23.7 C
New York
Monday, September 26, 2022

Subscribe

Friday Morning – Yipee for Yahoo!

This will be a short post because we have a lot of work to do today!

The jobs report was TERRIBLE, down 17,000 in January.  December, however was revised UP 64,000 jobs, from 18,000 to 82,000 jobs so that's a 355% margin of error in government reporting of what is considered a VITAL economic statistic.  Like I said, I'll take those ADP reports anytime.

Asia did some stuff, Europe did some stuff – who cares – MSFT just offered $44.6Bn for YHOO!  This is so fantastic for us I can't begin to tell you.  Anyone who's been following the $10KP and $25KP on the free site knows that YHOO was one of our key positions and yesterday we followed our trading rules and took out the $20 caller for just .42, a very nice profit off the $1.85 we sold them for just a week earler!

There is no better way to start the year over at PSW than to double up our smaller players in the first month.  Thanks to our very aggressive moves yesterday, the STP is also close to a double and should be well over as there was plenty of YHOO in there as well.  This is just way too much fun.

On the dark side, Google was going to be our focus play of the morning but this news should put a damper on their recovery off what were actually fantastic earnings by any rational measure.  We are still in Google of course and will take out our caller, roll down our longs to $520 or lower and give sanity a chance to reassert itself as Microsoft just told us Yahoo was 60% undervalued and Google is certainly better than Yahoo and was, even yesterday, trading at a significantly lower multiple.

Wake up people, do you really think the creators of Zune will suddenly blow Google out of the water by buying the competitor Google has been tearing to shreds for 5 years?  I'm not saying it's a bad deal for Microsoft, they need to do something on the Web and Yahoo is a totally underperforming asset but it's no Google killer.  Also, this bid is HOSTILE, which means it's possible Google themselves could turn around and make an offer (Microsoft's is cash and stock), which is why Ballmer waited for Google to be at a low value to make the offer – it's a lot harder for GOOG to match now than it would have been when they had an extra $60Bn in market cap.

Did MSFT work behind the scenes to tank the markets in order to close a deal they've been desperately after for almost a year or did things just align perfectly for them and they siezed the opportunity?  We may never know but we do know one thing – who will Steve Ballmer lay off to pay for this aquistion after spending over $1Bn in R&D to make MSN competitive?  Click here for the answer.

Our play on all this is TWX, who still have a small asset called AOL that Google already owns 5% of (probably with options for more) that company is way down from last year's high of $22 so we're going to grab the Jul $15s for $2 and wait for the rumors to start flying.

The jobs numbers destroyed a 150-point rally in pre-markets and dropped our indexes back to flat but I put no faith in those numbers and will consider this a great opportunity to get out of those QQQQ puts we picked up after hours.  The dollar is hitting new lows so gold is back up and oil will fly and it's going to be back to $500Bn for XOM as that company made $11.66Bn in Q4.  That should give us a nice rally to short into as it's probably the last hurrah for XOM as OPEC left oil production unchanged, which will add downward pressure to oil prices. 

Busy, busy, busy today.  Europe is holding up well and I expect our markets to recover.  Those DIA $125s we picked up yesterday need to be sold if we can't break 12,700 but they are already more than a double so let's hope XOM gets the Dow moving early on.  They should get help from BA, who may also get bought out if they don't get back over $100 soon – what a bargain!

Have a great weekend.

 

653 COMMENTS

Subscribe
Notify of
653 Comments
Inline Feedbacks
View all comments

Phil,
CCJ: covers:
Did you lower cover target to .7 or leaving naked since $1 is not met?

something going on HMIN .. just explode today .. got a bunch of them month ago as “Olimpic plays”

MDhamija – cover could of course also be that you are long on a number of technology stocks and you decide to protect (cover) your investment/gains by buying a put contract on the Nasdaq

I am covering my MCD, not selling. Sorry to confuse everyone. I am covering my position but I am planning on holding and rolling and hedging for 6 months! I wouldn’t advise that if you don’t like babysitting!

GOOG: Interesting that $527 was the breakout last time on the run to $700 and that’s where it stalled for quite a while before pulling back today

Phil/MCD – Realized that when I went to put in the cover and saw that I was going to “cover” by selling the position I already had, lol. Got out for 3.00.

Thanks for the SLB comment, I’m learning, slowly but surely. SLB was a company I was confident in and thought it got beat up too bad after inventories, so it was worth the DD. But I wasn’t going to be greedy.

opt, earnings are feb.4 on sirf

Opt

When you say DECK vertical, what are the parameters of the spread trade you typically enter?

Thanks

Phil and everyone,

Thanks for the advice this week. Very fun and profitable! I put aside my bearish mood and concentrated on making money. (Still hedged to the downside, though).

C/thanx- u the man, phil

opt/AAPL/5MA- this is it, i’m reading this a text book entry- yesterday u mentioned chart patterns to justify entry then, but right now we have:
1- 5MA up
2- stock at/above 5MA

Eric-Thanks for the mortgage input early in the week! That was an interesting conversation!

Phil,

Do you mean you got CCJ cover for .75 instead of 1? Thanks? How about YHOO? Did you got it filled at .75?

Thanks!

SPWR-Bought some calls.

DECK-I bought the Mar 120’s and sold the mar 130’s.

Market held in well. Look for a good day on Tuesday unless
we have a nasty surprise. Have a great long weekend everyone!

SIRF-Thank you. I am out.

There’s no long weekend Albo!

FXI-nice run. Keeping over the weekend.

sorry guys, i really thought the stupid fly was dead! seems someone gave it cpr. not to fear, it’ll get to it’s death very soon. hope it, and all of you, have a great weekend! really enjoyed hanging out together during this CRAZY week.

Newbie’s wife,

Looking at the chart for that call, it doesn’t look like Phil got filled at .75. Highest it traded for after he made the original call to cover was .70.

NYSE FEB 18 holiday- washington bday & president’s day!!!

http://www.nyse.com/about/newsevents/1176373643795.html

Phil,

Got an afterhours question for you. I’m curious about why you suggested the CMP trade originally. Looking at the way the options trade, there’s usually a huge spread between bid & ask and very low volume on the options side (there’ve been a couple of days with 0 volume). It just doesn’t seem like your “style” based on what I’ve read here so far.

Just curious does FXI trade AH?

Phil, look for a post from me sometime later. My GOOG play worked out fine for today. The Leaps at 540 outperformed my feb 520s on the way up and the way down. I thought I did it right and the profit is there, I guess I just need to figure out what I wasn’t looking at that you were.

Thanks for the help today and everyday.

Options I meant of course

Opt – KLAC puts; did you take profit on that little dip? I didn’t ’cause thought it’d bounce one more & we’d sell into close. Sold about even.

Optrader

For DECK, I gather you did a march bull call.

Thanks

Phil, looks like we’ll need to start a new 50kp. Or you want to hold off another month and just start a 100kp then? 😉 Mazal Tov!

What a crazy week. I went from a portfolio that intraweek was DOWN 12% at one point to ending the week with a portfolio that’s UP 63% and now have more in cash than what I started than what I started the portfolio with… This is all from a starting point on Jan 18…

I don’t mean to offend anyone if it sounds like I’m bragging like a school kid, but this was a crazy week and absolutely AMAZING in the end.

Well done everyone. This is leaving me very happy going into the weekend.

I’ll be in NOLA for Mardi Gras… if anyone’s going to be there, drop me a line

steve.j.place at gmail dot com

Opt

Why did you elect to go with a bull call on DECK rather than your normal long call? I assume you think there is higher risk in that trade than normal?

Thanks again

just a little “rational” exhuberance, Jake.

congrats.

jake- total congrats, nice trades- send a thank u note to ballmer!!!

opt,when you do not say the month,does it mean this months option? thanks

Thanks alot for your help, Jake. I think Phil must have his YHOO filled @.75, not CCJ.

Really appreciate the support in here. Have a great weekend everyone!

LOL Do you Yahoo!? YHOO Feb 2008 25.0000 call (YHQBE.X) At 3:59PM ET: 3.84 3.81 (12700.00%)

LOL Do you Yahoo!? YHOO Feb 2008 25.0000 call (YHQBE.X) At 3:59PM ET: 3.84 +3.81 (12700.00%)

Oopsss… obviously, Phil reads my mind. Thanks again for all the teaching and the great pick on our favorite YAHOO………………

It is such a long shot, but I would be just fine with a 12000% day.

Well, the leap was showing an IV of 34 and the Feb was at 47 when I covered, now at 41. That was a major part of the rationale behind selling the 520s. So, I guess I am smart. 😉

But, I understand what you are saying about covering a 540 with a 520 in general, but we are talking about GOOG where each strike is only 2% away. And with the massive added value of time horizon, my overall play was to start with a 520 and see what happens. I am expecting a continued IV suck next week, but that will give me something to look out for. I also thought that the 520 would provide added insurance against a further drop down. If I end up keeping all $18 of that, then I got my Jan-09 540 for $52 and I strongly believe we are putting in a bottom. I guess I am stuck in trying to figure out where I am really in trouble. It is just in a big drop, right?

I got out of my QQQQ calls almost even and kept the GOOG, just because I don’t believe it will stay down very long I could be totally wrong but I am down 50% from my buy this morning and will ride it into the flames or back up. That is the only trade I have on now (other then longer term stuff) and I hope to get out Mon or Tue as my wife & I am taking a short vacation to Phoenix Wed-Sun next week (without the kids, woohoo).

k1 – I will be thinking about your advice and planning how to refocus my efforts. Thanks.

Have a great weekend Phil & all.

Greg- if you are interested in the places I’ve been on my part of the journey, drop me an email (my address is on the main k1 page). Not saying that the direction I’m going is the one you want, but happy to swap ideas about it.

k1 – I always like to talk to anyone I can to learn what I can. I will contact you via email. Appreciate it.

greg – responding to yesterday.. thankfully my day job and trading mostly overlap.. I write software for one of the top 3 derivatives desks.. and their rules keep me in trades for at least 30 days.. severely limiting where I’ll take risks..

But no, I don’t sleep much. When I get regular exercise, I can sustain 4 hours a night, and survive off of 3.. that’s a bit over a half a work week that I have which most other people don’t.

Phil, I sent an e-mail for you to admin yesterday morning.. Now that it’s the weekend, I wanted to make sure it got to your eyes.. Cheers & continued thanks for your help -Peter

Greg-What did you learn from the trade you made this morning that you barely broke even on?

Stay Connected

160,723FansLike
408,526FollowersFollow
2,130SubscribersSubscribe

Latest Articles

653
0
Would love your thoughts, please comment.x
()
x