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Worrisome Wednesday

It’s up to Ben Bernanke to save the markets!

If that statement doesn’t inspire you with confidence, you’ll understand why, at 3:05 yesterday, with the Dow still at 12,700, I said: "Good time to pick up DIA $127 puts and QID $50s for overnight protection. XXX"  Hopefully we won’t need it as badly as the futures are indicating but it sure is nice to have isn’t it?

Durable goods orders fell 5.3% in January, a big recessionary signal but, like the PPI, this is a snap-back from an unbelievable 4.4% increase in December, when the government was pulling out all the stops to punch up the Q4 numbers.

Durable goods reports are insanely volatile and the WSJ points out that the ISM numbers were up from 48.4 in December to 50.7 in January, a much more likely indication of a bottoming move.  Shipments of durable goods ROSE 0.1% for the month (a GDP component) so we are down but not out…

As a corporate manager, given the fear and panic we were subjected to in January, don’t you think you might have held off a little when you were asked to consider making major equipment purchases?  The Dow plunged from 13,550 at Christmas to 11,634 on Jan 22nd (down 25%) and Durable Goods orders ONLY fell 5.3% – sounds like a market overreaction to me!

[chart]Of course we also have the stunning (but expected) decline in home prices as the average American home lost 8.9% in value from the previous year but don’t worry, George Bush is going to send you $600 to make it all better!  As we’ve mentioned before, the administration’s "Free Market" solution is a total disaster as all they have managed to do is allow the Banks to increase their mortgage "crack spreads" from 1.5% last year to 3.5% this month, more than doubling their profits per loan.  Conforming loans are the same price now as they were when the Fed Funds Rate was 5.25% and Jumbo loan rates have actually gone UP almost a full point – good luck with that refi when your home is down 10% in value and rates are up!

While I’m furious at this administrations handling of this mess, I’m just as mad at Clinton and Obama after last night’s debate for their utter failure to steer the debate towards something substantive.  NAFTA and national security are important issues but we are on a pace to serve 2.8M foreclosure notices in 2008, 57% more than last year and the banks repossessed 90% more homes than they did last January, despite all of Paulson’s BS.  These are real issues affecting 9M real Americans who live in these 2.5M homes and I blame the MSM for dropping the ball on this topic.  It’s shameful!

"The loan workout modification programs aren’t having a significant material effect on keeping properties from going back to the banks," said Rick Sharga from RealtyTrac.   Are we going to keep letting the governmnt get away with pretending they care while the situation gets worse and worse – what is wrong with this country?  Are we so beaten down and so defeated that we are willing to accept being brushed off like annoying children by a government that only cares about the polls, not the people.

FNM lost $3.2Bn in Q4 on a sharp rise (50%) in delinquencies and projects the situation to get worse this year.  This should hit the credit card companies and other financials today as well as FRE which, unfortunately, we have!  TOL also announced another loss for Q4 but it was "just" $96M with $245M in write-downs so again, signs of a bottom amidst all the doom and gloom.

Once again Asia had a super morning, blissfully ignorant of our troubles and the Hang Seng jumped 769 points, finishing just under the 24,500 mark while the Nikkei added 206 points, very significantly holding over the 14,000 mark for the first time since Jan 15th (when the Dow was at 12,700).  The Hong Kong government cut taxes to stimulate investment as they put their RECORD BUDGET SURPLUS to good use.  Another big factor in China’s gains was the apparently huge interest in various IPOs that are on the table.  This, of course, boosted bank shares.

Europe was off to a flat start but fell hard on our durable goods numbers and the bad news from TOL and FNM.  Microsoft was fined $1.35Bn by the EU for shenanigans but this is old news and shouldn’t affect them too much.  England’s largest mortgage lender, HBOS, MADE 3.8% MORE MONEY despite taking $450M in write-downs.  Again, this "crisis" is our problem, not the rest of the world’s.

Our boys at BX, who we picked up on Monday, have put together a $2Bn partnership to invest in US oil refineries.  At $1.50 to the Euro, we can expect a lot of M&A activity from across the pond – this was the logic in taking BX in the first place.  Meanwhile, GS is down but not out as they still have their fingers in the same pot.  This morning’s drop will give us another shot to pick them up at $170, so I’ll be adding some $180 calls at the bell for a quick mo play.

We’ll have to watch today’s action and see if we hold Monday’s closing levels but, as usual, there is nothing NEW in this news, you can’t sell off on the same story forever.


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  1. Soft commodities are having some issues.

    Look for opportunities in MOO, DBA and related components

  2. Good morning everyone. I was traveling yesterday and did only 2 trades between 2 planes: took some profits GRMN puts and some TSO calls.
    Funny thing is that Jim Cramer was sitting 2 rows behind me on the N.Y-L.A flight last night :)

  3. About the markets: nothing has changed, still in the same range, after these couple of days rallying.

  4. Good morning
    Phil i read your note on IBM spread yday. I hold the JUL 110 @ 10.70 (BO @ 8.60) and SO MAR 110 @ 5.90 (SO @ 3.10) Since it still has premium and we still have time i thought to ride the premium down first or is it better to jump to 115 right away? Thanks Henk

  5. Opt – you in 1st class and Cramer in coach?

  6. Op, did you “BOOYA” him?

  7. Sem, no he was in first too LOL. He worked on his computer the whole flight (at least he was when I fell asleep and when I woke up).

  8. morning all.
    JASO 8% down pre-market, I think this will hold solar stocks flat or down.

  9. Did not talk to him, no. My wife wanted to but I asked her not to. I would hate it if people would come bother me all the time. We were kind of surprised he flew commercial.

  10. Nice for your EOG play, Phil. Citigroup downgraded EOG, SWN, and CHK.

  11. EOG puts added at close but we still got a long way to even!!!

  12. Costco

    I’m starting to believe Phil about the conspiracy that Goldman is on the wrong side of the trade. How can you cut a great company like this on valuation while it is well off it’s 52 week high. This is a great buying opportunity. Thanks GS.

  13. Optrader – Looking at POT?

  14. XEC, strong to very strong? Know nothing about the stock / company… just TA noticing.

  15. LOL Opt, that was my closing comment above.

    IBM – no hurry to toss a $110 caller.

    FRE coming back fast – interesting.

    Whole market shaking it off (except GOOG of course).

  16. SPX testing Monday close again…

  17. FNM

    Coming off the mat…somewhat.

  18. Phil – I’ve got myself into trouble with IBM – I sold $110s to roll myself from April to July. Here is what I have:

    10x Jul 105 @11.095
    -4x Mar 105 @4.24
    -6x Mar 110 @2.94

    How can I improve my position? Should I wait for a dip?

  19. Check out the VIX bounce off it’s ema’s and trend support. Could explain the shaking off.

  20. POT-I did make a small trade here on this drop to reduce my cost, but I am keeping 1/2 size position. Will see how it closes.

  21. GS – Play mo already or now?

  22. So the market’s going back up, World is going to end and the market wants to go up?!

  23. RIG- sold a little before inventories.
    AG’s watching to buy some back

  24. AAPL-5MA is now exactly at $120. Now, that’s some key level!

  25. FCX-Strong!!

  26. Gotta standing short on ES at 1395 if it gets that high…

  27. BBD – what AG’s are you looking at?

  28. Who is strong:

    TOL, BIDU, AA, UNH, ERTS, UNH, GE, AUY (new high), POT, RIMM, FNM with a surprising bounce, BBY, DHI, GG (new high), KBH (so all buiders), AAPL, JDSU, SLW, X (never stops), GOOG perking up, LOW, more gold… I say we’re green by lunch unless Ben really blows it.

    I’m liking South African miners down here. They are all down due to power shortages that have cut production but they still own the gold and it will come out one day. GFI at $14.18 is a god one to own and sell calls against. You can get .77 for the Apr $15s, that’s pretty good! You can also get $2.15 for the Apr $12.50s, still a nice .50 premium for a month with huge protection. XXX

    I also like the GFI ’09 $15s at $2.28 as you can sell 1/2 against it and still make most of the money back.

  29. MY q. on $$ holding 75 seems to have been answered this a.m. – gold running but silver yahoo. Sold SSRI too soon.

  30. EK – Time to DD again on the 20s?

  31. Took a quick 16% profit on POT calls on a day trade.

  32. Can we please get a 20 point move on GOOG (up, of course). Sigh…

  33. Hi phil, I bought goog 460 call at open, what’s you target on goog? Thanks

  34. AG’s I bought some CF

  35. ATHN second Day in a row Strong start off !!!

  36. ACH calls-1/3 out. It’s been a great run and it is getting close to 200MA.

  37. EOG – it will still take bad numbers to push them over the edge but at least we can see the edge now!

    Oh, stopped out of protects on DIA and QID of course!

  38. Phil, great list for calls. What is it that you don’t like here? I am looking for puts.

  39. Bought some TTWO puts for fun.

  40. Hi phil, I have NEM June 52.5, ans is half covered with Mar 52.5, should I do a full cover now, or leave it open? Thanks

  41. Fannie, Freddie, Citi all positive.

  42. MDT is still climbing – caller is now seriously ITM but that’s a good thing that I’ll deal with closer to expiry.

  43. RIMM-Looking pretty strong as well. Someone is bidding up the calls.

  44. DanW – I bought some yesterday myself. If they do fall, it will be hard and fast.

  45. ACH calls-Another 1/3 out.

  46. K1:

    Citi gets a Legg up in SMA account trading

    Citigroup Inc. and Legg Mason Inc. today announced that Citi Global Wealth Management would acquire the managed account trading and technology platform of Legg Mason Private Portfolio Group. Terms of the transaction were not disclosed. The deal will allow the Citi to customize Legg Mason’s overlay platform and in turn provide greater flexibility in customizing multi-asset portfolios and as well as operational efficiencies. Legg Mason is a major player in the asset management space with some $998 billion in assets under management at the end of 2007.

  47. Phil,

    In 25K I have NDAQ all covered with March 40..Should I roll to April 42.5?

  48. Watch for a selloff on those housing numbers at 10. We’re slightly overbought on an intermediate trend. Don’t know if the selloff will last but that’s but we should bounce off 1380.

  49. Here goes RIMM. just amazing how the calls went up just before the stock did.

  50. EOG – spoke too soon headed right back; lookin strong to me

  51. FCX calls-1/2 out as we test high of the range.

  52. IBM/Marek – Just focus on your roll, you can roll the whole batch to the Apr $110s at $7.20, which is about even for the set so who cares right now? At the moment you have great protection and you wisely bought yourself plenty of time to roll them. If the $110s end up in the money at the end of April then IBM will be at $117 or higher and your July $105s should be about $17 and you can roll them to 2x the July $115s at $10ish and roll your callers to 2x the May $115s or maybe even the $120s so don’t worry, be happy.

    We do not want GOOG to have trouble at $468, that’s the 5% rule retracement off the drop yesterday and it will be double plus ungood if they can’t hold it!

    VIX – we love to see an angry VIX when the Dow dives, that was a very nice and encouraging reaction that adds to the idea that up is the “right” direction for the market again. Our big market moves last year came with the VIX below 22 so let’s hope we can crack that barrier again.

    GS – lol, a little late if you’re not in at the bell. I’ll be out at $177.

    The World isn’t going to end DM, just America and the rest of the world will be just fine. Heck, we might even pick up some scraps if we’re lucky…

    Danger, danger, here comes Bernanke! I’m going to be very concerned about a pullback here so watch 12,600 and take it very seriously. DIA $126 puts are cheap and QID $51s are good for mo but very dangerous. XXX if we fail 12,600.

  53. I think we are going to tank again.

  54. Wow, if I ever posted anything nice about Tradestation here. I take it all back. Stuff I discovered AFTER moving 7 accounts over.

    1) If an account ever goes to PTD status, it stays FOR LIFE!!! They will not lift it. Ever.

    2) If you are day trading equities, once you get below $25k in cash, you cannot initiate any new positions. Nor can you sell into a spread.

    3) You must have $4k in equity in an non-PDT account to initiate sell a call into a spread. (Big issue as I have some new IRA’s that were started last year.)

    4) You can never go below $2K in cash in any account.

    I am so screwed as I convinced my wife to move all the accounts from etrade, and now I am forced into a position where, at a certain point, I must make a final large lump purchase if I want to deploy cash below $25k, and I am forced into directional plays in my newer IRAs.

    I am so pissed off, I don’t know what to do. I want to maim someone.

  55. EOG- don’t have but that guy from Smith Barney isn’t the best. FYI

  56. Feb. 27 (Bloomberg) — Federal Reserve Chairman Ben S.
    Bernanke said the U.S. central bank “will act in a timely
    manner” to insure against “downside risks” to the economy.
    “The Federal Open Market Committee will be carefully
    evaluating incoming information bearing on the economic outlook
    and will act in a timely manner as needed to support growth and
    to provide adequate insurance against downside risks,” Bernanke
    said in semiannual testimony on the economy before the House
    Financial Services Committee in Washington.
    Bernanke’s remarks may reinforce investors’ expectations
    that the central bank will lower interest rates further to help a
    faltering economy. While officials have expressed concern that
    inflation is accelerating, Bernanke signaled he shares Vice
    Chairman Donald Kohn’s view that financial market turmoil and
    slowing growth pose the “greater threat.”
    Bernanke referred to “downside” risks for the economy four
    times in his testimony, and noted that data since the last Fed
    meeting in January pointed to “sluggish” growth. Policy choices
    have also become more complicated as energy and commodity prices
    rose in recent weeks, he indicated.
    Risks to the outlook include “the possibilities that the
    housing market or the labor market may deteriorate more than is
    currently anticipated and that credit conditions may tighten
    substantially further,” the Fed chairman said.

    Market Expectations

    Traders anticipate the central bank will lower the benchmark
    rate by at least half a point by the end of the next meeting, on
    March 18, futures prices show. Officials have lowered the rate by
    2.25 percentage points since September, to 3 percent.
    A half-point reduction to 2.5 percent would bring the rate
    adjusted for inflation, less food and energy, to almost zero.
    Bernanke, 54, is in the seventh month of a credit crisis
    that began with rising delinquencies on subprime mortgages, while
    also grappling with the economic impact of the worst housing
    recession in a quarter century. Banks are making it tougher to
    get loans after financial companies posted $162 billion in asset
    writedowns and credit losses since the beginning of 2007.
    At the same time, inflation is accelerating and the public’s
    expectations for prices may also be rising, Bernanke said. He
    reiterated remarks from testimony to a Senate hearing Feb. 14
    indicating policy makers will increasingly take account of the
    inflation outlook later in the year as the economy stabilizes.

    Inflation Risks

    “Further increases in the prices of energy and other
    commodities in recent weeks, together with the latest data on
    consumer prices, suggest slightly greater upside risks to the
    projections of both overall and core inflation than we saw last
    month,” Bernanke said.
    In its separate monetary-policy report released with the
    testimony, the Fed said near-term inflation expectations,
    measured by surveys, “rose somewhat in 2007 and early 2008,
    presumably because of the increase in headline inflation.”
    Longer-term expectations “changed only slightly,” the Fed
    report said.
    “A critical task for the Federal Reserve over the course of
    this year will be to assess whether the stance of monetary policy
    is properly calibrated to foster our mandated objectives of
    maximum employment and price stability,” the Fed chairman said.
    Economic reports since the Fed last met on Jan. 29-30 showed
    the first decline in U.S. payrolls in more than four years in
    January and a slide in consumer confidence to the lowest level
    since 2003 this month.

    `Distinctly Less Favorable’

    “The economic situation has become distinctly less
    favorable since the time of our July report,” Bernanke said.
    Still, the $168 billion stimulus package enacted by Congress and
    signed by President George W. Bush this month and continued gains
    in exports should help growth, he said.
    In the semiannual report, the Fed said that the U.S. economy
    “seems to have entered 2008 with little momentum.” Labor demand
    “has slowed further of late,” it said.
    The semiannual monetary policy report used to include a
    twice-a-year set of economic forecasts by Fed governors and
    district bank presidents. Bernanke last year increased the
    frequency of the predictions to quarterly, and the latest
    projections were released Feb. 20 and included in today’s report.
    The projections showed officials lowered their prediction
    for economic growth this year by half a point, to 1.3 percent to
    2 percent. Economists surveyed by Bloomberg News predict economic
    growth will slow to a 0.5 percent annualized pace in the first
    quarter after expanding 0.6 percent in the previous three months.

    Inflation Forecast

    Fed officials see inflation returning toward their
    preference range of 1.7 to 2 percent after running at a 2 to 2.2
    percent pace this year, minus food and energy.
    Bernanke said the forecasts depend in part on a flattening
    in energy and food prices. Crude oil this month surpassed $100 a
    barrel for the first time.
    Bernanke focused the final pages of his testimony on the
    Fed’s efforts to strengthen consumer protections and prevent
    “The Federal Reserve continues to work with financial
    institutions, public officials, and community groups around the
    country to help homeowners avoid foreclosures,” Bernanke said.
    “We are actively pursuing other ways to leverage the Federal
    Reserve’s analytical resources, regional presence, and community
    connections to address this critical issue.”
    Democratic Representative Barney Frank, who chairs the House
    panel, yesterday announced a proposal to provide $35 billion in
    federal funds to buy homes in foreclosure and offer refinancing
    for “distressed” homeowners under a plan unveiled today.
    Frank also proposed expanding the Federal Housing
    Administration’s ability to process and underwrite loans, and
    increasing funding for homeowner-counseling programs in a
    document outlining his panel’s budget priorities.

  57. goog stopped out

  58. OK, we made it past his prepared statement, that’s good and I think the bears are very worried right now. He’s still pushing growth at the EXPENSE of inflation, which is going to be good for the energy patch and gold but it will all come down to the Q&A I think.

    GOOG blew $468 and looks ugly, I stopped out at $8 and will reenter lower.

  59. IBM – Thank you Phil!

  60. Filmflam

    oh thats very bad, you must read through so much statements and agree so many much. It is much bureaucracy.

  61. AUY 09 4.5 basis – best way to protect? Cash out or roll & sell calls?

  62. SPX looks to test 1380 and 200 min sma at the same time maybe?

  63. GLD at ATH.

  64. AUY 09 15′s 4.5 basis – best way to protect? Cash out or roll & sell calls?

  65. Phil

    I have three GOOG Sept 470 (rolled it down yesterday from 500)
    I have two covered with March 470, I know you don’t recommend full covers but it is tempting. I would welcome your thoughts

  66. Film – I feel your pain on Tradestation. I really like the interface but they nickel and dime you relentlessly on fees and rules violations

  67. FCX calls-Another 1/4 out. Nice!

  68. GRMN-buying back some of the puts sold yesterday’s morning. 3/4 position.

  69. EK – no, looks terrible at the moment, maybe for a dime but it’s a long month so no reason to worry about a retest of the lows.

    DRYS coming back up.

    DANW – good thing you specified up! I’m leaning towards picking up the Apr $490s now as my reentry, $19 right now, as then I can MO sell the current whatevers to try to scalp dollars (I’m still $3 behind). The Apr $490s were as low as $14.50 yesterday so I’ll be happy to get them at $16 for the first round today.

    Bar – good job stopping out with a quick gain!

    What I don’t like – Refiners and integrated oil, they simply cannot have good quarters with gas under $3 and oil over $100. I also think something bad will happen to commodities soon, either that or the dollar has to go to 70 for commodities to rise another 10%, which is pretty much priced into copper, steel and coal producers.

    BIDU up 4%

    NEM, I’d stay half covered, if it drops you have the flexibility to sell the $50s but NEM could go much higher.

  70. POT-Green. Nice bounce. Taking a little bit out here.

  71. OPTrader- did you follow DBA? if not you might want to have a look? seems like a good entry for me on this pull back according to 5 ma. what do you think?

  72. BIDU going ballistic!

  73. Phil, thanks a lot!

  74. RAIL- Closed above 200 dma yesterday and looking strong today

  75. Grabbed GOOG $500s for $6 since I’m not getting my Aprils cheap but I have very little tolerance for a loss here if BIDU can’t crack $250 and GOOG can’t crack $470 in the next 20 mins.

  76. DBA-I like POT’s chart better here. Unless you mean for puts, but if so 5MA is still up.

  77. Actually, I think RAIL needs about 42.5 to be considered

  78. RIMM is always a great short when they take off. The $110 puts are a good gamble at $4.75, now $5.25 but you have to give up if they break $110.50.

    AAPL still having issues at $120, GOOG MUST hold $468 and here comes Ben!

    He will step on oil inventories so be careful as a big build can tank oil and pull the markets down and everyone will think it was something Ben said…

  79. We have Trade Station too and yes they are very strict, We have been considering changing, Think or Swim and OXPS are expensive in comparison though.

  80. film- just go back- u can’t work well if u don’t dig the environment.

  81. raffy, agreed. Tradestation saves you money with lower rates AND not letting you trade. So considerate.

  82. RIMM calls-1/3 out.

  83. thanks for sharing your view Optrader, was thinking about call.
    Pot is there any special reason you like it over DBA opt?

  84. No going back to Etrade. But, will move to TOS. Maybe leaving some accounts. Just need to see which accounts can live with their restrictions. At this point, maybe it is fine to go directional with AAPL leaps for 8 months, and when the account is up 300%, I might be out of some of the more annoying restrictions.

  85. Phil,
    I have ’10 Leaps CAT 60s, C 25s and HOV 5s. Is this a good time to cover them?

  86. Bigger than expected builds in oil and gas. Distallates were down but it’s cold, brrrr! No word on utilization.

  87. Raffy
    TOS will match just about any other rates. Just have to ask.

  88. NDAQ – look at it today – does that look safe to you? Make sure we’re out of the woods before you start paying premiums to your callers.

    AUY/MrN – ’09 whats?

    I see no oil numbers…

    GOOG/Anon – As long as you sold enough to roll down $20, that’s about right.

    BIDU broke up!

  89. Herb

    Do you have a contact name at TOS?


  90. JOYG calls-All out
    UPL-Buying some puts.

  91. Woo rally, lets do this!

  92. just made a quick 16% on POT mar 165…take it and run folks!

  93. Film – What’s PDT?

  94. When is Ron Paul going to start asking Ben what he thinks about the Fed ‘robbing Americans that save’? I hope we don’t have a meeting today, I love watching that!

  95. Raffy just ask for the trade desk. I have 1.50 per contract but I have read others on this sight that have done different and better. I think i talked to Scott but not positive. I just ask for the trade desk told the person i was with PSW and that i would like the 1.50 rate. He said no problem and set it up instantly. It was very easy. Great experience with them thus far.

  96. RIMM busting up already. We’re back to one of those markets where shorts just get spanked!

  97. Film,
    I have the same problems with Tradestation. I talked to TOS last week – he offered to match the price but did not have time to answer my questions – that makes me feel uncomfortable about their service if I ever needed it in a crunch – server /tech issues and you need to get an order in – am I going to face similar attitude? Please keep us posted on your situation – I am also looking to move out.

  98. I love POT! Up $7 from low today. Trader’s dream.

  99. was just about to say watch to blow thru 200 min sma stay strong… if it does then buying ensues… transports need to follow thru to. Country can produce and sell all they want, but you have to get it there.

    Still have standing short at 95 if it gets there.

  100. POT/DBA. POT is above 5MA., looking stronger, and chart less parabolic.

  101. RIMM calls-Another 1/4 out. This is just turning into an amazing day.

  102. Phil/All,

    How do you decide when to take out APPL callers? I have them 2/3 covered. Should I take them out end of day if the stock pass 120? Thanks, will check back later!

  103. CSCO-breaking up as well.

  104. headline story to follow:


  105. INTC green.

  106. CMan – C I wouldn’t cover but CAT and HOV are both prone to snap backs so 1/2 covers might be good but not into this rally!

    We’re moving now folks, even GOOG and Apple may break out now!

  107. CMan,
    Did you call during market hours? If so, ToS will answer in a quick and succinct manner so they can handle the next issue. If you still want to talk, they’ll take your number down and call after the market closes. Had this happen the other day when I had issues with BA (you can find my experience in last week’s comments).

    I’d say that’s top rate service, myself. Nice, quick, fast during market hours so they can handle as many issues as possible for as many as they can. If you want to talk about it, they’re there for you too after hours and will call you. I was honestly surprised when one of the support guys called me 3 hours after we talked, less than 15 min after the close, to discuss the issue in more detail.

    Something to think about.

  108. Herb….is there a minimum order size to get the 1.50/contract ? Thanks.

  109. Got in Apr DBA 43 calls at the opening. Still toppy but the opening sell-off was overdone. Plenty of time for the Apr’s to make money.

  110. made 7 points on ES long at 1380

  111. znake – no minimum order

  112. znake – just write scott at thinkorswim dot com and tell him you’re a psw member. end of story and consider it done.

  113. GOOG MAR 470 from yesterday looking happy. Rutterfly is a bit under water

  114. znake,
    $1.50 is for 1 or 1000 contracts, doesn’t matter.

  115. znake no min i’ve bot 1 at 1.50

  116. Boy step out for a few minutes.

    So did Ben or energy juice the market?

  117. Yeah Herb, that is $1.50 + 9.95 per trade, right? When I spoke to them a month after Etrade was going to crap, they said they were not matching rates anymore, so that is good news. Obviously, at $1 a contract with no trade fee is a rate I have not been able to beat with anyone other than Optionshouse. And I gave up on them.

  118. wow BA just can’t take out 85!!

  119. AAPL-Chart is looking pretty good here.

  120. CME almost as pathetic as GOOG and might be worth a try. Apr $550s are $17.85 XXX

  121. Filmflam
    no there is no trade fee just 1.50 per contract

  122. I guess it was OFEO re: FNM, FRE caps and reserve requirement.

  123. Film – Have you looked at IB? .70 contract per contract $1 min plus penny option spreads gives them alot of leeway in there subpar platform.

  124. Film,

    Depending on your assets you can get a very good deal with Fidelity. .65 per contract with no fee per trade. You need to be a Private Access customer.

  125. AAPL- I think the top of the current falling channel that it is in is at about 123…

  126. FNM,

    +16%, wow. Glad I didn’t have a cover on.

  127. thanks kwan, jake, herb…i’ll email scott….

  128. FRE – Got out of the calls.

  129. GRMN-Added more puts. Just because I need to protect all morning gains and I don’t see too many puts I like here (even if I think we are getting to the top of the range and risk could be the downside now. Unless we break up for good of course).

  130. COST – Bought back covers (Mar 65′s), going to wait for recovery. Holding the Jul 62.5′s.

  131. tos- i agree w/ jake. they have always been super helpful and engaged when i’ve dealt w/ them.

  132. FRED- don’t think an account that has 2k to 25k will get that rate? LOL

  133. Go GOOG!

  134. I’m happy with interactivebrokers trader workstation .. it works at least when others work too.. not having problems here in Europe with connections.. just add 449 and a pair of bucks for the prophet charts silver membership and you go.. the options table in TWS are right and the fees very low

  135. ThinkorSwim is fantastic! They are the first broker I’ve ever dealt with that actually seems to care about helping solve/answer your question. The live customer help is excellent. Plus the $0/trade and $1.50/contract commission can’t be beat!

  136. DM – PDT is Pattern Day Trader. Bad if you have small accounts. You have to plan to hold equity-based positions overnight.

  137. MRVL being pinned?

  138. HEDGE FUND + PSW Investment Club

    Since we are nearly into market, wanted to check in and see how the progress has been going. I’m definitely interested in getting in on the PSW Investment Club action.

  139. $449 year subscription and over $4 for real time market data in Prophet

  140. jAKE,

  141. PAL-All out. That was an amazing run, but chart looks toppy now.

  142. XLE…

    I just can’t believe the run up!

    We sitting at $78 !!!

    Phil what are your thoughts about this. Oil is rediculous at this level and I liked your comparison of the dollar vs the euro on the cost.

    I’m holding 10 puts on the $71… thinking on rolling up to the $75-77 range. What do you think?

  143. BillBigD

    Sorry, didn’t see all the comments about account size. They do look at cumulative accounts including cash. There are two ways to qualify

    1. $1 million in total assets, no volume criteria.
    2. Transaction volume if you are an active trader can get you there with less than that amount.

    It’s all a negotiation. They’ve dropped my rate each time I consolidated assets there. They do have some limitations but they let me close out .05 options with no fee, they can’t do this systemically but they credit me back at the end of the month. They also give me 100 free stock (not options) transactions a year.

  144. Film-Don’t even think about it twice and go with TOS. They are the best by far. Customer service is amazing, software is the best by far, and they have a great soft for blackberry and working on one for Iphone (called Thinkpod).

  145. thanks opt, are you looking at moo as well?

  146. POT dropping on rumor it is acquiring TRA

  147. Thanks sakiko! I guess we’re all PDTs

  148. William Tell, the PSW Investment Club is currently in the process of setting up its bank account and will very soon be applying for its OXPS account.

    You can email me at to be put on the interest list. The club will be accepting new members again sometime after we launch.

  149. Opt… for full disclosure I am an AAPL bear short term.

    The stock has traded in a range from about 116 to 121+ over the last 3.5 days. Personally I would consider a move above 121 a breakout but not until then. It has gotten rejected there many times since Friday

  150. FNM FRE … interesting timing of releasing caps, don’t you think…. as FNM reports 3.8 Billion loss. FRE reports tonite.

  151. $$ headed for 74 glad I keep my wallet empty and my gas tank full – my form of a carry trade!!!

  152. went short BSC into this FNM financial pump

  153. CAP – FRE interpret please.

  154. The Zouk, thanks for your view on AAPL. I agree with you that $121 is resistance right now. In fact breaking above is what would probably turn me strongly bullish as well as it would mean that 5MA has turned positive.
    Congratulation on your short on it, as it has been in a clear downtrend. Right now, I am keeping my bullish stance on it long-term and neutral short-term. This is why I like calendar spreads here (with a positive delta in my case).
    But chart has been improving in the last couple days, forming a bottom and getting closer to 5MA. If it turns up, then I would buy back some of the covers.

  155. Fred-I use the same service in one of my accounts. I like the platform but I been using it for years.
    CAP- thanks on Pot Rumor.

  156. Wow, I missed selling FRE! That was some crazy spike. Good job DanW, I was on the phone and missed the move.

    I am still not getting an update on the official inventory report but the energy patch is taking it neutral for the most part.

    XLE – If you are going to roll, maybe roll to April where you can offset your losses by selling March if you have to. I certainly think this is already far too much as they are going to get crushed by refining margins. Also, the Supreme Court is hearing the Exxon Valdez case and it will be a major shocker if they end up fining XOM (or making them pay the fines that were put to them 20 years ago).

    The Bugs Bunny moves continue as money goes back into Bonds! It’s possible that this is wire transfers that are staging for entry into our market on the not so bad news from Bernanke.

  157. Phil, I’m still screwed on GOOG. I have the 520′s at a basis of 3.8. I’m in a small account (under $20k) with very little leeway. Been trying to DD to get cost basis down so I can get out on a good spike (almost got it today).

    What are my options (no pun intended)?

  158. RIMM-If we break strongly above, I don’t see much resistance before $120. Like what Phil was saying about computers a couple weeks ago, Blackberrys are not discretionary items anymore. It is amazing that RIMM has managed to keep their edge for so long in this market against Nokia, Palm, etc. but they have. And the penetration is such in the enterprise now that they have become the small Microsoft of mobile.
    And their consumer products (started with the Pearl) are getting better.

  159. PBR- taking this off before #’s tomorrow. $700 per contract.

  160. CSCO-nice move.

  161. Phil,

    XOM – would you play some puts here?

  162. NDAQ – we cover the other half at these levels or let it go further?

  163. Any thoughts on a March/June 100 RIMM spread? Good time to think about rolling the caller to 105 or 110?

  164. doubleclick – I didn’t get any reply to my mail about the Investment Club, sent in December…

  165. RIMM;

    still to short/put110 ?


  166. Here goes GRMN again.

  167. Why am I having so much trouble???

    I jumped into SNDK April 25′s and covered with Mar 27’5′s
    Originally, this was a naked trade…

    When did I miss the roll to July?
    I look now and the portfolio’s are carrying some July Mar fully covered?
    I am trying to follow along and I keep screwing up
    Any advice from anyone?

    We need to have a r/t (delayed 20 min )
    portfolio on Yahoo to watch with a shared password
    or editgrid I think

    These portfolio’s with occasional updates are too dang hard to follow

  168. S-Real weak as well. I am lucky to still be in this one as I would have been stopped-out yesterday.

  169. CSCO calls-1/3 out.

  170. Opt,
    whose charting system do you use to follow your strategy.? I have tried Fidelity,OXPS and yahoo and still deciding. Thank you

  171. I have a question for anyone that has the answer. I feel I should know this but unfortunately I don’t….

    When you sell calls, in order to keep the full premium does the call have to expire worthless (stock price lower than strike price at exp.)

    In order to keep the whole premium do you have to let it expire (do nothing) and then just sell the next month after expiration?

    Thanks all!

  172. Cary:

    relax…What SNDK trade are you referring to? There’s been a couple in the past couple months so there may not have been a roll and you are comparing two data sets. There’s also different SNDK trades for different portfolios.

    The most recent SNDK trade was yesterday and we’re naked APR 08 25′s. I got in at 1.85 but I think the price was higher.

    The site is working on live e-mail updates, but if you need to go through it quick just search “XXX” or “10kp” on the pages.

    You can normally get a better entry than phil’s prices on the 10kp plays if you wait a little bit or do some TA stuff.

    If you haven’t done options before, you probably need to papertrade.

  173. BIDU back to testing $250 the wrong way, GOOG still can’t handle $470 with any conviction.

    GOOG/DanW – First of all, NEVER play volatile stocks in a small account unless you have a hell of a hedging strategy. In the case of the $520s, you have a better chance of getting $1.30 back on the $510s than you do on the $520s and that will cost you $1.40 to roll to. If you want to arrest your losses without giving up you can sell the $530s for $1.80 (maybe $2) and get most of your money off the table and then just cross your fingers that GOOG finishes higher than $522 at the month’s end.

    Out of the money calls are the stupidest play in the market. Which reminds me, we have June $600s that are dead money at $5.85 and I’m going to spend $10 to roll them to the $560s ($10 for $40 seems fair) with a plan of selling the Apr $570s for $5 hopefully. XXX

    XOM – I have puts from yesterday. The danger is that the Supremes let them off scott free and they rally and never put it past this court to side with big business.

    RIMM/anything running away – If we hold the week, with 3 weeks still left to expiration, then I’ll be looking for rolls but not now. We went up for the first week all year – that’s not a trend yet!

    Oil is starting to trade down! That’s great but it may drag the markets with it if this turns into a big slide. OIH already down 1% along with XLE…

  174. Ljupco, sorry about that. December was a crazy month with emails flying in and out of my address. Can you send another one?

    BTW, anyone emailing me will get a boring reply about how I’m just taking down names and emails for future contact with information about the club. (Since sometime in November we haven’t been taking new names for the launch. Prospective members need a lot of info and we were already busy writing out partnership agreement- a bit crazy when you have 80+ people looking at how you’re writing the document.)

  175. Confused Cary,
    I’m not aware of an SNDK calendar spread in any of the portfolios (new/old 10KP/25KP). We have naked Apr 25′s in the new 25KP.

    Premium is the same as extrinsic value, you want it to go to zero by expiration or close to zero before expiration. If you make 100% on your caller (it expires worthless) that’s always great, but the idea is to sell the premium, so even if the caller gains on you, when you roll, you’re still going to make money as his extrinsic value (time value and volatility) erodes.

  176. Carl,

    Yes, that’s correct however you can take gains along the way. Example:

    Own Citigroup @ $29, sell a front month $30 call for say .60. If it expires at $29.99 then the stock will not be called away from you and you keep your .60. At some point if the stock moves down and the call is worth .30 you buy it back and you’ve made .30. Then you can sell it again. Also, keep in mind if the stock closes at $30.10 you can buy it back for .10-.15 on the final day of expiration or roll it to the next month.

  177. Thanks Jake….. all clear now!

  178. Phil.


    Got hammered last night from their lowered guidance on the earnings report. The had been trading in the low 40′s.

    The dropped all the way to $32 today.

    Wondering what your thoughts on setting up a Long-Term Play were.

    Looks like as the volatility cools off we should be able to get into 2010′s $30 Call at $6 or less. They were recently trading at $13. Then you can sell at the money calls for $1.20 for the March $32.50.

    Rinse and repeat the remaining 21 months $1 x 21 = $21 – $6 = $15. That works out to be $7.50 a year or 100% yield on the investment. What’s your thought?

  179. Thank you for the example Fred!

  180. Phil – SBUX / LTP – thinking of covering with Apr 20s – may 1/2 or 3/4 just in case their staff training was so good that people will fight for the new expresso.
    Any thoughts ?

  181. Flirting w/ FMD; I don’t think we get it, but who knows if AAPL and GOOG can break up from here.

  182. Confused Cary – that’s what the stock club should accomplish. We will also be starting a portfolio alert system if they ever get the new site changes up and running.

    GOOG cannot get over that $472 hump! Very frustrating. The real test is $475…

  183. XOM – There is huge public interest in the XOM settlement case up here in Alaska as you can imagine. I was reading an article in the local rag the other day. One of the justices is sitting it out because he owns XOM, so the best many people are hoping for from the ‘pro business’ court is a 4-4 split that would let the 2.5 billion verdict stand.

  184. NEM finally!

  185. BA is stuck today and NOC is soaring. Has something been decided or leaked?

  186. ben- i think he’s doing much better than last time- markets showing this.

  187. GOOG-jeez Phil the stock hit a low of $450 yesterday. First you thought $468 was imporant. I think it has done pretty well. LOL

  188. EOG has bounced here @ 106 today – someone push it over the edge or I quit!

  189. BA – not sure but with the price action just covered 1/2 of Jan 10′s — had left them naked before

  190. CSCO-Flying!
    Charting-I use Power Etrade Pro.

  191. BBD
    with GOOG i find it more proportionate to think of it if a $45 stock climbs to $47 or $48, rather than 20 or 30 points. the great benefit of this thinking is that it trades in $1 strike incriments.

  192. APPL up $2 today to $121+

    The real test is to run through $122…

    I bet we’ve seen the high for the day.

    Come on Ben Bernanke… try and save the markets, t-t-try not t-t-to st-st-stutter! Else the market will come crashing down!

  193. GOOG:

    now at 473$
    my apr460 now up 37 %,


  194. r paul- getting nice…someone listen to this guy!!!

  195. Windy- I hear ya but it really doesn’t work that way when you are playing options. LOL

  196. Thanks for all the comments. Had no idea I could get ToS for $1.50 per/flat. That seals the deal.

    Yes, BBD. If I had $1M in that account, I would be a real dick for complaining about the $2k, $4k, and $25k rules.

    Zouk, you are the bravest person on the forum. Takes giant copper balls to be short AAPL with a triple retest of the August lows, Optrader going positive, and AAPL oversold on daily/weekly. Be careful though, I hear that with copper prices so high, people are stealing copper anywhere they find it. LOL.

    Also, AAPL did not have a single 38% retracement move since the consolidation between 170 and 180. That is an indication of how overdone this sell-off has been. The 38% retracement from the top puts us up at 136. And that is where I will cover. But, until then, I am holding leaps and Apr’s if the markets can hold together and make a nice little bounce out of this triangle reversal. All bad news has been sucked up over the last three days. And if Ben can’t take us down, nothing will. (Fingers crossed)

  197. GOOG roll — It’s hard to believe that by rolling to the 480s yesterday, I’m only down $450 from my basis when GOOG is down $15 from when I first bought those 510s. If I had stayed with the 510s, I’d still be down $2300 on the trade. Sold out here considering myself lucky to get out a lot closer to even than I imagined. It’ll probably retake 500 now that I’m out. LOL

  198. William Tell – That far call is ADSK ’09 30C, no?

  199. JNPR breaking above 50 dma now…

  200. Until AAPL convinces me with a strong me, I am short. When it does, time to go long

  201. Xian – Can’t watch. Is RP making nice with Helicopter?

  202. AAPL high today 123.40 tomorrow 129.95. I would bet that.

  203. Phil,

    You were very right about NFLX, but like you said often you are too early on a Stock. I remember last month you were bullish on that, and now It was a great long term buy!!!

    The more I´m here the more Ideas and plans I find and get too trade, but with 10K there is not so much to trade.

  204. AUTODESK Call is for the 2010…

    Right now it’s trading at $9. It will consolidate over the next few days and we should see $7. Just recently it was in the mid $8 range.

  205. primus/ben/paul- he was very respectful, but called him out on the lowering of rates and inflation- paul gave ben a little schooling, but paul was being earnest- not disrespectful.

    anyone c that differently?

  206. Did Ben have anything to say about it or did he just fold up like a lawn chair again?

  207. film/AAPL targets- is that spidey sense or charting stuff?

  208. William Tell/ADSK – OK, I see. At 11:46 you were quoting a six-handle, so the math is somewhat different. Personally, I’m thinking that you’re probably going to have to be babysitting that thing. Lotta work for a buck.

  209. FWIW, I think it is assinine that Congress has to be present to vote. Every member should have to vote or abstain on every vote. No reason that these old procedural games should be played anymore by bringing something up when it is known that members are out of town. Likewise, everyone should be forced to take a position on every vote. AH topic for sure, but that is all I wanted to say.

  210. ben/paul- he dodged it a bit and said that CPI was not too bad, so “price stability” is not completely out of whack.

    ban did say this is all about oil.

  211. xian, trendlines. I think we push up towards the downward trendline since 1/23 today, and then get over and run with GDP tomorrow.

  212. Got out of AXP in the old 25KP, just needed to free up some cash.

  213. Good, that is what killed him last time. All he did was give a little snort after Paul kicked sand in his face.

  214. but mostly SWAG numbers

  215. GOOG – Well, the 520′s werent all that out of the money a week ago. But I could not adjust & roll due to work obligations, and that is a lesson to me to not enter risky plays when I am not able to take appropriate action to respond to changes.

    Is there benefit to going for the 500′s for $3.85 instead of the 510′s?

  216. AUY – again, I’m in 09 15′s and wondering if 5% is a bit much in one day. Sell cover or take cash for sector rotation? I have a number of Jr.s that have been lagging, as a long-term bet on inflation, as I think big money may have been buying majors and selling Jr.’s as a hedge – but what do I know.

  217. AAPL- took off some cover.

  218. BBD
    you’re more experienced and better at this than i. so regarding GOOG, what prevents you from looking at it from a factor of 10 with options?

  219. comment above
    read: divided by 10

  220. LOL, I love Ron Paul!

    $477 is $30 off the bottom for GOOG! $472.50 is 5% off $450, a fair bottom, so let’s watch that range but if we reestablish $475 today then we throw out the whole spike down to $446 and treat $475 as the bottom (and we may end up back at $500 before it loses that status if we can top it by Friday).

    Congrats to all who gutted this one out yesterday but don’t be greedy unless you really enjoyed yesterday and don’t mind another possible round!

    ADSK – outlook was poor too as their CEO is one of the 3% that sees a recession ahead. I don’t like them, a little too specialized for me and not something I would put in the LTP but I don’t disagree that they would make a nice comeback play at $30 or lower.

    Cover SBUX?!? Blasphemy! Hell, I’d 1/2 cover them at $20 but this is just a pullback off the 50 dma at $19.33 and they are up from $18 so that’s $18.90 on the 5% rule, anything above that is still bullish.

    NOC – maybe up on rumor. Damn, that $85 call hit .85!

    BBD – $468 was important but now they broke that. I’m always refiguring strikes so I know when to get out. If they keep making my targets, I staty naked, if I get shaken at a spot or two I cover or get out but always, always, I take a fresh look at it every time (see microwave oven theory for why I don’t stick to prior predictions).

    XOM pulled it together as they jacked oil back to $101. The problem is that an easy Fed means there will still be money to steal.

    Beth – great lesson! It’s very hard to convince people that rolling and DD’ing is a good idea and you can get seriously screwed if you don’t manage your positions well but if you scale in and make the moves when the math works, you drastically improve your chances of getting even.

    We could be setting up for a nice post-Bernanke rally here.

  221. AAPL- Apple-AAPL volatility low; market cap $104B with Zero long-term debt & $18B cash
    AAPL is recently trading up 12c to $119.29. AAPL has a market cap of $104 billion with zero long-term debt and $18.4 billion in cash and short term investments. AAPL has been subject to unconfirmed stock buyback chatter after IBM announced an additional $15 billion buyback on Feb. 26. AAPL March option implied volatility of 42 is below its 26-week average of 47 according to Track Data, suggesting decreasing price movement.

  222. PHIL,
    RIMM running up on me. Have June 95 against Mar 96 5/8. Rolling advise please. Thnks

  223. TPX – like I said yesterday, they are waking up. Navellier pick if that’s worth anything. He nailed some earnings plays big time this round.

  224. Phil, what are your thoughts on GS’s downgrade of COSTCO today?

  225. AAPL-I was shocked while in France to realize that they are selling their computers for the same price as in the US, but in Euros! So for example the first Macbook is 1,099 euros, which is $1,660. They must be making a ton of money on those!
    The macbook air is 1,700 euros, or $2,600.

  226. RIMM !!

  227. Alex / Your bio Don’t sweat the English. Much better than my German ;-)

  228. Doubleclick, I just sent you email requesting some PSW investment club information. Did you receive it?

  229. NOC just got awawrded a 30M dollar contract. It’s not the big-un

  230. BTW about technical analysis , what parameters are you using on DMA (50, 100, 200) ?? and how much displacement on them .. thnkx in advance

  231. Beth’s trade- that is soooooo hard to have the guts to do, but Phil is correct.
    Windy- $2 increase on a $50 stock gives you a $100 gain on an ATM option. On a $20 increase you get $1000 roughly. Big difference. (assuming 1 contract)

  232. GOOG:

    out with 35 % profitt.

    Like to play again GOOG ??


  233. xian, also, it turns out that the Average True Range for AAPL is at $5, if you add that to the low of the day, then we get 123.08. Or as you would write it:

    AAPL’s ATR + LOD = my guess

  234. SBUX – thanks – please forgive my sins (especially greed ;-) )

  235. AAPL – to all the technicals — AAPL breakout with GOOG confirmation? Is it safe to lift the covers. xian – yours noted.

  236. Appl/euros – I keep telling my folks that they should come shop here – or at least
    let me send them stuff (it is also my excuse for not coming visit – LOL)

  237. Guys on the PSW investment club. In case you haven’t gotten an update recently. There were 40 or so people that sent in the info and then this info was sent to the State of Washington as that is where the LLC(?) is being registered. Once the club is set up, funded, and functional, I believe that it is everyone’s intention to then add people who were late to the party. I imagine this will only happen quarterly as this is a significant undertaking and would want to consolidate the paperwork.

    That being said, I am a member of the club but not helping to run it. Just wanted to give people a headsup who were asking.

  238. FYI/Rutterfly: Currently is would cost apx $2 per contact (the smaller number), to shift the Rutterfly to a $720 strangle. As we are in for just $2.80 per contract, this is a bit much to add but that’s what we’re looking at currently. It would cut our potential return down considerably and bring risk from $840 in the $10KP to $1,440, a bit much at the moment.

    It may be preferable, for a risk of an additional $450 (in this example) to add another 3:6:3 butterfly with the $710s, $720s and $730s that would pay off at $720 AND/or do the next leg up. The payoff on the strike is $2,550 and that would widen our profit window on the combined trade up to $724 (from $718).

    The short story is, don’t worry, there are lots of things to do once we decide it’s not going back down.

  239. JNPR still strong.

  240. guys convinced me to uncover my AAPL. Hope it goes

  241. Crocs is one sick puppy.

  242. FCX-Testing $105.

  243. Apple prices – in my country the formula is:

    US dollars converted into EUR + 5%

    which is quite expensive… and, IMO, definitively not w/out an impact on their bottom line (with that difference, I suppose they don’t care if they sell less); for example, in my previous company there was no way to get an Apple notebook.

    Though in my current company, we have a bunch of MacBook Pros.

  244. MRVL… Check out recent price movement and call option volume today. Spreads are incredibly cheap

  245. SNDK keeps bumping its head on 25.35

  246. Phil, Re: AAPL I have July $125′s and March $125′s to cover, would you leave the covers alone and wait to expiration to see if I need to pony up? Tks

  247. Careful uncovering your positions. We’ve run up nicely and are going to hit resistance at 1400 SPX. We’re starting to recover from this crisis but I suspect we will retrace a bit after we hit 1400 or slightly above and then continue a new uptrend. I’m not saying AAPL isn’t about to turn, just letting you guys know a potential scenario. Just watch it and see when it hits resistance levels and how we’re looking.

  248. GLUU-Slowly getting back in.

  249. SNDK is trying hard

  250. CNBC/larry/sergey losses- i hate this gossip

  251. CROX is a sick puppy and NTRI determined on staying lean

    AAPL and GOOG moving …

  252. Lets make some monaayy!!

  253. RE: GOOG

    Phil, I’m curious why you switched from the 490s to the 500s.

  254. SPX testing 200 min sma again!

  255. DM – which way you going to make it this time?

  256. Anyone playing Silver?

  257. FlimFlam
    call Bob at TOS
    He has a branch office and will cut deals
    for better pricing…
    He can do way better than $1.50
    (612) 418-9292 cell

  258. parchesia is dead on.

  259. 13:24 EDT AAPL Apple-AAPL positive comments regarding new enterprise iPhone product-Buy@UBSW

  260. Is the full “Beth article” posted anywhere? Thx

  261. BBD, I noticed silver was very strong as well, especially the last couple of days. Wondering if it is not too extended though. Are you playing it? Which one? I might take a small position.

  262. things feel slow

  263. Opt, on GLUU, which strike/month are you moving into?

  264. Can someone outline the play that we currently have on BA in the new 25KP Portfolio.

  265. Hi Filmflam, regarding the investment club, do you mean people already sent in the infomation for the upcoming one (March), or the previous one? Thanks

  266. xian – still lunch time!

  267. GLUU!

  268. MrN – lol I’ve been holding my shorts the last few days… This morning I took a 60 cent loss on the contracts :/. Looking for re-entry, up or down. But the market is ultra-bore w/ Bernanke.. Very unusual.

    BBD – Who’s your futures broker?

  269. Is there a way to see “Time & Sales” in TOS?

  270. Andy, I bought the stock.

  271. Apple SDK plans and new features to be announced March 6

  272. Opt – you might or you will? BBD is prostar!

  273. ok, no options I see, well the price is like a semi-expensive option I guess

  274. Apple to hold “iPhone Software Roadmap” media event next week

    By AppleInsider Staff
    Published: 01:15 PM EST

    Apple Inc. will hold a special event for analysts and members of the media next week, March 6th, to formally announce plans for its much anticipated iPhone and iPod touch software developers kit (SDK).

    “Please join us to learn about the iPhone software roadmap, including the iPhone SDK and some exciting new enterprise features,” the company wrote in a digital invite distributed by email.

    The event is set to take place at 10:00 a.m. sharp Pacific time at the “Town Hall” on Apple’s Cupertino campus — the same venue used for the introduction of the Intel-based Mac mini and iPod Hi-Fi in February of 2006, and the aluminum iMacs this past August.

  275. Opt,

    What was that platinum stock?

  276. BIDU up 7.5%!

    I like that Congress idea Film!

    AXP – you’ll be missing them if they go back to $60 Jake!

    Wow, GOOG $460 puts still $10.30, that’s hard to resist as a naked put (other than the crushing margin requirements). Of course I get non-stop heart attacks from the $25 C puts I sold so you think I’d learn. I’m picking up some $420 puts for $2.15 just so I can sell the $460 puts IF they get to $20 again as I’m willing to risk that one.

    DanW – Now your roll from the $520s is $1.50 to the $510s and $3.80 for the $500s, the difference between the $500s and $490s is $3.20 so you can assume a $10 move pays $3.20 while a $10 move from the $510s only pays $2.30. That means you can pay for the roll to the $510s, get a $10 move, and still not make money. Also, if you are quick, the $490s are $10, which is a magic number because the money you sell them for covers your margin requirement for selling them when you are in the $500s so you can cover if things turn ugly and use their cash to stop them out whereas, with the $510s or $520s, you don’t have a lot of options.

    AUY – stopping and holding the 5% rule is still bullish but, when in doubt, sell half, or at least cover half!

    RIMM/Rcha – To do it now costs a bit but you can roll up to 2x the $110s which will cost you about $5 per contract, and roll the caller to the Mar $106s, which is roughly even. That puts them into $3 (x2) of premium so it’s worth your $5 but you need some margin too. After that, you can look ahead to Apr where the $115s cost more already than the March $110s so the roll looks good.

    You don’t really have to do anything as the Apr $105s are $13, so it will cost you just $10 to roll them another $9 off the money from you (assuming RIMM stays up).

    GS/COST – listen to those bozos at your own peril! If COST goes down to $60 I’d want them but not in between here.

    Speaking of NFLX – ATH!

    AAPL/Euros – Don’t forget that includes 17% VAT (their sales tax).

    Lifting covers – I’m taking off 25% here and there but with tomorrow Thursday and then the weekend and the Wednesday rule having held up almost every week this year (Wed is high of the week), I’m not really too keen on taking big chances and we still didn’t make 12,750, which is what I said was my “or bust” target for the week.

    A lot of people think I’m very bullish but I’m only very bounceish. The market was very oversold last week but the closer we get to 13,000, the less oversold it is so I go from being 90% bullish at 12,200 to maybe 60% bullish here as I’m just not looking for a huge move from here. I still think we pretty much consolidate between 12,750 and 13,300 through March at least.

    AAPL/Jamie – I’d leave those. If anything you were undercovered and you may want to take them out next time they hit $2.50 and sell 1/2 the $120s instead.

    Larry/Sergey losses – that’s not gossip, that’s math! Ouch for them…

    GOOG/switch to $500s – I always looks to see which bracket has the best up/down ratios at the time and the $490s ran away on me and the $500s had less downisde risk and, as I was saying to Dan, I could sell some other sucker the bloated $490s on a downswing and pick up a few bucks to cover my position.

  277. “New entreprise features”. That’s good!

  278. BBD- Opt- What do you think of PAAS?

  279. JR, last night Apple release a very mysterious iPhone/iTouch update with the description (bug fixes), the file was 150MB…..

  280. VAT-You are right, Phil. But there still 33%…Isn’t VAT 13%?

  281. OPT-My friend likes SLW, and this old goat is good. But you are on your own as I know nothing about it.

  282. SLW, yes that’s what I am mostly following on SLVR, as it is probably the most liquid. It’s been up every single day lately though. Maybe a small position and add on a pullback. You have a friend who trades silver?

  283. Oops, there goes the market!

  284. spx testing yesterday’s close again…

  285. That is innovation I like:

    “Abilene Christian University (ACU) announced yesterday that they would be issuing iPhones or iPod Touches to incoming freshman for use in their college courses and day to day lives.”

    Opt/Phil, EU zone sales tax is not harmonized (France/UK/Germany etc. all different), I know you will not believe me, but in Denmark the luxury tax on cars is 180%, on top of that the sales tax is 25%…. if you wonder why bikes are so popular, well…

  286. Damn, I should just buy QIDs whenever they hit $50! Grabbed the $52 for $1.80, just looking for a quick .30.

  287. Ah, ok. Thanks, Phil.

  288. So the market dropping, but I don’t know if I like it. Feels… interesting.

  289. BBD, I have had SLW in my retirement account for about a year. Bought it at about 15. Nice thing about SLW, it that you can sell calls against it. Decent premiums. It’s been a good vehicle for covered calls for me.

  290. Platinum-It was PAL. Closed position earlier today, asposted.

  291. I’ll pick up some puts, just in case. I’m with you phil, not with the QIDs.. but the short direction.

  292. SLW-Jumped in. Small position. Trusting BBD on this one ;-)

  293. pop and drop, lets rack them and roll them boys.

  294. Also, bought back some RIMM calls and some AAPL covers.


  296. Phil wrote, “Out of the money calls are the stupidest play in the market.” Do you mean buying, selling, or both? Still trying to (re)learn.

    Also, per Jake and Fred, since we are trying to sell premium… When entering a new position, would the simplest method to select which strike to sell be to choose the option with the highest premium? Could it be that simple?

    Then when we roll, roll to the strike with highest premium again?

    I use E*Trade Pro and recently added Intrinsic Value and Time Premium columns to my tables and this has opened a new world to me. Better late than never!

  297. AMZN-Bought some puts.

  298. Grant:

    Most of the plays that we do here are ATM (at the money options).

    When people buy OTM, they usually look at the price and say “Holy crap for .25 I could double this in a week!!!1!”

    Bad idea. The greeks are against you more than they are of troy.

    Selling further than ATM is generally a bad idea b/c the risk compared to the protection does not calculate right.

    When you sell, you should sell ATM. I’m pretty sure that the further ITM you go, the less extrinsic (premium) you have.

    The best book to pick up to help you with this is McMillans “Options as a strategic investment”

  299. Phil we uncovered ERTS on monday. What’s the plan for recovering those?

  300. Roose- didn’t see if anyone answered you or not, but Beth’s post is referenced from the main page of the k1 Project as Hints on Getting Started

  301. OPT & BBD – Tell me your logic on SLW. I sold out early but have been unloading in this order SLWBF, SLW, SSRI, AUY (today). But like I said I have some juniors and bull call spreads on gold in the futures.

  302. DM
    Sorry, but we will stick to Phil’s original plan of a post Bernanke rally although MCD and AMZN seem to agree with you.

  303. MCD- ruining my day, i guess it deserves this as it’s been so well behaved- have at it MCD sellers!

  304. Henk – when does bernanke stop speaking?

  305. BA $25KP was 10 Apr $85s, selling 5 Mar $85s while we wait for it to move.

    Denmark tax – See, and I propose just $5,000 per car that gets under 25 mpg as a gas guzzler tax and they say I’m crazy!

    We’re holding 12,700 and 9,300 on the NYSE and 715 on the Rut and 2,350 (almost) on the Nas. S&P 1,380 is very important but this is not too bad so far.

    Gosh remember when we started playing the QID’s in the low $40s – now $50 is a reliable floor – that’s sad!

    Out of the money – buying them is bad. Selling them is good unless you really want protection for longs. If you buy 10 Apple $130s for $2 that’s $2K and Apple has to finish at $132 for you to get even and $130 for you to recover a penny. If you buy 4 Apple $120s for $5 you get half your money back at $122.50, your break even is $125 and at $130 you double vs. $134 you need to double the same $2,000 with the $130s. By the time you have a double on the $130s, you are about at a triple on the $120s. That’s what I mean by stupid.

    And yes, it is that simple. You are a landlord, go for the highest rent you can get and sell it 12 times, that’s the whole plan…

    Oh darn, here goes my QIDs – sorry bulls, bad ending here..

  306. SLW- I know Sh*t about this stock. My friend likes it.
    CF-eyeing on buying back

  307. EOG w/ nice little drop time to take 1/2 as this has been scarifying me.

  308. Thanks for the info Roose.

    There is a second club starting up? I guess I missed that. I think the one in March IS the first one, with delays. Again, it is quite an undertaking.

    Phil, if you like that one, how about doubling, or tripling the number of representatives. We were originally designed by the forefathers to have one representative for every 10,000 people. Now we have what one per half-million. Too much concentration. Also think of the dilution factor of lobbying money. I think we should have 5000 representatives, all vote, but only come to capitol hill to speak when scheduled. Or they vote in the top 10% to sit in chambers. A bribe has to be a certain size to be of any value, and if they need to use 10 times that to make their case, it will be cost-prohibitive.

    Definitely need more Sentators.

    Love the iPhone news. Gives us a floor until March 6th.

    Obviously, I am taking a big risk as I pointed out before that Thursday is still following Wednesday. (When are we going to do something about that?) But, I am sticking with the reversal triangle as long as we stay positive today. We are consolidating up here. Any kind of pop from here and I think we are flying.

    Phil, you had to expect HUGE resistance on the DJIA at 12750. That was the 6 week high and the low from Nov. Consolidation under here with a huge pre-market move and the bears are galled. Where as both the SPX and Nasdaq have support underneath, although a 200 point drop on the DJIA is still possible.

  309. Just heard on CNBC that Cramer will be interviewing Clinton tonight on the west coast. Now I understand what he was doing on this flight :)

  310. SLW- Mr N, I am just following BBD and his friend. Not good so far, but I just added as it was a small position. Silver has been on fire lately.

  311. Phil

    Is it advisable to go into FRE earnings half covered with the 25 strike?


  312. BBD – you may have nailed CF @ 123.2!!! I thot but can’t time like you guys.

  313. hill/cramer – is that the highest profile interview that has taken the chance to talk to him? he has proven so unpredictable that this makes hillary look desperate.

    anyway…back to markets- go C!

  314. Optrader-Really good timing on getting out of PAL!

  315. ANYONE,

    At what point do you roll your caller up when he is up on you by XX%


  316. rdfinder- it has been my experience that I don’t benefit from rolling up a caller that’s gone ITM on me. Note- this has been *my* experience. A number of times I’ve paid up to roll a caller farther OTM, only to have the stock price retrace.

    In general, I would suggest you keep an eye on rolls that would put your caller out a month and up a strike for a credit to yourself, or at least for no additional cost. You could even put in a GTC order for it and just wait.

    Keep an eye on the option’s IV, if it starts to get low then you want to pay up to roll so you don’t get assigned. But as long as the IV is around normal for that stock/option, don’t worry about it too much.

  317. ERTS – oops, would have been good to re-cover earlier today! I’m good with them retesting $47, this whole sell-off is no big deal unless we erase yesterday.

    How can you tell a final flush from a sell-off? Maybe watch Apple $220 and GS $175… GOOG is anyone’s guess.

    Film, that sounds good except you would be shocked at how little it cost to bribe a politician. Also, it would give too much weight (and corruption) to the Senate. At that point, you may as well let the people vote by refferendum a la California, which I wasn’t really against until they got tricked into voting down that energy bill that would have made the oil companies pay for the oil they were taking out of the ground. Even with the current system, we can’t find 500 articulate people out of 300M to fill the house!

    FRE – I’m so disgusted with them, I could have been out. I guess 1/2 the $25s makes sense, they seem to be holding it now but FNM is heading red and if FRE missess they will probably both tank.

    Rolling caller – when he runs out of 75% of his premium is a good time.

  318. XIAN- I thought the samething with Hillary

  319. Roose, what is your commission at ToS, or is your rate so good that you promised not to disclose it.

  320. Rutterfly- a caution for those with small accounts:

    I entered this trade (the 3/6/3 version for the 10KP), but now I realize that I can’t get out of it all at once. I have a small account (

  321. Anyone can somebody help--

    I have 10 APR 25 SNDK but i don’t see that in yesterday’s update of portfolio.
    Also I thought we sold BA calls. Does everybody else has 10 BA calls yet?

  322. PAL-Wow! you are right, I escaped just in time…ppffeeewwww

  323. rdfinder- one qualification on what I said above. What I meant to say is that I haven’t found it beneficial to roll the caller up/out too early. We have 23 more days before opX, in which a lot can happen, so I tend to be patient and wait.

    However, Phil’s rule is nice and clear. If the option you sold had $1 in premium, roll your caller when only 25c remains. And like I said, the best way is up *and* out, for a credit.

  324. Most of my last comment disappeared, so I guess I will summarize:

    Rutterfly- those of you with small accounts make sure you can get out. I found out that I need to leg out of each part separately and my account does not have enough “buying power” to buy back the short leg all in one chunk. I am only in the 3-6-3 version for the 10KP, but the six short contracts require more cash that I have (16K at the moment).

  325. 1372 or so next big support for spx. watching…

  326. AMZN puts-1/3 out.

  327. “we can’t find 500 articulate people out of 300M to fill the house!” That’s funny. That is what I was thinking when I listened to part of the hearings today.

    Phil, I sent you an email on Sunday to Just curious if you saw it.

  328. INTC behaving quite strong . and me too covered I think .. let’s do some magic if it goes up roling callers

    Is that all the bearsih market is ??

  329. K-1

    THANK YOU !!

  330. GRMN puts-1/3 out.

  331. Hi Film, regarding the club, I thought there was one last year before I joined. And there will be another one starting soon. Am I right?

  332. CSCO-Looking very strong. Barely dropped during the flush.

  333. Cramer – does interviews mostly these days… afraid to pick stocks

  334. for auto afficionados:

    Porsche Should Go Green to Beat Big-Carbon Tag: Matthew Lynn

    i think this is a good idea- once they figure how to get more power…but the trick will b to make the people who buy these cars think it’s “cooler” to b in a car that’s greener and still dips out nice (but not like b4)


    MCD- continues to b an object of disaffection.

  335. Phil
    you said:

    BA $25KP was 10 Apr $85s, selling 5 Mar $85s while we wait for it to move.

    Why 10 and 5 and 10 and 10 ?



  336. It is the same one, bar. Forming a corporation with 40 people who have never met and live all over is not as easy as it sounds.

  337. Thanks Film. How do I join now? I just sent email to doubleclick, is that the first step to do?

  338. Mos-in

  339. So, I was glancing at charts to find some LT puts to offset all the LT calls I see out there. And I happened across MO. I look at that chart and I see something that wants to come down. Anyone think of a reason why it should/could come down 40% to where I see support?

  340. RE: PSW Investment Club

    There is only one club (so far). It’s taken a while to launch. Once we had enough prospective members to make it feasible (sometime in November), we stopped taking new members to focus on launching the club. Once the club is launched, we will take on new members at regular intervals.

    Basically, at this time there isn’t a “waiting list”- there’s an “I’d like more info when the club reopens” list. Everyone who wants to join will have the opportunity to do so- sometime… sometime AFTER the club is actually up and running. (Thanks for your patience, everyone!)

  341. Rolling – K1 makes a good point, rolling up a caller is very tricky and leaves your profits exposed, often at the exact top of the cycle. It’s not to be takne lightly.

    GOOG bounced off $468 and my QID’s stopped me out so those are good signs! XXX

  342. About Investment Club .. Is it open to non USA people ??

  343. Flim just call bob and ask him whats the best he can do? …

  344. I think that is who is running it. He will let you know, but be patient. I would think that it won’t happen for several weeks. I suspect that we will want to get the first round funded before he would file to include additional people. But, I am speaking for him which means I am talking out of my butt. However, my butt has been known to make very good guesses.

  345. CROX how can a stock go up 1.02% and we loose $420 not exceptable

  346. JMAC – with options you don’t trade price so much as trade volatility

  347. PHIL,

    Thank you. I am learning, but can’t seem to get a grip on rolling the short call up or out when it gets ITM.

  348. Phil,

    What do you suggest going into tanker decision today. remove or full cover

  349. Mark – you are so out my league – I have no idea what this article or what you were talking about yesterday with Sakiko means – LOL
    But it is a good reality check on where I am at :-) And good way to expand knowledge, at least learn that there are ‘things’ out there.

  350. jhok….why do you have to leg out of the RUTTerfly ? it seems that closing as a whole would solve the cash issue (?)

  351. Jhok,
    1. Did you buy it as one trade?
    2. Which broker/platform are you using TOS?

  352. Bond Money Flow,

    I think with all the money that flowed out of the bonds in the last week, I think it was people trying to feel the dollar. I can see putting money in US equities, but not long-term fixed income where yields are so slow. I don’t know how much of that money we’ll see move into US equities. Thoughts?

  353. rdfinder- I have had exactly the experience you are going through. I looked back today, but don’t see that you’ve posted the position you’re concerned about. If you do so, I can guarantee you’ll get some interesting opinions about it.

  354. rdfinder, it makes (at least) two of us…

    Somebody used the term “learning by osmosis”, I think that is very good desc. of what I’m trying to do…

  355. 4 u all looking at SLW. Bought it at $9.75 & have been selling cov calls since. Been awhile, but it has paid for itself. Would like to find a gold stock I could do the same with. Out of Pal which I bought at #3.75, & intc for %50 gain in less than a week. LIke Crox but think they will be good for 3rd qtr, after summer. Sold them for 30% profit via cov calls also. Closed the appl call for another 40% & am looking at put now. Any ideas on good gold stock would be appreciated. Did some ABX awhile back but they all seem toppy now.Busy day but I think i’m on track again.

  356. DM-I hope you covered your short position. This could be the beginning of that run on 1400 SPX

  357. Phil and others thanks for your help today, as always.

    Now is it “buy high, sell low”. For the last several weeks I seem to have mastered that one.

  358. osmosis- that was me

  359. GS-Got some calls. Above rising 5MA.

  360. Mark – interesting, yes… but I would just as soon take the visibility! I feel like I’m missing the sentiment when they’re allowed to cross off-exchange.

  361. RE: Investment Club

    - It is open to non-US citizens. It just requires some tax withholding and a couple of forms.

    - Yes, Flimflam, your rear made a good guess. I’m the President of the club(!)

  362. Oh crummy- I was waffling on a DD on GOOG at 468 and missed it.

  363. DM
    it is not too late yet to put on your rally shoes!

  364. Grant – now you has it! The next one is: “sell high volatility, buy low volatility”.

  365. DoubleClick,

    I’d love to join if there were still slots, my email is



  366. Phil,
    AXP may go up to 60, but i’m happy with the 30% they gave me and would like to have more in cash right now ;)

  367. AAPL GOOG “Death Cross” on the daily charts –

    Looking at Phil’s GOOG/Euro chart earlier today, I see we had a Death Cross on Tuesday, exactly the day that GOOG took its huge dive.

    In dollar terms, I see the same Death Cross forming in both AAPL and GOOG right now. If current conditions hold (admittedly a big IF), we should have a true “Death Cross” in both these names by mid next week, if not before.

    Anyone else see this in their charts? I’m not a very good TA guy, but this seems quite significant to me.

  368. a nice steady rally would b so sweet

  369. So can we get the other end to make a good guess?

    Sorry, Film. Love you, Man. ;-)

  370. POT-All out for now.

  371. K-1 I am long 20 AIG aug 45 , short 12 march 45 . Should I have used a sell limit stop on the short side?

    Hey, THANK YOU in advance.

  372. GRMN and AMZN-bought back puts.

  373. Keep in mind 1380 is a retracement up and we have to hold 1377 or 1374 to make a run at 1400…

  374. CSCO-Testing $25! Looking good.

  375. I would love a close around here. I have not seen such relative strength in the big techs (AAPL, GOOG, CSCO, RIMM etc..) in a long time.

  376. AAPL-let’s break this $122!

  377. zsnake, cman

    I’m using OXPS. No margin, as many small accounts are.

    Yes I was able to enter the trade as one transaction.

    I’m not ready to close the trade yet, but the size of the position worried me, so I tried (as a test) to close the trade with the butterfly trade screen, just reversing the transaction. No dice, got error messages saying the trade couldn’t be completed and it would not enter the order.

    Individually the short leg is bigger than my cash balance. Additionally, if you have any option requirements those are subtracted from your cash to figure out what can be spent.

    So I will plan ahead when the time comes to exit the trade. Just wanted to warn others of possible problems.

  378. Sakiko. That is funny, however, if you just played the S/R numbers I post, you would be sitting on a huge gain. And would have had some great trades in 2007. I am back to about even with my previous stop outs from this week and still very happy with the action. I make no bones about my fortunes and trading prowess being tied to AAPL. The ups more than compensate for these downs.

    Just getting hopeful that I can soon get very excited about how profitable the rest of the year could be. Emotion is not a good thing, but it has been awhile since I saw anything positive in the technicals.

    Roose, Bob is the man. If you email me your name, I will get you a $50 referal bonus. He offered me the price I wanted and I am thrilled to get started over there.

  379. rdfinder- I’m sure Phil will weigh in on this as well, so take what I say with a grain of salt.

    First, notice that your short calls (AIGDI) have 47% IV. That is more than enough IV to keep you from being early assigned, in general. However, also notice that AIG is coming up on a dividend x-date (3/5). There can be some simple shenanigans that happen right around x-dates that can get you early-assigned, which can be annoying.

    Since you haven’t fully covered, you likely have an easy move up/out that will position you nicely without coming up with a lot of additional cash (buyback your 12 Mar 45s at 7.50 and sell 20 Apr 50s at 4). But I’m going to leave it to Phil to call the actual roll.

  380. Amazing how we can be happy about AAPL at $122 LOL

  381. We need one more push to get out of this dangerous zone.

  382. Sad and amazing, Opt. But, look at all that money between here and $300.

  383. Rutterfly/Jhok – Ask your broker to execute a complex spread if the platform doesn’t handle it, they can waive the margin issue to move the trade through.

    BID having a wacky couple of days.

    SNDK – there was no update of portfolio so you’re fine(ish).

    Film – no I did not see it but I’m still buried from the week the site crashed.

    BA – because if they get the contract they go up and if they don’t get the contract we will buy more on the way down.

    MO – I gave up shorting them, they just never go down. If they head back to $80, they are worth a chance but don’t short things that are in the middle of a range unless you REALLY think you know something.

    GS broke $180

    BA – 1/2 cover is good for me. $25KP and LTP

    Bond money – well my thinking is that any money being placed into US bonds must be temporary because what fool would convert their money into dollars at 2.7%? Of course, there are a lot of fools out there…

    Gold w/Options – I love NAK and they have options now. They are a very long-term play but have a huge mine in deveolopment. You can buy them for $12.40 and sell Apr $12.50s for $1, a nice return. I have a standing order to buy them at $10.50 but they blew out of my range a couple of weeks ago and I’m not sure they’re coming back.

    AAPL/GOOG death cross – Yep, if Apple doesn’t get back over $150 by the end of next week, they will cross. GOOG needs to retake $590 but may have less time it would be great to have something to refer back to but neither one has had this happen to them (maybe Apple many years ago).

    OXPS – check with your broker but I believe if you have an offsetting butterfly or condor and you let it expire in the money then they automatically straighten it out for you over the expiration weekend.

  384. Filmflam

    I will get in touch with Bob from TOS as well. You sound as if you got a good deal. May I ask if he matched Trade Station?

    Thanks also, Roose

  385. sakiko – agreed brudda, but I find it FASCINATING that options trading could see some day as much volume as some equities. This market is growing exponentially, and when you start to find benchmark trading strategies for a derivative… well now you’re opening the market to a whole other list of investors!

    stephane – dude, I’m prob not. Just been in this market for 6 years and have purposefully exposed myself to every product under the sun (SMA’s, prepaid forward contracts, RE, equities, fixed income, foreign, FX, swaps, options… basically most derivatives). The hardest thing to understand if you’re not in teh buy or sell side is their reasoning behind a trade. Sometimes best execution is not the priority, simply getting into / out of the stock as quickly as possible (perfect example is MBI yesterday before 1 with the volume spike).

    Or maybe a small 4 person hedge fund trade 5 million shares a day but their prime broker requires them to trade with them (and will guarantee close price… ;) ). So they’re bound to their agreement… their quant program spits out the trades to make, but they have no benchmark to see how their executions are vs anything else… they’re in / out of the stocks they want to be, but if the quant program said to sell MSFT at 28.80 and their prime broker gives them 28.00. they’ve already lost 0.80 (generated negative alpha).

    Basically their’s some shinanigans that go on out there, but then there’s just the nature of the business too. Takes a LONG time and a lot of reading / research to get a better understanding.

  386. Phil – with CCJ I am stuck with no premium callers. I was hoping to roll but really I cannot come with anything good. Could you apply your creativity to come up with a plan? Thanks!

    +9x Jun $30 @4.94
    -4x Mar $30 @3.17

  387. Film, you mean here and $400, right?

  388. here we go!!!

  389. What are you guys seeing in the market technicals that is making you feel so bullish?

    The SPX may rally into the close, but if it doesn’t it will have been rejected twice at the downtrend line (roughly even with the 50 SMA right now, as I draw it).

    We had good reason to think there’d be a big move in one direction or the other coming out of last week’s closing diagonal, and we got it. So it’s NOT surprising that we had a big move up so far. But I’m not seeing what supports much higher movement from a technical perspective on the SPX, unless and until we start closing above the downtrend line.

    What am I missing?

  390. Raffy, yes. And I am not a big player, although, I do trade like a bunny at a kegger at times.

    Thanks Phil. Assumed so, just wanted you to know it was out there. Not time sensitive.

    Mark, it does seem like the natural evolution (devolution) of money management would have derivatives trading taking pre-eminance as the underlyings “aren’t moving enough” to make big money. This is what I think the trend towards 100+, 300+, 500+ stock prices encourages. Individual investors feeling like they need to play options to make money because they missed the rise of AAPL from 120 to 400. And then, the end. Man, I hope I am net short that day.

    Come on Baby, 123.40. Come to papa.

  391. AAPL-Covering a little bit to protect profits
    RIMM-1/3 out.

  392. Jhok,
    Did you call their trading desk and ask ? worth a try – if they have a tech issue with that screen.
    I have wxperienced Roll issues on sevaral occasions on the Tradestation screen and evrey time it has been a tech issue that I could work around or had the trade done by the trade desk.
    Thanks for the info & caution.

  393. GOOG
    just covered the remaining 1/3 naked with 480s at $14.6

  394. Eric, you need to look at the indexes on a 1 yr/daily. And preferably a really small one to ignore the noise. Look at the triangle that we have consolidated down to over the last month and how we are now pushing up out of it. This is VERY bullish. Statistically, we should have broken down out of that. And if enough money went into that bet, then we have a great deal of support from the shorts.

    Opt, I was going to write between here and $500, but didn’t want to get into that, but now, I don’t even care. I am going to make so much on the move to $300 that I don’t care if I am wrong and they don’t make $400 or overtake MSFT in market cap, although, I am sure that they will.

  395. AAPL GOOG – Thanks Phil.

    I’m not a day trader, so I’m trying to look at potential chart patterns over the next month or two. The “Death Cross” bothers me a great deal from the long side, so I’ve been adding a few puts on these upswings.

    Realizing that’s like betting “Don’t Come”, and it certainly goes against my fan-dom, but this seems like a reasonable bias to me.

    Like Opt and others are saying, other indicators are pointing up, so I really don’t know. I’m just trying to look for a net bias to have. Right now that is pointing down. (Anton – I guess that means I’m looking at your team for some support!)

  396. $123-let’s do it.

  397. Opt:

    Are you still in those GRMN puts?

  398. jhok

    I was able to use the butterfly screen at OXPS and put in the Rutterfly order in to close with a 3.40, credit. It has not filled and probably won’t today. Don’t know why it didn’t work for you.

  399. Film,

    Thanks. But I’m still not seeing it (on SPX, at least). I can draw a closing diagonal from the December high and Jan low that we haven’t cleared out of. Then there’s the smaller diagonal from this month that everyone was following last week. I certainly agree we have broken out of that one, but not enough (so far) to break the primary downtrend line.

    Do you agree we are still in a primary downtrend on the main indexes? If not, when did we break out?

  400. GRMN-yes, I am still in the puts. Traded them a couple times today, as posted. That’s my insurance (with AMZN) to my big calls in AAPL, RIMM, and CSCO.

  401. EOG – phil you holding puts overnight?

  402. FXI-Bought some calls. Small position.

  403. Hey all,

    Could someone give me a recap on the current BA position in the 25k portfolio. I think is it only 10 BA Mar 85s since we sold 1/2 the position after DD. What is the current cover on this position.

    Many thanks

  404. Eric, yes, I agree we are in a primary downtrend. And that downtrend line will roughly hit at the same place as the low from December, which will begin the overhead supply. But, until we get up there, there is almost no resistance, so while we broke a smaller triangle, I think it was a significant one in that it should propel us up to 1450 or so relatively quickly, so I am excited about the risk reward of my trades right now. That is the source of MY bullishness. I don’t know about everyone elses. I think Optrader is just happy to have 5MAs moving up. But, he don’t care. He good. Sadly, I am a bull biased trader.

  405. I’m looking at the TOL daily chart:

    The current price is where it’s been rejected 5-6 times. Yesterday it blew through its 200 sma, and all the other MA’s are pointing up. If it can close above 24, then it will have broken through that trendline and have formed a massive reverse H & S pattern.

  406. And when we hit that trendline, I will be taking gains and covering with gusto.

  407. I stepped out for a bit and this is what I see… just sideways lol… Out of shorts at minor profit.

  408. I am NOT bullish in the market as a whole. I think we are still range-bound. But I see a lot of strength in the big names.

  409. AIG – Yep, this is my daily comment that you guys really need to stop daytrading spreads. Pick a target and stick with it. Adjust it when it goes way off on you, that would mean when you don’t see a viable roll out in the month ahead and never turn a spread into a naked trade unless you have a very good reason.

    AAPL $122 sure beats the alternative!

    FRE – I went with 1/2 cover on the Mar $25s against my Apr $30s – so pissed I didn’t sell on that spike.

    CCJ – that’s why we half cover. You are way ahead on the trade and there’s no shame in taking cash is there? You can roll yourself up to 8 Sept $35s at $6.80, taking about $3 off the table and roll the callers up to 8 Mar $35s, costing you .65. That gets your whole entry off the table with a profit and buys you 3 more months to sell into with better than 50% protection for the rest of the month.

    XOM, XLE moving down nicely into the close. Oil broke below $100, maybe the dollar is bouncing…

    Good job Windy, looks like you nailed the top. Don’t forget to have a “wish” target for taking out your lower callers.

    EOG – Oh sure, not everything is a day trade!

    That was a just fine day off that open…

  410. And I really that close on AAPL.

  411. Well henk, maybe you’ll get your rally tomorrow. Phil can say whatever, I love him, but if the market goes down, then it’s going down. Nothing more to it.

  412. Absolutely perfect day. Great consolidation. AAPL/GOOG strength, volume and finishing at highs.

    I am out. We’ll see what the GDP and initial claims has in store for us tomorrow, but we could still easily see a 1% gap down to try and shake bears / encourage bulls, but no sell-off has stuck this week. And that is what we want to see.

    Roose, if you didn’t see it, email me for your $50 bucks,

    Sorry, don’t know HTML. My limitations are limitless.

  413. Film, I agree that IF we break out of this downtrend it’s a bullish signal (and I’ll be changing some delta weightings).

    Good call earlier on AAPL closing at 123. Off by .04, though. Try harder next time. ;)

  414. DM
    i agree too much of a soft landing so i covered in the close.
    Have a good night all!

  415. opt/AAPL- ??? u really LIKE that close- me too

  416. Take care buddy!

  417. “Everything is not a daytrade!” THAT’S where I’ve gone wrong!

  418. Kids, kids, we need to remember perspective when analyzing the markets. I was reminded of this today. Thank you Mark! When you’re doing your analysis, look at 1yr, 2yr, 3yr, intraday, and 3-5day charts with moving averages. Analyze each one and you can see what’s going on. I would pay less attention to triangles and more attention to trends and support/resistance levels.

  419. Crox,

    Broke their cycle, six down days in a row until today’s monster move of .22. Like the creation and on the 7th day he rested.

  420. Film, given the current crop of Bozos in the Senate and the House, I hardly feel that we need more of them !

    Plus, add in the cost of salaries, staff, travel, benefits, office space, etc. etc. it is a gargantuan waste of additional money.

    It could solve our need for alternative energy, as that many more useless gas bags could provide power for a medium sized state or two.

  421. Opt, welcome back … you should have told Cramer, well, something.

  422. Parch. We triple tested the August 06 lows Friday, Monday, and Tuesday. Now we have a big move off the bottom. EVERYTHING is unconfirmed, but risk reward on AAPL is very good right now. They could pull a GOOG and gap down 5% on no news and I would be very sad again, but you pick your battles as a trader and I am ready to strap on a helmet and hit some buy orders.

    Don’t ask me about delta neutral, covering rules and such, I have nothing to offer you guys in that. I just do what I do. Maybe it will get me an island next to yours, maybe not.

  423. Cramer … he did give the buy buy buy again to FWLT the other day, right before the earnings miss; its $15 lower now.

  424. Film-I don’t follow AAPL so much :) . That’s your baby! I was more gearing towards an overall direction in the markets.

  425. this is a fascinating conference and they’re broadcasting part of it live via internet. it should be a treat. cost of the conference is something like $6 or $10K, and recently a single ticket sold on ebay for about $35K. here’s the link and the bulk of the email:

    Quick note to the TED Community at large:

    There’s a huge sense of anticipation in Monterey and Aspen as TED2008 opens today. With 50 main speakers and another 50 shorter talks and performances, there’s a real feast in store. For those of you who can’t be here, here’s how you can enjoy TED from afar.

    First and foremost, we are opening up one complete session of TED free to the world, streamed live over the web. It’s the dramatic session tomorrow evening when three remarkable individuals each unveil their TED Prize wish. (“One wish to change the world. No restrictions. Think big. Be creative.”)

    I invite you to join a global audience as Dave Eggers, Neil Turok and Karen Armstrong share their inspiring visions, followed by the uplifting music of Vusi Mahlasela.

    You can see the live video feed here on Thursday, starting at 5.15pm US Pacific Time and lasting a couple of hours. You’ll probably need a broadband connection to see the video properly. There’s a button below the video to select a full-screen view.

    We’ve been working with the three prize winners for the past few months and we’re truly excited about what we think they’re about to reveal.

  426. cap, and all you politico’s
    william f. buckley died today

  427. Cap, oh yeah, and they cannot leave Washington while legislature is in session. And all elections publicly funded. And the pay wouldn’t be as good, but we would give them all an apartment in the same building. And Reps and Dems on every floor. Shared bathrooms. Open door hours. RAs. They would love it. We could call it the University of Do Nothings. No mascot though. They don’t do anything.

    AAPL hits my 123.40 target in AH. That counts. I am taking it.

  428. Jhok,
    I tried too to place the order on my platform and it did place it. Sounds like a glitch and worth a call to your broker.

  429. AAPL keeps going up AH

  430. Interesting close right on 1380 S&P.

    Remember we have a month-end on Friday, which is usually mark up time, could explain a lot this week.

  431. alright folks!

    that was a great day- except MCD- whatever, u deserve it MCD.

    ben did awesome, yet the bar is low for him and he still has to hold back his tears thru tomorrow- u think they got him speaking coaches- or a new friend?

    AAPL, finally shaking off some of the funk- although, it’ll take more than this to get really naked w/ u- besides, let’s just take it slow as u seem to have a lot of baggage and i’ve been hurt b4, LOLOLOL

    and C w/ a 3% move. anyone want to guess what the upside is on this name in 12month time frame? anton, u can guess the downside (but don’t say zero, let’s b reasonable).

    anyway- peace up!

    im OUT!

  432. Interesting times in the market. Oil over 100. The USD acting like it’s the Peso. All this doom and gloom about baby boomers draining retirement funds. Foreclosures rising. Stagflation concerns. Yet, the builders have turned up, the credit reporting agencies are turning, beaten down banks are turning, luxury merchandisers like Zales, Nordstrom, Winnebago, Ralph Lauren turning up, rates for drybulk carriers rising, infrastructure stocks turning up. No idea where this is headed, but it’ll be fun getting there.

  433. If Apple breaks 125, I think it’ll be interesting.

    BBD – Good call on RIG, I missed my chance in getting it at 135 on the 22nd…Very stupid of me… Give me some black gold when you’re thinking it’s time again. Long or short, I’ll pay attention.

  434. WFB … that’s too bad.

    I am not a follower, but he is a conservative icon. The folks over at National Review are sure to be in mourning.

  435. Film, doesn’t holding hearings over whether this ballplayer or that took steriods count as doing something ?

    It must b/c I saw it on TV.

  436. someone must own AAPL AH ….

  437. Windy-

    The TED conference is very, very cool. My boss turned me on to that website a little while back. I strongly recommend it to everyone.

  438. DM-

    AAPL is over 125 AH, don’t know why

  439. Beth – Could all that stuff be the imfamous ‘Wall of Worry’?

  440. Must be something ‘Bullish’ on AAPL AH? Anyone?

  441. SAN FRANCISCO (Reuters) – Apple Inc (AAPL.O: Quote, Profile, Research) said on Wednesday that it will give details next week of how outside programmers can create software for its iPhone, a move aimed at spurring demand for the multifunction device.

  442. AAPL-Over $126 now. Loving it!

  443. Just stopped by and what to my wondering eyes should appear, but $126 and a trendline to its rear.

    Ok, Cap. I will own AAPL AH? Hell Yeah! Don’t know what the reason behind the move is, but I don’t really care. Hell, hell, hell yeah. Hope it sticks.

  444. Good thing I switched to long AAPL once it broke 121 hard

  445. AAPL up AH prob b/c of this, alright out CU kids:

    Feb. 27 (Bloomberg) — Apple Inc. says the number of iPhones
    that have been unlocked to work on unauthorized wireless networks
    is a sign of “great demand” worldwide for the Web-surfing
    mobile phone.
    “I look at it with a little bit of a smile because it means
    there’s great demand,” Timothy Cook, Apple’s chief operating
    officer, said today at a technology conference in Las Vegas. The
    number of unlocked iPhones gives the company “really good
    confidence” that it will meet its forecast to sell 10 million
    iPhones this year, he said.

  446. Anyone make anything of the high volume on AAPL 175 / 180 April put today? about 2x open interest.

  447. FIlm, I am with you, do we really care? We are just on our way to $400 LOL. Anyway, the more I trade the more I am convinced that we barely need anything more than charts. Do we really get an edge by analyzing etc.? Look at Goog and the move on Monday, that was an ugly candle and came BEFORE the news on Tuesday.

  448. Again, is a log of an Apple COO comments at a Goldman conference happenning now.

  449. AAPL – Tomorrow will be an interesting day for it. If it goes up, while the market goes down, then might be a good signal??

    maybe QUALCOMM hype @ 5,

    or this?

    or any of these:

  450. you nailed it JR.. That’s exaclty it…. I forgot about that entirely. euh.

  451. I have to write shit down.. I’ll start a list now.
    #1 Goldman confrence.
    #2 Spell checker

  452. Thanks JR. The faithful shall be delivered from the hell of Gates. Oh damn, I am too clever sometimes.

  453. That’s from yesterday’s Fast Money recap:

    “Google (GOOG – Cramer’s Take – Stockpickr) fell today on news that clicks on its site, a source of revenue for the company, were flat or down. Macke predicted that the next CEO will reduce headcount. He added that Apple (AAPL – Cramer’s Take – Stockpickr) hasn’t been working. He advocated avoiding the two stocks.”

    And today he is saying that AAPL is going to $130 in a couple days.

  454. Maybe a couple of hours at this rate. Ok, out for real. And FINALLY in a good mood at the end of the day. Tell your family you love them. It’s easy when you have a big up day and it is 75 degrees outside.

    And listen to Great music. And pay them if you do.

  455. Opt – What I find really funny is the phrase “the next Google CEO”--I didn’t know we were making predictions about the year 2030.

  456. JR, thank you for the link. These guys really know what they are doing.

  457. Just got back and looked at AAPL. I’m sure glad you guys talked me off of my AAPL covers!! THANKS!!

  458. Wow, just listened to the COO. Could not be more bullish. I don’t even think I’ll bother to sell some on tomorrow’s initial excitement. My strategy now is going to be to buy all the dips until we cross back below 5MA.
    I know I have been saying this since $117, but opportunities like this don’t happen that often. There is absolutely no reason why this stock is down from $200. The goal now is to not sell too early. Hopefully market will cooperate, but if it does not then it will just be more buying opportunities.
    VERY bullish here, in case you have not noticed.

  459. talk on yhoo of Munster reit buy / 250

    who knows / looks good

    but will it hold in the am ?

    I agree w/ Opt here.

  460. AAPL/GS conf- frickin’ awesome- good show!

    excellent links JR/opt- thanks.

    if we get any good news from another part of the market tonight/tomorrow(hopefully bank/housing/economy related), then AAPL will have free range to the upside- at least for 1 day, but i think this guy has some pent up upside. it has been completely written off since 140ish…i dont know- whatever.

    good stuff AAPL fan peoples- film, excellent timing- i need to get used to that.

  461. AAPL / Wowee! I didn’t take the covers off until 119 (having COMPLETELY missed out on taking out my caller yesterday morning), but this works for me! I guess that I should have moved off of neutral…

  462. hillary/cramer- not doing too bad- haven’t seen the whole thing.

  463. sakiko/AAPL- don’t beat urself up for improving ur position. i feel the same way, but fear gripped me while it was in the teens- i say it all the time: buy fear.

    anyway- u don’t need me to tell u that stuff, but i had the same criticism of my own AAPL position.

    either way, we’re better positioned if AAPL makes a real move and settles higher- of course the opposite is true.

    on the side, this can ignite some confidence in the general markets.

  464. xian/AAPL – see, but I was actually apathetic (having already given up on fear). I had an alert at 115, but looked at the next few bucks, which it seemed reasonable to go to, and went on doing something else. Keep in mind that I’ve been chipping away at the basis for the last few weeks, and since I’m now down below 112, if figured that I’d give it a rest. The profit was there for the taking, but rather than whisk it off the table, my guy got to keep most of what he paid me.

  465. Not intending to throw cold water, but that summary of the Goldman AAPL presentation didn’t tell me anything new or that I didn’t already know.

    If anything, it would make longs feel better about AAPL, and reinforcing that the stock is way oversold.

  466. interview w/ lucky luciano’s grandson- talks about kennedy assasination and organized crime

  467. cap/AAPL- ur right, nothing new. but this is good b/c there is official response/spin to the bear cases (unlocked phones, economic sensitivity)

    there was a lack of input from the source- this is confirmation of sorts on the bull cases.

    anyway- this may very well get sold tomorrow.

  468. Opt – 117 is your bottom call.
    Film – 117 is your bottom call… too?

    This is for your nuts boys. Directional bets. I love it. You’re playing my game now.

  469. Cap, I recommend that you listen to the link I posted. Like Xian said, what’s important is not that nothing new was announced. No one was expecting this. It is that all the reasons for the drop from $200 did not exist.
    There are also a lot of facts that are very bullish in the discussion, especially about potential for growth, strategy for the Iphone in other markets, impact of the economy on the company etc.
    So yes, sure, it could get sold tomorrow. Anyway, it does not matter how good news on a stock can be, there is always a chance that it could get sold. But taking this approach I think is the wrong way to invest. Sometimes we need to not double guess, but follow momentum. This is how you make big money, not by trying to figure-out if a move is exaggerated, if it will be sold into etc.
    To me, it is as good as it gets here. Extremely bullish comments from the COO of a company whose stock has been killed from $200 to $120 for no reason. Yes, there will be a bunch of traders trying to fade the opening tomorrow, to catch a point or two, mostly retail. Believe me, this is not where the money is being made.
    Just my $0.02.

  470. DM, I don’t make bottom calls. I have no idea what can happen. There could be any kind of catastrophe and AAPL could be at $90. The only thing I said last week was that the value was compelling below $117. Making a bottom call is not going to make me money.
    In fact the bottom does not matter at all. I know a lot of people are probably thinking that it is too late now, that they “missed the bottom”. So they’ll just wait until they get a pullback, see if it gets sold tomorrow. And if it does, then they’ll wonder if it is a pullback, or maybe a reversal, and maybe it is going to “test the bottom” again, and maybe it can drop another $2-$3 so we can get a better price.
    This is guessing, this is not trading.

  471. SU announces stock split.

    Do stocks still rally on split news ?

  472. Don’t know if anyone saw this today:

    UPDATE 1-BofA cuts 4 Chinese solar companies
    Reuters – February 27, 2008 7:56 AM ET

    Related Quotes
    Symbol Last Chg
    SOLF Trade 12.18 -1.85
    YGE Trade 16.90 -2.17
    TSL Trade 31.01 -3.31
    JASO Trade 15.90 -0.09
    Real time quote.

    (Changes source, adds details)

    Feb 27 (Reuters) – Banc of America downgraded four Chinese solar energy companies and cut its price target on the stocks, saying the solar industry gross margins will continue to contract due to competition for silicon, decelerating demand in Spain and Germany, and higher supply of modules.

    The rating and price-target changes:

    Company Rating Price target Current Prior current Prior

    Solarfun Power

    Holdings (SOLF) Sell Neutral $12 $37

    Yingli Green Energy

    Holding Co Ltd (YGE) Neutral Buy $18 $40

    Trina Solar Ltd

    (TSL) Sell Buy $28 $44

    JA Solar Holding

    Co (JASO) Neutral Buy $17 $27 (Reporting by Swagata Gupta in Bangalore; Editing by Vinu Pilakkott)

  473. DM, I actually called for a low of 115.45 on Friday, but it didn’t get touched until Tuesday (low of 115.44) but I ended up buying in around 118.50 because I am a crappy trader of my own predictions. Either way, it was the bottoming process that I have really been pounding the table on the last few days, telegraphing the downs and the upside targets. Again, I wish I was disciplined to wait for all my levels and trade accordingly, but like Optrader said, that is not where we are going to make the big money. The big money is “going to be made by the sitting and waiting.” Swing trading the covers is just going to pass the time.

    DM, I play your game way too much. Problem is I get impatient when AAPL is in a consolidation / irrational sell-off.

    Cap, doesn’t matter what the news is, what matters is the reaction to it. True for every stock everywhere.

    Xian, I hope you can get used to it, for both our sakes. It does feel good to see the path through the trees after tripping, scraping, and itching my way across the ground for 2 months. The drawdowns in my system are still hard to deal with, but that is something to examine and figure out for 18 months from now when we are getting closer to the top.

  474. Points well taken Opt.

    What options might you recommend for tomorrow … short term and long term ?

  475. same question for you Film; what new positions might you suggest ?

  476. Cap, I bought the July $120′s on Friday and like those. I am sure you can find some in April as well but I would not play March at this point. For long-term I like the 2010 150′s and the 200′s.
    If you are worried about “being late”, what you can do is buy a small position and then add at each pullback until you have a full position.
    if you buy Leaps, April, or July, you can also sell some March against them if the stock gets crazy and rallies fast. I have a feeling IV is going to jump on those tomorrow. Just make sure you keep a positive delta by adapting your ratios, at least until the trend changes.

  477. Cap, about what options to play, I think this could be a question for Phil. He is much better than any of us at analyzing value, premiums etc.

  478. Opt … Thank you.

    Also, I am not worried about missing anything. I have been both nibbling and trading in / out.

    Have a little bit of stock. Have some July 120 and 130 calls. Have some covers on for March … 135s and 140s.

    But looking to build up the position.

    Also, not being so expert in delta’s and all option lingo; can you explain how to “keep a positive delta by adapting your ratios, at least until the trend changes” ?


  479. Yes, good question for you Phil, if you see this. (new AAPL plays).

  480. Either Jan’10 120 calls to be able to sell covers against for LT or April ATM calls for a swing trade.

    In my IRA accounts, I put them in Jan-09 120′s since there is no tax advantage. But, I don’t roll my LT options on a run up as it is my hope that I can take the trading gains in the ST and the big move in LT gains.

    I don’t have any exotic plays, I will leave that to Phil, but I would really advise against butterflys or anything that is predicated on AAPL staying in a range. I think you buy Apr/July/Oct/Jan and then sell the front month when you think the upswing needs a pause, but be quick to take them back off on new highs.

    I think you can count on a touch of 125 tomorrow as that is the 5 week trendline, but I am not going to expect a closing of the gap. Anything the market can do to fool people into shorting it will be rewarded with smacks across the face.

    I am going to be pretty much all directional until 136-138, and then will be looking to cover if the DJIA/SPX/COMP are hitting resistance at the same time. But, if AAPL gets to its resistance (38% retracement line) before the indexes, then I may only half cover and be quick to sell those and get whipped out on a move to 150. Oh wait, my bad.

    $138 is the 76% retracement. We have to get all the way to $150 to get to the 38% retracement. And as Phil pointed out earlier, if AAPL gets to 150 next week, it could avoid/blunt a death cross. This would also roughly coincide with the iPhone SDK event. If people start seeing an actual/viable iphone corporate strategy, we could get some silly moves.

    But, most silly moves will require the broad market to continue to move up in a steep, but steady manner. That is my hope. Settle into an uptrend channel like all the other corrections of the last 2 years.

    I must thank Phil and PSW for teaching me the folly of OTM calls. This would be the point in the past where I would load up on Jan-10 200 or 250 calls. And wait and wait. Would still make money if it hit my targets, but would be unable to cover and sell premiums for a year. So, let’s see if I can surf this 5th wave like a North Shore native, with any luck we will get a nice long rolling break, where big money rotates out and the shore is clearly visible.

    Now I am just ranting. See you all in the morning. Will be happy to wake up tomorrow. Hope I am happy when the GDP report effect kicks in.

  481. Cap, you can find definition of delta anywhere, it’s how much your option moves for a $1 move in the underlying. Calls have positive deltas, Puts have negative deltas. When you have a calendar you subtract the delta of the short call from the delta of the long call.
    You don’t have to do it as your platform will give you the delta for the whole position. For example if the delta of everything you own (or have sold) related to AAPL is equal to $2,000, then every time AAPL moves up $1, you’ll make $2,000. Every time it goes down $1, you’ll lose $2,000.
    By “adapting your ratios” (selling more or less calls), you change the delta of your position to a degree of risk that you feel comfortable with. You also control if your delta is positive or negative.
    Hope this makes sense.

  482. Hey guys,
    I am still very new to trading calendar spreads and I feel like I am having trouble conceptually. I’ve gone through the new member section and K1 a few times and it’s still not clicking.
    What I am having trouble with is how to handle my front end short calls when my stock goes up, assuming I am fully covered. I always wind up feeling like this is a zero sum game – even if I roll my short call up and out, especially with some the of momentum stocks. I am ok when my stock goes down and my caller loses out, but when my stock goes up and my caller gains I get confused.
    I will give u the examples using my positions, but really I am more interested in the thought process in how I should have handled this rather than solutions in fixing my problem. Basically I don’t always want to come for help when I get stuck. I want to be able to recognize and solve this problem on my own next time.
    First position is AIG. Bought 10 of the Aug 45 and sold 10 of the March 45 when AIG was trading around 45.5. I am basically about even now on the position and AIG appears to be going up every day. What should I have done with the cover? Should I have sold half beforehand when I was down 20%? Should I have gone naked at some point? Were there triggers that u guys would look for to handle when to uncover? Or should I have just left the cover alone as Phil tells us that we sometimes micromanage our callers too much? Ok now pretend that AIG closes at around 52 on expiration day. I can roll to the april 45 and continue this zero sum game or I can take the hit and roll to the april 50. With my luck, if I roll to the 50, AIG will probably go down with my calls losing more than the callers gain. Therefore I worry about losing some downside protection with the 50s. (Hence again more insight on what triggers should I use to adjust my callers and roll down would be appreciated.)
    My other example is with AAPL. I have the 10 calls of 09 Jan 130s and sold the march 130s. I rolled my short call to the march 120s yesterday and of course AAPL just shot up today before I could manage the short position. So I am currently fully covered. Again, what should I have done? Where there triggers I should have put in to either do a half cover or go naked? Since I have the 120s, I worry that my caller will gain more than me now. With all the AAPL bulls around here, I also worry that AAPL will never come back down and I am tempted to just go naked at any cost now. (Obviously doesn’t make sense. But neither will being short the AAPL 120s if AAPL is on the train to 150 now.) Really, I think I may add more AAPL calls tomorrow (I have a tendency to buy high :) ) and make a half cover situation for myself.
    Well thanks everyone for listening.

  483. vbat
    Did you see K1 and rdfinder conversation in todays’ comments ?
    Same concern and same position (AIG)

  484. You AAPL guys be careful. I hope you make boatloads of money in the next weeks, but this market has a way of punishing enthusiasm.

  485. thanks stephane,
    I did see the conversation and that’s partly what triggered my comment. Basically I’m less interested in how to handle the AIG position and more interested in the concept and how ppl handle short calls that go against you (when to partial cover, uncover, wait and roll).

  486. Thanks Opt; I understand; now I have to see how to incorporate into my option trading.

  487. Eric, enthusiasm does not mean that we don’t have stops :) You are right, anything can happen and no one knows. All we can do is trade. If we are wrong, then we will just take the loss and move on.

  488. oh but I know Opt

  489. Wow, it looks like the platinum crew is pumping the silver contract now.

  490. Opt – C’mon have some fun man. I don’t expect you to be right all the time, and you’re right that we should all have stops…

    But put your nuts on the table and lets play some games. You’re French, you should be enjoying this.

    AAPL – 1 month from now, Up or Down? I don’t want tops or bottoms anymore. I want her naked. I want the full Monty. Just tell me where’s she going Opt?..HIGHER…Or…LOWER? Is she French, or she Canadian?

    Film – Trading like a pro! Just gotta execute that way. No worries I’ll be even later to the trade…. Later to the trade? Is English even that flexible? Why does it sound wrong. Whatever.

  491. DM, you won’t get me at that game :) I don’t know where she is going, and I don’t care. I’ll just follow her and when she stops I’ll stop too.
    Seriously I could tell you it will be back to $150 in a month, but what’s the point? Does it guarantee that I will make money from it? How confident can I be? How much money am I willing to bet?
    I don’t want to be a smart ass, but honestly I have no idea where it will be in a month, neither do you, and I don’t even want to spend my energy trying to guess. If I want to bet/gamble I can go to the casino. Being right about where it will be in a month won’t make me money in the long run.
    Do I want to be right or do I want to make money?
    I have a new goal in 2008: not have a losing week. I’d rather bet and focus on this. And I don’t think I need to catch bottoms and guess targets to achieve this. In fact I am really bad at it.

  492. vbat – Did you see Phil’s comment at 2:22? However, it sounds like you’re spending way too much time managing the paper loss on the short. Your long is obviously gaining as well, so you’re not losing *much*.

    It helps to “know your stock”, and its daily movement/range. When you have a lot of time left, like a month, you can’t get freaked out by the caller gaining on you. For me, I start paying closer attention when the $extrinsic value I SOLD gets smaller than the $intrinsic value that the contract gains. If I’ve chosen the strikes correctly, this might happen a couple of times a week. But remember, it is this strike that has the largest $extrinsic value (“premium”)!

    I’ll continue to ride it out until most of the premium is burned, and look at rolling, similar to the CCJ position adjustment depicted at 4:00 today, if I feel that my outcome is going to be disadvantaged if I don’t roll. As k1 stated, it’s not that often we get a benefit, as the silly thing usually comes right back down(ish) again in four to ten days (so we have to evaluate how much time we have to the expiration of the short).

    Also, although Optrader isn’t a believer in pinning, don’t discount the nefarious tendency of very rich people who wrote all those contracts wanting to let as many of their callers/putters expire worthless, and position the stock right there.

    When you give the market two or more chances to “do it right”, there shouldn’t be “a zero sum” game by the end.

    Obviously, rolling down is all about premium capture vs. margin requirement.

  493. DM, my fellow Canadian,

    LOL – is there anything you won’t say – nm – I know.

    Did you listen to what Apple’s COO said. He makes you a believer – he is clearly not spewing BS. I will admit that I’m already a believer and have been for some time – own 300 shares – have 6 MAR calls that I’m suddenly very happy about and I have a few leaps in my retirement account (RSP). My son in university has a MacBook Pro and he loves it – so do his friends. It appears that the majority of university students, in the US and Canada, want a Mac. They are our future. Need I say more?

    We should have a beer sometime – you’re just down the road – lol.


  494. DM,

    Don’t have to predict. Why not buy both Calls and Puts and profit if AAPL goes to $150 or $80 or both – Strangle

  495. network- i just got the dvd from blockbuster by mail

    nikkei- wasnt listening to AAPL COO- down 200ish

    phil/QIDs- i’ve begun keeping some QIDs at all times as my delta neutralizer and sell against them when i want more upside exposure, they’re really nice to trade in/out of considering u r always looking for a trade in them as well and they make nice overnight blankets as they have a lot of ooomph so i can use them gingerly (ie not a lot $$ risked for the delta cover they provide)…any thoughts on that?

    i know: if it works, then it works- but just thinking there might b some danger/aspect of them i don’t c (only been trading them 2 months now- i like them more than QQQQ puts)

  496. VBAT,
    I am in *almost* the same exact position that your in with AIG. I also find one of the hardest things to grasp is what to do when a caller moves against you. Here are a couple of things that I’ve seen done over the last few months to help the situation (Phil can correct me here as I am relatively new to options trading as well):

    -My AIG position is slightly different than yours in that I only sold a 3/4 cover. The remaining uncovered long positions have profited nicely during this runup and have more or less covered any losses I’ve incurred in the short position. In the past I have always sold full covers out of the gate, but I don’t think I’ll be doing that very often anymore. Having 2-3 uncovered long positions makes a big difference when your shorts move against you. If you have 10 long positions you bought for $6 and sell 8 short for $1.50, your really aren’t giving up a bunch in downside protection (instead of having $1.50 downside, you have $1.20).

    -Keep in mind that if your long position is the Aug 45, and the stock is currently sitting at 52, you can probably roll your long position to the Aug. 50 for a credit to you, and then use that cash to roll your caller up and out in strike as well.

    -In some instances, you may be able to roll your long position to twice your current position (instead of having 10 Aug 45′s, you might be able to get 20 Aug 50′s for a small debit). You can then roll your in the money caller to 2X an out of the money position.

    -No matter what you choose to do, be very mindful of the premium you pay to buy back that short position. I have made many mistakes buying back in the money callers that have 50%+ premium, but I was in panic mode because they were in the money. I now calculate the premium on every position I have at least once a day (before the market opens) and before I make any options purchase or sale. If there is a ton of premium on my short position, I generally will let that premium decay before making a move (might not work so well for PUT positions, but I have not yet been assigned on an ITM call position, so it has worked fine there).

    I certainly look forward to Phil’s answer to your question. I don’t know how he finds some of these “deals” he does. It takes me several hours a night deciding what to do on the few positions I own, yet he manages to answer folks during the day with some pretty unique (I never would have thought to do that) solutions.

  497. nice itunes podcast- quite bearish, but USD bull longer term- interesting & compelling logic and historical review of previous recessions- he specifically identified subprime bubble in JAN04

    FEB 27- Gary Shilling, president of A. Gary Shilling &
    Co., spoke yesterday with Bloomberg’s Tom Keene from Springfield, New Jersey,
    about a report today showing U.S. consumer confidence fell to the lowest level
    in five years, the outlook for spending and the economy.

  498. Opt – She stops, you stop eh? I never thought about being so considerate before.

    It’s all groovy player trader. You’re right it doesn’t matter, but all these attainable goal settings doesn’t get you to the moon. Profitable every week, or every trade?

    Stu – I’m just screwing around. People that are politically correct are boring. Watching *yawn* Bernanke is like jaw exercise for people with TMJ. Atleast Do’ush is fun to watch. He has that element that makes people, people.

    rD2.0 – Long live the Long and Short. I like the strat, very easy, very mechanical, defined risk… But I prefer the Jedi way in the market.

  499. callers- i’m new at this and what i learned very quickly is what sakiko said: i must know my stock and have expectations on it’s movement based on past experience.

    more sakiko- if they r ahead on me and i have 2-3 weeks b4 expiry, then i just wait for a better opportunity to adjust- if at all (i think JPM said: the market will fluctuate)

    also, i’m at least JAN09 on the long side-except QIDs- so i’m not seeking too much premium to stay on track- this may b different for other peoples. this lets me sell OTM which is 100% premium and has a higher probablility of expiring OTM.

    also, selling into rallies- its hard to do that all the time b/c i want to b well covered all the time, so i must sell something and it might not be on the rally i’d prefer- but scaling into the covers can make this easier.

    broad protection- keeping some QIDs (or whatever) can buy me the time i need to hold out for a rally/bounce that gives me richer OTM callers to sell.

    further- this market is gruesome- totally frustrating the best out there, so if i can make it through this, i can expect it to b easier when the market softens its character.

  500. DM/jedi way- i paper trade w/ my helmet’s visor blast shield down.

  501. For every “sky is falling” economist like MER’s David Rosenberg, there is always an alternative view … “notes on the latests ‘worst crisis ever’”

  502. DM – I certainly don’t promote political correctness – quite the contrary. I very much understand that you’re just screwing around. And I completely agree about Bernake – he belongs on the comedy channel. BTW, hope you’re enjoying your reading week. Mac’s was last week. My son is back at it this week.

    I wonder why Cramer flew to LA when he didn’t interview Clinton in person?


  503. Stu – lol okay good. Yah reading week is fun, just more time to do stocks hah. Working on some breakthrough stuff with a buddy.. Lots of probability analysis. What does your son take in school? I forgot, was it engineering?

    Xian – hah! I’m curious, which side are you, star trek or star wars?


  504. DM – Brandon is in second year Computer Engineering – he talks to me about stuff that is way over my head – meaning he’s a good investment – so far – lol. Probability analysis – sounds like great fun – :-) , eh.


  505. Callers – not sure if this will help but I remember there was a post by Phil a while back that helped me better understand that your caller is your friend. Ill try to reproduce the essence below.

    Firstly, I also like someone mentioned above, do not usually go into a full cover straight on as that 1/2 or 1/4 etc. of naked calls can really help you on a run up.

    However, say your caller does beat you, take for example Apple (I just use Apple because it is what Phil used and I know the ATM call is generally 5 or so)

    Say tomorrow you buy 1 Jan 09 130 (dont know the price) and sell a Mar 130 for 5.

    I used to think that I was betting (or wanting) Apple would finish at 135 (so I would lose nothing on the short side and gain $5 of intrinsic value on the long side). But I realized that is actually NOT what I care about. Rather say the stock went to $140, I would be having a blast. First of all, realize the caller GAVE ME $5 in the beginning of the month, and as long as I did not necessarily use this money (which is why Phil advocates cash at hand…I think?) to go wild and be 100% invested, I can just give him back his $5 and then sell Apr 140s for $5 and use those proceeds to pay back the Mar 130 caller. Now my long is up $10 in IV and essentially I have lost nothing on the short side.

    Now say Apple goes up to $150 the next month, then obviously I can sell the May 150s for $5 and I am out $5 from my own pocket BUT I just gained $10 in intrinsic value on my long calls for essentially the cost of $5.

    Of course as the stock goes up further and further, you would be losing downside protection and could get destroyed on a fall of the stock but of course I think Phil mentions somewhere that he looks at how much profit he has to protect and decides whether to actaully sell the next call or maybe roll up the long call to take some of the profits off the table.

    If even one month the stock does not fly up $10 you are getting some money back on the short side.

    Also, of course if the stock went up $20 in one month, you would be out around $10 but your calls just gained $20 in IV and that is why I prefer a 3/4 cover or 1/2 cover. And if the stock flies up TOO much you could just wait until you can roll your short calls to 2x the next month or a higher bracket so that you can sell all premium. Of course you could then move your longs to 2x whatever which may take some money out of your pocket but you would have to compare the risk/reward to how much extra premium you are now selling.

    In the short term though, it is better not to think too much about large movements unless your premium deteriorates too much at which point, if you are really stuck in the hole, you should just roll both sides up.

    I hope that helps a bit although I know it was probably extremely poorly written. Once again, I’m extremely new to this game and so might be totally wrong about everything I just said. On stock with lower premiums than something like Apple (and thus SHOULD be less volatile but who knows…) I tend to prefer 3/4 covers but if I was fully covered, I am still a little confused as to how to get enough premium back the next month. In the 1-2 bracket movements though, I tend to be OK.

    Phil, k1 etc feel free to correct anything I just said.

  506. definitely for anton-

    mega bear market if u plot DOW/GOLD-

    Prechter Says Dow-Gold Ratio Shows U.S. in Bear Market: Video February 27 (Bloomberg) — Robert Prechter, chief executive officer of Elliot Wave International Inc., talks with Bloomberg’s Pimm Fox from Atlanta about his theory that U.S. stocks are in a bear market, the impact of credit costs on equities and implications of the decline in shares of bond insurers.

  507. thanks everyone,
    Sounds like I have some ideas to play with. 50% to 80% covers instead of complete covers would seem to help as would scaling in my covers.
    Maybe 80% covers with OTM calls? But I still fear losing too much downside protection. I will incorporate the different suggestions and see.

  508. callers – I’m new here and like VBAT also struggle with the thought process behind what happens when the caller gains on you (and really much of everything else about trading options) Thanks to all your thoughtful comments, it’s starting to make sense!

  509. joosj- that was pretty darn clear- either i’m super confused or i now understand that better.

  510. joosj – Really, babe… you need to tighten up on the examples if you intend to give clarity to a reader. Slow down.

  511. is a very worthwhile thing!

    AAPL flying as it turns out all the BS about IPhone sales slipping is the BS we thought it was. I will say this about them, one of the longest quarters I ever had trading was last spring, waiting for Apple to pull back because I missed the pop over $85 – I finally got my pullback when it went from $125 back to $117!

    Fast Money – that’s the beauty of TV, apparently you can be totally wrong, then say the exact opposite thing the next day and then show that as your pick of the week…

    SU – that explains the run-up! Hopefully it will spur profit taking.

    BofA – Are those their new targets? Down 50%??? BAC has got to have the worst collection of analysts on the street but that is just amazing. Competition for silicone would mean a SOX rally, which I’m not seeing yet and decelerating demand in Spain and Germany with $100 oil just doesn’t seem that likely although I did hear Germany has adjusted their government alt energy incentives somewhat unfavorably.

    New Apple plays – I have to tell you how much I hate it when people ask me for plays $10 off the bottom! At $127 after hours we’ll have to see how the open looks but one thing you can do is sell the $125s or $130s into the initial excitement and then cover with Julys when things calm down, this is a good play if you have margins. Earnings are probably after the April expiration so you get a nice roll on March calls and with July options you get a nice big premium sale in May (assuming earnings are that contract) if you need it.

    AIG/Vbat (it is best with real examples) – What you have to keep in mind is you sold your guy $1.50 (or whatever) in premium and he has now lost that. Your goal is to sell $2 in premium every month so nothing really matters but getting back on track to sell premium. Your caller has no premium at $7.50 and your calls are $10.20 with little premium so you are in great shape.

    If you feel confident that AIG will not revisit $45 then you can roll yourself up to 2x the Aug $50s at $6.90 (+ $3.60 per current contract) and roll your caller up to 2x the March $50s (- .50 per current contract) to reestablish your original relationship. You add $2.50 per original contract in premium to your caller and there’s another $4.50 per original contract in the April $50s (which you could roll to now if money is tight) which will more than justify the roll.

    You can also simply just add some Aug $50s now, knowing that your March caller has you more than adequately covered. We have to have a longer discussion about stopping out callers but the gist of it is that when a set of callers goes up 20% on you, you should take 1/4 off the table as the value of the remainder adequately protects you. This is true for the next 20% and the next and the next. If you don’t want to take callers out then you can always pre-roll yourself in 25% incriments using the same logic – If your callers gain 25% then they are obviously able to protect 25% more longs so you can add to your postion with impunity.

    If you don’t want to mess around with adding more money in you can just roll you and your caller up $5 for a net cost of .70. Again this throws your caller into $1.25 of premium so it’s a worthwhile move on your part. Even if you just roll him to the Apr $45s, you pick up another $1 in premium against your $3 in premium so just doing that 3 times makes you a winner and boy, are you well covered!

    I always do the 2x rolls but my positions rarely start out as more than 2% of my portfolio. As long as you never let a position become 20% of your portfolio (10% preferably) then it’s OK to move it up to a 2X as long as you are remaining 50% covered with at least 3 months between you.

    AAPL – Also, this mania you guys have with full covers needs to stop! In that case you should have moved your $2 worth of $130 coverage to $4 worth of $120 coverage which would have been about 2/3 covered and would have made a roll out easier. Also, rolling your caller into a superior position to your own calls without rolling down to match is suicide, a lesson you will hopefully remember after tomorrow.

    Remind me tomorrow but it’s the same thing except since you have the ’09 $130s, which should be about $24, you can roll to 2x the July $130s for about even and then we can see about rolling your callers at least up to the $125s or maybe the $130s if we are lucky. If possible, it would be nice to leave a few open but not too many as we aren’t fully out of the woods yet.

    QIDs – I tend not to play them overnight because of the reverse oomph when you’re wrong but balance is balance as long as you use it proportionately. Mainly I just trade them for fun as they are easier to keep track of than silly Google calls for intraday fun.