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Monday Virtual Portfolio Moves

Posted July 30, 2007 at 10:02 am | Permalink (Edit)
I’m adding SPY Sept $150s at $2.80 as they had good movement last week so they will make a good momentum cover. XXX
Posted July 30, 2007 at 10:17 am | Permalink (Edit)

X is making a move, we never took the X and NUE trades from last week but they make nice recovery plays down here with the X Jan $105s at $9, selling 3/4 Aug $100s at $3.80 and NUE Jan $57.50s at $3.85, selling the Aug $55s for $1.32 XXX

Posted July 30, 2007 at 10:24 am | Permalink (Edit)

NYX – I’m in the Jan ‘09 $85s at 11.90, now $13.60 and I sold the Aug $75s for $4.30, now against half. You can still take the leap but I’d like to see it test $77.50 before I sold Augs if I were going in fresh but I wouldn’t let the $75s slip below $3.50 – If you are lucky, you’ll get $3+ for the $80s in a nice spike. XXX

XOM – good time to buy those Sept $90s for $2. You can sell the Aug $85s, now $2.60 either immediately against half or as a downward momentum play if you are good at that stuff.

Posted July 30, 2007 at 10:41 am | Permalink (Edit)

Sadly there was not much gas in this rally’s tank- be VERY careful here. I am watching and waiting. If OIH is going down with spectacular sector-wide earnings, what’s the real hope for the rest? If I were not very heavily hedged with index puts I would be stopping out of things, even IBM and AAPL as this market is about as unattractive as I’ve seen it since Q2 ‘06 when bad news was a disaster, good news caused a sell-off and great news would give a stock a 2 hour pop before turning back down. That was a 1,000 point drip but we’re 40% higher now so that would be 1,400 for a similar correction, right to my 12,500 target coincidentally!

Not chasing those SPYs or X or NUE but I will leave my entries open to keep tabs on them.

Posted July 30, 2007 at 11:08 am | Permalink (Edit)

SU – my problem is I already have the Sept $95 puts at $2.55 and they went down so hard I sold half and never bought more because I didn’t want to chase. Going on the premise that they have long-term structural issues that will hamper their growth (projected at 25% by ‘08) and allowing for the damage that a hurricane and high nat gas prices could do to their operation, I do like the Dec $80 puts at $3.50, hopefully selling the current $80 puts for around $1.50 on a nice down move.

GSK – I’m in the same boat – filling a little too easy, makes me think I want the .40! I’m following through though as this explains the sell-off. Never think that you are hearing news first, now we know why GSK got hammered last week and they are already down 10% which is a major overreaction to the pulling of a $3Bn drug (that is already off 22% in sales from last year on this “news”) from a company with $45Bn in sales. I’m actually inclined to roll my caller to the $50s but I’m following through by taking 4 off the table and waiting to see which direction we go. We have November at a $1.20 basis so if the $52.50s expire worthless we are in good shape if we just hold $50 but I’m not too keen on selling more calls if the stock is holding up as the company is going to bat on this one and evidence does not look compelling ENOUGH to warrant more than a black box warning.

Posted July 30, 2007 at 11:44 am | Permalink (Edit)

XOM looking like a flush – I’m DD on Aug $90s at .55 but half out at .80 (my new basis).

Selling GOOG $500s for $23.20 as mo plays against 1/2 my current open GOOGs. Stop at $25, hoping for $3+ but very tight .50 stops after $2.50. XXX

Posted July 30, 2007 at 11:59 am | Permalink (Edit)

NMX – it’s a stock so we don’t like it today but they are on track for 50% y/y gains and projected for 50% next year with fairly low expectations considering. There are 11 holds and 2 buys on them as no one is backing the high flyers anymore but a p/e of 60 with that growth isn’t too bad of a LONG-term investment. Someone will pay you $3.80 for the $130s and you can buy the Mar $140s for $10.55 with 6 months to roll high premium calls. If you do a 10:7 ratio you should have enough per contract ($2.66) to be able to roll down to the Mar $135s and possibly to the $130s for a small additional charge (which you would offset by selling more calls). So would you like to either buy the March $130 calls for $9 or possible end up with the $140s at $20 (after paying your caller $10) with the stock at $145 after gaining 20% on an earnigns jump? If both of those scenarios sound pretty good then it’s a BUYBUYBUY! XXX

Speaking of OIH, I’m back in the $185s at $2.35 as a mo play. XXX

Posted July 30, 2007 at 12:53 pm | Permalink (Edit)

WFR – If you have the margins for it I’d rather see 1/2 as many Jan ‘09 $70s at 12.45 selling either the Aug $65s for $1.25 or the Sept $70s for $70, which you can always roll down on weakness (again, assuming you can swing the $5 margin spread). I would buy and wait a bit as I really think this is a bottom for WFR unless the market drops another 500 and even then I’ll buy/roll them at every stop on the way down.

Posted July 30, 2007 at 1:07 pm | Permalink (Edit)

Mission accomplished on my XOM calls! Very relieved to be dumping 1/2 of them, totally out if they hit .60 again. XXX

Posted July 30, 2007 at 1:39 pm | Permalink (Edit)

Mattress plays (we need a permanent post for this): My initial goal is to protect 1/3 of what I think I will lose if the market drops 200 points overnight. This requires you assess your own portfoilo but an easy (and not 100% reliable) way to do this is to simply write down your value and log the Dow value. Then every 50 point change, write down your virtual portfolio’s new value and log the Dow value (or whichever index you are going to use to cover). Once you see what you are going to lose (say $30K) then you need to figure out which current DIA (for example) position has the best movement. Right now that is the $132 puts, which gain .40 on a $1 DIA move up and lose .30 on a $1 DIA move down (looking at the surrounding brackets). On a $2 drop they should gain at least .60 so that means I need 16,666 contracts or 160 DIA $132 puts to cover the downside on 1/3 of my exposed virtual portfolio.

Step 2 is that I may see that but I will, of course offer $1.90 for 40 contracts and wait a bit to see if I get it – every nickel is critical here. I will also, of course, try to time my entry for a top (pretty much right here) and then pick up 1/2 of my target amount before it gets too far from the LOD so, as I’m writing this, I would have just pulled the trigger at $2. Don’t forget I KNOW I have upside protection on this position, so there is no harm to buying these at any time, other than sacrificing a % of additional upside profits. Once I’m in at $2 I would fill the other half at no more than $2.30 as that would be less than 10% (aggregate) more than I intended to pay in my initial calculation for the full 160.

From that point forward my goal is to STRANGLE the Dow by rolling up a notch and even adding more contracts on any run up as well as our standard mattress strategies on the way down. If you keep in mind that this is INSURANCE and you act pleased and surprised to be able to take 20% profits off the table then you may end up with a whole lot of free insurance and, if you are not greedy on the upside, you may find yourself with an accidental windfall when disaster strikes and you collect on your policy.

Posted July 30, 2007 at 2:28 pm | Permalink (Edit)
OIH – sure hold. Of course half out on a good run but holding the rest is fine. My premise on this one is there’s still quite a few left to report and I doubt we’ll get much bad news so they may become the favorite target as energy money sloshes around within the sector.
Posted July 30, 2007 at 3:01 pm | Permalink (Edit)

GSK – suffering from lack of buyers but I’m not chasing it down. As long as we can sell the Sept $50s for more than $1.20 we’re safe enough here (although it’s a boring hold).

Welcome Buzz and thanks! BWLD is expected to gain 50% on earnings with a 30% increase in sales but I don’t see why they’d miss. If you have gains, roll them to a higher level, take 1/2 off the table and either buy some close puts to protect or sell maybe 1/2 your position in Aug $40s, which are fetching a stunning $3.20 and can be sold against the Dec $42.50s in a 4:3 ratio. XXX I’m pretty sure earnings are after the bell so you may want to scale in rather than sell all covers at once because my expectations are for quite a bit higher (but that’s no reason I’m not going to let some idiot pay me and 8% for 15 days).

Posted July 30, 2007 at 3:35 pm | Permalink (Edit)

CCJ – they beat by .13 (30%) but they guided slightly down for the year – I think we can put as much stock in that as we do in Jobs’ guidance or it might be a conversion issue, hard to say. Since this year was projected to be 3x last year and now they are saying 2.8x last year, it’s going to be hard to quibble but the CC will center on WHEN they get those mines producing. Still, we could be looking at a nice squeeze here so you may not want your $40 caller there. With a $1.50 premium, I’d be slow to buy him out though. I’m still here for the long haul but that certainly doesn’t mean they will break $42.50.


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