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Thursday Morning

Is today the day we break the pattern?

I predicted a wild week on Monday morning and we have been having a fabulous time as it only took me until 12:51 on Monday afternoon to point out to members that we were following a virtually identical pattern to the previous week.   That enabled us to anticipate the gap down on Tuesday morning, as well as yesterday’s stick save.  In fact, I predicted the Dow would close at 8,050 and missed it by 7 points.  Our short plays that day were MA (which we cashed in yesterday with a huge gain), BIDU and FSLR.  The last two are still trading up and I really like BIDU as a proxy for a possible disappointment from GOOG this evening.  Also, we got a downward revision to China’s GDP today to "just" 6.1% growth

I often say to members "We don’t care if the markets are fixed, as long as we know HOW they are fixed" and yesterday was a great example of that as we digested the Beige Book report and, at 2:53, with the S&P spiking down to 839, I was able to post a reminder "20 minutes until stick save" and put up a trade idea for the FAS $6 calls at $2.15 (because they had almost no premium), which closed out at $2.90 an hour later (up 34%). 

We did not, however, change our overall cover stance at the close of 55% bearish.  I would have been more bullish if we had NOT moved past 848 on the S&P, there was a sort of frenzied overkill to the "rally" that made me think we would not get the follow-through that we got last Thursday.  Also, we had to take into consideration that last Thursday closed the week so we have an extra day (and it’s options expiration day!) to play with so, as I said to members in yesterday’s chat, it pays to error on the side of caution – just in case.

Today we have the usual 650,000 people losing their jobs (yawn) along with anemic Building Permits and Housing Starts (550K each expected) and the Philly Fed at 10 am.  The Philly Fed is our biggest worry as it is almost certain to be worse than the -32 expected because it says right in yesterday’s Beige Book: "Third District manufacturers reported further declines in shipments and new orders, on balance, from February to March. Around one-half of the manufacturers surveyed noted decreases in both measures, and around one-tenth reported increases. Among the District’s major manufacturing sectors demand remains especially weak for primary metals, industrial machinery, electrical equipment, and measuring and testing equipment. Several firms in these sectors noted that demand for products related to autos or housing ranged from "weak" to "horrible."

Weak to HORRIBLE – Now there’s a rally cry if ever I heard one, right?  When your own Central Bank uses the word HORRIBLE in connection with ANY part of your economy – you may want to be just a little bit concerned…  On Tuesday morning I told you: "GGP is facing a dangerous end-game with bondholders that may force liquidations that will rock the commercial real estate market" and this morning they did file for bankruptcy – putting a damper on our otherwise happy futures just ahead of Europe’s open (3am).  JPM saved us from a really bad open (so far – 8 am) with a nice beat but they already had their rally yesterday afternoon so I’m not looking for too much but holding the 200 dma ($32.20) by itself will be quite a victory for the financials.  Now we need to get past our 8:30 data to see what kind of day we will have.

8:30 Update: Oops, housing starts were terrible at 510,000 (down 10%) and Building Permits were down 9% but who cares as Jobless Claims fell 53,000 to 610,000 so it’s party time in the futures pit as "only" 20,000 people a day were given pink slips last week – heck, that’s just one person every 4 seconds being laid off and, according to Realty Trac, that "only" led to 341,000 home foreclosures in March so we can look on the bright side and say almost half the people who lose their jobs manage to keep their homes – Yay I guess…

We expected a possible gap up this morning but I put out an early alert to members today, warning them of a possible "China syndrome" as the Hang Seng had a wild day, dropping 200 points in the last hour but really just retesting the morning low where they had dropped 500 points from a ridiculous gapped up open that had sent our futures UP almost 100 points at their open, so lots of shenanigans as people are being flushed both ways ahead of expirations.  To recap the Hang Seng’s day – they opened gapping up 400, were down 150 an hour later, up 100 30 minutes after that, flat for 3 hours then up 100 in 30 minutes then down 150 an hour later before finishing down 86 for the day.  Pull back to the weekly view and we call that hitting mild resistance at the 40-week moving average at 16,000.  For the US markets, it’s that 10 am Philly Fed report that will likely make or break our day.

The rest of Asia drifted slightly lower for the day as well but, as with the Hang Seng, nothing to be alarmed about after such a huge run.  The Nikkei also had a roller-coaster day but there was only one turn as that index gapped open 100 points, rose 200 more points into lunch and then gave all of it back in the afternoon.  Playing the Nikkei down after lunch has been a good bet for 2 weeks now.  LG Display lost $191M selling (or NOT selling) LCD displays but claims they are turning a corner and expect a 20% increase in shipments for Q2.  Are they overly optimistic or are we seeing "green shoots"?

It’s 9am and Europe is thrilled with our data and JPM’s earnings and they are trading up about 1.5%.  This is interesting because data in the EU shows Industrial Production there fell 18.4% to record lows and inflation was cut in half to 0.6% for March, also a record low.  Overall Capital Goods Production was off 24.7% for the year but the markets are liking the inflation number as it gives the ECB room to add more stimulus as their mandate is to keep inflation just below 2%.  This means the bank may follow-through with additional cuts as Trichet had been concerned that too many cuts would fuel inflation – clearly we’re far from it at the moment (but we’ll get there!).

We’ll have to play it by ear into the Philly Fed, ready to get bearish if we can’t hold our levels which are currently: Dow 8,000, S&P 847, Nas 1,585, NYSE 5,321 and Russell 456.  Yesterday’s build in crude took the US inventories to 19-year highs yet oil remains stubbornly at $50 on continuing NYMEX shenanigans.   This is going to end very badly I think but, other than the OIH, we’ve been scared to short energy as the pump monkeys are in firm control of the energy pits this month.  Natural gas inventories are at 10:30 and we’ll see if a build there can knock the wind out of the NYMEX but probably not

It’s all about Google tonight and we made some plays yesterday and will surely have more today as it’s always fun with earnings on expiration day.  In addition to JPM, we got good news from CCK, BAX, CY, FCS, GCI (yay!), ITW, ISRG (yay again), KNL, NOK (that’s a surprise), PII and SHW (more of a shock than a surprise) with LUV, HOG, VIVO, PH, BGG, IIIN, SON, TITN, UTEC and UMPQ disappointing us so it’s turning into a bit of a stock picker’s market – our favorite kind!

Let’s have some fun today but stay mindful of the meltdown – we need to watch our levels carefully and get bearish the minute we lose 3 of 5.


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  1.  Phil… what do you think of buying a few FAS $8 May PUT (FASQJ)  if FAS tries to make a quick move towards $10 this morning?
    I have a trigger set to grab a few puts if FAS "ask" reaches $9.98.

  2. Phil,
    Will GGP’s BK create an oppurtunity in shorting that sector?  SRS or any of the REITS?

  3. phil, any suggestions on how to play nflx going into earnings…currently no position in it.  seems there should be profit taking over the next couple of days with these record prices.

  4. Based on the commerical real estate forecast, does not SRS have to rise and therefore selling puts at this level seems to make sense?

  5. Phil what’s your bidu position right now?

  6. short DIA

  7. FAS/Merk – I wouldn’t play that way after JPM – there’s not a good fundamental reason to short the financials but we can sure play momentum with the Apr puts, just like we did the calls yesterday.  We’ll have to see and, don’t forget – we don’t care what FAS does on a chart – it’s what XLF (or IYF) does that matters.  If XLF holds $11 then you can’t be bearish and even holding $10.50 is not bad as that was our breakout spot yesterday and we’ll be watching that for a breakdown today and tomorrow.  It’s powerful when XLF and FAS line up, like yesterday it was 10.50 and 8 – that’s a good way to play but 11.50 is the 5% rule for XLF and that will be 10.35 for FAS so that may be your turning point, not $10.

    SRS/Chuck – Man you guys have got to stop with the SRS!!!  Have you not seen all the people that play has run over this month?  It’s over – stop shorting real estate until we have a really good reason to and GGP does not really have a value issue, they have a financing issue.  Their occupancy and collections are actually no worse than last year, it’s just that they can’t roll their debt so they are being sqeezed to death.

    GOOG off to the races.

    NFLX/Lunar – I haven’t looked but remind me later when things calm down and I’ll check them out.

    BIDU/Bigs – If you’re rolling up at $2 per $5, it’s the May $190 puts at the moment, $14.90.

  8. I’m enjoying the Zero Hedge blogs… very interesting reading.

  9. DIA $80 puts are cheap at .70, great mo play if we break $80.40 on DIA.

  10. pHIL: SRS shorting, no way, but I have calls and that is no good either.

  11. Phil:
    Do you like any SHW puts with this surprise surge upward on earnings?

  12. Horsemen being bought to prop up the Nas, don’t forget we expect to have some support at our levels, which we’re at but once they start falling, it’s a quick ride to the 2.5% ruleStill, if we hold them, then you have to respect the rally…

    Philly Fed in 5 mins.

    Zero Hedge/Texas – Tyler will be joining us as a regular featured author in his own box!

    Let’s see where the buyers are:  COST, JWN, CL, RT, OSIP, IBM, KSS for some reason, GOOG still going.  Not too impressive a group of leaders so far.

    Nas is outperforming overall so we’ll see if the Qs can break 33 – that would be a good rally signal.  AAPL $120 would be a good sign.

    Philly Fed is -24.4 – way better than expected.  That’s confusing.  Beige Book was through about April 1 and this report covers maybe 1 more week and they are very different but this is funny as we’re going down anyway so I guess that was the plan!  

    Let’s just watch our levles and try not to outhink things

  13. Phil:
    Are you suggesting buying DIA 80 puts?

  14. Phil,
    …if we’re respecting a rally, what would the exit strat b 4 the 80P’s?

  15. SHW/BV – I’d stay away, they affirmed guidance and had a really nice beat so lots of shorts will be running for cover there.

    DIA/Bvar – Well yes, when they crossed 80.40, those puts are .82 already so almost missed 20%  and I do not think it’s a good idea to chase as .77 needs to be taken off the table on a play like that.  With momentum trades, you are just getting in when the index crosses a line in your direction with a very tight stop and the second you make 10% you should be looking for the exits.  Once we cross 20% you absolutely set a stop at 10% and a 5% trailing stop is a good idea at that point. 

    Speaking of Mo plays:  GOOG $370 puts at $7.60 with a stop at $7, looking to cover with $360 puts at $7.60 or better.

  16. I find the GS ongoing debate quite interesting, why so much interest in it? We will never know everything, but let us look at what they told us – we were owed approx $12.5bln from AIG. AIG gave us $7.5bln in collateral to secure this obligation. We secured the balance using CDS arrangements with other counterparties for the difference. If AIG defaulted, GS would have kept the collateral from AIG and also claimed payment on the other transactions. It is quite plausible (to me at least) that they would have suffered little or no loss regardless. GS knew their AIG exposure needed hedging and were unlikely to have hedged it with other counterparties who represented a poor credit. It is plausible that some other bank may have become more stressed as a result.

  17. well, this is exciting….

  18. Hi Phil, can you please help with these two adjustments…thanks! Been selling premium each month since Nov and Jan.
    Long Call APPL Jan 70
    Short AAPL Apr 95 Call

    Long AAPL Jan 75
    Short Call AAPL Apr 90

  19. Scottrade doesnt allow me to sell puts online…everytime i have to call the broker and get it done…..this is becoming a pain…..Can anyone suggest a  brokerage ( with reasonable commissions) who will allow me to sell puts online without any issues.. Thanks for your time!!

  20. Think Or Swim,  Right Gang?!!!

  21. Phil, a line from yesterday.
    I think I mentioned YRCW yesterday.  $4.28 and selling May $2.50 calls at $1.93 and May $5 puts for $1.23 is net $1.12/3.06 and we know we don’t mind owning lots of them for $3! Decoding the shorthand, you pay 4.28 and get back 3.16 in premium making your cost for the first unit 1.12. If it winds up put to you, you pay $5.00 for the second unit. You own 2 units at an average cost of 3.06. Ok, I get that. What do you do then?

  22. Phil,
    Where do you think GOOG will trade down to? Thanks

  23. phil – re: FAS and cov calls in general
       i know you like to take the cash, but  if bullish on a  postiion, is it better to get called away (april 9′s) and re-buy the stock or simply hold the stokc and  wait till the last possible moment and rebuy your calls -take the $ – and cover again with a May 9 or 10
    RE: DIA  – I rolled into JUN 80 puts yesterday from May – on your advice – for about 150 or so…are you suggesting these are the way to have protection at this point?

  24. I have been using thinkorswim which offers a great platform to trade with, much better then scottrade elite. Also, if you are member here you can get $1.50 per contract trade without a ticket cost. If your not trading many contracts its a great deal.

  25. Ran – most here use TOS (think or swim).  I like OptionsXpress.  Simple, stupid is my take.  TOS is quite phenomenal, but takes a lot of time to get use to.  TOS might be a bit cheaper for smaller lots (2-5 contracts), but OXPS is $10 for that bunch FYI (You can talk them down).

  26. Phil: is rolling SRS caller apr38 to 4/40 caller UGMDG apr35 for 2.25$ ok ?

  27. Ran
    I use OptionXpress for my trades.  They have very good service and uptime too.  But I also use TOS for some of my charting and option chain info.

  28. Thanks folks …. I was also planning to get into TOS. Will be completing my application…
    BradyM – Do I have to sumit anything during application process to avail the $1.50 per contract rate as i am PSW member? Thanks

  29. Phil,
    Didn’t do well buying Apr 23 puts on FXP what about selling May 20 puts for $2.5?

  30. Phil – is this it for the drop you were looking for in FCX or is the party just getting started?
    Think or Swim for the win…

  31. GS/Steve – You are right, GS is double dipping at the taxpayers expense.  As I mentioned in a post last month, AIG was used to funnel $170Bn to banks through the bailout because if we hadn’t given AIG the bailout, then GS et al wouldn’t have collected that end of their bet.  It’s a great deal for them, it’s like you buy BAC for $10 and sell the $5 calls for $5 and then, when it falls to $4, you ask the government for $6 back – what a scam!

    Nat gas at 3.60 at the moment, we have 35% more in storage than last year and we have an in-line 21Bcf build so no big deal but not a rally point at all since production is way, way off.  OIH is flat and we’ll see if they can hold it but XOM already dropped 1.5% today along with CVX.

    Well, we held our levels on that try but I think we’re in a downtrend overall.

    AAPL/Ajay – LOL, a little late on the adjustment aren’t you?  I’d go 2x the July $115s on the putters and 2x the Jan $105s on the leaps, it will cost you a few bucks but at least it puts them in enough premium to cover all of yours.  You can also sell July 105 puts for $5.50 since your callers have to get wiped out of $14.50 $10 before you would owe the putters a penny but that may be a margin issue…

    Broker/Ranj – I think TOS is the broker of choice these days.

    YRCW/Barf – If it’s put to you you simply sell the June $3 puts and calls for another $2 and wash, rinse, repeat until you either win or have a cost basis of $2 or less at which point you just sell $3 calls, even if they are just .05 a month as that’s a 30% ROI on $2 with a 50% gain if called away. 

    GOOG/Aclend – I have no idea, we’re just establishing put and call spreads hopefully so we can make $10 no matter what GOOG does tomorrow.   If they have a big sell-off, we’re going to try the same play on a call spread (as long as we think there is time or inclination for a recovery).

    FAS/BC – Yes, that just translates to a roll and, as long as there is premium left to squeeze and you’re not expecting to be blown out, then you wait until the last minute (but get done by 2:30 on Friday) to roll things out.   On DIA, the June $82 or $83 puts are the way to go if you are naked at the moment but if you are going to sell May puts to cover then you really should take $1.50 of that money and move to Sept or you can wait until the July’s come out and roll there.

    Oil down at $49.21 now, taking down those stocks and everything else is falling off a cliff – very dull and predictable on the whole!  Only the Dow is below the line so far, S&P is critical next at 847 and then RUT at 456.  If those go then we are very likely to see the old levels come into play:  7,900, S&P 833, Nasdaq 1,580, NYSE 5,225 and Russell 444 – still looking to fill the gaps we left from last Wednesday’s close.

    If however, only the Dow fails and the others hold, we should take a turn up in the Dow seriously as it’s a silly index and really doesn’t count as much as the others so if it comes back without the others failing, then this was a false sell-off.

    So 7,980 is a big deal as that’s where the Dow needs to bounce before it pulls the other two below the line…

  32.  ranjan81 – ask scott sheridan for the discounted 1.50 rate and tell him you’re a PSW member. that usually does the trick. (right, texas?)

  33. ranjan81 : Email this person and he will take care of it.

  34. 80 DIA Puts doing well..   hit 1.00…. Thanks for the Tip

  35.  Phil… thanks for the FAS opinion… looks like I should have bought my FAS puts at the open for a day mo play. My trigger missed it… but oh well, cash is good.
    If we see a punch through of 7900 level on the DOW today,  what do you think of the chance to plunge to 7600 given that we have Friday’s expiration?
    I made a small gamble on 10 puts of April 78 just to make today and tomorrow a little more fun.

  36. ha, I think I answered my own question re FCX…

  37. actually I have it wrong. That’s only the case if the stock falls below 2.50. At a stock price of 2, you own 2 units at a cost of 3.06, and wondering what to do. If it goes over $5, you own nothing, and keep a profit of 2.50-1.12=1.38.
    The odds are good that you are called away and ALSO have a unit put to you at $5, so you have your 1.38 profit and own a unit at $5 – net 3.62. Is this the correct analysis?

  38. phil  as little help on the terminology please:      you said"  On DIA, the June $82 or $83 puts are the way to go if you are naked at the moment but if you are going to sell May puts to cover then you really should take $1.50 of that money and move to Sept or you can wait until the July’s come out and roll there."
    assuming I want the May puts, WHICH may puts to cover  and what do you mean by taking $1.5o out of them moving to Set
    thanks for patience

  39. In case you haven’t noticed… it’s an FMD for SKF.  Not hand over fist kind of money… but hey, it’s a start.

  40. BIDU May – Phil did you sell any april covers on BIDU?

  41. SRS/RMM – I don’t understand what you’re doing.  If you sold the Apr $38 it’s going to expire worthless – why would you buy him back at all?  You still have .35 to make off him and really you’re hoping SRS goes higher so you can sell calls for more money – we still could get a downside from a builder that hits that sector hard although look how pathetic SRS is if they can only gain 2.5% on a GGP bankruptcy.

    Stress tests results will not be out until May 4th now.  That’s not good but they’ll be telling us some stuff next week – crazy…

    FXP/Wes – I like that play as they are fine to own long-term.

    FCX/Kwan – We should get to $41.50 but I’d sell 1/2 if they retake $43  (here actually) and take another set of puts at $44 but out of all of it if they go up from there.

    TOS/Scott Sheridan – I thought we were getting $1?  Someone should ask Opt, I think he has the right details on that.

    Plunge/Merk – I don’t think so, I think it’s very possible this is a pre-rally shake-out.  I think the shorts were piling on and there are tons of puts taken against the market (VIX was very stubbornly high while the market topped out) and that this is just a good way to get rid of callers today and sell some more puts before ripping the market back up.  Don’t forget it’s the weekly candles that count and we only need to close up 1 point for the week to keep the V looking good.  Volume this morning is nothing so you can’t read much into this action so far and we got that bounce right on the mark at 7,980 so, as I said, you have to respect the rally.

    I’d like to see us test it one more time and then take off – will look less fake then….

    YRCW/Bar – That is the in between case but the reality is, if it’s in between the strikes, you’re in a perfect position to roll to June so it’s not actually going to happen.

    ICE is really falling apart!

    DIA/BC – Those whould be whatever May puts are $3.

    BIDU/Bigs – It’s a play on GOOG blowing earnings.  BIDU should get hit hard if GOOG misses but it’s possible that GOOG does well on increased market share and BIDU falls too so a safer way to play GOOG down (but not very safe).

  42.  phil, are you still holding Goog 370 puts ?

  43. Those sum bitches just made a liar out of me.  Again.

  44. Phil,
    what’s our DIA put cover status?

  45. Phil,
      I read an article about the Corporate Bonds default rising.  Is this an issue? since I don’t see that mentioned anywhere, including PSW.

  46. Phil, On TOS we are getting $1.50 as of last month when I signed up. I dealt with Scott via email.

  47. OK, Ive almost got it. Roll to June? Do you close out the puts and calls and do them over? or let it happen and do it again for June?

  48. TOS from Opt
    " Edro, I never dealt with TOS in behalf of PSW. Someone else did. I am getting between $0.75 and $1.25 for myself and my clients, but that’s for big accounts and I have been with them for years. I think $1.50 was the deal someone said they were offering for PSW, which is still pretty good."

  49. Phil,
    I’m looking to tip toe into buy-writing. I’m hoping to do it with stocks that have smallish share prices. Can you give me a few recos that you think are good right now?

  50. FMD – SKF ??  not so sure about that.

  51. Phil – Is today a stick save day ? What pattern are we following today :-)

  52. HOG up 10% because in CC they said "sales decline is slowing" – That shows you how underpriced the market is…

    GOOG/Lindsay – stop was at $7 but it’s a risky play of course.  If they don’t get through $383 on this dip then I’m losing confidence in it.

    We’ll see if the Dow can hold green.  SOX are having a good day, up 1.4% on positive outlook from LG – funny what people choose to believe on certain days…

    DIA/Maxt – Sept $83 puts, now $8.70 1/2 covered with May $79 puts, now $2.45 – We’ll almost certainly keep this into the weekend unless we get some massive breakout, then we can sell May $81 puts, now $3.40, with tight stops

    Now Dow needs to break back over 8,050 and it’s not looking too good at the moment.  This bounce is just about 1/2 our loss off the open so not impressive yet and, like I said, it would be better if we retest the lows anyway before a real breakout so let’s look for that to happen.  That means the DIA $80 puts, at .65 are a fun gamble but I emphasize gamble at this point.

    GOOG and BIDU are both heading up so expectations for GOOG are getting high.  Gold is back to $880 so no one is worried about something collapsing and oil is making another run at $50 but plenty of sellers as the clock ticks down on the May contracts and, with this glut of barrels, these guys couldn’t take delivery even if they wanted to.

    Interesting move today, no oil no financials…

    Corp bonds/Malai – Big issue, makes borrowing expensive and is why GGP goes bankrupt even though they were servicing debt.  See end of yesterday’s comments for very scary chart of money flowing out of corp bonds.  If companies can’t raise money, they can’t buy things or hire – that’s a very bad long-term issue.

    DIA/Barf – See above position of Sept $83/1/2 May $79 – that sould be your goal and if you stop at steps in between, that’s fine – your main goal is always to have the puts you sell pay for the positions you roll to and take .50+ profits often as you can always reposition. 

    Buy/Writes/Aclend – YRCW, C and LVS are all in pretty good places to start.  If you are just starting out, go conservative and make sure you will get AT LEAST a 20% discount to current price if put to you.

    And down we go again – game on with DIA $80 puts!

  53. DIA – oops, that was in at .65, looking for .75-.80 or better but once you cross .75 you realy want to stop at .70 with a .10 trail after that.  Hopefully we’ll make it down to 7,980 and hold it again.

  54. Pattern/DB – No way to tell right now.  I suspect we’re going back to the lows, maybe lower to about yesterday’s afternoon lows and then we either get a stick save back to 7,980 ahead of GE and GOOG earnings or we flatline at the lower levels.  Unless the S&P and RUT break their levels though, it’s all meaningless movement.

    CBS is a good cheap buy/write at $5.47 selling June $5 puts and calls for $1.70 nets $3.77/4.39

  55. Thanks, Phil on AAPL. I know I should have adjusted earlier, but each move up was so sudden and sharp over the last month that we kept always waiting for a slight pull back and not get too eager.

  56. AAPL stuck at 121 for the last hour.  Cannot seem to get above that level.

  57.  Thanks Phil… my thinking on that was… since the "game is fixed", I figured "Da Boyz" sold puts back in March while the market tanked to 6500. I was thinking that they would be buying back those puts real cheap to close them out now that we’re at 8000 so they could sell ITM calls to the retail speculators since this is an earnings and OE week. Then maybe they would plunge the whole market today and tomorrow to take a quick buck.
    Just thought I would place a small wager to profit on that scenario just in case they would fix it that way. Maybe I’m totally backwards and the game is really to slam the market up, like you say…
    like Tom Jackson says on ESPN NFL Primetime… "you got Jaaaaaacked up!"

  58. Fixings/Merk – Don’t give manipulators too much credit.   They can affect day to day moves of the indexes and any stock over a week but once the sheeple get with a trade, it’s out of their hands.  Like ICE, for example, got jammed down on a William Blair Downgrade to "market perform" from "outperform" and is now stupid cheap.  I hate to recommend it because it’s such a manipulated POS but look at this morning – they spiked it up to flush the shorts and then took it back to where they were before last week’s announcement that their CDS business was popping.  The idiot analyst said that their core business volumes are dropping but this has nothing to do with their core business but shameless jackasses like this just put out any crap their hedge fund buddies ask them to in order to flush out retailers before they take something up again.

    Transports made a big turn around so watch them breaking 1.5% and SOX heading back for another try at 2%.  REITs are flying again but the Qs need to take out 33 to be serious (1,650 on Nas).

    DIA Apr $80 puts dead of course!

  59. TOS also has a cool iPhone interface. I gotta get away from Interactive Brokers, their software kinda sucks… $1 per contract is very nice though…

  60. Cap, see my comment at 11:47am.

  61. phil – taking a look at soem earnings plays on ineexpensive stocks: C, GE and BAC
    Are there any positions you would open to play earnings upside?

  62. Boy did they sell alot of puts when we were falling from Jan to early March.  And the reversal was so quick the last 5 weeks not many people believed in it enough to buy calls in sufficient quantities to offset the puts that were sold.  So Phil you are probably right that we’ll get slammed up for this oe.  But will that make people believers then?  Over time, more and more people will start to believe.. but most probably think this thing is overdone and won’t buy enough calls for them to take it back the other way.  So how does this cycle get broken?  I dunno.  I guess just by hammering away at the bears day after day until more and more are pounded into submission.

  63. phil
    FAS Do you view selling the May 7 put at 1.05 as an acceptable lead in point for owning the stock?

  64.  Thanks Phil… your prognosis for the put gamble being dead looks right on now…. my pennies are flushed down the toilet.
    DIA seems like it wants to hunt and hover around 80 .. maybe it’s going to slide flat line thru Friday’s close to kill long calls and puts.
    Yawwwwwnnnnn…. time to go grab a bite to eat

  65. GOOG — with this run you have to think that this is set up for a fall !
    Look at AAPL go ….
    AMZN not so excited (still well down this week).
    Energy not participating much.
    Mostly real estate and parts of the horsemen; and some retail… SHLD.
    HAL … big short into earnings on Monday IMO.

  66. Who are the horsemen? I get the concept but is there a specific list of names that dictate a push/drag? Thanks

  67. Phil,
    My current portfolio is simply a large holding of SPY/SSO. Would now be a good time to replace them with equivalent SPY LEAPS? If so, what expiration/strike and a reasoning behind that selection?
    Would it be better liquidating and waiting for a pullback?
    Would you follow the Buy/Write strategy or simply write the monthly calls on them? I want to be a bit conservative…

  68. Hi Phil,
    Both FNM and FRE have $1 options.  Thinking about either a buy/write or possible calendar spreads for a nickel a contract buying June puts and calls and selling May puts and calls.  Thoughts?  May premiums are 0.35-0.40 (puts and calls combined).  Seems like a very nice return with relatively little risk.

  69. Somebody must be eating donuts, KKD up 50%.

  70. Interesting take on the Copper price movement….China and the new Copper Standard

  71. Not so good, ran into trouble at 8,050. 

    ZION is a very bouncy bank.

    GE/BC – I think getting $3 for the June $11 puts and calls against $12 for the stock ($9/10) is a good deal.  If earnings are strong and they run way up, you can still roll or you can cash out early.   C is a tough one with all the risk but also, at $4 with the June $4 puts and calls giving you $2.30 you are in for $1.70/2.85 so not bad with some sort of FAZ hedge (like selling FAZ May $7.50 puts for $1 as it’s hard to imagine C missing and FAZ not heading higher).  The same logic can be used fro BAC at $10.55 with May $9 puts and calls at $3.30 for $7.25/8.13.   If you add $1 of FAZ protection to that play you are knocking 30% off BAC if it’s put to you.

    Submision/Matt – At some point you have to accept that trading the S&P at 12-year lows, even ignoring 2% inflation that should have added 30%, is just a little silly.  If your investment horizon is longer than 2015 then this is a fabulous market to buy into and, contrary to what Cramer tells you, most big money investors aren’t sitting at their computers all day buying and selling based on the last analyst call.  There are Trillions of very patient dollars sitting on the sidelines, enough to lift the market 20% from here and they are looking at 5, 10 and 20 year charts looking for an entry.  That’s why Mort Zuckerman of BSX is on CNBC this morning telling the sheeple how scary commerical real estate is out there while his stock jumps 5%.  He doesn’t give a damn if you buy his stock – he just wants you to give up and sell him your building so if he can stir up a little panic in the markets he’s happy to do it.

    Shelly Adelson bought $37M dollars worth of LVS in late March at about $3 a share (12 M) .  In Nov he bought 93M shares at $6ish and the last officer to sell LVS stock was Brad Stone who sold 100,000 shares at $120 a share in late ’07.  Almost every homebuilder is doing the same thing.  These guys are laughing at us when we sell shares on a downturn like this.  They’ve been in the business for decades and they’ve heard of business cycles though it seems to come as a shock to the MSM and all the "expert" economists they interview.  As you can tell from Shelly’s first purchase, no one can call a perfect bottom but these guys know when their stock is cheap and the only shareholders they look out for are themselves and they don’t care how low your 401K goes, they will wait to buy when everyone else is lying broken and bleeding on the floor but that doesn’t mean the floor is 0, or even 6.500, that was a panic spike down and we got two major flushes in 6 months – you may never see those lows again.

    FAS/Drum – Yes but I would probably roll to June puts before taking the assignment.

    HAL/Cap – Yes, I think they have heavy OPEC exposure where a lot of production was cut back and, of course, they are going to shut down facilities that need the most service first so less business for HAL.

    Horesemen/Ace - GOOG, AAPL, RIMM, AMZN and BIDU.  Together, the make up about 12% of the Nasdaq so they can push the market around by just buying those 5.  CSCO, MSFT and ORCL are bigger but harder to move so no fun for manipulators.  It’s all about where you get the most bang for your buck.

    AIG sells auto insurance unit for $1.9Bn – now they only owe us $248Bn!

  72. AAPL
    I currently have
    14 Jul85C basis 21.50 currently 38.00,delta .92
    -14 May125C basis 5.00 currently 5.30, delta .46
    I’d like to reposition this to take some profits off the table and redduce the delta on the long calls.
    I’m thinking of rolling to 2X the Jul120C at 12.40, delta .59
    which lets me pull about $14 off the table
    and 2X on the covers
    What would you suggest?

  73.  Phil,
    Where do we go from here. …. flat day – nothing but oscillation.

  74. SPY/pyern   One conservative way to move to a calendar spread portfolio is to sell ATM or 1 strike up calls on your SPY position.   If you have enough shares, you might earn enough in option premium to buy a LEAP.  When/if you are called you can put the proceeds into spreads.
    Whether you keep the SPY shares or use LEAPs, it is important to sell calls against the position.  Not only is it a great hedge, but there is too much premium available to just ignore it.   The May 86s are trading for over $3; you can’t  pass up 4% for a month even if you have to plow some of it into rolling up to higher strikes.

  75. SPY/Pyern – Are you saying your whole portfolio is SPY hedged with SSO?  That’s pretty interesting...  

    I think with SSO, you’re able to give yourself pretty good cover by taking the Sept $15s at $8.40 and selling the Sept $21 callls for $4.45 and the Sept $18 puts for $2.  That puts you in a $6 spread for $1.95 with a triple if the S&P drops.  So let’s say you currently have 1,000 SSO shares for protection at  $22,850 and you are hoping to gain 40% ($9,140) on a 20% drop in the S&P.  You can get that some gain with 20 spread contracts at net $3,900.  Not only that, but a gain on your S&P longs may not even knock out your basis on the SSOs.  Since they are well in the money, you can roll them as time goes on for long-term proteciton. 

    Of course, if SSO drops below $18 and you can’t roll them and are forced to take the assignment, you will end up with 2,000 shares at $18 less whatever value you get out of the calls with so you need $36,000 to possibly commit on top of the $3.900 if things go badly (meaning the S&P goes way up). 

    On the SPY side, the Dec 2010 $65s have $5 in premium at $25.68 so rather than risk $85,800 on 1,000 shares, you can do the same job with 10 contracts at $25,680.  But, since you are covering $8,000 on the other side and you have all that unused cash, the plan can be to fully cover with 10 May $87 calls at $2.63, binging in $2,630 – enought to pay for half your puts in the first month.  If the S&P goes higher you can roll (the June $91s are $2.60 and that’s almost 10% away) and if you roll up the callers just $1 per month for 18 months they will be $40 above you and you’ll have $40K in the leaps (don’t count on it).

    That’s the way you can use options in a positiion like that.  Also, if the S&P flies up on you, you can always add some Dec 2010 $85s and roll the callers to 2x something even higher and you are still at half the cash requirements of doing it with stocks. 

  76. edro
    I would roll the jul85 out to oct or Jan10 105ish.  Time is your friend.  Rolling up in the same month will only double the theta you loose every day.   Imagine an extra 6 months of selling covers and how much you can make!!

  77. Hi Phil,
    I think you missed my earlier question, so I’m reposting:  Both FNM and FRE have $1 options.  Thinking about either a buy/write or possible calendar spreads for a nickel a contract buying June puts and calls and selling May puts and calls (only FNM has June contracts).  Thoughts?  May premiums are 0.35-0.40 (puts and calls combined).  Seems like a very nice return with relatively little risk.

  78. Phil, once we broke 8000 this morning and crossed 7980, I thought we were definitely headed lower and took out my Apr 80 putter for $0.95….did I act prematurely? right afer that things reversed and now we’re up again.

  79. Phil, SSO is an ultra long.  It sounds like pyern is long only.

  80. What have you done ? Went away for an hour and you started the stick save 2 hours early. What now for 3.00 ?

  81. Homebuilding Note:
    Homebuilding: April NAHB Survey Rises Solidly, But Likely Temporary, in Our View; Maintain Neg. Sector Stance


    While the April NAHB Housing Market Index rose solidly, up 5 points to 14, above the Street consensus of 10, we believe this rise will likely prove temporary, as we continue to believe demand trends should remain weak well into 2009, driven by rising unemployment, weak consumer confidence, tight credit conditions and rising foreclosure trends, which should continue to rise solidly through 2009 given many lenders and servicers recent lift of foreclosure moratoriums. Moreover, while the Future Sales component rose strongly, up 10 points, we believe this was more driven by the recent seasonal improvement some builders have seen, rather than a fundamental improvement in market conditions. As a result, given our outlook for weak demand, further home price deflation and large impairment charges for the builders over at least the next several quarters, we maintain our negative sector stance.

    Future Sales rose strongly, pointing to increased optimism by builders over the next 6 months; however, conditions remain challenging, in our view. Following March’s flat month, the Future Sales Index rose strongly, up 10 points from last month’s record low of 15, which we believe is relatively consistent with the builders’ recent commentary regarding recent seasonal improvement. However, given continued tight credit conditions, rising foreclosure trends and weak demand in the current challenging economic environment, we believe this component will likely fall over the next several months.

    Buyer Traffic rose following last month’s decline; levels remain depressed. Specifically, the Buyer Traffic Index rose 5 points to 14 in April following March’s 2 point decline. On a YOY basis, Buyer Traffic remained down solidly at -26%. Looking ahead, we believe the index will remain at continued depressed levels, as we expect demand to remain weak well into 2009.

    Lastly, Present Sales – akin to orders, in our view – also rose. Following last month’s 1 point rise, the Present Sales Index rose 5 points to 13 in March, 7 points above Jan.’s record low of 6. However, on a YOY basis, the decline remained solid, down 28%. We believe this component will remain at low levels well into 2009, as we believe order trends will remain challenged, driven by rising unemployment, weak consumer confidence and continued tight credit conditions.

    Maintain negative sector stance. We note that the larger-cap builders are currently trading at 0.78x P/B (ex-FAS 109, incl. MDC), or modestly above the 1990 trough of 0.7x. However, we believe today’s markedly more challenging housing and macro environment supports even lower trough valuations for the current cycle. Specifically, given our outlook for higher unemployment, still tight credit, rising foreclosures and elevated inventory levels, our estimate for impairment charges to represent another 30% hit to builders’ book values could easily prove conservative. As a result, we believe a sustained positive move in the homebuilders at this point requires a fundamental driver, rather than simply a more compelling valuation multiple, as large impairments should continue to prevent investors from gaining confidence in asset values, resulting in depressed price-to-book multiples, as well as drive further erosion of book values.

  82. You would think this is a FMD, but its not — not yet anyway.
    WTF is going on ?
    Short DIA now.

  83. WOW  everything looks strong qwith volume and advancers.  Nas is taking off, I thought I mentioned that yesterday cause it just seemed like the up volume was low and the TRIN ended high.  With a stick save like this early a 3pm sell off might happen.

  84. Phil: just learning/checking,  with X moving up, my may 27.5 caller is now deep ITM, premium is at 2.34$,
    a potential roll would be to jul 31 .

  85. DB, Hang Seng -drome?  Their sell off started at 2:50pm.

  86. Phil
    Any opiions on IBM and Earnings on Monday , I believe after the bell.   Analysts project 1.66. They have been on a nice upswing ever since the SUN breakup? 
    If GOOG misses do they drag the whole Nasdaq down?

  87. Ok, now don’t be obnoxious.  Go down and STAY DOWN!

  88. Phil: have SAP caller apr37.5 which is running out of premium, do not want stock to get called,
    roll now to may 39 ???

  89. Bought more SKF at 58.87.  We’ll see..

  90. Phil, what is your hunch on this?  More of the same or a reversal?  And the longer you take to answer the easier it will be..

  91. Now we’re moving!  REITs still flying.

    Acually – this is looking a lot like last Thursday!  Monday was a 100-point gap down but then a huge recovery, wouldn’t surprise me if tomorrow is like that.  In fact, I just noticed that, not only does this look like last Thursday but last Thursday we had the exact same run to 8,075 at around 2:30 and then a dip and a spike into the close back to 8,0800

    FRE/FNM/Bill – I don’t know that they are worth anything at all but you can sell the FRE Oct puts and calls for .85 so it’s .15/.58 but I don’t think I want them for .58 if they are put to me 6 months from now…. 

    Transports broke 2.5%, SOX at 3%, RUT heading to 2%, Nas close to 2.5% – suddenly it’s a rally!

    AAPL/Edro – How about taking $12 off the table by just rolling 1x to the Oct $105s at $26?  Less downside delta, more time to roll. 20% protected by May calls which lets you roll to $95s and, if AAPL flies up, then you can add 1x the $125s, now $14 and roll the May callers to 2x whatever.  If you roll yourself to 2x the July $120s,  you are going from $1 in premium to $20 in premium for yourself while the Oct $105s have less than $10 in premium and 3 more months to collect $5 per month in premiums from sales. 

    And what Steve said!

    Flat day/Ticker – So much for that!

    Premature capitulation/Ajay – Yes, it was too early but what can you do – this market is totally irrational and punishes anyone who thinks.

    SSO/Pyern – OOPS.  I thought that was the short one!  Forget that then, but a similar set-up on SDS but it’s more expensive so you have to go with the Sept $49s at $20.85, selling the $64 calls for $12.40 and the $50 puts for $3.90, which is net $4.55 for the $15 spread.  In this case, you probably want to stop out the puts at $6 though as you really don’t want that assignment but it makes the risk/reward more acceptable.

    DIA/Cap – Didn’t you say that earlier?  8-)

    Shorts – It’s getting worse, now money is coming out of bonds – maybe coming off the sidelines into the market.  This is really amazing stuff!

    X/RMM – Still way early to roll them.  They are just $1 in the money out of $3.70 and we don’t even know why we’re rallying today…

    Hang Seng/Matt – Good reminder but it’s now or never I think if we are going to head down.

    IBM/Chuck – A real wildcard with currency issues.  Operationally I think they are doing great.  GOOG would kill the whole market if they blow it, as would GE.

    Oh now CNBC tells us RF pre-announced a huge beat – thanks for nothing guys!

    SAP/RMM – That one you can roll, he’s about done.

  92. Phil:
    would you and if yes, when would you sell may calls on
    the following stock positions :
    and puts for JPM ??

  93. The 3pm shake out feels more like a head fake.  Internals are too strong for a sell off.

  94. Phil: did you give signal earlier to go from 1/2 to full cover for DIA puts /

  95. Phil- Hope all’s well. I own SLG long at 15.77…thinking of selling May $20 stike calls for $1.30…thoughts on whether this is a good idea or do you have other suggestions?

  96. Gold back at $873, almost 2.5% down for the day but NOT looking attractive.  Oil couldn’t hold $50, dollar pretty strong. 

    Crazy how high we can go on so little volume.

    Hunch/Matt – I think if GOOG or GE miss we gap down 250 points.  If they both hit the mark we may hit that 8,400 mark tomorrow so take your pick.

    DIA/If you sold the May $81 puts per 12:25 comment, now $2.75 it’s best to take off the $79 puts now at $1.95 (up $1).  Since we used $1.50 to pay for the roll up we have net ADDED .50 to our basis on the hurting Sept $83 puts, now $7.95 but they are protection – you’d better be making more than $1 on the call side on a 100-poiint Dow move up.  Since we have no idea what will happen tomorrow it’s best to just go with the 1/2 higher call and take the for sure profit off the table.  Even though we can roll higher for .50, we don’t do it without new money coming in but we have increased our % coverage slightly.  The delta on the Sept puts is .53 and the May $81 puts are .46 and just a 1/2 cover so good to the downside as we outgain them 2:1 and we can roll the $81 puts to 2x the $78 puts even so we’re good for a 500-point drop

    Calls/RMM – I would sell 1/2 against all of them right now, just in case.  Puts for JPM I don’t get?  You want to sell naked puts?  I wouldn’t sell $32s but I think the $30 puts are safe to sell.

  97. Any reason why OIH is so strong today?

  98. Phil: have sep DIA 80 puts with 1/2 cover may 79.
    any change ??

  99. Look at PG go

  100. Breakout/RMM – I’m sorry, I do see looking back that I only made a comment about breaking out at 12:54 and did not specifically say to fully cover the long DIA puts but – for future reference, our goal on a play like that is to get $3 (I think I even mentioned that earlier) so please ask if you are not sure, that’s one play enough people are in that I don’t mind repeating my stance if it’s not clear.

    SLG/SNS  – They have a long way to go if things go well but, then again they might not.  Why not sell 1/2 the $17.50s for $2.90 while they’re offering it (they were $1.25 yesterday)  as you can always roll them to 2x the $20s and, at $20, you are still getting $20.40 for the 1/2 you covered with no upside limit on the other half so the most you can be out is about $1.20 (if it expires right at $20 and you don’t roll) for staying more flexible and better covered.

    OIH/Ace – makes no sense at all.  I think they are just trying to jack the group up ahead of earnings.  XOM doesn’t think things will be so great.

    DIA/RMM – I would roll those up at least to the Sept $82s and pick up .80 rolling the callers up to the $81 puts to 1/2 pay for it.

  101. This market is so obnoxious I can barely stand it.

  102. GOOG:  May $400 calls for $17.25, selling Apr $400s for $9 and May $370 puts for $15.55, selling Apr $370 puts for $7.15.   Anything between the two strikes is a huge win and, in each case, you only have to collect another $16 on the roll to pay for the entire trade so if GOOG goes to $420 and the $400 callers are $20 in the money, you can roll them to the May $420s for $20+ and you’ve got a $20 spread on that side protected by what’s left of your puts at $8.   It’s a tricky trade to manage but really good if GOOG flatlines.

  103. Yo Philly, philly phillleeee..
    I appreciate your  views and sentiment on ICE ICE baby ……just wondering your thoughts on CME, as I am thinking of a bull spread…..maybe you could recommend 1?

  104. Phil: TXS a lot for help,
    the most difficult item for me is always doing the right move with the DIA PUTS AND PUTTERS, that is why a clear signal from you is huge help for me,
    now i have sept 82 puts and 1/2 cover may 81.

  105. Teeny tiny bit of reality creeping in at the close but not much…

    CME/Onc – Much the same as ICE as they too are playing the new CDS game.  I like the May $210s for $39.10, selling the $240s for $19.40 so you are in for less than $20 on the $30 spread and you can actually buy some $240 puts for $16.45 against it (maybe 1/2) to ride out a possible dip on 4/23 earnings but they should have good support at $210 (rising 50 dma).

    Oh well, it’s all up to GOOG now!

    GOOG: $4.1Bn revs (small beat) eps $5.16 vs 4.93 expected but then they have to dissect it and those are non-GAAP so don’t go by them.  Figuring out what really happened at GOOG is like doing quantum physics but I think not bad – they are up $2Bn in cash on a $121Bn market cap in a Q so $8Bn a year is a p/cash ratio of 15 – how can you not like that.  They cut staff slightly and still hit their numbers so I like them.

    Looks like they are heading to $410 at least, if GE hits tomorrow morning  it’s going to be a big day but we also have C to get past. 

    BIDU jumping to $210 – that sucks on that play! 

    Don’t forget if you think you are too short you can still buy QQQQ calls right now or, of course, Nas futures.

  106. Cheap buy/write #5 – DRYS!  $5.55 and you can sell the June $4 puts and calls for $2.55 for net $3/3.50.

  107. Phil, on DRYS is your comment for before or after the 10% spike in afterhours?

  108. Phil’s DRYS comment was made after the AH spike, but references the $5.55 closing price…seems like cheating to me! :) We’ll have to see how the options open in the morning.

  109. Goog’s earnings seems to be really upsetting the financials.  They’re pushing FAS down now.    Makes perfect sense!

  110. Phil,
    Per my ongoing disbelief of the oil market ….. look at the 4:35 bar on /CL (5 min chart) in your TOS system.  What the hell is that?  $2.20 GOOSE in 5 minutes.   Just curious?!?!?!

  111. Funny Daily Show commentary on GS earnings.

    Commment on GOOG conf call by Joe Weisenthal:  "Big increase in searching for stuff related to: unemployment, foreclosure, alcohol, gambling."

    Conf call not going so great.  Can’t convince people there will be long-term growth so selling off after hours but I still like the cash flow number a lot.

    Don’t you think Google should be able to figure out how to do a live conference call on YouTube – that would be impressive!

    That spread will be huge if we flatline!

    Nas down a whole point after hours now…  I may be liking that BIDU trade again.

    Oil/Chuck – LOL, isn’t that great?  Yes, suddenly someone HAD to have oil for 4% over the last sale – it’s amazing that no arrests are made.  On the futures, I would short them here $52.10 with a stop at $52.30 and get back in when they cross $52 heading down with a stop at $52.05 each time.  Costs $200 the first time and $50 for each additional attempt though...

  112. By the way Chuck – this is why you can’t sleep with oil futures – that was $2,200 per contract in 5 minutes!

  113. ELN at $6.15, selling June $5 puts and calls for $2.25 nets $3.90/4.45 so 25% profit or discount in 60 days.

    GOOG back to $383 at the moment. 

    One problem for GOOG is they are hitting the wall on market share growth (at 81.39%, within 1.4% of that since Oct ’08) so most of the analyst questions are about what else can they do and how soon can they do it.

    MSN’s global search market share is 2.92% and it’s built into your friggin computer!  Bring me the head of Steve Ballmer!!!

    Oh no:  "When you grow as fast as we did it’s impossible to get everything right every step of the way."  Not sure who said it but not a good thing to say in a CC.

    They are getting lower click conversion rates – people are getting immune to their ads.

    Andriod seems to be doing well but not so much Chrome, which they just started annoyingly advertising on GOOG main page.

    GOOG has $80 per share in cash so if you take that off ($305) and then take the the cash they are earning ($8 per year) you’ve got a p/e closer to $10.

    Possiblility of buying Twitter mentioned at the end and they still haven’t monetized YouTube properly.

    What I don’t get about YouTube is it’s one of the only web pages you can go to that doesn’t have Google ads on it…  That makes no sense since they get 100M visits a day and probably multiple pages per visit so, even at .01 per set of impression per page it would be an easy $500M a year.  Maybe they’re saving it for when they actually do have a bad Q coming up…

  114. Added HD to the Buy List as they have 3.6% dividend and SHW was such a good upside.

  115. ISRG earnings call did not go well – I missed it but down to $110.  8-(

    DRYS, on the other hand, raised $500M and is heading up.

  116. youtube/ads – that reminds me, the other night i was watching msnbc (to keep a balanced mindset, of course) and there were a couple of heads talking about piracy (music/movie) and how apple is the only company that seems to have successfully figured out anything. then it occurs to me why the hell hasn’t the MPAA set up a website with every movie that’s ever been produced on it and allow people to watch it for free. the catch is, throw an ad up every so often to generate some revenue, and do it every so often during the movie. if it’s a clip, play a 15 second ad every time someone hits the page.
    like phil said, why the hell doesn’t google do this with youtube? how many people would mind a 10 second ad to watch something that otherwise they would have to acquire illegally. i know most teens have the attention of a goldfish these days but i think even that demographic would be semi-okay with it. granted my logic isn’t perfect but seriously how difficult can it be to try something, *anything* for starters? like they said on the goog CC, you’re certainly not going to get everything right…

  117. This is for Matt -  From Silence of the Lambs adapted for recent trading:  8-)  This is funny if you sync the reading with the video at 4:30.  If I was good at computer stuff I’d subtitle it like that Hitler video (no offense Matt, you’re just our official bear). 

    I heard a strange noise.
                    What was it?
                    It was markets.
                    Some kind of movement.  Like a market rally.
                    What did you do?
                    I went in and bought more puts.
                    I went to my keyboard.
                    I was so scared to look at my account, but I had to.
                    What did you see, Matt? What did you see?
                    The shorts.
                    They were squeezing.
                    They were squeezing all your shorts?
                    And they were squeezing.
                    – And you stopped out? -

    No. First I tried to save them.
                    I tried to roll or double down, but order wouldn’t fill.
                    They just stood there, confused. They wouldn’t fill.
                    But you could fill one- and you did, didn’t you?
                    Yes. I took one short and I rolled it up as fast as I could.
                    – What was your target, Matt? -

    I don’t know. I didn’t have any target,
                    any levels and it was very high, very very high.
                    I thought…
                    I thought if I could save just one, but…
                    The bag was so heavy.
                    So heavy….


  118. GOOG;  Looks like Calls and Puts will be WIPED OUT.   Big money to the call and put sellers in GOOG today based on AH price.

  119. DIA -
    Phil, I did short DIA early at 80.73; and covered on the morning drop.
    Then I shorted DIA again at about 81 and 81.50.  Watched it run up some more.  Holding overnight.
    I was simply posting that I shorted DIA at that time, not that anyone should follow me.
    So, yes, I did say that earlier.  But its working out fine.

  120. Didja check out SPG and SRS today ?  Crazy.  SPG up $10 (25%) since yesterday.
    No worries in shopping center retail land.  GGP bankruptcy ?  Who cares ?  Party on.
    SPG damn near hit $50; sold off hard into close.

  121. GOOG – I can’t believe we may be dead center on that spread!  Selling is always better than buying…

    SPG, crazy – especially with the nightmare I see going on a Xanadu in NJ.  I can’t see how others are unscathed but I suppose to some extent, the survivors will get great deals and make years of profits and that’s what’s being anticipated.

    If SRS gets any cheaper I may actually want some!

  122. Xanadu; I was driving by on the Turnpike last week, and had a CD (what’s that ?) playing in the car …. a Rush compilation.  Song playing … Xanadu.
    Cosmic, man.

  123. The SRS chart has finally beguiled Phil!  Resist!  Resist!  It’s power is overwhelming!!
    Goldman recommended SPG and there’s a rumor they will get help from TARP--I’m not sure if i heard it on bloomberg or cnbc.

  124. Ha!  Very funny Phil!  I want you to enjoy your little roast… you Canibal!
    Cap, the same could be said for FAS and SKF.  Do you see a theme?  Financials and real estate.  The two biggest holes in our economy.  And they want us to believe that there is money to be made taking on risk to the long side.  Well, to be sure, alot of money has been made (not enough by me!).  Put an overlay of the Dow and KRE.  We are up against the machine.  If you can’t dazzle them with brilliance, baffle ‘em with bullshit!

  125. Cap / Cosmic Man:  DC lost its last classic rock station this week.  94.7 the Arrow swtiched over to ‘fresh’ contempary.  One of their djs, Surf, had been playing rock in DC for 35 years.  But not anymore.  DC has moved on.  If only they had played an occasional ‘B’ side I think they could have survived.

  126. matt; that sucks.  Just 1 more thing to hate about DC besides Congress, politicians, government, lobbyists and lawyers (which are you ??  LOL)
    go to website.  They have an app you can download to your blackberry.  I haven’t tried that yet, but will.
    And then there is Life On Mars Radio at !  60s and 70s Rock; Funk; R&B; Soul; everything.

  127. Matt, now you see how GS makes its trading money.
    Look at SLG for instance.  Buy the crap out of it; buy calls; put your best clients in it; then upgrade it 2 days before options expiration.
    That the market can only make 8100 w/ 100% gains in many financials and real estate stocks, AAPL at 122, GOOG at 400 and AMZN at 80, suggests that its going to be damn hard to go much higher.
    JPM 15-33 in 3-4 weeks.  GS 73-130.  BAC 3-11.   etc.  GE 6 – 12+  (can’t wait for that report !).  AMEX 9 – 21.

  128. ‘..Just 1 more thing to hate about DC besides Congress, politicians, government, lobbyists and lawyers (which are you ?? ..’  Ha!   None of them.  I threaded that needle.  I used to work for state gov’t and may wind up at the federal gov’t one day but for the last 10 years I’ve been programming in the private sector.  Found out Monday though that I’m going to get laid off when my current contract is up (either June or September).  So, I’ll be pounding the pavement soon.  My brother QUIT his job in March.  He’s been trading full time and doing well with it.  Said he made twice as much trading last year as he did working for COF as a director in hr.  Stroked a check to the irs yesterday for $100k.  I wish I had his taxes!   What I probably awta do is secretly replace Matt the Programmer with Matt1966 the Programmer.  That way I could subliminaly keep Phil in check and not let him get too carried away with the pixie dust he occasionally likes to huff!

  129. Hey Cap – I finally have something to contribute to your blog:

    Steven Rattner, the leader of the Obama administration’s auto task force, was one of the executives involved with payments under scrutiny in a probe of an alleged kickback scheme at New York state’s pension fund, The Wall Street Journal reported late Thursday, citing a person familiar with the matter.

    Pixie dust/Matt – Now that we’re trading with Cuba we can go back to Cohibas!

  130. Good one Phil.  Rattner … hot shot investment banker and private equity guy.  Made his mark at Lazard I think, protege of Felix if I am not mistaken.  Mix politics and business; poisonous combination.
    Matt; sorry to hear about the layoff situation; here’s to a new and better career (and fun and profits).
    Just got done typing and printing all of the options I need to watch or roll tomorrow in several accounts.  Gonna be a busy and hopefully fun day.

  131. We are not out of the woods yet:

    A flood of bank-owned properties is hitting the housing market as the U.S. recession deepens. The unemployment rate jumped to 8.5 percent in March, the highest since 1983, as 663,000 jobs were lost, according to the Labor Department. Home prices fell 19 percent in January from a year earlier, the fastest drop on record, according to the S&P Case/Shiller Index of 20 U.S. cities. The measure has fallen every month on a year-over-year basis since January 2007. Mortgage applications declined last week for the first time in a month, a sign that even with borrowing rates below 5 percent may not be enough to spur a housing recovery.”

    This is just to annoy the bears:  Goldman Reports "Signs of Liquidity":

    SL Green Realty Corp., Manhattan’s biggest office landlord, led real estate investment trusts higher in New York trading after Goldman Sachs Group Inc. said the industry is showing “signs of liquidity.”  New York-based SL Green climbed 17 percent after Goldman analyst Jonathan Habermann raised the stock to “buy” from “neutral.” Simon Property Group Inc., the biggest U.S. mall owner, rose 14 percent. Habermann upgraded the shares to “conviction buy” from “buy.”  …Many REITs have managed to conserve cash by cutting dividends and selling properties, which should help them lower their debt obligations, he said.

    This is too funny – So now cutting dividends is a good thing.  Weren’t they just downgrading stocks that weren’t able to pay their dividends a few months ago?  Oh, who can even keep track of the BS….

    PC shipments "less bad" than expected.  Only down 7.1% vs down 8.2% predicted by the same analysts who miss other economic indicators by 30-150% every week.  Really, think about it, some noodnick picks an almost random number out of a hat and then the market goes up or down based on how close the real number came to the number that is always wrong.  It’s no wonder the markets are so screwed up when we have people believing in this nonsense.

    IDC, who makes these predictions is a very small part of IDG, who hold tons of stuff and run PCWorld, ComputerWorld, MacWorld, LinuxWorld (see the theme), Network World (I don’t know why that one is 2 words), InfoWorld, JavaWorld…  so they are not impartial industry observers at all.  This is as crazy as putting someone like Rupert Murdoch in charge of a Financial Newspaper and expecting objectivity.  What?  Oh they did… Nevermind…

    So, using this report as ammo, C puts a buy on HPQ with a target of $51, just $1.85 below the 2007 high!  That would make HPQ worth 6 times more than C ($21Bn), maybe they can buy them in a stock swap as it would only dillute them 15%…  I swear people are just losing it.  Like we’re going to wake up next week and all of the last year or so will have been some bad dream and the Dow will be back at 14,000 and Cramer will tell you to buy POT at $300 because it’s going to $500 and RIMM will have a p/e of 120 and be on somebody’s buy list….  Ah, good times!

    Jon Najarian joins the pump monkey crew and is telling people everyone is a merger candidate.

    Very good article explaining why the dollar isn’t going to be replaced as a reserve in any amount of time we’re likely to care about.

  132. Phil, I passed along your comment to my buddy, the director of YouTube monetization :)

  133. PPR Daily Update – April 16, 2009
    "GGP – An Accelerant in Value Erosion?"

    General Growth Properties is the second-largest U.S. mall owner, with $29.5 billion in assets and about that much in debt. And that is the problem. The company is leveraged to perfection – cash flow assumptions had to be hit without exception, or it would surely default. And now that GGP has slipped into bankruptcy, investors are speculating on what this means for the market and specifically, market values.
    The bankruptcy of GGP was forced by an ill-designed capital structure, but the company’s cash flow troubles are simmering just below the boiling point. Although GGP reported positive year-over-year growth in NOI for the 2008 fiscal year, it noted a sharp deterioration in the fourth quarter. Hardly surprising, given the historic pullback in consumer spending and recent performance of mall tenants. But there is more to come: average rent and recoverable CAM costs on new leases and renewals are down 16% from GGP’s in-place rents.
    The more GGP’s cash flow deteriorates in the coming quarters, the more likely it is that its assets will be sold to settle debts. Any dispositions will set a very unwelcome benchmark from which the market will be forced to price its own assets. Unfortunately for existing mall owners, this heavyweight owns about 18% of the total mall inventory within the PPR54 and has more than 35% of market share in Honolulu, Las Vegas, Salt Lake City, Baltimore, Orlando, and Sacramento.

    Values remain notoriously difficult to pin down using market comps, as transaction volume, especially for mall properties, has dried up. Given the lack of comparable trades, appraisers have been slow to mark down properties – NCRIEF values on super-regional and regional properties are off 7% from a year ago. This implies a cap rate in the low 6% range, a fanciful number that only an all-cash buyer could make pencil today. So, are bigger writedowns coming? For sure. And the bankruptcy of GGP will be the catalyst to force the issue.
    And from Zero Hedge:

    General Growth Partners -Tenant Quid Pro Quo Begins
    Posted by Tyler Durden at 4:21 PM
    Interesting article out of WSJ, that dovetails with Zero Hedge’s expectation that the mega REIT bankruptcy will portend only bad things for all other mall operators as this develops into a stressed "market test". WSJ reports that while retailers have said they would be willing to stay with GGP, they will likely demand an arm and a bone in terms of concessions for remaining as a tenants. And the resulting looser lease terms will only have negative implications for even relatively healthy mall operators (SPG) who will be forced to meet GGP’s reduced terms or risk losing their own tenants

    Buy Buy Buy

  134. RE: ELN, are those look like July options Phil…

  135. GGP’s bk could very well be the ‘log’ that breaks the jam in forcing some more realistic valuations for real estate on balance sheets.

  136. Good Morning Phil,Matt & all

  137. good am…nice day so far (GE and C)

  138. Asia Markets :    Friday, April 17, 2009
    (The following is from WSJ; please cross check with other sources to confirm.)   

    Nikkei Average*                     8907.58    152.32    1.74%
    Hang Seng*                         15601.27      18.28    0.12%
    China: DJ Shanghai*             292.09        -3.74   -1.26%
    Seoul Composite*                1329.00       -7.72    -0.58%
    Bombay Sensex*                11023.09      75.69    0.69%
    Baltic Dry Index                      1604.00      70.00    4.18%

    *at Close

  139. Asian Markets Waver on Mixed Signs of Recovery

    Asian markets were mixed Friday and the yen slipped, after upbeat results from JPMorgan and Google kept a revival of risk taking alive, with shares outside Japan on track for a sixth week of gains. A jump in Chinese industrial output in March has added to a sense previously instilled by U.S. indicators that the pace of deterioration has slowed from the alarming rate of just a few months ago. Still, comments from policymakers about the economic outlook were cautious and hardly embraced the potential for a speedy recovery. Federal Reserve official Janet Yellen said in a speech there are tentative signs of stability but it was still impossible to know how deep the U.S. recession will ultimately be.

    Japan’s Nikkei gained 1.7 percent but marked its first negative week since early March. Steelmakers surged after Nippon Steel negotiated a smaller-than-expected price cut with Toyota Motor. Sony and other high-tech shares also jumped after Google’s quarterly profit topped expectations and world’s top cellphone maker Nokia said it saw signs of stabilizing demand.

    Seoul shares ended half a percent lower, with losses by banks such as outweighing gains by technology issues on rising DRAM spot prices.

    Australian shares shed gains in late trade to end flat, with some of the shine coming off banking shares after they earlier tracked their U.S. peers higher, though mining stocks were broadly firmer.

    Hong Kong shares rose 0.1 percent as banks and property investors found encouragement from Wall Street’s gains. Property stocks got off to a firm start after Goldman Sachs upgraded its call on the sector to neutral from cautious, owing to sooner-than-expected signs of stabilization in major economies. China posted its slowest quarter of growth since records began in 1992 but economists saw positive signs in its quarter-on-quarter performance.

    Singapore’s Straits Times Index closed 0.3 percent higher.

    China’s Shanghai Composite Index slipped 1.2 percent in active trade with energy and resource shares hit by profit-taking.

    Bombay Stock Exchange’s Sensex recaptured the 11000 mark after slipping into the negative. The 30-share index closed at provisional 11,052.93, higher by 105.53 points or 0.96 per cent. Stock indices recovered from a fall towards close to end in the positive on Friday.

  140. Euro Shares Edge Up Ahead of Citigroup, GE

    European stocks rose early on Friday, lifted by steelmaker ArcelorMittal after a surge in Japanese steel shares, banks, and techs that included Nokia and Ericsson.The FTSEurofirst 300 index of top European shares was up 0.4 percent at 805.09 points, having hit a fresh two-month high at 807.83 points earlier.

    Banks added most points to the index, with UBS up 3.5 percent and Deutsche Bank 1.8 percent higher.

    ArcelorMittal, up 3 percent, was the top non-financial blue-chip gainer in Europe after Japan’s Nippon Steel negotiated a smaller-than-expected price cut with Toyota Motor.

    The DJ STOXX technology index was the top sectoral gainer in Europe with a rise of 2 percent.

    Nokia added 2.2 percent after rising more than 9 percent on Thursday as investors cheered the mobile phone maker’s outlook.

    Shares in telecoms equipment maker Ericsson, whose SonyEricsson mobile phone joint venture reported a first-quarter loss in line with expectations and said it would slash another 2,000 jobs this year, rose 2.9 percent.

    ING said financial markets had been buoyed by data suggesting that the U.S. economy may contract at a slower rate over coming quarters.

    Measured by the DJ STOXX sector index, European bank shares have risen more than 80 percent since March 9, outpacing the broader European market’s 25 percent rise.

  141. Oil Dips Below $50, Stocks Lend Modest Support

    Oil prices fell below $50 a barrel on Friday as traders focused on brimming crude inventories, although equities markets provided a modicum of support.

    U.S. crude [ 49.82    -0.16  (-0.32%)] were trading lower, trimming the previous day’s 73-cent gain.
    London ICE Brent crude [  52.86    -0.20  (-0.38%)] fell.

    Oil has hovered around $50 for most of this month. The $50-a-barrel level is also key in that members of the OPEC countries have said it is a good compromise given the weakness of the global economy.

    Industry observers and analysts have estimated OPEC has delivered around 80 percent of its agreements to reduce output by 4.2 million barrels per day from last September. They have also said it could struggle to tighten output much more. Monthly crude allocations have shown leading exporter Saudi Arabia has cut supplies to some of its customers for May, but Nigeria and Angola have added extra cargoes to their April and May loading schedules, traders have said.

    Euro Hits 1-Month Low vs Dollar on Moody’s Comment

    The euro fell to a one-month low against the dollar on Friday on concerns about the health of the euro zone economy after Moody’s said it may cut Ireland’s sovereign debt ratings. Moody’s said Ireland’s prized ‘AAA’ rating may be cut to mid-to-high Aa range if it concludes that the country will emerge from the crisis with "relatively weak growth prospects and a much higher debt burden."  Ireland has already lost its top-notch rating status from the other two major ratings agencies, S&P and Fitch. Moody’s said its decision reflects the "severe economic adjustment" taking place in Ireland.

    The single currency had already been reeling from earlier comments from European Central Bank President Jean-Claude Trichet and as the market anticipated that the central bank will announce unconventional measures at its May meeting. He gave no details on any unconventional measures the ECB may be planning as it attempts to stimulate growth in the region. The dollar by contrast has been boosted by hopes for a recovery in the U.S. economy after data on Thursday showed an unexpected drop in the weekly jobless total and a slowing in factory activity contraction in the Philadelphia region..

    The dollar gained broadly meanwhile, jumping by 0.7 percent on a trade-weighted basis to 85.800.

    The euro [1.3062    -0.0122  (-0.93%)    ] fell against the dollar, just above a one-month low of $1.3057 hit shortly after the Moody’s announcement. Against the Japanese yen, the single euro-zone currency [ 129.76    -1.14  (-0.87%)   ] also dropped back below the 130 yen mark to trade down on the day. The U.S. currency [ 99.31    0.05  (+0.05%)   ] was steady against the yen.

    Gold steadies, ETF falls from record

    Gold hovered near a one-week low on Friday, pressured by firming equities, while dealers took a drop from a record high in the world’s largest gold-backed exchange-traded fund as a sign investor demand may be receding.

    Holdings of New York’s SPDR Gold Trust fell 0.7 percent from the record high it had climbed to on April 9, the biggest decline this year. The holdings fell to 1,119.43 metric tons by April 16, down 8.25 metric tons from the previous day. The trust’s holdings have fallen about 1 percent so far in April, versus a rise of roughly 4 percent in the comparable period last month.

    Gold was at $874.90 per ounce by 3:02 a.m. EDT, up 0.04 percent from New York’s notional close of $874.55.

    India’s gold buyers continued to trickle in to stock up the yellow metal to meet festive demand, traders said. Akshaya Tritiya, which falls on April 27, is the second-most auspicious day to buy gold after Dhanteras.

    Signs that the global economic downturn may be easing have helped boost platinum, which is used in autocatalysts. The metal, also used in jewelry, has fallen a touch since hitting a 6-1/2-month high of $1,244 per ounce on Monday, but has managed to stay above $1,200. Platinum was at $1,207.5 an ounce, up from its notional close of $1,201.5.

  142. Good morning! 

    Looks like a flatline, pinning expiration day but you never can tell of course. 

    GE’s earnings "only" off 36% (.26 vs .21 expected) and C actually made a profit but how much of that was AIG-fueled cash? 

    Markets are totally nuts though, Toshiba lost $3.5Bn and is laying off 3,900 more people and they led the Nikkei higher, SNE sucked too and went up but MAT lost money and is going down so we can’t say the markets are 100% irrational, just 99.44% irrational I think…

  143. good am phil
    I took a flyer on C yesterday and bought some shares as well as sold May 4 puts for a $1…I bought a small number of apr 3 puts just in case of a disaster…Also, in the event of a good report, i took a risk and DID NOT sell any calls and that looks like it worked out…
    Question: - 1. what is your opinion about the calls to sell at this point and 2. would you roll the 4 puts  to 5? it looks as though I would get another 80 cents or so

  144. [...] as we played GOOG to flatline and it looks like we’ll get our wish as my trade idea on Google in yesterday’s Member Chat was: "May $400 calls for $17.25, selling Apr $400s for $9 and May $370 puts for $15.55, [...]

  145. [...] as we played GOOG to flatline and it looks like we’ll get our wish as my trade idea on Google in yesterday’s Member Chat was: “May $400 calls for $17.25, selling Apr $400s for $9 and May $370 puts for $15.55, [...]