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Tempting Tuesday Morning

The pre-markets are soaring!

As of 7:30 am the Dow is up over 100 points in pre market trading as everything that was a catastrophe last week is suddenly just a speck in our rearview mirror.

The hardest thing we have to do as investors is to be patient but we have plenty of bullish plays in place (I mentioned yesterday that we had 3 times more calls than puts) so we can afford to wait before jumping back on the bandwagon.  Yesterday we grabbed the SPY $150s at $2.80 as a new upside hedge to our mattress plays but a weak open left us with less than we would have liked and the run-up in the afternoon forced us to sell half at $3.40 as it triggered our 20% rule for the day.  It is MUCH easier to get in and out of index puts and calls on momentum than it is to go in and out of multiple trades so we use them to "mattress" our other plays in both directions.

I find the pre-market movement very surprising ahead of what is going to be a very heavy data week.  Next Tuesday at 2:15 we have the FOMC statement and investors are now betting heavily on a softening which I don't believe is possible, especially if this week's data comes in heavy:

Date ET Release For Briefing.com Consensus Prior
Jul 31 08:30 Personal Income Jun 0.5% 0.5% 0.4%
Jul 31 08:30 Personal Spending Jun 0.1% 0.1% 0.5%
Jul 31 08:30 Core PCE Inflation Jun 0.1% 0.2% 0.1%
Jul 31 08:30 Employment Cost Index Q2 0.9% 0.9% 0.8%
Jul 31 09:45 Chicago PMI Jul 59.5 58.5 60.2
Jul 31 10:00 Construction Spending Jun -0.1% 0.2% 0.9%
Jul 31 10:00 Consumer Confidence Jul 109.0 105.0 103.9
Aug 01 10:00 ISM Index Jul 56.5 55.5 56.0
Aug 01 10:00 Pending Home Sales Jun   -0.6% -3.5%
Aug 01 10:30 Crude Inventories 07/27 NA NA -1103K
Aug 01 17:00 Auto Sales Jul 5.4M 5.4M 5.2M
Aug 01 17:00 Truck Sales Jul 6.9M 6.8M 6.5M
Aug 02 08:30 Initial Claims 07/28 310K 310K 301K
Aug 02 10:00 Factory Orders Jun 1.1% 1.0% -0.5%
Aug 03 08:30 Nonfarm Payrolls Jul 150K 135K 132K
Aug 03 08:30 Unemployment Rate Jul 4.6% 4.5% 4.5%
Aug 03 08:30 Hourly Earnings Jul 0.3% 0.3% 0.3%
Aug 03 08:30 Average Workweek Jul 33.8 33.9 33.9
Aug 03 10:00 ISM Services Jul 59.0 59.0 60.7

We've had strong earnings from F and (even more surprising) GM, which means I may be way too bearish on the economy as both of these companies are highly dysfunctional but, in line with my more macro theory, International sales more than offset sluggish domestic demand and the rising global economy will lift all ships, including ours.

Abby Joseph Cohen of GS was on CNBC this morning declaring the S&P undervalued and putting a 1,600 target on the index (up 10%) by the year's end.  This is in line with my Dow 15,000 target (for next June) but I still want my correction and it's very annoying that, every time the market takes a little dip, people keep running in to save it.  Let it fall people!  It's a big market, it can pick itself back up – let it leave the nest!

No one in Hong Kong was patient as the Hang Seng flew the coop, shooting up 445 points on the day as China once again took a Central Bank tightening move as a good sign, pushing Shanghai B-shares up 2%.  The A-share side of the Shanghai is now at 4,689 and may really take off if they get out of the 4s.  Let's keep in mind that there are TWO countries (China and India) that have EIGHT times more people than the US does that are growing THREE times faster than the US is, which translates into $1.5 Trillion in new business this year – that's the bullish global premise in a nutshell!

Europe was thrilled with Asia's performance and those markets are up 2% this morning on no particular news but the rebound is looking (at 8am) pretty strong ahead of our critical data release.  I don't think we will have to wait to long to see how serious our markets are about taking off as the income, spending and PCE numbers should tell us all we need to know as we can extrapolate 10 am consumer confidence from that. 

8:30: And the numbers are in!   Income up .4% and spending up .1% with a .1% PCE deflator all pretty good news for the Goldilocks economy but durable spending was down and savings rates are up, which means consumer confidence is likely to be a slight miss.  I'm still maintaining a cautious stance but will not shy away from picking up some global plays like adding to LTP plays like our CAT Jan '09 $80s at $11.50, which have been a solid income producer and our new UTX Jan '09 $80s at $7.30.

We'll be watching those same old levels as yesterday but the S&P remains well below our 1,505 comfort zone and the NYSE will have to retake 9.800 to impress me while the Russell is miles away from 830 so it's all up to the Dow breaking out over 13,500.  As much as Dow leadership scares me, it is logically in-line with my global bull premise and we'll have to go fishing for bargains in companies that have better than 40% international exposure (but NOT financials – still too scary!).

Happy Trading is targeting CELG over at Wang's World and I like that play too as the company is swimming in $2Bn of cash and just $400M in debt and has been a very steady grower for a biotech who's forward p/e has dropped to 37 after a 13% beat last Thursday.  We missed the first $4 of the rally but the stock is off the high of $66 so we both like the Sept $60s but if you missed Happy's 7/27 calls (or even if you hit them), it's a good time to roll to the Sept $65s at $1.85, setting tight stops on your profits on the $60s:

celg_7_30_07.jpg

Oil is well over $77 in early trading and for that reason alone (oh wait, that AND sub-prime) I will continue to roll up my DIA puts, keeping them tight to protect my possibly ill-gotten gains of the past 2 days.  We will use my VIX theory to determine how seriously to take this market move but I have a feeling selling the 20s will prove conservative if the market retraces more than 50% of last week's losses.

Zman has an excellent preview of the energy markets and we are keeping an eye on the possibly explosive situation in the natural gas markets as speculative short positions have climbed to painful levels.  VLO came through with great earnings (very good for our Sept $70s) but we'll be taking profits on the refiners as this party is clearly over in Q3:

cracks-tso-072707.jpg

I'm thinking a bear call spread will be appropriate here if they run up too far but if the management is honest, then guidance alone should kill this stock very quickly, along with many others in that sector.

It's shaping up to be another interesting day and we'll have to be fast on our feet but I STILL urge caution and patience.  If Abby Cohen is right (and she has a Trillion dollars backing her up) we have a looooong way to go in this rally so let's scale into new positions and make sure we're on the right track before we celebrate being even for the month (Dow opened at 13,422).

 


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  1. LCAV getting crushed pre-market


  2. Globex futures have dropped 15 points in last few minutes


  3. CCJ made a correction to their conference call this morning, due to the negative reaction yesterday. . .

    http://www.247wallst.com/2007/07/cameco-pinocchi.html


  4. LCAV – I wish it had gotten crushed last quarter instead of the middling move it made which didn’t work so well with the strangle I had!


  5. NVT strangle earnings today. It should be volatile, 2:1 or 3:1 overweight long 60 calls vs. 50 or 55 puts.
    PCE year over year is 1.9% within the FED comfort zone giving a variable to being dovish.
    Gasoline prices are tanking and Happy was talking about paying less than $3 per gallon in Cali, less perceived future inflation means Helicopter Ben can show some dovishness. CNBC says inflation at 3 year low. Its great they are softening up Benny and the Jets. Bond market pricing in 100% probability of a rate cut by the end of december from 1% about 2 weeks ago! Cramer says cut in September. 68% chance by Oct. 31 says the bond market.
    That was the dip, up we go!


  6. From Bloomberg – TXU deal lenders to pull out of financing the buyout.


  7. COH-looks like nice numbers!


  8. SIRF up 1.58 in pre mkt, volatile stock and low vol opts., but (imo) a tremendous LT pi Co. with their GPS technology (nicely patented also)!

    WFR, OIH and AAPL all up too…..Qls SMH up – could be an amusing day!


  9. FCX up close to 3% in europe…..Copper price increase a good thing here. BHP too


  10. Futures are bouncing off the 13490 level


  11. NMX looks good going into hurricane season and with a nice dip.


  12. FXI opt premiums wary high, brut Shanghai index on nice weg up….maybe 1000+ pts? Plus gotta love FXI holdings…..the two china girls + other homerun potentials


  13. UA great play.


  14. LDK up, up and away.


  15. Knew UA was going to beat and do good, but the market was iffy.
    Knew MTW(world’s biggest building crane manufacturer) was going to beat and raise but the market was iffy.
    Market isn’t iffy now.


  16. MICC nice bounce
    DNDN moving
    ACH up
    Rig up
    OIH up

    Glad I dumped my broker puts yesterday am

    Selling MRO aug 55 puts small loss
    Selling 2nd half IMB Aug 30 puts big gain

    Debating housing put position – may sell puts against


  17. Morning, all:

    Dragon --

    What exactly did you mean about it being good for NMX? I’ve got Aug 150s.

    Thanks.


  18. IMB actually beat guidance ($0.60 v. $0.54 expected) but refused to issue future guidance to uncertainties. That sucks.


  19. TASR on fire again!


  20. Peak hurricane season coming right up! Higher trading volume= higher stock price. Should


  21. Looks like giant short interest in UA.


  22. Dragon, what do I do with 10 August 45 LDK calls that I paid $3.00 for? Hold them through earnings tomorrow?

    dick


  23. Remember the OSTK that I’ve been asking about? “Funny?!??!” I’m smilin’ @ my few little Sept. calls! (I still don’t know what the chart reading service sees – but I like it!) :)


  24. Phil, Dragon… I’m holdling GRMN Aug 90s @ 2.10 basis naked at the moment, having dropped the puts off the strangle when IV was so high. Any thoughts on going into earnings?


  25. TXU story untrue – C denied it.

    COH – as long as the rich are spending, things are good!

    LDK – don’t forget what you are ALWAYS supposed to do!!!

    NMX flying! Beat by .02, I thought they’d do better so I’m selling the $130s, now $3.65 against for the moment. I’ll take some off if we break $127 but not otherwise. XXX


  26. SWN and EOG up again,

    APC rocketing

    NFX up a buck plus

    OII up $1.50!

    HAL and HK a little higher

    CLR still recovering

    VLO suffering from a little “so now what?” selling. They’ve got some an ace up their sleeve in terms of widening crude spreads since the end of the second quarter and I wouldn’t buy puts here. If you do and make money, hey great, just watch out for the CC at 10 est.


  27. Though now I’m thinking about it and the answer is… “When in doubt, sell half!”


  28. Wow IMB flying after all.. might have a chance to get even with the 25s I loaded up on yesterday… 11am conference call, sell 1/2 now?


  29. BWLD is flying before earning…


  30. utx a flush?


  31. Phil,

    Is there an arbitrage play that makes sense for some of the LBO candidates that are trading below their buyout price as a result of worries about financing? I’m thinking TXU, Alliance Data, etc. Alliance Data is trading a full 5 points below their buyout price. I am pretty sure these deals will happen; too many huge egos involved. The interest rates on debt will be higher and the covenants a lot tighter.

    What play would make sense if that were true and provide some downside protection if the mood in the credit markets turns sour(er) and these deals fall through?


  32. SOX doesn’t seem to be playing along with everyone else. Just flat to slight negative.


  33. HW had a big beat .98 vs .46 expexted and raised guidance. They are down 37% this year and I am in Aug 17.50 now.


  34. VLO didn’t last long. XOM cannot get it together, probably because refining was a good portion of their weaker-than expected profits.

    Cramer on again, another sign not to trust the rally – it’s always scary when they put a tie on him…

    NMX – I lucked out so far as it turned up before I got my sell in, I’m sticking with my plan but I’m waiting to see how far up it goes first of course. XXXX

    IMB 8-(

    TASR – I’m getting worried about the $17.50s I sold! Will buy out 25% while they are way low. XXX

    OSTK – great call MrN! Their loss narrowed, yipee! Losing “just” .58 a share vs. .78 last year on declining revenues – woo hoo! Just remember the reality of what you are holding and ALWAYS sell into the initial excitement!

    GRMN – expectations are way high but, if they beat them, look out! Your $90s are $4 of pure premium and if they should miss by a penny they will probably lose 50% or more of value before you can sell them so you might want to consider taking some off the table of moving to the Sept $90s at $6 and selling 2/3 the Aug $90s which would be the same as taking about half off the table but would leave you with a pretty good upside and less downside volatility (but still screwed if they miss).


  35. OLED – up $5.50


  36. Jazz- i’m selling half just like what Phil would want me to do and then you can hold the rest through earnings. It is tomorrow night after the bell.


  37. OLED – Sumitomo Chemical to acquire Cambridge Display Technology for $12/share


  38. NMX-weak response to earnings. Now APC is flying.


  39. starting strangle here with calls on NVT.


  40. LDK anyone?


  41. Phil, New Portfolios.. I’m all for resizing them to a level more possible for the users of PSW to compare to.. Perhaps a web poll for the members to pick a size.. 2 mil certainly isn’t one I can compare too..

    1 additional idea for the ring though.. Given your long term “typical” results/goal of 50% per year, how about a 200k LTP, that withdraws 100k a year (in monthly installments of 8,333). It should have a cash log showing trades, monthly “rent” withdrawals, and interest payments (3%? ) for whatever was in cash that month.

    -Peter


  42. Crox push.


  43. mrn,

    I agree with da OSTK, had a few growing dusty in the attic since opt vol on this one is weak….

    FCX a flyin on those pennies

    EDU a long climb but at least puttin in a lil effort


  44. Decided to try a couple small trades to go with the flow today. Bought AMAT Aug 22.5 calls on the open and paid a bit too much. Bought JOYG Aug 50 calls just now. I like that the chart touched long term support and bounced off. Wanted to buy some UA calls but they jumped too fast and didn’t want to chase.

    Sold my QQQQ puts on the open, small loss.

    Greg


  45. BBD

    oil 77.15 +.32

    What do you like this morning?

    Dragon, LDK – why the huge spread?


  46. Good morning Phil & everyone, I’m back home…looks like a nice day to be back home. Go market.

    j


  47. LDK
    earnings today?

    CEO
    nice jump!!

    WYNN
    catching up to LVS?


  48. J, missed you. Still holding NILE and BID?

    Jazz


  49. GRMN
    new ATH!!


  50. I don’t trust this rally either. Loading with DIA puts here and adding to AMZN puts.


  51. Sold MCO nov 55 puts +29%


  52. NMX delayed pop.


  53. Just throw darts everything’s up this is awesome Thank You GM for stopping me out of my puts yesterday!

    IPSU “sugarcane the new oil” I love channel trading that stock


  54. ACH/STP
    still charging up! FXI up 3+!!


  55. phil,
    AXP oct 60 is up over 50%
    would you sell, sell half, or roll here?
    thanks in advance.


  56. LDK earnings tomorrow after the bell, Happy.
    LDK recently IPOed last month, so there is only one MM but in the near future their will be others.


  57. Welcome back Juliet, hope you had a good trip.


  58. Zman

    Would you buy refiners here?


  59. GSK – Nice opening up this morning from yesterday’ close then momentum down, currently teasing with a 51 floor that didn’t cave in for the past 30-40 min and seems to be ready to leave for the upside.

    Glad we bought back those 52.50′s, looking to see how it evolves before selling some 52.5 or 50′s. Will sell some 50′s if the 51 level fails.


  60. Happy, whats ur take on BIDU? I got in last week, but its in a tight range so far. can it go higher?


  61. Happy: I will be visiting this weekend with a friend who is a partner in a casino, and worked many years in the casino business in Las Vegas. His father in law is also a partner in several casinos in Vegas. He is an insider in the business.

    Any specific questions about any off these casino stocks that you would like me to ask him that you would find helpful? I would be pleased to report back on Monday and contribute in some small way to this site.

    Greg


  62. Bill- i like COH Aug 50 calls on IV crush.


  63. Hello Valero!

    HAL up nice, OII same

    NFX and SWN strong

    APC call going very well.


  64. IMB – I’d take some off the table if you were behind and rolling to catch up but I also want to hear the CC. Remember, the reason we took these guys is the CFO was ADAMANT that they did not have default issues and he said they reiterate guidance which, at the time, had them going to $40 in the next year. Now that the premiums have come out a bit, I’m nibbling on the Sept $25s, now $1.35 ahead of the call but I will have little tolerance for a pullback.

    UTX a gift!

    Woo hoo NMX!

    TXU – I like those deals when I think regulations et al will cause huge delays, then I buy leaps around the target price and sell calls or puts each month. PD was great for that as was MCI last year but they can be dangerous and frustrating plays. Check out the DJ action the past couple of months and see if you would have made money…

    Consumer confidence through the roof at 112.6 (vs 105 in June). Construction spending is down .3%, worse than expected but I don’t think anyone cares about that industry anymore.
    OK, this is very funny. I haven’t touched the LTP and it’s up another 3%, I was sure I was going to take a hit on the VIX drop but I guess my callers are suffering far worse than my positions.

    SOX were up huge yesterday, I’m liking the IWM Sept $83s, now $1.67, looking to make .50. XXX

    HW – would have loved a head’s up on that yesterday! P/E is ridiculously low.

    OLED – That’s in my retirement account! I’m sad about it actually, I love those guys (and so does Sumitomo I guess!). I could switch to PANL but I always thought OLED kicked their ass in technology so I guess I’m done with this space as it’s gone Japanese. The good news is this is world-changing technology and will now get the financing it needs to come out of the lab.

    NMX – got $5.25 for the $130s so I sold 4/5 XXX Dropping fast now but may make another run.


  65. Hey Optrader: I didn’t like the close yesterday so I bought QQQQ puts during that extra few minute window. Premarket today I realized I was wrong and sold the puts on the open for a small loss, also bought some calls on a couple stocks to try to go with the flow for a day or swing trade. Now I see you are buying puts and I am doubting myself again.

    Is this common new trader irrational behavior? Is there a common answer? I am just doing very small trades to try and get my feet wet and learn to manage a trade better.

    Thanks
    Greg


  66. Hi optiondragon

    Any about the short future of AMZN calls ? Keep or kill ?

    Thanks,

    Ph


  67. Hi all, RBC on AAPL and CCJ this morning:

    Apple Inc. (AAPL) – $141.43 – iPhone Excitement
    Bear Stearns (OP; PT $199); RBC (Outperform; PT$175); S&P (Hold; PT $170)
    RBC reiterated its bullish view on the iPhone after discussions with executives. While Apple did not disclose specific product
    plans, the discussion sharpened RBC’s views on iPhone momentum and strategy. Apple appears firmly committed to
    EDGE/GSM and its Q4CY07 European launch. However, 3G iPhones may not arrive until Spring CY08, given battery life and
    form factor challenges. Management expressed excitement at plans to increase iPhone value over time via new software
    features, citing “the sky is the limit”. It appears Apple, classically, has more pleasant surprises in store for iPhone fans and
    investors.

    Cameco (CCO) – $42.85 – Q2/07 Results Beat Consensus, But Target Reduced On Lower Realized Prices
    Top Pick, Above Average Risk, Price Target $70.00
    Q2/07 diluted EPS was $0.55 versus consensus of $0.37 and $0.21 in Q2/06. The results were driven by higher realized
    uranium prices that resulted from market-related contracts. Cameco reduced its guidance for realized prices in 2008 as the
    company lowered its assumed sales volume and stripped out the impact of uranium trading activities in its realized price
    forecasts. Cameco now expects 2007 uranium deliveries of 30 million lbs, down from 33 million previously due to a delay in
    customer deliveries and lower expected spot market sales. The company also revised down its 2007 production forecast to 20.6
    million lbs compared to 21.0 million lbs previously due to changes in its mine plan at Rabbit Lake. RBC CM has lowered its
    price target from $80 to $70.


  68. XOM cannot get it together, nor can BA, CME pulling back, FDX treading water, SHLD not buying consumer confidence (or is real estate falling off a cliff?) and the DIA $135 putss at $2 are my put of choice at the moment. If the Dow can’t hold 13,450, I’ll grab the $134 puts a little early because $77.55 is a lot of money for oil, even in Euros… XXX – remember, these are protection plays, not profit plays!


  69. AMZN losing it


  70. BIDU
    what month do you have? As you said, it is in a tight range right now. If it seems like it’ll open up later today, I’ll let everyone know.

    Other Chinese plays are doing well: SOHU, EDU, CMED, SINA, SNDA, SNP, CEO, PTR!!


  71. Getting worried that AAPL might break below $140….


  72. too late….


  73. GS bringing market down, or vice versa ?


  74. BIDU: Thanx Happy. I have the Sept.


  75. ADP had earnings raised but missed by a penny.


  76. NOV
    is looking to go higher today!


  77. Listened to SPF cc on Fri….very impressed with the future politicians they have as their current CFO and CEO, don’t let that (1.05)/share alarm you, if we didnt have to write off or write down so many land and joint venture holdings, we would have made 33c a share! Looks like market has bought that last cpl of days though….

    Bottom line Co. will not have enough cash after Sep to operate without concessions by their lenders….Let’s see 350M+ in cash and 2.5BILLION+ in debt… but then what do you do; take a 2.5B hit or think (hope) if you give them a bit more they will weather the storm? Slam dunk for me if I am on that loan committee, be first in line and get what you can NOW while you can….time will tell but will ride this one through Dec if I have to.


  78. AAPL headed south now…


  79. Phil:

    I also had a position in OLED ! ! !
    I’ve got mixed feelings about their being taken over.
    I’m always happy to take a profit, but believe the big money is
    yet to be made. I also own PANL and believe they have a bright future.


  80. AAPL losing it as well?


  81. jazzcool, I’m out of PCLN for now. I do still have BID.

    j


  82. Phil -

    I love the idea of buying some LT plays on this nice 5% dip — but im sittin on my hands as IVs are still jacked way up on things like CAT, UTX and most everything else.

    My portfolio is all calendar spreads – some are diagonal.

    If I want to buy on this dip and start some new positions then how would I do it ? Still the best I can think of (being mindful of IV) is something vertical or a credit spread. I understand the calendar mitigates vega risk but unless you only give the legs a spread of 1 or 2 months, the position vega is still too high (for me) given the huge IVs. Right now im sittin on my hands and feeling helpless.

    I could buy the 09s with the understanding that I can just sell away and buying high wont matter in the end.
    Whats the most efficient way to buy this dip for a long-term position ? Say CAT, DE, UTX or something along those lines ?


  83. The blue light is flashing over the AAPL ticker, too bad I have about as much liquidity right now as SPF :mrgreen:


  84. wb fair juliet!

    Signed, Romeo


  85. Taking some profit on 1/2 AAPL puts bought yesterday.


  86. It seems like if the Q’s were going to go higher later today, they would need to dip pretty far right here and shake things out a little first.


  87. AMZN testing $80.


  88. Any bets AAPL should bounce off 135 today??


  89. Phil:

    I bought naked puts on AMZN yesterday AUG 80′s @ 2.00 now 2.75 ZQNTP. Is it time to take the profit or does this have farther to fall?


  90. GS and AAPL getting spanked.

    AAPL down to 50 MA


  91. Peter – LOL, that sounds like a real pain in the ass! Wait ’till I have my hedge fund and then I can put an intern on it. I wanted to distribute assets from the fund like that but the fund managers I’m talking to had a hemmorage when I suggested giving money back to the investors (less money = less management fees) so I’m not sure what kind of vehicle we could follow that very sensible strategy in. Returns would have to be 1/2 monthly profits (if any) with a 50% return on remaining profits as a dividend at years end to match tax efficiency with the income stream and to allow for the possibility of losing months.

    Welcome back Juliet! Good to hear from you again.

    AXP – I have the $60s, half out on the turn there (a firm rule with current month positions up over 50%) and a $4.50 stop on the rest for now. XXX

    GSK – may as well take the rest of the $52.50 callers out at .50 in the $10KP, they never went lower than .25 yesterday so that’s a blended $1+ profit that brings the basis on the Nov $52.50s down to $1.75 with a $2.15 current value, that’s a $400 profit and we still have 3 sales we can make but let’s hope for a real recovery, still selling the Sept $50s, now $2.50 if things get ugly. $51 should hold as long as the markets don’t tank. XXX


  92. AAPL rocketed off of 50 MA … $1 in about a minute.


  93. Just bought AAPL aug 135 calls a couple of minutes ago.


  94. phil--why dont your investors lend you the money, then you can return their funds as loan repayments, perhaps interest, perhaps depending on tax structure, a special dividend…or being a real devil…..lend the investors their own money back on an unsecured basis….so many schemes out there


  95. AMZN puts looks like your rule is take 50% on 1/2 on current mo. So there they go 2.75. Hope someone enjoys them as much as I did!


  96. GSK – Looks like we had different selling patterns against the Nov 52.5′s. I sold 5 each of the Aug 50′s and 52.5s. Bought back the 52.5′s yesterday @0.35, am now half naked and looking to sell again, hopefully higher but for sure if 51 fails.


  97. Happy, really like your NOV play not so much your WFR and CELG play although I like both companies.
    BIOman loves CELG, ISRG(up again!), OSIP(safe just reported), ONXX, BIIB (applying for Crohn’s disease another indication)


  98. AAPL drop weighing in on the QQQQs, and now the QQQQ is negative. Volume rising on AAPL as its going down. May be some hedgie closing their AAPL position?


  99. AAPL continues the drop, now under 137.


  100. phil,
    just to clarify, AXP is not current month, unless we’re already in oct. and i slept too long last night :)
    so i’m assuming you meant that you’re treating it similarly to current month positions ?
    anyway, out at 4.9, +52% thanks very much for the recommendation!!!!
    still holding the oct 62.5 calls.
    thanks very much for the recommendation!!!!
    windy


  101. Taking 1/2 off on DIA and AMZN puts from this morning. Will let the rest run.


  102. Phil – aaw, I was going to call it the “quit my day job portfolio”.. the planning around needing some of the money every month would be the key bit..

    On the other hand, if your intern can have 10+ years financial services technology experience, then there might be a plan B for me yet.. as long as you don’t impose any silly 30 day hold rules.. (not entirely joking..) -Peter


  103. Greg – make sure he knows you will be conveying this information to others and doesn’t tell you anything he shouldn’t! But thanks for asking. I’m mainly concerned with occupancy and total gaming play (the p&L is slightly randomized by “luck” but evens out over time). By the way, that’s one of the best plays in the market – buying a casino stock that had a huge loss due to a losing streak. Investors dump them as a few million can have a big impact on a quarter but, statistically, it’s meaningless.

    Also, read through yesterday’s post where I talked about sticking to your guns, the main reason I use index puts AND calls is to stop myself from running in and out of trades. As you may have noticed last week, you can be right, wrong, right, right and wrong about a trade – in one day! Every time you enter and exit you are paying a spread and a commission, with options, that can mean you are 10% behind the minute you enter a trade so you’d better be sure about it and you’d better have a plan to ride out a small dip (see comments about scaling in and out).

    I always consider my initial entry to be a placeholder – something for me to watch while I decide if I really want to play that position, many times, the more it goes down, the happier I am as I can take the bulk of my position at a cheaper price than I was initially willing to pay.

    Often, and unfortunately, especially when my timing is dead on, a position gets away from me – heading off my way so fast I no longer want to buy more. That’s why you see plenty of 5 and 10 unit positions in my portfolio. Generally, they either went right or wrong so fast I never got a chance to fill them.

    It’s not always about adding more or doubling down, I’m constantly rolling my brackets too. It’s effectively the same but adding to a postion that is unlikely to recover (like my C $52.50s) doesn’t make sense so a roll to the $50s is the better move (assuming you still like the position).


  104. OK, I am adding to my AAPL Leaps here at $136, but I am keeping my puts. This chart is getting ugly.


  105. THEY used the spike to get out? AAPL, GOOG, GS, ICE


  106. ABK NFI hurting.


  107. Hey everyone,

    Bought SYMC a few months back around 17.50 had a nice run up, but has since come down post earnings. Anyone like this stock LT and/or ST? Or do you think it’s a great idea to get out w/ 10% in the pocket?

    Thanks!
    MC


  108. Any predictions on days finish..:)


  109. Phil, I am about 2 months new to the site. Read everyday and have taken trades- PROFITABLE THANKS. Question regarding this statement from your comments this AM. …As much as Dow leadership scares me, it is logically in-line with my global bull premise and we’ll have to go fishing for bargains in companies that have better than 40% international exposure (but NOT financials – still too scary!).
    Where do I look for international exposure???
    Thank you sooooo much.


  110. Q’s 49.50


  111. Why is CROX so strong? It almost hit 60. Any new target?


  112. WFR
    needs to break 64; that’s why I got the Sept.

    CELG
    we already have the Sept. It looks like it wants to go higher in the next couple of days; breaking 62 was the key. So, I got some Aug to catch some of that momentum. We’ll see how things go today.


  113. Phil are you leaving newmont mining naked into earnings. thanks


  114. Seeking Alpha
    A Preview of Chipotle’s 2Q Earnings
    Monday July 23, 9:41 am ET

    David Kretzmann submits: Chipotle (NYSE: CMG – News) will be releasing its 2Q 2007 results on July 31 after the market close. I thought I’d do a little preview/analysis, and see if we can come up with a good estimate.

    The most recent quarter (1Q 2007) was especially impressive to me. The overall restaurant industry was feeling a lot of pressure this winter primarily because of rough weather. Analysts actually lowered their estimates for Chipotle, and were expecting a pretty big dip in growth, and margins. They were expecting the profit margin to fall down well below 5%, and in the end, Chipotle reported a profit margin of 5.3%.

    When many other restaurants were reporting little or negative growth, Chipotle was able to strengthen margins, and keep up very strong growth in sales and earnings. In other words, this is a one-of-a-kind business that has been able to grow at a remarkable pace while many other restaurants hardly went anywhere.

    Chipotle has reported quarterly results six times since going public in January 2006, and every time they have smashed estimates.

    For the upcoming 2Q 2007, the 17 analysts following Chipotle are expecting an average EPS of $0.45 (low estimate $0.42; high estimate $0.48), on revenues of $262.91 million. This means they are expecting the profit margin to come in around approximately 5.5%. I think this is a low expectation for the profit margin, and one that Chipotle should easily beat.

    The 2Q is a very busy time for Chipotle, and this year brought favorable weather (at least much more favorable than the weather in the 1Q), and Chipotle also made some adjustments to speed up the ordering process. The main downward pressure that people see impacting Chipotle negatively is commodity prices. Personally, I don’t think Chipotle will be impacted that much from higher prices.

    If it really did feel a pinch, I’m confident that management would have raised some prices on the menu, or found ways to improve efficiency. It’s not like the past couple quarters have been a walk in the park with commodity prices, either. So, I think the worries about high commodity prices have been overblown. Chipotle will work through it if it really does feel a good deal of pressure from it.

    The company has a very healthy balance sheet, and this management team has done a terrific job of improving efficiency. Management has said they expect higher pressure from commodity prices, so I’m confident that they have, and will continue to make the necessary adjustments. Last quarter it increased menu prices, and I’m sure they could continue to do so without losing customers.

    Analysts are expecting revenue growth of 28.3%. I’m believing that sales will be able to grow at a clip closer to 29% because of more favorable weather, the moves to speed up lines, and the fact that this is a strong time for restaurants in general. So, I’m expecting revenue to come in at $264,000,000. The difficult part is coming up with a reasonable profit margin to expect.

    I’m confident that at least some of the measures to increase efficiency will have come into play by now, and if commodity prices did put pressure on the company, I expect menu price increases to offset the extra cost. I’m expecting Chipotle to report a profit margin of 6%. In the same quarter last year sales were up 31.1%, and the EPS grew 57%. At this time last year the profit margin was 5.3%.

    A $264,000,000 in revenue with a 6% profit margin equals $15,840,000 in net income. Let’s assume that the share count will increase to 33,100,000. This translates into an EPS of $0.48, which is the high end of analyst expectations, and marks another example of its beating the estimates.

    Honestly, I wouldn’t be surprised if we saw the EPS come in at $0.50, because I don’t believe Chipotle is experiencing as much pricing pressure as many analysts are thinking. But, I’m sticking with a little more cautious estimate just in case analysts actually have their heads in the right place this time. If the EPS were to come in at $0.48, then the TTM EPS would stand at $1.54. Add to that a P/E of 55, and the B shares would be priced at $84.70.

    Anyway, I’m expecting another estimate-beating quarter from Chipotle. I love how management is executing, and think they’ve handled the pressure felt by the restaurant industry very well. I continue to have a lot of faith in management and think Chipotle has a great future ahead of it.

    I’m buying a strangle overweight long 2:1 to 3:1


  115. Cramersaid that CROX so far had the best Q of the market. Pretty nice. We’ve been on that bandwagon for a long time!


  116. Would be nice to see WFR bounce off the 61.91 support level, if not then next support 61.37


  117. or THEY used AAPL, GS etc to push the market down. Sell the high profile stocks that everyone will see and scare the crap out of them …


  118. Thanks Phil: I will make sure my friend knows not to spill anything he shouldn’t. But I will find out as much as I can that might be helpful regarding the publicly traded casinos.

    I am only trying a few small and very short term trades right now. I do not want to commit to this market until we see if last weeks dip is the start of a correction or just a dip. So far, it looks like it is just a dip in an overextended market. Like you, I would prefer an orderly correction to try to play on the way down and then comit to some longer term trades when the correction ends. Market is not likely to do what I want though. ;-)

    Greg


  119. OLED – My post from Dec 30, 3:28 AM (pat, pat)

    OLED – the old rule on them is buy them on the 10th of the month (arbitrary) whenever they are under $6 and sell half whenever they get to $7, we’ve owned this stock for over a year that way and it’s one of the few proper stock postiions I maintain.

    This stock will one day be at $25 but that day may be a very long time from now as the very cool technology is still in development but I’m betting they will be a winner in this field.

    We did do a full dump in October when they toppped out at $7.50 after having gone scary low on us but we came back in on 11/10 at $5.75 with another shot on the 10th of this month and a sale of 1/2 yesterday at $7 that reduced the basis to $4.50. Next time I buy at $6 I’ll be in for $5.25…

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

    AMZN – no change from last week’s comment (Posted Jul 25, 10:03 AM): “Oh this is my top call for AMZN by the way!” I also mentioned last week that I would be short on them except for the fact that Cramer will sell his children to keep one of his “horesemen” from making him look like a horse’s ass so it’s a stay away stock for me.

    CCJ – I’m just taking away that “lowered target to $70″ from that article…

    AAPL getting pulped! Could be a flush, if the Nasdaq doesn’t sell off I’ll be watching it for an entry but the SOX are way down too, giving up half of yesterday’s gains so perhaps the question is “when will the whole market turn negative.”

    SPF Lender – you have virtually no choice but to give them $250M if you have ANY hope it will get them through to next spring. It’s one thing to write a loan down as a term adjustment but quite another to write $2.5Bn off, especailly when that bad loan will call your whole portfolio into question. These issues run very deep and the interconnection in the BKX is VERY scary!

    DJ – all good choices with plenty of length so you can buy now and sell close calls like the CAT Sept $80s for $3.20 or the UTX Sept $75s for $2.15 or the DE Aug $125s for $3.35. You can always roll them and yourself down should they break more than $5 lower and, if you don’t see a market recovery by Jan ’09, you should REALLY be in cash right?


  120. cap I was thinking the exact same thing, and I am bearish. Expect many games for a while.


  121. Apple shares took a 3% dip Tuesday amid about a cut in production of the trendy iPod-inspired phone. The chatter that sent the stock down was that Apple was reducing its production of iPhones “9 million units to 4.5 million units,” according to a note from Miller Tabak & Co.


  122. Phil,

    Since I bought back my CCJ Aug 40 cover yesterday at 1.75, should I sell a CCJ Aug 40 at 2.5 and just plan on rolling it, or sell the CCJ Aug 50 and plan on it expiring worthless? I would think that I’d go with the 50 for .55 or .60 and avoid the extra commission to roll. You insight is always appreciated!


  123. MRVL- maybe giving us a gift. There is a rumor about Apple cutting iPhone production in half.


  124. If that AAPL news is true it’ll be back to $110 before you can blink.


  125. There’s other AAPL news about Eminem suing them over download issues.


  126. AHM still hasnt traded anyone want to join me in a class action lawsuit??

    cant believe the Q’s are down

    I’m long XLK calls barely up


  127. AAPL cutting production of iPhone by 50%…..no, 100% rumor by the shortskies


  128. Some good AAPL rumors….

    RBC Capital held a discussion with Greg Joswiak, Apple’s (NASDAQ:AAPL) VP, Worldwide iPod and iPhone Product Marketing. While Apple did not disclose specific product plans, the discussion sharpened our views on iPhone momentum and strategy. Topics covered included 3G, hardware/service pricing, carrier expansion (incl. Europe), iPhone roadmap, and new features and applications. Apple appears well positioned to achieve/ exceed its stated iPhone sales goals, and the firm affirms Outperform rating.

    Apple appears firmly committed to EDGE/GSM and its Q4CY07 European launch (initially UK, Germany, France, in RBC’s view). However, despite 3G’s greater prevalence in Europe, 3G iPhones may not arrive until Spring CY08, given battery life and form factor challenges. Apple may promote Wi-Fi as its high-speed strategy for now, offsetting slower EDGE.

    While not facing pressure to do so, the firm speculates initially Apple will differentiate its iPhone lineup not by features, but by price and memory capacity, similar to its iPod lineup, simplifying market positioning. This affirms RBC’s view of a lower priced ($349-399) iPhone CYQ4/ Q1, with a higher priced version at higher capacity, to expand its market opportunity.

    Reiterates Outperform and $175 target.


  129. That 4.5M unit cut in production by AAPL was prob the current model as it appears new models are being brought on-line faster than (I at least) expected.


  130. Karm thats what I read into the report. The new iPhone is coming which would partly cannabalize higher model iPhones but would still be substantially accretive to earnings. I think you are probably going to see more lines in front of the store before launch and the craze starting over again in time for xmas. strategic sense. Man thats crazy I hope they have more products and it could be Harry Potter day twice a year!!!lol
    The stock price would simply levitate.


  131. OLED!!! Phil PHil Phil!!

    Thank you very much!

    I put OLED in my LTP over a month ago, stock only no options, thxs to your recommendation i had never heard of it
    Has paid for my membership ……(I’m Libertarian Wackjob but for some reason coming up as my real name today…can’t hide my identity anymore, damn)


  132. Greg, can I ask who this person is that you know in the casino industry? You don’t have to say if you prefer not to. I know lots of people in that industry as well so just was curious.

    j


  133. BillBigD- nice call on VSEA


  134. BBD

    oil 77.96 +1.13 wow!!!


  135. VLO Call Wrap:

    My sense is that the analysts get off the conference call, get on the squawk box and say something like:

    “Ok, we know it was a great quarter. That’s history. Looking ahead, they’re going to be running at good rates in the back half of the year and spending is in check as are operating costs. 2008 looks good as well as they’re planning some major capex and refurb projects in 2009-10. So we feel a little better about 2008 estimates in terms of making product. As far as margins, they’re in a better position as seasonal margins decline than their peers and they’re easily the cheapest of the group. We’d be inclined to sell the more expensive, little names and husband more investment dollars at VLO.”

    At least, that’s what I would have said having been on that call.


  136. Cody – I’m not big on those kind of things. I prefer to run my stuff straight up so I can concentrate on making money rather than shuffling money around in “schemes.”

    AAPL – taking out Aug $150 caller at $1.30, adding Oct $145s at $8.50 (not there yet), will be happy to roll that one down, was $13.50 on Friday. XXX Can sell Aug $140s for $3.95 but only if we break below $136.

    AXP – LOL, that’s right they were Oct but also right that in this chop I don’t care, anything in Sept or Oct gets treated pretty much like an Aug because if we have another big drop, I doubt 3 months is enough time to recover! I was just looking over the portfolio and I am still very bullish mainly just covering a lot of calls with index protects, not even short on oil anymore but I’m still very worried about another 500 point drop so I’m taking any excuse to stop out of winners while I’m ahead.

    Peter – remind me when I get back, maybe I can make room for a low-touch income producer we can track as an adjunct strategy to the LTP (same plays but with a goal towards a monthly income).

    SYMC – best to play them if the Nas breaks back up but they won’t move independent of the market.

    Day’s finish – +/-30 and they will say it’s a good thing.


  137. BBD,
    u playing MA earnings for tomorrow morning..
    options seems very pricey… missed the fri afternon drop


  138. phill
    i have some RIO aug calls and earning is today after market. any advice???


  139. aha,

    see http://www.appleinsider.com/

    Ashok Kumar (Normally not a bad analyst) takes poke at i-phone

    Timing the introduction of his report just after the release of the final Harry Potter book, Capital Group senior VP Ashok Kumar told investors that the iPhone had the pedigree of the iPod’s success and the backbone of AT&T’s service but that, like the unfortunate offspring in J.K. Rowling’s stories, the combination fails to live up to the expectations set by its ancestors.


  140. IMB +2.30 but no love for my calls :cry:


  141. why is 62 key to celg? is that a resistance level? if it is im having trouble drawing a line on it. it looks like resistance might be a little bit higher.


  142. WFR breaking resistance of 63.22 could mean a EOD price of 64+


  143. IMB +3 lol


  144. NOV
    building up momentum; looks like it really wants to go higher. We could probably see new highs within the next coupld of days!


  145. IMB +4


  146. WFR
    karmcon, you really like this stock, huh?! :-)


  147. WFR
    when SOX run, WFR will do well!


  148. IMB +4.30 but losing steam?


  149. OII!!!


  150. HT,

    Yes I do, and it likes me! :grin:


  151. OII
    thanks for the headsup, Z! looks really good!


  152. What did IMB say on the call? I wasn’t able to listen in…


  153. sold 1/2 cfc jan 35 puts – up 183%


  154. CEO/PTR
    are these on their stream of gap-ups again!?


  155. followed happy and bought NOV aug 55 calls


  156. Phil — Thanks.

    So I guess the very bottom line for long-term is that time heals all v-wounds. I was confused when you said last friday to /not/ buy LEAPs and then yesterday you were talking about buying time — I guess that meant dont buy LEAPS nekkid, but only buy em with a good strong cover.


  157. did anyone notice RTI today…


  158. CROX nice … pass 60…Hope it holds EOD


  159. Phil – thanks for the comments on SYMC. New to the site and pretty new to options trading… made some great money on BIDU and FSLR calls a couple months ago… decided I should go away from the speculative plays and learn how to risk manage more.

    Thanks again for all the education everyone!

    MC


  160. Damn IMB dropped back quickly.. missed my chance to break even on that one…


  161. Welcome Nu2! Looking for international exposure requires serious research but I put the idea out there as I’m sure some of our members have plays we can consider.

    NEM – I don’t have them anymore but I’m pretty confident about earnings. They blew last Q by a mile and expectations are very low for them.

    CROX hasn’t made a misstep the whole of Q2, every statement, every press release, every deal, has been a good thing for them – they need to break $60 soon though or it will firm up as a top where we can expect a pullback to maybe $50. I have Sept $50s, now $11.50 and I have no desire to keep them under $59 but I am still hoping we break up from here.

    IPhone production cut probably not true – still trying to verify. It is unbelievable that this company, with 20Bn in annual sales, can now get yanked around based on if they sold $500M worth of IPhones or $300M worth of IPhones in 2 weeks!

    CCJ – no reason to cover if it stays above $41.50 (assuming you have a leap) this stock is miles under priced right now. I’d be tempted to sell the $45s at $1+, the same premium that you get for selling the $40s now.

    Crooks at the Street started IPhone drop in conjunction with what business 2.0 callls a deliberate “raid” on the stock. That Eminem thing seals the deal for me – too much bad news at once to be a coincidence, nice mega flush I think: http://blogs.business2.com/apple/2007/07/bear-raid-wallo.html

    Congrats Lib/Dave! Hopefully my BSEG play will go so well one day…

    They are forecasting a 1.7M draw in crude and 700K build in gas and 1.3M build in distillates with 92.1% refinery utilization. There may be a huge build in crude if a tanker came in off the Gulf (and at $76 in a $5 backwarded market I’d be full steam ahead to port with 2M barrels I’m paying $1.4M a month to store) so let’s look at the gift of SU’s run up as a good shorting opportunity with the $90 puts down to $1.65 and entry and as a mo play tomorrow (was $3.50 yesterday) and the SU Sept $85 puts at $1.77 as a pre-roll. XXX


  162. Happy, any thoughts on MPEL


  163. Look at the fertilizers today wow!

    POT AGU CF MOS MON


  164. CMG time already priced in lower expectations on food costs. Raising prices won’t deter customers.


  165. MPEL
    don’t know the company. But, looks like it needs to break 14 before going anywhere. it is trying to turn, though.


  166. Phil --

    Is there any sort of fix for my NMX Aug 150s? My cost basis is now 1.83. Do I just hope for a buyout soon, add some more to cut my cost basis or roll to something that margin will allow?

    Thanks.


  167. CRS
    flying!!


  168. Apple: iPhone cutback talk unfounded – LOOPRumors [from Briefing.com]

    LOOPRumors reports Apple’s shares took a 3% dip today on speculation that the co might cut production of the iPhone. The Street reports that Apple was reducing its production of iPhones from “9 million units to 4.5 million units” according to a note from Miller Tabak & Co. The speculation is unfounded, and provides no evidence that Apple has changed its outlook on the future growth of the iPhone. Rumor sites are typically the first to hear information about this and none thus far have added validity to the rumor. Apple’s goals are still on course: 1 mln iPhones by the end of this quarter, 10 mln iPhones in 2008.


  169. anybody nibbling on AAPL?


  170. Gabriel--thats an old headline from earlier today


  171. Expectation on BWLD earning after the bell must be very high. It is almost 43 now…


  172. Phil, what do you think of FSLR? I believe earnings tonight? Thanks.

    j


  173. What happened to CELG- still in the Sept 60′s?


  174. BWLD doing well ahead of earnings.

    j


  175. CELG
    looks like it’s negotiating with 62; needs to consolidate and go back up.


  176. Phil,

    My Aug UNH caller (Aug 50) is now worth .4. Should I buy it back and roll to Sept 45′s for 4.4 or Sept 50 for 1.3 or be patient and let the Aug 50 expire worthless?
    As always, thanks!


  177. FYI, I can’t hide either….I’m normally Bleau.


  178. Phil
    By your comments a few minutes ago, are you saying to
    buy sep 85 puts and
    buy aug 90 put
    Sorry still confused by the terminology.
    Thanks
    Don

    so let’s look at the gift of SU’s run up as a good shorting opportunity with the $90 puts down to $1.65 and entry and as a mo play tomorrow (was $3.50 yesterday) and the SU Sept $85 puts at $1.77 as a pre-roll. XXX


  179. Phil, Happy

    Any thoughts on MA before earnings tommorrow.

    Thanks


  180. Markets not looking good. Could be heading to an ugly close.


  181. God, E*Trade sucks. Phil, what platform do you trade on?


  182. Just got back from lunch…..why would a confectionary like M&M’s be suing AAPL?


  183. XLF, BSC, LEH, MER, GS…
    I try to follow most everything on PSW every day, but not sure if this was mentioned before:

    July 31 (Bloomberg) — On Wall Street, Bear Stearns Cos., Lehman Brothers Holdings Inc., Merrill Lynch & Co. and Goldman Sachs Group Inc., are as good as junk.

    Bonds of U.S. investment banks lost about $1.5 billion of their face value this month as the risk of owning the securities increased the most since at least October 2004, according to Merrill indexes. Prices of credit-default swaps based on the debt imply that their credit ratings are below investment grade, data compiled by Moody’s Investors Service show.

    …rest here: http://www.bloomberg.com/apps/news?pid=20601109&sid=aKsqEJVi3TZc&refer=home

    I’m going to wait another month or two for that crash…


  184. Celg thanks Happy Trading for the input.


  185. aapl-

    of course we will never see the sec investagate Miller Tabak & Co as to if it or its clients benifited from the ‘rumor’ of aapl cutting i-phone production but martha white goes to jail to show that they (sec) really are tough guys and really do protect us little fellows.


  186. Anybody have an opinion on FMCN? Both LT and ST. Bought puts last month to hedge my gains… but now thinking of buying Oct calls maybe?!


  187. Market
    very volatile. So, be careful, but, be patient!


  188. American Home Mortgage Working To Resolve Liquidity Issues

    American Home Mortgage Investment Corp. said Tuesday it is trying to resolve liquidity issues, which it said arose from disruptions in the secondary mortgage market. The Melville, N.Y., mortgage real-estate investment trust said Tuesday that lenders have initiated margin calls in response to the declining collateral value of certain loans and securities in its portfolio. American Home Mortgage has received and paid significant margin calls in the last three weeks and has substantial unpaid margin calls pending, the company said. The company said that, at present, it can’t borrow on its credit facilities and couldn’t fund its lending obligations Monday of about $300 million. It doesn’t anticipate being able to fund about $450 million to $500 million Tuesday.

    Deja vu, sounds exactly like NEW back in March


  189. I am strangling BWLD as well its only got a 14 million float?!! It can still move esp with the short ratio.
    Buying the AUG 45 calls and Aug 35 puts, 3:1 overweight long. CEO going to be on Fast Money tonight.


  190. I 2nd the E*trade sucks.. Recommendations on where to move would be appreciated.
    Thanks
    Don


  191. Happy – no trades today (per your website)?


  192. optionhouse.com the best options trading site out there. Lowest cost too.


  193. Happy, MPEL opened the Crown Macau in july this year. It has one of 6 licenses granted for gaming in Macau, small article following.
    MPBL Gaming is one of six companies granted concessions or sub-concessions to operate casinos in Macau. Its first property, Crown Macau (www.crown-macau.com), was opened on May 12, 2007. Other development projects include City of Dreams, an integrated casino resort located in Cotai. MPEL’s existing business includes the Mocha Clubs, which feature a total of approximately 1,000 gaming machines in six locations and comprise the largest non-casino based operations of electronic gaming machines in Macau. MPEL has entered into an agreement, subject to certain conditions, to acquire a third development site on the Macau Peninsula. For more information about MPEL


  194. as a true vulture play, i wonder if AHM holds your mtg and if you offered them like 65% of the loan amount, if they’d sell it? if they cant meet day to day funding, they probably cant meet payroll etc…


  195. Dragon,

    Thanks for the GRMN play, I closed the calls out today at 105% so I’m out completely now. On CMG, I assume you’re using the 90 call/85 puts?


  196. Vix is climbing, high of day.


  197. Thanks Dragon


  198. Interactive Brokers is very good with low transaction fees but they don’t bundle (options contracts are 0.75 per with $1 min, stocks are $1 per 100, forex are $2.5 up to something like $50000) so it’s good if you purchase ‘small’ lots and option house is better if you purchase lots of at least 13.3333 :) options.


  199. aapl-

    quote apple insider http://www.appleinsider.com from

    Apple skids on one-off analyst comment

    Apple shares slipped more than $5.00 or 3.5 percent in early morning trading on the Nasdaq stock market after TheStreet.com reported on a research note from Miller Tabak which allegedly asserted that Apple was reducing its production of iPhones from “9 million units to 4.5 million units.”

    However, Miller Tabak analyst Peter Boockvar later told AppleInsider that his firm authored no such note on Apple. Instead, he said, gossip was passed along during a telephone conversation and was subsequently overblown.

    “Disregard it. There’s no note on Apple today,” Boockvar said. “It’s pure noise.”


  200. once again the crooks are able to pull the nasdaq down and pump up the price of crude. Seems like things back to normal for them, and yes VXN is back above VIX :-(


  201. CMG- I have a small position on the 95 call and the 75/80 puts, 3 to1 overweight long.


  202. CG
    no “sell to close” yet!


  203. Underscore Fab -

    Actually IB charges .05 per share on stocks (1.00 min.)


  204. itching to pickup some AAPL…


  205. Phil- If you had to choose between initiating long term positions in CCJ or CHK, which would you choose? Due to current positions and margin, it appears I can’t do both.


  206. Bought NCT puts AUG 17.50 momo @.75


  207. congrats to AHM put holders.

    So, who’s next?


  208. HOV or BZH.


  209. BWLD 43+


  210. AHM … what a disaster !! Holy cow.

    Keep in mind, its a small company …. was 500 M market cap before this happened.


  211. SPF imo or DHI for homebuilders. What they need to do is merge and cut costs and slim down. The stocks will bottom then.


  212. AHM –

    I can’t believe these guys were in the 20′s just a month ago.

    ARRG!! I was in the wrong one again!


  213. Interesting, as soon as AHM started trading, market and financials started to pop back up.

    The sky isn’t falling after all !


  214. Lib

    Did your AHM puts start trading? Nice call (understatement).


  215. Want to see crazy predictive premiums. Look at NFI Leaps.


  216. I just couldnt wait for the AAPL Oct 145 to reach 8.50 and after looking at the 140s I decided for $2 more I could get $5 in position. So I took the AAPL Oct 140s at 10.90.


  217. if the AAPL Oct 145s do drop to 8.50, I’ll take those too!


  218. BK at NFI is practically assured if the Sept 7.50 puts are selling for 5.20 …


  219. AHMTB out with 700% gain!!! best trade i ever made!!!

    I LOVE subprime!!!!!! cant believe it!!


  220. market
    this slide is not good!


  221. we go red. uh-oh.


  222. What’s the current read on the broader market Happy?


  223. AAPL, GS, GOOG, CFC, BKUNA making new LODs.


  224. Interesting market today.

    Wonder if the charts are gonna print one of their hallmark ‘W’ patterns thats marked every correction in th past couple of years.

    We gonna retest the SPX 200-day ?


  225. got the AAPL Oct 145s at 8.40


  226. IMB – greed kills John! If you are behind and you get even, losing more than 10% from that spot is criminal! The reason we are down is because we were wrong – with our entry, about the market, about the stock, about the sector… We need to recognize a spike that goes our way as luck, not a validation of our original theory. I no longer trust this stock after reviewing earnings and calls are way too dangerous to leave in a short time-frame in a choppy market.

    Meanwhile, open this article: http://financial.seekingalpha.com/article/41023
    Next to this article: http://online.wsj.com/article/SB118588336546483293.html?mod=yahoo_hs&ru=yahoo

    Shouldn’t this guy (communications director of IMB) get in trouble for this?

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

    RIO – that’s a heck of a run to leave on the table – what positions?

    CELG – take a look at mid April, they took a huge leap to $62 and held there for about 10 days. On the way down in late May, paused at about the same spot…

    SOX ARE running – AWAY!

    Friday was a call not to buy leaps with VIX over 20, it means you’re overpaying. If you cover though, your cover is overpaying too so then you have do decide what the trade-off will be.

    Welcome Mark and thanks!

    NMX $150s – best use of that is to frame the transaction so you’ll never buy that far out of the money ahead of earnings again! As a rule of thumb, looking for more than 10% is nuts on any stock and 5% is a stretch for most. Depending on how far down you are, you can sell the $135 puts for $2.67, using your $1.50s as an upside buffer, perhaps being ready to buy the Jan $140s at $8.95 as upside covers if it starts to go up as they would be nice to own and sell against anyway.

    FSLR – they fall under my rule that if someone is going to pay you $7.60 (6.5%) for the $120s that are $4 out of the money, find some way to take it! March $125s are $19.95 and give you 6 months of very expensive rolls to sell. If the stock tanks, you have $7 from your caller which should let you roll all the way down to $110 – not too bad…

    CELG – will go from 10 to 20 or 25 on the Sept $65s but, frankly, I’m disappointed they are still at $1.60 so I don’t think people are buying this sell-off 100%.

    UNH – I think they are oversold so I’d be wathing the caller with a .20 stop and more likely to roll up to Sept $50s, hopefully for $2+

    Very strange name problem – some on, some off but I know they are working on something so Happy, Z and Sage get background colors, maybe it’s messing something up?

    Platform – mainly OptionsXpress but I’ll be opening on OptionHouse account when I get back from vaca. I also us MER for block trading as I pay a flat annual fee there and I like to have live traders as a backup in case the web fails me. If you have a small account, OptionHouse is the way to go as a $10 flat fee trumps pretty much everything.

    Waiting for the crash – it may not take that long Doubleclick!

    AAPL – well Highlander, I always say “I don’t care if the game is fixed as long as I can figure out HOW it’s fixed.”

    FMCN – I bought the stock and sold the $40s and I went from being worried I was going to be called away to being very glad I got called away last expiration. They are very rumor driven right now but I’m pretty comfortable with them at this price $41 and, since my caller kicked my ass for a while last month I like the Jan $50s for $3.75, selling 1/2 Sept $45s for 2.52 and using the other half for a mo sale after earnings.

    Market Volatile! LOL Happy, thank goodness you were here for that report… ;-)

    AHM – no one is falling for it this time, Brokers have their own troubles this week and are in no position to bail them out.

    Cody – I tried to get funding for a play like that, effectively taking a book of mortgages off someone’s hands like that then send in a specialist team to actually work with the borrowers and save as many as possible as I thought it would be a good deed that would make a lot of money but the labor-intensive nature of dealing with individual borrowers (especially “icky” class C borrowers) was rejected by every financing firm I pitched it to…

    VIX climbing – still telling us that down is wrong but market in no mood to listen.

    UTX having a strange day but CAT behaving well.

    Oil $78.23, pumping to a record at the close.

    CHK is more likely to pop in the near term (hurricane) so it would be dangerous to sell against but better if you are looking to just place a leap and cash it out with a 30% gain. I love that CCJ has $2.50 brackets in Jan, which is no longer a leap but gives you great flexibility to roll with your caller. Frankly with CCJ – I can’t believe you can buy the Jan ’10 $30 for $18.60, (a .25 per month premium and you can sell the Sept $45s for $1.65).

    Once again my mattress plays accidentally make a ton of money!


  227. AAPL – just hit it, now we’ll see if we can claw back to my Dow down – 30 mark.


  228. What is the message here – that XOM isn’t worth $86 with $78 oil? Then WTF were people doing buying it at $92 with oil at $74? This is what they sell!!! Too funny and then people tell me I’m wrong to call it a farce. Backwardation is OUT OF CONTROL, now $6 difference on a 12 month strip (up 20% from yesterday).


  229. Selling AAPL Aug covers phil?


  230. market
    we need to see if the market can pull-up in the last hour. the daily chart won’t look good if we don’t pull up above those support ranges that I’ve been talking about. The slow slide worries me.


  231. Taking a little bit more profit on AAPL, AMZN and DIA puts. This is crazy.


  232. Phil

    Any play on FWLT into earnings next week.


  233. Mortgages are so hosed that ‘prime’ doesn’t even have meaning anymore.

    Lest there be any confusion:

    1) Prime is the new Alt-A
    2) Alt-A is the new subprime
    3) old subprime was outright fraud
    4) 35 is the new 30 (I’m 31 so this is important to me)


  234. Sold CMG for almost 100% gain and closing out the strangle.


  235. CFC’s headed down…


  236. LUM falling!


  237. Good bye LDK.


  238. Biodiesel, if 35 is the new 30, does it follow 31 is younger than 30? :=)


  239. NDX the biggest loser of all the major indices? And the reason some BS rumor on AAPL.


  240. BDChris, I like that ’4) 35 is the new 30 (I’m 31 so this is important to me)’ also.

    All 31 year olds think alike? :-)


  241. HaHa Ha “Tomorrow is really the start of the BIG HURRICANE SEASON”.

    Stupid CNBC bozo talking heads !

    What was June 1 ? That they started talking about in March !.

    Now we know, Aug 1 is really, we’re not kidding this time, the start of a very big and scary hurricane season, batten down the hatches !”


  242. The way nasdaq is reacting to subprime, it is possible that for every dollar drop in crude, the nasdaq could drop 100 points. And then China takes over all the biggies in the Silicon Valley and Bill Gates takes MSFT private. :-)


  243. Zman: do you know anything about GTRE, a very small oil and gas exploration outfit? Huge volume, and looks like the start of a breakout (I know it’s hard to call this a breakout, but it could be). After hours reply is OK.

    Thanks
    Greg


  244. Phil – Mattress

    When are you moving to Sept puts?


  245. http://blogs.business2.com/apple/2007/07/bear-raid-wallo.html?section=money_topstories

    Bear Raid Squashes Apple

    Apple (AAPL) shares dropped roughly 6 points in the space of 90 minutes on the strength of a unsubstantiated report of a cut in iPhone production. Some Apple watchers are characterizing the action as a deliberately staged raid on the high-flying stock.

    The report that drove the stock south was mostly spread by word of mouth, but one version appeared shortly after 11 a.m. ET in a Scott Moritz piece in The Street:

    The chatter that sent the stock down was that Apple was reducing its production of iPhones from “9 million units to 4.5 million units,” according to a note from Miller Tabak & Co.

    The note cites talk among traders at Goldman Sachs and also includes speculation that the cuts may be coming in iPod production. (link)

    [Note: in a updated version of his story, Moritz deletes the reference to Goldman Sachs and replaces it with unspecified "talk on Wall Street."]

    AppleInsider later spoke with Miller Tabak analyst Peter Boockvar, who insists his firm authored no such note on Apple. Instead, he said, gossip was passed along during a telephone conversation and was subsequently overblown.

    “Disregard it. There’s no note on Apple today,” Boockvar told AppleInsider. “It’s pure noise.” (link)


  246. Ouch :(


  247. Phil,

    What do you think of BGC? Reports tonite. Short interest is 7 times avg trading volume

    thanks


  248. The wheels on the bus go round and round…


  249. Sorry Greg, Don’t know GTRE. I’ll try and take a look tonight.

    So I take it the market sliding into the close is bad?


  250. Selling all my strangles for profit. market is shaky now im buying CFC AUg 27.50 puts.


  251. RIMM
    going down!!


  252. AAPL covers – no, I made a bottom call, I have a well stuffed mattress protecting my downside so there’s no need to run out of anything I may want to keep.

    FWLT – No, I’m done with them but you could pick up the Sept $120 calls for $5.45 against the currentl $110 puts for $3.80 and probably work your way into a nice $6 avg strangle as it gyrates up and down between now and then.

    Mattress – currently using some Sept puts, 60 Sept $135s at $3.50 60 Sept $133 puts at $3 today were pre-rolls on the 120 Sept $138 puts but I’ve had no cause to sell the $138 puts yet (or any of the Aug puts!) as that silly 100-point gain this morning turned out to be a gift! Currently I’m about 3:1 August but not intentionally, I was aiming for 2:1 on the logic that Aug would be more volatile and would force me out faster but we’ve been straight down since my 10:22 call to load up due to the price of oil – gee, who’d have thought that would matter?

    BGC – not a sexy business but I wouldn’t mind owning them long as they have some great growth prospects. Very little following for a $4Bn company and good options premium considering how steady the growth profile is. The Feb $90s are $7.70 and you can sell Sept $85s against them for $4.45 as a pretty cheap entry since they don’t really move more than $10 after earnings and it’s plenty of time to roll and they haven’t violated the 200 dma, now at $80 in 2 years.

    Now I’m covering with the DIA $133s at $2.33, I’d like to buy Septs but I refuse to pay what they are asking at the moment. XXX

    Najerian says XOM Jan calls are hot but they are spreading them with the Aug $90s I bought like a sucker!


  253. GS
    under 190 again, not good!


  254. Whoa, look at AAPL dive.


  255. Look at this: http://blogs.business2.com/utilitybelt/2007/07/why-apple-stock.html

    Is this an incredible buying opportunity on AAPL or is there a rat here that my (newbie) nose is not picking up?


  256. Not that CAT does not care about the rest of the market today.

    AAPL – had to pick up some Oct $140s at $9.50!


  257. Wow, it’s a good thing they rang that bell!!


  258. WOW! That was unbelievable. You have to love these markets.


  259. My… that was an -ugly- close!


  260. phil when you say you picked up some oct 140s what does that mean? are you buying or selling calls or puts?


  261. 250 points drop on ATM DIA puts just makes your day :)


  262. Sahaida-

    If Phil doesn’t specify, they will be purchased calls.


  263. Damn, i figured on -100 dow at close, these closing dips are getting pretty harsh


  264. Phil- Thanks again for the rule “sell into the excitement”. Good day for it with CMG and BWLD climbing, probably to unsustainable levels.


  265. Great call optrader! I wish I made that play but I was thinking rally.
    What gave you the feeling so early?


  266. Phil – It seems some of my options when up more in value at the close than I thought they would – is this because the VIX went up again?


  267. Picked up = buying. Sold = selling. Usually I will say what I am selling something against and I would almost never sell a call or a put more than 60 days out (I just don’t think I am that smart).

    Sell into the excitement – don’t forget the Always, very important part of the rule!


  268. Hey Phil: After you reminded me to stick to my guns, I made a small put trade and stuck to it until the last hour. I made a nice 30% profit. It was a great confidence builder (don’t worry I won’t get over confident).

    Thanks for your encouragement.

    Greg


  269. GM gave it all back & finished red


  270. V hedge ? We dont need no steenkin V hedge.

    VIX up over 23. My IWM put credit spread (V sink) is on the edge of being unprofitable. The problem with not being able to sell the other half of the construct is that its not delta neutral.

    I am glad I bought a layer of DIA puts near the top of the market today – Phil’s influence. Just wish I woulda bought more (of course).

    The OIH rally was weak and unconvincing with respect to volume.

    All in all not a helpful ‘turn’ of events for a guy whos lookin for a couple percent up in the market by aug. exp.

    Its /real/ hard to ignore GS here. Tell ya what – when the ‘all clear’ is sounded, GS is gonna shoot up, skip orbit, and go right to da moon.


  271. Optiondragon,

    Calling the top earlier this morning was pure luck. Maybe a little bit of experience/ feel for the market. I am just a trend follower and right now the trend is down, from my indicators. So I don’t hesitate to sell into rallies, especially if they seem bogus like this morning (as Phil explained before me). One of strategies also is to look at 5MA and buy/sell when stocks bounce to these levels, while still in the trend. So that’s what happened. Like I said, there is a lot of luck in these. It could have kept going up and I could have been stopped-out for a small loss. Everything is in managing your trade. Was lucky on this one, like I was very lucky yesterday to buy AAPL puts on that bounce (as posted here).
    I added more AAPL Leaps at the close, but I am still keeping my puts until the trend changes (price above 5MA or above previous day high). I am also keeping a little bit more of 1/3 of my AMZN naked puts, bought yesterday morning and added this morning. Hope this helps.


  272. BWLD getting creamed in AH. Down 9 and change now.

    Missed revenue. Made EPS.


  273. CMG and WFMI flying in AH.


  274. NAK halted


  275. I will not react to the first trading hour. I will not react to the first trading hour. I will not react to the first trading hour. I will not react to the first trading hour. I will not react to the first trading hour. I will not react to the first trading hour. I will not react to the first trading hour. I will not react to the first trading hour. SLAP, SLAP, SLAP, SLAP.

    Okay, maybe that will work. I sure hope so.


  276. VIX – absolutely, that VIX is saving (apparently) a lot of positions as it climbed 15% since the open. It’s not exact but if you imagine the premiums you have in your contracts went up 15% to offset the intrinsic value lost it’s a good rule of thumb.

    Greg – 8-)

    CMG – Brilliant Dragon!

    NAK – someone is raiding my retirement account! This is just ridiculous…

    1st trading hour – I think I mentioned last week that Trader Mike (who I have a lot of respect for) has a policy of ignoring at least the first half hour. I can’t do that because I’m selling into the excitement but it’s the same theory – what happens at the open is a suckers market, very easily manipulated and easily reversed.


  277. LOL Bill P! I have been there too!


  278. Please,

    Anybody who cant afford to lose their money, sit on the side lines until a clear picture emerges or hedge yourself to the hilt. This kind of volatility is what can sideline even a pro for years. It is better to miss the first 20% of a move than go down in flames. I sincerely believe most “pros” have no idea what is going on. So, we are gonna whipsaw like mad. Certainly play with a portion, but do not risk your family or your own welfare. Sorry for being melodramatic, but after hearing someone lost 75% last week I couldn’t help myself.


  279. Sowood loses more than $1 billion in July
    Facing margin calls, hedge fund firm sells portfolio to Citadel

    http://tinyurl.com/2dz52u

    I guess there will be more hedgie blow ups soon.


  280. NAK may be good news. At least I hope so. Did something surface?


  281. I agree with Lithium R., as an amateur who has gotten creamed before in a volatile market (fortunately only a few thousands). Only L-T positions and spreads for me, and all short-term naked positions with 20% stops.


  282. Gold -

    Any recommendations for investing in gold as a hedge for when this market/economy starts (ahh, I mean continues) swirling down the cammode?

    tnx – Brian


  283. PGR theory – Admittedly I haven’t looked deep into the financials so they are probably into more than just auto insurance. However, my intuition tells me that the auto insurance business must be doing well and continue to get better with rising oil and gas prices. Insurance premiums are going up, yet with higher gas prices, I would think the agenda of the average driver is to DRIVE LESS, which means LESS ACCIDENTS, which means LESS CLAIMS, which means HIGHER PROFITS to the auto insurance companies.

    What do you guys think? Perhaps I’ll re-post this same message tomorrow too in case everyone is already sipping margaritas at this late hour.


  284. Phil can you answer my earlier question.
    Thanks
    Don

    #
    traderdon
    Posted July 31, 2007 at 1:38 pm | Permalink

    Phil
    By your comments a few minutes ago, are you saying to
    buy sep 85 puts and
    buy aug 90 put
    Sorry still confused by the terminology.
    Thanks
    Don

    so let’s look at the gift of SU’s run up as a good shorting opportunity with the $90 puts down to $1.65 and entry and as a mo play tomorrow (was $3.50 yesterday) and the SU Sept $85 puts at $1.77 as a pre-roll. XXX


  285. NAK

    maybe rio tinto will buy the rest.


  286. traderdon,

    On your question, Phil means SU’s Aug90 puts are a good buy at $1.65 in advance of tomorrow’s inventory report. On the Sep85 puts, I believe he means if you want to keep the put position longer term, and not as just a momentum play, you would buy (or roll the Aug90s) the Sep85s for $1.77. I suspect the put prices are no longer valid/current, however, given the market’s close.


  287. thanks KC
    I will get this down someday :)


  288. Brian –

    Gold isnt acting very well as a hedge these days, perhaps as a result of the recent commodity boom.

    It makes sense that any dollar-denominated commodity should be a good dollar hedge – but gold has basically followed the markets of late, regardless of the dollars movement. It should hedge against inflation also (same as currency for the most part), but has proven to be prretty much dead money for quite awhile now.

    If you wanna play gold you can buy the ETF (not optionable): GLD
    or you can use the gold miners index: GDX (optionable), which follows gold pretty closely.

    Gold is likely to go higher longer term. Short term it hasnt shown me much.


  289. The other small miner I like as a long-term hold is MRB but NAK is/was my favorite. ABX is a nice long-term accumulate but a little high here. GG has low expectations on 8/9. AU just missed though due to currency issues and (just like oil) runaway service cost – good for JOYG and CAT, bad for their clients…

    That’s why NAK was my favorite, they are sitting on one of the world’s largest gold finds and they have lots of molybdenum, which is also nice to have (copper is a waste product for them).

    PGR – I like that theory Egs!

    SU – sorry I think I missed that one… Yes it was a buy on each and the idea was that the more volatile Aug $90 puts would be taken off the table as a momentum play and keep the Sept $85 puts as a longer-term hold. Pre-roll (as someone else asked this) is buying a cheaper, further out of the money (and/or further out in time) contract that I will leave in place when the original appreciates. I do this when I feel strongly about a long-term direction (like I did with the DIAs at 10:22).

    You will often hear me say to people who have deep in the money calls that they should consider taking some off the table by rolling up to a higher bracket so, for example someone who bought the AAPL $120s for $8 on July 2nd and was still holding them at $27 on July 23rd would have done well to roll them to the October $145s at $12 on the 23rd (assuming they were still crazy bullish). That would have taken $13 off the table and lowered the downside risk as those Octobers held $7.50 in value today whereas the Aug $120s dropped to $13.50. So that’s why I roll.

    A pre-roll then is me taking that same $8 position in AAPL $120 on July 2nd but spending an extra $3 for the October $145s as a pre roll because my projected path for AAPL indicates $150 around that time. By taking a pre-roll, I can easily make a good stop-out decision (following my 20% rule), which frankly would have had me at least half out at $20 on the 24th but the point is that I already had my roll in place at a far lower price than the $10 it would have cost me to roll out that day, making it a very easy decision to kill my trade at a nice top. Meanwhile, following a 20% rule with the Octobers AFTER they became the sole position, I would have killed them at about $12 so that would be $32 from $11 invested as opposed to (in a perfect exit) $27 from a $8 investment.

    So the extra $3 would have been very well spent as a pre-roll and there are other advantages too, like if AAPL had gone down, I could have sold the $115s for $9 and my Octobers would have protected the upside. If the $115s got wiped out, I would still own the Octobers for $2 and have 2 months to recover. This is not a strategy I do often, generally just when I think I see a strong move coming.

    Speaking of the Oct $145s, they are now selling for less money than they were on July 12th when the stock was at $133 so I’m really liking this contract if we turn up. XXX


  290. I dunno if this has been mentionned on PSW before, but heres an idea I can finally believe in with respect to energy augmentation/replacement. Think Ill buy 1000 shares and just put it away.

    …of course the company is run by ex-oilmen but shoudl we hold that against em ?

    Biodiesel /is/ the new fuel.

    Check out NBF.
    http://energy.seekingalpha.com/article/43054


  291. Phil, thanks for explaining the rolling concept using AAPL as an example. I’m ready to DD on the Oct calls…


  292. Gold gets sold off as the carry trade unwinds. It will likely go up eventually but it could go lower first.


  293. Thanks Phil
    Super explanation which I completely understand now :)
    I did buy the AAPL Oct $145 in one of my IRA accts with the intention of selling the Aug $140 as was mentioned earlier. Only to discover that my acct isnt approved for that level of options so I couldn’t sell. So I am creating an account with optionhouse as we speak and E*trade will soon be history.
    One more question
    I did make your XOM trade yesterday in another acct buying 2 Sept $90 calls for $1.80 and sold 1 Aug $85 call for $2.15. I am wondering what I should do from here ? If XOM drops significantly, should I buy back the Aug contract I am short or try and let it expire. One thing I don’t understand fully is since the positions are all calls as the stock drops the value of both go down, which is good for the one I am short so you are gaining overall, but I need some more understanding on the exit strategy.
    I am going slow and small as this is new to me and I don’t want to make a big mistake until I get this all sorted out in my head.
    Thanks for your patience and being so helpful.
    Don


  294. GLD / IAU vs GG / NEM / GDX – Perhaps it doesn’t matter for this audience of options traders because a lot of what we do is short term per IRS standards of less than 1 year. But the raw material of GLD and IAU is treated like a collectible by IRS standards so regardless of whether you hold it 3 days or 30 years, you are taxed at the higher rate. Trading the mining companies themselves will allow you to reduce your tax rate if you hold for more than 1 year. I have owned IAU in the past but only in my IRA account where tax rules essentially don’t matter.


  295. Miners – How about KRY (Crystallex)? I’ve had it for a while. It has been going down recently (again) as their VZ permit is having yet more delays…


  296. XOM – first of all, on spread trades like that your goal is to make 20%, in all the gyrations of the stock, if you find yourself up 20% you should grab it. Stategy changes minute to minute on these but they are pretty much on par as of right now. If our bullish premise on XOM fails (and it’s looking pretty shakey now) we just need to pick a good exit but you can just take 1/2 off and let the rest ride if it starts going down, leaving you with a profitable spread to the downside. Today the Sept $90s topped out at $2.45 (+60) and the $85 topped out at $3.40 (+1.30) so there was no real advantage to exiting BUT, had you taken 1/2 your Septembers off the table at $3.20, you would have locked in a .40 profit and then sold you other two legs even later in the day for a .40 gain on $1.45 invested for 27%!

    That’s tricky to get right though but at least we tested my premise that 2 sept will out gain 1 aug and that’s key becuase you do not have to fear a run-up and you know he will lose premium faster than you. You have $3.65 in premium over 50 days (.07/day) and he has $2.17 over 20 days (.10/day) so, as long as you guys are moving pretty much in tandem, you gain a .60 advantage between now and expiration. As I said, since .60 is your optimal win, taking .40 off the table in the first week is clearly a good idea.

    If IAU had options I would play it. I prefer GDX as a buy and hold because a mine fire or bad hedging by management or a big merger (ABX) doesn’t hurt you. Since they are optionable you can own it and sell, for example, the Aug $35s for .35, not much until you do it all year for $4.20 on a $35 stock. Some IRAs let you do this some don’t but I think it’s crazy not selling calls. If you are not allowed to sell the stock, just set a stop and buy it out or roll it but why would you not want to collect another 10% a year on a long hold?

    KRY – VZ is a no no for me! NAK’s reserves dwarf theirs anyway for just 50% more cap and they are in nice, stable Canada. It turns out they just got $1.4Bn investment partner for their Alaska project where they may have as much as 50M oz of gold, 70Bn pounds of copper and 4Bn pounds of moly.

    http://www.northerndynastyminerals.com/ndm/NewsReleases.asp?ReportID=171529&_Type=News-Releases&_Title=New-Resource-Estimate-Confirms-Pebble-East-As-One-Of-The-WorldS-Most-Import


  297. Thanks again Phil.. Your the best
    Don


  298. Gold – thanks djczing .. much appreciated.


  299. Good article on stress:

    Dealing with Stress for Trading Success

    Stress from trading is one of the biggest killers of new traders. Most people (I mean traders and non-traders) have little appreciation for what they go through mentally and physically. So let’s spend a little time on trading stress and what you can do about it.

    First, you only have “X” amount of energy to use in your life. Some goes to walking and talking, some to thinking, some to play (hopefully) and a great deal goes to managing our emotions. Once you start burning more energy in one area, another must suffer. Many traders feel “burnt out” after a day (or lifetime) of trading. Trading is highly stressful and more so for the beginner. He or she has to deal with both real and imagined attacks on the psyche, money and emotional state. Traders burn a lot of energy in this arena, thus, other areas (walking & talking, for instance) suffer.

    What is stress? Here’s an example. The Stressor – you just got whacked for a point and half loser on a 1000 shares. You went “long” just as you see that stock’s CFO being lead off in ‘cuffs. Stress Response – increased perspiration, blood pressure, heart rate, etc. and wanting to throw your keyboard! This is Distress or Negative Stress. It comes in two flavors: Acute: Intense, but disappears quickly; and Chronic: not as intense, lingers for prolonged periods of time.

    You can also have Eustress, a Positive Stress which Motivates, Excites and Energizes you. A Eustressor might be a Roller Coaster ride. Stress Response – increased perspiration, blood pressure, heart rate, etc. and wanting to yell at the top of your lungs!

    Obviously, traders have to deal with both. When they get whacked or when they hit a flyer – good stress or bad stress, you have to deal with it. Of course, they both come in the Acute and Chronic conditions. Acute is the moment, chronic is the “day in, day out” grind.

    Because Stock Trading is the second most stressful occupation, next to disarming live nuclear weapons, it is essential that you learn effective Stress Management skills! In order to deal effectively with stress, you must understand how the stress response works.

    The Model of (bad) Stress is Five-fold:
    1. Stressor – The real situation
    2. Perception/Thoughts – Your initial reaction as you perceive the situation
    3. Feelings/Emotions – your psychological response to your perception
    4. Physiological Reactions – your body’s response to your emotional state
    5. Health Consequences – Energy consumption

    1. Stressors are manifold in trading:
    You just got whacked
    You’re distracted by other traders who have lost it!
    Your significant “other” is less than supportive.
    You’re trading with scared money.

    2. Your Perceptions
    “I can’t afford to lose any more money!”
    “My wife is going to kill me!”
    “It’s over for my trading career!”

    3. Your Emotional Response
    Frustration
    Rage
    Anger
    Fear

    4. How your body responds to the Emotion
    Increased perspiration
    Increased heart rate
    Increased blood pressure
    Increased muscle tension
    Bracing – Jaw clenching, shoulder tightening

    5. Your Health
    Heart Attack
    Stroke
    Asthma Attacks
    You name it – Headaches, Loss of Appetite, etc.

    Your ability or inability to deal with stress comes from your philosophical makeup and belief systems. They, in turn, help you interpret your perceived thoughts which, then, trigger your emotional response. Your emotional response then affects your body (pain or pleasure) – which, finally, adjusts your philosophical makeup and beliefs. The cycle of good or ill is complete and ready for another rotation – downward, if you are not careful.

    Thus, to break this cycle of (bad) stress, we need to set up “roadblocks” as early in the cycle as possible. Don’t wait until you’re about to “lose it” to deal with stress! “Nip it in the bud” and decrease or eliminate the stressor itself.

    Stressor: You’re always running late; Roadblock: Set your alarm clock 15 minutes earlier
    Stressor: You’re rusty on your trading skills; Roadblock: Take another class

    (continued in next post)


  300. (continued)

    If there’s nothing you can do about the stressor, then modify your thoughts about the stressor.

    Stressor: The bell is about to ring and you’re feeling nervous; Roadblock: Tune in to your own mind and take control of your internal dialogue (I’m going to have a great day today — if I don’t, life is still good)

    Finally, if there is nothing you can do about the stressor and you are already experiencing stress symptoms – headache, muscle tension, disorientation, etc – set up a physical “roadblock” – close your positions, log-off and go for a vigorous walk or other physical activity. “Walk it off!” is what my track coach use to shout at me. Set this up as one of your disciplines. I am sure most of you have heard of the “Flight/Fight” syndrome. As stress builds up, it actually prepares our body to either “run away” or to enter “mortal combat.” These bodily changes cause increased physical power, speed, and strength – the problem is that a trader does not need to be able to “leap tall buildings in a single bound” or “to be faster than a speeding bullet.”

    If the stress does build up, a number of bad things start to happen. Obviously, an acute (intense) case magnifies any underlying stress that has been lingering (chronic). These “bad things” are really destructive for a trader. They include the items already mentioned but also, forgetfulness, irritability, becoming less sociable and loss of concentration. Wow, would any of these affect your ability to perform as a trader? – Was I long or short; Damn this stock, I’m going to get my money back right now; Nobody loves me and I am all alone; or, Those pesky Prints keep changing color?!?

    Any one of these little maladies can destroy your account. It can also destroy your health, a far more important asset. Stress, in and of itself, does not cause disease but it is certainly a “co-factor” in unhealthy situations. Back to the “flight/fight” syndrome – yeah, it gives you power – by flooding your body with all sorts of hormones and chemicals. Part of this flood, if not used, is cortisol. Cortisol is good for fighting saber toothed tigers when necessary but if not used or flushed out of your system it starts to:

    Destroys appetite – I like to eat
    Cripples the immune system – colds lasts longer
    Shuts down processes that repair tissue – wounds heal slower
    Blocks sleep
    Breaks down bone
    Bronchial asthma
    Tension headaches
    Migraine headaches
    Temporomandibular joint dysfunction

    Now you start to understand why trading is fairly “high-risk” occupation.

    “What can I do about it?”

    Prior to the opening bell, during peak trading periods, and after the market close, learn to incorporate Cognitive Restructuring and Relaxation techniques. Cognitive Restructuring simply means that you need to talk to yourself. Mind talk is powerful and affects your subconscious mind, thereby affecting your behavior and performance.

    Cognitive Techniques:

    Tell yourself that it is not the end of your life if you get whacked.
    All you can do is try your best, given the strategies that you’ve learned.
    Count your blessings — no matter how bad things are, they could be a lot worse.
    No matter how bad things are, they will get a lot better.

    Relaxation Techniques are in the physical arena and help purge your body of unwanted by-products including cortisol. These include Progressive Relaxation, Breathing Clouds and Exercise

    Progressive Relaxation

    Take a deep breath and hold for 5 seconds
    As you inhale, clench your fists & jaw & pull your shoulders up to your ears (tighten your muscles)
    As you exhale, release all tension & completely relax downward

    Breathing Clouds (Repeat at least 3 times)

    Close your eyes and focus all your attention on your breathing
    As you inhale, visualize the air that you breathe in as being clean, fresh air that is pure & energized
    Feel the air enter your nose (or mouth), travel up through your sinus cavities to the top of your head, and down your spinal column to circulate throughout your body.
    As you exhale, visualize that the air leaving your body is dirty air, dark cloudy smoke that symbolizes all your stressors, frustrations, and toxins throughout your mind and body.

    Exercise as a Coping Method – Remember, our bodies go through physical changes (i.e. Increased heart rate & blood pressure, etc)

    A single 15 minute bout of aerobic exercise “burns off” stress hormones by directing them toward their intended metabolic functions. Otherwise, we are allowing them to linger in the body to undermine the integrity of vital organs and the immune system. Anaerobic exercise (weight lifting, isometrics, walking) is not as good as running, playing some vigorous tennis, racket ball, etc. You know what you need, you also know what you like – so here’s a great excuse to “have to” do it – make it part of your trading plan.

    How does physical activity help us deal with stress?

    1) Endorphins (powerful chemicals), released after 15 minutes or so of moderate to intense exercise, provide a euphoric feeling.
    2) Exercise acts as a distracter and/or tranquilizer — Helps your mind take a break;
    When your mind takes a break, your body takes a break.
    3) The training effect of exercise appears to prepare the body for future stressful episodes; secretions of stress hormones during the stress response are not as intense in exercisers as it is in non-exercisers

    Which technique works the best? It’s up to you. There are literally hundreds of relaxation techniques. You need to try at least a handful and see which ones are most effective for you. Stress can make you more than “tired”. Stress can cost you more than money. Stress is a physical and psychological response to how you perceive your life and its stimulants – in our case, trading. You know the old cliché, “If you don’t have your health, you don’t have anything”. Pay attention and get some Stress Management into your Trading Plan.

    Remember – If you don’t think any of this will work….It Won’t!!!

    Thanks to Mike McMahon, Director of Education at the Online Trading Academy for this well written, helpful article. (btw, NO I don’t work or get payola for mentioning the OTA! Although I will add an editorial comment that McMahon is an excellent orator with years of experience in options so any of his classes are very educational and entertaining)


  301. Huge down day for Major World Indices (Asia Pacific)

    Shanghai Composite Down 78.91 (1.77%)
    Hang Seng Down 767.10 (3.31%)
    BSE 30 Down 508.52 (3.27%)
    Jakarta Composite Down 75.89 (3.23%)
    KLSE Composite Up 21.30 (1.57%)
    Nikkei 225 Down 377.91 (2.19%)
    NZSE 50 Down 54.91 (1.30%)
    Straits Times Down 136.72 (3.85%)
    Seoul Composite Down 76.82 (3.97%)
    Taiwan Weighted Down 395.37 (4.26%)

    Hope its not as bad for us, when market opens tomorrow…


  302. it sure is picking up steam now daya!

    ^AORD All Ordinaries 5,989.40 2:11AM ET 198.10 (3.20%)
    ^SSEC Shanghai Composite 4,300.56 3:00AM ET 170.47 (3.81%)
    ^HSI Hang Seng 22,294.83 2:39AM ET 890.11 (3.84%)
    ^BSESN BSE 30 15,077.86 3:39AM ET 473.13 (3.04%)
    ^JKSE Jakarta Composite 2,267.89 3:38AM ET 80.79 (3.44%)
    ^KLSE KLSE Composite 1,373.71 Jul 31 21.30 (1.57%)
    ^N225 Nikkei 225 16,870.98 3:00AM ET 377.91 (2.19%)
    ^NZ50 NZSE 50 4,158.39 1:31AM ET 54.91 (1.30%)
    ^STI Straits Times 3,440.41 3:39AM ET 107.25 (3.02%)
    ^KS11 Seoul Composite 1,856.45 2:02AM ET 76.82 (3.97%)
    ^TWII Taiwan Weighted 8,891.88 1:46AM ET 395.37 (4.26%)


  303. I wonder what Europe is doing….DOH!

    ^ATX ATX 4,602.02 3:26AM ET 83.22 (1.78%)
    ^BFX BEL-20 4,292.19 3:41AM ET 92.28 (2.10%)
    ^FCHI CAC 40 5,626.66 3:41AM ET 124.42 (2.16%)
    ^GDAXI DAX 7,431.26 3:27AM ET 152.88 (2.02%)
    ^AEX AEX General 524.22 3:41AM ET 9.77 (1.83%)
    ^OSEAX OSE All Share 563.57 3:26AM ET 9.79 (1.71%)
    ^MIBTEL MIBTel 31,038.00 3:41AM ET 557.00 (1.76%)
    ^IXX ISE National-100 99.82 Jul 31 0.00 (0.00%)
    ^SMSI Madrid General 1,630.91 Jul 31 30.61 (1.91%)
    ^OMXSPI Stockholm General 395.61 3:41AM ET 8.54 (2.11%)
    ^SSMI Swiss Market 8,885.04 Jul 31 179.93 (2.07%)
    ^FTSE FTSE 100 6,233.50 3:41AM ET 126.60 (1.99%)


  304. Asia Markets : Wednesday, August 01, 2007

    Japan*

    16870.98
    -377.91
    -2.19%

    Hong Kong*

    22455.36
    -729.58
    -3.15%

    DJ Shanghai*

    440.80
    -20.14
    -4.37%

    S.Korea*

    1856.45
    -76.82
    -3.97%

    India

    14984.03
    -566.96
    -3.65%

    * at close
    Sources: Dow Jones, Reuters


  305. Asia Markets – Regional Shares Fall Sharply Following Wall Street Declines

    Asian markets fell sharply Wednesday following Wall Street’s decline, with Japan ending at a four-and-a-half month low and South Korea dropping 4%.

    Analysts say volatility is likely to persist until the U.S. stock market is able to stabilize, given that U.S. subprime-mortgage sector troubles continue to dominate. “When Wall Street sneezes, we catch a cold,” said an institutional trader in Sydney who declined to be named. “It’s driven by fear, and some of the complacency is coming out of the market.”

    http://tinyurl.com/2s38tx


  306. European Markets – European Stocks Tumble on U.S. Subprime Warnings

    European shares fell sharply Wednesday, following steep losses in Asia and Tuesday’s U.S. session prompted by more trouble in the mortgage sector.

    The European banking sector traded lower, despite forecast-beating earnings from both BNP Paribas and Deutsche Bank, as worries about the impact of subprime mortgage defaults continued.

    http://www.cnbc.com/id/20059913