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Just Another Manic Monday

This week we'll get a chance to see what happens to your leaps when a stock comes out of bankruptcy.

We've been buying an selling DALRQ (soon to be DAL) Jan $2.50s since 12/22 and have done quite well as they bounced from our nickel buys to as much as .30 but have flatlined at .05 since early February when we lost interest.  There's still 62 left in the LTP, worth a whopping $310 and people often ask me about buying bankrupt stocks so this will be an intereresting exercise for the week!  This leaves NWACQ as the last airline operating in bankruptcy.

We have a busy busy data week ahead of us so it's time for the famous Briefing.com chart:

Date ET Release For Actual Briefing.com Consensus Prior My Guess
Apr 30 08:30 Personal Income Mar   0.5% 0.5% 0.6% .6+
Apr 30 08:30 Personal Spending Mar   0.6% 0.5% 0.6% .5
Apr 30 08:30 Core PCE Inflation Mar   0.1% 0.1% 0.3% .2 (rounded)
Apr 30 09:45 Chicago PMI Apr   53.0 55.0 61.7 57
Apr 30 10:00 Construction Spending Mar   0.1% 0.3% 0.3% .2
May 01 10:00 ISM Index Apr   51.5 51.0 50.9 51
May 01 10:00 Pending Home Sales Mar     0.4% 0.7% .6
May 01 17:00 Auto Sales Apr   5.2M 5.2M 5.1M >5.2
May 01 17:00 Truck Sales Apr   7.1M 7.3M 7.2M <7M
May 02 10:00 Factory Orders Mar   2.4% 1.0% 1.0% 1.5%
May 02 10:30 Crude Inventories 04/27   NA NA 2074K +1
May 03 08:30 Initial Claims 04/28   325K NA 321K >325
May 03 08:30 Productivity-Prel Q1   0.8% 1.1% 1.6% 1.2%
May 03 10:00 ISM Services Apr   54.0 53.0 52.4 54
May 04 08:30 Nonfarm Payrolls Apr   115K 100K 180k 125K
May 04 08:30 Unemployment Rate Apr   4.5% 4.5% 4.4% 4.4%
May 04 08:30 Hourly Earnings Apr   0.4% 0.3% 0.3% .4%
May 04 08:30 Average Workweek Apr   33.8 33.8 33.9 ??

Today's topspin will be applied by the Chicago PMI, which I think will be BTE as should be/better be Construction Spending at 10.  After tomorrow's ISM, the rest of the Data is pretty much noise other than Factory Orders, as long as there are no shockers in the group.  

Judging from where all the money's coming from, it's a lot more important what Europe thinks about our economy than what we think but I think buying US equities should be a no brainer for Europeans.  The dollar is possibly at a low so a rebounding dollar would buffer a good percentage of the losses they market may hand them, especially if the market declines on Fed tightening or a run in rates that would boost dollar demand.  Should the dollar continue to fall, US equities  (especially Blue Chips) should rise just like any other commodity to offset the dollar losses. 

Picking up an International giant like IBM who pays a 2% dividend and is buying back 10% of their shares with a forward p/e of 13.5 has got to seem REALLY attractive to someone who sees the company as costing just 6 Euros ($10) more than it did last April ($75).  We got out of our May $95s last week but I'm liking the Jan '09 $110s at $7.70 and we'll be selling calls against it later in the week.  This week (assuming we keep going) we will be adding several of these conglomerates to the LTP.

China's Central Bank raised reserve requirements for the 7th time in 12 months, trying to keep a lid on inflation and speculation even as the Shanghai Stock Exchange zooms on to new highs. "The past two years of experience in China has shown that [reserve-ratio] changes are an ineffective policy tool to control monetary expansion," Hong Liang, a Hong Kong-based Goldman Sachs economist, said in a research note after the increase was announced. Such ratio increases are "simply not binding on banks' capabilities to lend," Ms. Liang said.  Traders apparently agree as this move garnered just a 1% drop in the Hang Seng today, barely a flinch ahead of  a week-long holiday.

Other Asian indices were flat ahead of the holidays and Chalco (China Aluminum Corp) IPO'd with a 230% on-day gain as it joins the rank of "Duh" stocks we talked about last week that can be bought based soley on their names or missions.  Another Duh, Capital Land, Asia's largest property developer reported a 400% increase in Q1 profits over last year but that disappointed investors who thought they should do better (imagine how they would feel about BZH!).

While US brokers don't like to mention it the Japanese brokerages are heavy into commodities, with earnings skyrocketing over there but MTU warns of a slowdown ahead "warning its earnings this fiscal year will slip due to lower coal prices, heavier investment costs and fewer gains from sales of equities."

Very unfortunately for us, our ISE $50 caller will be very happy this morning as the Deutsche Boerse may be making a $68 per share offer for that exchange.  Luckily we have the Jan $45s with a $2.10 basis so we won't get hurt but I wish I would have bought out that caller for .40 on Friday!  This should throw our ICE's back in play (plenty of room on those) and also means we need to get out of our CME puts, just to be safe!  NYX may make a nice mo play this morning, remind me in comments…

The ABN deal gets messier by the second but merger mania continues unabated in Europe as E is forking over $4.8Bn (just 3.4Bn Europs) to buy some E&P assets from D.  That works out to $18.40 a barrel in case anyone cares about what oil is really worth to the people in the industry.  Meanwhile ENI (which is the name of E but not their symbol) had an gain but a miss supplying electricity to South America as their huge hydroelectric project runs into environmental concernsTI picked up $5.6Bn on their deal so it's a typical Monday as we wrap up another $100Bn-plus month of deal.

We need a happy Europe as my theory for the week is that the shuttered Asian markets will force Euros to flow across the Atlantic so let's watch the EU closely as either Japan or China is closed thru Wednesday and both will be down Thursday and Friday:

 

 

Day's

Must

Comfort

Break

Next

Index

Current

Move

Hold

Zone

Out

Goal

Dow 13,120 15 12,468 12,600 13,000 13,500
Transports 2,882 -41 2,825 2,900 3,000 3,250
S&P 1,494 0 1,430 1,460 1,500 1,550
NYSE 9,705 -10 9,218 9,465 9,600 10,000
Nasdaq 2,557 2 2,454 2,500 2,600 2,750
SOX 498 -7 477 490 500 560
Russell 829 -4 803 820 850 900
Hang Seng 20,318 -207 20,200 20,600 21,000 22,000
Nikkei 17,400 closed 17,400 17,500 18,300 18,500
BSE (India) 13,872 -36 13,200 14,000 14,725 15,000
DAX 7,425 47 6,900 7,000 7,400 8,000
CAC 40 5,967 37 5,650 5,800 6,000 7,000
FTSE 6,464 46 6,325 6,450 6,600 7,000

Don't forget Asia had a big pre-holiday sell-off but it's still up to our Transports and the SOX, who got a mixed report as March demand increased while prices paid per bit decreased.  Once again, for the 42nd consecutive year, Moore's law baffles analysts who can't figure out what Semiconductor manufacturers actually do for a living.

Also confusing analysts is the fact that the US is not the center of the Universe (or even this planet) anymore as US sales are down 10.6% while sales in Asia were up 8.1% and sales in Europe and Japan were up about 4.5%.  Does that sound bad to you.  Perhaps, but if we dig just a tiny bit deeper we see that US sales are just $3.4Bn while Japan alone is $3.95Bn and the rest of Asia is $9.66Bn.  Even Europe has passed us in manufacturing electronics for the first time, buying $3.39Bn worth of semiconductors.

Let's focus on what's important, DRAM unit sales went UP 16% but prices dipped 20% (thank you Mr. Moore).  DRAM is not an end product, it's a thing they put in stuff – I reiterate my BUYBUYBUY on BBY!  Here's Happy Trading's Chart of the Day as we watch how the SOX take the news today:

sox_4_27_07_weekly.jpg

I'm inspired to write a Phil's Law, which will state that if you stop buying so much gas they will stop charging you $3 for it but I think it's called supply and demandWe, as a nation, have no self control but if occurred to people that, rather than cutting down on spending at the mall to pay for our gas that, if we cut down on our trips to the mall, we could spend more when we get there - then we could make some progress

Of course it takes leadership to change the habits of the people and, sadly, we have none but that is changing fast as non-energy companies are starting to shift millions of dollars away from Republicans and giving them to (gasp) the Democrats who are now the lesser of two evils for fiscal conservatives.

Dick Cheney's favorite commodity got a nice boost over $66 on the Saudi Terror news last week and we'll see if they can hold $65 for the weekGold ran out of gas at $698 but took a sharp bounce off the 50 dma at $670 so we'll see if that holds but it would take something crazy, like a dollar recovery, to drop gold below that mark.

I can pretty much guarantee an interesting week but if we can't break out on Thursday and Friday I'm going to start selling in May and going away!

 


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  1. Not going crazy today – mostly watching out for trouble.


  2. GM all

    WFR getting spanked early….


  3. I think we have a buy opportunity on semis if the broader market holds up but meanwhile – 20% of profit stops as we need to lighten up anyway. Oil going down, drillers and refiners going up.

    Chicago PMI tanked!!!! 52.9, was 61.7. The only rainbow here is this HAS to take a rate hike off the table.

    AMZN doesn’t care, JDSU doesn’t care, HPQ and Dell don’t care, GOOG doesn’t care – could be time for tech if the SOX can shake it off. If the companies I just mentioned start tanking, then we run away!


  4. ISE-SH*T sold all stock and options on Thursday of last week!!!!!!!! WHAT A TRADER
    ICE & NMX sold calls in the opening excitement
    BEAV- gone this morning! Will look to get back in HOPEFULLY CHEAPER


  5. Lots of photos of flaming refineries on the internet. Now even god is after the US driver as lightening was the cause of the last joy for VLO, TSO, and many other management teams that didn’t own the burning refinery in Ok but will benefit from it’s demise.

    GST and CHK sign a win-win deal. Near term gives GST cash to drill, long term gives CHK acreage and an increased stake in GST. They’ll eventually own the whole company.


  6. Phil

    What do you think about CSCO as a LTP?


  7. Wang’s World article got published on Seeking Alpha!!
    http://china.seekingalpha.com/article/33849

    I know that Phil’s articles get published by Seeking Alpha almost on a daily basis. But, this is pretty exciting for me! Heehee!!


  8. Congrat Happy!!! Keep sending them in, and you’ll get certified so they’ll pick you up on a daily basis too!!!


  9. Way to go Happy, congrats.


  10. ZZZ,
    That fire was pretty interesting in OKC. It looked very early they had it under contol and then about 45 minutes later in was almost twice the size.
    SWN- after the close?
    MBT & VIP down with new Russian ETF?
    HAPPY
    Your the man, congrats


  11. HT:

    Congrats! Keep up the good work.


  12. Phil, I need your advise on WFR. I have 100 shares, I’m looking for selling covered calls, do you think I should wait for longer, which one should I sell? What’s your opinion about it in mid term? Is it something I should stay in or I should just get out? Thanks.


  13. Thanks size123! Thanks Zman! I’ll keep on sending them like you said!


  14. I’m rolling my WFR Jan $70s to the Jan $65s at $5.10 (+$1.5), well worth it I think. XXX Not selling yet.

    Yes! I nailed the construction spending number – 2% on the button with commercial construction bailing out residential – that could save more jobs than we thought…


  15. SWN should be pretty good. Option trade there P? My best guess is you’ll either get a $1 to $2 pop best case or it just sits there or drops $0.50 worst case. All subject to nat gas which looks content to stay high despite record short interest (or maybe b/c of record short interest).


  16. Howdy all, I have been away for a few weeks and can’t keep up daily during market moves like I used to. But I am concerned about DNDN, I am holding a few hundred shares and have sold the May 15′s for about $5.00.

    My concern: What dates or decisions or meetings are coming up (and when are they) that might affect the share price? I can’t find the dates for the FDA meetings or whatever and I might want to hedge my position before those critical meetings. Thanks to anyone that can help….Mr. Burns.


  17. ZZZ,
    Any new insights on HK this week??


  18. Mr Burns,

    DNDN- Deadline is May 15th, but decision could come any day. If the drug is approved (which I thin there are 80% chances it will happen), the stock could easily run to $25-$30. If not it will probably drop under $10.


  19. Jumped on the WFR ride with the May 55′s at 2.05….Hope I hit the bottom!!


  20. Opttrader,

    I read the other day that the FDA, after receiving some concerns from 2 noted physicians re DNDN that the decision may be postponed to June or July….same with VRTX


  21. Phil:

    How do you handle rolling out-of-money short legs in calendar spreads
    (e.g., those positions in long term portfolio) in general?

    Leave it without actions as long as it stays out-of-money (and see if it will expire worthless)
    or roll it to next month about 1 or 2 weeks before expiration to maximize premium gain?

    Thx, Edgar


  22. Our ISE the Jan $45s have no premium (virtually) at $20.15 so the move is to sell the June $60s for $5.85 and buy back the May $50s at $14.50 XXX

    BEAV – yeah that was a hell of a run! Out at $7, up 13,900% since I made .95 on the April $30s! 8-)

    Getting back in is a good plan, I’d like to see the Oct $35s calm down, maybe $3.75…

    CSCO – too volatile, doesn’t pay enough for LTP but I’ll like the short-term play when they slam into the big uptrending 200 dma, currently at $25. A pullback and hold at around $26 would make me happy but earnings are next Tuesday so we proably need to do something by the weekend. The June $27.50s aren’t bad at .88 to start a spread but you have to take the $25 puts if they fail at $27 (or on any .15 pullback) XXX

    UNH is just giving $55s away for .38 – fun trade only but XXX

    Congrats Happy!

    OK fire – doing nothing to prevent fires is really the same as starting them. Companies pocketing Billions in profits using fire safety standards that were designed in the 50s (and barely up to code on those!).

    Mei – that was a coincidence before, I didn’t see your post. What WFRs do you have or did you have the same as me?


  23. Bill big D or Happy – what do you see for ATI today? Some day trading on this stock looks like a good potential. Thanx


  24. Phil, I’m testing a strategy with QQQQ options. I basically own Qs leap calls and puts, I’m looking to make monthly income by selling near term puts/calls. I either only sell puts or calls or both, if the market direction is considered up or down or neutral. I had short puts earlier but I closed out with some gains because at this moment I’m not sure. So I only own the leaps now. What do you think I should? Also with this strategy I’m not supposed to watch too closely or adjust my positions too frequently. I would appreciate your opinion. Thanks.


  25. ICE facing a brick wall around 132 to 135. If it clears 135, it should run for a bit.


  26. Karmcon,

    I did not hear this about DNDN, this is very surprising. Could you please forward a link?
    The two physicians you refer to are 2 CBER members who already voted NO during the panel. It also happens that they both have direct conflict of interest in this situation, either because they work for competitors or because the own stock in competitors. They both asked for a waiver before the panel.


  27. Phil, I own 100 shares of WFR, 2 Jan 08 60 calls at the moment. Please let me know what you think.


  28. Thanks guys for info on DNDN and upcoming events. I’ll watch for other posts on this matter, anyone else with info, or strategies to protect the sold calls against owning the stock, please chime in…


  29. JPL
    ATI- I am kind of useless today on daytrading this guy as I am packing and crying over ISE today. LOL
    Phil
    Any thoughts on plays for MRO and RIG with earnings manana? Also a re-entry for FXI?
    Interesting comments on 1950 codes! Learn something new everyday.
    Mexican wireless lower AMX & NIHD.
    WYNN- sold half


  30. Scobe – re HK – yes they’re jerks. Still no emailed presentation and their site to get it just spins and apins. I see no reason to hold it against the stock but it needs to get through $15 before I get more aggressive.


  31. NYX – I see in the Portfolio page that we sold the NYX Jul 100s last week. I must have missed that. Any suggestions now that NYX seems to be going up (slowly but surely)?


  32. OT

    Gonna have to dig for link, too many sites visited with no written refs, need to better org my dd and research. :oops: Have a few locations I will check, but no promises


  33. Phil!
    I see that you reiterated Buy on BBY. What month/strike did you go with?


  34. SWN – good for the $10KP but bad to track there (takes up space all year) so consider it an LTP that some $10KP profits should go to: Buy the SWN Jan $50s for $3.10 and sell the Sept $45s for $3.35 as next earnings will be early August and you’ll be able to roll Sept for a nice premium whichever way it goes. This will tie up $2 of margin so 5 contracts cost $1K in buying power but Z is long bullish so you may want to just sell 4 (or 3 if you are a daredevil) ahead of earnings. The 5/4 ratio is what I endorse as it saves us if the thing jumps $10 (doubt it).

    More aggressive day is to take the Jun $45s for $1.50 as well as the May $40s for .45 which won’t save you but should be good for .80 back on a dip.

    DNDN deadline is 5/15 but may get extended, wiping out put and call value immediately. This is a gamble but covering it with puts really eats into your margin. Still you can buy 1M shares of the stock for $15.20, sell 1M $15s for $4.65 and take $3.20 of that to buy 1M $12.50 puts. If the stock closes over $15 you collect $145K (9% for 15 days) and the most you can lose is $125K if it closes at $12.50 or less but you should do better as you can sell your commons on momentum tank the stock (which only trades 1.6M shares a day) and clean up on your puts with a nice premium (XXX for you evil hedge funds)

    Meanwhile I’ve been trying to buy the $15s for $4 for a week and no one will sell them to me…

    Rolling – ask me after hours as that’s a whole strategy thing but generally I play both ends as a mo tade so I may hold both for a while (as a pre-roll) but always I tighten my stops severely on the shorter leg so I don’t get double burned.


  35. QLGC
    starting to look interesting; see chart on Wang’s World. options are cheap!!


  36. What’s going on with TSO? Should have bought those 120 calls rather than selling them. Tired of this sucker.


  37. TSO blasts past 120 :(


  38. GST – CHK increasing its stake in GST… zman anticipated this…didn’t he ? :-)
    http://www.forbes.com/feeds/ap/2007/04/30/ap3667486.html


  39. Anyone on this board use INVESTOOLs? My subscription appears as terminated, even though I several months left. I’ve tried every contact number they have, including enrollment and no one answers. It’s as if they’ve just left the planet!


  40. Bleau – Investools was working fine for me last night – haven’t lgged on this AM, but I will now and let you know.


  41. CME, terrible action after the ISE news….Anyone playing long CME ?


  42. Bleau – mine is screwed up too! all I get is a subscribe/renew page coming up.


  43. More on DNDN-
    If you want to know more about DNDN, and I don’t usually participate on message boards, there is a fairly erudite group of folks at the http://www.investorvillage site, just plug in DNDN and you will be inundated with more information/opinions than you thought possible. Just hit the ‘top 100′ posts to get the cream.


  44. QQQQ – who said you shouldn’t adjust? Earlier this year I did that with the DIAs where I took the Junes on both ends and sold into the middle but I must have bought and sold my callers and putters once a week. This is something Happy and I should do because you want to identify a channel and buy low and sell high (just like the guy on TV) but once it breaks the channel, you need to break your pattern as well.

    Where do they find these CNBC guys? This guy is saying buy Euros now (FXE = $136.75) the ATH when the FXY (yen) is at 83.75, almost 5% off the March high. No one even questions these jokers. That disclosure rule is the worst because if you flash a disclosure on the screen you can then spout any BS you want with impunity!

    DNDN – don’t believe anything you hear unless its in the Journal or Bloomberg a spot report on CNBC – too much money to be made planting false rumors on this one.

    WFR Jan $60s – wow! First of all NEVER hold uncovered calls that far in the money as you will get hammered on a drop (but you know that now). Next question – how much did you lose and what will make you happy? You need a goal to have a strategy. Let me know your entries. Also, did you notice how you lost a lot less money on your Jan $60s ($14-7) than you did on your common ($67-54) – this is another important lesson because you could have taken 1 Jan $60 contracts for $1,400 and not tied up all $6,700 you did on the shares. Had it gone up $5, you would have gained at least $350 vs the $500 in the common but the $13 drop cost you $1,300 vs. $700 on the leap and with the leap you still have $5,300 to diversify and put to work elsewhere.

    While the absolute gains may not be the same on a big win, the fact that you can diversify the position and make that money 4 times is the core reason I’ve totally lost interest in holding stocks over the years.

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

    MRO/RIG – I think they’re all nuts but I’m not betting on them! I just dumped the RIG $75 calls for $7.80 because I thought they’d pull back today but no such luck.

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

    HK – do keep your eye on them, they did a spike flush at the open which may mean today’s the day they go for $15.

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

    AMX – great co but I don’t like the foreign stocks

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

    NYX – wasn’t working at all and we were $300 negative on the spread so we killed it. If you have the naked $100s (I had June) then that just sucks but you certainly should have taken out the $100 caller by now and the best move is to move to the June $95s for .70 more and wait a bit to hopefully get a good chance to sell the May $90s for $2 which will give you all your money back with a month to go.

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

    BBY Jan $50s for $3.85, now $3.75


  45. Chubby,

    I just called Sink or Swim since that’s who they merged with. They have suggested that INVESTOOLS has DROWNED – DOA! They are trying to revive it, but there’s no estimate on when it might occur. It’s hard to believe they could lose the website, phone, chat and everything else.


  46. I’ve noticed by looking at the Portfolio page that I’ve been holding the long side of short term spreads after I by back the short side. Phil, when you post to buy back the short side are you also selling the long side to close out the entire spread. I’m only asking becuase I was still holding 5 long sides this morning (one of them was WFR). thanks


  47. Phil – just trying to catch up and reading some past posts – you suggested some re-arrangements on BA, GG, BBY and T – are they all a go? Just when you have time – thanx


  48. MA- Nice buy on Friday
    ESV- Phil old friend is moving higher


  49. Go WFR GO:!:


  50. Phil, thanks for explaining the WFR to me. Let me tell you my entries on WFR. My IRA account cannot do spread so I bought 100 share @66.50 2 days before earning, I was considering selling calls then but I got greedy and became gambler so I didn’t. Friday I sold may 60 call @1.75, this morning I thought it might bottomed out so I bought back may 60 call @0.65. In the same time I saw your posting of your rolling your LTP, I bought 2 Jan 08 60 call @6.8 in a regular account which allows spread. So my loss so far is on the 100 shares. If I can get even (my cost basis now is 65.50) within 3 to 6 months I’m happy. Please give me your advice on my 100 shares (I can only sell covered call on it or sell the share) and the calls I just established. Thanks.
    QQQQ- that’s what I was thinking about a channel in the middle where we think QQQQ might expire around. My adviser on this strategy intends to let people use this strategy without too much commitment, he will only possibly adjust once a week. What do you think you would do now if you own the QQQQ leaps both calls and puts?


  51. Any thoughts on IRF? Been beaten up but seems to possibly have found a bottom.


  52. JC, look at TSO!!!! Think my May 105 P’s are resuscitable? JK, dumped :sad:

    I need to learn to stay away from oil…..looked at total gains and losses in port. YTD….80% of losses are oil/oil related……lesson learned finally.


  53. Playing MTW before earnings. buying SHLD for a breakout and pre earnings run and earnings announcement IV pop. playing UA and strangling BWLD


  54. QLGC (5/3) – expectations not too high and they are coming off 4 beats in a row with no change in estimate since last earnings. They are beaten down with the Semis who I think are going to explode soon anyway and you can split the Jun $17.50s for $1.10 with the July $17.50 puts for .62. Last earnings they dropped $1.50 and flatilined to Feb expiration, then all the way to $16.50. They have no debt and bought back about 15% of the stock last year. So I like that trade but it’s risky as they may flatline XXX

    TSO – I can’t believe I bought out my putter!!! $115 caller stoped out at 20% this morning and $105 call is doing well but I’m still selling the $120s on the turn as a mo play. I am taking $120 puts for $3 if I can get them but I hope I don’t have to say how dangerous this is!!!!!!!!!!!! These guys haven’t corrected since the 16th. XXX for the truly insane!

    My Investools is working. Today may have been the cut-off for switching to the new platform so maybe their call banks are flooded with confused people.


  55. Quick errand then back for the (hopefully) 12:30 pop in WFR and an exit :mrgreen:


  56. Qcom is a killer and being dumped! Any suggestions towards a strategy?


  57. INVESTOOLs is up now. Hope it can stay that way.


  58. CHAP- coming back strong
    TSO- unreal
    NMX- bought back calls from this morning


  59. Long short – no if I close the position out I usually say so and I still had my WFR Jan $70s which were a profit roll ahead of earnings, which I was worried about. My basis is $5.10 ($1.90 credit from BB of May $65s) and I spent another buck to move them to the Jan $65s. We still have 7 months to sell and the June $55s are $3.60 (not selling yet) so it’s kind of hard to panic when people are willing to pay me a $3.50 premium for 45 days.

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

    BA, GG… – you need to tell me what I suggested and I’ll let you know if it’s on or not.

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

    MA/ESV – the pattern I see is people are plowing money into companies like TSO that have less of a track record or less cap as they seem more exciting but to me that means the big boys are undervalued.

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

    WFR – sell the Oct $60s for $5.10 and you’re done. You can sell the Jun $60s for $1.65 too since you have the leaps, then you only risk $5.15 x 200 of new capital and a $5 move in the stock will run the Jans up to about $9 so you have plenty of cushion (and you can always roll you caller up or down).

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

    IRF is a good looking company that had good earnings but got dumped like the plague with the semis.and THEN had an accounting scandal. Since the scandal involved the way they book orders no one wants to invest until they report a clean quarter. And, of course, there is the inevitable class-action suit… Let me know if you find out when earnings are, might make a fun play…

    Oil losses – yeah I use them as hedges on someone noticing the economy sucks but they never do! This is an amazing run without a significant pullback tough and TSO’s move today has got to freak people out if they can’t break $125 (of course if they do break $125 I will freak out!).

    We were scoffing at their $7Bn valuation last week, now it’s $8.46Bn….

    MTW is a great catch Dragon! They are relatively under the radar in that group. Earnings are tomorrow though and they’d better be good…

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

    Great Quote: “I’m sure as heck not going to be going to federal prison for one day, let alone, four to eight years, because I’m shy about bringing in the deputy secretary of whatever,” Palfrey (the Madame) told ABC News. “I’ll bring in every last one of them in if necessary,” she said.

    On Thursday, Tobias told ABC News he had several times called the “Pamela Martin and Associates” escort service “to have gals come over to the condo to give me a massage.”

    Tobias, who is married, said there had been “no sex,” and that recently he had been using another service “with Central Americans” to provide massages.

    This is going to get very ugly!


  60. BA – buy the Jan ’08 100′s at some point sell the May 95′s. BBY Buy the Jan ’08 50′s, T – Buy the Jan ’09 40′s and the GG’s Buy the july 25′s….Thanx Phil…


  61. Massage? Yeah right ! ! !


  62. QCOM – just picked it up Friday, I won’t miss it if it stops me out.

    ATI having a great fall (as in Humpty dumpty, not the season), I’m raising my TIE stop to $2.10.

    IBM making new highs, GE moving up, MMM doing well – I’m liking my big cap thesis stick with names Europeans know.

    CCJ back on the move but I’m not getting back in until they break and hold $50.

    Interesting – LMT good, RTN bad.

    VZ says you can make money in Telco and I still like my Ts

    GNW, AFL moving – maybe insurance back in play?


  63. Phil, what is your price target for AVP? Jun 40s up ~0.40 at this point.


  64. BA – I couldn’t bring myself to pull the trigger on the sell as I think that BA, TIE and ATI are selling off over terror thing, which should wash out shortly, especially with DAL coming out of bankruptcy (ups demand, lessens chance used planes will come on the market).

    BBY I’m in those, will buy more at more of a bottom.

    T I’m in those too.

    GG – still accumulating (they are a hedge).

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

    Have to go to lunch – don’t let the markets crash please!


  65. AMGN

    has been treating me well – if it breaks $64.25 …. upside to $66 and possibly $68
    HappyT – your thoughts?


  66. Phil, any more thoughts on COH ?


  67. AVP – I did the spread so I’m stuck. If you didn’t do the spread you can sell the $40s for $1.65 and have a dime in your pocket and a free look at earnings or you can sell 9/10 and just keep the 1 free one.

    Now I’m really going!


  68. Anyone buying CTSH? (per Happy’s chart analysis this past weekend)


  69. COH-bought June 50′s for a quick trade
    CTSH- I am long with Stock, Leaps (stock for years)and July’s.


  70. AMGN
    KFAT, I think it can wait. It’s right at a resistance level, 64.1. Let’s see what it does with it.

    CTSH
    watching it closely. Also, waiting to see what the markets want to do today. If the markets turn up in the afternoon, CTSH should go with it.


  71. CROX
    is having a good little run since Friday morning!


  72. Don’t know if people saw. Dr. Brett is hosting a free educational webinar next Sunday. Rough early start time, especially for West Coasts, but probably worthwhile. http://traderfeed.blogspot.com/


  73. Any thoughts on an AKAM bottom?


  74. 1/2 off the WFR 55′s for 32% pi but may have gotten a wee bit greedy…..has to break resistance of 55.8 or will sink back to 55.40 +/-


  75. JPL
    Jumped in ATI july’s


  76. Bill – the 110′s? Thanx for the heads up…


  77. TSO-
    Whoever it was in here who wondered aloud, “Why would you short or buy puts on TSO before the chart breaks down?”, kudos. Great lessson in chart trading versus fundamentals.


  78. BillBigD, if mkt rolls COH looks a little vulnerable to me. first decent slide in the stock for a while. AUG 60 puts traded heavily


  79. AKAM sank 22% in same 90 day period from its high last year which would equate to 43+ this period. ST looks like 44.75 to me for a bottom, but has already breeched that number……


  80. I am the one who warned about TSO, but I should have followed my own advice. I was too impatient as well, and bought puts 2 weeks ago on the small pullback. Fortunately I stopped the loss when stock broke $112, so I am feeling pretty lucky right now. This is one strong stock, but I am watching very closely and this is probably a major shorts squeeze and this valuation will not be sustainable.


  81. JBL
    Yes both the 110′s and 115′s
    Dominic
    You certainly could be right! All retail is weak today so I picked up COH, JCP etc


  82. Phil / Others

    MA broke out of 110 channel and went to as high as 117 today. Comments ? .. Happy ?

    At 114 what do you think ? It reports wednesday?


  83. Gasoline keeps going higher!! What do you guys think of buying WMT puts? I don’t think the rich NYMEX/oil guys will let oil/gasoline go down.


  84. MA
    Niten, this one is hard to call before earnings! Anything can happen. I think there are far higher reward/risk ratio plays out there. I’m staying out of this one.


  85. cheap cege 5.00 straddle off dndn 5/15.


  86. Any thoughts on FDX ????? Marcha nd April been terrible for the stock.


  87. TSO started the year around 66, so just $7 more higher and the stock would have doubled in slightly over 4 months :-)

    Isn’t Energy considered cyclical? Does anyone know what the short-term and long term cycle spans are? Assuming the energy bull market started around 2004, how long can it last 5 years (2009) or 7 years (2011)?


  88. crox flying


  89. CROX
    on fire!!


  90. Massage – LOL me too I need them :-)


  91. CROX & UA- anyone get realmoney that can relay the comments?
    EQIX- Any thoughts Happy?


  92. Winning Combination for Under Armour, Crocs
    04/30/2007 11:53 AM

    If you buy Crocs (CROX – commentary – Cramer’s Take) or Under Armour (UA – commentary – Cramer’s Take) common stock ahead of their earnings reports this week, you could be in for some trouble, and not for the reasons Rev Shark outlines in Columnist Conversation.

    No, you could be in trouble because when you have a third of the stock sold short, as is the case with both companies, it’s too dangerous to use common ahead of the quarters. I would never do that at my hedge fund.

    Here’s how I’d do it: call options, specifically June calls. I would buy the Under Armour June 45s for $6.70 and the Crocs June 45s for $11.80.

    Then, as these stocks run up in advance of the quarter (Under Armour must get done today because it reports tomorrow) I’d have to short some common stock against them. That would give me some ammo to play with when the shorts color the stock and the media with negatives about both. I would do it on a 2:1 basis, two calls for every common share sold short.

    Both stocks have a history of being jammed down by shorts. They go up for a nanosecond and then get leaned on to knock them down. Although I took some heat for saying this stuff in a video, it is important for the shorts to control the media agenda by planting negative stories. Lies? No, there are always negatives, there’s always “hair,” so to speak.

    Why options and common? OK, first, the contracts I am referring to will be resilient. They are likely to come back in time to save you and will retain a lot of value if the stocks get hurt.

    Second, you won’t feel helpless when the bears lay all over the common. You will be able to cover into the quarter and then play the inevitable bounce that I believe will happen when people recognize that we are going into some seasonably strong moments for both.

    I used to do this as a matter of routine for stocks I liked that happened to have big short positions.

    Please note, again, that this strategy allows you to play both ways, and is therefore not as directional or as dangerous as a common long which has, of course, mucho downside.

    As for whether buying ahead of a quarter is dumb or smart, I am hard-pressed to have no opinion about a quarter when I like a stock. Per se I have to like it, or I would not be talking it up!


  93. TSO – rolled May $110 puts to May $120 puts for +$1.90. Seemed like a good idea to spend $2 to buy $10 worth of position.

    Just to be clear, there is a plan here. I can move my $5.90 basis May $120 puts (down $3.37) to the $5.40 Aug $115 puts and sell the May $115 puts for $1.35, making up close to half my losses. The June $115 puts are $3 so they’ll make a nice roll.

    A very important part of a DD, DD, roll strategy is rolling to a strategic position where you can turn around and become a seller. As long as your goal is to get out even and you stick to it, you have a good chance!


  94. EQIX
    I think it’s a nice pullback from 91. Let’s see if 85 holds! weekly chart is still good!


  95. TSO…FINALLY !!!!


  96. COH – same thoughts as last week. The fired their sales reps and are embarking on a massive spending campaign to sell direct right when the economy looks shakey. The need a quarter to prove themselves but I won’t be adverse to taking an LTP position and selling calls once this calms down. When establishing a position in the LTP you have nothing to lose by waiting. The calls you intend on selling will only get more expensive and it can be argued that you should wait until there’s a run UP before you get in and sell.

    Right now, TIF and JWN are failing too so this may be based on some luxury goods outlook and not just specific to COH.

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

    In general, this is not a thrilling day. The Dow is up on my morning concept (DIS is now on my radar) but AXP laying around is bothersome.

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

    Yogi/TSO – I’m certainly not gloating here because I got my butt handed to me by this stock but I get my options a LOT cheaper on fundamentals than I do with charting. A combination of the two is the best approach but fundamentals do win out over time – the trick is to live that long!

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

    MA – I still wont’ touch them over that EU nonsense.

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

    WMT – I think high gas chases me into WMT, not out. I think TGT sufferes most from a spending shif because the JWN/SKS crowd still won’t be caught dead there but 1/3 of their customers go back to WMT to knock a tank of gas off their shopping bill.

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

    MA might make a good spread someone remind me tomorrow but now would be the time to start accumulating June $120s for $2.50 against (hopefully) the June $110 puts for $2.50 if it bounces back (otherwise you’d need to flip to Jul $105 on a much more complicated play.


  97. RIG- bought back May 80′s. Thinking earnings will be good.
    Hopping on the plane to spend a bunch of Euro’s. Will see you guys in two weeks.


  98. OIH popped right off $160 – that’s messed up that so many people play an index fund that it hits resistance.

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

    Transports imploding, in for another 150 (50%) on my DIA $131 puts at $1.10, stopped out of my $124 calls – not at all happy with today. XXX


  99. Have a good trip BillBig! Don’t forget to turn to Mecca and start praying on the plane – they love that! 8-)

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

    FDX – $65 oil is killing the transports (as is a slowing economy). Even $60 oil won’t be believed now so I’d stay away until they test $95

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

    Energy Cycle – the cycle has been violated by manipulation. The real trick is to figure out how much that manipulation costs to keep up and at what point it all falls apart. I firmly believe, after looking at earnings of the majors, that they have let costs go out of control and any slip in either price or demand will send these companies back 2 years in valulation. This will look a lot like the real estate bubble when it pops – it will go down, and down with little rallies that get crushed into dust.


  100. TC billbig, safe trip


  101. Cramer is like oblivious to what’s going on in the markets while he speaks, he’s on TV with more “must owns.” Has this guy ever said “Let’s wait a day or two and see what happens”?


  102. TSO: Very nice bearish candle on the 60 min chart. I have not see anything like this in a long time. Let’s print a nice shooting star on the daily and it should be good for puts. Perfect blow-off top.


  103. Ahhhhhhhh CME got me, I stopped out at $9 this morning!

    LVS flying down ahead of earnings.

    TASR – somethings up, grabbing the June $10s for .12, will find out later!


  104. have a great time, BillbigD!


  105. CME tested 200 mvag again


  106. wow!!! VLO almost going negative for the day and TSO still up $3+


  107. AMZN – all uncovereds off the table – too much gain.

    Forget TSO, check out VLO! Hopefully they are leading the way.

    Now Google falling apart. Watch your Bidus if you still have them.


  108. Getting extremely ugly as of late……my watch lists look like bleeders.

    Did keep the DIA May 131 P’s just in case, so I got that going for me (which is nice)….not enough for the fully insured affect though


  109. P – check you email. My comments re positions pertain to natural gas.


  110. Utils, just a point of note “D” had some good news this morning and has reversed lower. Utils have obviously been the darling of the market recently


  111. Check out this desperation. Chavez “rerouting” crude away from the US, Nigerian rebels acting up – they are trying to get away with whatever they can before the dems turn up the heat on this scam!

    I still don’t know why I bought those TASRs so 1/2 out at .25, I’ll find out later I guess!


  112. FXI – rolling $110 calls I sold to $106 calls for $2.75 XXX


  113. P – Did that clear it up? Would you like links to the two data sets?


  114. TASR – added the JUN 10s at .14. thanks for the heads up, Phil


  115. any opinion on ATI anyone?? Taking a hit today -


  116. Thanks Z but more for you to do!

    ECA in power dive – gotta take the CHK Kun $32.50 puts for .52 just in case XXX


  117. Z – I sent you a note but yes, links are a good idea.

    TASR – don’t thank me until you sell half for .25 – I still see nothing, they just happened to be on my watch list and I saw them break up. Earnings aren’t until 7/25 so I assume it’s another court victory or some safety decision but the whole thing could just be a rumor.

    ATI – well, at least they gave us a heads up to get out of TIE! My opinion remains it was good to set stops today, I had too many positions anyway but this is a very ugly turn this afternoon.


  118. Z
    Looks like you may get another shot at CRZO.

    RACK holding up pretty well.


  119. DNDN below $15.


  120. Here’s what I don’t like about the Qs: Terrible day on the Nasdaq (-1%) is down .46 while a terrible day at the DIA is down $1.30 but a $1 Q bracket ($46 puts and calls) cost me $1.30 and the DIA $131 put/calls cost 2.65.


  121. DNDN – I STILL can’t get the $15s for $4!!!


  122. P – Msg received. Just sent him a page or so email, cc’d you.


  123. Not much of a hangover effect for the Canadians easing up on the enviro regs on oil sands.

    ECA but also SU and NXY in a flanking maneuver power dive.

    CRZO – yes but not today. Sick over the b slapping NFX is taking. Comp piece out on SWN with NFX before the close.


  124. Phil, are you adding to port insurance before the close?


  125. CRASH: 3:56pm while refreshing page.


  126. SU – that’s what I said last week. Lowering taxes doesn’t help them if they’re not making any profits!

    Insurance – I’m up to 450 now – that’s a lot and I took a lot off the table so I’m mainly protecting the open calls in the LTP which are slow movers. We have ISM and pending home sales (and car sales but who cares) tomorrow and the ISM can be a nail in the coffin if it comes in below 50 (contraction).

    BIDU turning down, Goog at $471 – this is ugly!

    I wish I had had the nerve to short GS on Friday, I couldn’t do it…

    Oh well, it was a great day to stop out…


  127. Crash – Hey me too, just now. Good one to send to Jared to see if he can see a pattern.


  128. Phil,

    The SLB play you made last week (June $80 Call). The option has fallen 50% to $.80 now…any thoughts?

    Also, you told me to ask you on any plays for SHLD and GE…feel free to answer whenever.

    Thanks


  129. Hey I crashed too. My pc actually powered down. Probably some tech guy at TSO messing with me!


  130. SLB – along with lots of other stuff stopped out this morning.

    At 9:47 the second thing I said this morning was set 20% of the profit stops, in SLBs case we opened at $1.40 so we were already down 13% at the open so mine went at $1.25. If you still have them at .80 you have to hope for the best, we have inventories Weds and SLB has a lot going for them. RIGs earnings should be telling as well.

    There was a HUGE sell-off that was so spread out that it seemed a lot like a program to me. There was a big flush at the close so hopefully it’s done (but I don’t think so). If Europe goes down tomorrow we may be into level 2 of our mattress plays, I’ll have more on that tomorrow.


  131. Vertex Pharma quarterly loss widens on higher R&D costs

    Vertex Pharmaceuticals Inc. after Monday’s closing bell said its first-quarter loss widened on higher research and development costs. Vertex posted a net loss of $80.7 million, or 64 cents a share, compared with a loss of $50.1 million, or 47 cents a share, in the same quarter last year. Excluding onetime costs, the per-share loss stood at 64 cents, while revenue at the Cambridge, Mass.-based biotechnology company rose to $68.8 million from $39.1 million. Analysts polled by Thomson Financial had been looking for a loss of 64 cents a share on revenue of $63.5 million. Vertex also backed its net and non-GAAP loss forecasts for the full-year period.

    Sure hope the FDA approves their Hepatitis C drug sometime in May/June 15


  132. New piece on NFX vs SWN shale plays on the zman site.


  133. Phil:

    Repeat of this morning’s question:

    How do you handle rolling out-of-money short legs in calendar spreads
    (e.g., those positions in long term portfolio) in general?

    Leave it without actions as long as it stays out-of-money (and see if it will expire worthless)
    or roll it to next month about 1 or 2 weeks before expiration to maximize premium gain?

    Thx, Edgar


  134. Phil, do you play the NW Air 2.50 Jan calls for .05 too?


  135. Sold calls not keeping up with FXI submergence!


  136. CC just warned, not a good day to buy BBY after all!

    If I hold a leap and my caller/putter is in the money, I will usually wait until about the week before expiration to eat as much of their premium as possible, then roll them into the next month. Depending on where I am – sometimes I roll them up a braket, effectively kicking in a little extra but buying myself more room (this is what I did with my own TSO puts earlier).

    If they are out of the money, I look for the point of diminishing returns. I watch the surrounding brackets and, if my guy goes down .10 but the guy above or below him goes down .15 on a days move – well then I’d rather flip and sell to the guy who loses the most money per day. Of course targets matter too as well as events like earnings (and it’s not just your earnings, your whole sector affects you).

    That’s the basics I look at but feel free to ask me about any specific thing any time – the best way to learn these things is by doing!


  137. EOG reports $1.11 beat over first call $1.02

    21% YoY production growth, strong in the Barnett.

    On target for it’s previously stated goal of 10% production growth 2007.


  138. NW – no, I was playing DAL because there were silly buyout rumors and you never know when one of those will spike the stock. At one point I had a couple of hundred but then I sold most at .30 and they got really hard to buy for a nickel and eventually I just lost interest but there was a period of about 3 weeks where I had a buy in at .05 and a sell in at .20 that was triggering 20 or 30 contracts a week on each side.

    FXI – what the $106s? You have to allow for some bounce. That was a totally brilliant save on those, we were miles underwater and doubling up by moving to the Jan $120s and selling twice as many $110s just made us a ton of money, that trade was below even, now up $8K so I couldn’t be more please (well, maybe a bit more but not much!).


  139. Phil, it would help if you point me to some earlier post (I tried to read them all but may have missed it) or describe for us the idea of mattress plays and how they work, what general advice/rules you have on these, when to make them, when to take them off the table, etc. Much appreciate your insights, as always. With you, I have started to make sensible investments once in a while, still mostly hit and miss but learning.

    Thanks,

    Jordan


  140. “there was a period of about 3 weeks where I had a buy in at .05 and a sell in at .20 that was triggering 20 or 30 contracts a week on each side.”

    Phil, what broker is that? Mine (Interactive Brokers) does not let me have orders active on both sides of the same contract. I am allowed only to buy or to sell at any one time, and until that order is active, I cannot place an order on the opposite side. Is this an account value restriction, you think, or just difference in brokerages?


  141. I gotta think T is still a long here right?


  142. no broker would let you do that would have to do in separate accounts and even then not sure if it is legal


  143. Wang’s World
    new post up!


  144. Just a little anecdotal evidence that consumer spending is really slowing down at all levels. I live in Denver obviously, and have been car shopping off and on for six months or more. In January I visited my local Lexus and Infiniti dealers on a Saturday and nobody really had time to talk to me. I went back last Saturday about the same time of day and the dealerships were near deserted, they were very glad to see me. Prices on the same vehicles are coming down as well.


  145. Mattress plays – have you tried using the search function? That usually brings up places we’ve discussed things, including comments. One day I need to get someone to go through posts and comments and make a guidebook or something… I wrote extensively about them either last week or the week before in comments and there’s a whole article somewhere – if you don’t find it by the weekend let me know and I’ll try to repost it.

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

    Buy/Sell – I was usuing options express but I can’t swear I had them at the same time, generally I would try to fill 100, then sell 50 at .30 with a .10 stop on the rest, then go back to trying to buy at .05 – I’m not sure I put the orders in at the same exact time.

    T – yes.

    You don’t have to be anecdotal about consumer spending, the numbers yesterday were quite a disappointment and car sales today will probably be awful.