fast our lenders dump us if we start paying less interest on our treasury notes!

So, now that the Fed is back on the table, all it will take is a word from Bernanke (and he will be saying approximately 10,000 of them to Congress this morning) to pop the dollar over 85.5 and drop both gold and oil like rocks.  No guarantee but let's keep our eyes open and see how it plays out!

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

Brother can you spare 130 Billion dimes?  EADS needs money, about $13Bn to cover development expenses of a plane they can't deliver yet.  "We are in discussions with our core shareholders on how to strengthen our capital base," said CFO Hans Ring. Those shareholders are DCX, the French government and French media group Lagardère SCA, which together hold almost 60% of EADS.  Perhaps BA could buy them, they've got orders coming out their ears!  Needless to say, I'm in no hurry to cover our BA leaps!

Speaking of Cramer – Soleil joined him and drank the Kool-Aid on LAMR (see my notes), issuing a Buy and causing the stock to jump a buck at the open.  We ignored it and held our puts as it gave up half the gains by the day's end.

Thank goodness we got out of those MER $95 puts Tuesday as earnings were great!  Following rules = saving money.

The LSE continues to "just say no" to the NDAQ, now buying back $500M worth of their own stock to stave off the unwanted advances or the Nasdaq.  I think this is a good gamble (but emphasizing gamble) with earnings on 2/13 and the Feb $35 puts at $1.70, taking advantage of any quick pullback if they start overbidding on the London exchange.  Bear in mind these guys are a triple from Apr '05 and anything less than stunning growth will dissapoint.

I have to pick up the RTP (2/1) Feb $190 puts for $2.85 even though they are already down 10% from last month.  They are cutting back output on rising cost pressures and collecting 30% less for copper than they were in November.  Even if they have a good Q4 – they simply have to cut guidance as next year is projected to be a 5% improvement over this year.  They are flat for 2006 after being up as high at $250 but they were at $110 as recently as mid-2005 so I think it's worth a gamble, just looking for a buck on a pre-earnings dip.

WIT had a huge bump in earnings  and it will be interesting to see how they perform as, like Apple, you really can't have a much better quarter than they did.

 


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  1. phil,

    what do you think about our aapl 95/100 trade @ the open?


  2. phil, LSE is trying to evade the nasdaq. NYX is going after euronext, japan, india, etc.


  3. i dont think you ment nyx


  4. I’ll be busy pouting today and thus might not be around as much today. ;-)

    reinharden


  5. Apple – see comments on tracking post but the gist of it is look to take out the caller the second it turns.

    OOPS – NDAQ!!! Must fix! Thanks….


  6. What about Sprint calls for Feb? JPM put out a note saying they can’t see it falling farther and all the bad news is baked in already.


  7. hOLY cOW! Zmann’s section on Phil’s site. That is just awesme!


  8. Just wondering…if GOOG has blowout earnings, but guides lower due to seasonality, wouldn’t it do an APPL? It seems to me contrarian is the way to play…Homebuilders keep going up, we get ONE cold snap and oil is safe again…

    Buy GOOG puts into earnings?

    K


  9. Personally, I’m buying April AAPL’s because, well, I’m stubborn and this is stupid.

    QAADB ($110) QAADD ($120) APVDF ($130)

    And, of course, I made enough on my Jan’s before today that the Aprils are effectively free. And much cheaper today.

    reinharden


  10. AAPL Jan $95 caller taken out at .15
    Holding onto the now naked Feb $100 calls with a .25 basis.


  11. I’m with you Rein, this AAPL stuff is nuts.


  12. I sold the April AAPL $90 puts for $5.50, putting me in the stock at $84.50 if exercised, otherwise keeping the income. I wouldn’t mind owning those shares at $84.50.


  13. What is up with the $SOX breaking down? I think there is an argument for some kind of a floor at 460, but obviously we’re past 470/475 and is this “sick” canary telling us to get out of semis, like TXN for instance? Thanks for any input.


  14. size, this AAPL “stuff” is becoming too predictable after a couple of years of following it. Something is always slightly different though. :)


  15. S – we already have T, too much in the sector with no action so far (although I agree S is good too).

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

    Yes, Z and I have big plans!

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

    Bear in mind with Google that I do have a spread – if you have naked calls only you really should consider covering!

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

    I’d wait on buying more Apple, very weak 1 Min chart. (I know, very day trady!).


  16. HOKU signed a deal worth 7 times its market cap!


  17. Phil, I’m by no means *done* buying. I was just starting my buying. ;-)

    reinharden


  18. Yev, can you elaborate about AAPL, I am new to this. Thanks.


  19. phil

    Great call on selling the aapl jan 95′s


  20. The APPL Feb $100s are stabilzing at $1 so watch for a turn!


  21. Phil – You still hanging on to those homebuilder puts?


  22. Canaries – if the SOX don’t recover. If Apple doesn’t recover. If the Nasdaq doesn’t recover – the ENTIRE market is in deep trouble!


  23. AAPL – At least on my level 2 quotes, I’m seeing most of the sales being pretty small lots. So I’m somewhat of the believe that this is not institutional. And, while they might wait, I’m of the opinion that the institutions are more likely to be buying than selling.

    Since I started writing, I’m starting to see a few larger blocks crossing on the buy side. Although *there* goes the price.

    Anyway, I’m ready to double down if given the opportunity.

    reinharden


  24. Ouch. I had sold a lot and moved into April, but ouch. The Street is relentless. They were relentless before earnings. Cramer couldn’t come out and say sell AAPL because he knows it will go higher and the earnings were amazing, so he said sell all tech instead. Simply amazing.

    Should have taken so much high volume buying last week as a concern. Live and learn.


  25. Is much of this AAPL s**t likely options shenanigans?


  26. what time is bernanke today?


  27. digger,

    first hour of trading often doesn’t mean much

    watching my LEN puts closely

    bear in mind, there’s a bunch of HB earnings releases next week – CTX, RYL, BZH …

    anyone else notice that interest rates have been inching up as well?


  28. Qs are holding up well against a Nasdaq sell-off. I wonder how much Cramer induced panic is involved here?

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

    HOKU – I guess we missed that one! Up 75% for the day…

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

    There was a rumor that one of our ships got hit by Iran – didn’t happen.

    Could spark a rally as false rumors often do.

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

    HB puts – yes, we’ll see if Bernanke moves it one way or the other. I’m worried about China’s new tax, it could chase money over here or – if they are taxing no matter where they invest – it could take money out of our market, hard to say.


  29. This is entirely options shenanigans. All future months on sale.


  30. Taking DIA $125 puts for .20 to cover all open positions as I may have to start selling!


  31. As a random speculative play, I’m picking up AAPL Jan $95 (QAAAS) at $0.10 or $0.15.

    reinharden


  32. ES and ER2 futures getting sold on massive volumes, am I seeing this right?? I’ve got a 2 million ES contract 5 minute bar!


  33. HOKU

    Solar panels, young man, they’re the wave of the future!

    Wow – have looked at that one in the past, talk about a pure tech play


  34. AAPL – from recent high to low in 12/06 of about $77, 50% retracement would be about $87.50.


  35. Apple busting 5% rule at $90 – what a scam! Nobody can be this irrational. Rein is right, this is not a volume sell-off.

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

    Bernanke starts by 11 I think, will talk for maybe 2 hrs, maybe longer as Dems haven’t been able to ask questions for 12 years and there may be some posturing!

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

    Took DD on SU Feb $65 puts at .55 (couldn’t resist!).


  36. Rein: I just jumped on the AAPL 90′s. This should find a floor soon I hope.


  37. size,

    over the years, there are a number of fairly predictible moves that Apple makes, one of them is January earnings. Over the last few years no matter how great the earnings were after the Macworld run up Apple has sold off on news. Last year was particularly painful due to Intel transition uncertainty. This year it seems Mac sales weren’t “good enough”. Earnings were amazing. Go back and have a look at the charts and corresponding earnings over the last couple of years, you will notice a few patterns specifically:

    Jan – Apr earnings generally selloff.
    Jul – Oct earnings generally pop.


  38. Phil,
    Are you looking to DD on HPQ FEB45 calls?


  39. Nasdaq
    2452! Things should start to rally; at least, I hope so!


  40. Wow, this is ugly guys, the markets are running scared of the Dems in a big way! GOOG, BKX, SMH are getting whacked along with AAPL, not to mention NYA giving the morning rally all back!


  41. Thanks Yev, I will.


  42. CVX Mar $70 puts are $1.90, lower than where we made 43% on them from 1/4-1/16 so keep an eye out there.

    Here comes Bernanke!


  43. Finished by truly speculative QAAAS position at $0.10 since no one would give me any at $0.15.

    reinharden


  44. Sorry, no one would give me any at *$0.05*

    reinharden


  45. I hope I am calling the bottom with my alarm bell ringing! :)


  46. HPQ, no – they are a roll of part profits and I will hold them but I will not throw the rest of my profits into them.

    Whoa! Benanke said this is the calm before the storm and we could be screwed by entitlements!!!! Run away!! Seriously, this could be it if the markets start running down….


  47. PHIL- just to keep track….as expiration drawws near over consistent put seller of IWM continues to bat 100%, trading at 77.46 ……he stand to make huge as it stays under $78. I’ll report what puts he sells for FEB


  48. I take it back (partially) it could be interpreted as a positive that Ben feels he can work with the Dems to find a solution – he may be making an end-run around Bush to talk sense with the new bosses!

    I would be very happy to lose my .20 on the DIA puts today!


  49. Lots of manipulations going on. Now, time to scare out the puts!


  50. Offering DD on RDS.A Feb $65 puts at .50


  51. SHLD
    If markets rebound, we should new a new 52-wk high very soon!


  52. If the numbers are bullish and oil spikes PTR is overdue for a rebound.


  53. TSO Feb $65 puts DD at $1.10


  54. Bought some Exchanges ICE NYX
    Sold some retail GES AEOS ANF Probably to early


  55. ATI
    Moving again!

    LVS
    Puts, taking the profits, not moving much with the stock.


  56. Inventories must have been bad, VLO having a meltdown – whole group is following.


  57. AAPL sold 1,046,000 Mac units in Q1 2005.
    AAPL sold 1,254,000 Mac units in Q1 2006. Circa 20% growth.
    AAPL sold 1,606,000 Mac units in Q1 2007. Circa 28% growth.

    Year-over-year growth is accelerating!

    And yet we’re assailed with headlines about “flat sales”. Argh. I hate the media. ;-)

    And yes, I realize that sequential sales were flat. But sequential sales isn’t normally the basis of comparison for “mature” companies.

    Thankfully, in addition to a variety of options, I’ve a reasonably large position in the stock.

    reinharden


  58. OIl stocks dropping SWEET


  59. CME
    Hit 590 today!! Wow! Might be time to think about puts?


  60. +6.3M barrels of crude?

    Wow. Where are they going to put it?

    reinharden


  61. Crude at $51.21, down $1.05

    Distillates up 900Kb refiners at 87.9% (super low)

    Nat gas down 89Bcf – not much!

    Crude up 6.3Mb – total disaster. Biblical disaster.

    Gasoline up 3.5Mb – Armegeddon for oil!!!

    50.90 as I write it’s plunging!


  62. OMG – they can’t hold $50.70!!!!


  63. FXI
    Why is this sliding, considering Asian markets were up big!?


  64. AAPL – There was 1 less week in this year’s Q1, that’s 8% right there!

    CME – will kill you! Very dangerous to play either way, worse than Google.

    People who bought 150M barrels of oil for March delivery this week must be freaking out!


  65. Gas Storage: 89 Bcf vs my 80-95 range. ;-) Maybe seen as a little bit high by the spinners and you should definitely look for 170+ next week. My sense is that no one will care given the following.

    Oil: 6.8 mm bls build!!!!!!!!!!!!!!!!!!!!!!!!!!!!
    Dist up only 900K
    Gasoline up 3.5 mm bls!!!!!!!!!!

    Vindication is a dish best served with a glass of cheap crude!


  66. Happy Trading,
    CME at $590 might have been a bad quote


  67. FXI – I mentioned this morning, Chinese banks and real estate getting killed on new tax.



  68. FXI
    Should we hold on to the calls?


  69. T starting to move.


  70. CME
    It does move fast. And, the FEBs are expensive!! It however does move in one direction at a time and doesn’t jump back-and-forth much. I guess 20B market cap is easier to move than GOOG’s 150B.


  71. That’s a 10Mb build in the middle of the winter – that indicates a 3-4% decrease in consumption for the world’s largest consumer – imagine what the people who actually economize must be doing!

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

    They are trying to stabilize oil at $50.79 but they’re having trouble getting back over. Dow is ignoring XOM and liking it on the whole.

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

    Ben says we have $38T in unfunded obligations – that’s a little short!

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

    Dow:

    BA coming back from silly drop – that’s a good sign
    CAT keeps cranking
    DIS (I knew I should have bought them!) up again
    GE – always a disappointment
    IBM – nervouly trading down a point
    HPQ – down a point
    MRK/PFE – safety stocks
    T – 1.2% Boo Ya!
    VZ – 1.1%

    INTC and XOM causing problems.


  72. FXI – I sold calls against and I’m content at the moment – expecting them to expire below $107

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

    Apple holding the 5% rule – this might be it for a sell-off.


  73. Lender story is not congruent with HB story,

    “Bad Loans Hit Housing Lenders”
    http://yahoo.businessweek.com/investor/content/jan2007/pi20070117_457554.htm

    Something has to give eventually…


  74. Cool! Bernie Sanders (I-Vermont) is pressing Bernanke on the Wealth Gap!

    Crude down to $50.15!


  75. OIL now $50.15


  76. FXI
    Phil, thanks! I don’t have the Jan’s. I have the FEB 107s.


  77. Oil Put plays are panning out pretty good. Now for some work on finding what the bottom will be.


  78. i love this bernie sanders guy


  79. Phil, please pardon my ignorance. I am not an expert trader like you guys. I just joined yesterday to pick up some tips from you guys.

    What is “Taking DD” as in “Took DD on SU Feb $65 puts at .55 “? Does it mean you bought Feb $65 puts of SU at 0.55 ?


  80. Almost 70% up on goog 450 puts
    Phil : Would you treat this as an automatic sell or hold on?

    Thanks


  81. Bernie’s questions were scathing!

    Ben says wealth gap must be addressed. They decided Brazil might be as bad as us but no other countries came to mind that are this disparate. Says he wants to address the issue.

    Deficit and Tax Cut – he will not support or oppose specifics. Ben suggests eliminating exclusions on high income tax payers. Trade imbalance caused by us saving too little and we are borrowing from countries that save more (pretty much all of them). Bernanke is much sharper and more confident sounding when you engage him in an academic discussion – this is a good thing, I think over time he’ll get really good at this!

    Free Trade – too large a topic to get into.

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

    The NYMEX boys are just killing themselves to keep from printing a $49.XX on oil.

    GS does not seem happy with crude collapsing.


  82. FXI
    Took a closer look. The volume is not very high. I think I’ll hold them and see what happens next week, until the expiration trades blow over. Although for the upside, it looks like we’ll need to break 108, and, the bollinger bands are narrowing in. For the downside, we bounced back from below 101. We might be stuck in the 105-107 range for a few more days, unless Asian markets make big moves?


  83. XOM – 71.50 seems to be a brick wall, what’s up with that?



  84. Phil
    STX play??
    Buy Jan caller and move to Feb in case stock drops more (more to gain on Feb than .05 Jan)


  85. DD = double down. Usually we aim to take the same number of contracts as original play for 1/2 the money. See strategy tab on entering and exiting positions.

    See the portfolio tab for a list of existing positions – always feel free to ask if you’re confused (that’s how we know what to put in the FAQ file!).

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

    GOOG – when in doubt take half! Then you can set a loose stop on the rest but don’t give up 50% gains!


  86. GOOG
    “When in doubt take half!” Yep, took half off yesterday! Great call on the 490, Phil! Waiting for new entry point, although we should keep an eye on the whole market.


  87. http://blogs.zdnet.com/BTL/?p=4270

    why csco wants to sue apple


  88. AAPL showing signs of life at 91-ish


  89. Phil it doesn’t hurt that we are the wealthiest country in the world, how can we save when we have so much of it to spend. :)


  90. U.S. natural gas supply down 89 bln cubic feet: Energy Dept.

    The Energy Department said natural-gas inventories fell 89 billion cubic feet for the week ended Jan. 12. Global Insight expected a decline of 80 billion. Total stocks now stand at 2.936 trillion cubic feet, up 354 billion cubic feet from the year-ago level, and 491 billion cubic feet above the five-year average, the government data said. February natural gas was last up 5.6 cents at $6.29 per mil


  91. I’m looking at the 10 minute chart on VLO . Up volume is non-exisistent. . This is a headfake and will at least close to 50 or possibly below. . Just my thoughts.


  92. SU Feb $65 puts are now trading at 0.85. Is it still a good buy ?


  93. AAPL
    Mr. Reinhardt,
    Buying the AAPL 110, 120, and 130′s is an example of laddering?
    Thans,
    JB


  94. FXI – Big moves? China’s at 20,200? A 1% move is 200 points! BEWARE BIG MOVES…

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

    XOM is a safety stock when you don’t know where to put your oil money. Also, they are going to celebrate holding $50 as if it’s some sort of victory (T Boone set up the psychology for that yesterday by predicting $50 as the bottom “$48 at worst”)

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

    STX – well that’s annoying!

    Who the heck are FTN Midwest? They went from a Buy to Neutral so I’m not selling into a panic – they were holding up great in a bad Nasdaq and I have them through earnings with a $1.20 basis so at .95 they’re not even a DD candidate. No reason to give my caller back a nickel between now and tomorrow so hope for a bounce.

    SOX running into the 5% rule for the week at 456 (median high was 480) but you could argue that 482 was a legitimate consolidation which makes 457.90 a bounce point, where it just bounced from.

    Since 480 is the 20% rule from the July/Aug low of 400 – you could construct an arguement that this is a very nice, healthy consolidation and very bullish if we hold $460(ish).

    Nov-Dec ’05 the SOX went from 420 to 500+ and pulled back 20 points before rocketing to 540 in Jan-Mar.

    Taking a DD on IGW Feb 65s for .20 (actually a Triple, as it’s so cheap). XXX

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


  95. Anyone tracking BIDU ? Has given up most of its gains it accumulated over the week.


  96. IGW do you mean FEb 55?


  97. sorry I was thinking puts.


  98. SU – I wouldn’t chase – I’m taking half off if it flinches to reduce the basis.


  99. STZ is $25.01. Nice to see it green.

    j


  100. KBH feb puts
    Time to add more? STill a believer?


  101. Thinking of taking half of EOG, MUR, XOM puts off the table


  102. Phil,

    QQQQ’s – Is this a good entry point for calls?

    N


  103. Boy, oil defending 50. I would love to see it break down to the 49s today.


  104. So now Bernanke is supposed to manage the pills in someone’s closet?

    You smoke, do drugs, are fat, don’t excersize…the government won’t pay.(government meaning my tax dollars.) Why not that plan?

    Sorry for the rant…

    K


  105. Jacox Boy – Yeah, the $110, $120, $130 buy was a very simplistic ladder.

    I wasn’t planning on having to build that today, so it’s not very complicated and the size of each rung was therefore more intuitive than analytical.

    reinharden


  106. But how long can they hold 50? Because once it hits 49.xx it could take a nice dive


  107. AAPL sneaking up on us! I think they will try to pin $90 to the close.

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

    ANF – Flipping my Jan $70 caller ($10.15) to Feb $80 caller ($3) for a net loss of $4.65 which I will add to the basis of my Feb $72.50s. XXX


  108. NDAQ already owns about 29% of LSE so it seems to me that LSE buying back shares would help NDAQ. Trying to puzzle this out makes my head hurt. :-)


  109. That XOM 71.50 wall is amazing.


  110. dday97 – not a bad idea. The Street just doesn’t want to give up. I’m thinking about calls on OII and PTR but am still on the fence about it.

    I….think….oil….will….trade….off…into….contract…..expiration. The speculative net position is headed into short territory for the first time in long term memory. We won’t know until CFTC releases the latest data either tomorrow afternoon or Monday (sometimes they’re lazy)

    I’m holding my MUR puts here but the smarter thing to do is probably to scrub them and reevaluate after the “$50 antipatory bounce #2″ (we got #1 yesterday) has driven the stocks up again.

    Also next week you’ll be looking at smaller builds in HO (weather and utilization) and gasoline (utilization). Refiners took the week off and utilization tumbled from 91% to 87%. Almost unheard of this time of year. How do you know you’ve really got too much of something? When people quit making it.


  111. QQQQ – not until the SOX really do turn.

    LOL Kays – I agree, Congress asks embarrassing questions sometimes!

    $50 – there are guys who will lose Billions of dollars if oil fallls below $49, including some hedge funds who may fold at $45 so don’t expect them to knock over their king and say “good game” – this could be a big, ugly fight.


  112. Don’t you know the weather girl on CNBC is greatly Ben’s testifying today! How do you put a postive spin on those oil numbers? I’m confident the CNBC minions are scripting a spin about “cold weather and wait ’til you see next week’s numbers” as I type this. LOL.


  113. MC buy back but stock not moving -why?


  114. zmann, good insight. Sold half of all 3 of my positions and will wait for the probable bounce to reenter.


  115. NDAQ – it’s the 70% they don’t own that I’m worried about.

    Let’s say you own 30% of a $1bn company and you want the rest and you are offering a 20% premium = 1.2Bn – your $300M = $900M

    Now they buy back 20% of the stock and raise the value of your shares to $360M but the whole company is now worth $1.2Bn and your 20% makes $1.44Bn – your $360M = $1.1Bn (about). So not only did they cost you 66% of your initial holding (which you probably stretched to buy) but they also used up the cash you thought you were going to be able to get your hands on when you took over the company.

    It would be illogical for the Nasdaq to continue to pursue this but they are now backed into a corner as they have no other expansion plan and the market has taken the news positively and rewarded them for going after the LSE – they will likely be punished severly if they back off as they have already indicated they think its very important that they form a global exchange.

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

    Out of DIA puts even – things look pretty good to me!


  116. MC is an ADR – wont’ really move until Asia opens.

    1/2 out of oil puts is a very sensible move!


  117. YRCW up another buck!

    T wants to break $35 so badly!


  118. IGWBM (aka IGW Feb $65 call) – I’m in too although at a higher price. I doubt that IGW will get to $65 by Feb expiration, but with the increased volatility, it shouldn’t have to move much to increase the time value. So I like it.

    reinharden


  119. Europe closing – time for NYMEX manipulators to pile on!

    Total build is 11Mb – in one week! They are trying to claim that this has something to do with the Houston Ship channel from last month….


  120. Phil – NDAQ explananation – thanks!


  121. http://www.engadget.com/2007/01/18/50-percent-of-your-iphone-purchase-to-pad-apples-wallet/

    According to iSuppli (no affiliation with Apple, of course), the 4GB iPhone will yield a “49.3 percent profit margin on each unit sold at the $499 retail price,” while the 8GB rendition will kick back a 46.9-percent margin. You heard right, they’re supposing the $499 mobile only costs Apple $245.83 to produce, while the 8GB flavor demands just $264.85.


  122. Hmm…one site is reporting:

    Apple Inc. price target increases:
    • Citigroup: to $105 from $98
    • UBS: to $124 from $118
    • Piper Jaffray : to $124 from $99
    • Prudential: to $100 from $90
    • Bear Stearns: to $130 from $125

    Odd that I’ve not seen that in my ticker. I need to see if I can verify any of that ’cause I’ve only seen the JP Morgan downgrade. JP was the highest analyst on Mac sales, so had no choice: they had to either say they were wrong or downgrade.

    reinharden


  123. LEN

    Should have waited until this morning to DD, could have gotten more Feb 50 puts for 0.70

    Another LL


  124. Taking out AA Jan $30 caller for .55

    Phill Fed very low inflation number – optimistic sentiment – much strengthening


  125. AAPL – Engadget/iSuppli is probably a touch high because that particular screen should cost quite a lot more than currently shipping screens. There’s likely quite a lot of commodity parts in there, so quite a lot is pretty cheap. But in order to operate at the demonstrated speed, there has to be either some custom silicon or some NVDA-style silicon to drive the graphics. Which probably had a fairly high initial cost.

    Anyway, the first million will cost more than the 10th million.

    And you always start off by targeting 50% gross margin. When Lucent was designing 802.11 products, the target was 60% gross margin for Lucent. Then a distributor got a 20% gross margin and the wholesaler got a 20% gross margin and the retailer usually ended up with 10% gross. That meant that something with $100 in COGS retailed at $250. (before you count in transportation, etc).

    I mention this as why AAPL and DELL went to direct sales models.

    reinharden


  126. Thoughts on MOT into earnings?


  127. Prof:

    I think wait until Monday morning to buy the puts on the HBs. Too much options shenanigans right now.

    K


  128. AAPL (and others) -

    In an interesting twist, the U.S. Attorney for the Northern District of California resigned. He was responsible for leading the various Silicon Valley related options backdating cases.

    See http://www.businessweek.com/technology/ByteOfTheApple/blog/archives/2007/01/the_resignation.html

    There’s some speculation in various quarters as to whether or not a successor will be as interested in following through on the drudgery portion of the case now the headlines portion is fading.

    reinharden


  129. Bought XOM Febr 70 puts @ $1.2 (with trailing stop of .10 as I can’t be online today to monitor)

    Bought TSO Febr 65 puts @ $1.2 (also with trailing stop of .10)

    ————-

    The drop in crude has been incredible.


  130. Phil, Zmann – yep, we’ve been correct on oil fundamentals 6 months before Wall Street woke up that there is no logical explanation as to why oil should be $61. Unfortunately, we’ve taken heavy lossed for most of that time. It may be time to cash in :)


  131. That iPhone report is rubbish. It completely negates to mention the Cingular subsidy on the phone… which will be something more than $0…


  132. CNBC guest calling oil drop a “head fake ” LOL


  133. The only faking is the junk keeping oils head above water


  134. I made my MOT bed and I have to lie in it!

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

    EBAY crushed on shenanigans I think. This is why you really want to avoil buying your callers out early!

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

    Head Fake! LOL!

    Just watch the $50.79 level – not that anything they can do means anything under $52.10…


  135. Phil, I guess the Chinese overpaid for those millions and millions of barrels for their SPR — looking back now, they overpaid by $15-$20 per barrel. No very smart, lol.


  136. …and by leaving out the Cingular subsidy I think the report grossly underestimates the cost of the phone NOT the Apple margin. I think they had a numer for Apple’s margin then matched the cost to get where they wanted.


  137. Hugo Chavez wants to make laws by decree.

    http://tinyurl.com/32ktus

    He’s doing away with the wealth gap in Venezuela, at least for government employees. Since he’s nationalizing a lot of things, that means most people in Venezuela will be public employees.

    I wonder if that salary cap applies to him. Or do you need a salary when you are a dictator?


  138. LOL – the Republicans are fillabustering a bill that would make them pay the full charter fare for flying corporate jets!

    Deferred compensation limited to $1M – huge tax attack on CEO compensation…


  139. Hi Phil, do you still like Best Buy (BBY) at this level?


  140. Someone in Dubai is building an iPod shaped highrise, sitting on a docking station!
    http://technology.guardian.co.uk/news/story/0,,1978724,00.html


  141. Ruling by decree means he has the keys to the treasury!

    I’ll say one thing for Chavez – I would be shocked to find out he’s doing this for personal gain. Of course he will live well and be set for life but I don’t think he’s being excessive (like Marcos). I think the guy genuinely believes in what he’s doing…

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

    This is it for the SOX (457.90), lower than this and we have a serious problem.

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


  142. So I am getting killed in tech right now. There is a lot of fodder from Cramer and CNBC that it is time to bail out of tech. I will admit I tend to that direction simply because I did not get back into the market until around October, so I missed most of last year’s runup.

    What are the groups thoughts on tech from a general or macro perspective over the next six months?


  143. AAPL – It’s really hard to come up with an accurate cost of something when you’ve never touched it. Much less taken it apart. Ya’ll may recall that there were several possible vendors for quite a few of the components. So these guys are just guessing as well. Granted, there are lots of people that are pretty good at guessing. And, undoubtedly, they’re not accounting for the cost of “OS X” whereas other people would have to pay per unit for Windows CE/Windows Mobile/PalmOS/SymbianOS.

    Also, I’ve confirmed that those AAPL upgrades really were issued. Sure wondering how come eTrade didn’t feed them to me.

    #####

    Some random thoughts on iPod growth. First 20 months of iPods existence: 67 million units. 21st month: 21 million units. About 24% of all iPods were sold last quarter, more than 50% were sold last calendar year. 21 million units is roughly 1 out of every 300 people on the planet.

    Total digital audio player market (given AAPL’s alleged 72% marketshare) == ~29 million units.

    Yeah, why not go play in the cellular market where there are 2.7 billion subscribers (and growing) replacing their phones every 18 to 24 months on average.

    reinharden


  144. kays,

    wouldn’t “options shenanigans” imply buying puts THIS week prior to OE?

    e.g. buy cheaper puts as stock price is run up towards max pain by OE?

    in any case, placed an order to buy ultra-cheap RYL Jan-08 35 puts for 1.40
    that price is the lowest yet for that contract, low risk play into earnings next week


  145. BBY – well I would have loved them this morning had I noticed them at $48! I really don’t think it’s a good time to buy calls until the Nasdaq and the Qs stop falling, which may be here but it’s a tough call ahead of expiration.

    I do have the March $52.50s and I am happy with them at $1.51 entry and they are currently going for just $1.20.


  146. phil, didn’t get in on the stx play yesterday. Should I pull the trigger now or wait? vlo down only .37 – give me a break!


  147. My thoughts on tech (and everything) is that when everyone knows it’s time to get out, it’s time to get in.

    It’s harder from an options perspective and I’ve been picking at stocks more on weakness.

    It’s not like INTC/MOT/MSFT/STX are actually priced *high*. The large techs were relatively cheap before and were approaching reasonable. At least from an historical P/E ratio perspective. But the S&P500 is also historically underpriced. The last number I saw was P/E was under 17 for the S&P500 as a whole. This after how many quarters of double digit profit growth?

    I don’t know which way the next 1000 points on the DJIA is going, but I’m content to keep buying SPY and QQQQ components at this levels ’cause I’m pretty sure, barring bigger issues than the stock market, that 10 years from now, they’ll look relatively cheap .

    But I’m happiest figuring out companies that are doing good and then letting the market perception catch up to my analysis.

    reinharden


  148. RE: the KBH Feb puts, (now down by a third). I forgot if this was an earnings play into Feb, or should we be looking to get out? The site keeps getting better, and lots of great insight into our plays!!

    SDjerry


  149. Nice two day drop on LVS


  150. Out of AMZN Feb $37.50 put for $2.40

    DD on AIG FEB $75s for .15 (Mar $75s are $1.15)

    CVX cited as the biggest oil royalty evader (80% of the outstanding charges!)

    DD on GRMN (2/14) Feb $55s at $1


  151. Reinharden – I find that quoting the “billions” of mobile phone subscibers (or, as Job’s did the “957 million phones sold last year”) to be rather disingenuous when SMART-PHONES only account for a TINY fraction of those numbers.


  152. AAPL/INTC/MSFT -

    These three thoughts cross my mind that:

    1) AAPL couldn’t have afforded the visability that the iPhone launch has provided it

    2) MSFT has to be fuming because they probably thought the month of January would include an occasional mention of the imminent consumer launch of Vista. January 30. We all remember that, right?

    3) I’d suggest that this blizzard of “cool”, “innovative”, “it just works”, blah, blah, blah might well translate into more Windows to Macintosh converts in this quarter. If there are widespread reports of things not working in Vista as people attempt to upgrade their consumer machines, how many waiting to see what happens will decide to just buy a Mac instead?

    I’m still long MSFT. But, while I’m disappointed by the Mac unit sales last Q and the overall forecast this Q (although it’s about what one would expect from AAPL), I’m liking the way things are lining up for AAPL in 2007.

    And barring a leapfrog advance by AMD, INTC could care less whether it’s Wintel or Mac.

    Sorry it’s not actionable, but I think it’s an interesting backdrop.

    reinharden


  153. No one has even considered the concept that Apple could end up with 20% of the global phone market – not nec. with IPhone but with the “Nano” version that is sure to follow!

    20% (MOT) = $40Bn in sales and $4Bn in profits. The global mobile phone market is growing 20% a year so that 20% doesn’t even have to be taken from any competitors, there is room for another major player.

    The best performing player in the market is SNE/ERIC, who only sell top-of-the-line phones.

    So Apple computer – who currently sell $17.5Bn a year with $2.5Bn in profit, need only to capture 5% of the mobile phone market in the same Expensive/Cheap/Cheapest fashion that they have captured 80% of the MP3 market (and they were not the first there either) in order to boost Revenue and earnings 50% – and that’s using MOT’s numbers and they are being hammered for not making enough money!!!

    OMG – stop me, I just taked myself into buying more Apple….


  154. GRMN
    Phil,
    At this point, why not the GRMN APR 55′s at 2.05 instead of the FEB’s?
    JB


  155. c’mon… we need to get the markets going


  156. RYL – be careful prof – the CEO might say that IF 20M Chinese people take a boat to america and get high tech jobs and really good credit by June THEN they might all by homes and RYL can beat estimates… It worked for Lennnar!

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

    STX is a fundie play, I still like them, will be happy to roll them forward a month until people get it.

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

    LVS – like I said, fundies! 8-)


  157. I’m all out of Aapl but itching to get back in
    would the FEB 80 put and $100 call for $1.30 make sense?
    thx


  158. Hey what do you guys think about opening a position on ACN? Looks like fairly cheap vertical/diagonal spreads can be put on for AUG07 or JAN08. I lean away from calendar because of its consistent uptrend.


  159. Phil

    why are you out of AMZN ? I understand protecting profit but seems a bit early considering last few years where stock keeps going down towards mid feb?

    also any logic about CAT going up? Feb put doing well and am considering bailing unless I understand the logic if any

    How about KBH? time to add more or cut loss or wait?
    Thks


  160. GRMN – because the Feb $55s are down $1 in 3 sessions and I think they are just held down for a bounce, I can always roll to April so why pay the additional premium. Also, it’s just easier to DD on one position if it’s not hopeless than it is to open another!

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

    If you want to get the markets going, put in an offer to buy SNDK for $10Bn~


  161. PHIL – you’ve made a slip on the AIG calls – it’s the *MAY* $75 that’s trading at $1.15 not the March.


  162. LVS taking a nice dive. Out of my Feb 100′s for a nice little gain (was the house of pain for days) and ready to move the Mar 95′s, up 48% in two days…


  163. Re: CVX cited as the biggest oil royalty evader (80% of the outstanding charges!)

    …and it’s down a penny. I guess the Street believes that Congress is going to give BigO a walk on these royalties like they did with the MMS royalties in the Gulf! It’s just sad really.

    Wait a moment…there goes oil heading back down.


  164. ACN – too rich for my blood but may go up forever – great company. If you really have faith in the trend continuing you can take the Jan ’08 $45s for $1.15 and sell the May $40 for $1.10. You can set a stop-loss if the spread goes more than .40 against you and if the stock continues along it’s long-term trend, you could pick up .50+ for your troubles.

    AMZN – I’m expecting a bounce and 60% profit in 3 weeks is a lot of money so I took it. I could be wrong but this was a big dip today and that was a big position for me as I was very sure about it and it took a long time to move. This is where they bounced on the 10th and I wish I had sold then – Feb is not that far away!

    As a rule, I tend to follow the rules more and more the closer to expiration I get…


  165. Phil,

    Was going to just buy some common shares (boring I know. ) of HPQ. .Good time to buy on the pullback or would one normally wait until the Option Expiry is over.. Looks like it will be pinned roughly to 42.5

    Thanks, John


  166. Phil:

    Any chance of a macro tab at top

    Hate Oil
    Short term bearish on Google
    Short term bullish in Garmin
    Sandisk bearish

    in 1 paragraph : a reader could catchup on your overall stance?
    Thanks


  167. RYL

    LOL – good one, Phil!

    As we have seen with oil over the past few months, and now seeing with LVS, sometimes it takes a while for price to catch up with fundamentals.

    The same has to come true with housing everntually this year. Of course, I am beating a dead, decaying, fly-ridden, smelly horse carcass here!


  168. AIG – oops, there goes that logic! Didn’t occur to me they don’t have March or Aprils – I just saw the price of the next box beginning with M! Still, if they are having earnings soon I’ll be happy to own them. Last earnings were 11/9 so it’s a crap shoot when they schedule.

    Wow! They chopped Feb contracts down to 84K! That’s 40K knocked off today. Now 373K in March and Feb is a short month with a Holiday in is so I’m not sure what they think they are accomplishing.

    Be very very careful as they now have some dry powder available to jack Feb back up because they can probably afford a small build from here.

    http://futures.tradingcharts.com/marketquotes/index.php3?market=CL


  169. jack_of_hearts –

    I say “billions” because the iPhone is fairly obviously the first of many products. AAPL isn’t targeting just the subset of the US market that is the subset of Cingular’s customers that use smartphones that only use GSM/EDGE.

    AAPL is targeting the upper end of the entire cell phone market. And to get there will require a family of products.

    In it’s most recent quarter, AAPL probably had an iPod ASP of $170 +/- $15. The last estimates I saw for ASP for MOT and NOK were $121 and $113 respectively. Since AAPL doesn’t fill compelled to compete on the low-end, it’s not hard to imagine AAPL with a line of phones starting at $199 in 12 to 18 months.

    You’ve got to look at AAPL and Jobs historically. They’re not launching the iPhone because they think that the 10 million most affluent people in the world will eventually use it. Remember, they launched the Apple computer to let everyone have computers, the Macintosh computer so that everyone could use computers, the iPod so that everyone would have a digital audio player. They’re launching the iPhone because they think that, in a few years, everyone will use phones like these. And, of course, because doing this made ‘em some money.

    When Jobs and AAPL say that they’re going to sell 10 million iPhones in calendar 2008, it’s certain that they’re not talking about just the current one. For example, you’ve got to have at least CDMA/W-CDMA/UMTS to launch in Japan and Korea. And, in my experience, this phone will sell in Japan and Korea. You’ve practically got to have HSDPA/HSOPA/HSUPA to succeed in Europe (although you can launch with GSM/GPRS/EDGE…you just won’t do as well).

    But once you build the core technology and demonstrate that there’s a market for it (aka the current phone), changing the access media (aka the confusing collection of letters) is a fairly simple engineering exercise. Although, at the moment, you also have to wait for the chipsets to catch up in order to get 3G technologies that don’t kill your battery.

    Delaying 3G until MacWorld 2008 means that
    1) the chipsets catch up
    2) the chipsets get more affordable
    3) the screen, likely the single most expensive component on the phone, drops by ~50% in price and makes selling 10 million substantially more palatable

    At least, if I were building this product roadmap (and, by the way, I’ve done a few product roadmaps), that’s what I’d probably be thinking.

    Anyway, key point, *the* iPhone is just one of many of what promise to be a family of iPhones. The relatively slow 2007 launch is something of an experiment. And a great advertising campaign.

    And yeah, it could, of course, blow up. ;-)

    reinharden


  170. Phil,

    How about DOW…nice call on the Mar 45′s…..should we take half with the double and let the rest ride free? Also, we don’t have much left on the HAS call we sold for Jan. Buy it back at the lost or hope for a pullback tomorrow.
    Thanks,


  171. 1/2 out of LVS Mar $95 puts for $4, applying $1 to Mar $85 puts and putting a stop on them at $1.50 (up .25). Setting stop on the rest of the March $95 puts at $3.50 (.50 trailing stop).


  172. OK, are we still sweating out the MRVL trade, or is it time to DD, thinking that we’ll spend a few days at this strike ?


  173. AAPL – A fuller version of the article that Engadget references can be found at:
    http://www.eetimes.com/news/latest/showArticle.jhtml?articleID=196901711

    reinharden



  174. VLO finally went below 50


  175. GRMN under 50! Has really fallen apart in last 20 minutes. How about the Feb 50′s instead?


  176. AAPL has a *lot* of buying support at $90. Several 50k buy orders flashed across.

    reinharden


  177. Phil,

    I closed my eyes and joined you in Grmn feb 55′s. Tell me again what we are looking for. Thanks.


  178. RYL

    IMHO,

    For the record, I view Lennar (along with Pulte and DR Horton) as a more premier builder and definite survivor in this housing downturn. These companies are better managed, have been more aggressive in responding to market conditions and have healthier balance sheets than others such as CTX, RYL, and BZH.

    BZH is among the weakest in the group, but its price in relation to its book value largely reflects that view already. RYL has had more of a run up off its lows and is a better play on earnings here.


  179. HPQ – great IRA stock – so many ways they can win long-term. No competition in printers, best retail distribution of desktops, building a credible consulting arm…

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

    Dan – you guys need to stop thinking of new things for me to do! ;-)

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

    OH NO – now CNBC says low oil prices may be bad for the economy and the market! Quick everyone, go waste some fuel!!!

    They sound like my kid when I catch here lying and she makes up a bigger lie to cover it up….

    Now they are trying to spin that the Saudis are manipulating oil down to hurt Iran (implying that this drop is unnatural).

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


  180. Iran/Saudi Arabia – Hmm. So Iran says that oil revenues alone are insufficient to ensure long-term energy security for its citizens. And that Iran therefore needs nuclear power.

    So, the theory is, that by reducing Iran’s oil revenue Iran will need less long-term energy security…umm…oh, never mind.

    reinharden


  181. If you don’t understand it Rein, you need to drink more kool-aid.


  182. grmn was dropping like a hot potato? Seems to happen everytime I jump on something.. Anyway, Is it common that after a stocksplit that a stock will trend to trade sideways, instead of barreling dirctly back up? Why is this? I thought a stocks split because the company was doing extemely well.


  183. OIL BELOW $50


  184. Phil the Saudi’s did come out and say that they will be investing billions to raise production capacity. So there may be some truth to that story. Iran on the other hand is running out of oil and has no other means to power its booming economy but to buy centrifuge’s and produce nuclear weapons and is being truthful in that they would like to make BIG bombs and make Israel go POOF, so someone here is lying. Take your pick. Silly i know


  185. DOW – Wow, I didn’t notice them. I had gone in and out of the Feb $40s and applied .25 of the profit to take them down to .03 (as they had been a loser). The fundamentals are great with oil down but no way am I passing up a chance to take 1/2 off the table at .30! XX

    HAS, let it play out, no sense in overpaying – might pin down.

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

    MRVL – it’s May, relax!

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

    GRMN – too late for me, I took the Feb $55s and I don’t even want to know what the price is now. I still think it’s an option pin, we’ll see on Monday.

    There are 2,633 open $50 puts and I doubt they’ll get paid but there are 30K in the money puts at $50 with 25K of them deep in the money, that’s how fast this stock went up last year.

    Jan is a very funny expiration month because a lot of very old, deep in the money puts that were leaps from ages ago come into play. That’s why you have to ignore a lot of strange things.

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

    $49.95 – and that’s into the close!

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

    AAPL – you keep looking for that support Rein – you’ll find it one day! Remember, stopping at the 5% line at the end of day is NOT a good thing at all!

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


  186. everybody wants a peice of Apple pie
    http://www.amtddj.inlumen.com/bin/djstory?StoryId=CrA7:0aebqLqWmdCXnJC

    KUWAIT CITY (AP)--Kuwait will cut production of oil by 2% as a temporary, precautionary measure after a refinery fire, but national exports won’t be affected, a spokesman for the state-run petroleum organization said.

    Production will be reduced by 20,000 barrels of oil a day, said Mohammed al-Ajmi of the Kuwait National Petroleum Co. The country produces about 900,000 b/d.


  187. I believe the truth (as always) is somewhere in between. Iran does need high oil revenues to fund their nuclear aspirations, so a permanent decrease would be needed in order to place that initiative on the perma back burner. Like any cancer however, Iran will adapt over time to decreased oil revenues and find alternatives to be able to mfc nuclear weapons.


  188. Stock splits are nice times to take half off the table. Everyone just made a lot of money and now you just doubled the amount of shares so it’s a logical time to lighten up.

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

    Half out of T Feb $35s at .95 – figure it might pull back tomorrow and I save a dime.


  189. Finally some important news for a change
    DJ H-P Case Deal Would Drop Felony Charges


  190. thanks for the rebuttal Reinharden – enjoyable & interesting!

    Dan Ellis – I threw the figures for your strangle into my software, says you’ve got a 53% chance of one of the legs going ITM at some point during the next 30 days.
    Seems quite a high % to me – but these figures don’t tend to lie… appears to be a reasonably priced strangle and I’m not usually a fan.


  191. Technology aside (’cause it’s too depressing to pay attention to the market today):

    What I’d like to see is more computer and cell phone vendors bringing the rapid recharge technologies to market. It’s been two years since http://www.toshiba.co.jp/about/press/2005_03/pr2901.htm Toshiba was showing off their version of the technology.

    80% full charge in only 1 minute of charging. Full charge typically in under 5 minutes. Other companies had better stats on degradation per charge cycle (Toshiba was losing “less than 1%” after 1000 cycles; others were up to that stat across 15,000 cycles).

    reinharden


  192. HPQ charges being dropped – buy buy buy!!!!! They’re blaming the PI

    Feb $45s for .35!!!!


  193. just checked hpq…liking what i’m seeing


  194. I’ve been advocating that the Saudi’s watch out for Iran’s military spending for a while now. Glad to see they’re reading my copy. Iran’s got big problems since it subsidizes everything including it’s peoples’ use of gasoline and it’s a net importer. Oil down you have less cash to buy everyone off with. ROFLMAO at Adineedjah’s little problem.


  195. oh wow. is that what happened!


  196. Wow, Nasdaq is really going under.. Any thoughts?


  197. i’d double up on hpq but i’ve already got enough riding on it for my nerves


  198. CNBC: “Housing Implosion Ending”

    housing starts: MFH +42%, SFH -4%, biggest increase in activity in NE

    doesn’t increase of inventory in already soft market portend lower prices?

    laughable, at best

    why isn’t there a competing business channel yet :(
    now, THERE’S AN IDEA FOR YOU, PHIL

    you’re so much better than Cramer!


  199. OXPS – Am I the only one who made this play?


  200. Can’t we just take the QQQQ the rest of the way down to $44, call it a 2% test/correction, and be done with this in time to rally tomorrow? ;-)

    reinharden


  201. You guys do realize that Iran does have a legitimate desire for nuclear technology to produce energy right? They are a rapidly growing country and export less and less as their people consume more and more. There is a serious financial incentive for them to lessen the oil usage by their own people – just like every other one of the 50 or so countries that already have nukes, including the Saudis.


  202. HPQBI (as Phil said) – Why not, might as well buy something else down here.

    reinharden


  203. REIN(using a slow hippie type of speech) its a conspiracy man, why make batteries that can last longer than a few hours and need less than 8 hours to charge man. Its the battery company’s man they want the windfall profits. tongue in cheek

    Only thing holding back truly portable high tech gadgets is battery power, nanobatteries are the future. As is anything else thats nano


  204. LEN

    about to go negative on the day

    RYL

    raised my bid on Jan-08 35 puts by a nickel to 1.45. any takers? :-)


  205. Why Garmin calls? and do you like the aapl 80 puts with 100 calls for $1.25 for FEB?
    Thx


  206. Whole market breaking down. I wonder if appl is resting at the 5% rule, or if it is being pinned at 90. It sure looks like it wants to test the 50dma.


  207. digger, nope, I made the OXPS play also. I thought I was doing good because I got in for 0.75. Should have waited a day or two.


  208. Hey lets just surrender now!!

    There’s a difference with the Saudis they bought the weapons they don’t produce them. Iran would like to have the capacity to produce many and use them.


  209. daveo, how you gonna play it? Seems like good money after bad to me.


  210. QQQQ – Argh. $44.03 is only 1.995% I’m not sure I get to round that up and call it a 2% test…

    reinharden


  211. How many times is CNBC going to replay Cramer saying to dump tech? Geez!


  212. Nasdaq – yeah, I thought that was going to happen…

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

    Competing business channel – I know, we should do that. Someone would probably send a squad of ninja hit-men after our first broadcast!

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

    OXPS – OMG! What the hell is going on there? Digg I take it you didn’t stop out at some point?

    Earnings are 1/31, AMTD had great earnings but everyone is selling the sector…

    I hate to say it but I am loving this play once it stops dropping!

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

    Housing, it’s a 60 degree December in the Northeast – of course people started more homes! The only reason they don’t start homes is when the ground freezes.

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

    Cramer says the economy is bad. I cannot figure this guy out anymore…

    His logic for selling tech is because in 1990, when he worked at GS – they used to have a rule to sell tech in January. Has this guy done any actual research in the past 18 months???

    Oil closed at $50.42, .37 under my target floor! Watch out if VLO can’t retake $50.

    CVX down just .14 – offering $2.10 on the March $70 puts.


  213. why is CVX holding up? any clues?


  214. what aapl needs in the short term is a “charges dropped” type thing like hpq just got. no more investigation on jops options


  215. MU the risk to the downside is limited here, took a small position. Day trading BA for the last 3 days has been easy to say the least, today not so much.


  216. He did say he like AAPL! That should make this Chat happy.


  217. OXPS – Phi, should I risk a dd into earnings? AMTD did pop on earnings, but their red today.


  218. KSS up in htis mkt?


  219. SIRI spiking for some reason


  220. GRMN is a fundie play for earnings, I think estimates are way low. Apple I would not bet against for the same reason – If they had a better quarter they would have been called up into heaven!

    CNBC will say dump tech until every retail buyer dumps it, then Cramer’s pals will buy up all the tech and the Nadaq will gain 100 points in one day and Cramer will tell you how he told you that would happen and review all his great picks from December.

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

    SIRI off to the races agian!


  221. digger,

    I’m not adding to it, but I don’t plan on selling either. I’m waiting for earnings at this point.


  222. The buy orders on the QQQQ were pretty astounding. For awhile, there were 350k+ buy orders on three exchanges versus 10k+ sale orders.

    And the price barely moved…

    reinharden


  223. OXPS – wait wait wait… unless you are pressed for time, try not to react when freshly wounded.

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

    SIRI because FCC guy said maybe they can merge…


  224. Hmm. Now the QQQQ situation is exactly the reverse.

    Who pretends to understand days like this.

    reinharden


  225. Bob Pasani blames lack of tech leadership for tanking markets today.

    Says money has nowhere to go but retail is benefitting as low oil prices put consumer money into retail. Lack of clear leadership is leaving money on the sidelines.

    Sounds good but doesn’t explain LVS and WYNN suddenly falling out of favor (although LVS is just a scam)


  226. XOM – Someone, somewhere is not going to let this stock trade below 71.50 for long at all. This has been amazing to watch the past few days.


  227. You know its a pointless sell-off when BA gets dumped. What changed since yesterday? Their only competitor is down for the second time and getting the mandatory ten count before they even let them back in the ring!


  228. QQQQ is resting on the 50 day SMA…. Hmmmm. Buy, or wait for a bounce?


  229. Our market leaders GOOG and APPL need to turn first before making any long plays. (QQQQ)


  230. Phil
    “Watch out if VLO can’t retake $50.” You mean watch out in a good way, correct?


  231. I absolutely love OptionsXpress’ “trailing stop loss” order feature.

    Just had to say that.

    ———————

    What’s holding oil stocks up? The markets are down, crude crashed since 12/31, who are all these buyers?


  232. My puts on PBW – alt energy ETF – really starting to work. Cheap oil takes down the other commodities used to generate and makes the comps for those Ed Begley types producing clean coal or electricity seem all the more expensive.


  233. Phil,

    Are you still in on the HPQ 45 Calls?. . Might take a nibble at 0.35 cents. .


  234. “CNBC will say dump tech until every retail buyer dumps it, then Cramer’s pals will buy up all the tech and the Nadaq will gain 100 points in one day and Cramer will tell you how he told you that would happen and review all his great picks from December.”

    Isn’t that the truth?!!!! LOL

    Cramer’s minions are so mindless!


  235. Damn I chickened out on those MER puts yesterday!

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

    VLO – good for us oil bears, yes!

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

    Oil buyers – like I said earlier, they’ve sold off the NYMEX to just 84M barrels for delivery in Feb – possibly trying to create an artificial shortage during Feb or possibly looking to add 10% to the barrel count tomorrow or Monday to give a boost to the March contract.

    There are currently more barrels scheduled for April delivery (as well as June) than there are for February and February becomes final on Monday night. They either legitimately can’t take any more or they are trying to force an inventory draw during the next month. This is a good strategy unless it gets warm again, in which case the 373M barrels coming in during March are going to crush these guys.

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

    About time on PBW – good call!


  236. HPQ – yes I just grabbed those Feb $45s at .35


  237. Yay – Snow!!!


  238. Bought some MA after taking some off yesterday.
    I know Phil you hate this Stock


  239. Well, 20 million XOM shares were sold and BOUGHT today. How I’d love to have Goldman’s visibility into who the buyers are.


  240. RYL

    Who broke the logjam and snatched those 9 Jan-08 35 puts for 1.50? Someone here?

    My offer for 5 is the only (highest) bid at 1.45 … trying to save a nickel
    It’s fun to move the markets ;-)


  241. i would love to see HPQ finish green. speaking of can somebody throw out what its trading at right now, dont have realtime quotes on this comp and havent seen it on cnbc lately. just have my 20 minutes yahoo delayed quote.


  242. HPQ @ 42.31 at about 15:40

    N


  243. hpq bid 42.30


  244. IGW – at least it’s still .20! (best I could say about it).

    LOW Jan $31.25 gone for .05

    MA getting crushed today!

    Took a nickel on MOT Jan $20s (down 95% but at least I got a nickel!)

    OII Apr $40 put – 1/2 out at $4.10 – too much, too bouncy!


  245. VSEA getting smoked from LRCX earnings.
    Happy Trading when you getting back in FFIV? Or do you think Cramer is correct? HA Ha


  246. IBM, hope they can beat (after the bell), otherwise HPQ most likely going down with them. .


  247. Man, Mastercard! Holy cow!


  248. Phil, what do you think about EEM(emerging market) puts?


  249. VTUNP showing $4.50 bid for all that got stuck in this trade.


  250. QQQQ $45.63s gone for a nickel

    RIMM – damn, now my putter is in the money again!

    20M is a nothing day for XOM – the roaches are trapped in there!


  251. Mei – fwiw, I bought a small position in EEM JUN 110 puts @ 6.90 this afternoon


  252. What’s up with the solar stocks today? STP down over 5% on no apparent news. Any ideas?


  253. My screen is bloody red! ;(


  254. AAPL – phil do you think apple will bounce back on tomorrow


  255. Maybe it’s BRSN on the alt energy house bill. Still that’s a pretty good pasting.


  256. Taking IBM $100s for $1.60 as a craps roll


  257. ibm anyone playing?


  258. Solar – that’s why, ultimately, I held off on CY – the tie to SPWR was too dangerous.

    AAPL – I refuse to let my thinking get in the way! If they can push it down to $85, they will as the people who own it will still own it next month and the month after that but you pesky option buyers will be gone at the bell!


  259. JAN 100 straddle in place


  260. this cnbc girl is cute, wish i was home at this time more often. I would go long oil for her :)


  261. Holy collapse on brokerage houses and NYX, some fines for a few specialists and this occurs?? Think is a good time to play??


  262. Oh AMAT – we should have thought of that one!


  263. Joseph Morris, are you talking about your EEM puts?


  264. That was a rather ugly close in AAPL.

    Glad that I had taken sufficient profits before hand; however, I’m appalled at how much money I lost versus how much I could have had. Woulda, coulda, shoulda. I hate it when that happens. :-(

    By the by, did I mention that this AAPL reaction was stupid?

    reinharden


  265. From AP a few minutes ago…

    Saudi oil minister Ali Naimi, who earlier this week said he opposed calls from other OPEC members for new cuts in production, announced Thursday his country planned to increase its crude oil production capacity nearly 40 percent by 2009 and double its refining size over the next five years to keep pace with growing global demand.

    Don’t you know Chavez and Adnineedhajad are screaming at their oil ministers right now!


  266. Wish Tom2oc was here to give us a technical read on AAPL


  267. I’ll mention that I said a few days ago that all the semi equipment and material folks were at risk.

    Although I admit that we had that one head fake yesterday.

    But on a day like today, I don’t think you can take credit for saying something bad about any company in the tech sector. ’cause it didn’t much matter whether the company was bad or not today.

    reinharden


  268. Agree w/ yev
    we need a chart man here


  269. Mei – JAN 100 straddle is IBM – sorry


  270. Don’t play the brokerages! One more blow-up of a big fund and we could have a game of dominos going.

    Ameranth was wiped out on a drop in Nat gas that was not as severe as the two consecutive 20% drops in oil we just had Since August.

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

    Oh no! Bad news from IBM – what a waste that was!


  271. cof sees fy 07 7.40- 7.80 vs reuters 8.10 and guides lower ,there goes MA


  272. IBM results from CNBC 2.26 vs 2.19 estimated


  273. IBM at 96.6 on Level 2. . rats. .


  274. IBM beats, getting sold off hard


  275. [IBM] IBM Q4 net earns $2.31 vs $1.99
    [IBM] IBM Q4 First Call earns est $2.19
    [IBM] IBM Q4 total rev $26.26B vs $24.43B
    [IBM] IBM Q4 First Call rev est $25.67B

    [COF] Capital One Q4 net earns $1.14 vs 97c
    [COF] Capital One First Call Q4 EPS est $1.24


  276. IBM-what am i missing here? looks good to me, where’s the bad news?


  277. Nice call on the spread – I was an idiot not to cover with the Feb $95! Earnings aren’t even bad, just missed the whispers but now we can take a serious position on it if it sells to the low $90s.


  278. Joseph, do you plan to sell the Feb puts on EEM at some point? I’m new to option strategies. I used to only buy calls and sells. Is the way Phil played on FXI, buy leap call and sell the near term call, called “calendar spread”, should we do the similar thing on EEM? Thanks for helping me understand.


  279. 0.06 due to lower tax rate; apples to apples on ibm is 2.20 vs 2.19


  280. just missed the whispers?


  281. COF Q4 numbers look good though
    Low guidance hmmm… buy back shares hmmm….


  282. CWTR lowering guidance by 40%. One of Cramer’s favorite stocks.


  283. Well, in the absence of a recovery tomorrow, you’ve got the 50 day moving average at $87.31.

    After that, you’re possibly looking at the fact that AAPL is current in the range of the jump back on Jan 9. Which might not bring support in until $85 or so. P&F would probably require testing back to the gap somewhere around 82, but I’m not sure about P&F.

    And fortunately I’m not a technician. Otherwise I might be scared. :-(

    reinharden


  284. IBM – I doubt the volatility was there for a really good straddle, but if it gets whacked enough there will be a small profit. Good point on being able to take a more confident position when it settles down


  285. Nice timing from COF – saved me buying out my caller!

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

    When techs beat and get sold off, the general dumping is probably not over…

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

    My best guess on IBM is that they are unhappy with core growth as most of the gains are from acquisitions. Kind of picky with $100Bn in revenues and $8Bn in profits, about as good as XOMs ROI with a much better growth profile….


  286. The only thing that scares me is this, margin buyers thinking whatever stock it is that they bet on does the opposite of what they thought. This would explain some of the funny goings on as of late. I would tack on a percentage point or 2 just for these folks. You have to let the bad taste leave the mouths of investors. The street will let you know when its time to get back in.

    Have the power to buy and don’t become powerless by buying.

    Someone once said when good news becomes bad news a bad news is something or another i forget but the markets look like they need a breather.

    Confucius has lef the building.


  287. Max pain for IBM is 90. Can they pull IBM all the way from 99 to 90, that will be ~10%.

    Lesson learnt today …. be careful with Jan options because of leaps expiring.


  288. Mei – I just started the EEM position this afternoon and it is quite small for now. I’ll add to it over time as well as sell calls against it. Need to see how the next few days play out as we may be entering a new market altogether


  289. Good job, CNBC. They got exactly what they wanted: a big drop in AAPL. First time I see a stock drop 6% after beating estimates by 46%! A lot of their friends, calls writers, got obviously caught short into Macworld. This is when the CNBC’s bashing started with “Iphone is too expensive”, “Jobs is going to jail”, “Stock is priced to perfection”, “Stock is up 25% in the last 3 weeks”, blablabla…Well, they did it, congrats!


  290. FFIV
    BillBigD, been watching it for couple of days. But, I think it’d be safer to wait until next week (or, at least see what IBM does). They really know how to make money around expiration day. Did you see the 80 and 85 puts for JAN? Wish I had the smarts to buy 80 puts this morning for under $1.

    Nasdaq
    Still shocked that they took us back one week in just one day. It was getting kinda of saturated on top. But, after passing 2500, I was hoping that we’d consolidate some and continue the move up. Guess that INTC and AAPL didn’t help, but, it still depended on how people read it. The sentiment all changed quickly. We didn’t even hold 2445. Not sure what to make of it. We sure need some positive earnings, news, and forecasts from big companies! More money came out of oil. There’s a lot of cash on the sideline after today. Wait and see what happens, I guess…


  291. kustomz – pass whatever you’re drinking around!


  292. This means it is now up to Motorola to save the markets tomorrow otherwise it’s time for us to take a little break!

    Apple – while I feel bad for you Rein – this is making me a fortune on the spreads that I may have hit right on the nose! I almost took the $1 and ran on the Feb $80s and $85s today!


  293. Tech rev down but look at this WOW, they are getting the job done
    IBM 4Q Service Signings $17.8B, Up 55%, this is where they are refocusing and its working!!
    Global finance REV is down, hmm
    IBM 4Q Total Gross Profit Margin 44.6% Vs 44.1%, not bad


  294. “The street will let you know when its time to get back in.” Yes, when there’s blood on it. :) Not even close to that yet, if Phil’s rockeship sputters here…


  295. Joseph, do you really mean selling “calls” againt your Jun puts on EEM?


  296. Phil,

    With the IBM reaction, should take the HPQ 45′s off tomorrow?


  297. Selling the news, is this a pattern for this cycle ?? Markets way up, no pull backs, lots of paper profits…


  298. jdsu up AH seems they had a bad Q,


  299. hey hey our buddy COF making a come back over $75
    Phil I got some June 80 today in hope sell against
    Am thinking to jump tomorow on the selling jan 80 for free money then monday feb 80 -good plan?


  300. IBM
    It’s all a game. Look how many people bought Jan 100, 95 puts today, and how many people are still holding Jan 95 calls.


  301. Leaps – This is my problem with Max pain – you have no idea at what point people bought in. If the market’s up 20% then it’s a fair bet that 20% worth of options are way in the money from a long time ago and a lot of fund managers who sold calls would rather pop a stock down 15-20% by selling 10% of their holdings than have the whole thing called away at a 20% discount.

    If I sold you IBM $85 calls last year for $8 and now it’s at $99, I’m only going to get $85 (and what if I’m not out of short-term gains, then I lose another 20% on taxes if I get called away!) – I’ve already got your $8 so I dump shares down to $85 and, conspiracy or not, there are so many fundies in the same boat, some are bound to join in the fun.

    The best thing is, when I do this to a strong stock like Apple or IBM, I can be very confident that once the dust settles there will be more buyers and I can just wait until it gets back to $100 (or whatever my target is) and sell some other sucker the Jan $110s.


  302. Phil, no worries on my behalf. I cleared enough the first two weeks of the year not to work this year except for fun. ;-)

    So I was working on upgrading to a new house with what was left over. Oh well, greed is not always one’s friend.

    You can’t make money without having some at risk. But I do so *hate* giving *any* of it back.

    reinharden


  303. Anybody wanna take a guess if the Nasdaq hits 2400?.. It is does, has a lot of support.


  304. OH OH COF over 76
    I knew those number were good after all
    Like I said lower guidance to buy back shares….
    All right go to go exercise…. till later


  305. COF – my mission is accomplished on this one but if it holds up I have to decide wheter to just buy out or roll my caller.

    I’m not going to speculate (I know that statement makes no sense coming from me!) as the market could go totally either way tomorrow.

    Time for me to take a break and come back later and read the real (not financial) news, figure out what the heck is going on to cause all this!


  306. i know this is really random and off topic but how bad are the taxes on options profits. this is my first year with options and as bad as it sounds i havent really looked into tax issues on it. skimmed a little but info is vague and minimal. thanks for any and all help you can give me


  307. fyi, http://jeffmatthewsisnotmakingthisup.blogspot.com/. From a guy I like to follow


  308. Options gains/losses are capital gains/losses. Short-term if you hold for less than a year, long-term if you hold for less than a year.

    Short-term capital gains/losses are taxes as ordinary income. Long-term capital gains have their own lovely 15% tax rate for most people.

    See http://taxes.about.com/od/capitalgains/a/CapitalGainsTax.htm for details that look correct at first glance.

    reinharden


  309. JDSU
    Thanks Kustomz! This might be a good play into their earnings, which should be early Feb. Better chances if you knew the answers before taking the test. At least it’s some good news! See what happens with the markets tomorrw.

    Nasdaq
    I say we open “slightly” lower and close higher. Hopefully, it will establish a base around the “old’ 2445. If it breaks and closes above 2454, good for us (but, we’ll likely need a few days). Looks like not many stocks are being too affected by IBM. With GOOG below 490 and APPL below 90 (I think that’s where they’ll pin them at), providing some upwards action. IBM is probably going to open below 95, making the 95, 100 puts buyers very happy and give them time to cover; then, it’ll probably solidify around 95. If not, Nasdaq needs to hold 2425.


  310. House votes to cut oil company subsidies

    http://biz.yahoo.com/ap/070118/congress_oil.html?.v=4

    We’ll see what happens in the senate


  311. Gordo – you beat me to it

    Key quote “The $14 billion raised from the additional royalties and repealed tax breaks would fund research for renewable energy sources” — this will result in oil demand reduction (in addition to lower oil co profits)

    Feeling good about my XOM and TSO puts


  312. Phil,

    Is it good to buy Feb 130 calls OIH.
    Do I need to sell against this call to cover..
    let me know..


  313. I missed to mention above..
    which month call I need to sell to cover so that my basis cost is expensive..
    Currently Feb 130 call is @4.10


  314. Be careful with tax guidance on the internet……if you are day-trading you should consider filing an election by 4-15 for the year election is effective i.e. 4-15-07 for 2007. This states you are (more or less) a professional trader/broker/investor and allows you to report all the activity from your profession (trading) on Sch C (report of business income/loss by an individal). Any expenses incurred (Phil’s fee for example) can be deducted as a business expense as well. If you have a large enough loss that results in an NOL on the current 1040 you are filing you can carry that loss back 2 years and receive a refund for taxes paid. You can elect to forgo the carryback and simply carry the loss forward (forgot how many years forward but think at least 5(?)). The election also relieves you from having to calculate the wash sales adjustment. (same stock sold and purchased in a 30 day period for a loss…results in a limitation of the loss until repurchased stock is sold

    Now the negative, you must do a mark to market adjustment on 12-31 each year. This results in recognizing any unrealized gain or loss you might have. Example, you hold 100 shares of AAPL at a cost of 50 from a 10-15-07 purchase. On 12-31-07 AAPL is selling for 75. You report the ordinary gain of 25/shr on the 1997 tax return on schedule C. Your basis in the 100 shrs of AAPL is now 75/shr. That’s one reason for alot of end of year activity often labeled tax selling. You also have to file a form 3115 (change in method of accounting) which is a biatch.

    In general, if you have W-2 earnings I would not advise the election unless you are prepared to prove to the IRS your trader status, as they will pronounce it a hobby (even though it may be an expensive one!) which imposes loss limitations (up to the amount of the gross income typically – just like gambling losses).

    Just remember for you first time pro traders must file by APRIL 16, 2007 (the 15th is on a Sunday) to be in effect for 2007 and must be filed by that date EVEN IF you extended your income tax return.


  315. OIH calls are very overpriced and, with today being expiration, there’s really nothing to sell against.

    Paying $4.10 to be $2 out of the money means you need a 3.5% upside move to get even by Feb 16th. While OIH does indeed routinely move 2% on a good day, you still need to string together 2 consecutive up days to get in the money which means every down day you have makes it less and less likely you’ll catch up.

    Take a look at the daily chart and look how “obvious” it was to buy the $140s on 12/28 as it was just “bouncing” up from a $10 drop. OIH is not even at the low of the year ($118) or the low of the month($126) but oil is MUCH lower.

    I’m not saying it won’t bounce – I fully expect a pump and for many oil stocks to climb – I’m just not going to bet on it!

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

    Taxes – this is why we have accountants!