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Thursday Wrap-Up

"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." – KeyserSoze Posted July 26, 2007 at 4:48 pm | Permalink

What can I say?  I'm very proud!

We had a fantastic day as everything went perfectly for our short positions, especially our mattress plays that usually protect our virtual portfolio but today were the stars.

It also didn't hurt that we've been short on oil for the month and it finally paid off in spades, especailly our old buddies XOM, who lost about $26Bn in market cap in what can only be described as a rough day.  As I mentioned in yesterday's wrap-up, we were keying on XOM and the XLE for put plays, capitalizing on the strategy Zman and I have been playing up for weeks – that producing less oil leads to less profits! 

Our MN1 broadcast pick, the PTR $150 puts, had a fantastic day as well as they doubled on the $5 dip.  We held onto those, hoping for a very hard slap in Asian trading to drive the stock back to the 50 dma at $143.

Our Apple plays (also reviewed last night) went off spectacularly, with the stock coming in right at our sweet spot and we closed out $135 calls for a 20% loss, the $140 calls for a 105% profit, and the $135 puts with a 50% loss leaving us open  with the Jan $150s with a 121% profit, the Oct 140s with a 223% profit and the Aug $150s with a 32% profit in the Complex Spreads Virtual Portfolio, putting it up 135% for the year, an 11% gain on the week.  We also still have the Jan '09 $140s, up 20%, against which we sold the Aug $140s and $145's in the Long-Term Virtual Portfolio.

Tomorrow it will be our CROX Sept $50s that make us very, very happy as the earnings were so good they had to halt the stock!  We also have a spread of the Sept $52.50s and the Aug $50s in the $10KP that cost us a nickel so we'll be looking for a dollar or so there if we can get it!

 

We took a neutral stance into the close but, like the great Yogi says: "It ain't over 'till it's over" and we moved into the close with very mixed feelings as the Plunge Protection Team was clearly scrambling with Paulson running around telling everyone to remain calm, which only served to make me nervous!  Paulson scheduled a pre-market interview on CNBC tomorrow so we went a little longer, just in case but I warned at 3:39: "If the FXI (off 4%) is a good predictor of the Hang Seng, we could see a 1,000 point China drop tomorrow to get us rolling!"

Paulson's pals at GS looked anything but calm as their stock plunged another $8 to what looks like support at $195, down $38 since June 1st as deal after deal gets called into questions and the oil and other commodities they've been pushing on the planet start to lose their luster, much like gold, which also slipped $11 to possible support at $662.

It was a tough day for the Dow, which bottomed out 449 points before bouncing, finishing at 13,335, 5% off last week's high, while the S&P clawed back from 1,465 to finish down 35 at 1,482, EXACTLY 5% down from last week's highs.  The Nasdaq was our strongest index, dropping just 4.5% for the week but closing just under 2,600 in need of a serious lift.  GOOG was no help today with another $2 drop but at least they took a nice bounce off $500

Happy Trading says we need the S&P to show us the money tomorrow and I say we will need that Nasdaq leadership to pull it out so we took the QQQQ $49s to cover our remaining DIA puts:

 

Happy's excellent streak of picks continues, all still available for FREE on his Happy Trades tab:

  • FCX Aug 85 puts, FCXTQ, at $2.2, +12.8% (partially out)
  • MRO Aug 60 puts, MROTL, at $4.6, +35.3% (partially out)
  • MRO Aug 60 puts, MROTL, at $5.2, +53% (all out)
  • RIMM Aug 210 puts, RFYTB, at $4.2, +16.7% (partially out)
  • RIMM Aug 210 puts, RFYTB, at $4.5, +25% (more out)
  • AMZN Aug 90 calls, ZQNHR, at $2.85, +9.6% (took some off)
  • AMZN Aug 90 calls, ZQNHR, at $3, +15.4 (all out)
  • FCX Aug 85 puts, FCXTQ, at $2.25, +15.4% (more out)
  • RIMM Aug 210 puts, RFYTB, at $4.3, +19.4% (all out)
  • FCX Aug 85 puts, FCXTQ, at $2.05, +5.1% (all out)

That's right, we have trades for every market direction, sometimes all in the same day the way things have been going lately! 

Zman showed some amazing flexibility by picking winners with NFX calls and FTO puts even as our earlier HOC pick went lower than low  today.  NFX was up 10% from Z's Thursday morning featured pick and pulled back to up 'just" 5% by the day's end but he gave us a perfect exit at 10:41 saying: "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."  Kudos to ZMan for an excellent earnings play and the much appreciated play by play during the conference call! 

Congrats to all on a great team effort!  It was a very exciting day and we have no idea what the market will do tomorrow but at least we do know that we'll be ready for it – and that's a good thing!

 


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  1. Asia Markets : Friday, July 27, 2007

    Japan*

    17283.81
    -418.28
    -2.36%

    Hong Kong*

    22570.41
    -641.28
    -2.76%

    DJ Shanghai*

    446.22
    2.19
    0.49%

    S.Korea*

    1883.22
    -80.32
    -4.09%

    India

    15342.93
    -433.38
    -2.75%

    * at close

    Sources: Dow Jones, Reuters


  2. Asia Markets : Nikkei Follows Wall Street’s Fall; Shanghai’s Market Holds Its Ground;
    Tumbles Elsewhere
    Asian equity markets were knocked lower Friday after another bout of risk aversion mauled Wall Street overnight.

    Japan’s Nikkei 225-stock average slid 2.36%, or 418.28 points, to close at 17283.81, while South Korea’s Kospi Composite fell 4.1% to 1883.22 and Taiwan’s benchmark index dropped 4.2% to close at 9162.28. Hong Kong’s Hang Seng sank 538.66, or 2.3%, to 22673.03 in midday trading. Shanghai’s major index, the benchmark for domestically listed Chinese shares, finished little changed at 4345.35, after hitting a record close Thursday.

    http://tinyurl.com/2sh7zu


  3. European Markets – European Stocks Mixed Following U.S., Asian Selloff

    European shares bounced in and out of positive territory Friday, following three days of losses for the majority of global shares, as concerns over the rising cost of borrowing remained.

    http://www.cnbc.com/id/19983729


  4. Carry Trade – Yen Surges as Market Turbulence Stokes Risk Aversion

    The yen hit a three-month high against the dollar and a six-week high versus the euro on Friday as a selloff in credit and stock markets forced investors to cut back on risky carry trades.

    The yen gave up some gains as Japanese investors seized on the rebound to buy foreign assets and higher-yielding currencies at better levels, but traders said further turbulence in
    financial markets could prompt another wave of short-covering.

    The yen’s broad value has slid to 22-year lows as many market players have used the currency as a cheap source of funds to buy higher-yielding currencies in the carry trade.



  5. I read this on another board and found it straight forward and needed (by me) when I begin to get a little cocky after some successes. Although, I am “kind of” insured I still need to be reminded of the basic risk this type of trading inherently comprises.

    “If you do not think that the markets are risky, if you do not take steps to protect yourself from the type of carnage we saw today, you are absolutely going to be wiped out by the end of this summer. Tell yourself everyday:

    When I put my monies into the market, they are at risk and my cash is at risk of ruin.

    The markets are not gentle and loving and they don’t care about you ( except to take your money) and even then, they don’t care. You play the markets and they play you. Lots of playa haters to go around! They don’t know who you are. YOU know who you are. You care about yourself, your hard earned money, your loved ones and your future. Take personal responsibility for whatever YOU do in these turbulent markets. The markets are structured in such a way as to make as many people as possible lose money.

    There are going to be vigorous rallies. It happens all the time. The S&P has not finished going up. It has to do that to get as many people as possible bullish and complacent again. On days like this, everyone gets bearish and starts buying puts and shorting futures etc only to get whipsawed in the next rally.
    Markets go up on the back of shorts who are forced to cover, and down on the backs of longs who are desperate to get out--sometimes at any price.

    We are in a massively volatile market that many of us have never experienced.

    No matter what- even if we didn’t have to contend with the vol and whipsaw, the markets are risky. The markets are always risky. Simply put, we are buying and selling risk . ”

    Link to a utube video that relates migrations of the african willabeast to traders like us entering the equity markets.

    http://youtube.com/watch?v=cE8oAjQMWU8


  6. The FT reports that Google (GOOG) will offer free services to Sprint (S) WiMax customers.

    Believe (or at least I want to) this is one more spoke in the wheel supporting my CLWR WiMax technology partnered with S, and now GOOG also, theory for the 700mhz FCC auction. Have the CLWR Jan 09 30′s with the Aug 35′s and Sep 30′s as short calls. Auction’s deadline is Jan 8, 2008 and will be enforced as the fed govt could really use the 15-25Billion it is expected to generate. Will take mos to identify the winning bids and delivering of the purchased licenses, but the formal release of the licenses “won” and the plans to implement by S, GOOG and CLWR will be a major catalyst for stock price appreciation (at least for CLWR).

    This is only my concoction of the future as I haven’t seen anything in black and white as of yet. I do like following computer technology and its advancements. In fact, the money made from the purchase of 200 shares of a little computer Co. in 1984 has paid my divorce atty’s, the Ex and provided me my capital for this little venture. I had asked the thoughts of my broker buddy and he said it would never pay and was a waste of $$, but I thought a 286 microprocessor and 4K of vram on a video card would be very successful so I spent 3800 bucks for 200 shares of Intel. To this day I enjoy reminding the same broker buddy about it on occasion. :cool:


  7. Thanks for the early moring smile, Karm. Great story.


  8. morning!


  9. That is a cool story, Karm. :-)


  10. Phil,
    Any actions we should take for CROX in 10KP today?

    Also, in your LTP portfolio, I thought you have GDX in there, but is not in the spreadsheet.
    Also, CAT is not covered.


  11. Phil,
    When did you initiate the CROX Sept 50 calls? I didn’t see them listed in any of the portfolios and I didn’t see them in yesterday’s post.


  12. Zman post up! All the news you can use on NFX, refiners, natural gas … you know, energy stuff. Have a great day gang!


  13. Phil: CROX spread. This one has me confused. What is the exit strategy? Sell the spread for a 1$ credit 9(hopefully)? Buy back the short side which will be deep ITM & let the long side run?


  14. Harvey, I don’t see them either.

    Dick


  15. Good morning! Writing up post but CROX was 3:27 on the 11th: “CROX – LOL, listen to yourself. You took them to save another position and you did – mission accomplished (and not in the BS Iraq banner way). Remember your pain and let go of the position – it’s not doing what you thought – find something that’s behaving itself to bet on. I like the Sept $50s for $5.10, selling the July $50s for $1.35 and rolling to the Aug $50s, currently $4 as a new earnings play but it’s just a math play, not a certification that CROX should be up over 100% since May. XXX ”

    In a similar vein, someone asked me about CLF and it turns out I did stop out of that Friday without realizing it (once I was naked on a position I didn’t trust I set a tstop of course, that one triggered on a dip below $85 on the 20th but on Monday at 10:15 I said: “CLF – I stopped out of them on Friday but I think they will come back so if you still have the Aug $90s, now $1.77 you can either take that pretty good gain and run or roll to the $85s for $1.70 but it’s a risky earnings play (26th). You can also roll out to the Sept $95s for $2.02 and sell the Aug $85s but that’s also risky pre earnings.”

    Sorry about that, I have a lot of positions and sometimes they trigger out before I notice, especially if they are not on my main screen.

    Oh my gosh are our leftover puts going to make some more money today!!! Let’s be ready to stop out if the GDP is taken well. I’ve got 200 $49Qs and 300 DIA $136s against about 600 DIAs (Sept $139, $138, $136 puts and Aug $136 and $135 puts so, whatever happens is good for me!


  16. Karmcon- were you able to play the bounce on WFR yesterday?


  17. I noticed that many of you are able to see multiple bid/ask pricing on whatever software you are using…any assistance around this is appreaciated. I am using Think/Swim presently


  18. CVX with BIG BEAT:

    $2.52 vs 2.32 Consensus.
    Revenue of $56B vs expectation of $50.


  19. Phil, I hope that isn’t a pic of your wife doing her ritual to get you to come to bed?!

    jk


  20. Phil…

    you said”Good morning! Writing up post but CROX was 3:27 on the 11th: “CROX – LOL, listen to yourself. You took them to save another position and you did – mission accomplished (and not in the BS Iraq banner way). Remember your pain and let go of the position – it’s not doing what you thought – find something that’s behaving itself to bet on. I like the Sept $50s for $5.10, selling the July $50s for $1.35 and rolling to the Aug $50s, currently $4 as a new earnings play but it’s just a math play, not a certification that CROX should be up over 100% since May. XXX ”

    I am trying to fully understand what you are doing here…buy the Sept 50 call at 5.10 cost…selling the july 50 call for a credit of 1.35 (here’s what I don’t get…and rolling to the Aug 50′s currently 4.00…this is the part I am not sure of… could you take a minute to explain the last part of this, you have many trades that are profitable that I don’t execute for myself do to not understanding the last portion of this trade..

    Many, many Thanks
    Don

    Thanks Don


  21. Pre-Market Stock News (July 27, 2007)

    (ACPW) Active Power -$0.07 EPS vs -$0.10 estimate.
    (BHI) $1.12 EPS vs $1.10, but was $1.09 after items.
    (BPO) Brookfield Properties $0.42 EPS vs $0.37 estimate.
    (CROX) Crocs traded up almost 20% after beating earnings and raising guidance again by a wide margin.
    (CRDN) Ceradyne received a $78 million ceramic body armor order from US Army.
    (CSCO) Cisco Systems investing $150M into EMC’s VMware; CSCO also authorized a $5 Billion additional share buyback plan.
    (DEBS) Deb Shops being acquired by Lee Equity Partners for $27.25 per share.
    (EMC) EMC’s VMware is getting a $150 million investment from Cisco Systems.
    (FO) Fortune Brands $1.53 EPS vs $1.44 estimate.
    (GPS) Gap named Glen Murphy as replacement for Fisher as permanent chairman and CEO.
    (IDXX) IDEXX Labs $0.89 EPS vs $0.84 estimate.
    (IR) Ingersoll Rand $0.95 EPS vs $0.95 estimate.
    (ITT) ITT Industries $0.92 EPS vs $0.90 estimate.
    (KDN) Kaydon $0.61 EPS vs $0.60 estimate.
    (KIM) Kimco Realty $0.71 EPS vs $0.60 estimate.
    (KYPH) Kyphone being acquired by Medtronic for almost $4 Billion at $71.00 per share.
    (LZ) Lubrizol $1.17 EPS vs $1.13 estimate.
    (MHS) Medco Health Solutions $0.86 EPS vs $0.77 estimate.
    (MOG-A) Moog $0.59 EPS vs $0.59 estimate.
    (RCKY) Rocky Brands -$0.16 EPS vs -$0.01 estimate.
    (SCG) SCANA $0.47 EPS vs $0.39 estimate.
    (SCMR) Sycamore traded up 6% after Cramer gave it a speculative value endorsement as trading close to its cash value.
    (TRGT) Targacept formed an alliance with GlaxoSmithKline in therapeutics for CNS-related disorders
    (VECO) Veeco Instruments $0.05 EPS vs $0.09 estimate.


  22. Phil: CROX “We also have a spread of the Sept $52.50s and the Aug $50s in the $10KP that cost us a nickel so we’ll be looking for a dollar or so there if we can get it!” Please clarify the exit strategy for this! How will we take a $1 with the Aug 50′s deep ITM?


  23. BBD,

    Got fortunate on both APPL and WFR bounces, sold my Aug LT calls in each (close to high of day) then sold against my Jan’s (at almost same price as sale), then bought back for almost $3 pi per contract. Rest of port didnt fare as well though, except for Windy’s Gen Moron Aug 35 P’s and the Sep/Dec SPF 15 P’s. Suckin wind on IMB , MICC and EDU big time. FCX down also but Nov C’s and I am slowly scaling into.

    You’ll prob be tappin CROX and CVX today? Congrats on your results yesterday, BIDU too if I recall correctly?


  24. BBD,

    oil – 75.33 +.38 have a good one and I am sure you will have a good weekend….


  25. VMARE-first ivestment from INTC now CSCO! I have been saying this is going to be big.


  26. I swear I just now read this:

    Google’s (GOOG) Back Door Wireless Grab
    Google (GOOG) has cut a deal with Sprint (S) to provide search and its GMail and calendar functions for handsets that will operate on Sprint’s new WiMax network. The deal could expand to include customers on Clearwire’s (CLWR) WiMax system as well.

    As The Wall Street Journal points out: “Google’s collaboration with Sprint comes as Google is battling in Washington to impose new rules for a coming auction of valuable radio spectrum.” The search company may not have its way in terms of opening up the spectrum to more competition. AT&T (T) and Verizon Wireless are doing what they can to block Google. They cannot afford to have an open systems where their handsets can be used on other networks and consumers can download wireless applications at will without paying their primary carrier a toll.

    So, Google will go in the back way. If Sprint’s WiMax network is successful, it could create the single biggest threat to the 3G plans of its larger competitors. And Google can make certain that the Sprint product can be feature rich.

    In addition to the Google software, Sprint will open its system to allow consumers to download any handset-ready software, including VoIP applications.

    As the FT writes: “Google’s partnership with Sprint signifies one of the many avenues that the company is taking to enter the wireless space, with other paths bypassing mobile network operators entirely,” said Nick Holland, a senior analyst with Aite Group.

    Google intends to win its fight for open wireless networks whether the FCC cooperates or not.


  27. BBD/Dragon – what do you see as trades today for CROX? And what is VMARE? What is the symbol? Thanks


  28. VMARE a still in the can IPO, see blurb below

    VMware Scores a Cisco Systems Investment (EMC, VMW, CSCO, INTC)
    If an Intel (NASDAQ:INTC) investment of $200+ million for a 2.5% stake into VMware wasn’t good enough, EMC Corp.’s (NYSE:EMC) soon to be spin-off is getting a new investor: enter Cisco Sytems (NASDAQ:CSCO). Cisco will purchase $150 million of VMware Class A common shares currently held by EMC Corporation and will have close to a 1.6% stake in the company. Based on the dual classes of shares it will have less than a 1% voting stake.

    According to the release, this will enhance efforts and collaboration. Cisco’s purchase is intended to strengthen inter-company collaboration towards accelerating customer adoption of VMware virtualization products with Cisco networking infrastructure and the development of customer solutions that address the intersection of virtualization and networking technologies. VMware and Cisco also entered into a collaboration agreement that expresses their intent to expand cooperative efforts around joint development, marketing, customer and industry initiatives. The companies intend to foster solutions for enhanced datacenter optimization and extend the benefits of virtualization beyond the datacenter to remote offices and end-user desktops.

    We’ll see how this all pans out, but at this point EMC is setting an even more solid value-base for its upcoming hot partial IPO.


  29. CROX: I’m long the Sept. 52.5 and short Aug. 50 in equal amounts. Could any of you experienced options traders tell me what’s obvious about this play that I’m just too stupid to see? I think I need to act right at open but I’m not experienced enough to know how to limit the damage!

    “CROX “We also have a spread of the Sept $52.50s and the Aug $50s in the $10KP that cost us a nickel so we’ll be looking for a dollar or so there if we can get it!” Please clarify the exit strategy for this! How will we take a $1 with the Aug 50’s deep ITM?


  30. Thanks Karmcon – so is this a CY/SPWR type of trade? Do you buy EMC and VWARE when it goes public? Thanks for the info.


  31. new post is up


  32. EMC already public, maybe now look to buy?


  33. CROX

    Just relax until you see what its going to do, I believe it still has a little premium left so let that dry up first, just don’t panic for pete sake.


  34. CROX – I never did roll the second part as I decided that the dive to $45 was a pin. That was just the original plan.

    We’ll discuss on the new post.


  35. If it starts running I’ll roll, but I’ll wait to see if it can handle 60 first


  36. VLO and HAL rising, FTO still falling.

    NFX up 2.3%, stopped out of remaining 50s on the market headfake at $1.70 for a quick 70% gain. Watching for re entry.


  37. Oh well we’re breaking those nice support levels we were sitting right on top of on DIA and SPY.

    Of course it all depends on the close but the market made a feeble attempt at a rally early on and then just sat and twitched for awhile.

    Its in need of intensive care.

    Is Dylan Rattighan on crack ? I swear the guys on something – hes wired up… maybe he just needs to drink decaf…