Archive for 2007

Contingency Plans

OptionSage submits:

Most traders I encounter are what I call ‘binary’ traders.  They have a win-loss attitude.  Either a trade goes as expected and they make money or a trade moves against expectations and they suffer losses.  This approach to trading requires good timing on the part of the trader to stay in the game and indeed good discipline.  Investor’s Business Daily, for example, imparts an approach of letting winners ride and cutting losers short.  While this approach has its benefits, I tend not to be a huge fan of it because, by definition, it implies you must accept losses and (if your timing is wrong sufficiently often) those losers, though small in percentage terms, on an individual basis can add up to some hefty losses!

I prefer trading with what I call contingency plans.  Contingency plans take your trading to the next dimension.  It’s like only being aware of 3 dimensions and the finding out there are 10 - like in this video.  Suddenly you realize a world of possibilities exist that had not been countenanced before!  Contingency plans are strict rules that I follow in the event that a trade moves opposite to that which I expected.  You will find Phil has contingency plans in place too for the same reason I do – neither of us are arrogant enough to believe that the market will do exactly what we want it to do 100% of the time and so we have to account for the times when we are wrong!  For Phil, this might include following basic rules for position sizing.  For example on the $25,000 account he discussed in this week’s wrap-up that means no more than 10% in a position, 5% for contracts under $1.  You will see his rules for doubling down in his Strategy section too.  We are both aligned in remaining flexible in the market and accounting for surprises and new trends should they occur unexpectedly.

An example of where contingency plans offer you the opportunity to mitigate loss or indeed maintain profitability is an iron condor.  In this week’s wrap-up Phil commented on the BIDU iron condor from a few…
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Weekly Wrap-Up

I won’t waste time talking about the month as we did that in the previous post so we’ll just run down the numbers and talk about the new format.

We closed out 29 positions with a 92% average gain on 13 average days open for the short week, not counting Friday, which will go into next week to keep the month neat and also because I started a new reporting format that I hope everyone will like.  From June 1st on, we will be tracking our virtual portfolios off a fixed dollar base and I will leave all cash on the spreadsheet.  This will substantially cut down the returns on capital (as a lot of cash will be laying around) but it will also let us benchmark overall virtual portfolio progress.

I tried something like this once before and it was such an annoyance to update that I gave it up, but we’ve just set up a new system and I will give it a try for a month and see how everyone likes it.









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Friday Virtual Portfolio Moves

Posted June 1, 2007 at 9:38 am | Permalink (Edit)

WFR is flying, SOX off to a good start.

LOL – some nervous nelly put my DNDN’s to me so now I’m short 700 shares in my $10KP. Suits me fine for now, I’m up .40 already but I have to clean these out by the day’s end or I will have no buying power.

Posted June 1, 2007 at 9:48 am | Permalink (Edit)

GLW – If it doesn’t break $25.55 then I’ll be worried but I’m more tempted to buy the $25s than sell them.

MRO/SU – I’ll be holding these into the weekend and very sad if I don’t get a pullback, will probably roll them but I’ll decide on Monday.

GCI (Gannett) on fire! Taking $60s at .55 as mo play XXX

Posted June 1, 2007 at 9:58 am | Permalink (Edit)

DJ – As I said in earlier comments, I like the puts but I’m not going to risk it as the deal makes too much sense for the family and Murdoch wants it too much to count him out.

Out of extra 10 DNDN $10 calls at .60 in $10KP, I think they’re going down. I wouldn’t be doing this if I still had the puts but since I’ve had the shorts put to me the math is different. XXX

Posted June 1, 2007 at 10:10 am | Permalink (Edit)

Watch GCI around $60, may be a good spot to 1/2 out. XXX

Posted June 1, 2007 at 10:28 am | Permalink (Edit)

Rates are kicking up on strong job numbers, be careful up here! Setting stops to take stuff off the table.

GCI – dead!

Posted June 1, 2007 at 11:16 am | Permalink (Edit)

CAT – yeah, use up the premium first. I have rolled to the $75s myself and will be selling the July $80s, now $2.51 but I can afford to wait as it’s all profits now.

MO – you want the stock to pop as your putter loses value…
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PSW Contest – Closing Out the Very Merry Month of May

We had a fantastic May and made a lot of good picks and had tremendous returns on our members site.

We closed 263 positions during the month with a 186% average gain and a gain on capital of 299% – that's what we call a great month!

Our members already know what a great job we do and support the site.  Now I would like to ask those of you who read us for free to do me a favor:  This site is supported by advertising and advertising is supported by people like you coming to and reading our site or signing up for the FREE EMail Subscription through FeedBurner, at the top right-hand corner of the free site.  Those of you who do subscribe already know that we never give out your names or Emails to anyone and we don't even ask you to join – I'm not asking you to join now – what I am asking for is for you to help us move this site up to the next level.

We will be closing to new subscribers shortly for the summer as we revamp the site, add some features and launch our first paid newsletter service.  Those of you who are FeedBurner subscribers will get a mailing when we reopen the site, as memberships will be limited, and will get an opportunity to receive the newsletter at a discount.  Right now though, I'm asking for your help in bringing some more people over to the free site so, if you enjoy reading my daily commentary and find the information useful, please do me the small favor of sending this invitation to subscribe along to 5 friends or family members (hopefully not mutually exclusive!) who you think would find this useful as well.

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That's it, that's all I'm asking you to do in exchange for all this free content!  Please though, 5 people.  We want to get to a level of audience where we can negotiate our own ad rates and that's
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Friday Already?

Another fun week comes to an early close.

Oh well, there's a lot to think about over the weekend.  If we can keep going despite all the underlying economic issues then we really may have finally broken orbit and are ready for our moon shot.  As I said earlier in the week, I just need to see one 200-point up day to confirm weightlessness but I'll be lining up new long positions over the weekend as there are a lot of stocks I want to buy on the road to 15,000.

I say this despite the fact that the Shanghai B-shares sold off another 6.4% this morning as foreign funds continue to flee the Chinese market.  A-shares dipped just 2.6%, down 112 for the day but down 224 points from the day's high.  There is a lot of speculation that the market is retreating from the number 4,444 as 4 is a very unlucky number in China as it sounds like the word "death" ("si") in MandarinYou may think this is wacky but we were just joking this week about my gold target of $666 and how many elevators do you go into that have a 13th floor so let he who is without superstition cast the first stone.

The rest of the Asian markets held up very well and even our beleaguered TM shares should get a boost today as the Nikkei picked up another 83 points, putting them back within spitting distance of 18,000.  Of course their last visit to 18,000 ended with a 2,000 point drop in 5 days (how much would you be loving our DIA puts then?) back on 2/27-3/3 but let's all pretend that never happened and call this a healthy consolidation at 17,500.  The dollar is dead in the water again as other countries have a more realistic view of our GDP than we do and commodities are shooting up again but only in dollar terms, not a problem for the rest of the world…

Germany is up a point but the UK is flat ahead of our open but our jobs report was great, up 157K with education jobs up a surprising 54K construction jobs shockingly unchanged so we
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Thursday Wrap-Up

[Downshifting]There's the consolidation we've been looking for.

Nothing to worry about but nothing to get excited about either.  We held our critical levels and survived a disappointing GDP report at just .6%, our lowest level of growth since Q4 '02.  Rising imports and a decline in business inventories each shaved a percentage point off first-quarter economic growth. But continued strength in consumer spending carried the economy forward. Consumer spending, which accounts for more than two-thirds of GDP, jumped 4.4% after gaining 4.2% in the fourth quarter.

The main culprits for the poor report were the bloated trade deficit and businesses cutting investment in supplies of the goods they hold in inventories.  “We are still keeping our head above water — barely,” said economist Ken Mayland of ClearView Economics.

This data seemed to take the Fed further off the table but at the same time the Chicago PMI came in a little stronger than expected and in the confusion the yield on the 10-year note snuck up to 4.89%, the highest level since August which sounds bad until we remember that August was pretty much the beginning of this 1,000-point rally.

It's OK though, we just need to embrace the fact that America has slipped from first to worst on this planet and accept our place as the ball and chain that is dragging down the global economy.  India is expanding at a comfortable 9.4% clip while the Philippines are growing at 6.9% and Malaysia clocked in with 5.3% growth among reporting countries this week.

We've been talking about the housing crisis, the one the Fed thinks will be "contained" all week but let's remember that some of the really bad housing data we've seen lately – the rising inventories, the drop in home prices, the explosion of delinquencies – have been in data reports that have come to light since the last Fed meeting.  I find it impossible to believe the Fed really thinks housing is not a huge problem, the fact of the matter is that they need ANY excuse not to cut rates, because the thing is – they can't.  Our rising deficit (we just approved another $100Bn we don't have for the war that was "off budget") and declining dollar are simply making our Treasury notes downright unappealing and it really would be the straw that breaks the camel's back if all that "non-core"
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Thursday Virtual Portfolio Moves

Posted May 31, 2007 at 9:37 am | Permalink (Edit)

GOOG – don’t panic, if you intend to roll then you can always roll, the postion you will roll to will go up more than the one you intend on buying out so there is no hurry. If the Nas doesn’t hold 2,600 then I doubt Google will hold $500 but watch Apple at $120 too.

DNDN – what a nightmare for complacent shorts!

Posted May 31, 2007 at 9:41 am | Permalink (Edit)

DNDN out of $7.50s at $3, might be too early but WOO-HOO!

Posted May 31, 2007 at 9:52 am | Permalink (Edit)

I will enter DNDN July $10s if they hold $9 and sell the June 10s on a bounce so 10 for the $10KP but only if it holds $9 and starts moving back up.  I placed the spread order at .20 to see if I get a bite for now, if that fills I may still buy 10 more on mo.

Posted May 31, 2007 at 10:12 am | Permalink (Edit)

RDS.A July $75 puts at $1.97 are the only new ones I’m buying. The OIH July $165 puts for $4.35 are the mo play and otherwise it’s a DD on my existing positions. I have no positive plays lined up but I suppose the XOM July $85s at $2 should move well with the stock.

Posted May 31, 2007 at 10:23 am | Permalink (Edit)

Market does not look good to me though..

Posted May 31, 2007 at 10:39 am | Permalink (Edit)

OK so oil inventories were not that bullish and I’m looking at this as a head fake but it’s a big one. Let VLO show us the way and don’t try to outthink it, if they break $75.50 then there will be no stopping the push but I’m accumulating $75 puts at $1.40 with a .20 tstop after my first DD at $1.10 (basis $1.25, stop at .90 for a pretty nasty loss if I blow it). XXX for crazy people!…
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Thrilling Thursday Morning


Another exciting day in the markets!

We have lots of data including the GDP and Jobless Claims at 8:30, the Chicago PMI at 9:45 followed by Construction Spending and oil inventories at 10:30.  I’d say by 11 am we should have a pretty good indication of which way we’re going from here.

Asia didn’t need to wait for our data, the Hang Seng shot up 340 points while the Nikkei rose 287 points but South Korea is the month’s hottest market, breaking the 1,700 mark today, up 10% for the very merry month of May.  Shanghai A shares rose 1.4% after taking a 9% plunge the day before and my regular readers will take note that this is less than a 20% bounce, leaving us unimpressed.  The B shares dropped another half a point but made a strong recovery from an 8.5% drop at the open – possibly a bottom test over there.  From our list of "Duh" stocks (stocks you can just buy based on the name):  China Petroleum & Chemical and Shanghai Pudong Development Bank rose the daily 10% limit.  Industrial & Commercial Bank of China gained 3%, while Aluminum Corp. of China (huge Duh) jumped 7.4%.

The World Bank, in an incredible (as in NOT credible) case of fortunate timing, picked this morning to raise its forecast for China’s growth this year to 10.4%, from 9.6%, down slightly from last year’s 11.1% rateMoody’s said it may raise China’s credit rating (now A2), which would be a big stamp of approval for the government.   The World Bank expects China’s exports to rise 20.6% this year.  It also raised its projection for China’s current-account surplus to $340 billion, or 10.8% of GDP.  White House economists have assured the President that running a country with a surplus is a fairy tale, much like evolution, and should not be taken seriously.

The World Bank said the current-account surplus continues to boost China’s foreign-exchange reserves, and it raised its end-2007 foreign-exchange reserves forecast to $1.389 trillion, from $1.066 trillion at the end of last year. In February, its forecast was $1.334 trillion.  The bank said growth in M2, China’s broad gauge of money supply, will likely be 17% this year, compared with its previous forecast of 16%.  While saying that inflationary pressure isn’t an imminent problem, the bank raised its forecast for consumer prices to a 3.2% increase this year from the…
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What, Me Worry Wednesday?

I wasn't worried, were you?

Well, OK, maybe a little worried but we quickly got over it.  It took us all the way until 9:44 to dump out of our QQQQ $47 puts and another 10 minutes to give up on the DIA $136 puts.  We flipped the FXI calls from sold to owned right out of the box as planned and we hoped for a Daily Double but we had to settle for just 57% on the COH July $52.50s and 71% on the CHL June $45s, which were a very nice pick for the free site this morning.. 

Needless to say we had a very fun morning and Optiondragon called it at 1:38 when he said we were having a pullback into the Fed minutes.  We were all a little cautious ahead into the release but Dragon once again nailed it 4 minutes ahead of the Fed by predicting "The Fed will say the same that ” inflation is the main worry for the committee and that the economy looks strong.”"  and so it was written, so it was done and we were off to the races again just a few minutes later!

As much as this followed my game plan for the day I have to tell you I was stunned by the power of the response to minutes which revealed pretty much nothing new about the economy or the Fed's thinking.  I spent too much time reading the minutes and not enough trading and didn't follow my own advice to buy DIA calls, which I had tee'd up earlier in the morning.  Luckily, ZMan and Happy Trading were there to carry the ball with a slew of excellent picks! 

ZMan had NE June $90s, NFX June $45s and HK June $12.50s,all huge winners on the day as were EOG, CHK, GRP and PQ.  Happy Trading predicted the moves in the Nasdaq, the S&P and the BTK early this morning but his GRMN July $65 calls this morning made everyone money as that stock promptly took off after giving us an easy entryGOOG was another big winner at Wang's World with the July $500s yielding a quick 28% but it was AAPL that gave us all a reason to…
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Wednesday Virtual Portfolio Moves

Posted May 30, 2007 at 9:36 am | Permalink (Edit)

ICE $140 puts at $2.75 as a mo with a .50 Tstop. XXX

Posted May 30, 2007 at 9:44 am | Permalink (Edit)

Nuts – post broke out of QQQQ $47 puts at .97, will roll to july if it heads down. XXX

Posted May 30, 2007 at 9:49 am | Permalink (Edit)

I was saying that RIMM was holding up, AAPL is a gift after the MER upgrade, GOOG looks strong, MRVL is also a gift as it comes down to $15.60… markets just don’t look that bad yet.

Watching 2,550 on Nas (and grabbing QQQQ July $46 puts, now .88) and 1,510 on the S&P and a lack of 13,500 on the Dow as big danger signs (1 of 3 so far). Add gold $660 to the bench and $480 as a level the SOX must retake and 2,900 on the TRANQ for good measure.

Posted May 30, 2007 at 9:54 am | Permalink (Edit)

Happy to get $2 for my DIA $136 puts, moving to July $135 puts at $2.40 XXX

Posted May 30, 2007 at 10:17 am | Permalink (Edit)

NOVC huge deal not optionalble but a mo buy at $14!

Posted May 30, 2007 at 10:18 am | Permalink (Edit)

Oops! Went up $1.20 as I posted it… LOL

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

COH – nice one, worth a chance on the July $52.50s for $1.15 XXX

Posted May 30, 2007 at 10:28 am | Permalink (Edit)

FWLT – watch the $100 puts if you sold them as this is a chance to buy them back at yesterday’s lows if they fail at $103 again. Double top means we can wait and sell the $95 puts later but if they break up we’ll be really glad we sold the $100s. XXX

Posted May 30, 2007 at 10:37 am

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Zero Hedge

Enemy Of The People?

Courtesy of ZeroHedge. View original post here.

Via The Zman blog,

There has never been a time when normal people did not know the media was biased and biased in a predictable direction. For every non-liberal in the media, there were at least ten liberals. The ratio was probably higher, but then, as now, some lefties liked to pretend they were independents or some third option.

The media used to invest a lot of time denying they had a bias and an agenda, but the only people who believed them were on the Left, which had the odd effect of confirming they had a bias and an agenda.


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Phil's Favorites

A 2019 Earnings Recession?


A 2019 Earnings Recession?

Courtesy of 

Shout to Leigh!

On the new Talk Your Book – Josh Brown is joined by Leigh Drogen of Estimize, one of the leading providers of crowdsourced financial and economic data to talk about the trend in corporate profits that could potentially lead to an earnings recession later this year.

What is the thing that Leigh is seeing in the data that Wall Street isn’t yet picking up on? What segment of the stock market is most at risk? Why is the crowd smarter than the narrow consensus of Wall Street analysts?

Check out Estimize ...

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D.E. Shaw Investment Calls For Leadership Change At EQT

By ActivistInsight. Originally published at ValueWalk.

Elliott Management has offered to acquire QEP Resources for approximately $2.1 billion, contending the oil and gas explorer’s turnaround efforts have done little to lift the company’s share price. The company responded and said that a thorough review of the proposition is imperative in order to properly act in the best interests of shareholders, “taking into account the company’s other alternatives and current market conditions.” The news came only a month after Travelport Worldwide agreed to sell itself to Siris Capital Group and Elliott’s private equity arm Evergreen Coast Capital for $4.4 billion in cash and two months after Athenahealth was bought by Veritas and Evergreen for $5.7 bi...

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Kimble Charting Solutions

Gold & Silver Testing Important Breakout Levels!

Courtesy of Chris Kimble.

Gold and Silver from a long-term perspective have created a series of lower highs over the past 8-years. Will 2019 bring a change to this trend? A big test is in play!

Gold since the lows in 2016 has created a series of higher lows, while Silver may have created a double bottom.

Gold & Silver are currently facing break attempts a (1) and (2). These falling resistance lines have disappointed metals bulls for the past few years.

The direction of Gold and Silver weeks and months from now should be highly influenced by what each does as they are attempting to break above important resistance levels.

To become a member of Kimbl...

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Insider Scoop

UBS Says Disney's Streaming Ambition Gives It A 'New Hope'

Courtesy of Benzinga.

Related DIS Despite Some Risks, Analysts Still Expecting Double Digit Growth From Communications Services In Q4 ... more from Insider

Digital Currencies

Russia Prepares To Buy Up To $10 Billion In Bitcoin To Evade US Sanctions

Courtesy of Zero Hedge

While the market has been increasingly focused on the rising headwinds in the global economy in general, and China's economic slowdown in particular, while the media is obsessing over daily revelations that Trump may or may not have colluded with Russia to get elected, a far more critical, if underreported, shift has been taking place over the past year.

As we reported in June, whether due to concerns over draconian western sanctions and asset confiscations following the poisoning of former Russian military officer Sergei Skripal, or simply because it wanted to diversify away from the dollar, Russia liquidated virtually all of its Treasury holdings in the late spri...

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Chart School

Weekly Market Recap Jan 13, 2019

Courtesy of Blain.

In last week’s recap we asked:  “Has the Fed solved all the market’s problems in 1 speech?”

Thus far the market says yes!  As Guns n Roses preached – all we need is a little “patience”.  Four up days followed by a nominal down day Friday had the market following it’s normal pattern the past nearly 30 years – jumping whenever the Federal Reserve hints (or essentially says outright) it is here for the markets.   And in case you missed it the prior Friday, Chairman Powell came back out Thursday to reiterate the news – so…so… so… patient!

Fed Chairman Jerome Powell reinforced that message Thursday during a discussion at the Economic Club of Washington where he said that the central bank will be “fle...

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Members' Corner

Why Trump Can't Learn


Bill Eddy (lawyer, therapist, author) predicted Trump's failure based on his personality, which was evident years ago. This article, written in 2017, references a prescient article Bill wrote before Trump became president, in July, 2016, 5 Reasons Trump Can’t Learn. ~ Ilene 

Why Trump Can’t Learn

Donald Trump by Gage Skidmore (...

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Opening Pandora's Box: Gene editing and its consequences

Reminder: We are available to chat with Members, comments are found below each post.


Opening Pandora's Box: Gene editing and its consequences

Bacteriophage viruses infecting bacterial cells , Bacterial viruses. from

Courtesy of John Bergeron, McGill University

Today, the scientific community is aghast at the prospect of gene editing to create “designer” humans. Gene editing may be of greater consequence than climate change, or even the consequences of unleashing the energy of the atom.


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Mapping The Market

Trump: "I Won't Be Here" When It Blows Up

By Jean-Luc

Maybe we should simply try him for treason right now:

Trump on Coming Debt Crisis: ‘I Won’t Be Here’ When It Blows Up

The president thinks the balancing of the nation’s books is going to, ultimately, be a future president’s problem.

By Asawin Suebsaeng and Lachlan Markay, Daily Beast

The friction came to a head in early 2017 when senior officials offered Trump charts and graphics laying out the numbers and showing a “hockey stick” spike in the nationa...

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Swing trading portfolio - week of September 11th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.


This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...

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Free eBook - "My Top Strategies for 2017"



Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:


·       How 2017 Will Affect Oil, the US Dollar and the European Union


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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

Learn more About Phil >>

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About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

Market Shadows >>