Archive for 2007

k1 Project – Earnings – Dragon’s Story

When Napoleon was asked which generals to take to war Napoleon answered "Give me the Lucky ones." – optiondragon

For the past 4 years I have been perfecting the Earnings 3 ways method. One of my specialties is event catalyst volatility plays. – optiondragon

One of my best friends Dad didn’t believe that I made $200,000 strangling GOOG earnings back in 2005 2nd Q earnings. I run into these people everday. I just shrug my shoulders and move on when they don’t take my ($1000)bet that i did. What are u gonna do? – optiondragon

Short Weekly Wrap-Up

I’m still on the road so I’ll keep this fairly brief.

I won’t be able to update the member spreadsheets until Tuesday as tomorrow is a travel day but there has been little changed since the ones I published on Wednesday. This does bring up an interesting point though.  If you reread my recent post about virtual portfolio balance and go over the positions we had open in Wednesday’s virtual portfolio reviews I think that article would really hit home.

If we just left all those virtual portfolios completely alone since Wednesday morning (and, for the most part we did) you can run through the updated prices and see:

  • The Short-Term Virtual Portfolio gained $49,130 (6.2%)
    • These are profit improvements on open items, not virtual portfolio gains, which, in the STP’s case would be over 12% in just those 2 days.
  • The Long-Term Virtual Portfolio gained $8,325 (2.3%)
  • The $10,000 Virtual Portfolio lost $50 (-6%)
  • The $25,000 Virtual Portfolio gained $2,260 (28%)
  • Happy 100 lost $400 (-2%)
  • Complex Spreads gained $13,220 (4.9%)

This is a great illustration of the point I was trying to make a couple of weeks ago.  If we learn to balance our virtual portfolios, then wild swings in the market shouldn’t bother us, even if we go on vacation and stop trading for a few days.  Sure we could have done much better had we traded those wild swings on Wednesday and Friday but we can make money any time – balance gives you control of your virtual portfolio and, by extension, control of your life so you can make time for the things that truly matter.

I often quote Charles Dow (of the DIA and founder of the WSJ), who said: "If you speculate and intend to make a fortune, you may end up broke, but if you speculate to earn a good return, you may just get rich."  If we construct a virtual portfolio that brings in even a modest, reliable return, month after month, then we can afford to engage in a little speculation when it suits us.  More importantly, we can afford to take the occasional break and enjoy friends and family – things we really can be thankful for in life.

Balance will continue to be our theme as long as we stay in this choppy market.  I know it ALMOST looked like we were going to pop out of my
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Retail Survey

Let’s use this post to build on David’s report on various geographic areas.

Please don’t use it for chat, it would be nice to have a place where we can search for information using CTRL-F so let’s make sure we do something like this:

Wayne, NJ – Willowbrook Mall packed every day, couldn’t get a table at CAKE for 45 minutes and GPS and ANF were full of kids but BBW was like a ghost town.

In other words, try to give cities, states and symbols whenever possible.  Anectodal evidence is very powerful when it’s grouped together!


- Phil


Feast or Famine Friday

SnoopythanksgivingI don't know about you but I'm stuffed.

Not just from Thanksgiving indulgences – it's been a wonderful year in the markets and we have much to be thankful for.  It should be remembered that Thanksgiving is one of many harvest festivals celebrated around the world and it may be a good time to think about harvesting some cash from our stock virtual portfolios if it looks like we're heading into a long, cold winter in the markets.

Now this is interesting because I said "if" and, since I started writing this article last night, we already have some member comments treating it as IF I said WHEN it looks like we're heading into a long, cold winter!  What happened to Santa Clause and his famous rally?  How quickly we all lose faith?  I don't know IF the markets will turn back or not, I just want us to be mentally prepared for the not but I stick by my pre-Thanksgiving assertion that we were being flushed out of the markets ahead of a "black Friday" that may see a lot more green than our low expectaions are allowing.

It's not simply because the markets dropped that I think we will bounce, it's the way they dropped.  GS clearly came out on the attack, downgrading everything in site the day after CitiBank (who were downgraded by GS too with an outrageous statement that they have $15Bn in losses) downgraded ETFC in a hysterical statement the ETrade may be insolvent which poor ETrade has denied but nobody is listening.  This week of negativity was capped off with former Goldman CEO, Hank Paulson suddenly deciding to tell us he sees a mortgage crisis.

There were no new facts and nothing had indeed gotten worse than it was when I was warning you about all this same stuff as the market was flying to 14,000 and we decided to join the crowd and party like it was 1999.  This meltdown was so fundamentally obvious that I only missed the exact moment by 24 hours when I called it 3 weeks in advance but now we've had our correction and, as I mentioned two weeks ago in the weekly wrap-up (I'm on the road so I don't have the links), the technical boys are wrong about the bottom because they're not adjusting…
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AIG woes whet bears’ appetite…while at TIBCO, the call cornucopia runneth over

Today’s tickers: AIG, PRU, CVH, TBX, XLF, GM, VIX

AIG – Shares in American International Group, the world’s largest insurer by market value, hit their lowest level in more than two years after the company announced late yesterday that it has pre-empted the theme of an early December investor conference in order to discuss its exposure to the ailing U.S. home mortgage market in greater detail. Concern about the capacity for further writedowns was reflected immediately in a near 47% jump in AIG’s implied volatility to 63%, levels not seen since 2002, as option traders put some 56,000 options in play before noon. The option action here is characterized by buying in the December puts at strikes of 45 and 50, with additional call volume at the December 50 strike at a level twice the open interest. Most of these calls are trading to the middle of the market, making it hard to discern the order flow, but a buyer of this call might be doing so in conjunction with puts at the same strike in a volatility-based straddle combination, or may be anticipating AIG shares to bounce back from the $50 level in December if the investor conference succeeds in allaying investor concerns about its mortgage exposure.

PRU – Prudential Financial – With stocks melting just about everywhere today, there is no respite for the Pru as options traders step up to the plate and lift puts. Options aren’t hugely traded in this issue, which is why our market scanners picked it up today. Traders are playing the put side and sending volumes to more than twice the daily average rate. Open interest of 163,950 contracts compares to today’s volume of 13,075 lots. Investors seem to be buying protection against a further slide in the share price below today’s 2.5% loss, where shares are left trading at $91.83. In the December contract the 80, 85 and even 95 puts have been active. The share price has slipped 9% in one week and is now threatening a two-month low. All three of the most active December puts are trading at around the current level of open interest in the individual strikes, but these are likely more opening trades at a time when investors across the board are reaching for protection. Curiously in the January series at the 55 strike some 2,779 lots have traded at premiums between 0.15…
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Whipsaw Wednesday

And down we go again!

Gosh, who'd have thought I've gotten too bullish?  It seems that might be the case.  As Fredrang pointed out, the August lows may have been 12,845 officially but the Dow touched 12,517 that day.  On the one hand ouch and, on the other hand, don't forget to take those mattress plays off the table if we get that crazy.

I'm not saying we're going to go there today but it doesn't look pretty over in Asia, where the Hang Seng dropped 1,153 (4%) and was only saved by the closing bell while the Nikkei plunged right into the 2.5% rule and finished down 373, breaking below the critical 15,000 mark in a very steep drop at the end.  At least, UNLIKE THE US MARKETS, the Asian markets tend to pick a direction for a day and stick with it!  Shanghai A shares lost another point, down to 5,473 from 6,250 on 10/31.  That's a 12.4% drop in 21 days, far worse than our own 7% (so far) drop in the same period but you won't hear this from the Mainstream Media because it does not serve the China growth myth they keep trying to shove down your throats.

Remember the A shares are the ones that are NOT manipulated by foreign institutions and reflect, for the most part, the sentiment of the actual Chinese investors.  Japan's MTU reported a 49% drop in net profit, roughly $2.4Bn lower than last year and the bank is worrying investors by claiming just $182M of anticipated losses on the $2.4Bn of sub-prime loans that are still on their books.  Meanwhile, no matter how bad things are in Japan – at least they're not America and the Yen hit a new high against the dollar, falling below the hyper-critical 110 yen to the dollar mark – all the way to 108.89.

That's it folks – if we fall below the Yen we have officially gone to bottom of the global currency chain and Japan is a country that has effectively been in a recession for 20 years!

Our pre-markets are tanking as global investors are simply losing confidence in our markets as well as our economy.  "What the heck were the wild ups and downs in
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$10K Virtual Portfolio Status

I cannot tell you how happy I am that all we have in here is the closed-loop Applefly position.

Leave it!  Have a nice family weekend, we’ll make money next week:

Description Type Cost Basis Opened Sale Price Closed Days Gain/Loss $ %
2 DEC 07 180.00 AAPL CALL (APVLP) O $ 880.00 11/19/2007 $ 920.00   2
$ 40.00 4.5 %
2 DEC 07 160.00 AAPL PUT (APVXL) O $ 910.00 11/20/2007 $ 1,050.00   1
$ 140.00 15.4 %
2 DEC 07 165.00 AAPL CALL (APVLM) O $ 2,320.00 11/20/2007 $ 2,510.00   1
$ 190.00 7.6 %
2 DEC 07 170.00 AAPL PUT (APVXN) O $ 1,880.00 11/20/2007 $ 2,440.00   1
$ 560.00 23.0 %
Total Gain/Loss for AAPL
$ 930.00 15.5 %
Total Gain/Loss
$ 930.00 15.5 %

$25K Virtual Portfolio Status

What a nasty turn from yesterday!

Clearly we are not hedged enough here and I can see how it is easy to get lost on the Applefly trade once it gets off the template.  The short answer is that once we complete a round (both legs filled) with a good price, we are not obligated to complete the next round with the same strikes as the 2 spreads can function independently of each other.  While this is obvious to me I realize it is not necessarily obvious to you so I apologize for getting annoyed with all the Apple questions yesterday.

Hopefully Sage will have some time to do an article on this trade and the strategies around it as he explains these things much better than I do.  For today, I would suggest taking some January DIA puts, perhaps 10 $129 puts for $4 to hedge against a catastrophic drop but we are 90% in cash so I’m not too concerned.

Description Type Cost Basis Opened Sale Price Closed Days Gain/Loss $ %
10 DEC 07 150.00 AAPL PUT (APVXJ) O $ 4,710.00 11/15/2007 $ 2,760.00   6
$ -1,950.00 -41.4 %
10 DEC 07 165.00 AAPL PUT (APVXM) O $ 7,100.00 11/15/2007 $ 12,740.00   6
$ 5,640.00 44.3 %
10 DEC 07 165.00 AAPL CALL (APVLM) O $ 11,600.00 11/15/2007 $ 11,990.00   6
$ 390.00 3.3 %
10 DEC 07 175.00 AAPL CALL (APVLO) O $ 6,160.00 11/15/2007 $ 6,500.00

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Happy 100 Virtual Portfolio Status

This virtual portfolio was the wrong strategy at the wrong time and I’m inclined to shut it down.  Of course I’m hedged in the STP for the downside but I don’t like to lose and it is very frustrating for me to have these laying here.

Description Type Cost Basis Opened Sale Price Closed Days Gain/Loss $ %
40 JAN 08 52.50 AMGN CALL (AMQAZ) O $ 20,530.00 10/9/2007 $ 14,200.00   43
$ -6,330.00 -30.8 %
Total Gain/Loss for AMGN
$ -6,330.00 -30.8 %
20 JAN 08 22.50 HXL CALL (HXLAX) O $ 5,910.00 9/26/2007 $ 4,800.00   56
$ -1,110.00 -18.8 %
20 DEC 07 25.00 HXL CALL (HXLLE) O $ 1,500.00 11/16/2007 $ 2,190.00   5
$ 690.00 31.5 %
Total Gain/Loss for HXL
$ -420.00 -5.7 %
20 JAN 08 110.00 IBM CALL (IBMAB) O $ 13,690.00 9/6/2007 $ 5,300.00   76
$ -8,390.00 -61.3 %
Total Gain/Loss for IBM
$ -8,390.00 -61.3 %
40 JAN 08 40.00 IMCL CALL (QCIAH) O $ 20,610.00 9/24/2007 $ 12,000.00   58
$ -8,610.00 -41.8 %
40 DEC 07 40.00 IMCL CALL (QCILH) O $ 9,000.00 11/20/2007 $ 9,390.00   1
$ 390.00 4.2 %
Total Gain/Loss for IMCL
$ -8,220.00 -27.8 %
Total Gain/Loss
$ -23,360.00 -32.8 %

Complex Spreads Virtual Portfolio Status

This one’s a mess with al the Googs but the Decembers are sells as are the CROX Decembers:

Description Type Cost Basis Opened Sale Price Closed Days Gain/Loss $ %
20 JAN 10 40.00 CROX CALL (LYPAH) O $ 34,510.00 8/21/2007 $ 27,200.00   92
$ -7,310.00 -21.2 %
20 DEC 07 60.00 CROX PUT (CQJXL) O $ 8,010.00 10/17/2007 $ 42,600.00   35
$ 34,590.00 431.8 %
20 JAN 08 37.50 CROX CALL (CQJAU) O $ 14,810.00 11/1/2007 $ 10,200.00   20
$ -4,610.00 -31.1 %
20 DEC 07 42.50 CROX CALL (CQJLV) O $ 3,500.00 11/19/2007 $ 5,990.00   2
$ 2,490.00 41.6 %
Total Gain/Loss for CROX
$ 25,160.00 41.4 %
20 JAN 08 5.00 DNDN CALL (UKOAA) O $ 5,610.00 6/1/2007 $ 1,420.00   173
$ -4,190.00 -74.7 %
Total Gain/Loss for DNDN
$ -4,190.00 -74.7 %
15 JAN 09 680.00 GOOG CALL (ZPXAP) O $ 34,510.00 9/19/2007 $ 166,800.00   63
$ 132,290.00 383.3 %
10 MAR 08 620.00 GOOG CALL (GOOCD) O $ 14,510.00 10/8/2007 $ 81,100.00   44
$ 66,590.00 458.9 %
20 JAN 08 650.00 GOOG CALL (GOOAJ) O $ 37,510.00 11/12/2007 $ 84,400.00   9
$ 46,890.00 125.0 %
10 DEC 07 650.00 GOOG CALL (GOOLJ) O $ 29,000.00 11/20/2007 $ 31,690.00   1
$ 2,690.00 8.5 %
20 DEC 07 650.00 GOOG CALL (GOOLJ) O $ 58,000.00 11/20/2007 $ 63,390.00   1
$ 5,390.00 8.5 %
15 DEC 07 650.00 GOOG CALL (GOOLJ) O $ 43,500.00 11/20/2007 $ 47,540.00   1
$ 4,040.00 8.5 %
Total Gain/Loss for GOOG
$ 257,890.00 118.8 %
20 DEC 07 140.00 SHLD CALL (KTQLW) O $ 9,010.00 10/8/2007 $ 900.00   44
$ -8,110.00 -90.0 %
Total Gain/Loss for SHLD
$ -8,110.00 -90.0 %
10 JAN 27.50 YHOO CALL (VYHAY) O $ 4,360.00 5/17/2007 $ 4,800.00   188
$ 440.00 10.1 %
10 DEC 07 27.50 YHOO CALL (YHQLY) O $ 1,050.00 11/20/2007 $ 1,340.00   1
$ 290.00 21.6 %
Total Gain/Loss for YHOO
$ 730.00 13.5 %
Total Gain/Loss
$ 271,480.00 91.1 %



#1 Performing Global Macro Hedge Fund Sees More Shorts Opportunities Ahead As China Bursts

By Jacob Wolinsky. Originally published at ValueWalk.

Crescat Global Macro Fund update to investors on 1/19/2019

Crescat Global Macro Fund and Crescat Long/Short fund delivered strong returns for both December and full year 2018 in a difficult market. Based on ...

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Zero Hedge

Johns Hopkins, Bristol-Myers Face $1 Billion Suit For Infecting Guatemalan Hookers With Syphilis 

Courtesy of ZeroHedge. View original post here.

A federal judge in Maryland said Johns Hopkins University, pharmaceutical company Bristol-Myers Squibb and the Rockefeller Foundation must face a $1 billion lawsuit over their roles in a top-secret program in the 1940s ran by the US government that injected hundreds of Guatemalans with syphilis, reported Reuters.

Several doctors from Hopkins an...

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Phil's Favorites

Divisive economics


Guest author David Brin — scientist, technology consultant, best-selling author and futurist — explores the records of Democrats and Republicans on the US economy in the following post. For David's latest posts, visit the CONTRARY BRIN blog. For his books and short stories, visit his web...

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Kimble Charting Solutions

Stock declines did not break 9-year support, says Joe Friday

Courtesy of Chris Kimble.

We often hear “Stocks take an escalator up and an elevator down!” No doubt stocks did experience a swift decline from the September highs to the Christmas eve lows. Looks like the “elevator” part of the phrase came true as 2018 was coming to an end.

The first part of the “stocks take an escalator up” seems to still be in play as well despite the swift decline of late.

Joe Friday Just The Facts Ma’am- All of these indices hit long-term rising support on Christmas Eve at each (1), where support held and rallies have followed.

If you find long-term perspectives helpf...

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Digital Currencies

Transparency and privacy: Empowering people through blockchain


Transparency and privacy: Empowering people through blockchain

Blockchain technologies can empower people by allowing them more control over their user data. Shutterstock

Courtesy of Ajay Kumar Shrestha, University of Saskatchewan

Blockchain has already proven its huge influence on the financial world with its first application in the form of cryptocurrencies such as Bitcoin. It might not be long before its impact is felt everywhere.

Blockchain is a secure chain of digital records that exist on multiple computers simultaneously so no record can be erased or falsified. The...

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Insider Scoop Explores Strategic Alternatives, Analyst Sees Possible Sale Price Around $30 Per Share

Courtesy of Benzinga.

Related 44 Biggest Movers From Yesterday 38 Stocks Moving In Wednesday's Mid-Day Session ... more from Insider

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 chaotic presidency based on his high-conflict personality, which was evident years ago. This post, written in 2017, references a prescient article Bill wrote before Trump even became president, 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 >>