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Tuesday Morning

Let’s see how much of yesterday’s gains we end up giving back…

We have lots of earnings disappointments (see last night’s post) including TXN, who reported soft demand, as well as BP – the first in what I have been predicting will be a series of disappointments from the majors as the service companies’ record profits translate into integrated oil’s record costs.

Had BP not sold a refinery (who needs those?) and a pipeline (did they have one that was operating?) they would have "only" made $5.35Bn, down 12% from last year as the endless string of various (and very coincidental) supply interruptions finally begins to outweigh the benefits they gain from supporting the price of crude by failing to supply it.  Isn’t economics fun?!?

Economics have also finally kicked in at our favorite lemonade cartel as OPEC President Mohammed al-Hamli said that a "fair price" for oil is between $60 and $65 a barrel or, as I said last week, they simply can’t sit by and collect 20% less dollars per barrel than they did last year while pumping 10% less oil.

Unfortunately for us, the energy sector has grown like a cancer on the markets and now comprises over 20% of the S&P so a correction there will take down the whole market – especially as we don’t have any real new leaders ready to step up – in large part due to the fact that energy costs have finally reigned in consumer spending, driven up costs and damaged the other 80% of the market.  It’s a cancer that has to be removed but the operation will be very painful as we try to correct the damage done to the broader markets.

Brent crude dropped $1.13 in overnight trading but is a LONG way away from normalizing as it still sits over $75 (up 50% for the year) but our WTIC broke that barrier yesterday after last week’s forced march to $76 finally abated.  Keep in mind that the charts do not reflect that we are making significantly lower highs in Euros, which is the chart most of the world is looking at.  It remains to be seen whether my 7/16 call that this last run was a "blow-off top" was premature or right on the money.

Demand destruction is indeed evident in Asia as even Nissan says they can’t make enough "small, fuel-efficient cars" to keep up with demand.  Autos consume 1/2 of the world’s oil and, if consumers take matters into their own hands by choosing more economical cars and raise the global average MPG from 25 to 35 ahead of Bush’s 10-year crawl, we would knock off 20% of the global oil demand – close to 20M barrels a day!  No wonder Phil Flynn is having fits over OPEC’s early capitulation, all those barrels he ordered are just going to start piling up at the docks if we don’t burn them up in a hummer every time we need to get some milk! 

I tried to warn OPEC this would happen back in October, but they still haven’t called for a consultation and ZMan points out that we are actually accelerating our builds in LNG to double last year’s levels as energy roaches try to stuff as much as they can down our throats before the jig is up.  With crack spreads falling off a very large cliff and oil prices peaking, even the sacred refining business may have some issues as we run into Q3:

cracks-072307aaa.jpg

Asian trading was generally mixed this morning (see chart last night) and the energy sector is leading the European markets lower.  Fortunately we loaded up on our index puts in yesterday’s rally as this was pretty much exactly what we expected to happen.  Our OIH calls came off the table as did Happy Trading’s fabulous DO calls, which pulled a clean double on the exit.  We’ll be watching the Nasdaq for some desperately needed leadership but I think TXN makes that very unlikely and T posted less than expected IPhone numbers for their opening weekend which bodes ill for Apple maniacs (see  Option Sage’s excellent article on the subject).

David Fry captured my concerns about yesterday’s S&P action on this intraday chart:

D Fry Market Outlook 24 07 2007_002

I’m keeping an eye on the IGM, which has given us strong and stready leadership since the February sell-off and it will be critical for the markets to continue upwards but it disturbs me both that the Sept $60 calls are listed at .55 and that I don’t want to buy them at that price!

Gold is very near a breakout at $685 and that’s not a flight to quality we want to see while the dollar continues to reside in "a house of pain."  Let’s not expect too much from the markets today and resolve to be happy if we can just hold Friday’s levels, which would be:  Dow 13,800, Nasdaq 2,675, S&P 1,530.  If we hold that we have a shot and the declining dollar, which was briefly supported by Paulson yesterday, should go back to giving the markets a lift, unfortunately along with commodities.

Apple will be sharply lower in the morning on T’s numbers as "only" 140,000 IPhones were activated but the Quarter ended on Saturday and the Phones were available at midnight on Friday so that number actually constitutes the number of IPhones that were taken home and activated within 24 hours of the phone’s release so our play of the day is to take the money and run on our puts, buy some $140s as a momentum play and rebuy the puts (as we still want protection into earnings) as the stock recovers (assuming it does!).

 


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  1. You would think I would learn my lesson from supporting TI.

    Question, Phil, have a bunch of ROK $75 calls. Earnings out tomorrow. Yesterday, unusual put buying at the August 75s. Since I have no downside protection, how much would I get from the buying the August 70s. The 75 puts would cost me more than I paid for the 75 calls. Also, heavy open interest in October $65 puts that I didn’t notice when I bought the calls. Feeling really dumb since it was my intention to buy Rockwell Collins (COL) rather than Rockwell Automation (ROK).

    Jazz


  2. BBD

    oil 74.01 – .88


  3. Holy Pre-Opening Tank! MICC -10.40, EDU -4.65, APPL -3.25, GOOG -3.51, OIH -1.16, SMH -.69, but WFR +.29 :shock:


  4. I for one will be a big buyer of AAPL Aug 140s or even 135s this morning. Strong overreaction to AT&T numbers. Everyone forgetting the significant activation issues that AT&T had. Estimates that only 20% of iPhones sold those first two days were activated by Saturday at midnight still puts AAPL at nearly 750K sold for the two days! Maybe I’m alone, but I’m a big buyer near the open.


  5. On second thought Phil, I think I am going to keep those short AAPL Aug 135′s just as they are……:oops: Now AAPL is down 5.40!


  6. After crushing the July 60s calls with a negative forecast, here is the latest from UBS on WFR. How can they go from thoroughly negative to thoroughly positive in less than a week.

    Jazz

    “UBS’ discussions with industry contacts suggest that WFR’s most likely next solar wafer customer could be in the form of an expanded solar wafer contract with Suntech Power or a deal with a new emerging solar cell co such as Huantai. Firm believes that MEMC has also been in discussions to supply Neosolar, E-Ton and China Sunergy with solar wafers. Firm ests that WFR will raise its full year 2007 sales guidance to over $1.95 bln and EPS to $3.20 to $3.30 (compared to $1.9 bln and $3.00 previously) given the better than expected solar wafer demand. Firm believes concerns regarding their recent channel checks that found sequentially declining 200mm and 300mm semiconductor wafer prices in 3Q07 have likely been discounted.”


  7. AAPL – Notable Calls submits: CIBC’s Ittai Kidron is out with monster call on Apple (NASDAQ:AAPL) saying based on their store checks, they believe that demand for the iPhone has seen a significant decline in the past 10 days.

    http://ce.seekingalpha.com/article/42050

    Dollar – 80.06


  8. (AAPL) Apple trading down almost 2% on perceived weak AT&T iPhone hook-ups in last 2 days of June.
    (AXP) American Express $0.88 EPS (on gain) vs. $0.86 estimate; traded down almost 2% after saying it was seting aside almost $1 Billion for customers who were missing payments.
    (CFC) Countrywide missed earnings and lowered guidance; trading lower by almost 7% pre-market.
    (DD) DuPont traded down 2%or more after posting EPS that were flat on higher energy costs.
    (EMC) $0.16 EPS &.R$3.12B vs. $0.16.$3.07B Estimates.
    (JBLU) Jetblue $0.11 EPS vs $0.12 estimate.
    (LMT) Lockheed Martin $1.78 EPS vs $1.53 estimate; shares trading up over 3% pre-market.
    (MCD) McDonald’s $0.71 EPS vs $0.71 estimate; was loss after charges and items; shares trading down 1% pre-market.

    (MICC) Millicom trading down 11% after earnings reports overseas.

    (PEP) Pepsi $0.94 vs $0.89 estimate; put 2007 guidance $3.35 vs. prior $3.30 target; shares indicated down 0.5%.
    (T) AT&T $0.70 vs $0.67 estimate; shares trading down 0.4% pre-market.
    (TXN) Texas Instruments traded down over 3% after meeting $0.42 EPS targets; guided $0.46-0.52 cents per share, in line w/ estimates on revenue of $3.49 to $3.79 billion ($3.7 billion est.).
    (UPS) UPS $1.04 EPS vs. $1.03 estimate


  9. Phil,

    What is your take on BA for tomorrow’s earnings?
    I have Nov 105 calls that I am not sure whether I should hedge.


  10. MICC – big overreaction from the market based on this blurp from RTTNews:

    7/24/2007 7:58:24 AM Millicom International Cellular S.A. (MICC) on Tuesday posted second quarter net profit of $102 million compared to $34 million in the corresponding quarter last year. Earnings per basic share increased to $1.01 from $0.34 per share last year.

    Quarterly revenues increased 80% to $613 million from $341 million a year ago.

    On average, 3 analysts polled by First Call/Thomson Financial estimated earnings of $0.93 per share on revenues of $623.78 million.

    I haven’t found any forward guidance info yet, and that’s probably the reason for the stock drop.


  11. EDU – beats top line, misses bottom line estimates
    http://www.reuters.com/article/marketsNews/idUSBNG6840720070724


  12. AAPL – Well it sure was a good thing to stay 100% short against my leaps!


  13. Seeing credit liquidity issues arising…raising concerns higher.

    FT writes that Expedia (EXPE) had to cut its share buy-back due to poor conditions for raising debt for the offer.

    The Wall Street Journal reports that Wall St. firms postponed at $3.1 billion offering for an LBO of GM’s (GM) Allison unit.

    This might be the end for now. Who’s gonna go down the slide first. Buy protection. Can’t believe that some whale bought the 30 Vix calls. wow. He has 3 outs though- devestating hurricane or concerns, terrrorism/war, subprime/ credit liquidity crisis. he might hit his flush but he’s got a small window on the river.


  14. EDU – sorry, correction. Beats top line only w/o stock compensation included, so both a miss.


  15. Phil or somebody tell me if X is up enuf to sell initial excitement I long Aug 115 X HC from 1.7


  16. option--the issuer could also be waiting and seeing what happens

    the Fed has a very limited time window to do anything, keep in mind that if they raise rate close to an election or drop them, the losing side will scream about political motvations at the fed – the have a huge disincentive to do anything now


  17. BIDU
    At 178.5
    Note that the Jul 5th intraday reaction low corresponds directly with the pre mkt lows near 176.00.
    JB


  18. Morning all

    Buying the AAPL 140′s for the bounce…as per the plan.


  19. X – I’d be getting out even in this mess – this could turn horribly ugly if we break below the levels I set in the morning post – only gold is up, not a good sign. Don’t forget to layer your mattress plays!!!


  20. picking on refiners this morning.


  21. X – “Sell initial excitement” applies to even a 15% profit – especially with a nasty open. I missed it & ended up losing. Trade the rules – always!!!!!!!!!!!!!!!!


  22. I wouldn’t short AAPL into numbers now. Expectations have shifted and iPhone sales won’t matter as much as Mac sales which will be phenomenal.


  23. EDU – glad I took last 1/2/profits just before close yesterday. Is 50 a new entry or a trap?


  24. You would think that apple makes just the iphone, the way the market is reacting. Lets not forget that itunes became the #3 retailer of music this past quarter as well.


  25. EMC down for no reason that I can see, just posted double digit growth….again.


  26. CFC, IMB, HOV new 52 week lows.

    GOOG fighting hard.


  27. Refiner Capitulation Day 3?
    TSO dn 5%!!! – this should go to $50 and bounce
    FTO dn 3.5%!!! – $42, then $40
    WNR dn 4%!!! – needs to break support here than it’s got an $8 buck drop and lots of brokers telling you to get out. Nobody is going to support this thing from a ratings standpoint at 18x earnings and the stalwarts under 9x.

    RBOB making a move on $2


  28. Phil,

    -6, is this a good entry for MA?

    Thanks


  29. Phil

    Great call on the AAPL 140 momo in your post, up 12% already for me!


  30. PCP- always trade into the excitement.
    AAPL- bought back August 150, long Sept 145 and will cover with Aug 145 on bounce. I hope! LOL
    EDU- ouch


  31. Sorry guys, very busy getting rich off oil puts!

    ROK they’re in a hot sector but the question is how much of the business is international? $75 is pretty far out of the money for a stock that’s up 25% since May. I’d run back to the Sept $75s at $2.20 and sell someone else the current $75s for $1.43 even if I were bullish on the stock. Maybe leave 20% uncovered but at least that halves my risk on what is certain to be a huge volatilitiy crush, especially after the drop of the last 2 days.

    We held 13,820 again, that’s a good thing! Let’s watch that NYSE 10,000 too! We lost the Nasdaq and the S&P and if they don’t retake their levels, it will most likely be a matter of time before the others follow them down.


  32. zman- building a nice large short on WNR, agreed it still is the most expensive.


  33. T

    Whoever had the “sell the August 42.5 for .45 yesterday. Great call.


  34. BIDU- Phil I just pulled on BIDU SEPT calls. $3800 gain per contract. Yipee Yippe. Do you have a plan for earnings like last time?


  35. OIH

    Sweated that one out yesterday. Back to even on the puts. Nice put job on the oil Phil, I should’ve been there.


  36. Only thing working today is my little diabetes drug play – AMLN. 5% so far…


  37. I take it AMZN is after the bell today, probably better off since the market doesn’t need another flop.


  38. BBD

    Awesome trade

    oil 73.28 -1.61


  39. I wonder where that AAPL bounce is hiding?


  40. Great AAPL strategy Phil. Glad I was well covered against AAPL leaps. Puts still going up! Yes! This is gonna be great!


  41. Phil,

    Please advise on what to do with CCJ. I holding the Sept 50′s and Jan 09 50′s and looks like it could get crushed bad today again. This guy really needs to turn around, maybe if I buy a put or 2. What do you recommend?


  42. HOC off a nice cliff!

    WFR – just shows you how ingrained the “analysts” are with the market manipulators. They talk about the NBA refs not making enough money to offset the tempatation of bribes but no one worries about how a $100K analyst can be corrupted by traders and companies that have Billions on the line. I was just offered a ride in a company jet to come out and see someone as a “friendly gesture.” If they are bothering to entertain me, imagine what shenaningans are being played by the big boys!

    T has turned, AAPL should follow. They are holding $138.50 (last Wed’s highs before the jump) so this is really just a gap fill if they hold it. They want you out of your calls REAL bad… I’m not giving up on my puts but I smell the same rat in Apple’s dip as I did in oil’s rise last week.

    Took profits on DIA $140 puts, usually there’s a good chance to rebuy and, if not, I’ll just switch to the $139 puts. GOOG is UP! SHLD is up. YHOO is up… Someone is buying the dip! XXX


  43. DDAY- did you see the breakout of the numbers. What increase was hardware sales? I can’t locate
    PCU- naturally picked some up?


  44. VIX
    At 18, ten day resistence, preceeded in the past four months only by 19 on 6.26
    JB


  45. Bleau: CCJ looking real bad, I know. I’m in there with you. The good news, it’s beating most of its “peers” today as they are down 4-5%. Uranium spot down today, but doesn’t matter to CCJ earnings. Many other U miners actually having to BUY in the spot to make shipments! It’s all a gamble, but just keep track of your stops and don’t move them. If you meet your stop out, sell. If you don’t have one, shame.


  46. Phil, have you heard about the new Blue Nile exec who used to be an analyst and did nothing but upgrade the stock for 6 months? I wonder why any of us worry about the SEC when they have so many fish to fry.


  47. Phil

    I read that oil is actually around $43 a barrel for Saudi Arabia because of the stellar performance of our greenback. Just an interesting tidbit when they think about production cuts.


  48. BBD – I assume you need the EMC results, see if this is good.

    EMC Reports Record Second-Quarter Results
    HOPKINTON, Mass., July 24, 2007 /PRNewswire-FirstCall via COMTEX/ — EMC Corporation (EMC) , the world leader in information infrastructure solutions, today reported record second-quarter revenue and strong profit growth marked by double-digit revenue growth in its systems, software and services businesses and across all major geographies. EMC has now delivered double-digit top-line growth for 16 consecutive quarters.

    Total consolidated revenue for the second quarter of 2007 was $3.12 billion, 21% higher than the $2.57 billion reported for the second quarter of 2006. GAAP net income for the second quarter of 2007 was $334.4 million or $0.16 per diluted share, 33% higher than the GAAP earnings per diluted share of $0.12 reported for the year-ago period. EMC generated strong operating cash flow of $622 million, an increase of 59%, and free cash flow of $422 million, an increase of 123%, compared with the same period a year ago.

    Joe Tucci, EMC Chairman, President and Chief Executive Officer, said, “EMC executed well in the second quarter. Customers continued to choose EMC for the depth and breadth of our information infrastructure technologies and solutions, which translated into solid revenue growth that was well balanced across our systems, software and services businesses and all major geographies. Add to this the explosion of digital information and the positive 2007 IT spending outlook we see in all major geographies, and it is clear that we are in a sweet spot of the IT industry.”

    Compared with the second quarter of 2006, EMC systems revenue increased 18% year-over-year, led by strong revenue growth from the company’s mid-range information storage products. EMC systems revenue represented 43% of total second-quarter revenue. Software license and maintenance revenue increased 27% year-over-year, led by strong customer demand for RSA’s security offerings and for VMware Virtual Infrastructure. Software license and maintenance revenue accounted for 41% of total revenue in the quarter. Professional services, systems maintenance and other services revenue grew by 18%, driven by double-digit services growth in all four major EMC business segments. Professional services, systems maintenance and other services represented 16% of total second-quarter revenue.

    For the second-quarter of 2007, revenue from North America increased 20% compared with the same period a year ago and represented 58% of total reported revenue. Revenue from operations outside of North America grew 23% year- over-year, highlighted by double-digit year-over-year revenue growth in EMC’s major international regions: Europe, Middle East and Africa (EMEA); Latin America and Asia-Pacific and Japan (APJ). APJ, which experienced 32% revenue growth year-over-year, retained its distinction as EMC’s fastest-growing major international region for the second straight quarter.

    David Goulden, EMC Executive Vice President and Chief Financial Officer, said, “Looking across our business, we remain pleased with our strong, balanced performance and the progress EMC is making towards its 2007 operational and financial goals. We believe we are now on track to exceed the annual targets we set in January, as we continue to execute on our plan to help customers address their information infrastructure requirements.”

    Second-Quarter Highlights

    EMC’s Information Storage business, which includes revenue from storage systems, information management, information protection and resource management software, and related customer and professional services, reached $2.5 billion, an increase of 12% compared with the year-ago quarter. The second-quarter momentum was led by double-digit year-over-year revenue growth in EMC CLARiiON networked storage systems and solid customer demand for EMC’s backup to disk offerings. EMC also announced deeper technology integration across its product portfolio, including EMC Avamar data protection software optimized with VMware and EMC Celerra, and EMC RecoverPoint replication technology with EMC Replication Manager software.

    RSA Information Security revenues for the second quarter of 2007 grew 21% when compared with the results of the division’s constituent companies in the year-ago period and generated approximately $125 million in revenue. The information security business continued to do well during the quarter due to significant success in Payment Card Industry Data Security Standard (PCI DSS) initiatives and notable demand across multiple industries for stronger authentication requirements. Also during the quarter, the division experienced strong growth in alternative forms of authentication, which include software tokens and smart cards, as well as in its information and event management offerings, consumer-facing applications, and encryption and key management solutions.

    EMC’s Content Management and Archiving business grew second-quarter revenue to $174 million, an increase of 5% year-over-year. In May 2007, EMC announced the availability of EMC Documentum TaskSpace — a new, highly configurable user interface for the next-generation EMC Documentum 6 enterprise content management (ECM) platform. Next week, EMC will formally announce the Documentum 6 platform, advancing EMC’s ability to lead the industry into the next generation of enterprise content management. In recognition of its ECM market presence, EMC was honored in the quarter with two marquis ECM industry awards: E -DOC magazine’s Readers’ Choice Award and the ECM Connection ACE Award. Last week EMC also announced that it has been positioned as a leader in the Forrester Wave(TM): Business Process Management for Document Processes.

    VMware, an EMC subsidiary, grew sales 89% year-over-year to $298 million during the second quarter as it continued to unlock the value of virtualization for existing and new customers around the world. During the quarter, the virtualization leader broadened its product portfolio with new releases of its award-winning virtual desktop software and continued to expand its network of technology and distribution partners. VMware recently announced that Intel Corporation, through its global investment arm, Intel Capital, has agreed to become an investor. The partial initial public offering (IPO) of VMware is expected to be completed this summer.

    Business Outlook

    The following statements are based on current expectations. These statements are forward looking, and actual results may differ materially. These statements do not give effect to the potential impact of mergers, acquisitions, divestitures or business combinations that may be announced after the date hereof. These statements supersede all prior statements regarding business outlook set forth in prior EMC news releases.

    * Consolidated revenue for 2007 is expected to exceed $12.7 billion.
    * GAAP diluted earnings per share for 2007 are expected to exceed $0.64.


  49. ACH – nice jump


  50. phil,
    i’m totally out of GOOG, with somewhat of a loss after trying to daytrade it on X day
    wondering if this is a good time to buy some longer term calls, or a spread trade of some sort?
    thanks very much in advance.


  51. AAPL bounce on?

    IMB – roll down Phil?


  52. AAPL coming back. Sold the puts at the top – I hope. Picked up 140s that are already up! I love it when you guys have it all figured out! Nice gains on DIA puts. Will reposition later, as needed.


  53. Also on AAPL – ML raised PT from $143 to $173


  54. dday,
    i just read your update
    thanks so much for all your work towards our investment club. i, for one, really appreciate your efforts and look forward to participating in this. this is terrific!
    thanks,
    windy


  55. SUN – why do I keep forgetting to play them (kick, kick).

    BA – if they blow it let’s just all vow to cash out and get on a slow boat to China as this country is over.
    Just because I love them, doesn’t mean you shouldn’t cover 1/2 with the $105 calls at $2.40!

    EDU – well, I said I will happily roll down.. looks like I lied about the happy part!

    Uh oh! Dip buying runs into relentless selling, DIA $138 puts are nearing $2 buy point but I’d rather wait until we actually break below 13,800. XXX

    BIDU really taking off, if they break $185 things could get interesting but who in their right mind would pay those option prices? I’m going to go with a small 4:3 spread of the Sept $185s, now $20.30 and I will sell 3/4 the Aug $180s on the turn but just 8 I think… XXX


  56. SNDK holding up well in this market. Cramer pump yesterday.


  57. Thank you windy, I appreciate it.


  58. Phil, any recommendations on a POT play before earnings?


  59. I want to add my thanks dday for all you are doing to make the investment club a reality.


  60. DDay – by all means my thanks is there as well – the product you guys will put out will be great – thanks again.


  61. I am having a put party

    LFG FNF FAF CFC IMB ETH XHB LEN BZH all up
    TSO WNR sick

    Bought some XLF and wsm puts

    Still on the fence with MBI


  62. what is the deal with the investment club


  63. Phil …. laid on that XOM 85/90 put spread for 1.05 that we discussed last nigh. Now 2-1 on 85/90.
    Also got out of USO puts.

    Do you still have the IMB call ?


  64. My daily Put report:

    Well hell, throw darts they’re all down and down big you know the names…..

    Buys today MICC TASR CRDN


  65. GOOG
    seeing some action?!


  66. DDAY- Thanks for the EMC post. Systems sales better than I thought.
    AAPL- Didn’t have the puts but nice buy when down $7
    GME- acting better today
    CTRP- buying after yesterday’s sale. I swear we can play it almost daily


  67. AAPL – Unhedged myself a little, bought back ~1/3rd of shorts in the dip to free a bit of the sky if it takes off for the moon tomorrow.


  68. dday,
    Add me to the list who appreciate all the extracurricular work you’re doing to create the investment club. I’m sure the virtual nature of this group makes a difficult job close to impossible. Thanks for the leadership and the time you take away from family (and trading) to get this set up. Can’t wait to see the outcome.


  69. This may be a perfect set-up for a big AAPL jump after earnings. Agree with Phil and Optiondragon. Guidance should be strong for back to school season.


  70. NOV- Down over 3% I buy.


  71. BBD – what mo/strike you go on ctrp?


  72. GOOG could be looking to fill the big gap above 523 in the next few days


  73. Why’s DNDN creeping up?


  74. Dday,

    Thank yous are more than in order indeed! Looking forward to becoming part of this new venture.


  75. All the broker/financials jumping. Short covering to follow. Enjoy the ride.


  76. CROs is appraoching 50 faster than I thought …..


  77. CTRP- went with Aug and Sept 85′s. My wi-fi is killing me. I think next earnings season I stay in USA. LOL


  78. EMC — Coming back. Thanks, dday, for posting that report.

    Also, dday, I’m a newer member here and didn’t have a fix on what was being done with the club…so, thank you for all the work you’ve been doing. If you need any help proofreading/copyediting, I’d be happy to help out…that’s what I do in my “regular” job.


  79. Phil – on the BIDU spread, what do you mean by selling 3/4 ‘on the turn?’


  80. Just started executing trades on optionhouse.com and i love it. They do have realtime streaming quotes so the 20 min delay was because my account was not funded yet!
    $10 a trade yea!!!!


  81. Lithium:

    Where did you read about the Saudi’s getting $43 because of the dollar?
    Thanks.


  82. BillBigD,
    Are you buying CTRP call or put?


  83. DNDN- A flight to quality? :)


  84. option--depending on your volume, Fidelity can be much cheaper and is a higher quality credit, IMHO.


  85. MICC – that was ugly, but they’re rebounding now. Glad I took 40% covers just before the close yesterday.
    EDU – was 50% covered on these guys, still hurts
    T – it’s like nothing happened; my positions are essentially unchanged from yesterday
    AAPL – bought back my Aug140 callers, I think I’ll resell these (almost $8 per contract) instead of taking puts given the high premium.


  86. Phil – KNOT earnings Aug 8th


  87. T wants to pop bad.


  88. Thank you all, it’s moving along fine. It’s just arduous since I’m used to setting up Clubs geared for 30 members who generally know each other instead of of 100 members who only know each other by screen name. Someone at some point is bound to be disgruntled so I’m just trying to protect us all with the legalities and wording of the documents, and we all know, lawyers don’t work as fast as we want since they get paid by the hour. Thank you for the help offers, a couple of you I talked to and have given me a hand and that’s great. Karmcon already helped me change many things that I had overlooked, I tend to be more trusting which isn’t always good. I’m submitting my revision as we speak to some people for review, hopefully this will be the ‘good’ one. I’ll try and keep you all up to date as much as possible.


  89. BJS conf call not going well.


  90. SNDK still moving up. up .70 since last mention.


  91. Albo

    Somewhere on the Bloomberg site. They are not getting less the conversion/dollor drop makes it worth less because of exchange rates.


  92. BBD

    I like EMC and I thought their numbers looked great. I have the OCT 20′s.


  93. Cody posted on my site that XOM is having a refinery issue at Beuamont, big facilit, looking for details while on the BJS call. Very defensive management and analysts keep going back to margins and market share. EVeryone exasperated on call.


  94. Optiondragon

    So are you getting real time Level II now for free?


  95. Pardon the typos, I have a 20 month old climbing on me. Just you wait Dragon.


  96. Optiondragon, thanks for the feedback on optionshouse, I am ready to move over there.


  97. AAPL usually sand bags guidance.


  98. Phil – Should I have bought back CROX calls this a.m. off the long Sept. 52.5 CQJ IX and short Aug. 50


  99. I’m in the process of switching over to optionshouse from optionsxpress. I don’t think OH has streaming so I plan to leave a small position in OXPS to maintain access. Not sure yet how small that amount can be but it can’t be that bad.


  100. TSO – on the button Z! Weakness is really showing in FTO, HOC, WNR, SUN – funny how it takes a real slap in the face to get the bulls to wake up and smell the numbers.

    Go Google – must have cleared all the suckers out…

    MA – I wouldn’t, there are too many possible consumer issues creeping into earnings. If AXP isn’t forgiven then no way.

    T $42.50s – like I say about many of these pre-earnings calls – how ridiculous not to take that kind of money when it’s just being offered to you like that.

    CCJ – at this point I just roll and roll to lower strikes. I’m taking the stance that everyone else is wrong and I’m right and luckily I can afford to as everyone else WAS wrong (except Z) about XOM, COP, VLO, OII, PTR and SU so I’m a little ahead of the game today…

    NILE – that’s like politicians and regulators who leave to join “the private sector” and get amazing jobs with the people they supposedly should have been at odds with all those years.

    PFE Sept $25s back to .70 – we got 1/2 out at .85 yesterday for a nice .55 basis and at .65 or .60 for sure they are worth a shot. XXX

    GOOG – why does everyone ask about getting in AFTER it recovers? I’m too worried about $520 to want to jump in fresh here and the $520s we sold yesterday were very, very good to us this morning so I’m not worried about my naked Septembers but I will sell those $520s again, now $12.75 if I can get $13.50 again as I just bought back my caller for $9 so that seems like a pretty good one-day premium against my $8 Sept $550s (basis now -.50). Rather than sell again just yet, I”m more likely to roll down a level if we get another good dip, especailly if $512 holds.

    AAPL – Thank you MER!

    Getting out of oil ahead of inventory, had plenty of fun, will see which way the wind blows tomorrow.

    The problem with POT is it might get smoked and who knows if that will put people off or make them want it more… 8-) I’m very cautious of huge gainers into earnings and this one is up close to 100% for the year so what’s it going to take to get a good pop? As with all hyped up stocks, I like to take a play like the Sept $83.38s for $5.20 and sell the Aug $80s for $4.80, maybe 4:3 if you are bullish. My entries on these are like the BIDU – take the longer call on upward momentum and sell the shorter call the second it starts to roll over to narrow the spread as much as possible.

    Watch those financial/housing puts, I see a lot of them putting in bottoms at the same time which may mean someone is drawing a line around here.

    IMB – like a train wreck. I’m going to join the inevitable class action suit against that guy if they actually have problems he claimed they didn’t!

    Fab – I’d go 2/3 covred myself, you can see what will happen if they confirm that number as a trend (I super doubt it but even Reinharden urges caution). As I’ve said, I went to puts because I don’t want to cap what could be a huge upside but I’ve also taken a lot off the table as the gains were just too outrageous to risk.

    DNDN – there’s the usual rumors that they are talkign to the FDA (they are always talking to the FDA, it’s what companied conducting studies do!) but it could be something as simple as us loading up on $10s when they were a nickel causing Jonh Nagerian to see “heavy buying activity” in his heat seeker service and telling other people to buy more $10s because “someone knows something.” I’m 1/2 out at .15 of course!

    BIDU – sorry I mean selling 3 contracts for each 4 I hold. Sometimes, if you don’t like a strike price, you can adjust the risk factor by doing a ratio spread rather than just a straight sale.


  101. NE
    flying!!


  102. AAPL mo play now up 22%, they are going to make my day.


  103. Buying some GLW calls for earnings, everyone here seems to like them.


  104. Picked up CCJ Jan 47.50s for 3.40. Now trying to sell Aug 50′s for 0.35


  105. AHR continues to get spanked w/ sector. I am still pounding the table to buy the stock (or $10 calls if you can get em at a small premium)


  106. Phil – AAPL, 2/3rd covered is almost exactly where I am now (I’m a bit over 2/3rd covered). I was fully covered when I bought the 3rd back.


  107. Optiondragon

    Does Optionhouse have the tax compilation at the end of the year that OXPS does? Seems to make my life easier come springtime.


  108. dday- thank you, your advice has been invaluable to me (my accountant can put a $ on it tho) and efforts for the club are very much appreciated. Would it make sense to have a post on PSW just for the club? Keep most of the club talk there, instead of being spread across many days worth of PSW chat. ? -Peter


  109. Phil – On IMB, are you rolled down to the $25s? I own 6 Aug 30s contracts with a $1.40 cost basis. Suggestions?


  110. fotoaddict
    I’m hoping we can set up a site or something when we get this started so we don’t clutter up Phils space.

    GLW
    I have the Jan 08, 30 calls. I like them here.


  111. BJS – I’d say there are either downgrades or at least “stay away from this one for now” coming here. Bad CC, brokers on squawk boxes now have little to cheer about. Took some $27.50 August puts at $0.75 and $0.80.

    Still nothing on the Beuamont refinery snafu but it’s holding RBOB over $2 and the refiners just off their LOD


  112. Optionhouse does have streaming quotes updated evey 5 secs once your account is funded.
    Cody- sorry buddy no one beats $10 a trade with $0.00 per contract fee, trade 1000 contracts pay $10.
    Fidelity couldn’t touch that with a ten foot pole unless they want me to start shorting them too bcuz of declining margins!!
    seriously , I’m impressed, these guys are vet option traders so the tools and the investigators are really cool! They also have a liquidity pool where you can send large orders of 50 contracts or more to get a better fill than market price with that volume.


  113. LOL – DIS with another good day!

    KNOT – my premise there is they have 7/7/07 planning that fell into the quarter and they are just catching the beginning of China’s 8/8/08 brides so if they don’t get a pop here, they never will.

    BJS – holy cow did they fall hard!

    HBs on the march – told ya so…

    CROX – that was earnings protection, you need to be careful if you intend to start trading in and out of it.

    YRCW moving, that indicates that people don’t think oil is coming back to quickly.

    CC moving up – now I know it’s a buy program! No human would give them money… 8-)


  114. I’ll check it out later……..are you saying you can trade 1,000 lots for 10 bucks, all-in?


  115. dday yes they seem to have a very easy tax prep forms but please call them to ask the finer details.


  116. Happy, is it ok to dd the ICE trade i.e ICE Aug 180 calls?


  117. OXPS – I’ve had accounts open with $100 in them that laid around for a while and they left them along. No guarantee they do that with all though.

    EBAY on a roll.

    HOC breaking way down now!

    Option House – yes I was speaking to them about the pool, I’ll be looking to give that a shot!


  118. Yes cody, I shit you not! $10, thats what I said even with 1000 contracts all-in, all filled. Hey ive been trading some 100 lots this morning and it cost me $10 period.


  119. ICE
    I wouldn’t right now. The market is shaky!


  120. Optiondragon – that’s awesome! Any word on the tax compilation issue? My father in law is my tax accountant and he’d kill me if I don’t have a phone book of trades sent from my broker!!!


  121. AAPL – I’m holding Oct 150 calls afraid of selling any covered calls or buying puts for a few reasons;
    1- AT&T is paying Apple a bounty of between $150-$200 per phone — plus $9 a month per phone over the life of the typical two-year customer contractnot included in eps models
    2- Although T had 146k in activations this only represented 24 hours of activity. T’s tech problems plus non activations probably bring actual 2 day sales of 250k or higher
    3- Potential & probable SPLIT


  122. SWN continues to power down….trailing stops raised…


  123. RDS.a off a cliff. HOC is off a cliff the first cliff fell off before they both fell into a hole! WNR looks like it’s leaning into the hole to see what all the fuss is about down there….


  124. Man I cannot believe the spread on WNR, I mean 60 cent bid/ask spread is just BS on the 55 puts.


  125. WNR down 7%!!!
    FTO and co down 4-6%!!!


  126. Phil – would you consider a play on KNOT with options here? Also CCJ 09′s? Strike & price?


  127. optiondragon – WNR spread=crooks. In the money working a little better though.


  128. zman- no they have very accurate tax reporting and paper coverage but ask them directly and they’ll let you know about specific issues.


  129. FSLR – on the move. Bad reversal on my BIDU….may be too risky on the upside into earnings.


  130. ESV – pretty goo conf call.

    ESV Conf Call: That Jud Bailey analyst at Jefco is very smart…he seemed pleased. Question re use of cash generation. Still like repurchasing stock here and “in the very near term there will be an announcement” as they’re about done on their current purchase plan…


  131. YGE and STP up


  132. BillBigD – COH earnings will be on 7/31; just saw CC scheduled for 8.30am ET


  133. FNF powering down …. trailing stops raised ….


  134. WNR- I have filled between bid/ask numerous times on the call side of course. LOL


  135. NFLX recovering from initial excitement drop approaching trailing stop..


  136. KC- yes I saw it on COH thanks


  137. MTG powering down….trailing stops raised….


  138. My STP could hit 300% at this rate! Still can’t catch the damn Free Picks portfolio though…

    KNOT – Jan $20s for $2.10, sell the Sept $20s for $1.05.

    CCJ – Jan ’09 $50s at $6.85, sell Sept $45s for $2.15. Both of these have terrible charts so its a big gamble.

    BIDU might hold here so get ready to buy out $180 caller at $16 (if I can get $15 I will take it, then set a $1.50 stop on the Septs from that point). XXX

    What’s wrong with this market, including oil is that there’s a group of people (PPT?) who won’t let it fall. This has been going on since 12,000, when a correction to 11,500 would have been very healthy. The way this is going we are going to form a very rangy top here as we haven’t shaken the weak sellers out of their stocks yet. We desperately need new leadership but there is no way we can get that without really and truly killing the energy sector as it just sucks up way to many fund dollars to give the other sectors a break.


  139. “RDS.a off a cliff. HOC is off a cliff the first cliff fell off before they both fell into a hole! WNR looks like it’s leaning into the hole to see what all the fuss is about down there….”

    Now thats funny, I don’t care who you are..thats funny.


  140. TASR – Sold Aug 15 Puts for $1.00 in hope of buying it and holding it


  141. Piper guy coming on CNBC to talk about AAPL.

    SBUX down because they are raising coffee prices .09 per cup (4%). I suppose these traders just don’t even understand how the companies they buy make money…


  142. ZMan: re WNR crooks echoing my comments from a few days back SEC really ought to check into it
    evidently option spread rules are non-existent


  143. holy cow look at the volume spike again on CSCO.


  144. Does anyone here use Hamzei Analytics? I was thinking about using a week trial.


  145. YO- Where you been guy?
    ZZZ- Just read one guys thoughts on RIG/GSF merger says it could be cheap. Your thoughts?


  146. Happy I like your MRO puts, I wish i could have gotten your fill though so i’m waiting and watching. Inventories are out tomorrow so closing this out before that looks really good.


  147. I’ve been here. Just not posting.


  148. I have XOM Jan 09 85 puts and SU Jan 09 90 puts. My sold july and june puts expired worthless. Waiting to sell SU aug puts.

    Bought VLO jan 08 72.5 puts and sold Aug 72.5 last week. About break even so far.

    And finally TSO, my favorite oil stock. I am way ahead on my Jan 08 55 puts that I sold only 1/2 aug 52.5 calls on friday.


  149. IPhone – All I can say about that is my dad bought one last week and he came to visit this weekend and bought one for my brothers and both my nieces (he didn’t buy one for me because he was sure I already had one by now).

    My dad is not an Apple person, in fact he gave the IMac I bought him away because he didn’t like the OS but he bought that phone and thinks it’s the greatest thing ever. He says it’s sweeping the Boca crowd and all those people can afford to make them Xmas gifts. Also, my brother, who’s an accountant, worked out that the family plan offered by AT&T is cheaper than the VZ account he had as you buy 1,500 family minutes for $120 and then it’s just $29 per phone which includes data plus 200 messages.

    Everyone was upset you couldn’t get insurance YET and I think the reason is Apple doesn’t want to charge until they are sure the product is pretty defect free as they’d rather do exchanges on early models, which seems to be the policy at Apple and T stores. Lots of buzz about possible Nov release of 3G IPhone by xmas but they’d better charge more or current buyers will be pissed (this is why I’m waiting).


  150. Something is wrong with yahoo. Finance. hey pull your head out of your ass over there fellas. And you wonder why your stock gets no love. Get a clue.


  151. AAPL- could someone mention what the Piper guys says? Thanks in advance


  152. MRO
    I might cash it out at 59 today, although this thing could go to about 52.5!


  153. VLO group turning up – be careful with those oil puts. Watch $73.50 for a bad upside that can be covered by SUN $75s for $1.90 (was $4 yesterday) or the COP $85 calls for $1.70 (was $3 yesterday). XXX


  154. WFR
    60+!!


  155. EDU roll – should it be to the Jan60s? Thanks.


  156. Looks like buyers are not giving up yet.


  157. Phil,

    yesterday you told me to sell the Aug 35 XLF put at .75 or the 34 at .75 if it dropped (against my Sept 36′s at 1.00- now worth 1.75)… so of course the market has got me stuck by bouncing around between the two without hitting either target. Sell 35s for .85 or better? or the 34s for .60 or better? Or continue to wait?


  158. Happy--hearing FSLR could move higher as it consolidates here


  159. solar plays
    getting bids! STP, FSLR going up!


  160. Will be pretty interesting if we come all the way back and close positive


  161. MRO
    taking 1/2 out, as market seems to be coming back!


  162. Phil
    Is it time to roll BA 105 calls to 110 ? I have Nov 105 calls and I sold Aug 105 against them


  163. Re Yahoo finance, ever since someone here mentioned Google Finance for the excellent Events info (esp earnings times) I’ve been using them.

    So many smart people here, thanks to all for your daily wit and wisdom.

    Btw, checking out the daily XHB chart and today could for sure be a bottoming tail doji, at least near term. It needs to bounce. Closed out my puts for nice gain, bought some Dec calls for a trade. Doubling down on GLW Dec calls (Jan seem pricey).


  164. WFR-running into tomorrow numbers!
    STP- hit buypoint but WEAK VOL


  165. AAPL – also, if that number is right (Apple getting $150-$200 per IPhone subscriber PLUS $9 per month) then that means that aside from sales, service contracts and accessories, each 1M IPhones sold drop $200M to the bottom line PLUS $27M per quarter in sales. If they sell just 1M phones a quarter that works like this:

    Q1: $200M bonus, $14M in fees
    Q2: $200M bonus, $41M in fees
    Q3: $200M bonus, $68M in fees
    Q4: $200M bonus, $95M in fees
    Q5: $200M bonus, $122M in fees
    Q6: $200M bonus, $149M in fees
    Q7: $200M bonus, $176M in fees
    Q8 on: $200M bonus, $203M in fees

    These are cash payments from T and Apples current quarterly profit is “just” $500M and we are assuming that selling 148K phones in 24 hours leads to just 1M phones over the next 2,136 hours. Again I will remind you that the Razr sold it’s 100,000,000th phone this year, the 3rd year since its 2004 release. If Apple were to sell 3M phones a month on the above schedule they would get a $600M bonus and average about 450M in fees by the end of year 2. If they also make $100 per phone that’s $1.3Bn a quarter on IPhone sales alone just 24 months from now which would give them a p/e of 5.

    All that is IF they are really getting a $200 sign-up bonus but it doesn’t have to be 100% true for Apple to do 50% better than people think they will!

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

    EDU – I like to let my collections dictate my roll so I’ve got $3 from my $60 caller (projected) so I may as well roll down to the $55s and sell those against my other half (setting a $1 stop on the $60 calls that I sold against the other half).

    XLF – I’d look to keep him .50 out of the money so I’d more likely wait for direction than lock into a .53 sell but you are way ahead so error on the side of protection OR you can (when in doubt) sell 1/2 of the $35s as that gives you .44 per share without covering them all so you can sell the other half late or let it ride.

    BA – like I said, if they don’t beat it’s time to learn Mandarin but they are now offering $3.05 for the $105s which I cannot not take a half cover with as THAT would be communist!


  166. Much appreciated, Phil. Thanks again.


  167. AAPL – The Aug calls appear way overpriced. Couldn’t we do something like buy the Sep 140′s for 10.00 or Sep 145′s for 7.90 and sell the Aug 140′s for 7.90?


  168. Hey Phil -

    I agree with your market sentiment – Ive been waiting for a significant correction since last march. Only difference is, last March I didnt play through it. Bad move.

    On the bright side, this kind of ranging volatility is just about perfect for these calendar spreads – especially if you buy the dips and sell the peaks.

    I was wondering what you thought of spreading ETFs – Ive been building a position in the EFA. The issues are that you need to find ETFs with some volatility, option liquidity and (relatively) tight spreads. EFA has a .40 spread in the 09 calls, and that is about the best I can find in the broad international ETFs. The spread is my biggest complaint – and maybe thats unfounded, as one premium sale should cover it. Its hard buying LEAPs on something like EEM though, when the spread in the 09s are over $1. Are there any concerns Im missing, or over-worried about ?

    I figured the ETFs that just slowly bleed upward would be perfect for a calendar spread…


  169. AAPL- really good thoughts on the payments PHIL! But is it afraid on $140 today? UP $2.50 on calls from this morning. I am getting tempted. LOL
    CTRP- nice comeback from down $3


  170. Phil or BBD. I rode CTRP Aug. 85′s for a quick 20% profit that Phil you say is insane not to take in a couple of hours. I’m letting Sept. 85′s ride for a while since I can cover the spread slippage with profits if it turns. Can you suggest a TS amount or do I have to sit w/ my finger on the trigger?


  171. Oh.. the other reason I like playing indexes and ETFs is that I /hate/ earnings season. Maybe thats a reflection of the fact that Ive always had a problem playing earnings reliably.

    My goog shares are case in point – I had GOOG shares with about a 12% gain. I was unsure if I should hold em through earnings (I shoulda sold half right there) – I got greedy and figured odds were more towards a good response to earnings. Well… Ill label that chapter ‘How to turn a 12% gain into a 3% gain in 20 short minutes’. I sold the shares in disgust at 520, and will now look for an entry into an options position as IV comes back down and the stock price evens out – both are happenning quite quickly.


  172. CFC heading to Zero!!

    MICC and CRDN nice comebacks from purchases this morning


  173. BIDU
    trying hard to turn the corner, but, the options are so expensive.


  174. CFC not so fast, the honorable CEO still has some stocks and options to sell :-)

    New 52 week lows, I will take it.


  175. Phil and Optiondragon,

    I am long the GLW Aug 25 calls —-earnings this evening which I expect to be strong—of course in this market who the hell knows—-
    Wanted to know your thoughts on the stock/options into earninsg—

    AKAM--I still like it long into their earnings ( I especially like it becuae unlike the majority of patterns--run up into earnings and then a drop—this thing has been the ugly step sister for the past couple months) —looking at the 45 calls of Aug—any thoughts

    Thank you in advance


  176. trdsfr! =nice trade on CTRP but TS? Don’t know what you mean.
    PCU- I see green


  177. EDU – wow that sucks….had been away all morning…


  178. BBD – Trailing Stop? It worries me b/c the spread is so large. I could take a 25% profit on these right now, I believe but if it turns that is cut to 10% immediately.


  179. phil.. I’d assume the 150-200 per subscriber would only be for those that didn’t come through at&t channels, as those channels would pay a similar fee to the salesperson/shops.. So how many apple stores vs. at&t retail.. Beyond the first day hype, I don’t know anyone who went to at&t for an iPhone, so perhaps (my guess, no source) 80% from apple directly.. Still, a p/e of 5 is a sale I wouldn’t miss.


  180. CFC soon to go below 30! Too bad I sold some of Jan08 35 puts yesterday thinking the CEO will pull some gimmick.


  181. CTRP- yes I hear ya. I just had some AUG fill at $4 and $4.1 But for a second the stock had a 40 cent spread also. LOL


  182. Re AAPL bounty payments – RIMM is getting $170 bounty plus $7 per month from their carriers.
    It makes sense that AAPL would work out a similar deal with T & all other offshore carriers [including Rogers in Canada]


  183. nonsequitor- I like GLW, articles and sentiment has changed drastically for this company. I like those calls you bought and they seem to be a ggod value with time vvalue and IV pretty low. Historically has shown a ATR of 2-3 points after earnings or news. honestly I don’t think playing earnings without being hedged with puts or writing some calls on it is a good way to play right now. Buy a little bit of the 25 puts, but thats just my opinion.


  184. Hi all,

    Been loving the WFR move since I loaded up when they went on sale last Thurs and Fri……My only concern with them is tomorrow with earnings announcement. Optiondragon or OpTrader you both have mentioned straddles in the past….any thoughts on a WFR 60 straddle play into earnings?? Any takers that WFR closes exactly at 60 today?

    AAPL: rolled the Jan 140′s to the 135′s and am up nicely, bought a few Sep 140′s when they were a blue light special this AM and am up nicely there also, so all is good….

    BBND: still going with my earnings comp and loaded up on the Aug 15′s at a discounted .95-1.00….I guess this will indicate my accounting/prognostication abilites (if any!) Earnings Aug 2

    OIH: Bought the Aug 180′s and 185′s this AM when on sale….looking like it is recovering as I type

    SIRF: Back in after taking pi yesterday and dip today…..LT this stock will fly as they have the tech that will be used by almost all portable tech devices for GPS feature.

    MICC, IMB , NTES, DNDN, EDU and SMH sucking wind however. Have DD’d on SMH and IMB enough so that my basis is acceptable, but have serious concerns with IMB. Even if they show great earnings, give great guidance and swear they don’t have a sub prime issue, will the Market believe them?


  185. AAPL-keeps fighting back. Did the Piper guy say anything I need to know?


  186. btw BBD,

    Congrats on the mucho homeruns as of late!! You are to be commended as you show good judgment on equities that are new to you…..I have come to the conclusion I should stick with the 3-5 Co’s I am somewhat familiar with like AAPL and WFR. Soon going to add OIH to the list after a bit more observation/study (that is the closest to Oil I will get!)


  187. Karm – I like WFR too esp after that analyst lowered expectations and then today he said that more than likely they will raise guidance. Depending on your buypoint, i would try to get a free ride. buy if you would like to strangle. i would buy the 55 puts with a 2:1 or 3:1 overweight long dollar ratio.

    JEC had great earnings andd raised guidance so it looks good here for an analyst upgrades tomorrow. Infrastructure play for refiners.
    buying the AUG 70 calls at 1.00


  188. karmcon--cfc is saying the problem isnt with sub-prime, but with the folks who took out equity loans ….maybe thats why IMB was brave saying they dont have subprime problems


  189. Happy what do you think of JEC?


  190. AMZN – Phil, are you going into earnings fully covered on your Oct80/Aug75 spread?
    QCOM – appreciate your thoughts on these guys (earnings tomorrow); I have some naked Jan45s (took out caller couple days ago) that are about even.
    EDU roll – Thanks


  191. Karmcon
    Thanks I was just going to say if I don’t know the company well I go further out. STP is an example as I just got in.
    WFR- ditto am tempted to sell some Aug 65 myself. ala Phil selling on these guys is a good moneymaker


  192. cnbc. . . get back to bussiness, if i want sports, i’ll turn to espn


  193. Dragon, does Optionhouse have a Trading platform? or are trades executed in internet explorer?


  194. Last month VLO has 10 buys, 7 holds and 1 sell (this month YHOO shows no ratings yet). TSO had 6 buys 7 holds and 4 sells – do the investment houses follow their own analysts picks? If so the XLF may be in for a beating from another sector if a downturn in energy continues.

    AAPL – sure, if you can afford it you can sell the $7.90 $140 calls against the $32 Jan ’09 $140s. If it flatlines that’s 25% in one day and the stock would have to drop $20 to really hurt the leaps. On the upside, with $3+ per month in premium, 18 months of rolls = $54, that’s a pretty good buffer. This works very well with Apple because they have $5 incriments on close contracts but carry a similar premium to GOOG. I’m not inclined to risk a closer play the way things are going. Perhaps 4 Sept $150s at $6.15 against 3 Sept $145s at $5.85 but there’s still a lot of risk there.

    ETF plays – I like the more liquid ones like the FXI, OIH, XLE, XLF – I prefer a tghter focus with lead components I can easily key off of.

    AAPL – those morning plays were mo trades! Do not leave them on overnight!! If you are way up and way ahead then flip maybe 1/2 the profits to the $145s if you are feeling daring but since I already have positions, I’ll be all out by the day’s end. XXX NEVER FORGET WHY YOU ENTERED A TRADE!

    CTRP – nice play but I see a failure at the 50% retracement of the 2 day drop at $84.50 so I’d be taking it and running. I realize it sounds like a strong play based on what we are hearing from the airlines so far but you made a great play on it, isn’t it time to look for your next opportunity rather than dwelling on the past?

    BIDU – out of the Septs down $1 for $2 gain on the whole trade, plenty for a day trade! XXX


  195. CFC IMB etc

    The problems are happening across the board. Many Alt-A loans would have been called subprime months ago. There is no firm line between the labels. The problem is with all adjustable products. Many people were using adjustable products to buy spec properties, whether condos or vacation homes with the assumption that if rates went up the could just refi and start the clock over. That game is over. If there is any chance you are stretching to get a loan you won’t get it. They have also found out that a huge number of people who used low doc features have grossly overstated their incomes (shocking). It is mess and probably will last a while. When was the last time a bubble corrected to fair value without overshooting? I think housing and mortgage related co’s are as safe to short as refiners. Just my 2c.


  196. rD2.0, I am not very technically saavy, but I do execute the trades on explorer and the quotes are still fast. approx 3 sec slower than my Real Tick 8 level II quotes. I use both but execute on optionhouse.


  197. phil
    BIDU, are you holding naked calls now then?
    thanks


  198. Is it a coincidence that Greenspan speaks today ? I think not.


  199. I don’t even know WHAT to do with retirement holding’s KBH LEND BKUNA CFC TOL BZH puts I have bought way out to Jan-08. Roll to 09′s hahaha?? Too bad XOM TSO etc are taking so long to deflate. I keep my eye on PhilStocks for entry points. At least my retirement is pounding the S&P by 12% YoY for three years annum.

    Interesting article on ‘Private Market’ investing.


  200. crash crash crash.


  201. Market
    the broader market doesn’t look very good right now. SPX is back to testing that old 1525 support. So, be very careful!


  202. AAPL and Iphone rev for Q02…..read an interesting theory on the Jun 29 6:00 PM (in each time zone also) sales commencement…..theory was that 6:00 PM was the close of AAPL’s Q02 so that there will be no impact from the iPhone until Q03….sounds plausible but I had read the 6:00 PM/time zone was to prevent T from receiving 100K simultaneous calls instead of only 35K. Regardless if true the revenue impact will be negligible as AAPL is deferring net rev recog over a 24 mos period so for a two day period the revenue equation would look something like this….

    (Units sold) X (net rev per unit) X (2 days/730 days)

    They could accrue two days of the monthly royalty fee from T and 2/730 of the one time charge, but that won’t amount to diddly. The additional computations and revenue accruals could be a good reason to conclude the Qtr ended prior to the start of Iphone sales.


  203. Cap what time?


  204. GLW – Love them! Earnings – who knows? I’m working my way out of most of my August calls and puts as there is no way to guess this market right now so why risk it. Effectively setting tight stops as soon as anything is up 20% and that goes for things I’m selling too!

    AKAM also looks good but they got murdered last earnings ($55 to $42.50) and the sector is out of favor so it won’t take much for them to disappoint investors.

    RIMM – then why does RIMM carry a 36% higher market cap?

    WFR – in keeping with my theme for the day – how could you not take $3.50 for the $60s on half your open position (was $4 an hour ago). The stock has to gain more than 5% before you do more than give him his money back. XXX

    AAPL – I missed him.

    AMZN – yes, I will be surprised if they gap up but I have a 1 month buffer.

    QCOM – same thing, I don’t care how much you like them, someone is offering to pay you $1.20 for $45s that are 2.5% out of the money ahead of uncertainty. That’s 25% of your contract, if you sell just half that’s a 12% buffer

    Back in a little while – don’t forget your mattress plays!! XXX


  205. Phil – CTRP. Thanks, got called away (from the desk not the stock) and E*trade platform crashed – so I’ll see if you are a prophet (or profit) as soon as I get on they are bye-bye.


  206. ok thanks Dragon


  207. CTRP – Phil, you were right and I was right too (25% turned into 10% exactly) took it w/ regret. I think it’ll turn again but I need to make up for CCJ. Thanks! :)


  208. optiondragon,

    I was thinking a $60 straddle due to the high volatility and estimated pop one way or the other upon earnings announcement….I thought strangles were more geared towards a constant range vs. a dramatic movement?


  209. Total financial meltdown!!!

    And TSL STP and YGE up i have achieved Nirvana!!


  210. CTRP – I almost always regret my trades – even when I make $. I need a psych overhaul.


  211. AAPL- nice bounce at $139
    CTRP- following the market. 33% gain on the August’s. I will take it everyday of the week.
    AKAM- yes got killed but FFIV and RVBD doing pretty well? IMO


  212. Other Uraniums are crashing hard, worse than CCJ (and this has been the trend for the last week or so along with our CCJ crash). So believe it or not, it could have been worse. Despite all the bad news, CCJ appears to be the flight to quality pick among the U miners/producers. Still doesn’t make me feel better, but if the U play comes back at all, it should come back very strong for CCJ.


  213. y’all may want to watch what CFC is saying…its gonna scare folks if it gets to the 6 oclock news tonight


  214. greenie … not sure … thought it was a lunch speech, but could be wrong.
    also Fed Poole speaks after the close I think.


  215. Phil – on your “prophet of profit” status. You said re. CTRP: “I see a failure at the 50% retracement of the 2 day drop at $84.50 so I’d be taking it and running.” It turned just .04 cents short of that!!!! Was this a fib. # and where do we get the ed. on reading that. When/if you have time.

    BBD thanks for the heads up you doubled my ave on the same stock in the same time. What signals do you trade on?


  216. coydog
    what is CFC and what are they saying?


  217. Back from lunch:

    BJS down $1.33 ha,ha,
    Refiners hitting fresh LODs


  218. Karm- Strangles are better for dramatic swings because the % gain will be bigger with a relatively smaller risk position. Straddles are better for range boundness because you can sell the dramatic move on the profitable contract then get a good rebound for the other contract but the problem is the IV premium you must pay to break even is very high going into the event and demand is pushing up those premiums too.
    The IV crush following the earnings should not be as bad as if this were options expiration week bcuz of time value cushion and reaccelerated IV after the inital morning IV crush. After opex week i ususally like to strangle a little bit wider because of favorable reaccelerated IV after earnings esp after volatility re enters the stock after stabilization. But every case is different and this shouldn’t be the gospel but that is the mechanisms behind options prices after earnings and remaining timeline. The reaccelaration happens due to expected future volatility given the time left to opex. hope you understand that.


  219. 2:45 – 3:30 WFR has spiked up as of late….let’s see if it is a creature of habit


  220. Forget Alt-A, we are heading straight to prime loans :-)

    http://tinyurl.com/362lfb

    Countrywide quarterly profit tumbles; shares off 7%
    Subprime problems spread to top-rated mortgages, lender says


  221. Bill Gross Pimco

    For those of you who just missed Greenspan’s newest best friend. He is saying he is not helping finance deals until he likes the terms. He says the deal balance has shifted to the lenders. Read this as higher rates for deals and financing in general. He may be bluffing but EXPD and the failure to close other deals tends to validate his bluster. This means less private equity cash and less floor on crappy stocks. We have also recently lost the ability for companies to engineer earnings through buybacks. These are indeed going to be interesting times.


  222. MRO LOD!

    Nice call Happy!


  223. trdsfr-I really trade on Gut. My thought was just like yours. 20% is great. I think like Phil’s but based on $ not %. If I can make $300-$700 on a trade just once a day. That is about $150k a year. If you do it 2 your at $300k and with alot of balls in the air, well you get the math. Then add a couple of HR’s. Anyway I bought some August 85′s at 2.90 and 3.10 and you know where I sold.


  224. Anyone got an opinion on FCX before earnings?


  225. zman – BJS puts looking good. thanks for the heads up from the cc.


  226. QCOM – Good point on selling the 45s. The lower $ premiums tend not to register on my radar screen unless I work through the math (in this case, you did it for me). Thanks.


  227. MRO
    Thanks!

    Market
    could go into a correction from here. So, I’m going mostly cash.


  228. Well I was hoping I would miss something but just more of the same…

    A lot of things look like they are getting ready for a second leg down! CEO, RIMM, PTR, XOM, CVX.. heck everything!!!


  229. out of NTRI Aug 60 puts, NTRI Aug 80 calls now free.


  230. FTO finally acting like we knew it should gang, down 6.5%!.

    WNR and HOC, the priciest of the bunch moveing nicely lower as well, down 8% and 6.5% respectively!

    TSO obviously targeting $50 so tight stops but the dip buyer appear to running for the hills.


  231. What the hell did Greenspan say??? There goes 13,800!


  232. BZH, 82 to 17. What a difference a year makes. HOV: 73 to 14

    CNBC pumping oil is nothing compared to the “no spillover” housing nonsense. That is exponentially more serious. It will spillover, in fact it already has. I think the words you want keep in mind here are: DEEP. PAINFUL. LONG.


  233. optiondragon, Thanks mucho for the volatility lesson…..am taking a CBOE course called Trading Volatility and only a little of the info you just provided is mentioned in the course! You might have a second calling you weren’t aware of! Thanks again!

    If WFR breaks 59.07 new strategies will need to be employed :?:


  234. BJS second worst performer in the OIH today!

    NBR set for tomorrow on puts. Risky but it should have some of the same dynamics and Canada issues and I think analysts, like used car salesman, are telling the clients, “let me show you something in deepwater that’s just perfect for you. Land? Oh, brother, you don’t want to be investing in those land guys!”


  235. WFR…..shizen!


  236. CFC free fall in progress :-)

    TSO, will probably sell some Aug 47.5 when it breaks below 50.


  237. Dia Sep 135′s — I’m in for 4!!


  238. Man nothing is holding.
    JEC beat by 20 cents and raised guidance, great technicals…doesn’t matter.
    Buying SNDK 55 puts for 1.20!


  239. damn GS, is going to break below 200.


  240. Well that did it, blew right through 300% in STP, lousy way to get there though…

    Pisani says CFC call just ended and looks like total disaster with losses in PRIME loans hurting them now. Prime??? Oh boy, this could be a doozy!

    DNDN still positive… BA still up – I can’t imagine what market they think they are in. Apple, not good at all now. FWLT making me very happy… SBUX holding up!

    BG on my list now, $80 puts for $1.12 XXX


  241. wow … never thought I’d sell my GS OCt-170′s for 6.30. I actually got 1.70 out of that (+37%).


  242. The only stocks holding are AMD and DNDN which I have PUTS on!!! lol


  243. Leaving for Bali tomorrow. All cashed out, but it’s been a great month.

    Couple of weeks of scuba diving, massage, iced tea, and suntan with the wife and kids.

    I have been blessed FAR beyond my merits, and hanging with (and learning from) you guys is just one of the blessings. I’m trying to resist the temptation to sit up in the middle of the night and trade from there. THAT might verge on the compulsive LOL!

    Peace and prosperity to all,

    Gordo


  244. Doing a little WNR covering of puts here: 1/2 coming off with the stock down 9.5%


  245. CTRP – ask me later, good discussion to have!

    I’m debating whether or not there’s even any point to getting back into DIA calls at this point – total disaster! DIA $137 puts are about to cross at $2, now $1.85 and I’ll be holding quite a few overnight if we can’t get a recovery (not likely) as this kind of thing can spread around the world overnight. XXX


  246. Gordo, have fun but I have a feeling your gonna miss something big so keep one eye open.


  247. Have a great and safe vaca Gordo.


  248. RIMM
    If the market goes into correction, RIMM has a long way to go down!


  249. Damn, knew I should have bought puts on FSLR at 113. Oh well.


  250. Phil

    If this is sign that “contained” actually means “not contained”, wouldn’t gold be a nice safe haven? Any new picks? Overseas overnight plays?


  251. It took 7 months for MRO to finally drop really hard. Seems like today was the day Phil.


  252. biodieselchris, congrats on GS. Buying far out puts seem to work most of the time.


  253. Hi Guys, Is it too late to play CFC?


  254. Bill Gross – this was the worst case scenario I warned about. Watch for this to cause M&A deals to start to unwind and suddenly sectors that were up on acquisitions will suddenly crash as they realize bankers think they are overvalued.

    FCX – it’s a stock, so I’d be very careful… Seriously, nothing is safe right now.

    Great timing Gordo! Take a rest, we’ll find something to buy when you get back.

    Gold – of course, we have tons of it but they are down too today.

    AAPL – amazing the way the calls are holding up at the moment….

    IBM meanwhile making ATH!


  255. They just need to let the market go! Let it test 13,500, panic everyone – it will be healthy. What scares me is that they are scared to let it fall, makes the whole thing seem kind of false…


  256. Jamie, IMO buying Jan 08 or Jan 09 puts on CFC is better. Buying near month puts is just too damn risky on these highly manipulated beasts.


  257. AMZN hitting LOTD, creeping into Aug 70 puts


  258. LOL, now YRCW makes a 52-week low, I knew that seemed odd before…

    Looks like we’re heading to 13,700 anyway.

    Remember – before you buy anything you must say “IT IS NOT MY JOB TO SAVE THE MARKET”


  259. Phil,

    I bought 200 DIA puts yesterday at 1.8 and sold today at 2.3, do you think I’m kicking myself in the ass right now!

    Bry


  260. What? Trading curbs already??? Oh I don’t like this at all, that’s going to lead to a lot of pent up selling orders for early tomorrow…


  261. Today reminds me of that Barrons commercial…”The market goes up you make money, the market goes down you make money….but this time it’s because of PHIL, HAPPY, and ZMAN.


  262. I’m not a fan of naked calls in general but AAPL is just begging me to enter some with those premiums $30 out of the money!


  263. Thanks Bry – I am so glad to see so many calm people gathered here, it makes me feel like I’m really accomplishing something! 8-)


  264. Bryan
    I did the same thing only made .50 on DIA puts this morning too.. oh well
    Don


  265. Implied Volatility is almost off the charts (literally) on some of those out of the money calls


  266. Just got an alert saying SPF will go belly up very soon, looking at Sep or Dec 15 P’s


  267. mj23, Thanks I’ll have a look at them, perhaps the $25′s. Jamie


  268. sorry to spoil the party, but not everyone is doing so well
    i’m down really really big today
    :(


  269. Traderdon,

    Well better to be safe then sorry. I’ve seen the market bounce back so many times in the last couple of months I didn’t want to lose my 25%. It looks like it would have been 60 or 70% but oh well.

    Bry


  270. BX down around 25 – incredible. They will make a nice pick-up when the market turns, lots of buy opportunites for them. FIG also at new lows.

    Speaking of straddles – $135 was my straddle target on Apple (complex spread portfolio). That went from being down $4K to even today! AAPL is so funny, worst loss in 7 years because their new phone only sold 148K in one day at $500 a pop – totally irrational…

    Maybe that VIX guy was right…

    Here’s 13,700, let’s see if it holds.


  271. Well I’m all cash at the moment. I need a recommedation on what to buy


  272. windywheel – i am sorry to hear you are down. make sure to step back and try to analyze what positions you have after the dust settles. in the education section each week phil and i discuss lots of topics including ways to hedge your portfolio really well and still make lots of capital with strategies such as double diagonals. read the ebook too if you haven’t and get a good sense of what strategies offer better hedging.


  273. RIMM, AAPL- getting killed


  274. I’m having the same temtations on AAPL Dragon. Looking at the 08/09 leaps. Somebody stop me! This looks like a great entry – except it could be even better tomorrow or after earnings. Maybe I’ll just take a very small position, so I won’t feel so bad if I were to miss it.


  275. Have a wonderful time Gordo, what part of Bali are you staying in? I love it there, magical.


  276. I wonder for how many here a short term speculation has now become a long term holding.


  277. Karmcon

    Do you have a link for that SPF info?

    Bry


  278. optionsage,
    thanks so much for your reply. i’ve been trying slowly to pull out, but have not been successful at doing so. trying to get to a point where it’s more of a LTP, though i’m still far from it.
    i will take your advice and reread all of what you’ve written.
    i’ve lost quite a bit hedging in the last few months, so really am not well hedged for a day like today. timing is everything.
    i appreciate your comments very much though.
    thanks,
    windy


  279. WNR down 10+%
    FTO, TSO etc looking worse and worse.

    TSO probably gets a good bounce at $50.


  280. phil--re your 12.03 or so post — so, where are the folks who wont let this go down? or the PPT?

    day off, perhaps?


  281. Added 10 additional DIA 138 puts, sold ICE, IBN, FFIV, BG calls. BIDU ratio backspread starting to work. STP starting to look dicey.


  282. Ugh… Overall my options portfolio is down almost 75% today. I will take this as a lesson and hedge better next time.

    It’s funny – I’m not really that pissed about it because it’s not a lot of money compared to my stock portfolio which is still up huge for the year AND I know that Phil and the gang will get me back to even very soon…


  283. With all my targeted puts, I feel like Slim Pickens at the end of Dr. Strangelove. They are up, but I don’t like it. Apple is killing me though, despite my hedge.


  284. DIA puts – a little late but you guys need to read the mattress plays post. They are not meant to be taken off, always rolled. Reduced but never off, especially if your portfolio isn’t otherwise balanced.

    Action in the BKX makes me think something big is going to blow up.

    BIDU – glad I left that one!

    HOC – can it break $70?

    This is the hardest part for me, I got so many calls off the table I’m sure I’m way overprotected to the downside but I don’t have a good feel for the new mix. I think if the markets are going to be saved, it”ll be the Qs that do it so I’m going to take 300 QQQQ $50s in addition to 300 DIA $140s ($1) as an upside cover. XXX


  285. Okay everyone, I got filled on some DIA puts, so the market can go back up now!


  286. UNH and GOOG down the same amount on my screens i.e $0.15!


  287. Playing off of Phil’s analysis of the market junction right now. I am already looking at the highest flyers which have been boosted by so called buyout rumors. Steel sector, is one.


  288. CFC Jan 2009 $30′s The calls are 6.30 X 6.70 down $2.50 today and the puts are $5.20 X $5.30 up only $1.30 today. The stock is around $30
    Does this hint that the depth of the mortgage default problem has not sunk in yet? What am I missing? Jamie


  289. jesus down 75% for the day,
    I’m down about 7% and feel like taking a golf club to something breakable….!


  290. SPF – it’s speculation only – they have 3.8 million cash and 2 billion in debt


  291. Windy, I’ve been where you are at. What worked for me was to go almost completely cash and step back for a day or two and then reenter slowly with some good quality leaps. Took a while but I got myself back in the game and then started making money. I’m sure you’ll do the same. Hang in there. Takes a while to really get the hang of option trading.


  292. bought some appl aug 145 calls for 3.70 Lets hope for a bounce tomorrow


  293. optiondragon – what are you looking to play?


  294. trdsfr- need to do more analysis and look at some charts so I got homework tonight.


  295. Holding AMZN leaps into earnings. Very well hedged. Not sure if I want it to go up or down..


  296. AAPL leaps – I was looking too but since I’m going to be selling closer calls there is no penalty to waiting for earnings, either they get much cheaper or the calls I sell get much more expensive.

    PPT – I think they got my other note that said they should just let the damn thing go for once, we need a good sell-off and this isn’t even it yet.


  297. billp
    i’m finding it difficult to get out of positions, especially those that are losing ones. my goal is to step back, as soon as i can get balanced.
    thanks so much for your comments, i really appreciate it!
    windy


  298. AAPL – Sold Aug 135 puts at EOD; looking for a quickie or I like owning the stock


  299. Happy

    Out of MRO +48% for the day. Thanks!


  300. TSO – Looking to enter, as don’t often see 6.5% drop in a day…and we still have hurricane season to worry about.


  301. Know its not my job to save the markets but i had to buy some BA into the close to play earnings.


  302. AMZN running, deja vu?


  303. AMZN beat 19c vs 16c


  304. I got smoked today, as well. Going to drink a beer or ten on the roof now.


  305. AMZN is a nice beat! I think I like that? Have some puts to sell in the morning.


  306. Phil: I have SBUX Jan 08 30′s @ 1.42 covered with 4 to 3 ratio of SBUX aug 30′s @ .45. With SBUX down so far but holding up well today, should I consider buying back the cover against my LEAPS or is that self-defeating?


  307. Down 75% for the day. We can’t help with that unless you are willing to adopt a very new attitude about trading. The only way that could happen is that you had a lot of current month, unhedged calls with little or no offsetting puts, this is not at all what we advise. Really take some time to read education and strategy sections and we’ll get back into things when the markets stabilize.

    Speaking of stabilizing – AMZN looks like it’s trying to make my Q calls pay off!


  308. MRO
    you’re welcome!

    GS
    198.15!!


  309. Phil or anybody,
    I’ve been out for a couple of weeks and need a little advise if you have time. I bought Paas Jan 09 25′s a few weeks ago at 6.50 now 9.50 and sold the Aug 25′s at 2.25 now 5.20. The trade is still about even I just can’t figure out what to do with it at this point with both sides being so much in the money (Paas 30.11) now.
    Any advise would be appreciated.


  310. Karm those AMD puts should be good to go
    AMD to hold technology analyst day
    23 Jul 2007 , SUNNYVALE, CA : AMD (NYSE:AMD) today announced that it will hold its technology analyst meeting at approximately 8:30 a.m. PT (11:30 a.m. ET) on Thursday, July 26, 2007 at AMD Headquarters in Sunnyvale, CA. AMD Chairman and Chief Executive Officer Hector Ruiz and members of AMD’s management team will deliver key presentations regarding AMD’s businesses


  311. I see you all couldn’t keep the market steady while I was out. At least it’s nice to see that all my callers are looking good. Funny, my screen goes red, green, red, green etc. since I have all the same underlyings grouped.

    Well, I guess we’ll see how my Amazon play works out. Have the Oct. 75′s and sold half of the 72.5′s.


  312. SBUX – wow, so greeedy! The stock has to gain almost 10% before you owe your caller his money back and then you can roll him anyway. Self defeating does not cover it, more like self sabotage – kind of like self laying landmines all around yourself and then swallowing a few just to make sure you get yourself… 8-)

    AMZN just shows you how fundies have nothing to do with market action. AMZN finished at the LOD, down 5% just 10 seconds before the earnings release put them + 5% after market. Traders are, on the whole, clueless sheep and the trick is to realize that and try our best not to be one of them all the time (because we all are one of them some of the time!).


  313. Jeez, I guess I should have been 3:1 upside instead of 2:1.


  314. AMZN $78.6+ making run at $80.
    Nutty. Should help calm the market tomorrow IMO.
    AAPL … that was a classic shakeout ahead of earnings.


  315. PAAS – now that’s a good problem to have! He’s got no premium so he’s useless to you now so you can roll him to the Sept $30s if you can afford to eat $3 or, if not, you can move yourself to 2x Jan ’08 $30s at $3.90 and sell 2x Aug $30s for $1.40 which gives you $2.80 back per $5.20 you have to buy back plus the $1.30 you will pocket on the roll should be enough to cover you.

    AMZN going insane now… That one’s going to be a tricky roll tomorrow but the Qs are going to save me I think. By the way, this is exactly what can happen to Apple when they announce.


  316. Zman/Phil – Mattress play for oil/gas positions

    I’m thinking that I should have something in the oil/gas sector to hedge. I use DIA for my other mattress but, as you know, O&G generally acts differently. Do you think it makes sense to use USO or USG (which I just looked at and man did that get killed today)? It would have been great to have a bit of that against CHK and HK positions. OIH would be another choice if I had mainly service companies.
    Thanks in advance…


  317. GOOG likes AMZN numbers too.


  318. AMZN

    Yea, not sure how I’m going to play my Aug caller yet (roll everything or just buy it back), I’ll have to see how this shakes out in the morning and check on the Oct. 75′s that I have. Should still be a very nice profit.


  319. Thanks Phil – I love it when you talk like that! ;) You’re are so right on & your calls today were amazing!!!! I have so much to learn. I paper traded for a year and made over a thousand trades. But it is so different with real money and it’s my greed/fear! Now I’ve traded for 2 years with real money and I keep 2nd guessing myself. You ARE making a difference b/c you don’t sugarcoat the facts! Sorry for so many questions today – but you save my bacon – BIGTIME!!!!!!!!!!!!!!!!!!!!!!! Thanks is not enough!! (But I’ve got too much money in play to send more)! :)


  320. Thanks Phil, you guys are amazing. I’ve learned more in the last year with you that the previous 20, I was your caller all those years.


  321. NTRI down 13 at 55. The earnings trade that Option Dragon recommended should be profitable. I was out of the puts, so no profits for me :-(


  322. Wow, you would think people just heard about this Amazon thing for the first time!

    CG – I like the XLE and the OIH, both nice an liquid, which is essential for mattress style plays. It is critical that you get to learn you mattress well and be very comfortable with it. I can tell you the price of DIA brackets within a nickel pretty much anytime, no matter what the market is doing – that’s very important when you are making decisions on major blocks and the last thing you want is illiquidity issues messing up your buy and sell points.

    CAKE came in pretty good.

    AMZN – I don’t know about you Dday but I sold the $75s for $4.75 back on the 13th against the Oct $80s for the same price so I’ll be happy to give this guy some of his money back tomorrow with the stock at the ATH. I only took the trade because it was low risk so it’s silly to wish I would have done it different when I wouldn’t have done it at all a different way.

    No problem trdsfr – glad you realize I don’t mean to be mean but I’ve never had a good teacher who didn’t kick my ass once in a while so it’s the style I’ve adopted. I’m actually really nice here, when I first started my old data company I used to make some of the trainees cry when I would hand them back their work for the 10th time and make them do it over until they got it right. On the bright side, those people are some of my best friends today…


  323. Later all, I’m going to run downtown to a tax deed sale. I like throwing bids in to piss off the realtors and make them pay more. They just love it when I show up…lol.


  324. I think AMZN just found a cure for AIDS.

    I had bought the OCT 75′s and sold half that amount of the Aug. 72.50′s when the stock was between 72-73 on both.


  325. Denver – that was you?! Wow, I can’t believe you bought those YHOO $290s from me, thanks so much! 8-)

    NTRI guidance not so hot…


  326. Zman/Phil,

    Are you guys going to roll-down the CHK 37.5 ’08 Leaps. I had them covered for aug at .85.

    Phil, do you think CCJ has found a bottom at 42.5?

    thanks in advance.


  327. Phil, is it finally time to play GS/MS?

    I think maybe so….


  328. I had an APPL calendar spread at 150 going into today. Mid day I bought back the Aug calls for a nice profit. When APPL started up again I decided to sell some more AUG calls. I sold a higher strike at 155 thinking that it would lose value more on the way down than the lower strikes such as 140 or 145. I also thought that if APPL has great earnings tommorow it would be cheaper to buy back the 155 calls than the 140 or 145′s. So far it looks like I should have sold the 140 or 145′s. Any comments?


  329. Why do I have this vision of Steve Jobs sitting back in his easy chair with a smirk on his face? Cramer told everyone to sell AAPL. Are all the big fundies lining up for a major kill tomorrow? I hope so, cause I’m with them. After a few nice trades today I’m left with some naked AAPL leaps (140s, 150s). I’m going to have to cover those tomorrow but I’m going to bias long for sure 3:1 or 4:1.

    I covered my AMZN leaps heavy toward the end of the day because AAPL was making me nervous. So I’ve limited my upside a bit. I would have kicked myself for that at one time, but Phil has learned me real good!


  330. Phil,

    WHO TIPPED THE APPLE CART ??

    I’m long AAPL with hedging only in near term DIA puts. I anticipate earnings will be above consensus largely on reduced component prices during the June quarter and continued strong iPod sales(> 10 m). The hemorrhage today was excessive and based upon certain assumptions. One is that Apple didn’t really sell out as rumor had it. The second is that we really believe that most users bought and activated their phones within 48 hours. I would imagine that a significant number of individuals that purchased iPhones did not activate them immediately due to lack of familiarity with the process. I bought one of the iPhones and activated it within minutes but then again my credit rating is good and I was currently a Cingular subscriber. In order to activate the iPhone after purchase the potential user had to have an iTunes account and become at least somewhat familiar with iTunes. MacOSX users would have no difficulty. AT&T had tremendous problems with activation during the first 48 hours with numerous articles and blogs heralding the inept AT&T activation process. If potential users were changing from different carriers then the activation took longer. It is at least highly probable that the actual numbers were skewed by purchases by speculators who never activated the phones. All of the phones for sale on eBay were likely purchased during the first 48 hours and thereby reduced potential activation by real users. My guess is that 2/3 of early buyers were speculators!!.
    Tomorrow’s earning report will likely be above analysts expectations. Don’t forget that a new small format laptop is in the works along with a revamped iMac. Touchscreen iPods are likely to be available by Christmas. Despite the IV contraction that will occur within 48 hours LEAPS appear to be a bargain. Any advice is most welcome.


  331. OptionSage:

    Did you pick up those OTM AAPLs? If so, which ones?

    Thank you.


  332. AMZN over 84 now. Hysterical.
    Its still a POS, but they are gonna take it to $100 this year anyway.
    One of these days, it will be the short of the century, once the mafia (bill miller and others) let go of enough shares.


  333. Food for thought re AAPL- my own opinion -

    Lot’s of AAPL selling today may have been panic. Many investors had big profits in AAPL and didn’t want to give them up and worried about earnings – after seeing what happened to GOOG. May be more of that tomorrow, but AMZN results may temper that.

    Steve Jobs has a big ego. I’ll bet he will take an “I told you so” attitude and provide strong guidance to boost the stock price.

    I’m looking for a strong comeback tomorrow after earnings, but I’m holding Jan calls for safety in case I’m wrong. By January everybody will know how strong the I-phone really is. Now is the time to pick up those leaps, IMHO.


  334. Have been researching the reason for EDU’s steep drop today and haven’t found a great deal of info/data but I have found enough to conclude there are a number of deductive number calculations that when used result in an unfavorable financial picture and left me with more questions than answers. This is one of the inherent problems with ADR’s, they don’t have to (and so 99.9% don’t) comply with the same SEC rules and regs as domestic Co’s. It’s kind of like when you ask your Child a simple question and they don’t want to answer or give you an answer that makes no sense. The parental antennas perk up and you know something is not quite right. Further investigation normally proves the parental instinct correct.

    New Oriental Education & Technology announces Q407 and FY07 results (EDU) 58.66 : Reports Q4 (May) earnings of $0.02 per share, excluding non-recurring items, $0.01 better than the Reuters Estimates consensus of $0.01; revenues were $24.91 mln vs $24.00 mln consensus. Total net revenues for FY07 increased by 35.5% year-over-year to $136.45 mln. EPS for FY07 was $0.96.

    At first reading I thought wth is wrong with this earnings release? They beat estimates and net revenue growth of 35.5% is tremendous! Reading a second time I began to understand why the stock got hammered today. What this nicely crafted PR above didn’t say is, when the Co. included the non-recurring items in computing earnings the result is a loss for the quarter. It is actually a fairly standard method of reporting EPS (to not include non-recurring items) when comparing to analyst estimates as the analyst wouldn’t be aware nor include in their earnings estimate any non-recurring item (typically an expense, as non recurring revenue seldom exists by hook or by crook!).

    The major financial issues are

    If eps was .97 for FY07, that means 3 very strong qtrs followed by Q04 which came in at a loss

    The analyst only estimated .01 for the 4th Qtr? Most businesses if not mandated to be on a calendar year end, choose the month end equating to their highest revenue or busiest quarter. Without looking at the 10Q’s that were not filed, I can’t say I have never seen an entity with earnings/qtr like EDU could have had as in this example…Q01=.33 Q02=.33 Q03=.33 Q04= -.03 without a major problem in sales, costs or other bus. factors that could have an impact on the entity’s financial future.

    (GROSS) revenue of 24.91M compared to analyst estimated 24M. That’s nice, but how about NET revenue?
    It appears net revenue is decreasing at a very high rate in the fourth qtr of 07. Assume Q04 NET revenue was 20M (which is admittedly too high, but will make the following result all the more telling). Total annual NET revenue was 136.45M. Subtracting the 20M Q04 Net revenue results in 116.45M annual or 38.81M of NET revenue for the first 3 Qtrs. 38.81M down to 20M is a 94% DECREASE.

    Something is amiss at EDU and I can understand the spanking it received today. I also understand the analyst(s) who analyzed EDU’s numbers were not the same ones who analyzed AMD’s, :mrgreen:


  335. In the words of EVERY poker player I know, “I hate this Game”, which also goes for the Stock Market today.

    We all know a correction of some sort is always looming, but betting against lofty valuations will drive you crazy. I tried shorting the home builders last year and got crushed so I decided to let the IDIOTS keep driving the prices higher, and I would just stay out of it. I tried shorting the energy sector several times this year and got crushed more times than not. It’s all this free credit going around and leveraged buyouts that make shorting anything way to risky. So I just either bet long, or stay out of it, unless of course Im HEDGING with covered calls.

    It’s about time some of these freaking ridiculous valuations came down a bit. It’s just to bad my timing sucks so bad, otherwise I’d be as rich as Phil, who always seems to have perfect timing on his shorts.


  336. Oh, here is my only new play of the day – Buy FTO and sell the August 45′s against them. I would have done a calendar spread but Im tapped out of buying power in OptionsXpress and Scottrade won’t allow spreads. If they stay where they are through expiration, it’s close to 4% return in less than a month, and if they manage to squeak past 45 again, that’s almost 10% in one month.


  337. Nice analysis Karm, thanks


  338. The Scottrade “Why are you leaving Call” -

    Scottrade just got my account transfer forms to move one of my IRA’s to OptionsXpress and wanted to know why I was leaving:
    1) I wanted more control, including the ability to do calendar spreads and selling Naked Put’s.
    2) There site has been down frequently in the past just when I needed them most.
    3) Their Account History page SUCKS. I never knew I had it so bad until I compared to OptionsXpress. I don’t blindly trust any tax software import feature and ALWAYS go through transaction by transaction to make sure the tax software got it right. I need more than 10 fingers to count how many mistakes TaxCut made last year. Anyway, it’s a big pain in the ARSCH when Scottrade ONLY lists the Option Symbol and not the underlying security it is tied to. It’s a bigger pain in the ARSCH when the LEAP options change their symbols mid-year and ST does not have all the changes listed in your account history. OptionsXpress makes all of this VERY CLEAR in their account history tab and this is by far the best reason to switch. It doesn’t really matter for an IRA account because I don’t have to report individual transactions, but this was just the first of my account transfers.


  339. Hate to keep mentioning this, but there will be only a negligible amount of revenue, if any, from sales of the iPhone for Q02. The impact will be revealed in Q03′s Co. earnings estimate and the methodology used to derive. I sure hope an analyst asks for all the numbers and estimates used by Jobs to derive his Q03 financial projections during the cc.


  340. AAPL – of the 6% drop today app 200 basis points was from index funds. The balance was from holders of AAPL stock – the weak holders. These nervous speculators were for all intents and purposes washed out today. That’s good news. And with the RSI dropping from 80+ to app 50-60 on the daily charts the overbought condition is finished.

    Articles with headlines reading ‘IPhone Sales Disappoint’ can only set us up for a huge rally on Thursday – a la Rimm.


  341. Cap:

    Legg Mason is probably the broker dealer stock to play.
    Bill Miller is definitely back !!!! And they are primarily
    money managers.


  342. Yep, that was me Phil. Thats when I discovered the perils of DD and Roll.


  343. Wang’s World
    new posts up!!


  344. phil,
    please advise me what action to take regarding AMZN in the morning
    Oct 80 calls will be just fine,
    however, i sold the Aug 75 calls at $4.2 and don’t know how to approach this part of the play
    should i close it at the open, or wait for it to calm down?
    thanks very much in advance.


  345. EDU – Excellent analysis, Karm. Thanks.


  346. I don’t need to say much about AAPL today, as you’ve all covered it quite well.

    I unwound half of my Apple puts while sitting in the Boston airport before the close and bought a half-position of August calls because, while I’ve more than enough long-term AAPL plays, previously I wasn’t going to play August with the premiums being so ridiculous, but this situation is just too tempting. Assuming that the market cooperates, I will be unwinding the other short half tomorrow and building the other long half as well.

    AT&T’s numbers, as most of you already well know, only covered activations from 6 PM Eastern Friday to midnight Saturday Eastern. A *significant* proportion of activations took longer than that to complete and I believe, with no real evidence, that AT&T doesn’t count the activation until it’s complete which means that the old phone number has been transferred which was often taking 24 hours or more. More importantly, all of the analysts have fallen all over themselves forgetting that they predicted sales for the entire (3 day) weekend. Not just 30 hours of the weekend. After an initial burst of negative quotes, they may come back to their senses. ;-)

    I believe that AT&T’s report creates a large market inefficiency because whatever Apple reports will be higher than what AT&T reported. And Apple *might* talk about what’s happened since (and there was no way AT&T was going to do that).

    I too believe that we’ll see RIMM like bounties and revenue sharing…and that’s not been calculated in by most analysts previously. And at this point, I think the probabilities have moved to it being perceived as a positive surprise whether than having attention focused on the bounties not being as high as we might like.

    Speaking of RIMM, the so called analyst out with his flop analysis and demand has collapsed analysis is a RIMM analyst who’s never previously been published discussing Apple. So I believe while his story today helped pushed the stock down, it’ll be quickly overlooked.

    My long-term long positions are still out there based on fundamentals. And I can’t reasonably buy more of those without unduly unbalancing my portfolio.

    But (in addition to loving the profit on my hedges) I welcome this hit with great joy as I think it’ll give us a great opportunity for August options. This afternoon, and possibly tomorrow, should be a nice time to build a speculative long position for AAPL’s earning announcement. Hopefully I’ll have some time to deal with the aftermath of my new positions Thursday morning. But if not I emerge from the wilderness the day before August options expiration and now I’m planning on coming back and hunting down a network connection and hopefully booking some more nice profits. ;-)

    I hardly ever say things like “Buy, buy, buy”. But I believe this is a great opportunity. And any additional weakness tomorrow (barring material news) will just improve the odds of a positive surge out of the earnings report and call. I love getting tons of bad news right before…

    reinharden


  347. wow – what a day in the market …

    housing troubles FINALLY coming home to roost now, fully 2 years after the peak of the bubble.

    i still stand by my previous call that bzh will be the first hb to go bk. (still holding jan-09 30 puts purchased back in feb-07 as hedge to falling home equity)

    i’m not sure we won’t see LOWER U.S. interest rates coming — with housing prices crashing, consumers pulling back, and blue chips having nothing better to spend their $ on, than to buy back their own shares.

    if the fed managed to keep rates low for five years of surging home, energy, food and health care prices, who’s to say they can’t cut when spending demand starts lagging?


  348. AAPL – Nice analysis, rein.


  349. Asia Markets : Wednesday, July 25, 2007

    Japan*

    17858.42
    -143.61
    -0.8%

    Hong Kong*

    23362.18
    -110.70
    -0.47%

    DJ Shanghai*

    438.13
    10.67
    2.5%

    S.Korea*

    2004.22
    11.96
    0.6%

    India

    15656.02
    -138.90
    -0.88%

    * at close
    Sources: Dow Jones, Reuters


  350. Asia and European Markets – U.S. Tumble Hits European Stocks

    European stocks opened lower Wednesday as heavy losses in the major U.S. indexes Tuesday weighed on investors, while mixed earnings presented some trading opportunities.

    Asian markets were lower in the afternoon session Wednesday with exporters dragging Japan down to a weaker close, but South Korea swinging back into positive territory to end stronger.

    The yen hit a 2-½ month high against the dollar as investors bailed out of stocks and risky trades financed by borrowing in the Japanese currency. The rush to safety bolstered government bonds and kept gold near 11-week highs.

    http://www.cnbc.com/id/19939037


  351. Amazon (AMZN) Gets Four Upgrades
    This AM, Amazon (AMZN) was upgraded by four firms.

    Credit Suisse took that shares from “neutral” to “outperform”.

    JP Morgan took them from “underperform” to “neutral”.

    RBC took them from “sector perform” to “outperform”.

    And, Lehman pushed the stock from “underweight” to “equal weight”.

    A prime example of research trying to catch the horse once it has left the barn.

    Amazon’s shares rose as much as 20% after hours yesterday on strong earnings and guidance. Where were the upgrades before the report.


  352. AAPL – Here’s the latest analyst report courtesy of Notable Calls – much more bullish
    http://siliconinvestor.advfn.com/readmsg.aspx?msgid=23730485


  353. This from Notable Call site who had the AAPL downgrade comments from RIBC yesterday…..might get a nice AAPL rebound and then a slam dunk with the earnings release? Oh well gotta fantasize occassionally! That reminds me off to CNBC and that sultry sounding “analyst”. :shock:

    - RBC Capital comments on Apple (NASDAQ:AAPL) saying their channel checks suggest sustained iPhone momentum. Current checks at Apple and AT&T retail stores in major US cities suggests, contrary to concerns, iPhone demand/sales momentum remains steady, following the huge initial surge in iPhone sales 1st weekend of launch. Replenishments appear to have restored Apple store iPhone inventory to 90%+, and checks show AT&T stores have stock. Early activation issues appear largely resolved and returns appear to have been minimal to date.

    AT&T Reported 146k Activations Q2, implying sales only slightly light to RBC’s 450-500k Q3 Sell-in Estimate. AT&T reported 146k iPhone activations Q2 (June 29 and 30). However, this may not reflect Apple’s true Q3 sales, as AT&T excludes iPhone buyers who experienced activation delays (up to 40% – 50% of est. buyers), as well as additional units sold but not activated until after the weekend, as well as those purchased for gifts, and non-US buyers. Incorporating these factors suggests Apple may have sold 350-450k iPhones to users the first weekend.

    Given Apple will report iPhone sell-in Q3 (i.e. sell-in to AT&T, sell-through online and Apple stores), Apple may report 400-500k iPhones sold Q3 (2 days ended June 30).

    They would accumulate the stock; expect Apple to resolve the connectivity/pricing issues and subsequently reinvigorate iPhone sales through new launches at attractive pricing and faster network technology; as well, they expect subsequent Mac/ iPhone momentum to overcome margin concerns.

    RBC’s comments regarding AT&T excluding iPhone buyers who experienced activation delays from their yesterday’s iPhone number make sense. I suspect these comments will generate some covering/buy interest in AAPL stock early on but I’m not entirely convinced it’s enough to generate a meaninguful bounce today ahead of earnings.