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Thrilling Thursday Morning

Pre-markets are on fire!

After looking at all the bad news yesterday and writing about it in the morning post, it took us all of 12 minutes of trading to call a bottom in the 9:42 Alert where I made the first general call to hit the Buy List since I last updated the trades on March 18th.  That day we were at 7,761 and, 2 weeks later, on our second test of 7,500 in 2 days, it seemed worth taking a chance on our hedged entries as we had some near and clearly defined breakdown levels where we could flip back to bearish if we had to.

In that same alert we flipped our DIA covers to bullish with a target to hold 7,550 (the same one we were watching all week) and this time we hit it and never looked back.  We did make several cautious moves in the late afternoon – JUST IN CASE we had a massive reversal and we finished the day 55% bearish (meaning our long DIA puts are 1/2 covered) which we will happily flip to 60% bullish if this pre-market rally (up 2% at 6am) looks like it has legs.  We don't mind taking a few hits on our DIA covers because the purpose of them is to let our long plays run and we surely wouldn't have been comfortable leaving a 300-point recovery on the table without downside protection.

The federal government is saying they will back the warranties of the Chrysler or GM vehicles. Well that’s great news for consumers — combine the efficiency of the federal government with the honesty of car mechanics…   President Obama is giving GM 60 days to come up with strategy of viability for spending taxpayers’ money. GM should have said to him, “Hey — you first.”  – Jay Leno

It was the Jobless Claims that made us nervous, yesterday's ADP report was TERRIBLE and we have claims ahead of the open at 8:30 along with earnings from CREL, KMX, MON, MOV, RAD and SCHN which we are weary of but what's trumping all market fundamentals is the hopes that mark to market accounting rules will be relaxed today and banks will be able to make up any numbers they want for their asset values so – Yay, I guess…  Yesterday I said that the government's actions are like replacing the carpet and furniture in a basement with a leaking pipe but ignoring the leak.  Changing the accounting rules is like redefining what "wet" is and declaring the problem solved if humidity is below 120%!  Still – this is, above all else, a crisis of confidence and a little of that goes a long, long way when we are down so low.

Although we were very skeptical of the rally, my closing comment to members at 3:44 was: "Be careful bears – We are in a very good spot for FASB and the G20 to both make nice noises and then the 650,000 jobs lost in the morning can be spun as a good thing because it’s much better than that silly old ADP report and we could gap up 100 easy."  Our overall game plan can be summed up by my earlier comment to members at 2:50: "I don’t think you should risk being too bearish.  Perhaps a little bit of upside protection just in case, something like FAS that can really take off if we break way higher.  I don’t see it but this is unrelenting and it’s very possible that they announce the rules tomorrow and the financials spike 10% as if it’s news and then Cramer hits the BUBUYBUY button on the financials tomorrow night and CNBC plays it every 20 minutes on Friday until the bears are left whimpering in a corner.  THEN it will be time to short!"  So we will go with the flow, until it's time to go against it – that's the plan

We still have a bit more to go before we get out of those resistance lines on the S&P with 833 being last Thursday's high, which would be just over a 3% gain for the day so we'll be watching that line closely.    The Dow topped out at 7,900, Nasdaq 1,580, NYSE 5,225 and Russell 444.  Those were the levels we hit, keep in mind, ahead of an almost 10% pullback over the next two days and we will remain on guard for such an event until we are happily proven wrong by holding those levels for at least 48 hours.  A large part of this morning's positive market move is a 1% drop in the dollar as China revalued the Yuan overnight.   That shot the Yen all the way back to 100 and the Euro broke $1.33 and the Pound hit $1.46.  This is the best kind of dollar drop as it lowers our export costs to China and Europe without raising our commodity prices too much.

Well, not all commodities, as oil is having a massive party this morning, driving up from $47.25 yesterday to $51.50 as of 6:15 despite a massive build in inventories yesterday of 2.8M barrels of oil, 2.2Mb of gasoline and 300K of distillates DESPITE imports being down 2.1Mb per week from last year and DESPITE refineries operating at 81.7%, 1.4% lower than last year (at 15Mbd that's another 1Mb per week off-line).  There was, in fact, so much oil and products NOT being used in this country last week that we shipped 1.65Mb PER DAY OUT of the country.  Tempting though it may be, we've stayed away from the oil trade lately as it is clearly going back to being manipulated nonsense.  

The Baltic Dry Shipping Index fell yet another 2.5% today and I hate to bring these things up on a rally day but WHERE IS THE BEEF?  If no one is using oil and no one is shipping anything – are we really having a rally because banks can now fiddle with their books again?  So let's have fun as our stock market roller coaster races up the tracks to retest the highs but we'll take it all with a Lot's Wife-sized grain of salt until we see a proper break-out on good volume that holds – is that too much to ask for? 

We couldn't ask for more from the Hang Seng, which jumped 7.41% (1,002 points), erasing all of last week's losses and popping them back to 14,521, a level last seen on Jan 7th and just about where they really broke down last October.  The Nikkei gained 4.4% (367 points) and Bombay added 4.7% but the Shanghai was up a subdued 0.77%, still a 7-month high.

Europe is up about 3% as of 8am this morning as the ECB cuts their key rate to 1.25%, a bit less than was hoped for bet lower than what their recent rhetoric had indicated.  At 1.25%, the deposit rates for overnight loans are right about zero, so 1% is probably the lowest the ECB can run without causing other problems.  The ECB didn't provide a reason for its decision, but Mr. Trichet will brief the media at a press conference scheduled for 1230 GMT. The Euro jumped above $1.34 immediately following the smaller-than-expect cut, but fell back again as traders await Mr. Trichet's comments.   We'll be watching last week's highs of the European indexes to hold today to give us a preview of our own close.  The FTSE topped out at 4,000, DAX 4,250 and CAC 2,900 – all of those must hold if we are to be expected to hold our own breakout levels.

We shoudl be off to the races with yesterday's financial plays, especially FAS, which should be good for a huge pop.  As I reminded members on Monday, when FAS again touched $5 (and posted free in our Tuesday morning post): "How many times will you see this ETF go from $5 to $7.50 before you start buying some at $5?"  Today I will remind all of my readers – How many times will you see this ETF go to $7.50 and not take your profits off the table?  The same can, of course be said for FAS's evil twin, FAZ, which will once again spike down to $17.50, where we can sell $20 puts for $6+ and we have many strategies for rolling this entry down the road to a point where we end up with great long-term protection for our financials.

As much as I hate to bring up reality on such an exciting morning, we have our jobs report and it's a new 25-year record at -669,000, about 12,000 better (worse?) than expected.  This makes 9 consecutive weeks of over 600,000 pink slips being handed out and continuing unemployment is now 5.73M.  That means tomorrow's unemployment figure will be a stunning 8.5%, the most since 1983 and the 4-week moving average rose to 656,750 from 650,250 with continuing claims the most since records were first kept in 1967.  So party on Garth – just don't plan on doing it at work because no one is likely to be in the mood…

So let's enjoy our market roller coaster today but let's remember the harsh reality behind those jobs numbers.  People are losing their jobs, they can't pay their mortgage, they get foreclosed on, they leave the community and there is less business so companies cut back and more people lose their jobs…  It's the leaking pipe in the basement and we still haven't done anything to fix the actual source of the problem.  At best, you can argue that more stimulus from the G20 and a change in mark to market regulations is like going to Home Depot and buying a pipe wrench – we're still a long way from actually stopping the leak!

What we are accomplishing is taking the worst-case scenario off the table.  From our 8,650 base we said there are 3 things that could EACH knock 20% off the market.  One is a GM bankruptcy.  Although this is still a possibility, it is once again put off for 60 days and it looks like it will be a restructuring at worst, not a liquidation and that's not even good for 5% (432 points).  Second is a major bank failure and that looks to be off the table entirely.  Third is a minor country failure (like a Baltic State) and that is less of an issue with no more bank failures and a doubling of the IMF reserves so, unless things change considerably, we can look to be around 432 points below 8,650 or 8,218 so that's what we can consider a fair medium point for the market to be valued at (we'll call it 8,200).  Applying our 5% rule to that puts the top of our range right back at good old 8,650 and the lower end 7,790 – pretty much right where we should be testing today.  Isn't math fun?!?

So it all comes down to whether or not we feel that the FASB magic wand will really make the banks all better and that money will once again flow through the system and oil will stay over $50, which will stop Russia, Mexico and Venezuela from imploding and that currency traders will regain confidence in global FOREX and stop putting all their money into dollars which will keep our balance of trade from adding too much to our massive deficit as long as everyone keeps lining up at our Treasury auctions to keep buying low-interest dollar notes.  As long as all that goes off without a hitch – everything will be fine!

Be careful out there!


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  1. Excellent point on the Hanckock Tower, which was worrying us yesterday and continues to do so….

  2. Phil/all
    FAS up big in premarket- any play here today that makes sense or this chasing ghosts?
    FAZ- would it be wise to set up short play on the financials sometime today assuming financials run up and go short for Fri?  i.e., pick up April 17.50′s? If so , at what entry?
    Also- re: FAS- you mentioned yesterday in one of the comments that FAS is good long term for a buy write deal. If so, wait for $5 again?

  3. morning phil
    Iv been thing about some thing. What do you thing about pooling some money from members, have you invest it and give the monthly profits or part of it to food banks. The money will grow and pay more profits for food. And at some point people can get thief original investment out and the fund lives on. Too Many hungry people around and food banks going dry. This is America people.

  4. hello phil, i sent an email regarding a billing issue through the "contact us" site. could you please let me know if your office received it. previous couple of correspondences did not seem to make it--perhaps due to site upgrade or something…thanks.

  5. Good am – enjoyed the macd articel
    Question re: trade on fas:    
    yesterday am, I had some bgz, which I have been holding as insurance on other long postions…now, I am down about $8 per share…on the other hand, at the close yesterday I bought a bunch of April 6 calls (for a trade) as well as some FAS shares (to hold)
    Since I am trying to learn better cash mgt and trading best practices, would the smart move be to close out both trades and clear a profit or leave the BGZ alone and scale out of the FAS using trailing stops

  6. the financial crisis has ended--all due to a wave of the Barney Frank wand!

  7. pstas – re: FAS – just my opinion on buy/write….why not enter anywhere below 7 put on the buy/wtite and if you are a long-term beleiver, simply average down and maybe you’ll get your five…Also, if you write the April 7.50 at the open (assuming a $.50 open and a $1.00 value on the FAS DU), your cost basis now is $5 anyway
    your worst case is that you are collecting premium for a while (assuming you write April 7.50 or the May 7)

  8. phil – my 8:27 post addressed to you (or certainly anyone else who wants to offer 2 cents)

  9. It seems that jobs numbers no longer move markets. Sell 2 or 3 cars more than expected and you can move markets. More covers for my shorts. Humbug

  10. jobs --not really important--accounting fiction WOW

  11. DB think this is a sell on the news day--all i see now is that the economy is recovering (without eople working) and the banks are fixed—-all positive spins--looking really hard at FAZ

  12. What did Ken Lewis have to say ?   anything meaningful ?

  13. Despite futures, AMZN down 50 cents pre market on volume ….. any reason ?

  14. AT&T seeks to enter e-book market ?

  15. Barclays downgrade.

  16. Citi downgrade – 65 PT

  17. Corleone/Sell the news. – It’ll take some selling to work off the pre-market gains. But I’m all for it :-)

  18. I already had one short on DIA for 23 cent gain.   Looking for a new re-entry.

  19. Phil, I am only being shown the GUEST VIEW of your site.  I’ve logged out and logged back in but the problem persists.  Call  Programmer Matt STAT!

  20. Market goes straight down from open ?

  21. FAS/Pstas – I wouldn’t chase, as above, let’s see if we hold our breakout levels.  The real opportunity this morning is to sell FAZ puts short but we need to give them a chance to run down.  If you already have short FAZ puts, then it’s a good time to roll down into the excitement as your higher caller loses premium.

    We don’t want to jump the gun as we could keep going and going if we break through.

    Today we’ll be watching last week’s highs of  Dow 7,900, S&P 833, Nasdaq 1,580, NYSE 5,225 and Russell 444 for resistance.  We had a sharp fall from there last week so we’re going to be cautious.  In Europe it’s FTSE topped out at 4,000, DAX 4,250 and CAC 2,900.

    We may finally be getting a good entry on gold as well.  Possibly a test of $900 and we’ll call an audible on that later.

    Breakdown levels remain:  Dow 7,636, S&P 805, Nas 1,525, NYSE 5,075 and Russell 420 but nice and far away now – it would be really tragic if we hit those!

  22. AMZN is a Must Short into 2 downgrades and its up almost $1

  23. Short DIA
    Short AMZN
    sold C $4 calls
    sold PQ
    Long SRS

  24. Phil: increase cover for DIA from 1/2 to full with apr 77 ?

  25. Cramer — premature ejac…… ?

  26. OOOOOH , Cramer getting tuff questions from a pretty face…..

  27. Cramer — priceless.  That’s right, change the rule and everything’s fine.

  28. cramer calles it over!!!!!!!!!!!!!! end of depression!!!!!!!!!!

  29. What a rip-off, FAZ $20 puts just $5.20!  Not worth selling at that price.  Hoping to sell the $17.50 puts for $4+, now $3.50.

    Pooling/Micro – A nice idea but I couldn’t do it with the fund now.

    Billing/Lunar – I’ll have Greg look into it this afternoon.

    BGZ/Bcfla – Rule #1 at PSW is "ALWAYS sell into the initial excitement," what that means is that it’s best to sell to suckers when news hits or we gap open as you usually get your best prices.  The reverse of that applies to you getting "blown out" at the open on BGZ but you can see why I don’t like those as much as options for a cover.  You don’t want to be forced to sell and it would be great if you could instead scale-in here to add cheaper protection.  In general, it’s the same rule as with everything else – let’s take a deep breath, watch our levels and see what’s real before doing anything rash.

    Don’t forget though, if you have DIA June $80 or so puts – now IS the time when you do want to take advantage of a roll up to the June $82 puts, now $6.85 or + $1.10.  They have a 0.08 better delta so you pretty much get the dime back on the first dollar of pullback and it will put you in a good position to sell DIA Apr $80 covers, now $2.80, if they hit $2.50 (roughly at our breakout levels).

    Crisis/Corleone – What crisis?  8-)

    FAS/Bcfla – Don’t chase applies to buy/writes too.  Once we are sure we’re holding higher levels, then we can write at higher strikes but we don’t want to do it at the top of a 5% run in 24 hours.

    All our indexes kicking around 2.5% rule at the moment.  Transports at 6% despite oil up 7% – I guess that alternate energy stuff is working already.

    Remember my prediction that Cramer would cheerlead the FASB like it was the messiah for the markets?  Well CNBC isn’t waiting for tonight – the Pumpmaster General is already on the phone at the open!

    DIA/RMM – Taking out all covers here, rolling up long puts and reloading with $80 covers at levels mentioned above.

  30. Well sitting here with cash and missing this move up.  Will wait till 10 to 10:30 and see if there is a pull back at that time.

  31. Phil,
    Good article on mtm! "mark to market for dummies"

  32. Gosh this puts me in a quandry…  I had planned on shorting into the Cramer crowd buy, as Cap so eloquently put it – it’s premature jubulation on Cramer’s part and that indicates to me that "THEY" are not getting the pop they had hoped for from the FASB news. 

    XLF is having trouble at $9.50, the Qs aren’t breaking $30.50 and we’re stuck at our levels for the moment so shades of last Thursday already and one thing the bulls DO NOT want is a double top forming after they threw the kitchen sink at the markets.

    Still, we have to respect the power of the PPT and let our levels be our guide.  My favorite way to play the turn remains our trusty DIA puts and shorting the FAZ puts as both have long-term uses, even if the markets do pop another 5% today (Hong Kong did). 

    Dow is over, Nas is over, NYSE is over so it’s up to the RUT to confirm 444 and the S&P to confirm 833 and we have to cover with DIA $80 puts (60% bullish) using 3 of 5 of these as the on/off switch to get a little more bearish.  If these levels hold, however – there is no point to taking any bearish postitions until the close.

  33. AAPL Is now trading at 111, which is above what was major resistance at 110.  I am having a really hard time not pulling the trigger on the may 110 puts for $7.  Any thoughts?

  34. Re: your suggestion on selling FAZ naked puts, any thoughts on buying FAZ 15 or 16 calls?

  35. I took a position in FAS at 6.67, with a stop at 6.45. What do you think of selling the 7.50 calls for 80c or maybe more in a bit?

  36. Cash/Steve – Better to be in cash than on the wrong side of this one!

    Factory orders up 1.8% but las month revised down so sort of a wash.  Nothing to stop Rallyzilla though…

    The SOX is the only index not over last week’s highs now so they are worth watching.  245 is their mark, now 241.

    Gold broke below $900 and is a stay away if they can’t hold it but I do think they snap back.  Remember we are hoping for $875 from that post I wrote on buying gold 2 weekends ago.  The short play on gold is, of course, fantastic!

    VIX is only down 3.5% today, was down more yesterday on far less move.

    AAPL/Craig – I would suggest you use those levels (3 of 5 of our majors) as an unemotional check on any bearish play.  If we can hold those we can move up to that  8,200 target very quickly and if we get over 8,200 – we’re not likely to turn back unless there’s some really negative news.

    FAZ calls/Bvar – Same thing there, it’s a bear play and not advisable at the moment.   The difference in selling puts is you are selling the premium which WILL wear out in 3 weeks no matter what FAZ does so that’s $4 (for the $17.50 puts) that can never be taken away from you and then we look ahead to the roll to the Oct $12.50 puts, which are already $4.30 so probably your worst case is owning FAZ for $8.50 in October by sellingthe $17.50 puts for $4 now.  Compare that to your worst case buying the calls

  37. Phil, what is the "power of the PPT"? thx

  38. Phil:  Sold Apr FAZ 17.5 puts a couple of days ago for 2.45, thinking I wouldn’t mind taking the assign at 15ish.  Would you recommend to roll down to 15 puts for 1.45 debit?  Or stay put with the 17.50′s, since I still think financials will fade later in the days to come.  The bid/ask spreads are quite wide right now, reflect significant disagreement right now, and making it hard to get a good fill.

  39. Re the Apr FAZ 17.50 puts above, I did hedge yesterday with selling Apr FAZ 25 calls for 2.50, which seems to be working, so I’m wondering if I should do anything with the 17.50 puts…thanks!

  40. Everyone is calling the bottom and everyone is pumping good news. Nows the time to look for shorts.

  41. Shorting AMZN at 74.25 and up has been a ring the register type play.  On my 3rd short position of the day.  Good chance AMZN sub 73 today or lower IMO, especially if/when we get the inevitable selloff in the market.  TRIN ticking up now.
    MTM — a) everyone knew something would be changed; b) what they got was less than they wanted;  so c) this 400 point rally since open yesterday is BS.

  42. MON  missed.  They might be a good buy in a day or two when things settle out. 

  43. OPT or anyone who uses Tradestaion
    I am tryiong to set up my charting with pivots and 5 SMA…I am using the "floor trader pivots" but need help with which straegy technique to pick for the moving average…Do I pick 2 line MA and just set one of them to 5 or should I use something else

  44. Phil:  This a good entry point for AUY?  $8.62

  45. Greetings All!!!  I think we may have seen the "CRAMER TOP"

  46. Phil you like BIDU puts again?

  47. FAS/Barf – They could go back to $5 very fast so not much protection in the calls unless you don’t mind riding it out.  Certainly do something before something bad happens!

    PPT/Steve – The plunge protection team – long  story.

    FAZ/LvModa – I wouldn’t worry yet.  When you are stuck in a put like that, always look ahead at your rolls.  The now $3.30 $17.50 puts can be rolled to May $15 puts or July $12.50 puts or Oct $10 puts at little or no cost.  Only when you begin to find those rolls unpalatable should you feel forced to give your putter any premium (more than 1/3 anyway).

    BS/Cap – Yes it is but it’s the kind that sticks….

    Earnings:  KMX was good as expected (great actually) but CREL, RAD and SCHN were all terrible.  MON did not look like a miss to me, pretty good performance in a rough quarter.  RAD could not have been worse and no one seems to mind and SCHN went up on -.25 vs -.05 expected so I would be very, very careful about playing anything bearish under these conditions!

    AUY/JW – Worth a toss here if you hedge. The stock is at $8.88 and the May $8 puts and calls can be sold for $2 so that’s $6.88/7.44, not a bad entry.

  48. BIDU/Bigs – No, not today.  They just got an upgrade from someone to $230.  Notice GOOG went flying too.

  49. Both V and MA look like ascending triangles ready to break out.  Bout some calls on V this morning because how can AMZN go up without credit card action.

  50. Under the "what the hell do I know" category; AMZN goes parabolic touching 76; should still sell off; but to where ?
    AAPL rocking at 112.30

  51. TRIN hits 1.00 first time today

  52. Phil, GLD coming down nicely. what’s the recommended play now? The Sept 85 still the way to go from the weekend post? doesn’t make sense to sell 92 calls now though.

  53. Stuck with DIA June 74 puts. Any suggestions?

  54. CELG is taking off now.  Low volume but all buys.

    V/Steve – Good logic on that. 

    AMZN/Cap – I don’t get everyone’s fascination with shorting them.  FSLR is back at $140, much more fun to short.

    AA is still a nice recovery play, not the bargain we first go but a nice buy/write at $8.35, selling the May $7.50 puts and calls for $2.40 nets $5.95/6.73.

  55. I received the email of PSW World News today.   Thanks.  I often forget or don’t have time to read Phil’s Favorites, and it’s easy to skim titles in the email form.  Unlike the alerts, which were redundant to me since I"m online most days, I’ll keep that subscription open.

  56. Looks like a determined attempt to hit Dow 8000

  57. FAS, long with a stop at 6.40. If I sold calls, they could go naked if I’m stopped, so that would need to be watched. I’m a little surprised FAS has not ridden the market wave at all since the open.

  58. 7999.75

  59. CELG was just churning this morning not going any where so bought in at 39.35 and yeehaw.

  60. 8002.46 — mission accomplished.

  61. Singapore Steve
    Don’t get the AMAZON credit card relationship. AMZN are taking business from other retailers. All retailers take credit cards. Most bookstore purchases are on cards already IMHO.  Only minor benefit for V I would think.

  62. interesting that as the dow makes new highs the financials are making new lows.

  63. Phil, GLD very close to your 87.5 target.

  64. Mail/Eph – Good, I’m glad you like it.  We wanted to give members good control over what they do and don’t get and I love the headline feature.

    RUT getting up around 5% at 450!

    AMZN/Steve/Steve – I don’t think it’s that much of a win/lose relationship.  AMZN is looking up as an early sign that retail is not that dead.

    GLD/Mampcs – Very hard to be patient but $875 was a concession from my original $850 pullback as the point at which I’d want to re-establish.  Don’t forget we got out at $980 back in Feb so this is a 60-day move we’re tracking.  The reason we’re at $875 is we blew our chance at re-entry in mid-March when they spiked down to $867 and then flew back to $950 so I raised my target not wanting to miss out twice.

    SOX just hit their highs!  That is a signal for money to come off the sidelines – we could jump up another 1.5% from here.

  65. Phil:  What levels do we need to hold now?  Does DOW 8000 change anything?

  66. Steven
    Agree loose relationship at best but when all of the retail sector goes up it wil ldrive them up too.  I did like the ascending triangle on both V and MA.   And no one buys iphones with cash.

  67. PTEN at $10 is a good oil play.  Selling May $10 puts and calls for $2 for net $8/9 (scaling in).

    ZION is a cheap bank play and just broke resistance at $11.  Stock at $11.45, selling May $11 calls for $2.05 and May $9 puts for .90 is $8.50/8.75.

  68. The recession is over!  The dam had been breached!

  69. Levels/JW – Same as breakouts for now, even if we pull back, holding those levels is bullish.  Now we actually have to look at 5% levels for the day to possibly hold into the close.  RUT and SOX already there, NAS and NYSE are close, Dow and S&P both at 3.5% so magic 8,200 is the line for the Dow and 855 for S&P and that would put us just under our new range, just 5% below our 8,650 goal.

    Not saying we get there today and getting there without a pullback would be amazing so we actually have a very high-percentage short opportunity at 5% on the S&P as we’d be looking at the one-day 5% rule and multi-day 10% rule and almost 30% off the bottom and way above the 50 dma at 790 so I’d say that (855) would be a great spot to short the S&P for at least a 2% pullback.

    M is still cheap at $10.16, selling May $9 puts anc calls for $3.05 nets $7.11/8.06.

  70. DBA and DBC rockin’ and rollin.  Those were from last week.

    UYG at $2.90, selling May $3 puts and calls for $1.02 nets $1.88/2.44.

  71. Why UYG ?
    also when i said for the food bank thing i didn’t mean the fund you have set up, just something we all pool together. if it doesnt make sense then it doesn’t i guess. i don’t know how it would work.

  72.  Phil:  This is a basic question, but I am new at this.  I am short UNP April 45 calls, sold at 1.3. UNP is now around 46.  Do I wait to closer to April expiration to roll to a later expiration at a higher strike?  What is a good strategy in this kind of situation?  Thanks.

  73.  Does anyone know how LIBOR has reacted to these new guidelines?  —- I have a concern that LIBOR rates may increase bec. of these rules, which may bring about some anxiety.  

  74. I’m seeing the real downside of being overly hedged today.  I’m for the day, but marginally, and I"ve had to spend a bunch of money to adjust buried callers.

  75. RIMM   One of the companies I was buried on.  I was + 2 Jan 35 / -2 Apr 40.  I spend 3.75 to roll one of my callers up to Apr 45, but I’m leary at doing of them going into earnings.    I got whip-sawed on them once where I adjusted my position in response to a spike and then it reversed and I want to avoid that again.

  76. Phil: what is signal for uncovering DIA puts ?

  77. phil,
    financials not participating with this whole kabuki being about making them look good makes me very nervous, thoughts?

  78. Phil: is shorting FAS apr 6 attractive ?

  79.  nothing like an old fashioned European rally as the peasants run amock in the streets!!

  80. I would expect financials to be leading this rally, but they seem to be pretty weak…cause for concern??

  81. Qs breaking 32 is a big deal. 

    UYG/Micro – Because we’ve already looked into the UYG abyss and returned from there.  It’s less likely to go bust than, say, just picking C and we don’t need it to take off, just to drift along between $2.50 and $3 and we’ll be happy to roll it 10 times.

    Food Bank/Micro – I love the idea, I just couldn’t be involved unfortunately.

    UNP/John – That was one dangerous naked short!  First of all the caller has $2.10 in premium so not exactly an emergency.  Also, you don’t want to be panicking out and buying at the highs, that’s what you want other suckers to do.  Since there is a clear roll to the May $50s (now $2.05 and we would expect your caller to lose .75 in premium per week at least) it’s not a big emergency unless we think UNP is going to plow through that but, if you really think that will happen, you can just buy the Aug $50s for $4.25 to stop the bleeding and then you can just keep rolling the caller forward into an eventual veritcal, no matter how high it goes.  On the whole though, better to watch and wait a bit.

    LIBOR/Occam – It’s not coming down, that’s for sure.  Still, what this does is create a flood of money (backed by fake assets) and that money has to go somewhere eventually.

    RIMM/Eph – Don’t forget earnings are today and I am not seeing how they are going to hit .84 a share when Q4 was .83 and last year’s Q1 was .72.  I think people buying RIMM like this are on drugs and I like the QID $45s if they can be had for $2.10 (now $2.20).  Just resolve to add 2 Jan $50s if they take off and roll the callers to 2x whatever.

    DIA/RMM – I would uncover if the Dow hits 8,200 to see if they hold it or if 3 of our indexes fail the 2.5% rule.

    Financial/Maxt – I think a lot of this was baked into the financials already and it’s the rest of the stocks that are "surprised" by this rule change.

    Shorting FAS/RMM – Way too dangerous.  They could be $9 tomorrow.

    Good old DOW is poking along and may break $10.  I still like them at $9.82, selling the May $9 puts and calls for $2.27 for net $6.95/7.98.

    Obama speaks at 1:15 so no rest for us!

  82. Phil:  Lots of stocks breaking out today, but the volumes are not unusually high.  I find this curious.  Perhaps a red flag?  For example:  Notice the volume on AAPL & RIMM.  Volume was higher yesterday than today.  Your thoughts?

  83. Phil: are you bullish on FAS ?
    or right now, FAS too dangerous to buy or sell ?
    I closed most of my FAS at 6.7$ this am,

  84. Phil
    Financials moved up today but not MS.  Any thoughts on why they are left behind?

  85.  I think it’s a little disgusting that Faber is wearing S&M gear.

  86.  Phil:  I think that I was unclear regarding my UNP — sorry.  I own the stock and sold April 45 calls at 1.3.  Assuming that I don’t want the stock to be called away, is it better to wait until closer to expiration to roll to a higher strike at a later expiration? In general, when the market has moved above your strike price, is there any particular strategy to follow when doing this?  Thanks again.

  87.  wow—IYR at 27, seems to be trying to get to 28.  Crazy.

  88. Volume/JW – I mentioned that in the above post – it’s hard to have a real low-volume break-out but I see it more as a reason to be cautious jumping on board, not a reason to be a contrarian as the volume could break in to the upside just as easily.

    The most likely rally killer will be the budget battle with the Republicans talking about how the US is putting our great, great grandchildren in debt etc. etc. – that could spook the markets more than any BS arguements about fair value of assets.

    FAS/RMM – Too in between.  I love them at $5, hate them at $7.50.  If they break out and establish a floor at $7.50 I may start a new relationship.

    MS/Steve – I think someone downgraded them but I haven’t found a specific.

    Transports now up almost 10% on the day – it’s like trading the Hang Seng live!

    UNP/John – Ah, since you have nothing to lose there is NO reason to panic early and buy back the caller.  You can roll him any time and it’s highly unlikely he would call you away with more than 10% premium.  You sold the caller for protection and to earn the premium – don’t lose sight of either.

  89. phil--thanks for getting me out of my financial short position yesterday--saved my ass

  90. XLF  I’ve got 1/2 covers with Apr 9s.   Should I do a 2X roll to Apr 10s or just sit tight?

  91.  Gold just made a jump.

  92. eph
    I would sit tight on XLF.  15 days till OE so you have at least 5 more days for the sky to fall before your callers will start to move on you, that is the delta starts going up fast.

  93.    FXP is in the low 20′s. Might be something to look at tomorrow.

  94. MS
    Credit Suisse went from outperform to neutral.

  95. What is the World coming to? Meredith Whitney is now recommending buying banks!

  96. Phil: have a look at my LDK buywrite, still in loss position,
    have stock, and jun7.5 putters(base 3.3$), have no callers,

  97. I can’t believe we have to waste time discussing an alternative budget that can’t possibly pass.  Doesn’t Congress and the media have better things to do than talk about fantasy budgets? 

    G20 communique is very inflationary.  They will spend many more Trillions to boost the markets.  Really picked gold off the floor

    Ass saved/Corleone – You are very welcome!

    XLF/Eph – Same as John’s UNP, why pay them the premium.  You can always roll them to the May $10s if things keep going up or 2x the May $11s and that’s 25% up from here.   Is that not enough money for you to make in a month that you’d rather spend money to take chances now?  After a run like this, you may want to consider rolling to 2x the May $9s and putting 10% in your pocket.

    FXP/Silent – Wow, thanks for reminding me!  FXP is now lower than it was whent he Hang Seng was at 28,000!  The Apr $23s at $1.50 are the simplest way to play.

    MS/Steve – thanks!

  98. Phil; review of buywrite of SNDK, have gain,
    have stock, and have july 9 puts base 2.13$, no callers, had big runup, could sell apr calls strike 15 for 70 cents,
    what is your view ?

  99.  Hi guys,
    General question.  When you’re partially covered and things rip, do you always roll up 2x or some multiplier realizing the loss on the caller and getting better position (more premium) for about even or minimal credit/debit?  Or do you write another batch at a higher strike to get paid some more while leaving your callers alone and not realizing the loss on your callers just yet.  Does it depend on how out of position you are with your callers?
    I’m thinking perhaps since the markets are so volatile, use the ups to get more credit by writing a fresh batch of calls on the rips and use the pullbacks to buy them back if they drop in value significantly.  And with rolling 2x, you’re adjusting your caller position, but you’re not getting any more credit and you’re committing yourself to realizing a short term loss.
    What do you guys think?  I feel the determining factor on the decision is how much you want to keep your long position (again, goes back to how out of position you are on your callers).  Also, I guess your old callers are also currently providing you some protection too if you write another batch instead of rolling 2x up.

  100. CROX went ballistic last 2 days.   Are people suddenly buying plastic shoes?

  101. chenboy
    Rolling up 2X is always an option if you have money if you are 100% covered.  But if you are only 3/4 or 80% covered even if the stock rips up, you will still come out ahead.   Your only screwed when your 100% covered and don’t have the capital to buy more calls so you can roll up 2X.    Staying at 40% covered gives you a easy option to roll up 2X. Your just not as greedy as you may want to be especially if we are in a bull market. 

  102. Time to short natural gas with storage where it is and up coming week season?  Looking for a good short
    play out to June or July.  any thoughts?

  103. FXP – Also liking Jan $15s for $9, selling May $25s for $2.05.

    SNDK/RMM – I would not be greedy and sell the May $13s for $2.35 and roll the July $9 put to the May $11 put, which seems safe enough.

    Rolls/Chen – Always depends on how full you are on the position and what the outlook is for the time period.  As you can tell from my last few comments – I’m very much in take the money and run mode at the moment.  Using the peaks and troughs to wriggle into a position is great, especially when you are willing to stick with it long-term.  Too much on this board we talk about positions like they are all day trades….

    CROX – Tina just bought CROX slippers and she really likes them…

  104. Phil,
    I have some DIA 74 puts with a basis @ 1.5. Its near .6 now. I was expecting a crash this week based on ADP and unemployment. Do you have any suggestions on positioning them ? Thanks !

  105. Nat Gas/Bvar – They are so low down here it’s hard to short.  We had a good run shorting CHK and EOG last week and they have had the nerve to come back so maybe we can reload on those tomorrow.

    Uh oh – Barack looks tired!  He’s way behind schedule and 1:45 is his officail talk time now. 

  106. Phil    Is there any way you can tie your reponse to a question so that we have a complete understanding of what you
    are responding to maybe tying the time of the question to your answer

  107. Phil/Steve/Chen
    Need some help understanding Chen’s query on rolling 2x – are we talking about buying leaps, selling the stock and rolling out & up the buried callers? This would be helpful to me as it looks like everything I have is buried at the moment. Also, any opinion on the timing of this relative to expiration would be helpful.

  108. Can’t get the FAZ 17 1/2 naked callers for $4….want to get my losses from yesterdays financial shorts back! (Yes, thank you for making me suck it up and take my losses last night on my stupid gamble. Would have been further buried today).

  109. Can’t get the FAZ 17 1/2 naked callers for $4….want to get my losses from yesterdays financial shorts back! (Yes, thank you for making me suck it up and take my losses last night on my stupid gamble. Would have been further buried today).

  110. Phi:  Thanks for FSLR tip! 

  111. Deano – I was just talking about callers.  Writing calls against your long position (longs established either via leaps or stock).  And the situation in particular is when you’re partially covered, say 50% covered against your long position.  When the price rips in the short term, like today, what should we be doing and how should we be thinking about it?  You can either write a fresh batch of calls at a higher strike, taking in more front month premium or use the opportunity to roll up 2x to 100% covering with not much money out of pocket.  Rolling up 2x will help you up the chances of not being buried.  But at the same time, you’re losing some protection on the longs and you’re also not extracting more credit either.

  112. Phil: on those buywrites: always full cover in selling puts and calls or less cover?

  113. Phil: please comment on my 12:58, TXS.

  114. RMM, on the buy writes, always full cover. I guess you could tweak it if you like…just calculate the % return if called away vs. the % discount if put to you.

  115. Market looks like it topped at 12;30  all red since.
    BAC only up 0.12 c now
    C only up 0.04

  116. Phil – 12:29 post — budget — but it is true, is it not ?

  117. chen/deano
    It makes a difference if you have stock or leaps.  if you have stock then I always go 100% covered because the idea is to be called away.  You still have the option to roll up but usually wait a few days after a run to see if it holds.  With leaps it is important to maintain some delta advantage over your callers.  If not you can go in a really deep hole but if you are only 80% max then you will have delta advantage.   You can always roll your leaps up to help pay to roll your callers up.  But if you get close to OE , like we are now, then your callers begin to increase in delta faster than your leaps.  One way is just to roll them out to the next month even and wait to see what happens.  The delta will drop and not kill you as we get close to OE.  Plus remember it is always nice to have 2 strikes difference, gives you more ability to adjust.

  118. DIA/Niten – Those are way out of the money now, hard to fix.   If you have the margin for it you can sell the $78 puts for $1.52 (getting your $1.50 back for now) and rolling yourself  to May $75 puts at $2.16 which will give you more time to be right.  You can also sell 2x the $73 puts for .55 each and buy a $72 put for .40 which takes .70 off the table and, if you are lucky, you’ll catch a break on a sell off and get a little more back but that’s a very limited upside.

    ROFL Bill!  Well I do start my responses with the topic of the question and I do answer the questions as near as possible in order as I can so if you want to, you can probably catch up that way.  Also, I find it useful to open chat twice – one for reading and one for writing so I suppose if you did that when you read my comments, it would make perfect sense…

    Rolling/Deano – It depends if you are full covered or 1/2 covered and how close to expiration and what your alternate strikes are in longer months.  Best if you give us a couple of actual situations and we can look at those.

    FAZ/Ajay – Well you could sell next month’s $14 puts for $3.  Pretty much costs $7 in margin to make $3, a fair trade and easy to roll to longer $10 puts.

    FSLR/JW – Yes they terminally suck but keep getting bought – always a good short when they get too full of themselves.

    Buy/Writes/RMM – Well I try to sell the puts on the way down, then buy the stock on the bounce and then sell the calls at a top.  It works about 1/3 the time but the satisfaction you get from hitting it on the head is worth it.  If you are buying 10, scaling in 2 or 3 at a time and trying to catch it is good practice.

    Nice pullback here – watch those 2.5% lines on the indexes.

  119. LDK/RMM – Well selling calls would have been a good idea at $7.50 after all that suffering…

    Budget/Cap – Yes true but shhhhhhhh!  Also, it’s been true for 20 years, not Obama’s fault in particular.

  120. Phil
    Did you remember to short FSLR at 142?

  121. I thought Whitney said to buy banks.  Is C that sucky to be down all day.   Steady decline since the opening. 

  122. Budget / Phil; yes that is so; however, Obama is compounding the problem to absurd levels.

  123. SKF retakes $90

  124. Phil: how about my X position:
    have LEAP 2010 jan 17.5, base 5.5$, have jan 17.5 putters base 6$, top open, no callers,
    could close out with a 8.7% ROR, all depends on outlook for X,

  125. We seem to be missing Matt today. Looks like he’s still not able to log in?

  126. Oil – another leg up?  Wouldn’t mind reloading DTO at $130s.

  127.  Phil
    Thanks for the help,
    Buried position examples: AMZN – APR Calls @ 65, HOG APR Calls @12.5.

  128. Excellent, I completely agree with Obama on executive comp.  The market should set pay levels rather than the current system where CEO hand-picks his board and they give him what he wants.  It’s a simple principle: you can’t pick your own boss.  Competitive board elections where shareholders can pick nominees would solve a lot of the pay abuse.

  129. Phil    how about buying 1000 shares of crox selling the May 2 puts and calls collecting .65

  130. Eph – Ref BoD. There is disconnecting between words and deeds: I did not noticed that GM BoD was approved by shareholders and I am not sure which BoD relived Wagoner and approved new CEO.

  131. Phil: is VLO worth holding for many months, have 16 % ROR,
    have stock, base 18.1$ and LEAP jan 15, base  6.1$,
    NO cap on top/no callers, but have putter apr 16, base 1.06$,

  132. FSLR/Steve – too many things to short today but thank goodness silent reminded me about FXP!

    Obama saying nothing that should be lifiting the markets 5%.  He talked to people, they made some progress….

    X/RMM – Of you are in good shape and well in the money, why not just cover with May $26s for $3.05?   That’s a 30% ROI against your longs.

    AMZN/Deano – I assume you have the underlying stock.  Well you left it way too long so there’s not much you can do, UNLESS, you want to get out of the stock and switch to 2x the 2011 $50s at $35.83 and then roll the $11.73 $65 callers to 2x the May $80 calls at $5.42.  You go from one share that would be called away at $65 to 2 shares that have a $30 spread and you take about $4 off the table so little difference to you overall but, to the upside, once you get rid of the callers you gain 2x.   HOG – Same kind of thing if you want to go to 2x the Jan $7.50s but sometimes you should just let something go and get back to cash – there’s always another trade tomorrow…

    CROX/Bill – I like it but that company killed me last year so I just stay away now.

    VLO/RMM – Into the summer they are absolutely worth holding.  Sounds fine to me but you should half cover.  Again – it’s just greedy not to take $2 for the May $19s isn’t it?

  133. eph
    Major companies are incorporated in Delaware because it is against their law for shareholders to have any say.  What will Biden do?   There the law does not allow shareholders to oust CEO’s or boardmembers and limits what they can pu onto the ballets.

  134. this thing is getting ready to explode!

  135. Phil: UNh, a tough one,
    have stock with a gain, base 19.48$,
    have 2x putters jun 22 base 3.35$,
    top open/no callers,
    this position needs some improvement please.

  136. Good point, Bronek, but the govt involvement with the banks and the autos are the exception.   In general, I think we need competitive elections for BoD.  As it is now, 12 seats are open, 12 people are nominated, and if they get even 1 vote they are elected.  Allow shareholders over a certain ownership % and any shareholder who’s held shares for a certain amount of time propose candidates for the BoD and have them be included with the proxies.  You need a majority to get elected to the Board.  This kind of reform is resisted by the Business Roundtable, but just on principle I think it should be adopted.   You want to support the CEO, but board needs to be a watch dog not a lap dog.

  137. I’m no expert on business law, but I think the SEC can trump state law when it comes to governance.   What’s Biden got to do with it?

  138. SingaSteve; am sure you made $$ on AAPL today, you know how to play AAPL, I went in early and took a small profit, closed much too soon,
    you must have a whole basket full of AAPL$$$$$$$$$.

  139. Gotta run to get PT on my broken foot.  Back after the close.  Let’s see if you guys can keep us above 8000.

  140. We mention shorting FSLR, anyone have opinion on STP? BOY has it moved.

  141. eph
    Biden was Senator from Delaware who protected their laws so the state could make money.  The SEC does not have that governance.  Until you change some of the state laws or make a federal one that overides them, you will continue to have CEO’s who can name their lap dog without any due process of the shareholders other than selling their stock.

  142. RMM
    I had sold out my AAPL calls yesterday and bought in after some run.  But still have a 25% profit on them so far, if I sell.

  143. UNH/RMM – The improvement is to stop messing around and sell calls.  If you have the stock and only sell naked puts you are simply doubling your downside risk with no hedge – effectively you are taking a strategy that is supposed to make investing safer and turning it into hyped-up gambling.  Your base on the stock is $19.48 (does that include what you sold these puts for?) – if you sell the June $20s for $3.30 your basis is $16.18 and you’re called away with a 20% profit.

    Cramer says the depression is OVER!  Gee, I didn’t know we were in a depression and it turns out I missed it already….

    Be careful – this may be the blow-off the bulls were waiting for and XLF still can’t break $9.50.

    I think at this point I’d go naked on the DIA June Puts (60% bearish) unless we break 4% on the Dow and S&P (now up 3.5%).  Just as a guess that we pull back a bit and get better sells.

  144.  phil, jpm only up .06 cents?  baked in? i think that earnings are going to give boys reason to sell – they are selling inflated covered calls here.  phil xom puts here (buy)?

  145. Shortest Depression ever !
    Seriously, I don’t know what crack people are smoking today.
    RIMM will be interesting; those guys are snake oil merchants.  Their numbers really cannot be good.  Just think about how many BBerrys cancelled at C LEH BSC on and on, plus retail.  Where will the growth come from in increasingly competitive field ?

  146. Steven – I am short STP.  It is a whacky stock so buyer beware.

  147. STP/Steve – Actually I like them.  FSLR is bad because they use rare materials to keep their cost down and it limits their growth.  STP just has a cheap production run and that gives them legs.

    $52.50 seems like a good spot to short oil on the futures.  Friday’s are generally good days for oil though but I’m banking on a big dip like last Friday as they’ve had such an idiotic run.

  148. Anybody get the memo on companies hiring ?

  149. I definitely misjudged today & the strength of yet another FMD.  I expected 833-35 to be a firm ceiling; so I missed on that; although the day is not over yet.

  150. Rolling out all the bulls and cliche folk today ….

  151. JPM/Jo – They don’t really hold assets like a bank, generally they just bundle up the paper and take a profit so this isn’t as big a help to them.  XOM is too dangerous to put at $70 but very tempting.

    RIMM/Cap – If they beat then I have to go lay down and rethink my whole concept of the economy…  The real question is – do they need to beat to stay up at $48?  That will be the interesting part.

    Laws/Steve – Just like we got a Patriot Act jammed down our throats you will see a Corporate Governance Act by the end of the year.

  152. yeah cap--it is a hiring fest—citi is loaning the money to the companies at 55% interest

  153. Phil – I was out and missed the DIA trade
    which jun puts, the 80?  also, with regard to this BGZ postion I still hold and added to mid-am – should I just hold this instead of the dia

  154. RIMM, CHINA and MU after the bell.  Not very likely any of them beat.  If MU and RIMM both miss, then QID calls could be very much fun.  QID was $71 on March 9th and $50 yesterday morning but the May $42 calls are $5.20.  Nice general protection if you are thinking of going bullish on other tech into earnings….

    YRCW $5.79 – that one was a buy and forget at $1.60 less than a month ago.  The market is so irrational…

  155. cap-dude on MSNBC said the bear marhet is DEFINITELY over

  156.  cap, bought a small amount of rimm 45 puts.  would buy more but realize i am going vs. sentiment.  if xom can go despite all tthe oil parked on the shorelines, than rimm can be spun as well, but worth a small gamble.

  157. SRS – reloading some here @ $46s

  158. Speaking of buy and forget.  GE is still just $10.88 and really not seeming like they’re going under.  May $10 calls are $1.67 and May $9 puts are .50 for net $8.71/8.86.

    TXT is still being given away at $7.23, now hitting the sweet spot and we can get a quick $1.33 from the Apr $7.50 puts and calls for net $5.90/6.70.

    CAL looks good at $10.40.  May $9 puts and calls are $3.45 for net $6.95/7.98.

  159. Phil — rethinking strength of economy.   Everyone, and I mean everyone, that I know, personal or business can only express what a disaster business is, or the economy and their outlook.
    does anyone know anyone with a contrary experience or view ?    Anyone saying yeah things are great; or even getting better, and they are going out and buying a new Benz; diamond; coach bag; computers; houses; anything ?

  160. Corleone; the bulls today are riders on the storm !

  161. BGZ/Bcfla – Remind me after markets so we can figure out where you are.  We always like to cover with DIA puts,June $82 puts are the current favorites and, if we hold 2.5% to the close, we’ll do a 1/2 cover with Apr $80 puts

    Cap – if you are going to go out looking for facts you may miss the entire rally…. 

  162. And I would like to be a bull … I have long positions too; but this is ridiculous.
    I think today may prove to be the high for a while.

  163. Phil; I’m not missing the rally; I am up today.  I am selling into the rally; and shorting into it.

  164. Plus, the rally happened ..,, 6500-8075    666-845.

  165. Say I like a stock, GE for example.  Is there some website that allows me to see, among all the ETFs who has greatest concentration of GE?  Trying to comply with a restriction that only ETFs can be bought in a 401k plan and am looking for an ETF that has a lot of GE.

  166. Phil
    What’s your prediction for tomorrow other than the sun will rise. Are we ready for a small pullback?

  167. Think of the bravery involved going into tomorrow’s Non-Farm Payrolls as well as RIMM earnings tonight.  I’m impressed on that basis alone and if we shake off misses from RIMM and MU then we just have to throw up our hands and buy anything that isn’t nailed down (HOV back to $1.73!).  It’s hard to imagine the market can just forget everything bad that happened this quickly but our main mistake has been assuming the market would act intelligently so we won’t be doing that again!

    GE/Jordan – The Dow is an ETF with GE.  That is an interesting idea for a database, back out the ETFs so you can search on a company and find out what ETFs it affects.  I smell a business model! 

    Next Tuesday pm is the real start to earnings with AA, BBBY, MOS and RT.  Wed am is STZ, FDD and SGR with JOSB mid-day.  Tomorrow morning is NFP and ISM at 10.  Next week there is very little data other than Consumer Credit Tues and Wholesale Inventories on people can afford to be brave into the weekend. 

    I’m expecting a modest sell-off tomorrow but modest would be 200 points after this run. 

    For the close though, just in case we get burned at the open, a 1/2 cover on the long puts with the DIA Apr $80 puts at $2.50 UNLESS we can sell the $79 puts for the same (now $1.90) but, either way, another wishy-washy 55% bearish into the close.  It didn’t hurt us today as we had a chance to snap bullish at the open so we can afford to chance it again since we just whacked a full set of putters.

  168. Economy? Hell, who knows.
    My business is off 30-40% from last year but I just got back from a weekend in Phoenix for Spring Training (go White Sox) and I was surprised. AZ is supposed to be in the crapper but the planes/hotes were full. People were buying in the shops and restaurants were busy. The hotel I stayed in was just off I-10 near an industrial/distr area. The heavy truck traffic was unrelenting- all day and night and on the weekend too.
    What recession?

  169. I like STP too. Held it all the way up from ~5.50 to 11 before finally getting nervous and selling April 12.5 Calls against the position. Not sure what to do with it now it seems horribly overextended but just isn’t stopping going up….

  170. Look at SRS down 9 to 44 – wow

  171. I am always impressed at how they can hold a level in the market or a stock against all the facts.
    A 200 point selloff would suit me just fine.

  172. Uh oh, man the lifeboats !

  173. Here’s some cheap portfolio insurance: I just bought the SRS OCT 85/90 call spread for a dime.

  174. How about some TBT?  I know GLD/Gold are down today, but if inflation is getting ready to rear it ugly head, TBT might be worth it to scale into.

  175. Phil: DBC, I think this is worth keeping ??
    have stock at 21.4$, putters  july18 at 1.15$, no callers, should sell july calls 21 ?

  176. Phil, the FXP trade, buying Apr $23 for $1.50, they are now $1.80  Are you exiting prior to the close?

  177. Phil, DIA options at the close…wait until 4:10-4:15? or 3:59? DIA 79s are rising…

  178. Economy/Pstas – Well that’s my overriding bull premise.  The $50Tn global economy really can’t slow much below $35Tn so 70% of all commerce remains intact, even in a Depression.   With the global markets trading 50% off, everyting is too cheap.  Even broke people need food shipped to them and sneakers from Asia and every time they flick on a lightswitch they burn oil – the people who fantasize about the Dow going to 5,000 are just way off.  Sure we could panic to those levels but that’s all it would be – panic. 

    STP/Steve – They are in a real sweet spot because they are the low-cost provider.  In a real market, they’re not as efficient and not everyone’s first choice for power but, in  a subsidized market, most subsidies don’t specify efficiency so they go in and low-bid everyone.  I think they will have good legs.

    Holding 2.5% to the close would be just fine, about 830 on S&P and 7,950 on Dow.

    SRS/MrM – NIce one!

    TBT/Pharm – I do like that hedge, we played it a while ago but I’ll look again later.

    DBC/RMM – Sure, that was a long-term play.  Nice inflation hedge and super safe-looking with our entry and YES, you should sell calls – it’s the whole point!  When in doubt, sell half….

  179. Jordan – Ref GE follow down to Ownership -> Major holders and scroll down to ETFs

  180. The mood this market is in any earnings that meet or miss just slightly will rocket. And on current form the job numbers tomorrow will cause a rally unless they are around the 1m mark.

  181. FXP/Jordan – When in doubt, sell half.  I really think RIMM misses and chops the market but I can cover with Futures if I’m wrong…

    DIA/Ajay – As long as mo is on your side you can let it go but don’t forget you will get lousy spreads after the bell so maybe better to take $2.70 for the $80 puts than mess around hoping the $79s gain .30 more.

  182. cap – I was just sweating that srs…i did a vert call spread on that today and not having fun…

  183. Jordan – GE. OOPS only MF’s are listed not ETF’s

  184. Oh now you let me in!  I feel like I’ve been in purgatory.

  185. Man big push to get back over 2.5% at the close!  We shall see….

  186. Time on RIMM release?

  187. Economy
    Phil- your macro view is right on. Although my business is off significantly, I saw this coming 2 yrs ago and adjusted accordingly- working out of speculative deals; cutting costs; etc. Despite the depressed level, I am still making a profit.
    People & markets are irrational on the upside and downside. You just have to pick your niches/battles where you can win.

  188.  got rimm puts and may qid calls….hmmm….gonna be interesting

  189. LOL Matt – that was fixed ages ago I thought.  Sorry about that.

    RIMM time/Texas – no idea.  They are whacky Canadians so you never know what they are going to do.

    Good attitude Pstas!

  190. Econmy
    Just to clarify, I may be smart when it comes to my business, but less so when it comes to options/stocks. That’s why I am here.

  191. Now that the market is closed, I had a quic question.  I keep seeing people mentioning a live chat.  Do they mean the conversation that is going on on the comments, or is there some other feature that I am missing?

  192. Craig…just this conversation in the comments is the "live chat."

  193. I think they mean this, unles I have been missing the chat for the last three years. Which could happen… LOL

  194. I love watching afterhours trading during earnings….

  195. Couldn’t get a good fill on the DIA 1/2 covers…stupid fidelity. I guess I’m riding naked tomorrow! Hope I don’t get burned again like yesterday.

  196. Looks like RIMM beat. They are up huge AH.

  197. made some of those frigiin faz losses up from yesterday- need some LVS afterhours magic again--that stock is on fire

  198. From SeekingAlpha:
    Q4 EPS of $0.90 beats by $0.06. Revenue of $3.46B vs. $3.4B. Sees Q1 EPS of $0.88-0.97 vs $0.82 and revenue of $3.3-3.5B vs. $3.35B. Shares +15% AH.

  199. RIMM  Okay, at least I rolled up one of my callers so I’m not quite as buried on them.   Here’s my position, + 2 Jan 10 35 / -1 Apr 40, -1 Apr 45.    Suggestions on how to improve my position for limited cash outlay?  I guess we need to wait until tomorrow to see the option prices, but probably something like 2X rolls on calls from Jan 35 --> 4 Jan 50s, and 2X rolls on the callers to May 60s.   Should I wait until option expiration at least for the callers?

  200. Holy Cow – RIMM with a big beat!  I give up, I just don’t understand that company.  Imagine what they would have done if 2M people hadn’t lost their job during the quarter!

    That shot AAPL up over $115 to match – it’s going to be a wild day tomorrow.

    I wonder how much of that, if any is exchange rate for them?

  201. phil what was rimm actual--it’s not on etrade

  202. DIA covers.   Since I’m not as nimble a trader as you, there is nothing wrong with covering farther away, right?  For example, I went to full covers today, but with a cushion:  + 8 Jun 81 / – 5 Apr 77, -3 Apr 78.   I might not earn as much premium, but I don’t need to sweat the moves as much.

  203. Phil/ In:  I’m not sure what’s going on… I kept trying to sign up for membership but I kept getting an error message about using the coupon with an already discounted rate.  Then I just tried to access today’s blog to see how many comments there were and it let me in.  So I don’t know if I paid or not.. or how many subscriptions I’ve signed up for… or how much I’ve paid for any ot them!  Kind of a mess..  but I trust we can work it out.
    Had a profitable day today.  TG I covered my SKF with FAS last night!  That alone more then made up for my losses on SKF.  Then it was all about milking the two of them throughout the day.  I’ve now lowered my cost basis on SKF and have more cash.  Hope it was good for y ou all, too.

  204. BTW, I did pretty well trading on my own… but it was lonely. :)

  205. RIMM/Eph – Hey, it wasn’t that dumb waiting for earnings.  Now you can roll up your longs with confidence.  We’ll have to see tomorrow but Jan $35s can be 2 June $40s and Apr $40s can be 2 May $50s oor something like that. 

    "Looking ahead into fiscal 2010, we see exceptional opportunities for RIM and its partners to leverage the investments and success of the past year to continue growing market share and profitability," Jim Balsillie, RIM’s co-CEO, said in a statement.

    Wow – What planet are they doing business on and how do we get there?

  206. RIMM going crazy; but is a nickel beat on 50 M extra in REV really worth the run that its had ?  Was 43 yesterday; 59 now AH.
    Tempted to short it here. 
    But no.

  207. Covering in general.   I was confused by some of your covering suggestions today.  For example,
    VLO/RMM – Into the summer they are absolutely worth holding.  Sounds fine to me but you should half cover.  Again – it’s just greedy not to take $2 for the May $19s isn’t it?
    Why is that a better cover than Apr 20 for .75 if you are bullish?   I’ve had problems on this run getting buried on my callers, but it seems like you’re advocating ITM rather OTM.   Is this because we’ve run so far so fast?   In general, I think you prefer 1/2 covers ITM to full covers OTM, but when you need to do a 2X roll when your caller gets buried, do you look to maximize premium sold or cash taken in?

  208. Oh well, at least they were only 5 Rimm puts.  That’s why it was a gamble.  unbelievable numbers.

  209. matt i was worried about your skf—that was a big drop —glad you popped the cover

  210.  RIMM – Now everyone is going to be rigging their books so that they can show an extra $6M in earnings and have their stock go up 30%

  211. Matt – they are fixing your thing as our new member system has a bug in it.  Your prior membership has been extended 5 days while they fix it, that’s all.   Greg will sort it out for you once Matt has the bug fixed.

    DIA/Eph – As long as you are on track to collect $1 from your putters for each 200 point gain in the Dow (so you can roll up using the putters’ money) then it’s fine.

    RIMM/Cap – Well their p/e was down at 15 so if they are showing good growth and +10% earnings then I can see a 20% bump in price, 

    VLO/Eph – Because he’s go $22 puts and it’s too risky the other way.  You can’t get buried on callers when you own the stock, you only get called away with cash and, if that represents a 20% profit in 6 months – then what’s to complain about?  We’re still nowhere near a place where we can afford to trust a rally to hold.  If you go into all your plays with the goal of getting called away with a 20% profit then you won’t be upset when it happens.  A lot of you tend to get greedy and start putting money in and repositioning and taking on more risk and paying premiums to calllers instead of selling them – all to avoid just taking a nice profit and moving on.  The buy/writes are generally meant to pay 15% upside and provide you with 15% downside protection over about 45 days (which is why we’re in May now).  If you make 15% 6 times a year on a position, that’s a 90% gain – what’s wrong with that.

    If you scale in $400 with $100 and lose 20%, then DD at $80 and it loses another 25% and then you DD at $60, which puts you in for $300 with a "value" of $240 (4 x $60) and that makes 15% and you get called away, then you got $276 back on $300 after about 6 months – that’s not that bad!  That’s what happens to you if your stock goes from $100 to $80 to $60 before you rack up your first win.   The problem is everyone thinks they have to be showing a profit every single day on every position or it’s some kind of disaster….

    You can go back and look at the buy list and see how it performed since October with a wide mix of stocks during one of the worst crashes in market history making just one adjustment per month – that’s all you need to do with these trades – have a goal and be patient.  If a stock totally sucks and we dump it down 50% and it’s 10% of the portfolio and we were fully invested due to a series of poor choices then it’s still just 5% out of the portfolio.  If the other 90% makes just 10%, we’ll be ahead. 

    There is no such thing as being "buried" by a caller on a buy/write – it’s simply called a win and you collect the cash and move on.  If there’s an easy roll – sure, go for it but there are certainly better things to stress over in life. 

  212. Well, they certainly are good at rigging their books and burying shorts.

     Good article on the impending commercial real estate disaster that is looming…

  214. G20 TRIPLED the IMF funding to $1Tn.

    Good article on the BS of new mark to model.

    Whiney’s ratings on Banks:


    I’ve thought over RIMM’s numbers and it occurs to me that what happened with RIMM may be that 200,000 people who had Blackberrys from their jobs got laid off and had to give their phones back to the companies, who fail to terminate the accounts (or maybe have contracts) so RIMM keeps booking revenues.  Perhaps they even get bonus termination revenues!  Then Crackberry addicts, even though they just lost their jobs, run right out and buy new phones, initiating new accounts and giving RIMM a great quarter.  Also you had the Obama factor as a big deal was made about his Blackberry usage…. 

    Still, all in all, a crushingly great quarter for RIMM.  MU lost $1 per $4.50 share but are holding up so the market is just in that kind of mood and it doesn’t pay to get in the way…

    Good one Ajay!

  215. Oh hey – Our new "Insider Zone" section is up and running!  It’s the purple box on the main page.  Check it out.

  216. The articles posted by Ilene today (especially the ones from Zero Hedge) on Unemployment and Real Estate make me think…. Just dont understand this rally even more now.

  217. Phil — U were right about Cramer’s show — I never watch, but had to tune into the first minute--Do you secretly control his brain?

  218. I don’t see the "Insider Zone" . Is it supposed to be near the top with the other tabs?

  219. Oops…nevermind. Got it.

  220. RIMM i think lots of people upgraded in the past few months, i know i did (IPhone) i think the upgrade cycle is over for the next few Q’s.

  221. iPhone mania I think must be helping RIMM too….I know a couple Verizon customers that want a smartphone so the BlackBerry Curve was the way to go.

  222. RIMM – I would say good quarter.  Gross margins way down vs. historical.  Can’t trust future guidance.  Revs and earnings seem decent; beat by a little bit, of course after guidance was talked down previously.  Its a game and folks keep falling for it.
    Not sure I see why RIMM was $40 last week and $60 tonite; but then again, I’ve never been a fan of the company or mgmt.

  223. More on RiMM.  I have Blackberry account.  I pay only $20 per month for unlimited email and internet.  I can also get a Blackberry for $90 or less either as an upgrade, or as a new customer.  Most of RIMMs growth is on the lower $$ lower price point consumer side.
    Not sure I get all the excitement.

  224. Nice predictable drop in FAS AH.  Come to papa…

  225. R U for S-ing me?  rimm is up 22.5%?  Cap, have you been watching it?  Has it pulled back some?  I’m tempted to scale in a position short.  The last time it was this high was February 2006?  Am I reading that right?  I’ve never traded it but unless someone can talk me out of it I probably will.

  226. Whoaaa.. I need another drink.  It was that high on Feb 6th.  Not ’06′.  Dohh!

  227. Steve – UR right on Celg….just don’t get it.  SunPower, X, MRK, and others have done the same thing recently, big gap down, go right back to fill it in a day or two.  Oh well.  GILD is still my one to shine.  BMRN will be interesting as they are takeover bait.  BMY was on the march, now receeding a bit. 

  228.  Cap,
    Thanks for posting the article on commercial real estate collapsing. Very interesting read.. some handy links to investigate as well. I have become a bear amongst the bulls lately. At least in the short term. I don’t think we’re out of this mess yet……… 

  229. Cap, i meant ajaytoo… sorry

  230. texas, I’m with you….just hope I don’t get burned too badly.

  231. SRS had it’s highest daily volume yesterday ever.  And the biggest spikes came end of day when the share price was going up.  I think it’s a turn indicator..

  232. Good Morning Phil, Matt & all

  233. Asia Markets :    Friday, April 03, 2009
    (The following is from WSJ; please cross check with other sources to confirm.)   

    Nikkei Average*                                8749.84      30.06    0.34%
    Hang Seng*                                    14545.69      23.72    0.16%
    China: DJ Shanghai*                         281.21      -1.13    -0.40%
    Seoul Composite*                           1283.75        6.78    0.53%
    Bombay Sensex                             10348.83   446.84    4.51%

    *at Close

  234. G20 Supports Asia Ahead of US Employment Data

    Efforts by G20 leaders convinced investors that policy makers were united enough to keep a risk taking rally alive Friday, pushing up Asian markets higher for a fourth day and knocking the yen to a six-month low against the Australian dollar.

    The perception of global policy coordination added to a growing optimism based on sprouts of economic recovery around the world in the last month. For example, a gauge of Chinese manufacturing in March released on Thursday reflected expansion for the first time since September 2008.

    Japan’s Nikkei rose 0.3 percent to a three-month closing high, boosted by increasing optimism about the U.S. economy and active foreign buying of blue-chip exporters he yen’s retreat, which at one point saw the dollar bounce above 100 yen, lifted car companies ,while domestic demand shares such as pharmaceuticals lost ground. 

    South Korea’s KOSPI ended half a percent higher, but gains were limited as shares took a breather following their latest run of advances. Banking issues led rises, but defensive issues fell as investors grew more risk-tolerant.

    Australian shares closed up 1.5 percent, their highest level in nearly three months, as tentative hopes the global economy may have found a bottom spurred buying of blue-chip bank and mining stocks. But shares in gold miners dropped after gold prices fell below $900 an ounce on renewed talk of gold sales by the International Monetary Fund, and reduced safe-haven demand as Wall Street rallied.

    Hong Kong shares rose 0.2 percent, but profit taking pressure following the previous session’s rally slowed the main index’s advance.

    Singapore’s Straits Times Index reversed losses and gained 1 percent. Oil rig builders advanced after oil prices jumped nearly 9 percent overnight.

    China’s Shanghai Composite Index fell 0.2 percent despite strong economic data as investors took profits on big gains over the past several weeks. China’s official Purchasing Managers’ Index for March rose to 52.4 from 49.0 in February, marking its first time in expansionary territory since last September.

    Bombay Stock Exchange’s 30-share index ended at 10,348.83, up 2.99 per cent or 300.34 points over the previous week. The sun will continue to shine on Dalal Street all through the forthcoming week as there is renewed sense of optimism among market participants that the global financial crisis has begun to ebb. However, volatility is likely to be high as India goes to polls between April 16 and May 13.

  235. Euro Shares Flat; Banks, Commods Rise

    European shares shook off early losses to turn flat by mid-morning on Friday with banks rebounding and commodities tracking higher metal and crude prices. The pan-European FTSEurofirst 300 index of top shares was up 0.02 percent at 781.64 points, having earlier been down as low as 773.58 points.

    European shares rose nearly 5 percent on Thursday after world leaders agreed to pump $1.1 trillion into the global economy through extra funding for groups like the International Monetary Fund (IMF).

    The banking sector recovered from earlier falls. RBS was up 12.7 percent after the group said it would cut more jobs and promised a "return to paying dividends as soon as practicable." UniCredit, Societe Generale, Barclays and Banco Santander were up 2.5-5.4 percent.

    Oil stocks gained after crude rose 0.6 percent with BP and Royal Dutch Shell up 0.3 percent and 1 percent, respectively.

    Miners were also higher as copper ticked up 0.2 percent. Anglo American, Antofagasta, BHP Billiton, Eurasian Natural Resources Corporation, Rio Tinto and Xstrata were 0.3-4.8 percent higher.

    On the downside, drugmakers were in the doldrums. Novo Nordisk slumped 11 percent after a US advisory panel failed to back its experimental diabetes drug Victoza, or liraglutide, with votes split on whether it was safe enough to come to the market due to worries over cancer.

    Novartis, Roche and Sanofi Aventis were down 2.4-3.1 percent.

  236. Oil Rebound Above $53 Ahead of US Job Data

    Oil rose above $53 a barrel on Friday after surging by nearly 9 percent the day before, as global markets continued to see the outcome of the G20 summit as positive for an eventual recovery from economic recession. Oil made its largest one-day percentage gain in three weeks on Thursday as markets rallied after world leaders at the summit announced a trillion-dollar deal to act on the economic crisis.

    U.S. light crude [ 52.91    0.27  (+0.51%)] for May delivery rose, up from Thursday’s $4.25 gain that lifted the contract to $52.64.
    London Brent crude [ 53.29    0.54  (+1.02%)] rose.

    Market watchers said recent price rises in the crude market in spite of low demand and heavy supply were likely to be a sign of low appetite for risk outside the $40-$50 a barrel range.

    U.S. factory orders rose in February for the first time in seven months, and a rebound in China’s official purchasing managers’ index (PMI) in March showed the Chinese economy may have bottomed, China’s chief statistics official said on Friday.

    The non-farm payrolls figure, due at 8:30 a.m. New York time (1:30 p.m. London time), is forecast to show a fall of around 650,000 jobs in March to take the unemployment rate to a 26 year high of 8.5 percent.

    Euro Falls vs Dollar as US Jobs Data Looms

    The euro fell against the dollar on Friday in cautious trade as investors nervously awaited key U.S. employment data which are expected to show the U.S. economy suffered deep job losses in March.

    A surge in investors’ risk appetite after Group of 20 leaders agreed a $1.1 trillion deal to counter the global crisis had sparked sharp gains in equities on Thursday, while the euro and other currencies seen as higher risk jumped. Investors were particularly encouraged by the equivalent survey for the UK services sector, which showed the index jumping to a six-month high of 45.5 from 43.2, well above forecasts for just 43.5.

    Investors meanwhile continued to digest the European Central Bank’s decision on Thursday to cut interest rates by 25 basis points to 1.25 percent, less than the 50 basis point cut that had been widely expected. Later in the afternoon, investors will be watching for U.S. non-manufacturing ISM data at 10 a.m. New York time.

    The euro fell against the dollar [ 1.3421    -0.0038  (-0.28%)    ] , but rose against the yen [  134.01    0.05  (+0.04%)    ] after trading in negative territory in early European trade.

    The dollar [ 58.22    0.76  (+1.32%)   ] also gained against the yen after rising as high as 100.18 yen in early trade on EBS trading platform.

    Sterling [ 1.4746    0.0022  (+0.15%)   ] gained against the dollar, having earlier hit a seven-week high of $1.4828 after the UK data was released.

    The dollar’s trade-weighted index was up 0.1 percent on the day at 84.429.

    Gold holds steady above $900/oz, US jobs data eyed

    Gold held steady above $900 on Friday following a slump the previous day when its safe-haven status was hit by a stock rally as the G20 agreed on steps to restore global economic growth and rebuild the financial system. Gold stood at $903.45 an ounce by 0516 GMT, almost flat with New York’s notional close of $903.15. It has fallen about 2 percent this week, retreating further from a peak in February above $1,000.

    Gold may get a lift if North Korea launches a rocket over the weekend in a move that is widely seen as a disguised long-range missile test.

    Th G20 also agreed that some money for low-income countries would be raised by the IMF selling 400 tonnes of gold as previously planned.

    The world’s largest gold-backed exchange-traded fund, the SPDR Gold Trust GLD, said its holdings were unchanged at a record 1,127.44 tonnes as of April 2. Its holdings climbed to that amount on March 29.

  237. Good morning!

    Futures holding up very well so far but 45 minutes to Jobs Report so we’ll see what the resolve is.  Tough levels I see are 840 on S&P, 8,000 on the Dow  and 1,625 on the Nasdaq – they all keep getting tapped in the futures but not broken.  If we break them after the jobs number, then it may be another Free Money Day…

  238. Phil – This is interesting
    TrimTabs Investment Research estimates that all equity mutual funds redeemed $11.2 billion
     in the week ended Wednesday, April 1, versus a revised inflow of $1.7 billion in the previous week.
    Equity funds that invest primarily in U.S. stocks posted an outflow of $8.5 billion,
    versus a revised inflow of $2.3 billion in the previous week. Equity funds that invest
    primarily in non-U.S. stocks had an outflow of $2.8 billion, versus a revised outflow of $557
    million in the previous week. In addition, bond funds had an inflow of $2.9 billion,
    versus a revised inflow of $7.1 billion in the previous week, and hybrid funds had an
    inflow of $810 million, versus a revised inflow of $451 million in the previous week.
    Separately, TrimTabs reports that exchange-traded funds that invest in U.S. stocks
    posted an outflow of $1.4 billion, versus an outflow of $5.0 billion in the previous week.
    ETFs that invest in non-U.S. stocks had an inflow of $502 million, versus an inflow of
    $1.6 billion in the previous week.