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Thursday, December 1, 2022


Wednesday Virtual Portfolio Moves

December 12th, 2007 at 9:31 am | Permalink   edit   copy

I’m not doing anything in general – sometimes you have to take a hit, take a breath and then come up with a rational course of action. Let’s see what levels we get to before buying into this. I’m not sure how much this really helps anything other than giving the bulls an excuse to rally. The CB’s have been giving money out like candy anyway, this is just more of the same but we’re not going to fight the tape.

December 12th, 2007 at 9:49 am | Permalink   edit   copy

LTP – I’d wait a bit for a real dip. 13,700 is so close to the top of the year’s trading range that you are much more likely to be overpaying than underpaying.

I’m tempted to short here actually but I’ll just be happy if this lunacy calms down here. I’m really getting fed up but S&P 1,505 is nothing to rally about and all I see is a ton of blocks being sold to retail investors who think $40Bn tossed out by the CBs is going to solve something. If they Dow breaks back below 13,600, we can probably short anything we wished we shorted yesterday, like XOM, which is now up over yesterday’s high and very close to it’s 10/29 high of $93.61 (spike to $94.27). At that point, out of prinicpal, I will have to bet the farm on XOM going down!

If you are long, I would suggest exiting with the big boys and just being happy you got out of yesterday’s mess with little damage. Let’s wait for a real breakout before we start “bargain hunting.” If you are short, I would roll up to Jan puts but you have to assume Dec is dead as we only have 8 sessions left.

December 12th, 2007 at 10:09 am | Permalink   edit   copy

DIA Dec puts – I’m only in Jans but I’m not covering.

NEM – after yesterday you have to ask? Yes, cover! AMGN – yes cover! This Fed thing is just more smoke an mirrors, likely capitulation to Paulson’s pals who got caught with their pants down yesterday and need someone to sell to. Remmbemr in yesterday’s comments I noted that there were NO buyers, that could have been catastrophic if it continued today thus the BS move followed by a hard-core media blitz to tell you how great everything is.

Meanwhile, SLM at 52-week low (their deal is dead), MBI heading down, GM down, C down, COF down – this is a textbook study of a sucker’s rally. FRE down, FNF down, AET down, BAC down, WM down….

December 12th, 2007 at 10:34 am | Permalink   edit   copy

LEH – sure that still works but the V puts a little more risk in. Are you sure you make money buying just 1 of each? Seems commissions get painful there.

BA – my plan is to buy more leaps for less money. This is about the deal they made to outsource some manufacturing limiting their upside because analysts think the alternative would have been to knock down Bill Gate’s house and put up a plant there or something. How the hell did they think BA was going to deliver 1,300 more planes in 5 years? I think there should be a rule that an analyst should have some clue about what a company actually does for a living before they are allowed to spout off about a company. Maybe they could have a vetting process like they do for jurors where the company to be analyzed has the right to reject unacceptable candidates if they can demonstrate that they are unfit to talk about them.

On the BA May/Jan $95s – I’d take him out for .08 (tough decision) and roll to the May $90s for + $2 and sell the current $90s for .55 since the Jan $90s pay for the roll at $1.90.

Oil inventories down 700K but gas built again to 1.6Mb and distillates down 800K so net neutral but a disappointment overall. Refiners should lead us down on this one, that would be VLO, TSO and SUN but I’m sticking with XOM $90 puts right now at .60 as a mo play and the Jan $90 puts at $1.67 as my focus put but I’m not expecting much movement if the market stays up.

December 12th, 2007 at 10:58 am | Permalink   edit   copy

BA – oh sorry, I just realized you had Jan $95s and not Dec which is too bad as the Decembers got toasted! The advice is the same though, spend $2, spend .20 to roll your caller to Dec $90 THEN roll back to the Jan whatever is appropriate. You turn .78 you won’t collect for 6 weeks into .55 you’ll collect next Friday and improve your position by $5 for a net cost of $2.20.

GE – holy cow I missed the chance to sell there in the morning! Gosh that’s got to be a concen with GE dropping 3% since the open… It’s a tough call now but maybe wait to see if we test $37 as that seems likely right now and, if not, you don’t owe him more than his money back until $38.30 and by then you can probably roll to the Jan $40s for the same .40 you want to give him now which would leave you naked. I already bought my guy out so I made my bed and now I’m lying in it but you are in a different position with new information (the stock got sold off hard at $38). I will, in fact be looking to sell between .80 and $1 so just send yours over to me at that point – we could be like a miny IAB if we get that working!

Windy, that is really great! I’ll have to add that advice to the strategy section…

CMan – Apple I assume? Well if you liquidate you get $2 so lets see what we could do. You could roll him to 2x the $190s at $14.50 which will cost you $2.50 per contract of yours but net you a possible $5 per contract return (if Apple finishes above $190. If it were my position I’d roll out to the Jan $195s and roll him up to the 2X the Dec $195s which will cost you $5 per contract but that’s what you owe him anyway and you have another month to play with Apple and, if you then sell the $200s, now $9.62, you get almost all your money off the table with a $5 spread.

December 12th, 2007 at 11:18 am | Permalink   edit   copy

QID – I know, I was greedy and didnt’ sell yesterday either. I’m not going to yet but if we hit $38.50 again I probably will sell the $39s.

AXP – ugly, the $55s.

CCJ – As a leap yes but you have to sell against them and they are very stressful to hold.

LOL Khan!

Yev -that is a good weekend discussion. As I mentioned last weekend it’s the little things that tip us off to a real recession like my daughter noticing there were a lot of cars with dents in the mall parking lot. People are already having to cut one thing to pay for another and think how badly they NEED a bailout if the Fed has to keep lowering rates. Look at what Japan did today and their Fed is broke too. These are desperate measures and we are pretending that these are not desperate times – that makes no sense in general. If this is what they are doing in a “decent” economy, what is their plan if the economy goes “bad?” That’s what scares me, the lack of acceptance and the business as usual attitude from CBs and government in the face of a global commodity crisis that threatens to swallow up all the available capital on the planet or force a massive and painful correction.

IMB 52-week low – yep, everything is great!

BA – $85 is a good floor but you have to be willing to roll and DD at $75 or you might not enjoy owning this one.

LDK – WOW, those are huge premiums! How could you not sell the Dec $60s at $5.25? I’m doing an immdeiate butterfly there myself selling the $60 puts and calls for $11 and buying the $70 calls for $2.27 and the $50 puts for $1.77 so I get a $7 net credit with a max risk of $3. XXX

December 12th, 2007 at 11:39 am | Permalink   edit   copy

That LDK filled as a spread in 2 seconds, I think I could have done better.

Including non-trading days – when it’s close I do but when it’s more than a month it’s too much hassle and as long as you are calculating both ends the same way it doesn’t really matter.

COST is tricky because they lose so much money on gasoline when it’s high but I think they should do well but I’d roll him to the Jan $70s near even so you can get that premium. If they tank you’ll have to ride it out but I think they’ll hold $67.

Downgrades – well it depends on if I agree or not. With BA I think the analyst is an idiot but with AKAM I’m not so sure… You can’t just apply this strategy to random companies, if they don’t come back you are just screwed. Still, it only cost you $1.80 to roll to the $35s and you can sell the current $35 for $1 and the Jan $35s are $2.25 so from a pure math perspective it makes sense assuming you want to stay in it.

Seattle – now you are just fantasizing!

XMSR – unless we close right at $15, with most brokers you are better off closing out the position. Our max possible gain is about $3.30 and we’re up .80 so it’s a little early to shut down but at around $2.20 it becomes a sirius (get it?) consideration.

December 12th, 2007 at 11:47 am | Permalink   edit   copy

JNK – There was one of those I liked better but I forget which one but yeah, with the Fed so actively bailing people out the risks are probably overstated.

C – I shorted them yesterday on the news but we planned that from way back. I’m off the financials until we get a real handle on this crisis (maybe 2010!).

I will reiterate that WM LIED about $4Bn in losses and UBS LIED about $10Bn in losses – who knows how bad this really is?

I still like the ATI play long term, they are getting to be like SNDK with their wild swings for no apparent reason. They’ve been channeling nicely between $90 and $95 for a while so picking up $90 leaps and selling $95s when they top out the channel is a good income producer.

December 12th, 2007 at 11:56 am | Permalink   edit   copy

DO at an ATH, I’m wondering if it’s a blow off after plunging to $126 yesterday. I like spreading the Jan/Dec $130s for $3 as you pretty much win either way. XXX

December 12th, 2007 at 12:04 pm | Permalink   edit   copy

C – no I still have 2010 leaps, I think that’s enough time for them to recover. That’s another nice thing about having leaps with a beaten caller, I am covered on my puts to the upside!

JD – I dont’ know what you mean by normal margin. Do you mean what you should expect to make? I use OXPS and I’m happy with it and TOS and IAB seem to be the top favored alternates.

XOM – of course roll him up. That’s the point of a leap, even if your caller beats you so bad that you can’t buy him out, you can always buy more time with a horizontal roll at no cost. All the stock has to do is fall once between now and your leap date and you’re a winner.

Pisani says traders say the Fed deal is still not enough. I’m telling you they are crack addicts, there is no amount of money you can throw at them that they don’t want more so they can keep making the same mistakes.

OIH tempting again!December 12th, 2007 at 12:06 pm | Permalink   edit   copy

Down we go I think!

December 12th, 2007 at 12:10 pm | Permalink   edit   copy

XOM $90 puts at .65 going for .90, DD at .50, stop at .40 XXX

December 12th, 2007 at 12:17 pm | Permalink   edit   copy

BIDU could be good for a nice drop. $380 puts are $11 XXX

December 12th, 2007 at 12:18 pm | Permalink   edit   copy

FSLR $230 puts at $6, stop at $5, get $10 XXX

December 12th, 2007 at 12:27 pm | Permalink   edit   copy

AAPL Jan/Dec – well you have to do something… If you can afford to you can roll them and yourself to 3X the $190s. You’ll have to take some out of your pocket but you are buying $12 in premium for each of your callers you roll up. Otherwise, just roll them to the $190s for $17 and $20 and roll yourself up to the $190s for $17 so you can at least capture a little premium. Another play I like that would cost you a bit is rolling them to the Jan $185s at $15.93 and rolling yourself to the Apr $180s at $29.85, that way you have time to work the position.

$25KP DD on AAPL $190 put at $3.75, look to get all out even. XXX

December 12th, 2007 at 12:34 pm | Permalink   edit   copy

Margin – no, that’s what it is unless you have virtual portfolio margining in your account, you will be charged the difference between your strikes no matter what you think the risk really is.

Just remember that if we close at +60 or less it’s a very serious 2.5% rule failure to bounce 20% off yesterday’s drop, which is a very strong indication that we will head down another 2.5% before the next possible turn.

There are many profitable hedge funds but they don’t need to advertise. Once I get a $1Bn fund up and running if I’m maxed out on members and we’re making 50% a year, why would I want publicity? The guys you see on TV either need investors for whatever reason or they are publicity hogs, neither are the types you want to give money to. Hedge funds have been around for years but they used to be things rich people whispered about – the good ones you keep to yourself.

December 12th, 2007 at 12:39 pm | Permalink   edit   copy

MA getting whacked today. Stopping out of my very ahead $210 and $190 calls and taking covering $220 calls that I sold with $230s at $1.50 XXX Tight stops on my puts as I dont’ need them anymore.

December 12th, 2007 at 12:47 pm | Permalink   edit   copy

Here’s the 20% bounce off yesterday’s drop – Hyper critical failure if we break here, which is conveniently just under 13,500. Nas 2,675 keeps popping up as an inflection point as does S&P 1,485. Right now the energy patch is holding up the whole market so if XOM does go you’d better damn well be covered elsewhere because this could go fast!

December 12th, 2007 at 1:18 pm | Permalink   edit   copy

50% annual. It remains to be seen for sure if I can scale to $1Bn it but 50% would be a terrible year for the LTP, which is the strategy my fund is pursuing. We’re probably going to start with just $200M, which I’m very comfortable with and we’ll scale it up over time.

LDK – looks like we could have picked a better entry but it’s fine unless we break below $55 but the rolls should be kind to us so I’m not going to worry.

Pandit – I felt bad for him because he’s really not trained to be in public like that but it was poor judgment on his part to make so many public appearances when he should have done a controlled conference and not come on interview shows until he had a plan with bullet points and such.

BIDU – $12 down from the high is a little late to cover. About the point where I selected the $380 puts, now up 30%, would have been a good time to cover! Greed, greed, greed is all it is, we make fun of the financials wanting more and more and more but if we make 20% in 2 hours we want more – that’s kind of nutty don’t you think? Anyway, We seem to be holding the levels I just laid out but now we need a 20%+ bounce off that to confirm an uptrend so look for 13,560+ as the upside breakpoint at which you may want to cover, maybe $390 on Bidu where selling the $390s for $14 would be a nice day’s work.

X is flying – something’s up over there.

No volume to this bounce so far.

BDC – are you saying it now takes this country 80 seconds to burn through 22,000 barrels of oil? You know, sometimes I think this country isn’t even trying to be #1 anymore…

December 12th, 2007 at 2:57 pm | Permalink   edit   copy

Calulator – I don’t use.

BXP – good call! I sold my 30 at $2.50 too! You have to offer on the way down with those and we were too close to expiration to take a chance. With the stock at $98.50 I had to say, well it has to finish at $97.50 for me to get $2.50 and if goes up a buck I get nothing so it’s a bad risk/reward to stay in considering we’re protecting a double.

Oil closed at $93.93 in the end, a small miss but a strong statement by the bulls.

Optionetics – That thing gives me a headache! It’s a good range but I’d rather drop it $5 as what are the odds of even breaking $160 in the next 10 days? It’s very dull but you can’t knock picking up that premium in 6 days with virtually no risk, let me know if you do it.

LDK right back where we started.

December 12th, 2007 at 3:01 pm | Permalink   edit   copy

I’ve been trying to give the energy patch the benefit of the doubt but Oil is up $4 and there was a build in gasoline despite pathetic utilization numbers so it just seems to me that they are full of crap!

I’m still out of my Dec puts today but I’m adding VLO $67.50 puts at $1.50 XXX

December 12th, 2007 at 3:16 pm | Permalink   edit   copy

I’m not even going to talk to people who aren’t taking some puts off the table into this fall, especially if you just recovered from getting burned in the morning! Don’t be greedy, take a little profit on the way down when the mo slows, not when it reverses. XXX

December 12th, 2007 at 3:28 pm | Permalink   edit   copy

LDK – I’d be inclined to take a medium profit if the situation presented itself before earnings.

$25KP/$10KP XMSR – take out $15 calls for .50 XXX

December 12th, 2007 at 3:30 pm | Permalink   edit   copy

XMSR – I see no reason for the drop other than to flush you out but that was too much money (+ $1.60) to turn down. Now we need to keep a reasonable stop on the other leg which is down $.52, perhaps .75 is the most we want to lose.

December 12th, 2007 at 3:32 pm | Permalink   edit   copy

AAPL – oh sorry, take those $25KP puts off!!!

December 12th, 2007 at 3:36 pm | Permalink   edit   copy

QID – yes sell the $39s for $1.10 if you’re in the Julys as you pick up $1 per month so the calls would have to hit $46 before you owe anything (plus premiums) back to the caller so it’s better than not selling but maybe a 2/3 or 3/4 sell just in case we dive.

December 12th, 2007 at 3:48 pm | Permalink   edit   copy

T – I’d sell or at least sell $40 calls for $1.70 to pick up an extra .40 because if we end up barely holding $40 through expiration you may decide to keep them with Apple earnings coming up.

GE – back at yesterday’s bounce point, I think we hold here on the overall, same a yesterday really.

December 12th, 2007 at 3:59 pm | Permalink   edit   copy

XMSR – still not filling??? Pay the .60 if you have to but this is a solid working trade, don’t let it get away. I’m thinking of rolling my puts up to the $20 puts, which have no premium (.15) and collecting the $15s .70 premium. Then we could sell the $12.50 calls at $1.57 with .90 premium against the $10s at $3.30 with .15 in premium and make big money again between $12.50 and $15 so actually XXX to that:

Buy out $15 caller for .50 or .60
Buy $10 calls for $3.30, Sell $12.50 calls for $1.55
Buy $20 puts for $6.80, sell the $10 puts for .25

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