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Which Way Wednesday?

It’s all about the Nasdaq today.

2,525 has been a very critical level for the Nasdaq since it gapped up there on April 20th and it matched the highs the index made the week leading up to the big drop on February 27th so Happy Trading and I think we need to draw a line in the sand here or we may be looking at a retest of the 2,400 mark:


2,400 on the Nasdaq translates to about $43.50 on the QQQQ, about a $3 drop from where we are now and the June $45 puts are just .43 so we’ll be keeping our eye on those today if we do fail this critical level.

Keep in mind I still think the Nasdaq should be doing better, not worse, as I think CDWC’s earnings and outlook mark a real change in tech spending.  A survey done by CDW also indicates that although Vista may be off to a slow start, much of that is due to the late roll-out which has backed up IT testing of the new system.  "Everything that we’re hearing from our customers is that they’re going to be patient about this and they’re looking more in the third or fourth quarter this year than the first or second," CDW CEO Edwardson said.

Asian markets held firm this morning with India jumping a surprising 197 points as foretold by the run in our IBN shares the past three days.  We sold the June $45s against our Dec $45s on Thursday but we’ll be watching them today in case we need to take those back quickly.  SNE (we have June $55s) reported a loss but better than expected overall and they raised guidance.  Sales of LCD TVs doubled to 6.3M for last year and the company forecasts 10M units for 2007.  "We expect profits from TVs to get a boost this year, led by LCDs. We had a huge cost for the battery recall, but we won’t have such expenses this year," Sony Chief Financial Officer Nobuyuki Oneda told a news conference.

Hmmm, 10M LCD TVs time 40 average inches diagonal is about 100M square feet of glass for Sony alone so I’d have to say that the GLW Jan $22.50s for $3.35 are a BUYBUYBUY.  I would expect to be selling the June $25s for $1 later this month so they are a buy too at .22 but I’d rather be sure the Nasdaq is behaving before playing with short calls but the leaps I would be happy to double down on if they go lower.  We also still have our TXN leaps but let’s wait for a pullback to go back on the short calls there.

Europe is very flat ahead of our open.  Airlines led the decline over there as oil ticked up yesterday but with most of Nigeria’s production already shut down by various rebel events there is not much new bad news to prop up the price of oil in the face of huge housing inventories and a 9% drop in building permits (worst since 1997).  Builders will jump on the news that housing starts are up but they should get a reality check as well once investors dig deeper into the data.

The Dow is going to open up this morning as Eddie Lampert took another 15M shares of C but AMAT got is getting killed in the pre-market on what seemed like a pretty good earnings report so I’m still gravely concerned about the Nasdaq but we also have oil inventories today so the Transports will weigh in at a critical juncture:















Dow 13,383 20 12,468 12,600 13,000 13,500
Transports 2,870 3 2,825 2,900 3,000 3,250
S&P 1,501 -2 1,430 1,460 1,500 1,550
NYSE 9,764 -1 9,218 9,465 9,600 10,000
Nasdaq 2,525 -21 2,454 2,500 2,600 2,750
SOX 498 -1 477 490 500 560
Russell 814 -8 803 820 850 900
Hang Seng 20,937 69 20,200 20,600 21,000 22,000
Nikkei 17,529 16 17,400 17,500 18,300 18,500
BSE (India) 14,127 197 13,200 14,000 14,725 15,000
DAX 7,488 -17 6,900 7,000 7,400 8,000
CAC 40 6,034 -15 5,650 5,800 6,000 7,000
FTSE 6,560


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

We gained green boxes on the Nikkei and the BSE and the Hang Seng is a hiccup away from hitting its break out number.  Europe is waiting to see what we are going to do and as long as we hold our levels we should be in pretty good shape as options expiration should turn this week into a nice consolidation pattern.

Oil inventories are at 10:30 and they are expecting a 500Kb build in crude and suddenly a 900Kb build in gasoline, which I’m not sure we’ll hit.  We’re still watching the $62.50 mark as critical failure but we need to drop the June contract to $60 by the week’s end in order to get the July contract to open well below that lineZMan thinks oil will hold $60 and that’s bad news for summer drivers but I think that the $35 crack spread (historical average is $10) cannot hold up as tankers full of gasoline are heading to our country to take advantage of our insane RBOB numbers which ZMan points out are in heavy backwardation.

We’ve got puts on VLO and TSO and if we can get past this inventory I think we’ll get that $2 plunge I’ve been waiting for.  The dollar is still weak and gold is still at $670 and we’re still waiting for one of them to make a real move!

It’s going to be another fun one!

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  1. Phil, looks like the dollar is staging a comeback again. Gold Bulls should start getting scared I think.

  2. GM all, agree 100% with your GLW hypothesis Phil!!

  3. Good morning Phil and everyone, I’m back for few days before I travel again. Hope everybody made lots of money.


  4. WFR?? Am showing trading just starting?? Very odd

  5. Welcom back fair Juliet! We’ve been having lots of fun but it’s a little tricky up at this level.

  6. Well Phil. Lets see if those SHFL’s that I got back in for at a buck work out as well as yesterday. Did you ever get back in on these on the drop?

  7. Optiondragon.

    Nice call yesterday on JBX being 3:1 overweight on the plus side.

  8. Thanks Phil, I know I’m missing out the fun but now I’m worried to start a new position.


  9. AAPL iphone not looking so strong in (small) UK survey – could be a barometer for Europe.

  10. Juliet,
    Hi, welcome back!

  11. Here we go, TSO must break 113.85. Damn I sold some may puts, but would be happy to roll.

  12. GLW
    getting it starting! In agreement with Phil’s call also!

  13. MRO- Added some calls when down for the split coming up in June

  14. Phil,

    Thanks for the lift on GLW I have been in the Jan 22.50 for over a month.

  15. I am in the WYNN spread. Bought Sep100 for 6.2 yesterday, sold June 95 for 5.0 this morning.

  16. Phil, are you going to try and salvage ebay or put it up for scrap.

  17. TSO look out below

  18. SHFL – no I was having trouble justifying the extra dollar and decided that .75 would be a fine price to pay (splitting the difference between the .50 we started with and the $1 we ended with) so I have a bid in for that this morning.

    JBX – Very nice play Dragon. I’m sorry I chickened out on the calls after making money on those puts.

    J – not the best time to initiate unless you see a put you want to pick up. Not any old put but there’s lots of overbought stocks and the Dow is going to have a heck of a time getting over 13,500 and the S&P and the Nasdaq also face heavy resistance so the risk/reward to the downside is getting attractive.

    I don’t even think they’re selling IPhones in Europe.

    TSO – whee! Watch out for inventories though!

    CNBC iis in full oil pump mode trying to justify high gas prices. They are actually asking which group has the better energy policy – Republicans or Democrats… Is it possible for the Democrats to have a worse energy policy? They would have to call for setting fire to US oil reserves and dumping our oil directly into the ocean in order to have a “worse” plan…

  19. Qcom
    what is your read? are they being pegged at 45? Jun C/$45.- is very volatile
    Thanks Henk

  20. Just got out of JBX strangle for over a 100% gain after the puts. I was expecting more but the expectations were raised by Cramer thus more pre earnings longs taking profits this morning holding down the pop and price. JBX is a good canidate for gap trading as well as DE. Long of course.

  21. CHK – I have May $32.50 covered calls – don’t want to loose the stock (for now)

    any opinions on short-term price of CHK after Oil/Gas inventory reports today & tomorrow? I am waiting (& hoping) for it to get to low $33s

  22. ICE looks good.

  23. Notablecalls
    SEC filings published last night showed that Eddie Lampert, the billionaire hedge fund manager known for making large bets on a few companies, including Hoffman Estates-based Sears Holdings Corp, has acquired a 925,000 share stake in Motorola.

  24. EBAY – I took a DD at .55 so my basis is not .65 but I will likely leave these be and take the Oct $35s (now $2.28) and sell the June $32.50s (now $1.48) against those to recoup my loss using the June $35s as a break in case the stock jumps up. XXX

  25. SHLD just popped..looking for a possible entry.

  26. DE, would have expected to hold those gains. Starting to get a little disappointed in MKT again here

  27. PCU- grabbed some on the pullback

  28. SHLD 180 calls for quick momo if it continues or pulls back a little.

  29. TSO – I have the Jan ’08 105 puts @ 9.10 and I sold the Jun 115 puts @ 4.00. The Jun 115 puts are down (for me) 50%. I feel I should take this puter out since I think TSO is going down a lot farther. Should I wait until after inventories? Is it wise to even take out a caller or puter early on LTP positions?

  30. Added the GLW pick and shorted TSO June 120s

  31. CORNING, N.Y.--(BUSINESS WIRE)--Corning Incorporated (NYSE:GLW) Vice Chairman and Chief Financial Officer James B. Flaws will participate in a “fireside chat” with investors at the Deutsche Bank Technology Conference in San Francisco on May 16.

    The company’s estimate for LCD glass market volume growth for 2007 remains unchanged at 35 to 40%. The higher growth forecast for 2008 is the result of stronger LCD TV penetration expectations. Corning now anticipates the penetration rate of LCD TVs to be about 47% in 2008, versus its previous estimate of 45%.

  32. OPtiondragon,
    Nice call wonder what that is all about

  33. QCOM – pinned. I have the naked Jan $45s at $4.35 and I didn’t want to risk selling the Mays but I will take .50 if I can get it. XXX

    CHK – I think you’ll get there. I have June $32.50 puts on that logic.

    ICE – not too good I hope, I was counting on them to pin $140 for the week.

    MOT – that’s good news! Check out his effect on C. I’ve already got leaps (I alway own MOT) and I’m going to grab the June $18s for .62 (.50 premium) XXX I think they are pinning to $18 as they do have calls there.

  34. TM
    creeping up.

  35. Bill- Eddies buying MOT shares and also C shares. He is showing that he is a value investor and maybe something is cooking at SHLD? What really attracted me here was the volume bars and the technicals. It is clearly a good buy with this base and with all those short positions recently initiated. SHLD is one of the most heavily short big cap stocks too.
    80 million share float with a 8 million shares short

  36. PCP- acting strong!
    Options- you in? I jumped in Monday

  37. Taking the MOT jun 18′s with a 50c prem….does that mean selling for the premium (if you think pinned to 18) or reasonable premium with upside to rationalize buying the call??

  38. CHINA
    Motorola seals $2.3bn deal

    Wed, 16 May 2007
    A major Chinese firm announced on Wednesday it had signed a $2.3-billion deal to buy mobile phones from Motorola of the United States, a week ahead of high-level Sino-US trade talks.

    China Postel Mobile Communication Equipment, the country’s largest mobile phone distributor, said it would buy 16 million handsets from Motorola this year worth $2.3-billion, according to a statement on its website

  39. phil, with oil comming down, do u still expect FDX to go lower from here till expiration?

  40. RIMM acting strong with a nice pop

  41. DE – got a little ahead of themselves plus lots of reasons to pin $120.

    Have my finger on the VLO $72.50s at .55 in case inventory goes against us as I already have plenty of puts. Beware the head fake though…

    I’m not very bullish just yet. Need SOX and Transports to participate.

    TSO – your $115 putter still carries a huge premium ($5) so I don’t think I would buy him out unless I had a compelling reason to. Your premium is irrelevant as you are way out of the money but the idea is for you to sell 6 month’s worth of premium that will add up to more than $9.10. It seems like you are on track.

    Oops, there goes VLO, inventories must be bad but CNBC is in commercials

  42. 1.7 million rise in gaso. Ouch gaso bulls. Did TSOdie!

  43. 1 mm barrel rise in crude,

    ref util at 89.5% but gaso prod up good.

    distillate very full, up another 1 mm barrels. those prices have been too fat.

  44. Buying RIMM May 150 calls for momo

  45. Crude + 1MB
    Gasoling + 1.7Mb
    Distilates + 1.1Mb and CNBC weathergirl says it’s in-line! LIES!!!

    Also, refinery utilization is 89.5, a bit low and that is not bullish for oil because it means that imports are rising and that is bad for refinery margins. Now would be a good time to take out that putter!

  46. Optiondragon,
    Yes i saw those buys, but really that would make me want to sell. LOL I didn’t really know about the HUGE short interest. I really started playing this from this board. Thanks for the info.
    VSEA- looking hard at getting back in as I sold at $70 on earnings

  47. CELG and PCR did well for me while I was gone.


  48. Gaso imports were over 1.5 mm bpd. up from the relatively high level of 1.2 mm bpd of the last few weeks. Who says it doesn’t exist, it just took these prices to get it here.

    CNBC said this was inline??? That’s rich, it was out the top of the range for gasoline build expectations. No agenda there!!!

  49. TSO volume is good, lets see that 110 soon :-)

  50. Phil,
    JWN- we did really well with the 55 May/60JULY play last time. Are you looking to do something like that again with the stock down 4 from that trade. Earnings manana

  51. Moby TSO is looking weak, could it be this time? Probably

  52. COP June $70 puts at $1.25 XXX

    SHLD/C – If I were about to cut a deal on $15Bn worth of real estate I might want to own the bank I give the business to! SHLD better get it together, I’ve had a tough time holding onto my calls this week.

    Meanwhile Warren Buffett did a DD on JNJ.

  53. TSO now through the low following the earings miss two weeks ago.

    Note: Oil rallying. There was a sharp drop in crude imports. Like I wrote in this mornings post, the increased utilization at refiners means more demand for crude, drop on top of that a lull in imports and the troubles abroad and crude could rally here. Very bad for the refiners as RBOB starts to correct.

  54. Phil, what is wrong with DE? Do you think this will be good one to buy puts? Thanks.


  55. cnbc talking head laughingly referred to ‘conspiracy theory’ of those wondering why gasoline is holding up under the build as

  56. Took the QQQQ Jun 46 P’s at .73…..gut feeling again.

  57. MOT – when I say taking a call and something like .50 premium it’s because I XXX the call at that premium, not nec the exact price.

    FDX – tough call if oil breaks below $62 but we still have gas tomorrow so I don’t think FDX is going to have anything big to celebrate and also the market is weakening again. I’m really concerned with a huge sell-off into expiration, maybe a 150-point Dow drop tomorrow or Friday as there’s lots of gains to flush.

    JWN – what killed SKS was a big drop in Childrens sales but people who shop Nordstrom’s down have kids so I think they’ll do very well. The Jun $55s are just $1.10 which is too cheap to interest me in selling but I like the Oct $60s for $1.71 against the July $55s for $1.80 since it doesn’t cost anything to play and at $55 I owe my caller $3 but I’m pretty happy paying $3 for in the money Oct $60s if they are doing so well… XXX

    DE – no, they were just way overbought but earnings were good, people freaked out because they are down 16% from last year but they are still way BTE.

    QQQQ – I liked the potential gains on the June $45s just a little better but they both make a good safety.

  58. fidelity selling china oil co in sudan, i bet buffet keeps his.

  59. TSO
    If it gets to 112 today, I’m 1/2 profits on the puts.

  60. VLO-shutting down a houston plant. Shocking! LOL

  61. It’s pay the piper day at TSO

  62. Phil, what’s your read on FXI for rest of today? I have May 115 puts, right on the money. They are $1.20 now, cost basis $2.35. Sell now, or wait till tomorrow? If same thing tomorrow, then they will be probably half the price, right?

  63. There is a change in character for the market. Upgrades did not hold, great earnings did not hold.
    Everything is being taken down, profit taking ensuing. Got stopped out on all my momo plays.
    IWM puts are probably the best play right now or Phil’s DIA puts.

  64. Wow I am not paranoid. The news girl just read that oil was a 1M, not 1.7M barrel build and no one corrects her. Many people listen to this misinformation on satellite!

    NMX is getting wiped out on their 20% OPBL stake. That’s $27M down the tubes!… We talked about this weeks ago at OBPL screwed up the Bank of Montreal’s gas trading costing them $400M. NMX will scaveng the platform and I think they will be a buy on the dip here as the loss is large but not devestating for them but I’ve hear 5 different people overstate the damage to NMX by a wide margin.

    SOX doing worse, GOOG pathetic again, AAPL negative, Transports diving as oil holds $62.50, gold selling down $7.50 – it’s really time to cut back on positions. I’m going to be taking half off the table on anythng that doesn’t stop out. XXX

  65. Pretty obvious with EBAY they are gong for 32.5 Strike. .

  66. I don’t think I’ve ever seen a shart (i)crying out(/i) for a split more than GOOG. Stuck in the mud.

  67. sp: share

  68. BillBigD – VLO had the opening salvo in mid January that started the gasoline run with a plant closure. It’s fitting that they do it again now. Here’s the question, is it voluntary or did they have an incident?

  69. test {i}test{/i}

  70. Phil,

    IBN – Your call that it goes up in spite of fundamentals was super. Any further trades in IBN?

    INFY lost key support levels in spite of Indian SENSEX up 1.4% and continues downwards (to $49 I think).
    India CEFs, IFN & IIF both up up today, but still selling at 10-14% discount to NAV.

  71. I am cleaning house today, down to my core long term holds. Cash ready to move to short side. Looking for good put oppotunities.


  72. TSO – don’t be too greedy. If selling half puts you in good shape then do it. We can always use the lovely cash to roll ourselves into lower puts if it keeps going.

    FXI puts? That’s a gutsy play! If we finish way down they should drop .70 tomorrow which would keep you a little ahead of your premium loss but you really shouldn’t hold a May call this long, especially a high premium one. Let’s keep an eye on the close of Europe for a clue.

  73. GLW – wondering for those who got in today, what your fill price was. I haven’t seen any less than $3.60. No nibbles at $3.4 or $3.5. Thanks.

  74. phil ,

    what would be a good entry point on nmx jan calls? cramer was ranting last night about someone doing heavy selling of nmx puts and distorting the price lower and he called for mgt to step out and correct the misunderstand re financial position

  75. IBN – way past my target. I will probably take another shot at selling calls but I’m gun shy after yesterday.

    INFY is a bargain if it sells off. Slowdown in US is good for them. Hopefully they find support at $50.

    Wise move Greg! Good time for spring cleaning but I’m still not prejudiced to the downside. If we survive May we could get a huge pop over the summer as no one is betting on it right now.

  76. Phil’s play of Short IWM against SPX has worked. The world is short the dollar as a trade. In my opinion the mkt is failing because of dollar strength. I can’t ewver remember that being the case before !!!! EUR/GBP seems to be the stress play.

  77. ZZZ,
    VLO- claims there was a steam issue. 130k off line.
    NMX- good thing I sold calls. .58 per day in premium.

  78. GLW I only got a few at the open at $3.70 but I’ll give up and pay $3.60 if they hold it for the day but I think they’ll sell down with the market. There is very little premium to sell at this price so I would be fine with buying more leaps at $2.50 and sell a .75 premium on the $22.50s to cover my loss on the first batch but I’m hoping that I will be selling $25s for $1 or better instead.

    NMX – don’t know but I’m watching. If they get a big sell-off, maybe $117.5 I don’t think I could resist it.
    Yes they scrwed up with this deal but they lost $1.5Bn in market cap recently, kind of a lot and we already know that NYMEX churning is giving them fantastic numbers.

  79. GGP rolling over, if it breaks 58 look out. I nibbled some July 60 puts few weeks back.

  80. Phil, thanks, its 2 contracts, so I am not sweating it, but from a strategic point of view, will not hold options that far into expiration. Do you suggest getting rid of them/rolling them more than 30 days before they expire, or less?

  81. Oops, there goes $62.50!

    Expiration – starting 2 weeks out I get more and more worried and by the 7th day before expiration I will have almost nothing in the current month (not including guys I sold but even they get stops). By Wednesday of expiration I am out of everything except for ones I took specifically as momentum plays but my guiding principal is that if I don’t like a position enough to roll it into the next month then I shouldn’t be holding it in the first place.

    This is just like yesterday by the way – Dow is being held up while everything else is selling off. S&P 1,505 is no great shakes but we’ll take it if it holds…

  82. People are going defensive. SYK, BG, HDB

  83. Well, I’m not going for this little light buying during lunch hour. .

  84. Phil,
    You understand this oil thing much better than me, but did those two guys make any sense?
    Also did you see your buddy T Boone gave SMU $50 million

  85. Happy – hows the TSO chart now?

  86. BigBillD- I go to SMU- I saw that Boone gave 50 Million with the requirement of it turning into 500 Million in 25 years- Was it SMU or SW Medical Center?

  87. Phil:

    What about GE? I have both June’s and LEAPs, small profit on LEAPs – sell & buy back later?

  88. What just happened to AAPL? Does anyone think it has topped and going lower?

  89. Europe with a slow close and Monday is a holiday (I know, another one!) so we are in big trouble if we don’t get a good close.

    RIMM up after seeing MOT’s new phones, not good for MOT!

  90. Ryan,
    You are right it was University of Texas Southwestern Medical Center.

  91. Amazon Announced a store similiar to iTunes without copying restrictions

  92. AAPL rumour of iphone delay

  93. Billbig D – the dem was right, the U.S. is the third largest oil producer. He’s wrong on the subsidies, not billions unless oil and gas tumble by 1/3 and I think 2/3 respectively from current levels.

    The republican had nothing new and the smug, anti-renewable, attitude is so 2006 for the Reps. He really needs to get the new party play book. lol. He is right about the stupid corn based ethanol surge though. Makes me want to buy STKL everytime I check out at the grociery store.

  94. I get the sense that this is like a chess match right now, the Boy Bigs deciding whether to long or short. . Does that ever happen?

  95. BigBillD-
    How about that ridiculous stipulation on the 50 Million?

  96. gold -8 again

  97. DNDN about ready to make new high of the day, might pop a little if it does. . my guess $6.50 the high

  98. damn NYT does not seem to go down.

  99. Z – just checking in – how do you think TK, GSF and EOG are doing – DD or dump? Thanks

  100. XOM $80 puts from yesterday are still a fun gamble at .22

    SU DD on Jun $80 puts at $1.40

    BillBig – sorry was on conf call, missed whatever nonsense. T Boone thinks that will keep him out of Hell somehow…

    GE hanging tough. I couldn’t bring myself to sell the Jnes but I’m certainly holding the Jans for now (up .66 while the Junes are down .12). I won’t let myself go negative on the set though.

    AAPL – I’m guessing they are trying to pin it to $100. I still have my Jan $100s (10) and my Jan ’09 $120s (20) which are offset by 30 Oct $95 puts and I haven’t seen a good reason to sell closer calls or puts against any of them just yet.

  101. AAPL shareholders getting fed false info!

  102. HA what a scam on AAPL

  103. TSO is hurting I say this is for real this time.

  104. Ryan,
    I like what TBoone did. To much money is wasted by schools. Besides if it doesn’t go to sports it is wasted. LOL. Now that $165m he gave to OSU now that was a gift

  105. Don’t believe everything you hear: iPhone and Leopard NOT delayed

    By Jacqui Cheng | Published: May 16, 2007 – 11:05AM CT

    This morning, an internal memo was sent to some Apple employees saying that both the iPhone and Leopard had been pushed back again. The iPhone was allegedly delayed until October and Leopard—previously delayed from June to October—was now delayed until January.

    Certain sources appear to have also gotten wind of this “news,” but apparently did not wait for the alleged press release that was to come with the announcement. Here’s a tip guys: When the memo says there will definitely be a PR to accompany the “news,” wait for the PR.

    As it turns out, the internal memo was (apparently) a hoax. Apple sent out a followup memo to its employees saying:

    You may have received what appeared to be a Bullet*News from Apple. This communication is fake and did not come from Apple. Apple is on track to ship iPhone in late June and Mac OS X Leopard in October.

    According to Apple, both the iPhone and Leopard are still on track to ship as previously expected. Now, back to your regularly scheduled program.

  106. Optrader – read the fine print on that article…

  107. I think it is good as well. The problem that I see is the goal of 500 Million. Instead of the money being put to good use, whoever runs that money is going to be focused on that 500 million mark. I didn’t read the full article. So, I don’t know the exact consequences of that goal not being met.

  108. phil,

    greetings.. new to the discussion here.
    where do you expect SU to end up?


  109. JPL – no action today, maybe add to NE, not in GSF yet but thinking. Like to see oil hold the recent days low. Still happy with TK and HAL.

    Still holding the TSO 115s and 110s – these are my old May positions (some of the last May anythings I have as this is a total violation of my rules for being out of close to expiry options.) Still, this is pretty much a dream recovery for those two puts. Yeehaw.

  110. TSO
    Z, sorry, I was away for 1 hr. I have an order in to take profits on 1/2 of my puts (was aiming for 112 today). It just got “partially” filled. I’ll put up a daily chart in a bit.

  111. Wow what a great planted story by some hedgie or some 16 year old kid!
    Reminds me of the Good Shepard.

  112. Ryan,
    All money made is given to OSU! LOL
    DRIV- very weak.
    VLO- getting smoked

  113. Big Boys – I always tell people to imagine they are an ant on a football field and every once in a while a dozen giants seem to randomly thunder past in seemingly random directions. If you watch long enough, you might manage to figure out a play as it’s forming and hitch a ride for a while but one mistake and you are crushed like a bug….

    NYT – they are praying the Murdoch gets rejected by DJ and settles for them.

    IPhone is NOT delayed – pre expiration rumor mongering. AT&T is spending major bucks in a rush job to add electrical outlets and such in all their stores for a massive IPhone display and employees seem to be getting lots of technical briefings already. June is graduation and such and there is no way they are going to blow this launch – especially after Apple has repetedly stated that they have sacrificed Leopard to get the IPhone out on time.

    TSO below $112!

    Got my $2 drop in VLO – pretty good prediction…

  114. ADBE – sell the Jun42.5s for $1.55?

  115. Think OIH will hold 160??

  116. Phil, when you say you are tightening up and selling half of your positions, is this in the STP or both STP and LTP?

  117. 2525 – thinking this might be the last time we see this for awhile if it breaks for good this time like Happy says. .

  118. Welcome Solar!

    If we can get SU to fall below the $81 line it has held for a month then we should get a test of $80 pretty quickly but if oil goes back to $55 then you can expect SU to be no more than $15 behind it.

    Sadly this is my smallest TSO position in 3 months!

  119. ATI- buying back from sale at $115 manana

  120. Phil, any ideas for playing MRVL? Or should we wait for abridged earnings tomorrow and then make a decision?

  121. Take this news with a shot of whiskey and skip the grain of salt

    AMD’s Chip-Shipping Back on Track
    Word Count: 385 | Companies Featured in This Article: Advanced Micro Devices
    Advanced Micro Devices (AMD: NYSE) By ThinkEquity Partners LLC ($15.36, May 15, 2007)

    WE ARE UPGRADING ADVANCED MICRO DEVICES from Sell to Buy on strong Dell orders.

    After Nvidia’s public statements at its quarterly report, and data we heard in the channel, we spent the weekend checking on this data. The summary: Before the weekend, we didn’t believe the AMD ramp was real. Now we believe AMD could beat expectations for the next several quarters.

    We raise our estimates, …

  122. TSO
    My order got filled. I’m 1/2 out with +88%! See charts on Wang’s World!

  123. HLYS – Phil, I need help. I had the HLYS strangle and made out quite well on the short side. I continued holding the long Aug 45s and they had dropped since then. I know I should have closed the whole strangle out but I got greedy. I have 10 Aug 45s @ 1.17 cost basis. I DD’d once (stoopid) to get it to 1.17. I thought about selling against the 45s but the stock has dropped so much I need 25k+ in margin to sell anything near the money. thanks

  124. Europe’s TUI Group orders 11 Boeing 787s, 50 737s

  125. TSO
    oops, excuse me, that was +92% (my records show that I had a better purchase price than I thought; I guess if I include the profits from previous trades, this one is over 100%)!

  126. POT breaking 200 looks real strong thinking this could be another GOOG possibly?

  127. ADBE – not for me. I think they are ready to pop and I would rather take a chance and DD on a drop as I only have a small entry so far. Earnings are 6/14 so it’s a dangerous sell if you believe in the company, which I do. Of coure you can’t fight the tape so maybe sell it as weekend insurrance but only if ADBE drops below $41.75, which it generally held yesterday.

    OIH – I was just having a fight with myself as I am trying to resist the urge to take the $160 puts but I think down $2 was the right call on VLO (I took my puts 1/2 off).

    Tightening – any uncovered position with certain exceptions like SHLD as they have earnings soon.

    Holy cow, CME right back to where they started last Friday! That’s another tempting one with June $530s at $11.15, down from $27 on Monday. XXX if we close positive (the market, not CME) today.

    While we could drop 150-200 points by Friday I think that’s what most fund managers are expecting and NOT dropping 100 points by Friday will but me (as a fund manager) heading into the holiday weekend on the wrong side of the market. That will cause me to put money into things that seem like they will rally but should be safe like MSFT, GOOG, MRVL, UPS… solid names that haven’t rallied with the markets.

  128. Phil, I don’t have any AAPL position at the moment, would you recommend to buy some calls?

  129. VLO & TSO- Phil real nice call this morning!
    POT- Last buypoint was $193 and change says IBD.

  130. GME
    quietly rising 2+% today!

  131. GENZ spread – When we buy back the short side (or let it expire) does it make sense to continue to hold the long Jun 67.50s?

  132. OIH – highly dependent on the direction of gas: Anybody hear the number for tomorrow?

  133. X snuck in under my radar. . would have been a good short when it broke 110. .

  134. I take that back on X. . volume light today. . if anything, maybe a good opportunity to go long. .

  135. TM
    could break out from here, watching closely!

  136. I think ICE is contemplating a bid. If they weren’t interested they would have said something.

  137. Anybody thinking SBUX might break through 28 bucks??

  138. here goes DNDN

  139. MU

    popping nicely

  140. MRVL – As I was alreay 1/3 down on my Aug $17.50s and as I think they will clear up their mess by next earnings I did a DD on those and will hold them naked but it’s a very risky play.

    AMD – wow, I never realized how little weight a think equity upgrade carries until now!

    HLYS – I’m confused because the trade I did in HLYS was to buy the Aug $45s for $1.90 and sell the May $40s for $2 on the premise that there was no way they were going to break $40 this month. Either way my take on them is that earnings were great but nothing was going to be enough to live up to the Cramer hype. Between those sheep leaving and 8M shares coming off lock-up (avg volume 500K) they did a pretty good job holding $30. If you are dead set trying to save a .18 position that is down $1 then your best bet is probably to spend .40 and move to the Aug $40s and just hope that 50M extra trips to the mall give them a strong quarter.

    You must be smoking strong POT to think they’re another Google! It’s a good company but there’s a limit to how much they can grow and I’d be really alarmed if they try to expand out of their niche. Much like Hank Hill, who sells propane and propane products, POT is just the perfect company for the commodity surge in food (which is not part of the CPI) that is going on right now.

    GYMB making an interesting comeback.

    Gold down $13. If the market is doing this well with falling commodities and a rising dollar this might be an early sign of some very good rotation. If only the Brokers would go away…

    UNH perking up.

    TASR on the run again! Jan $10s back to $1.05.

  141. Matrix, I bought 10 SBUX Jun $27.50 puts and 10 July $27.50 puts today.


  142. Z – GSF and EOG picking up steam – why?

  143. OIL stocks and OIL Services coming back

  144. AAPL – not that I don’t like them, just that I don’t see any opportunities I particularly like right now. I suppose my Jan ’09 $120s at $17.10 (.40 more than I paid) would be my favorite at the moment but I came very close to stopping out of these this morning. I wanted to sell the June $110s against them but they dropped from $3.50 to $2.35 while I was thinking about it so now I’m hoping they get back to $3 at least before I sell.

    GENZ – in the STP? My thinking is that it’s pinned to expiration so I’m willing to take the chance with the Jne $67.50s as they are a free play (we were paid .55 to take the spread). Probably I will get out at about .40 if it doesn’t work but I will risk $350 on the off chance we could make another $500+.

    SBUX – I’ve been betting it to hold every dollar since $31 so I will stay out of this discussion!

  145. ZMAN,

    What’s your opinion on EGY?

  146. Sorry, just not falling for this little uptick today, market volume too light. . I consider it a dead cat bounce. Hope I’m wrong. .

  147. Phil & Others,

    What do you think of establishing a LT bull position on LMT. Its been getting new contracts on daily basis. Chart looks great too.

  148. AAPL the point today was to get the price below a certain number and id say mission accomplished. 110 to 103, 6 million shares traded in less than 10 min. Blatant manipulation, but im not complaining

  149. Phil, what’s your view on commercial REIT? I’m thinking about getting some IYR calls?

  150. MA moving…

  151. indices showing intraday highs and the naz is leading the way. This is what Phil wanted — an ant on a football field? I think not :)

  152. Market suddenly very perky.


  153. JPL – EOG, though in the top 3 biggest gassy large cap E&Ps it trades with oil, not natural gas. Oil is trading up – I think on the drop in crude imports and the higher refining demand, but it could be just the longs smacking the shorts around, or anti profit taking or some other such Crackpots for the Nigerian based Boosting of Crude nonsense. I came very close to buying some about 2 hrs ago but got busy elsewhere.

    If you like that GSF action, check out HAL – up another 2% today. Also, you’ve got to love NE today.

    Even CHK is up and they got a bit of bad news today. CRK too and HK.

  154. TEX- picking up some calls after yesterday’s sale

  155. EGY – Nice call too small in this market. Maybe if things settle down a bit. I wrote a little piece on it here:

    I’m probably long if it gets to and settles around $4.75.

  156. ZZZ
    Thanks for the heads up on HAL! Need to put on my board. Up .6 on the OCT 32.50′s. You have a target?

  157. HAL up 2.7%. Definitely breaking out. Boosts dividend 20%. Insert your favorite Cheney joke here.

  158. BMRN
    up 5+% on possible seeking approval for one of its drugs (only news I can find)?

  159. WOW check it out fellas they just started trading USO, UNG options!!!!!
    USO looks pretty liquid.
    Cool!!!Look at those cheap USO option prices!

    INDEX INTELLIGENCE: Options Begin Trading on Commodity Funds
    Tuesday May 15, 5:00 pm ET
    By Frederic Ruffy

    It took more than a year, but options on the United States Oil Fund (USO) started trading last week. The exchange-traded fund [ETF], which was created to give investors a pure play on the price of oil, started trading on April 12, 2006. No options were listed on the fund for more than a year for regulatory reasons. That changed on May 9, however, when the Chicago Board Options Exchange [CBOE] listed options on the USO and ten other commodity funds.

    The USO is not your typical exchange-traded fund. Rather, it is a registered commodity pool that invests in oil futures on the New York Mercantile Exchange [NYMEX], options on oil futures, and forward contracts. So, unlike most ETFs, the USO is actually a commodity pool rather than a fund registered under the Investment Company Act of 1940. The objective of the fund is to give investors a way to get exposure to crude oil prices. For example, investors expecting the price of oil to rise can buy shares of the USO. On the other hand, if traders expect falling oil prices, they might sell USO shares short. Now, beginning last week, puts and calls on the USO are available to traders as well.

    Since its inception in mid-April of last year, the USO is down from $67.84 to $48.99 a share, or 27.8%. During that time, crude oil has also slipped, but not nearly as much. Crude is down roughly 10% since April 2006. The issue facing the fund is related to the way futures prices experience contango, which occurs when near-term contracts are more expensive than longer-term contracts. Contango creates a problem because the funds must continually roll positions from one expiration period to the next and incur losses in the process. (The details of this problem were discussed last month in SECTOR WATCH: USO—Why are the Oil Funds Falling More than Oil.) In short, the USO might be better suited for playing crude oil to the downside rather than the upside.

    In any event, prior to last week, options were not available on any of the commodity funds. According to a spokesperson at the Options Clearing Corporation [OCC], the delay in listing options on the USO was due to the fact that commodities are regulated separately from stocks and exchange-traded funds. In short, the fact that these ETFs actually held commodities futures posed some complex issues for regulators. Apparently those problems were sorted out.

    Now, traders can play gold with the PowerShares DB Gold Fund (DGL), which is designed to track the Deutsche Bank Liquid Commodity Index-Optimum Yield Gold Excess Return Index. The DGL can be used to play changes in market value of gold. Meanwhile, the United States Natural Gas Fund (UNG) is similar to the USO, but offers a way to trade natural gas. The PowerShares DB Agricultural Fund (DBA) offers a way to play agricultural commodities like orange juice, coffer, and cocoa. The table below provides a list of the eleven commodity funds and their respective ticker symbols. More information can be found about each fund on the CBOE’s web site,

    Commodity ETF

    iShares GSCI Commodity-Indexed Trust

    PowerShares DB Agriculture Fund

    PowerShares DB Base Metals Fund

    PowerShares DB Commodity Index Tracking Fund

    PowerShares DB Energy Fund

    PowerShares DB Gold Fund

    PowerShares DB Oil Fund

    PowerShares DB Precious Metals Fund

    PowerShares DB Silver Fund

    United States Natural Gas Fund

    United States Oil Fund LP

    As with all most new index or ETF options, the action in the commodity funds has been slow during the first week of trading. The USO and UNG have seen a modest amount of activity. The other funds have not. That will change over time, however, as more traders become aware of the options on these funds and how they can be used to play trends in the commodities markets.

    Frederic Ruffy

  160. TSO dropped from $120 to $112 which is 6.66% The 5% rule is $114 so any “bounce” lower than that is meaningless.

    DIVX getting killed, not sure why.

    LMT – maybe on a pullback but not up at $100

    REITs – generally I like them but some have had a big run already and calls don’t pay you dividends so not for me right now.

    AXP up 1% – could this be a real rally???

    Oil bouncing back because they slammed it over $62.50 at the close with a .40 pump since 1:30 – BRILLIANT!

  161. BillBigD – yes, on my back, put there by the TSO guys. lol.

    Re HAL. I think it goes to high 30s on a move from 12x to 13x forward eps over the next month or two. I will sell half in the moring prior to the gas storage number, hopefully some place over $35, as my June 35s are up just short of 100% since I picked em up on may 11th. Hate the fact that I sold those May $32.50s but they were up 83% and gains like that are a problem to have!!!

  162. GOOG and FXI running!

  163. GOOG

    Heading for 470 pin?

  164. RBOB rally???!!! Same story as last week. Hey look bearish fundamentals. Four hours later, hey look gasoline is down, let’s buy the crap out of it. When this breaks, and as Phil said, those crack spreads are not sustainable, it is going to be nasty for the refiners.

  165. interesting read:

    he’s a little extreme, but still a good read …

  166. phile,
    cramer saying bears are shorting haliburton and going long oix, is there a play on this?

  167. Just got back from a meeting. Anyone hear what SHFL had to say at the conference in Boston today?

  168. Damn look at Google go! I should have held those calls from yesterday.

    Despite great market I am still going ahead and pulling back on positiions.

  169. added some more SU leaps. Sold few Jan08 TSO puts. I still have Jan 09 110′s, Jan 08 110′s, Jan 08 115s and short May 120 puts. Will wait till friday to roll the May 120 puts.

  170. Phil::

    Imcl sell June 40′s 2.20
    Buy Nov 45′s ??? 2.9



  171. AAPL should be fun to watch tomorrow and friday, manipulations galore :-)

    Hanging on to those June 105 puts.

  172. RIO-All time high

  173. Anybody watching Brazil ? +2% on snp upgrade

  174. dell up 1.07 will they be pinning it back tomorrow?

  175. Cramer – play is not to follow this man! I was almost buying into the HAL logic you guys have been using until Cramer called it a buy and now I am concerned. The “rally” in the OIH is because oil held $62.50 today but they produced a lot of Nat gas last week that nobody used so we could get another bearish sell-off tomorrow. I’m out of TSO and VLO and SU and XOM so I don’t really care but I will jump right back in the puts if they can get back to yesterday’s levels.

    SHFL – they said sorry to all the people who paid $19 yesterday! They just finished at the conference and I don’t think they announced whatever people thought they would announce yesterday. There’s supposed to be a webcast here but it’s not working:

  176. TSO- look at it sitting right at $114 Guru Phil

  177. Phil, do you think NYX have bottomed? And, also I would like your comment on GOOG.


  178. Good call on GOOG Phil!

  179. Phil,

    What do you think about XNG PUT? Since you are bearish of Nature Gas…


  180. GOOG may 470′s are up 800%. It just goes to show there is always a good time to buy these things.

  181. RE: SHFL…that conference call is now available on the link provided by Phil (on the 3:25 PM post).

  182. DNDN – whatever happened to announcement from the Feds…did it come thru? was reportedly due on may 15.. :-)

  183. Thanks chubby, was having problems with it. I pretty much figured it would be a do nothing speech but at least we had the nice quick hitter yesterday to hang our hats on thanks to Phil.

    I’ll let my new play sit until next week and look to pushing it forward a month or so.

  184. GOOG changes search…

    Google (GOOG – Cramer’s Take – Stockpickr – Rating) on Wednesday announced a revamp to its search service and a slew of new features.
    Called “universal search,” Google’s new method will incorporate results from a variety of new categories such as video, books, images and local into the search giant’s traditional display of Web page search results.

    Users searching for the term “I have a dream”-- a reference to Martin Luther King Jr.’s famous speech, for example, will be shown Web results as well as video clips.

    The new feature will take advantage of the various different types of content — from video through the company’s YouTube acquisition, and books through the company’s ambitious plans to scan millions of titles.

    The move is important because Google is the world’s most used search engine, and it carefully considers changes to its search methods. Search advertising makes up virtually all of the company’s revenue.

    Google had first thought about tying together search results in 2001, said Google vice president Marissa Mayer, but did not have the resources to pursue the idea then.

    The company also announced a navigation link that will allow users to drill down into specific categories as well as a toolbar that allows them to toggle between different Google tools.

  185. Phil, you think this initial excitement would be a good time to buy a Jun/Aug GOOG 470 and sell the May into expiration?

  186. Well my gut feeling today must have been simply indigestion :mrgreen: Laddered into the Q Jun 46 P’s fortunately so my basis is .65 (still not good, but didn’t think this two hour pump would happen). Insured for a month at least.

  187. $SOX might even go green – oops, might have jinxed it

  188. VRTX….something good must have occurred…..stock up to 32+ and Jun 35′s up 57%

  189. GS- picking up steam

  190. Optiondragon- Good call on Rimm.

  191. AMZN looks ready to go higher in the near future. I think I will try some.


  192. ZZZ,
    I owe you a nice glass on wine or a martini! Close out on HAL! $1 profit. Still hoping Phil does his 1 year blog meeting in November in Vegas, Miami, NYC or some place fun.

  193. I think we’re turning Japanese, Nikkei look out

  194. WFR

    announced $500ml stock repo – last minute pop supported AH by $.50

  195. At least ebay and yhoo finally made minimal progress at the EOD. So I got that going for me…which is nice.

  196. I’m in for that meeting. I’ll be in Vegas for the Big Smoke in November so that would work out good.

  197. wow. . i go out to pick up the boys from school, and bam, we end at the high with the volume pretty good.. .amazing. . so much for the QQQQ Puts I bought today. .

  198. IMCL – I like that play but I’d put a stop at $3.50 so you don’t get killed if they get something approved. They just goe ANOTHER Erbitux rejection so the sell-off is not unwarranted so be prepared to roll your caller down (and make sure you have the margin to do so) as you still have .70 at risk.

    AAPL – with a heavily optioned stock like APPL finishing between two strikes is normal.

    Brazil the country was upgraded?

    NYX – may pin $80

    XNG – I’m just losing my taste for shorting these crooks, they find a way to turn it around every day, no matter what actually happens in the world.

    GOOG – LOL – you better be taking some off the table! I am crying because I didn’t get around to putting in my call plays after whining about how undervalued Google is for a week!

    DNDN – delayed indefinitely.

    QQQQ – I’m happy to have some insurace too, this is nuts – I didn’t stop out of anything as the market went straight up since I decided to get out of it!

    HPQ with nice numbers!

    Dell, perhaps they shook out enough callers yesterday or perhaps today is the headfake. Either way below $25 is max pain and I will be surprised to see them finish at $26 when the NY lawsuit is such a good reason to take them down. Possible legitimate reason for rally is lawsuit is far less bothersome than people thought it was going to be. I’m going to take $25 puts for fun for .05 XXX Must half out at .10 but DELL is on my buy list as this price.

  199. BillBigD – Your welcome. I had a friggin fab day!

    I vote Vegas or Austin.

  200. ZZZ,
    You live in Austin? Prettiest major city in Texas. I head down there about 5 times a year. What were your other plays. I am loaded on oil services

  201. BA, got excited today but the orders were already on the website listed as unidentified.

    The US manufacturer said the orders were previously recorded as from unidentified customers and include 11 787-8 Dreamliners and 50 Next-Generation 737s. Two of the airplanes have been delivered.

  202. zman,

    When reading your comments and plays, I have accumulated the following:

    EOG Jun 80 C
    PQ Jul 15 C
    VLO Jun 75 C
    SU Jun 80 P

    Are these still appropriate? I am making a loss on virtually all of them. :(

  203. Brazil Debt Rating upgraded by S & P to one rank below investment grade. bb+

  204. Here the Endgadget false news release, its comical going through the comments made by readers

  205. Bill Big D

    Used to but I get back frequently. In service just the HAL and NE

    Jordan – I keep a detailed spreadsheet on my site under the ZEB perf tab.

    I never got the EOG Junes but exited the may 75s with a nice profit.
    PQ is correct and it’s held for an event. Unfortunately I’m still in my May’s as well and have given back a lot on them.
    VLO – ??? out for quite some time now. That was a paired trade with TSO short and it worked well
    SU – yep and I’m sucking on it right now.

    I’ll post an update on the site in the next few minutes showing current positions.

  206. Jordan, perf and positions posted.

  207. Interesting article on Seeking Alpha about current market indicators relating to this bull run:

  208. zman, thank you very much! well, I follow your recs very closely and appreciate your explanations!

  209. Money Flows: Selling on Strength | Buying on Weakness | View Market & Sector Page
    Find Historical Data Wednesday, May 16, 2007 – 5:18 pm ET
    Among stocks that are up today, these have the largest outflow of money. Figures are updated hourly between 10 a.m. and 4 p.m., eastern time. Money flows are calculated as the dollar value of composite uptick trades minus the dollar value of downtick trades. The up/down ratio reflects the value of uptick trades relative to the value of downtick trades. Money flow, uptick and downtick volume are in millions of US dollars. Percent change is calculated from the prior day 4 p.m., eastern time, closing price.

    Company Price Chg % Chg 1-wk
    % chg Money Flow Tick
    Up Tick
    Down Up/Down Ratio Money Flow Tick
    Up Tick
    Down Up/Down Ratio
    PwrShrs QQQ (QQQQ) $46.55 0.45 0.98 -0.60 $-333.79 $307.19 $640.97 48/100 $-327.25 $88.15 $415.40 21/100

  210. Yahoo!My Yahoo!Mail Make Y! your home pageYahoo! SearchSearch:Welcome, crzy4anet
    [Sign Out, My Account]Finance Home -Help

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    Micron Technology to Offer $1.1B in Debt
    Wednesday May 16, 6:24 pm ET
    Micron Technology Plans to Sell $1.1 Billion in Convertible Senior Debt

  211. The main reason why I posted the QQQQ money flow was to show that they are number one in terms of Money Outflow. . .

  212. Wang’s World
    new post up!

  213. Gasoline on fire in the aftermarket. I hear COP and Valero running refiners at reduced rates for maintenance (new downtime announced today for both). So gasoline closed up 3.5 cents and has tacked on an additional $0.027 since the close of NYMEX.

  214. Hi Phil,

    Just read your post regarding your AAPL positions, in one of the posts you said you have combined 30 calls for Jan 08 and Jan 09 as well as Oct 95 puts against those. Later on you also said that you almost got stopped out on the Jan 09s. If you have Oct 95′s to protect your long term calls why stop out?


  215. Phil,

    Re the goog put spread (short may $460 @ $2.45 / long jun $450 @ $5.95) we have achieved 85.7% of the potential profit on the short may $460 leg but the long jun $450 leg is heavy in the red with a net present loss of $0.85.

    prior to expiration and goog probably moving higher should we not buy back the may $460 put @ $0.35 and sell the jun $440 put @ $1.90 (net credit of $1.55) to reduce the basis of the jun $450 put and thus move the spread to a positive $$0.70.

    or is there another play in which we could use the jun $450 put ?

  216. some heavy a/h trading in xom, back down to 80.95 from close of 81.45

  217. AAPL – Sorry to miss the fun today, I’d likely have had a heart-attack on the $110 to $103 insta-drop. That having been said, a little historical reference is useful with regards to these polling results that are bandied about. An earlier poll in the US said 6+% were definitely going to get an iPhone and now the UK poll with it’s 7+% number. Interestingly, the press carries these primarily as negative stories. But the historical element is this: the RAZR, allegedly the best selling cell phone ever, *peaked* at around 6% market share and will soon sell its 100 millionth unit in only 3 years.

    AAPL’s official goal is 1% of the one billion unit market. And a resulting 10 million units (by the end of 2008). If these 6% or 7% numbers came true (and supply could keep up with demand), we’d be talking about an extra 50 million units * $499; in other words, an *extra* 25 billion in revenue, perhaps an *extra* $7.5 billion in profits. That’s nearly $10/share in *extra* profits. Give those a PE of 30 and we’re looking at an *extra* $300/share in price.

    Which is why I love to speculate with way out of the money long-term LEAPs. I mean, heck, if that wildly optmistic scenario if off by a factor of 6, I’m still looking at a $50 move on top of an expected 30% appreciation this year.

    Anyway…if you see a poll that says 6% are *definitely* getting an iPhone and that spells doom, just rub your hands greedily together. It’s that kind of disconnect that allows us irrational markets that sometimes makes us money.


    PS: Will MNST get swallowed before June options expiration?

  218. AAPL – I recognize that it’s stupid to even contemplate. But with 12.5B in the bank, no debt, operating cash flow of nearly $5B, and a market cap of only $92B, I’d be tempted to try and figure out a way to take it private.

    Not to be overly jingoistic, but my nightmare optimistic scenario is the $2.3 trillion wave from China taking companies private rather than lifting the US stock markets to additional record highs. With the US markets only being worth about $15 trillion, that’s a huge wave of cash looking for a home. I can’t imagine what would happen if we suddenly found 10% of the US economy out-right owned essentially by the Chinese banking system.

    But anyway, with that much money sloshing around looking for a home, something like a $100 billion deal doesn’t seem so far-fetched (and is quite appealing when you’re looking to park that much money). And, in a weird sort of way, it makes a fair bit of sense. There’s probably a lot more people in China et al working to produce Apple products than there are Apple people designing them here in the States.


  219. AAPL – One last stupid comment about LEAPs far out of the money.

    At the moment, the furthest you can go is Jan 09 $200′s which cost $2.45. If AAPL doubled over the next 18 months, you’d be looking at $214 or 7 times your money. A long time. But maybe fun for gross speculation. Just in case that 6% number is true and AAPL is hitting $500… ;-)

    While you’re speculating, don’t forget to get something a little more reasonable for Jan 08. For example, the $170′s are under $1. If you figure that the Oct $140′s are currently $1.50 (and the same price/time ratio holds), then if AAPL is within $33 of $170 (aka $137) by July, you ought to be at break-even in July.

    If I were being conservative, I’d say that the July 07 $110′s at $11 look almost cheap…then again, I think most of the July AAPL options look pretty cheap since I’m hoping for at least $135 post July earnings announcement (and post WWDC product announcements) (and post iPhone ship date).

    Of course, post all that we might just have a massive “buy the rumor, sell the news” event. In which case, I’ll be crying in my Mountain Dew. ;-)


  220. Asian Markets : Thursday, May 17, 2007



    Hong Kong*


    DJ Shanghai*






    * at close
    Sources: Dow Jones, Reuters

  221. AAPL positions – just because you have a protective put doesn’t mean you have to ride your calls down to 0. The put is there to help me ride out a downspike and not have to panic sell but if the trend goes down, then I am just being foolish not dumping my calls. So the Oct $100 puts let me watch the spike down to $104 at lunch without freaking out (as many people did) and gave me time to check the facts on that rumor (turned out to be BS). It did give me enough of a scare though that I ended the day with 1/2 of my position as there was too much profit to leave on the table, protected or not.

    GOOG spread – I’m confused by your numbers. I know I took the June $450 puts for $6 against the May $470 puts for $8.25 last week but I don’t remember the one you’re in so let me know where you started. While your play is a good, safe move, I would sell 1/2 the $460 puts for $5.50 to collect $2.75 per share rather than $1.90 but that’s still a risky bullish postition.

    Very nice Rein! I am assuming Apple can mass produce these things at some point but I think the really key point is no one ever paid $2,000 for a Razr on Ebay but that’s about the going rate to secure an IPone in June. As to China, Jobs is not going to give up control of that company again…

  222. Phil, we sort of caught the Gold trade the middle of last week. Do you think there are some ramifications to this move?

  223. Gold – see today’s post but we may get a nice commodity collapse which hopefully won’t (but probably will) cause a market pullback.