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Which Way Wednesday?

First of all, I'd like to congratulate my man Vlad for being selected as Time Magazine's "Person of the Year."

As many of you know, I was selected as last year's person of the year and I have served out my term with great honor.  I will be very busy today consoling Al Gore, who hasn't lost an award he's been nominated for in quite some time and is taking this rather hard.  "It's like November 2000 all over again" was the message he left on my machine

Both Al Gore and Vlad Putin have been vocal critics of US policy this year but, when push comes to shove, Al Gore just isn't willing to go that extra mile and poison his critics, which gave Vlad a serious edge as the judges deliberated who they'd rather not piss off.  As much as the US mainstream media would spin it otherwise, Putin is admired in much of the world for his vocal criticisms of the US, reasserting Russia's place in the world after years of accepting "defeat" in the cold war. 

In market terms, Russia is ?? ?????? (on Fire) with the RSX (Russia ETF) jumping 44% since its launch in May and TRF holding steady this year after gaining 300% since '05.  We still grossly underestimate the economic potential of Russia and their vast recourses covering almost twice as much land as the US with about 1/2 the population, Russia may be in better position to expand their $2Tn economy  than China does of expanding their $3Tn yet you almost never hear a positive word mentioned about our former enemy in the US press.

That's why Putin may be a surprising choice to US readers but to the rest of the World, it is certainly not surprising that he beat out JK Rowling, David Patreus, Al Gore and even Hu Jintao in the magazine's international poll of editors.

Speaking of Hu, the Hang Seng mirrored the Dow's weak bounce yesterday, impressing no one with the "recovery," especially the Nikkei who came back from lunch in a very sour mood and dove 200 points in 150 minutes and were literally saved by the bell at 15,030.  The Japan drop was led by heavy selling of the energy sector, notably refiners as well as shipping companies as the economic forecasts for Japan look awful and the rest of Asia, although strong, do not look good enough to carry the weight.  Asian consumer discretionary outlook took a huge downturn as attendance at Hong Kong Disneyland fell close to 20% through September (and things are getting worse!). 

Europe was way downed but has fought back to flat ahead of the US open, still very scary on the heels of a $501.7Bn cash infusion this week.  One would think if the banks took on $501,700,000,000 that they intended to do something productive with it and our concern has to be that they really needed that money just to stay solvent and there still isn't any left to loan out.  "The enormity of the sum is an indication of just how stressed [commercial banks] were," said James Nixon, euro-zone economist with Société Générale in London. ECB policy makers aren't aiming their relief at any specific bank, but they worry that European banks still have undisclosed losses related to the subprime-mortgage problems in the U.S.   "This isn't solving the problem," he said. "It's just postponing it."


I mentioned yesterday how hard it is for Investors to resist the temptation to gamble but these are VERY uncertain times and, if you can't be in cash, then at least make sure you are very well hedged as we head into the holidays

MS lost ANOTHER $5.7Bn that they forgot to mention last time they told you their $4Bn write-down would be more than adequate.  With Monday's CNBC poll showing us that 87% of US homeowners do not believe their homes will lose value next year – how realistic do we really believe 100% of the financial industry's outlook to be for next year.   With $15Tn in mortgage debt outstanding, it wouldn't take much of a drop in the housing market to make this year's round of write-downs look like the first act of a very long play.

Meanwhile our broke-ass government looks like they may pass a $555Bn spending package that includes an unfunded $50Bn annual cut of the AMT but does not yet address Bush's requested $190Bn of additional military funding as they house bill gives the President "just" $47Bn to tide him over the holidays while the Senate was more willing to compromise by offering $70Bn.  Word is the Prez will take the House cut and that will be bad for defense contractors so we'll keep an eye on that sector.

Also heading to the President's desk is the revised energy bill, which raises mileage requirements to 35 mpg but over a very long time and, more importantly, raises the use of ethanol to 36Bn gallons a year by 2022, which will be a big hit with farmers and a big hit on your food budget.  If you want a really quick take on how stupid this is – 36Bn gallons of fuel is 45 days worth of fuel at our current consumption rate. 

Using food to run our cars will drive up food costs perhaps 30% over the current record prices while simply raising mileage requirements by 25%, to 25 mpg of all new cars by 2010 would IMMEDIATELY save us 5% (15Bn gallons) of gasoline in the first year those cars are on the road and will save us over 20% of our current fuel consumption by the 5th year, when the majority of the fleet rolls over.  That's 60Bn gallons saved by 2015 under the Davis plan with no disruption of the global food market.  Sure there's the disadvantage of having a few less agribucks to pay for the election but ACTUALLY DOING SOMETHING THAT HELPS might be a nice idea once in a while.

As to the markets, they're in our range – what else is there to say.  We get to play cat and mouse with our callers this week and get ourselves into position to maximize the gains from our January callers, who are paying us full price for just 17 trading days and that includes Christmas Eve and New Years day – not usually big market movers.

Hopefully we'll get another silly oil run around inventories to short into.  They closed the shipping channel again and they roll the contract to February today so the gain you see in oil needs to be taken with a grain of salt and those are the new plays I am most likely to make.

Have fun out there!

- Phil


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  1. Goldman Sachs Key Oil Services Research Changes (WFT, DO, SLB, BHI, DRC, BJS, DO)

    Goldman Sachs is rolling its primary coverage responsibilities for oil services stocks to Charles Minervino from Arjun Murti and Daniel Boyd. Murti is remaining the lead Oils analyst at Goldman Sachs; and Boyd will continue to co-cover the services sector and will maintain the lead coverage of drillers and OSV’s. Below are some key coverage changes:

    * Weatherford (WFT) is being ADDED to the CONVICTION BUY LIST.
    * Schlumberger (SLB) raised to Buy from Neutral, $106 price target remains.
    * Dresser Rand (DRC) raised to Neutral from Sell, target raised from $35 to $40.
    * BJ Services (BJS) downgraded to Sell from Neutral, target cut from $26 down to $23.
    * Baker Hughes (BHI) downgraded to Neutral from Buy, target cut from $96 to $90.
    * Diamond Offshore (DO) REMOVED from the CONVICTION BUY LIST but maintained Buy with slight estimate decrease.

  2. If you can own one stock…buy AAPL — This article says it all my friends :)

  3. Good morning,

    Phil 87% of US homeowners do not believe their home will lose value??? WOW, all I can say is WOW. Now wonder consumer keeps spending, albeit at a slightly slower pace. The market will get hit real hard sometime next year, when that 87% drops down to 70, 60, 50 sometime around the election time LOL WOW.

  4. Putin as Time Person of the Year ?

    TIME is such an irrelevant joke of a publication.

    Phil, you would have my vote….

  5. Phil, Xian and I want to say thanks for writing that Investing vs. gambling article for us. It is flattering to be the object of your disaffection. =)

  6. I am shocked, I was sure that article was about me.

  7. Game time.

  8. JBL and RIMM report tomorrow, should see some fun action in these to guys the next few days (as far as you day traders are concerned)…

  9. Good morning, everyone.


    Where is the K1 tab? I see the “K1 Project” tab but that only has articles. Am I missing something?

  10. BSC & GS act like it’s up time?

  11. Tos add to Jayhawk note
    Transocean (NYSE:RIG): BofA reits Buy and $175 tgt
    - Banc of America is out with a good call saying they see incremental demand for deepwater rigs from exploration success driving additional backlog and ultimately multiple expansion from the higher visibility. Among the names, the firm reits Buy on Transocean (NYSE:RIG) with a $175 tgt.–from Noteablecalls
    Also NBL is almost ATH, could be a trigger at $78.25

  12. What makes me nervous about Phil’s 162 price target is that that would make my reentry into AAPL stock at the halfway point of the correction, WHICH IS WHERE I ALWAYS REENTER.

  13. Off topic, Britney Spear’s sister is pregnant… ( lol

  14. AAPL- ok, they want to shake the tree again-

    the “taffy” data comes out soon and that can move us- most likely

  15. Gambling money getting ready to be raked off the table by the market!!!
    Bye-bye to the buy-buys!!! :(

  16. AAPL @ 162- that scares me- very big time- i hope that’s after DEC expiry

  17. etraders
    don’t forget that today’s trades are free
    make the best of it!

  18. JK – You nailed it, I meant to read to all the articles so you get up to speed with the community.

    SPY is ticking down.

  19. PHIL or anyone,
    Have long TT 40 leap(’10) against Dec 40. The IR buyout screwed me. What do I do not. Close the spread?

  20. Windy – thanks for the remind. Time to cash out and switch?

  21. definately!
    i signed up with tos
    re-naming etrade pos after i leave for all the trouble i’ve had with them

  22. I got this:

    Dear Valued E*TRADE Canada Customer,

    Thank you for making E*TRADE Canada your choice for your trading and investing needs. We appreciate your business and
    continued loyalty.

    $100 Commission Credit* -
    It’s Our Way of Saying Thank You!

    In recognition of your commitment to E*TRADE Canada, we’re pleased to offer you a $100 commission credit* to be used towards 10 free trades. To help you take advantage of this offer, we’ll automatically deposit $100 directly into your E*TRADE Canada account on Tuesday, December 18, 2007.

    We hope this offer gives you a convenient chance to evaluate your investments, balance your taxable gains or losses, or capitalize on trading opportunities should you choose prior to year end.

    At E*TRADE Canada, nothing is more important to us than our customers. We thank you for your continued business and, on behalf of all of us, I wish you and your family a memorable holiday and best wishes for the new year.

  23. DM,

    Got it, thanks.

  24. Phil,
    When and how do you suggest closing the “Normal” LTP position – is it when your last caller is 1 month behind you? e.g. If you had an LTP position with the long being Jan 08, would you close it now? Or would you just buy the Dec caller out and stay naked if you still had bullish outlook on the underlying stock?

  25. The white house is on fire!

  26. Phil – look in the crystal ball and tell us who wins this opening battle!!! I hear the roar but can’t tell if it’s the bear or the crowd – but I feel like the man running in front of the grizzly in the pic you post occassionally!!

  27. fire in DC gov’t building- i hope this isn’t something malicious

    the smaoke looks bad.

  28. YES My fellow Canadians have striked back! After all these years, never thought we could do it 2 for 2!

    Very interesting market movement.

  29. Phil-That’s not a rhetorical on fire is it? It’s actually on fire?!

  30. what took the fire trucks so long?

  31. 1/2 out of TTWO with 100%+, I’m going to let the houses money ride to see where the short squeeze takes me.

    TTWO will be a great play for March, thats when GTA-4 will drop.

  32. ROFL – It’s Chenney burning the evidence!

  33. I immediately thought Cheney’s office--why is it not surprising?

  34. Wow, the markets rally on a fire. This is a very memorable time for our markets! We’ll probably sell off when the fire trucks get there and they start putting the fire out so look for puts!

  35. Cheney has an alabi!

  36. Funny – the White House Executive Offices are on fire and the market starts moving up!

  37. Its the Eisenhower executive office building on fire.

  38. MA’s graph is unreal

  39. ICE- acting well

  40. NG – Nova gold coming back from the dead!

  41. AAPL-Why are the Jan 200′s down big with stock up?

  42. Phil C Jan 09 32.50′s bought at 4.10.
    Sold C Jan 08 32.50′s for 1.17

    seems like an attractive play on C, no ?

  43. oh I think NYX hit a bottom yesterday, I forgot to mentioned that.

  44. AAPL- staying green

  45. SOLF

    Taking my gain on the Jan 22.50 Calls I sold for $2.70, now $1.90. Will re-enter on a dip.

  46. Phil,

    I have 100 shares of UNH stock. I sold 1 Dec 55 for .94 which is now 2.50. the premium is gone and it’s now ITM. Should I roll to Jan 55 for 3.25 ($1 premium) or leave it uncovered and let the stock run?


  47. Opt, just noticed that. Can’t believe that. Ominous???

  48. There was some healthy buying at the ask this morning on the Dec 185′s.

  49. See, I told you guys we’d fall when they started putting the fire out!

  50. I have no idea what is going on with the Jan 200′s. Pretty frustrating as I have a spread where I am long those and short the Dec 185′s and I am down on both sides this morning.

  51. SLM is being positively torpedoed, down 15% in a hurry.

  52. Film – sadly you are not the only crazy gambler here!

    K1 tab should have it all, I’ll check with Jared.

    Getting a nice early move today but no real conviction from XLFs just yet.

    AAPL – that $162 is the lowest I would imagine a quick spike down and I can’t see how they could even do that other than a holiday when no one is looking. It will be a move looking to flush out stops prior to some serious buying but if you see any kind of viscious down spike that finds aggressive buying at the bottom, that will probably be it.

    COH at 52 week low!
    SLM making new lows.
    AMD demonstrating the Moores Law of a failing company’s stock price.

    Homebuilders leading this rally so you know it’s being driven by idiots…

    Fed auction went out at 4.65%, just .1% below the regular discount rate on $20Bn with 3x open interest to availability so banks want $40Bn more money but not badly enough to pay the discount rate.

    HOV was perfect from the standpoint of killing our $7.50 callers, keep a tight stop on them but I think we may get them right on the mark by Friday.

  53. Unreal movement, christmas rally!

  54. There must be some massive selling for vacation going on. Or one person with a lot of options wants out. Look at the whole chain is down HUGELY. Dec’s and Jan’s.

  55. AAPL- is the object of affection right now- y do i think this may change- abruptly?

    has “taffy” news come out? markets look enthused, but we r/were oversoldish.

  56. ISRG looking interesting again to me… THINK it’s fundie worth ~ 400, but may need some correction still… will keep on watchlist again. They report 1/31, but I need more confirmation on the technicals before I’m in.

  57. This is why I keep stressing be careful right now guys. There’s very little support/resistance. Have tight stops!

  58. Phil, is that you again?

    What is scary is that when he starts the hedgefund, it will be him.

  59. yes PSW, there is a santa claus rally

  60. Hi Phil .. Strategies for AAPL Call Spread 180 Jan/Appr .. guess wait for jan prime deflate a while but how deep in the money will we let our callers be ??? or it’s just a matter 7-10 days before exp we have to worry about ??

  61. It was funny hearing people on TV bitch and moan about GS. In the end, it’s about going with the flow and who makes the money, who by the way is…..GS.

    BTW, I got the book ‘High Probability Trading’ for my bday yesterday…already read half of it, pretty good read so far for any of you interested in such things.

  62. Okay, ladies. Here is a fabulous GS trader, flush with year-end bonus, crying out for some lovin’.

  63. Santa my ass! He’s probably hung over and accidently kept his sleigh in the lines. Trust me, the homebuilders leading this rally will most definately end up putting Santa in a ditch looking for a ride home!

  64. xian, I know phil is right about the possibility, but he is saying spike down. The kind where your portfolio turns to ass at the open and is unchanged at the EOD.

  65. Optrader – assume you’re riding AMZN. I jumped in on the dip this a.m. to test your 5 ma trade. Gambling money! :)

  66. XMSR moving, could use another buck out of them.

  67. yogi, seems fake to me. Sounds like something DM would write.

  68. film- true, i got that same idea- phil meant a move to 162 would b a panicky trantrum down- it would have to b

    i so want to see that happen next week (maybe we get 170ish?) – but not before monday’s open!

  69. Yogi, FILM…very large LOL.

  70. AMZN-Yes, that’s a nice move. Makes up for the loss in AAPL’s spread this morning (which I still can’t explain). Phil, any idea why the Jan’s are down so much? I almost want to buy a bunch here, as we still have Macworld and I am surprised IV would drop that much.

  71. I’m going to say 13,300 and 13,275 here in case I forget later but it’s getting dull to keep pointing out that it’s not a rally if we can’t beat those.

    TT – not much you can do when that happens other than roll your caller to the ’10 $45 leap at $3.80 so you will likely collect a $5 spread when the deal finalizes after paying him just $1.80 of the $5.60 you currently owe him. You could take a chance and roll yourself to Jan $40s and sell him the Jan $45s for $1.40 and pick up $1 per month rolling that forward until the deal closes but if you can walk away from this one near even, that would be far less trouble.

    Closing the LTP – I close them when I sour on the long-term outlook otherwise we generally roll back a year each July and keep going. Tecnially, less than a 4 month spread shouldn’t even be in the LTP.

    DD at 52 week low?

    Crystal Ball – I see pain on both sides. I see my cash getting more valuable as the dollar makes a small comeback (becuase Europe just killed their own currency, not because we did something right), I see stocks being pushed around on low-volume days in ways that will make you sick 7 times in the next 20 sessions, I see myself watching from the sidelines…

    TTWO – textbook flush yesterday, good job staying in Khan!

  72. FCL looks LT technically / fundie interesting… don’t know much about it though, just sayin’.

  73. CAKE
    PHIL, should we be tying in some profits or just let it run its course? They were down this morning by .90 Thanks Henk

  74. Crap, I’ve been discovered. *changes digital identity*…

    Though that bonus seems unusually small for a sachs trader. I guess in his words, his life would be ‘less meaningful’ than the other million sachs traders clearing a mill in bonus.

  75. LDK must be on drugs with these option prices!

    Jan/Dec $70 put and call spread nets out at $10 and that’s an XXX out of principle!

    Oil inventories in 8 mins.

  76. I still like FCSX too.

  77. What happened to CAKE?

  78. Mark / FCL – looks like a short on the daily from my point of view. I wonder if it’ll break 50.

  79. Go CCJ! Finally…

  80. dday – “High Probability Trading” is the last book I read, also thought it was very good. I need to read it again to remind myself of what I need to try and improve on.

    I just ordered: Blacklisted by History: The Untold Story of Senator Joe McCarthy and His Fight Against America’s Enemies. Looking forward to reading it, especially after Time magazine’s disconcerting choice of Putin for man of the year.

  81. XMSR

    For anyone interested, I called Investor Relations and they indicated that for every XMSR contract you will end up with 4.6 SIRI contracts at a pro rata price. Keep this in mind if you plan to do any transactions given the low price of the stock you will end up paying a whopper of a commission if you need to close the position. Using a rounded number of 5 vs 4.6, if you did a butterfly for 10 contracts (40 in total) you’d end up with 200 contracts. So rather than a $30 commission @ .75 per contract you’d pay $150. It still may make sense but just thought you’d want to know. Caveat: The guy on the phone was “pretty sure” how this works. I think he thought I was some kind of crackpot.

  82. CAKE – just another flush this morning. I said the other day you will see this constantly as fundies will do whatever it takes to make a buck. We took off the caller and went naked because I felt they were way undevalued and there is no news to this move so let’s enjoy it for now.

  83. DM – like I said, LT interesting. I like leaps on this guy. But can’t speak much for the coal industry. Others on here are much more in-tune with it…

    BBD? Your two cents?

  84. SU- touching $105 for the second time. Inventories in 2 mins

  85. yogi – Awesome find, nice for some morning lols

  86. Phil, I miss your live oil inventory reports on MN1.

  87. CAKE – actually I will take $1.50+ for 10 Jan $25s as it would be greedy not to so set a tight stop on the sell around there. XXX

  88. Greg – Let me know how that book is…I love to read.

    XMSR – patience increases wealth. Check out those 15 putters now.

  89. Energy Report

    Crude -7.6 MM
    Mogas +3.0 MM
    Distillates -2.1 MM

    Crazy numbers, they should rally on this.

  90. why is he talking just when oil inventories are due to come out? very suspicious.

  91. GOOG wants to try a run back up to 684 to check resistance, I think.

  92. GRMN-Fully loaded on puts at $97.5, with stop at $98.

  93. bush speaks the market sells- or is that just me.

    man, he is such a tool

  94. I like HOLX fundie and technically speaking.

  95. I think I must stress that in my opinion the oil numbers are telling me two things. One, oil inventories are absolute crap because of the shipping channel being closed, etc. Two, gas inventories have climbed yet again telling me that demand is in fact down for the drivers of the world. Keep that in mind!

  96. Crude inventories down 7.6MB. Gasoline built 3.6Mb. Distillates down 2.1Mb – generally bullish but the ship channel was closed blocking imports so it’s a load of BS and that build in gasoline (3 weeks in a row) has got to be freaking out the refiners.

    Very bad that the energy patch is rising on this but the market is still laying around. If we can’t break 13,300 with this boost it’s very doubtful we’ll find anything else this week to do it.

  97. CAKE?!?!?! what in the… I just had a long-term gtc order on a dd portion sell that I thought was dead? Huge jump 8% stock and 100% in option.

  98. Still can’t get over the fact that someone bought SPY at 144. How smart is that!

  99. Q’s are not participating in this little rally at all. Nasdaq and tech still under big pressure.

  100. yogi

    That listing is too funny. What are you doing reviewing the CL postings anyway…just for laughs?

  101. CAKE – sorry missed your posts above as I was out & it traded electronically. If you get 1.5 I sold way too soon – again. Went for $1 & thought that was high.

  102. Someone must have heard me and lit a fire under the Q’s…

  103. FMD Alert …. very close.

  104. DM:

    Sorry man (and anyone on this blog who might be one), but analysts can suck it Trabek. They most of the time have no idea what they’re talking about. It’s not that their analysis is incorrect, maybe they’re spot on. But I’ve found my own fundie and technical analysis is more reliable than theirs most of the time. Basically, I don’t trade on anyone elses analysis, only mine. That way I find how I’m falable / can improve, rather than blaming it on someone else.

  105. MA- any thoughts? entry looks nice here near 20-DMA

  106. CAKE – maybe my autotrade wasn’t that bad $1 is day high (so far) for cfqae and it’s almost 1/2 price now!! Man I wish I could do this all the time – like Phil. It’s fun watching premium disappear – when it’s not mine!

  107. I got that CL posting off Trader Monthly’s free daily webzine:

  108. xian – I liked it yesterday. Options are probably expensive as hell now, wait till near close to see if it’s over 205… If not, might be problems.

  109. See this auto safety thing is being used to excuse not making cars more fuel efficient. If you mandate maximum weights on cars then you solve that problem but as long as one guys got a hummer and your Prius has to protect you from a head-on with a tank, it simply perpetuates an arms race of bigger and tougher SUVs as long as you let safety standards trump fuel efficiency. When they say, but 300 less people died in collisions you need to compare that to how many people die in Iraq fighting about oil (or whatever it is we’re there for).

    There are CLEARLY vehicles that disporpotionately kill other people (see page 8) and there are ways to make them safer. Since they already are grossly overweight, wouldn’t it make more sense to make those 10M mostly pickup trucks safer to other cars than layering armor plating on 200M cars in case they come in contact with one of these monsters in a collision?

    C – Yes on the ’09s, you can probably do better on the Jans so scale in.

    UNH – you have nothing to lose by waiting, he’s giving you $2.50 in free insurance and will lose money faster than the Jans on the downside. UNH is known to make all sorts of interesting moves near options expiration (and, not surprisingly, it’s a long-time favorite of “Dr. UNH.”). I stopped playing UNH because they were too annoying and the front-month premiums got low but those $55s have spiked down to $1.60 yesterday and $1.75 on the morning of the 14th so perhaps put in a GTC offer at $1.80 and see if you luck out. Once you are naked, just be ready to sell Jans (hopefully on a bounce).

  110. in the last quarter, GS bought back shares at an average price of 217

    CNBC- pushing tech/internet- big focus on GOOG/AAPL

  111. Phil,

    I would appreciate it if you could explain how can I determine that my long option is gaining value faster than my short one and vice versa. I studied greeks last night but I’m still not clear on it. Delta alone doesn’t seem to answer that question.

    Thank you very much.

  112. How far does the aapl fall this time? Entry point of suckers buy?

  113. MrN- AAPL, i’d get very nervous around 178ish as that is yesterdays low that filled a sweet gap up from 12/5

  114. xian – I’m not in aapl, but wanting an entry. You say 178 is not one eh?

  115. Mark – Yah I bet there’s a lot of analysts that are paid off to say one thing or the other… Or they’re just stupid.

    I linked to the Reuters material so you see the fundamentals of the company. Balance sheet, ratios, etc… They’re all neatly done against other sector’s / industries.. So you don’t have to do it… But I guess your fundie already has that stuff calculated lol… I didn’t realize, i’m sorry.

  116. With GS up quite alot, is there a play for BSC??

  117. cake – rise again?!?!

  118. CNBC- mark is a great anchor- he’s not a huge insight guy, but he makes the news flow so easily.

  119. BTU puts?

  120. MEE another interesting name technically. broke downtrend, then broke resistance at 34… could go to 40-45 range me thinks LT

  121. MrN- AAPL, i think 178 is a buy if it tests and rallies up- or pierces it violently and then back up.

    so i think it’s a support/resistance point for AAPL-

  122. Fuel Efficiency : Wouldn’t it make sense to seek safety as opposed to fuel efficiency in cars? Assuming everyone is driving fuel efficient cars, and say you are in a accident, wouldn’t safety matter? What better way to protect yourself than in a sturdy SUV…in this case I may be nice to the environment but not at the expense of my safety would be the argument. Just being meanie devil’s advocate. :-)

  123. Ramana-Who cares if our gas tanks blow up so long as it’s being done efficinetly! LOL!

  124. car safety- what about this mini cars that r coming out? – u know, like the tiny euro cars.

    those things will b pureed by a hummer.

  125. DM – no worries! My spreadsheet gathers the data from Bloomberg, so it’s something that needs a second look no matter what. Some data is based off of “Avg Analyst Growth Expectations” which could be shit for all I know. Def need to do some analysis before I pick any of these. Just based off of inital quick and dirty analysis, fundies look solid and techincally I like how it has a nice bowl shape from Apr ’06 and broke thru it’s double top resistance of 45…

  126. RIMM, GOOG, AAPL, AMZN – all at resistance and appear to be held or turning back down on 15 mon 2 week charts. QQQQs to follow IMO

  127. XOM is not holding up after inventory report, and not breaking 13,275, wondering if we aren’t headed lower…

  128. Did you know that for every death “saved” by safer cars, one extra pedestrian has died from people driving more recklessly because they feel safer. That is why you always see middle-aged women in volvo wagons cruise through red lights.

  129. Phil / Auto – Don’t you think the extra weight in your Mercedes gives you better winter driving?

  130. Oh and DM with the comeback! That could be a burn DM! We’ll have to wait for Phil’s rebutle…

  131. AAPL- i think the buyers r taking an early lunch and will come back in the 2nd half

  132. LDK

    Keep in mind earnings are tonight.

  133. DM – salty LOL

  134. AAPL- careful, this came from GOOG finance board

    It is simple actually but since I keep seeing the question I thought i
    would give you the correct answer.

    The theory that Major Market Players are buying the shares Long and
    then Puts to match, only to dump the shares and spike the value of
    their puts to then sell as well could be happening made possible
    simply because volume is really light and there are many people
    closing out gains for the year so the buyer shortage makes for little
    risk of being burned long, but there is also a lack of news around
    Apple and Macworld being a few weeks away. At the end of the year you
    also get an increase of tax related selling. People take losses in
    companies and then sell winner stocks in amounts equal to offset those
    gains. This does not mean a total sell off, but it does allow some
    cash to be freed up with no tax implications.

    Next, there is often some selling in order to free up cash for holiday
    spending. Again, not a large amount, but this with the above factors
    in the absence of buyers is often enough to pressure a stock down.
    Even a good stock.
    By the very end of the year, and beginning of January money will start
    going back to work. It may take a bit longer this year as many still
    sit on the sidelines until the economy gets more direction.

    Overall, unless there is a reason for buyers to come out in force, the
    volume will allow for the slightest downward pressures to overly state
    a direction that really has no fundamental relation to the stock. This
    will abate as all these factors go out with 2007. In the meantime you
    can use these dips to add and prepare for what will be a great 2008 in

  135. We need a “Hummer Only Lane” with a 20 MPH speed limit, that is, the Breakdown Lane. That would cut down on those traffic fatalities.

  136. Still riding some NFLX jan’s – all greed from here on?

  137. lol it’s like prime time haha.

    windywheel – I keep watching the markets but I’m doing nothing, I don’t really know why the market is moving the way it’s doing, it’s in a up channel though. I might buy some calls for fun at the 145.7ish level.

  138. Good point, Flam. Look at the Europeans:

    Sure, we let our 16 year olds drive around and they don’t, but primarily they actually pay attention to the road.

    DM – Put sandbags in your trunk.

  139. xian – that’s a good article. We need more of that! it explains stuff.

  140. ISRG is a buy on the dips play, almost a retirement-worthy stock except for the possibility that someone will come out with a better machine (doubtful) but the fact of the system is that it will dominate health care next decade. How they are managing growth will be intesting and is keeping me in a mild position pre-earnings.

    I got out of Apple last week Film! I don’t know but $192 seemed toppy at the time, silly me…

    AAPL Apr/Jan – no, I “worry” about any spread that goes off target (see yesterday’s post re. investing) but I can’t imagine what you expect me to say about a $180 spread with the stock at $183???

    GS – I think the attacks on them were an attempt at a pre-earnings take-down and it looks to me like someone is working hard to pin them to $200 through expiration. I have some GS and I’m going to chance them naked after this caller expires. If I have to give my money to one of these bozos – I can’t even see a distant second.

    AAPL Jans dropping due to low demand. Simply less people willing to bet Apple will break $200 (and I was saying last week how ridiculous those premiums were anyway). Sometimes an out of the money call will hold it’s value for 1 day on a drop as the drop only serves to back up the volatility of the stock but, by day 2 down $7, the enthusiasm for a comeback quickly drains out. This is why I was calling for Apple spreads in the afternoon yesterday, the rally monkeys on this stock are both quick and crazy to get in on any bounce.

    That $200 contract is lower now, at $183, than it was yesterday at $178 – it’s not all about statistics, a lot of the option pricing is based on sentiment. At $4 I almost like these things ahead of MacWorld but my logic is I then look at the $195s, which are just $1.33 more and that’s a no brainer for $5 better position and I look at the $190s for $1.69 more and that’s worth it too for $5 closer to the money and then I look at the $185s, which are another $2.18 but I can offset that final roll by selling the Dec $185s for $1.50 so that would be my play of the moment, looking to expire my caller worthless and hoping for a move to perhaps $13 between now and MacWorld, which would be a net profit of $5.25 on my $7.25 spread. This is not really a hedged play, I’m just using the $185 caller to cover some of my cost but it’s a gamble that this ($9.25 for the Jan $190s) is cheap given the cookoo sentiment of the Apple faithful heading into MacWorld.

    CAKE – too greedy. Time to cover with 10 (1/2) Dec $22.50s at $1.25 which we’ll roll on Friday but downside protection would be nice here. XXX

  141. AAPL — good call on the options pricing … definitely gave the heads up for a move down.

    I traded Jan 85′s yesterday. Down $1.50 today from where they were yesterday at this stock price.

    No FMD obviously.

  142. dm
    not entering any new positions, but need to roll/close goog dec 660 callers and aapl 180 callers before the end of tomorrow, as i won’t be around on X day. things looking better for me right now in terms of direction (down).

  143. Q’s in freefall…

  144. AAPL- the support line i see for it’s current downward channel (started after fed cut) is 179.50ish

    i think we must go there- it calls us, so we do it’s bidding (yeah, punnery)

  145. Santa isn’t in the ditch yet but he’s certainly wandered to the rumble strips, probably taking out a few hybrids in the process…

  146. AAPL pricing-Thanks, Phil.

  147. rockain’tdeadyet – What if you’re front wheel drive in your prius? Sandbags would promote understeer.

    Kinda funny about that “wheel” bit in FWD… It’s cause there’s no limited slip differential in most light, fuel efficient cars…. So the wheel with the least amount of traction in the front, spins. Incredibly dangerous.

  148. NFLX – yep that’s enough; all out!

  149. rockain’tdeadyetbutitswheezing, notice all the countries over 120 on that chart are where people are most likely to be driving drunk

  150. FYI, Apple January earnings are on the 21st, which is a Monday AFTER options expiration. Optrader, perhaps that’s why January calls lost some value?

  151. film
    you make me laugh often. thanks for that.

  152. SIRI – Phil have Jan 09′s naked now at profit. Cover or sell, jan’s only offer 2.5 & 4?

  153. stunned- m caruso cabrera just made a good point: china just bought into MS with it’s strong cash position over the US, when japan had the same position it bought pebble beach!

  154. drinking doesn’t get in the way of my driving!

    I don’t have any food in my fridge, it looks like I have to go shop for breakfast.
    I bid you adieu.

  155. XMSR – anyone with a commissions deal like Fred outlined needs to get a new broker asap! How can you possibly make any money paying $150 for any sort of transaction? That would cost me about $1M a year – I can open my own brokerage for that kind of money! Even if you are a very small trader, OptionHouse is $10 flat per trade and you can get close to that from many brokerages if you negotiate. Now is a very good time to negotiate as the brokers need to make year-end numbers and would love to get/hate to lose your business, no matter how small.

    As to the split, I never try to guess what strangeness will come from a merger but, as a rule, I like to buy the cheaper partners contracts, like the SIRI Jan ’09 $5s for .57 – just for fun.

    Oil collapsing already. Same as usual, SU Mar $100 puts at $5.30, XOM Jan $90 puts at $2.20 XXX

  156. SUV’s arent safe there have been a lot of rollovers which killed several people. Anyone who lets teenagers drive them needs to have their head examined.

  157. naked put play (or spread play).

    MER Dec 50 puts for 40 cents. Expire on Friday.

  158. DM-If you see Santa in the ditch, could you help him out and see if we can’t get him back on track like yesterday afternoon?

  159. AAPL- is an object of disaffection now

  160. S&P Ambac MBIA news … should not move the markets.
    No downgrade. Negative outlook.
    Moodys already acted last week on these. Affirmed Ambac, negative on MBIA.
    S&P just slow ….

  161. Morning all,
    There is a very nice spread on WM jan/ july 15 calls. I just payed 1.60, but you may be able to do even better.

  162. Richard in Houston, you around? Haven’t heard from you in a while…

  163. CCJ-I am in with calls. Good luck to us, Juliet!

  164. Phil – I have 10 SHLD JUN 120 @ 12.61 (now 9.20)long and 10 JAN 08 120 @ 3.59 (now .90) short. There are several ways this can be adjusted but I’m not sure which alternative is the best. Can you please clarify?

  165. Anyone have a price target in mind for GOOG come Jan expiration?

  166. Yev, yes I understand that, but we still have Macworld in that time frame. But what Phil said makes sense. These might be a little bit too much out of the money and there is just no demand for them right now. Could change fast though if stock goes back to $190 (which is only 5% higher from here).

  167. Live oil report. Zman talked to me about doing a webcast together but we both got too busy to follow up. It was fun to do though but I also like not being distracted by being on radio during one of the most profitable trades of the week.

    Damn, missed another cheap crack at those BTU $60 puts.

    MA – that EU fee thing is still dogging them but if they keep holding $200 they make a nice pick-up.

    Jasmine – ask me on the weekend about that but a lot of it is experience with a ton of factors. It’s like asking a doctor “how do you know it’s bronchitis and not just a cough” there’s a lot of things that go into a diagnosis and all the textbooks in the world don’t make up for experience.

    SLM getting interesting down here. The CEO ended the conference call saying “Let’s get the f*ck out of here!” It reminds me of the Hudsucker Proxy, where the board tried to tank the price of the company by appointing a totally incompetent CEO.

  168. 87% of Americans don’t think there home is going to lose value next year?!?! At first I read that as ’87% of American’s homes will lose value next year,’ which is much closer to the truth ($5 bet with anyone that is minimally the actual number).

    It’s hard to believe there are that many people in this country that are really that stupid. Sometimes it really does surprise me.

  169. dr replies: b/c i can’t push these drugs on u for having a cough

  170. Hey guys how about Oracle Mar08 $22.5 for just a $1 ? earnings tonight !
    Stock down a lot today.

  171. ABK and MBI downgraded to junk! I can’t even begin to outline the repercussions of that move…

    Rolling AIG callers to Jan now – all financials must be covered. Cash is very important here as I’m not quite sure the financial markets can even function if theis kind of thing spreads and it sure isn’t worth risking.

    XLE $29 puts at .41 are an XXX

  172. Yev – by the time 13% of homeowners think their house will increase in value the following year – that’s when I buy!

  173. rahul – GOOG Jan expire = 675 :D

    such a silly thing to state, but they report 01/31, so I don’t expect it to be more volatile until after expiration and the bets start coming in for Feb and March.

    Also it’s doing its clasic “lower highs, higher lows” tightening like in the past (01/06 – 09/06, 01/07-05/07). Maybe it won’t spike up again depending on the report obviously, but… strangle!

  174. CAKE coming on strong again

  175. CAKE- try their vanilla bean cheesecake- it’s awesome- and i only like plain cheesecake with some fruit/chocolate on the side

  176. Phil MBI Jan 35 Put trading at 10.80 Stock at 24.90 Cost do you think this is worth a play if the stock tanks (more than it already has) off of today’s news-

  177. Mark – I’m around. But I’ve been busy of late trying to turn my sour apple juice into a potent apple cider. Rolling and rolling. Stirring and stirring.

    Double, double toil and trouble
    Fire burn, and caldron bubble

  178. a viable kass short idea: shorting canadian banks b/c they r still in the queue for confessing their sins

    he is shorting CM, BMO and TD

  179. XLE $29 puts for .41? I’ve got XLE at 76?
    XLE $29 puts at .41 are an XXX

  180. yeah, yeah, yeah. The corrections on my beloved are always more than they appear. I can’t believe people actually thought earnings were going to be before Jan expiration. That blows for me.

    I still believe that those Jan 200s will touch $20 before it is all said and done. But, the IV suck today is painful.

    Here is my thesis/problem: I think there is going to be a huge sell-off in January/February around the world as the world’s margin call goes out. The best thing for the large sellers of stocks, is a low-volume climb to give the illusion that things are fine and to have high prices to sell down.

    As for AAPL, I see a return to 195 in December. I think in Phil’s head he sees a repeat of last Dec which was a slow trickle culminating in a V-bottom. I see Dec 2005. Strong buying in AAPL in spite of pronounced weakness in the Q’s. That gets us to January and a slate of good news and a major strategy shift by AAPL into the home.

    Just because earnings aren’t before January expiration, doesn’t mean the stock won’t be moving higher in anticipation of great earnings. The options just won’t have the added IV from earnings. I think today is a clearing out day. I am not bailing on my Jan200′s yet. Mostly because they are troughing a bit on this devaluing.

    I just don’t see any way for AAPL to not have a larger move over 200 in January, not because it is 200, but because why bring it up to 192 in October, November, and December and not make a larger move to benefit the big boys who have brought it up this high. I cannot stress enough that the crux of my argument is that January expiration is the only thing that matters. All these machinations are just a setup for that. AAPL has been doing exactly what I thought it would (except the severity of the pullbacks which always surprise me) all year. I will be wrong eventually, but I can’t let anyone talk me out of my thesis. (How I trade that thesis is totally up for debate though.) I do agree with Phil that the 190′s do look good down here. At $7, definitely a safe triple when AAPL hits 205 on January 4th.

  181. biodieselchris – Those same 87% will probably point to their municipal assessments to show everyone that the value of their house didn’t go down! :-)

    (Talk about real trouble brewing!)

  182. Mark – GOOG target – I was thinking 700 – 710, at least a little bit of a run up before expiration and then a breakout after… which way we break I’m still undecided.

  183. Optrader, I ‘ve got Jan 95p GRMN also; would you pick up more Dec 95p for these last 2 days ;or sell them against the Jan(as some extra profit?)

  184. AMZN calls-1/3 off

  185. GRMN-I am just keeping my Jan’s naked for now.

  186. marathonman – I think Phil meant the XLF puts … XLF trading at ~29.14 currently.

  187. “The corrections on my beloved are always more than they appear.”

    I don’t know what that means either. I meant worse than I expect.

  188. My first post so be gentle – been reading last 3 months.

    Have a trade would like advice on:

    Long POT Mar 08 150 – 8.95
    Short POT Mar 08 160 – 6.45

    Trade plan – buy back caller at 3 then sell jan 140 and feb ??? after earnings.

    Comments? Ideas? Earnings about Jan 23 08

  189. SLM, STU and FMD – Not sure I understand the big drops as these are student loans whose interest is paid by the US government while the borrower is in school. What gives? Everyone worried that students won’t pay their student loans because they are knee deep in mortgage debt?

  190. I have say once again that we must consider the possibility of another black Monday soon, not to panic you guys but just so you consider it. Everyday something new comes along that is not exactly heartwearming. Today it was a 10BN writedown when we’re expecting 3.7BN and now ABI and MBK being downgraded to junk. Just so you guys know, liquidity isn’t just about being able to get mortgages. The guys at the stations of the stocks on the floor use liquidity to guarantee trades as do most of the traders in credit derivatives. If liquidity can’t be guaranteed, there is essentially no market and everyone begins panic selling. If we can make through the next Fed meeting with no blow up, I think we’ll be fine but until then, there’s no telling what may happen. As I speak, we’re rallying just like yesterday, which may mean we get back where we were but anyone who can’t afford to lose, papertrade right now and wait until the markets get a better handle on what is going on.

    This is less important for Film, Opt, and the guys that trade and watch all the time as markets will always bounce up and down but you guys with retirement savings really need to consider this stuff and hedge your portfolios!

  191. Rein – CEO of FNSR bought 100,000 shares at$1.43/share yesterday. A couple other management insiders also bought 10,000 each. I’m interested, based on your positive comments recently.

  192. YHOO – I see a blip on the heart monitor!

  193. Mercedes has a “Smart” car that is all over Europe. They are cool but I like the mini-coopers better. Mercedes absolutely much safer design as it’s almost a motorcycle wrapped in a steel cage but the Mini Convertible I’m considering buying.

    Winter Driving – that’s why you need a coordinated policy. To save $500Bn in gas you need to allocate $5Bn more to plowing and stuff, easy trade off but impossible to get the idiots that run our government to coordinate anything. Europe is great at that sort of thing, which is why they are kicking our asses.

    LDK – I still suck up $10 in premiums for a day’s work, the Jans can be sorted out.

    GE $10KP – let’s take out the $37.50 caller for .05. Also, if we get another run on XMSR we should take out the $15 putter.


    Same on GE
    Same on XMSR
    CAKE see above
    GOOG fine
    HMY – offering .05 for $10 caller, no takers
    LVS – I’m in the Mar $110s with the current $110s sold against as I’m only going to sell Jan anyway so may as well pick up the extra premium but if you have the $115 caller, then there’s no point in rolling them but still take the March roll, the money will come back on Friday.
    MSFT – offering .10 for $35 caller
    PFE – glad we held caller so far
    RIMM – prefect
    SHLD – taking out Dec $110s at .20 (you should be in Mar $105s) holding naked
    T – ROFL! You have to love pinning when you’re on this side of it!
    DIA – looking good, $131 caller still has too much premium
    TSO – Rolling Jan $50 puts to Feb $50 puts for $1.10, taking out $45 putter for .12 and will sell $50 puts for no less than $1 (now $1.10) as we’re only going to roll them anyway and may as well pick up the extra .50.

  194. OK.. close the jan/apr 180 spread (even got some money) and got some jan 190 @ 7 on the bottom

  195. Phil
    Any thoughts on the LDK spread with earnings coming up tonight @ 6pm EST ? The position looks protected between $67 and $81-ish with the sweet spot in the mid-70′s. Do you think it’s a little light on the downside protection with the stock at $69.50. We rolled the Dec70c up to Jan75c a couple days ago…would it make sense to roll the DEC50p out to a JAN50p to buy some time if it takes a strong dip?

  196. MS – Now there is a ROFL, watching them go up AFTER their report.

  197. who is playing LDK & how?

    RIMM – earnings AH or pre-mkt?

  198. Richard – I remember a discussion on the weekend about this site being like Crack. I figured you found a substitute for your addiction… ;)

  199. MO – There is a huge IV skew between the Dec/Jan 80 puts. The Dec 80 puts are DITM and still have ~.72 of extrinsic value with only 3 days remaining till expiration. You can pick up the Dec/Jan 80 put spread now for about .20 and should be able to close the entire spread on Friday for ~ 0.60 – 0.80. Took me a little while, but I was able to get filled at 0.20.

  200. dilbert – RIMM earnings after close tomorrow.

  201. Phil. Could we just watch GE’s closely and let the Dec caller expire worthless??? Or are you expecting a big run before Friday expiration that would push it over 37.50. Thx

  202. DELL – what’s up besides price?

  203. another note on RIMM: that’s why Friday will be so fun to watch for RIMM. tripple witching, and the last two option expirations there were MEGA contracts being day-traded on RIMM. Not for the faint of heart, but a while ago I pointed out that (pre-split) the 210′s were trading at their low of .40 with hundreds of contracts, and ended the day at $10 (4 hours later). If you can stomach it and have a good sense of the stock, you can make a big intra-day profit trading these options Friday. Note: past performance not indicative of future results. :D

  204. AAPL- i’m playing it with a JAN 185/190 call spread- legging in very slowly, i hope we get a spike down to 178ish- but not until next week

  205. Phil, did you roll LVS back down to the 110s yesterday? You used to have the Jan/Dec 110s. On Thursday you rolled them up:
    LVS – rolling Jan $110s to Mar $120s about even and paying $3.75 to roll $110 caller up to $115s. This is reflected in the last updated port:

  206. designcurve,
    That looks interesting, im in with you but there must be a reason for this — some event in the next two days?

  207. DO- Phil, what do you think about selling the Dec 130′s again(bought back Monday)

  208. Mark – g/f only wishes! :-)

  209. Phil,
    I think you mean XLF puts
    “XLE $29 puts at .41 are an XXX”

  210. Phil, I have a Mini Cooper S and I love it. It has been my favorite car by far. Had to wait 5 months after order it last year but well worth the wait. They are everywhere here in Scottsdale.

  211. Phil, SBUX just went below 20. Are you still a believer?

  212. Mini’s are cute cars, I guess we should get a European for president lol.

  213. SIRI – I’d cover with 1/2 the Mar $3s at .72 as you don’t really want to cover but you don’t want to get killed either and this, with .50 in premium, does a little of both.

    China isn’t going to fall for the same crap Japan fell for when they were rich. Chinese investors are mind-numbingly patient.

    Drinking and Driving – DM, you must visit Ohio, home of the drive-through liquor stores!

    SHLD/Joe – ideally if you can get to the same play as the $25KP it should help.

    87% – I linked to that poll in one of my morning posts this week – it’s stunning what people think on many levels.

    ORCL – $1 for Mar is not bad but there is so little premium in the current $20s you may as well just go for it at this price with maybe the Mar $20 put as a whole or partial cover.

    GOOG – Mark is wrong, $666 will be GOOG’s expire, but one thing is for sure – that stock will move either up or down $30 between now and earnings day. Since the Mar $520 puts are $6.05 and the Mar $550 puts are $9.50, I can expect a 50% upside on that move. The Mar $800s are $10.40 and the Mar $770s are $16.20 so that’s a 55% gain over there while the $30 losses in either direction are less on both ends so I’m going to take that spread for fun and sell into the excitement of a $20 spike in either direction, hopefully I can cash both ends out at a profit.

    MBI – no puts, it’s not a surprise, just another nail in the coffin that’s already half covered in dirt. Don’t forget these guys are down from $70 this year and this is the kind of thing that you can expect BX to bring some Yuan into as it’s a good way for China to circumvent Congressional objections as they take positions in US financials. The British did this to China for 200 years, after starting out as friendly buyers of exports they became the de facto rulers of the country through banks – unlike us, China learns from history and there is nothing in history that gives you an in better than a country that’s desperate because they can’t pay their war debts.

    Oh sorry, did I say XLE puts before – I dod mean XLF of course. It was only a .50 top and certainly not worth it now.

  214. still thinking about trades that don’t require thought-

    what about selling the put spreads on AAPL? i think i’m liking this. for instance, buying the JAN 150 and selling 155 puts for 0.60 credit.

    the 155/160 credits 0.80
    the 160/165 credits 1.00

    that’s $600, $800 & $1000 (respectively, 150.155, 155/160 & 160/165 of credit for every $5k one let’s sit (at risk of course) until JAN expiry.

    even the 145/150 spread credits $430 for $5k at risk.

    these trades boil down to the probability of AAPL settling below the higher strike, then one loses $1000 for every $1 AAPL stock goes under.

    if a trader finds these trades only 4 times a year, then they can make about 20% to %80 each year.

    people, please knock these ideas, i want criticism. i know phil has warned me, but the point i see being made is that the risk/reward is pitiful- yet the probablility of success seems to b very high.

  215. Rmarble – There are no pending events that I am aware of. MO had a nice run up over the past several weeks and now appears to be driven back towards the 75 strike.

  216. DM

    Answer to your question last night. Yes, I live on Hamilton mountain, just minutes from where you went to high school. I figured you might be at Western. My 21 year old is in second year Engineering at McMaster.


  217. MO- i think they have a heavily anticipated board meeting this JAN – they may give timeline/terms for break up the company into international & domestic

  218. Jomamma,

    I used to live in Tucson, I miss Arizona a lot (have we had this discussion already? I’m getting deja vu)

  219. LDK:

    Phil, I like your trade on LDK earnings but correct me if I’m wrong the FSLR and SOLF earnings both had gap up moves of 20%, more in FSLRs case, obviously that’s why were seeing addict-like option pricing, what would you think of spending a $1 on the Dec 90c/50p to protect yourself against the insane move, because that’s what solar has been of late insane.

  220. Khaann, az is especially nice this time of the year. Going to Kentucky today with my kids and wife and expect to freeze my ass off. Your blood really thins out here.

  221. Phil – I’ll take your Pepsi challenge. GOOG won’t expire at $666 b/c that would mark the beginning of the end in our superstitious market. Nostradamus made many a prophecy, but he was too smart to predict GOOG on expiration.


  222. MO – I should have clarified, there are no anticipated events between now and Friday’s expiration. Altria plans on announcing the exact timing of the split on Jan 30.

  223. Hey guys, someone here posted about a month or two ago a simple 1-2-3 guide to selling premium against LEAPS.. I know this is all over the K1 project, but that little guide was very nice, and I wish someone remembers what I’m talking about and can salvage this for me from the archives.



  224. I’m also a former Zonie (tempe for me) and I dearly miss it. I love the heat but more than that I love the consistency of the weather. If its 105 today it’ll probably be 105 tomorrow +- 2 degrees. Now I’m in SF and the temperature swings 15-25 degrees every day.

  225. Drive through liquor stores! LOL Now I can get my liquor quicker.

    Dec expire for GOOG is 666, Quad witching baby.

    Smart Chinese are smart, but I’m really scared of the Russians, their intelligence is insane.

    If it ever came down to American & Canada vs Russia & China… I would be very very scared.

  226. And I should clarify… when I say he was too smart, I mean we’re our of our minds even predicting anything on it. But I guess that’s what makes this so fun!

  227. Phil,

    ORCL – I did not understand what you said about it.

    Is it buy the stock and buy the Mar $20 Put as protection?

  228. Jomamma,

    LOL, I’m from miami, so moving to AZ exposed me to lower temps than I was used to. Living in tucson, it snowed once. it was been the sole time in my life I had seen snowfall

  229. russian- very good at math, yet i think the most famous equations all have the names of french people (poisson, lagrange, fourier, laplace, gauss, etc)

    this isn’t very noticeable

    don’t know about gauss, i think he was french

  230. xian, I am coming around to your selling spreads idea. With my price target, I could buy bull spreads or sell bear spreads. Even the 170/175 Jans pay about $2.50 either way. And there is no way we will be under 175 or even 185 at Jan expiry. I could just drop a wad of cash for a sure double. That is a definite thought.

  231. CELG – DD at 48 on my Apr40s. Seems way oversold, but glad I was fully covered.

  232. Stu – That’s awesome, Mac’s a good school… My buddy’s grand dad donates a lot to that school, ummm Michael DeGroote, i think that’s his name… 2nd year was the easiest for me at Western… This year (4th) is very interesting…. What type of eng is your son doing? Mech? Chem?

  233. SBUX
    – Jan ’09 20 3.30 all premium
    – Jan ’08 20 .85 all premium.

    That is 25% of your premium in one month. Any reason we aren’t diving into this?

  234. DM – That’s right, quad witching and $666… if that really does occur, half the traders in NY will be pulling out rosaries, Canadian Club, and Laughy Taffy. Baptizing the new month in whiskey and licorice what a lovely way… drowning sins in tooth decay.

  235. xian,

    What you describe is the way I make a living…75% very safe. The rest is daytrading and selling naked puts (occasional naked call) when I know I want to own the stock so I don’t take the downside protection which increases risk but improves premiums as well.

    It is very safe if you pick the right stocks and know them well. For example I have a multiple spreads on VLO every month. I shoot for 10% on my margin spread i.e. $500 on $5000 margin for 10 contracts and I take fairly large positions on a few I know really well. It’s boring and caps your potential gains but it works if you have the margin $s. I prefer to keep the caller/putter’s $s in my bank account.

  236. re: ORCL – $1 for Mar is not bad but there is so little premium in the current $20s you may as well just go for it at this price with maybe the Mar $20 put as a whole or partial cover.

    Thanks Phil. Looks like the cover will be a good idea. Does anyone out there have advanced trading tools that can tell me who is selling/shorting ORCL into what seems like a good earnings report ?

  237. Russia/China alliance would pretty much rule the world. Don’t forget the commodity price collapse killed the USSR, not the US persay, although I think some credit Reagan for pushing prices down although, they acted just like should have at that point in the cycle.

    It is the next leg up of the commodity cycle in a few years that will be REALLY scary. And if global warming actually was real, that would make it easier to mine/drill in Russia and they have 20% of the worlds fresh water in one lake. Maybe that was 20% of the worlds fresh water in lakes. Either way, whatever commodity you are talking about, they tend to have a lot of it. Except democracy. Oh wait, that is even scarce in America.

  238. mer 55 and 60 LEAPs (09 and 10) look interesting
    bought a few

  239. xian – The french are very creative, but sucked in war time. They need a Napoleon! But usually you hear of “russian” scientists, not french ones. Everything russian seems to be better and cheaper…

    Americans spent millions on developing a pen that could write in space… Where as the Russians used a pencil.

  240. film- i’m totally think about doing these trades- i have DEC 170/175s i sold monday and yesterday-

    while only risking the wanton vagueries of AAPL for these 5 days i’m getting $450 for each $5k i leave sitting (again, at risk)

    i think the key is to do this on high priced and higher volatility stocks and also, mo’ time, mo’ money- but that decreases the probablility of being right (sort of)

  241. Flim, I think you’re right.. It’ll be kinda awkward living in a communist world from being born in a capitalist one. The Transition would be nuts.

  242. russia/china- it’s the SCO (shanghai cooperation organization) it has china, russia while india and/or pakistan r “official observers”

    this bloc is becoming a political/economic/military force (china and russia held joint military “exercises” over the summer)

    also, there is a lot of push and pull on a pipieline that the US wants to run thru turkey, but the SCO wants to avoid that yolk.

    check the facts- this is lose memory from reading JANE’s (sometimes, very nice reading)

  243. KC – celg catch a knife or covering?

  244. Welcome JimBo! That trade sucks! (was that gentle enough?). Actually I really hate vertical spreads and I’m not sure, with earnings in late Jan, how your plan would work. I take it that’s what you bought them for so you had a $2.50 spread and now it’s $1.80 spread BECAUSE YOU PAID MORE PREMIUM THAN YOUR CALLER AND YOU BOTH LOSE MONEY AT THE SAME RATE!!! This is a great learning example for people – thanks!

    There’s no good way to fix that without spending lots of money (did I mention how much I hate verticals?) but you can roll yourself to the Dec $115s for $8.25 ($1.75 out of pocket) and roll your caller to the Dec $120s for $4.10 (.40 back to you) which increases your total exposure to $3.85 but gives you a very good chance of ending up with $5 on Friday, rather than twising in the wind for 3 more months while your premium erodes.

    SLM, STU, FMD – it’s an availability of funds issue. Money is tight, thus expensive.

    I just realized last expiration Wednesday GOOG opened at $673.28 but it closed that day at $641.68 and fell all the way to $620 on expiration day so watch your assets!

  245. DM- i think the french r great (also, i left out euler – maybe french). i live in charlottesville VA and there r many french people who come here to teach folks here how to grow/make wine- good friends.

    also, i have a high respect for them intellectually b/c of the abundance of useful math that is named after them.

    also, i love how they just take to the streets on the drop of a hat (although, i don’t like violence- just dissent)

  246. Film – I have been doing my part to help make Apple’s Q4 a huge success. I have been the resident Apple evangelist for the firm that I work for and was finally able to convince both the Engineering and IT that a MacBook Pro is a must have for the Engineering team. Engineering was on board from the start, but IT dragged there heals because they did not have an “in-house Apple expert.” I told them no problem, no IT services will be required (wonder why I got so many harsh looks???). ;o) We just put in a huge order for MacBook Pros and a handful of the Desktops! Apple is viral, as word has spread and now both product marketing and sales are whining because they were left out of the deal!

  247. cake not going to break day high?

  248. DM

    Michael DeGroote is very well known at Mac. In fact the business school has his name on it ( My son is in Computer Engineering and Society Co-op, a five year program. He doesn’t have time for much of a social life and is very glad to be home for the holidays right now.


  249. Xian you can play with TOS “Spread Hacker” for those put spreads…Today FYI
    Buy Dec 135 Put at.11
    Sell Dec 140 Put at .57
    Net Credit .46/Contract

  250. DM – we had a Russian Scientist/ nanny living with us for a year. She worked at chernobyl, sending Robots in to pickup the children after the disaster. I think the only remaining Chernobyl scientist not inflicted with cancer.
    She came here with her son, who earned a scholarship at Princeton. Brilliant woman- very sad life.

  251. LDK – take out the putter as we’ve made all but $1.50 on him, leave the other puts just in case. I’d rather go to the $65 puts for $2.88 as downside protection if you think you need it but we’re still holding the midpoint (13,150) quite nicely so I’m not too worried and solar is very hot.

    Oil flying up, done with XOM and SU puts for now (those were all I had left) XXX

  252. Xian that was on the SPY quarterlies

  253. marathon- i still haven’t checked thru all the functions on tos, but it looks great.

    i need to watch those video tutorials

  254. CELG – I hope I’m not catching a falling knife, LOL. A Robert Baird analyst reduced his price target by $1 to $60 (only news I could find) but maitaining his “neutral” rating (hence my comment it seems oversold). I was fully covered with Dec50s but took out the caller and waiting for a bounce, after DD.

  255. Optrader & Julie – you stick w/ CCJ? Trading a spread?

  256. xian,

    Have to be pretty careful on the vertical spreads. I take a good look at the deltas involved. The risk thinking is more than just $ at risk or % reward – in my way of thinking you also have to factor in market expectations that an event will occur.

    Very bad things can happen on verticals – nothing like watching a gap against you after hours or overnight.

  257. Cake – there it goes again!

  258. Celtic’s Question:

    Is anybody in the Boston area on this board interesting in splitting 2 club level season tickets for the 2008-2009 season? It’s 41 home games so 20 each. Send me an email if you are interested

  259. fred- i think i want to b like u.

    also, i think it has everything to do with knowing the stock.

    i’m going to see how this works for a few months-

    upside- i won’t be able to overtrade my $$ b/c a lot will b tied up

    someimes, my broker make more than i do-LOL LOL LOL

  260. designcurve. Years ago I saw the stat that one mac IT person could support 100 computers and the average PC ratio was like 1 to 8. I think that is a little bit of hyperbole, but not if you count “fully” supporting. I don’t mean you have a ratio of 1 to 5, but noboby’s computer works to their satisfaction.

    So, where did you eat and drink in Seattle?

    I wouldn’t be surprised if China invaded Taiwan 2 months after the Olympics.

    Phil, hadn’t thought of it, but you obviously hate Bull and Bear spreads then, right?

  261. CYNO – this one is perplexing; the bounce, after the errorenous attribution, never came. Trying to roll down (from Mar30s to 25s) but options are thinly traded and I’m not quite ready to pay what the MM wants yet. Where the stock is price-wise makes it tough to sell, so covering with index puts for now.

  262. Nevermind Phil, I think you answered this before when you stated you would do it when the risk reward was better. You preferred risking $3 to make $2 than risking $4.50 to make $.50.

  263. DFS

    Anyone have any thoughts on Discover Card (DFS) ? They have been on a steady drop since their IPO in June, and seems to ignore what other companies do that would otherwise seem to be in the same boat.. Aren’t they essentially in the same business as AXP and MA? Oh yeah, and they have earnings Thursday morning.

    Are they an overlooked opportunity here, or are they just dead in the water? I mean MA price kind of just languished for its first two quarters also…

  264. I think the problem with the MO trade could be that the market makers will exact a pound of flesh to get out of them on friday. We shall see — thanks for flagging the trade :)

  265. SEM- i agree about the need to b careful and think this is the “new wheel”, but i’m talking about selling spreads so far OTM that those wild moves that can hurt me will b unlikely.

    also, putting out the spreads closer to expiry makes it eaier to guess.

    i’m going to wade into these trades slowly and see if they can consistently work on the stocks i’ve been following anyway.

  266. designcurve

    just out of curiosity, if it is not prying, how many laptops and desktops did your firm order?

  267. GE – I have too much respect for them not to take a 90% gain off the table when all they need is a buck. I’m probably going to want to sell a jan or get out anyway and even on Friday at 3:45 you will have a hard time getting rid of that caller for less than .05.

    DELL is a good gamble down here on a long play. $60Bn in sales, $2.5Bn in profits is 6x and 12x AMZN and AMZN has a $36Bn cap while Dell has a $55bn cap. Both sell “stuff” on the web. HPQ is worth $131Bn with $91M in sales and $6Bn in profits and they do pretty much exactly the same thing as Dell. I was hoping for a little lower but I like the ’10 $22.50s for $5.75 selling just 1/2 the Jan $25s when they hit $1 but I’m waiting for the $1 (which we almost just got) before I get the leap, which should indicate a break up. XXX

    LVS – I have Mar/Dec $110s personally but I was nervous when I rolled my caller, the premiums on the $115s aren’t worth taking out yet.

    Money pouring into bonds, driving rates down. Be careful!

  268. LDK:

    What is the contingency plan if it gaps more than $10 either way?

  269. Bert, the reason I finally got into MA yesterday is that I realized that I currently have one discover card (never purchased anything only balance transfers), one visa debit card (rarely purchase anything with it, it’s just an ATM card), and 5 mastercards that I have been using for home, business, and literally all of my purchases as my wife likes to track our spending through it and we get the dividend rebate for the heck of it.

    DFS doesn’t have that kind of usage or growth potential. It isn’t a story I can really get behind.

  270. Xian – the french are very smart and beautiful people in general. I found that every European / Asian country has a underlining personality to it.

    Britain – Creativity
    Germany – Precision
    Italy – Passion
    France – Beauty
    Russia – Intelligence
    Spain – Culture
    China – Organization

    That’s off the top of my head… I kinda hoped Canada would develop something like that…. No real sense of passion.

  271. Phil. GE. Thanks. Always good to hear what is going on up in that supercomputer of yours. Cheers.

  272. Here is your dose of DOOM & GLOOM for today:

    I urge you to read it and tell me why it is wrong. It is too depressing even for me and I am loaded with Jan & Feb index puts.

  273. lindsay – that’s a sad story, but she’s very lucky at the end of the day.

  274. Why is it again that you despise vertical spreads so much?

  275. Thanks Phil – yeah I know it sucks why would I ask for help :-) )

    Sometimes it just better to take the loss and wait for the next trade. Will continue to read – maybe I will get the hang of this stuff.

  276. DO – absolutely on selling the $130s – they’ll never learn! Reward not as good as it was so you have to set a stop at $1.60.

    Uh oh – “Mark to Myth” is very catch, that’s not good if it starts getting used.

    SBUX – I’m still a believer but I also keep promising my daughter when we go to Japan we’ll visit Godzilla’s island, so take it with a grain of salt!

    Thoughless Apple spreads – maybe the $155/$160 but AAPL also opened last Wed before expiration at $177.16 and was at $159 on Friday. You only have to get burned once to sentence yourself to 10 months of trying to get back to even and parying you don’t get fooled again. I would love it if you did this as long as you promise to write a post about your terrible time selling verticals so I can just refer people to it from now on.

    Speaking of huge drops – GOOG $660 puts at $1.50 on the bounce here, DD at $1 and then either give up at .75 or hope you luck out tomorrow. XXX – craps roll only.

  277. DFS

    Discover…that’s another company on my personal boycott list. They’ve got to have the worst customer service I’ve ever experienced. I had a fraudulent charge on my account and because it was below their $ threshold they told me they couldn’t remove the charge but they could send me a “free gas” coupon. How stupid is that?

  278. DFS vs AXP vs MA

    But is there something different about the DFS business model that prevents it from having the usage or growth potential of AXP/MA? In a way I can see where it is now-- it does not seem to have the brand cachet of AXP nor the proliferation of MA, I can see that by opening my own wallet. 1 AXP, a couple MA/Visas, more if you count the MC/Visa debit cards.

    Still I don’t see what prevents it from directly mimicking either MC or AXP if no other strategy works.

    At the very least, at some point it becomes a takeover target for the other two to be able to eliminate a competitor, right?

  279. Parchesia, about your Black Monday comment. I had been feeling the same way for the last few weeks. But, I watched that CNBC special on the 20th anniversary of Black Monday. The thing that stuck in my brain was that there was already ferocious selling before that Monday. The writing was on the wall. If Phil says on a Wednesday, COVERCOVERCOVER. And then on Thursday he says. SERIOUSLY, COVER. And then on Friday Phil says. I am sorry. I meant SELL SELL SELL. And you still have positions on Monday and then we collapse, then you are an idiot. That was the price action the week before was as follows.

    10/14 Open 2485 Close 2412 Down 2.9%
    10/15 Open 2412 Close 2355 Down 2.4%
    10/16 Open 2355 Close 2246 Down 4.6%

    I do think we will have this kind of price action soon, but I think we will see heavy selling that could lead to this, so I am really bearish we break 13000, but until then I have to give the market the benefit of the doubt. Especially because if you have to sell now, you didn’t sell at 14000, and if we don’t go down, the next stop is 14000+. Whether we want it to be or not.

    GO MA GO. I don’t mean you, ma’.

  280. Ha! Does anyone get Traders Magazine?

  281. LDK – there’s nothing wrong with protecting the outsides, it’s a good idea if the position is significant to you.

    Just bought FSLR $240 puts for $2.80 for fun.

    ORCL – it was buy the $20s with the Mar $20 puts as protection. The $20s are .95 with just .30 in premium and will capture almost all of an up move, the Mar $20 puts are $1.10 and will do fine on a serious breakdown but only lose about 1/2 on a run-up (the Mar $17.50 puts are .40).

    CELG – yes, very tempting down here.

    SBUX Jan ’09/Jan $20s for $2.45 – very good spread bigs but I’d buy the ’09s first and hope to get a little more. XXX

  282. Bert, there is nothing to stop companies from mimicing YouTube either, the problem is acquiring the installed base is hard and expensive.

  283. Phil,

    Someone ( copy your trade on DNDN 2009 Jan 2.5/5.0 spread you mentioned a while back.
    But they are a month late +:)

  284. AAPL AAPL AAPL- i try to leave but they keep sucking me back in

  285. Massive buy program hitting the markets. Very big and wide but isn’t spurring copies yet so may fade.

  286. Sold my Jan 210 MA’s up here to bring me back to almost even after a day of lackluster trading. Hoping for a pullback to 207 to get back in. It just had to wake you all up.

  287. xian -

    Hope you do well. Rule of thumb is to sell about 10% OTM and this will generally give around 10% return on the trade (obviously varies). Further OTM gives less return but greater chances. Question you have to ask yourself is … are you feeling lucky? In this volatility is a quick 10% move possible. I have tried trading these with some success, but all it takes is one bad move (FYI- never do with MA!) and there go all the profits.

  288. CCJ – I’m holding some Mar Calls and expect to cover this week. My expectation is that this has a long way to go up if it would ever get back on track. This was, maybe still is one of Phil’s trades he made earlier this year. I’ve just been hanging on rolling down waiting for a pop.

  289. MA vs the rest- i think the main thing that puts MA above the card issuers is that MA doesn’t lend money to anyone (no credit risk at all)

    MA only takes a toll for each time the card is swiped (no matter how big the purchase)

    there maybe others that r only toll-takers but i don’t know which ones – except MA is definitely just a toll taker, not a lender

  290. A note on Programs, if you think ahead a LOT of plans need to have changes in place by the 31st (Monday). Unfortunately, there is usually a lot of administrative problems that don’t come up until the last second (getting the board to sign off on the allocation change, contacting the legacy managers to terminate and cease trading, etc) so a lot of random trading will go on the last few days of next week b/c everyone’s trying to settle before the new year. Something to think about when you see volume spikes in what should be a low liquidity environment (and hence interesting price movement).

  291. Greg,

    That is one depressing take on the issues we face. I might as well start burning my furniture for heat right now.

  292. Hey Fred, it is depressing, but it does hit on alot of the same issues Phil has been talking about for a long time.

  293. CCJ – I was half covered yesterday and now fully covered after this last run. $3.2 for the Jan35s was too hard to pass up, given the highly volatile nature of this stock. If I’m wrong, I can always roll the caller next month.

  294. credit card stocks – anyone know when the Visa IPO is? Seems a bit late to the party, but I’m sure someone will want in.

  295. Opt there goes your amzn again

  296. PPT (Plunge Protection Team) buying? What happens if/when Paulson pulls the plug on the PPT.

  297. Phil:

    How about loading up on C
    with a mar 35 put $35.8 level…

    If it heads up in Jan sell some Jan Feb calls
    and sell puts

    If it heads down cashout with your $35.5 intact…?


  298. KC
    why didn’t you cover CCJ with decembers before rolling over to january’s? it’s a bit late now, but a week or 2 ago you could have sold the dec 40s for about $1. the 35′s seem risky to me as CCJ can move up and down fast and furiously.

  299. NKE:

    What about a calendar on NKE for the earnings, sell the Dec 65c, buy the Jan

  300. SPY 146 Dec puts – Whoa somebody sold 10,000 lots just now at 1.45…

  301. windy – I was covered with Dec35s for a while, but took out the caller before CCJ started to run up, and then started selling Jan calls. I wish I could time things this well always LOL.

  302. First, Greg, thanks a lot. I hadn’t forgotten all the reasons I bought those Jan 131 DIA puts. I need to buy them back.

    Why would the PPT be buying up here? Obviously, that money is much better spent when we are down 10%. No one really cares about keeping a bottom in place up here. I think there is just a need to slow down the panic until January when everyone is at work and they can make good money on the fall.

    I do take issue with the recession fears, though. When is the last time we had a recession in the bottom half of a decade? I will go look. And the answer is VERY few. They all start at the very end or beginning of a decade. We had one in 1957 and one in 1926. Source is

    I believe if cash is indeed going to be king, where is all the cash. Well, from what I heard it is all locked up in corporations, more specifically, tech companies. Phil, can you back me up on this?

    I absolutely believe we are going to have a liquidity event, but I would expect it to be like 1997 or 1998, not like 1987.

  303. What’s that GOOG put play look like here?

  304. YHOO – what is driving this up today? Being on TV?

  305. Phil, on the Dell trade, I don’t see any ’10 22.50′s. Were you looking at a different strike or year, or am I looking at the wrong thing? Thanks.

  306. lots of buying in puts now.

  307. Maybe it’s the same guy covering his shorts.

  308. DM- how can u tell there was buying of 146 puts vs selling? i’ve never understood that?

    is it just clearly listed on level II quotes or do u have to notice some nuances?

  309. DELL — probably ’10 25s for 5.70

  310. Xian,

    If theres buying, then someone must be selling. But to see which way its leaning check out whether the last price was closer to the bid or the ask.

  311. xian – Big traders need liquidity, so they usually buy on ask, and sell on bid.

  312. For example if I wanted to buy 10,000 lots worth right now, it’s stupid for me to put a bid price…. I have to clean out the level 2, so I buy everything on every exchange.

  313. on ask

  314. I dumped my Jan200′s since they pulled back up to almost what I bought them for yesterday. Damn you Greg! :D

    I had them in accounts that shouldn’t take a big hit like that and I am in agreement that the upside is capped and that a sharp sell-off during christmas is more likely than a sharp rise. And I want to have the cash available then.

    Basically, I know I want to be in all cash, but it is so hard for me to hold off. Damn those casinos’ bells and bright lights.


    I have learned the hard way that Friday afternoon of expiration week is crazy. If you are going to throw your wallet up in the air while walking that tightrope, you better be good at taking your losses, because once it picks a direction that day, it just keeps going.

  315. The ask of dec FCEL 10 is 1.45, the stock is trading at 11.75. That doesnt make any sense!!!!!

  316. This looks like a very good short-term spread trade on the SPY.

    If these optionetics graphics are right, the downside breakeven in two days is $141.63, the upside is $153.18. SPY currently trading around $146.25

  317. lol BA is still in red

  318. DM – more than likely that was done at the institutional level as a cross. The institutional sell side found the buyer and crossed it in the market, hence it goes on the tape and you see a spike in the volume (look at the intra-day chart on SFB+XP). What’s interesting is that that exact amount was traded at 11:39 EST earlier today for what looks to be about 1.73. Could have been anything… maybe “they” had to be hedged for a short amount of time.

  319. RIMM’s earnings are going to play a huge part on whether AAPL hits $210 + in Jan.

    If Blackberry #s are stalled…AAPL will fly…if RIMM continues to trump estimates I think AAPL will continue with boring momentum…there are no big rumours for Macworld, economy is in the shithole (according to the media) and unless the iTablet comes out I can’t see anything other than a sell the news on Jan 14/15.

  320. Phil. Never caught that rimm spread Mar/Dec 100 for $9.00 debit. Would you still take it at $9.40 debit??

  321. Do I feel retarded. Sorry about that bid/ask now 8.80/9.05

  322. mrl, everyone knew AAPL was switching to Intel before 2006′s macworld, still flew up 10% on the news.

  323. If A/c has more than 25k, can we exceed 3 day trades?

    the 25k is profit from 2k – is it still accountable?

  324. It’s just like earnings. The news matters less than what THEY want to do with it. They will rally before or after, but they will rally. You guys are crazy if AAPL trades only between 185 and 200 from Jan 1 to Jan 18. But that is me.

  325. DIA puts – finally took out my Dec putters on that spike, but still holding Jan puts for now. Phil, when are you rolling your Jan puts to Feb? Thanks.

  326. What’s the best bet on an index overnight?

  327. Hey, do not knock the space pen! That was one of my favorite toys at one time…

    French – well you have to love a people that hauled their government out of the palace on cut all their heads off. Of course when the French do it we say Viva la Revolution but when the Bolshevics do it it’s called a Communist uprising…

    I can’t believe it’s 2:30 already and the market has essentially gone nowhere again.

    Now CAKE is rising

    Bull/Bear spreads – I just don’t like being boxed in. I’ll do them to close out a short calender if I run out of months and don’t want to roll but I will rarely just go into one.

    DFS – They were spun out of MS so I don’t trust them.

    LDK contingency – If they gap up the plan is to do something about it. 8-) – I don’t mind if people buy our positions after we do, that’s why Najerian runs around telling everyone his trades after his members get them, if you push it loudly enough it’s a self-fulfilling prophesy.

    Did we all fill our Google puts?

    Dan/C – that would work but make sure they hold $30 first.

    Dell – sorry that was ’10 $25s, I originally was looking at the ’09 $22.50s at $5.20 and then decided I could afford to spend .40 to pick up a year at the cost of $2.50 which, if I’m right, won’t seem like a lot.

    Gee imagine how much money you could make on Index puts and calls just trading my range (buying puts at 13,300ish, selling at 13,150 mid-point, buying calls there, selling at 13,300ish again)…

  328. MS, GOOG and YHOO being fined (small) for promoting Internet gambling. Not a mover but interesting.

  329. Okay, don’t have much in play anywhere anymore. It sucks that it takes me 3 days to come around to Phil. Taking the pressure off and will be able to take advantage of The Phil Maneuver if they attept it on AAPL. Will probably still be checking in but not as often.

    Besides, I have a lot of tax crap to get caught up on. Good luck on RIMM’s IV crush earnings.

  330. Mark – that’s really interesting. I’m glad you brought that up. I’m looking at the intra-day chart on SFBXP and I see what you’re saying.

    10,000 is too round of a number to be not from the same guy, so I suppose it’s reasonable to assume it’s the same fund that made the order. Hedging for a short period of time, I guess that might work… Rather expensive security to hedge on, wonder why they didn’t do it on the future’s markets.

  331. mrl14 – I think you got it wrong with your logic: if RIMM does well, then AAPL will go up, because if blackberries are selling, then consumers are buying the smart phone products, which AAPL just happen to sell as well…. Wow that wasn’t a run on.

  332. RIMM taking off.

  333. SPY – good spread.

    RIMM – for $9.40 sure

    More than $25K – check with broker, they all have rules.

    Index puts – QID Jan $37s for $3.90 are unlikely to lose much but have just .60 of premium and will gain $1 or more if we break 2,575 on the Nas, which could happen with bad tech earnings.

  334. RIMM – roll callers up to $105s for $1.90 XXX

  335. CAKE:
    Phil if we close over 24.35 i expect that we may make another nice move. I followed into cover @ 1.25 for half. Should i make that a full cover tomorrow and then roll on Friday?

  336. I think hedgefunds are gearing the stock for a massive breakout on earnings.

  337. (RIMM I mean)

  338. RIMM Roll- for all portfolios???

  339. 100 to 105 DEc Rimm callers at 2.70 ask to roll phil?

  340. U mean 104.37′s

  341. RIMM- looks bullish

    i know people r tired of this, but:

    yes PSW, there is a santa claus rally

  342. Phil, that RIMM roll is now 2.60-2.70 tks

  343. 1.90 for 100 to 103.37 Dec caller roll. Maybe thats it.

  344. Phil/anyone,

    How much did you fill your Dec 105/Mar 100?


  345. Can you sell stocks short AH? I would assume so, but…

  346. Phil, Roll the Dec 100 to Dec 105 for 1.90 (I got 2.60) ???? still roll?

  347. Took it for granted that it has to be 103.375 there were no trades at the other

  348. Looks like someone got a preview of LDK results :-)

  349. DM,

    Are you thinking the explosion on RIMM is to the up side?

  350. GOOG looks like it wants to eat the put play!

  351. Here’s a vertical I like – buy FSLR $260 puts for $13.30, sell $250 puts for $6.30. XXX Risks $7 if it breaks ATH by Friday, makes $3.

    CAKE – No change, we’re going to roll him to 2x the Jan $25s so all we did was collect some money early. If it does break up, we’ll want to roll to 2x the current $25s to get that premium, then roll to the Jan $25s, now $1 but hopefully higher.

    Everyone is acting like they are worried about breakouts but this was a flat market day where nothing really got going. We’re down 600 points in 6 days and flatlining just over the 5% rule — that’s not good!

    RIMM roll – yes, it was a brilliant roll on that run as the guy paid me $5 for that call. The spreads a little more now and not as sexy, especially as RIMM is diving back to $100. I wouldn’t do the roll for $2.40, where it is now, but for .50 better it was totally worth it as that was a 10% improvement.

  352. Went 2-1 overweight short strangle on LDK and closed 3/4 before close as it went up 100% in a half hour!!! woohoo.

  353. Phil little help with this “RIMM roll – yes, it was a brilliant roll on that run as the guy paid me $5 for that call. The spreads a little more now and not as sexy, especially as RIMM is diving back to $100. I wouldn’t do the roll for $2.40, where it is now, but for .50 better it was totally worth it as that was a 10% improvement.

    First I didn’t get to see anything near that price (1.90) except for the 103.75 for 1.80 which I rolled into-

    Where did you end up on this spread?

    I have the other leg as we set it yesterday and now I have rolled to the 103.75 at an additional 1.80 I’m sorry but I can’t quite decipher what you did here.


  354. film: no one knew they just speculated as they had been for many years about intel. But where is that intel/iphone rumour this year? I’m not denying Apple is going higher, I’m very bullish, I just see a big selloff after the keynote and not much of a run now. Maybe 10% tops.

  355. ORCL trading a buck up AH…

  356. LOL – oh sorry, you guys are right, I totally thought that was the $105s but they were the $103.38s! Not as happy with that trade then… It happened too fast and I assumed the next bracket was $5 and I was so excited about getting a roll for just $1.90 I executed right away. That’ll teach me.

    ORCL blockbuster numbers! Those $20s should do well.

    Yes Xian, I am officially tired of it!

  357. JK – Depends on earnings… I believe RIMM will beat estimates. I don’t think analysts can quantify China, which RIMM has been since this Q.

  358. AAPL- finding buyers AH- eh?

  359. LDK – In line, not enough to hold them up. This could hurt the whole sector.

  360. Phil…thanks…I thought that you had a NEW stratagy that I had to Learn!

    BTW 12 Commits (out of 68 interested for Vegas) if you didnt receive yesterday’s email with the details and have emailed me directly let me know and I will send it again, Don

  361. Tell me a little bit about yourself JK

  362. What’s up with WYNN? OXpress shows AH close at 111.06, down 1% for the day, but the stock closed up 5% at 118 during regular hours?????

  363. Phil – yeah bought the Oracle 20s – also had a large stock position to cover so I protected 1/2. Thanks.

    However I’m a bit disappointed with the muted response to such good figures. Everyone waiting for guidance I suppose.

  364. film – I agree, no system is without it’s flaws. However, I don’t anticipate any support requirements from the Engineering department. We usually throw away everything that IT installs on a standard issue Dell laptop and set it up to our own standards.

    Unfortunately I ended up working a ton while in Seattle and only had time to visit McMenamins Queen Anne and the Sea Saw. I really wish I had more time to play tourist, as Seattle seems very charming. Reminds me quite a bit of SF.

    Dan Bender – Not sure of the exact size of the order. We are a mid size firm with ~20 Engineers in Seattle, ~80 in Sunnyvale, 23 in Shanghai and a half-dozen or so spread throughout the states.

    This whole day job thing is getting in the way of my fun! Back to another meeting…

  365. Don, I never got an email and I just wanted to double check that I originally sent my notice of interest to the right email address.

  366. ATVI- gamer consumer:
    Due to “better than expected consumer response to its holiday slate worldwide”, Activision (ATVI) just guided up AGAIN, now expecting Q3 EPS of 76 cents a share on revs of $1.375 billion versus prior guiance of 66 cents a share on $1.225 billion in revenue.

    Housing and much of retail is crud, but some stuff still works. ORCL/ACN aint so bad either.

  367. rahul – don’t see your WYNN down there man. my quotes are 117.68.98 now

  368. RIMM_ i’m seeing it hold 102ish? is this the quote?

  369. RIMM_ conf call will b important- i don’t know management, but maybe they can pull a “chambers-esque” call

  370. ORCL – Did not see anything blockbuster in what is announced so far – a beat sure – but that was factored-in already!

    In ATH the stock barely up $0.40-$0.60 from where it was at 3:59pm.

    Perhaps people are being cautious and waiting to hear the conf. call?

  371. LDK Solar-LDK reports Q3 EPS 37c vs. consensus of 37c
    LDK reports Q3 revenue $158.7M vs. consensus of $143.22M. The company sees Q4 EPS 40c-43c vs. consensus of 41c and revenue $180M-$185M vs. consensus of $167.52M. :theflyonthewall

  372. Email for Vegas: subject VEGAS

  373. marathonman – I emailed you, but you didn’t email me back, email: cheers.

  374. xian – RIMM reports tomorrow AH.

  375. mSquare – Beat by 4c and 300million when all and sundry were saying the financials would drag them down after CSCO at which point they were priced
    at 23$. Just look at the money they generate.

    So I’d say that was pretty blockbuster.

  376. WYNN – Thanks Mark – I needed the reassurance, since it was the only big move for me today and I didn’t cover down at this level. The streeming quotes at Oxpress is still show the 111, but IB is showing 117.98.

  377. RIMM spread — Maybe I’m not understanding this right. Earnings are tomorrow after the bell. I think it’s safe to say it won’t stay here at 102 Friday morning so do we really care what it’s trading at today after hours? So except for improving position during the day, what’s to be gained by all this rolling discussion? And as far as I can tell, paying $1.90 for an extra $3.375 doesn’t sound like an improvement. I’m in the Mar/Dec 100 spread for 8.85 on paper and am interested how this will all turn out.

  378. Rmarble – I made the same play on MO back in Aug with great success. IV has already come down a full 10 points on the Dec 80 puts since opening the Dec/Jan 80 put spread.

    Note, I already have a double calendar on MO that was opened 4 weeks back. This was simply a trade that I put on to manage my deltas. I now have a profit range from ~$69 – ~$83 by Friday’s expiration!

  379. LDK has some support around 57. Is solar fun over?

    The thing about solar is there’s always new technology coming out, like solar thermal and Nanosolar, profiled in the NYTimes yesterday ( There are probably 5+ companies like nanosolar.

  380. DM.

    I live in the suburban area of Philly, and have three kids (1,8,14). I have a full time job, and my wife is the one learning how to day trade (about a year now).

  381. CNBC on Oracle

    Oracle’s Oracle second quarter financials are stunning by just about every measure. Everyone I had spoken to leading up to these numbers knew the news was going to be good, but no one expected the news to be this good.

    Oracle’s 31 cents in earnings per share blew past Wall Street’s expectations of 27 cents. Pacific Crest Securities’ Brendan Barnicle anticipated 28 cents and told me anything north of 29 cents would be significant. Ok. Well, this is significant. Further, Oracle’s top line is staggering. The company beat the Street by nearly $300 million, and Pacific Crest’s estimates by $200 million.

    So where is all this good news coming from? Looking back over Oracle’s historic performance, this is the best quarter the company has seen in almost a decade. And you can thank the blistering acquisition hunt this company has been engaged in since 2004. Since then, Oracle has added more than $40 billion in market cap and the strategy is clearly paying off on the top and bottom lines.

    Total new licenses soared 38 percent, to over $2 billion, the best growth since 1998. The best estimate I saw on the Street was something closer to 27 percent. Database and middleware new licenses, Oracle’s real engine for growth? They jumped 28 percent, with Oracle claiming to steal share from IBM International Business Machines in both categories. Analysts projected 22 percent growth. New applications licenses? Up a whopping 63 percent when analysts expected something closer to 35 percent.

    These are blockbuster numbers to be sure and could go a long way toward beefing up big cap tech which has been under some pressure these last few weeks. Many of the biggest in big caps are well off their November highs, thanks to concerns about a recession in this country.

    But the opposing view has it that the rising global economy, a technology renaissance overseas, could eclipse any bad news that might materialize in this country. Oracle’s numbers seem to indicate that despite serious weakness with big financial customers, Oracle is still seeing dramatic increases in every measurable metric.

    This will all come down to guidance; what Oracle sees globally and domestically and we should have that shortly. Pacific Crest has a $27 target on these shares. We’ll see if that target holds up. Meantime, this is a company firing on all cylinders. The quarter was extraordinary.

  382. Larry Summers of DEShaw on CNBC: DEShaw was the second biggest looser in the LTC crisis, so he’s a good voice on the ‘subprime’ problem.

  383. Phil – I have EMKR for 9.9 and sold dec 10 against it for $2 as an alternative to just cashing out. I’ve done this several times and it seems to drop the last week & I can pull some cash off and keep the stock. It’s running strong this week. Any way to capture some of the profit or time to just let it go?

  384. RIMM – although I would have been less inclined to roll it had I realized it was the $103s, I still have a caller who is at $4.50 and all premium, which I will collect after earnings. As RIMM has held $100 firmly, it is slightly less attractive for me to have the $100s at $6.17 as they are $2.50 in the money. While giving me $1.60 more downside protection, they have $1 less premium than my new caller (and I actually sold him for $5 and already “made” .50) so I paid $1.90 to a caller I already owed $3 to to gain $1 worth of premium and $3.38 worth of position on him.

    If it turns down, then I made a $1.90 mistake but if it goes up or even flatlines at $103, then I saved myself $1 and since I have a roll that will get me another $7.50, I can afford to take a chance. Like I said, I thought I was buying $5 in position, not $3.38 so I was excited about it but the principle is the same, when you can make .50 more – take it. If you do that 20 times a month it’s an extra $10 x your average number of contracts.

    Solar – I said the other day, counting on the low cost producer to be around for 5 years as your investing premise is madness. Samsung and Hitachi are your major competitors and the only reason they haven’t put everyone else out of business is because we haven’t standardized on a “best” solar system so that they can start fabbing billions of them. FSLR’s business plan is a Moore’s law gamble where they sign a contract betting that their cost of production will decrease faster than the prices they promise their clients. That would be like Intel contracting you to buy your next 3 processors from them over 10 years at a flat or declining price per GHz – it’s a pretty fair bet they’ll pull it off but in 5 years they have gone nowhere.

    EMKR – depends if you still want it. You can roll him to the Jan $10s just to keep things going and look for another dip or you can bite the bullet and roll him up to the $12.50s at $2.23 for another .70 in premium and you are still pretty well covered. You could turn yourself into a long-term investor and roll your guy to the June $12.50s even.

  385. Phil – Thanks, EMKR long-term investor? O, yeah, that was why I originally bought this thing. Funny how a few hundred trades in a quarter change your perspective. I wonder if investing works…

  386. Phil – What would you recommend as the best way to offload the “protection” I bought on my Oracle calls ? (March08 20s) Some sort of limit to catch the open ?

    Thanks for any advice

  387. Broader question. I have a futures broker who has made me a lot of money this year on $18 commissions. I appreciate him and want to keep him happy. Do you send that kind of guy a Christmas bonus; what’s appropriate? Does SEC have regs or… Sorry I’m new to the whole realm! Anyone train me on this one?

  388. AAPL- seeing love but it’s AH and they’re easy lovers

  389. MrN-You can give him anything you want, so long as the gift isn’t illegal. So, no hookers or illegal drugs! You just can’t do any insider trading or market manipulating.

    Film-You can short anything AH, just like you can by nearly anything AH, depending on liquidity. You just have to use limit orders but you knew that. I shorted AMD at $42 in AH. That was one of my best trades ever!

  390. For the record, that was buy, not by: I hate stupid grammatical errors…

  391. Phil, thanks for the education. Let me see. You had the Dec 100s short around 6.60. I’m guessing you probably bought him out around 6.90 and sold the 103s at 5 leaving you 1.90 out of pocket. Those 103s are now going for 4.50 so you made .50. But those 100s are now going for 6.25. So by staying put, you would have kept .65. I understand the 1.60 in added downside protection you gave up for the extra 1.25 in premium and 3.375 in position. You figured 1.90 was a decent price to pay even in retrospect finding out you had 1.625 less in position than you thought. The extra 7.50 roll I assume is to Jan 105s. But I don’t understand where you get the $3 you owed the caller. As far as I can tell, you owed and paid him .30. Where did the $3 come from? Are you saying you owed him $3 because the stock was at $103 and you sold him the $100 strike?

    I get the idea you’re looking at these options prices with a whole different set of glasses than most of us have on. And the key to getting better at this is to try your glasses on for size and trade mine in. But to do that, I have to first see what you’re seeing. In the archives, I saw there was one education play earlier this year with SHLD. I saw the beginning of that trade, but unfortunately, the next post on it was the end with a 265% gain. Would be great to dig though that as that was a 3 month play. Maybe K1 has a link to that. Thanks for the help.

  392. LDK – I never adjusted anything from the original 4 way spread centered around $60. I tried to get out yesterday with a 15% profit but barely missed the mark and never got executed. It looks like after hours they are down to ~$63, which if they stay there or even better at $60 then I will do very well. I’d prefer of course to shut it down early tomorrow if I can but no telling whether there is any correlation between after hours trading tonight and opening tomorrow.

  393. i think i saw cramer eat some pizza and then wipe his mouth with a wad of cash

  394. Parchesia – thanks; do you know what’s appropriate – kinda like how much you tip the waitress?

  395. ORCL – well now it’s getting good right? The last thing you want to do, and the first thing I want to do, is buy out your caller into the initial excitement. I’ll be selling then so I can just send my shares over to you but be patient, you are screwed so you may as well enjoy it and you’ll have to roll your guy anyway. The Dec caller has everything to lose by not cashing out at the open (and you control that) and little to gain as you are only going to roll him to inflated Jans anyway and not really pay him a cent.

    The puts, on the other hand, if you covered with the March $20 puts – may not be as shocked as they should be and if you can get out for .50 you may as well, otherwise, we wait for a market collapse to take them out.

    Futures broker – well I’m sure he’s done well for you but I’m a big giver of wine myself. Even a fairly wealthy guy does not usually go out and buy a $200 bottle of wine so something nice is always appreciated. If you were thinking bigger, something like an ITouch or IPhone, Kindle or even a Wii, which pretty much everyone on the planet wants is always good as long as you make it clear you don’t mind if he regifts it by saying “I don’t know if you already have one but I’m sure you know someone else who would appreciate it if you do.” People in service businesses always need things to give to big clients. Above that level would be First Class tickets (as they can be changed to anything) or a hotel suite but that would assume a more personal relationship where you know something about them. Concert, Sports or Theater tickets are always nice as long as the seats are better than you think they would get for themselves.

    Of course the best thing you can do for a professional who does well for you is to bring him another client – that’s the gift that keeps on giving. For the wine, and you can never go wrong with a bottle of Lafite as it’s a total indulgence for a wine lover.

  396. Phil – excellent advice again! Thanks.

  397. Owed $3 at $103 – yes. You’re right, I feel like I owe it to him as my target changed while I was watching it. As to the SHLD trade, I remember running one with Sage and we followed it up in each weekly wrap-up.

    What’s appropriate – That’s up to you. If they guy made you $1M and you are so inclined, then $20K worth of season tickets would not be out of line but, as a rule of thumb with clients of mine, I’ll usually go about 1% of my net profits on their business so a guy who sends me $100K for consulting is worth more to me than a guy who buys $100K worth of software as that company has a lot of costs so maybe $1,000 for one (more if I like him) and $500 for the other.

  398. Wow, some of these analysts on the LDK conference call seem like they have a vandetta against the company

  399. KAAHN,
    How about SLM’s call, Al Lord (CEO) ends it with: “let’s get the (expletive) out of here.”

  400. Phil, I don’t say it much but you never cease to amaze me. Your knowledge of client gift etiquette is very insightful. Speaking of clients, can the wonderful members of PSW expect XMAS cards this year? Or at least a funny and entertaining Christmas article and comical graphics. ;-) Or do we need to send you the Christmas card for a year of keen insight and happy reading?

  401. Orion,

    LOL, thats pretty much how I end all my phone conversations.

  402. Hi Phil,
    RIMM – How did you calculate the $1.60 downside protection for your post above.

    qoute: “As RIMM has held $100 firmly, it is slightly less attractive for me to have the $100s at $6.17 as they are $2.50 in the money. While giving me $1.60 more downside protection”


  403. Phil, on the C ’09′s …. I did sell the Jan 08 caller for 1.17, now 0.90. Should I buy that back tomorrow and hope for another sale oppty ?

    AAPL; opening another Manhattan store …don’t know when, but its in my neighborhood.

    AHR; looks like divvy run finally underway.

    MER; nice rebound; sold some Dec 50 puts earlier today for 0.40, looking good unless BSC tanks everything.

    ETFC; stock is a dog; but did make about 1/2 dozen free trades there today.

  404. Betting on CEO’s … I was about to comment that betting on MER w/ Thain probably a good idea.

    Then again, MS not doing so hot w/ Mack these days, so there you go.

  405. Speaking of having a vendetta, FSLR is really starting to bug me. I saw a lot of scam companies back in the day and one of the things you look for is strange board appointments. The put on a Texas lawyer and a German Fund manager recently, neither of which seems to have any knowledge of the industry.

    They promoted the VP of sales and marketing to EVP and gave him a $360K salarey with 60% bonus but what’s strange is an 18 month severance clause, which is not something you would usually offer to an internal promotion.

    They also just this weekend made their IPO lawyer an EVP with a $500K salary, an 80% bonus and a (and I kid you not) “a sign-on payment of $7,000,000, payable in 20 equal quarterly installments commencing on March 31, 2008.” AND “Prior to commencing employment, Mr. Gaffney will receive a grant of restricted stock units with respect to First Solar common stock with an aggregate grant date fair market value of $7,000,000, as determined by the Board of Directors of First Solar (the “Board”), which will vest in 20 equal quarterly installments commencing on March 31, 2008. He will also receive a grant of stock options to purchase 100,000 shares of First Solar common stock, exercisable at fair market value on the date of grant as determined by the Board, which will vest in five equal annual installments commencing on December 31, 2008

    WOW – where do I get one of those jobs? Remember the hassle Google got for being genereous with comps? This is just amazing! $7M in cash, $7M in stock and $24.8M in options – I wonder what Mr Gaffney has pictures of???

    They also file a lot of press releases, that’s often associated with pumped up companies and it’s unclear if they are talking about the same deal over and over again or not. Also, the contracts assume a $1.30/euro exchange rate, 10% below the going rate which could be a tragic miscalculation if the dollar doesn’t bounce back.

    SG&A is running at an alarming rate and I talked about their very strange movements of funds last night. They still have $45M in deferred taxes and I’m pretty sure that’s their income growth strategy so I’ll be watching very closely for the quarter when they run out of that booster.

    They sold over $500M worth of stock this year and have 78M shares outstanding but they have 500M shares authorized so shareholders better hope they don’t need cash!

    Also, I’ve noticed they have borrowed a lot of deferred money that doesn’t hit them until next year, a lot of this could explain the frenzied pumping here because all these good looking numbers may turn ugly when the tax breaks run out and the bills start coming in. They bought Turner Renewable energy last month just 10 months after Ted Turner bought and renamed DT solar and Ted is a long-term investor – that makes me wonder too…

    All in all, I think I was early, but not wrong with my short call so when we do hear some bad news and see the stock break down, we can jump on the mo train as we know there’s lots of possible reasons for it.

  406. Nexstar — not sure this is right, but here’s how I got there. The 100 strike is 2.13 in the money with RIMM @ 102.13. Those Dec 100s are selling for 6.23. So 100 – (6.23 – 2.13) = 95.9. The Dec 103.375s are selling for 4.50. With RIMM @ 102.13, they are 1.245 out of the money. So 103.375 – (4.50 + 1.245) = 97.63. 97.63 – 95.9 = 1.73 of protection. I’m sure someone will correct me if I’m wrong.

  407. Says the old lady who’s been here a week and hasn’t made a real trade yet…

  408. XMas cards – Poor Tina barely gets out the current load by New Year’s but I’ll be around this year so I’m sure I’ll post something seasonal.

    Nexstar – I use a very complex mathematical formula determining the value of the discarded option (Y) from which I subract the value of the acquired option (X) which I then sqare and round off to the third decimal place, take the square root of that number, round that off and add Pi rounded to two decimal places and subract 3.14. That gives me the downside protection differential.

    C – only if the broader markets and XLF are ticking up, otherwise you may want that protection!

  409. Phil- FSLR. How about shorting after-hours as a momentum play on LDK earnings?

    I was also thinking about March Puts – for a LT short – but damn, they’re expensive.

  410. Any idea when the doo-doo might hit the fan with FSLR? Too bad it can’t be before Friday.

  411. phil
    i thought this was interesting:
    a friend of mine who’s involved in the fashion industry likes to shop at designer sample sales. she was dreading going pre-holidays because they usually have lines out the door, even down the block. she said that of the 3 that she went to there were very few shoppers at any, although the merchandise was very high-end and the prices very low (for designer items).

    this made me think of all the dented cars in the parking lot.

  412. Santa … may be coming tomorrow and Friday just in time for expiration.

    or not. but tomorrow could be our FMD.

  413. FSLR … holy smokes ! I want one of those jobs !

    Sounds outrageous and fishy.

  414. Phil/ others
    How about this:
    Buy March 240 FSLR P $33.50
    Sell March 210 FSLR P $21

    Net cost $12.50 –

    Or… Buy March 240 FSLRP 33.5
    Sell Jan 210 FSLR P $6.6

    net cost $26.9
    then roll to selling March 210 FSLR P? Much more expensive.

    Thanks, in advance, for the advice.

  415. Phil – ABK and MBI NOT downgraded to junk. That’s the point. They are on watch and could get downgraded months from now which would be devastating for the markets … all credit markets. Those companies will be out of business if that happens and Bill ackman will be insanely rich.

    ABK’s AAA rating was actually affirmed by Moodys.

    These are not downgrades to junk (at least not yet). Very important distinction.

    I think what will happen is ABK and MBI will get credit infusions. ABK already got one; probably needs more. They are too important to fail, much like C or CFC.

  416. Phil — sometimes sarcasm is the best medicine. All that figuring, and all I had to do was subtract two numbers. Well, I guess that just confirms I made a good decision by not rushing into things. You’re a good teacher.

  417. For more anecdotal retail evidence, I was talking to a mechanic for UPS today. He said with all the talk of internet shopping, he was expecting their volume to be up this year, but so far he said it was down about 6%, at least what he was seeing here in Florida.

  418. Hey, has anybody checked out “Firebrand” lately.

    Its a new channel that only shows commercials, most of which are cool, funny, innovative. Plus hot VJ’s !

    Anyway, check it out … very addictive.

  419. FWIW – Had dinner with high ranking officer of Gamestop the other night. He just was hired 6 months ago (was formerly at Compusa). he told me that revenues were up about 30% since he had been there, attributing higher sales to all the problems with Chinese toys this year, they are selling more games and Wii’s than ever before. Thought someone here might find it interesting here. Thanks guys.

  420. Jamie Lynn Spear … I didn’t do it ! I swear !

    Boy, talk about one trailer park trashy family !

  421. phil- very nice FSLR breakdown, oil price and politics add to the mo- but watching the deferred taxes vs earnings growth looks key.

    b spears- seeing her fall apart is tragic

  422. Ha, just logged in a second ago to see what the AH discussions been…

    Beth / Phil – damn I want to meet you Beth. I must say Phil is pretty sarcastically brilliant in his math, b/c when it comes down to it, it’s pretty simmple geometry. I think people get lost so easily in the options game, but Phil does a great job of dispelling the myths and (if you can read between the lines well enough) you might just learn that you can do barely nothing as far as trading and get away with a ridculous return by anyones’ yard stick. Good job Phil on the “eye opening” explanation, and good job Beth being a “first timer” – very dubious prnouncement BTW. :)

  423. MrN-A bit late but yeah liquor! Candy is dandy but liquor is quicker! A nice bottle of wine or brandy/scotch, whatever it is they enjoy. If you’re into being a big gifter, i’m a whisky drinker and my friend Phil absolutely loves tequila! LOL! Damn, what’s happened to me? I’ll do anything for free liqour these days…

  424. Phil, I have a general policy when it comes to Putin. I don’t say anything negative about him. :)

    Something went down in England w/ of lethal polonium-210 radiation poisoning under less than ideal circumstances. Now I’m not saying that Putin is reading PSW, but I would just like to go no the record and say I like Mr. Putin.

    Alexander Valterovich Litvinenko would tend to agree with me, assuming he was still around. :)

    Putin sent a message that is loud and clear….

  425. Phil, I agree with you 100% – t’s Better to be the Bank/House than the Player:

  426. Shangrali – LOL. That is my all time favorite episode!

  427. phil
    i just read this and laughed my socks off! now if you only were to learn ADVANCED calculus…i can’t imagine the outcome…you’re too much!

    Nexstar – I use a very complex mathematical formula determining the value of the discarded option (Y) from which I subract the value of the acquired option (X) which I then sqare and round off to the third decimal place, take the square root of that number, round that off and add Pi rounded to two decimal places and subract 3.14. That gives me the downside protection differential.

  428. Beth I have no idea how new you are and I mean this with no disrespect. Usually when I write things concise, it comes off offensive.

    But if you’re brand new you need to start ground up. If you haven’t traded before, trade stocks. You’ll make / lose maybe 5-20% on the year, that’s not bad and you get to have some fun in the process.

    If you’ve traded stocks for a bit then:

    1st – Read this:

    2nd – Understand the greeks.

    3rd – Buy a couple long LEAPs… Make some money, lose some money… Get familiar with the liquidity. It is very hard to transition immediately from stocks to calender spreads… Mentally it’s very demanding, and takes a while to get used to the concept… Just Buy 1 lot at time, feel them out. See how the premium slowly decays as the stock ranges…. Get some ideas off of PSW. This site is an excellent tool, like a phillips screwdriver…. Hmmm Phil stock world…. Phil screwdriver… Interesting.

    Moving on.

    4th – Read the K1 Project. Some people don’t do it —- Those people lose money. Don’t be like those people. Leverage on Phil’s experience.

    5 – Lots of people love asking about spreads… Why the 103′s over the 100′s, why the 50′s instead of the 55′s, why the 65′s instead of the 60′s… They all have the same answer. It’s in the K1 project.

    Sometimes Phil makes errors, and yes it’s good that you catch him on it. But the real knowledge isn’t from knowing spreads.

    Try and figure out why does Phil hates GM, why does Phil like BA, why short MA, why Google at 666… Knowing these things makes you a better trader… Knowing what’s the best spread, makes you a better calculator.

  429. Shit DM, once again I find it hard to believe you’re only 21.

    As you went to Hillfield Strathallan does that mean you’re originally from Hamilton? Actually you’ve said a few things in the past that are very English. I picked up on this as I was born in England so I wondered if there is English influence in your life?


  430. BTW DM, you know damn well that a Robertson screwdriver is far superior to a Philips screwdriver. Another great Canadian invention – LOL.


  431. Cap, I totally forgot. The other day when we were talking about inventions and such that we had come up with, I totally forgot to mention that 10 years ago, I wanted to start a cable channel that would only show commercials. Show really good new commercials and classics for cheap/free. Then charge for other ones. I hope they do really well and inspire great commercials that are not G rated.

  432. Beth – I’m not harping on you. I just don’t want you to lose money, cause it sucks, and it’s sucks like no other. Kinda like these girls:

    Stu – Hah! Robertson is the better screwdriver… Would hate to see if there was an RSW…. Robertson’s Stock world LOL…. I was born in England as well, moved to canada while I was young (Caledonia…ish)… Family is really British, but lost the accents over the years..

    Anyways, Born in London, background’s Trinidad, have some scottish and various things in me… Pappy’s Muslim, mum’s presbyterian, and I’m roman catholic.

    Some rabbit hole huh?… Should’ve named me Alice.

  433. DM – While we are at it:

    God I can’t wait for my trip to Korea. Though my wife keeps threatening me that I will have to wear one of these:

  434. God I hope I did not just violate site policy and will end up banned forever from this site…Damn you DM! ;~)

  435. xian – I hope you still take me serious after the last post…

    Just catching up on the days posts and saw your Q on selling an APPL put spread.
    Please, take it from me and other “High Probability” experienced system traders apart of this community – DON’T DO IT!!! I know many traders who make there living this way and I was one of them until I lost my a$$ets when I encountered my fist major market correction.

    I was lured into a false sense of security by selling high probability spreads while abiding to a series of system rules where I would never risk (on paper) more then one months expected returns, never let a short get violated, always have a GTC order to buy back my spread @ 0.20, etc. However, the fact of the matter is that all it takes is one bad month to set you back 3-4 months minimally! What about a major gap down/up or another black swan type event? There is very little that you can do to adjust and hedge for such an event when selling verticals.

    I still put on a high probability trade every now and then when I feel the timing and market conditions are right, or when I have the capital and don’t mind potentially owning the underlying at what I feel to be a discount to its fair value.

    If you really want to trade this way then I would suggest that you read up on Phil’s recent article where he outlined a strategy where you slowly build up your account equity to the point to where you are only risking house money. Problem with this is that all it would take is another major market/equity event to take you all the way back to the beginning. Seems like a sum zero game in the end.

  436. Asia Markets : Thursday, December 20, 2007

    (The following is from WSJ; please cross check with other sources to confirm.)



    Hong Kong*


    DJ Shanghai*






    Baltic Dry Index (BDI) -160 9591

    BDI Charts & Spot Rates –

    * at close
    Sources: Dow Jones, Reuters

  437. Asian Markets End Mixed, China Gains
    Asian markets closed mixed Thursday with Australia slipping into the red after initially rising in the morning and South Korea paring back gains to trade flat. But Chinese shares managed to move higher with property stocks on the advance. Investors were quick to book profits in a highly volatile session with light trade. There was little reaction from the financial markets that Japan’s trade surplus unexpectedly fell 12.2 percent in November from a year earlier to 797.4 billion yen (US$7.04 billion).

    Japanese stocks pared earlier gains to finish flat. The Nikkei closed just 0.01 percent higher. South Korean stocks finished almost 1 percent lower amid lingering worries about turbulent credit markets, but financials surged on hopes the president-elect would carry out deregulation and privatization of state-run banks. Australian shares closed lower for a seventh day of declines, their longest losing streak in more than five years, on worries over credit markets and banks’ exposure to the troubled property sector. While some property stocks rebounded after steep recent losses, investors
    were worried the global subprime mess could infect more sectors.

    Hong Kong shares seesawed in choppy trade, but ended flat, mirroring the shares of heavyweights HSBC Holdings and China Mobile. The Shanghai Composite Index closed up 2.1 percent as index heavyweights PetroChina and Sinopec surged and property stocks rebounded. Banking and property shares, which were hit last week by government tightening measures, were also making gains.

    Banks, Oils Fuel Rally in European Stocks
    European shares rose on Thursday, led by energy shares and banks including HSBC as investors awaited the next injection of liquidity from the Federal Reserve and more quarterly earnings. The FTSEurofirst 300 index of top European shares was up 0.6 percent at 1,491.11 points, having fallen by 0.46 percent on Wednesday. The Fed’s special auction aimed at unclogging the credit markets met good demand on Wednesday. The central bank is set to auction another $20 billion on Thursday. Barclays accused Bear Stearns on Wednesday of loading one of its hedge funds with about $500 million in troubled assets just weeks before it collapsed with another fund. Barclays said it did not have a price figure for the damages.

    The FTSEurofirst is up 0.3 percent this year, compared with a 16-percent gain this time last year, as concern about the impact of the credit crunch and U.S. housing downturn on corporate profitability and the global economy has taken its toll.

    “This is a crisis of confidence and lack of trust between the banks, which will take months to iron out,” said David Buik of Cantor Index.

    Rising crude oil prices pushed up shares in Total and Royal Dutch Shell by 1.1 and 0.8 percent, respectively.

    British energy group Tullow Oil was down 3.5 percent after a disappointing well update. Shares in the company had fallen by as much as 9.2 percent in early trade. London’s FTSE 100 index, Frankfurt’s DAX and Paris’s CAC 40 all rose 0.7 percent. All 16 major western European benchmark indexes were up. Advancing shares on the broader European index outnumbered decliners by about 5 to 1.

  438. Oil rises as US stockpile draw continues to fuel supply fears
    Oil rose, extending yesterday’s gains, after the US Dept of Energy reported a steeper than expected drop in US crude and distillate stockpiles yesterday, reigniting fears supply will be tight over the peak demand winter season.

    Analysts say expectations for unseasonally cold weather in the first quarter of next year in the US northeast, which has already been hit by a cold snap this season, are also fuelling gains. At 9.38 am, New York’s WTI crude for February delivery was up 60 cents at 91.84 usd per barrel, while London’s Brent crude for February delivery was up 55 cents at 92.03 usd per barrel.

    “This week’s (DoE) report was bullish,” said Cameron Hanover analyst Peter Beutel. “Crude oil inventories fell by much more than expected, and with fog again in the Houston Ship Channel this week, it is hard to predict a sudden surge of crude oil into storage. “The decline in utilization was also bullish. At this time of year, we really need to see utilization nearing peak levels before turnarounds in the first and second quarters,” he added. “Distillate stocks were also lower, as one might expect, and stocks are now well below year-ago levels.”

    Copper rises as inventories fall, traders square positions
    Copper rose for a second day running, taking the other metals up with it, as traders digested a surprise fall in LME inventories and as position squaring ahead of the year end also lent support.

    At 9.30 am, LME copper for 3 month delivery was up at 6,640 usd a tonne against 6,510 usd at the close yesterday, when it gained some 2 pct. The LME said in a daily report today copper stocks held in its warehouses fell by 250 tonnes to total 195,675 tonnes. The decline reversed a strong rising trend that has seen inventories almost double since July.

    Elsewhere, lead was up at 2,635 usd a tonne against 2,526 usd at the close yesterday, still benefiting from news that some production in China’s Yunnan province has been halted due to the abolition of a preferential VAT rate. In addition, a surprise decline in LME inventories also boosted the metal. The LME said today inventories held in its warehouses fell by 175 tonnes to total 43,425 tonnes. Overall lead stocks have almost doubled since mid-October. In other metals, nickel was up at 27,200 usd a tonne against 26,700 usd, aluminium edged up to 2,433 usd against 2,430 usd while zinc climbed to 2,340 usd against 2,308 usd.

    Gold closed lower in Hong Kong on Thursday at US$801.50 an ounce, down US$1.55 an ounce from Wednesday’s close of US$803.05.

    Euro, pound slip against U.S. dollar
    The euro and the pound both slipped lower against the U.S. dollar on Thursday after the head of the European Central Bank warned rising inflation was likely to last longer than expected.

    The euro bought US$1.4339 in morning European trading, down from US$1.4381 in New York late Wednesday. The pound slipped below US$2 for the first time in weeks, dropping to US$1.9906 from US$2.0133. The euro’s dip came even as consumer sentiment in Germany, the 13-nation euro zone’s biggest economy, unexpectedly rose, according to the GfK research group. The group’s forward-looking consumer climate indicator for January rose to 4.5 points _ up slightly from a revised 4.4 points in December, and above the 4.0 points that had been expected.

    The pound fell after Wednesday’s release of minutes from the Bank of England’s latest interest rate meeting showed that its monetary policy committee voted unanimously to cut rates to 5.5 percent from 5.75 percent. Markets had expected a 7-2 vote in favor. Lower interest rates can jump-start an economy, but they can also weaken a currency as investors transfer funds to countries where they can earn higher returns. In other trading Thursday, the dollar slipped to 113.23 Japanese yen from 113.35 yen.

  439. Where is everybody – Am I in the right place?

  440. shoot, just realized I wrote geometry last night instead of algebra. VERY silly mistake. will start reading over my comments before posting!