Wow, the last week of January already?
This year is already flying by and we're heading into a February with just 19 trading days so just 39 trading days until March options contracts expire – how's that for perspective? Let's keep that in mind with the VIX still near 50 as these fat premiums may not last forever so we may want to move away from February sales early, especially in cases where we get a near double for selling 39 days vs. the 19 days that remain in the current expiration period.
We have to consider – what would it take for the markets to get MORE volatilie? Last week was devoid of data but this week will be exciting with Existing Home Sales and Leading Economic Indicators at 10 this morning, Case/Shiller and Consumer Confidence tomorrow, Crude Inventories and the Fed on Wednesday, Durable Goods and New Home Sales on Thursday and Friday we finish the week with Chicago PMI, Michigan Sentiment, Employment Cost Index and the Advance Q4 GDP – which will make everything else irrelevant so strap in for a wild ride!
We also have earnings from about 1/3 of the S&P 500, highlighted this week by CAT, HAL, MCD and AXP today; DAL, BTU, X, VLO, VZ & YHOO tomorrow; T, BA, COP, GD, LM, PM, ALL, BXP & SBUX Wednesday; MO, BUD, CL, EK, F, OSK, RDS.A, TXT, UA, AMZN, SPWRA and YRCW Thursday and XOM, CVX, HON and PG on Friday. XOM and CVX together on Friday (15% of the Dow weighting) have me really, really, REALLY worried that we'll get a -5% GDP along with poor earnings from them and people are going to act like the world is ending so it's going to be a tricky play this week but lots of fun playing the ultras.
After not hitting our levels last week we shifted to Neutral at 2:21 on Friday and picked up DIA puts for protection and we are sincerely hoping that this down 7% (so far) January market is not the much-discussed "January effect" as, statistically, January is THE BEST month of the year for the markets. It would be quite a feat to just get the markets back even in the next 5 days, let alone come up with a finish that would be encouraging for the rest of the year. Many companies that have reported so far have been hit by the violent swings in currency and commodity prices with many airlines taking hits on fuel hedges while COP, for example, is taking a $33Bn reserve write-down and CVX has warned that it's Q4 earnings will be "significantly lower." KFT is taking $140M in hedging losses this Q and GIS marked down $269M of commodity hedges they took at the height of the Ag bubble.
I was discussing how currencies hit the big international players this weekend with some investors and we used the example of TM, who may have priced a car for sale at $26,000, which was 3M Yen in October but, by the time the car is sold in January $26,000 is just 2.3M Yen, over 20% less then TM planned to collect. If they spent 2.5M yen building and shipping the car and expected to make a 20% profit on the final sale – they are going to have a problem and this certainly isn't the market environment to mark the car up another 20% on this end. This is the reason the Nikkei is off 14% this month as the Japanese market is very export-focused. The dollar has been strong but still losing ground to the Yen, which is seen as the safest global currency at the moment.
Of course no currency is "safe" as gold (I believe I may have mentioned gold before) is flying past $900 as investors look for REAL safety as opposed to the very imaginary safety of fiat currency, no matter what country is issuing the paper. I won't get into it here as we are already big into gold but Adam Hamilton wrote a great article on Inflation and the Money Supply this weekend that is a must read – especially for those of you who think keeping it on the sidelines is going to protect you! The government is trying to keep a lid on gold prices and the US mint suspended and then resumed only limited sales of gold coins and has halted new production. Dennis Gartman agrees with my general strategy of hedging with GLD and agrees we should not go too crazy, as it would be nice if we're wrong and sad if we hit my $1,500 target (at $2,000 we go short).
Speaking of out of control inflation, an inflated money supply and insane levels of government spending – It looks like FRE and FNM need another $50Bn or so this quarter (ah yes, it has already been 3 months since we last bailed them out). Foreclosures are kicking up and, much to my chagrin, the government still hasn't done anything to stop the actual bleeding at the homeowner level so: "Their losses are going to be much higher than anyone anticipated,” said Paul Miller, an analyst with FBR Capital Markets in Arlington, Virginia. “The more and more that people are digging into these virtual portfolios, they’re finding out the more and more these guys were doing subprime and Alt-A loans and classifying them as prime." The companies have posted five consecutive quarters of losses totaling $68.4 billion combined. The Federal Housing Finance Administration seized their operations in September amid concern from regulators that the government-sponsored enterprises may fail in the worst housing slump since the Great Depression but virtually nothing has been done to actually address the problem by the outgoing (thank goodness!) administration.
Speaking of companies that are being rocked by housing, CAT just reported a 20% miss and guided down 20% for 2009 and is taking a 20% hit pre-market and will be laying off 20% of their workforce. We took the $34 puts for $1.83 on Friday but it looks like we should have taken Komatsu's warning more seriously as our net $32.17 entry target may not be low enough for a CAT entry. Fortunately they have now put March contracts up and we should get a near even roll to the March $30 puts and, despite to poor outlook, I do like this 5% dividend payer (6%+ at this level) for a sub-$30 entry. As an exporter, CAT was hit by the strong dollar as well, getting less of them back in exchange for foreign currencies. It's very possible that a hedged entry into CAT would be nice this morning but we'll have to wait and see where it shakes out in this morning's trading before committing to ownership so stay tuned in member chat as we'll watch this one closely – it could be a great chance to get into a stock that should directly benefit from infrastructure building at a time of maximum panic – very much on-target with the way we're lookng to play this earnings cycle…
Again XOM buyers seem to be in la-la land as XOM is still strong pre-market but CAT was also hit hard by cutbacks in machine sales to commodity producers. We'll see on Friday but we are short XOM at $80 long-term. Another intersting macro to watch is a glut of shipping vessels hitting the water in 2009 as the 3-year building cycle of jumbo vessels that began in 2006 begins to increase capacity at perhaps the worst possible time. The new ships are 30% larger in capacity than Panamax tankers, holding 13,800 house-sized containers and STX Shipbuilding has plans for a 22,000 container ship. The rate for shipping a container from Asia to Europe has fallen from $3,000 last year to $300 plus the $500 fuel service charge – also down from last year. Compare that to what your local movers charge you!
Asia was mostly closed today (lunar new year) and the Nikkei loast about a point on thin trading. Still, that is a 3-month low in Japan and SNE has already warned ahead of earnings this week with not much expected from the auto industry to cheer things up. China denies manipulating their currency, which is interesting since the government sets the official exchange rate which, to the untrained observer, would pretty much be the definition of manipulation. LEH's assets go on sale in Japan this week and that will be an interesting auction as real estate prices in Japan could not (seemingly) get any lower.
Europe, on the other hand, is up about a point as the World economic leaders begin to gather in Davos for the annual World Economic Forum. Financials led the gains as BCS jumps nearly 50% as they move up their reporting date to 2/9 and CEO Varley pre-reported that the bank "will report a profit before tax for the year well ahead of the consensus estimate of £5.3 billion ($7.4 billion)." They also said the bank's capital resources are "well in excess" of regulatory requirements, creating a "large performance cushion" for the bank. So we go from a run on the bank rumor to a run on the bank's shares in just 7 days!
We're waiting to see if Geithner finally gets confirmed today as that should give us a boost and we should also be getting some more stimulation commitments this week, also good fuel to move us up despite some scary earnings reports but I will be very, very, VERY concerned about Friday so we'll be paying careful attention to energy earnins this week to try to get a clue on XOM and CVX on Friday. Also, don't forget to keep an eye on rates today as the US has to find buyers for over $100Bn worth of notes at two auctions.
Kudlow’s becoming as much as a blowhard as Rush.."Washington hates drug companies….they might just nationalize the whole kit and kaboodle"
IBM / XOM / CVX – now carries 24% weighting in the Dow. GE is only 1.2%!
SKF $125 puts are $11.65 and were $9 last week and XLF needs to gain 10% from here before caller is in the money so that’s the way I would play SKF to the upside, looking for a quick $2 and prepared to run out the premium otherwise with an eye towards rolling to the March $105s even if you have to.
Dow/Fab – Very scary when 3 stocks have that much effect but worse that XOM and CVX are likely to move in lock-step with each other.
ibm keeps some pretty good economic forecasters on staff and if they see something so bad to justify an immediate 10% layoff and if the market ignores the short term benefit from the layoffs and instead focuses on the ibm bad forecast that justified the layoffs then the dow could take quite a kick down!!
CHK I’ve got 1/2 covers with Feb 12.5…not much premium left…should 2X roll to Feb 15s?
Phil/Money Indicator: The Fed didn’t give us the money. They gave it to the banks. And the banks are sitting on most of it. They are still in a defensive posture. As in building their capital and lowereing their risk exposure. That money won’t flow out to the public. It will trickle out. So, it might be good news for the banks, but not much else.
Had breakfast with a friend of a friend who owns a commercial construction company. He said is bank is killing him. Lowering his line of credit on a almost weekly basis. He said he can barely concentrate on running his company because he’s worried about his cash supply. The banks seem indifferent about pushing companies under and are intent on defending their own selves, even if it means taking a hit on a certain smaller default then being exposed to a potential larger one. Very defensive. And not a positive statement. They are hunkering down.
UK just closed up 3.6% (149pts) @4202. Not a bad day , lead by Barclays up 69%. (Although they only reiterated the statement they made last Thursday !)
IBN – Announced earnings Sat and with Monday being a trading holiday in India the Indian Markets reaction to it will be tomorrow. Growth was much smaller than the 30%+ in past few years and non-performing loans (they are supposed to have most of Indian Banks) grew.
If you own the stock as I do (basis below $15), analyze and perhaps buy downside protection…eg. Feb $15 calls are about $2
MSFT Think it’ll make it back to $18.50 this week?
IBN – If you do not own the stock, a buy-write at this point is probably a good one. Buy the stock around here at $15 and sell the $15 call for $1.9. Good return for 2 weeks if called away.
I picked up the AAPL pre-earning play you recommended selling Feb 80 puts and calls against Apr 80 puts and calls. Is it time to adjust, or best to wait for the remaining $2.30ish in premium to decay? Thanks.
Phil: AAPL covers feb 80 running low on premium: 1.15$ which is 10 %,
have 1/2 cover with feb 80 and 1/2 cover with feb 85,
looks like not much to do at this time.
Matt Ref banks. They do what they supposed to do: A. Watch for their own interest; B. Restrict loans when collateral is going down with value. It is self reinforcing spiral, when we break out of it banks may change their posture. Banks should not be charity or “patriotic” business. I am not expressing value judgment.
Phil: how does QLD look to sell 3/4 cover and maybe make some $ ? feb 26/27 ??
News seems to be S&P / Moody’s weighing downgrade of PFE.
Bro, this guy’s company is making money. Since when is ‘lending’ money to someone considered charity? Since when is lending money patriotic? He said he’s talked to other banks but as soon as he says he’s in the construction business they aren’t interested. Banks can’t turn their backs on an entire industry. Most of his money comes from commercial maintenance contracts. He doesn’t build houses. But it doesn’t matter to the fat cat bankers. They just get scared and say no. They’ve gone from giving money to everyone to giving money to only a select few. It’s a knee jerk over reaction. Unless they know more about their situation then they are letting on about.
Here’s one: What company that charges $3 to use an ATM (which saves them money by not hiring a teller) still lose money? BAC. That’s who. They are terrible. And just what was Thain thinking when he had his office decorated??!! What an idiot. What arrogance. What a pu$$y!
"Unless they know more about their situation then they are letting on about."
“There is no means of avoiding the final collapse of a boom brought about by credit (debt) expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit (debt) expansion, or later as a final and total catastrophe of the currency system involved.”
— Ludwig von Mises
Phil, ITMN has 300% VOL, would you recommend a play? could it be possible that they may be in play which caused this high VOL(so I wouldn’t want to sell the calls)
have a number of feb shorts which are down to 10 % of premium left, (the others are 15plus all thye way to 100%).
GE 16 put
aapl 80 call
uyg 5 put
ibm 85 call,
I suppose you would just set a tight stop but not yet close wityh 10 % premium left ?
CHK/Eph – I’d go for that, it puts them into all premium and you can always roll 1/2 back to $12.50s if you get nervous to the downside.
Banks/Matt – It’s more than hunkering down, I think they are trying to steal properties. I think a lot of local banks see this as an opportunity to pick up properites cheap by declaring defaults. If a guy’s got 20% in a $5M building that brings in just enough to cover the bills and the banks squeeze him out, they end up with the building at 80% and are covered on payments and anything they flip it out for is a bonus so it’s not a bad thing at all for them to push out the marginal operaors. Let’s say they end up owning the building at $4M (their loan) and sell it for $4.2M – on a 15 year 7% loan that $200K would have been about 3 year’s profits on their spread so they are going to accellerate their take and, most likely, they end up doing the financing to the new owner anyway so the payout is totally gravy.
BCS/DB – I know, it’s so silly that we had a whole conversation about them last week when they said the rumors were unfounded, the finances were good and they would move up earnings to prove it but TODAY the market decides to react to it…
IBN/M2 – Holding up well considering. Now is not a bad time to get in for $14.90 and sell March $12.50 puts and calls for $5.40 for a $9.50/11 entry.
Speaking of earnings. CAT said coal demand held up well relative to steel, copper and oil, which were all way off. Gold miners were also a help for them.
MSFT/Eph – That should be a tough line to cross.
AAPL/Bill – They are having huge trouble with $90 and it’s a long way to expiration and I’m really worried about Friday so I’d hold off unless they break $90 with some serious authority. I did like spending $2 to roll the Apr $80 put to the $85 put to start widening the spread on that end (and you’ll need it for margin when you roll anyway).
AAPL/RMM – Same as Bill – enjoy the protectiion.
Banks/Bro – Yes but what if it’s systemic that they are designed to steal property. Remember Jefferson’s quote on banks? It’s been the same for 1,000 years – the rules are designed so the wealthy to lend money to the poor who promise more assets than they have against the property to guarantee it and then, in the inevitable downturn, the wealthy get to take back the land, the poor forfiet the interest they worked to build up (see slave labor) and the rich can afford to wait out the cycle, sell at the next top and then lend out money again to the next sucker who wants to buy….
QLD/RMM – 50 dma is $26.11 so it depends which side they fall on today but covering some on that nice run is prudent.
ITMN/Greg – I haven’t got a clue why they are running as I don’t follow them. I never like chasing these things, mostly I like to go for a biotech when people leave out of boredom while waiting (like DNDN) and then get the hell out on the next pop.
Phil: SKF earlier: were you selling or buying ?
RMM/List – GE is not flying back so 2x the March $12.50 puts covered by $5 puts is same $15 downside you have now but all premium on the putter. AAPL is a wait, UYG is one you may as well give a week and see if they bounce but if you can get an even roll to the June $4 puts and don’t mind waiting then why not? IBM is worth holding to see how people take that job news but if they pull back and you can roll to the March $90s for $1 (currently $2) then that’s probably as good as it gets – $1.50 is probably a realistic target through expiration.
Very funny – CC "liquidation" prices are still higher than WMT’s regular prices. So ridiculous to act like a sector is having problems just because a poor operator can’t compete. Whenever you have boom times you find crappy retailers like CC surviving or thriving as there is so much to go around they can make money even with an awful business model but once the competition gets serious in a downturn – they all look surprised when they get wiped out. Electronics and computers have always been like that because it’s not just about selling but about managing inventory over time and that’s something very few people do well because manufacturers are always dangling carrots to get retail chains to take crap off their hands and the weak operators always end up with a warehouse full of crap nobody wants in exchange for a little bonus money….
Eric Bolling just got out of half his USO, he’s a pretty good energy trader so maybe a small top here.
SKF/RMM – that was selling the naked puts as a way to play the financials bearish per conversation with Matt re his desire to buy SKF calls.
Good call by Bolling – USO $37 puts at $4.90 have $1.40 in premium so not so bad looking for $6+ and out if we break $34.
OIH up over 5%, XLE up 3% so they are half the rally and another big chunk coming from materials means this is not a good rally so far. If you have DIA or other long index puts then best to roll them up to higher strikes while you can.
Phil – Ref Banks.
So, if you are right, banks should be making a lot of money.
Phil I agree about Kudlow (nails on a chalkboard).
But now to listen to a blithering idiot like John Kerry is just as bad; as if he knows anything about the banking system.
Sue: Senator, one of the criticisms of your op-ed is that there wasn’t a lot of meat on the bones.
Ha… that was priceless.
I don’t care what party is in power, Congress is truly incompetent and bound to screw things up badly.
Phil, I think you might have got that one right. It’s this guy’s ‘marginal’ account thats getting fooled around with by the bank. They know he can’t weather the storm without credit. He holds land in downtown Richmond. They could be after that. But, I don’t know if it’s possible for them to get at that the way the deed is held. But maybe. I certainly would not put stealing land beyond the capacity of a bank. And while banks don’t need to be ‘Patriotic’. They sure as hell shouldn’t be ‘Unpatriotic’ and take advantage of people while they’re down. There are good reasons why I think banks are bad businesses!
Phil: DIA is up, your comment ??
I have DIA puts in 2 accounts:
protective apr83 puts, covered fully with feb 84
trading account: apr83 puts, covered with feb83, but in addition some naked puts feb 83.
I wonder what you suggest ? TXS, for the DIA puts I always need your help.
VLO I wonder the best way to fix this position. I’m not worried about the put, but I thought I’d put my whole position.
-1 Feb 22 Put
– 2 Feb 22 Calls, -1 Feb 24 Call
+ 2 Mar 15 Call, + 1 Jan 17.5 Call
I guess the easiest thing to do is to roll the Feb 22 –> Feb 24 and pay for it by rolling the Mar 15 –> Mar 17.5. I’d put them in to more premium and still have decent downside protection. I was wondering if you see something better. Regardless of my caller situation, what do you think about rolling my calls Mar 15 –> Jan 17.5 even. Giving up $2.50 in strikes for 10 months of time doesn’t seem bad, especially since it is for free.
Phil/XOM – a friend in the industry working for a competitor of XOM says that XOM is actually prwetty good compared to others, in terms of operating margins. I haven’t looked at the numbers myself, but he is not as gloomy as you are on XOM.
Banks/Bro – No, they have to call a bottom to the cycle early so they eat 6 monts to a year with the intent of being property sellers in the up cycle. Generally the push to get people out before they realize they can refinance, which would allow them to hold out through the downturn and possibly squeeze the bank out of the picture. There are plenty of small towns in this country where you can look at commercial deeds where the same 3 banks own most of the town at one time or another.
VIX down 5% today, looks like it would fade very fast if we get back near 9K.
Speaking of analysts you shouldn’t listen to… C upgraded LEN this morning and they went up $2 and now retraced $1 so that’s 30% up and then 15% dwon in 3 hours so far… GRMN allso got an upgrade, which is strange with the auto outlook but I do like them. HSBC downgraeded a ton of gold miners, I’d like to see their logic on that.
Banks/Matt – whether or not they are after that specific property, the idea is that all their rules and regulations are there to "force" them to take advantage of people when they are down. So much of the law is designed to screw the little guy, especially business law, patent law (we talked about Friday), monopoly legislation etc – all designed so big firms can sue little firms out of existence. When it comes to real estate – the Magna Carta forced the king to give the land to the peasants but then the nobels realized that they could make more money selling the land over and over again than they ever could simply holding it and farming which is what really led to the end of castle walls and the development of towns and villages (as putting a church in the center of 100 acres of land makes that land much more valuable as people vie to be close to the town centers). The old model was the king or lord would offer his peasants "protection" and they would work his land but the new model allowed the lords to collect a pile of cash as the peasants took everything they had and used it to buy the land, which they would then work and get taxed on in exchange for less protection than they had before while all the care, feeding and education of the families became the workers responsibilities. Since they sat on huge pilles of money and since the poor needed money and didn’t have enough to buy all of the land that was available – the mortgage system began and the fact that people willingly enter into contracts where they obbligate themselves to pay $2,000 a month for 30 years to buy a $300,000 home ($720,000) which they must repair and pay taxes on shows how great this scam really is.
DIA/RMM – up is good, that’s my comment. I don’t want to win my cover plays – it means my other plays are losing! Your $84 puts look just about right, same as they did on Friday – probably same as they will tomorrow. Still a month to go and a ton of possible March rolls. Apr $83 puts should be rolled higher for .50 per $1 and, if not, then no worry as they must be the right strike.
Cramer says DRI had big month-to-month improvements, same as I saw with CAKE.
VLO/Eph – earnings are this week you know… Rolling out to Jans is good idea, giving up position is irrelevent as long as you are happy with potential sale income. Feb $22 putter is probably money in pocket. and the other spread not likely to hurt you but Feb $22 callers can be rolled to March $24 callers for .7 and that’s not a bad way to shove them into anohter $1.50 in premium but it’s a little more bullish on VLO and I’m not so positive they have a good Q as their spread went way down and sales are down so mainly I’d get to Jan so you don’t get burned.
XOM/Jordan – I’m not "gloomy" on XOM overall but I am gloomy on XOM at $80 or even $70 as they could have the greatest margins in the world but in Q4 ’07 oil was at $95 and in Q4 ’08, oil was at $45 so that would have to be on HELL of a margin for them to have a good comp. Q1 was no improvement and last time they reported was 10/30, when oil was still $65 and I really don’t think anyone was forecasing their earnings at $40 YET THE STOCK IS 10% HIGHER NOW THAN IT WAS THEN!!! THAT IS INSANE!!!
ISRG having a good day, up 8%.
Steel with a big sell-off since my comment at 11:19 that I was baffled they weren’t down. I guess it just takes a while on a Monday… 😎
USO with the 1:30 pump not worth riding with the puts up a quick 10%.
GE Mar 12.5 calls and puts — argh, keep trying to get filled at 2.95, 2.9, 2.8, but premiums keep collapsing. Should I just take what I can get (2.67-2.7?).
ajaytoo if you still like the entry, do half!
Phil – Banks. If the market value of assets decline, banks cannot put more of these assets on their books. This is a policy problem, banks –as is shown in their performance, are in the hole as rest of us, so they should stop digging. Banks may have a visibility to both sides of a deal, I mean they see books of business that wants to borrow, and books of the borrower’s customer. If they see problems they prefer leave some change on a table and not to make loans. Please note that there are many loans made, there is boom in refinancing. Banks don’t want to do it b/c significant percentage of those who re-finance are defaulting. So, the fee based business is good, but banking – not so much.
Naked puts or spreads on X might be an interesting play.
$22.50 puts are .75/.80
That’s a long way down for X. Would you own X for less than $22, even w/ bad earnings ?
SLG earnings tonight. I like them long.
SKF. I would like to point out that SKF is now green today. It is also up 12-13 off the intraday lows.
Yet, the OTM calls, such as the 280’s I had sold; are still down $2 from Friday.
Gotta luv that. Shows what kind of decay these will have; also the near impossibility for SKF to get that high.
Cap, good work on SKF, it is pretty unbelievable what fear people have. Even if SKF spikes, it will not last at such high levels.
the market just doesn’t like anything the Obama administration is saying-hopefully they come up with something
Closed SKF going to take a gample on UYG now…
Phil: have trouble understanding the 12:26 comment on GE:
I have hedged stock position, now only (no callers left) with feb 18 putters, this one is DITM at 3.9$ ( base is 1.49$),
flying back jargon: you mean will not until OPEX move up ??
so you say: roll to march 12.5 ( 2x 1.56$= 3.12$),
covered by 5$ puts is the same $15 downside:: do not understand thsi.
Cap: as I missed selling the 125 put, maybe I can sell soonn the 200 call ???
This looks like a good time today RMM
I sold a 290 and a 310 call
GE/Ajay – Just get the put money on this dip and wait and sell the cals for more on a bounce but make sure you have a total, like $2.30, that you don’t get less than so if you get $1.60 for the puts than your goal is to get $1.20 for the calls but no less than .70 (now $1.10).
Banks/Bro – I’m talking marginal commercial where the value is a computation of the rental income. If the property is servicable then the banks can take it over – if it’s not worth it for them to own it they just bleed you dry and sue you while foreclosing to "lower their exposure". Best for them, in our new system they get the government to take all the really bad loans off their hands, which is just yet another way of taking more money from the taxpayers, who are just trying to pay their own mortgages. Don’t even get me started on how ridiculous property taxes have now become…
X/Cap – Oh I’d be happy selling the March $25 puts for $2.55 as a cheap entry at $22.50 as a long-term hold.
SKF – quite the turnaround! Would be great if they zoom back up to where we can sell calls as it’s a nice buffer against the puts sold earlier!
Obama/Greg – Better they not like what he says now and they overdeliver than they overpromise now and lead to 4 years of disappointment. Would it have been better for Bush to say "Mission Accomplished" or stand on that carrier and talk about the great progress we had made and the objectives we had achieved but warned of the long, hard fight that we would have the resolve to continue until our vision for a better Iraq has time to take root in the hearts of the people who long to be free and will one day be welcomed as our brothers in democracy? Just because your constituency is made up of immature yahoos looking for a quick fix doesn’t mean you have to cater to them because those same people will throw a temper tantrum as soon as they find out you lied about there being a Santa Clause…
GE/RMM – you have the stock and you have the Feb $16 putters with $16 of margin and the putter is worth $3.90 and has pretty much no premium so you can roll them to 2x the March $12.50 puts at $1.65 ($3.30 total) and cover with 1x the $5 puts for .12 and that puts them into $3 of premium at a net cost of 0.72 with no more downside risk than you have now. Presumably you collected some money for the original puts so this is a nice way to roll them lower and cut your net entry and, of course, you can always sell more calls to cover at some point.
Made 7.5 % on selling SKF 210 in 5 min.
At least this afternoons drop means there can be a hockey stick finish !