Wow – what a wild ride this has been!
40% seems to be the number of the month as our $25KP is now up by exactly that much, our $10KX is up 40.6% after its first expiration period and Optrader's Swing Trade Virtual Portfolio hit 41%. All in all it was a great month. Day Trading did well but was reset on 8/4 and is up "just" 13.2% in that period while our "safe" Stocks Portflio made a nice 11.4% and our Butterfly Collection made 11.2% in its first month, which is really good as we absorbed a huge loss in ELN along the way.
We started these virtual portfolios after the 7/18 expiration week in order to more fully illustrate the various styles of option trading along with various virtual portfolio balancing techniques. Only our pokey old Long-Term Virtual Portfolio, now up 224.8% for the year, had index puts for protection as we ran this month generally bullish – as we had last month when we were punished for it as we started our bottom fishing just a little bit early. The waters are still very treacherous and we still have plenty of covers but, on the whole, things are going pretty much according to plan.
On December 31st, I did my Index Round-Up '07 and it's good to go back and read these things once in a while to see how on or off track my predictions are as we move through the year. We had expected a rough first half and we expected Q2 earnings to be the beginning of a market turn – so far so good but the bottom was lower than we thought as oil went higher than we expected. Now it depends what kind of pullback we get in crude and how soon the now-recessionary global economy can pull itself back together. Back in December, with oil just getting to $100, I said we needed it to ge below $100 for us to kick-start the economy. After spending most of Q2 in the $120s, $110 just doesn't cut it, we need to average $80 in the second half of the year and July is already over at $125 avg.
The difference between $80 oil, which is what the second half of '07 averaged (and they had terrorism and hurricanes and peak oil too) and $110 oil is $19Bn a month taken out of the pockets of US consumers and $80Bn a month out of global consumers that used to be spent on other things. Over the last 6 months of the year, that's $480Bn LESS that will go to the companies outside of the energy sector that went there last year at this time. The difference between $62 that was the average of the first half of '07 and the $110 average of Q1 was $751Bn of global consumer money diverted to energy that produced not one erg more power than it did last year. There's your ENTIRE shortfall in the financials accounted for right there!
When is the rest of the economy, the 387 of the S&P 500, the 412 of the Fortune 500, the 2,300+ NYSE companies that are NOT oil companies – going to realize that oil and commodity pricing is the enemy of us all? These companies have lobbyists, they contribute to campaigns, they vote… Why don't they realize that the reason their customers don't have any money, the reason they can't buy goods and services or pay their credit cards or buy cars, or go to restaurants or pay their mortgages is simply because there is an infaltionary food and energy tax that is costing US consumers 10% of their net income above what it did just a year ago, which was 10% above what it cost the year before that???
I've said it before and I will say it again and again – Oil was $40 a barrel in 2004 when the world consumed 82.33M barrels per day. In Q1 2008, the world consumed 85.69M barrels a day, a 4.1% increase and the price of crude averaged $100 a barrel, up 150% as speculators, not traders, drove the prices to completely ridiculous levels. At 85M barrels a day, that $60 a barrel difference represents $5.1Bn PER DAY, $36Bn PER WEEK, $143Bn PER MONTH, $1.7Tn PER YEAR that is being sucked out of global pockets, diverted away from other things consumers could be buying and stuffed into the coffers of OPEC and the energy cartel. With oil prices pushing food prices higher and feeding inflation into other parts of the economy, we are looking at close to $3Tn PER YEAR that is not available to companies that do not occupy the rarefied commodity sectors.
Wake up Technology, Health Care, Financials (although you idiots created this monster), Consumer Cyclicals, Consumer Staples, Telcom, Utilities and Industrials – You make up 80% of the economy yet you let this situation get out of control and the people, your people, your consumers are suffering for it and they can't buy things from you with money that they don't have and they WILL be needing pay raises to make ends meet. S110 oil is not a goal – it's a start and you have to let Congress know that.
Last weekend I pointed out that the markets were recovering, especially when charted against the Euro and let's not forget that oil's decline is, conversely, not as impressive when priced in Euros or Yen and consumer suffering is a global event that affects all corporations. We have a very tough fight ahead of us next week as our indexes face some critical resistance points we outlined in Thursday's Big Chart review at the same time as oil goes to test the critical $110 mark and this could still go either way.
Let's make no mistake about it, this week was a loser. We opened the week at Dow 11,700, 80 points down from Friday's close of 11,782 and we finished the week a little lower at 11,659. Monday morning I had two main concerns, the fighting in Georgia and the GDP, in the form of Tuesday's upcoming treasury budget. On the bright side we noted that AAPL posted some amazing numbers at the IPhone store and our play of the day in the morning post was the AAPL Jan $170s for $19.80, now $23.32 (up 17%). We worried about the dollar on Monday night and we ended up holding up well for the week, which was good. Tuesday morning we coasted and set our levels, taking a chance in the morning post on the IGW Jan $45s at $7.95, now $8.65 (up 9%) despite the downturn the markets took that day as our fears of the monthly treasury debt were realized at $102Bn.
Wednesday morning we confronted our fears and revviewed our concerns, as we often do at PSW in times of economic crisis, and we decided that the problems, though still dire, were still solvable. My logic has always been that if I can come up with a solution to the housing crisis and oil crisis, then surely someone else will take up the cause and things will get better in the future – and that is what we invest in, the future.
Thursday it was the CPI's turn to knock us down pre-market but we'd been expecting that number all week and decided to ignore it on Monday and I said my bit against idiot economists and the media in my morning post as they panicked the sheep out of perfectly good positions. My take on the 100-point morning drop ahead of the open was: "It’s like Alice in Wonderland in these markets – everything is so silly the best thing to do is just go about your business and ignore the nonsense…" Or play in the morning post was to go back to the well on WM, a complex play that is already up $3,170 on $13,280 in risk capital (24%) in just 2 days on just a .40 net move in the underlying stock.
Thurday night and Friday morning I was very concerned about the upcoming data and it was choppy but we got through it, leaving us more optimistic about the week ahead. I did pick RYAAY in Friday morning's post but it took off so fast (get it?) that we missed the trade. All in all it was a very good week, going 3 for 3 on picks in the morning posts with tons of good selections made for members in our intraday chat. For the week we closed 87 positions with a 17% cash gain and a crazy average gain of 128% as we had many callers expire worthless on expiration day so this list is not as impressive as it looks but it sure is nice to have some winners:
Stock |
Description |
Type |
Basis |
Open |
Sale Price |
Sold |
Gain/Loss |
% |
AAPL | 40 Aug 2008 170.00 AAPL CALL (APVHN) | SC | 22,410.00 | 8/5 | 8,390.00 | 8/15 | -14,020.00 | -63% |
AAPL | 20 Sep 2008 185.00 AAPL CALL (APVIQ) | LC | 11,590.00 | 8/12 | 8,590.00 | 8/15 | -3,000.00 | -26% |
AAPL | 20 Sep 2008 170.00 AAPL PUT (APVUN) | LP | 10,470.00 | 8/12 | 10,190.00 | 8/15 | -280 | -3% |
AAPL | 20 Aug 2008 175.00 AAPL CALL (APVHO) | SC | 1,410.00 | 8/12 | 9,530.00 | 8/15 | 8,120.00 | 576% |
AAPL | 20 Aug 2008 180.00 AAPL CALL (APVHP) | SC | 0 | 8/12 | 4,050.00 | 8/15 | 4,050.00 | 100% |
AAPL | 10 Aug 2008 175.00 AAPL PUT (APVTO) | SP | 590 | 8/13 | 1,040.00 | 8/14 | 450 | 76% |
AAPL | 20 Aug 2008 175.00 AAPL PUT (APVTO) | SP | 1,170.00 | 8/12 | 3,690.00 | 8/14 | 2,520.00 | 215% |
AAPL | 10 Aug 2008 165.00 AAPL CALL (APVHM) | SC | 13,110.00 | 8/5 | 4,940.00 | 8/12 | -8,170.00 | -62% |
AAPL | 10 Oct 2008 160.00 AAPL CALL (APVJL) | LC | 13,660.00 | 7/21 | 23,190.00 | 8/12 | 9,530.00 | 70% |
AAPL | 10 Aug 2008 165.00 AAPL PUT (APVTM) | SP | 1,160.00 | 7/21 | 6,870.00 | 8/11 | 5,710.00 | 492% |
AIG | 50 Aug 2008 22.50 AIG CALL (AIGHX) | SC | 2,010.00 | 8/12 | 5,490.00 | 8/13 | 3,480.00 | 173% |
AKAM | 20 Aug 2008 22.50 AKAM PUT (UMUTX) | SP | 0 | 7/31 | 1,890.00 | 8/15 | 1,890.00 | 100% |
AMZN | 2 Aug 2008 72.50 AMZN CALL (ZQNHD) | SC | 2,650.00 | 7/23 | 580 | 8/13 | -2,070.00 | -78% |
ANF | 5 Aug 2008 52.50 ANF PUT (ANFTX) | LP | 510 | 8/11 | 790 | 8/12 | 280 | 55% |
AXP | 80 Aug 2008 37.50 AXP CALL (AXPHA) | SC | 3,370.00 | 8/12 | 3,990.00 | 8/13 | 620 | 18% |
BA | 80 Aug 2008 65.00 BA CALL (BAHM) | SC | 0 | 8/12 | 11,990.00 | 8/15 | 11,990.00 | 100% |
BA | 80 Aug 2008 65.00 BA CALL (BAHM) | SC | 0 | 8/5 | 11,190.00 | 8/15 | 11,190.00 | 100% |
BAC | 20 Aug 2008 30.00 BAC PUT (BACTF) | SP | 0 | 7/25 | 4,990.00 | 8/15 | 4,990.00 | 100% |
BAC | 100 Sep 2008 30.00 BAC CALL (BACIF) | SC | 17,910.00 | 7/17 | 34,990.00 | 8/13 | 17,080.00 | 95% |
BAC | 200 Sep 2008 30.00 BAC CALL (BACIF) | SC | 76,320.00 | 7/16 | 44,990.00 | 8/13 | -31,330.00 | -41% |
BHP | 40 Jan 2009 80.00 BHP PUT (BHPMP) | LP | 26,210.00 | 5/2 | 66,190.00 | 8/13 | 39,980.00 | 153% |
BIDU | 2 Aug 2008 310.00 BIDU PUT (BDUTA) | SP | 120 | 7/25 | 690 | 8/14 | 570 | 475% |
BIDU | 2 Aug 2008 330.00 BIDU CALL (BDUHE) | SC | 410 | 8/6 | 1,590.00 | 8/11 | 1,180.00 | 288% |
BIDU | 2 Aug 2008 330.00 BIDU CALL (BDUHE) | SC | 390 | 7/23 | 218 | 8/11 | -172 | -44% |
BSX | 50 Aug 2008 12.50 BSX CALL (BSXHV) | SC | 2,010.00 | 7/22 | 4,140.00 | 8/14 | 2,130.00 | 106% |
C | 50 Aug 2008 20.00 C CALL (CHD) | SC | 0 | 8/5 | 3,990.00 | 8/15 | 3,990.00 | 100% |
C | 10 Aug 2008 20.00 C PUT (CTD) | SP | 1,530.00 | 7/28 | 2,590.00 | 8/15 | 1,060.00 | 69% |
C | 300 Aug 2008 17.50 C CALL (CHR) | SC | 26,620.00 | 7/29 | 41,990.00 | 8/13 | 15,370.00 | 58% |
CCJ | 20 Aug 2008 35.00 CCJ CALL (CCJHG) | SC | 0 | 7/23 | 190 | 8/15 | 190 | 100% |
DIA | 200 Aug 2008 115.00 DIA PUT (DIATK) | SP | 0 | 8/13 | 9,580.00 | 8/15 | 9,580.00 | 100% |
DIA | 200 Aug 2008 116.00 DIA PUT (DIATL) | SP | 13,610.00 | 8/8 | 14,990.00 | 8/12 | 1,380.00 | 10% |
FIG | 40 Aug 2008 12.50 FIG CALL (FIGHV) | SC | 0 | 7/11 | 1,590.00 | 8/15 | 1,590.00 | 100% |
FRE | 20 Aug 2008 6.00 FRE CALL (FREHQ) | SC | 0 | 8/8 | 1,290.00 | 8/15 | 1,290.00 | 100% |
FRE | 40 Aug 2008 6.00 FRE PUT (FRETQ) | SP | 0 | 8/6 | 1,190.00 | 8/15 | 1,190.00 | 100% |
FRE | 300 Sep 2008 6.00 FRE CALL (FREIQ) | SC | 18,010.00 | 8/12 | 17,980.00 | 8/13 | -30 | 0% |
FSLR | 5 Aug 2008 260.00 FSLR PUT (HJQTY) | SP | 210 | 7/24 | 9,240.00 | 8/15 | 9,030.00 | 4300% |
FSLR | 5 Aug 2008 260.00 FSLR CALL (HJQHY) | SC | 2,510.00 | 7/24 | 11,640.00 | 8/15 | 9,130.00 | 364% |
FSLR | 5 Sep 2008 270.00 FSLR CALL (HJQIZ) | LC | 13,160.00 | 7/24 | 7,490.00 | 8/15 | -5,670.00 | -43% |
GLD | 5 Aug 2008 78.00 GLD CALL (GVDHZ) | LC | 1,335.00 | 8/12 | 1,355.00 | 8/13 | 20 | 2% |
GLD | 5 Aug 2008 78.00 GLD CALL (GVDHZ) | LC | 1,335.00 | 8/12 | 1,335.00 | 8/13 | 0 | 0% |
GOOG | 20 Aug 2008 500.00 GOOG PUT (GOPTO) | LP | 710 | 8/15 | 490 | 8/15 | -220 | -31% |
GOOG | 1 Aug 2008 500.00 GOOG PUT (GOPTO) | SP | 187 | 8/12 | 640 | 8/14 | 453 | 242% |
GOOG | 1 Aug 2008 500.00 GOOG PUT (GOPTO) | SP | 187 | 7/17 | 197 | 8/14 | 10 | 5% |
GOOG | 80 Aug 2008 500.00 GOOG PUT (GOPTO) | LP | 10,650.00 | 8/14 | 7,990.00 | 8/14 | -2,660.00 | -25% |
GOOG | 20 Aug 2008 490.00 GOOG PUT (GOPTK) | LP | 6,210.00 | 8/13 | 6,990.00 | 8/13 | 780 | 13% |
GOOG | 20 Aug 2008 500.00 GOOG CALL (GOPHO) | LC | 6,010.00 | 8/13 | 9,990.00 | 8/13 | 3,980.00 | 66% |
GOOG | 20 Aug 2008 500.00 GOOG PUT (GOPTO) | SP | 9,810.00 | 8/12 | 8,990.00 | 8/13 | -820 | -8% |
GOOG | 20 Sep 2008 510.00 GOOG PUT (GOPUU) | LP | 50,910.00 | 8/8 | 50,190.00 | 8/13 | -720 | -1% |
GOOG | 10 Aug 2008 480.00 GOOG PUT (GOPTI) | SP | 1,010.00 | 8/11 | 1,590.00 | 8/12 | 580 | 57% |
GOOG | 10 Aug 2008 480.00 GOOG CALL (GOPHI) | SC | 22,580.00 | 8/4 | 8,350.00 | 8/12 | -14,230.00 | -63% |
GOOG | 10 Aug 2008 490.00 GOOG PUT (GOPTK) | LP | 10,540.00 | 8/4 | 3,090.00 | 8/12 | -7,450.00 | -71% |
GOOG | 1 Aug 2008 470.00 GOOG CALL (GOPHG) | SC | 3,110.00 | 8/1 | 1,290.00 | 8/12 | -1,820.00 | -59% |
GOOG | 1 Aug 2008 470.00 GOOG CALL (GOPHG) | SC | 3,110.00 | 8/1 | 1,290.00 | 8/12 | -1,820.00 | -59% |
GOOG | 10 Aug 2008 490.00 GOOG CALL (GOPHK) | LC | 6,820.00 | 7/24 | 15,060.00 | 8/12 | 8,240.00 | 121% |
GOOG | 1 Aug 2008 540.00 GOOG PUT (GOPTX) | SP | 3,910.00 | 7/17 | 3,170.00 | 8/12 | -740 | -19% |
GOOG | 20 Aug 2008 510.00 GOOG PUT (GOPTU) | SP | 19,510.00 | 8/11 | 22,490.00 | 8/12 | 2,980.00 | 15% |
GOOG | 10 Aug 2008 480.00 GOOG PUT (GOPTI) | SP | 1,010.00 | 8/11 | 1,570.00 | 8/12 | 560 | 55% |
GOOG | 10 Aug 2008 480.00 GOOG CALL (GOPHI) | SC | 22,580.00 | 8/4 | 8,330.00 | 8/12 | -14,250.00 | -63% |
GOOG | 10 Aug 2008 490.00 GOOG PUT (GOPTK) | LP | 10,580.00 | 8/4 | 3,090.00 | 8/12 | -7,490.00 | -71% |
GOOG | 10 Aug 2008 490.00 GOOG CALL (GOPHK) | LC | 6,720.00 | 8/4 | 15,190.00 | 8/12 | 8,470.00 | 126% |
GOOG | 20 Aug 2008 500.00 GOOG PUT (GOPTO) | SP | 9,620.00 | 8/11 | 8,990.00 | 8/11 | -630 | -7% |
GOOG | 5 Aug 2008 500.00 GOOG PUT (GOPTO) | SP | 4,410.00 | 8/8 | 5,490.00 | 8/11 | 1,080.00 | 25% |
HOV | 20 Aug 2008 7.50 HOV PUT (HOVTU) | SP | 0 | 7/24 | 1,990.00 | 8/15 | 1,990.00 | 100% |
HOV | 5 Aug 2008 7.50 HOV CALL (HOVHU) | SC | 0 | 8/11 | 315 | 8/15 | 315 | 100% |
IBM | 15 Aug 2008 125.00 IBM CALL (IBMHE) | SC | 2,005.00 | 7/17 | 7,490.00 | 8/13 | 5,485.00 | 274% |
ISRG | 10 Sep 2008 300.00 ISRG CALL (AXVIT) | SC | 11,210.00 | 7/16 | 4,490.00 | 8/15 | -6,720.00 | -60% |
MA | 5 Aug 2008 230.00 MA PUT (MALTF) | SP | 0 | 8/12 | 1,990.00 | 8/15 | 1,990.00 | 100% |
MA | 5 Aug 2008 270.00 MA PUT (MALTX) | SP | 18,610.00 | 7/25 | 10,365.00 | 8/12 | -8,245.00 | -44% |
MDT | 20 Aug 2008 52.50 MDT CALL (MDTHX) | SC | 2,010.00 | 7/16 | 5,090.00 | 8/13 | 3,080.00 | 153% |
NYX | 30 Aug 2008 45.00 NYX CALL (NYXHI) | SC | 0 | 7/16 | 3,590.00 | 8/15 | 3,590.00 | 100% |
OIH | 20 Aug 2008 175.00 OIH PUT (OIHTO) | LP | 3,410.00 | 8/11 | 4,990.00 | 8/11 | 1,580.00 | 46% |
QQQQ | 100 Aug 2008 48.00 QQQQ CALL (QQQHV) | SC | 1,510.00 | 8/12 | 4,480.00 | 8/15 | 2,970.00 | 197% |
SHLD | 40 Aug 2008 90.00 SHLD CALL (KTQHR) | SC | 4,410.00 | 8/5 | 16,990.00 | 8/13 | 12,580.00 | 285% |
SHLD | 20 Aug 2008 90.00 SHLD CALL (KTQHR) | SC | 2,210.00 | 8/5 | 2,490.00 | 8/13 | 280 | 13% |
SNE | 20 Aug 2008 40.00 SNE CALL (SNEHH) | SC | 0 | 7/16 | 1,790.00 | 8/15 | 1,790.00 | 100% |
USO | 20 Sep 2008 91.00 USO CALL (IYSIM) | LC | 14,290.00 | 8/6 | 14,190.00 | 8/13 | -100 | -1% |
USO | 20 Aug 2008 88.00 USO CALL (UNAHJ) | LC | 8,610.00 | 8/12 | 9,590.00 | 8/13 | 980 | 11% |
USO | 20 Aug 2008 91.00 USO CALL (IYSHM) | SC | 4,010.00 | 8/12 | 3,990.00 | 8/13 | -20 | -1% |
VLO | 5 Aug 2008 35.00 VLO PUT (VLOTG) | SP | 360 | 8/11 | 565 | 8/15 | 205 | 57% |
VZ | 100 Aug 2008 35.00 VZ CALL (VZHG) | SC | 0 | 8/11 | 5,790.00 | 8/15 | 5,790.00 | 100% |
WFR | 10 Aug 2008 45.00 WFR PUT (WFRTI) | SP | 0 | 7/24 | 4,240.00 | 8/15 | 4,240.00 | 100% |
WFR | 40 Jan 2009 55.00 WFR CALL (WFRAK) | LC | 16,010.00 | 4/20 | 13,980.00 | 8/12 | -2,030.00 | -13% |
WFR | 2 Aug 2008 45.00 WFR PUT (WFRTI) | SP | 120 | 7/24 | 870 | 8/11 | 750 | 625% |
WMT | 5 Sep 2008 55.00 WMT CALL (WMTIK) | LC | 1,710.00 | 8/14 | 2,640.00 | 8/15 | 930 | 54% |
WMT | 5 Sep 2008 55.00 WMT CALL (WMTIK) | LC | 1,710.00 | 8/14 | 2,590.00 | 8/15 | 880 | 52% |
WMT | 40 Aug 2008 57.50 WMT CALL (WMTHY) | SC | 1,610.00 | 7/16 | 6,190.00 | 8/14 | 4,580.00 | 285% |
XLF | 360 Aug 2008 21.00 XLF CALL (XLFHU) | SC | 30,800.00 | 7/16 | 10,790.00 | 8/15 | -20,010.00 | -65% |