Archive for 2007

Long-Term Trade Watch

Now is a good time to review our long-term virtual portfolio, we need to tee up some possible sales against our long-term positions as that was a pretty harsh reversal on Friday.

This is my plan for the stocks we have open:

  • AIG (early March?) Jan ‘09 $70s – basis $9.80, now $9.40 (big drop from early gains)
    • If heading up – wait!
    • If heading down -  sell the $65s for $4,
      • buy back for $3 or less
    • If sideways movement – sell March $70s for .90

I still like this stock long-term and would buy more if it bounced off the 200 dma at $66.  Falling 50 dma is $70.62 which broke down harshly mid-Jan.

  • AMZN (was 2/1) July $37.50s – basis .45, now $4.40
    • Sold $35s against for $3.30, now $3.90

I expected a short-term test of the 200 dma at $35 and with a p/e of 86 I’m very comfortable flipping my caller to March if I have to but we may be back at $37.50 by expiration, which would put us up .80 and maybe considering the March $37.50s for around $1.50 as we can always roll them to the March $35s if it sells off too much. 

  • BA (was 2/8) Jan ‘08 $90s – basis $2.70, now $9.50
    • Unless the market is bouncing – may as well take .85 for the Feb $90s
      • that guy loses .17 per day and my worst cases are:
        • Buy him out on a dip and take a dime hit
        • Roll him into a more expensive March call.

Sadly, as this is an up 228% position I will have to set a stop at $8.75, which should give me a look at the 50 dma at $88.70.  Fundamentally, this stock is great, chart-wise, it has some problems and, if the market is weak, I’d rather come back and bargain hunt later.  

BA, LMT, NOC, RTN and COL are all in the running for a new arms race of satellite killing and defending technology now that China has proved they can shoot one down any time they want to.  All have run-up lately and all need to be watched for buying opportunities.

  • BAC (was 1/23) Jan ’08 $55s – basis

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Weekly Wrap-Up

What a very disappointing finish!


I'll summarize the indexes by saying is was a canary massacre – I'm far too disgusted to even go over it (and that's after waiting a day) so I'll just give myself another 24 hours to take a technical look at what we need to watch for next week.

Contrary to what you might think based on gold's jump to $667, the dollar did not go down.  It retested 85 and failed but held firm at 84.88 as traders gambled ON the dollar ahead of the G7 (they must be readers!). I said in the morning "I’m spending the morning looking for some good oil covers but I just can’t find one I actually like.." and boy was that a good call as we didn't even get a good run into the weekend!

Our safety oil cover CFK did manage to gain 2% on the day, popping nicely over the 50 dma and finishing on a strong note.  The rest of the oil patch, along with crude itself, finished flat for the week and in danger of looking toppy.


I'll give myself a nice pat on the back for hitting our HB plays right on the button as they all turned down nicely but my real call of the day was to play chicken little in the morning, closing with:

"Sorry, it’s not pretty but I think it’s a good idea that we take a cautious posture here as it’s a long way down if we don’t break orbit soon!"

Luckily, I had been getting more and more bearish all week and over 1/3 of our positions were puts so we actually gained ground yesterday!  Of our 44 remaining open calls, we sold cover calls against 19 of them – that's pretty darned bearish!

The week started off so nicely too!

On Groundhog day we accepted the fact that we would be stuck in a rut for a while and I started shifting our mix of puts and calls to reflect that but the early part of this week gave us some false hope and I may have been a little wishy washy about the turn.  I'm still a little bullish but punching the
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Friday Virtual Portfolio Moves

Posted February 9, 2007 at 10:06 am | Permalink (Edit)
  • I’m DD on BHI Mar $67.50 puts at $1.05
Posted February 9, 2007 at 10:27 am | Permalink (Edit)
  • Out of MA Mar $100 puts @ $2.90

Posted February 9, 2007 at 11:44 am | Permalink (Edit)

  • XOM $75s for $1
    • tight stop (.80) half out at $1.20 with a .20 trail
Posted February 9, 2007 at 11:50 am | Permalink (Edit)
  • Out of PTR $120 puts for .60, too risky.
  • Stopping out of TSO Mar $80 puts for $1.35 (no sense riding it out).
Posted February 9, 2007 at 12:35 pm | Permalink (Edit)
  • XOM had a .20 trailing stop that just triggered at .90
    • very surprised to get thrown out like that

Posted February 9, 2007 at 1:56 pm | Permalink (Edit)

  • Buying Goog Mar $470s for $12 – will sell Febs later
Posted February 9, 2007 at 2:09 pm | Permalink (Edit)

MA is unreal!

  • VLO $50 puts for .50 - .05 trail at .65, stop .45, .15 trail on rest 
Posted February 9, 2007 at 3:06 pm | Permalink (Edit)
  • Selling FXI $150s for $1.60
    •  if it jumps up on me I can afford to give his money back with a bonus.
Posted February 9, 2007 at 3:25 pm | Permalink (Edit)
  • TXN Apr $30s stopped me out at $2
    •  (the ones I owned, not the ones I sold)
  • DD on PEP Apr $65s at .90
    • seems done going down


Finally Friday

Wow, let's get this week over with!

What a pain in the neck these consolidations are.  Flatlining into the G7 makes sense as we've had no notable economic data this week but soft labor costs have indicated our Fed will have no reason to raise rates, putting a cap on the dollar even as the Yen tumbles.

Next week, in addition to options expiration, we also have Bernanke's semi-annual testimony on the economy and monetary policy along with trade numbers, retail sales, net foreign purchase numbers for January, industrial production numbers, the dreaded Philly Fed and producer prices – no wonder no one is moving this week!

Sometimes a picture is worth a thousand words!  I don't think there is anything to add here except that 9/11 had nothing to do with that sharp, early 2001 turn.  New York never even got all of the $20Bn that was promised to them!

The Nikkei jumped up 211 points today as machinery orders weren't worse than expected – that's all it takes over there folks!  Asia was generally up as commodities took a bounce. 

Europe is up across the board with a rebound in commodity stocks leading the way there too.  EMI looks like they will be the first record company to take Steve Jobs' challenge and release their music through retailers in an unprotected format

I've got to say that, as an adult, I certainly will be more likely to buy music if I can easily throw it on my computer, my IPod, my car, my kids' stereo etc..  but, as a college student, I'm pretty sure I would have had a terrabyte of free music…  Of course, we all had tapes that we shared (back in the day) and that's what turned us into future consumers.

Speaking of Steve Jobs – now it's time for the Pixar options scandal centering on grants given to director John Lasseter, who was given grants dated 3 months before he came to work!  While there is no clear finger to point at Jobs, Apple bashers could care less and you will hear about this for a week at least!

House of Pain

HousingAutoDogmatic has come up with a bunch of interesting leads to follow up on in the form of an "Implode-O-Meter" to
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Friday Thoughts

We’ll be glad to get out of this week even on the indexes!

I’m anxious to move on to an exciting options expiration week, we’ve gotten rid of pretty much all of our February contracts but there’s a lot of great opportunities to enter quick trades with small premiums especially during an earnings quarter


Here’s a nice, level-headed article on the HBC with the key paragraph: :"Such subprime customers have always been risky, but HSBC figured it could control that risk. In 2005 and 2006, it bought billions of dollars of subprime loans from other lenders, lured by the higher interest rates they carry."

Many of those loans have soured, sometimes quickly. The percentage of HSBC mortgages more than 60 days past due is climbing. Fraud by borrowers has been higher than expected. "We made some decisions that could have been better," says Tom Detelich, the HSBC executive in charge of understatement, who is in the U.S. spearheading an effort to clean up the mortgage virtual portfolio.

In 2005, HSBC stepped up its mortgage buying. By early 2006, interest rates were rising and home-price appreciation was slowing. The rate increases made it difficult for some borrowers to lower their monthly payments by refinancing, one way that borrowers in a financial pinch try to avoid default.

This is nothing to panic over – yet!  If it starts spreading we can panic but for now, HBC and their "150 Ph.D.s skilled at modeling credit risk" can simply hang their heads in shame…


A WSJ survey of economists found 40 out of 47 rejecting President Bush’s energy proposal in favor of a premium tax on fossil fuels.  "Economists generally are in favor of free-market solutions, but there are times when you need to intervene," said David Wyss at Standard & Poor’s Corp. "We’re already in the danger zone because of the outlook for oil supplies and concerns about climate change", he said.

There’s a solution that would have OPEC folding up their tents.  If the US started paying European prices for energy and ended up becoming as energy efficient as Europe, we’d knock about 7Mb a day off global demand!  Couple that with pouring the extra $200M a week into alternate energy research and we could curtail global warming while defunding terrorists and taking away the political leverage of our enemies in the Persian Gulf. 

A solution
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Thursday Thump

You think we’d learn by now that Thursday is thump day but, if we were the type of people who learned we’d buy more calls on oil!

Actually, on the whole, we did a very good job of not panicking during that scary sell-off but we did add a few ill-fated puts as oil was going down all day until the last half hour, where a sudden buying frenzy added $2 to the front-month contract.

Our indices did their best under heavy fire, let’s see where we are vs Monday’s close:

If you don’t think that budget affected you, think again.  Our country’s business plan has been soundly rejected by our creditors who are burning dollars instread of Russian gas and getting out of US equities as home loan defaults look like an early sign of a consumer crisis that can wreck this economy.

Or is it just more tree shaking by the big boys, chasing foreign investors out now that they’ve gotten rid of as many US retail investors as possible?   We know the HBC isn’t the big deal people are making it out to be – they gambled on sub-prime and lost but all the people they bought those rotten mortgages from are having a party! 

ABN, for example, is in the same business and had a great year!  You always need to be aware of the PR machine that comes out and spins these stories to move the markets.  That’s why sometimes you hear news and a sector goes up, then two months later you hear the same news and a sector goes down – it doesn’t matter what the news is, it’s what the analysts say it means that moves the markets!

The NYMEX pump crew worked March deliveries down to 277M barrels (-27M) with an amazing 335M traded!   April delivery is up to 199M (+28M), this now becomes more humorous every day as you see the…
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Thursday Virtual Portfolio Moves

Posted February 8, 2007 at 9:47 am | Permalink (Edit)
  • Taking another DD on the LEN Aug $45 puts for $1
    • just looking for $1.50 here on this round

Posted February 8, 2007 at 9:56 am | Permalink (Edit)

  • CTX March $50 puts are $1.10
    • I will sell the current $50 puts if it even twitches up.
Posted February 8, 2007 at 10:27 am | Permalink (Edit)
  • PTR $120 puts, offering .75
  • TSO Mar $80 puts (TSOOP) – offering $1.60

HYDL Mar $80 puts (HBQOP) are $2.75 and will be slow to go down if VLO group starts dropping, especailly SLB

  • NOV $65 MAR/FEB $65 puts for $1.30 is a nice spread!

Posted February 8, 2007 at 10:51 am | Permalink (Edit)

I’m watching the Dow 12,600, Nas 2,480, S&P 1,438, NYSE 9,288, Russell 810, SOX 465

Dollar getting hit again, saving oil and gold.

Breaking 3 of these levels is a good time to sell off calls! I’m setting 20% from today’s open stops on Feb Mar and Aprils – obviously too many to list!

Posted February 8, 2007 at 10:53 am | Permalink (Edit)
  • QQQQ $44 puts for .30 make a fun day trade
    • half out at .40 with a stop at .25
Posted February 8, 2007 at 10:57 am | Permalink (Edit)

Got my PTRs! .75 half out at a buck, .75 stop on the rest if it goes there (.25 trail)

  • BHI Mar $67.50 puts for $1.55

REMINDER – All these oil plays are still very dangerous and may have to be DD’d or rolled more than once to pay off! 

Posted February 8, 2007 at 11:59 am | Permalink (Edit)
  • Covering my day oil puts with VLO $55s at .80
    •  half out at $1.20
Posted February 8, 2007 at 12:07 pm |

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Thursday Morning

Sideways into the weekend or do we try to break out?

This has got to be the worst rally ever!  Incredibly, the VIX has gotten LESS volatile than it was when we couldn't believe how low it was back in November.  Needless to say this is great for our long-term plays, where we sell options against our leaps, but not so good for our short-term plays, which are still a mixed bag.

This is now month 5 of what one might call VIX consolidation for a huge rally in volatility.  There is one school of thought that the rise of options trading and hedge funds and the more fluid availability of good information have wrung the volatilty out of the market and, looking at the 3 and 5 year charts that does seem to be the case. 

It is also possible that we are merely experiencing the calm before the storm as the last time we had this kind of consolidation pattern in the VIX was the early 90s, during the first information revolution, as the VIX flatlined from 1993 through 1995 (yes there was one spike), when it finally exploded from 12 to a peak of 40 during the .com boom.

There is nothing so far to dissuade me from my bullish premise on the global economy that caused me to predict a major rally back in August – that was 1,500 Dow points ago so not a terrible call considering most people were in the doom and gloom camp with $75 oil (but they all believed it was going up!).  When you have time, you can review my very charty article that I put up later that week, see if you recognize the patterns I predicted.


Members Alert:  BillBigD suggested a VIX spread and I really like buying the Nov 13s for $3.40 and selling the March $13s for .75 or better (might get a little uptick today so lets take the leaps and wait a bit).

As I said to Bill, you would think it would be a big (ie. unlikely) trick for the VIX to jump 30% in 30 days, especially with the 200 dma at 12.87 unbroken since 9/11, when the market…
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Wednesday Wrap-Up

I told you we would have to grind this one out!

That was a real squeaker – I didn’t think the Dow was going to make it at the end there…  15 components went down with just 13 positive with mighty mighty CAT leading the pack with a 2% gain and AA leading the losers by giving up the same.  Thanks to a little bit of Dow magic though, $42Bn CAT carries more than twice the weighting of $28Bn AA in the index (because it has a bigger share price) and the Dow managed to eke out a .56 gain for the day.

On the whole, it was a nice positive day:

How much does it cost to roll 32M barrels out of March? 

Well, selling 32M barrels out of March cost the NYMEX boys $1.17 on that contract but that just leaves 304M barrels rushing to Cushing on the 20th.  April was able to absorb 24M barrels after playing hot potato by trading 134M barrels back and forth to bring that total up to 171M barrels – more barrels than can possibly be delivered and we haven’t even activated that contract yet!  Even if they "only" roll 230M barrels out of the 304 open March NYMEX contracts, that will put us over 400M April barrels by Feb 20th – what a predicament!

4M barrels found their way to May (66M) so they "only" dropped $1.07 but June fell $1.17 to $59.58 even though they finally broke 100M barrels.  We had a good old time shorting oil today made even better by the side sport of watching CNBC spend the whole day trying to figure out what was going wrong.  As analyst, after analyst came in to tell us how scarce oil was and how dire the geopolitical situation, oil went down and down and down in the afternoon, triggering a…
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Wednesday Virtual Portfolio Moves

Posted February 7, 2007 at 9:54 am | Permalink (Edit)
  • Bought GOOG Mar $490s for $9 (avg)
    • only so I can sell $480s if they spike up
Posted February 7, 2007 at 10:10 am | Permalink (Edit)

IFFFF we get a net build of over 1M barrels (combination of 3 segments) AND oil falls below $59:

  • APA $70 puts at $1.40 make nice momentum.
  • APA March $65 puts are a limited risk gamble at .70 if you set a stop at .50
  • PTR March $120 puts are $2.10
  • PBR I already have Mar $95 puts at $2 (up 10%) from yesterday
  • BP $65 puts are being given away right now at $1.50 (were $1.80 yesterday)
    • I’m in on these now.
  • TSO flew up $1.65 this morning, I’ll be liking the $85 puts on the way down for momentum.

Momentum, by the way is in on the way down looking for 20% and setting a nickel stop on any pullback with a strict 20%, preferably 10% stop loss if it turns against you.

Posted February 7, 2007 at 11:02 am | Permalink (Edit)

BECAUSE I am down .60 on my MRVL May $22.50s:

  • I am buying the MRVL May $20s for $1.40
    • selling the MRVL March $20s for .75 or better (.05 T stop) but no less than .60 if it turns down.

This makes up what I am behind and the May $22.50s protect my upside if the stock spikes on me.

Posted February 7, 2007 at 11:24 am | Permalink (Edit)
  • XOM $75 puts are just .60
    • I had to buy them out of principal!

 Posted February 7, 2007 at 11:54 am | Permalink (Edit)

  • WFR – buying back the $50 caller at $6.80
  • Looking to sell the $55s at no less than $3.40
    • to pick up an exta $2.80 in premium.
    • .20 trailing stop on the sell
Posted February 7, 2007 at 12:25 pm |

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Zero Hedge

Auto Shares Surge As Fiat, Renault Confirm Merger Talks

Courtesy of ZeroHedge. View original post here.

With President Trump in Japan for a state visit and most of Europe headed to the polls to vote in the quinquennial EU Parliamentary elections, there was enough news to keep market watchers occupied during what was supposed to be a quiet holiday weekend in the US. 

But on top of these political headlines, on Saturday afternoon, the news broke that Italian-American carmaker Fiat Chrysler had approached France's Renault with a merger proposal that would leave the shareholders of each carmaker with half of the combined company, in a tie-up that would create the world's third-largest au...

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Phil's Favorites

Trump and the problem with pardons


Trump and the problem with pardons

Courtesy of Andrew Bell, Indiana University

As a veteran, I was astonished by the recent news that President Trump may be considering pardons for U.S. military members accused or convicted of war crimes. But as a scholar who studies the U.S. military and combat ethics, I understand even more clearly the harmful long-term impact such pardons can have on the military.

My researc...

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Insider Scoop

Jefferies Sees 60-Percent Upside In Aphria Shares, Says Buy The Dip

Courtesy of Benzinga.

After a red-hot start to 2019, Canadian cannabis producer Aphria Inc (NYSE: APHA) has run out of steam, tumbling more than 31 percent in the past three months.

Despite the recent weakness, one Wall Street analyst said Friday that the stock has 30-percent upside potential. 

The Analyst

Jefferies analyst ... more from Insider

Kimble Charting Solutions

DAX (Germany) About To Send A Bearish Message To The S&P 500?

Courtesy of Chris Kimble.

Is the DAX index from Germany about to send a bearish message to stocks in Europe and the States? Sure could!

This chart looks at the DAX over the past 9-years. It’s spent the majority of the past 8-years inside of rising channel (1), creating a series of higher lows and higher highs.

It looks to have created a “Double Top” as it was kissing the underside of the rising channel last year at (2).

After creating the potential double top, the DAX index has continued to create a series of lower highs, while experiencing a bearish divergence with the S...

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Chart School

Brexit Joke - Cant be serious all the time

Courtesy of Read the Ticker.

Alistair Williams comedian nails it, thank god for good humour! Prime Minister May the negotiator. Not!

Alistair Williams Comedian youtube

This is a classic! ha!

Fundamentals are important, and so is market timing, here at we believe a combination of Gann Angles, ...

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Digital Currencies

Cryptocurrencies are finally going mainstream - the battle is on to bring them under global control


Cryptocurrencies are finally going mainstream – the battle is on to bring them under global control

The high seas are getting lower. dianemeise

Courtesy of Iwa Salami, University of East London

The 21st-century revolutionaries who have dominated cryptocurrencies are having to move over. Mainstream financial institutions are adopting these assets and the blockchain technology that enables them, in what ...

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DNA as you've never seen it before, thanks to a new nanotechnology imaging method

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


DNA as you've never seen it before, thanks to a new nanotechnology imaging method

A map of DNA with the double helix colored blue, the landmarks in green, and the start points for copying the molecule in red. David Gilbert/Kyle Klein, CC BY-ND

Courtesy of David M. Gilbert, Florida State University


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More Examples Of "Typical Tesla "wise-guy scamminess"

By Jacob Wolinsky. Originally published at ValueWalk.

Stanphyl Capital’s letter to investors for the month of March 2019.

rawpixel / Pixabay

Friends and Fellow Investors:

For March 2019 the fund was up approximately 5.5% net of all fees and expenses. By way of comparison, the S&P 500 was up approximately 1.9% while the Russell 2000 was down approximately 2.1%. Year-to-date 2019 the fund is up approximately 12.8% while the S&P 500 is up approximately 13.6% and the ...

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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...

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Mapping The Market

It's Not Capitalism, it's Crony Capitalism

A good start from :

It's Not Capitalism, it's Crony Capitalism


The threat to America is this: we have abandoned our core philosophy. Our first principle of this nation as a meritocracy, a free-market economy, where competition drives economic decision-making. In its place, we have allowed a malignancy to fester, a virulent pus-filled bastardized form of economics so corrosive in nature, so dangerously pestilent, that it presents an extinction-level threat to America – both the actual nation and the “idea” of America.

This all-encompassing mutant corruption saps men’s souls, crushes opportunities, and destroys economic mobility. Its a Smash & Grab system of ill-gotten re...

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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 >>