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Thursday Thump???

"When the M&As start to unwind it is time to be all cash or short the market – this is that time!!!" – Me, in noting the problems with the Chrysler funding, yesterday at 10:50

[chart]5 minutes later I said: "Transports off a cliff even with declining oil prices. I’m letting the rules dictate what I get out of with Aug and Sept stopping out on 20% of the profit pullbacks (which is most of them). The DIA puts are in great shape again but at this point I’d rather take a fresh look at things in a couple of more days than try to “save” things now."

11:16: "So this is why I work off stops, as soon as I started setting them, the market stopped dropping but I am raising them with every tick up and will be getting the hell out if we fall again."

11:50: "The VIX is calming down now pretty consistently going down when the markets go up, indicating up is still the right direction but things seem pretty out of control to me if XOM can go up and down $5Bn in value 3 times in 2 hours."

12:16: "XOM – I am adding back puts into earnings. If they miss then $1.75 for the $90 puts will be a real bargain. There is what I consider to be an irrational expectation that they will earn 14% more money despite tha fact that sales are down 1.5% (at least). Now these guys can make their numbers say anything they want them to as they take in $100Bn a quarter in revenues but politically I think they wouldn’t mind a miss this Q as it will carry them all the way through the Summer able to tell Congress how they are just a poor struggling energy company that’s just trying to make a nice return for all the widows and orphans who own the stock. They do have 5% less shares than last year but I think costs are way up. If they miss, it will be a Dow disaster."

3:38: "S&P needs 1,520 to make this thing real. Dow needs to get back to 13,850 to make up 1/2 its losses for the week. Nasdaq needs to retake 2,675 to catch Friday’s low or yesterday’s open but still way below Monday’s high of 2,705, which itself was pretty far down from the 2,720 close on the 19th.  I hate to be the grouch but I really don’t think much of this movement and everyone else seems to be buying like crazy so I’ll take the contrary position for the day…"


So you may have guessed that I am not surprised to see the market down 100 points this morning in overnight trading.  ""If there are three major concerns for the stock market, it's the concern about residential real estate, the concern that the (leveraged buyout) market is drying up and concern about energy prices. That's enough to give this market a pause," said Art Hogan, chief market analyst at Jefferies & Co. in Boston.

In other words, maybe all that stuff Phil keeps droning on about does actually matter!

Something mattered in Asia this morning as both the Nikkei and the Hang Seng had very bad finishes, each giving up 150 points just into the close.  Possibly it was triggered by a sharp spike in crude which was spurred on by the usual Nigerian rebel activity that takes us by surprise 2 or 3 times a week.  Criminal Narrators Boosting Crude have the nerve to say that the lower inventories in Cushing are the cause of the spike in oil yet I just pointed out the other day how NYMEX traders CANCELLED 350M out of 380M barrels that were scheduled for delivery to that facility by the last day of August contract trading

This is the same nonsense they pulled last month and the month before and they will pull it again next and every other month unless you do something about it.  Send this article to people, demand a Congressional investigation of the NYMEX trading activity, ask why over 330 Million of the 378 Million barrels of crude that were scheduled for September delivery TO CUSHING, as of yesterday's close at $75.88 a barrel (up $2.32 from the morning's price), will not be delivered in September.  Ask what kind of shell game these people are running while you suffer!  Really, do it, just send this page by Email to your local representative with a header saying "Why aren't you investigating energy traders?"  Or you can just pay another $50 to fill up your tank and wonder when you will need a C-note to do the same.

Europe is also flying down despite the "great" news that RDS.A posted an 18% rise in profit as MASSIVE refining margins (more than 3% better than any previous quarter) more than offset the 1.4M barrels a week that they failed to protect in Nigeria.  Security Fence: $5,000.  Cost of a security guard to fend off teenage rebels in an outboard motorboat: $35,000.  Cost to the World as oil climbs from $60 to $77: $558Bn.  Amount Shell oil makes per quarter: $8.67Bn.  Ability of CEO Jeroen van der Veer to say with no conscience ""We have delivered another set of competitive results, driven by operating performance. Our investment plans are on track" – Priceless!

Notice how oil is once again being pumped up like crazy just as the oil companies announce their quarterly results?  This is all a part of the Roach Motel Theory as it let's them get out while you are being pulled in and I still see this as a very false run-up in crude but, like I said – you let it happen!

Rather than watch the charts today I think we'll take a look at the progress on the advance/decline lines, which have been bothering David Fry and I for a week now:

If we don't get a turnaround here, it really doesn't matter what the headline index numbers are does it?

DollarWe'll see how the dollar holds up but it should get a good boost between the short squeezing and the "flight to quality" that is sure to grip the bond market this morning. 

Stay tuned for the fun and excitement!




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  1. This is spooking the mkt abit too-

    The USS nuclear carrier USS Enterprise (CVN 65), en route for the Persian Gulf, entered the Mediterranean Sea Monday July 23 for joint maneuvers with the French Charles De Gaulle carrier. Rafale M fighters took off from its deck, touched down briefly on Enterprise runways and returned to the parent ship. This is the first time ever that French fighter-bombers have landed on an American carrier and used its facilities.

    DEBKAfile’s Middle East and Washington sources say that the closely integrated maneuver is part of the growing cooperation between the Bush administration and the new Nicolas Sarkozy presidency on burning Middle East issues.

    The gambit on which Washington and Paris have embarked together takes into account Iran’s elevated standing as a topnotch Middle East power. This partnership and the new horizon opening up are explored in detail in the next DEBKA-Net-Weekly out on Friday.

  2. More unwinding of the carry trade…

  3. Thanks again, Phil. Truth be told, I need much more skill at reading charts at all, but to the extent that I have, I’ve used the 5-minute, not the 1-minute, but your point is well taken, and I appreciate you using so many keystrokes on my basic learning.

    Thank you, too, codydog.

  4. Man, credit markets taking everything with them… AAPL and WFR giving back lots of gains from last night.

  5. DO too now

  6. from RBC July 26:

    Apple Inc. (NASDAQ: AAPL; 137.26)
    Risk Qualifier:
    Price Target:
    Above Average Risk
    175.00 s 160.00
    Mac Attack!
    • Mac and iPod Drive Blowout Q3 Rev/EPS. On vigorous Mac Momentum,
    Apple reported $5.4B revenue (up 24% Y/Y) and $0.92 EPS, above RBC at
    $5.3B and $0.77 and conc. at $5.3B and $0.72.
    • 270k iPhones Sold 1st 2 days – iPhone just hitting its stride. While below our
    400-500k est., 270k phones sold the first 2 days remains huge; our 18-mo.
    iPhone sales outlook remains 13.4M units.
    • Q4 Guidance Light, on NAND Margin Impacts – But Also Conservative.
    Q4 guidance was $5.7B revenue and $0.65 EPS, below conc. at $6.0B and
    $0.83. However, guidance is conservative, and we still expect even stronger
    Mac/iPhone momentum Q4, offsetting margin concerns.
    • OP Thesis Maintained, Estimates Adjusted. Mac Momentum bursts out
    sooner than expected and we foresee further catalysts to valuation, including
    new Mac’s, iPhones and an iPod refresh Q4/Q1.
    • Reiterating Outperform and Raising target to $175 (from $160) on our
    F08 Outlook.

  7. Phil,

    As this market starts to collapse this morning, could you post your mattress plays. Your moves are really helpful for all of the new mattress players.

    Also, for those of us that could use more cushion in our mattress, when would be the best time to pick up some more DIA puts? (I know, yesterday…) I’d expect those PUTs to be pretty expensive at the open, so should we wait 30 minutes before making the determination of which PUTs to buy? (I’d assume I’d be looking for the strike closest to ATM around a $2.00 price – not sure we’ll find these today though.)


  8. also from RBC :

    AT&T Inc. (NYSE: T; 39.68)
    Risk Qualifier:
    Price Target:
    Above Average Risk
    44.00 s 43.00
    Solid EPS Quarter, Slight EBITDA Miss on iPhone Launch; Raising PT to $44
    • Solid EPS quarter – slight EBITDA miss due to iPhone launch.
    • Slightly increasing 2007E/2008E EPS on higher margins and greater synergy
    • PT from $43 to $44.

  9. A problem I had last year was being on the right side of an options trade, a la BIDU and I went to bed seeing a new car in my driveway. Woke up feeling great only to see the mkt trade off and the option only making a few grand.. I called up a few brokers and asked in the future, could I trade the underlying shares , pledge my option against it and lock in the profit. Not one broker would allow it or make me an OTC option which could offset my winning option. IMHO, as great as these gains look, dont spend it until the check clears.

  10. POT had a great Q, will probably drop today though..:(

  11. XOM with a nice 13 cent miss and it’s first loss in 3 years but we’ll see how much it actually gives back. Every day it drops a buck it goes up $2 the next day.

  12. Zman: 2 posts up! One on NFX’s quarter which beat estimates and saw production guidance raised;
    The other the morning post which walks through tons of stuff and the reasoning behind the rally in oil and gasoline since yesterday (once again its the hype driving prices higher and not something fundamental…this time our own government is to blame). Also my natural gas projection would put us at record storage for this time of year but that commodity is rallying in sympathy with a $3.30 rally in the last 20 hours!

  13. If I see any weakness on NFX spilling over from XOM I’m a buy of either the Augu 45 or the 50s.

    TSO getting spillover from XOM now and the miss at Exxon was attributable to natural gas prices, not refining. There’s rational markets for ya! Like I said yesterday, don’t fall in love with the bounce off $50 for TSO. Still have puts on FTO and WNR.

  14. zman

    Good entry now for puts on refiners or too late?

  15. CNBC: are we lemmings or are we treating this as a buying opportunity?

  16. z--your site appears to be offline right now

  17. Yesterday Phil said (regarding XOM):

    “Now these guys can make their numbers say anything they want them to as they take in $100Bn a quarter in revenues but politically I think they wouldn’t mind a miss this Q as it will carry them all the way through the Summer able to tell Congress how they are just a poor struggling energy company that’s just trying to make a nice return for all the widows and orphans who own the stock.”

    When I saw the numbers this was all I could think about.

  18. Short squeeze in BIDU?

  19. Phil,

    Your morning post says IN PROGRESS.. did you have any mattress plays or market open commentary that so far hasn’t been posted?


  20. good morning all

    phil, would you sell these at the open?
    Bidu sept 185 calls
    WFR aug 65 calls


  21. Z, thanks. I guess I will get stopped out of my TSO Aug 47.5 puts short. I have naked XOM Jan 09 85 puts. XOM down a miniscule $2. Hope it goes back to 60 :-)

  22. Well there I was at the close yeseterday, not wanting to push the button to buy more index puts. As the bell rang, I remembered the horrible market internals of late, the SPY closing with its head rubbing on the 50, and most of all Phil.

    I hate buying puts when the markets up – but its much better than buying em when the markets down.

    Thanks for beating that discipline into our heads Phil. That and having my short calls positionned below my long calls on my indexes should keep me outa too much trouble today.

  23. The irony of CNBC talking about lemmings (Fast Money, Cramer, Bob Pisani). I am amused.

  24. Windy:

    Per Phil at the end of yesterday’s post: SELL INTO THE INITIAL EXCITEMENT!!!!


  25. AAPL options down?

  26. Sorry, Windy… screen froze…..I wanted you to get that before the market opened.

  27. look at BIDU options as well……….oh well

  28. I don’t get it. How can my AAPL 160′s be worth less than what I bought them for yesterday ?.

  29. Volatility premium went away…

  30. Mattress plays – I hate to talk about them while we’re dropping as the worst thing you can do is initiate a play in a panic – NEVER buy into the initial excitement! But, if you don’t already have them the rule of thumb is to take 2X of whatever costs $2 and 1X of whatever is one bracket below that. Right now that is the Aug $136 puts at $2.05 and the Aug $135 puts at $1.67. When the $135s get to $2 you add 1x to them, sell 1X of the $136s and add 1x of the $134s setting .25 stops on the whole group (your 2x position in the Aug $135s will have a blended basis of $1.84.

  31. Windy – Remember the rules (#1 & #2 in the FAQ)..

    the BIDU is ~25 now, up from about 10? last night.. Why wouldn’t you sell it? greed doesn’t buy nice lunches, selling for a profit does.

    the WFR is about 0.8 now.. and each contract is currently losing about 4$ a day to time decay.. (0.04 cents per day).. so unless you have a good reason to think it’s going to go up by more than that for the next 3 weeks, it might be a good time for that to go as well..


  32. Someone please explain, my calls on Baidu and Apple have gone down in price although the stock has gone up in price. Is it the market makers sucking out the volatility and are they just crooks?

  33. NFX call going great, stock rallying in the face of the XOM disaster.

  34. Phil,
    is it good time to initiate a new AAPL Jan 08 calls

  35. down volume at 90% CNBC

  36. draz,
    got out of Bidu quick, near the top, 59% gain
    holding WFR as it’s still OTM
    helps heal the wounds of the past few days
    good luck!

  37. Sh.t! VIX above 20!

  38. Who sells Lemmings, I want the stock. They keep mentioning them on CNBC. I want me some of those. :)

  39. Sorry, very important to mention that I am currently scaling into 1x DIA $137 CALLS as an upside play and I will roll these down if the $136s get cheap and then possibly DD.

    AAPL – WOW! $140s opened at $10 and are now $8.45. Tough call if you didn’t sell yet but if they hold $145 I guess it’s worth riding a little. Obviously the opposite is true for callers – now way do I pay them unless I have to!

  40. Refiners getting whacked today with XOM. FTO down 4%, WNR still flat.

    NBR and BJS still falling as that’s the most lackluster of the OIH.

    OII actually up Strong!!!

    XOM down 3% with NFX up 4.5% and rallying still!!! b

    NFX Q&A coming. Outlining the really nice new hedges.

    my site is intermittantly upand down this moring. Agghghgh. This won’t happen after Sept 1 when I’m over here.

  41. BIDU- 1/2 out
    APPL- gone on Sept 145′s, still have some covered by Aug 150 sold yesterday at 3.
    WFR- Still in hoping for more. LOL

  42. what kind of numbers do you think Wall Street will want to see on new Home Sales? Hot or cold?

  43. BBD

    Holding your Aug 150? I am debating hold or roll

  44. ICE trying to come back.

    Damn the volatility has not died atleast in BIDU calls, puts are a toast.

  45. windy -

    Congrats on BIDU!!

    I’m in the same boat on WFR, as I’ve got the Aug 65s. I thought for sure there’d be a little profit at the opening….but it looks like it’s coming back a bit. Good luck to you, too, and everyone else.

  46. WFR looking good now!

  47. Phil, holding 800 shares of WFR with a base of around $55. Have 18 WFR August 60 calls. What do you think is the upside from here until about a week from 8/17 when UBS will downgrade the stock.

    I am writing a letter to the SEC about UBS’s actions in the last two months--tout the stock in June, downgrade it about three days before July expirations, and then upgrade it the next week.


  48. raffy yes that’s exactly what’s happening – i am amazed that there is still so much implied volatility in some of the options, i sold bidu 280 calls expecting to profit from that implied volatility crush for $1.15 yesterday near the close and those options can be bought back for $0.85 now….in fact the bid value is still $0.75 which is amazing to me given how far out of the money those options are but I am sure somebody will tell me BIDU can increase another $65 in the next 22 days (just not me!).

  49. man, if only I had enough cash in my account, I would have short all those damn bids on BIDU aug 130, 140, 150 puts :-)

  50. Windy – would I sell at the open???? Holy cow I need a function button for Rule #1! ANY close call you have that you don’t sell at the open (at least half) is exactly what Cody was talking about. It’s the best way to turn your new car into a new car mat!

    Glad it’s helping a bit Dj! People always say “buy low and sell high” is a myth but isn’t that what I just did on the DIA calls? Mattress plays work both ways but only if you work your way into them when the market is going against you. Chasing the train while it’s leaving the station will either exhaust you (as you pay more and more to catch up) or, even worse, crush you to a pulp when the train turns around just as you are about to catch it (by pouring all your money into the top/bottom).

    Cowboy – see Sages articles about volatility crush – you are the sucker we tell members to make money selling to! The way this works is once the stock stops accellerating, the physics start to catch up to it and the formula for it to gain additional value in the remaining time changes faster than the slowly rising price can support.

    AAPL – same concept – we wait for the V to calm down before initiating new positions (with the exception of diagonals that take advantage of early volatility of the open on the sold call).

    New home sales down 6.8% in June and May is revised to down 2.2% so they lied to us then too! Median prices are still dropping as well and inventory is up to 7.8 month’s supply – this is worse than terrible!!!!

  51. got sidetracked by AAPL and BIDU yesterday, missed initiating some XLE puts.

  52. Phil, your thoughts on toyota or honda? honda can’t make cars fast enough, are making more money and are down from their high of 40$ in Jan. Toyota took a thumping today. Thanks in advance.

  53. Phil – GM -

    I’ve got the Jan ’09 LEAPs, do you think it’s time to sell some Aug $32.50 or $30 puts against it or just keep letting it ride the downtrend? We have some initial “excitement” this morning.

  54. NFX – there will be upgrades here, I know it’s up a lot but I’m holding the $45 and $50 and on any weakness later I may add Septmber $55. They are nailing the confernce call in a most un-NFX-like way.


  55. CMI
    up 10+!!

  56. Phil.
    CROX now 51…. should we roll up the caller?

  57. Phil – I’ll read the article about IV. Lesson learned. I don’t intend to be caught like that again.

  58. More NFX call:

    Monument Butte: extended contract with Flying J refiner for another year, also just entered TSO and Holly.

    Woodford ? – less than expected production at only 115. It was the switch to pad dcilling, just logistics….

    I’d bet my hat Keybanc/McDonald upgrades tomorrow.

    up 6.4%

  59. AAPL – just sold Aug140s for 9.90 against my remaining long calls
    NFX – 1/2 out on doubling of Aug50s. Thanks Dr. Z
    QCOM – just waffling back and forth; was expecting better after earnings beat/better guidance
    FFIV – both calls and puts are toast; big time IV crush

  60. CMI- I guess they put up!
    I guess I can close up shop. BIDU, AAPL WFR and CMI. EVEN ICE didn’t let me down

  61. phil,
    i listened to you, i sold it at the open. yes, add that function button to the keyboard, maybe get apple to put it on the next generation of the iphone!
    back to even for the year, which is a tremendous leap forward from where i was 2 days ago. doesn’t account for my time and energy, but i have confidence going forward, and not in so much despair.
    thanks for your, and everyone else’s, support, education and encouragement!

  62. OptionSage, all your articles are present under Education section?

  63. MU under $13 again

  64. OII – zmann, saw in your post you like these guys for earnings, would the Aug55s or 60s fit the bill or maybe something further out in time? Thanks.
    CROX – just realized earnings is tomorrow

  65. CROX earnings today, thought it was in aug!!!

  66. KC,
    do you expect AAPL to be below 140 by X, or just the IV to lower the price of the call before that?

  67. yes rD2.0

  68. WFR – LOL on UBS jazz! You have the S&P putting the wind in your sails but why take chances on a big option payout if you’re going to get a dollar for dollar gain on your stock anyway? Wouldn’t you feel silly losing on both ends at this point? If you LOVE your calls, roll to the Aug $65s at $1.27 so you can take $2.30 off the table, maybe sell the Sept $60s for $5.10 against your stock for another nice lock of gains or would you not take $65 for your stock right now? (you can always buy more you know, they sell it every day).

    Naked shorting – that’s one of the reasons I back the stock club idea, there are so many good things you can do with a larger portfolio margin account that you just can’t do with a normal amount of money.

    TM is a buy on the dip stock for me, I like them better than Honda.

    GM – I hope those are put leaps! I haven’t sold against mine as I am very nervous that they will drop $6 in one day if, perhaps, someone sees their books… If they start going up, I would sell, for example, 1/2 the $32.50 puts as a momentum play but only that.

    Buyers are coming in but it remains to be seen whether they run into another wave of selling. XOM was a very disappointing $2.30 ($1.40 basis) but I’m happy to finally get a win out of them! Now I like the Sept $95 calls at $1.60 (was $2.80 yesterday) in case they announce an even bigger buyback against the Sept $90 puts at $3.25 but scaling in slowly to the puts as I expect at least a little bounce. XXX

  69. BA: Dreamliner flight pushed back.

    …”And first flight is now pushed back a month until the end of September — chief executive Jim McNerney conceded it could even slip into October — leaving a bare eight months, maybe fewer, to complete the tests before the first scheduled delivery.”

  70. FFIV
    is starting to get the correct reaction!

  71. Phil – what are your thoughts on Yahoo 2010 Strike 30s for $4.00?

  72. thanks Sage

  73. BillBigD – one word I have for you: amazing! Congrats.

  74. Hey y’all, don’t miss the forest for the chipper/shredder.

    AAPL, consolidating for its move higher. Only if it doesn’t reach $150 by end of day do you have any cause to worry. $160 by next week. The drop in volatility allowed you to get in after earnings, before the real run-up. But, did you?

  75. I think Fidelity is clogged with lemmings today, or apples, totally worthless, old data and lousy fills and they say “sorry.”

  76. BBD

    You are the man.

  77. Phil – GM – Yes I have put LEAPs – thanks

  78. fiedlity for some reason wont add server capacity – maybe the message is they dont want retail anymore

  79. Phil/ Sage, does the IV stay high for some time during the morning after earnings and then goes down? or does it go down at market open itself?

  80. I know the fundies are crap, but anyone else looking at the VIX, the technicals, and the put/call ratio and seeing the last selloff before a pop to 14,500?

  81. Codydog- I think Fidelity thing sucks as I use them also for NOW but you are wrong they spend a ton Tech.

  82. BIDU

    I’m tempted to sell the 270 naked now as well. This is ridiculous.

  83. rD2.0 – in my experience you get a significant crush at the open – particularly on the options on the losing side (i.e. the puts in the case of BIDU), followed by a continued crush over the next few days….check out and some of their charts on how implied volatility tracks in a sawtooth pattern leading up to earnings.

  84. If Fidelity spends a ton of dough on tech, its mis-spent – whenever a headline hits or there is some action, their system jams up. Also their afterhours platform has got to be the most difficult to use, although I do feel comfortable leaving money at Fido as I think they have a high credit quality

  85. OIH

    Looks like a good spot for my call buying here.

  86. dday97 – you and me both! i considered selling the puts naked yesterday too which would have been the thing to do based on how implied volatility has crushed them so significantly – it’s a great example of implied volatility crush though that we sold call options, the stock is up $33 and we’re still making money, high fives!

  87. NFX – I forgot I had them! Thanks so much Z!!!

    CROX – never buy out your caller into the initial excitement. He’s got a massive premium and we are on par with him as the spread cost us a nickel. Again, watching the 1 minute chart will make you make bad decisions every time! We sell callers to get the premium. We get the premium by waiting for it to expire. How many moves do I make on the LTP? VERY FEW! How much does the LTP make? 157% so far this year. If I can make 157% by being very patient, conservative and cautious, does it really make sense to take a risk to try to get 200%?

    AAPL – good sell KC – it’s often smart to take the highest amount that was offered at the open if it’s offered again. The $145 calls are now $6.40 and could have been picked up for $5.25 as a roll just 45 minutes ago, that’s the way you stay in, not hanging on to your in the money call with a huge premium…

    XOM $90 calls getting cheap at $1.85, almost tempting if the market comes back but it’s been head faking like crazy…

    Cool Windy! I am very happy! Congrats and don’t discount the value of experience. I always say, I never mind taking a loss as long as I learn something, then it’s an education!

  88. Z/Phil

    Best DO LEAP? I want some deepwater longterm exposure.

  89. I guess I get too suspicious that the jam-ups at Fidelity happen at the most inopportune times, and I have to wonder if they are in their favor.

  90. FCX- looking to jump right back in those September if it goes below $91ish.
    CODY- you are right but remember they probably have 1000x more clients then the other trading platforms.

  91. ok thanks Sage

  92. AMZN
    moving up again! cashed out, +15.4%! Taking profits when I can in this market!

  93. Dow needs something to take it higher, and it has been IBM making a new high everyday this week.

    Phil, why are there IBM leaps in the Short-Term Portfolio? Safety in case you are wrong?

  94. Nat gas build 71Bcf, a little more than 65Bcf expected, firmly under $6 now on gas. This is nothing for XOM or COP to get excited about but neither was yesterday’s oil number and they acted like it was a major rally point.

    QQQQ $50s for .69 good way to play FFIV, AAPL, BIDU, QCOM, SYMC strength. XXX Oh sorry, SYMC still going down so SYMC Sept $22.50s for .35 are a good way to play them. XXX

  95. bill--I agree and thats probably the best reason they need to have real dough spent on upgrades – unless you dont care about customers and plan to churn them.

  96. I haven’t been following along for a couple of weeks because of vacation, but just reading through today I am surprised there hasn’t been much talk of the recent homebuilder meltdown. And I wonder how much farther they have to go. Seems like the next stop for LEN and CTX, for example, is 25.

  97. Cody, BBD, do you both get lots of “invalid symbol” messages for your options watch list? They told me they had never heard of that before, duh.

  98. Phil & all – Leaps – do you have any general guidelines for ’09 vs ’10?

    I’m looking at a few stocks for longer term investment (which i’ll probably sell premium against) and I don’t see any reasons for the 9′s over the 10′s other than investment $$

    SNDK 60′s for example.. jan9 = 13 jan10 = 18. that extra 5 buys 12 more months of premium to sell at ~1.5 per.. feels too much like a no brainer, what am I missing?

    Thanks, Peter

  99. Phil,

    TM – What is a position good right now for someone without any TM so far (or anything auto related)?

    I see that you have 2 Calls: Oct 125 and Jan 120s in STP at lower net cost than quoted now.

  100. T seems to be displaying great relative strength.

  101. High five right back at you pal.

  102. BillBigD:

    Great trading ! ! !
    Is VIP starting to look interesting again?

  103. Coming out of some NFX $45s now. 100% since yesterday is too good to miss. Will add $50s later but that gas number could pull it all in a bit.

    TRADE: out NFX $45 between $6.10 and $6.20

  104. T
    Investors realizing the IPhone data they gave was premature and flawed because of timing, now getting back into action.

  105. why doesn’t HOV just file for bankruptcy and get it done with. I think the homies and sub primers are in big trouble with this slow death.

  106. Fidelity just told me that the problem is they are trying to get data from the exchanges directly into their system and not via Reuters, which they used to do. Seems like a truly odd thing, going live when the kinks arent worked out

  107. Lithium – I agree with the concept. Timing: I’m not sure you won’t get it a little cheaper soon. I table the particular LEAP to P.

  108. Any news on the BG call? Obviously up big in anticipation…

  109. CROX – no way I’d buyback my caller with IV on the Aug45s at 86.8!!

  110. Happy:

    Current thoughts on WYNN & LVS?
    Looks like WYNN is bouncing off 50 & 200 MAs.

  111. FIDELITY- one last thing and I will stop talking about it. SIZE123 yes I do before the market opens, but what has pissed me off the last two weeks while down here is I will try to sell something from Active trader Pro and they give me a void message. Says I don’t have the option and I go to and I have to sell it from there.
    VIP- sold Aug 110 at 4 yesterday, but yes the chart gave me a buy sign about 10 points ago. Good thing I chicken out. So I am watching those OCT’s

  112. size – i’ve called Fido on invalid symbol messages.. transfered me immediately to active trader services (for which I’m not one yet, for pure lazyness on my part..) anyway, they’ve had problems every month with new issues on that first Monday when they came out.. It’s annoying too, as their chains find the issue, the quotes work, but the trading bit fails to find it. You can force it through with a limit price.. but still annoying..

    having worked on the technology side of a derivatives desk though, I can attest to how hard it is to get everything perfectly right.. it makes the good old days when I did nasdaq trading technology back a the top of the dotcom boom look like cakewalk.. There are something like 40x as many option issues at any one point than there are stocks.. And some of the chains (DIA) have soo many (~1000) issues that you can end up having a server handling 5 names before it maxes out.

  113. BBD, me too.

  114. WM

    Only down 10% from ATH. If CFC is hurting, these guys could be in trouble. In the past they kept non-fixed loans “in portfolio” in house. Someone give me a good put. Maybe Oct 37.5′s.

  115. NFX – out of my other half for total +124% gain on my 50s. zmann, need to thank you again, but if you’re now getting out of 45s and going into 50s, maybe I bailed too early ?!

  116. BUCY- trying to fight back a little. To bad I have the Sept 70′s! LOL

  117. Acct way up today on all those financial/homebuilder puts I’ve been harping about for weeks…PII is helping out well!

    Lookin for a tech bounce that seems to be where the rotation is going

    Love my AAPL BIDU AMZN GRMN RIMM POT STP YGE longs stock only not enough guts for options on those

    Also long ACH bout had a heart attack at the open!

    Bought QQQQ calls also looking at AKAM

  118. zman

    What’s your take on NBR? Looks like it is slowly falling – but the key seems to be slowly…

  119. WYNN
    is trading strangely. very volatile. Daily chart is still good. Intradays could be bottoming. Let’s see where the overall market goes.

  120. YHOO – I am just so sick of them I can’t tell you! I don’t like them because the only reason to own YHOO is a possible buyout and I’m not sure anyone will pay $34 a share for them and that’s the only way you will win. You may think Yahoo is cheap but the manage to keep earning less money to keep up with their declining stock price so their p/e is still 47. You are buying a current p/e of 66 with your play so it’s not for me.

    BBD – hell of a feat in a bad market, congrats!

    AAPK – to be very clear, I am still in all my long positions as I stick by my targets from yesterday but I am happy to take non-greedy exits on close calls and lower my risk as well.

    The VIX does give me some hope that the markets can still come back but now it’s calming down while the Dow is still down more than 100 and that is a very bad signal.

    BIDU – buying 2x $260s for $1.77, they will gain $3 per $10 in the short run. Selling 1x $220s for $9.95, which should gain about $5 per $10 and buying 1x Sept $260s for $5.50, which should gain about $3 per 10, for a net .91 and hopefully some leftover value down the line. XXX but you need margin.

  121. Phil …. XOM.

    If you recall, I had 20 85 puts long; 10 90 puts short. Put on another 10 90 puts short at 2.55 just now.

    Right move ? Too early ? My thinking was would like to see XOM trade back over 90 to wipe out the 90′s.

    How should I manage this now ?

  122. FFIV

  123. Market: Putting aside fundies; I am not seeing a lot of fear, and with the VIX pretty high already, I am still forecasting a market snapback … maybe not today, but soon. (barring a real blowup … I find this credit “crisis” to be semi-bogus. Deals will get financed, just cost a bit more. All the housing agida was already known.).

    Funny thing was last week it was all about the markets being flooded with cash; global Goldilocks growth, yada yada. This week, there is no cash … its all going to Treasuries.

  124. NOV-bought while down! Really trying not to buy things but somethings look cheap compared to Monday. HEE HEE
    BIDU- I would not sell the Aug 220′s but could be wrong. LOL The CC made thing look great.

  125. Someone just bought 4800 contracts and another 1000 contracts of LEH 65 puts i bought this morning.
    Played FFIV after earnings in order to fix my failed strangle.
    AAPL after earnings was great. my Bidu was great.
    Play earnings after earnings, highest prob with still 100% gainers.

  126. cap--it felt more like a forced liquidation this AM more than anything else

  127. FFIV
    dragon, your original instinct was correct to just play it after earnings! almost a 10-point swing from open!

  128. Sold 2/3 TSO aug 50 puts. Sold 1/3 WNR sept 55′s. Both up over 100%. Can’t be greedy.

  129. NTRI just tanked yesterday….holding flat today in a down market.

  130. Down 300 points today could get real bad.

  131. Die XOM die!

  132. wow, hope and pray 1490 holds on S&P

  133. Happy

    S&P below 1500, What are you charts saying?

  134. DO – I like RIG better, the GSF deal will make them a powerhouse and RIG will be the symbol they keep. RIG Jan ’09 $105s are $21.15 and you can sell current $115s for $2.35 $3 out of the money. DO Jan ’09$100s are worth the extra $5 at $20.40 and the $110s are also good to sell at $2.80. XXX to both of these and if the stocks take off on you they are set up so it’s easy to jump to 2X on the out of the money calls and double up on your sells so it will be hard to get caught short on this one. To the downside, just roll with your caller to a lower spot.

    AAPL gathering strength, it is very important for them to break $150!

    Goldman et al being decimated, unwinding of deals hits them where it hurts.

    PTR $150 puts at $2.50 were my radio call yesterday, looking pretty good!

    BG killing me with ATH!

    T doing well.

    I got out of FWLT puts too early!

    IBM – leaps in STP mean I feel the need to watch them. I look over the STP every 5 mins at least while I can go all day without looking at the LTP.

    HB meltdown – kind of old news is why. Yesterday we discussed who the worst was and I said TOL and Prof had picked BZH but really we’re just bored with it.

    Holy cow, major sell-off now, legging down again, another layer on the mattress with the DIA $135s at $1.85 (for the moment). XXX

  135. First day of the drop for XOM

  136. FTO and WNR @ LOD, stocks looks broken on the daily.

  137. CRS
    down almost 20!!

  138. Phil/Z

    is RIG/GSF as focussed on deepwater as DO? I am looking for deep.

  139. CROX – oops, coolkid is right, earnings is today sometime, not tomorrow. I’d thought it was end Jul/early Aug as well.

  140. XOMTR

    Thxs Phil and Co.!! stops raised to guarantee pretty good gain will let it run……

  141. CROX – I didn’t realize earnings were today either. .

  142. At the rate things are going, we’re going to see that correction to 13500, if not lower…

  143. Happy, what do the charts say on CRS? Thanks.

  144. Lithium Rocketbottle
    RIG- Is the leader in Deepwater!

  145. wow. AKAM is getting clobbered. . 35 bucks might hold, but doubt it.

  146. Thanks BBD

  147. Scalped Crox this morning during the spike now just waiting to play AFTER the earnings and take advantage of IV crush in the morning.

  148. Happy- missed your TSO darn it, but hopped and loaded up the boat bigtime on the XOM AUG 85 puts for .80. XOM is seriously in trouble.

  149. Phil,
    For LTP, we just sell to the caller. Do we need mattress layer as well?

  150. Leap guidlines – will my anticipated rents pay for my position? That’s the most important thing. SNDK – you are missing nothing, that’s it. What’s missing is most, like 95% of all option buyers, try to buy “cheap” contracts so they can take a dollar and double it. This happens one time out of 5. Investors, on the other hand, put up $10 and try to make 20%, this happens 6 times out of 10 if you are careful. Do the math and you’ll see who makes more as long as the investor is sensible and limits his losses.

    TM – I wouldn’t try to save it right now but the ’09 $110s at $21.50 would be nice at $20 as you can sell the current $120s for $2.33 and still be happy if it goes back to $125.

    WFMI says – “Cliff? I’ll show you a cliff!”

    Relative strength? DNDN is showing “relative strength” in this nightmare!


  151. Hi Phil,

    TIE – thinking about buying more. As you still in? Insiders including the chairman have been buying. On the negative side, ATI beat EPS cons, but revs were light. Oh and the market is collapsing.


  152. I knew about CROX, pretty much I don’t miss any real earnings news unless I choose to avoid it.

  153. Phil – you bought XOM 95 Sep Calls, right? I missed the 90 puts…are the calls still a good bet???

  154. 1490 seems to be holding so far. .

  155. Phil – time to start thinking about DIA $137 calls?

  156. Drop LEH..drop. ouch. ka-ching.

  157. XOM

    ordering those Sept. 95 calls for 1.1

  158. well, i spoke too soon now didn’t I ?

    VIX over 20 now. TRIN still very low. 80 ish, which is odd given the big selloff.

    XOM taking down the market (phil on target again) along w/ financials.

  159. Market down 200 and my portfolio is even…I guess I’m hedged :)

  160. Lithium Rocketbottle
    RIG-Also I might add a much stronger company! IMO
    What to do? Don’t want to buy anything, Is it to early to start drinking.

  161. LOL dday ! Same thing for me… :)

  162. Bill- Erin didn’t look so hot today was kinda wearing alot of clothes and covered up. you know what that means. drink a mojito for me or 3.

  163. fab

    Makes you feel like your doing something right on a day like today doesn’t it.


    I think it hits its limit right around 88, calls got executed now we’ll see. Added more OIH calls.

  164. BSC probably going to hit Phil’s 110 target.

  165. LTP mattress – long discussion we can have on the weekend but the idea is to protect about half of what you believe your uncovered losses will be on a 200 point drop at the open. Undercovered and uncovered are the same thing though.

    Wow, stunning gains in the STP – I wish I could be happier about it but I hate to be a bear, it’s like playing the don’t pass line in craps…

    MRVL not down!

    I never thoght I’d see the day when my XOM 2009 $80 puts would save the LTP from a loss… XOM looks like they must have started selling organic foods. 8-)

    Cap – I agree but I’m hedging with the Sept Calls instead as I could care less if XOM drops another $5 and I lose the now $1.20 and they also make a nice cover for the next 6 weekends (of course I’ll roll them to the $90s if they get cheap enough).

    By the time you are in the third layer of a mattress play you should be anxious to take off your top layer, don’t wait to give back a quarter, especially if you are more than a quarter ahead on layer 2. Take the money and run and keep stops so you get the rest out even, which will leave you cleanly ahead on the largest part of your play. XXX

  166. FFIV
    still flying!!

  167. Thanks again BBD

    I will wait for you to call a bottom and load up :)

  168. dday

    Indeed it does, indeed it does… Thanks Phil & others for the education!

  169. TSO – MJ23 – tell me you covered those $47.50 puts you sold! Thought that bounce yesterday would be fleeting. Looks like $45 may be in the cards and then a much bigger bounce (probably to coincide with earnings on 8/7)

  170. 1480 next stop on S&P?

  171. Oooh… Dow down ~240 points, this is getting really ugly… and my portfolio is oscillating within a $200 range. Neat!

  172. Hey Phil – For those of us who decided to hang onto the IMB Aug 30s, any suggestions on how to attempt to save this trade still assuming they meet earnings?

  173. Phil,
    I am confused – I am sure I do not understand the premiums in the 2 plays you mentioned earlier this morning in the following quote:
    “CROX – never buy out your caller into the initial excitement. He’s got a massive premium and we are on par with him as the spread cost us a nickel. Again, watching the 1 minute chart will make you make bad decisions every time! We sell callers to get the premium. We get the premium by waiting for it to expire. How many moves do I make on the LTP? VERY FEW! How much does the LTP make? 157% so far this year. If I can make 157% by being very patient, conservative and cautious, does it really make sense to take a risk to try to get 200%?

    AAPL – good sell KC – it’s often smart to take the highest amount that was offered at the open if it’s offered again. The $145 calls are now $6.40 and could have been picked up for $5.25 as a roll just 45 minutes ago, that’s the way you stay in, not hanging on to your in the money call with a huge premium…”
    Can you please explain.

  174. Dragon, how do you play “Earnings after earnings”. Do you buy strangle after earnings or just either Calls or Puts.
    ex. FFIV was down $5 last night. What do you do in the morning today? Buy Calls or Puts or both?

  175. RIG- it will the first one I grab, If I recall I did sell at 118 just a few days ago.
    mojito- Not strong enough on a day like this

  176. Ka-Ching on those XLE puts BTW!

    DO – lower prices and deepwater sites get scrapped. Still plenty of cheaper projects to pursue. The price of oil is a scam so I’d rather play the guys who will generate volume for the oil companies as they will be scrambling to pump more oil for less money to stay even.

    TIE – I agonized over keeping those yesterday and made the wrong decision. I still have 10 Sept $35s, no longer ahead.

    XOM – calls are only as a cover to the puts I kept. By themselves they are a very risky gamble. Now it makes sense to spread them with the Sept $85 puts at $1.95 though so you can start with the calls and pick up the puts when/if it runs out of gas on this bounce. XXX

  177. 1490 is holding because trading curbs are in again. Fat lot of good that did us yesterday…

    QQQQ $50s now .55 so I’ll DD here on the trading curbs, yesterday we got almost a full recovery off the curbs so it’s worth a gamble to prevent me from jumping out of my puts too soon. XXX

  178. Phil,

    QQQQ-was that a gap fill at 48.80?
    CRS- Sept 125′s @ 5.75-6.00 as a spec play?

  179. TASR – Only have a few of the Jan 08 15′s, time to DD?

  180. Phil: Just following your dialogue box I can’t track what you did w/ your dia 137 calls – sell bounce, add, stop out…

  181. Something up with CTRP!!!!

  182. Phil,
    Is this a good time to buy Leap put for DIA and sell short put?

  183. Can you remind me again how long these trading curbs last and what the specific restrictions are?

    Is it a full stop on trading for so many minutes? Or does it only limit trades that bring the stocks lower?

  184. yippeee, my General Morons 32.5 put leaps are finally in the money!!!!!!!! did you see that karmcon, your downgrade finally had an effect!

  185. PCAR-getting really really ugly, optiondragon do you know a good entry point to keep and eye on?

  186. NFX got pasted on profit taking back to even now rising again – took a large position in the Augst $50s for a buck!!!

  187. RVBD anyone playing earnings this evening.. up nice since IPO..
    last earnings was up 6

  188. Kinross Gold (KGC), Goldcorp (GG) and Anglo American (AAUK)

    Anybody like any of these?

  189. GRMN still holding up.

    Happy: if S&P closes below 1490, where it’s bounced off of 4 times since May 10, where do you think it might land?

  190. NOV-couldn’t help myself got some

  191. RVBD was a Cramer pump last night.

  192. NFX – saw the big dip too late, been holding out for it to dip again before jumping back in, or would you go in at $1.6′ish on the 50s? Thanks.

  193. CRS,
    Happy, you liked CRS some time ago, what are the volitility implications to buy a further out position now and wait for a bit of a rise with the VIX so high and sell calls.
    Some observers feel that the sell off is way overdone.

  194. Hard to find many bright spots…AAPL stocks helping portfolios. Nibbling on DIA calls.

  195. CRS:
    On that note, the DEC 125 are 10, the AUG 125 are 3.1.
    This is best of course in a market comeback scenario.

  196. RD-

    GAP Trading Method

    1. Dip, Pop and Pop
    If the first move is a “dip,” I look for the first support level and go long. Remember, if a gainer is going to hold its strength, we won’t see much profit-taking at the open, and plenty of buyers will be lined up to carry the stock to higher highs. So the pullback should remain shallow, meaning I am looking for support to form at the very first level down.
    Gainers are usually opening far above any pivots, so for support levels, I will be watching things such as the premarket low, any nearby whole numbers, moving averages and sometimes the previous day’s intraday high. If the gap is large, first support should come in well above the previous day’s closing price.
    Once I see buyers coming in around first support and I enter a long position, I want to see a move up and over the open price — and a break above the premarket high — to confirm that the uptrend is continuing.
    2. Pop and Pop
    If the first move is a “pop” from open, I will wait for a pullback before going long, and I might even short the pop, depending on the size of the gap. The reason is a large gap, plus any early buying, creates a lot of incentive for profit-taking, so the first climb in that case will usually be more of a short-lived pop before a deeper pullback comes in.
    For first resistance levels, I will be watching things such as the premarket high, any nearby whole numbers and any previous resistance levels on the daily chart that might be nearby. If I short that first resistance, though, I want to keep my target very conservative. Remember, if a gainer is going to hold its strength, we won’t see many people taking profits. So any short will be a small scalp against the trend, and I want to turn around and go long at the first bottom. The safest trades with the most potential will be with the trend.
    From off that first top, the pullback should remain shallow if the uptrend is continuing, and it often bottoms at a higher low, near the open. The premarket low might also act as a support barrier. That bottom is your best long opportunity. The next climb should then hit higher highs. We need that higher high to confirm a continuation of the uptrend; otherwise, we could have a double top, which would be another short opportunity.
    Now let me give you a couple of examples of these patterns in action, from news stocks this past week.
    On April 25, we had plays on (AMZN – commentary – Cramer’s Take – Rating) and Biodelivery Sciences (BDSI – commentary – Cramer’s Take – Rating), among others.
    If you look at Amazon, you see it opened with strong momentum at 53.12, up from 44.75, Tuesday’s closing price. Buyers stepped in almost immediately after the open, just below 53, and it “popped” to 54. From there it pulled back and, fitting with a “Pop and Pop” pattern, found support again just below 53, close to the opening price, before continuing the uptrend and breaking to higher highs. That successful retest of the 53 area was a great long opportunity.
    With BDSI, too, buyers stepped in almost immediately. It opened at 7.44, up from Tuesday’s 4.63 close. After squirming a bit — I don’t usually consider that early “squirming” to be a real pullback if it’s a matter of pennies — it “popped” a dollar, from 7.21 to 8.25.
    In this instance, we decided to short the pop. The large gap, plus a dollar early climb, creates enough profit-taking incentive to give us a predictable pullback. Normally, with a strong stock, we would then look for support back around the open or early low. In this case, however, the pullback broke below 7.21 and continued to lower lows. So we lucked out there with the short.
    Every news stock is different, but they do follow similar patterns. Knowing those patterns prepares us with an instant game plan when we recognize them occurring. And even when they break from a pattern, we can use those red flags to create new opportunities.

    *Look for Double Top or double bottom

    *A breakdown of either formation is bearish and should be shorted

    *The bigger the pullback the weaker the trend

    *Watch Open price reactions

    * Create pivot lines for pre-market low, nearby whole or strike numbers, moving avg, previous day’s intraday high

    *Draw trendlines

  197. DIA $137s – see 9:45 comment. Average entry is $2 and I will now roll to $136s for .40 if I have the chance (when I do this roll I buy about 1/2 of the $136s and set a .10 downside stop on the $137s at which point I buy the second half of the $136s and set another stop on the last of the $137s so that, if I catch a bottom, I have 2 layers working my way).

    Dday – doesn’t that feel great?

    BBD – drinking – best call of the day so far!

    IMB – dead trade for me. Sometimes you just have to walk away and this is one of them. I don’t even want to DD at a dime to halve my basis although strategically it makes sense to spend $300 on the off chance of salvaging half of a $3,500 loss on a lucky spike so a very unenthusiastic XXX I guess.

    GOOG down again, if APPL falls we may have a new definition of a bad market day!

    CROX – in our $10KP we sold the Aug $50s. CROX is at $50.40 and the $50 calls cost $4.70, which is $4.30 of premium. Our Sept $52.50s are now at $4.50 so we would be taking a huge risk for no reason by buying out the caller.

    AAPL – The $145s opened at $7, dropped to $5, then went back to $7 which is where they are now while the $140s opened at $10, fell to $7 and are now back to $10 EVEN THOUGH APPLE IS HIGHER. The best move to make is, of course, sell at the open, buy the next bracket up on the dip (assuming you are uber bullish) and take $5 off the table in case things don’t go as well as you think.

    QQQQ – I don’t even watch that chart. I’m watching the components that are holding up to see if I think they can turn but now, other than APPL, it’s not looking so good.

    DIA – currently in 200 $137 calls at $2 avg. Bidding for 100 $136 calls at $2.20. If I get them I will set a .10 stop on 1/2 the $137s, and a .20 stop on the other half and I will try to buy more $136s for $1.80 the $137s are now $1.90 so I expect to lose about .30 on the roll, giving me a .30 basis. Once I am down more than .60 I will consider increasing my call volume to lower the basis a bit (so I can get 1/2 out on a spike to even). If you need more clarification than that it will have to wait for after hours.

    DIA Leap puts – it’s too short-term volatilie. We cleaned up on that play last year when I saw a flatline coming in Q2 but I sure haven’t seen that lately!

    Curbs – they shut down the robots first, then they have a wacky rule that sales can only be made on an uptick (in other words, buyers must overpay and are fooled into thinking we are bouncing when we’re not). It’s just another way the system ends us screwing the small investor.

    NFX – I’m considering getting back in on the $50s after that sell-off too (but I’m not because I love my cash!).

    GG I like a lot.

    Welcome to Hell BZH! Nice call by the Prof, wherever he is…

  198. Is there a short squeeze in dollar or what? Gold is taking a beating

  199. SShhhhhh….on the Gap trading Method—:) -just make it easy and focus on only 4 patterns to recognize!!!
    1)pop and pop
    2)pop and pop failure
    3)dip,pop and pop
    4)dip, pop and pop failure

    If it gaps down you have to reverse the thinking my young jedi. It reverses. for example FFIV was a reverse “dip, pop and pop failure”. It SHOULD have dropped of the last “pop”. Use 3min chart, japanese candlestick. You’ll see slight variations but the style holds true.

  200. KC – What can I say it was a great call with no disgruntled analysts although the JP Morgan guy is capable of feats of extreme mental in-clarity. I joke with the IR guy via blackberry durring the conf call about setting up a shale 101 camp for the newbie analysts so they wouldn’t sound so stupid during Q&A. Anyhow, maybe one of these guys said take profits and on this type of day you get a big sell down cascade effect. That was the best NFX conf call and quarter I can remember and I’ve been listening in since 1998 on these guys. Estimates have to come up given the new production and some interesting cost cutting. Probably see Keybank upgrade tomorrow but you need the broad market to stop tanking. and nat gas to hold around which I think will happen. If you don’t want to pllay the short game the Septembers or later are a good bet. I increasinly think these guys are history in 12 to 18 months and I’m not alone in those thoughts.

  201. GT – worse than I thought when I said they’d miss yesterday.

    NFX – would I pay ZMan a 60% premium for the calls he bought 30 minutes ago? No. (sorry Z).

    If you all have time, look at the intraday prices of Apples calls and see why you rarely regret selling into the initial excitement and almost never regret selling half. If you need more convincing, imagine you had bet heavily on BIDU in the same situation – it’s also fairly strong but that subtle difference in the chart has dropped their $210s from a $17 open to $13.

    Holy cow – are we getting ANOTHER leg down???

  202. BZH

    LEN (Miami exposure) and SPF (west coast) might follow

  203. FTO: my `$3 $50s from the down refiner call piece I did on the 12th are bid $12.10!!!

    NBR and BJS continue to go down but OII riding high on new contract wins. They’ll have a lot to talk about Aug 1.

  204. You have to analyze the numbers and get earnings sentiment to impact probabilities in order to make the highest prob choices avail.

  205. Alan Mulally – 61 years old. He looks 40. We’ll see how he
    looks after a couple more years in the auto industry !

  206. Dollar/gold – I want to create a chart that overlays the dollar against precious metals. Anyone know what the dollar symbol/index is? Thanks

  207. So how much market cap did XOM lose today..:)

  208. Btw, the Gap Trading method works nicely. I picked up nice gains on BIDU and AMZN. Thanks guys..

  209. My puts are soaring!! I keep raising my stops I’d really like to unwind from all this crap I’m holding
    but the market wont let me

    My UTHR call is up! FUHHN

  210. John Edwards wants to double capital gains for people making over $250K!

    BX $23.62! FIG also a mess.

    FAF found a big cliff – these guys have been good canries for housing troubles to come.

    Dragon – very nice! Can we turn that into a post?

    Shale 101 – I’ll fund that! It would be a vital public service… 8-)

    XOM down about $25Bn.

  211. SPX/Nasdaq
    both have caught their lower BB. So, be very careful going long, especially the ones are falling hard. This momentum might carry things lower. The ones that have fallen hard are also probably the ones that have risen so high!

  212. AAPL earnings were great, but I’m surprise how well it is holding up in this market. I’m picking up Aug 140 puts for a day trade only.

  213. I’m all cash right now. It’s sure hard to not feel like I’m missing the short boat…

  214. Yes you can Phil.

    PCU, somethings wrong.

  215. -300 here we come. EOD might be good time for some calls?

  216. NFX – thanks for the CC summary zmann. I’m back in (but not at $1.6, sorry didn’t want to pay you the big premium either LOL), though with a smaller position this time. Now hoping for that rebound; better yet the upgrade.

  217. Please add the additional comments to it to because the technicals plus fundies is very important.

  218. tom2oc was right on the money with his bearish call

  219. Other than a few leaps and a bunch of DIA puts, I’m all cash, and gonna stay that way till this all blows over.

  220. Phil, I would appreciate your thoughts on SCI. Is it a good time to get back in? I know barrons had a bearish article a few weeks ago. thanks in advance.

  221. I think we’ve all been right, Fred.

  222. GOOG flirting with $500, not pretty if it falls.

    DIA – darn I forgot to mention and it’s very important – I don’t just roll like an idiot, I stopped out and I’m waiting for things to settle but the losses are 300% offset by the gains on the puts. XXX

  223. Some oil..COP, VLO, TSO…slowly turning up!

  224. CROX – Phil, with the current premiums on the $50 calls, do you think its worth adding more to our Aug $50 / September $52.50 mix?

  225. Wells Fargo closing up its subprime operation!

  226. AMD – below $15 finally. Not a big gain for me but at least a moral victory LOL. karmcon/reinharden I hope you guys still have your puts.

  227. PCU- something is wrong? Yes the market is down 285 points. LOL

  228. Look at BSC!!!

    BSCTF straight up I’ve rolled these guys down twice to get here should have held my original position!

  229. I’m slowly dipping into FCX and PCU leaps, one at a time (literally..:))

  230. optiondragon
    shorts all over on it and a weak market, not sure if it will jump like last earnings…

  231. GOOG
    under 500!

  232. We may be heading for -500 at this pace!

    I don’t think you can put a lot of stock in calls on this kind of fall into curbs. Curbs mean that nowhere near the sellling that is demanded is being filled. That makes sense when there’s an event like 9/11 or some crazy rumor but this market is dropping because of reality and that’s not going to go away if people sleep on it. What is going to happen is people are going to start realizing that Phil Flynn and Larry Kudlow and Jim Cramer are idiots who’ve sold them a bull of goods and wouldn’t know fundamental market issues if it bit them in the ass. When people lose faith in their bullish religious leaders, the collection plate (the market) suffers quickly!

    SCI – when the dust settles but don’t try to save them.

  233. RIMM
    still green, amazing!!

  234. CROX – not in the $10KP but no problem in a regular portfolio. We are counting on it NOT to go up, hopefully strong but in-line earnings.

    $10KP is just about even and 80% cash, that’s fine for me today!

    Greenspan – repeating cost of capital will continue to rise. Flight to bond safety is jamming down 10-year to 4.75% but that is a very short-lived effect that is supportive to the market.

  235. Dragon, Thanks for all the enlightenment! Really appreciate it. You the man!

  236. RIMM – hello happy are you saying that it is time to buy some RIMM puts :)

  237. Coolkid, I am not sure either so i’m going to play CROX with Gap trading in the morning and try to catch the collapsed IV in the correct trend. It will be volatile tomorrow.

  238. Phil: Are you still betting on BG puts here? Same premise?

  239. BEAV- Phil I know not right now but you looking to do something for earnings next Tuesday?

  240. GOOG bouncing off $500

  241. I’m about 50% cash right now. The other half is split up between LEAPS, short term callers a couple naked calls and a couple naked puts. Up about 1/2 percent for the day so far.

  242. libertarianwackjob

    I know how you feel I got shook out of some GS and BSC recently.
    I still have some BSC and MS puts, so I can’t complain.

    What do you think about the ETH move and give back? I am still holding that and opened a WSM position. BBBY also might be a good target great managers for growth, but that is not their current status.

  243. zzz did you ride nfx on that buck or take your .6 plus in a few minutes or add @ .9?

  244. Phil,

    If your sold calls have nothing left, do you buy them out and then what? In a severe market like this, do you sell off your long side and get out with a small profit or just stay naked which seems crazy. Selling more calls seems very risky too.

    thanks for any insight. Your mattress plays are outstanding!!!

  245. Gold looks to be bottoming. Buying more GDX to go with the puts I sold. Does anyone play the TLT’s (interest rates)? I have been selling calls for a while now and making a steady bit of cash. Losses are sort of limited (rates can fall only so far) and there is always a nearby level to roll your caller to if it goes against you as it has one dollar strikes. Any thoughts?

  246. Nice contribution there dragon, always nice to learn something new when you already THINK you know a lot….this board puts my knowledge in perspective about how much I don’t know…good job.

  247. XOM

    95 calls heading up nicely, now I think I’ll leg into those puts for protection.

  248. That VIX option whale really hit that good he initiated that position right before Anthony Mozillo CEO of CFC let everyone know this is “Depression” territory.

  249. Phil

    When and Where do you typically set you stops for your DIA calls after your initial purchase?

  250. Thanks Dday.

  251. BA just filled gap from yesterday

  252. Is the end of short tick rule a reason why market is going down fast?

  253. Hey brokers, i would suggest that you come out with bad news earlier rather than later for a higher blow out bottom reversal thus a higher future price. Get rid of the cloud. i know the investment houses read Phil’s blog.

  254. My 2 cents, If GOOG goes to 215 -220 again (that I really doubt would happen anytime soon). It’s a perfect opportunity to short it. I bought puts when it was at 420. I was hesitant to post it here as every body seems to be bullish on it. I think it will go down to 450 area in the next month or so. Also if RIMM goes down to 210 -215 area, it’s an opportunity to scoop it up on the long side. It is going to 250 before the split.

  255. if not for AAPL and homies and subprimers, I would be pretty damn upset the last few weeks!

    let me understand this, they have curbs for DJIA but it is ok for the nasdaq to drop 70, 100 even 200 points for the day. What BS.

  256. Dragon--thanks for the post on dippin & poppin. It provides a good framework, especially during this whacko earning season.

  257. What a great opportunity to sell puts and move to more cash – FTO 35 puts sold, GM 30 puts sold – only thing I’m buying are 30 T Sept 50 calls because T is a monster of relative strength today. Good luck all!

  258. Deso anyone know when DIA option going to expire for August?

  259. 13,500 held well but 13,600 was the 50 dma so if we don’t retake it, there could be a lot more trouble ahead. Sorry, I meant to say A LOT!

    It’s always time to buy some RIMM puts! RIMM is the XOM of telcom, not a chance they are worth $42Bn, which is more than MOT ($39Bn) and not much less than S ($60Bn), who have 10x more subscribers that pay 5x more in monthly fees than RIMM. They are projected to double this year in earnings and revenues yet they missed Q4 and Q1 and Q2 was a 10% beat of lowered expectations. Earnings are 9/27 and I’m hoping for a nice run-up so I can do a “mon-back” on several layers of puts. Other than that, nice company!

    BG – no, I give up. I was wrong, earnings were great and people are into the sector so I walk away.

    BEAV – not with ATI and TIE in the dumps. BA taking a hit too (nice opportunity if they go down more).

    Open Leaps – when my callers are way down I have to decide what I think they have left and also how each individual stock is perfoming on the dip. That determines how much protection I feel I still need. I won’t be able to put my head on a pillow tonight uncovered if we don’t get back over 13,600 as trading curbs will be off in the morning and sellers who were frustrated today may be chomping at the bit to dump out tomorrow morning. You actually get a better premium rolling down while the dip is in progress because the IV is high and there’s a lag to how fast the next bracket down adjusts to suddenly finding it’s the bracket that’s nearest the money.

    DIA stops – I don’t set stops per se. They are protecting my calls so I don’t mind losing on them but in trying to caputre profits on the way down it is key to keep your portions (level closest to the money first) of 2:1, then 2(with .25 tstop):1:1, then 1(with .25 tstop):2(with .25 tstop):1, then 2(with .25 tstop):1:1 again. Generally you don’t want to go more than 3 layers, tempting though it may be but I find that it is exceedingly rare that the Dow moves more than 300 points in a day. You also don’t really want to have more than 2 layers max at the end of a day so whenever you get to level 3 you should be taking off level 1 for ANY reason (Erin puts on lipstick for instance) as you are virtually guaranteed to lose .25 on the last set you buy in a session (as the only reason you stop layering is BECAUSE the market turns back).

  260. Where to find the Short Interest on S&P….

  261. I like BZH. But puts now just have no real upside anymore


    I went with CTX instead. CFC, BKUNA still my favorite soon-to-croak lenders…

  262. RIMM
    puts: thinking about it!

  263. FYI:

    DJIA % Declines *
    10% If the DJIA declines 10% prior to 1:00 p.m. CT, the NYSE will declare a one-hour trading halt. If the DJIA declines 10% between 1:00 p.m. and 1:30 p.m. CT, the NYSE will declare a half-hour trading halt. After 1:30 p.m. CT, the 10% limit is not in effect.
    20% If the DJIA declines 20% prior to 12:00 p.m. CT, the NYSE will declare a two-hour trading halt. If the DJIA declines 20% after 1:00 p.m. CT, the NYSE will declare a trading halt and will not reopen.
    30% If the DJIA declines 30%, the NYSE will declare a trading halt and will not reopen.

  264. BillBigD,

    Are you buying anything today?

  265. Short tick – I think its more a reason why we get so many short squeezes lately. It makes it easier to short stocks so there are more shorts. When this drop turns I bet we see a lot of severe snap backs.

    Oops, here come those tears again – no recovery is not met with relentless selling!

  266. Phil,

    thanks for explanation. Do you put stops on your DIA calls?

  267. TRADE: NFX 50 calls – half out at $1.80. There’s 80% for you in 1 1/2 hours. Letting the House Money roll for a bit as I think they’ll be higher in the am.

  268. BG- I guess they didn’t hedge this time. Your buddy Bolling must be grinning ear to ear.

  269. RIMM finally red!

  270. vinaydh, have taken note of your claims and will be holding you to it. ;)

    Markets needed a colon cleanse. I went mostly cash yest. Whats funny, i drew a line on the end of a BA chart yesturday that created a cliff straight down to 103. Here we are 16 hours later. Myself, well i amazed.

  271. anyone have ideas why WNR isn’t falling as hard as the other refiners. just below 50 dma

  272. Phil,
    YHOO- In 10KP, Since we have Oct 27.50′s, what are your thoughts on selling Aug $22.50′s (about 1.90 now)?

  273. DIA calls – same deal, I generally take those if I find myself too bearish or if, like today, I am concerned about getting whipped out of insane profits on my DIA puts. The key to this system is I treat the portfolio like a business and I reinvest profits into protection (up to 1/3) which allows me to stay agressive longer in either direction than I would if I were to hold naked options. Sometimes I hedge myself into a corner and make no money (like the Complex Spread portfolio the first month) but, as I said earlier in comments – as long as I learn something I feel like it was a win. There’s a lot of value in trading a stock even for a couple of months, you get to learn it and learn how it reacts to different stimulus and that makes you a much better trader the next time you get back on that horse.

    RTN slipping – that’s bad!

  274. BUYING- If I didn’t have a bottle of booze I would be buying cocktails one after another. No I made two buys today and both were NOV. Got $900 on the first trade. The second trade was at $121 so I am underwater as we speak.

  275. I shudder to think about the market action, but RIMM has a big gap around 180 that it might want to fill…

  276. Happy with you on both RIMM and FCX. I think those were excellent finds.

  277. WNR – already down from $66 in 2 weeks, I think they are just resting.

    FIG – what’s the real value of a hedge fund that has a negative quarter with investors clamoring to yank their money out I wonder? I’ve heard that MANY hedge funds have locked up investments which is really going to piss off the rich folk. This is bad for me though as my new fund will have trouble attracting investors if the climate turns sour.

    YHOO – I have the $30s so it’s out of the question for me. See my comments on YHOO earlier, I’m simply hoping there’s a buyout rumor before October so I can get the hell out but in a $10KP I can’t take that chance on selling a close call like that. I do endorse rolling down to the $25s for .43 and selling the $25s for .47 though. XXX

  278. Phil – With all the talk about rolling calls, a question keeps coming up for me.

    Ive been rolling callers down on my indexes as the market has been coming down — it makes me take profits and slowly transitions me to a bear stance. The question is in rolling the long calls. Id imagine if I want to maiintain a bear stance id leave em right where they are – but now that theres alot of air between where the underlying trades and where the long options are struck, I would probly wanna roll these down to /at least/ the strike of the short calls (or maybe an ATM strike, which is a couple points lower) when I feel safe again (or maybe even now?). These are 08 and 09 calls.

    In rolling, to do it for a credit, or even money Id have to sacrifice time. How would you handle this ? (with an expectation of a 5% correction).

    No need to answer now – more of a stratactical quesion…

  279. long Leaps – Excellent, thanks!!

  280. VIX is more than VXN.

  281. zzz – thanks on nfx!!!! I followed but like a novice trailed you in on 2nd dip 1.1 & all out @ 1.65. “Somebody” says that’s not bad if you anualize it!

  282. Holy cow, PTR down $5.84 – I love being right on a national broadcast (even if no one actually watches it…)

    DJ – give me the exact positions and entries later and I’ll be happpy to run through them. Essentially you only need to protect the capital you are leaving at risk so you don’t want to overhedge. All hedging is about disaster protection, not wiggle protection so you just need to make sure you’re covered while you sleep or while you’re away or while the market is closed. I hedge my calls so I DON’T have to sell GOOG when it drops $7 but meanwhile there were 20 other calls I cut as I look at each one and CALMLY decide which ones look like they might recover and which ones are acting shakey. That’s what I’m paying for, it’s a buffer that lets me make better decisions and ride out a dip until it starts to look more like a cliff.

    I think I menitoned I moved a lot of my DIAs to the Sept puts this week so that also helps as it let’s me effectively day trade the Aug contracts with tighter than usual stops as I still have the strong and long protection of the Septembers.

    Every time they lift the curbs programms start fighting to sell – very bad action and I’m not buying any calls, index or otherwise until I see 13,600 prior to the day’s end (and even then I’m not too keen on them).

  283. man, GS and MS in nuclear meltdown.

    Very lovely.

  284. happy & dragon.. in on the RIMM puts.. needed something to keep GM company on that page of the spreadsheet ;)

  285. my long AAPL leaps got covered with RIMM puts

  286. Phil, I know you advocate “ITS NOT MY JOB TO SAVE THE MARKET!”. But I have read somewhere that in this kind of broad sell offs, there are some really good stocks (fundamentally strong) which are sold for a discount. Any such hidden gems to keep an eye on?

  287. and this is for a very long term investment.

  288. Phil,
    YHOO – You said “rolling down to the $25s for .43 and selling the $25s for .47 though”, i don’t see $25 for .43.

  289. Phil

    I have 50 DIA Aug 137 puts where should I move to in sept?

    I am also slowly adding QQQQ sept 50 calls, Are those the correct upside cushion. I am up big today.

    You can answer AH.

  290. GS 190, Premiums in options point to a big drop, way expensive like going out to buy car insurance and it costs almost as much as the car.

  291. BSC words cant describe raising the stops ever higher getting scary….

  292. RIMM looks really weak like it wants to drop 10.

  293. TIN is a gem, and on a huge sale right now. Every sum of the parts model on the street has this at $70+, including mine before Pru shut down. Thanks to Icahn pressure they’re breaking up by year-end into 3 publicly traded companies, selling their timberland, and using the proceeds to either pay a special dividend or do a large buyback. TIN’s three businesses are containerboard manufacturing, a real estate development company, and a savings and loan (refused to do subprime lending). TIN holders will get shares of the other two companies, and either the large special div or a buyback.

    Icahn’s pressure got them to finally breakup and unlock the hidden value. He’s still involved, and SAC too. I’ve bought or sold puts everytime it was near $60-- this is a great buy now at $58. The breakup is happening in the third quarter. Maybe wait for the market to stabilize, but this is unquestionably a great buy here.

  294. Thanks Happy for FCX.
    I also bought BX AUG 25 puts with deals unwinding this could be it.

  295. LEH puts doubled and then doubled again on the 60 puts, whoa.

  296. Free fall on FCX.

  297. Phil, no worries you’ll actually get more investors cuz your rate of return is way higher than anyone elses with less risk too. Besides your so good you can create the money you were initially missing.

  298. I think it is safe to assume that we WILL close at the lows of the day.

  299. Happy a lil too early on your sell of FCX, let it ride, but it never hurts to cost avg out.

  300. SHOT time!

  301. VLO getting shot. Bought more Jan 08 puts this morning as part of rolling down from 72.5 to 65 puts. I will sell the 72.5 puts at close of the day.

    GS and SHLD almost 40 points down in just 4-6 weeks.

  302. 1460 next stop on S&P??

  303. holy smokes, at this rate my General Morons 30 leap puts will be in the money soon, wow!

  304. Holy cow… 13400 just broke. The last time this happened in Feb, I was in a technical conference all day and my wife told me about it on the phone after I got out. It’s entirely different watching it live.

  305. CNBC bloodymary time.. booyaaaaaaaaaaaah

  306. Dow down 382
    NASDAQ down 78
    S&P down 47

  307. wow

  308. Down $400! this is fun!

  309. Why did we not short BIDU and AMZN today? Gosh just too many things going on but that was silly. Of course we do have the AMZN bear call spread from yesterday but we could have done better if we were on the ball.

    MJ – NO, not THIS kind of sell-off, if it weren’t for curbs every 25 points we’d be at 13,200 right now.

    YHOO – rolling down to the long $25s for +.43 and selling the Aug $25s for .47, I doubt it’s still valid with Yahoo down another .15

    DIA – well I still have all of mine up to $139 because none of those stopped out (the benefit of length) but I’m up to (down to) Sept $133 puts, now at $3.25.

    Understand this: They are halting electronic trading every 50 points or so. 90% of trading is electronic so 90% of the sell orders are backing up until the lower the curbs so do not read ANYTHING into a pause or even a small bounce in the indices! There is nothing to buy and may not be until we get all the way to 12,500 with a test of 13,000 being a near certainty if 13,200 doesn’t hold.

  310. What does the Erin Index say?

  311. down 400 on the Dow!

  312. wow is it just me or has the wheels really come off the republican party’s buggy. Tokyo ‘Fox News’ Rose is calling Senator Specter (R-PA) a democrat on their news site! Hilarious! Criticize Gonzales The Liar and you magically go from R to D on this propaganda site. They did this also back when Mark Foley was feeling up children.

    With this massive amount of propaganda reaching the general public (between CNBC and Fox) there’s so much money to steal from indoctrinated fools I just don’t know whether to feel guilty or not.

  313. This has been the most structured decline of this magnitude that I have ever seen.

  314. BBD – we should have a stock market drinking game – take a shot every time we break 100 one way or the other, should keep us plastered for the next few weeks!

    GM – I believe I said earlier that my fear is they will drop $3 in one day…

    I can’t wait to hear Cramer explain what a tremendous buying opportunity this is!

  315. QQQQ’s bounced off its 50 Day of 48 bucks (roughly), but most likely it will probably close at the low of the day around 48 bucks. .

  316. VLO bidding small August 70 CALLS.

  317. Phil – GM – bless you….

  318. PHIL- I like it! Back to 300 down I will do one. LOL

  319. IRBT UP .60 WOW.

  320. SHLD down huge the last 30 days

  321. oil falling off the cliff

  322. QQQQ rather than buying DIA calls again I am going to roll down my 200 $50s at .62 (avg) to the $49s at ,74 for + .35 and then DD at .74 to end up with 400 at .92. If I get a bounce here, I will be taking at least 1/4 off but the Nasdaq is down 3%, same as the Dow and the S&P but I think if we are going to have a recovery it had better be led by the Nasdaq or I won’t be buying into it anyway. XXX

  323. Since you asked Phil :-) here’s Cramer’s comment

    “Did we lose the rest of the world? That’s what today’s selloff is about because this one may have started here, but the good folks in Europe and Asia are saying that the worldwide slowdown is upon us.

    That’s so counter to the conventional wisdom that it actually has appeal. Oil’s up too much. Rates have been ratcheted up all over the world. If the U.S. credit markets are shut down, that’s not good news for all of the Europeans who have been buying our debt.

    It would also take away a lot of the gains that we have seen among the U.S. companies that do business overseas.

    I am not buying it. I do believe that we could have a slowdown, but more likely is that we have panic like we had in China.”

  324. phil,
    many thanks for xle !
    ? = i have been wanting to get into spwr – should i wait or what would you recommend?
    it held up fairly well today.

  325. BBD – I’m sticking to beer while the markets open, the way this things gyrating I had to stick 2 in the freezer just in case!

    Oil, the best news there was a massive volume spike into the close that ran right into very heavy selling. Anytime a pump fails it’s very important to note and they couldn’t get $75 at the close and don’t think they didn’t try REALLY hard.

    Cramer telling us 3% on all the majors is no biggie.

    Down 418!

  326. Cramer is on crack if he thinks the fed will bail out big brokerages after they fed at the trough for so long.

  327. wow.. . we may land on 13000 even today..

  328. RIMM – LOD!

  329. Cramer did not save the markets.

    SPWR – if you can get a copy of fast money from last night watch it. SPWR CEO was on saying how amazing the company is and Eric Bolling went nuts on him saying it’s a fad, it’s subsidized, it’s impractical… You could see the desperation in his eyes as he stared into the face of demand destruction that’s going to land him in the Henry Bodget wing of the old analyst’s home.

    XOM down $6! This is so great! Sept $95s are holding up well at $1 so I’m just going to wait and DD rather than roll. Maybe at .80. XXX

  330. “Free Falling” music video on Wang’s World!! =)

  331. phil
    the other day when the markets went down 200 points my portfolio was hurting big time. since then i have repositioned, been shorting calls against long positions much more, and buying DIA puts. this time i’m actually doing so well, it’s amazing.
    i’m really really grateful for your teachings and humbled by what a difference a few days make!

  332. Phil,
    JOSB – In 10KP, i did not roll over my July calls, at this point do you think it is better to sell Aug 35′s(1.40) or Sept 40′s (.90) for our Oct 45 longs?

  333. If I understand this correctly the curbs will come off at 9,590 which means we are 1 NYSE point away from a fresh sell-off. Lets see…

  334. is it too late to buy the DIA puts or Rimm puts?

  335. boy, the poor bastard’s are trying thier best to shake out the aapl near calls. aapl was down more than the dow for a while (% wise) but the calls are holding value, even the $150′s which i’m short against my jan ’09 140′s.

  336. NBR put trade closed for 69%

    Added VLO and HAL calls

  337. Z

    Closed out NBR puts at +46%. Got nailed by BG puts though. :)

  338. Does anyone follow NFLX closely? Why is it up so much today?

  339. dragon
    Are you still going to play the CROX strangle you mentioned yesterday ?

    Posted July 25, 2007 at 11:15 am | Permalink

    CROX strangle – 2 to 1 overweight long, bullish, usually their best Q,

  340. OT (for me at least): SNE probably gets hosed tonight. $50 puts for a buck would be interesting if I did that sort of thing.

    Patrick – cool! BG wasn’t one of mine.

  341. SNCR tonight (apple play)

    any thoughts?

  342. Holy Cow Batman !

    Was the Dow really over 14,000 LAST FRIDAY ?
    and the S&P at 1554 ??

    What a flush !

  343. Cheap is working again. HAL and VLO rallying nicely.

  344. Are we gonna close at 1490 ??

  345. SHLD hit 130 today, now 140

  346. EXM could also be interesting tonight

  347. NOV- up .50 on my calls, there is a Santa.

  348. Thanks Windy! That’s really what it’s about, stop trying to make a killing and start trying to make a living, you might make a killing once in a while anyway but you have a lot less chance of being killed yourself.

    JOSB – hmm, I rolled to 5 $35s and sold 4 Aug $35s but that isn’t as attractive now. At least roll to the $40s for .75 and sell 4 $35s for $1.40 to get in a better position at no additional cost.

    DIA puts, I’m looking more the other way now as this bottom finally held. $136s for $1.93 are the way to go at the moment.

    XLF $35s for $1.50 also make nice upside protection in case the Fed says something calming into the weekend. XXX

    OIH (now you know it’s cheap!) Oct $195s were $8.75 on Monday, now $5.50 XXX

  349. sold everything at the bottom, Paulson and the Bush men coming up to a tv near you.

  350. For those who are NOT risk averse, from a well read website:
    “If you look back on the charts to each time the market had a Wide Range Bar Down and closed at session lows, there was a high probability of a rally the next day.”


  351. No, crox after. of course it will probably fly now. lol
    Big boys buying the bloodshed. Cover rally mixed in.

  352. JOSB- Phil should have told the guys in the 10k port the trade while you did it. Everytrade is very important and we don’t want to lose any of these people.

  353. SNE – do not bet against! Weak Yen may have made them mega-bucks.

    SHLD – looks like Uncle Eddy may have stepped in at $138, if we see another floor put in there, it may be a good spot to bet on holding.

    Remember how nicely EDU was recovering yesterday? Now it’s back to $5.80 so I’ll DD. XXX

    Be careful here as Paulson said subprime is contained and added 120 pts to the Dow, all evidence is to the contrary and they slapped curbs on the NYSE to lock in those gains so I’m not too sure this is real right now. It’s all about tomorrow but I’ll reestablish a neutral stance for tonight with my Qs and the DIA calls against the DIA $135 puts, now $2.78, the rest are off the table.

  354. OIH

    I’ve been slowly adding calls on the way down

  355. I’m out of ALL the puts purchased today. Holding cash!!

  356. Market
    going back down for the finish?

  357. FFIV
    still up 4+! One to look at if the market bounces tomorrow!

  358. Happy same here saw those MRO’s and wish i had those too. great trades.
    Phil I feel the same!

  359. XLF
    Phil, what month XLF calls. I do not see a 35 at 1.50.

  360. Wow FFIv thanks Happy. post earnings just as fun.

  361. Josb – did I miss that one? Sorry then, I do try to log all of those. I think when I made it I was thinking it might be risky but it did seem to work out so far. Still down $700 on the position though.

    Rally next day. Also a high probability that it’s a false rally so be doubly careful!

    Cash is very good – make no mistake I am 80% cash, this is just fun trading…

    If the FXI is a good predictor of the Hang Seng, we could see a 1,000 point China drop tomorrow to get us rolling!;range=1m;compare=^hsi;indicator=volumema+macd;charttype=candlestick;crosshair=on;logscale=off;source=undefined

  362. XLF – sorry $33s!!!!

  363. Wow found MDC again, S&P downgrade strong sell, looking at puts.

  364. It is the end of oil services. I actually own SLB RIG and OIH for the first time.

  365. Phil,
    Thanks, got it

  366. S&P Equity Research Downgrades MDC Holdings (MDC) to Strong Sell
    07-26-2007 02:47:42 PM
    More Downgrades

    S&P Equity Research Downgrades MDC Holdings (MDC) to Strong Sell
    Stifel Nicolaus downgrades Matria Healthcare (MATR) to Hold
    S&P Equity Research Downgrades ONEOK Inc. (OKE) to Hold
    S&P Equity Research Downgrades XM Satellite (XMSR) to Strong Sell
    S&P Equity Research Downgrades Glimcher Realty Trust (GRT) to Sell

    S&P Equity Research downgrades MDC Holdings (NYSE: MDC) from Sell to Strong Sell.

    S&P analyst, T. Smith, says, “MDC reports a Q2 loss per share of $2.32 vs. year-ago $1.66 EPS, wider than our $0.47 loss estimate. Total revenue fell 42% amid the housing industry slowdown, which we project will last through 2008. MDC booked asset impairment and other pretax charges of $167.5 million. The order cancellation rate of 44% marks no improvement from a year ago or from Q1. We are widening our ’07 loss per share estimate to $4.50 from $2.35, but maintaining our ’08 EPS estimate of $1.00. We are lowering our 12-month target price to $39 from $44 based on our updated price-to-book analysis.”

  367. what edu did you dd on phil

  368. Phil, those XLF 34 puts sold against the large gain on 36 puts is working nicely. Though I’m obviously missing out on a grandslam, the long put is gaining more than the short and trickling on extra gains (just like you said!). Excellent, thank you!

    This is probably an after-hours question:

    However, if XLF continues to drop, shouldn’t they begin moving a bit more in parity? If so, and XLF stabilizes way below 34, I’m wondering if XLF calls would make any sense for this position on a rebound to pay for the sold 34 puts-- in case that rebound doesn’t push up to 34. (Or should I just save the headache and accept the maximum gain on the original put spread?)

  369. RIMM
    look at it go!!

    2600 close!

  370. CLF – Earnings after close, still have the naked AUG 90′s from the earlier 10k spread. Down quite a lot while we were waiting for market to (erhm) show us the way…

    Stock is climbing back from its low, now 76. What play for earnings?

  371. WOW strong pump of IV into CROX unreal!

  372. Wow 97% of S&P 500 is negative!

    CME and GOOG recovering.

    EDU offered $5.80 for Jan $55s but no takers.

  373. The QQQQ’s bounce off of the 50 MA at 48 bucks was textbook perfect . Surprise to see it bounce that much. .

  374. CROX

    No kidding, the 50 calls are ridiculously expensive.

  375. CROX my jan 55 call just went to 7.2.. nice

  376. aap forming back up! sma 20 > 50 sma > 200 sma

  377. All things considered, AAPL stayed pretty resilient today…

    Anyone have thoughts on DO’s reaction to earnings even though they beat pretty well in terms of future plays? I own a few hundred share of their common stock..

  378. Statistically most likely an up day tomorrow, despite real trend.

  379. monstrous volume again on CSCO last 15 min

  380. after all that BS, GOOG might have closed green today.

  381. mmm sole winner on the dow!!

  382. VSEA- added Novembers for earnings

  383. were closer to dow 13000, than we are to dow 14000

  384. CROX huge quarter again

  385. had to schnitzel on 10 contracts of CROX! AUG 60.

  386. Phil, you mentioned dow 12500 as the next possible target. Do you have a down side target for SPX. Thanks.

  387. Nadir – Not true… Close just a bit over 13500! Impressive feat… Wonder when the PPT intervened! :)

  388. Nasdaq
    2599.34!!! LOL!!

  389. The level of non-panic here today was unreal, thanks to all for all that I have learned here.

  390. CROX beat by 14 and raises on top and bottom guidance!!! Its jumping higher. We’ll see.

  391. XLF – headache is right! Once I make a spread I’m happy to take a 25% gain off the table as that’s about as much as I expect from that kind of play. Of course, when in doubt, sell half (or buy back half) applies.

    CLF those are long gone from $10KP, closed on 20th when Julys had to be bought out as we couldn’t risk the Augs naked. This might be a good time to go over the 20% rule which is, quite simply – sell a position if it’s down 20% and you don’t have a better plan (hoping it comes back is not a plan!). If you still have the $90s the only reason they are worth .53 IS earnings, that will disappear tomorrow. I think these were .80 when we started, now .53 and I would have sold 2 $80s against them for $460 to cover my open calls but it’s a bit risky for a small portfolio. However, I have decided my avoidance of risk in the $10KP was its downfall so I will be restructuring now that we have cash.

  392. CROX halted.

  393. phew – what a day !
    off to see harry potter – too bad they don’t sell
    real drinks there !

  394. as expected Russel 2000 and S&P were the biggest losers. NDX lost the least.

  395. Check out all the asks lining up for CROX…this should be interesting can’t wait to see how that spread looks tomorrow.

  396. BSC finally got stopped out though the put came down 300.00 off its high that I saw! 25% stop off 11.80
    It’s been a helluva ride…..

  397. mar – byob.. enjoy..

  398. OPTIONDRAGON please explain ” SCHNITZEL” thank you

  399. S&P 1,450 – the 200 dma below that is another 70 points to 1,380, which would be back to the 2/27 drop zone.

    PPT – Pauson made a statement and about $50Bn was pumped into the market in 15 mins… I’d say that was when!

    Non panic – yes I’m so totally proud of this group – it’s exactly the trading community I wanted to build when I started this site!

  400. Well that was fun. At minimum the age of options is upon us with higher floor on the VIX.

  401. Seems like a monstrous buy of the QQQQs might have triggered those spikes on INTC, MSFT, AAPL, CSCO in the last 15 min.

    There was already record short interest on NYSE and Nasdaq, and I assume a lot of people shorted more today. We could have an interesting friday and next week :-)

  402. Colombian downturn-Was here in Feb, market gets smoked. Now another smoking! LOL

  403. Phil

    You should reconsider the hedge fund and create a Peer to Peer Investment portal. You know web 2.0 sticky stuff. You might make out better than the fund with an IPO. Hedge funds are so early 00′s. My Fairfield County neighbors all work for them and they are never home.

  404. CROX

    Was that a 1:1 ratio in the 10k portfolio, couldn’t find it anywhere. I did a little different spread which should look good.

  405. Likewoods- it means buying a small position, just to have exposure to the event but with a small risk capital investment.

  406. Hm. I have a Sep/Aug 50 spread with a locked in gain of 1.2, wonder where it will end up..

  407. Mar – that’s what those little bottles are for that they sell in the liquor store! 8-)

    CROX – looks like a big beat to me. Certainly makes me like them more.

    QQQQ – how’s that for hitting it to the penny? $49s closed at .92, a great example of using DD and roll to save a daytrade! (pat, pat)

    VIX – don’t forget that high VIX is making you think you are doing better than you really are on your leaps!!! When the VIX deflates if your calls are on the wrong side they will lose value fast…

    Peer to Peer Investment Portal – sounds like fun. Have you put real thought into it?

  408. dday they quote times are at 30 after and 35 after it resumes trading. Should be AAPL volatile!

  409. optiondragon,

    do you think CROX is worth buying after hours?

  410. WOW new GAP CEO. Now the markets will really rock!

  411. Peer to Peer Investment Portal…never heard of that particular PtP group.

  412. Looking at the numbers I’m leaning that way. But the market is moving against it and it could pull an AAPL.
    Which was a lil disappointing.

  413. If it hadn’t been for AAPL and WFR, I would be preparing to go outside with my dark glasses, a cane and tin cup. Oy vey!!


  414. Phil, your thoughts on the interest rate drop?
    I would cost avg into CROX but watch how it trades, wait for tomorrow even and Gap trade with long biased.

  415. WOW $62 on the BID so far!!! with Crox

  416. Phil – Mattress

    Thanks to your coaching and my mattress position, I came out just fine today. The XLE puts hedged my oil positions just fine also. Had a few other put plays and actually made $ overall today. Hmmm, maybe there’s something to this Phil’s Stock World!

    Question: why do you use DIA and not SPY for your mattress? Aren’t your positions more correlated to the S&P?

  417. That bid is being supported.

  418. WOW 64.45

  419. JAZZ- love it!
    APPL- not really disappointing dragon, but when you think 500% gain and get 50% minus puts maybe.
    CROX- At 59 now that might get you your 500% LOL

  420. BOOM – reported good earnings, stock up AH, maybe helps the metals.

  421. Wow! My $10KP just closed at $71,806!!! Turns out the MSFT Aug $32.50s are now worth $16 each. Now that’s a nice way to end the day and I’m going to pretend that number is real and go get some sushi!

    YRCW came in not as bad as expected – Yay!

    AMGN with a nice beat.

    BOOM back up on earnings. Now I’m glad I held TIE.

    Jazz – sounds like more length and more hedging would be a good plan for you!

    Interest rate drop? You mean notes? It’s temorary as people threw money into bonds in mega-billion chunks, this is unlikely to last. If the market recovers they will Bugs Bunny right back out of these things and we’ll give it all back BUT, another down day, especailly a Friday, could park a lot of money in bonds for a while and won’t that be great for our friends at the XLF, who just so happen to need some capital???

    Thanks to whoever pointed out that crazy VIX guy buying the $30s as it kept me naked on my Nov $13s!

    XOM right on the 5% rule for the day.

    CG – you are very welcome! I’ve found that the SPY offers good protection but never a win while the DIA is prone to very dramatic moves more often. The spread on a $3 SPY move is about $1.25 while a $3 DIA move nets about $1.25. Also, the Dow is easier to check when I’m out and that’s a factor too as I tend to slap those plays down whenever I have to go out or take a day off to cover the portfolio.

    Good day guys – dinner time for me!

  422. Peer to peer

    No thought at all, but I am sitting on the url and I think which I was going to use for a dating site in 2000 (using neural networks and personality profiles – eharmony eventually did something similar). Some lunatic offered me $125,000 for the name. I replied $150,000 plus warrants in the new entity. They responded 5 minutes later saying they were going with their #2 choice because their clients didn’t want to negotiate. I kicked myself. 2 weeks later the bubble popped. I traced the client to the for dummies publishers.

    I sure there are some part time traders who work in the industry who may have ideas.

  423. CROX – I’m in some JAN/AUG50 spreads and SEP52.50/AUG50 spreads. The AUG50 had about 4.90 in premium left today at the close. My plan is to wait this one out and pick up the premium decay before I roll out to SEP.

    That said, I’ve never had a short position against such a big position move. Is there any reason with a big jump like this to do anything besides wait out the premium on the short and roll just before expiration?

    Thanks gang. Also…thanks for the training that set me up to be up 13.5% on a down day like today. That NEVER would have happened without the day to day classes all of you have been giving.

  424. CLF – Must have missed when you sold, I was still under the impression we were going to wait for earnings which is the only reason I kept them after legging out of the JUL.

    Ah well… things can be missed in the 4-500 comments a day. :|

  425. SPY DIA – sorry that was $1.25 vs $1.55 but it’s hard to quantify looking at today’s numbers.

  426. Thing is if CROX opens up over 60, and stays that way, there really wont be much of a premium on the 50′s that were short. I need to see what happens tomorrow and odds are i’ll have to roll both my 50′s (Sep and Aug) out quite a bit.

  427. Crox

    I forgot I had 10 Jan 08 50 calls. Nice bonus. Good day indeed. This site rocks.

  428. Phil – Mattress – DIA vs SPY
    You said:

    The spread on a $3 SPY move is about $1.25 while a $3 DIA move nets about $1.25.

    Is that a typo on the $1.25 move on the DIA? Did you mean to say that the DIA moves more?

    By the way, we’ve been on 3 Disney cruises w/ our kids and loved them. Too bad they’re older now and too bad they didn’t have the European cruise a few years ago – enjoy

  429. SPY – DIA – sorry, didn’t see your answer before I posted.

  430. Phil, good memory on my post questions. I am moving my accounts from Scottrade to Options House, and that should allow to do more hedging. Scottrade will not permit you to make most of the trades you advocate, so I go long a lot of your recommendations with no downside protection. Also, you’re right on the shortness of my long timeframes.

    Can’t wait until you and DDay get the club going. I just hope I have enough pecunia left to invest.


  431. VIX call- your welcome phil that was me an it was too big of piece of info I had to let everyone know! =)

  432. Oh no – CROX is flying – hopefully it will deflate by the open tomorrow – if not – Phil we need some good plays on this one – I sold some Aug 50 calls against my Sept 52.50′s – so any suggestions will be helpful.

  433. LDK look sgood still.

  434. Dragon, How did you get this info…?

    “Someone just bought 4800 contracts and another 1000 contracts of LEH 65 puts i bought this morning.”

  435. Real time Real Tick 8 Level II platform, you see all trades and since I owned it I saw those trades and knew I was on to something.

  436. Dragon -

    Thanks for the LEH puts. Think it’ll fall some more in the morning? I couldn’t take the great profit on it earlier because the daytrade would have frozen my account for days.

  437. ok dragon. I didnt know Level II quotes were available for options also. Fidelity ATP does not seem show them…

  438. See if you can bring up a marketmaker window and type in the option contract name.

  439. Phil,
    Do we have to do anything for CROX in 10KP since it is up so much or wait till closer to expiration?

  440. I can see Level II quotes for stocks, but for options is says symbol is invalid

  441. thedraz- unknown, awaiting more news tomorrow morning.

  442. Phil,

    TM – Bought Jan-09 $110 Calls and sold Aug 120 Calls for net debit of $18.75. Thanks for your help with that.

    Now when do I roll to Sep calls? More important, when to jump out if TM starts heading back up (as it did a bit towards close)

  443. Do you recommend paying off the caller now?

  444. CROX – Do you recommend paying off the caller now?

  445. bmb -

    Re CROX premium…even at 60, I can’t imagine there won’t be some premium left in the AUG50s. With CROX @ 50.59, the AUG40s had about 1.40 in premium. While it’s not a given, I’m hoping that we open tomorrow with about that left in the AUG50s. If so, I don’t want to pay the caller $1.40 for the 3 weeks to roll early.

  446. dragon,

    do you remember checking what the short interest was in CROX in last earnings?
    I know you mentioned yesterday its 50% this time…

  447. Yahoo Quotes – Can they really be this bad?!?!?! Im looking at the Yhoo QQQQ August $50′s and they show up right now after market close at $.56, but $.45 on Scottrade. Obviously, I’ll trust Scottrade more, but how is it possible that Yahoo quotes can suck this bad??? Phil, you posted a note a few months ago stating how Yahoo quotes were completely broken for days without anyone noticing. If the rest of the company is being run like the Yahoo quoting system is, it gives good reason why their stock is in the crapper as of late.

  448. Double OUCH on these Diagonal Spreads. – First I get crushed on AMZN, and now CROX in afterhours. Phil, Im looking for good advice tomorrow on the likely consolidation point to roll up to for CROX.

  449. DECK- DID it again also. Beats by 7 cents

  450. Wang’s World
    new posts up!!

  451. BA volume over last 3 days… pretty interesting check the volume and closing price, nice fill
    Date Open High Low Close Volume Adj Close
    26-Jul-07 106.06 106.80 102.23 103.70 10,480,300 103.70
    25-Jul-07 106.98 107.83 106.38 107.23 10,402,700 107.23
    24-Jul-07 103.45 105.67 103.34 103.80 5,535,100 103.80