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Just Another Manic Monday

Sorry, I got distracted today by this $200 oil nonsense

I've had my say on oil and the banking industry this weekend (and don't miss my pick on AUO, in member comments!) so now it's time to get to work.  To say we have a lot going on this week is a MAJOR understatement with a very full economic calendar, highlighted by a 2-day Fed meeting that hopefully will end in a pause or at most a quarter-point rate cut in order to give the dollar a chance to find a true bottom to stage a rally off of.

According to Briefing.com, here's what we have to look forward to this week:

Date ET Release For Actual Briefing.com Consensus Prior
Apr 29 10:00 Consumer Confidence Apr   62.0 62.0 64.5
Apr 30 08:15 ADP Employment Apr     -55K 8K
Apr 30 08:30 GDP-Adv. Q1   0.7% 0.4% 0.6%
Apr 30 08:30 Chain Deflator-Adv. Q1   3.0% 3.0% 2.4%
Apr 30 08:30 Employment Cost Index Q1   0.8% 0.8% 0.8%
Apr 30 09:45 Chicago PMI Apr   49.0 48.5 48.2
Apr 30 10:30 Crude Inventories 04/26   NA NA 2421K
Apr 30 14:15 FOMC Policy Statement          
May 01 00:00 Auto Sales Apr   5.1M NA 4.9M
May 01 00:00 Truck Sales Apr   6.3M NA 6.2M
May 01 08:30 Initial Claims 04/26   NA NA 342K
May 01 08:30 Personal Income Mar   0.4% 0.4% 0.5%
May 01 08:30 Personal Spending Mar   0.3% 0.2% 0.1%
May 01 08:30 PCE Core Inflation Mar   0.2% 0.1% 0.1%
May 01 10:00 Construction Spending Mar   -1.0% -0.5% -0.3%
May 01 10:00 ISM Index Apr   49.0 48.0 48.6
May 02 08:30 Average Workweek Apr   33.7 33.7 33.8
May 02 08:30 Hourly Earnings Apr   0.3% 0.3% 0.3%
May 02 08:30 Nonfarm Payrolls Apr   -70K -80K -80K
May 02 08:30 Unemployment Rate Apr   5.2% 5.2% 5.1%
May 02 10:00 Factory Orders Mar   NA 0.4% -1.3%

This is why we were fairly bearish going into the weekend.  $118 oil, Consumer Confidence (or lack thereof) on Tuesday followed by high unemployment a low GDP on Wednesday could be a recipe for disaster and the Fed is going to look like they have no control over the situation if we don't see some moderation from the previous levels.  With GDP estimates ranging from 0.4% to 0.7%, it's anyone's guess where this will go mid-week.

The hits just keep on coming on Thursday with Auto Sales and Personal Spending AND Construction Spending AND the ISM each capable of tanking the markets all by themselves.  Unemployment is always big on Friday and Factory Orders will be awful if they don't show big improvements over last month.  Feeling bullish yet?

Now let's talk about earnings.  Another 500 companies report this week and we're going to be watching:

  • Monday: BEAV (a Boeing Buddy ™) already beat, HUM had a beat, RSH in-line, TSN had a beat and are a buy if you think their +$600M feed cost won't last, VZ (got 'em) was in-line and WWY had such a good beat that Warren Buffett is buying them!  Later today we get NLY, AXS, BLDP, CHINA, CVD, EEP, FLS, MTH, PBI, STM, TZOO and V (got 'em hedged).
  • Tuesday: ADM, AVP (need 'em), BYD, BP (taking the June $65 puts on this boost), BNI, CBS, GLW (need 'em), FDP, LEA, MSO, MA (spread would be nice),  MHP, MHS, ODP, PCZ, RDN, RDSA, SIRI (got 'em), SPG, TSCM (tempting short), TUES, X (we're short), US and VLO, who will clue us in to XOM's refinery earnings. 

Wow, that's just 2 days and we haven't gotten to Tuesday night!  Hopefully I'll remember to do the rest later

If oil can't break $120 on this big push we may actually have a good week but that economic data is scary so we'll continue to let our callers do most of the work for us (and take most of the risk!).  It's possible for the data to surprise up and the Fed to say they're done and for the market to gain 1,000 points but I think it's most likely we are at about the right level here, somewhere between 12,750 and 13,300.

Asian markets were mixed this morning with the Shanghai falling victim to 2.5% of profit taking.  Japan finally got their inflation mojo back, with a 1.2% rate over the past 12 months, their highest rate in 10 years.  This is not good news when you have a strong currency that may drop 10% very quickly…

Europe is also bursting with inflation but the markets there are in a good mood this morning with banks coming on strong but there are signs of dollar strength that are very encouraging for exporters.  Barron's reported on the dollar's comeback this weekend (see Phil's Favorites) and that is the number one thing to keep our eye on this week.

Our man Kirkorian is picking up 13% of F, a good sign as long as you don't think he's lost his marbles.  CAL says no to mergers but is really talking to British Airways (shhh) and it's going to be one heck of an interesting week.

Let's be careful out there!

 


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  1. Good morning!


  2. Morning Phil
    Great write-ups on oil and banking!


  3. Citi – Own stock (cost around $27.5) and currently no covers. Reccomendations on what call to sell or should I wait till Wed after the Fed announcement to have Citi go higher and thus get more for the call?


  4. OIL- Looking forward to reading the Banking and Oil comments.  Watched the Draft and Hoops all weekend.

    Crude Oil-$CL: Target Price and Levels to Watch

    In late February we put out a note on the prospect of Light Sweet making a run for the $118-$120 area within the course of a few months. As we are at that objective it is time for a review of potential price action. First, it is important to note that there is a pattern symmetry at play here that may reflect seasonality and expiration cycles and provide a clue to future price. Light Sweet double-bottomed in February and then broke out to fresh highs (the congestion area from November to that date looks like a bullish flag on the weekly chart). A "failure" of that new uptrend produced a second double-bottom at the start of April from which the current advance began. It appears from pattern measure that we may be close to seeing a fulfillment of the pattern on both the daily and weekly charts. This may lead to another apparent pattern "failure" which over time will look more like price consolidation at a new high range. We may still have drift upward before that takes place and it would not be atypical to have a strong price move just as these patterns reach maturity. Price levels to watch include resistance at the upper limit of the bullish price channel at $123.63. Support is at the lower limit of the channel at $115.06. A break below that level on a sustained basis would be the first warning that consolidation is underway. The next downside objective would be the 10-week moving average which is the long-term close-fit uptrend line proxy ($109.50).


  5. Thanks Furnace!

    C/M2 – You don’t want to bee too greedy.  If you cover with 1/2 $25s just for safety, you can roll them to 2x the June $27.50s on the upswing so that’s 5% collected per share that doesn’t call you away until the stock gains another 4% so you get 3.3% downside protection now and a 9% upside between now and June.  Of couse I think not taking advantage of the leverage on the 2010 $25s at $5.62 is a terrible waste but I assume you have a reason for owning the stock and tying up $22 extra per share to get the same returns with more risk…

    LOL on SU’s run-up.  Gave me another nice round of $115 puts but too fast to mention…


  6. MSFT   LEAP premiums seem pretty cheap here, especially since you can sell the May 30s for .50.   Would you open a position here, and if so, which option Jan 09 27.5s, Jan 10 25s?


  7. Phil,

    Can you repeat what the spread is for AUO?


  8. G –Morning to all
    Phil – Thx for wknd writeups re portfolios & banking. I appreciate both of them.
    RE SNE & V, they are deep ITM. What you think about SNY ($45.63) May40C Roll 2x to Jun45? I have V (currently $75.5) with a May70 covered call. I need to hold the stock until Jul, so what is your opinion about Roll May70C -> Sep75C? Thx.


  9. GS hanging out on the all importat 200 day EMA.  needs to break thru (193.50ish).  But already breaking thru downtrend started in October


  10. Phil- I hate to refute your well reasoned article on oil but Erin B. on CNBC said the numbers show XOM isn’t gouging America. She couldn’t be wrong, could she? (Sarcasm font.)


  11. CROX 11+


  12. Phil,
    Hope you had a good weekend. I have the following trades which I need some help on.
    120 May 30 Put of NFLX @ .72 and 120 May 12 Put of WM @.62
    The trade is likely to go stale and I hoping that you help me out on roll strategy to salvage.
    Thanks as always.


  13. Phil – Is the AUO play only for the DTP or also for the $25kp?


  14. Schwab is screwed up this morning !!!!!!!!!!


  15. rebelat,
    what prob are you seeing? i have bpth ss.com and ss.pro open and things seem ok.


  16. CMG/CMGb   Chipotle is getting down to a level where it is starting to get interesting, but I hate to buy CMG when CMGb is a much better intrinsic value (only difference is the B shares have 8x more votes).   Options are much more extensive on CMG than CMGb, so do you make your trades in CMG or actually buy stock in CMGb if you like the long story?


  17. General Question: Jan 09 vs Jan 10 for the long option on calendar spreads, how do you chose which to use?


  18. Highlander, I have an order still pending for at least 30 min now.


  19. AUO is 30 $20 June $20s in the DTP for now.  We may roll to a spread if they pull back but no luck so far.

    SNE/Bronek – yes on that one, they seem safely on their way up.  V with earnings, I’d rather wait and adjust aftrer the fact as you still get $2 in premium but you could roll them even to the June $72.50s which you should be able to roll to 2x the $80s ib a big run. 

    XOM – ROFL CBTC.  You have to look at the staggering amount of salaries and dividends as well as the $40Bn stock buyback when people say they are "just" making $10Bn a quarter.  They hide behind that 10% net number like it means something and that is total BS and it drives me up the wall to see Congress give them a pass for this.  And it’s not just XOM, of course, look at the cross ownership of major shareholders of XOM and major shareholders of the less-scrutinized service companies, who are XOM’s biggest cost and are making 10-fold profit increases running their business at "good, honest rates."  Just like with real-estate deals, there are so many complex layers to a transaction that a wealthy player can screw the government, the consumer, their partners and the construction company all at the same time and still make lunch at the club!  What a country…

    NFLX/Xybrown – Well the best help I can give you is to tell you to stop following stocks down and assuming they will go lower just because they sold off.  You took a very risky position and left yourself no outs.  Since you bought 120 of them I assume you have money (although much less than when you started) so perhaps you can roll yourself to the June $32.50 puts at $2.30 and sell the May $32.50 puts for $1.23, which gets you back about .20 per week (the difference between your decay and your callers) and gives you a little more time to be right.  I will warn you that if they break $34 though, you are in BIG trouble.

    WM/Xybrown – What’s with the 120?  Do you just plunk that straight down or is that a scale in?  Also a terrible idea for a put and I’d go to the July $12.50 puts at $1.42 and sell the current $12 puts for .45 and roll my putter to the $13 puts, now $1.05 if the stock breaks over $12.75.

    AUO – I can’t spare money in the $25KP as TASR is still killing us.  Until that is resolved, I need to keep our cash.  We did jump 9% this morning though so that’s a good thing – hopefully it will stick.

    CMG – I just don’t like the stores so I stay away from the stock.  There is NO WAY I would tie up $100 on those guys but the 2010 $90s are very cheap at $19.50 ($8 in premium) as you can sell the $100s at $5.10 each ($3.30 in premium) and roll those already (meaning whenever you need to) to the June $105s even for another $5 in premium so you’re looking at possibly covering 100% of your 18 month premium in 2 months while getting 25% downside protection.  XXX

    ’09/’10s – Whichever one seem like a better deal plus I tend to stick to ’09 longer if I think the stock is going up soon (better upside delta).  By July expiration I am only in 2010s and 2011s because you never know when you’re going to have a day that will take 6 months to recover from!


  20. Phil:

    anything to UNCOVER or COVER this am ?


  21. Google going ballistic!


  22. ISRG – Waking up this am.


  23. Yes RMM – Your broker called and advises as much churning as possible.  Also, the market maker says he will be very happy to take your spreads as you react to every hour’s move of your stocks….  We closed 42 positions all week last week – if the market doesn’t do anything violent, we may do less this week.  Ideally we should be acting on information but all I ever get from you many of you guys is technical BS with no actual homework being done on the positions you hold.  Of course if you don’t understand the position, the fundamentals, the news or the sector you are going to panic every time the little squiggly line goes up or down 2% but don’t expect me to drop all my research and start dancing with you, that’s how people go broke…

    ISRG, case in point.  Our plan is to sell $310 calls and the stock has been up and down over $10 3 of the 5 days we’ve owned it, you can’t react to everything and 8 times out of 10, you are better off not reacting at all, especially in an uncertain market. 

    I am very tempted to DD on my XOM $90 puts but now that they are under $1 I’m going to hope for a bigger spike so I can roll to the $95 puts.  XOM should never go up more ($1.20) than oil (.64) in a day.  If they can’t take out $94 I’ll probably just DD the $90 puts and get 1/2 back out once I’m even.   XXX


  24. ISRG:

    I still need to sell may calls and collect premium against my jan240 LEAP,
    with the drop on 4/18, wonder what strike I should pick ?


  25. Good morning everyone. I am a new member here watching some of the moves and learning a lot! I missed the GOOG play :( but jumped on the AAPL fly and loving it! I played the original one and after one roll I am sitting at:
    -4 May 170
    2 Jun 165
    2 July 175
    Should I leave it alone or make any adjustment?


  26. Phil, will you looking to cover CROX at around this price?


  27. CMG followup (& general Q from a newbie learning the PSW method)
    Phil:   There is NO WAY I would tie up $100 on those guys but the 2010 $90s are very cheap at $19.50 ($8 in premium)
    Why don’t you go deeper ITM on the LEAPs?  In this case, the 80s only have about $$ in premium.   My guess is that the deeper ITM you the less upside leverage you have, but I thought I’d ask to be sure.


  28. MA & V – Thoughts?


  29. Phil:

    I did not react , it was just a question,

    I sold however my may45 of SNE with 119 % profit,


  30. AUO June 20′s were filled at $1.10


  31. Phil – XOM if it stays <$94, you will DD to were? Thx


  32. Phil – XOM if it stays <$94, you will DD to where?


  33. Phil,
    Citi – Thanks  for your quick answer. I do heed to ‘not be greedy’, but the May $25 has almost no premium. How about selling the May 27.5 call for about $0.70 and rolling to June after Wed?
    As for owning the stock instead of the LEAPs as though I agree in principle with what I see you advise, I have not been too successful in executing the strategy – I make some $s on the short side of selling calls, but being unable to trade during most trading days (and making do with setting-up limit-orders) I seem to loose out on the long/leap side. I am doing ok trying to do this with a slower moving and higher priced stock like TM (where I just own leaps and sell calls against) but thought why not just buy the darn stock at $26s instead of an option at $6!


  34. OIL- Didn’t this same joker say that if the $ went up 10% oil would be at $40.  Also I thought you mentioned that a fair price of oil is around $60?  Well wasn’t it just 16 months ago when  a DEM congress took over that  where is was sitting.


  35. ephmen85
    the deeper ITM your options are the bigger the delta, so they have more leverage, not less to stock moves (both up and down).


  36. V & MA – Thoughts?


  37. Phil, I am also in TASR with 10 Sept 7.5 at 1.6.
    They announced a buy back program today saying the current value does not reflect the growth prospect of company. There are 15.8 M shares short as of now and they plan to buy back 12.5 M. Wouldn’t that create a short squeeze?
    Should I DD with Sept 7.5 sitting at 1.4?


  38. Phil,
    MDT leaps – do you plan to cover at this level?  Earnings to come after expiration.


  39. ABX, CCJ, NEM, FCX all moving up today.  Doesn’t look like a strong dollar.


  40. Phil,
    XLF – I rolled my Jan 09 23′s (c/b 3.50, sold for 5.05) to Jan 2010 23′s this morning for 1.15 (seemed pretty cheap to me…I can sell .10 premium a month to cover that roll). Would you add more here or wait until this week passes? I’m fully covered right now with the May 25′s @ 1.50 now 2.08. If I add more I probably won’t cover those…


  41. Phil – ISRG – I thought that I would take a moment to bring it to your attention that it was above any price during the past week.  You did say that you were going to look at it this week when you expected it to recover.  I have a lower 2010 strike price then you and thought it would be ok to mention it and see if selling any cover here was appropriate  Sorry! 

    I have also covered my AAPL 2010 110′s with 175′s this am.  

    ARTC – am enjoying a great ride on the June 35′s on the short squeeze that I mentioned last week, selling 1/2 position.


  42. AAPL!


  43. MA & V – No Thoughts?

    Woow people ARE busy trading!


  44. Phil – I have several AAPL positions, which thanks to you, Optrader and others , are all
    doing well.  One is a spread which I probably should have rolled by now but haven’t.
    Am long Jul 50 calls and short May 50 calls entered at good prices, but  too deep in the money
    now to carry much premium.
    Suggestions?   Thanks.


  45. Phil,

    I have rolled my NDAQ Jun 42.5 to NDAQ Jan09 45 last week.
    I also have the May 42.5 at 1.8 these are now 0.3 80% ahead!

    Should I buy back the caller and wait for an upturn to sell higher? or is this week not good for much NDAQ action?

    Thanks


  46. dilbert, I think best case for V is to hold gains from last two days. I would cover or be net short myself.  But, that’s me.


  47. phil, thoughts on adding POT here?


  48. ok..Gotta go early today to work will see u all in coupla hours

    Here is to "THUMBS Up* V & MA jumping at least 40-50%


  49. SU PUTs
    Phil,
    I have MAY115P basis 7.20 now 3.50

    I can DD the Mays for ND 3.50 or roll to the Junes for ND of 2.50 or just wait till inventory as is.
    Thanks


  50. Welcome Sumit!  We’re happy enough with Apple as is at the moment, still lots of premium in the caller and we are holding $170 nicely although we have the June $170s and July $165s so you will be in a bit of trouble if they take off compared to where we are.  I’d add 1 more July $175 if I were you, it’s certainly well protected with 4/5 $7 callers.

    CROX – NEVER COVER!  No, actually I should but the May $10s are $1.50 so I’m not feeling much pressure as we can always grab a quick cover but we’d hate ourselves if we miss a nice comeback.

    CMG/Eph – look at the math from the above example, I don’t need to go deeper, I’m only paying 2 of 18 projected months in premiums.  Also, the deeper in the money you go the more you have to lose to the downside so you quickly get to the point of diminishing returns.  Since I anticipate collecting $5×18 months or $90 (best case) against each $20 call I buy, it means every extra dollar I put into the same number of contracts cost me $4.50 I could be collecting by buying more contracts or, better yet, diversifying my portfolio somewhat.

    MA/V – should be good but I’d play V as a proxy for MA since they’ll get their pop on V’s earnings but with a chance to recover if it goes the wrong way on you.  I was actually thinking of a very complicated play where I took MA puts against V calls but it’s too much of a pain in the ass.  Notice MA is determined to hold $240 for the day, that’s a nice spread to play but I’m not rushing into it.

    NDAQ moving up.

    SUN going down, good leading indicator.  FSLR weak again. 

    Sorry RMM, just in a bad mood today over this oil BS, I’m so pissed (but at least CNBC shut up with the $200, hopefully because I embarrassed them!).

    XOM – over $94 I’ll be looking to roll to $95 puts and, if no pullback tomorrow, I’ll move to June and sell May $95 puts to start recovering my losses.

    C/M2 – Selling the May $27.50s caps your gains but also works.  If we get a BTE GDP and a Fed pause with nice noises about a mild recession, C could hit $30 by expirations.

    BBD – Dem Congress has better things to do than get into veto fight with Bush over energy.  The damage done by this administration is so catastrophic it may take 2 8-year administrations to clean up.  By then you guys can run Chelsea to keep the legacy going…
    2/26/08 Congress warned: Bush likely to veto oil taxes
    12/03/07 White House Signals That It Might Veto Energy Bill
    4/30/06 Bush challenges hundreds of laws
    "When Congress passed a massive energy package in August, for example, it strengthened whistle-blower protections for employees at the Department of Energy and the Nuclear Regulatory Commission. The provision was included because lawmakers feared that Bush appointees were intimidating nuclear specialists so they would not testify about safety issues related to a planned nuclear-waste repository at Yucca Mountain in Nevada — a facility the administration supported, but both Republicans and Democrats from Nevada opposed. When Bush signed the energy bill, he issued a signing statement declaring that the executive branch could ignore the whistle-blower protections."

    TASR – I think most of the shorts got out at $7.50, there were about 18M shares bought at that level.  Now we have to wait patiently for buyers to get their nerve back.  If you are in Sept $7.60s at $1.6 you are better waiting to see which way it breaks as a DD at $1.40 only takes you down a dime (unless you are scaling in, then that’s just right for a 2nd round).

    MDT – I think they are way underpriced here and so, apparently does somebody else today…  Of course we expect a pullback at $50 but I think we’ll do much better.  Earnings are not until the 20th so the $50 calls are overpriced so if they break $50.50 I think we’ll roll to the June $50s and sell the May $50s (maybe 1/2) to cover, taking about 1/2 our position off the table but leaving us with a good path to more gains. XXX

    Dollar – well if you are a foreign investor and you sat through the last 4 Fed meetings, what would you be expecting on Wednesday.  You have to ignore everything ahead of the Fed, the Fed is it this week. 

    XLF/JB – I’m standing pat ahead of the Fed.  I think any market move one way or the other will correct back to the center until then.

    ISRG – thanks David but I’m giving them a good month to get going.  The callers have such big premiums that I don’t feel pressured to sell one every month and they are so far down I’m worried that selling a $290 caller for $10.75 would be a huge mistake.  At $310, I will be happy to sell 1/2 the $300s for $20 and then see where it goes.


  51. GOOG – phil, with goog @ 551, what would you do with equal contracts: long jan450 short may480?


  52. LOL, not Chelsea of course (that’s the Dem stategy for 2024) I mean whichever Bush twin is sober enough to run for office by then.


  53. Phil. Got an alert from your last post, the whole post. Lol.


  54. teso
    POT S1 for today is 197.84. But on a ten day, all the averages are trending down
    JB


  55. SWN – Southwestern Energy, FYI – popped 19% on friday, now 43.79, PE 56, recent upgrade of 12month target to 40 (from 38).


  56. Alex,
    NDAQ – I would take out the caller and go naked (which I already am).


  57. Feels like AAPL May puts are getting bid up for a quick drop…  Seems like it is all I will say.


  58. GRMN making a good move….


  59. Apple to the Core: Why Steve Jobs is buying PA Semiconductor.
    Apple this week bought a fabless chip company called PA Semiconductor and pundits far and wide are trying to explain the deal with broadly varying ideas, some of which are close but none seem to really understand what the deal is about. In the short term this acquisition means precisely nothing to Apple users. In the long term it could be quite significant, however, and gives a number of tantalizing hints about Apple’s hardware strategy.


  60. POT and MOS are so nice .  Bought back my callers for a 50% profit.


  61. Singapore – pot/mos/50% – sweet!


  62. rebelat,
    sorry to take so long to respond, but schawab (as do all brokers) have only three minutes ‘to review’ a market order or to place a limit order on the floor. if you lost money after three minutes, schwab owes you. call schwab and make a claim if applicable.


  63. trade idea: wait for GRMN to melt up to around 50, then short it while going long either RIMM or AAPL to eliminate market movements


  64. Apple-AAPL: Support and Resistance Level to Watch

    The the upper limit of the bullish price channel is at $174.97 (resistance), the midpoint of the price channel is at $171.87 (resistance) while the lower limit of the price channel is at $164.18 (support). On a break of the lower limit the 10-day moving average, proxy for the near-term uptrend line, is at $161.86. Prices may move with roughly equal probability within the limits of the price channel.


  65. Phil – What do you think of IMB?


  66. Thanks Phil!
    I also tried GRMN and EOG plays. I chickened out of GRMN roller coaster and sold the whole position for a $250 loss. They are going up again. Is it a good time to start a naked/covered/partial covered position?

    I got burned badly by EOG. Bought 5 May 130 puts at 6.5 – now they are 2.6. I screwed up and couldn’t keep up with cover and roll (that’s when I was learning the strategy). Now I am holding them naked front month :( Any advise here or should I take the loss and chalk it up to experience?


  67. EOG- Earnings May 2nd.  FYI


  68. future political actors- i got my eyes on the gates children. hopefully they’ll stay sober and responsible through their adolescence and beyond


  69. ARCT – good call David and smart job locking in Apple profits.  With our leaps it is our job to sell calls, it should bother you A LOT to have uncovered leaps!

    AALP/Albo – I assume you mean $150s?  I’d put more money into the trade and roll myself to 2x the Oct $170s at $21.85 (costs you $15 per current contract) and roll the caller to 2X the $170s (costs you $10 per current contract) and then probably the June $175s for get that $10 back.  If you can’t swing that cashwise, I’d go straight to 2x the June $170s, which is an even roll and if you can’t spend that first $13 then all you can really do is take $9 to roll yourself up to the 165s and use that $9 to put the caller up to the $60s, which you can then roll to the June $170s which is some improvement over your current $4 spread.

    NDAQ/Alex – Oh I’d take out a caller for sure.  You should always take out a caller that’s up 80% with more than 2 weeks to go as they are going to sit at .10 to .20 no matter what happens so all they are doing is locking you up.

    POT – I just lightened up on mine and am really bearishly selling calls now.  If the dollar goes up commodities will collapse.

    SU Puts/Edro – that ship has sailed for May unless we get quite a good oil dip.  You may as well go Sept $115 puts at $9.10 and sell the $115 puts for $3.50 as it’s cheaper than a DD and buys you 4 months to sell $3.50 for, which is $14 so a good return for your next $2.10 net spent.  XXX  Isn’t rolling fun?

    GOOG/MCK – I’d run those up to 2x the $550s (costs you $12 per current) and roll the caller to 2x the June 550s (costs you $15 per currrent) and, of course, if you have the cash it is much, much better to first roll them to the current $550s to grab that premium but you could also jusr toll them up to 2x the $530s as an interim step which is better than nothing and adds $16 of premium (2x $9 vs 1x $2) that will expire in 3 weeks.  You can also, if you need cash, trade in some time by moving to the September calls, which are much cheaper and you can always roll back once you collect some premium as Septembers are protected by earnings.

    IMB – very dangerous of course.  They are too SoCal focused for my taste, notice my banking picks were either well-spread out or away from foreclosure central.

    GRMN/Sumit – I’d let it go.  If it comes back to $45, then you know for sure you want it but chasing it now after already taking a loss is probably not the best timing.  Earnings are Wednesday so it’s a real gamble to hang on.

    Oh good, CNBC is tying in with HCBK on the $1M challenge, that will be nice exposure.

    EOG/Sumit – The only question when you are behind is how far behind are you ($4) and how much are you willing to put in.  With that position I’d go to the July $130 puts for $6.95 (+4.30) and sell the May $135s for $4.50 if you have the margin or the $130s for $2.62 if you don’t.  Either position can be rolled ddown better than even to the June $130 puts for another $3 in premium which would leave you in the July $130 puts for your original $6.50 plus the $4.30 roll less the $4.50 in premium for the May $135s less another $3 (at least) premium in the June $130s = $3.30, which is the price of the June $125s so even if it flatlines, you should get even.  If not, rollin’ rollin’ rollin’…


  70. Phil,
    I just recieved an alert. COOL!!!


  71. You know what I hate?  You get an idea for a calendar trade, buy the LEAP first, get filled, the underlying moves up, you sell the short option, you’re feeling good and then you realized that you put the LEAP in order backwards and actually shorted both the LEAP and the near month.   Then you gotta reverse the LEAP at a loss….. I hate when that happens.
    Anyone else ever put in trades backwards?


  72. Thanks Phil.  Yeah 150′s.


  73. phil, WFR off a CLIFF!


  74. Bronek-Keeping your IPO shares?  I am I guess.  Although tempting here before #’s


  75. PHIL:

    thought you might come up with your suggestion on USO puts ?
    but I assume you wait buntil we see what the FED will do on Wednesday,
    I hope they do NOT lower further..


  76. Ephmen85,
    I once bought an in the money butterfly 2 hours before EOD on expiration day thinking I was buying the next month out. I remember thinking at the time "why the heck won’t this fill" and, to make matters worse, I upped my limit order (so I basically screwed up twice). It didn’t hurt too bad, but just enough for me to doublecheck the months I’m buying.


  77. BBD – Yes. I am locked for 3mths under the penalty of not to be able to participate in next IPO for 6mths. It seems a low risk hold. I have asked to roll my May70C -> Jun72.5 @ even (Phil’s suggestion, so it must be a right move).


  78. emotrader,
    sounds like some form of financial dyslexia!


  79. bbd, you talking about IPI?  If they can’t get a pop on their first earnings report, short the underwriters.


  80. sort of like my own vertical posting name dyslexia. meant to respond to ephmen85


  81. Film- No I was talking about V.  I didn’t ask or really didn’t even know about IPI until the night before.  LOL  Still played it but then read the PE was like 200 so I took my win and have not played since.


  82. AAPL-Long but since everybody loves it
    Long-time iPod manufacturer and current iPhone builder Foxconn Electronics has been selected by Apple to assemble the company’s upcoming 3G iPhone handset, with volume shipments expected to begin this June, says a new report out of the Far East.
    Citing sources at component suppliers as well as foreign institutional investors, the Chinese-language Commercial Times reports that the Taipei-based manufacturer was recently instructed by Apple to begin procuring component materials for the next-generation touch-screen handsets for an initial test build no later than the end of May.
    Shipments of the 3G iPhone are expected to top three million units in June with the model likely to ship a total of 24-25 million units throughout its life-cycle, the paper added.
    Since introducing its first-generation iPhone last June, Apple has managed to sell just shy of 6 million units with help from exclusive wireless partners in the US, UK, Germany, France, Austria and Ireland. However, a flurry of recent reports have suggested the Cupertino-based company will forgo exclusive carrier contracts as it expands distribution of the handsets to additional European nations and portions of Asia around the same time it unveils its 3G offering.
    Specifically, Italian newspaper Repubblica reported last week that Apple had inked a deal with Telecom Italia Mobile (TIM) to begin selling a 3G iPhone through the carriers retail shops. The report added, however, that the exclusivity to TIM would last only a few months and that other Italian carriers would immediately be free to offer the handset, which would ship unlocked, to their own customers.
    That report added to similar claims emerging out of Australia and was soon followed by an almost identical report out of Belgium. In the case of the latter, regional publication Astel.be. cited sources in saying that three Belgian carriers — Proximus, Mobistar and BASE — were each creating special data packages for the 3G iPhone, and that Mobistar would likely have a several month exclusive to market the handset through its retail shops like Italy’s TIM.
    Sales of iPhones have thus far been described as lackluster in Europe, as customers largely chose to forgo the existing model in favor of waiting for a version capable of taking advantage of third-generation wireless networks, which are most prevalent in the region.
    As such, the iPhone currently stands as a relatively minor contributor to Apple’s top line, generating only 2-3 percent of the company’s revenue. However, analysts on Wall Street believe that sales of the device one day become as large as the the company’s current Mac business, fueling approximately $15 – $20 billion in annualized revenue, as the iPhone capitalizes on a global handset market ten times the size of the worldwide PC market.


  83. VMW-Nice move off of earnings.


  84. yeah, I hear that iPhone thing is going to be bigger than the hula hoop.


  85. In popularity, not it size.


  86. retailers moving


  87. WFR at 5% rule for the day.  I had sold 1/2 May $70s so I’m not overly concerned, don’t see any reason for it but I’m not jumping in to buy either although I will take this opportunity to roll my Jan $85s down to the $70s for $5 and put stops on the $70 callers here.  Also, I’d have to XXX the Jan $60s here for $16 since you can sell the June $65s for $5.90 (but I’ll wait and sell them for $4 if it keeps going down.


  88. Phil,

    NDAQ question. I bought back at 0.25.
    But now would you Sell the May 37.5 for 1.45. it´s all premium!!!
    Or would you wait for an upturn?

    Thanks


  89. PHIL,
    I have 1 – AAPL Jul 120/May 145 that I would like to roll out and up at a low cost while maintaining a hedged bullish outlook.  I am in an IRA that cannot sell short lower strikes than owned.  I was looking to roll the Jul 120 to an Oct 140 and Oct 160 and selling a May 165.  Or Rolling the Jul 120 to 2 – Oct 160’s and rolling the May 145 to 160 and selling a 165.
    Both cost around $600.  Do you see better options for me?  Thanks.


  90. ok back on, how’s everyone doing?  Had 3.2mm shares this morning. fun fun.  AAPL testing 173 now beautiful.

    SPX ABOVE 1400 but not "strong"… let’s see if it can hold or if we come back to "normal" 1392-1398 range


  91. AAPL- took some off
    MOS- bought some


  92. Interesting to see equity markets up AND bond market AND gold UP…


  93. USO puts – you want to short into a crazy run.  We got nothing today but that might be my fault for pointing out CNBC’s BS in the main post, I should have left my mouth shut and let it run a bit and then gone short…
    NDAQ – I’d wait as long as the Nasaq itself holds up.  Good market = good volume = NDAQ profits, pretty simple way to look at that particular stock.  You can also get the daily volume numbers, another way to check the temperature of that stock (you can use the Qs for a proxy if it’s easier).

    This is nice drift with some nice things taking off:
    FIG up 5% today.
    CMI with a big move, up 64% already.
    AXP moving well.
    VZ consolidating to break $38
    DRYS still going strong
    PEP coming back (LTP callers gone)
    POT 20% trailing stop ($1.50) on callers in LTP
    BIDUfly holding even, $10 over target.

    $10KP:
    AAPL – we’ll have to suck it up if they keep going up, gotta wait for Fed to decide.
    Rest are fine for now

    $25KP:
    ADBE turning up, won’t be happy if they can’t break $37.75 and hold it. 
    HOV – why do we only have 5?  Let’s get 5 more at .65 but no higher.
    MDT – roll as stated above!!!
    FIG – Rolling May $12.50 caller to 2x June $15s (-.20).  Rolling June $12.50s to Sept $15s (+.85).

    DTP:
    GRMN – Taking the $1.90, wiill buy something else tomorrow if someone reminds me.
    HOV – DD at .65
    MDT – roll as above.
    Now all the oil puts we sold are turning around to bite us but we’ll be happy to get even I think.  Weds we might make changes.


  94. Phil – One thing you’d expect from these oil prices, that Iraq can pay for it’s own private defense contractors to fight off the jijadists.  They say Iraq still isn’t producing oil at pre-war levels, but they must be pulling in way more money than in the pre-Sadaam days, considering oil costs  4-5 times what it did back then.


  95. MOS: S3 pivot at 119.16


  96. AAPL/Scott – I’d go to 2x the Oct $165s about even (you can go 1x if you don’t want to up risk) and roll the $145 caller to 2x the Jun $165s (+$2 to you) as it moves your caller from .35 to $15 in premium, which is as much as you are likely to get for a month of Apple and takes you from a 2 month advantage on your caller to a 2 month advantage.  It would be worth your while to spend $2.70 more to go to the $160s just in case Apple runs from here and, of course, if you had more money, it’s a damn shame not to make your caller make a pit stop at the $170s so you could pick up an extra $8 ($4 x 2) in premium before you roll him to June.

    Iraq/Troy – Actually, because Bush isn’t their President, they have a budget surplus of over $20Bn (final figures not in yet) because they underestimated oil revenues by $25Bn.  This is 1/3 of the entire GDP of the country.  Here’s a sickening article on the subject, including the fact that they are charging our military $3.23 for gas ($153M a month).


  97. Scott,
    What broker do you use?


  98. MOS testing 10 day lows made last Thursday…


  99. Cramer: What Buffett’s Wrigley Move Means for Banks
    Jim Cramer says Warren Buffett’s participation in the Mars’ purchase may signal poor things about the financials.

    Time to buy banks.


  100. CAL Jun $17.50s, now $2.10 are a fun way to play a drop in oil. CAL can zoom to $21 if oil breaks below $110.  XXX


  101. UBS – I am reading the UBS shareholder report, and the risk measures that they used for the subprime securities that they had were almost non-existent, in my opinion. According to the report, "There were no RFL (risk factor loss) measures that specifically addressed certain factors relevant to Subprime exposure, such as delinquency rates or residential price developments". Are you kidding me? They weren’t factoring in price developments? Ridiculous. 
    http://bigpicture.typepad.com/comments/files/080418ShareholderReport.pdf


  102. WM picking up nicely after giving us a cheap entry!

    Lots of financials perking up now, lots of builders too.  Alf, you are right about the Banks, if Cramer says sell, we say buy!


  103. GOOG – roll of jan450/may480 - great comprehensive suggestion Phil, thank you! I especially like the interim roll to may550 so I can sell again in June. I’m done at: long jan450 -> 2x jan550 for debit  13.5, and may480 -> 2x may550 debit 36. Figure that gets me about 11/week on the caller by going May versus 8/week going go June.


  104. BA-  I do not have or own but i heard this weekend that if anyone wanted to sell the rights for the new 737′s they could sell them for $4m per plane.  FYI


  105. phil – what is your plan for SBUX in the LTP, earnings (or lack of) are on Apr 30th


  106. Phi,
    That is pretty eye-opening.  Man I can’t wait for Bush to go back to go back to baseball or cattle ranching or whatever it is he does at his ranch in Texas.


  107. Phil – I’ve been holding off rolling my callers up until after the Fed reports since we seem to have made some really good gains the past week(s).  My take is that the chances of a fall are greater than a bump up.  Is that in line with your thoughts?


  108. Phil- Fig Sep 15 calls are $1.75 not $.85. How many to buy for 25K


  109. NDAQ – going for 5%?  =)


  110. Memc Electronic Mat-WFR: Shares defended, reiterate Buy@PIPR :


  111. SBUX – can it get worse?  They already gave a shocking warning so one would hope earnings will give some relief.  This is effectively dead money in the LTP and I don’t have the will to chase them until they show me something.

    AAPL going up and up!

    LOL SU negative, oil having trouble moving into the close (keeping my fingers crossed but how many times have we seen this movie? OXY, HES, SU breaking down nicely, let’s hope the trend sticks for a change.  XLE hanging tough and easy to jump on as a mo play if the majors start failing.  Good time for it as OIH is weaker than XLE at the moment.  XXX


  112. NDAQ  I just bought the 2010 30s for 13.40, but I’m waiting until after earnings on May 8th to sell calls.


  113. err…I mean sell my callers….gotta get with the lingo!


  114. double top in xom, cvx. said this on friday, my theory still holds. i’ve got stops just above the high mark. good risk/reward


  115. SBXU   I was about to ask about them.    I have no position at the moment, but 2010 10s only have $1.40 in time premium and can’t be that bad a buy.


  116. Phil:
    AAPL at 70% RSI, but approaching 175$,
    have
    6 oct155
    4 july165
    these are all covered with 6 may175 and 2 may170.
    here I need to buy back the may170 which leaves cover 6/10.

    Also have:
    4 jan09, 140,
    will sell may175 to collect rent,
    wonder whether I should take some of the gain and roll up ??
    Nice issue to have .


  117. WFR – yeah that worked out great!

    Baseball doesn’t want Bush back!

    FIG – just an even roll on our 10 June $12.50s, we have a 10:5 spread, going to 10:10 with more time.  Meant $1.85 so that’s OK!

    SBUX – I like those 2010 $10s but I liked the $30s too!  8-(

    AAPL/RMM – A little soon to be buying back $170s I think, still $4 in premium.  If you want to change the ratio, buy more longs, you are well protected.  Or, better yet. spend the money to move your Julys back to October so you can sell more premium down the road.  Absolutely roll up the $140s, can only cost you money down there.   ’09 $140s are $36 with $3 in premium, Jan $$160s are $21 with $8 in premium so you get $15 back at a cost of $5 in premium but the good news is a $10 drop in Apple will only cost you $6 from there vs. $8 from the $140s and, if you look at it from a collections standpoint, you can take that $15 and buy 2/3 more calls and generate an addition $10 per month in premium sales so think about how silly it is to tie that money up in the $140s.


  118. Singapore/V – on your V play at earnings, are you still playing the calls? I exited my short puts at +27%, so thanks very much for the idea!


  119. XOM – If you came in at $1 earlier, not selling 1/2 for $1.35 with a .10 trailing stop on the rest is pure greed!


  120. billbigd – BA
    Come on…you didn’t sell your rights and upgrade to the 787?  Celts sucked on Saturday….


  121. SBUX  I made the trade:  Bought Jan 2010 10s/ Sold Jun 2008 17s -  Net: 6.80.   I better be able to make up 1.05 in time premium in 19 rolls!


  122. once again, bonds and equities being bought up at the same time… there truely IS NO REAL money in this market…


  123. Wow, I didn’t realize that there was an active secondary market just to get closer to the front of the line to buy planes from BA  --  that can’t be bad for BA’s margins…..


  124. So Phil..  from you 2:22 post.
    Would I be correct from you post that I should roll up my 3 Apple Jan 2010 $110 Calls to 5 Jan 2010 $160 calls?


  125. MA – here’s a nice spread:

    Buy 6 MA MAY 2008 230 Call (.MALEF) $15.69 $9,414.00
    Sell -9 MA MAY 2008 240 Call (.MALEU) $10.20 ($9,180.00)
    Buy 4 MA MAY 2008 260 Call (.MALEW) $4.00 $1,600.00

    You lose $1,834 below $233, make $4,166 at $240 and lose again at $255 (up to $1,834 at $260) but if it really breaks high you can make money again.  Since it’s pretty early in the month, we’ll assume we can roll our way out of trouble so I’m putting it in Complex Spreads.

    On the put side you can go:

    Buy 5 MA MAY 2008 250 Put (.MALQV) $18.90 $9,450.00
    Sell -10 MA MAY 2008 240 Put (.MALQU) $12.46 ($12,460.00)
    Buy 5 MA MAY 2008 230 Put (.MALQF) $7.90 $3,950.00

    Which is nice because it requires just $9.40 (loss at $250+ or -$230) with a $4,060 payout at $240.


  126. FRED- Southwest has alot of options on those 737′s. LOL  My point was that I thought US airlines might cancel the orders but even if they do BA is well taken care of.  LOL


  127. mck
    I am playing V for a pop at earnings. have jun 80 and sep 80 naked.  If they don’t get a pop i will start selling against them but I saw what MA did so with mosy of the finacial seem to have shaken out will take the chance for a few days of not covering.


  128. Mark,

    Yeah, it’s interesting to see bonds bought going right into a Fed meeting at which there is some chance of no cut.

    At the risk of sounding like a broken record, I really think you guys buying banks ought to be keeping an eye on things like the LIBOR-OIS spread, Fed TAF borrowings, the TAF rate, and so on. Libor-OIS is still very high today:
    http://tinyurl.com/53pwjs
    TAF borrowings up. TAF rate well above the Fed target.

    Those of you who know what’s going on, please explain to me why this is remotely bullish for banks.


  129. phil/AAPL- regarding last RMM comments, im seeing the prices and premiums very different (ie JAN09 160s at 34.00 w/ 20.00 in premium)

    not trying to b stickler or anything, i just want to c how u’ld handle the RMM postion as i’m looking to roll up as well.

    i got to throw in my props for the oil scam piece- very nice, as per usual.


  130. Rebelatl,
    I use optionshouse.


  131. Anybody know of a brokerage that lets you do spreads in a KEOUGH account?


  132. rebelatl
    Fidelity


  133. Just got an email from Apple announcing the new iMac. It is on their Website too. Get some sorta pop mebbe? :)

    The more powerful iMac. Now running at speeds up to 3.06GHz.
    Just when you thought iMac had everything, now there’s even more. More powerful Intel Core 2 Duo processors. And more memory standard. Combine this with Mac OS X Leopard and iLife ’08, and it’s more all-in-one than ever. iMac packs amazing performance into a stunningly slim space.

  134. Wolfensohn `Pessimistic’ as Financial Losses Rise

    April 28 (Bloomberg) — Former World Bank President James Wolfensohn said he’s “pessimistic” on the outlook for financial markets and predicted losses from the global credit turmoil may climb to $1 TRILLION
    “I’m more pessimistic than optimistic,” Wolfensohn, 74, said an interview today in London. “That doesn’t necessarily mean a crash, but it means we’re not through the woods yet. There are continued dangers.”
    U.S. Treasury Undersecretary Robert Steel forecast last week that tighter credit conditions “will take a while to work through.” Banks worldwide have reported more than $309 billion of writedowns and credit losses caused by the U.S. subprime collapse and the seizure in credit markets.



  135. SS – I like the sound of VIP for the V SEP 80C



  136. JAMES – you still long BNI’s?  CSX et al still strong, and YRCW holding "steady"


  137. Fredrang,

    Fidelity doesnt let you in a Keough account thats who i have now.


  138. Is anyone playing either the Powershares long (UUP) or short (UDN) U.S. dollar ETFs?


  139. Still long the BNI May 100 – up 30% so far.  I am being too greedy holding them for the earnings?  Time to sell 1/2?…or GO FOR IT!


  140. K1,
    Thanks, I must have missed her/his response before.  I am checking now with Optionshouse.


  141. MOS came off it’s 5 and 10 day lows made Thursday, now sitting below it’s R1 and sitting on it’s 20 dma of 124.50.  this looks like a transitional point… either looking to test 100 again or looking to go 140 again… LT macd is very high… needs to "take a breather" IMHO.


  142. SS – word is that the AXP report means to expect good things for V and MA.  You agree?


  143. mark- thanks for the BX stuff…awesome.


  144. Anybody know about Apple’s ichat?  Cramer talks about it but i havent seen anything on it.


  145. James
    You got me on VIP??   On V and MA,  I wouldn’t bet against them.  Haven’t read that report but everything else I read seems good.  Will be interesting though to see how they react to the fed announcement this week.


  146. That was $940 on the put spread, not $9.40!

    AAPL/WT – yes, there is no point in having $110 calls with $16 in premium since rolling 3 at $80 ($240) to 5 at $50 ($250) puts you from 3x$16 in premium ($48) to 5x$27 in premium ($135) but allows you to collect 2x$4×20 ($160) in additional premiums over time while getting 60% more benefit from gains in intrinsic value.  This is good for a stock you think will move much higher, if I thought Apple was like POT, for example, I’d stay more in the money to keep leverage on callers that I would sell aggressively low strikes on.  With AAPL, you can sell 3x June $170s for $21 ($12 in premium) and roll them to either 3x the June $175s, now $9.90 or, if Apple goes higher, then they can roll to 5x the $185s, now $5.85 putting you right back into having a huge position value over your callers at $25 in the money.  If they keep going up, you can roll to another 2x and you may find yourself selling 10 $5 premiums a month, collecting $50 against your original $180 perhaps 18 times.  This is how, with just a few good winners, the LTP can really start cranking out cash after a while!

    LIBOR – banks don’t want to lend to each other.  So what?  The ECB and the Fed are very happy to lend and we just had finanical earnings without any great indication that more is needed.  Of course EU banks don’t want to lend, they have +40% currency and if they lend out 100,000 Europs now to buy 140,000 dollars worth of stuff, they may get back 140,000 euros over time but then they can only buy $140,000 worth of stuff with it.  Inflation and a strong currency are not a good environment for banks.  This is why Buffett did the Wrigly deal, he has inflated dollars sitting around that he wants to put to work buying undervalued assets but US banks don’t pick and choose and until rating agencies figure out what things are worth, we’re not lending either.  This makes cash-rich corporations very valuable (see MSFT being the only bidder for YHOO). 

    AAPL/Xian – oops, I must have had the wrong strip up!  Sorry RMM but you get the idea I hope.  In that case the ’09 $140s are $46.23 with $13 in premium and you only get $17 back to move to the $160s at $33.50 with $20 in premium, which is not as good a roll so the move would be to go to the Sept $160s for $28, which only have $15 in premium and give you back $18 and it doesn’t really matter that you have 3 less months as you are selling the same front month either way and you can always roll back for $7 when you are ready (the Septembers have a better upside delta than the Jans so on the way up your rolls back will get better, not worse)


  147. James – earnings tomorrow morning right?  I can’t give recs, but if I was playing I’d sell half to be sure.  Really good play, but anything up that much before earnings can always come down no (or go no where like aapl and IV killed the options)? 

    Either way great play and hope you make out good brutha.


  148. ARTC – Crushing the shorts!


  149. Wolfensohn – I love 74 year-old former Presidents!  They are usually so on top of things! (end sarcasm font)  Meanwhile I’ve convinced the Carlyle Group, who just announced they will be putting money into bank stocks.  I find it very unlikley that banks have 200% more to write down than currently reported.  50%, absolutely, 100% maybe but no way 200%.  The only way you get to numbers like that is to start extrapolating collateral damage to extremes. 

    Powershares – which is the yen one?  That’s most likely to fall against the dollar I think.

    BNI/James – you risk going from up 30% to total wipeout so it depends on your comfort level.  Unless the stock gains at least $1.50 you will lose money and they are already up 33% from Jan.  I like them but not enought to risk earnings on, especially paying a $2.80 premium at the ATH.


  150. rebalatl
    Fidelity
    Well I’ve traded spreads in my Keough.  They made me complete an additional agreement level and I had to have a certain level of assets and trading experience.  They told me no at first.  It may be worth pursuing.


  151. xian – nw brutha!  That stuff’s all free.  I HIGHLY recommend going to the major IB’s out there and signing up for all the free research you can get (not b/c you have to trust it all, but so you can know what their saying).  He was my old CIO and a very smart guy who manages more than can be moved as nimbly as us, so he’s LT always.


  152. Wow. today went by fast for a dull one. 

    SUN really got killed today.  I’ll be surprised if they can’t hold $50 (now $48).


  153. Phil,

    the LIBOR doesn’t measure commercial-type loans for "stuff," but the rate charged for interbank lending (usually overnight) for banks to meet reserve requirements. If they are charging a lot, as they are, it’s either because there isn’t a lot of liquidity to lend, or because they perceive risk of default to be high (the loans are unsecured), or both. It’s not a "so what" issue — it’s an indicator of real stress in the banking sector if LIBOR is high. If you’ve been following what’s been going on with the BBA thing it’s very disturbing because it now looks like banks were mispricing the risk until today, basically (and now we see the real price, as the LIBOR falls into line with the Eurodollar contracts).

    It’s also not "so what" if the banks are paying the Fed over 80 bps above the Fed’s target rate for TAF acution swaps. Banks like to make money. I can’t imagine they are paying this because they want to. They need the liquidity, which they are hoarding rather than lending. And it’s not "so what" if the Fed has to keep expanding the size of the TAF auctions either (now $300 bn, up from $40 bn in December), while at the same time pouring money out of non-borrowed reserves at a breathtaking pace:
    http://tinyurl.com/4or3ou

    Maybe everything will be fine and you guys will be the first in at the bottom of the financials. But it’s crazy to ignore this, IMO.


  154. Fredrang,

    I ll check. Saves the hassle of moving the account.  How do you like their software?  Schwabs is alot easier.


  155. mark- DERRR!!! true, thanks anyway. i get MER stuff but hadnt considered looking at others- definitely need to keep up w/ the gossip. 

    still, i like the brevity of the BX stuff and have heard similar things about doll, so i’m keen to read his pieces.


  156. SS – VIP is the option symbol for the V SEP 80 calls
    Phil, Mark – okay, I sold 2/3 BNI (got another dime in the last 15 minutes) and letting the rest ride.  CSX jumped 6 points and it was near the high so BNI could do 10 points…..and Transports hitting highs supports the DOW Theory.


  157. Phil: SUN got killed today, but does any company suck more the WNR?  Holy Cow, at least the rest of the refiners have an occassional up day, but not WNR.


  158. with the VIX being low (ish) I am adding to a Long term spread — short june 130 DIA puts, long jan ’10 DIA 120 puts, for $5.00 or less. This is a very wide diagonal, but I see us chopping around for a while at these levels, or breaking up from here. Longer term, I think we have not seen the last of the bear, so I’m looking for ways to accumulate some LEAP puts on the cheap.


  159. Look at V into the close. That’s interesting. COF has had a stellar run….


  160. V taking a dive at the close


  161. wolfensohn- i’m not buying his story either, but thought it was wild enough to kick around…C has not given me any chances since they reported, so i’m praying for a bear raid on banks.


  162. Phil: FXY is long yen/dollar


  163. xian = LOL. 

    James – that’s a really well done trade man.  and yes it could spike tomorrow and you bank on the 100′s (in fact I hope you do).  But instead of betting the house on it you did the smart risk management thing and locked in some hefty profits.  Good for you, that was really well done.

    Agreed with your statement Friday and today (sorta what I was saying a few weeks ago with CSX)… market can’t go up unless transports going with it.  I know I posted it before but def watcing how TRAN index moves intraday with a 163 and 200 min ema on the 1 min tick.  Crazy.


  164. A good bank is STI, it does have some FL exposure, but its sitting on $2 billion of Coke stock at the original basis when it went public.  They have been selling some it.


  165. Phil – Please clarify. You have a rule to buy-back a caller if it drops 70% of the sell price, but sometimes (see your wknd C trades essay) you let them expire. Is this an exception to this rule or you just apply your “judgment”. Thx


  166. POT also killed today. (And its mate CF !)


  167. BNI – today’s trade volume almost matched the open interest.


  168. Greg-No they don’t as much as WNR, months ago I said they were getting smoked by a company called Flying J.  Fred made some comments also.


  169. DB: they weren’t exactly *killed*… CF bounced off breakout support friday and held above it, and POT, well… I ain’t buying puts


  170. LIBOR – I know that, that’s why I said banks don’t want to lend to each other, that’s all that rate means.  You’re also not taking into account the fact that these are short-term loans and the asset pricing issues means the Fed is substantially less paperwork intenstive than another bank – while banks are trying to wriggle out of portfolios, that may be worth 0.08% per month.  As you say, liquidity is key and next week is probably not soon enough for banks who need it.  BSC has scared everyone into hoarding cash lest they fall victim to the next run that is stirred up by hyenas.

    I’m not saying to ignore this, I think my comment was that it’s always darkest before the dawn and we’re just hoping to be the early bird that gets the worm but that’s the reason I started off with the example of rolling C down 33%, you have to be willing to do that before you put in your first dollar or this is a crazy bet to take.  We followed the same strategy for oil and we now have shocking amounts of puts in the DTP and STP but, that’s what happens when you roll and DD as the sector moves against you but imagine how great it will be if we turn out to be right with this much invested…

    WNR – are they still around?  They’ve been sucking for a year now.  VLO is the only refiner I’d invest in but I’d rather see them back at $30 (maybe after earnings?).  Everyone seems to forget XOM is the world’s largest refiner.  Unless they have magic cows that turn oil to gasoline as better spreads than anyone else, they are going to have a rough time explaining how they lapped GE in valuation by 130% in valuation gain since 2005 when GE has a forward p/e of 13 and XOM has a forward p/e of 10 (based on $100 oil).

    Selling DIA shorts ahead of the Fed is very ballsy Richard!

    FXY – thanks Steve, I’m going to take a whack at those i think.

    Buying back caller – well it depends on a lot of things like I won’t spend .15 to buy back a caller when my long call is just $1.50 or less unless I think it won’t expire.  So 10% or more of my long means I’m not keen to buy it back.  Also, if there’s absolutely nothing I want to roll it to or if its a 1/2 sell and even if it recovers I’m only going to roll it to 2x the next month anyway….


  171. Mark – BNI earnings is tomorrow BMO


  172. FXY! That’s what I used to hedge my vacation to Japan this past December.


  173. today was the lowest volume on a lot of index etfs since christmas


  174. *VISA SEES YRLY ADJUSTED OPER MARGIN LOW 40% RANGE        :
    *VISA SEES YRLY REVENUE UP 11%-15%                        :
    *VISA CASH, EQUIVALENTS, RESTRICTED CASH, S-T $8B AT MARCH
    Visa-V reports Q2 EPS 52c vs. consensus of 55c [MORE]
     *VISA 2Q EPS 39C, EPS EX-ITEMS 52C; ANALYST EST. 45C      :
    *VISA 2Q TOTAL PROCESSED TRANSACTIONS 8.8B                :
    *VISA 2Q SERVICE FEES WERE $792 MILLION                   :
    *VISA INC. 2Q NET OPER REVENUE $1.5B                      :
    *VISA INC. 2Q NET OPER REVENUE $1.5B                      :
    *VISA 2Q PAYMENT VOLUME UP 19%                            :
    *VISA 2Q EPS 52C ADJUSTED                                 
    *VISA FISCAL 2Q 2008 EARNINGS


  175. Hey Steve, if Phil can say SUN got killed on -1.62% then surely I can say POT got killed on -6.7% and CF on -3.0%. :-)

    I’m expecting them to bounce tomorrow. (Consumers permitting)


  176. V – trading down.


  177. V- not being rewarded- 72ish


  178. AH Forum – I’m heading to China (PRC) May 21 for 3 weeks and looking for input.  I will be hitting Beijing, Xi’an, Chengdu and Shanghai.  Has anybody been there and have advice you can’t find in travel guides?  I’m planning to ride the Z trains (I know about the freight train crash yesterday) instead of flying.


  179. I bought 5 QQQQ Jun 46 puts last week because every other position I have is bullish.  This is just a little downside insurance.  Every day I wait until the close to see if it is above resistance and I can sell it, and every day is pulls back to my resistance line.  Here is my chart as of today: http://i29.tinypic.com/2ajchw1.jpg


  180. James – Check Robert Hsu’s website. In April news letter he talked ~where to go & things  to see. He is there few times a year.


  181. V- phew, glad I didn’t put any cold hard cash into rolling up my caller. My long 65 will be ok, but my poor 67.50 caller is going to take a beating.


  182. Phil, we know that reserves for at least some banks have been going down for banks not up.  C for example said that its Tier One capital ratio fell from 8.8% in January to 7.7% at the end of March. So while they might like to hoard extra cash for a "bear raid", the fact is they are losing ground here.


  183. DB: Don’t just look at percentages; compare to ATR, volume vs avg volume, and average imp vol.
    Example:
    SUN: 42% more range than 14 day ATR
    POT: 20%

    Would you be saying the same thing about POT if it went up 6%? It did that friday…


  184. interesting statement:

    Unlike rivals American Express Co. and Discover Financial
    Services, Visa and MasterCard are insulated from rising U.S.
    defaults because they don’t make loans to cardholders.
    First-quarter results from credit-card lenders show
    consumer defaults and overdue payments are rising as the U.S.
    economy slows. Capital One Financial Corp., the McLean,
    Virginia-based card issuer, said its outlook worsened as $6.7
    billion of loan losses were expected in the year through March
    2009.


  185. I wish that roll order I had in for V Jan10C 65 to V Jan10C 75 had been filled.  I guess that I should just be glad that partial roll GS Jan10C 160 to GS Jan10C 190 got filled.


  186. What happened to DTP AUO Jun08 20C?


  187. I take it by your silence that you mean "no."


  188. james- watch out for the tiger, bull and bear penises- they’re everywhere, like food.

    also, check out the panda meat. its the cutest meal u’ll ever have.


  189. CTRP – up 15% in past several sessions, SOHU gap up 15% today.


  190. …expensive though, unless u hunt them urself. just lay down some bamboo and b patient…


  191. James / China,
    I was there 5 years ago (spent a month). The pollution there (everywhere it seemed) is awful. Pick anywhere in the US, multiply by 10, and your halfway there. If you have any sort of  asthma or you get any type of chest cold / bronchittis fairly easily, you may want to bring some meds with you just in case. I would bring something to soothe the throat for sure (Vitamin C drops, cough drops, whatever). I spent a month there and came back with a pretty severe case of bronchitis. The air is really pretty bad.
    I hope you have a translator outside of Beijing and Shanghai. I’m not sure about the other 2 areas you mention, but once I was out of Shanghai or Beijing (TianJin, Jiangsu), nobody spoke a word of English.
    The food was actually pretty decent compared to a lot of other places I’ve been…the fish was good, the beef was good, but I skipped on some of the more exotic foods (I’m picky!). Wasn’t much for breakfast either it seemed.
    The trains were pretty awesome…they are on time typically but extremely busy! Make sure you get to the station a tad early and get your tickets early.
    If you get bored, the Great Wall was a fun climb and the Forbidden City was pretty cool too.


  192. Quick peak in, here is an interesting photo of Steve Balmer using Macbook Pro for Microsoft presentations:
    http://flickr.com/photos/paintitblack/2439080330/


  193. Don’t all you Apple computer/laptop users use MSFT Office for those applications?  What do you use if you don’t want to use MSFT for office applications?
    I need to buy my daughter a laptop, an 8th grade graduation/start of high school thing.  Anyone have a recommendation for me in the under $1200 range?  Thanks.


  194. greg- back to school promos in AUG might b a nice time to buy.

    china pollution- i bet all the distance runners put in bad performances.


  195. greg- wooops…i missed the graduation angle


  196. Greg- I use the macbook pro… But, for a high school student the macbook would work perfectly (you can use microsoft office)… It starts at $1,099. 
    http://www.apple.com/macbook/


  197. Greg, you can use something called OpenOffice (http://www.openoffice.org/), it can read all the Microsoft formats, or if you don’t need the complexity of office, check out Apple offerings if you want to go with a Macbook ($1099).
    Is there a specific laptop your daughter wants or is this a surprise, I’d try to find out what she wants.


  198. Thanks guys, she said she wants a Macbook.  I have never bought anything but Dell desktops and HP laptops before, so I am not familiar with the Macs.   I’ve always thought of Macs as much higher priced for comparable power, but that seems not to be the case anymore.  $1099 for a Macbook seems like a good price.  Thanks.


  199. Yev – she is a typical teenager, unfortunately not a brainiac (she takes after her Dad).  She needs word processing software and eventually powerpoint kind of software, for school thats about it.  then she needs email, instant messaging, internet browser, Itunes and photo gallery and editing software.  And maybe I need a parental snooping software loaded that she doesn’t know about.  ;-)


  200. Greg,
    On the MacBook, you might want to consider the model one up from entry level.  When I got one for my son a couple months ago, the cheapest model did NOT have a CD/DVD burner.  I’m not sure about your daugher, but having the burner was a make a break need in our household (don’t ask why).


  201. Keyser – I actually like to have a sales person pitch me the better models, if they can tell me why it is worth the extra $$, I will almost always go for it.   The problem with laptops is they go obsolete so fast that they are a disposable commmodity now, cheaper to buy a new one in two years then spend too much buying the top of the line now.


  202. Greg, you guys should go to the Apple store and talk to them just like you are here.  I promise you will get everything answered and will walk out with a machine :)   Don’t need to be a brainiac, everything you are looking for is available on the MacBook.


  203. Greg, personally, I always buy Applecare for my laptops.  If anything breaks, you are covered, and you don’t have to spend hours looking through forums when something isn’t working right (or you screw up the settings).  As for them being disposable commodities, Mac laptops hold their value very well.  In fact, I suggest most people buy used ones as you get about 30% if you buy something 18 months old.  If you aren’t going to buy the extended warranty (Applecare) then it doesn’t really matter, does it.  Finally, I always buy my stuff from their "refurbished" section.  Just type that into the search field and it will take you there.  For example, this deal is available right now it is a $1299 computer for $949.  It has the same warranty as a "new" computer and you can buy Applecare too, if you want.  (I might grab it.  That is a smokin’ deal.)

    Refurbished MacBook 2.16GHz Intel Core 2 Duo – White
    13.3-inch glossy widescreen display
    1GB memory
    120GB hard drive
    8x SuperDrive (DVD±R DL/DVD±RW/CD-RW)
    Built-in iSight camera


  204. But, I HIGHLY recommend upgrading to 2GB memory.  Maybe for Xmas or something, but it makes a huge difference.


  205. Low ETF volume – I know I didn’t feel like trading anything so it makes sense to me.

    SUN killed – well relative for an oil co as they’ve been unbreakable for a month…  Ah Steve makes an excellent point on ATR.

    V – Not surrprising given ridiculous expectations.  Didn’t effect MA, hopefully they’ll stay in-line.  I don’t understand how people feel that the IPO price is some kind of joke that’s 50% less than the proper price.  When it is it means the investment bankers are not doing their jobs properly and on a big IPO like that, if they price out at $55 then $70 is a very generous value for the company (usually you want to shoot for 20% appreciation within 6 months).  All I care about with V is the consumer dynamics we can read into the results… 

    Good luck on those trains James!  I’ve been to Japan but never made it to China or Hong Kong but I envy you the trip.

    Good discipline on the positon Greg – you’re right, we’re not out of the woods yet but I felt 47 was a significant breakout, we just need a little good news to give us a push but it won’t take much to send us running back to 44 either.

    Tier 1 – Of course it bears (oops, don’t say bear!) watching but obviously capital was sucked out in the sub-prime debacle but you can’t extrapolate the worst hit since Brazil to be a trend, once it starts to turn, you’ll be very sad if you are short on these banks.  Hopefully these banks will be perfect LTP plays for us, a strong genreral uptrend that consistently wipes out callers because every other day someone comes up with some new thing to worry about, none of which ever pans out…

    AUO took off after the bell – I got mine!

    Ballmer MacBook – Wow, that is the proverbial fat lady singing!

    Greg – MacBooks I think and they are pretty inclusive but you have to use office if you expect anyone else to be able to read your stuff unfortunately.  At 14(?) I would think you should get her input as to what she wants as it’s a very personal item she’ll be stuck with for a couple of years – you don’t want to spend $1,200 on something that makes her pissed at you every time she looks at it do you?  Kids are very style/cool conscious so if she’s got here heart set on the neon pink Apple, getting her the onyx Dell might not accomplish your goal.  Take a few hours and head off to a Mac store if you can, if you do it on a weeknight or, better yet, early on a weekday they’ll have plenty of time to help you and the salespeople in NY NJ have all been top quality.

    Oh I see everyone else has the same thoughts!


  206. Steve or Phil,
    Regarding ATR, I have considered the importance of ATR based on Film giving me the idea.  Questions:
    1) does any charting software let you chart ATR?
    2) does anyone have a good rule of thumb (ie 14 day ATR mentioned, vs. 20 or 50 day, etc)
    3) is it assumable that the ATR volatility correlates with the option volatility
    Thanks.


  207. greg
    Assuming good care of the laptop. Using the educational discount you can get $200 off on a MacBook Pro or $100 off a MacBook. Then use the computer for about 1 year. one or two months before the standard AppleCare is up, you can sell it to someone for the same price you paid ($200 less than the store). You can use a laptop for a year, then upgrade (ie change to the computer with the most recent update). Rinse and repeat. You never loose money on the transaction.


  208. Broad of KB Home Says Home Prices May Drop Another 20%
    video- also, he says art market is bubbly and average education in the US is what will ruin us (not in such harsh terms). doesnt think its different this time, so expect a rebound in housing in the next couple of years.


  209. Phil,
    I have 7 XLF Jan ’10 23′s, I am currently short 4 XLF May 25 Calls (c/b 1.50) currently selling for 2.15. That short call has just .14 premium in it. Would you roll the short position up, roll it out, or do anything with it? It’s providing good protection to the downside, but should I take any action on it considering the lack of premium left in it?


  210. Oil May Rise Until Demand Collapses, Says Deutsche (Update2)
    By Ayesha Daya
    April 28 (Bloomberg) — There is a “huge risk” that oil prices will continue to rise until demand collapses because additional supplies are limited and alternative fuels decades away from replacing crude, Deutsche Bank AG said.
    “There is a huge risk that the oil price simply continues to escalate until it gets to some level ($200 a barrel?) when demand finally collapses because ordinary people can no longer afford to burn as much energy as they are burning now,” Deutsche Bank’s chief energy economist Adam Sieminski wrote in a report dated April 25.


  211. Brazil Oil Trapped by 500-Degree Heat, Salt Barrier (Update2)
    By Joe Carroll
    April 28 (Bloomberg) — Brazil’s plan to become one of the world’s biggest oil exporters hinges on exploiting crude 6 miles below the ocean surface in deposits so hot they can melt the metal used to carry uranium to nuclear plants.
    Tapping what may be the biggest oil finds in the Western Hemisphere in three decades will require equipment that can withstand 18,000 pounds per square inch of pressure, enough to crush a pickup truck, pipes that can carry oil at temperatures above 500 degrees Fahrenheit (260 Celsius) and drill bits that can penetrate layers of salt more than one mile thick.
    Petroleo Brasileiro SA, the state-controlled oil company, is betting on the Tupi and Carioca fields to become one of the world’s seven biggest crude exporters. Until the tools needed to exploit the reservoirs are invented, the crude will remain locked under the sea, said Matt Cline, a U.S. Energy Department economist.


  212. xian, ha.  I knew there had to be a catch.  Couldn’t be that easy to find a gazillion barrels of oil just lying around.


  213. Thanks again for all the laptop advice.  Much appreciated!


  214. By the way, while I have an Apple store just a few blocks from my house, the nearby Best Buy store just recently opened up a big Apple computer department in a very large prominent location within the store.  This is a big new change for Best Buy.  A big committment to the Apple brand.


  215. Good morning everyone.

    UK up slightly this morning 0.48%. Oil profits from BP and Shell pushing their stock higher. Everything else seems on a downer.


  216. Greg, just to add to the long stream of options.You get a mac and you have all you need for the basics, then there is the question of microsoft products, essentially word and excel. So you have the following 4 options in my mind:
    1. Get Apples products, Pages and Numbers, don’t do the same, but once you get used to them they do it much nicer, not something you can easily program with, but the output is fantastic
    2. Get Microsoft office for students for Mac, new release was made in Jan 2008 and seems quite useful
    3. Install VMWare fusion and install Microsoft native application within XP, you essentially run a windows XP environment inside your mac, beef up on memory and get the top processor
    4. Go open source, openoffice or other
    Thinking ahead it will be useful to have the native microsoft products, but the Mac version will probably do nicely, not too costly a package to be honest if you get the student version.
    Interestingly with mac I think the creativity possible out of the box for the younger generation is quite substantial over the pc in my mind. Good luck. Also do remember that you can buy extra memory at a great discount than Apple’s prices from a series of vendors, installation is very simple (Apple style design). I saved about $1000 buying memory for my MacPro by getting this from another vendor.


  217. ATR – Try: http://stockcharts.com/h-sc/ui?c=amzn,uul,adaclnnaypiur14]

    Also, here’s a nice tutorial on ATR.

    KBH – I agree with all that, I’ve been saying 20% is the bottom for some time but I think anyone who knows real estate knows this and those numbers are baked in – that’s why most builders have turned into small caps now, it’s going to be at least 18 months before you see any real housing recovery (next spring should be the turn, I plan on buying builders in the fall).

    XLF/JB – I would not touch it because you have "won" the month and gotten all of your caller’s premium and now they are protecting you ahead of the Fed.  When you have a leap, you should have a monthly income plan and stick to that, once you hit your goal for the month (I assume you made at least .50 for each $6 share that you have 20 months to sell against for a 66% profit goal) you should switch your attention to your next roll.  Can you convert your $8.60 worth of May callers into $3.50 of June premium?  At the moment you can roll them to 7 June $27s at $1.27 for $8.89 in pure premium so there is certainly nothing to worry about.  Once we get past the Fed you could do an interim roll to the May $27s or $26s or whatever to pick up some premium but, right now, you get your best protection off the $25s, which will lose penny for penny to the downside while you should gain about even with them on the way up and, as I said, your roll to June has plenty of cushion to keep you on track.

    Deutsche Oil – Yes, that’s right, what happens in a demand curve is that people use the same amount at $80, $120, $140, $160 but at $200, THEN demand just suddenly collapses as people say "Hey, I can’t afford $200!"  I mean REALLY, that’s their CHIEF energy economist? 

    Notice this story and the Brazil story, this is what a hyena attack looks like.  My oven has 500 degree heat and hasn’t melted yet!  I guess it must be made of some sort of cutting edge materials that present a huge technological barrier for someone looking to extract $3Tn worth of oil…(end sarcasm font)  The oil bulls spin the PR releases and have their boys make outrageous statements one after the other in order to foment (as Cramer likes to say) the impression that we are still in a crisis.  This is nothing more than a coordinated attempt to try to get oil through $120 and the more it has trouble the more ridiculous crap you can expect them to roll out.  There is absolutely NO news in that Brazil article – that’s the conditions, so what?  It’s like saying the Dreamliner has problems because of the relentless pull of the earth’s gravity and it’s reliance on just 2 engines to overcome it as it has to get to a "cruising altitude" of 60,000 feet, very near the outer layer of the earth’s atmosphere where the air is 50 degrees below zero and too thin for humans to breathe.  A fall from that height would also crush a pickup truck!

    By the way, it’s also useful sometimes to check on an author.  Joe Carrol also wrote the following (in a quick search):
    Bloomberg: Exxon Profit Rises as Oil Surges Toward $100 a Barrel
    Exxon Overtakes PetroChina as World’s Biggest Company
    Net soars at U.S. oil companies – International Herald Tribune
    Exxon’s Tillerson Urges Governments to Relax Barriers
    Profit Soars at Exxon Mobil
    Soft living amid the hard labor Oil companies add luxuries at
    Alaska rejects Exxon Mobil’s gas-project plan

    Reading a few of these I’d have to say he’s a pro-XOM oil bull.  XOM has more of the world’s reserves than any other oil company and a big find in Brazil is a threat to XOM’s valuation so there are many, many Billions riding on sowing the seeds of doubt in any new find that threatens the value of their holdings.


  218. phil- nice angle on the brazil oil guy…33B barrels, that’s a lot of caipirinhas


  219. "so hot they can melt the metal used to carry uranium to nuclear plants"

    it’s going to a b*tch building a nuclear reactor down there…LOL


  220. Phil / XLF,
    Thanks for the insight. Yes, I got 1.50 of pure premium out of my May callers, so I think I am in pretty good shape.


  221. Thanks everyone for the input on China – penises and panda meat, should be interesting.  Hopefully I can find Internet access to keep up with you guys.