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Thoughtful Thursday Morning

I'm really having trouble enjoying this rally.

Despite my determination to go with the flow and despite the break-out levels we've hit for the Dow, the S&P, the NYSE and the SOX I still feel like it's some kind of silly dream we may wake up from at any moment

We hear from retailers today and expectations are already low so they'd better not miss.  We also have a Google Gathering, which is always interesting but, at this point, Google needs to colonize other planets in order to grow any faster than they are so it will be interesting to see what they have to say today.

Shanghai is still showing no signs of worry with yet another record close and New Zealand, Australia and Indonesia also closed at record highs.  The Nikkei, Hang Seng and Bombay all took a rest and India concerns me as they have some catching up to do.  Toyota was a huge disappointment as they are having trouble controlling costs as they grow sales 9%.  Forbes makes an interesting observation that perhaps the company is just having trouble controlling expectations as the numbers are indeed far better than the guidance would suggest.  Toyota made more money this quarter ($3.7Bn) than GM has this decade (-$11Bn) and is on track to earn GM's entire $16Bn market cap this year.

China is doing their best to bail us out by purchasing $4.3Bn worth of "technology" from US companies but I was disappointed that this includes $1.3Bn worth of MSFT software by Lenovo, who need some sort of operating system on their computers anyway.  An additional $8.2Bn will be spent on China's upcoming shopping trip as they join millions of other International shoppers taking advantage of our cheap dollar this summer.

Europe's big news is that Tony Blair is stepping down on June 27th paving the way for new leadership to tell Bush he is on his own in Iraq.  Mr. Blair told supporters: "Hand on heart, I did what I thought was right." Following the Sept. 11, 2001 terrorist attacks in the U.S., it was right, Mr. Blair said, to "stand shoulder to shoulder with our oldest ally, and I did so out of belief.   But the blowback since, with global terrorism and those elements that support it, has been fierce and unrelenting and costly.  And for many it simply isn't and can't be worth it. For me, I think we must see it through." He added: "I may have been wrong. That's your call."

In an additional blow to US interests, the Bank of England raised rates to 5.5% but the ECB saved us by holding their rates steady at 3.75% but watchers there are certain they will hike next month so it's tick, tick, tick for the dollar…  "If the euro-zone economy gains further momentum in late 2007 and early 2008 … the ECB will probably raise rates further to 4.5% by mid-2008," said Holger Schmieding, Bank of America's chief economist for Europe.

We'll watch the S&P to see if we hold 1,510 today but retail numbers look weak and nothing spooks this market more than fear of a pullback in consumer spending.  SKS posted huge numbers though as the rich grow ever richer and do their best to trickle on the rest of us whenever the mood strikes them and JWN had an interesting report with stronger sales of designer wear being offset by a drop in children's wear indicating that the moderately wealthy (it's hard to be very wealthy when you have kids) may be starting to feel some strain:

 

 

Day's

Must

Comfort

Break

Next

Index

Current

Move

Hold

Zone

Out

Goal

Dow 13,362 53 12,468 12,600 13,000 13,500
Transports 2,910 -4 2,825 2,900 3,000 3,250
S&P 1,512 4 1,430 1,460 1,500 1,550
NYSE 9,827 40 9,218 9,465 9,600 10,000
Nasdaq 2,576 4 2,454 2,500 2,600 2,750
SOX 509 8 477 490 500 560
Russell 834 3 803 820 850 900
Hang Seng 20,746 -98 20,200 20,600 21,000 22,000
Nikkei 17,736 -11 17,400 17,500 18,300 18,500
BSE (India) 13,771 -10 13,200 14,000 14,725 15,000
DAX 7,442 -33 6,900 7,000 7,400 8,000
CAC 40 6,033 -18 5,650 5,800 6,000 7,000
FTSE 6,524

-25

6,325 6,450 6,600 7,000

Oil will rear it's ugly head again as the Nigerian news catches up with the slow traders but we are still watching that $62.50 mark with great interest.  Today is natural gas inventory day so we can expect a pointless run-up into those numbers but the damage is already done to our trade deficit which shot up 15% last month on rising energy costs.

ZMan is featuring positive plays on MCF and END, neither one optionable but at $2 per share END may as well be a leap.  If oil does break back above $62.50 both of these plays should make good hedges against our longer puts.

Criminal Narrators Boosting Crude have now sunk to new lows by promoting a ridiculous segment where they are featuring a woman who claims that she broke a florescent light bulb and the mercury inside it required a hazmat team to clean it up costing her "thousands of dollars" in damage.  Could the fact that their parent company is the World's largest seller of old fashioned, energy inefficient filament light bulbs have anything to do with it?  This is being coordinated with a PR campaign to slow the spread of these light bulbs as Congress is considering requiring them.

All this safety nonsense may be a nice boost for my pals at OLED (currently $5.18) as their diodes will soon provide another energy-efficient light source in the near future.  I like owning this stock and selling the June $5s for .75 as I consider it a great long-haul investment but if someone wants to pay me over 10% for holding it for a month, I have no problem with that either!

Speaking of exotic metals, TIE is having a great week after I told members on Monday that I liked it much better than ATI.  Happy Trading has our chart of the day on it and we'll see if they can break back over $39 on this run but shame on you if you didn't take some off the table:

 

 


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  1. Morning fella’s.


  2. Does anyone think the weak number out of WMT will spook the market


  3. Phil: What’s your plan with your TM OCT 140′s now?


  4. TSO up again premarket. Getting my head sawed off on the TSO put position. Anyone DDing?


  5. Morning chaps. Dollar and Gold grabbing my attention also.


  6. Looking to grab the NKTR Jun 12.50 for a quicky due to short squeeze


  7. Phil, what do you think of KRY? Bill Cara speaks positively about it says can go to 10bucks eventually. I also asked you to take a look at WITM for me about a month ago, could you take a look at that also when you have time.

    Thanks


  8. Morning. Still eyeing FWLT with an upgrade to $127. DE. RIMM. MA.
    Market could pullback today.


  9. Phil?happy – is there a good entry point for puts on TIE/ATI? Thanks


  10. FWLT
    cashed out with a quick +36%!

    ATI/TIE
    JPL, you didn’t go into ATI at 110 like I said? Now you should wait.


  11. Other US investors share their concern on Indian markets. Both the Indian Closed-End funds IIF & IFN are trading at discounts of 12-13% since past few weeks. These sold at premiums most of 2005-thu-Mar 2007 and huge premiums such as 15-40% back in mid-2006.

    Past 2-3 weeks lots of US investors have lightened-up on these Indian CEFs – sort of waiting for the inevitable 10-15% pullback.

    IBN & INFY are in the top-5 holdings of these funds and a big part of the Indian indexes SENSEX & NIFTY (3-6%) – good play to consider Puts on these for Jun-Aug timeframe for if/when the sell-off happens and be long IFN & IIF with the discount to protect you some from the downturn


  12. Thanx Happy – I missed it at 110 – is 119ish a point to enter onthe downside? or wait to 110 for the upside again – where is the channel?


  13. msquare,

    Thanks for that info!


  14. Weak WMT – it sure spooks me! I don’t mind if WMT is weak by themselves but when TGT is down too then you know the shoppers didn’t move up market (and there is no down from WMT). COST did well but I don’t see them as being a real day to day substitute for WMT.

    TM – I’m waiting for the dust to settle but my plan is to buy the Jan $120s for perhaps $10 and aggressively sell the June $120s for $3.20 to make back my loss on the Oct $140s (-1.27 so far) and using the $140s as a buffer in case it spikes up on me.


  15. Z – I got out of NE yesterday – what oil’s do you see as good plays and what entry points? Thankx


  16. Phil,

    DNDN – Do we double down on Aug 7.5 (cut in half since yesterday afternoon), the 10s, or consider $5s now?


  17. rETAIL SALES WEAK JOSB and ARO exploding higher
    ICE- looking nice


  18. RIMM – added JUN 160 short. Also have JUN 155 short


  19. Phil: I have a small position in TM OCT 140′s @ 1.65 would you rec. the same strat. or should I just bail?


  20. Morning Phil – are you considering any moves in the LTP today?


  21. Phil

    Did you see TM buyback (posted on Wed wrap-up)?

    N


  22. MNST.. Strong move on no news.

    There was an ATI for TIE $52 rumor floating around yesterday. My guess is TIE pulls back on lack of confirmation.


  23. Joseph – do you see RIMM testing 155 today? They are bouncing back well…Thanx


  24. TIE/ATI – when I miss something like that I generally tend to just wait for a nice market crash so I can get in around their last consolidation, these guys are too dangerous to chase.

    KRY – too new, not sure about them.

    TSO – selling $120s for $3, out at $3.50 – it’s risky but I can’t pass that up. XXX Yes, I know it is currently at $2.50 but it spiked to $3 and that’s what I want to sell it for otherwise I won’t bother ($2.75 min on half).

    IBN already got hammered on that news but my Dec $45s aren’t moving so I’m going to DD there and start selling the Jun $45s, perhaps for $1 but I’m not in a hurry.


  25. APPL- Phil nice details on options in yesterday’s blog for the holder of the apple calls.
    VIP- bought calls this morning when stock down 3


  26. JPL

    I like E&Ps in here. They’re printing money/hedging like crazy right now. The ones with falling operating expenses on unit basis are more attractive.

    In service: I like the drillers, I picked NE b/c it’s top notch but many of them work well. Activity is only going to increase. There’s been some decline in rates in a few markets but the big boys are locking in good contracts now.

    Also HAL, it’s cheap and it has a “get out of jail free and unscathed pass” after punting KBR. They’re pretty much bullet proof with the onshore activity in the US and expansion of Middle Eastern ops

    Tankers – I’m in TK but I like most of them aside from TOPT which is too risky for options. The trade deficit became even more bloated in March because of, wait for it, a surge in oil imports. How can you go wrong here? TK’s 1Q pr last night said rates were stronger than historic levels so far in 2007 and that they expect rates to continue firming in the second half.


  27. Phil -

    DIA cover – I’m practicing with DIA covers but not much luck (lots uncovered LEAPS in my port to cover). yesterday I bought 25 Jun 126 puts @ $0.45 and 10 Jun 136 call @ 0.75 to get a 3-2 put bias. when DIA moved positive yesteday, my puts per contract value dropped way faster than my calls increased.

    How do you determine the best strikes and ratio for both sides and when/how do you roll up/down. I want to adjust as minimally to avoid whipsaw trading. Is this even feasable and should I expect to continually leak money for this type of cover strategy?

    Don’t want to interfere with trading w/question like this, EOD answer is OK.


  28. FMCN
    making a move today.

    ATI
    JPL, let’s wait and see what the sector does.

    JOSB
    what’s up with that?

    ICE
    BillBigD, you weren’t kidding! Back into the 140s!


  29. DNDN – Wow, that’s a shocker. at least my $7.50 puts covered them so far… Not going to buy any more on this until we get some time in but you do need to make sure you have downside protection – better to be neutral on the way up than lose more so selling the June $5s for .92 makes sense if you don’t already have a put.

    I’m opening a new $10KP appropriate position (but I won’t put it there due to length) of buying the Jan $2.50s for $2.88 and selling the Jan $5 for $1.58 which means you’re OK if it holds $3.80 and you’re in for $1.30 with a $1.20 max gain. You can also do that with the Jan ’09 $2.50 at $3.35 against the Jan ’09 $5 at $2.60 which is a risk of just .75 agianst the same $2.50 spread and a break even at just $3.25 – it’s pretty good money for a year or 2 and you may be able to get out early with small losses or gains along the way. On a big spike, you would cash in as both premiums would be wiped out so you could take an early exit. XXX

    TM – I have the $140s, that’s what I’m doing. Yes I saw the buyback as did everyone else who’s dumping it but I do think they’re wrong. Expectations were just too high but this is a car company, not a tech company, things happen slowly.

    RTP – I knew I would regret not taking those $300 puts!


  30. KRY – big caveat is the mine is located in Venezuela. They are waiting on approval from the Chavez government to begin mining in earnest. Given that Chavez is nationalizing anything that moves in the country, take this one with a grain of salt


  31. I dont have any but watch for the 1 hour blue light special in WFR beginning at 10:15……fairly consistent pop during that period of time. Instead of enjoying the ride I am sitting here cashless :cry:


  32. LMT

    making a nice move – picked up some June 100′s


  33. Happy – How do you like the TK chart. New all time high post earnings last night. OPEC is cheating.

    This rally in gasoline on the back of Nigerian unrest and a blurb out of landlocked Colorado that a Hurricane has an above average chance of striking the Gulf this summer is pretty unfounded given cur swollen inventories of crude already onshore. There are still refineries on the coast that are out of service from 2005, so what, are they going to get knocked more out of service?

    Note that the stocks aren’t buying the rally. You’d think TSO would be up $6 today on a $0.06 spike in RBOB!


  34. Z- thanx for the info.

    Phil – thankx for the opinion on ATI/TIE


  35. Happy, BillbigD. JOSB huge short position. SSSales good. CMG,AMZN,NVEC…I spot a trend !


  36. GENZ- looks to be coming back strong


  37. Am enjoying watching the shorts attempt to manipulate NKTR however. In at .45 :cool:


  38. DIA puts have barely budged on this drop indicating no one is buying it. Selling DIA $133 puts for .85 to cover some of my earlier losses. XXX

    DIA Spread – LOL – I wouldn’t pay you more than .75 for the Dow to hit 13,675 in 30 days either! You can’t do big spreads on the Dow like that with a short timeframe. Any movement that doesn’t indicate you may get a 700 point drop or a 250 point gain in short order will damage your options. I generally play just to cover the disaster of a 100+ drop/gain AGAINST my existing positions. It is purely an accident if I actully make money on this position. It’s like life insurance – your best case scenario is you die a horrible death right after you make your first payment – Ka Ching!

    JOSB is a totally great company – sorry I missed them this time around.


  39. Phil….following up on your dollar comments….TM predicted a Euro/USD rate of 1.50 by the end of the year…


  40. Zman

    What do you think of FRO?


  41. Phil

    Still hold KNOT?


  42. KRY: I am long (cost ~$3) since 4-6 months. They did a big convertible in April at around $3.66 (Cdn $4.25) – bought more on dips & sold some too, but holding big position for when they get their permit – pundits claim it will go $10-$12. I am loosing patience and may sell some above $5s this week with no permit yet again…

    IBN: Phil, $45s are unlikely to move much – how about selling calls in the $40s and buying $45 as protection? They have the $5b secondary and $2-$3b debt offerings (in GBP/EUR) in Jun, so picture may clear by then but by then late to get good prices for the calls if they go down big (as I expect to mid-$30s as in Mar 2007 sell-off)


  43. 96 Bcf – gas holding up well. I was thinking triple digits and you have a set back. We didn’t get that so I think we hold the $7.50 to $8 trading range. Good news for E&Ps as cooling load is starting to filter into demand.


  44. phil,

    Regarding cy & spwr, i used to be affiliated (executive level) with cy and they can be pretty short sighted when they think that a subsidiary is eclipsing or dominating the parent. from their egocentric perspective spwr was the tail wagging the dog. i doubt that they waited until they had a promising new venture in which to invest. so i believe that the selling of spwr stock is a negative for cy’ stock for at least the next 12 mos. if my theory is correct what would be a good way to play it?


  45. NKTR


  46. Dendreon to Hold Conference Call on Thursday, May 10, 2007 at 4:30 PM ET

    SEATTLE, May 09, 2007 /PRNewswire-FirstCall/ — Dendreon Corporation today announced the company will hold a conference call tomorrow Thursday, May 10, 2007 to discuss its first quarter 2007 financial results, as well as the complete response letter it received from the U.S. Food and Drug Administration for Provenge(sipuleucel-T), the company’s investigational active cellular immunotherapy under review for the treatment of asymptomatic, metastatic, androgen-independent (also known as hormone refractory) prostate cancer.

    Time: 4:30 PM ET /1:30 PM PT
    Date: May 10, 2007
    Dial-in: 1-866-293-8972 (domestic) or +1-913-312-1232 (international)
    Webcast: http://www.dendreon.com (homepage and investor relations section)


  47. CNBC had an interesting report that China’s Shanghai exchange market cap exceeds all the rest of Asia combined including Japan, Korea and Australia. From that perspective the market seems a bit inflated. It seem that China’s huge trade surplus money is inflating their own markets.


  48. At $1.50 per Euro the Dow would have to be at 15,000 just to stay even.

    KNOT – wow, got smoked on those, totallly unexpected and down 33% because I ignored my own note to sell the Mays ahead of earnings so kick, kick for me. May $22.50s were $1.10 yesterday, all premium and I was too greedy to lock in a 30% profit ahead of earnings… I’m holding to see where this goes, seems like a bit of an overreaction but then again, so did DNDN!

    IBM – I have the Dec $45s for that reason but just 10 so far as I thought I’d get more on the dip but the dip never comes. That makes me nervous about selling shorter calls but I’d sell the June $45s if they come up around $2, otherwise I’d rather let it drift down and buy more or move down to the $40s. If India falls through our levels then I will lose faith in this one, otherwise I think they are undervalued. Banking growth statistics out of China are staggering and I doubt India is too far behind.


  49. MA – taking profits here


  50. Highlander,
    I also found that info on China quite interesting. Phil your take on some longer term puts?


  51. Phil,

    CTSH flying higher today on no news/reason. Considering selling Jun $80 calls for about $4 as I expect (hope!) it will be below 80 by Jun expiry.

    But I am afraid as CTSH is volatile (and rumors of IBM buying it – again!), so what is good to buy as protection?


  52. TK
    Z, it’s got the “perfect” chart!! It just keep on going! See chart on Wang’s World!

    FSLR
    cashing out a quick +20% gain from this morning!


  53. Just look at Mastercard go….wow I wish I would have played them. Hoping GOOG will build a base here and catch on fire starting in July. I have a feeling they will be a second half play this year. Do you agree Phil?


  54. LCAV DD Jun45 C’s.

    They got an upgrade (Buy -Oppenheimer) but it is still a stretch to 45 from here. Hold on?


  55. CY – I agree with you, that’s why I dumped mine on that sale, small though it was. The problem with shorting them is CY is likely to rally with the semis who just broke over 500 and look pretty good this morning with a mild pullback. So I just don’t like them for selling puts as they have low premiums on close puts but if you are firm in your belief you could play the Sept $20 puts as an earnings play (and any other of a million market disasters) and even pick up a quarter selling the June $20s or just wait and hope for .40 or better.

    DNDN – this may be your chance to get out of this trade if you are looking to exit. Should be at least some speculation this afternoon. It will be too funny if we are back at $15 tomorrow…

    Shanghai market is out of control but so are a lot of things. If they don’t come down then everyone else has to go up at some point.


  56. Phil,

    Do you think Apple would pull back at all? It looks rather vertical (and scary with my naked shorts).


  57. IBN

    They are a great bank but their 2008/2009 projections are too high. They have grown like crazy because of India growing AND more so as they have had to compete with state-run banks which were easy to beat – foreign banks could not expand and have had to operate with all sorts of govt. restrictions.

    Starting 2008/2009, foreign banks will be serious competition and Citi/BAC/ABN/HSBC already with big operations in India salivating at the chance…So, don’t buy the popular golden scenario projections that assume no serious competition for IBN going forward too easily…


  58. FMCN
    1/2 out with +68% gain (had to hold on to this for a while, since 4/27, when I had the same gain in 1 hour on the day I bought. A good lesson to cash out when you get a quick hit!).


  59. msquare,

    Just a perspective on IBN

    To open a cit/bac/abn/hsbc account in India, u need 50,000 rupees minimum and more than half of the

    population live below poverty line.Not sure if u been to India, but ICI bank is like Duane Reade in NYC,

    they have branches like crazy in major cities.. they offering 9% money market account for 1 yr…


  60. MA looks like they must be on the Shanghai exchange!

    GOOG – their meeting is not until after the markets close so tomorrow is a big day.

    LCAV – I like them funamentally so if they get severely beaten I would buy them but not very interested right now.


  61. Thanks Happy!

    How about MCF when you get a moment. I know, no options but I’ve got people in the common on this one. Don’t worry the gap, it is more than accounted for in the fundies. I’m more concerned with the breakout with volume out of the flag.


  62. zman – are you familiar with OMNI? Any opinion?


  63. MCF
    Z, this thing needs to vent!


  64. TIE-nice call on taking some off Phil Thanks
    PCU- keeps on rocking!


  65. Oli

    Apple is slated to release iphone in june. There is also speculation that a 6G ipod could be announced, the have placed a large order for 15 inch LED screens (AU optronics maybe) and the could be refreshing the imac mini lines with core 2 duo’s. It is also widely expected that they demo some stealth features for the new OS at WWDC. I have found that the only good time to naked short apple is when they have great earnings. At the current price P/E is still low 30′s, lower for forward. Some hedge would help you sleep.


  66. DNDN,
    it may go up a bit if the info from the meeting tomrrow is positive. But i doubt it will go up a lot, without the expectation that FDA approval will arrive soon. And FDA usually doesn’t change its mind that fast.


  67. LOL – some jokers are lobbying to get shareholders to vote against the board. The stock is up over 100% since last year so I’m going to go out on a limb and predict it won’t get very far.

    FMCN – great call on those!

    Good point Cool, the rich will get richer but IBN is a people’s bank and they’ve really gotten a handle on their expansion issues. I don’t have the actual numbers but I really think 1M people a month are opening accounts in China and India, although poor, is actually a wealthier population. Don’t forget some of these people still keep their wealth in jewelry so the whole concept of banking for the average person is a huge growth industry.


  68. Joseph – I like the company. Transition zone (swamp) players and GOM shelf seismic, tool leasing, transportation, it’s like a mini SLB without the price pressure for the hiring E&P. They’ll be very busy with gas above $6 let alone hanging out at near $8.

    Chart looks good to me, good earnings but no coverage. Options have wide spreads/fattish premiums.

    Maybe Phil can look at potential play there. May not be option material

    Happy, you like that chart?


  69. AAPL – never short it unless you are covered. Really I’ve seen way too many people crushed by this stock for 4 straight years now…

    DNDN – they can appeal, which could put them 90 days from an approval. I’m not sure the FDA wants to reject them, they just don’t want to look like they’re rolling over on this one. They could also (long shot) announce that they have an understanding with the FDA and that the decision will now be on XX/XX and we go right back on the little roller coaster.

    Meanwhile the markets are now falling apart in whaat loks like some big program selling as nothing is being spared.


  70. zman, I still have position in CRK from two days ago. May $30 call. Should I cut losses here or wait?


  71. OMNI – they look great but too small for me to be comfortable with. Owning the stock at $10.25 and selling the Nov $10s for $1.90 puts you in for $8.35 with a possible 20% gain in 6 months – nothing to sneeze at.


  72. coolkid / IBN

    Yes, I have ‘been to India’ – In fact born there, studied there and even worked for Citi! Have lots of relatives, friends and have been visiting frequently last 20 years. Personally know of service(s) of IBN v/s others as of 30/20/5/1 years ago and as it evolves. If at all, I perhaps have too much of an ‘insider’ bias.

    As for interest rates all banks offer comparable rates and keep minimums high to avoid having to deal with ‘small customers’. The big money (to be made) is in commercial borrowings where the small foreign banks have been beating IBN/HDB too often – I expect that to intensify with the banking liberisations already announced and expected, making IBN work harder to justify it’s 3.5 times book lofty valuation (prior to coming dilution)…they have had it easy so far and I do expect them to do well but just not as well as they did the past few years.


  73. JRCC up again……bucking coal trend. Anyone with thoughts?


  74. Msqure – from the ground view, do you know the adoption rate of banking in India in the lower classes and is IBN the bank of choice or just the bank we heard of. My understanding is that they’d be making lots more money if they had made better lending decisions as they were initially too lax and got smacked down by defaults. With that under control and their reputation for “easy credit” I would think they could still grow quite nicely.


  75. telecoms
    did something spook the sector today? MICC, MBT, VIP, GLDN all down substantially.


  76. This pullback is good for the markets. . Anybody check on volume on the markets? It is fairly low. . Nasdaq hasn’t even reached 1 billion shares yet. . . We need a breather and consolidation phase. . The TICK/TRIN reflect the same thing today. .


  77. 200+ point down day?


  78. Phil-

    Question about rolling vs. entering a strangle/straddle/etc. When you talk about entering a spread, you always mention you do not do it all at once but do it a leg at a time, to shave off a nickel or two. However, when rolling from one month to the next, you do not make that distinction.

    My thinking is that rolling from one month to the next is just a calendar spread, so you should also do that. Question is: when you roll, do you do it leg at a time, is this an Options Express feature and how does it work, or do you just buy the spread all together? I am using Interactive Brokers and trying to see what the equivalent to rolling is there and how I can do it more efficiently. Thanks!


  79. Jordon – Re CRK – I’n in the JUNE $30 and waiting for the group to turn to add more. I’m not touching any MAY’s at this point but that’s just my comfort level. It was a great quarter with more expected but they’re beating energy land with knotty stick today, hell, even TSO is down.


  80. Or, maybe, the “sell in May” phase has begun. .


  81. DIA puts,
    sold them early…dammit


  82. LTP

    AMZN – selling $60s at $2.45
    CAT – selling $75s for .50
    GDX – selling $40s for .68
    SCI – woo hoo!
    SHLD – selling 1/2 $175s at $2.65
    SNDK – selling June $42.50s for $2.65
    UNH – selling $50s for $3.35
    XOM – selling $80 puts for $1

    SBUX – offering .50 for June $30s


  83. Happy would GLBL have something to do with the move?


  84. This market can take any type of bad news you throw at it….BUT NOT BAD CONSUMER DATA!
    Change in character in the market probably a short correction right here.


  85. Any thoughts on whether to adopt BTO (Buy To Open), STO (Sell to Open), BTC (Buy to Close), STC (Sell to Close) terminology as standard here to eliminate confusion over whether positions are being opened or closed?

    Stock – BTO Month Strike Debit e.g. SBUX – BTO Jun 30 $0.50
    Stock – STO Month Strike Credit
    Stock – BTC Month Strike Debit
    Stock – STC Month Strike Credit


  86. IBN

    Banking is for the ‘middle-class’ in India – this grew from $50m to $300m in past 10-15 years. IBN got the business as they were formed (via privetisation & mergers from quasi-govt. past) at the right time to take advantage of this and by being just ‘nice’ to their customers v/s almost take-it-or-leave-it/obnoxious state-run banks. Being private they also did not have to make loosing small loans as mandated by govt. which helped. They are primarily an urban bank with 1/10th the branches of state-run banks such as SBI/BOB. India is still a ~60% rural population and that is the one that has a much bigger of the poor. Sure, they have been good but they are not the only game in town – other smaller private banks (not listed in US) are learning and increasingly taking business away from ICICI.

    They earn 2/3rd of their profits from consumer/home loans rather than corporate and with foreign banks such as Citi/HSBC are allowed to expand more, they’ll have to work harder to maintain their superb growth rates of the past few years. They lack the resources & aggressiveness of the big global players to get much of the corporate / debt / Indian company buying abroad (e.g. Tata Steel buying Corus in UK or RDY buying Betapharm in Germany) – this is where the big money is…

    Another cousin of IBN listed in US is HDB – less volatile and the only one valued similar to IBN. Most of what I said about IBN applies to HDB but they have less exposure to consumer/housing markets – so some argue better…


  87. Gold -$11……wow


  88. Healthy consolidation but Europe went down hard after their close so it’s possible we get follow through tomorrow.

    Rolling – ask after hours but I do buy out on the dip and try to sell back (or whatever) on a rise but not everyone has margins for that so I just treat it like a roll. OPXS actually has a roll function which saves you lots of margin hassles but I never use it as the spreads are awful.

    TSO – damn they get me both ways! I didn’t fill that sell earlier and now they’re down to $1.45! Big deal if they fail $117.

    PTR got killed.

    SOX down $8 – crazy sell-off. Buying QQQQ $46s for .65 as a mo play (was .99 in morning so looking for .80+).

    Buying DIA July $134s for $2.30 and selling DIA May $132s for $1.30 – just a math play as their premium is more than I would lose on another 100 point drop. XXX


  89. OptionSage,

    I for one overwhelmingly second the idea of adopting the non confusing terminology. I have much to learn here and I think I’d benefit 200% more if I spend less time trying to guess what someone’s trade was.

    In addition to the terminology, how about a phrase/line about the why as in ‘think SBUX breaks $29 and heads to $25s’ – when known and fast-typing allows

    Stock – BTO Month Strike Debit e.g. SBUX – BTO Jun 30 $0.50
    Stock – STO Month Strike Credit
    Stock – BTC Month Strike Debit
    Stock – STC Month Strike Credit


  90. Phil,

    After reading your AAPL commentary last night a few times and reviewing my positions, I sold off everything on the rise up to the high today. Someone paid an even more ridiculous premium on the Octobers compared to yesterday :)

    I took home almost a 100% profit on most positions. I will be waiting for a pullback, options expiration is next week. Although there are a ton of positive going for AAPL no-one just hands out free money day after day.

    Thanks for the expectations check and much more !


  91. BTO. STC – feel free but I tried it once and always forget and it slows me down so I just gave up on it.

    When I get an assistant we will standardize that stuff (probably over the summer).

    Thanks Msq – big help!


  92. Good timing Yev – congrats!


  93. GOOG

    I still have May $440 GOOG Puts left from earlier straddle – need advise on selling Jun $460 Puts for $9.5.
    Think GOOG goes up after tomorrow’s analyst day


  94. PQ – if you’re in the May’s I’d take profits and roll to June calls on the modest weakness here. They a few days (maybe as soon as tomorrow but I bet next week) from reaching TD on a big prospect. They miss it’s $12, they hit it’s $14+.


  95. PQ – sorry, meant to say it’s $12.50, doubt it would go as low as $12 but the May $12.50s get wiped right before expiry which would be unfortunate.


  96. Nada mucho working for me today…..sold the SHLD 175′s and just got out in time to only have a 15% loss vs the 22% I would have now…..think I will go walk the cat :wink:


  97. Anyone looking at NYX on this dip?


  98. VRTX

    Can’t find it in blog ….

    When was the next info release on Telaprevir??

    Thanks


  99. Phil

    thanks for the emails trying to pick a spot and waste more time on the phone with them, feels bad so they do it commission free, how nice of them, Anyhow I think we make a low later today in this market, we haven’t done that since in a few weeks, we’ll see after lunch we traded right down to the S2 daily for both naz and SP futures and are off it just a touch. We shall see


  100. LONDON — Prime Minister Tony Blair, the most successful politician in the Labor Party’s history, has announced that he will resign on June 27.

    The announcement, anticipated for months, triggers a party leadership contest that is expected to confirm Gordon Brown, the chancellor of the exchequer, as Blair’s successor.


  101. Edro, searched several sites with no success on the VRTX announcement. I seem to recall the same date as for DNDN (May 15), but dont quote me.


  102. Phil, I have FDX Jun110/115 with .4 credit. Should I buy back the 115s now or should I just close out the entire position?


  103. Phil

    You can answer this AH.

    I use pretty straightforward strategies. Mainly Leaps on unfairly beaten up stock, and short term NTM puts and call for events. I love the idea of covered calls, but have an irrational fear about having to turn my stock over to a caller.

    I have 1100 shares of Apple with a basis of around 8 bucks. I don’t want to incur cap gains by being called, on the other hand I realize I am neglecting a cash cow.

    I know if I sell calls and the price spikes I can by back the caller with the paper profits, but it is hard for me to visualize how I can get away with this month after month.

    Can you elaborate on my expected risks from selling OTM stikes? Obviously a drop in price is great, as well as flat. but what are the downsides of an up move, how bad would a spike hurt? What considerations should I factor when choosing the strike?

    You had also mentioned in the past that not every stock is a CC candidate, any rules of thumb?

    I’m looking for Phil’s concise primer on covered calls. If it is already on the site please point me.

    Thanx in advance.


  104. Anyone got a good play on Gold? Every time it has gone close to or slightly below $670 it has rebounded to $690 in next few days.

    Was thinking of buying GLD but rather prefer some options play to have less $s tied-up and with some hedge if this time it goes lower (to $640s)


  105. MCF up another 3%. Wonder if they’re gone. It would do wonders for the E&Ps to have a takeout. My luck it’ll be NFX. The assets are right up their alley.


  106. Bond auction on 30yr looks like high yield !!!!! 4.84% is that right ?


  107. My TSO leap puts not moving much. Planning to Sell some puts soon, TSO going down but volume is low. TSO did not go below the low of 114.85 and hope it breaks below that.


  108. STP

    AMZN – $60 caller stopped out $2.20
    BIDU – selling $125s for $3.85
    BRCM – buying June $35s for .52
    CHK – half out at .50
    CSCO – selling $27.50 puts for $1.10, stop at $1.20 just looking to get my .20 back on other puts.
    DNA – selling $80s for .88
    GE – buying June $37.50s for .47
    GOOG – buying June $450 puts for $6 and selling May $470 puts for $8.25 XXX
    HPQ – out at $2.65
    IBM – selling $105s for $1.05
    INTC – June $22.50s for .65 as a mo play XXX (I already have these at .05 basis)
    MRVL – rolling aug $20s to $17.50s for .85
    RIMM – rolling to June $140 put for $2 (+$1.25)
    YHOO – Buying back $32.50s for .10, rolling to Oct $30s for $1


  109. MSQ. One play is GDX, it has options.


  110. Karmcon

    VRTX

    Thanks, I seem to remember it was this month also.

    Edro


  111. msquare
    you might want to wait for gold every has there eyes on it right now, It got rejected at 700 and june gold just made new lows at 666.30 really needs to prove itself very soon


  112. boy, could wind up being a 300 point selloff today at this pace . .


  113. Phil, are you a MO fan? Haven’t heard you talk about this stock much, or if you had, I missed it. .Just thought about buying today for my IRA on weakness. 4% dividend you can’t beat . .


  114. Selling volume has really picked up on the markets. .


  115. buyers trying to make another stand but it’s been lower highs all day. Seems to me there are a lot of profits to protect and will tomorrow be the first Friday to selloff in earnest before the weekend in quite some time?


  116. CME
    sub-500!! getting tasty! =P


  117. sold BIDU JUN 130s, UA JUN 45s, GOOG JUN 480s. Just looking for scalps and assuming tomorrow might get them


  118. Happy, if dollar continues to rally and commods keep coming under pressure, could CME struggle with volumes going forward as people get tired of punting the contracts?


  119. MNST – Making another move, very odd considering market conditions. GOOG meeting later possible news?

    Any thoughts?


  120. Phil,
    PG--I own ’09 $65s cb3.75 (been sellings 65s agnst it)
    Does it make sense to sell ’08 $60s@4.70 now ? Thanx


  121. I have been a contributor to the selling today; out of some retail & restaurant stocks. Also selling June call protection on some techs…GIGM, BRLC, NVDA.


  122. GOOG – what a catastrophe! Very dangerous to sell the June $460s against May $440s – is that your trade?
    May $440s are just dead and you have to be quite the mo player to take a chance but at least don’t be greedy and sell the May $470 puts for $9.25 as at least you have $2 of premium as a buffer. Still the risk is $20 if something horrible happens so too rich for my blood. May $460s, on the other hand, at $4.30 have a $7 premium with a week to go and that I will sell against my open puts. XXX

    NYX – I’m not looking at anything on a 132-point dip! S&P down 17 points is just icky…

    FDX – if they are both Junes, you ratio is not likely to improve that much and you do risk a run-up. FDX will turn but not enough to make me want to June $110s but I’m going to take the July $115s for $1.75 with an eye towards selling the June $110s on a run-up.

    Gold, by the way, is down because the US is not the center of the universe, or even this planet and the BOE tightening today and the ECB indicating they will tighten and Chinese people putting tons of money in the bank cannot be offset by loose US monetary policy.

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

    AAPL – Rocket, you have 1,100 shares you bought at $8?!? That’s a nice trade! I’ll be happy to commiserate with you about it at Nobu (obviously your treat). First off I’m not an accountant but it’s my understanding that one day you will pay taxes and it’s just 15% (20% maybe if your state hits you too) so it’s not a good reason to ride out a big dip. The easy answer is you shouldn’t think of yourself as getting called away. You own the stock, you are renting your shares to someone at, say $105 through June and they are willing to pay you $5.50. They get an option to buy but you can buy them out at any time.

    You start off with $5,500 (for eg 10 contracts) If the stock goes down, you can buy back your caller for less than he paid you. If the stock hits $110, you either owe him $5 back or you can then roll him to the July $110s at, perhaps $2.25. That guy will give you $2,250 and you will take $2,750 of your original “rent” and pay back your caller, leaving you with $2,750 for the July $110s. If the stock goes to $115 you can do the same thing with the Aug $120s and keep doing it pretty much forever as it’s your stock and you have no premium to worry about. Meanwhile your gains are muted by the sells you make but you capture the premium dollars every month while protecting your investment. If the stock (heaven forbid) actually goes down a bit, you can end up with a nice accidental income.

    Even if Apple went to $130 tomorrow (other than a buyout) you could roll your caller to the July $135s and still pick up antother $1 or so. The July $75s are $30 in the money and still carry a $1 premium. Now all that being said, I would trade the whole thing in for 30 Jan ’09 $90s at $32.25, use the change to pay the tax man and take me to Nobu and then sell the June $110s for $2.95, recouping 20% of your premium in the first month. Set a stop at $4 on your caller so you need $12,000 for that (but you collected 9K when you sold) and be prepared to roll from there to the next level up, maybe with a .50 Tstop.

    The June $110s peaked out at $3.50 today while the Jan ’09 $90 was $33.10 so you may actually outgain your caller on a good run.

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

    Gold – We have GG and GFI and AUY, all of whom are doing poorly but I think I like GG best on a turn. Earnings are tomorow and I’m DD on the July $25s at $1.15 XXX Gold is $650 for Q1 vs. $550 last year and ABX already showed that costs weren’t that bad. Q2 last year was a spike to $730 but we’ve been steady at $680 so I thing guidance will be an up surprise.

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

    MCF – must be my mention this morning! 8-)

    No kidding on the notes – no one wants our money!


  123. TSO making a run back to 120.


  124. VLO should start moving positive, that crack spread is super wide.


  125. Phil,

    GOOG – Thanks for putting me right on wanting to sell June $460 against the almost dead May $440s left from prior May 440/460 trade – I did sell the $460 for a profit a few days ago. Will look to dispose it later for what I can get or hold just in case GOOG stumbles with more sell-off today/tomorrow.

    Bought Jun $450 @ $6 and waiting to fill on May $470 – currently bid $8.4


  126. Hi Phil,

    Just trying to understand your most recent GOOG trade vs. the trade you mentioned for the STP. Was the trade for the STP to close out an existing position or a brand new trade?

    Thanks!


  127. Phil,

    Nevermind re: GOOG. I see what’s going on.

    Thanks!


  128. MO – I have moral objections and don’t play the sector. I think they are fully valued here but Jan ’09 $75 puts are $9.70 and have a $3 premium and you will collect > $3.60 in dividends during that time so you can own the stock, get all of the upside over 10% no downside risk. Combine that with selling, for example, June $70 calls for .80 and June $65 puts for .50 (assuming you don’t want to risk getting called away) and you can end up with a nice chunk of change after 18 months.

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

    It’s up to Google to save the markets again. They sparked this rally last time with their earnings but got not respect for it. Too bad I have no confidence in their presentation skills.

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

    MNST in the rumor mill, play at your own risk.

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

    PG – be careful, I see 2 Jan $60s and the more expensive one almost certainly carries some obligation you may not want. Also, you are unlikely to maintain a $8+ premium for 8 months so you have to imagine that your inaction will cost you at least .50 per month. If they calls you sell don’t do better than that in premium, maybe you are better off killing the trade.

    They took a fast bounce off $61 today and they just got rejected off the 200 dma at $62.20 yesterday and this is about the right spot for them.

    I would take the profits off the table, roll to the Jan $65s at $1.55 so you will not miss any upside and then it’s worth selling the July $65s for .43 but I would wait as we are just at a 5% rule pullback off the $65 high ($61.75) and unless it drops another buck I would call this a very mild pullback after a 30% run from $51.66 last May (and note the incredible summer thay have and how they had a huge sell-off last spring too).

    So I’m going to XXX the Oct $65s for $1.30 as a slow accumulate.


  129. OMG – just got back from a lunch with kids, what you guys do to let it go down so much?

    Z, at what point is a DD proper for NE, TK, HAL? all June calls. Thanks

    Phil, BBY and JWN? Is retail getting crushed – is there a DD in the future? Thanks


  130. From what I heard, Brainfill has been selling – tanked the whole market…. ;-)

    The only DD I recommend here is cash!


  131. phil

    I entered your rec. DIA trade – bought 100 contracts of July 134 DIA calls and sold 100 contracts of May 132 DIA calls. Net debit of $1.1. I realize that my potentail loss is $11K – but not really sure what the optimal path for the index is (that would make me most money).

    That is, is the strategy basically to hope the Dow hovers around this level (and go slightly down) to let my May 132 (sold) lose time value and expire out of money – netting me my premium, before rebounding upwards (and allowing me to cash in on the July calls)? But if the Dow plummets – I lose quite a bit more than I sold (on my July 134 calls). On the other side, if the Dow shoots back up, don’t I lose more on the May 132 that I sold, given the delta is higher than the July 134? Little confused. Thanks!


  132. Phil, does OXPS allow you to buy BRCM June 35 calls for .52? I tried to buy options in between the spread on TOS and Scottrade (e.g., .48), and neither platform would allow me to do that.

    Jazz


  133. Hank Paulson’s hitting CNBC this afternoon – I smell a reversal in the making. Let’s not get too excited shorting until we see tomorrow.

    AMGN – something bad! $60 puts for $1.40 as mo play XXX


  134. GOOG: Bought Jun 460 Puts @ $6 and sold May 470 @ $9 (now $9.7!)

    Should I have a mental stop at 20% loss on both or just the May?


  135. I have no facts but it looks like something leaked re. FDA meeting on COTE.OB which is supposed to be a $1Bn drug – no reason to hold this if it turns at all but it could go way down if this is true. I already sold 10 of 30 at $2 and will sell the rest at $1.40 as this is too dangerous to guess – probably silly not to take $1.80 for the whole thing now…


  136. I’ve been doing a little digging after comments made on CNBC regarding the amount of LNG coming into the country. It checks out, LNG imports have doubled from 1.6 to about 2.9 bcfgpd in three months. Seems bearish until you look at the decline in Canadian gas imports. down 1.2 Bcfgpd and set to slide more .

    JPL – HAL, TK NE – I’d wait until the group is acting a little less correleted with the borader and more with the commodities.


  137. GOOG – I like that play because your putter is paying you a $3 premium and the June $470 puts are $14.75 so you are even on a $10 drop and well in the money on a gain…

    Whoa CNBC announces AMGN negative news!!!! 15-2 in favor of restricting Aranest and Ecogen (they share this with JNJ) – this is a big part of AMGN’s current revenues!!!! Whooot!!!


  138. COTE.ob? Coates International?


  139. Pre rolling to AMGN June $57.70 puts for $1.15 – if this works it’s gonna be a fur coat for mothers day!


  140. Phil,

    Appreciate your thoughts on some positions I have, which all seem pretty dead. Some are still viable but will require adjustments IMHO soon.

    GOOG – Jun480s (suggested for 10KP), Jun490s and Jun500s. As you said, too volatile to sell May ATM calls.
    NYX – Jun95s – can’t sell against at current price; I expect NYX to do well LT, so thinking I should roll to Jan85s or 90s and wait to sell June calls
    SHLD – Sep195s and Jan’09 200s. Is this a good time to roll down to Jan185s, or wait until earnings? I really prefer not to sell against with current positions to avoid tying up margin
    AAPL – Oct100s (sold Jun100 against). When I close the Jun100s in future, seems I should roll to Jan’09 120s?
    AAPL – Oct95 puts (sold Jun95s against). Same question, looks like I should roll up so I can sell for decent premium w/o having to put up big margin
    OVTI – my Jun15 caller stopped out; I see you haven’t sold again either. Is there some trigger you’re waiting for?

    You can answer these after hours. Thanks.


  141. I have not hit any stops yet today, I think we are OK if the General Markets hold at this level for the day, much lower and I will start to worry. A consolidation period would be healthy. Just my 2 cents worth.
    I actually bought more ALNY & ISIS, stock not options.

    Greg


  142. COTE – ignore that, I think I got the feed mixed up. The Anemia drugs are probably going black label and are being called oversubscribed. It’s not death but it’s not good.

    Drug names are Aranesp and Epogen and Procrit (JNJ) and JNJ lost .50 on this news but AMGN is bouncing back already so I’m out of the current puts at $1.50 but I’ll hold the Junes, which are now down to .98. Had I been really smart I would have whipped around and sold the May puts against my June puts but I’m just glad to have made a quick .20 a share in 10 mins.


  143. Phil i am also interested in your AAPL constellation as i own some AAPL stock and am not really familiar with options descriptions. Just to be sure you buy the leaps and put a $ 4.00 Stoploss on them whilst selling the calls with a .50 trailstop??


  144. AMGN,

    Falling now June 57.5 now at 1.40


  145. Selling today…my little selling had no impact other than make me feel good (out of country, next week). Having spent some time in retailing, I don’t like what I heard today about the excuses of the “weather” and “Easter”. I’ll be watching for markdowns in the stores. Also, closed my first combo trade, on Apple…turned a widening loss into small gain, with some quick footwork in today’s volatility (i.e. luck).


  146. Phil – a quick .60 on amgn – thanx for the heads up – lost nerve….


  147. Phil great call on AMGN just closed out at 1.6, 45% gain in 10 minutes.


  148. RIG-bought back August calls after selliing earlier today.


  149. JNJ – any thoughts. Even on my Jan 09 65.0 calls. Seems like a string of bad news lately on them.


  150. Greg – I agree. I am shocked at how few stops have triggered in this sell-off (although I’ve been stopping out since last week so most of the remaining positions are pretty strong). It will be healthy if we flatline or recover slightly into the weekend, going down more will set a very bad tone for next week considering last May 11 was the start of a major drop.

    GOOG – next week will be a good time to sell on momentum. I know I didn’t suggest naked June $480s so what happened to the other end of that trade? In preparation for selling $470s against the June $480s I would move my money from the $490s and $500s into the $480s as the spread is too painful otherwise.

    NYX – 20% stops would do you the world of good! They only went down with the market today and were looking really strong at yesterday’s close so you may not want to panic out. A DD to the $90s might be money well spent as they were $1.90 yesterdayand $2.50 last week, also you can possibly get a reasonable sale of the May $85s if they get a little run-up.

    SHLD – what does it cost you to gain position. I would take back the Sept $195s for $4.60 and put that towards a roll of the ’09s to $190 there. You gain $10 in position for $4 so that’s smart and now you can sell the June $185s for $2.58 with all the time in the world to roll but I would wait as I think this drop is a little unwarranted. Earnigns are 5/31 and they already warned so I doubt I will sell June calls but I know for sure that the premiums on the May calls will evaporate in a week so I sold the $175s to collect $1.50.

    AAPL – when I get smoked on a sold call I like to at least roll up one box so I would go with the June $100s at $9.25 and pay the $3.40 penalty to my caller. At least that way you pick up another $1 in premium without giving up much protection. If I were cash poor ten the July $100s are $11.55 so it costs me just a buck to sell $4 in premium and gain a position (at the cost of a month).

    OVTI – no, I’m liking them for a bounce from here but I only got .80 for my june $15s and am still stuck with him.


  151. AMGN

    Lots of insider selling in the last 2 days. Think they suspected something?


  152. AMGN – ditto, .45 gain.
    NMX – what happened? I was waiting for my 125 caller to expire… and to rub salt in the wound, it dropped $3 right after, but is now rebounding. aargh.


  153. NMX – forgot to mention, my caller stopped out (though with $1.55 gain).

    PSW busy – 2nd time I got this message; page does not refresh (12.57 PT)


  154. Thanks Phil!!!!!

    Out of AMGN Jun 57.5 puts at 2.10 for a .98 scapl in a few minutes. You just paid for my Phil’s World subscription and I only joined this week. You Rock!!!!

    Greg


  155. AAPL – it was buing the Jan ’09 $90s for $32.25 and selling the June $110s for $2.95 with a stop on them (you buy them back) at $4 at which point you would then put a .50 “sell-stop” on the June $115s meaning you sell them when they pull back off the run that forced you to buy back the $110s. I hate to be that specific because there are 100 variables that alter the decision (like the AMGN trade we just did) while it’s in progress but that’s my plan in a vaccum.

    AMGN – Tina will be so pleased!

    JNJ – I buy them on bad nws but not today. If they get back to $60 I will load up the truck with those leaps.

    AMGN – this is where patience and cash are the key to day trading. I’d say once a week we get something that obvious to trade and if we risk just 2% of our portfolio on it them and stop out at a 20% loss on half and make 40% on the other half that’s still an average gain of 20% per week or a 20% gain on your portfolio at the end of a year. Notice how I got the hell out of the shorter call with a tiny profit and moved my risk out – it was safer and living to trade another day is much more important than going for it…


  156. HLYS

    wow up 1.2 in down market.. glad i kept my calls………


  157. Amgn-I saw the $4 drop on CNBC! Thanks for the direction PHIL. No fur coat, but made the car payment. LOL


  158. AIG very nice numbers! $1.68 vs. $1.55 est. Very pleased I stuck to my guns on that one…


  159. Brainfill, I hear ya, sometimes I wonder how much of my gains (or losses) are due to skill/knowledge and how much are just plain luck.


  160. AIG – I must be looking at different numbers than the AH traders. I see adjusted net income up 33%, this is stunning growth after a year with no hurricanes (when you assume they’d have a harder time closing big policies). The thing is going down on the earnings, possibly due to guidance. They have a forward p/e that will have to be adjusted down from 10 vs. BRKA at 15 (not the best comp but AIG is not like other insurers either). Oh well, bottom line is it’s a company making $4.4Bn a quarter with a market cap of $187Bn which is $2Bn a quarter more than MSFT who have a cap of $292Bn and who is more likely to be around in 50 years?

    Unless I find out something really strange, I may buy shorter calls on this tomorrow rather than sell them.


  161. Skill/Luck – whichever one makes you money, just take it. The real skill to trading is realizing when you’re lucky and managing your cash accordingly. Being in the right place at the right time can be accomplished 2 ways: You can randomly show up somewhere at what just happens to be the right time – this will happen to everybody from time to time or You can keep showing up at the right place and wait for the right time. The second is the strategy I try to pursue – I pick a stock based on fundamentals and pick an initial timeframe I think will pay out.

    If I’m lucky and it’s the right time right away, I realize (or try to) that I was lucky and take my gains and move on to the next place and if I am unlucky on my first attempt I either pick another place or buy some more time. That’s pretty much all there is to it. I see lots of good stock pickers with no sense of timing and lots of people with good timing that wouldn’t know a winner if it bit them…

    Best advice ever is from Wayne Gretzky: “Don’t go where the puck was, go where the puck is going to be.”

    Same with anything, learn the game, spot the plays, know your own strengths and weaknesses so you know where you are going to be most effective in any situation. If you do that consistently, luck will find you.


  162. AMGN-Ouch! Holding naked Jan08 $60′s. Haven’t even sold short calls against them yet.


  163. From MarketWatch:
    … The committee voted overwhelmingly in favor of expanding existing warnings about the risks of death, blood clots and other side effects when the drugs are prescribed outside of approved uses, the Associated Press reported.
    The panel also unanimously recommended that the companies should be required to conduct new studies to definitively prove the safety of Amgen Inc.’s Aranesp and Johnson & Johnson’s Procrit, according to the AP.
    …The safety concerns and labeling changes have prompted a reduction in insurance coverage and doctors’ prescriptions, cutting into sales of Aranesp and Epogen. Amgen late last month said Aranesp sales in the first quarter came in at $1.02 billion, down from $1.11 billion in the fourth quarter and $893 million in the first quarter of 2006. First-quarter sales of Epogen fell to $625 million from $661 million in the prior quarter, but up from $604 million in the same quarter a year earlier.

    From MarketWatch’s coverage if the AGMN Apr 23 earnings report…

    Aranesp is approved to treat chemotherapy-induced anemia and chronic kidney disease-related anemia. Amgen in January said a late-stage study evaluating Aranesp as a treatment for anemia in cancer not associated with chemotherapy not only failed to meet its primary endpoint of reducing red blood cell transfusions in Aranesp-treated patients, but also indicated a statistically significant increased risk of death in the group. Analysts at the time estimated that roughly 10% to 12% of Aranesp sales were derived from this off-label indication.
    The FDA’s oncology advisory committee will hold a May 10 meeting to review the effects on survival and tumor progression in cancer patients of Aranesp and other drugs in its class. In the meantime, the FDA said the warning labels on Aranesp and Epogen would be strengthened to the most severe, or “black-box”, level, to warn they can cause severe side effects, including death, when used in high doses or to treat conditions for which they are not approved.


  164. AMGN--so this is old news, but publically and negatively restated. The 10-12% of Aransesp sales identified in the 4/23 report above translates to about 3% of AMGN sales. Not good, but not death. I think it’s a good time to DD and roll to the Jan09′s


  165. AMGN – if it holds here you should still get a couple of bucks for the June $57.50s and it’s sure to be a long slow recovery so that might be your best bet.

    Those new studies throw a major risk factor into the mix but to some extent a lot was baked into the cake and the stock held the 50 dma (now $60). I wouldn’t play them up at this point – just because you know something and the analysts know something you can’t assume that the other 240M shares worth of retail shareholders know it and the stock trades just 16M shares a day so even if just 20% of the people didn’t know it that’s 3 days worth of surprised people who might want to get the hell out of the stock.

    Then you have the 20 out of 31 analysts with a buy rating (10 holds one sell) who might change their minds and the fact that ’07 earnings are supposed to be $4.31 vs. $3.90 last year and $4.74 in ’08.

    Here’s a good earnings rundown:

    http://www.marketwatch.com/news/story/amgen-posts-higher-profit-trims/story.aspx?guid=%7BAD5379A3%2D068F%2D4103%2DB1AD%2D54AF04FA3867%7D&siteid=yhoof

    Note: “The biggest biotechnology company in terms of revenue noted that the adjusted earnings-per-share leverage in the quarter was principally driven by fewer outstanding shares compared with the same period a year earlier and a lower adjusted tax rate, but partially offset by lower adjusted interest income and significantly higher adjusted investment in research and development.”

    “Amgen was originally scheduled to report its first-quarter results late last week, but postponed the release to include results of a study evaluating its Aranesp anemia drug in small-cell lung cancer patients undergoing chemotherapy. The company ended up issuing the highly anticipated study data last Thursday, and the results cheered investors by showing that the risk of death didn’t increase in patients who were given Aranesp compared with those who were given a placebo.” – from 4/23, no longer the case.

    In January the company said Aranesp failed to meet endpoints and the stock went from $76 to $55 in late March so I strongly caution against thinking this is a great time to get in. While it may well be I’d rather see it get back over and hold $60 (the 50 dma) as I made the mistake of trying to pick up PFE once and learned a very hard lesson…


  166. Phil- you’re turning into Dr. Phil now :)


  167. Wow, FL (foot locker) is gonna have a bad day tomorrow.


  168. Phil--nice explanation on skill/luck.
    I am trying to turn the “fill” in “Brainfill” into mental templates that will help me to intuitively recognize the better trades. Certainly subscribing to this site has added more “fill”, on the s/t, but slowly I am building up my knowledge on advanced option trading…so a big thanks to all.


  169. DNDN down 10% a/h could it be linked to AMGN?


  170. Ouch, 3 billion shares on NYSE. . That hurts. . We will be lucky to defend 13000 if this keeps up. . 2500 on Nasdaq will be a tough one to defend. . My guess is S&P holds support at 1460. .


  171. MOT, have been trading this for a few weeks now. Chart is beginning to excite me. One to watch closely for a fast C/S trade.


  172. DNDN:

    Based on – Comments From Dendreon’s Conference Call (May 10, 2007) at
    http://www.247wallst.com/2007/05/comments_from_d.html

    So I guess Aug out of the money calls any of us gamblers bought go almost worthless tomorrow?


  173. PHIL

    In the LTP you sold the in the ITM calls on SHLD and UNH today. Was this a cover play or is it to collect a May premium on those Leaps? How did you come up with those price points?


  174. Boy, pretty bullish move by AMD today. . time to short it or go long? Nasdaq down 40 points and this thing is up 3.5% . . .



  175. DNDN – yes, it seems they did not have good things to say so now we have to hope they get bought (or at least rumored to) between now and August.

    LTP – at this point, just scalping a quick premium. I know for a fact I will make $1 no matter which way it goes so it’s kind of silly not to collect it, especially since I intend to sell June anyway so my worst case is I miss a bit of a jump in the next 5 sessions but that’s assuming there is no retrace for a month after that as I only collect more money from my June caller if the stock goes up. Also, of course, it stops the bleeding!

    AMD – piggyback of NVDA’s success, nothing to do with AMD as a company.


  176. John not sure if your big on reading but heres AMD Q10
    http://www.sec.gov/Archives/edgar/data/2488/000119312507108224/d10q.htm

    There are some Steven King novels i could recommend if that wasn’t scary enough.


  177. Phil,

    Concerning the post from kc (Posted May 10, 2007 at 3:17 pm) re buy on goog jun $480′s

    you did set up this single leg of a future spread with intention of setting the short leg later.

    your post is at the end of this msg.

    however you also said to set a stop @ 10.00 if it was naked. You never came back with a sell of the may leg since goog turned bearish on what was to be a bullish spread. I (like kc) failed to set a stop as you required. however i posted later that i sold the may $480 at a price ($2.20) that would put me in the black or at least even on the jun $480 leg if goog was pined down to $470 and the may $480 expired worthless.

    Posted May 2, 2007 at 10:06 am | Permalink (Edit)
    GOOG buying June $450 puts for $6.40, selling May $470 puts for $8.20 and rolling to a higher put every time they go to $10 (ie. when the $480 gets down to $10 I roll into it). XXX – but tough on margins. Stope your putter at $9

    Buying June $480s for $11.25, will sell May later. XXX Stop if naked at $10.


  178. Nvidia is investing and hiring in the so-called graphics processing computing division, as well as in a separate effort to break into the market for cell phone chips. This will mean a 3% uptick in operating expenses in the coming year.
    For the three months ended April 29, Nvidia said the big performers were its stand-alone desktop graphics processors and notebook graphics chips.

    Strong demand for these products helped Nvidia beat the Street on the top line, posting $844.3 million in revenue vs. the $836 million expected by analysts.

    The one downer was Nvidia’s chipset business, which suffered a 31% sequential drop in revenue. The company ascribed the poor showing to Advanced Micro Devices (AMD – Cramer’s Take – Stockpickr – Rating), whose microprocessors are typically sold in connection with Nvidia’s chipset products.

    AMD, of course, had a dismal first quarter, with sales down 7% year-over-year.

    But Nvidia executives said they expect AMD to regain market share in the second quarter, which will lead to a rebound in Nvidia’s chipset business.

    Nvidia expects that chipset rebound to be significant enough that it will offset the seasonally slow period of the year for PC sales. As a result, Nvidia projected flat-to-slightly increasing revenue in the current quarter, as well as flat to slightly increasing gross margins.


  179. Some industry players observe that both Dell and HP seem to have no signs of growing their orders.
    Although the magnitude of the DRAM contract price fall weakened in the first half of May, the downward price trend persisted. Some industry players explained the weakness to Dell and Hewlett-Packard (HP)’s slow ramp in procurement.
    http://digitimes.com/bits_chips/a20070509PD217.html

    Interesting INTC
    http://digitimes.com/systems/a20070509PD216.html

    China market: Nearly 37 million GSM and CDMA handsets sold in 1Q07

    Press release, May 10; Adam Hwang, DIGITIMES [Thursday 10 May 2007]
    There were 36.89 million GSM and CDMA handsets sold in China in the first quarter of 2007, with Nokia and Motorola having a combined market share of 52.8% for GSM handsets while Samsung was the top brand for CDMA models, according to China-based consulting company Analysys International.
    http://digitimes.com/telecom/a20070510PR200.html

    Nokia
    31.7%

    Motorola
    21.1%

    Samsung
    9.0%

    Lenovo (China)
    6.5%

    Sony Ericsson
    5.5%


  180. NVDA
    Many of the CG (computer graphics) studios are using NVDA’s graphics engines in their computers. They even have their own computer graphics team making animated reels to demo their products. In the CG entertainment industry, NVDA is well-known!


  181. Phil,

    Sorry for not replying back earlier; Thursdays is my busiest day with children responsibilities. I see Highlander has already responded with your original post re the GOOG Jun480 trade. I’d in fact sold the May470s a couple times against, but bought back when the stock moved up quickly. After I’d been caught on the short end of the ICE May130s a week or so back, I was a bit leery to sit and keep my GOOG May470s callers. When you said “next week will be a good time to sell on momentum”, I presume you’re referring to selling the May470s, and that next week is a good time because of all the movement associated with expiration week? If so, I’d definitely appreciate a heads up if/when we get the right ‘mo.

    Actually here I feel I have to ask for clarification on the handling of sold calls. When I sell calls, I lock into the premium at the time of sale, but I don’t get the full premium unless I hold to expiration. This is where I get a bit confused. Sometimes it is advantageous to roll out the caller, when the premium is down to something minimal (if I remember correctly, you’ve mentioned .25), even if the stock has appreciated and the intrinsic value of the caller puts one in a loss situation, to collect additional premium via the roll. However, I’ve also heard you say, you enter a trade because you’re guaranteed xx premium, which suggests you’d hold it through expiration. Do you have any guidelines as to when you’d roll and when you’d continue to hold a caller (or putter)? It seems to me when the premium per day of a front month caller is significantly greater than, like 2x, the next month’s caller, it would make sense to stay with the front month caller (e.g. ICE May135 vs Jun135).

    Back to my other trades/positions, thanks for the confirmation on the SHLD roll to the 190s. NYX – I don’t have the 90s but rather the 95s, but you’ve confirmed I need to roll down here as well. AAPL – I’ve already sold Jun100s, not May100s, against my Oct 100s. My question is should I roll my Oct 100s to the Jan’09 120s? As for my AAPL Oct95 puts, I also think I need to roll up to the Oct 110s or Jan110s so I’m in better position to sell near term puts, unless you don’t think this is prudent. Thanks as usual.