Archive for 2007

Weekly Wrap-Up

Why do I still have so many open positions?

I set stops on Friday when I left (noonish) figuring I would let the chips fall where they may and take me out of this mess of a week but hardly anything moved enough to take me out…

There are still 75 open positions with a 42% average gain on 19 average days openThat's half the gains of last week!  Part of this was the result of opening 22 new positions and part of it was the result of buying out 21 callers and putter which raised the basis considerably as we haven't really sold any February contracts yet. 

Nonetheless, less is less and we would have been better off taking the money and running last Friday rather than give back half our gains just to keep playing in what we knew was going to be a very rough week.

As I said last week, without our reduced premium positions on Apple, RIMM and SPF, we were only sitting on 23% with our open positions and buying back our callers cost us dearly on those.  That is the price you play for playing it safe!

Amazingly, we managed to take 32 positions off the table this week for an 85% average gain on 15 average days held.  This is well below last week's 119% but still a respectable 15 day return in the grand scheme of things.  Our winners continued to be dominated by oil puts and it was the oils we left on the table that caused the bulk of the damage in our remaining open positions as doubles turned into halves on the last day of trading.

Unlike last week, where we had just one losing trade to close (Ebay!), this week's expiration forced us to confront the harsh reality of 6 wipeouts:  MOT Jan $20s, OII Jan $37.50 (roll), QQQQ Jan $45.63, TXN Jan $30s, VLO Jan $47.50 puts and WCI Jan $20 puts.  It's really hard to do well when 6 of your position lose over 85%.

Luckily we had 10 positions that more than doubled and only 2 other losers (Mer Jan $95 puts, down 16% and PLCE Feb…
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Friday Flatline

Nothing of note happened today.


We had minimum movement from our indices but a minor bounce from the Nasdaq and the SOX with the Transports holding firm so, on the whole, a great big nothing of a day…

We had a very sudden 30 point sell-off in the Nasdaq in the Monday after expiration last month and this month it took 3 sessions to drop the Nasdaq 60 points – to the exact same spot!  The same spot that (coincidentally, I'm sure) the Nasdaq was at the Monday after November options expiration.  Don't you just love it when everything works out like that for the options sellers!

Luckily, those options sellers were us as we sold calls and puts against 1/3 of our open positions, playing the house nicely in a very choppy month.  The returns aren't as sexy but thet sure beat losing money!

The Dow blah blah, the S&P blah blah – just click back in the week and read any EOD commentary, we both have better things to do than go over into that on the weekend!

Oil was interesting only in that it failed to get back to $52.10 despite a really huge effort.  $51.99 was the best they could do with just 65M barrels remaining open for February delivery.  As I suspected they forced the open contracts to an artificially low point in order to have some pumping room for the last two days (Friday and Monday). 

March contracts are sitting at a MASSIVE 387M barrels.  This is big trouble for traders who have until Feb 20th to bring them down to some number that can actually be accepted in Cushing during March.  Since 94Mb was adequate for January (more than adequate it seems as we had an 11Mb build last week) and less than 70Mb seems all right for February, one can only wonder what the traders think they are doing with the other 300 Million barrels they have contracts for.  Hopefully they are making IPods out of oil, otherwise it will just end up being a cheap substitute for ethanol this spring…

Cushing itself has a 25Mb storage capacity, so it would take 12 turns of inventory (oil dropped off and picked up) in 31 days in
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Friday Virtual Portfolio Moves

Wow, it’s been a week of this new section – seems to be working well other than being kind of ugly….

Posted January 19, 2007 at 9:38 am | Permalink (Edit)

Don’t forget to take out any in the money January calllers/putters you may have left no matter what by EOD (and don’t leave it until the last half hour!).

Also, at least ask for a nickel on posiitions that are wiped out, it pays the commission if you get it!

Posted January 19, 2007 at 10:07 am | Permalink (Edit)

HET – I’m waiting, hopeing to take out my putter a little cheaper.

  • AIG – .15 trailing buyback on Jan $70 caller
    • currently $1.25
  • BEAV – taking out my April $25 caller for $4
    • setting $4.75 stop on my July $25s
Posted January 19, 2007 at 10:25 am | Permalink (Edit)
  • COF – Takiing out Jan $75 caller for $2.55,
    • selling Feb $75 if it goes as low as $3.25 – otherwise letting it ride
  • DNA – buying out Jan $85 caller for ($3)
    • selling Feb $85 caller if it goes as low as $4.25 – otherwise let it ride
  • EXPE — taking out Feb $20 caller for .15
  • STN – buying out Jan $80 caller for $1.50
    • waiting to sell Feb $80s, no less than $1.75

If Apple breaks $90 I’m taking out my remaining callers! 

Posted January 19, 2007 at 10:48 am | Permalink (Edit)


  • Taking out DIA $125 caller for .50 (.55 if I have to)
  • Taking out HAS Jan $27.50 caller for .65
  • Taking out HRB Jan $22.50 caller for $1.90
  • Taking out ORCL Jan $17.50s for .05
  • Rollling RIMM Jan $125 puts for $2.65 to Feb $130 puts for $9.90 to lock in massive returns
  • STX - DD on the Mar $27.50s at .85
  • Taking out XOM Jan $72.50 putter for .10 – another one I

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Finally Friday

I can't wait to get out of this week!

What a disappointment it's been.  We'll have to wait until next week to see how much of this action is option pinning and how much is a genuine change in market sentiment.


As is often the case, when I take a day to step back and objectively observe the markets, I still see a lot of underlying strength but that doesn't mean we can't have a nice, healthy correction here.  As I said on Wednesday the 10th:  "Are you prepared for a down 295 point day?  Let’s remember I am a bull with a short-term target of Dow 11,500!  I would like to say I would be pleasantly surprised to be wrong but I will not be able to really enjoy additional advances unless we get a long-overdue correction out of the way.  As I said yesterday, if the IPhone can’t inspire people to get back into tech, then we really do have to lighten up at this point."

Did everyone cover themselves?  I hope so because it will be very hard to go through the weekend without a good mix of puts and calls as pretty much nothing is being rewarded this week and the sentiment shift could lead to that long-awaited correction.  I said yesterday in comments that I have no idea what will happen next week – and I am prepared to stand behind that statement!  While it would be a shame to turn back here, it's all part of normal market action and very much a part of orbital physics as well!

Asia was mixed, with Tech shares killing those markets too while Europe is off slightly, also on Tech!

We won't know until next week – whether this week's action was natural or the result of a massive manipulation of stocks to force long-standing leaps out of the money (see yesterday's comments) so the best thing to do is wait and see:

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Thursday Thump


That was nasty!  Not really bad in the big picture but for those with a short-term view of the markets, that was a scary little dip today.  Canaries are dropping like flies and, to further puree a metaphor, we have a full-fledged flame-out on our Nasdaq engine and the SOX drive is shot!

Well that's OK, the manual says: "In case of Nasdaq engine failure switch to the Transport drive."  What?  Down 16 you say?  How about the backup Russell engine?  Fell apart at 780?  OK – time to panic! (just a little).

We did hold our senior index levels today!  But when you're driving with 7 major tracking indices and you have a blowout on on 3 of them, you'd better schedule a pit-stop fast and rotate your positions or you may crash and burn on the next curve!

Hard to get enthusiastic isn't it?

I can forgive the Dow, the S&P and the NYSE – they are dragged down by the commodity sector but the other indexes are supposed to provide some sort of leadership and they have really fallen apart.  Blame Bernanke for being a downer this morning, warning congress that "that rising entitlement spending could create a "vicious cycle" of rising debt and interest payments and an eventual fiscal crisis."  Not exactly a tune you want to whistle is it?

Oil was no help today, falling so hard, so fast that it made investors think something was wrong with the global economy, despite CPI and PPI evidence to the contrary.  IBM's net was up 11% but it sold off, Apple was up 48% but it sold off, Merrill Lynch was up 68% but they
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Thursday Virtual Portfolio Moves

Apple, Apple, Apple!

This may happen fast or it may not but be ready to buy out your out of the money callers:

  • Feb $100 callers were $3.50 yesterday
    •  we sold them for $2.80 protect your gains with the 20% (of the profits) rule.
  • Jan $95s were sold for $3.60
    • same plan, treat it like a naked gain, worry about your longer call later but don’t give up more than 20% of your profits

Personally, for .25-.50 I take the money and run, I don’t need the extra dime once I’m up more than 66%.

The deeper calls we’ll have to watch at the open once they price the options.  It would be great for those postiions if Apple sold all the way down to $80 but I kind of doubt that’s going to happen.

Oil plays:

I should have organized these better and had a list ready but I didn’t.  Let’s look for any of the currently open plays that fall way behind (50%) as postential DD candidates but we will absolutely wait until inventories and follow the Valero Rule today.  I’m willing to sit tight on these positions as they are minor but I’m not willing to throw good money after bad. 

  • The XOM April $80 calls are great movers at .80 if you are still uncovered.  I took a DD on Tuesday at .75 and they’ve barely budged so you probably won’t lose too much if XOM goes down to $71 again and it’s great upside protection as it could hit $1 on a spike.

If the markets can’t get it in gear today then it will be time to lighten up in general.  As I often say "When in doubt sell half." So consider cutting down on exposed positions if the Dow fails at 12,600 and especially if the Transports, SOX and Nasdaq are determined to lead us downward!

I am not going to be able to issue 100 notes on things I am cutting back on but I will say REDUCE if I feel it comes to that.  Remember – I am way ahead and generally conservative so I have a low threshold for riding out a shakey market.  Consult a professional financial advisor (or anyone saner than me) before jumping on anything one way or the other as it has to
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Thinking About It Thursday

Apple is still trading down pre-market (6am)!


They beat earnings by .36 (48%) but that somehow isn't enough to get people excited.  Cramer made a bearish call on tech in general yesterday, especially cell phones, handheld products, storage stocks, semiconductors and software (I guess that leaves just cappuccino machines and treadmills).

He did give his blessing to our holdings of AAPL, HPQ, GOOG and MSFT as well as CSCO, which we just dumped and LVLT, which I disagree with until they pull back to the $5s.

I think it may be just a little premature to write off tech just yet, although I warned yesterday morning that the ides of March are nigh, I still think we are too near escape velocity to cancel our moon shot after just one orbital pass.

Not to pick on Cramer but seriously, the man just spent Tuesday morning telling people this is the year of the Nasdaq and then a day later, he reads my headline and changes his opinion 180 degrees – Jim, don't take me so literally!  I'm cautious but I haven't thrown in the towel just yet…

Both the PPI and the Fed Beige book indicated the economy is still moving along nicely and I strongly believe the entire tech cycle is being dragged down by the delayed Vista launch.  While a late winter will dampen enthusiasm, I think an early spring will get CEOs to whip out their checkbooks and pump up IT spending sooner than expected as you tend to want to get your year into focus before you start thinking about summer vacations.

As with yesterday, the Asian markets shrugged off our lackluster performance and turned in some very nice numbers with the Nikkei climbing another 109 points back near the ATH at 17,370 while the Hang Seng added another 212 points to finish at 20,277.

I jumped the gun yesterday as I should have said, there will be no way the BOJ raises rates tomorrow when I said "The BOJ backed off raising their rates for this session."  Sometimes I'm so sure something is going to happen I think it's already news!  As I said to someone yesterday, the problem with being a fundamentalist is sometimes it takes the markets some time to catch up with you…

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Wrong Way Wednesday Wrap-Up

I did not like that!

Intel got us off to an awful start and oil raised its ugly head back over $52, breaking my $52.10 danger zone on a huge end-of-day pump that had crude finishing $1.64 above its low of $50.60. 

When we tested my week’s target for oil at $50.79 on Tuesday, at 1:39 I said: "We’re just over my mark of $50.79 so be careful with oil short oil plays here!Just a half hour later I said: "Really, really this is a good time to take oil off the table!!!!" 

We dumped all but our long oil puts but first thing Wednesday morning I amended it and warned: "Valero rule says get out! There will almost certainly be pain if you hold so only do so if you like it!"

Zman opened his new section on our site (we are testing this week but this is going to be a huge addition!) with the comment:  "Exculpatory Clause To Today’s Generally Bearish Comments: Watch out for a potentially large bounce off $50.00.!!! If we don’t knife through it the bounce could be very painful so watch your puts. "  And we’re not the types that need to be warned twice, yet alone 4 times!

As we discussed further in comments, we are not holding any oil positions that we aren’t ready to either double down on at half or roll into
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Wednesday Virtual Portfolio Moves

Posted January 17, 2007 at 9:53 am | Permalink (Edit)
  • Looking for a chance to take out my AA caller, hopefully .30 or less.

THINKING ABOUT (NOT DOING) Offering $2 to take out my GOOG $510 caller // Offering $6 to take out the $500 caller

  • DHI – looking to DD on Feb $25 puts for .40

Valero rule says get out! There will almost certainly be pain if you hold so only do so if you like it!

Posted January 17, 2007 at 10:40 am | Permalink (Edit)

JOSB on a nice roll – 3% today

  • DD on KBH Feb $45 puts for .45
Posted January 17, 2007 at 11:04 am | Permalink (Edit)
  • AAPL – The Feb $100s for $3.70
    • selling the Jan $95s for $3.60.

Your risk is the $1.30 between $95 and $100 through Friday minus whatever premium you will still get for having an extra month. It only costs you a dime and if Apple tops out around $95 to the end of the week it could be a $1.50+ return.

Posted January 17, 2007 at 11:42 am | Permalink (Edit)
  • FXI – selling the Jan $107s for $1 against out $110 leaps
    • the $107s have to go to $108 to cost us money and we are already way ahead on the underlying.

Posted January 17, 2007 at 11:51 am | Permalink (Edit)

  • Now I am taking out my Google callers! 
  • CHK Feb $27.50 puts for .60 are nice 


Posted January 17, 2007 at 12:37 pm | Permalink (Edit)
  • CTX – higher than yesterday’s stupid spike! I like the Feb $50 PUTS! for .85.
    • I made a mistake earler and wrote 50s but, of course, they weren’t .85!
Posted January 17, 2007 at 1:31 pm | Permalink (Edit)
  • STX – here’s an interesting play.  You

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Which Way Wednesday?

Et tu, Intel!  Then fall, Nasdaq.


It's looking pretty dire for the Nasdaq as first SYMC, then RACK, the SOX and now even INTC all take a stab at it.  Will the Nasdaq die a death of 1,000 cuts?  It's really just the top 100 we care about but there's a lot of pressure mounting on Apple, IBM and MOT to give us a brighter vision of the future of tech than we've gotten so far this week.

As I said last week, we need Nasdaq leadership to guide that commodity money off the sidelines and into something new – I'm not sure that the industrials will be up to the job.  Like the Roman senate, the analysts are all too willing to take down the Nasdaq just as it's breaking out but they have no clear plan for a successor!  Without a hot sector – the markets, like Rome, will crumble.

Asian markets weathered Intels storm fairly well yesterday, also working hard to shake off falling commodity sectors.  The BOJ backed off raising their rates for this session, a bit of a surprise that rallied the real-estate sector over there (you'd be amazed at what kind of house you can get with a 1.5% mortgage!).  We had a Bugs Bunny rush back into steel, real-estate and construction with banks giving up some ground as there is not much margin to be made on 0% interest.

Europe is trading flat ahead of our open and their timing couldn't have been worse for Intel as the EU is recommending formal charges against INTC for not playing nice with AMD.  As we know from Microsoft's monopoly case, the EU's bark is worse than it's bite but never underestimate investors' fear of a barking dog.

Back home we got some good news from JPM, who are still cranking out profits at a record pace with a 50% increase in investment banking revenues.  That perked up the DOW pre-marked, which includes JPM as a component.  Still, I'm going to be watching the downside today as anything up is obviously good:

  • Dow 12,550 needs to hold, with luck we can make progress towards 12,600 but just staying halfway there would be great!

    • Transports need

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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...

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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 >>