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Weekly Wrap-Up

Well that was a pretty good week!

Thanks to BIDU and Google our $10,000 Virtual Portfolio is now worth $17,051 just 34 days after we opened it.  While you could say this was, to some extent, just fortunate timing – we did make a lot of really good adjustments to get to where we are today!

The 95 remaining open positions in our Short-Term Porfolo have an average open gain of 115% but the more important gain on cash is 29% and we closed 53 positions this week with an average gain of 121%, our best of the year so far.  Because we sold a lot of positions the gain on cash was over 100% as well, which means we deployed no additional capital to make our 121% return - this is why you MUST use a broker that lets you do spreads, it is a night and day difference in your risk management.

Ironically we didn't sell positions (for the most part) against our Long-Term Virtual Portfolio as we saw this rally coming a mile away and our average open gain in that virtual portfolio is now 160% on 46 open positions but my trigger finger is very itchy on that side as 28 positions remain uncovered.

Even our pokey 18 position Stock Virtual Portfolio has gained an average of 19% on 60 average days open so I would have to say that we were just very lucky to happen to be very bullish this month – but I'll take being lucky over being good, we can always work on being good later!

Our special (and temporary) Google Virtual Portfolio had 22 positions that were open an average of 11 days and have returned 96% so far with just 8 plays remaining open.  That spreadsheet will be available along with the others on the members site today and anyone who doubts the rule "ALWAYS sell into the initial excitement," should compare the value of what we got out of on the 20th vs. what some of the open contracts are worth now.

I'm not going to bore you nice people reviewing how right I was about the markets – obviously you don't generate these kinds of returns being wrong – and I'm a lot more concerned with protecting the positions we have on the table because taking profits off the table, as we did this week, doesn't mean a thing if you blow your principal!

So it will be protect, protect, protect next week until we get a nice, positive break forward.  The Asian markets will be flying at half mast at best due to holidays and the month ends on Monday so change will be the big constant next week and we will need to be quick on our feet.

I want the $10KP players to promise me they will move at least half their profits to some long-term covered positions as I am VERY uncomfortable leaving a lot of money in play there.  We may have another big payday coming with our DNDN positions as long as the stock holds $14 through expiration.  I'm considering doing a monthly reset on that virtual portfolio so please give me your opinions as to what you think about that idea.

Sadly, we are still sitting on some big losers in the STP as our protective DIA and oil puts have been just terrible but the portions were right and we gave up about 20% of our profits to pay for the insurance.  We should have shorted the XAL as that index had been under suspicion right from the Monday Morning Post and was, by far, the worst performing sector of the week.  Even the broader transports finally got fed up and broke away from their weaker cousins on Friday but don't be fooled, they can't stay apart for long.

Another breakaway for the week was oil, which left gold in the dust as apparently oil and gold traders now analyze the risk factors on totally different planets.  Of course we had the Saudi oil plot of the month so at least there's some reason for last week's spike, although last time a big plot  was foiled (2/25/06) prices plunged over 5% the next weekThat plot was also "uncovered" as crude prices fell from $68 in January '06 to mid February and here we are having trouble getting oil back over $65 and once again the Saudis come to the rescue!

Leaving both the XLE (Energy Spider) and the price of crude in the dust was the OIH (Oil Service Holders) as the XLE stalwarts but the ETF that really suffered was the IXC, which is more specialized with the integrated majors who are, across the board, producing less oil for more money.  This has drawn my attention to the XOP which, even though TSO and VLO are it's largest holdings, suddenly turned a little toppy this week.  We'll be watching this one for signs of a breakdown or a breakout above $44 as they are nicely diversified and still represent what I consider to be a relatively undervalued segment (TSO notwithstanding) of the industry.

In addition to shrugging off spiking energy prices and a sagging economy (but, as Zman points out, food and energy inflation doesn't seem to count) the market was able to ignore a few earnings disappointments as well.

Dow 131290.94 1.2%
Nasdaq 2557.21 1.2%
S&P 500 1494.07 0.7%
10-year yield 4.7% 4.67%
Euro vs. dollar $1.365 0.4%
Gold (for June delivery) $681.80 -2.0%
Silver (for May delivery) $13.44 -3.7%
Crude oil $66.46 3.7%

We hit 13,000 on Wednesday after our "Testy Tuesday" as Tuesday eveing I said: "But did we pass our test?  I think we did because we had awful hosing data but didn’t tank the market (in fact we got a huge dip at 10 and recovered nicely)."  We decided it WOULD happen on Wednesday morning as BA and AAI finally gave a lift tou our XAL's and Happy Trading predicted a Nasdaq breakout but I don't think any of us were expecting to zoom right through Dow 13,100 as well.  We can thank a happy Beige Book for that!

AAPL kept the party going with an 88% jump in profits on Wednesday night and Thursday we knew were were in for a fun day as Nintendo chipped in with a 77% increase in profits, giving us a nice global balance in consumer tech.  Asia continued to give us a nice boost as we wrote a love letter to BIDU on Thursday night as they showed us you can hedge and still make money on a big move.

Speaking of playing games, MSFT announced on Thursday and after saying earnings would be good, then bad, then good – they did indeed turn out to be good but it was the GDP that was BAD on Friday but the markets STILL didn't care!  So we took a lot off the table, left on our covers just in case, and we will grin and bear (oops, don't say bear!) it over the weekend where we will get a real test of my Global Market Theory as we're expecting the shutdown in Asia (holidays) to force more money into US equities.

Can anything go wrong?  Absolutely!  That's what's going to make it so much fun…

Have a good weekend,

- Phil












AAPL M  $   95 P 3/28 4 $5.00  $  1.00 4/27  $   (4.00) -80%
AAPL M  $   95 C 4/23 -20 $3.00  $  4.25 4/27  $    1.25 42%
AAPL M  $   95 C 4/19 10 $2.00  $  6.75 4/27  $    4.75 238%
AIR A  $   35 C 2/1 40 $0.53  $  0.75 4/24  $    0.22 42%
AKAM M  $   50 P 4/25 20 $1.30  $  2.15 4/25  $    0.85 65%
AMZN M  $   45 C 4/24 -40 $2.00  $  8.50 4/25  $    6.50 325%
AMZN M  $   48 C 4/24 50 $0.85  $ 14.25 4/27  $  13.40 1576%
AMZN M  $   45 C 4/17 -9 $2.10  $  8.20 4/25  $    6.10 290%
AMZN O  $   45 C 4/17 5 $2.30  $ 20.00 4/27  $  17.70 770%
AXP M  $   58 C 3/5 25 $1.25  $  4.00 4/24  $    2.75 220%
BKS J  $   40 C 3/7 30 $1.20  $  2.40 4/23  $    1.20 100%
BRCM J  $   35 C 4/24 50 $1.40  $  1.85 4/26  $    0.45 32%
BRCM M  $   35 C 4/24 -50 $1.30  $  0.30 4/27  $   (1.00) 77%
BRCM M  $   33 P 4/26 50 $0.40  $  0.85 4/27  $    0.45 113%
CCJ J  $   38 C 3/5 20 $5.60  $ 11.85 4/23  $    6.25 112%
CME M  $ 520 P 4/23 10 $4.00  $  7.00 4/24  $    3.00 75%
CMI M  $ 100 P 4/27 10 $3.00  $  5.25 4/27  $    2.25 75%
DIA M  $ 130 P 4/23 300 $1.55  $  1.75 4/23  $    0.20 13%
EWJ M  $   14 C 4/23 20 $0.60  $  0.50 4/24  $   (0.10) -17%
GE M  $   35 C 4/25 100 $0.55  $  2.00 4/27  $    1.45 264%
GOOG J  $ 500 C 4/3 20 $11.40  $ 11.50 4/23  $    0.10 1%
GOOG J  $ 490 C 3/30 20 $8.00  $ 15.75 4/23  $    7.75 97%
GOOG J  $ 490 C 2/27 40 $4.60  $ 15.75 4/23  $  11.15 242%
HRB J  $   23 C 2/27 24 $1.00  $  1.65 4/26  $    0.65 65%
IBM M  $   95 C 4/18 50 $1.45  $  1.70 4/23  $    0.25 17%
IBM M  $   95 C 4/18 50 $1.20  $  4.10 4/24  $    2.90 242%
INTC J  $   23 C 4/17 50 $0.54  $  0.90 4/26  $    0.36 67%
INTC M  $   20 C 1/22 40 $0.65  $  2.10 4/24  $    1.45 223%
JWN J  $   60 C 4/9 20 $0.95  $  1.65 4/26  $    0.70 74%
MCD M  $   48 C 4/20 20 $1.45  $  1.70 4/23  $    0.25 17%
MSFT J  $   30 C 4/26 100 $0.80  $  1.60 4/27  $    0.80 100%
MSFT M  $   30 C 4/26 200 $0.40  $  1.00 4/27  $    0.60 150%
MU M  $   11 C 4/19 40 $0.50  $  1.10 4/25  $    0.60 120%
NEM M  $   43 C 3/30 20 $1.75  $  2.00 4/24  $    0.25 14%
PBR M  $ 100 P 3/29 90 $2.20  $  1.95 4/24  $   (0.25) -11%
PBR J  $ 105 P 4/20 10 $5.30  $  6.60 4/27  $    1.30 25%
PBR M  $ 105 P 4/20 -10 $3.90  $  1.85 4/27  $   (2.05) 53%
PEIX S  $   18 C 4/4 10 $1.50  $  0.90 4/24  $   (0.60) -40%
QCOM M  $   45 C 4/23 -10 $1.95  $  0.75 4/27  $   (1.20) 62%
RIG A  $   85 C 4/11 20 $4.25  $  7.80 4/27  $    3.55 84%
SU J  $   80 P 4/24 40 $2.50  $  2.30 4/26  $   (0.20) -8%
SU M  $   80 C 4/26 20 $2.70  $  3.50 4/26  $    0.80 30%
TGT M  $   60 C 4/11 30 $1.72  $  2.45 4/23  $    0.73 42%
TGT M  $   63 C 3/27 30 $0.35  $  0.50 4/24  $    0.15 43%
TM M  $ 130 C 4/16 50 $1.25  $  1.00 4/23  $   (0.25) -20%
TSO M  $ 120 P 4/26 -232  $ 6.00  $  4.95 4/26  $   (1.05) 18%
TXN M  $   33 C 4/20 20 $1.10  $  2.80 4/24  $    1.70 155%
UNH M  $   55 C 4/24 -10 $1.00  $  0.35 4/26  $   (0.65) 65%
 WFR M  $   65 C 4/24 -10 $4.00  $  0.50 4/27  $   (3.50) 88%
WFR M  $   65 C 4/20 -10 $2.40  $  0.50 4/27  $   (1.90) 79%
WM M  $   40 C 4/17 20 $1.52  $  2.85 4/23  $    1.33 88%
XOM M  $   75 C 4/23 -50 $4.80  $  4.50 4/24  $   (0.30) 6%
XOM M  $   80 C 4/23 50 $1.20  $  1.40 4/25  $    0.20 17%
XOM M  $   85 P 4/23 -150 $5.80  $  4.60 4/27  $   (1.20) 21%


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  1. From a couple days ago:
    Here’s a quick status of the $10KP – I’ve sworn off oil plays as they’ve proven far too volatile and we’re going to stick with spreads, especailly since we found out some of the discount brokers do make it easy for small traders to take spreads (as long as they don’t day trade!):

    So, which of the discount brokers are friendly to these small traders taking spreads?

  2. Seems like ToS or IAB are the nicest for the small guys.

  3. Hi Phil-

    I would greatly appreciate a 10k monthly purge.

    Personally, I have been a reader since last September and joined the pay site right when it started – but I have not been able to follow your trades because of cash flow issues. I am maximizing my tax advantaged accounts, and a couple of recent large expenditures does not leave me with enough to comfortably trade as I view my future 10k portfolio as my ‘play/high risk’ portfolio. A monthly purge will allow me to jump in and feel comfortable that all moves are based off of having 10k of capital instead of 17k (if I were to start today).

    In general, I think it’s a good idea to purge the 10k monthly portfolio so that gains are locked into more stable and safe positions. Wealth will build in time, and perhaps after a year, readers that started with 10k can follow 100k portfolio management rules. Also, new readers – regardless of personal wealth can use the 10k portfolio to ‘test things out’.

    I haven’t been active on the comment boards – but I would like say that despite not ‘making money’ from your picks/advice/market insight – I have still learned much by following your daily postings. My monthly subscription is well worth the education.

    Jared- do you think there is a way to have monthly ‘Word’ archives of all the posts similar to the Excel spreadsheets?

    Thanks to Phil, Jared, all of the official writers of Phil’s Stock World and fellow subscribers who make this a great options community.

  4. Thanks Navi, that’s great to hear.

    I kind of like the idea of purging from a scorekeeping perspective although the reality is I won’t make 70% ever month (if I did we’d end up with a membership full of millionaires by the end of the year!).

    I really don’t want people to feel they have to “catch up” but – on the very big other hand, when we are behind I don’t want to abandon the positions either… So I am looking for a consensue here…

  5. Trading Goddess on Wang’s World
    Hi, all! Trading Goddess just stopped by to make her first post. Please come by and say ‘Hi’! Thanks!

  6. Phil,

    I also vote for a monthly purge.

    Question: Is the $10K portfolio on the “Portfolio” page up to date? It looks like there may be a few old positions in there, but maybe I’m wrong.

    Thanks for everything.

  7. Phil,

    Regarding the purge, do you mean wiping the slate clean and starting with zero positions on Day 1 of each new month? Or some other “purge”? Personally, I would go for a reset (no old positions/start from scratch) every quarter as a month just doesn’t seem to be enough time to let some things ride when they need to. Also, it would make it easier to figure out where/when to establish postions if they are reset periodically. I view the $10KP as a good place to learn with the “fun money” (read: not my retirement accounts).

    I more or less agree with Navi, but I would make the reset quarterly rather than monthly. Plus, we’re all good enough at math to scale plays up and down to fit present resources.

    As an aside, if there are other random things like that DJIA calculation that might be helpful to everyone, post it up and I’ll see if I can make more simple worksheets.

    One somewhat unrelated question: My broker didn’t initially grant me high enough permissions to do spread but I have enough on deposit that I would qualify for uncovered call writing. Presumably, my trading level was low because experience was none with them. Is it worth my time to call them up or should I make some initial trades to show I’m not a complete moron and then call them in a few months’ time?

  8. By whatever means works best for you, Phil, I vote to keep the 10k portfolio a 10k portfolio. I feel it has great value to those with a small account, but a lot of that will be lost if it is allowed to grow too large. Specifically, the trading philosophy directed to this small level is different. That is definitely worthy of preservation if possible.

    Would this be facilitated by just removing realized profits from the account? Current positions would be evaluated on their current merits…the more we keep, the fewer new ones we can enter? Would the amount have to be reset to exactly 10k, or would it be more flexible to allow it to fall in a range between 10k and 15k? (Would that allow you to carry some trades you’re loathe to get out of, but would feel compelled to if you reset to exactly 10k?) Or would that alone change the whole philosophy behind having it in the first place?

    Sorry if this seems rambling, just thinking out loud…


  9. Phil – Should have asked earlier in the weekend…do you consider the “COT” Committment of Trader stats in any of your analysis? I’ve been trying to get a handle on it, and would appreciate feedback from anyone who looks at it, or who has decided not to consider it.

    This guy puts up some stats and analysis on it..this one on the USD, which indcates that Commercial Traders are starting to go long on the USD.


  10. Phil, I also vote for a monthly purge. Ive been paper trading up until then and it hurts to see the 10K portfolio become 17K+ and I have nothing to show for it! will start this week with some longer term positions as you mentioned

  11. Also…..would vote to purge the $10K on a monthly basis, or quarterly if that made more sense, but its a very useful approach to analyzing trades on a tight risk/reward basis…so good to keep the $-amount low — IMO

  12. I’d vote for resetting to 10k for 10 k portfolio too. But, I dont necessarily agree with wiping off the slate. Rather how about just taking any profits at EOM over 10k off the table ?

    Anything you do is fine with me. Its not like i can resist some of your “big portfolio” trades for my sub 10k portfolio. I did kick myself for not being able to get into BIDU.

  13. Portfolio page is updated weekly, Intraday tab has the daily moves and I do try to label $10KP moves specifically when I make them.

    Quarterly purge might be a good compromise… As to brokers requirements, you’d better ask them what they are looking for. If they have a rule based on X year’s experience and you just told them you had 0, it may not matter what you do for 3 months…

    I’m thinking from a scorekeeping/neatness/discipline perspective it would be best to start from scratch with $10K in cash at a set point and try again. That way the portfolio can serve those who play long-term as well as those who come in fresh. Also, for the conservative crowd who may want to take a dip, it’s a nice way to limit exposure. What I would do with $10K in cash this week is very different that what I did with it a month ago and what I do with positions I’m already stuck with is differenct than what I would do from scratch. In the STP, as Sage pointed out – it doesn’t matter because there are no major commitments of capital but in the $10KP, every position is 10% or more (which really freaks me out) and requires a totally dfferent strategy.

    One thing I want to make SUPER CLEAR is that people who do double up on the $10KP should NEVER double the amounts they play on those positions. We do 10% because we have no choice due to fees, not because it’s a good way to trade! As I said in the wrap-up, please move money to some nice, covered income producers…


    COT – I consider everything and that’s a good one when it gets extreme but we had to expect some dollar buying at this pathetic level. There’s also a “flight to safety” aspect to the dollar in a Global crisis (pick one) so it’s possible for Gold and oil to go down even as tensions rise due to dollar strength but that’s why we watch all 3 together.

  14. Asia Markets : April 30, 2007



    Hong Kong*


    China: DJ Shanghai*






    * at close
    Sources: Dow Jones, Reuters

  15. Here’s one for the CNBC challenge (NOT for real money): OPBL is an energy broker service specialist that works with BMO, who announced Saturday they (BMO) lost $400M trading nat gas and will be repositioning their energy portfolio. BMO is OPBL’s biggest client and that explains this Friday’s massive sell-off. These guys are probably going to stink up the joint today but they will get pretty interesting at $5 if they hold it. It’s a pretty good LITTLE (18 people) company and NYMEX just bought 19% of them but the real question here is what the hell is a bank doing losing $400M playing the gas market? BMO made $2.3Bn last year but now we have to question HOW they made that money – you don’t lose $400M with just $400M at risk (or, if you do, that’s not good either) so we’re looking at a bank that is taking some really out-of-control risks with your deposits!

  16. Japan wasn’t actually open today.

  17. Mr. Sparkle

    Depending on your broker, I would call or email asking for the Level increase you desire/qualify. The trading history limitations are typically imposed upon the initiation of the account and, as long as you qualify per the Fed/SEC rules of equity in your account, are raised upon the account holders request with few exceptions.

  18. GMA

    MONDAY post is up.


  19. I’m comfortable with any form of reset. A quarterly clean slate sounds like a good compromise.

    Unrelated – I missed the email address for Tom’s GOAX news letter. Anyone have it?