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Friday Flip Flop

Well that wasn't so bad was it?

Just a little dip to keep us on our toes - so far!

Did the market just fire a warning shot across the bow of the bulls or is this the beginning of the end?  On the whole, it was a mild-low volume pullback but it won't take much follow-through to send us into a major correction so we need to be vigilant and get ready to move back to cash.  I will be VERY concerned if we give up another 25 points on the Nasdaq (2,750) as that could lead to a quick retest of 2,650, an that's a test we dare not fail!

Asia had a mild sell-off in response to our little dip with the Nikkei and the Hang Seng giving back a point going into their weekend.  China's trade SURPLUS jumped 56% in September with the country sending out $24Bn more than it purchased.  Wow, they run their whole country at a profit!  Maybe we should make Hu Jintao our next "CEO in Chief."

The WSJ says: "Critics of Beijing's trade record say controls on China's currency, the yuan, keep it undervalued and give Chinese exporters an unfair price advantage in foreign markets."  ROFL!  What do you think the rest of the world is saying about us?  We've got the worst currency on the planet!

China held back on its imports of both crude oil and refined products in September, possibly in response to benchmark prices hitting record highs. The country, which is buying crude not only for its own refineries but also for strategic stockpiling purposes, imported 13.66 million metric tons of crude in September, or the equivalent of 3.34 million barrels a day, according to preliminary data from the General Administration of Customs.

Wow!  So China uses it's SPR to control the price of oil and buys LESS when it's expensive.  Wow!  It's almost like they are an intelligent consumer…  President Bush is a consumer (notice missing adjective) of oil too.  In fact, he is actively fighting congress right now to push through the addition of 1.5 BILLION barrels of oil to the SPR, an amount that would take us 6 years to fill at 5M barrels a week.

  • Aside from this increasing global oil demand by 5% for 6 consecutive years
  • Aside from it costing taxpayers $120Bn at current prices and aside from it
  • Aside from it increasing the price of the 20M barrels of oil we do consume by (conservatively) $20 and costing US consumers an additional $146Bn a year (not including refining mark-ups)
  • Aside from the fact that that $146Bn, Bush's $120Bn and the $584Bn we're already paying for oil (not including refining mark-ups) ALL going in no deniable part directly into the hands of "terrorist states"
  • Aside from the fact that Bush is bulling through 300M barrels of purchases AGAINST the will of Congress already


We are being told every day that there is a shortage of oil.  If this is true then how can the White House even begin to plan to buy an EXTRA 1.5 Billion barrels of it?  How can the American people allow a man (who has already purchased 300M barrels of crude since he took office USING YOUR MONEY and stuck it in the ground AND refuses to release any of it, no matter how high the cost of oil goes) to increase "his" control of oil by over 200%?  What Bush wants to do, aside from spending $120Bn of money we don't have (never stopped him before) is to control that PLUS the $56Bn worth of oil we already have sitting in the ground.  Not only is he President, but he and Dick get to control $176Bn worth of crude…

Are we going to add this to the list of things we are going to lie back and take?  Why not?  We take so much BS already what's another few hundred Billion a year funneled from the people to the fat cats and sheiks that run our government?  Today they are telling us that the PPI is up only 0.1% and the markets are rallying into the open.  Forget the fact that "non-core" PPI was up 1.1% (that would be 13.2% annualized) due to rising energy costs

It's time to switch off our brains again and BUYBUYBUY the momentum as retail sales increased 0.6%, much better than expected and completely the opposite of what was indicated by yesterday's same-store sales numbers.  Whatever you do, don't actually read the report, which shows retail sales were up ENTIRELY based on a 2% increase in gasoline sales, a 0.8% increase in food spending and a 1% increase in health care costs.  Yipee!  We're buying stuff we need to live for much more money than last month!

Suffering in this report were things we LIKE to buy like Furniture (down .6%), Building Supplies (down .1%), Sporting Goods, Hobbies and Books (all down .7%), General Merchandise (down .1%) and clothing (down .4%).

What a bright, shining nation we are building where we can all look forward to working all day long in order to have enough money to heat our empty homes at the end of the day.  Thank goodness for television – the true opiate of the masses, that allows people to live a life with nothing more than the box, a chair and some Cheetos while CNBC and Fox news tells them how great everything is.

Everything is great if you are one of the nation's wealthiest 1%.  The top 1% of Americans earned 21.2% of all income in 2005, up over 10% from the 19% of the country's income they earned in 2005 and it's probably getting close to 25% this year, if it hasn't already passed it.  This is a post-depression record folks – congrats to all for sticking it to the man (the man being the other 99 people out of 100).

In an interview yesterday with The Wall Street Journal, President Bush said, "First of all, our society has had income inequality for a long time. Secondly, skills gaps yield income gaps. And what needs to be done about the inequality of income is to make sure people have got good education, starting with young kids."  Oh that's right, he's the "Education President.

One study by University of Chicago academics Steven Kaplan and Joshua Rauh concludes that in 2004 there were more than twice as many such Wall Street professionals in the top 0.5% of all earners as there are executives from nonfinancial companies.

Mr. Rauh said "it's hard to escape the notion" that the rising share of income going to the very richest is, in part, "a Wall Street, financial industry-based story." The study shows that the highest-earning hedge-fund manager earned double in 2005 what the top earner made in 2003, and top 25 hedge-fund managers earned more in 2004 than the chief executives of all the companies in the Standard & Poor's 500-stock index, combined. It also shows profits per equity partner at the top 100 law firms doubling between 1994 and 2004, to over $1 million in 2004 dollars.

Ah well, if you can't beat them…

Time to play the markets!



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  1. Damn, I sold outta BEAS a couple of days ago because I was raising more cash, and thought the play might be over…..


    Oh well, easy come easy go,


  2. PHIL:

    Well done ! ! !
    Learning at the feet of the master !

  3. DUH:

    How do I reset my name?


  4. Did this do it?

  5. OK. Sorry guys. On with the day.

  6. Phil,

    Is it snowin in Joycee? Way too dark of a piece for a Friday! Unfortunately, you make many valid points. So along with that perky piece, and the fact my puts are up and calls down in premarket, I believe it may be Miller time very early today. :grin:

  7. Gotta be baked Cheetos for me though and a Sparks (black) !

  8. INFY gapping down…

  9. haha, check out this article that just came up:

    Oct. 12 (Bloomberg) — Investors should buy call options on
    XM Satellite Radio Holdings Inc. because the share price doesn’t
    reflect the probability of a takeover by Sirius Satellite Radio
    Inc., Citigroup Inc. said.
    Eileen Furukawa, a New York-based analyst at the largest
    U.S. bank, and Mitchell Revsine, a derivatives strategist,
    recommended buying January 2008 calls on XM Satellite with a
    strike price of $15 or $17.50. The options are trading below
    their fair value, the analysts wrote in a report today.
    Call options give the right to buy a security for a certain
    amount, called the strike, by a given date. The cost of buying a
    January 2008 $15 call is $2.60, Bloomberg data show. Buying a
    $17.50 call with the same expiration costs $1.35. Citigroup
    estimates the “fair value” for the options $3.35 and $2.05
    Shares of XM Satellite, which have gained 36 percent in the
    past two months, fell 2 percent to $15.11 yesterday.
    XM’s share price reflects only a 29 percent chance that the
    all-stock $5.1 billion transaction will be completed, wrote
    Furukawa, who has a “buy” recommendation on shares of XM and
    Sirius. Furukawa raised the price estimate on XM’s stock 30
    percent to $19.50 in a note dated Oct. 8.
    The U.S. Federal Communications Commission and Justice
    Department must both approve the deal, which was announced in
    February. Executives of XM and Sirius have said they expect
    approvals by the end of the year.
    Sirius and XM, the only two U.S. satellite radio companies,
    can achieve cost savings of $7.2 billion by combining, Furukawa
    Betting on an approval of the acquisition in the options
    market rather than by buying the shares is “interesting”
    because it limits the downside risk and allows investors to
    leverage their strategy, the analysts wrote.
    Sirius declined 3.3 percent to $3.57 yesterday in New York

  10. BEAS, YES!!!!!!!!!! .2 to 3.1 in the Octobers! Out 2/3 Phil thanks!!! Holding one – should I take that money & run too!?!??

    HXL – nice dd – now sell calls or cash?

  11. BEAS – sweet!

  12. MrN

    What are you doing still holding those Octobers? I bailed out of mine two days ago. Darn.

  13. Cash cash cash – taking calls off the table.

  14. Phil – CASH it is. Does that include WMT, IRBT cut loss?

  15. I’m wondering who will win:

    Will Apple lift the Nas?
    Will GOOG come back
    Will BIDU be the weight that drags it down?

    PEP making a comeback.
    PLCE making a comeback.

    Seems like bargain hunting to me – that could just be perma-bulls shopping but let’s grab AKS $50s as a mo play, looking for them to break over $49.50 or dump it. XXX

  16. Another anti-(Peter)Lynch investing hunch:

    Just bought a new car, came with 3 months of free XM. They call me 2-3 times a day to get me to sign up. And I tell them I will probably get it unless they call me again. Then a new person calls me in 2 hours.

    I cannot invest in idiots. XM and SIRI are toast, by the time they get there acts together, they will be competing with internet radio via wi-fi and wi-max. But, they will still have the truckers.

  17. Scratch that AKS, November $50s at $2.90, sell the current $50s if it breaks below $48.50. XXX

  18. Phil, I don’t believe you. Are you really not going to short RIMM again if goes up $3?

  19. Phil
    I am still holding my ’09 $30 Leaps with cost basis of $3.83 (now $4.40)
    I have short OCT $30 calls that I shold short for $1.35 (now $2.40.

    What do you recommend doing?

  20. PFE – Phil, OCT callers – time to roll already or wait?

  21. Phil – with all the crazy movement yesterday I didn’t make the roll on my GOOG Dec 600 / Oct 600s.. seems like the roll from the oct 600s to nov 620 for no cost is still fine. You still recommend moving to the Jan 620s for $5 credit or going to March 620s for $7 debit?

  22. FilmFlam – I wrote you a message in the prev. post . you must not have seen it.. you said you say something about ToS equaling their price structure to that of OptionHouse.. can you pls point me to more information? thank you very much!

  23. aks broke down but still not @ buy for NOV – wait, wait… too risky?

  24. BBQ – I just left a comment for you under yesterday’s wrap-up re: TOS matching Optionshouse commissions

  25. oh, didn’t see it.. Thanks Hng10!

  26. Phil…awesome trading in BIDU yesterday. Shows how experience & strong nerves in timing (the trades) are needed to play these meltdowns. Thanks for the discussion summary as it highlights how tricky these complex positions are…too advanced for me, yet!

  27. Cash is tight stops on winners. There’s no way to guess the direction so, as long as you are reasonable balances, it’s best to just start taking profits off the table, we can use the profits to save other positions later. Don’t forget tomorrow started with a 100-point gain and didn’t end so good.

    Yes I was in a bad mood this morning. I thought that SPR deal was dead but Bush found a way to add 300M barrels without congressional approval as various expansions were once approved but never completed so he’s just pushing those project through. Once he has his storage there is nothing to stop him from buying the oil.

    Between that and clear economic indicators of where that money is going (out of the hands of the bottom 99% and into the hands of the brokers and oil companies who fund the other side of the war so the defense contractors always have someone to throw expensive bombs as), I was really pissed off this morning!

    MAR breaking out, I like the $40s as a mo play at $2.20, stop at $2, looking for $3 (.25 Tstop there). XXX

  28. Hng10 – when I joined them about a month ago they wouldn’t agree to IB’s structure (duh)… I’ll tell them about this one.. thanks! I hope I am still considered new!

  29. Phil, FYI: looks like you have two morning posts up.

  30. 2k –
    10 lots MAR 2.20 = 2,200 invested, 400 cash

  31. are we on this site or another one?

  32. Oh damn, I posted this article twice. Here are DMs missing comments:

    Demetrius Michael
    October 12th, 2007 at 9:41 am | Permalink edit

    Demetrius Michael
    October 12th, 2007 at 9:44 am | Permalink edit
    DD on CNR.TO

    Demetrius Michael
    October 12th, 2007 at 9:53 am | Permalink edit
    BA – okay I’m taking an ITM LEAP on this, DDing on 94…. Where is everyone?… I’m going to bed.

  33. Well guys, don’t let the markets do too much today. I am going to stick to the other part of my system: When you have a tremendous day, take the next day off and reward yourself.

    This is a lesson I learned from my golf game. I have never followed a birdie up with anything less than a bogey. So, if I could I would not count the next hole after birdie-ing a hole, and that is what I am doing today. This has been a perfect 3-week run capped by closing all my near-term gains and throwing 30% into aggressive puts the other way. It was just like I drew it up when I decided to trade full-time and I executed it as perfectly as can be. The fact that it was so profitable means less to me than that I stuck to my plan and never panicked.

    Since any trade started today would be guessing, I will be happy to wait and see.

    Still expecting a major move to the upside but hope it doesn’t happen today.

    Best of luck to you all today.

  34. Following along the oil theme: “There Will Be Blood” looks superb, Day Lewis is always top-notch and this looks like another Oscar contender! Nothing to do with finance, but all work and no play….

    Trailer here:

  35. Hng10, FilmFlam – thanks for info on ToS “variable” rate structure. Will have to look at them again now given this.

  36. I aggree I see two friday morning post…

  37. Thanks Phil, I wasn’t lieing about going to bed part, I’m really sick… But that MAR looked like a cool deal… So I’m staying here for a bit.

    MAR – What the hell? you broke 42! what’s with the retrace!

  38. bought some PWER Nov 5′s for a mo play

  39. PWER – looks cool greg, atleast half out at 6.

  40. AAPL – Breaking up of the past 15 min sideways, testing 165.

  41. I would*… sorry I’m really sick, I’m not telling you how to trade, you’re probably more experienced than me Market looks awkward though…. Shouldn’t have risked my 2k if I’m this sick and drowsy… I might as well be on LSD.

  42. Bad Consumer Confidence number. We all know what that means. Buy buy buy, the Fed is now cutting.

    Film Flam-forget golf, you need to figure out where to put that new bike!

  43. HMY – set stops and be out if it breaks 10 ?

  44. CAKE – still acting sick (a DM metaphor)… doesn’t respond much to consumer number either way..

  45. BEAS – no, by all means don’t take a 1,500% profit in a week. Good traders do that every day (extreme sarcasm!).




    Any other questions, kindly see Rule #1. Thank you.

    HXL – the DD was at $2 but if you caught the DD and have a chance to get out even on half, well, that’s kind of Rule # 2 isn’t it?

    RIMM shorting – well, never say never..

    PTR gone wild, up $15. Turkey on the warpath!

    Johne, if I knew what stock it was I could be much more helpful. The plain vanilla comment is don’t worry, you’re only going to roll him anyway..

    Oct callers – if there’s premium left I’d rather keep them for weekned insurance, won’t change the roll any.

    GOOG may come back like CME very soon. Tough call but I could do without callers unless they break back below $622. XXX At $640ish I’d want to have callers again (the $630s).

    Goog roll – Jon, you have no reason to rush into it. If you can afford to take out the caller temporarily, then do that but otherwise, the roll will still be there on Monday.

  46. Reloading puts right now, with tight stops.

  47. BBQ – I like your thinking! 10 was a good place to enter or DD on, I think I said that a while ago.. The company is worth 12 to me, but I would be selling at 11 if you can make money there.

  48. parchesia,

    Still working on the wife. She doesn’t think it is bad karma to NOT buy the bike even though I did make exactly what the bike would cost plus tax in my day-trading account. I said she was playing with fire. She said, shut up.

    It’s a work in progress.

    Think I am going to have to buy some Nov Q’s with a trailing stop if you guys are going to be like this.

  49. lol BBQ *cough cough*

  50. BEAS – thot that might raise your font voice a bit!!! I cashed 2/3 at open and put a ts on the 1/3 just to see the diff. All went at exact same! Woohoo! hxl dd in & out according to rules. Don’t sweat teach – you da man!!!!!!!!!!!

  51. Sold Nov Put, TGT 60′s @ 1.20, covered with TGT 55′s .40, 20 contracts

  52. MAR – Neat 10M pendant. Somebody buy some blocks!

    BEAS – lol wasn’t Orcl asking 17.50? as soon as I saw it opened that high I would’ve bailed.. It’s just trading on speculation of other bidders, which is risky to the max… There’s only one Alcan, and that’s Alcan.

  53. Flim

    Here’s my advice for next time. When my wife gets home on Friday, the kids are gone, I take her for the weekend to the Chatham Bars Inn on Cape Cod. When my latest gadget arrives the following week she rolls her eyes at me and it’s done.

  54. ICE is down not reporting trades to the street

  55. per e-trade

  56. Lol I think Etrade’s mirroring my account…Hahaha I’m going to screw with them… But so sick… Euh I need something with low liquidity and ridiculous spreads.

  57. New here. Doing okay till now. So far just doing “buy to open” and close to sell”. Could someone explain to me what phil means when he says roll.
    I have an IRA account, does not let me sell anything unless its covered.
    Also, phil…you should make GLOSSARY of the meaning of the terms used. Could you recommend to book that will teach me or help me understand all the deals phil calls. THANK YOU.

  58. Well now i know the end is near

    Al Gore gets the Nobel Peace Prize for pushing his man-made global warming questionable science junk

    And did you see the buyout number of Oracle’s buy out of BEAS

    6.66 billion 666 the number of the BEASt too bizarre!!!!!

    I’m buying puts!!

  59. Rolling – Closing your current option and “rolling” to a more ITM strike with a higher delta…. You’ll capture moves in your direction easier.

  60. Hah, got a name now.

    Sorry, meant ‘Sell to close’ with my previous post.

    Also, any speculation about Google and AAPL earnings and if the beat,what price stock could be at?

  61. 2k – closed MAR for 2.10 I’m too damn sick to watch a couple hundred dollars. 100 loss. 2500 cash…

  62. can’t trade right now and I have no idea where I am….guess everything was directed to ICE….. this sucks :(

  63. SO DM, when you roll, you basically sell your position and rebuy again OR is it done differently. I use Fidelity.

  64. Enjoy your trading… I’m going to go and cough all over random people on the street… Old man styles….

    That should keep me entertained for atleast the next couple hours.

  65. Fidelity won’t let you roll, the bums. You should call Steve Hett @ Fidelity 800-544-5115 and complain. I do this on a regular basis. He is the Active Trader Consultant for the New England Region. Also, they don’t free up your margins as quickly as they should when settling trades. That’s why I use Tradestation for most of my activity.

  66. DM,

    Can you kindly give an example here?. I think I understand but I rather be sure.

    Thanks in advance.

  67. Have a nice day Flim – good attitude!

    MAR – DM, I am going to have to confiscate your 1 minute chart!

    HMY – I’m still trying to DD at .15!

    CAKE – I was at one of their places this weekend and it was packed. I live in a rich area but that’s my channel check…

    VNO took a nice dip on all that confidence.

  68. AMGN waking up.

    PTR – rolling up to $200 callers at $4.50, turning it into a mo play and hoping for a pullback. XXX

  69. fredrang

    I roll naked options on Fidelity ATP using the spread trade

    You can also use the combo trade to roll spreads.


  70. Selling BIDU oct340′s for 6.50. I’ll take the buck a day.

  71. Damn, that was PTR $200 putters.. What time can I start drinking?

  72. Sold one of my MOS calls from yesterday i don’t trust this market

    MCD calls moving up but i expected a bigger move

  73. going on possibly Andrew’s last show (contract dispute).

    Someone on MN1 right now saying AKS is takeover rumor!

  74. Yup, I don’t roll most times though… I rather take really tight stops on ITM fronts and re-enter, than fighting a technical trend… Because lord only knows that the fundamentals gone to shits…

    That’s not to say Phil’s strat is wrong, he obviously has a better track record, if anything he’s more right in doing what he does. But it’s not my style… He seems to win by I-vol crushes and expansions, I try and win through a trend maintaining it’s current direction. Different strats, same outcome.

  75. Depends if your drinking coffee, you can add a ‘specialty shot’ at any hour you wish (you won’t find these shots at Starbucks).

  76. I did ok yesterday , but i’m seem to be frozen up today. I’ll just watch awhile. lol

  77. Bloody Mary is also ok for brunch

  78. edroo,

    As far as I know they won’t let you do this in an IRA account. For example if you sell covered calls in an IRA, you can’t close October and open November all in one trade. It needs overnight to settle before you can open November which is poor at best. If I’m wrong let me know. The only way around this is to call your order in and they will enter it at the web rate. Also, I have issues when canceling a trade to enter a revised trade it often hangs up even after the cancellation is done.

  79. Hmm, I wonder what happens to our show? When Andrew’s away they still call us but he says he’s gone for good now.

    CSCO back on the move, missed the beginning but I don’t mind Nov $32.50s as we can sell the current ones for protection. XXX

  80. Phil

    After the big drop, you still think GOOG/AAPL will go up unless they beat and raise guidance? I’m inclined to be a bit more bearish..

  81. Phil,

    For your channel check, CAKE in Boston is always mobbed. Also, they are building a new one in Natick, MA where Nordstrom and Neiman Marcus just opened.

  82. Phil- My bad! You are so psychic about trading how could you not know that I was talking about GG! Sorry, sorry, sorry!
    I am still holding my GG ‘09 $30 Leaps with cost basis of $3.83 (now $4.40)
    I have short GG OCT $30 calls that I shold short for $1.35 (now $2.40.

    Thanks again!

  83. Phil,

    Does this mean that your are thinking of buying Nov. 32.5 calls and then simultaneously sell Oct. 32.5?, in the hope that stock will temporarily move down or stay flat between now and expiration?

    Help us with the strategy and thinking a bit.


  84. fredrand

    You are correct about the IRA account restrictions. I wound up just entering two trades to do a roll. The problem with calling was by the time the rep entered the order I would change my mind or the strikes, etc.

    And I get stupid IRA margin letters every month that the reps tell me to ignore.

    I moved some of my IRA to OPXS to get around that nonsense.


  85. is much better for IRA option trading

  86. ‘NMX”, it’s done nothing since IPO. Does anyone feel that with increased liquidity, someone will buy NMX before end of the year?

    A while ago, there was lot of rumor about buy-out.

  87. ACH pretty amazing will stay in my LTP forever

  88. Okay Example… Lets take Big Oil… Cause that’s Phil’s favorite.

    TSO, it’s a refiner, but whatever.

    This is the worst case scenario just to prove that it’s very possible to be profitable, even if you suck so bad.

    Lets assume you don’t know how to pick options or know anything about price action

    Say you’re bearish on the 4th, thinking 48 was too strong of a floor for it to break. So technicals are on your side, and fundamentals… Well they’ve been on your side since Oil@60.

    So you buy the 47.50 Nov puts 2.65, the stock continues to spikes up and you’re like “crap it’s in a channel, this is going to 52″.

    on the 9th, it hit 52 and your option is worth 1.35 (loss of 1.30). Sucks.. You think it’s a top so you roll to a more ITM strike, banking on a retrace. This time you take the Nov 50 puts for 2.15.

    It breaks again! “you’re like crap it’s going to 56 now!”

    On the 10th, It hits 56 and your new option is worth 1.60, so you roll yet again! Take your loss of of 55 cents (total loss of 1.90)… You buy the 52.5 puts for 2.35, with a break even of 4.20.. Right now you’re at 3.10 needing a movement to 50 to Break-even, instead of a movement back down to 48.

  89. CHK – I still have Oct 35 Calls sold against Jan 35s. NG, and thus CHK SHOULD be heading down and was hoping to cover/roll Oct 35 Calls for cheaper.

    short CHKJG Now $2.50 (cost $1.35)
    long CHKAG Now $3.75 (cost $2.05)

    Suggestions on roll / opinion on NG/CHK for next week?

  90. Phil,

    You mean puts or calls on CSCO. I’m going after Jan 35 calls once this current selling snap hits a bottom…..

  91. DM,

    Nice example…although sometimes I will abandon the trade altogether and try to recoup with another name like VLO which trades more logically.

  92. Phil, given the cash call, do you want to sell the INFY Nov 55s from yesterday a small loss, what about spreading them against 3 or 4 of the INFY 50s at 1.80

  93. Hey, any recommendations for LTP picks at the moment (or the near future) or are we waiting until after earnings season? Thx for any thoughts.

  94. That’s just blind rolling and you save $2…

    If you roll into higher deltas than you started with before, you’ll B/E sooner.

    If you had price action and know better spots when to roll, you would a B/E even sooner!

    If you sell fronts puts and cover on ceilings, you would be in profit!

    If you DD on your rolls, you’ll be in a lot of money, but also make a killing on the actual retrace… Every stock has to retrace, eventually… Look at BIDU… Better look at Phil’s 1/2M worth of profits in a day!

    It hurts to roll, but it’s worth it if you truly believe against the market.

    If you blindly roll w/o knowledge of anything, then you only save on the time decay of your options.

  95. My instinct is to sell the Oct 50 puts for .75. Isn’t there less risk given 5 days to exp?

  96. sorry infy puts

  97. Anonymous (Why are people anonymous? I’m going to have them not allow that), all that is in the works, for now there is a guid to new members, the education section (including Sage’s book) and, the old standby – reading the last 30 days of posts and comments to get a feel for the site.

    CTX holding up well considering they wrote off $1Bn (which is $750M more than they made last year). Oops, sorry, almost started thinking there for a second…

    Rolling – a good trading platform has a roll function. This lets you simultaneously sell your current position and buy the next for the spread. The advantage is obvious as you don’t have to have a ton of cash sitting in your account just to move an October caller to a November caller.

    I was talking about that yeserday’s EOD comments, it’s very important that you find a trading platform that matches your trading style – very much like having the right tool for a job.

    GOOG and AAPL will now follow the Nasdaq so you can play them agressively with Q puts of vice versa. Other than employee expenses, I think GOOG should have a great quarter and AAPL I will always buy on a dip regardless as they are well worth $200 a share by the spring.

    GG should expire at $32.50 and you want to roll him to the Nov $32.50s for $1.85 but, if you can afford it, it is much better to buy him out and sell the current $32.50s for .80 and let that premium expire before moving to November. I’m not seeing that price for the ’09 $30s (they, the OPJAFs, are $7.75 on my screen) so I assume you have the ’08s. You could roll yourself up to 2x the $32.50s and your caller to 2x the Nov $32.50s for about .50 net out of pocket if you want to be more daring. Since you pick up $1 per month and it only costs you $1.10 to roll back to the Apr $32.50s from the Jan $32.50s, it gives you an excellent exit strategy even if gold spikes them up.

    Buying Nov $32.50s and selling Oct $32.50s. Just like the play I just talked about with GG – the idea is that up, down or sideways, I get the premium and I get free insurance over the weekend.

  98. For sure, there’s better plays, but I like worst case scenarios, it puts things into perspective.

  99. PTR denying new find & Buffet selling? Is this a good put play for newly deployed 30% of profit money? I’m losing ground in BXP still after 2 dd. but scaling in slow.

  100. Vale

    I like Lexmark (LXK) as a long term pick. It just made a nice reversal and has consolidated nicely at the current $42.20 level.

  101. Fredrang,
    Spoke to Fidelity. They said I could do spread on ‘OptionTraderPro’. Are you using it?

    AND are you in MA. I am in Shrewsbury. Lived in Natick for a while.

  102. Continuing on rolling – There’s rolling to other months too. Phil would stay what he’s rolling to and when… Same principle as saving on time decay, and paying less premium. I think they’re pretty much equivalent, but I have to double check that. I don’t roll, so I can’t tell you too much in detail.

    Yes I’ve seen other platforms that have an automatic rolling feature! They’re really neat… The really good platforms have strangles / straddles / etc already listed as the end price you pay!.. Does IB’s platform do that?.

  103. Parchesia – You use IBD? Is this the cup and handle but you’re buying before their classic “buy point?”

  104. … I didn’t expect to stay this long else I would’ve stayed in MAR LOL…Minute charts… I can’t help it!

    Anyways, enjoy your profits boys! I’m going to find me some drugs!

    Cheers, have fun trading.

  105. VDSI-nice move from yesterday. Dec 40′s really not moving that much.

  106. MrN

    I don’t use IBD. For one there are buyout rumours, which I usually don’t buy into but a good chunk of premium came off yesterday, before the selloff. Second, I like them technically and in the current period of the business cycle. I see fewer short term risks than long term advantages. Long term being 6months to 3 years. Please, give me your thoughts on it. That’s why i’m a member of this site.

  107. BIDU puts are insanely expensive right now.

    Market looks ready to rock and roll. Not a very creative rally, just same old, same olds making a comeback. GRMN, DRYS, GOOG…

    You can’t be too short in this environment because a clear message is being sent that selling the high flyers is a mistake. Waiting to buy is a mistake. Thinking there’s a top is a mistake. There are all the psychological games the big boys play to train you (the retail investors) to take their huge positions off their hands before they tank the markets.

    This probably means we have a bit more time for this nonsense because it costs a lot of money to pull an institutional reversal like this so the people pushing the Qs must be very, very deep in it so they need record headlines. That’s why there’s the adage that by the time the story makes the cover of time it’s already over – getting the markets on the cover of consumer magazines is mission accomplished for manipulators, that brings in the flood of new money that they can sell into.

    As I mentioned above, the top 1% have gained 5% of the nation’s wealth in the past 3 years. First in housing, now in stocks. Now that play has run it’s course it’s time to go to cash so the move is to get out of the markets and pour money into bonds, which can spike our currency (a double win) as well as rates.

    Remmeber we discussed yesterday that just 20 funds control 1/3 of our nations assets – don’t think they have all that power and don’t use it…

    So fundamentals continue not to matter and, as long as we keep our eyes open, we will have lots of good opportunities in both directions but – if the big boys say buy on the dips, we need to learn to say “how much would you like me to buy SIR” for as long as the game will last.

  108. OII strangely weak.

    OK, my AKS and MAR are officially on their way now. 8-)

    BA making a comeback.

    OXPS looking to get back in gear. I don’t know why I ever sold them. Nove $30s are .62 and that’s fun for 10 in the $10KP and $25KP XXX

  109. hi any one playing ELN for this Monday desicion of Tysabri for Crohn’s Disease?

  110. so is it official that andrew mn1 is gone? i hope not, that guy cracks me up

  111. Phil: Been thinking about your strategy to screw the oil traders and their scam. Wondering why China doesn’t do it, they have the juice to do it? It would be worth it for them to do it too.

  112. BA came around today — its 200-day is 95.08, its low for htis dip was 95.42.

    Pretty quick to call a turn, but the strength today is encouraging.

  113. Phil,
    people are anonymous because previously, if we just type in a post, it would print the name by using login id. but now, it looks like you need to put in the name in the post

  114. Looks like my office blocked the VNC port here so I can’t check in with my stuff at home. Anyone know how to verify if an outgoing port is blocked? This all worked fine up till yesterday.

    Phil, with earnings for OXPS coming up, you still think Nov $30 is a good bet?

  115. Phil

    I meant to ask this a few days ago. Bloomberg article on OPEC nations buying up tons of bonds. I’m all for screwing big oil right with you kids but didn’t OPEC bail us out by buying our corporate debt? Has nothing to do with us sticking it to oil, just reminded me of the article. I’d really love to hear you thoughts on OPEC buying these bonds Phil.

  116. DM’s going to need a column for this teaching gig (I guess he took the non-drowsy medication!). Much appreciated Demetrius!

    CHK – ouch, we uncovered those long ago. You may as well keep them for insurance value unless you intend to roll them to the Nov $35s with just a .60 premium (nothing wrong with it, just dull). I would go to 2x Nov $37.50s (gives you .20) and 2x Jan $37.50 (costs you .75) as a roll out. If you don’t want to spend money you can also roll yourself back to the Apr $37.50s for .25 in your pocket and roll him to the Jan $37.50s which will take that quarter right back. Also very, very dull…

    CSCO calls!

    Things are weakeingin here I think (very not sure), be careful, take downturns seriously…

  117. This is looking just like yesterday

    My calls are rockin (CHL PGJ EWH MCD ELON SIL MOS)
    My chinese rocket stocks are flyin (CHNG STV CPHI etc.)

    and then KaBoom market implodes
    Emini acct saved me yeserday we’ll see if i need it again today

  118. CMG is tanking…anyone shorting them?

  119. INFY/Cash Call – Cash OR cover. A good cover is as good as a cash out but a little dicey with Nov/Oct plays but a 2/3 or 3/4 ratio solves that.

    LTP – BA for sure, ’09 or ’10 $100s at this price. You can also take the ’10 $110s and wait a while to sell or sell if you have the margin for it. Otherwise, I’ll try to run a review over the weekend.

    INFY – selling the puts is not a cover to a call…

    Have to recover GOOG if we break $626, looks like we will.

  120. Parchesia – I’m not up on LXK & just trying to learn too. I’m learning this – anything I come up with on my own is suspect. I’ve made a lot more money trying to stay with Phil – his calls are absolutely uncanny. It would be interesting to just trade his dd’s. I bet it would be less risk and near equal profit.

  121. YRCW- will this guy ever catch a break?

  122. O – except for Phil’s opinion on OSTK and WFMI… :)

  123. The CMG post was me…

    Phil I think this anonymous issue is a bug. I was logged in but still showed as anonymous. I logged back in and is fine now…

  124. Err… no, you’re still Anonymous.

  125. LOL is it really me now…testing

  126. rcha

    I don’t use Op Trader Pro but maybe I’ll give it a try. I still own a house in Natick but live in the Back Bay. Don’t all the in the know people still call it “shoosberry”

  127. BXP – don’t worry, look at VNO (and we were supposed to get both). The spread in BXP is ridiculous, I forgot that’s why I don’t usually play them even though I know that sector like the back of my hand. I can’t see these guys skating through the next 5 weeks without something hitting the fan in the commercial realty space.

    Watch, the bid is $1.05 and I’m going to offer $1.20 and no one will sell it to me but it will make you feel better when you look at your account… Probably I could offer $1.50 but my basis is $1.55 so no point in that.

  128. Phil: could you be more specific re: your cover for INFY…tks

  129. Phil
    Have been out of contact a few days. Sent a msg last week or so to whoever was running the investment club but did not receive anything back. Had some questions. Where can I find info. on it? Jared said yesterday post had some information but my computer and your web site are having a disagreement and will not play together. It is an adventure every morning finding your morning post.
    Great about Al Gore and his scientific presentation on global warming. Be great to have President Clinton and VP Gore (again). That’s of course if the other party will play fair this time.

  130. LXK – I wrote them up long ago as a good long-term play. Analysts don’t understand their business model, which is like Gilette, they give away the printers really cheap to sell the ink forever (and parts). This leads to unspectacular sales results but the high-margin business builds over time. I liked them much better at $37 than at $42 so I’d say buy on the dip.

    PTR – still waiting for my morning puts to kick in.

    All energy flying into the weekend, I’ll be shorting XOM with the Nov $90s but BTU stopped me out.

  131. MrN

    That’s a hell of an idea, trading phils DD’s. Lexmark just came off of a 3 year low and this is the point where the GE’s of the world start spending on better equipment rather than hire more employees. Again a long-term play….

  132. You probably tagged LXK before I was member Phil

  133. MAR – I just got taken out on .2 ts – too tight.

  134. It’s too bad that Mr Nobel Peace Prize wasn’t president on 9/11. I’m guessing that his response would have been to log an official complaint with the UN accusing the ist of contributing to global warming. Maybe the UN would have actually done something in that case.

  135. Buying some Q puts

  136. BXP – I’m probably dragging the spread wider. I’ve been bidding .75 & .95 – thought last one might fill…

  137. BIDU…October 310 puts…hoping for a drop into the close…

  138. UNH Dec calls bought last week up nicely.
    Sold Oct 50 calls for .75 against them.
    C’mon suck out that premium !

  139. Phil – I still have GOOG mar/oct 560. What should I roll it to?

    My GOOG jan/oct $600 still has a lot of premium. Any adjustment at this time?


  140. I have SHLD Jan $140 /Oct $135 with cca 0.90 premiu left. Should I wait on this one or try to get more premium by selling/rolling into something else?

  141. XHB is down on an up day don’t tell me sanity has returned
    to the marketplace……

  142. BIDU turning south again. Buyers heading for RICK (what the hell, it’s Friday) but otherwise it’s dried up a lot.

    WFMI making a move again! Might actually get somewhere if they break $51 but otherwise I would bet the week’s groceries on the $50 puts at .45.

    Feel better DM!

    China – too late. Look at PTR and COO, already large employers and taxpayers and who knows what else… That’s the problem, oil is pretty much everywhere and they are not stupid enough not to dole out a slice here and there to keep the status quo.

    Thanks Sanjith, we’ll fix that for sure. You’ll be happy to know that when I Email your post to Jared, thunderbird spell checker decided it should be “Withstand”. 8-)

    OXPS – because earnings are coming up. I’ve been trading like crazy this quarter, that’s gotta be good for a point of earnings for them! Actually new portfolio margining is encouraging people to borrow like never before as well as jacking up the number of transactions from the same accounts.

    Wow, so much for a downturn – like I said, not short play goes unpunished in this market…

    OPEC bonds – well that’s the catch 22 of the global economy – they’ve gotta put the money somewhere. If they really loved us they’d buy treasuries and take money OUT of circulation instead of buying corporate bonds that DECREASE the demand for currency and accellerates the inflation cycle so I wouldn’t say they are acting out of the goodness of their hears. Destabilize the dollar in a way you can spin positively and collect more even more inflated dollars for the stuff that’s just laying around in your sand anyway – nice work if you can get it.

    They can flip that switch anytime they want to and REVALUE the dollar as they pour money into treasuries and benefit from the rising dollar AND the rising rates (because corporations no longer have access to their bond money).

    Watch the FXI – that was our best signal yesterday (and a nice put!).

    GM putting in new highs.

    YRCW – it’s funny because they are such a good company. I have to go with the Jan ’09 $30s at $3.85 here and sell the Nov $30s at .70 for obvious mathematical reasons (plus someone just asked for a new LTP play). XXX

  143. Phil:

    I just noticed Google’s home page.
    Is that you waving adieu to BIDU, Maestro ?

  144. I still don’t like the “feel” of this rally. It feels empty inside but there’s nothing I can point to just yet…

  145. Stopped out of MAR at 2.

  146. Phil, is this a good time to sell some PTR puts?

  147. mrl14 (mike)

    You might try telnetting to your machine on taht port:

    telnet youripaddress portnumber

    If it says connecting, then connection refused, then chances are you /are/ getting through the firewall.

    If it just hangs there and does nothing until it times out, then likely its blocked

    Not 100% reliable, but 70-80% reliable indicator

    The other way is to ask your local network admin (or your helpdesk).

    You might also consider using remote desktop (windows software), if both are windows machines.

  148. CMG – Cramer asked the viewers to dump CMG because the forward P/E (51%) was 2 times growth (26%) and when P/E over growth reaches the magical number of 2 – it becomes “expensive”. Not sure where he came up with the growth number from.

    Disclaimer: I don’t watch the Cramer show, I just happened to have been channel surfing then. :) Also – I don’t have any open positions in CMG right now – I had tried to short them a while back when they were around 100.

  149. DD on Q puts

  150. Very good post today Phil.

    Apparently the last time the top 1% enjoyed this type wealth disparity was in the 1920′s

  151. Im lookin at the 15m chart on the DIA. Low volume, rolling over just a bit, almost up against he 50-bar MA.

    Rebought 1/2 DIA puts — 140s @2.25
    Of course that drove the market up another 10 points.

    Ill buy the other half at DJIA +100.

  152. With GM going up my neglected GM put spread needs adjusting

    Jan’09 $35 put (@6.20)
    Oct $37.5 put (@1.99)

    I am at lost with this one. Taking out putter is no brainer but what to do with the rest?

  153. YRCW- phil i’m still holding the Jan 08 30′s from the first play. they worth holding since they still have some time or send em’ packing?

  154. Phil – thanks for the CHK option roll options.

    DNA – Reports Monday AH – anyone own it and have any earning-plays?

  155. CMG – I see…so that means if Cramer shorts it I buy it :)

  156. rcha

    Just loaded Fidelity’s OptionTraderPro – looks very confusing and not intuitive.

    Anyone using it??

  157. INFY, with the 10 Nov $55s, you can cover with 6 Oct $50s, thats about a 2/4 cover and nets you a .61 premium (or 60% of that per contract) and your additional shares protect you from a big run-up but, more importantly, gives you really good downside protection on your $1.20 calls without forcing you to sell.

    Irish – let’s try to catch up with the club on the weekend.

    MAR – that’s what we were just talking about at the end of Thursday’s post. Hard stops are very bad as you will always get taken out on a spike. At the point MAR hits $2 you should take a very careful look at the overall market and the chart (the 10-minute chart DM!) and the sector before dumping out. Or you can just ask me!

    Yes Brian, maybe if we would have gone officially through the UN something would have been done about it on a global scale with our country leading a multi-national, full-scale assault on terror rather than the US running around the world looking a lot more like a gunfighter than the sherrif.

    BXP – someone’s out bidding me now – spread is $1.25-$1.90. The current 105 puts say .45, I wonder what I can sell those for? This is kind of fun, we should do this one day – kind of a course in market manipulation 101. It would help people understand how easy it is to make these things dance to whatever tune you want to play.

    FWLT on the march again along with the OIH at $200. XOM looking a little toppy with the Nov $95 puts at $3.60, which I already have so I’m pre-rolling to the Nov $90 puts at $1.50. XXX for that extra 30%.

  158. hey phil, PFE oct calls roll time yet? perhaps to nov 25s for .3 credit cause the stock looks somewhat bearish in the real short run

  159. Covered 2/3 AKS with $50s at $1.40 XXX

  160. I use Fid OPTrader Pro for a while. It is pretty good but have not used any other, so opinion is biased. Must read the help manual. I am still a work in progress but help is ok. Attend one of their classes and that might help. Their help desk is good and helpful but only working during week, 8-4 or so. They have a special help desk for OpTr. When, and if, I spend more time on it maybe I will get better use of it. I just use it for trades, monitoring position and in that pretty good.

  161. Of course Phil. You mean this is not the weekend?

  162. FXI put time?

  163. Phil,

    Should we cover UTX again with the Oct 80 or move to the Novembers?

  164. Out of half Q’s, 2 cents above my DD.

  165. PFE – no way do I give that guy .25 for the calls. We want PFE to flatline at $25, no way will I pay him $590 out of my $10KP!

    GOOG Mar/Oct $560. Too far in the money. Best is to roll him to 2x the Nov $620s (even) and roll yourself to 2x the Jan $620s (cost a buck or two). That takes him out of $66 worth of intrinsic value (you owe him) and puts him into $56 (per original contract) of premium at no cash cost to you but giving up 2 months of gains plus your own intrinsic – which wasn’t doing you any good anyway as you were still at $37 in premium out there.

    Think of it as you going from $37 in premium to $47 in premium while he goes from $4 in premium to $28 in premium but he’s still covering 65% of your value, about the same as the current caller.

    SHLD – I’d stand pat for the weekend, I’m not loving this rally.

    GOOG home page – a little late for the Pavorati tribute isn’t it?

    Sell PTR puts? No, that’s WAY too dangerous. I can’t let go of my $200 puts myself but I really should…

    BIDU coming down nicely. FXI looking to confirm if it breaks $197 but I’d go with the $190 puts now at $2.85, stopping at $2.50. XXX

  166. Looks like bidu is starting its downward spiral again

  167. ANF $80 puts for .70 XXX

  168. GM is up about 40% in the last month, when will the madness end?

  169. Oh this is that downturn I’ve been feeling – we’ll see if it follows through but now the market feels right to me! Check out today’s insane VIX action!

  170. Qs-Watching $53.20 very closely

  171. Phil,

    ATI down due to weakness in demand for stainless steel. Does that make other steel makers such as X, MT, NUE good shorts??

  172. Phil – What am I doing wrong? Any suggestions?

    5 CAKE JAN 08 25 Call -225.00
    -6 FNF OCT 17.5 Call 210.00
    6 FNF NOV 17.5 Call -150.00
    -6 GM OCT 37.5 Call -1,620.00
    6 GM DEC 40 Call 1,290.00
    10 HMY NOV 12.5 Call -150.00
    6 INFY NOV 55 Call -150.00
    5 NFLX JAN 22.5 Call 590.00
    -5 NFLX NOV 20 Call -960.00
    6 TSO NOV 50 Put -600.00
    Total Gain/Loss: -1,765.00
    Total Cash: $3,306.98 – not available for trading
    Account Value: $5,369.98 – Started at 7K

  173. Irished- what is your email? I’ll contact you about the club.

    Phil I was thinking about trying to contact you this weekend to show you the interested persons list, FAQ, draft partnership docs, etc. Also have a couple questions.

  174. Q puts kaching

  175. Phil,

    PTR Oct $220s still going for $5. It would have to climb another 7% by next Fri (which seems quite unlikely – even though I thought the same 20 pts ago!) before you have to pay the caller. How to steal these premiums?

  176. AUY! Is it all of gold? Not quite, but still nice.

  177. Doubleclick/Phil,
    I’m a closet investor silently watching the action here and trying to learn. I’m also interested in the investment club. Could you add my name to the list for the next available club? Thanks…

  178. Doubleclick
    Don’t give it out to the “right wingers” on the site. LOL (Just kidding). I follow the Phil approach to politics.

  179. GRA: hearing there are two bids on table 40 plus rumor moving stock, something is up

  180. irished: I just signed you up for the Ann Coulter Fan Club.

    just kidding ;-)

  181. Greg
    Thanks. I can separate politics from other things! Just as long as she doesn’t smoke.

  182. Thanks to Colin (doubleclick) for organizing the investment club info, the FAQ and bylaws are very informative and I can’t wait to join.

  183. phil, what do you think about uso puts right now?

  184. ANF, buying or selling the Oct 80 puts?

  185. Anne Coulters not right-wing — shes just self-promoting and disgusting. In look and in attitude.

    Thats coming from someone whos fairly conservative.

    I spose we can have a label-gun fight this weekend ! yeeehaw !

  186. Oh gosh I’m such a softie… There’s room for you, John.

    But seriously, we need all the names now! We can’t be using all our efforts to answer to more interest… We’d like to start inching forward.

  187. HXL – had to take the .50 to cover at this point.

    YHOO holding up well

    CMG was the reason I loved MCD last year but I thought they were overpriced on the spin-off. Good for MCD either way so that’s how I played it but now I wish I’d gone with CMG. Seems insane at this price though, I’d have to use my WFMI logic – It’s a FAST FOOD RESTAURANT WITH A 5% NET MARGIN!!! I do agree with Cramer on PEG, 2 is a little high for any sector and certainly this one…

    Wealth disparity – this is what people don’t understand: When you see Grapes of Wrath or whatever, aside from it being in black and white, it’s hard to realize that 10 years earlier those same people were lighting cigars with dollar bills in the roaring 20s. We went from “full” employment (including widespread child labor) to 25% unemployment in 3 years and the depression lasted about 12 years (until the Great War gave everyone something to do).

    The markets declined 89% from Sept ’29 to July ’32 and the GNP of the country was chopped in half. This was all mainly caused by “just” 1 in 5 banks ultimately failing but it was all kicked off in 1929 with a 5% bank failure rate. Why did it happen? Loose lending policies led people to overborrow and overspend which caused a run in commodities which caused people to borrow more to buy the things they needed and then a food crisis drove the price of commodities to the point where people had to choose betweeen food and shelter (clothing was the first thing to go).

    Once people choose food over shelter the bank starts suffering and then money gets tight, businesses close down, people go out of work, more businesses close…. The problem with today’s society is no one really lived through it and, as it gets more remote, it’s easier to repeat all the mistakes that got us there.

    Oh yeah, one more thing. The top 1% became pheomominally wealthy and were able to buy the whole country for 10 cents on the dollar. After 3 generations of inheratence taxes and economic expansion leaving the top 1% with “just” 25% of the wealth, a good old-fashioned recession is just the ticket to give them the chance to buy everything back again. It’s a multi-Trillion dollar game of global monopoly and, as I’ve said before, it’s not even the top 1%. 48% of the wealth of the top 1% is controlled by just 1,000 people.

    GM – you should have taken putter out a while ago and rolled him up. You need to roll to the $40 put for $2.30 and sell the Nov $40 put for $1.55. You have nothing to fear on the downside, it’s the upside that will kill you if you let it get away.

  188. I would also be interested in the investment club. If you’ll have me of course.


  189. Phil, Because of my 30 day window, the last day I can initiate a caller for Novs is Monday.. which can only then be unwound on expiry day. I have the following callers remaining:

    Spy 148s / Mar 148s
    CCJ -9x 45s / +5x jan 42.5 & +6x jan9 50s
    SNDK -3x 55s / +4x Jan10 50s

    And DNDN 10s that I’m planning to let expire.. against Jan 10s.

    I agree in keeping the SPYs till Monday for more protection over the weekend.. Any thoughts on the other two? -Peter

  190. Investment club – many thanks should also go to dday (hope I’m not wrong on the handle!) who did the groundwork but couldn’t get enough interest at the time.

    Glad doubleclick took up the torch!

  191. Back in XOM Nov 90 Put $1.45

  192. CMG- wow. Bought a bunch of stock last spring at 60, and decided to sell Wed. because it had doubled. (When in doubt, sell half). Glad I did, thanks Phil for the Rules.

  193. I meant to have posted this on Tues evening re AUY. ABN AMRO did an ultra fancy unique financial offering utilizing 1.5M in AUY stock with 18% guaranteed to the investor if AUY stock stays at or above 11.23 through 4-08.

    The financing mechanism basically comes down to the investor indirectly selling ABN AMRO an AUY put. Is known as a knock-in reverse exchangeable security listing (ABN AMRO does many of these and I am going to start tracking the stocks to see if they all bump up like AUY did) Stock has moved upwards very nicely since security issue BMO on Wed,

  194. General Morons is insane! people have lost their minds.

  195. Karmcon- thanks for the AUY update, but unfortunately I’m not a financial derivatives whiz. Does this mean AUY is likely to go higher as we get to/beyond Apr08, or that this financing structure provides artificial support for the price?

    I’m in good with my Jan08 10s, and making the decision between selling half and happily taking my double.

  196. Irish – my weekend starts at 3:59:55! 8-)

    UTX/all covers – I won’t be giving up any protection into the weekend.

    Well nothing is staying down so cashing out on the bull run was the right call – just have to wait to see what Monday brings.

    ATI down on demand for exotic metals, not steel per se. They should recover with BA, TIE, BEAV and AIR (the Boeing Buddies).

    Sohrab – I wish you would have given me that list pre-market (nights are best actually).


    CAKE – the call was to sell the Oct $25s if it dipped below $25, which it did on Monday, not doing that was very expensive…

    At this point you sell the Nov $22.50s for $2.08 and roll yourself down to the Apr $22.50s for .75.

    FNF – not a problem. He has $590 in premiums you will collect by Friday.

    GM – I don’t think that was ever a $10KP play was it? Roll to Jan/Nov $40s and collect $1

    HMY – That’s a DD at .15

    INFY – did 2/3 sell earlier.

    NFLX – if I do a play in the $25KP and not in the $10KP and you only have $10K, then the play is not risk appropriate for you! Still, he has $840 worth of premium to give you in 5 days, patience is the key to learning how to trade…

    Naked TSO puts? So wrong for you! Roll back to a Jan/Nov $50 spread and collect .50.

  197. Kids, it’s been fun! It’s Friday, the market is deadlined flat with a slight downtrend, that may reverse to a slight uptrend into the close. I’m gonna grab a beer. You kids behave and have great weekend! Thanks for a fun week Phil!

  198. Windywheel, Call me superstitious but I have noticee when I enter into GM in even numbered months aka Aug and Oct, I get smacked but vice versa on odd numbered months. I rolled early this time into November (afraid to roll to Dec = 12 lol) 35′s and 37.5 P’s. :cool:

    Also aside from the mystical analysis above, GM’s chart is trending bullish in the short term. Got burned badly in Aug, but if I would have rolled into the Septs instead of folding, would have erased all losses and turned a profit. :oops:

  199. Double – weekend is great to call me. During the week I have no time for anything…

    PTR – I’d go for the premiums on the $210s ($8 of it) and spread the Jan $220s at $23.90 against the $210s if you have the margin for it as it would take a $30 drop for you to fall to $14 and, even if he comes in the money, you can roll him to the Nov puts, which currently have another $17 in premium, that would put you into a free trade with a 2 month spread a week from Monday. XXX

  200. PTR – ps, the bonus to that is it gives me an excuse to hold my puts!

  201. Phil- I was in “the cave” yesterday so only got to read about the market excitement after hours on the train ride home. Still getting caught up on comments, but the BIDU post is not only exciting (congrats!) but an outstanding advanced strategy discussion. As you might expect, I’ve grabbed a number of links out of it for my “Phil PHAQs” topic list.

    One important but subtle point I would like to emphasize to the newer PSW subscribers who might have missed it in all the excitement is that the BIDU play started out on Sep. 5. It did not materialize yesterday. Phil has spoken about this before, choosing a solid strategy, setting up to be in the right place, managing and adjusting it as circumstances change, and most of all being patient.

    I’ve posted links to the basic articles on this several times, but the key reason (in my mind) to pay the subscription for PSW is to learn to develop your trading skills, share your insights within this community, and use those skills to make a lot of money. In my case, the insights are pretty simple things about how to progress from a beginner to an intermediate, but we’re all on our own learning curves. A large part of the reason I started saving links was simply to give myself a “task list” to follow as I developed.

  202. hey, sorry to be a johnny come lately, but can i also get the info for the investment club. thanks

  203. Four horsemen back into nosebleed territory. I must have imagined the drop yesterday!

  204. K1 – in “the cave” yesterday? Do you work for the CIA? Nevermind, because if you told me then you would have to kill me.

  205. Sup w/ uranium? URRE rocket!

  206. why does Cramer forget his 2 PEG rule on BIDU?


    14:43 BIDU pops after Cramer says on CNBC he’d buy BIDU, thinks it’s going to $500 (318.00 +9.25) -Update-

  207. Greg- LOL! I’m a technology guy, currently doing work for a large corporation designing a complicated network. The funny thing is that their facilities have the worst networking you can imagine, so when I’m doing my weekly on-site visit I’m basically cut off from the outside world.

    Ironic? Sure. You would almost expect that the government was somehow involved. Oh, wait, maybe they are…

  208. nevermind. seems like forward PE is low

    F P/E: 57.78

  209. Geez, I might go for the Q puts again and try for the daily double.

  210. I like to think of myself as a centrist…

    GOOG making their daily $10, I should have just stuck with it!

    USO puts. I like them as a play but they are thinly traded so be careful. SU puts will give you more bang for the buck. I have the March and Jan $100 puts against which I’ve sold 3/4 current $100s, now $2.15 and I still like that play (better with the March if you can afford it).

    ANF – it was buying puts. Getting less fun now with the “recovery”

    Foto – I would shoot myself with those rules!

    Spy 148s / Mar 148s – Roll him up to the Nov $154s for $4.85 (costs you $3.33) and roll yourself up to Mar $152s at $11.18 (gives you $3). Improves your spread by $2 at the cost of 1 month. Do that ever month and you’ll have him by $8 by February.

    NOTE – this is NOT what I would do with an account that can be traded, these are safe and static rolls for Foto’s crazy situation.

    CCJ -9x 45s / +5x jan 42.5 & +6x jan9 50s – I’d rather see you in all March $45s (10 or 11) and sell just 1 less the Nov $45s.

    SNDK -3x 55s / +4x Jan10 50s – Cost you money worrying about your upside didn’t it? May as well go for the Nov $50s at $2.80 but sell them all, silly to worry about the stock going up when you have 26 rolls to go.

  211. k1

    Due to ABNAMRO in essence buying puts I believe the current up trend is partially due to the artifical support generated by this security package (Also, gold futures and prices account for the price movement as well) Am going to research results of previous KRES listings to validate the conclusion of a short term price hike followed by slow downtrend completed by reaching a price per share at or below the floor price contained in the prospectus. In this case it would be $11.23 for AUY.

    If history proves this theory correct, it reeks of market manipulation, imo. But could provide one more tool to us lil people. :cool:

  212. _Fab

    You got the handle correct. I’m glad that interest has boomed for the IC and everything wasn’t done for nothing.

  213. SYMC: I just did this trade and I am curious if Phil or others think this is a good risk reward trade.

    I bought 180 Nov 22.50s and sold 60 Nov 20s for 1.70 for a net “credit” after commissions of about 40 bucks. I think my risk is about 1.35.

    There has been much call activity in SYMC over the last month with buyout rumors etc. On a TA basis it is overbought vs. a breakout. If it moves to the upside over 23.05 I can have a nice gain. If it declines, I could also make a profit.

  214. SYMC: My 22.50s were bought at .55

  215. I guess cramer lost a bit of dough on BIDU yesterday so he needed to pump it up a bit.


    If I’m just a basics options player here, and I’m thinking about a GOOG earnings play, what do you recommend if anything? (I am only comfortable buying to open and selling to close calls or puts)

  216. dday – Pheww…! Would have hated being wrong. :)

    I’m glad interest picked up too, also interestingly it appears I wasn’t in the original interest list although I had sent a mail as soon as it was asked for.

    Maybe I wasn’t the only one, and doubleclick’s re-advertising helped push the bar back up by recovering those who fell through and new ones.

  217. markets look toppy, a lot of leaders are forming interesting candles on the 15m..look at xom, bidu, fxi..

  218. Phil, not to be a complainer but I never saw anything that was a clear to sell the CAKE calls. “CAKE – nah, we have to let some things run – perhaps if they can’t take $25 and fall below $24.80 then we could sell the $25 calls but I’d set a tight stop on those.” on Oct 5. “Perhaps” does not a recommendation make. But if it does then I need to know. There was nothing on Monday. Got to do a better job of communicating the trades for those of us trying to learn and stay up. So, I just stay pat in CAKE and wait for it to rebound.

  219. AUY – that’s funny! For 18% in 6 months I WILL make sure AUY stays over $11.23!

    I need to go to funamentals school again with oil at $83 and the markets on fire on the same day the PPI shows a 13% inflation rate due to energy prices and energy going up another 1% on the same day. I mean really, is it me or it it everyone else?

    GM Jan/Nov $40 puts for $1 XXX to play the madness

  220. mrl14,

    Just a suggestion, but why don’t you open a “virtual” trading account so you can practice hedging the option investment and reducing risk of loss. Limiting your plays to BTO and STC basically leaves you in the nude with little insurance against loss and no ability to reduce risk.

  221. Phil thats 18% compounded annually and paid in arrears (resulting in an actual yield of 7.5% over 6 months) with a host of provisions reducing the payment and/or the principal upon termination.

  222. _fab

    Yeah, some got lost when the interest list was Jared’s and then it went to me. I’m glad it got righted for those that got ‘lost’.

  223. Phil, would this be a good time to buy back those MTB calls @ $.70 or $.75 ?

  224. Phil, for someone who has no position yet, do you have a favorite SNDK play for the IV crush on Friday morning after earnings? Or better just to wait until Thursday to see where it settles out before they report?

  225. Phil missed earlier sell on HXL cover should I take .45 or .4 before close?

  226. CNBC said big options play on DOW.

  227. Bought a few XLF 35 puts for the weekend, cheap cover.

  228. BAC forgot who brought that up yesterday re potential drop due to subprime issue larger than first thought, but THANKS. Got into the 52.5 P’s for .55 and now at .80. Should I take my 45% and run or hold out for more? (Oops, think I just answered my own question with that 45% figure :oops: )

  229. Phil, “GM Jan/Nov $40 puts for $1 XXX to play the madness”

    Buy the Jan (GMMH)/Sell the Nov (GMWH). Right?

  230. Grant:

    Yes you are correct

  231. solars doing good (FSLR, JASO, SPWR,…)

  232. So long Parchesia, I’ll be joining you in that beer in an hour… Oh wait, I’m an adult – I can start now!

    Thanks K1 – I’m going to have to put you in charge of PR too! 8-)

    4 Horsemen – If I’m not mistaken, they rise up and ascend which is the sign of the coming apocalypse so I’m not sure if we should be giving them a welcome party. Cramer is a very well-read guy, surely he knows this and I wonder if this is a private little joke he has knowing that insane valuations in the tech sector are probably a sign that the end is near.

    BIDU following the 2 cubed rule for Cramer.

    ABN – somebody did a deal like this with China a while back. A guy asked me if I thought it was a good idea and I said Hell No! It was a major institution getting you to take all their shares off their hands (ie, they get your money) while they keep the stock and hedge it with part of your money. Great scam for you and you might get lucky but they win either way and get to play with your cash now.

    SYMC – Sage loves those ratio spreads, I find them a little slow to develop for my tastes (in this market, in a slow market I love them too). SYMC is not that safe, especailly ahead of MSFT earnings as they are constantly picking on that space. If you are playing a rumor, go longer and sell more (maybe 2/3), it gives you more time to adjust.

    GOOG earnings – that’s another thing you guys need to remind me of this weekend.

    CAKE – I wasn’t sure at the time but I’m pretty sure that sometime between Monday and Wednesday, when the stock was still testing $24.80 from the wrong side, I made a couple of general calls to put covers on open positions. If you are not sure it applies to yours, you can always ask but don’t expect me to go through the list and specify all 200+ positions.

    Compounded and paid in arrears? I’ve got a rear they can stick that deal in! You can buy the stock yourself for $13.65 and sell the Apr $12.50 for $2.62 for a net entry of $11.03 and a $1.47 gain as long as it closes above $12.50 (13.3% non-annualized). You and me should get in on this scam!

    MTB falling fast, need to roll Nov $105 caller back to Jan $100s for $7.05 and sell the Nov $100s for $4.95 XXX in $25KP Sell first, roll later if you have the margin for it!

  233. SNDK – let’s wait on that one.

    HXL- better safe than sorry.

    gm yes, never the other way around.

  234. since we’re coming up on 3:59:55,
    have a great weekend phil and everyone!

  235. SNDK Getting close to 200 day MA.

  236. looks like the new shorts who thought that was it yesterday are running for the hills again?

  237. Woo Hoo! What a week!

    Have a great weekend all and congrats to the Google gang! Next week is going to be fun fun fun!

  238. Phil – could not perform any mentioned above. On TSO I bought back my caller as you said in the comments but could not roll myself to JAN because I have no margin no cash.

  239. All right I’ll ask….besides 2 cubed = 8, how does this work for the Craniumer? :?:

  240. Sohrab, I feel your pain….do you have a $$ hungry ex also?

  241. None of those plays cost any margin or cash. You need to call your broker to see if he can push them through. You can give him a list of the trades you want to make and he should be able to move things around for you.

    That’s why our $10KP is pretty much all cash with only the T spread taking up margin ($2,500) and that is why you should not make trades that are not appropriate for your portfolio size. It is risky enough trading option but compounding it by trading way over your head is a virtual guarantee of failure.

  242. Hi Phil… Look at this.

    My wife is telling me about the news at tv about european people invading Madison Ave. compulsively shopping.. and is noting me about the posibility of get a property.. she’s thinking that and we are absolutely midlle class.. at less (she said) .. let’s go shopping they are saying goods are 1/4 cheaper… real as I tell you

  243. karmcon –

    yes I have been thinking about that to kinda learn the ropes. Do you have a service you can recommend that lets you do all these fancy option plays and do you know if the quotes are real time or just 20 min delayed? Thanks

  244. Phil.. yes, the trading restrictions have not been fun.. 30 days is a very very long time.. Thankfully with your help, I’ve managed to lock in gains, adjust positions, and still make some decent profits even with the restrictions..

    If anything, it’s forced me into an LTP mindset, if I like it or not.. Not as much fun, and I’ve had covers I couldn’t undo rob me of gains, but my worst month lately was up 10%. Can’t quit the day job yet, but some day..

    If you know anyone starting a hedge fund in need of a technology guy with 10 years experience between Derivatives, Program trading, Algorithmic trading, Nasdaq trading, mutual funds, and some research bits a while back, let me know.. ;)

    Thanks and have a great weekend! -Peter

  245. BIIB went above $80 after hours!

    Can anybody please suggest a tool to check what this will do to the Apr/Nov 70s spread on Monday?

  246. Dmitry-M,

    My ThinkOrSwim platform shows these theoretical prices on Monday morning with the stock currently at 81.55:

    Nov 70 call, $23.93
    Apr 70 call, $25.31

    This does not take into account a change in implied volatility…but there will most likely be one. Hope this helps.

  247. rmyadsk – thanks a lot!

  248. Phil – BIDU – you rule … awesome yesterday.

    Gore — boy is that Nobel Peace Prize a devalued POS. Gore, Carter, Arafat, yada yada. I’m kinda surprised they didn’t give it Ahmadenijad this year.

    What was up w/ the market today ? I was thinking “calm before the storm”, but who knows ?

    Article below called “China Stock Party Won’t Last” … no kidding, but a good read.

  249. Oh, and GM …. talk about goosing the Dow. GM up $5 this week (more than 10%). Are you kidding me?? People just had to own GM ? C’mon. Take it out of the Dow and it goes to $5.

    Had to short it.

  250. uh, Phil, we did go through the UN … remember. 17 UN resolutions. Unanimous on last one.

    UN is worthless corrupt POS anyway.

    And with Kofi “Oil for Bribes” Annan in charge back then, a lot really got done. Kojo did get a deal on a nice Mercedes, and Kofi’s number 2 had to runaway to Crete to avoid prosecution, and lots of other good stuff like Cuba and Syria leading the Human Rights Commission or Anti Terror commission or something like that.

  251. Cramer…. what a POS…. probably has buddies stuck in BIDU. No wonder it was strong out of the gate…. you don’t think anyone knew in advance he would pump it do ya ?/ Nah…

    BIDU got another downgrade today (CS) + negative comments from the guy who runs the internet fund (Ryan Jacobs), called AMZN and BIDU “holds” while slapping out buys on a bunch of others.

  252. Looks like Cramer was good for a 10 point kick on BIDU into the close. Look at the volume spike just after 2:30.

  253. Phil … I like to think of myself as a centrist too …. LOL.

    That’s one big center !

  254. Phil … whats the cramer 2 cube rule ?

    Also, a laugh from the ticker this morning “Bush reiterates strong dollar policy” … must have been referring to the Canadian dollar !

  255. One man’s praise for Al Gore’s glorious achievement

    (don’t get mad Phil :>)

    The Congrats Due [Mark R. Levin]

    “I’d like to add my name to those congratulating Al Gore for his peace prize. Frankly, I can’t think of anyone who has done more to bring peace to this world – from Rwanda to the Sudan, from Burma to North Korea – than Al Gore. And what a selfless man. He always avoids media attention, preferring to direct accolades to the little people who do all the heavy lifting behind the scenes. And like Mother Teresa, Al Gore eschews materialism and luxury, despite his enormous wealth from oil and technology stocks. I hear that he insists on flying older private jets to his six-figure speeches. What a guy! I just wish there was another honor somebody could bestow on Al Gore — as long as it’s not president. “

  256. And finally, since it is after hours and a weekend:

    Gore Wins Nobel Prize, High Court Gives It to Bush

    by Scott Ott ·

    (2007-10-12) — Although former Vice President Al Gore won the Nobel Peace Prize this week for his work as a global-warming performance artist, the U.S. Supreme Court ruled early today that President George Bush would receive the gold medal, the diploma and the $750,000.

    Mr. Bush, who was narrowly defeated by Mr. Gore in the 2000 presidential election, thanked Justices John Roberts and Samuel Alito “for swinging the vote my way, and helping me to join the pantheon of great Nobel laureates like Jimmy Carter and the late Yassir Arafat who together brought peace to the middle east.”

    Mr. Gore could not be reached for comment as he was returning from Oslo, Norway, in a private jet. However, his spokesman said that his efforts to bring peace on earth speak for themselves.

    “Thanks to Al Gore’s movies, speeches and books,” said the unnamed spokesman, “Terrorists and tyrants around the world will soon lay aside the weapons of war and give peace a chance by working together to develop a hybrid car that runs on cheap, clean-burning gunpowder.”

  257. I wrote a long article just now, but I’ve came to the conclusion I’m too high.

    Thanks Phil, I’ll try and get better… I didn’t ask you about the trade because you already stated about the 25cent stops (or stops at 1.95)… I’m just way to sick to trade, I had to get out, even if it was at a small loss. My actual stop on that trade was below the 41.80…. 10M is boring, but you’re right I have to switch.

    Anyways thats enough for a night.
    Take care, cheers.

  258. A cautionary note – Monday new SEC rules go into play forcing naked short sellers who have been previously exempted to cover. We may see some massive short covering as a result.

  259. That would be nice, particularly for small stocks that naked shorts improperly and illegally (my view) have mercilessly punished, fleecing investors.

    Doubt it would have much affect on any dow, s&P, naz 100 stocks.

    don’t know the specifics, but SEC rules in this area have to date been ineffective and rife w/ loopholes one could drive a truck through.

  260. To no one in particular, Happy recommended BIIB Nov 70 calls at $2.55. I put in an order at 2.60 but it didn’t fill and decided not to chase. Stock is up over 17% after hours as it considers selling. I’m so sad right now. So sad… I need a beer so I can cry in it.

  261. Who’s Andrew Wilkinson?

  262. “Trader Feed (new highs/lows is what I like to watch)”


    Phil, what is this Trader Feed?

  263. Phil, do you know about this SEC rule change? Can you throw a comment into one of the future posts?

    My two-cents on Gore. The Nobel Foundation is always criticized for being late to recognize great accomplishments. So, they are trying to make up for that. Gore is to climate change what Phil is to energy prices. He is just stepping in front of the most obvious trade in the world. There is no way the world is going to slow down emissions enough to make a dent in the exponential trajectory we are on. Not to get personal, but I don’t understand how anyone can support such a blatant raping of the country. That is not the flag waving majestically, that is the cabal beating the crap out of you and Fox News not bringing the camera around the back to see what is really going on.

    I will put my money where my mouth is. I will bet up to an ounce of Gold with any 1 or combination of people that the ocean levels will rise 12 inches before 12/12/2012.

    We are pretty majorly screwed. It is awful to be aware of it, just like it is going to be awful watching the dow fall from 30k to 5k in 3 years while commodity prices explode, and the Baby Boomers who thought they had it all worked out, find out that it ain’t there after all. It will happen slowly, and people on this board will make tremendous money off of it, but you won’t be able to tell anyone because all your neighbors are going to be losing their homes.

    So, listen to what Phil has to say because as frustrating as it is so think you are the only one who sees it, if you can wait for everyone else to come around, you will be so amazingly rewarded.

    And if I am wrong… then the markets will just go up forever.

  264. Incidentally, I am working out the flowchart on my investment plan and I think it might be helpful to some people on this board.

    The only thing I did today (besides pay $375 to play golf) was buy $70,000 worth of GLD. That puts my money into something that accomplishes many things.

    a) it is a good looking chart
    b) should perform well when we have moments of panic
    c) reduces the amount of cash I have available to buy options

    My risk reduction policy is to limit the amount of money I can day-trade options with. Phil is an incredible genius with his spreads and his ability to make money using complicated, offsetting option plays. I haven’t had much luck with that yet, so I stick with what works for me.

    I started a day-trading portfolio at OptionsHouse with $30K, with the intention of only putting $10-$15K to work, but you have to maintain a $25K balance to day-trade. So, I was getting nervous because I was pushing up against my maximum intraday losses and was able to DD my way out of trouble, but not a strategy that will work forever, right LTCM? And when I did make 100% return on cash in 1 hour on Thursday, I only had about $15K in play. But, I cannot just leave money in cash as I will see it as available money and trade it, risking it, and on some bad day losing it. The trick is that washing out in this account is theoretically okay, because when I do, all my other more conservative and larger accounts will go into lock down and will be out of the stock market. And since I have already pulled $20K out, I am only playing with the houses money. Now, whenever I have profits from trades, I buy more GLD and will buy it all the way up as I believe that it will go to about $2500 over the next 6 years. Or you could substitute GOOG for GLD and probably do just as well. Hmm. That’s a good idea. I will roll between the two.

    Anyways, for those of you who haven’t washed out an options account yet, beware. Odds are that you will. I have 3 or 4 times. It is the only way you learn. But, if you are able to make profits and take them out so that you can start over, you can always be in the game, until 12/12/2012 anyways, after that, the markets will be dead for years, and you will have to take all your not-hard earned money and put it to work rebuilding our flooded country.

    I think the biggest mistake people will make on this site is trying to follow these complex trades poorly, and then discover that you weren’t hedged like you thought you were. You must figure out your temperament, your style, and your advantage. Mine is AAPL and GOOG. I can regularly find 500% returns on them because I understand just how dominant they are going to be over the next 3 years. So, when they go on sale, I go nuts, and I make incredible returns. Almost everything else I do loses. So, I play around with suggestions on this board, but invariably, if I get excited about a play mentioned here and I go in big, it doesn’t work out.

    Let me put it to you this way, if you went to the Bernie Kosar football camp, and he was trying to teach everyone there how to throw sidearm, you would give up and go home. Everyone can’t throw sidearm, and even those who do, probably shouldn’t. Not everyone can trade like Phil. Don’t exhasut yourself trying to follow him and then get disappointed when you blow out your shoulder. Ask OptionSage who wrote about how much respect he had after trying to track the accounts when Phil went on vacation.

    Over time we are going to see a lot of people come and go. I hope I am here to see it all. Because this is now my day job.

    And Phil. It’s F-I-L-M, baby. There is no FLIM in my FLAM. =))

  265. Oh I like Flim Flam better now – want to change it? 8-)

    FILM is right, it’s time for another article on cash management (K1, I would really appreciate it if you have the links to my previous posts on the subject) as this is a very important aspect for new members.

    Unfortunately, we are in this strangely distorted market where it actually is better to throw money into the wind and take your chances on wild stock moves than it is to hedge properly. Although it is against my nature to make these plays, I do try to go with the flow but it has led to an imbalanced portfolio compared to what I prefer to run.

    At the beginning of the year, I did what I always do, I start with an equal amount of cash in the STP and LTP ($400K this year as last year was a great year) after putting the majority of my proior year’s profits into commercial real estate.

    During the year, my goal is to have 75% of my money in the LTP and 25% in the STP BUT the STP is the “proving ground” for my Long-Term plays where I test stocks for short-term movement until I graduate them to the LTP after I deem them safe at any speed. The LTP, ideally, should not need to be played on a daily, or even weekly basis. This was much more important to me when I was taking on a lot of consulting work and more active in Real Estate.

    While I often make more money (percent-wise)in the STP than the LTP, it is much more stressful and risky and is not the kind of thing you can walk away from to take a vacation (or even to go to bathroom some days!) while the LTP is designed so you can go out to lunch and walk by a TV and see the dow up OR down 300 points and say “yay!”

    This has been a crazy year (2 actually) in the markets and hopefully we’ll have another one as the Dow goes to 15,000 but I’m not as entusiatic at 14,100 as I was at 10,500 when I first predicted 15,000 as the next move, mostly because we haven’t had a healthy pullback in a long time.

    The markets have been so busy and there have been so many great trading opportunities that we have lost track of what I was trying to do with the multiple portfolio set up, which is to teach good portfolio management and trading strategies while graduating members from the $10KP to the $25KP to a $100KP to the STP and LTP (which can be played as the $25KP and LTP).

    When/if the market calms down, I do want to get back more to this – as I said at the end of yesterday’s comments, it is dangerous when smaller traders see some people doing spectacularly well and jump into inappropriate risks trying to keep up. I know it is painful to grind out a 20% gain in a month while others are making 20% gains in a day but, if you only have $10,000, losing $5,000 sets you back much worse than if a person with $100,000 loses $50K. As Film mentions re. $25K day-trading rules, once you go on that path, you simply CAN NOT afford a set-back or you will be margined out of your whole portfolio.

    It is important every once in a while to remind people that there are traders of many different levels on this site and that within a year (and with some luck), we can bring people from the $10KP to the $25KP to a proper $25K/$75K spread that will produce a reliable monthly return while allowing a decent amount of short-term gambling.

    Once you get there and keep it going for another year, you are a professional trader, ready for pretty much anything the market throws at you. That’s what I want, a site with 1,000 great traders who exchange ideas and find opportunities in a way that will rival the resources of the best brokerages.

    We are very early on in this experiment and already we are building a great community, there are many amazing contributors and I am already able to bring in pros like Andrew and we have a deal with Stock and Option Trades as well for daily content and more will follow but only the best for this site. We are not looking to be some blog aggregator, if you see someone writing on this site it’s because I believe in them 100%, whether I agree with them or not!

    It will take us a while to work all the bugs out but the new format is shaping up well and, once that’s all smoothe, we can move forward and add more writers and more features but it’s very important that we not lose sight of the basics, which include good portfolio management, something even the best of us sometimes forget to practice.

  266. I want to apologize to MrN, who asked me about BEAS in the morning and, for some reason, I didn’t realize he had already taken 2/3 off the table when I answered him. I’m writing up the portfolio moves and reviewing comments and I can tell by all the typos I made that I sure didn’t get enough sleep this week as I was very punchy in the morning (as you can imagine I had a bit of an exciting evening on Thursday!).

    So I’m sorry MrN as you played that perfectly and please everyone, feel free to slap me in the face if I’m wrong on something, it’s actually helpful to me if someone lets me know I’m missing something as it took a good night’s sleep for me to come back to all this and realize there are several decisions I could have made better yesterday had I just realized I wasn’t functioning at 100%.

    A good warning sign was that I started off the morning without realizing that I posted twice… Second warning sign is my spelling, which is always horrible (it’s a mental defect I have) was REALLY bad and the third warning sign was not only grammer but mistakes in tenses – that’s really bad!

    Anyway, nobody’s perfect and that’s why having a support group like this is so important, we can lean on each other when things are tough and cheer each other on when things are going well – it sure beats staring at a screen all day with only CNBC to keep us company!

  267. Phil,

    Can you please advice on how to adjust the BIIB Apr/Nov 70s spread on Monday if it opens above $80? The spread price should be $1 or $2 down, right? (we bought it for $3.20)


  268. Amen Phil.. Your mistakes are forgiven even though I didn’t notice yesterday. :) Maybe you need to lower the personal expectations a little..setting the bar at perfection and being disappointed when you don’t attain that isn’t the best way to go IMO.
    When I was younger I was like you and tried to attain perfection, but you know being right 99% of the time (or 70% in my case now) isn’t so bad. :)
    Your the best so stop being so critical.

  269. Good morning everyone (West Coast here, and I’m a slow starter :-) . I have two things to share. First is the set of links Phil requested. These were part of the Reading Assignment for Newbies last week, but I don’t think they can be emphasized too often:

    Portfolio and cash management articles:
    Position management:

    Two related comments from Phil about initiating portfolios:

  270. Hmm. My post just went to moderation. Guess posting links makes me a suspected spammer, so the cash management links will be available shortly when Phil or Jared gets a chance to clear my post.

    But anyway, the second point I want to bring up relates to FilmFlam’s post, and Phil’s comments on it, and my own experience, and the experience of some others I could post as well (but won’t because I don’t want this post going to moderation too).

    There’s no need to wipe out your account while you’re getting started. You’ll probably lose some money because you’ll make bad entries, lose faith in your positions, not follow the 20% loss rule, all of those things. But if you are conservative about the percentages you allocate, the number of positions you initiate, and just slow down, you’ll be able to learn the basic skills and come to an understanding of your trading self that will allow you to achieve your goals.

    Did I do this? In a way, I did. I was afraid of making a lot of mistakes and losing too much money, so traded single contracts at first. This allowed me to restrict my losses on any given position to a few hundred dollars each. I still lost a few thousand dollars before I figured out what I was doing, but that was way better than losing 10s of thousands.

    When we get our forum/wiki area up, I’m planning an entire topic area around finding your trading self, because that seems to be a very important transition point for each of us. There’s some outstanding writing on this by Sage, Optrader, optiondragon, Happy, and of course Phil.

  271. One last thing. Somewhere back last spring there’s a comment Phil posted about a day he had to fly to Houston for a meeting. His portfolio got hammered while he was stuck on the plane, and then again on the flight back. The point was that he developed his hedging strategy to protect against those kinds of negative moves.

    This is why the LTP strategy appeals to me so much. I’m not a professional trader right now, and may never be. But the LTP allows me to contemplate 20-30-40% returns without concern about being away from my tools for a day or two. Sure, I missed out on the BIDU play Thursday, but even midday when I noticed the market was down, I had no concern, angst, or fear. I know my positions can handle the drop.

    It’s a wonderful thing to know that a 15% or 20% down day would simply provide an opportunity to buy out your short callers for pennies, and roll down your long calls to better strikes. And a big up day, well, gotta love those.

  272. BIIB – we’ll have to get a reality check on Monday as this move is based on speculation but the rule is ALWAYS sell into the initial excitement which (for you advance logic types) means NEVER buy out your caller into the initial excitement.

    I would be looking for a chance to roll my caller, if you can get an even roll (or close) to put him in 2x the $80s and put yourself in 2x the $80s, that’s your best bet. Possibly one of you will have to go to Jan if you can’t afford to put more money in, that remains to be seen. You can also roll yourself back to a higher Jan ’09 and give up ground to him in Jan too but what I don’t like about rolling the caller to Jan is a deal may come down by then which will wreck your premium.

    There is also the possibility of rolling him to 2x the Oct 75s for a huge premium (maybe even the $80s) that will evaporate by the end of the week for sure but maybe even the end of the day! If someone is willing to pay you a $2 premium on a $5 contract with 5 days to expiration – it is really best to find some way to take it from them…

    Thanks Don but it’s too late, my mother already thinks I’m perfect and she reads the site every day so I have to stay on my toes (not the member section, too fast for her, but she’s really getting to be quite the stock maven among her friends in Boca!).

    Moderation seems to come from too many links in one post, Jared found that filter on the old site and killed it so I’m sure he’ll be able to track it down again. I’ll go rescue it for now!

    You’re right about not getting wiped out – that’s what we’re here for! Hopefully trading with a group for guidance and support can save a thousand members tens of millions in losses by learning from our collective mistakes without having to go out an make your own.

    I’m sure FILM (I’ll get it right if I keep doing that) and I and others who lost our shirts at one point all came up the hard way, trading on our own with little or no support (or, even worse, Schaeffer) and a lot of us would be very rich men and women had we avoided just half of all the bonehead things we did early on.

    Personally, I’m a learn by doing kind of guy – I test, I experiment, I try things. If I fail, I try something else. If I succeed, I add it to my bag of tricks. My system is a combination of Edison and Einstien. Edison would try 1,000 different materials to come up with the best one for (example) the filament of the light bulb while Einstein would simply think of 1,000 possibilities and eliminate the ones that didn’t work until he would simply sit down and write out the one that was left.

    While those are two very different ways of obtaining a perfect outcome – I, being not as bright as those two, tend to do a little of each. From my many years of management experience I learned that it’s great to have ideas but they are useless if you don’t implimnent them and, from my many years of managing managers I’ve learned that not all ideas should be implimented!

    That’s why I often enter a position where I will hedge or at least have the option to hedge, even when I really like the stock (like Apple… sob) and then, like a sculptor who takes away the layers of rock until he reveals a statue, I try to peel off the non-working postions until I end up with a good portfolio. It doesn’t mean every pick will be a gem but it does mean, if we keep chipping away, that we can make a pretty consistant profit overall.

    This site is about becomming a better portfolio sculptor. When you take an art class, they give you a lump of rock and some tools and say “go.” I haven’t been to a museum yet that had anyone’s first art project on display. Only through trial and effort and practice, practice, practice will we all become better traders and better portfolio managers.

    Da Vinci (my other hero) said: “He who loves practice without theory is like the sailor who boards ship without a rudder and compass and never knows where he may cast.” Yet he also said “It had long since come to my attention that people of accomplishment rarely sat back and let things happen to them. They went out and happened to things” so I suppose we’re both a litte of each!

    My favorite Da Vinci quote that applies to trading: “Life is pretty simple: You do some stuff. Most fails. Some works. You do more of what works. If it works big, others quickly copy it. Then you do something else. The trick is the doing something else.”

  273. Phil, that last Da Vinci quote was my sig for a while. And you reference The Man Who Planted Trees. And I lived in West Paterson. The similarities are eerie. If only your mother had named you Philm.

    As a huh-rumph to K1 and Phil, you absolutely don’t need to wash out, but that is my trading self. I am way too able to emotionally handle wiping out an account, so I define my risk by giving myself an account I can wipe and actually gain something from it if I do. I really only know something isn’t working when I have no money left. But, I swear, I am trying to change.

    I was exhausted this week, too. The only stuff I held overnight on Thursday were RIMM and AMZN puts. The market opened up and I felt pretty crappy because I had given up most of my gains for the week. But, I DD’ed on some stuff closed it out when I got even then felt much better and after a few hours decided that I was right and that I needed to get short again. That never would work have worked if I wasn’t sitting there staring all day and reading Optrader and Phil’s comments about going short BIDU and AMZN.

    My prediction for the next (couple?) weeks: Brokers are going to go up in smoke. I believe that the market action either up or down or both will test the technological capabilities of all the upstart brokerages. I believe we have experienced their limitations twice already. Once on August expirations where the move was to the upside and you couldn’t get in or out and Thursday where the same was true. Thursday was worse. AAPL actually gapped down intraday. Think about that. How can that happen on arguably the most liquid stock in the market. Sounds like IB is going to have problems. I am very nervous about what I will be able to accomplish in my E-trade accounts. I am thinking that I will just leave in a spread of long AAPL options I want to buy incase I am the only bid left in the system.

    I would exercise EXTREME caution over the next few weeks. Phil is right, this market is perfect for me. Taking ridiculous risk with define loss is working too well. I would argue that isn’t necessarily good.

  274. FilmFlam – Why do you think gold is going to 2500? And lol I think you’ve seen waterworld one too many times… You can’t predict the earth’s temperature using minute ticks. Show me a 500,000 year chart and tell me why we’re out of statistical reason.

    “It’s sexy to save the world.”

  275. Flim – you’re right though, you’re only as good as your emotional capacity. If you’re OK with losing, then you’ll have a clear head when you’re winning… Kinda hard for me on leveraged money, but it makes the game interesting.

    Phil – Props to your mum.

    25k Rule – Yup, need money to lose money. But does it ever make you focused… Investors have a hard time taking a loss in a losing position… But if you were a day trader turned investor, you’ll make most funds look like a little nancy boys with your tight stops and pristine entry points.

  276. Film (and DM, by extension)- I never meant to impugn your trading self. Rather, I speak to the newbies and almost-beginning-to-get-it crowd that read these pages and dream of big hits like some of the experienced traders pull.

    From my personal experience and those that I’ve seen shared here in this forum, it seems that the process of finding your trading self and the strategy that fits your mindset is a difficult and frustrating journey. Without some care, it can be an expensive one as well.

    I don’t know that there’s a way to avoid a few thousand dollars at first (optiondragon even called it your first term’s tuition) but having the cast-iron innards to take a full washout is not something I would expect of new subscribers. Although I can picture the sign-up form. :-)

    So let’s recognize and celebrate the difference in style, capability, risk tolerance, and eye for targets and opportunities. Film, you’re going to score much bigger, much faster than I will. DM will likely hit one of his “2k going for a million” shots. I won’t.

    But I recognize that about myself, and am comfortable with the risk/reward path I’m on. Both of you recognize and are comfortable with the risk/reward paths you’re on, which is ultra-cool. And on this site, among this community, there is a wide variety of folks who have figured themselves out, are trying to figure themselves out, or haven’t yet figured out what they need to figure out.

  277. As long as we’re sharing inspirational sayings, here’s one I saw today that I dig:

    The will to win means nothing without the will to prepare.

  278. K1, I totally agree with you. I was trying to illustrate my different approach and how I manage that. In my other larger accounts, I am trying to take a much more measured approach. It survived its first test this week. My throw-away account flew through the roof and my conservative account which I thought was hedged, didn’t even flinch. So, that was why I was so ecstatic with my day. It was my two new approaches that worked perfectly at the same time.

    DM, have obviously haven’t seen The Inconvenient Truth. I can’t find the graph on the web but it breaks down like this:

    Through gas trapped in polar ice and data collected in many disciplines, there is a 700,000 year chart of the earth’s CO2, average temp, and ocean levels. These three levels are HIGHLY correlated for 700,000 years. We have made in the last 100 years a massively new high in CO2 levels, the chart suggests that it is only a matter of time until temperature and ocean levels adjust to resume their correlation. That requires 30 ft of ocean level and another 4 degrees celsius (if memory serves).

    This is the single thing that woke me up. I am a chart guy. That chart said to me, “We are screwed.” So, there you go, if you only want to look at the last 500,000 years. It will tell you the same thing.

    As to why gold will hit 2500, just look at the performance of commodities and gold during the last major commodity bull market. We are probably not too far from a plateau for a few years until the rallies resume. I have seen several charts that overlay the scale of a few of the other cycles (from the 1930′s and the 1800′s) and that is about the range that everyone keeps hitting.

    Oil should probably go to $120 at some point, but it shouldn’t happen yet. That needs to plateau too.

    That is my thesis.

    And my inspirational thought: Light travels faster than sound, that is why some people appear brilliant until you hear them speak.

    Seriously, I love PSW. Thanks, Phil. This really is the most fun I can have with my fingers.

  279. well… a beginner shouldnt be risking /all/ of his capital unless he is perfectly willing to lose it /all/.

    I rather like the 90/10 approach, with variation. 90% low-risk, fixed-income, 10% to learn the options game.

    A viable risk spread in fact is 90% fixed income at 5% and 10% call options. It provides limited risk, and unlimited profit potential.

    From the simplicity of that you can color in many variations of grey.

    The bottom line, and key point is to know that what you are learning with, you are risking — be prepared to lose it. Starting out you shohld learn conservative tactics and positions that are slow and forgiving, then graduate some of your portfolio to the more edgy, ultra-fast strategies.

    I consider it to be kinda like sailing — Learn in the stodgy ole dingies or cruisers before you take on a racing boat, which requires so much attention to the control and sail surfaces, that general sailing ‘feel’ had better be something that you dont have to think about.

    Learn principles first, get them to second-nature status. Then crew on a racing boat. Then if you got the chops, be the skipper.

    IMHO, of course !

  280. K1 write a book, I don’t care, just do it. That was very well written.

    2k going for a million – I’m not planning for 1 trade to do that, just a series of trades towards it… I just want to show that it is possible for a small investor to make considerable returns…

    The Fund world operates under different rules and it’s difficult to return over 20% (y/y) only because of liquidity in the market… A lot of new traders forget that, and try to compare themselves to a fund managing billions of dollars…. It’s a different game entirely for them.

    They way I see it, under 100k
    A sniper should make 10% a week.
    A good trader should make 2% a week.

    Tell you the truth, I was a ‘noob’ with options till about a few months ago? I don’t think I even really knew what a short call was until recently. I’m just taking advantage of my youth by learning as much as possible.

    Phil’s a great resource and the comments thrown by other members, especially you k1, make this even more enjoyable for me.

    Thank you.

  281. Film- I now get where you’re coming from, thanks for clarifying. Earlier on in this post, you were saying you might put a flowchart together to map out what setups you made, what choices you faced, and how you pursued your strategy through the choices. If/when you do so, I’d like to make sure and capture it as one example of what it means for one of us to figure out our “style”.

    One of the threads I pick up on this list over time, especially in the couple weeks after a new group of wait-listers are allowed on, is a bunch of questions that essentially boil down to how to get started and figure oneself out. I’m not sure there will ever be a cookbook, but sharing the raw experience (good and bad) from the folks who’ve been through could provide a bunch of value for everyone.

  282. DM- thanks dude, now I’m blushing. But seriously, I actually have 2k set aside to start following your “going for a million” strike, as soon as I get enough feel for your style to start following you. Might not happen for another month or two, but I’ve already built the stake.

  283. Bah, whatever I’m sick, I’m allowed to mess up my: Grammar, Spelling, Diction, sentence structure, syntax, clarity, semantics, punctuation, fluidity…

  284. 2k is fun, follow the trades that make sense to you, we’re at the same level. :D …. I’m probably going higher risk every week to make up the return I should be having.