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Stop the Week, We Want to Get Off!

Man, this week was going so well for a while

Oh well, we've done our virtual portfolio reviews and, on the whole, things could be much worse so let's just lick our wounds and get back into bargain hunting mode over the weekend.  There was nothing we heard yesterday that made things worse than they were last week and, as I said yesterday morning, this is what the market needs to make sure that buyers coming in now are real buyers, not delusional optimists that get chased out of their positions every time Bernanke's voice cracks.

Today we have some VERY inflationary import pricing, up 1.7% from last month.  Adding insult to injury our export prices are only up 1.2% – mainly a reflection of the declining dollar but a net 0.5% disadvantage in our trade in just one month.  Additionally, the Empire State Manufacturing Index was down a "shocking" 11.7, a very recessionary sign heading into a 3-day weekend.  BBY cut guidance this morning and Citigroup has barred withdrawals from a $500M hedge fund as manager John Pickett walked off the job "following a bitter dispute with Citigroup executives and complaints from investors that he put too much money into a single investment that went bad."  All I can say about the Citifund investors is they are lucky compared to their Falcon Plus Strategies, which plunged 52% last quarter and a letter sent to investors told them to expect additional losses ahead as the fund "tries to dump some of it's battered holdings."

Asia was generally flat this morning and China's export growth continued to accellerate (that's where our 1.7% monthly inflation is coming from) so we can expect Beijing to continue to tighten monetary policy, which is what sensible governents do when they want to support measured growth rather than put up some pretty numbers in order to win an election and dooming the economy for years to come.  China is famous for its 5-year plans and it would be nice if we adopted A plan of any kind in this country!

Europe is well off, about 2%, ahead of our open after hearing all the bad news and our pre-markets are in shambles.  There are signs of slowing in the EU economy and the heat is on Trichet to cut rates from the same Cramer crowd that pushed our Fed into setting our economy on the slippery downward slope have now set their sites and setting Europe ups as a funny money zone.  Destabilizing currencies is fantastic for currency traders and, since the public has begun to discover options, trading houses are turning to more exotic derivatives where they can make their money unencumbered by real people.

The dollar continues to fall as more rate cuts are in the cards for the US.  Hell, we still have 3 points left to cut before zero and surely that will fix everything because if everyone can borrow money for free then we can all afford to pay $1M for a 2 bedroom condo in Miami again and all will be right with the world.  The fact that a tank of gas would cost $200 shouldn't bother us, after all, we only buy 5M barrels of oil a day from nation's that the administration says are sponsoring terrorism, but at least if they make a phone call (and they can afford REALLY good phones now!) we'll be able to listen in…

Barry Ritholtz says "The Monolines Are F#@%ed!" and it's hard to argue today as FGIC is giving up and asking to be split into two companies, presumably one that is totally f#@%ed and one that's just 90% f#@%ed Meanwhile, BSC is getting probed and, just like with alien abductions, they won't be the last as these investigations seem to gather steam and this is probably not the best time for people to lose faith in our financial institutions.

Thank goodness for the 3-day weekend as we all need a little time to step away from the market and take a breather but we can just go back to my articles of the past two weeks (and I will on the weekend) and I will say again that there is nothing NEW in this news.   Earnings are still going fairly well and I continue to say – show me the losses!

I'm very excited to be starting two new small virtual portfolios next week, there's a lot of irrational selling going on and we'll be evaluating many new opportunities as well as revisiting some of our old favorites that are going back on sale.  I don't see how this economic crisis can possibly be handled more ineptly so I'd have to say this is a bottom unless they start another war (always on the table) or get Congress to give away even more money so let's give it a few days, let everyone have their say and make a realistic evaluation next week.

Meanwhile, happy President's Day!

 


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  1. Solars – Opt

    YGE missed earnings so today should be a good opportunity to add to SPWR and cover FSLR shorts.

    What is your current position on SPWR?


  2. SPWR-I have calls, will hold them and reconsider at end of day. Not adding right now. I also have a FSLR March vertical put (210/195) ratioed to a slightly negative delta.
    Don’t want to take too risky positions on solars as they are unpredictable so feeling good with this somewhat balanced position and will not add on a drop.
    Anybody watched Fast Money yesterday? What did they say?


  3. Cap – haven’t read Pit Bull, but will put it on my LONG list of to do’s. re-reading The Sun Also Rises… it’s funny. I love reading “investing story” books, but find I become a better trader by reading well known novels / fiction more. I learn / understand myself better thru that kind of odyssey… keeps me grounded.

    eminis are perfect trading vehicles for this current market. Very predictable s/r each day… bouncing off whole numbers, 135 lines, etc.


  4. this just in…
    In honor of George W. Bush, President’s Day scheduled for Feb. 18 will be cancelled, as there is nothing to celebrate. Please proceed with business as usual.


  5. I saw a piece of the segment and Najarian’s top pick was Canadian Solar, they trashed a bunch of the smaller Chinese guys, Adami liked Evergreen Solar and Macke believe it or not liked FSLR. Overall the story was okay but not glowing. The primary negative they hammered on was that the cost per kilowatt isn’t competitive which is no secret to anyone.


  6. The TNX did not behave very nicely yesterday with yields climbing despite the sell-off in the markets. It broke up out of a channel it has been trading in since last month and looks like it wants to climb again this morning! Let’s hope it changes its mind.

    This can’t be good news for the very-shaky credit markets, and where they go, equities will soon follow.

    Good morning from your friend Chicken Little.


  7. I’m with you Eric – the TNX looks really dangerous.

    How about FGIC – I can just picture the MBIA and ABK guy; like the band on the Titanic – playing on as the great ship goes down.


  8. Morning Eco Headlines:

    U.S. JAN. INDUSTRIAL PRODUCTION RISES 0.1%; CAPACITY 81.5%

    U.S. DEC. NET LONG-TERM FOREIGN ASSET PURCHASES UP $56.5 BLN

    U.S. JANUARY IMPORT PRICES RISE 1.7%; UP 0.6% EXCLUDING OIL


  9. Mark

    Will you share your thoughts on the best firm to trade eminis and which service you use for real time tick data? I set up an account about a year ago, made millions paper trading (due to a mistake, an extra zero and I made $13 million on one trade) and did a few real trades (did pretty well) but then my tick chart service ceased to exist and I let the whole thing go. What I found frustrating was the need to have one place provide the data but nobody I found offered the data and the ability to execute trades. Thanks if you have a moment. I loved this as it was purely technical and I learned a bunch.


  10. Wheat up 5.77% overnite. Look at the MWH8 chart and observe a classic parabolic spike up. What to do? Observe, gather information and prepare to pounce when it breaks down.

    Be advised that if there is any kind of crop failure in the U.S. wheat crop this summer, all bets are on the other side of the trade.

    For those of you who do not trade futures, DBA is the optionable instrument.

    Phil, could you look at DBA for some trading strategy over the weekend?


  11. Hey Phil, im in Europe. Spent a week in Frankfurt and counted no less than 18 cranes. In Montenegro at the moment then heading to north Serbia and i can tell you the strength of the Euro has this place in serious growth mode. There may be a slow down in the States but Europe is growing at an extraordinary pace. No wonder they are keeping rates high here.

    Looking to invest in a steel mill that has been producing parts for a relative in Detroit. Craftsmen are in high demand in this area as there is a great need for infrastructure. Roads, steel for building, cement, wood, copper. Most importantly getting clean water to the sprouting communities. Simply amazing whats happening here.

    Millions being made in the market here if you have the right sources of information. Stay on your toes looks like the forces are trying to take down the markets.


  12. anton/titanic- tragic story but, aren’t they still sailing ships under the cunard name?


  13. Banks at Risk From $203 Billion Writedowns, Says UBS (Update1)

    By Poppy Trowbridge

    Feb. 15 (Bloomberg) — The world’s banks “remain at risk” of up to $203 billion in additional writedowns, largely because the bond insurance crisis could worsen, UBS AG said.

    “Banks have made progress in credit-market related writedowns,” London-based UBS analyst Philip Finch said in a note to investors today. “But more are expected,” he added.

    Writedowns for collateralized debt obligations and subprime related losses already total $150 billion, Finch estimated. That could rise by a further $120 billion for CDOs, $50 billion for structured investment vehicles, $18 billion for commercial mortgage-backed securities and $15 billion for leveraged buyouts, UBS said. “Risks are rising and spreading and liquidity conditions are still far from normal,” the note said.

    http://www.bloomberg.com/apps/news?pid=20601087&sid=aJtsbIyu6jHY&refer=home


  14. Phil,

    Just wanted to thank you on explaining me few things about BIDU condor. I actually made $500 bucks with pretty much 0 investment.

    I rolled caller and my calls to march/june combination as you suggested in morning post.

    This is new play right? Or was is related to BIDU Condor?


  15. Opt,
    To add to Fred’s comments re: Fast Money. Najarian said FSLR and SPWR were “volatile and frothy” – not the comment I expected from him.


  16. Morning all
    FXI strong in pretrade; any thoughts


  17. GS downgraded all the coals right after the Peabody (I think it was) CEO said that coal was still tight and expected pricing to continue to rise. Hmmmmmm… Did GS need a better entry point?


  18. Thanks for the recaps of Fast Money. Not that good indeed.


  19. Looks like Cap’s yesterday rumour about C turned out to be true.

    http://news.yahoo.com/s/nm/20080215/bs_nm/citigroup_funds_dc_1


  20. fred – great question man. I use IB for eminis, but frankly didn’t comparison shop much around. I felt their round turn price was reasonable, and I’ve made $1k just playing a contract / day for about 10 min the past 5 days. I’m obviously playing just technicals (and my own personal feel for it) but love it man. I feel like their charting service is pretty good, but I’m spoiled with a bloomberg. I sit here with my own custom charts I’ve created that show me the support lines I need to watch out for daily / weekly / monthly etc. Plus I’m on a desk so you just sort of get a feel for if business is there… hard to explain.

    You might want to ask around if anyone else plays them too… I’m still relatively new to trading these, but I know FTP has played them for years. He and others might have much better advice than I do.


  21. ACH-1/2 out.


  22. David – DBA has gained more options interest. It is pretty narrow (corn, soybeans, sugar, and wheat) but at least it can be played in either direction. I have been accumulating some RJA in a retirement account, but it has no option chain.


  23. Goldman Invests in Epocrates

    New York – Goldman Sachs’ Hudson Street Services has made a minority investment in Epocrates, Inc. a developer of clinical solutions for healthcare professionals. In addition to the investment, Hudson Street will be marketing Epocrates market research solutions to its clients. Although publicly announced, the deal has not been fully implemented in the sense that Hudson Street has not started to market Epocrates yet. The investment is the ninth investment that Hudson Street has made in alternative research providers.

    http://integrityresearch.blogdrive.com/


  24. PCLN- good numbers out of some Marches Last 3 1/4′s big gap ups


  25. People are buying, bless their little hearts. It’s not a total disaster but oil is leading us and that’s never really good.

    LOL Windy.

    FSLR – people just don’t understand that cost per Kw issue or maybe they do but FSLR is like a scam. You buy the lowest cost crap on the market so you can say you’re green but you can get more environmental impact by upgrading to double glazed windows and CFC bulbs. Effectively they have their niche and as long as the laws don’t change to start requiring higher efficiency they will be fine, just as suppliers of any cheap building materials manage to survive but that doesn’t make them a company worth investing in.

    TNX up as the Fed lowers, what a surpise that the banks are upping the crack spread… As I often say, the Fed is there to protect bankers, not people.

    EBAY still going up, SHLD doing well. SNDK holding the line, OI strong as expected and COP not per yesterday’s pair trade.

    RYAAY flying again but financials are flying down so I wouldn’t put much faith in a recovery with GS below $175 and C under $26.

    We’re going to need GOOG and APPL positive if the Nas is to have any hope and it would be very ballsy for the market to turn positive into the long weekend.


  26. kustomz-You like cranes? If you like them well enough to invest in them MTW is the way to go. I have a bet with DM on that company. They have huge international exposure primarily in Asia. A great stock play!

    Let’s remember that we’ve been selling off on Fridays and let’s all remember what happened on Monday of the last long weekend and see if investors remember.

    Mark-you’ll have to let me take a look at one of your charts. I love charts and support lines and all those things.


  27. Not sure all my new positions got posted yesterday evening as I had to leave fast. At the close I got S puts, Leap puts, ACH calls and CCJ calls.
    By the way, if you want to meet some really cute girls, just go have a drink with Cap.


  28. Xian,
    Cunard never owned the Titanic, White Star did.


  29. NILE-These puts have been rocking. Real weak again today. I mean, who is buying diamonds now?


  30. parchesia – ha! I’ll kind of give you my “things to look for today”. prob be completely wrong of course :)

    yesterday’s 4 day channel was broken from 02/11 bottom at 10 EST and bottom 02/12 at 3:30 EST… broke thru at the 1354 line I said to watch for yesterday… then popped off of 1350 rather perfectly and closed at the 2 day close pretty much to the point.

    What I see today: 1340 is important, if it falls further will pop off that, but if it takes 1350 again then we’ll see 1367 to close 2 days flat. It’s option expire and 3 day weekend, so “feel” like we’ll end the day flat to slightly up. I think the worst this day could see is 1330… so my TRUE answer is to be prepared for anything! LOL


  31. CMP – finally slowing down. I want some payback on them


  32. Auction-Rate Market Perking Up
    Article published on Feb 15, 2008
    The suddenly scarce auction-rate securities market is starting to attract buyers again, reviving hopes for the closed-end funds that rely on it for financing. So Dow Jones Newswires reports.

    Hedge funds, international banks and bond funds, among other investors, are showing interest, drawn by the high penalty rate that debt issuers have to pay when dealer-banks can’t place bonds that holders want to sell.

    Their participation could bolster efforts to resell the billions of dollars of bonds at periodic auctions that have been obstructing the market, Dow Jones notes.

    There are new signs of liquidity returning to the market, says Lee Epstein, chief executive of the broker-dealer Money Market One.

    Earlier this week, several auctions failed, apparently because investors are worrying that bond insurers could be downgraded.


  33. ouch consumer sentiment… forgot that was coming out still…


  34. Phil, (repost from last night, so when you get the chance…)
    Using DGX to see if I grasp the concept of the LTP and how to formulate a play.

    The LEAP should have a delta near .80 if possible, so that would be the Jan 09 40. On the short side I need to look for one either just slightly ITM or OTM, whatever has the highest premium. That would be the Mar 08 50.

    The Jan 09 40 is 11.90, the Mar 08 50 is 1.95 with 1.58 in premium.

    Is all of that right? Or should the LEAP be at the same strike as the caller, meaning a Jan 09 50 going for 5.00?


  35. NILE puts-1/2 out.


  36. DBA – remind me over the weekend but I think it’s early enough in the season for farmers to switch back to wheat (I’m no farmer though) and that makes me think that there will be a very nasty surprise for the wheat bulls come harvest time but that’s off the cuff for me as crops are my weakest area as it always seemed to random to bother playing with.

    Cool Kustomz, good to hear from you. Hope the trip is going well.

    PCLN flying on nice earnings. They don’t seem too worried about a recession.

    UBS – $203Bn is about right, that would be almost exactly the $400Bn I predicted a year ago and really is not a very big deal in the grand scheme of things.

    Great Happy, glad it worked out!

    The roll was just what I decided to do with the active leg of the condor after taking out the putter yesterday and now I’m very glad I did as my March puts are doing very well but I’ll probably stick to my plan and cash them out rather than make another spread.

    Coal – The play I like on coal is the rails, not the coal companies, there’s a guy on CNBC pointing out that NSC is good bet on coal demand but I think so much is priced in already I don’t think I’d be jumping in.

    FSLR testing $220!

    I like Fast Money, you get a good story from the group as a whole, I don’t even bother with Cramer anymore.


  37. CMA puts-1/2 out. 1/4 left.


  38. PHIL:
    what about the March Puts on AAPL ?

    They haved moved ITM

    Keep them ?

    RMM


  39. GS – Holding Apr 200′s nekkid, and they’re totally destroyed at this point. What’s the best roll at the moment, Apr 170′s?


  40. swc


  41. David — The MW futures are in a pretty steep backwardation. I’ve been trading W and they exhibit the same backwardation but not as steep. I’ve seen news indicating that farmers are planting more trying to take advantage of prices but I don’t know how much of an impact it will have in pushing later months up. I’m betting the price will rise faster than plantings can compensate for but we’ll see.


  42. Mark, that’s a ray of hope for the bond markets. When muni bonds were pushing 20%(!), as they apparently did at Wednesday’s auction, someone HAD to get interested.


  43. PCLN-Recession plays right into thier hands. The bidding process works great when there is a lot of inventory in hotels and cars. If you can save $200 to $250 on a hotel in Europe that is a big deal. Wait until the airlines start selling them more inventory.


  44. Mark-thanks, I love any information I can get my hands on, good or bad, just let me decide. I started daytrading with the Q’s, especially on expiration because I like to live on the edge and trade front month. I’ll probably quit around 12-1. It gets stupid and risky to trade after then (if not before) on front month. It’s nice to have an SPX, emini perspective.


  45. Eric – agreed brutha. I post “the news” so we can all see what is being “sold” to the markets… ;)


  46. Some big purchases of QID 52′s going through.


  47. NILE puts-had to sell another 1/4. Wow! that drop just made my day :)


  48. FSLR – out of naked FEB 220 short. I think it goes lower but I have to go out and a bird in the hand….


  49. Phil-If I remember right, I think “contingency” was in the grain pits trading. If he’s still around, he’d be a good person to ask.


  50. NILE-Now I understand. Very nice.

    NILE
    theflyonthewall.com: Blue Nile-NILE target lowered to $68 from $110, maintain Buy@THNK
    ThinkEquity lowered their target in response to the company’s guidance for flattish Q1 sales and reduced Q1 EPS.


  51. Parchesia – nw man, thanks for the encouragement! Working for a b/d I can’t day trade stocks / etfs / options… but we don’t trade futures so I can dip my little cup in that all day if I want. My last two cents: buy side still isn’t commiting capital. So if capital is scarce, there’s nothing to trade but technicals (IMHO).


  52. Mich consumer sentiment came in at 69.6 down from 78 last month. Hard to get worse than that!

    APOL flying off the bottom.

    Damn I can’t believe I sold those QIDs!

    MDT still green.

    CNBC pumping oil hard but the actual energy companies are failing.

    VIX is still far too relaxed in realtion to our drop. We havent really made market bottoms until the VIX got over 27, now 25.

    DGX – don’t worry so much about the delta. When you are too far in the money you have too much to lose on a downturn so unless you are extemely bullish, it’s not always the best spot. I don’t see the point of buying an ’09 $40 that is 15% protected to the downside collecting $1.50 in premium against $12 when you could have twice as many ’09 $50s which will be 40% protected by your calls, selling $3 in premium and putting $2 back in your pocket, which you can use to roll down to the ’09 $45s if the stock drops hard and wipes out your caller. It doesn’t matter that you have $8 more premium if you are collecting $1.50 per month more in premium on the other side. That ratio, coupled with the far greater absolute protection makes this a far better play. The only caveat is is that I think DGX will head higher so I would do a 3/4 sell.


  53. What’s causing the surge in BSC?


  54. OPT--You have sprint puts?


  55. Jason, yes I have Sprint puts.


  56. Bear Stearns-BSC call volume light, volatility at 56 on renewed buyout chatter
    BSC is recently up $1.35 to $79.49 on renewed buyout chatter. BSC call option
    volume of 6,324 contracts compares to put volume of 1,755 contracts. BSC March
    option implied volatility of 56 is near its 12-week average according to Track
    Data, suggesting non-directional price movement.


  57. XMSR

    Sentiment for the deal to close must be favorable, approaching $14 and it was just $10 2 weeks ago when nobody thought the deal would get done. A boring stock but selling puts has been very good to me since last fall.


  58. Solars at critical levels. FSLR at 50MA and SPWR at 5MA. Let’s see if they break or bounce.


  59. anton/cunnard/white star- i know, cunnard took over the white star line and this is my point (ie cruise ships still travel the artic)


  60. QID

    Looks to me like those $52′s are just closing to take their .15 that’s on the table.


  61. AAPL Mar puts – I don’t have any March puts but I’d take that money and run.

    Oh my poor $220 caller on FSLR! I will have to send him flowers. 8-)

    GS/DanW – since you originally must have paid $10 or so I’ll assume you have money and say that I would go to the Jul $180s and sell 3/4 the Mar $175s for $11, but hopefully more if they head higher (look for $177 to be upside resistance). That gives you a pretty fair chance of getting your money back and a little flexibility with your caller. You could even start by just selling 1/2 as it won’t kill you if you can afford to take a chance over the weekend on a bit of a recovery.

    Good point on PCLN BBD.

    QID current $52s? That’s bad. Either someone knows something or someone’s an idiot…

    How about a weekend grain primer Contingency?

    Wow, no buying goes unpunished today!


  62. Optrader:

    what is your view:
    keep the March PUTS on SPWR and FSLR ?

    They are now ITM.

    RMM


  63. Vix dropped suddenly


  64. Doesn’t really matter that the hedgies are getting interested because they don’t have the leverage anymore – there was (and is) far too much debt with far too little equity and now the crrrrrunch kills all.
    Looking more and more like a nasty bout of deflation is in store for us.


  65. Xian, yes they did, but the Titanic sure doesn’t..!


  66. OPT--ILMN really spiked up, quickly!


  67. Redmountainhigh, sell 1/2.


  68. So MBIA and ABK are the Titanic and Berkshire Hathaway is the Cunard line! ;)


  69. We’re getting to the 1348.86 / 1350 test now…


  70. ILMN-Nice, Jason, I had not even noticed. This has been a great run, I am just holding, earnings were great and last I checked I think there was a big short interest.


  71. I know. One earnings I wished I played! I like their prospects (beyond charts) and could be a good run, especially if we spike up (as you called the short interest!)


  72. NILE-Bought back puts sold earlier. 1/2 position now.


  73. FSLR has the tendency to turn on a dime, so if the market heads north you could see if back @ 225 today.


  74. anton- yes and hopefully, just FGIC is titanic- u know, the typical fall guy set-up. as in, “look how bad that guy is- at least we weren’t like that guy”


  75. Jason, I had the same feeling the day of earnings, but we did not need to play earnings. I did not, and made more during the run the last 4-5 days than I would have made playing earnings. Without the IV crush. Just not worth it.


  76. AKAM-Looking strong. Would be nice to breakup out of this bullish flag.


  77. OPT--Yeah, I know. You have to sell into initial excitement with earnings. FSLR the other day was rare, great earnings and huge spike afterwards. Typically seems IV crush gets you after earnings if you hold.


  78. AIG going well, Qs picking up, SHLD strong, GRMN perking up but not a lot of conviction to the moves.

    I gave Tina a cool plaque with a first class ticket for the Titanic and the promotional flyer and a copy of the SOS message which says “Sinking, wants immediate assistance.” It’s always good to remind yourself that not everything goes as planned!


  79. Phil or anyone else,

    Is the VIX down today because of option expiration?


  80. Phil,

    I’m in the Jun/Feb 520 GOOG spread. Should we roll the Feb 520 to March 530?


  81. fred – shot you an email.


  82. Q’s found support at 43.8, let’s see if they retrace 43.9 or we can sustain this intermediate bottom. we have to get above 44 to have any meaning.


  83. zouk – VIX is calculated with next month’s volatilities.. and VIX options expire next wednesday.. So to answer your question, no. -Peter


  84. parchesia – do you have an email address you can post?


  85. Yeah, just no one sign me up for any porn! I don’t mind answering questions but no porn, please!

    madd_oxracing@yahoo.com


  86. FGIC is (was) a private company and probably had less controls than MBI and ABK. Also, it is harder for them to raise capital so I don’t think you can assume that they are all in the same boat.

    There’s a really good bull and bear battle going on at this level, we’d better hope the bulls win but I don’t like the way things are going so far.

    VIX – I do not know but I don’t think so other than I think a lot of stocks are pinned into expiration lowering their relative volatility which gets factored into the VIX. It’s all very complicated for a Friday…

    GOOG Jun/Feb – Lets assume GOOG can recover and sell 1/2 the Mar $520s for now.

    Ah thanks Foto, that fills in the VIX data!


  87. on Tuesday, do we have another crazy gap down like we did after the last options expiration?

    Phil, sorry for having to ask this, but I’m relatively new--is Tina your wife?

    I wonder if those who survived the Titanic got their money back on their tickets.


  88. parchesia – I just signed you up for backseatbangers.com. Enjoy! ;)

    I kid I kid of course. Shot you an email with what I’m looking at TA wise. Good times.


  89. Mark-LoL, Thanks!


  90. Out my Q front month puts. We could go lower, I just don’t want to risk anymore with expiration.


  91. Phil,

    “GOOG Jun/Feb – Lets assume GOOG can recover and sell 1/2 the Mar $520s for now.”

    Could you explain why you would roll the GOOG Feb 520′s to the March 520 vs the 530′s, especially if you expect GOOG to recover?

    Thanks


  92. It’s just slowly going lower and lower. No panic just steady selling.

    UK market down 1.5% with 15 minutes to , similar behaviour all day.


  93. now now everyone, don’t go crashing the webserver to see if that’s a real site or not.


  94. NILE-Bought back rest of the puts. Full position now.


  95. EOG taking a nice tumble. You can make such a fortune shorting energy if you have faith that it’s a scam. I guess I could also make money going long but the fact that I am so absolutely sure it’s a scam makes me too worried about my longs so I guess that’s why I prefer to short them, it’s a position I can believe in!

    Yes, Tina is my valentine/wife! Kids are Madeline (7.5) and Jacqueline (6.05) Now you are up to speed as I don’t even know what the names of the currently surviving fish are and they can’t have a dog until they have fish that live at least 3 months…

    I always look at that ticket I have and I think I would have been thinking “I can’t believe I paid for fist class!” Of course, they were much closer to the lifeboats, an elitism I notice was carried through on the Disney Cruise we took.

    GOOG – I roll to 1/2 the $520s because I may be wrong and they give me a free roll on my full coverage, put $3 per current share into my pocket and leave me flexible enough to sell more should GOOG go higher. If Google does head up $20 tthen I can assume that the $520s will be worth $40.25 (the price of the $500s at this level) and that I can then roll them up to 2X the $550s (since the current $530s are $20) in which case I will have brilliantly covered myself with the $550s at $20 (now $11.35) rather than fully covering now with the $530s at $20. On the downside, I am giving up $14 worth of my max possible protection but I can sell the other half for $14 AFTER Google drops $20 IF I have to. Obviously, the big benefit comes on a $50 gain where 1/2 of my position is unencumbered.

    I would call the selling resolute.


  96. Rubenstein of Carlyle Says Leveraged Loans Will Rebound:

    Video February 15 (Bloomberg) — David Rubenstein, co-founder of the Carlyle Group, talks with Bloomberg’s Pimm Fox in Fort Lauderdale, Florida, about the outlook for the private equity market in a slowing economy, expectations for leveraged loans and the significance of sovereign-wealth funds for private equity firms. (Source: Bloomberg)

    http://www.bloomberg.com/news/av/


  97. parchesia – you trade front month Q’s this close to expiry.. I’m too chicken, and I use them primarily for mo, sometimes to balance portfolio delta.


  98. USO, anyone considering put buying today? (Besides me, I mean.)


  99. if AAPL closes under 125 i will be very happy
    still about $0.75 of premium on those callers


  100. Whats a good play to maybe start shoring oil?


  101. NILE-Look at this bounce. Glad I sold my puts on the drop or I would be real mad. You need to be real fast and take your profits in this market as there is very little follow-through.


  102. AAPL-Rolled callers to March $135′s.


  103. quick points on auction securities markets from MER:

    Auction market securities failure:

    what happened?
    An unprecedented number of auctions for auction market securities failed in the
    past week and particularly yesterday. The failed auctions spanned across student
    loan securities, municipal bonds, and preferreds of both taxable and tax-exempt
    closed-end funds. Ultimately we view this as a liquidity event and not a credit
    event.

    What happens after an auction fails?
    The interest rate is adjusted to the “fail rate.” The fail rate is specified in the prospectus for the fund. It is usually either a fixed rate or a designated margin over a specified index. In some cases, the “fail rate” is higher, but in other cases it is not much higher than the rates that investors had received in the last auction.

    How long will the fails last?
    Unfortunately, history offers little guidance in answering this question because
    auctions have never failed on this scale before. We believe the time period until agiven auction gets up and running again is very issue specific, being largely dependent on credit and the “fail rate.” Macro factors are also involved.

    What are investors’ options?
    A “fail” is not a default. Investors have three options:
    (1) hold on to the security until an auction clears,
    (2) hold on to the security until it is redeemed by the issuer(either through the call option or at maturity), or
    (3) sell it in the secondary marketat below par. In all cases, the investors’ liquidity needs must be weighed versus
    the lower level of liquidity in the security.

    If an auction fails, what are an investor’s rights?
    Investors own the same instrument as before the auction failed, but the liquidity is lower and the coupon changes. When these instruments were created, they were designed with a feature (i.e., fail rate) that was intended to compensate investors for the potential lack of liquidity in the market, typically with a higher rate than they
    would have received in the auctions.

    Is there an opportunity in this confusion?
    We are confident that some investors find these securities more attractive now
    that they are yielding more than they were when the auctions were clearing.
    However, those investors must be able to tolerate the lack of liquidity and term
    uncertainty that comes with failed auctions.


  104. I don’t mind my portfolio delta as I believe in most of my positions and watch them and cover (well, I guess that means I do care cause I hedge), but yes, I love trading Q’s on expiration but I always always stops at or before 12 on that Friday. The devaluation just goes against you too quickly after that. I used to be chicken but the methodology of my trading doesn’t matter day to day, it works everyday, just like the Patriots formula why they’re good year after year. So I figured, why be a chicken if it keeps working again and again? I say that rather humbly because I have missed quite a few things in the past and did get lucky this morning with the bad consumer sentiment.


  105. Phil,

    NEM / ABX – would you recommend a new entry here?


  106. OPT – been out; so where are you positioned on NILE puts now? mo./strike?


  107. Premiums on the current Apple $125s is ridiculous at $1, very annoyed at having to wait to roll them.

    Oops, selling picking up fast now!


  108. Opt – are you holding those SFLY puts from two days ago? It seems acting quite strong …

    D


  109. Interesting that EOG and SWN have dropped but CHK holding up well.


  110. NILE-I have the March 50 puts.
    SFLY-No I don’t have any. Got out 2 days ago on close above 5MA. I am looking for re-entry though.


  111. FSLR-out of the vertical puts, good enough for me. Keeping the SPWR calls naked for now but will close at EOD if it closes below 5MA.


  112. popping off 1340 again…


  113. NDAQ, March 42.5 at 1.6 looks good???


  114. CHK – they hedge forward…


  115. Phil,

    Presently all cash, with $150,000 in margin account. Does selling the aapl mar $115 put @ $3.00 sound like a good play? Your previous post on this seemed to say so?


  116. I don’t trade these, but QQQ’S sitting on 5 day close of 43.60 which has been nice support the last 5 days.


  117. MCD – Going well for me so far, but I just rolled my Feb 55 caller to March 57.50. I was concerned about the ex-div date later this month and didnt want to get exercised, so I was either going to close out the whole position or roll higher for a month.

    VIXDEX – Phil (or anyone), you mentioned this yesterday I believe again and said it was bad for a down market not to have a VIX increase. Why exactly is it bad for the correlation to be missing? And what does it imply about market sentiment when market goes down WITHOUT increase in VIX?


  118. Goldman Sachs First-Quarter Profit Estimate Cut 51% (Update1)

    By Samar Srivastava and Nick Baker

    Feb. 15 (Bloomberg) — Goldman Sachs Group Inc., the biggest securities firm by market value, and three of its largest competitors had their first-quarter profit estimates cut by Fox- Pitt Kelton Cochran Caronia Waller.

    Goldman faces “continued challenges in credit markets” and may report a $1.7 billion writedown from leveraged loans, Fox- Pitt analyst David Trone wrote in a research note today. New York-based Goldman had $42 billion of leveraged loans at the end of November, he wrote.

    The firm will probably earn about $2.58 a share this quarter, Trone estimated, compared with his previous prediction of $5.30. The analyst reduced his first-quarter estimate for Morgan Stanley 18 percent and cut Lehman Brothers Holdings Inc. 28 percent. Bears Stearns Cos.’ estimate was reduced 27 percent.

    http://www.bloomberg.com/apps/news?pid=20601087&sid=aJlAzpuhImLY&refer=home


  119. “very annoyed at having to wait to roll them” – I was thinking the same thing about a couple of others that I’m playing…The 130Cs, for instance, now at 3 cents. Why don’t those dreamers just die!?

    Highlander, I own AAPL at just below that (basis 115.12)… 118/sh seems like a good deal on assignment.


  120. Hey everyone…new member here.

    Anyone have any suggestions for following this thread? Right now I’m just refreshing every couple of minutes and then scrolling to the bottom of the page. Hopefully there’s an easier way…??


  121. just a headline:

    `MULTIPLE EXPLOSIONS’ WERE REPORTED ON TEXAS GAS PIPELINE


  122. EK looking under developed again…


  123. Eurpope just closed, if we’ve got a rally in us now is the time.


  124. Phil,

    I have (2) AIG Jan’10 50′s with a $9.5 basis and with the juicy March 45 premiums should I sell (2) of these versus (1) as I have plenty of time to roll up?


  125. Ya, the dow jump right at 12:00 seems to show european short covering on our markets prior to the long weekend.


  126. surfah – Hit f5 instead of refresh. Avoids having to scroll down.


  127. sufah – read the new memebers guide. K1 has links for several browser refresher downloads.


  128. Metals & miners – I’m on the run so… Are the miners just following the market down or what be the forces at work here?


  129. News Flash! Underwriting Discipline Makes a Difference in Subprime Mortgage Lending

    Believe it or not, lots of those loans are going to get paid back

    Friday, February 15, 2008
    Thomas K. Brown

    I am continually surprised by the overgeneralized predictions about eventual subprime mortgage credit losses lately being thrown around by people who ought to know better. As I’ve discussed here before, Egan Jones’ Sean Egan came up with his preposterous estimate that the guarantors need $200 billion in new capital based on . . . well, no research at all. Bill Gross says that eventual credit default swap losses will tally to $250 billion. How does he come up with that number? He doesn’t say.

    In fact, it’s possible to subject these back-of-envelope predictions of Armageddon to a reasonableness test. How? By looking at the actual credit performance of individual mortgage-backed securities issued as the subprime market began to crack up. The most widely followed are the MBS that underlie the ABX indices issued over the past two years, the ABX 06-1, 06-2, 07-1, and 07-2. They represent (as was the plan when they were included in the indices) a meaningful cross section of subprime mortgages underwritten in those time periods.

    And as you’ll see in a minute, the credit quality among the different bonds varies enormously. Despite what the talking heads on CNBC would have you believe, not every subprime mortgage written over the past two years is bound to default—and not every MBS issued over that period is headed for a crackup. There is a huge disparity that’s not reflected in the alarmists’ broad-brush predictions of calamity.

    http://www.bankstocks.com/article.asp?type=1&id=9881648


  130. BURNING TEXAS GAS PIPELINE BELONGS TO HESCO, SHERIFF SAYS


  131. I really though BIDU would hold $260 – obviously wrong. Likewise GOOG and $528


  132. C’mon windy, start your magic.

    Make this the low of the day! :D


  133. Auctions – good conversation for the weekend.

    GOOG $530s are very tempting at $1.25 as a fun bet!

    NEM Jan ’09 $50s at $6.40 with a 2/3 sell of the March $50s at $1.75, that’s 20% back in your pocket in the first month with some flexibility. ABX I’m not happy with at the moment so I don’t like them as a new entry.

    NDAQ – that was some sell-off! I like the June $40s for $5.20 now as you can sell the March $42.50s for $2 or more if we’re right and the $40s for $2.50 if it goes the other way. XXX as a roll for people in the March $42.50s and can afford the naked roll for now. ($3.50).


  134. Phil,
    On that NDAQ play, would you be comfortable if we held the Mar 42.50′s that we hold now in addition to buying 10 Jun 40′s? Then when the 42.50′s hit 2 or more, selling 20 (the 10 we hold now plus another 10 to short)?

    On second though, I’ll probably just hold what I have now, see what Monday holds, and roll then.


  135. oh the political disucssion:

    Feb. 15 (Bloomberg) — Republican Senator John McCain’s
    presidential campaign said it has stood by a year-old pledge
    made with Senator Barack Obama to accept public financing for
    the general election if the opposing candidate did the same, the
    New York Times reported.
    Obama’s campaign refused to reaffirm its earlier
    commitment, the Times said.
    Under public financing rules, the nominees are restricted
    to spending about $85 million each for the two-month general
    election campaign, far less than what Obama might be able to
    raise on his own, the Times said.
    Obama had originally proposed the pledge in February 2007,
    at a time when he wasn’t raising as much money, the newspaper
    said. Obama will address the issue of public financing later, if
    he is the nominee, spokesman Bill Burton told the Times.


  136. Lol, somehow I missed the huge “New Member’s Guide” banner ad. Next time I’ll save the stupid questions for after the market closes :)

    Thanks for pointing me in the right direction anyway. Looks like I’m going to be busy reading…for about a year.


  137. Mark,

    Thanks for the email info, looks great.


  138. surfah – you just need a solid weekend! i wish that guide were here when i joined many moons ago…


  139. POT-Breaking down, now that I sold my puts. Oh well….


  140. AAPL/Highlander – I don’t think it’s a good use of margin. You can only short 10 contracts for $3,000 and that ties up your whole account. If you want to make $3K you can just spend $14 on 10 July $130s and sell 5 Mar $125s for $7 ($3,500). If it goes lower, you sell more and roll down and it’s a lot cheaper for you than paying off a putter and, if it goes higher, you still have 5 open positions, you can roll the caller up to the $135s and if they end up in the money at $140 you will have gained $5 more than your caller for about $5K with just $14,000 at risk.

    VIX – I’m sure there’s a K1 link to a VixDex ™ discussion but generally I see the VIX as a measure of the tightness of the rubberband that’s going to pull the market the other way so, if you don’t like the way it’s going, you want to at least see the rubber band getting tighter and building up restistance. If the market is heading down and the VIX is heading down too, then that indicates that down is the “right” direction, the pasth of least resistance.

    AAPL $130s – I don’t think you’ll ever get rid of them for less than .03 other than letting them expire.

    Welcome Surfah! Make sure you read our fabulous new member’s guide that K1 just updated.


  141. fred – nw man, don’t know how much help it is but it’s what I look at!

    *CONOCOPHILLIPS BOOSTS QTRLY DIVIDEND TO 47C-SHARE FROM 41C-SHAR


  142. jake
    sorry, but ‘my magic’ is working against you today
    i don’t believe this will be the low of the day
    i’m more focused on my callers than my calls
    ask again next week though, or the week after that, it’s a 5-week option period for march.


  143. OPT--ILMN March calls I have up 100% today. Others not so good, but this is en fuego


  144. From the FT:

    The cost of protecting European corporate debt jumped sharply higher on Friday as the market again buzzed with talk that structured products were being unwound.

    People in the market said a bank had bought large amounts of protection in late morning, consistent with the liquidation of a structured product or the sudden hedging of a large amount of risk.

    “The size of the trades suggests it’s not speculation,” said Mehernosh Engineer at BNP Paribas. While sudden unwinds have been expected by the market, news that they may now be going ahead nonetheless set nerves further on edge.

    The iTraxx Crossover index, which measures the cost of insuring the debt of 50 mostly junk-rated companies against default, rose about 38 basis points to 570bp. This means it cost €570,000 annually to insure €10m of Crossover debt against default over five years.

    The iTraxx Europe index of 125 investment-grade credits rose to 110.5bp, against a close of 101.2bp on Thursday.

    Amid the volatility, the fate of the monolines snapped back into focus after Moody’s yesterday slashed its rating on bond insurer FGIC by six notches.

    “The downgrade of FGIC from AAA to A3 in one step highlights the non-linear nature of credit risk, and the potential for acceleration of the pain,” Willem Sels at Dresdner Kleinwort wrote in a note that highlighted how the many triggers built into the market could cause systemic problems.

    We think the FGIC case is an example of the inherent problem credit markets are facing: many structured products and investors will be fine up to a certain trigger level, beyond which the losses can no longer be absorbed, and begin to spiral.

    This trigger level can be decided by the rating agencies, be set in the formula of the structured product, or be related to the moment when the equity is threatened to be wiped out. In many cases, this trigger level would cause forced selling and negatively impact the wider investment community.

    ———————

    steer clear of the financials folks.


  145. ILMN-I have the March 75′s as well, I don’t know why they are up so much, but I won’t be complaining too much :) I was kind of surprised that they were not moving too much the last 2 days. I guess we are making up for it today.


  146. big volume on C Jan10 Leaps..

    25 C – 7.5k
    20 P – 3k
    25 P – 7.5k
    30 P – 4.5k


  147. this looks so bad


  148. AIG/Calch – sure, take the money. If it starts going up, buy more leaps.

    Oooh European short covering ahead of the weekend – I totally agree Highlander, great rationale for the little bump given the environment.

    NDAQ – sure if you can afford another round that’s fine but you need stops as you are really ratcheting up the risk. As you say, holding is good as the play’s not going anywhere.

    CMCSA flying!

    It’s not looking very pretty right now in general. Buyers dump, rest, dump, rest, dump, rest… it’s the kind of action that can get impatient near the close and lead to a very big sell-off.

    Watch out for tops forming at Nas 2,325, Dow 12,300, S&P 1,340, NYSE 8,900 and Russell 700, those could give us some very ugly finishes if we can’t break through them by 3.


  149. fotoadict – now there’s a fun gamble… what about C 25 calls for 0.20?


  150. Phil,
    Just a suggestion:
    New member’s guide – As you know, surfah is not the first one to miss the banner. Most people ignore that area as mostly propoganda/ads area. I believe that a tab for New member’s guide has a much better chance – may be, you just want to change the K1 tab to K1′s guide for New Members and keep the banner as well. I would hate to take K1′s name out of it as he has contributed immensely for this site’s enhancements and towards developing/training new members.


  151. In this kind of market that is going sideways, with many reversals, it is very important to be in sync with the market. If you are not you will buy at the wrong time, take a loss right before a reversal, etc..If that’s the case, just get out of your positions and take a good breather, come back with a fresh view. It is very important to look at support and resistance levels right now and keep your stops below/above them but with a little bit of room.


  152. accelerated selling at close- i c that happening


  153. Out of March 126 DIA puts. 20% profit taken. I think that we are going down more, but did not want to lose the time value over three day weekend. QID’s? Waiting for end of day selloff… This is play time/money!

    Given the inflation data Gold seems a little soft. Perhaps it’s because the Fed’s hands are tied a little tighter as far as a rate reduction goes.


  154. “Watch out for tops forming at Nas 2,325, Dow 12,300, S&P 1,340, NYSE 8,900 and Russell 700, those could give us some very ugly finishes if we can’t break through them by 3.”

    now that’s what i’m talking about… :)


  155. If everybody is expecting an end of day selloff, it might not happen.


  156. Opt, good point! Thank you for all you do for us!!!


  157. I have to get on a plane so reducing all positions now, as I won’t know if we got an EOD selloff before tomorrow sometimes. I hope they don’t have TV on the plane. On the way here I watched CNBC and it was very frustrating to look at moves and not be able to trade.


  158. all on board 4 EOD sell off- or people just start looking around all shifty-eyed and begin inching towards the exits at accelerated pace


  159. selloff — no, but it’s always good when your levels match phil’s levels so you know what to look for and can adjust accordingly. he’s pretty good at this stuff.


  160. New Member Guide:

    Why not have this be the clickthrough the first time so that anybody new will see the table of contents and realize it’s not just marketing? I know anybody new is anxious to get to the action but they can go back and read it later.


  161. Oh dear :-(


  162. Wow, I thought I made a mistake doubling down on those FSLR puts yesterday. Now up 90% with a stop at 70%


  163. I think/hope the use of some red letters will solve the problem more so that changing everyting around. Worst comes to worst we develop a macro for RTFM. I think Jared had and intro Email for new members, I’ll have to find out what happened to that.

    LOL Opt, you are such an addict (and I should know!) have a good trip!

    Way to go Beth! Good job sticking out the open too but don’t be greedy, the Feb premiums evaporate fast into the close.


  164. C 25′s at 25% return now. papertrading only of course… :(


  165. Phil,

    Would you please let us know when you pick up the NDAQ callers? I just rolled my position to Jun, but can’t decide the entry and strike price for the callers, and don’t want to leave it uncovered for the weekend either! :) Thanks in advnace for your help!!!


  166. has anyone read that t brown thing on the mortgage backed securities analysis?

    wheat vs chaff


  167. Beth,
    Just a reminder – If you have not had a chance to write your article – can you possibly post one this weekend – tomorrow if possible?
    Thanks!


  168. bought some GE FEB 34.- for fun!


  169. mark.. don’t know how I’d gamble WRT those leaps.. but I hope you made that 25s bet.. it’s up about 30% right now..

    -Peter


  170. foto – unfort not, can’t day trade options :( But I would have! The volume’s there that’s for sure. I see 100 contract clips going up rather easily… turn 2000 into 2600… eh. C’est la vie!!!!!!


  171. foto – BTW, those clips on the 25c’s for 2010… there were two I see. One for 6500 around 10:20, and one for 1000 around 10:30 CST. Both crosses I assume.


  172. You wouldn’t believe NovaGold (NG) was in the gold business :-(


  173. Phil:

    Since most of your returns comes from the “rent”

    Why not just roll the NDAQ March 42.5 to June 45′s? or even 47.5?

    Thx


  174. Los Alamos lab says it can harvest fuel from the air

    Uses nuclear technology, gas costs about 4.60 / gallon

    http://tinyurl.com/2b6a9l


  175. MAR FOMC meeting is week of expiry


  176. Just in from meetings … what did I miss ? Looks like not much, just more of yesterday and some pin action.


  177. foto – 50% gain now… :( I keep hearing the Cry Me a River song by JT in my head… boo hoo…


  178. SFLY – bet opt woulda taken puts right there?


  179. Is Google gonna pin at $530
    should I sell those tempting $530′s puts for $3.70 aaaargh


  180. Here’s my idea for eliminating carbon:

    You set up a non profit that sells carbon offsets (there are others but they sell offsets for large projects, some of them like ethanol, actually don’t reduce carbon). Instead of the offsets going to large projects, you finance simple proven 10x carbon savings and cost savings. In about a year this will be feasible with the 7.5 watt LED bulb that replaces a 75 watt bulb (10x reduction and cost savings) and the aptera (www.aptera.com).

    The purchases you finance are paid back to you and then you finance more purchases, so there is a multiplier effect when you finance individuals as opposed to large corporations.

    The 75 LED bulb should be available in August (http://www.ccrane.com/lights/led-light-bulbs/index.aspx).

    The economics are really compelling 10x carbon reductions and 10x energy savings by the end purchaser.

    Of course, the Aptera and the 75 watt bulb are the only products that give 10x savings right now.


  181. NDAQ callers – oh no, I’m fine waiting until Monday, especially if we hold the levels I just listed.

    Brown securities – that’s what I’ve been saying. They throw out these wild numbers as if every home in America is worth zero and every homeowner in America is going to walk out on their mortgage – at some point you have to look at the statistical norms, we have decades worth of data and the risks taken by the industry, no matter what you think of them, did in fact take these scenarios into account. Granted we may be at “worst case” but as long as we don’t get worse than worst case, the vast majority of lenders will get through this.

    NDAQ – Brilliant Roose! See my 12:33 comment to see how much I agree with you… 8-)

    Air fuel – Why not just use the nuclear plants to make electricity for electric cars directly? All these plans are nice but misguded when we can cut our dependence on foriegn oil to 0 by simply using 50% less fuel. That can be done in 5 years of 10% reductions and any “breakthroughs” they have in the meantime would be a bonus but, even at a gobal consumption of 100Mb per day, we still have 1Tn barrels of productive oil in the ground (not counting shale, tar sands, ethonal etc) which will last 27 years even if they don’t discover another drop. If the world cut back 30% of it’s usage, we would have 40 years to figure something else out (again, assuming no further improvements or discoveries).

    30% Conservation alone is as good as discovering 50% more oil in the world and it cuts down on pollution as well as our issues of production capacity and it depowers any single nation from being able to hold the industrialized world hostage as we would have 30Mbd of spare capacity around the globe.

    All these solutions that take the focus off cutting down are no better than shoving pills into unhealthy people so they can continue their unhealthy lifestyle. Sure we need alternatives but we need to do what we can to stop the probelm now, not 10 years from now when we’re down to a 17 year supply.

    75 watt LED is nice – about 15% of our energy use goes to lighting.


  182. steveplace, thanks for the link, it reminds me to buy some uranium miners/processors. Anyone have any insight on the best long plays here?


  183. Hi Phil, I have the DIA mar 126 put, and sold feb 123 put against. Now should I take profit of the mar put, and roll to apr put, then sell the mar 120 put. Or I just hold on to march put? Thanks


  184. GS really flying off the mats! Lots of buying, very broad rally(ish) going on.


  185. lunch is over! who wants to finish flat going into a 3 day weekend and on expire day… ??? everyone?!?!?!?


  186. Phil, what about buying puts on PCLN ?


  187. Sign of the times? I have had three AAA-rated municipal bonds downgraded to AA and even lower in the past two weeks. I’ve had them for over five years without incidence. I assume this is happening a lot and must mean that munis are perhaps more vulnerable or at-risk than is generally ackowledged in the media.


  188. Thanks Phil for your quick response on NADQ – glad to learn from you and many others everyday!


  189. oops it should be NDAQ…


  190. Since you made good money on the March put and nailed your putter on the button you have cheap insurance. You can either roll to longer calls and just keep the insurance in place like I always do or leave them where they are if you think you need tight protection. It really depends on how exposed your portfolio is without them.

    I really don’t think we’re going to hold this bump as I can’t imagine why anywone would want to go into the weekend with fresh positions. If this is a real rally, where are Apple and Goog?

    PCLN – it seems a little overdone but why not pick on someone who didn’t have great earnings and raise guidance?


  191. CMan, sorry I haven’t gotten to it. I planned on doing it Tuesday night, but hubby surprised me with the pre-Valentine’s date. Yesterday was Valentines, and tonight is my treat for him, and I’ll be traveling to a wedding over the weekend. I’ll write it early next week. But from looking at my records, my 30k account is now at 68k for a 38k gain since Jan 22. 10k came from YHOO, 7k came from CME (my own trade I posted here after their 20% hack job), 5k from the EDU “mistake” Phil made, 2k from MRVL, 3k from MON (my own trade after Phil said he liked it), 3k from FSLR that I just sold after Phil’s warning (Phil’s xxx, but not for the 25k). So 30 out of 38 came from 6 trades with 2 of them being my own after already being way ahead in my account. The rest came from little gains like MCD, CCJ, ERTS, and BHI. A good example is EK. I bought 5 at 1.20, 5 more at .9, 5 more at .6, 15 more at .5. So I had 30 at .7. I sold 15 at .8 (60% in a day on the 15 at .5), and 5 at 1 (67% gain on the 5 at .6), leaving me 10 at a basis of .47 with a bid for 5 more at .5. It’s just the legging in and doubling down and getting out once I’m back to even that helped a lot. That’s what is drilled into our heads every day here. I completely missed AXP, NDAQ, and I think a couple of others. But basically, that’s been my strategy. A lot of luck and giving myself room for some gambles that paid off.


  192. NDAQ roll to $45 or $47.5

    Do you make most of your gains on the selling “rent” or the
    Owning ; Longs

    It seems 70% of your profits are from your covers?
    Am I wrong?

    Why should I pay up for the $40′s

    Why not just roll to the $47.5′s???
    and keep selling the 42’5s (Margin a bit higher…)

    Thanks!
    I just need to understand this…


  193. Been doing my aapl right-been going off & on Buy calls, let it run-sell, buy puts-goes 30% sell. Its the only thing that is working!! Going to pick up some others like that. Maybe I can recover some of my losses!! Apology for an error I made-the Canadian oil trusts pay their dividends monthly, not quarterly like I said. The Can hold taxes out every month too, which u can supposedly get back(with alot of paperwork, of course). Sorry for the misinformation. The trusts are supposed to expire in 11, but with a chg in govt it will probably stay the same.


  194. Opt, you still here ?

    Have a good trip, my friend.


  195. OPT,
    Whose charting system do you use to follow your strategy? I have used Fidelity, OptionX, Yahoo but cannot decide. Don’t mind getting another paid service.


  196. Beth: People like you inspire me to keep trying. Thanks and Cheers to you!


  197. BSC, dumped $2 in seconds as soon as Faber came on before he even mentioned anything.

    Since my back is to the TV, I did not see if there was a headline; but I happened to have the BSC chart up and noticed it dump seconds before he spoke.


  198. Gee a BSC takeover rumor on a Friday of options expiration ?

    Who would fall for that ? LOL.

    These crooks are good; someone made a fortune on $80 calls.


  199. Rcha

    I’m using those platinum rt charts on Worden
    Unbelievable… Best system for charts I’ve ever seen…


  200. I must have seen 10-15 takeover rumors this week, all claiming deals are “done”, signed off by boards, etc.

    So far …. NONE happened.


  201. MrN

    SFLY – What were you looking @ on this one?


  202. bar,
    Don’t forget : They will auto assign any puts/calls if the underlying is $.05 in the money. I would buy out the putter first if I were you.


  203. Mark,

    You’ll be glad to know I took your C 25 play and it hit my limit order while I was at lunch. I owe you a couple drinks, thanks.


  204. Feb. 15 (Bloomberg) — Transocean Inc. said it has a
    contract with a group headed by a unit of Marathon Oil Corp. for
    the ultra-deepwater drillship GSF Explorer to drill in
    Indonesia.
    Contract revenues are estimated at $351 million, the
    Houston-based company said today in a statement on Business
    Wire.


  205. fred – greatness!! ha, hope you took your profits, but that was an easy one!


  206. NDAQ roll – In the LTP and the small portfolios most of the INTENDED profits are from selling covers but it’s nice if our longs appreciate too! You don’t want to get into a position where your caller will gain much more than you if the stock jumps up, especially with an exchange, which could be bought.

    BSC – It still seems that the big boys are selling into any strenght across the market. I’m still worried about what happens if there are $100Bn worth of guys who have been hoping for more of a bounce but damn well want to go to cash for the weekend.


  207. sandyb

    Not all of them pay monthly; some are on a quarterly dist.


  208. Thanks Greg. I’m just plugging away. But I have no illusions that this is a typical month. I would be extremely happy with 15% a month, which translates to over 400% on the year.


  209. fred – sfly: Don’t follow me; I’m just trying to learn by watching opt trade puts. Here’s my guess. SFLY is in a downtrend; it bounced briefly to fill the gap but has met resistance three times at this level and turned back down.


  210. beth,
    Thanks – Appreciate it. I am still looking forward to your detailed article next week – more interested in – your methodology in placing orders / chasing or not chasing a suggested trade etc.


  211. What was the C play ?


  212. just spoke to my rep. at etrade and he said for an options expiration friday volume was very light. the only reason we could come up with as to why is that people are leaving early for the 3-day weekend.


  213. Phil,

    You will love to see this!
    http://www.custombobble.com/20080215-myfriendisadonkey-p-1420.html

    Cramer is a Donkey is here! I’m waiting for your photo to make the superman!
    If someone lover cramer here, please do not click the link.

    Miles


  214. Phil

    I will re-read the K1 over the weekend, but one point I find the trickiest, amongst many, is the decision of full cover or not / cover with same or higher strike (assuming calls) – my conclusion is, if one is to use that strategy, you need cash reserves available to turn a run-away stock into a gainful position.


  215. Beth that’s an excellent return. Congrats. Very interesting how you’re not the typical noobish trader since you’ve came here. I’ve misplaced you, and I apologize, obviously your strategy is a working one. Psyched for your article!

    Par – The cookie, I just wanted to tell you that I’m a chocolate chip kind of guy… You know, just a heads up.


  216. Cap – roll of the dice really. C’s chart wanted to come back to 25.20 like the 11:30-12 time range, so when it was at 25.06 area I thought a good gamble was to buy the 25′s for .20 at the time. Before the lunch time they were trading around .30 so I figured there had to be a 30-50% profit in it just for sh*ts and giggles.


  217. Cap,

    Mark pointed out you could pick up Feb25 Calls for .20 as a fun trade earlier today. I picked up 20 contracts, put in a limit order to sell @ .30 and went to lunch. I’m sure there are dozens of these on opex day but I always think it’s too much trouble. I should do more of these.


  218. ben valentines card- i think cramer does a dis-service to the economy w/ all his disrespect of the fed.

    one thing is to b criticising the FOMC action/inaction- but this is not very good natured and only instills more frustration and lack of confidence.


  219. Phil,
    Conservation – I’ve been able to cut electric use by 14% annually (family of 5 currently at 10,000 KWH per year). Yeah, I’m a geek and read the meter every Sunday night and have the data in a spreadsheet. First step is paying attention and gathering data, then getting the teens onboard.

    BTW I also chart oil usage against degree days..

    No wonder I enjoy ‘options math’..


  220. Phil,

    Would like your clarification on this.

    You sell calls to protect the longs. Isn’t like buying the puts? If so why don’t you buy puts? Just wanted to understand the difference between selling calls vs buying puts.

    Thanks.


  221. DM

    What are all the cookie references? Did you guys make a bet to destroy some guys life like Winthorpe, as in Trading Places.


  222. malai,

    In essence you like your position and sell calls to collect premiums versus buying a put to protect your position. You reduce your risk by taking in cold, hard cash which is preferable to giving someone your cash. You are correct that they basically accomplish the same thing. It does limit your upside on the downside by selling calls vs buying puts.


  223. Phil,
    I have AAPL ’10 leaps strike 120, net cost after buying out the caller today – $46. With AAPL near its low (122) Would you recommend 1/2 cover with 125s for the weekend or wait and cover with whatevers towards the EOD?
    Thanks!


  224. Thank you for the compliments. But I am still a very novice options person. Read Phil’s critique of my LTP this Monday just to see how much of a beginner I really am.
    http://www.philstockworld.com/newsletters/members/2008/02/11/monday-market-movement-3/#comment-115440


  225. orion,

    Do you have the whistle and stopwatch standing outside the shower door? I tried using a kitchen timer as both my kids love to drain the hot water tank.


  226. GOOG just went through its low of the day – Need it to bounce off $525 but I guess thats a nice options number – halfway between strikes.


  227. pisani looks like a an anime character

    Suitengu

    http://en.wikipedia.org/wiki/Speed_Grapher#Main_Characters


  228. AAPL jumping, somebody must have fallen asleep and inadvertanly bumped the BUYBUYBUY button.


  229. CMan – surely you don’t think these guys will fall out of the sky over the weekend? Right now, the terrain-following radar is on, but I think selling against my AAPL positions is a bit early. I usually sell against on a skeptical rally.


  230. xian – speaking of anime, have you seen this trialer yet?

    http://www.apple.com/trailers/wb/speedracer/trailer1a/


  231. GOOG – remember the max pain is 520!
    http://www.iqauto.com/cgi-bin/pain.pl


  232. I’ve contacted the Plunge Protection team who promised we’d end flat :-)


  233. Max pain = what my GOOG caller felt today!

    Feb 530 call, .125 mark, -4.225 net change :)


  234. thanks


  235. nav
    i’m not sure about this, but think that max. pain is calculated at strike levels. since goog trades in $10 increments, wouldn’t even greater pain be smack in the middle between 2 strikes? hence 525.


  236. sakiko/AAPL- same here, just letting my callers expire and will look to cover into a green screen

    also, film thinks there may b a 20-40 point run in store in the next “few weeks”- thanks film!!!

    mark- sweet! i hadn’t known about a speed racer release


  237. let’s see if spx can touch 1348.86 again and look for 1350…


  238. Hi, I’ve posted a couple new articles at http://philsbackupsite.wordpress.com/, one on DNDN and one on expiration day buying, taking advantage of the volatility.


  239. cman, I’ll second sakiko.. I’m naked on aapl right now for the first time in 6+ months.. largely naked.. -Peter


  240. xian
    if it could go up then it could also go down too, haven’t we just learned that the hard way? think about covering some of it rather than all naked. IMHO, for what it’s worth.


  241. phil is naked on AAPL
    film looking for rally
    stock on a depressing downday

    this makes me not too eager to cover


  242. AAPL – also took off covers this PM. Ditto for BA and all in the hope they can get past their respective resistance next week


  243. sakiko/foto,
    Appreciate your input – makes me feel better about leaving them naked over the weekend as I am not comfy selling at these low levels.
    Thanks again.


  244. LOL Bobble! Needs more spittle on the chin…

    So far no crisis, that’s a good thing.

    Orion – 14% is good. That’s why a 20% tax on energy would be neutral for the consumers (it would simply force them to conserve) but would put $109Bn a year into alt energy research that would yield tremendous benefits down the road. It’s nice that a motivated person can do it but this is what governments are for, to take the long view.

    I’ve written before about my conservation tax. $109Bn buys a lot of research (look how excited people are about a $25M prize!). If I give you $5,000 for trading in your used car for a car that gets 15MPG more and 1/2 of the 8M people who buys cars does that, I would pay $40Bn (which would boost the auto industry) and, at 15,000 miles average per driver I would save about 400 gallons (10 Barrels) per vehicle (saving the driver $1,200 a year on top of the rebate) x 8M vehicles = 80M barrels of oil a year. That’s $7.2Bn per year off our trade deficit and $7.2Bn dollars back into the economy PER YEAR on my $40Bn investment.

    I would still have $69Bn remaining to develop alt energy and encourage other forms of conservation but just 5 years of that program, if only the mileage upgrades worked, would save 400M barrels of oil a year (1/2 the US fleet moved up just 15MPG) and would save Americans $36Bn a year even if my $345Bn spent on finding alternataves yeilded NOTHING (and assuming oil doesn’t come down in price despite our reduced usage).

    That’s all it takes, a 20% tax on energy and 5 years and WE CAN change the world.

    AAPL – as much as I love them, I am going into the weekend 1/2 covered with the Mar $120s, better safe than sorry.


  245. AAPL- i heard the man, 1/2 it is.


  246. phil/AAPL- y the 120s and not 125s? is it for the delta and not the absolute premium value?


  247. xian,
    Just noticed your response to my AAPL query/dilemma. Appreciate it.
    Thanks!


  248. cman- no prob, one of the greatest things about this board is to get feedback from people w/ similar positions weighing similar decisions-

    we have a market of sorts right here, we need more folks like anton to keep us honest.

    on AAPL- my inputs have changed- phil is covering 1/2 so i’m doing the same.


  249. xian
    phil wrote this earlier about GOOG, but same logic as for AAPL:

    GOOG – I roll to 1/2 the $520s because I may be wrong and they give me a free roll on my full coverage, put $3 per current share into my pocket and leave me flexible enough to sell more should GOOG go higher. If Google does head up $20 tthen I can assume that the $520s will be worth $40.25 (the price of the $500s at this level) and that I can then roll them up to 2X the $550s (since the current $530s are $20) in which case I will have brilliantly covered myself with the $550s at $20 (now $11.35) rather than fully covering now with the $530s at $20. On the downside, I am giving up $14 worth of my max possible protection but I can sell the other half for $14 AFTER Google drops $20 IF I have to. Obviously, the big benefit comes on a $50 gain where 1/2 of my position is unencumbered.


  250. i dislike selling red tickers.


  251. AAPL – 1/2 at the $120s because it’s a lot of money if I lose it and I’ll be happy to spend $3 to roll them to 2X the $135s if we jump $15 since this gives me a free roll all the way down to the $110s if it goes the other way. I don’t think there’s any major catalyst to worry about and I can always roll them up once we get past the weekend without dropping 500 points.

    If I don’t cover them here it only forces me to buy more DIA puts to cover the open calls so, again, I’d rather put $3 into paying off my callers after I know for a fact my own calls have jumped $6 or more in value.

    11,634.82 – that was the low after our last Monday holiday. I’m not saying it will happen again, just that it would really suck if it does!


  252. alright, here’s the test! comeon spx… I dare you… kiss 1348.86…


  253. windy/AAPL/GOOG- excellent, thanks a ton- that’s perfect reasoning for my question on a similar stock.


  254. PCLN still leading us higher!

    What a great finish, I’m regretting my covers already!


  255. i need a bidu pin at 260….

    Just finished reading “Trend Following”… very good book. Starting on the complete turtle trader this weekend


  256. fred, 25′s are 50 cents now!! shnap……………..


  257. Phil, what do you think about BBY 45′s 2010 for a LTP. 44 seems like their bottom and they have nice premiums?


  258. Green on the S&P!

    NYSE looks like it wants to go green too…


  259. AAPL STOP PLAYING WITH ME!


  260. GOOG sneeking up to $530 at the last minute! Those scamps…


  261. BBY – I’d wait for next week. Maybe downgrades.


  262. turtles should b free, not traded!


  263. thanks. have a good long weekend.


  264. AAPL – took the advice and 1/2 covered w/ MAR 120s.


  265. Now wasn’t that just silly? SPX trying so hard to close 1350 :)


  266. YEAH!!! AAPL under 125. i’m happy.
    too bad president’s day was cancelled this year.


  267. Phil / anyone
    GE:
    the profits were fine but the commissions do eat in these small contracts. Is there a provider with lessor contract charges or maybe a lumpsum. No need to rush an answer and have a great long weekend.


  268. Have a good three day weekend all! (Especially the person who has been calling for a 3-day weekend for the past 4 weeks--and I don’t blame him!


  269. you really sweat out that last dime on AAPL 125s? lol


  270. Mark- .02 off on SPX! Not bad. Phil-Opt- Thanks for PAL. It made my day.


  271. Phil,
    On the AMGN changes in the 25KP review. Why roll down to the 45′s? Especially when the Mar 47.50′s still have the most premium (considering they are OTM)? Just protection on the downside?


  272. JR- LOL!!

    it’s happy hours!!!

    have a nice weekend, go outside and do stuff- we have excellent weather here in VA- a bit cold , but breezy, sunny and fresh!

    thanks for all the feedback

    im ouT!!


  273. Everybody. South of my border…

    Have a tremendous 3-day weekend.

    I will be in Plattsburgh, NY this weekend checking out the Sam’s Club (none here in the province of Quebec) for President’s Day specials. (insert bad George Bush joke here).

    Bye y’all!


  274. CBTC – .01 off!! ha! close enough. Still has 1 min to make up the different ROFL!

    Have a great weekend everyone.


  275. Did not get the end of day selloff. I read it as a positive for the market in general. We survived alot of bad news today lending creedence to the old addage that “Wall Street climbs a wall of worry”.

    Thanks; Phil and all of you for a great week.

    P.S. DBA strategy and good uranium stock discussion appreciated if anyone has time over the weekend.


  276. Uranium Sector Doesn’t Radiate Strength

    Friedman Billings Ramsey

    ALTHOUGH A SEASONAL UPWARD MOVE in uranium prices over the coming few months could help uranium equities, we would use that as a profit-taking opportunity with a view that there is additional downside ahead for uranium equities, given our expectation of uranium markets to ease further in the second half of 2008 and into 2009.

    The key issue with uranium is not resource availability, but achieving sufficient new production-supply growth by 2013 before secondary supplies begin to taper off.

    While this risk offers disproportionate upside — given the fairly inelastic nature of demand — the large resource base, expected production response and anticipated new production response should fill this gap. As this outer-year production-gap concern eases, the call option value will also ease, bringing uranium prices lower ($65 per pound long term), but still well above historical price levels, similar to other energy commodities.

    While uranium prices could bounce back in the summer months, we believe prices will be lower in the second half of 2008 (as Kazakhstan acid issues are resolved) and the uranium market could ease further in 2009 (continued production growth and unlocking of Russian volumes). The nature and economics of the nuclear business model, combined with our view that resource availability is sufficient, suggests that long term, uranium should only trade marginally above its all-in expected supply cost curve.

    Longer term, we believe that prices should average above current supply costs ($40 per pound to $45 per pound) to reflect: (1) rising marginal supply costs from increasing production requirements; (2) supply disruption concerns until mine production supply is less concentrated and (3) optionality related to an upside power demand case, given the inelastic demand.

    Therefore, we are assuming a $65-per-pound long-term uranium price.

    Essentially, we are looking for uranium prices to average $80 per pound in 2008, falling to $70 per pound in 2009, $70 per pound in 2010 and $65 per pound long term. In the future, as production grows, uncertainty about whether supply will be sufficient to satisfy demand should be reduced, and at the same time, supply concentration (disruption risk) will be reduced as new mines come on line.

    Although a bounce from current levels is possible, given a potential seasonal uptick (65% probability of upward move during February to May) in uranium prices, we believe that additional downside remains from (1) correlation with the underlying commodity as spot prices come under pressure by the second half of 2008; (2) downward estimate revisions, given that consensus uranium estimates are too high and (3) additional selling pressure if a downward resource market develops (if global demand concerns resurface), given the speculative nature of the space.

    We are assuming coverage of Cameco, Uranium One and Paladin [both traded on the Toronto Stock Exchange]. Despite our bearish outlook on uranium prices, we are initiating coverage with mostly Market Perform ratings, given that these names have already sold off 40% on average during the past four months, and seasonally, uranium prices tend to be stronger heading into the summer.

    With this brief, we are transferring coverage on Cameco, Uranium One and Paladin from Fadi Shadid to Amir Arif. For Cameco, we are downgrading the stock from Outperform to Market Perform and lowering our target price from $41 to $40.

    For Uranium One, we are downgrading from Outperform to Market Perform and lowering our target price from Canadian $11 to Canadian $10. For Paladin, we are maintaining our Outperform rating and current price target of Canadian $6.


  277. Have a good weekend guys! I’ll catch up on questions tomorrow.


  278. On Seeking Alpha:

    PowerShares DB Agriculture ETF: ‘Optimum Yield’ or Undue Risk?
    posted on: February 15, 2008 | about stocks: DBA

    Morningstar tracks 672 ETFs. Of those, the PowerShares DB Agriculture Fund (DBA) is the sixth-best performer over the last year (through Feb. 8), with a market return of 50.3%, compared with -5.1% for the S&P 500.

    Commodities are one of the few asset classes that are negatively correlated with stocks and bonds, meaning they tend to zig when the market zags. Likewise, they tend to have a positive correlation with inflation, another apparent plus these days.

    DBA offers exposure to agricultural commodities by investing in futures contracts of wheat, sugar, soybeans and corn. Prices for all four commodities are sky-high. Wheat prices have more than doubled in the past year and hit another all-time record on Feb. 11, after the Department of Agriculture forecast a dip in supplies to a 60-year low.

    Soybeans and corn have also reached records recently. Soybean futures prices are nearly double their 2007 average, and corn, which has averaged about $2.50 per bushel in recent years, is now above $5. Sugar, meanwhile, is up 14.4% year to date.

    The reasons for the run-up are broad but straightforward: Demand from China, India and other markets is up because rising incomes and improving diets mean more need for animal feed. Biofuel regulations and initiatives in the U.S. and the E.U. have increased demand for corn—one-fifth of the world’s corn now goes to ethanol production—and other grains. Even sugar benefits, because Brazil uses that crop for ethanol.

    Meanwhile, supply is down, thanks to worldwide challenges to food production, which are often related to weather conditions such as drought. Finally, speculators drove prices up in expectation of a supply dip.

    All that, combined with high energy prices, a weak dollar and worries about a U.S. or global slowdown—signs that generally help commodities—built a perfect storm for DBA, even as oil and gold prices backed off records.

    The fund again and again posted all-time highs in recent weeks and months, grabbing the top spot in its first two weeks in our PowerShares Momentum Tracker rankings, as the top performer for both year-to-date and one-year returns.

    Like the other PowerShares DB funds, DBA uses the PowerShares/Deutsche Bank ‘Optimum Yield’ model, which attempts to maximize returns. Commodity investors generate returns in three ways: through gains in the spot price of the commodities; through ‘collateral income,’ or interest earned by buying futures on margin and investing the extra cash; and through ‘roll yield,’ or the price difference between futures contracts when the fund rolls one expiring contract into another.

    It’s through roll yield that PowerShares funds purport to have an advantage, through the ‘Optimum Yield’ formula. Futures markets are said to be in ‘backwardation’ when longer-term contracts are cheaper than the spot price of the commodity. When that occurs, the fund can generate a positive roll yield by selling the more expensive, expiring contract and replacing it with a cheaper one.

    Likewise, DBA and commodity investors can lose money when, say, a 120-day contract for wheat costs more than an expiring contract. Greg Collett, chief operating officer of DB Commodity Services, recently said that with the ‘Optimum Yield’ system—which allows flexibility to choose from several different maturity dates—“the formula can pick a new contract expiring from one month to a year out to mitigate contango or take advantage of backwardation.”

    Investors here should remember that DBA and all commodities are risky places to invest. Though this ETF’s short history has offered nothing but positives—the fund is up approximately 52% since its Jan. 5, 2007, inception—PowerShares offers data on its index back to 1998. In 10 calendar years, the index has gained or lost more than 10% nine times, including dips of 25.2% (1998), 15.6% (1999) and 17.8% (2000).

    Performance has been impressive recently, with a five-year annualized gain of 14.9% through the end of 2007 that beat the S&P 500, the Dow Jones Agriculture Index and the Lehman U.S. Treasury 20+ Index (bonds), but as Morningstar’s Karen Dolan points out in reference to the broader PowerShares DB Commodity Index Tracking Fund, the recent strong streak heightens “our worry that we’re closer to a peak than a trough.”

    That’s a tough thing to forecast, although an unexpected upturn in economic growth, or even a short-term rally in stocks, could cause the kind of shockwaves that make commodities wallow during bull markets.

    That said, DBA has a lot going for it, both in terms of recent performance and short- and long-term trends, including inflationary pressures and recession fears, as well as population growth and the rise of the third world.

    More important, commodities, especially those in the agricultural sector, can offer a real haven when economic times are tough and stocks struggle.

    As a small slice of a diversified portfolio, DBA can provide diversification for investors willing to deal with its volatility.


  279. My boss just sent me this hilarious subprime mortgage powerpoint presentation. It had me in tears by the time I finished:

    http://www.maggan.org-a.googlepages.com/Presentation1.pps



  280. Guys, From A very Infrequent Poster:
    I have seen some comments from members to get Phil involved in politics directly.. That would be a waste of his talents to subject him to the dirty world of politics, and have hime waste time on things/people that would drive him crazy. An Idea:::::
    How about we members form a political action committee.. I am serious.
    The charter would be to hire a team that could put forth Phil’s/our ideas.
    To be funded by our members from successful trades:
    Everytime we feel that we owe a great profit to Phil we could contribute some of our profits.
    All we need is:
    A PAC set up ny Phil>
    An easy link on the blog to contribute money to the PAC, we set up pre-authorized accounts to ACH from.
    Then, I would further like to suggest that we set up the ACH so that none of the Principal is ever spent, we only spend the earnings, so that this effort to save America can have everlasting benefits for all our generations to come.
    If Phil can set this up I will send the first $100, just because I didn’t make any money today, but I didn’t panic.

    Jamie


  281. I am so serious that I will post my email address to help garner enough support to get this going. I would particularly like to hear from OPT ( On a first class flight to Paris) Cap, WindyWheel, BBD, and Xian, Peter, and all of you. This is no laughing matter we need to ACT.


  282. The email,address jamiehead@cox.net

    No porn please!!!


  283. Phil,
    AAPL weekend protection:
    At the time you chose to go with Mar 120s 1/2 cover AAPL was at or near 125 – Did you choose this based on the ability it gives to roll your position to 110 if necessary for free or was it based on the delta as close you yours as possible or do you think/see it has a real possibility of dipping that low or something else? I am curious and would like to learn that.
    Thanks!


  284. It’s the weekend ! Yippee !

    I am seeing lots of interesting political commentary; lots of scary stuff about O’bama.

    Here is an interesting piece:

    The Problems with Obama [Victor Davis Hanson]

    Under pressure to produce some facts and specifics, the Obama team is beginning to release a little on the economy, taxes, and new entitlements. But the problem is that Obama himself seems not familiar with the details, and still prefers talking only about hope and change. Wonks releasing details doesn’t solve the problem. And it won’t, until he, the candidate, can talk in serious fashion ex tempore about the specifics he wants to achieve.

    The other problem could well be racial. His coalition initially was based on the notion that he would capture 60 percent of the black vote in a tough competition against the wife of our first honorific black president, and go on from there to cobble together a coalition with other minorities and elite whites. But his success seems to have been achieved with a slightly different calculus — 80-90 percent of the African-American vote, elite yuppie whites, and students and Moveon.org progressives.

    The problem with that is illustrated by Hillary’s last-ditch appeal to win Texas, Ohio, and Pennsylvania with working-class whites and Hispanics. Since the agendas and past voting records of Obama and Clinton are nearly identical, and since he is the far more inspirational candidate, she hopes to tap into a growing resentment that his appeal is boutique for whites, and based on racial solidarity among African-Americans; the former turns off the working classes and the latter other minorities as well as poor whites. I think squaring that circle is every bit as problematic as McCain pacifying the conservative base. And the Democrats would worry about a candidate coming into the convention and beyond that lost the popular primary vote in the key November states of California, Florida, Michigan, New Jersey, New York, Ohio, Texas, and Pennsylvania.

    With Hillary, Obama looks youthful and invigorating. But beside the scarred old veteran McCain, he will appear inexperienced and wet behind the ears. Putin’s comment that Hillary didn’t have a head reminds us that the problems in the world are not, pace Obama, due to misunderstanding or miscommunication, but because thugs like Ahmadinejihad, the Chinese apparatchiks, Assad, Putin, Chavez, etc. profoundly dislike the impediments the United States poses to their respective carnivorous agendas. McCain gets it, the others don’t (cf. his Putin KGB quip compared to Hillary’s ‘duh’ redundant remark that Putin didn’t have a soul.)

    These creepy leaders are more like beady-eyed wolves that wish to break into the global hen-house and prey on the European, African, Asian, and Latin American chickens inside — and so pace back and forth, eyeing the trigger finger of the farmer with the shotgun at the door. They know exactly what they want, and how to get it, and can’t wait for the guardian to sit down, discuss their hunger, and invite inside them for discussions — and some lunch.


  285. I found myself reflecting a lot on my investments. I recall how I invested 8 thousand dollars in JDSU before its big run in 2000. At the time, I was a buy and hold investor, much influenced by The Motley Fool. I watched the value of those shares increase to 60K at their peak. Sadly, their value depreciated to 1500 before I sold. I kept waiting for the turn around that never came and paid dearly for hoping. Phil has said many times, that “Hope is not a strategy.” So burned, I stayed out of the market for several years. I read a book by David Dreman whose stratedy is low PE high div payers which motivated me to get back into the market but I was bored with those plays. Since I am relatively young I figured I would research out options to not only mitigate risk but use leverage. My plays had been conservative. Specifically selling covered calls. I had a basis in NVDA at $30 which I worked down by selling calls and buying puts to $18/ share. Things were going well until this week when they reported earnings. The street was unhappy with their qtr and the stock took significant haircut this week on very high volume. This of course amongst a horrible market backdrop has caused me to be soured on trading. Not to mention my serious tendency to give back gains and I kicking myself for it. I feel awful.
    I made a calendar call play with the apple starter spread and rolled my long position down from the 195s to the 130s most recently before I quit. I was spending a lot in commissions and time just to manage this spread. Today, I got so frustrated I sold everything. But you know, I felt a tremendous burden lifted off of me. Investing had become a chore in addition to my regular full time job as well as father duties. This website has been an tremendously education. The members here, along with Phil of course have been amazing. But be careful. That market is very unforgiving and most importantly it is never wrong. Only investors are wrong. Unfortunately for me, I have been wrong a lot more than I have been right.


  286. Jeffro-I feel your pain. I was the best fundamental trader I knew when I started but I never knew when to sell. I had a couple blunders like that but it didn’t take me long to figure out my mistakes. If you need anything other than encouragement, just ask one of us.


  287. Thanks parchesia. I think I plan to lay low for awhile. Take some time to figure out what I am doing wrong and eventually start slow again. ie some 10k plays.

    j


  288. jeffro409 – I’m going to sound harsh, but it’s clear from your posting that you have a problem with both risk management and loss discipline. Not sure what your approach to diversification is…

    There’s already been a lot written here about those topics, and hopefully reviewing several months of member comments will be sufficient to overcome what’s needed to stay successful in these markets.


  289. “Putin’s comment that Hillary didn’t have a head reminds us that the problems in the world are not, pace Obama, due to misunderstanding or miscommunication, but because thugs like Ahmadinejihad, the Chinese apparatchiks, Assad, Putin, Chavez, etc. profoundly dislike the impediments the United States poses to their respective carnivorous agendas.”

    This is the same mentality that got us into Iraq. Yet we’re so colored by our arrogance we can’t see the forest for the trees.


  290. workdog3- i dig it, man- totally. (no sarcasm font)

    we always negotiate w/ countries we disagree w/ using force or threats- that’s not a good way to get a deal done, particularly when started off in that posture.

    the operative threat always is “all options r on the table”- which the whole world knows means “we have plans to destroy ur country and economy”

    it’s no secret y this is. we have the monopoly on force and violence, so we stage all negotiations in that context- where we’re pretty sure we can defeat anyone.

    the trick is to make the other side of the table look aggressive first, so we can cry self-defence- basically “they started it”

    it’s shameful.


  291. Phil and friends / NMG – I’ve been thinking that the problem with the NMG banner isn’t so much being banner blind, as it is not looking or knowing where to look. I’m of the opinion that red lettering and welcome email still get lost in the hot and heavy scroll down to the bottom of Comments to get “the latest PSW news”.

    I’ve constructed a mockup for a simple mod next to the “Submit Comment” http://handymandev.com/PSW/submitsample.html ; maybe the programmers can rip out the salient piece and incorporate.


  292. Phil,
    I you have a chance I will appreciate your thoughts for possible candidates (calls & puts) for my wife’s accts where they all need to be directional trades only (no spreads).
    Thanks!


  293. Phil, it seemed like that less stocks were pinned on Friday and closed at uneven numbers. If this is an accurate perception (perhaps not) then there will probably be some assignments on monday with some initial selling pressure?

    If AIG drops to 40 would you add it to the LTP? I know that barrons just did a positive article, but it seems to have a lot of negative market sentiment. Thanks


  294. Obama says, ‘there are no red states, no blue states, 0nly united states’..what is Republican response to that ? Doesn’t matter what you say, it will sound petty. Just watch Hillary and she is desperate. I simply dont see how the Republicans will fight Obama.


  295. jeffro409

    Just my 2 cents. We’ve all had some type of negative experience but the key is to stay in the game. You’ve had some decent picks so why not start again with one stock you’ve really researched and set some key money management principles against this one position, i.e. if it loses 7% than you sell, if you gain 20% sell half and let the other half run. The way I started trading options many years ago was to sell a put spread on a stock I really liked. I used to stay way OTM and would be looking for $500 on $5000 in margin, i.e. 10 contracts. I thought it was amazing I could make 10% per month. Now I mostly sell naked puts because I only do this on stocks I want to own lower. Find a place where you are comfortable set some boring rules and follow them. If you need excitement take 2% of your money and put in on a flyer, sometimes you lose but every once in awhile you score big.


  296. jomama

    On the one’s I watch there was a lot of pinning, XOM, BA, TIE, VLO. It was amazing to watch XOM hover just under $85 for a long time and around 3:30 they pushed it past $85 forcing a slew of covering on the calls. I was one of those being a bit greedy and should have just covered for a dime and ended up having to cover for .20 on stock I own.


  297. jomama / non-pinning – I had noticed that on several pages of watchlist, myself. First time in a while. I like what you’re thinking. It should present some opportunities. We had a RIMM assignments recovery trade just a few months ago.


  298. ramana,

    I do find Obama very inspiring although his economic policies really worry me. I hope he gets some really solid talent around him. He reminds me of our governor in MA, Deval Patrick, first African American governor in our state. He was very inspiring but his agenda has been poor and his ability to get things done has been an F-. When I think that this is the best we can do for candidates on both sides I find it sad. We are one of the most powerful countries in the world but we no longer attract the “best” people to politics since it’s such a joke.


  299. Xian – I agree 100%.

    I think this is a big reason for the Obama phenomenon. Many Americans, especially younger ones, would like to see us get along with the rest of the world. They don’t like our current role as the world’s bully and would prefer to see us work with others as opposed to punching them in the face and occupying their lands. Obama represents this change in mentality.

    McCain, on the other hand, represents the status quo; a continuation of the same garbage we’ve been hearing for the last 7 years. “They hate us for our freedom. If we don’t go after them, they’ll come after us.” How anyone could believe September 11th happened because “they hate us for our freedom” is beyond me. Take some time and consider how we’d feel if Afghanistan started setting up military bases in the U.S. We be pretty pissed off and our anger would have nothing to do with how the Afghanistan ran their own country.


  300. Sakiko--

    As a new member I value all the input that occurs on this site and was equally baffled as to what was going on when I shifted from the “free” site to the member site. I didn’t have a problem finding the banner, though I must admit to reading the K-1 project before even looking for it. I think it’s pretty clearly demarcated and to put a tab next to the comments would be superfluous. Hey, we’re all adults (kinda) and know how to read.

    Part of the joy of this site is in the discovery --new ideas, different styles, different terminology and where everything is. I think that we gotta learn by doing and trying new things. I understand you just want to make it easier to undo some of the clutter but I’m not sure it’s really necessary.


  301. SEM, thanks for the information! I am looking at this wheat/grain/sugar market as up too far too fast.

    Countering that perspective is the concept that money going into the DBA ETF supports the same “rolling” that keeps oil prices high and may be an emerging factor in supporting the high price of the grain complex and other commodities. When someone places money in an ETF they are probably placing it there for a longer timeframe then a futures trader. The ETF is mandated to keep the money invested in the commodity so it becomes more self supporting then a market that has traders scrutinizing the fundimentals of each trade and getting out quickly when market conditions change.

    In the piece you posted, I noticed that “going short” was not listed as an income source for the fund. Though it was not specifically excluded, by implication the fund is “long” the market. Could this be a common thread with the oil market and the absolute disconnect with the supply/demand that oil prices have maintained?

    Phil, you have often mentioned the manipulation of the oil market. Could the ETF’s “contract rolling” make market manipulation easier? Is too much money in these markets keeping them inflated?

    Grains do not have an SPR for our administration to use to drive prices higher, do they? 8-(


  302. PMaggan

    It would be really funny if it weren’t completely true. Have you sent a copy to the Senate Banking Commission? Perhaps that would get them to understand.


  303. haksawmusic – Clearly, you’re not in the demographic I’m going for! I remember smiling at seeing your first – actually, second – posted comment a few weeks ago.

    I’m pretty sure that you read the comments day after day and can see that we have a pretty large population of members that are “learning to fish”, or perhaps “learning how to fish something different”. It takes a decent amount of study to do this, as you well know, but that’s not the path of least resistance!

    The community is at 425 comments/day, and a pointer or reminder that the general questions have already been asked and answered before seems appropriate. I don’t have access to the database underlying the site, but would not be surprised at any number of entries that contain the phrase, “it’s in the k1 project” …


  304. sakiko

    I agree, otherwise it’s like that movie “Groundhog Day”.


  305. I enjoy Obama’s rhetoric, fred. I sincerely hope, he gathers around very good talent. Since my man, Rudy, quit, I am shopping around for a candidate. :-)


  306. What do you guys think of this play :

    KERX collar
    Buy stock at 5.6
    Sell Jun 10 call at 2.45
    Buy Jun 5 Put for 2.55

    Cost 5.6 – 2.45 + 2.55 = 5.7
    Maximun risk (stock ==10) 4.3
    Break even point stock at 5.7
    Max return on invs 75%
    Max return on risk 6.1R

    Now , I don t anything about the company , I was just looking at the crazy IV (200%+) – obviously(?) based on the clinical trial result expectations.
    I have not find yet when they expect to release result.


  307. oops , I meant maximum return 4.3 , maximum risk 0.7


  308. ANOTHER M&A TRIUMPH:

    Discover pays $1.7 billion for Goldfish, a UK credit card issuer, in early 2006, and then turns around and sells the business less than two years later . . . for $70 million.

    That works out to a loss of $1.63 billion in just two years—not including the $200 million or so in transaction-related charges Discover will take in the first quarter and any foregone returns it would have earned on the original $1.7 billion if it had invested in something less adventurous.

    Discover says it’s selling out now because “the funding and operating environment continues to be a challenge.” Translation: “What the heck were we thinking?” In the meantime, what’s $1.63 billion among friends?

    http://blogs.reuters.com/reuters-dealzone/2008/02/07/discovers-goldfish-deal-goes-belly-up/


  309. trichet- at around 18min in q&a he really gets inflation hawk- i kind of like it.

    http://www.bloomberg.com/avp/avp.htm?clipSRC=mms://media2.bloomberg.com/cache/vCK1JKf.vxso.asf


  310. Sakiko,

    I didn’t mean to undermine your suggestion. You’re right there are an awful lot of questions that come up that are answered in the K-1 project. I was just suggesting that the answers are there obi wan if you just look for them. You know that whole journey not destination trip. Which is why until I feel more comfortable with this way of trading, which is new to me, I don’t post during trading hours. Much to learn, much to take in, much to profit by.


  311. haksawmusic – I am not offended at all. I suspect that those members that can surface a better way to get our newer guys and gals looking in the right places to come up to “site speed” will do so.


  312. Jeff – “That market is very unforgiving and most importantly it is never wrong. Only investors are wrong.”

    That is the quote I live by. But I’m a pretty bearish on the long term, so obviously I would not be saying to invest.

    Like AAPL, I wouldn’t buy and hold until over 150 — The time when you’re absolutely sure the dust has cleared from the market… So what if you’re 30 dollars late on the trade? It’s a 200 dollar return on your “investment” anyway :) … $30 is just too fractional to care about, especially when you have such a bull move afterwars… But tieing up your money now is more risk than it’s worth.

    Obviously that’s my stock trader’s mentality. I can’t wrap my head around the short and Leap strat. I can do the two individually, but together is still a doozy for me. I guess I’m just too used to “Is it going up or down? Okay *enters order*”… Versus “I don’t care what it does, I’m making money!! la la la”.

    Youth is a hindrance sometimes. The quick buck is what I live for.


  313. Stephane,

    How were you able to find this play? The risk/reward is pretty impressive.


  314. ramana – seriously, how can you have been for Rudy and now consider supporting Obama? These two are complete opposites on ALL the important policy issues.

    I am seriously interested to understand what it is you view as important in your decision about who to vote for? I honestly do not understand anyone who calls themselves an independent and says they vote for the person not the party. It is incomprehensible to me, yet we hear people say this all the time.

    People keep comparing Obama to JFK. JFK’s political philosophy was farther to the right then John McCain is today and so far from Obama’s positions that the comparison is absurd. I am completely baffled by today’s voters!


  315. workdog3
    From the covered call screener from optinistics
    http://www.optionistics.com/s/good_covered_calls
    Just looked for a matching put to do the collar