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Thrill a Minute Thursday

Markets Markets Rah Rah Rah – Gooooooo Markets!

OK, that's all the cheerleading you'll get out of me, you can go to every major media network or read 400,000 other financial writers if you need to feel good about buying but I am still VERY concerned!

I detailed some of my skepticism in yesterday's wrap-up so we'll just go with the fresh stuff this morning:

Other than China, Asia is had a good morning.  Even the Hang Seng put up a 288-point gain, pretty much ignoring the action on the mainland exchanges.  Exporters are having a field day on the rising dollar and the commodities are making a comeback on the "strength" of the US economy as the Beige Book gave us a real Goldilocks story yesterday.

Our PPI came in a .9% – that's for ONE MONTH – but don't worry, the "core" PPI was just .2% so we're going to pretend everything is just great!  For the year, Producer Prices are up 4.1% which one would think is "too hot" but if we're willing to believe that 3 bears come home to find a little girl in their bed and aren't picking her out of their teeth after dinner, then we're willing to believe any sort of nonsense the pundits throw at us.

GS had a beat, but not the huge ones we are used to and BSC came in a little light so let's beware the brokers today.  Our markets still look good and Happy Trading and I will be watching that S&P chart very closely today as they came just inches away from failing yesterday:

spx_6_13_07.jpg

What we REALLY don't want is for 1,515 to form a ceiling, a "lower high" for the S&P.  For me, this is one of those times when I have to bite my tongue and wait it out for a couple of days.  As tempting as it is to jump on the bandwagon, I've looked at the wheels and we're missing more than a few lug nuts!

D Fry Market Outlook 14 06 2007_003David Fry was unimpressed with yesterdays "bond rally" which has a long way to go before it can really be called more than a bounce.

Eli Hoffman points out that FRE lost .46/share, way down from last year, when they made $2Bn ($2.80).  The 15 analysts who cover this $43Bn corporation must have been drinking Bernanke's Kool Aide as not one of them had a sell rating on the stock and the average estimate was for earnings of $1.01 with the lowest coming in at .62.

"Freddie Mac said it will cease buying subprime mortgages and those with a "high likelihood" of default. Freddie Mac and its larger competitor Fannie Mae have about $170 billion in subprime mortgage-backed securities."

Spillover, what spillover?  I don't see any spillover do you?  Let's keep a close eye on FRE shares today to see just how "baked into the cake" these numbers really are.

10_year_ytd_20070612Barry Rhitholz had a great article yesterday on why bonds are such a major threat to the market and I urge people to consider this as I will urge caution, caution, caution ahead of the weekend.  We've had a fantastic month, a fantastic quarter, a fantastic year-to-date – it's time to take a little more off the table and protect what we have.  If this rally has legs, we have 6 months to "go for it."

Am I being overly cautious?  Perhaps – I could just urge caution, caution and leave off the third one but I'm feeling pretty cautious.  Energy prices are heading higher, not lower and the strong rally in commodities indicates that those cartels are willing to push our economy to the breaking point

 

crude-oil-stocks-061307.jpgWe have our natural gas inventories today but a bearish oil inventory report didn't stop the roaches from leading a big rally in the oil patch so we'll see what they do with what ZMan projects will be a 95Bcf buildAs if it matters, crude oil stocks are back at the top of the 5-year range, where logic would dictate we get a sell-off but the gasoline importers have taken a page out of the oil importers playbook and started to slow down imports, which were off 2.4M barrels last week despite record prices being offered in the Western US.

Now there is a legitimate macro scenario for this:  East Coast gas strips fall causing a company to divert a tanker or two full of gasoline from Texas to California, adding days to the trip and causing a shortfall in imports which were not needed anyway as, despite record prices, we are very well stocked with gasoline.  So we won't accuse these crooks of simply parking their tankers next to the oil tankers that have been sitting in the Gulf for weeks waiting for you to pony up $70 per barrel to offset their storage costs.  See – I'm fair and balanced!

Oil at $67 will be bad if they hold it but also perhaps a good shorting opportunity if they fail.  We'll be watching the usual suspects, VLO, TSO, XOM, SU… for nice tops and perhaps enter a few July puts in case nothing blows up over the weekend (but let's keep our fingers crossed for something truly tragic to happen in the World for all you oil bulls!).

Watch gold to see if the World is worried about inflation or not as well as our treasuries but judgment will probably be reserved until we see tomorrow's CPI report.  The dollar has not real resistance all the way up to 84,  where it faces a big test at the 200 dma but we'll be spending our day cleaning up our virtual portfolios ahead of expiration and maybe scalping a few day trades to pass the time.

Have a great day!

 


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  1. Phil,

    In case you missed it it the wrap up comments…..I was looking for some advice this morning….

    Just checked the account and I got assigned 1000 shares of MO on the June 75 puts! Causing maintenance call.

    I still have the 10 MOSO July puts, but obviously I need to address very quickly. SUGGESTIONS?

    Thanks,


  2. Morning Phil. Morning all. Am keeping a close eye on Gold juts to see if rallies !!!!


  3. Good morning all


  4. Phil here is a few comments on GWB (just for you) from none other than my fantasy lunch date, Ann Coulter.

    “President Bush was so buoyed by the warm reception he was given in Albania that he immediately gave all 3 million Albanians American citizenship, provided they learn Spanish. The offer was withdrawn when Bush found out most Albanians haven’t broken any U.S. laws.

    Bush keeps claiming he’s dying to enforce the border, but he just can’t do it unless we immediately grant amnesty to 12 million illegal aliens. I wonder if that worked on Laura Bush?”


  5. Scott,
    Had the same thing happen. Set up to sell the corresponding number of puts as well as the shares put to you at the open. Should be fine. This MO trade turned out to be a pain :)


  6. BSC

    Roaches in play, or have they sanitized their portfolio already?


  7. MLM downgrade to sell
    BSC short possibility JUne 145 puts
    GS short too June 230 puts
    ICE long June 150 calls
    FRE short watch


  8. Karmncon,

    That bag of antlers is your fantasy date?!?!? Leaving her politics aside, she’s a scary looking dude! The Adam’s apple on her is impressive!


  9. Phil,
    Are all your etf positions for hedging purposes only or do take some as directional plays as well?


  10. Happy GRMN calls looking good!


  11. Scott, I wrote that up yesterday. Worst case is you can get rid of them by doing the same thing to the guy you bought the July calls from, check with your broker but you should be in luck if the markets go up as you were assigned at $70.10 and you should be able to sell for $70.30 or better (Wednesday topped out around $70.50, yesterday $70.35). By all means talk to your broker and discuss what options you have but if the market stays strong, you may catch a nice break.


  12. Does anyone know anything about OXPS – seems perky today


  13. CHK – new all 52 wk high. Check out the monthly chart. Looks to me like a base from 10/05 to present that we are starting to break out of. Given its prospects and valuation it could easily test $39 in coming weeks (if gas prices hold up).


  14. Phil:

    Regarding JOSB trade in $10KP, why wasn’t double diagonal employed?

    Thx,Edgar


  15. OXPS got hyped by Cramer in Lightning Round last night JPL. But besides, that I have no idea.


  16. Holy #@!X%!

    ACH out this morning at 39.04 on purchases yesterday at 35.12

    I love these Chinese gappers!


  17. BIDU testing 140.


  18. LOL – if MO goes to $70.50 that pain will be a very nice gain! Make absolutely sure you speak to your broker, most likely they will need you to clear the trade today which means you should NOT be greedy and be happy to make .20.

    ETFs – a little of both but the big ones are hedges.


  19. NMX, ICE, AAPL strong this morning. CTSH continues the uptrend from yesterday.

    TLT also wants to run!

    GOOG being suppressed.


  20. Scott – Same thing, got assigned 600 shares of MO and a maintenance requirement. Sold them for a .24 profit per share since my basis on the JUN’s is $5.0011. Although in the end I should have waited some more, seeing how the stock is rising, but then I wouldn’t have been able to do much until I sold them.


  21. NOV-took some more off 9 points 2 days
    NMX- ditto


  22. NMX volume is just amazing. Almost reached the average daily volume in just 30 min of trading today!

    Don’t understand what is making crude go higher!


  23. TASR stunningly higher


  24. Has that weathergirl Liz said the consensus number for nat gas this morning?


  25. Nice gains BBD!!!


  26. Thanks,

    Got out about even selling the july puts and then waiting for the small rise in MO.


  27. About to roll some LEAPS from 08 to 09 with same strike price – does timing matters ? does the price difference between the 2 fluctuates a lot ?


  28. Phil,

    I am looking for some advice…

    I am new to this option stuff, I have the following,
    RIMM Sept $180s – $9.1, now 10.1
    Sold Jul $180s for $4.50, now $5.5

    What should I do or should I wait till July expiration? Should I roll up or just buy back Jul call?


  29. BHI-pick some up, as it has lagged a little
    RIMM-starting to move


  30. Hi Phil,

    Re JSDA, would you roll the Jul 17 1/2′s down to 15?

    Thanks!


  31. BBD where did you figure entry was on BHI?


  32. GM……time to short???? We’re over 32.50


  33. Good morning!

    FCX
    wow!

    PTR/CEO
    doing pretty well!

    RIG
    cashed in for +26.3%!

    SLB
    BillBigD, you’re the man!!


  34. Ok, just rolled back the DVR and Epperson says analysts are expecting 98 to 99 Bcf. Simple call is:

    > 100 Bcf bearish: setting stop on my CHK
    =


  35. RIMM
    moving!


  36. I was just thinking the same libert on GM, must be GMTA :wink:


  37. OXPS has been perky all week, despite the downturn. In the very least there must be word of a great Q, possible merger interest.

    JOSB – I’m trying to keep the trades fairly simple and that was my best guess for a way to pull a profit without severly hampering the account margin


  38. Gonna look at GM chart first though, it does occasionally pop up to low 33′s which is prime puttin time


  39. Phil – I thought it might be useful if you and/or Sage could write up something about intelligent buying/selling of leaps. Given that they are frequently very thinly traded and/or have huge bid/ask spreads, especially deep ITM ones, I think it might be helpful if we had some guidelines. Thanks for considering this.


  40. ACH got a Goldman upgrade overnight .. i love you guys!

    powering ahead re entered half position at 38.39 after the initial excitement this morning


  41. SLB-took some profit 65% gain
    BHI-I entered at $84.5


  42. ACH has been great for me too, bought at 19.89 after Feb 28 mini collapse…..halting of trading 2X in last month was a gut check however.


  43. Karmcon: Thxs on GM will watch it for a fade


  44. RIMM – $180 is a long way away, you need to be patient as he’s paying you a $13 premium. If RIMM goes up more than $3 a week, then worry.

    JOYG and TXT going nuts. CHK at ATH. Steel coming back. GOOG ,making a move.

    GM – can’t short anything in this market but I can’t wait!


  45. phil, ESLR jan 7.5 up from 1.9 to 2.45….. any call writing against it?


  46. that 504 is killing GOOG


  47. GRMN
    out with +26% in 1 day!


  48. FSLR
    still flying!!


  49. Phil,

    I have the 08 SNDK 40′s and have sold the jun 42.50′s. Need to roll….recommend the Jul 42.5 or 45′s. 42.50′s offer more downside protection, but less premium ~.45.

    Just curious on your thinking


  50. 92 Bcf – bullish


  51. KWK-took half off before numbers


  52. FFIV
    could go up from here!


  53. BBD or HT: Did you jump on RIMM or wait?


  54. MO – I got assigned on this one, too. Wierd, it’s only the second time this year its happened – both in the past 30 days. The stock went up enough this morning that I sold it and the long put for a small profit.


  55. Nice run for TIE


  56. My little china girls CHL and LFC finally running last 2 days after 2 months of rolling CHL (patience not one of my finer virtues)!


  57. CHK call volume running hard post number.


  58. EOG for $0.40 may be worth a short for the June 80 calls for you gunslingers.


  59. ATI
    flying!!


  60. HK and PQ performing nicely. Both at all time high.

    UNG is soaring on the minute chart

    NFX back above $50

    CRK still up a paltry $0.36 today. Really like this growing, low cost, gassy name.


  61. ESLR – not in a very attractive spot to sell calls against.

    SNDK – jun $42.50s have no premium so I would just roll to July $42.50s for $3.05 as the stock is massively volatile and would probably not be doing so hot if the markets hadn’t gained 270 points in the last 8 trading hours.

    Let’s keep an eye on Europes close.


  62. happy,

    FSLR – I’m in on these guys too (Jul75s) but became impatient a few days ago and sold Jul80s against. Do you see a near term top for them? Trying to decide whether to buyback the caller or let it ride for a while. Thanks.


  63. 10 – 11 WFR pop in progress!


  64. ZZZ,
    CHK-I just got a buy alert on this guy.
    RIMM-MRN I’m already in


  65. TLT slowly inching towards 84


  66. BillBigD,

    NMX – I think you said you’re holding Jan120s? I’ve Jan130s and going to roll to Jan135s (instead of 140s) in case this is a temporary spike. In the process, I’m going to take some profits. Aren’t you a bit worried about some a downward movement with your calls so deep ITM?


  67. OXPS

    The Sept 30′s for 1.15 look good with a possible sale of July 27.50′s for 1.35 on a 2-1 or 3-2 ratio. July expiry is before their earnings on the 24th.


  68. MO

    You guys with the assigned shares… you just sold the shares assigned? I know that’s a dumb question but there are some large numbers in my account and I just want to be sure I do this right.

    Another question: I’m then left with 20 Jul 75 puts and 10 Jun 75 puts. What, if anything, should I be doing about that?

    Thanks…


  69. Very hard to keep GOOG pinned down in this market!

    MO – turning back down on market strength. Be very careful if you are holding the longs and do not forget you have the right to put the stock at $75 by executing your July puts (but it will cost you the value of those puts).


  70. 14 June 2007 – Starbucks will stop selling Jones Soda this summer, reports the Seattle press today.


  71. OXPS
    Actually I may buy myself a few more months and possible rolls and get the Dec 30′s for 1.80


  72. Speaking of puttin anyone watching the US Open at Oakmorgue? 288 yd par 3 and 657 yd par 5 is making the pros look like weekend duffers, lol.


  73. FSLR
    KC, they are pretty strong, although intraday charts may be toppy. Don’t know about this one. Do the gains from your calls more than cover your losses from what you sold? If yes, you might want to hold on to them for now.


  74. Phil, I bought back the MO Jun 75 puts (@4.9) yesterday – sold Jun 70 Puts (@.2) today to wrangle some more premium. Still have the Jul 75 puts. What stops should I set?


  75. KC
    NMX-Yes, I will look into it tonight or over the weekend. My Leaps are free so nice problem to have. LOL


  76. I dont see the benefit of excercising the puts on MO?


  77. MO – you need to check with your broker to make sure you don’t have margin issues. I also just have the July puts now so I’m hoping to get about $5 and be done with this annoying trade. XXX

    Whatever program kicked off that buying frenzy has stopped but it looks like people are just afraid to sell anything!


  78. any predictions on where the QQQQ will end up on by end of friday?


  79. happy,

    I agree they look strong with MACD up and good money flow into stock. Unfortunately, I have a slight loss on the entire position, but with a .57 delta the Jul75s will outgain the Jul80s (.40 delta) soon. I think I’ll wait for a day or so, and maybe take out the caller on a dip (if the charts still look strong). Thanks.


  80. OIH/NE
    taking a breather… NE looks like it has more room to go today…


  81. BillBigD,

    NMX – nice problem to have indeed. I didn’t take out my caller soon enough this go around (thinking it was one of those intraday spikes) so I had to take a decent loss there. Now, I’ve to work harder to work back towards a free trade. What are your thoughts on selling calls? Was hoping it’d go above $140 long enough before doing that but looks like it’s dropping back now.


  82. ZOLT
    40! new high!


  83. Nice .7 snatch on the WFR 55′s today….caught the wave this time!


  84. GS – Anyone still have Jul calls? I wasn’t around yesterday to take advantage of the afternoon price, and decided to hold this morning after earnings (still have a small profit). Looking at selling the Jul240s for $2.75. Or, maybe it’s better to sell the Jun230s for $0.9 and then sell the Jul240s. Thoughts?


  85. ESLR

    Phil, you said “not in a very attractive spot to sell calls against.” for a quik learning note, can you explain why. is it because you still see some upside before a pullback?

    tnx as always – Brian


  86. Happy – OIH breather tied to that UNG chart. Agreed NE.

    Can I get your thoughts on the long term CHK chart?


  87. uh oh! TLT now negative. Damn those bonds!


  88. MO – if you had $75,000 worth of MO put to you and your broker needed you to get rid of them by EOD you would see the benefit! That, of course based on the assumption that they continue to pay such a low premium (currently .05).


  89. GENZ – Phil, thanks for giving me a way out yesterday. I did what you said and it only cost me another 0.60. That seems reasonable since I have until Oct now.


  90. BBY – Should we roll the June 47.50s to July tomorrow or hold off?


  91. KC
    NMX- Well last time you did better than me on the downside as I kept thinking it would comeback. I luckily took my guy out last week.
    DO- out of some July’s


  92. ICE
    anyone playing it today?


  93. SBUX down as usual…


  94. I find it hard to believe people are shopping and not buying SBUX. May seem expensive compared to MCD but i wouldn’t compare the 2 and once traders figure that out SBUX moves up.


  95. Happy:

    Still have some Jun ICE 145s. lost $3 in premium in last 4 trading days at the same high price (did that make sense)? I meant to get rid of it last week and didn’t. I intend to hold off until tomorrow as I think we may be finished with this CBOT game and ICE should run a few bucks higher. If it flatlines later today, I’ll probably take profits. I would NOT do any calendar spreads only because if ICE makes a REAL run, I think you’ll be in trouble, but a simple vertical spread right now looks safe as even if ICE continues to make offers driving the stock price down, it’s established a nice floor.


  96. GRMN – nicely up + $1.14 @ $68.56


  97. phil,
    MRO i own july 115 puts, down 55%. should i close this position or roll into something else?
    XRO july 80 puts, same as above
    thanks in advance


  98. oops, typo
    XOM july 80 puts, not XRO
    sorry


  99. ICE
    Played July’s keeping Sept’s.
    Kustomz-I hate SBUX coffee! Taste like sh*t.
    Phil-Any trades today, or just sitting tight?


  100. DOW rejected at 13550… stalled the market


  101. optiondragon

    Have you had a chance to experiment with the tools (call spread/put spread investigators) at optionhouse? If so, have you found them helpful? Thanks in advance.


  102. LTP – What should we do with the TXN and WFR spreads in the LTP? Rolling or waiting?


  103. Bill, i hear that from the older generation of coffee drinkers, its common :)


  104. Phil, are you still holding the SWIR Jun 25′s Stock at 25.34 volume of 3 calls have sold at .60 today. I’m going to ride the callers out until tomorrow unless the stock suddenly takes off…..a 25c premium is only something I will take this close to exp on this turtle….am I missing anything that I can learn from without spending mucho dinero? Thanks


  105. ADBE- would greatly appreciate if anyone has any thoughts on earnings. how you think they’ll do and what kind of move they might make depending on outcome


  106. IO way up
    BTJ up…same business as IO
    USU big bounce
    CH another ATH
    MU and VCLK nice moves up


  107. ADBE expected to post .35/shr which would be about 10% above the street est and 23% higher than last qtr……don’t follow stock well enough to know it’s history of movement on pos. earnings announcements so can’t add any intelligent input pro or con.


  108. Ive never read this paper before, it may like the Enquirer in Ireland

    Scientists warn that oil will start to run out in four years’ time
    http://www.independent.ie/world-news/scientists-warn-that-oil-will-start-to-run-out-in-four-years-time-701870.html
    http://www.belfasttelegraph.co.uk/news/world-news/article2657414.ece


  109. National Enquirer – If Murdoch succeeds (I hope not) in acquiring WSJ, Enquirer might be the only credible source of news we might be left with. Lets not put down the lovely ragtag. :-)


  110. MOT, i have been buying this in the 17s, love the action today selling some into this rally. LOL yea .20 is a rally in MOT.


  111. Kustomz- very clever.
    GS- ouch


  112. Happy:
    Wow. I think I killed ICE. Ooops.


  113. I would argue in the event three folks were sitting next to each other and TRUE=71% and FALSE=29%, the probability of all three TRUE events would be 0.71*0.71*0.71 or 35.8%. So three random people sitting next to each other being Bush haters would be far hire than 4% based on independent probability alone.

    [2.4% for 3 unanimous FALSE results, hehe)


  114. biodieselchris

    We can’t fault Phil for his pro administration biases.=:)


  115. NOV- starting to run again after the re-test


  116. House passes it’s energy bill.

    Slows drilling, sets back development of Rockies Oil Shales, …going to be seen as bullish for nat gas and perhaps oil prices.


  117. CNH
    breaking out today!


  118. ESLR – offer for July $10 is only .32 and I don’t feel nervous enough to cap my gains there just yet.

    BBY/Any June caller – it depends on the spread ratio that you will gain. With BBY in particular I see no reason to give the caller a .22 premium just so I can roll him to July a day earlier. If it flatlines at $47.50 tomorrow, he gets nothing and the Julys will likely bee about the same price.

    GENZ – glad that worked Dave!


  119. GOOG -0.48%

    QQQQ +0.46%

    what gives with GOOG today?


  120. BBY/Any – I guess what I am wondering is if we always roll on Fridays or do we wait (for the market to settle down?)


  121. It is just 12:30pm and the light trading indicates as though the market closed an hour back!


  122. OIH: Zmann – hurricane ? we dont need no steenkin hurricane !
    Bought back my poor, beaten up 175s this moring (held em way too long), let the long calls run, then sold 180s and 185s. If these suckers make me walk em all the way up to the moon, i swear Im gonna get something to expire worthless

    Ah well – the new short calls are posittioned better – my 175s were bought on OIH /weakness/. Bad move.

    FXI broke out to all-time highs

    AKAM had a choice to recede below support of its recent breakout or jump over its 50-day MA. It jumped. AKAM has officially broken out of a consolidation range that only AKAM could print. Ive always wanted to backspread this thing.

    TIE – mmmmm TIE.

    GLD – I think the floor is 63 -although it hasnt gone below 64. Can the dollare really continue rallying ?


  123. This is just incredible and the tip of the iceberg
    The fake toothpaste with the Colgate name is labeled “Manufactured in South Africa,” but Colgate said it doesn’t import toothpaste from South Africa. The counterfeit packages also have several misspellings, and were found in New York, New Jersey, Pennsylvania and Maryland.

    UPDATE: Colgate: Counterfeit Toothpaste Found In Four States
    http://money.cnn.com/news/newsfeeds/articles/djf500/200706141002DOWJONESDJONLINE000736_FORTUNE5.htm


  124. considering buying BSC July puts, anyone have any thoughts?


  125. ICE – the only guarantee you have is that you will have 0 premium tomorrow but it’s pretty much gone now. This is why we get out of our Junes within 7 trading days of expiration. If ICE makes a crazy offer for BOT you could get killed. If you really love them you can roll to the July $155s for $6.65 and sell the $150s for $2.15 to pick up a buck and some measure of safety.

    XRO Claymore/Zachs? Who the heck owns them? Oh XOM, that’s totally different. Well this is the idiotic run in energy stocks I was hoping for but $67.50 oil is very scary to short against. I have the XOM July $80 puts too and since I have a $1.27 basis, if I spend $1.40 to roll to the $85 puts I will be in for $2.67 on a $1.92 contract that’s in the money by a few. Seems worth playing that way. XXX

    MRO July $115 puts – I rolled those up to the $120s puts, which are down considerably too so I will spend another $1.50 to roll to the $125 puts at $3(ish), giving me a $4.15 basis and not too badly off. XXX


  126. Putin Watch: Russia plans to cut exports by 170,000 bopd for 3Q07. Payback for that missile shield.


  127. TXN, WFR – until there is a hard reversal, I’m willing to play them out a bit but $2 bucks for the WFR $60s is good money and we can always roll them down to the $55s if it turns on us so I’ll take that one on any weakness. TXN is the same, I’m hoping for a buck on the July $37.50s which is plenty to make in a month.

    Don’t forget CPI comes out an hour before you can do anything about it tomorrow!

    SWIR – I have the July $25s for $1.75, now $1.70 and sold the Jun $25s for .75, now .60 and I’m sure as heck not giving him more than a nickel of premium.

    I bow to the statistics BioDC!


  128. ELN what on earth is going on massive surge on massive volume


  129. any thoughts on ISIL and BEZ


  130. ELN buy out rumour on yahoo msg board


  131. Sell TIE 35 ? or 40s ?

    The 35s seem pretty close all the sudden.


  132. Man, look at that pump in the Oil stocks. These crooks make $$ coming and going, don’t they ?

    Turmoil in Gaza … that big oil producing strip … that is unnerving the traders according to CNBC. LOL.

    Very low volume IMO market wide at this point.


  133. MTL- up on nice volume.
    OIH-ATH


  134. I’m working hard to become adept at spreading and would really appreciate feedback from some of the more experienced hands here (Phil, Dragon and others) on the following bear calendar spread.

    KFT implied volatility is far above historic volatility right now, and KFT is approaching what should be significant resistance at ~$36. With that in mind:

    Long 10 September $37.5 for $0.75
    Short 9 July $35 for $1.1 (about $0.75 premium)

    At the 10/9 ratio, the trade yields a credit and is premium neutral with a positive theta.

    Assuming that KFT implied volatility reverts to its norm, the premium on the $35s should suffer more than the premium on the $37.5s.

    Also, there will be an opportunity to sell more premium for August and September.


  135. TIE – not sure what position you are referring to. I have Jul $35s and sold June $35s against them, very happy on the whole, all according to plan with a $1.20 basis if the Junes expire worthless.

    I should have taken my cash and bought everything that was not nailed down on Tuesday night when Cramer said not to buy anything!


  136. happy,

    PTR – Are you still in on this trade? I got the idea from you but got in with a higher basis. Chart looks a little toppy to me. What do you think? Thanks.


  137. PCLN – finally broke over $63. Looks to me like it’ll head higher still and test $64


  138. Mike: thxs for ELN update could be another BIIB in the making


  139. Cramer-I should have taken my cash and bought everything that was not nailed down on Tuesday night when Cramer said not to buy anything! LOL That was great.
    But he did say buy Oil Service yesterday


  140. DIS is plowing up, but options not budging. Trying to get out at .10.


  141. PTR/CEO
    I think both of these can go higher!


  142. BCSI
    seems to want to run!

    ATI
    BillBigD, are you playing this, yet?


  143. Amazing complacency out there today


  144. Happy – Agree PTR higher. That Russian news is a big deal for oil. Having another militant startup in Nigeria is also pretty bullish.


  145. KFT – that’s a very good play as long as the market doesn’t break up from here and take Kraft with it but that’s no reason not to do it. If you can pick up another .75 premium in Aug your risk is the minimal


  146. KC- good call on PCLN. Might look at Oct’s.
    Did you see that guy on CNBC yesterday that said PTR and CEO or SNP have found 7 huge oil fields.
    ZZZ, can you help on which one was the other company?


  147. Cramer’s losing his touch he said to switch out of FRO and it’s been straight up all day

    SBUX careening down!


  148. KFT — thanks, Phil.


  149. DIS looks like a morning star pattern with a high volume hammer yesterday to boot. Unless you DD’d at .05, why not hold the July calls instead of getting out at .10?


  150. OPEC To Maintain Its Current 30M B/D Output Level -Secy Genl


  151. Phil: sorry – I initially bought the TIE Jan 35 and sold the July 35. Bought back the short calls this morning and am gonna sell em again today. WOndering which July calls to sell…

    Cost basis on the Jan calls 3.57, currently at 4.70.

    I shouldna rolled the OIH calls til the close… OIH just wont stop runnin. Shes gonna blow captain !

    Goog: ‘consolidating’ like a tired ole dawg…

    Phil, regarding market risk tomorrow – after the last 2 days of running up, im tempted to just let my short calls protect me – since the market has gone so far against em. Granted it wont cover for a wicked ugly correction, but I got this feeling the market is back to lookin at the sunny side of our gross economic negligence.

    Im leanin 70-30 that the report will be seen as benign or better than expected, or ignored.
    Or in any case, wont cause enough correction to overcome the protection of these poor abused callers.
    Thougths ?


  152. took ELN Jul 22.50c for .60


  153. PTR – thanks everyone; I’ll sit tight for now.
    FSLR – taking a little dive; probably heading lower still, don’t see any news


  154. KFT – why is the IV higher than the normal at this time?


  155. Phil,

    I called TD Ameritrade about 7 bucks per trade since some of the board are getting this. .They were asking the Clubs Account # . Did you have a 9 digit Account # or they were also asking Tax ID if nothing else. .Geez. .these guys are unreal. . .

    Just thought I would ask. .


  156. Happy
    ATI- sold June 110′s on the run this morning. There was a $1.25 premium.


  157. ATHR has been rising steadly


  158. 6f-

    I did DD at .05, and my basis is just under .09. Was gonna try to get out today to free some cash.


  159. GRMN
    69+!!


  160. Option analysis software -

    Anyone have a package they like or could recommend?


  161. FFIV
    taking off! Above 82 is a very goog thing!


  162. GM at $33.05


  163. Matrix TDameritrade i called and they didnt ask anything , just said ok took about 2hours. I’d call back and ask again.


  164. ACH
    still going, rest of the metals feel kinda weak…


  165. FFIV- I will add if VOL picks up.
    ATHR- I saw that it made ATH last night. Forgot to put on Radar this morning.
    US Open-- showing Phil’s meltdown of last year.


  166. PTR and SNP or CEO? They’ve all been racking up major discoveries but I missed what the guy was saying.

    The spate of discoveries is a bigger deal to CEO as they have a much smaller reserve based, they’re not as big a refiner as is SNP and they’re about half the market cap.


  167. Matrix and Likewoods, but they still charge the $.75/contract – this is very expensive in addition to the $7. Are you able to get them off of that? Thanx


  168. KFT — After the spinoff (and the selling pressure that followed for a few weeks), KFT started a strong move up. Its daily and weekly charts are moving into a bullish formation (although they are not there yet) and there is a strong positive on-balance volume trend. However, IMO, KFT is no shining star or screaming value from a fundamental perspective. There may also be some selling pressure at $36, as people who are underwater in the stock try to get out at the stock’s most-recent recent highs. The trade is basically a bet that the stock’s recent pace of appreciation will moderate over the next few months, and I’m expecting that the ability to sell more premium in the next two months will provide a margin of safety. Please don’t take it from me, however. I’m learning and am wrong more than I’m right. :-(


  169. TIE – be careful, I’m liking my July $35s!

    OIH – I’m taking the July $170 puts for $3.40 JUST so I can sell the $175 puts (later) for $1+, crazy premium for 8 hours!

    70/30 – just because you don’t have a mattress play today doesn’t mean you can’t have one once the market goes down 100 points. Just pick a strike you can live with based on how much protection your callers afford you. I’m down .50 on my July $135 puts and it cost another .40 to move to the $136 puts so I’m spending .70 to leapfrog my DIA July $134 puts up to the $136s and leave the $135s in place. As that’s just spending $7,000 against the day’s gains, it makes sense for me now, just in case there’s a big overnight drop.

    What I am short on is upside protection – lets’ see if the Nasdaq can hold 2,600 and think about who isn’t participating besides GOOG.

    KFT – that was a big move for them the past few days! It perked up the V.

    Club Account #? We don’t have a club yet but if they’re handing out discounts maybe sooner will be better than later!


  170. Likewoods, thanks. . .Those stinkers!!!


  171. FCSX going crazy again ATH


  172. Support for GS around 220? good time to bite or see if it holds. . guessing 200 would be the best buying opportunity if the markets fold for some reason. .


  173. DIS – absolutely if you can get 1/2 out for .10 even after that DD then of course you do, why continue to risk more than you intended when it’s been underperforming?

    GM – $33.20 is my target but the premiums are ridiculous on the put side. I’m liking the Jan $32.50 puts at $3.50 with an eventual sale of the Jul $32.50 puts, now $1.15 if it breaks and holds $33 but I’m waiting for at least one break up with a rejection.


  174. Going to the open tomorrow at Oakmont! Enjoy expiration day!


  175. ICE
    can go a lot higher from here!


  176. ICE- picking up stream!


  177. DIS – the ticker changed to HFW right….


  178. ICE-up $6


  179. ICE – they might have thrown in the towel on BOT


  180. Have fun Chem!


  181. BSC is going positive for the day ! GS still down $8 … Crazy !!


  182. How come there is no Aug option for RIMM? Will it be available after June expiration?


  183. Phil:

    TIE: Heheh – welllll lemme just borrow that 35 cuz itll be nice to have should tomorrow be the day from he*L
    I sold the 40. THeres not much there but it expresses my view of TIE going down,.

    31 MA support, and excellent price and people support at 30.
    Good market positionning for an overall raw material consumption market
    …and to top it off, it should be a dollar hedge yes ?

    Like your OIH play !


  184. CCJ-nice move today


  185. based on reading these comments i called etrade and they just agreed to lower my commissions from 9.99 to 6.99 per trade, (+0.75 per contract, unchanged)
    unfortunately, this won’t go very far in covering the losses i’ve been incurring thinking the market was headed downwards
    thanks for the thought of it though


  186. IYR – is this still a play? its down -$0.77 to $80.85


  187. Sorry guys but I keep looking for things to buy and everything looks overbought to me. I’ll get over it if we confirm a breakout next week but I’m taking a time out to assess the situation. Last time this happened I was able to construct a bullish case for our markets based on a dollar decline and the inflows of foreign capital – both of those things have dried up and I just can’t get a read on where this money is coming from (oh yeah and no M&A this month either).


  188. ICE
    Man, buying program must have kicked in. Since I mentioned it (20 minutes ago), ICE flew 3 points!!


  189. ELN still going up.

    ECA wayyyyy up.

    CAT ATH, INTC new high, Cramer about to pump BBY – $47.50s just .40 for a mo play.


  190. Oh cancel BBY – he’s NOT endorsing it!


  191. Phil

    Didn’t the Chinese gov’t recently allow banks to invest a portion in foreign equities? Petro-dollars?


  192. figure the market will give us a choice around 10am tomorrow. Ill have some delta ready either way, unless the news is REAL bad,

    As far as needing ammunition to construct a bull case, look at the SPY 60 minute chart. We just broke out with a fairly nice W breakout – putting at least medium-well support right near 152 – and from the looks of the volume, that W was created with high turnover.

    That said, a dismal CPI number and sure we klnow where the markets goin.

    You think the market will rally if the CPI’s in line ?


  193. ELN smoking up7% today


  194. These guys are good

    Hickey and Walters (Bespoke) submit: Both Bear Stearns and Goldman Sachs are trading lower this morning in reaction to Q2 earnings reports. Looking back at prior days since 2002 where the stocks gapped lower (1% or more) in reaction to earnings, we found that the two stocks have reacted differently.

    In three out of four instances, Bear Stearns went on to trade higher from the open to the close for an average gain of 1.69%.

    Goldman Sachs tends to continue lower with declines in three out of five periods for an average decline of 0.44%.


  195. Congrats ICE people! Might make $160 at this rate!


  196. Phil: Scared me on BBY. I’m covered with July 50′s which are up 25% against the Jan 50′s that are flat. Still safe?


  197. NMX-$140 shocking


  198. Does it seem as though the markets are moving in slow motion, or am i having a flashback?


  199. Is there any way to get the comments BBS style for PDA use? I am on the fly all the time and utilizing my blackberry more than my PC or Laptop. thanks, Jon


  200. BillBigD or HT: Were you mo trading RIMM? If so, is it time to give up until after June expiration? I notice the June premiums are actually falling as the stock wiggled down & recovered. IV change or does the premium deflate by the hour this close to x?


  201. ADBE

    Any good straddle?


  202. My ICE got taken out on that last spike while I was in a meeting. Still nice. Happy, you still in?


  203. China Banks – I think it was the other way around, they allowed about $6Bn in foreign capital to be invested in their banks.

    LOL DJ – squiggles on a graph do not a bull case make for me! 8-)

    BSC just realized their quarter sucked and their up to their eyeballs in subprime debt that’s foreclosing at record rates! Have to take a chance on the $150 puts for $1.25 XXX stop at .95 out by EOD


  204. NMX – crazy is right. Really itching to sell the Jul140s but afraid to given possibility of merger/buyout.
    PCLN – waiting to sell Jul60s for $5 or better against my Jan65s.


  205. phil,
    BSC – would you buy a july put on it?
    was thinking of this often today.
    thanks


  206. SOX
    screaming!! daily MACD turned green today!


  207. OIH – When you sell Jun $175 Put, don’t you need enough margin balance to be able to buy it (in case stock is put to you)? Even if you have the Jul $170 Put against it…i.e. doesn’t it mean an automatic margin call the minute OIL falls below $174.95?


  208. I sold those ICE 160 calls against by Jan 160 calls for 0.6 now 0.4. So difficult to sell calls against stocks like ICE and NMX. Lost some $$ on NMX 130 calls yesterday, thank God, I got stopped out, otherwise could have been a huge disaster.


  209. One more thing, NMX volume increasing as it goes higher. 12th June – 2.5 million, 13th – 3 million, today – already 4.2 million. Man this thing could just keep running for few days now :-)


  210. ICE – If you want to sell calls against mo-mo stocks like ICE and use leaps to cover, you will have to buy deep ITM. OptionSage had a great artcile on GOOG last weekend (I think) where he discusses looking for leaps that have a delta of at least .80. They will move very nearly like holding the common and prevent runaway disasters. You must also handle the situation where you may be called away in which case you will have to roll the caller or close out both sides of the trade. Phil discussed this using EWZ as an example yesterday


  211. BSC

    8000+ open interest at 155 call and 145 puts, seems like a settle around 150 would cause max pain. Am I reading this wrong?


  212. SIRI,XMSR get some backing from someone that may have influence

    NEW YORK and WASHINGTON, June 14 /PRNewswire-FirstCall/ — Thomas Hazlett, the former Chief Economist of the Federal Communications Commission, Professor of Law & Economics at George Mason University, and a principal in Arlington Economics, today released a study regarding the merger of SIRIUS Satellite Radio and XM Satellite Radio . Commenting on the merger, Professor Hazlett stated, “After a thorough analysis, it is my opinion that the merger of XM and SIRIUS will predictably enhance consumer welfare.
    http://www.earthtimes.org/articles/show/news_press_release,122741.shtml


  213. thanks Joseph. I have not tried either of those plays. I should go back and read them again.


  214. Phil, would you hold on to BSC June 150 puts overnight. Looks like it could open much lower tomorrow.


  215. IF CPI is in-line (what does that mean though?) then they should be able to pull a positive into the weekend but if the “core” is over .1%, I think people will get a little more nervous.

    BBY – nice Cramer headfake. They telegraphed BBY as a pick and he slammed it, must be a lot of disappointed people there and explains the mega run since yesterday as they should have been pinned at $47.50. I wouldn’t be concerned about BBY going to $51 by July 20th and, if they do, your Jan $50s should gain $1.50 anyway.

    Kustomz – Flashback for sure, I see trails…

    BBS – there is, I think some kind of RSS feed, you’d have to check with Jared.

    ADBE – there was yesterday but not so interesting now. You could take the July $45s for $1.45 and sell the $45s for .62 and take the Jul $42.50 puts for $1.15 and sell the $42.50 puts for .55 so you are in for net $1.40 and don’t owe your caller or putter any money without a 5% move.


  216. Rebecca Jarvis on CNBC just said on EBAY: “Here’s one I want to mention. The target at EBAY, lowered, at Piper Jaffray. They ARE NOT out with the note yet, but the target has been lowered. $34 per share. You haven’t seen an impact on the share price, but watch for it-- the note comes out after the bell.”

    What the !?!?


  217. AMZN – Found this on seeking alpha: Amazon.com: Why Now Might Be the Time to Short
    http://biz.yahoo.com/seekingalpha/070614/38291_id.html?.v=1

    I didn’t read through it completely (long article) but what I did read makes sense. I’m definitely warming up to the idea of buying a long term put and selling against when AMZN finally turns down. Any picks Phil?


  218. Getting the S&P to close above 1530 would be bullish. . still need more volume to project higher. .


  219. CCJ- july 50′s starting to look sweet


  220. I just don’t get this. Just looking at the price action WYNN looks like it is being pinned to 95 for tomorrow’s expiration., but the open interest for 95 calls and puts is a mere (3 + 2 = 5k contracts). Are they trying to fool someone?


  221. BSC – not at those premiums but you can pick up $4.40 selling the July $150 puts and buy the Jan $150 puts for $10.85. Thats an nice enough margin to start with, for example 5 and sell 3, then add 2 and sell 2 as it moves down whenever you get worried about a turn. XXX Goal is to be short 10/8 unless it breaks over $150, then cover and roll up when you have to.

    OIH – depends on a lot. Lots of us got MO put to us in the morning at $75K per 10 but as long as you clear it out the same day it’s usually not a big margin issue (but absolutely check with your broker about things like that!).

    SIRI/XM – Don’t forget XOM had studies about the myth of global warming and MO had studies saying smoking was good for kids, all from noted authors…

    BSC – only a gambling amount as you could get zero’d out at 9:31 but yes, I believe that someone looking over their numbers would come to the conclusion that $150 is a lot for this stock (but that may not stop them from pinning it into expiration).

    BSC open interest – the problem with the whole “Max Pain” concept is that you have no idea when those people bought the open orders. If they all bought them today, then this exact price is the right spot, if they bought them months ago, then $140 may be more realistic.


  222. CCJ – Jul 55 is probably better at $1.90 than the Jul 50?


  223. CLWR up big on announcement of deal with satellite TV providers. It’s a good deal if CLWR pricing comes down, but I don’t see anyone lining up to pay cable prices for not-quite DSL speed.

    Phil, if I’m betting CLWR goes down during the coming weeks, which puts would you recommend?


  224. Crude is just being silly at this point.


  225. Walt’s frozen head finally bought my DIS at .10!


  226. I will point out that EBAY is now at $31.50 so that’s like giving AAPL a $135 target and calling for a sell-off.


  227. Phil most likely its just an ocular migraine.

    SIRI/XM – Don’t forget XOM had studies about the myth of global warming and MO had studies saying smoking was good for kids, all from noted authors…

    You forgot to mention higher paid lobbyists


  228. Airlines scaling back growth plans, cant be good for BA..which really sux i just picked up shares hoping for an end of day bounce. Short term news concern is all. Why now CNBC! Damn ye


  229. Just did some digging on CPI m/m change. Range for last 6 years between, 0.0-0.3%. Est tomorrow 0.2%


  230. CLWR – They don’t compete with cable, but with people paying $40-$60/month for cellular internet access – at least in the short term. Once (and if) they have sufficient coverage in a given area, they can further benefit by giving VOIP at nominal charge. Best, if they can get a city to choose them to provide access (think Univ. towns) or someone like Sprint to buy them…I do own the stock.


  231. Wow. That was some move in EK today.


  232. CLWR – yes, they do compete with cable — at least they are trying to sell in the same areas. Their coverage maps overlap mostly in areas covered by DSL and cable. At least that’s the case here in the Northwest. Maybe other markets are different.

    As for competing with cellular internet access, do they have a mobile solution?


  233. EK came out with some great new stuff.


  234. CLWR – just checked again – no mobile service, but they do have VOIP for an extra $30/month (promotional rate).


  235. Phil you out BSC?


  236. At EOD, buying some puts on AAPL to cover my long positions and some more DIA $134. 250 point move in the DOW in 2-days is making me cautious!


  237. ELN shooting higher yet…BIG volume increase


  238. ADBE – beats only by a penny (non-GAAP) with higher revenue. Next qtr guidance in-line with expectations. No wonder they are down AH. Good thing I had a cover.


  239. CLWR – Absolutely they offer ‘mobile’ solution – don’t think it works when moving as in a car but WiMax PCMCIA cards (currently not available with CLWR) would make it portable and similar to cellular company provided 3G etc. services.

    Sprint has bet their cellular farm on WiMax deployment and claim will reach 100-million users by 2008. Lately, they have been talking about spinning this WiMax stuff off and perhaps a combination with CLWR makes sense. Technology-wise WiMax much superior than cellular 3G (or later), has non-industry backed standards and is going to be a big player – the question is if CLWR can make $s off it and the stock…


  240. CLWR – Intel (an investor backer of CLWR) rolled out PCMCIA Card and may offer WiMax-inside laptops later in the year. See http://www.wimax.com/commentary/blog/blog-2006/blog3-15-2006fo1


  241. BSC – no but only because I had a phone call and missed the close!


  242. Phil: Volume numbers and charts are just random noise ? Ahhh geeze Phil…

    Shake a chart up in the amalgam of other sentiment indications and a chart can be useful.

    Hehe – you obviously dont need it, theres no argument there.

    And Im sure youve had this argument plenty of times so I wont bore you with mine.


  243. Phil – I take ‘CPI in line’ to mean that it is at its accepted levels, ex-(insert all items inflating here).


  244. AAPL

    Apple announces Safari for Windows Public Beta Downloads Top 1 Million in First 48 Hours


  245. I can’t believe AAPL released the beta SAFARI, per several reviews from the super techno guys, they dispise it and caution anyone from installing until the beta bugs have been worked out! Keep an eye out for damaging reports next week after the beta has torched several million computers.


  246. I’m on the Windows Safari right now…and so far, there’s the same kind of small glitches there are with IE…..but we shall see. My timing has been off on most things for months now.


  247. Charts – I use them all the time but mostly for timing, not to tell me what the market, or a stock will do – just when it will do it. I think TomOC once said about a Google move he called “I don’t know why it’s going to $500 and I don’t care, it just is.” That’s the difference between a chart guy and a fundie guy – I can see the market going up but Happy is better at jumping on things and makeing money than I am in this situation because I am weighed down by the problems I see so I’m unable to enjoy the rally. That’s why I like having a team here, better decision from a group perspective.

    CPI – they are looking for a .1% number, I can’t even imagine how they’ll get it but Paulson seems to print numbers at will these days.

    LOL Draz! I use a Mac as my 2nd computer and I’m not a big Safari fan, probably just because I’m so used to IE though…


  248. Wang’s World
    new post up!!


  249. Phil or someone please tell me that that big run up in GM cannot be justified – check out the five day chart – really? If that is not an impending short I dunno what is. I’m gonna be on that one tomorrow morning, it’s gotta be ripe.


  250. GSK
    Group: Diet Drug Alli Linked to Colon Cancer
    http://www.foxnews.com/story/0,2933,282617,00.html


  251. natural gas page updated!

    http://zmansenergybrain.com/?page_id=8


  252. Phil: Yeah – I appreciate that perspective.

    The fundamentals are strategic.
    The charts are tactical.

    I also look at them as the best, quickest, easiest to digest picture of past sentiment – and clues as to future sentiment and the turns. Some stocks are very dependable on the chart, some arent.

    Tell ya what – SPX/SPY chart looks dang strong after today. Ill be holdin my breath in the morn though…


  253. Alfamike.

    I heard one explanation that all three were playing heavy on the unions and were going to receive concessions, for the first time in decades (?) Both Ford and Chrysler were up also, although at 1-1.5% v. GM’s 4+%. Will be watching on Fri, but will prob stay on sidelines until Mon.


  254. GM – if you scale into it with the intention to roll up and DD and roll to Aug and DD, then you’ll have a very good chance of cashing in as the fact of the matter is they don’t actually sell any cars and they just announced 0% 60-month Hummer financing right when rates are at multi-year highs.

    If I were an auto union, I’d be pretty slow to give concessions just one year ahead of getting a candidate back in the White House. They’re already talking protectionism on the hill…


  255. what’s up with aet and hum. too late for puts?


  256. Good Morning
    Phil or anyone if you have some time this w/e please let me know what is the reason. I bought some 14 contracts TTI C. Jun 30.- on an earnings gamble and as we all know they did not really perform all that great. So that was the gamble. So i left the option expire worthless as i was not interesting in rolling it. However now i got a margin call of 2,490 dollars. Does that mean i have been assigned some shares and should have closed out this position?
    Other then that i had a great week. The sum does not make any sense to me, but i just want to understand the principle and get on with it! Thanks for your reply and have a great w/e! Henk


  257. Don’t worry i got it already. It’s making up the balance of 10 contracts. I just thought this would never happen as it never appeared to be in the money. Teaches me to close all contracts on loss a week before expiry. I understand that i can also buy the shares but i am not particularly keen on TTI so i just let it slip!