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Friday – The Good, the Bad and the GDP

Clearly there are people who will do anything for money.

In the classic movie, "The Good, the Bad and the Ugly," the characters all lie, cheat, steal and kill as they chase after a chache of government gold.  They all kill, they all try to kill each other and the only character trait they all share is they will all do anything for money.   We are lucky enough to have a modern version of that, with our own government supplying GOLDman Sachs and other bad market manipulators with TARP money, which they are using to, not to lend money to the good citizens of the US but rather to prop up the commodities market, stealing Billions of dollars from the very people they claimed they were going to help.

Since the November bail-out, consumer lending had gone down, home foreclosures have gone up, unemployment has gone up, housing has gone down yet the CRB has gone up 25%, led by oil, which is up 88% at $66 this morning.  $66 oil is a noose around the neck of this economy as the it was cheaper oil that helped us begin to recover as it stayed around $40 from November through the beginning of March.  On a per barrel basis alone, that was $500M a day LESS than we are paying now but, despite the fact that oil is still 54% in price from this time last year, gasoline has gone up so fast that it's only down 23% from the prices that knocked the wheels out from our economy.  Including refined products, that extra $26 a barrel is costing US consumers $1Bn a day, $365Bn a year or 1/2 of the TARP money going straight out of our economy and back to the countries that fund terrorism through the very ugly hands of GS (who are partners in ICE) and other TARP recipients who have funded and coordinated this commodity "rally," screwing the American people over with our own tax dollars.

Aside from the very obvious upgrades by the TARP-sponsored Financial houses of anything and everything that even smells like oil and the GE-sponsored 24/7 pump-fest on CNBC, we now have Goldman Sachs this morning telling the sheeple specifically to: "sell Petrobras October $34 put options for $1.95 because a U.S. economic recovery and lower petrochemical supplies will limit declines in the price of oil."  What Goldman does not mention is that they were one of the "large speculators"  that increased their net long positions in commodities 300% since they got their TARP money.  This is just BRILLIANT – take OUR money and invest it in commodities, then pull out all the stops to run oil up 88% where these leveraged investment can pay off 10:1 and then give us our money back early at virtually no cost while keeping the 900% gains for themselves – BRILLIANT!

This is the exact same nonsense pulled by GS and company back when they were flush with cash and they drained the American public dry last year, as is documented here in "What Is Really Going On With The Price Of Crude Oil?"  Of course this strategy blew up in their face and we had to bail them out when it collapsed, but not before the American people were forced to spend over $4Bn a day for petroleum products last summer – that's $800Bn we'll never see again – enough money to employ 16M US citizens with $50,000 jobs or enough to pay 12 Arab Sheiks and 1,000 Wall Street bonuses.  Guess what they chose and guess what they are choosing again?  It was also enough money to destabilize the balance of trade, throw this country into massive debt, crash the housing market and (in the one positive outcome) finally threw the Republicans out of power.  Are the Democrats about to prove that they are no better?  Can the same nonsense really go on less than one year after we "learned our lesson"?

Even the Libya's Oil Minister believes there is no fundamental support for these prices, saying: "Prices are moving because the speculators are back.  Fundamentals do not tally with psychology."  That is certainly backed up by this week's Petroleum Status Report, which had the very interesting statement: "Total products supplied over the last four-week period has averaged nearly 18.3 million barrels per day, down by 7.3 percent compared to the similar period last year."  That's right, the US Oil Cartel produced 1.5M barrrels LESS per day than last year, creating a 10.5Mb product deficit on the busiest week of the year.  Not only that but imports were down 650,000 barrels a day, shorting the US another 4.5Mb of oil for the week.  This data is for the week that ended Friday, May 22nd – a week when massive amounts of fuel are transferred to retail gas stations who get ready for the biggest driving weekend of the year and despite having the head start of a 15Mb shortfall in supply, the total drawdown of product was just 5.4Mb for the week.  Imagine how much oil we'd be swimming in if we didn't EXPORT over 1.8Mb PER DAY (12.6Mb/week):

4-Week Avg U.S. Total Crude Oil and Petroleum Products Exports  (Thousand Barrels per Day)

And this nation is, in fact, swimming in oil, despite the fact that speculators like GS are paying to store oil in tankers offshore and around the world in order to create the impression there is more demand than there is in this slumping global economy.  We discussed this obscene practice before but it has gotten so out of hand that it now threatens to destabilize the global oil markets and Iraqi Oil Minister (hey, wasn't that supposed to be OUR oil?), Hussain (no relation?) al-Shahristani said last week: "We don't think it's a wise economic decision to produce oil from secure underground fields and then pay to store it in floating tankers.  Future generations can benefit from it better than we can, if we don't need it."  The suppliers KNOW they are selling us more oil than we need and they KNOW the speculators are sitting on it, the only people who don't seem to know what's going on here is the Obama administration and the American people who are being conned out of 16M jobs worth of money again by the same bastards we had to bail out when their last con game got busted.

That is how, using our bail-out money, the price of oil has been driven up 88% in 6 months and it will go up another 88% if this Administration is going to act as deaf, dumb and blind as the last Administration while the American people are robbed blind with over $600Bn global consumer dollars being sucked out of the economy with every $10 increase in the price of crude.  We are at a 25-year high in petroleum storage in the US and we have 139M barrels more in storage than last year – an average increase of nearly 3M barrels a WEEK despite OPEC's 29Mb/week production cut.  Reuters reports that there is a "floating oil lake" that "is now so big that it is likely to keep a lid on prices for some time" as the volume of oil stored at sea has risen to record levels.

Reuters points out that the last time floating oil stock levels were anywhere near these levels was in the early 1990s after the first Gulf war. Tanks were drained then into a rising market and traders and analysts say only a rise in demand will clear the stocks now.  But there is little chance of a quick recovery in oil use as the world faces its worst recession since World War Two, and the massive floating oil inventory is now haunting the market, an extra source of supply at a time when demand is extremely weak. "Out of the market and off balance sheet, everyone knows about this oil but is trying not to think about it," said Simon Wardell, director of oil research at IHS Global Insight.  "It is deferred supply, an almost ethereal source of oil waiting offshore. As long as it is unused, it is effectively acting as a support for the market, but at some point it will reappear so it is acting as a ceiling on oil prices."

Of course, there are other players besides Goldman Sachs reaping huge cash rewards as they put the screws to the good people of the United States.  BP's trading operations reported that Q1 "trading profit was about $500 million higher than what we would consider the normal range of quarterly volatility.”  VLO reported $150M in "profits related to trading,"  RDS.A's CFO, Peter Voser was proud to report: "We have used some working capital actually to drive trading during the first quarter, and to a certain extent also into the second quarter" and HES said: "winning bets by its trading desk during the first quarter helped cushion the blow from $5 million in weekly losses on oil and natural-gas production, the company’s traders generated a $19 million profit in the January-to-March period."  MRO, the fourth-largest U.S. oil company, also benefited from the trade: “A very small amount of crude was put in tankage for contango purposes,”  said SVP, Garry Peiffer.  In contrast, Chevron Corp., the second-largest U.S. oil company said a scale-back in trading contributed to a 99 percent drop in its U.S. oil and natural-gas profits. Chevron reduced its use of derivative contracts such as futures contracts and swaps to lock in margins by an undisclosed amount during the first quarter, spokesman Jim Aleveras said during a conference call with investors and analysts.

So Pete Rose is banned from baseball for life for betting on games but we not only reward the energy producers that bet the energy prices charged to US Citizens will go higher but we punish the ones who choose not to participate.  This is a rigged system and only government action will ever change it.  What's really sad here is that all of these bastards are just skimming profits off the barrels and those come in from overseas so it costs the citizens of the United States close to $1Tn of hard earned cash that literally goes up in smoke in order for the Big Oil/Big Broker Cartel to make $100Bn.  It's not an efficient system – it would be much cheaper for us if we just hand them their money or perhaps start lobbying for real change to stop this madness.   I am making this article free so feel free to send it to whoever you can – this is a serious issue that needs to be addressed before it's too late to save us.

We'll find out shortly to what extent the GDP supports any of the 88% rise in oil prices since Q4.  I don't suppose we'll have an 88% rise in GDP – in fact, they are expecting a 5.5% decline but that would be a 0.6% improvement from the preliminary reading of -6.1% so the global markets are partying in anticipation of this blessed event.  Oh here it is:  Down 5.7%!  That's a little disappointing but I think there has been such a massive effort to get the markets up this month that I can't imagine they'll let it go on the last day but there is NO WAY I would go into this weekend bullish.  It is likely we zig-zag into a finish around 8,412 on the Dow and 908 on the S&P and I'm not expecting the kind of wild moves that we got yesterday. 

As with yesterday though, absolutely anything can happen and we remain mainly in cash but I will be scaling into yesterday's oil shorts, painful though it may be.  We expect a top at $70 (100% up from $35) and a 20% pullback to $63 so scaling in at $63 (yesterday), $66 (today) and $70 is the plan we are following.  If we ultimately get blown out and take a 20-25% loss on this round (if oil flies through $70 and we stop out), then the plan is to wait for $100 and try again!  Can the oil markets once again remain irrational longer than the nation can remain solvent?  We will find out this summer for sure

Meanwhile the dollar is being crushed, falling to $1.41.5 to the Euro and $161.5 to the Pound and back to 95.5 Yen in one horrible morning's trading.  Of course currency speculation is not much different than commodity speculation and when you are a big investment bank and can control both at the same time – well that is just a home run play!  Gold is flying up to $980 and oil is hitting our $66 target this morning.  Just in case you thought your stocks were doing well, here is the performance of the S&P priced in barrels of oil.  Depressing isn't it?  In fact, if you are well indexed to the S&P, your holdings buy 33% less oil today than they did on Jan 1st.  For many Arab nations, of course, they see the opposite as they have gained 33% against us in the first half of the year.  Priced in gold, the S&P is only down 15% this year, but in a very ugly downtrend and in Euros we're only down 8% so yay, I guess…

Asian markets were up about 1.5% this morning (China was still closed) led, of course, by commodity stocks as well as Japan enacting an EXTRA $143Bn stimulus planIndia's GDP came in at 5.8% vs. 5% expected and I'll be doing a global overview this weekend so we'll save that discussion.   Europe is also up 1.5% ahead of our open but the DAX did not take our GDP well and turned sharply down off 5,000 (9am) so we'll have to see how things play out over there.  Europe is also being led higher by energy stocks, which are also leading the US indexes with 12% gains on the month, accounting for 100% of the 3% gains the indexes have put up – it would be a real shame if they do sell off so please be careful out there!

 

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  1. The question is – why did the strategy collapse at $147 per barrel?  Why did it not go on to $200 per barrel and then $300 and on?  Whatever the reason – will the same circumstances not cause a collapse again – and as is likely that it will – should we not encourage this speculation (but staying on the sidelines) as this is likely to be the final nail in their coffin as they once again go bust spectacularly  .. ?  As I see it, even with TARP, there just isn’t enough money to sustain the high price levels – there must be an excess 10 million barrels they are having to buy and store every day and I get the impression this is not being disclosed.  If this continues they will soon end up holding, say, 9months x $60 x 10m barrels per day surplus = $ 160 bn in crude oil stock.  But with apparently $1.4trn at their disposal I guess they can continue with a few more months (or more?) of this at the end of which we should get a spectacular and seismic crash and burn.  I think we should therefore, for the common good, be cheering them on as they will not be bailed out a second time. 


  2. Hi Phil, that’s an excellent post (though currently in progress) – you’re really tieing loose ends together in this horrific story. 


  3.  whoa dude (Bill & Ted’s excellent adventure)… look at those futures go up this morning….
    Ted:  whatz duh newz cuz I don’t see anything happy happy joy joy to dance and sing about??
    Bill: Unless the lords of war at Goldman Satan are relishing the prospect of a Second Korean War, then maybe THEY are happy…
    Ted:  yeah dude… party on…
    Bill and Ted: Excel-lennnnnnnt !!  (wild guitar rif)
     
    looks like I’m gonna get my 8440 trigger filled at the open… bring it on


  4. Good morning … copying a couple of posts from the the end of yesterday’s comments:

    Cap
    May 29th, 2009 at 7:59 am | Permalink  
    Another futures pump …..’
     
    Forget the Oxen Group Ilene …. for day trades, let’s look at some potential short opportunities today … selling gap ups ….
    my early thoughts on this are OIH, WFC, SPG and POT as short candidates for today.

    Cap
    May 29th, 2009 at 8:01 am | Permalink  
    Wait until Obama and the Dems try to jam a European style VAT (value added tax) down our throats, in addition to income taxes.   They are already talking about it.   How else are they gonna try to finance massive deficits and health care boondoggles ?   And O will still try to claim that he is cutting taxes for 95% of Americans, or working americans or some amorphous definitiion.  I guess when there are no working Americans left, that 95% will be a small number.
     
    You want to see a revolution ?  just wait until these crazy bastards try to come out w/ VAT.


  5. Phil:  You ask:
     Can the same nonsense really go on less than one year after we "learned our lesson"?
     
    I answer:
    Are Barney Frank and Chris Dodd & Charlie Rangel (& Reid & Pelosi) still in positions of power to affect things like financial services, budgets and tax policies ?   When the "are they no better" Dems have a reckoning of their own and clean house of these crooks, maybe we can have hope …… unil then ….
    NOPE.


  6. What lessons do you think Barney & Charlie & Chris have learned ?


  7. Phil.. I am just a report member… and have been reading your posts for a while… Though you have made some good calls on a number of stocks…..  I just see that your call on oil prices have basically bombed against you… up when u short and down when you go long… almost 99% of the time….  


  8.  Chinese fishing boats are reported to be leaving the tense inter-Korean border in the Yellow Sea after North Korea’s threat of military action.
     

    South Korea’s Yonhap news agency quoted defence sources as saying the South’s military authorities are trying to find out if Chinese ships were told to go.
     
    http://news.bbc.co.uk/2/hi/asia-pacific/8073129.stm


  9.  NK nuke bomb test… how I see it… it was a "dog and pony" show for a business deal. I would bet all my money that high level Iranian observers were in North Korea for the explosion test which was done in order to prove the NK bomb design works.
     
    I think Iran is looking to prompt jump their nuke program by buying a working weapon design from North Korea and this is why Kim Jong-il is threatening war with South Korea. South Korea just joined the international naval scheme to intercept shipping from NK to the Middle East that might try to ship disassembled bomb components to Iran. 
     
    War in Korea and the Middle East… it’s all linked together… just like Tom Clancy would write it.


  10.  Phil
     
    Good morning. I have SLB Nov 45 calls full covered by Jun 50’s. Starting to get buried here – any opinion on when to roll and where to or just sit tight for now? Thanks,


  11. 99% wrong/ desi…  LMAO … desi ….
    Phil has been doing this a long time. If he were wrong 99% of the tiime, he would be broke and living under a bridge sooooooo long ago.
     
    What is extremelt valuable about this site is how we eventually turn a profit even when the market goes against us. Very few people can do that and that is why very few are doing it. Phil is a master at it.
     
    Watch and learn and you will see why Phil has been doing this for years. 


  12. This is a pretty good read, IMO:
     
    http://economistsview.typepad.com/timduy/2009/05/a-return-to-a-nasty-external-dynamic.html
     
    The upshot of his argument is that the Fed is unlikely to make any policy change in the near term, and that barring a flight to dollar safety, this will keep downward pressure on the dollar and upward pressure on commodities/oil.


  13. Good morning all – in the Insider-Zone section, we’re going to be tracking day-trades for David at Oxen Group. He’s going to be giving us the trades (stocks) that he’s taking during the day, along with instructions.  Here’s the post with more details:  http://www.philstockworld.com/2009/05/29/the-oxen-group-day-trades/


  14. GDP off 5.7%: above estimates. Futures taking that little jolt in stride.


  15. Collapse/CJ – I imagine this will fall apart way below $147 but Desi is right that I do tend to jump the gun on oil, which is why I’m very adamant about scaling in on these trades as we learned last year that the market can indeed remain irrational longer than we can remain solvent.  I suppose we could have waited for a 100% gain to short but, in theory, we should get a pullback to 80%, which is $63, before they break $70 so that was my plan for entering and rolling.  If they plow through $70 and keep going, then this trade will suck!  I thought the 10% move from the middle of the month was screaming for a correction and, of course, a negative GDP number could send oil below $60 so I didn’t want to miss it but, at this point, I wish I had so far.

    Shorts/Cap – I know – so tempting.  I do wonder if this manic run-up is BECAUSE the price is about to collapes and they are pumping ahead of the bad news so they can dump or roll contracts.  If you are stuck with 150Mb in tankers you need to get rid of then you need to stir up a lot of long demand.  Once you sell your contracts, you don’t give a damn how far oil falls as you’ll still get your price.  In fact, if I bought oil at $40 and sell October contracts at $65 and I have enough of it, I can bring my ships sell all my oil now at $65, $60… down to $40 and tank the market, leaving me with naked Oct $65 callers THEN buy to cover at $40, making me twice as much money as if I simply honor the contract (and saving me a lot of storage costs).  Life is so much fun when you can manipulate the markets without fear of prosecution!

    VAT – I’m all for it, starting with an oil tax of 90% of all profits over $60 a barrel.

    Oops, GDP in the middle at -5.7%.  That is worse than expected by a bit.  I think they are determined to hold the markets up here to close the month so we’ll probably zig-zag into an 8,412ish close but no way do I want to be long into this weekend.  The dollar dropped another 1% since 5am, this is just nuts.  Party on Garth!

    The PCE is down 1% for Q1 so the Fed can keep pretending inflation is contained even though oil is up 50% so far in Q2 but they’ll be "surprised" by that later.  Core PCE is up 1.5% (ex-food and energy) and we’re waiting on the Chicago PMI at 9:45 and the Michigan Consumer Sentiment at 10 but, with 2 major auto makers in bankruptcy this month – what the hell do they have to be confident about?  So I may as well get it out of the way now as you know it’s coming – the people they poll are idiots!

    We’re still going to be watching our 40% lines today as they still haven’t been taken out:  Dow 8,412, S&P 945, Nas 1,716, NYSE 6,232 and Russell 513.  It is complete nonsense to have a rally led by commodities if we can’t get the small cap RUT or the broad NYSE to move up. 

    Still mainly cash, bearish if anything but only small bets or I’ll start ranting like Matt, Merk and DB and we can’t have that can we?  8-)


  16. By the way, "The Oprah Effect" special on CNBC is just another version of "all you need is a dollar and a dream" to keep investors salivating over "the next big thing" that watching CNBC will clue you in to…


  17. Phil,          do you expect that the Obama administration will intervene in the oil scam as they purport that the most effect way of curbing demand is to increase the price until it becomes painful..their agenda suffers  when  prices for crude remain below $50.


  18. short OIH in premarket at 106.40


  19.  rant rant rant… chuckle


  20. Merk, Who the hell are you??? Sounds like you are sipping Margarittas on a beach without a care in the world!


  21. Who ARE you George Costanza ?


  22.  Sentiment survey…
     
    like you said Phil… the only ones answering the phones are the ones who still have a job… so naturally they are glad to still have a job and have better feelings…
     
    the rest of the people who got laid off have already cancelled their phone land lines and are just using a cell phone…
     
    and the smart ones plugged in a Magic Jack for $20 a year fee and are now using thier computer as a telephone, butthey  only get incoming calls when thier computer is on and connected to the internet.


  23. VAT-Geez………tax the hell out of Exxon and subsidize the UAW———--madness.


  24.  Jamie… chuckle
     
    I’m a very recently unemployed 20yr experienced high tech engineer (nuclear and semiconductors), Desert Storm Vet  (Navy), a home owner, married dad, backyard survivalist gardner, big red 4WD truck driving patriotic american, life time Republican who is pissed off at the party… who likes to trade options and chatter with Phil and the gang….  
     
    howz that for a profile    ;)


  25. TOS/Phil/All: Yesterday, we talked about TOS commissions.  If you go to TOS web site, and look at their commission schedule, you’ll see that there is a category "Most Major Broker’s Rates".  Under that, it says "New customers can choose from most major web-based brokers’ rate plan. You’ll receive the lowest available rate for which you qualify."
    For those of you who traded with another broker, contact TOS and negotiate.
    Phil: That’s your bargaining power.  Go look at Schwab/ETrade/ScottTrade/TradeKing/etc.  And then go back to TOS and negotiate.  Hey, TOS made that offer in the first place!


  26. Oil- remember drill here, drill now? Oh, horrors what an archaic concept – increase supply in the face of rising price?


  27. Merk, My Gosh, you sound like the perfect pen pal!! I’m mighty pleased to meet you. You are the backbone and the hope for this great country, I hope we both live to see this country run by politicians with a brain, subscriping to PSW, who put the people’s interest first instead of some other agenda.
    Market is open time to work. Good Luck


  28. 99% wrong/ desi…  LMAO … desi ….
    Phil has been doing this a long time. If he were wrong 99% of the tiime, he would be broke and living under a bridge sooooooo long ago.

    Merk I don’t think Desi means Phil is always wrong. If Desi had said "you would have  money already if you were buying calls instead of puts on oil" we would have had to agree, no? I think the same would have been true for our Potash trades, it would have been easier to make money on the long side.
    Phil’s post this morning is stunning as always.
    The thing I take away from it, with more clarity than I had, is that we are betting against the big boys and the obvious trend in the market by shorting commods or oil here.We sometimes mention shorting GS and also say they are driving up oil, if so perhaps  this is the same trade?
     
    My analysis is much simpler than most peoples as I have little experience. However I will point out that GS was highly profitable 38 of the last 40 quarters (I discount the last one). I can also tell you that it has a similar track record of profit for the preceeding 10 years while privately held.
     
    If we believe it is GS shorting Oil, we are fighting a company that has been hugely profitable for 76 of the last 80 quarters, and whose JAaron unit that trades oil is enormously and consistently profitable. While there may well have been extra froth on top last year, history encourages us that these are not entirely or even primarily one time profits.
     
    Oil was at $147 last summer, and while it fell we have to remember that the entire financial system "was in danger of collapse" at the time.  Many people will view oil as a hedge against inflation, terrorism, war, political action in autocratic nations, and certain natural disasters. Production and consumption levels seem to be only one of many factors.
     
    I am in the USO trade, just pointing out that we all have to be fully aware the type of position we are taking here. It does occur to me that this is on the harder end of the scale of how to make money, rather than the easier end….


  29. Desi and stevenparker,
     
    I haven’t done a scientific evaluation of Phil’s oil trades, and I am not an expert, but Phil does know his stuff. Mistakes are made by all or we would all be rich. I participated with others in his USO puts earlier in the week and made a quick 25%….he was right on.


  30. ocelli7 I hope my post did not seem critical or argumentative. I am trying to achieve neither.
    I wouldn’t be in the trade if I had no confidence in this service…


  31. I hold the following: OIH June100 calls @ $5.90; OIH 95 Puts @$1.95 and USO 35 Puts @$1.30.  Would you suggest these be rolled up now or wait for oil prices to settle a bit?


  32. [...] The Good, the Bad and the GDP [...]


  33. FAZ/FAs -   checking in:     we have not been talking much about ithese lately,
    I just wanted to check in the price goal for each…  meaning if I have bought faz  for 6 and sold June puts and calls for a total of about $1.30, my cost is about $ $4.70. 
    My cost on the FAS is about  7 (I own the stock at about $8.90 with Jun 9 calls at $1.20 and June 8 puts sold for about .60)
    What are the current target prices for each


  34. have 1/2 GLD Jun 92 caller ar 2.25. Gold is inching up lately. What action do you recommend?


  35. how does this one trackback keep getting through?


  36. well, that was awesome fun killing the OIH short !!


  37. Hi Phil-
    I have officially dipped my toe into the pool of options.  Sold $4 July calls for shares of UYG.  I sold them for .40 since the market wasn’t as hot that day.  Just a question, if the market tanks next week and the calls are going for .35 or less, can I buy them back to make a profit and then sell them again if the market gets hot?  Thanks


  38. Obama/Potter – I dont’ think they play it that way.  I don’t think that they’re worried that oil must stay high to enact their policies and cerftainly there won’t be a second Obama term if oil goes to $100 and bankrupts the country.

    FSLR getting fiesty again, waiting for $200 to short.  OIH at $106 today, $100 caller at $8.60 and the roll up is to 2x the $105s now $5.10 so that roll is getting better, not worse so I’m DD on the $100 caller here (sold naked $100 calls).  That makes the average sale $7.50.

    Amazingly, transports are up 1.5% so I guess $66 oil is good for them and everything we thought we understood about economics is wrong.  OK, I can go with that…  8-)

    Great profile Merk!

    TOS/Cwan – Thanks.

    GS/Steve – They were amazingly profitable except for the unprofitable quarter that wiped out all the other ones when they were wrong on oil and housing.  While there are only small victories to be had on the way up shorting oil – if we are cautious and stay on top of the wave, there will be one SPECTACULAR victory on the way down.  Would you have done better betting long on oil from $0 to $147 from Jan ’07 to July ’08 or shorting from $147 to $35 from July ’08 to Nov ’08.  The mistake I made last time was underestimating how high they could take it before it snapped.  Hopefully this time we can catch these little pullbacks (target is $63) and then wait for the next top and keep doing that until we "accidentally" catch the big one.  Stage 2 of the plan is we have a huge win on diving oil, which takes out the market and then we cash out and go bargain shopping again.    I was not wrong that oil was over-priced from $80 to $147 but I was wrong to stay in the trade too long.  If shorting oil at 88% and 92% and 100% off the bottom doesn’t work this time, we will need to let it go and wait to see how far they push it.  This is not the quick and easy path but I’m just not comfortable choosing the dark side (oil up) which would require me to make a bet I have no funamental belief in.

    Meanwhile, oil is off .60 from $66.50 but I’m in no mood to add to the position at the moment.  I think I’d rather wait and roll or DD at $70 if the weekend doesn’t give us a pullback. 


  39. FWIW I made decent money following Phil’s oil short trade a year ago. Yeah, I followed him in too early and got out waaay too soon too. (started my entry around 105, started to exit around 80). But that’s still a good return, despite the pain in between.
     
    That article I linked to above has me a little worried this time though — there may be some room left for this game to run.


  40. Phil what you make of this DRYS.  Seems like they buzz is about the 8:AM Monday Conference Call? Is GOOG put a good idea.  GOOG has not been up here fro a while.


  41. Oil & Phil – Phil has been consistently right. Especially when it comes to understanding supply and demand. Phil has also provided over the years great insights into how the oil markets are manipulated.


  42. Does anyone see a good reason why I shouldn’t continue to build an IYR short? I’m buying Jan 40 puts, selling Junes at strikes between 30 and 33. I’m not expecting a sudden breakdown (as my position shows), but I just can’t see any plausible case for significant upside from here.


  43. Ah everythings rosy again, green shoots (not in Chigago) computers buying the SPY again. Rosy indeed


  44. whoops typo - Chicago -


  45. back in OIH short here ….. like 10 X so far


  46. Phil et al
    My deal with TOS (negotiated directly with Scott) is at $1.25/contract which is typically for customers trading 1500 contracts per month. In order to go to $1.00/contract you need 2500 contracts/mo. Hope this helps!


  47. GS/Phil – yes of course you are right, I am just wondering how this awful Q fits into context.
    In "the year the world almost ended" they only made about 2.30 / share (including the orphan month losses)
    GS have had awful Q’s from time to time and will again, but the last one that was awful like Q408 was in 1994.
     
    So I suppose this is a timing question. Do we have strong reason to suppose that the next awful Q will be soon?
     
    I am in the oil trade. I guess if I could do my comment over the upshot would be "this is gonnna take real stamina and if you don’t have it you shouldn’t be in it"


  48. Phil, re OIH calls..Yesterday you sold OIH $100 calls naked for $5.20 now youu are dd at $8.60 ….so isn’t the average $6.90 or does the $7.50 refer to the roll. I cannot get the maths right.


  49. EricL -No reason other than the fact I too am short IYR ! I actually believe that its difficult to short anything in this market , when the shorts build up on a target they just get squeezed out.


  50.  Phil – third time with this question – if you responded and I missed it sorry –  I have SLB Nov 45 calls full covered by Jun 50’s. Starting to get buried here – any opinion on when to roll and where to or just sit tight for now? Thanks,


  51. POT getting back to where we like to short them, up at 116 right now.  I think I will start scaling in to a short position when if they get close to 117.


  52. Man, I am just killing the OIH today !!


  53. Also, scaling in to a short position in SPG.  Bought one round of JUN 49 puts at $2 looking to pick up another round if they get down to $1.75


  54. deano
    That is the problem with full covers.  If the stock runs , the delta will kill you.  If I have 5 contracts, I will only cover with 4. My 80% max guideline has always saved me on gaps to the upside.


  55. Thats 2 more 500 share blocks / short & cover.  Missed getting a 3rd block off.
    I can’t get the trades in fast enough !


  56. I am noting that XOM is still under $70.  That’s about 10% under where they usually are with oil at $65.  It seems that they are not buying this move either.

    Critical/Steve – I didn’t think so and it’s fine if it was.  I’m not going to learn to be a better trader if no one points out my mistakes…

    Adjustments/Sarahd:  The OIH $100s (sold naked I assume), I sold another round (above) but, if you have margin issues, it’s better to roll to 2x the $105 calls now as they pay $5.05 to your $8.20 caller so you pocket a total of $8 against 2 callers with $10.20 in value so not too badly off and they are 80% premium.  The next move would be a roll and the July $110s are currently $5 so that’s our  target but maybe the July $115s, now $3.05 if the premium on the $105s starts to erode.  On the OIH $95 puts, I would spend $1.10 to roll them up to the $100 puts and youcan sell the $95 puts to pay for it, which limits your gain to $3 but less risk over the weekend (when in doubt, sell half).  On the USO $35 puts, if they retest $36.50 and you can DD at .75 (where we opened) I like that play as your avg would be $1.03 at .75 and the delta is .35 so a $1 pullback and you’re even

    Transports up 2.5% now!   YRCW obviously not a transport at $2.57, nor is CAL at $9.25.  I think this is Cramerites buying the rails who haul the coal which is used as a substitute for $100 oil…. 

    FAZ/BC – Just leave them, as long as they are above $5 there’s really not much to do unless you want to buy more at $5 to lower your basis to $5.50 but I wouldn’t unless they get to $4 or something, at which point I’d take out the callers and buy more and roll the putter to July.  On FAS, you’re going to get called away most likely, unless the financials tank, which is a good case for adding some extrea FAZ.  I don’t expect much movement from the financials which means both FAZ and FAS will drift along between $4.50 and $7 and $8 and $11 through expirations.

    Gosh, did anyone notice Chicago PMI missed by a mile?  34.9 vs 41 expected.  Thas is a stunning miss and if we had a real financial news channel they would have dropped everything to dig into that number rather than pretend it didn’t happen…  Oh that’s right, Jeff Immelt gave a "green shoots" speech on Tuesday so I guess there will be no contradicting the boss with facts!

    GLD/Drum – I’d go to 2x the $96 calls at $2.45, about even and then set a stop at $3 on 1/2.

    Trackback/Kwan – It’s been since we put the wikis back in so that’s my theory.  They are causing some kind of "leaks."

    Congrats Celeste!  Not naked selling I hope?   Yes you can buy them back any time, just take into consideration your trading costs when thinking about your "profits".

    Room to run/Eric – Well there’s a lot of cash at the sides and GS, Cramer et al are working overtime to convince them that commodities plays are the "safe" way to play the market.  Fundamentally, this is like a guy who sold you magic beans for $147 last year and got busted coming to you now and saying "Now you can have the magic beans for $65!"   As long as you think there’s another sucker out there who will pay $75, this scam can go on so the real question is, not so much how dumb are the current buyers, but how many even dumber buyers are out there to support this game.  Last year, we had an amazing supply of idiots but the oil rally was running out of steam at $110 until the stimulus checks coupled with total BS NYMEX trading jacked it up 30% more. 

    I’m pretty sure $110 would be a firm top now and that is 50% higher than here and 200% off the bottom so that would be the maximum level of investor stupitidy that I can imagine.  That has to be tempered by the fact that people just can’t afford $110 this year so maybe knock that back by 25% (about the global dip in production, drop in home prices etc) and you can make a pretty good case for $82.50 being as ridiculous this year as $147 was last year.  Of course if the green shoots do sprout, then $110 becomes a possiblity again but still the max and still unsustainable.  The world consumes 86Mbd of oil.  At $65, that’s $5.6Bn a day or $2Tn a year but oil doesn’t rise by itself and needs to be refined etc so it’s about $4Tn at $65.  If the global GDP is now $45Tn, can we really think we can divert another 10% of the global GDP over to oil in the near future?  Who will be giving up 10% of their money and how exactly will those people fill up their tanks? 

    DRYS/Thatway – they are all about the financials.  If they have managed to wrangle their lenders into concessions then they could fly higher, especially with the BDI up 470% and the stock up just 200% from the bottom.  I am absolutely convinced that the BDI is sky high because of all the tankers holding oil though so we could be setting up for the same kind of crazy collapse we had last Q3 in commodities, transports and brokers as this thing blows up in their face – AGAIN.  No way on a GOOG put, I just made a long play on them yesterday.

    IYR/Eric – The FHA just gave $8,000 to first-time home buyers.  It may provide some support but I don’t see a lot of upside soon without MASSIVE additional stimulus.


  57. Phil,
    Maybe a different way to look at the transports being up toiday is that it’s a confirmation of your oil play ( ie  that they are betting that oil is about to drop and they are jumping in to catch that break)


  58. TIMMEH to Jeff Immelt …. hey Jeff, you took some TARP money you know; and then there are the relaxing of mark to market and other things we are doing; how about some "FAIR" coverage about all the "good things" me and O are doing to "save" the economy instead of all that g-darn negativity you guys are known for.
    And oh by the way Jeff, O would just love to have you on the WH reocovery advisory board.
     
    Whaddya say ?  Aren’t you patriotic ?  
     
    wink wink


  59. Look at DIA or SPY daily & weekly trend lines and consider how hard they are fighting to keep these from breaking down.
     
    All is Well !


  60. Obama on TV again ?; man does this guy need to feed his needy ego !


  61. Short OIH again !


  62. Hah !  That was tooooo ez !


  63. HAS is extremely happy today, cannot find any news tho…


  64. Alrighty time for the good luck chant, DIE SPG DIE!!


  65. Ah that’s funny … "unprecedented transparency and accountability".
    George Orwell would be proud.
     
    How is that accountability working out regarding how "every dime" of the stimulus package spending would be publicly disclosed and available ? 


  66. SPG …. looks like that’s working Craig; I have been too busy w/ OIH to grab that one !


  67. Yeah, you have been blasting trades on that guy all morning.  Depending on what kind of drop we get today, I am thinking about holding my spg puts over the weekend.  I think we might get a gap down on monday, especially if they jam everything higher this afternoon to make May look like a good month.


  68. O just said in "other countries" cyber attacks have "plunged entire cities into darkness".
     
    That’s the first time I am hearing that … anyone know if that is true and where that has happened ?


  69. Craig, as a heads up I was noticing this morning a pretty large open interest in the SPG 55 calls …. so just keep in mind there could be a pretty big pump in that direction sometime during the next 3 weeks  (which of course should be shorted into if it happens).
     
    Gotta be quick and nimble and take profit where you can in this market, particularly on the short side given the efforts to pump everything up.


  70. I will take that to heart Cap.  Thanks.




  71. O just said in "other countries" cyber attacks have "plunged entire cities into darkness".
    Lol rank incompetence and lack of regulatory involvement was enuff to plunge the eastern seabord into 3 days of darkness here…..
    I am beginning to spot a theme here. In america we are so frightened of government that we prevent it from doing the things it should, like ensure a properly integrated electricity supply chain….


  72. Damn, I knew I hould have shorted POT at 116.  Now 114 having taken out the days low and support at 115.  How low will she go?


  73. Wow!  UYG and SKF are BOTH green!!  U can’t lose!!!!


  74. out running errands… what did I miss???….
    Heeyyyyyyy… my 8440 trigger filled… gotta love how an auto scale-in plan executes, even when I’m out doin other stuff
     
    I got two more put buy triggers waiting for them at 8520 and 8600 
     
    Buh-bub-buh-BRING IT ON !!!!


  75. OIH – good timing Cap!

    TOS/Gel – Yes I would like all the ammo I can get.  I think I’m going to make a post and have every TOS person make a comment so I can say to Scott – we have X number of people in aggregate and we’d like this kind of deal.

    GS/Steve – Oh I wouldn’t bet against GS as a company.  They are very smart guys with no scruples and, sadly, no sherrif in town.  Don’t forget they made a fortune last year shorting housing while upgrading builders to the general public – they are crooks and they will prosper until the rules change and then they will figure out how to prosper under the new rules but GS clients lost Trillions along with everyone else – you don’t want to be caught following them when they’ve already secretly changed direction. 

    OIH/Magret – My  average is $7.48 on 2 rounds so I guess I filled the first round higher.  Don’t just jump into trades and fill them right away, look for better prices.  If some get away, so what?  We have plenty!  Actually I often tell members the best way to enter a trade is wait for me to either roll or DD because that means I was 20% wrong and I’ve looked at it again and still like it.  If you are paitent, you will get 20% better entries than I do all the time.   Aside from scaling in, it would be a good idea to do an article about entry targets so remind me on the weekend (although probably next one) and I’ll try to put something together.

    SLB/Deano – I guess I did miss it because I don’t remember it.   We can assume SLB will hold $52.50 and your callers are $7.40 with almost no premium so not much fun for you.  First of all I’d certainly pay .70 to roll to the Jan $45s and, if you can, I’d buy 1x the Aug $60s at $3.80 and roll the caller to 2x the July $55s at $4.85 so you collect $9.90 less the $7.40 and the $2.50 extra pretty much pays for your new calls.  Otherwise, just roll to Jan and see how it goes, at worst, you collect $1.50 in premium next month or you pay $1.50 to roll them up $5.

    Damn, is anyone watching TBT?  Something wild is going on in Treasury land! 

    POT/Craig – I like it!   $100 puts are nice weekend speculation at $1.25.


  76. So, no news organization is interested in verifying or disclosing the details of WHICH CITIES HAVE BEEN PLUNGED INTO DARKNESS FROM CYBER ATTACKS.
     
    Or are they trying to not call BS on O ?


  77. Phil:
    What’s with DIA 81 puts? Price doesn’t seem to be moving as stock drops.


  78. JNK (High Yield ETF like HYG) that has a yield of about 13%. Good Buy-write opportunity. Buy ETF and sell Jun $35 call for about $34.40. It goes ex-dividend next week…
     http://www.etfconnect.com/select/fundpages/fixed_etf.asp?MFID=182451


  79. Wow, took me a while to get through all the posts from last night and today.  You all are chatty!
     
    Phil, you don’t want to go to the dark side and bid up oil?  Now you know how I’ve been feeling for the last two months in the fiinancial sector.  I’ll be damned if I’m going long for more then 20 mins.  I think the financial sector and the oil sector have alot in common right now.  They both are being walked up by massive money.  Alot of which as you point out is probably taxpayer money loaned to them by the govt.
     
    I will judge this administration on two things.  Enacting comprehensive regulation on the financial industry similar to what they are trying in Europe.  And curbing energy speculation.  Obama’s campaign didn’t really promise the first one as much as it did the second one.  But they both were mentioned.  There will be MASSIVE resistance to both.  But that, to me, will prove his leadership abilities.  Spending money is NOT leadership.  Leadership is making tuff choices to not spend money.  Anyone in America is OVERLY qualified to spend money. 
     
    We need a Dept. of Homeland Security for the financial system.  The various entities don’t work together.  And in fact, they are competing against each other for the banks’ business.  Lunacy.  I will campaign for the guy during the next election if he can pull it off. 


  80. Typical US media fear-mongering: CNN reports vehicle acticity at a misslie site in N-Korea; just reporting this piece of s…., they cause problems.
    irresponsible behavior.
    news not worthy reporting.


  81. going after OIH short again …..


  82. phil – glad you mentioned the TBT…it has been bothering me all day…I own it (covered) at 55 – have the 57 callers at  $1.80


  83. Transports/Maxt – That’s a good bright side but I usually try to look for the simpler explanation.  Sherlock Holmes said:  "when you have eliminated the impossible, whatever remains, however improbable, must be the truth " and Occam’s Razor states: "The simplest explanation for a phenomenon is most likely the correct explanation" and then there’s PT Barnums wisdom about the American consumer/retail investor so idiots buying rails to move coal tumps clever people making a side play on a commodity crash.  8-)

    Immelt/Cap – You are right about that but can you seriously be the same guy who just yesterday was upset when I said the same about Cheney and his Energy Task Force.  Gooses and ganders Cap….

    HAS/Steve – Now that one I like.

    Cyberattack/Cap – I think he might mean Estonia but the UK Ministry of Defense was attacked by Russians earlier this year and I’m sure crap like that happens all the time in countries that don’t get McAfee or Norton with every computer.  Speaking of systems that promote bad behavior – the best track to working for a web security company with a 6-figure salary is to be a known hacker so the system encourages people to create viruses for future employment – very clever!

    LOL Steve – great point!

    Merk, I love this new attitude.  Entertaining to say the least.

    DIA/Bvar – either there is no interest or the MM is playing games. 

    JNK only pays 13%?  I would think they are riskier than that.  That’s an interesting play M2, let me know how it works out as I’m wondering if you get called away on X-day.

    Transports – I checked and it is the rails leading things higher.   Rails are up 1.5%ish across the board.

    Dollar getting worse and worse as the day goes on.  Makes no sense that rates are coming down so either the Fed is doing something strange to push rates down or the commodity pimps are driving the dollar down – either way, something is going to snap and it probably won’t be the good kind of snap…


  84. SPY being kicked up again on really small volume. Where are the bears ?


  85. "the Fed is doing something strange to push rates down" 
     
    That’s my guess. If ‘natural’ buyers had just shown up it should be accompanied by some dollar strength. If the Fed is hinting at (or engaging in) more QE on the long end, then it makes sense that the dollar is getting clubbed.


  86. love it !


  87. Phil … yesterday you included "Cheney and his gang".
    As Cheney is out of power and in no position to influence anything, that’s all I was commenting on ….
     
    I had no way of knowing you were referring to that energy task force of 8 years ago as something that was manipulating things today.


  88. I think more and more of the various markets are detaching themselves from reality.  There are too many unknown forces at play here.  I’ve been in cash for a few days now except for the occasional cherry pick and I"m pretty comfortable with it.


  89. C’mon Cap, Cheney has become like an exclamation point.  You just throw him in there whenever you need some negative emphasis.  That’s all Phil was doin.  8-)


  90. Gel with those rates is there also a ticket charge pls?


  91. Phil,
    I am looking at converting my AKAM and USG stock holdings to leaps.
    Can you give me some guidelines on how and why to pick whick strike and when to make the conversion, if that is even relevant?
    Thanks,


  92. Check out this 3 day bounce in the dollar, it was more than reversed today and we’re below 80 again. 

    Dept of Energy Security/Matt – Good idea!

    Fear mongering/RMM – I think we can assume that every single bribable reporter and editor has been paid off by the guys who are sitting on 150M barrels of oil in tankers to dig up every possible story that can possibly cause fear and uncertainty to drive people into commodities.  After all, it’s only $10Bn and the NYMEX trades 300M barrels a day so figure they can dump 30M barrels on the NYMEX a day without destabilizing it (as long as they keep the media hype going) so about 5 days up here and they are ready to go short by dumping the physical barrels.  Right now there are 346Mb of contacts in July, 110Mb in Aug, 75Mb in Sept, 42Mb in Oct, 22M in Nov and 131M in Dec.  Dec is going to be a huge problem (which trades in Nov and we saw the same thing coming last year) and the 3 front months are active so figure they only have 3 more months before they must dump oil at any price.  Keep in mind that only 42Mb can actually be processed at Cushing so they have to end each month lower than that so it will be interesting to see where barrels come in.  

    Speaking of fear mongers, John Stewart very funny on the subject at 5:30.

    Cheney/Cap – Ah so they all went home and pose no further danger to America now?  I somehow don’t feel better..

    Cash/Matt – Just make sure you’re not in cash for too long, it’s down 20% this quarter, worse if you want to buy oil!

    LOL – After that daily show clip there was a Mr. Bill Master Card commercial and I’m thinking how appropriate he is as the proxy for the average credit card customer…


  93. Having a hard time hedging against the dollar to preserve my pounds. Made about 10% on UDN this week but the options were so illiquid I had to sacrifice about 5% just to get out. FXB is even more illiquid. Gonna have to look elsewhere but like Phil said "Why on earth is the pound getting stronger" ?


  94. Cheney – Hey, don’t you guys get it? Haliburton bought the black helicopter and it’s Cheney as the pilot.


  95. Well it looks like agency mortgages finally caught a bid:
     
    http://www.bloomberg.com/apps/news?pid=20601087&sid=aEwmo3tytik8&refer=home
     
    That could explain the move in the 10-year too; maybe there is some convexity buying by the GSE buyers. If so, that’s actually a good sign.


  96. OIH is dropping and I have no more short position …. damn that Cheney !
     
    Oh yeah, and I am short HAL.   Cheney told me to.


  97. Cheney – They all went home and hired lawyers to defend against Obama and Holder’s "reckoning".


  98. DB,

    Those currency ETF options are a killer on the spreads. I do trade them, but I always expect to get hit on the exit. The worst is they sometimes let you in at some really great price, and after that it’s like the Hotel California.


  99. Averaged at 1.21 on the USO puts.  I guess when you meant scale in to them, you didn’t mean intraday.  Oops.  Should I be looking to bail early next week if it gets back to 1 or so, DD at around .70-.75 if we get a an afternoon surge, or just sit tight until next week.  They have made their way back to .90 already so I’m not quite as concerned as I was in the premarket.


  100. DRYS testing 8


  101. EricL – yeah i do the same. putting the same exit sale in day after day from the day I buy it and hope to be suprised.
     
    Back to the PPT video Phil posted yesterday – you really should watch the level 2 and trades on SPY and see how the up trades just go in $0.1 and the down in $0.01. (they dont really but the up volume on each $0.01 is miniscule) and its dome is split seconds. Its quite interesting to watch the old computers at work. (I know I’m sad !)


  102. case in point – Spy just jumped $91.09 to $91.19 in spli seconds


  103. Started buying X Jan-11 $60 calls back on the 21st… WOW!   I don’t usually buy otm options, but when you can pick them up for 3.18 and sold the front month 40s for .50… keep selling against them… these little guys could be monsters in a few months… if we recover????  LOL!!!!   Up 60% 
    I don’t usually play this way, but with X, I think there is a chance!


  104. Speaking of media bias, Bloomberg is getting increasingly crazy. Before the GDP this morning, they had all kinds of bullish-sounding articles about the worst being over. They’ve increasingly stopped saying "signs the worst is over" and just say "the worst is over".
     
    Then GDP and ISM came in below expectations. They reported on it, but quickly took it off their front page, leaving only the bullish-sounding confidence article, mortgage rate article, and commodities articles up top.
     
    What’s a little surprising in this is that I’d expect their biggest customers to be Bloomberg terminal buyers who have no patience for being bullshitted to.


  105. 34% decline in Federal revenue.  Kudlow’s solution is more tax cuts!

    AKAM/Pstas – If you are doing a simple proxy for ownership, you just want to go deep enough to have very little premium.  Obviously, as long as you are going to collect .10 a month selling premium, you can afford $1.80 in premium over 18 months so that’s around the range you want to stay under for a small $ stock.  In the case of AKAM, they look nice and strong so we don’t worry about the upside and we look to see what we can sell and that would be 1/2 the $21s for $1.45 and that’s comfortable as it pays for 1/2 the roll from the 2011 $12.50s at $9.45 to the $10s so you can roll the stock to 1x or 2x that position and do a half cover to start.  Since you have 1/2 of 10% downside protection, you just need to keep in mind you should be covering more if they drop 5%.   USG may be toppy here and I wouldn’t want to pay the premiums of the 2011 $7.50s ($2) so it’s $7.70 for the 2011 $5s and, if you want to go 2x there, you probably should 1/2 cover with July $10s at $2.47 and look to sell $12.50s, now $1.10 for the other half if they fall below $11.50.  That pays for most of your shortfall but, otherwise, the 1x roll with a simple half cover on the $10s is fine as you can roll to 2x the Aug $12.50s and that puts you $7.50 in the money before you pay the caller a penny.

    Transports up 3.2% now, Fast Money is going to tell you what oil stocks are the best to catch the wave on tonight! 

    Only $1.09 Canadian to the dollar, still at 95.5 Yen, $161.50 to the Pound and $1.41 to the Euro.  Gold can’t punch through $980 but oil hangin onto $66.

    Hedging/DB – Try finding hedges you can sell that expire worthless.

    Morgagers/Eric – The crack spread got so huge that was bound to happen (very low short-term vs much higher longs), especially with the government subsidizing it further down with free money (OK, maybe 0.25% money).

    USO/Smasher – that’s the $35 puts right, now .85?  If you are concerned over the weekend you can put a brake on your exposure by selling 1/2 the $36 puts, now $1.25.  Since they pay you more than the spread, it shouldn’t be a margin issue and since you intend to buy more puts, if they start heading down you just buy more to increase your delta and drop your covers when you are ready.  I’m going to be staying naked on USO puts over the weekend but it’s not something I would recommend for everyone.  The most important thing about scaling in is KNOWING what your next 2 moves will be.  In other words, you are in at $1.20 and if you DD at .80 you will be in for $1 and down 20%.  What do you do next?  At that point I would 1/2 cover with the $36 puts that have a .47 delta and mine is .36 x 2 (although both would be lower at .80) and I would have the putter’s money, which is plenty for me to buy another round of the $35 puts at $1.20 or less when things move my way.  If things go against me, I can sell another 1/2 the $36 puts so I’m fully covered at about $1.10 with my puts at .70 (these are all estimates but this is where it’s good to internalize your greeks) and it costs me about $1 to roll to the July $35 puts so that would be my escape plan which would buy me another month to be right and I can wash, rinse, repeat until oil agrees with my position. 

    X/Texas – I agree, good stuff at these prices as long as the world doesn’t actually end by then.

    Bloomberg/Eric – I have noticed that too but sometimes I think I’m just getting paranoid.  They replace headlines a lot with more bullish ones.  I’m starting to believe there may actually be a vast left-wing conspiracy except the Times still thinks we’re heading to disaster…


  106. LOL:  Jay Thomas just said "I almost told the truth, that would be horrible – they’d throw me off television."  I wonder what he was saying coming out of that break?  The hostess lauged it off and quickly moved on…


  107. CLN9 falling….


  108. Meanwhile, at least those GM shorts are working their way to zero nicely.  1/2 out now with a 40% gain and letting the rest ride.


  109. phil: tough making $$, but I made some with:
    4 times with AAPL calls
    2 times selling OIH calls
    1 time with SPY call.


  110. Interesting article on what Obama is doing re: gov’t and the economy.
     
    http://article.nationalreview.com/?q=MmNkZmU0NWVjNDg2Y2Y5ZjBiNTBmMTQ5N2JjNzRmZGE
     
    I look forward to Phil’s attacking it….


  111. Times / that’s because the NY Times IS heading for disaster.  And since they think the world revolves around the NY Times, then the world must be heading for disaster also !


  112. Phil: what is your stance on protective sep DIA puts and their cover, now and for weekend /


  113. Cap, when you shorting SPG next?


  114. It is my belief that the Koreas will engage in combat before the end of June.  FYI


  115. Good job RMM – I just look at it as something to do while we wait for the market to pick a direction so 10% here and 10% there is fine with me.

    National Review/Cap – It’s crap.  There are you happy?

    Keep in mind if you DD’d on oil and now you are even on the average, you must stop 1/2 out if it goes back up on you.  Then you can DD again later and you have a higher basis or, at least, it’s cheaper to roll and then DD if it flies back up.  Once you are forced to DD and worried about getting burned, it is MADNESS to then risk your doubled position trying to get a big score.


  116. What about a WAG and buying June 09 GMs @ 1 for 10c thinking by some act of the heavens above that they reach an agreement over the weekend.


  117. texasmotion: your Korea comment: is this a faith-based statement you made as you say belief ( you mean believe)?


  118. By the way Cap, I love the way that one ad on the national review link gets your attention by flashing the word "Christ" (Chris Chritie attack) and the other ad in that spot says "Do you want to secture Americas Energy Future" and that sends you to energytomorrow.org, which is a PR front for the Petroleum Industry.  You are just brain-washed on so many levels!

    DIA/RMM – Those I will leave naked as they still haven’t rolled me so if we gap up I’ll just be happy to finally get into the $88 puts!

    Korea/Texas – I’ll put $100 on North!  8-)

    GM/Pharm – I’ll take that bet.  How many dimes do you want to give me?


  119. Oh I get it, GM goes BK and the transports are up 3.5% because now we have to buy 20% more cars from overseas?


  120. Phil..i would have made 10% off you already : )


  121. RMM, that’s another good one.  We should keep a list of them(Obama).  I realize the winner of the spelling bee last night was a 2nd generation from India.. but should someone who has English as their second language really be correcting a ‘been here’ from TX? 


  122. Wow, that was so Freudian!  I meant to say, We should keep a list of them (Cheney).


  123. RMM-  I can’t hold a believe… It is my believe does not work either…. that would be a verb.  Either way, the Ks are going to fight.
    Phil, I have to say… I would agree.  NK can kick the shit out of SK
    Do you think I would end up on a watch list if I wore my old "Kill a Commie for Mommie" t-shirt around town?


  124. GM/Pharm – Oh no, I only pay off on expiration day!

    Oil is so annoying but it will be interesting to see what happens after they print the month’s close at 2:35.

    LOLTexas – Consider yourself watched!


  125. matt
    you verbal oddball, LOL, I refer to my protected right of free speech but it has to be factual and correct, don’t give me crap,
    the constitution left out one word when it comes to free speech (that is why there is so much crap and abusive expressions): the right of FREE SPEECH but NOT CRAP.


  126. Phil, could you explain this a little more pls?
    Keep in mind if you DD’d on oil and now you are even on the average, you must stop 1/2 out if it goes back up on you.  Then you can DD again later and you have a higher basis or, at least, it’s cheaper to roll and then DD if it flies back up.  Once you are forced to DD and worried about getting burned, it is MADNESS to then risk your doubled position trying to get a big score.
    Yesterday your basis in oil was .80, as was mine.  I thought the next move was roll up.
    I have been adjusting that position today, should I have been doing so pls?
    :)


  127. *meant to say not been adjusting


  128. Phil – Loadsa data next week – whats the plan ?


  129. Interesting fact just hit the newswires – Program trading at NYSE was 26.5% for week May 18-22.


  130.  phil, i appreciate all the oil shenanigans…but cop 2011 40 leaps are 11$.  do you really think cop won’t be 51$ in 19 months?


  131. Nice article by Tyler that could have given us an early tip-off to the GS game.   They are levered up 1,056% according to OCC!

    Oil/Steve – Hmm, I was thinking of the futures as to averaging up.  I have plenty of oil positions so I’m not sure which one and my scaling makes everythign different but mainly I have USO $33 puts averaged at .52, now .40 and $35 puts, averaged .975, now .875 and then the futures.  I was saying in general but that’s what I said we need to do an article about.  Generally, if you are doing 10x you buy 1x at $1 and 1x at .80 for a .90 basis and then 2x at .70 or maybe a roll at that point – depends on the situation).  Assuming you are in 4x at .80 avg with the option at .70 and then you spend .40 to roll to whatever at $1.10, you are stil in for $1.20 and now 6x invested (as you added cost to the position).  If you then get back to $1.20 or better you should set a stop of 1/2 at $1.20 which puts you back into a comfortable 3x investment at a higher strike than you started with and even on the trade so if it goes down you get a better delta and if it goes your way you are great or if the option drops to maybe .90, you can buy 3x more for a $1.05 avg or roll…..

    Next week/DB – Short on the Dow into the weekend, short on USO into the weekend (now is the time to DD as the NYMEX just closed but with tight stops on the new 1/2) and MAINLY cash until we see some data.  

    COP/Jo – I like that play as you can sell 1/2 OTMs and still do well

    Cramer jammin’ the rails of course.  So he puts people into the rails and now says the rise in the rails proves that the economy is strong despite all that silly data.  It would be funny if not so tragic…


  132. WOW, look at DRYS go.  Nice call on the entry the other week Phil.  I got 200 at $6.66 and sold a 7.5 call for $.50, then on the tear today sold another 7.5 call for $1.  This should puts me in at an average of $5.91 and called away at $7.5 for a profit of $300+ after commisions.  Once again another Phil trade pays for this months membership.


  133. Also I have been doing alot of trading in AFL recently.  They are in a really nice channel between $33 and $37.  Every time they get to $33 I sell a put and knock out one of my callers.  Every time they get to $37 I knock out one of my putters and sell another call.  Its happened twice so far in the last 10 days.


  134. Let me whip out the good luck chant one more time to see if I can get SPG to take out its support at 51.1.  WARNING I will also be doing the good luck dance, which is possible NSFW. 
     
    DIE SPG DIE (now with new BOLD technology)


  135. RUT – is outperforming today as they had a steeper drop yesterday.  Selling RUT Jul 530 calls going into the weekend, and have a good weekend everyone!


  136. If you were a big bank/financial institution looking to recoup losses in late 08 and you had plenty of cash (courtesy of the govm’t), the markets would be a pretty good place to go to get that cash.   Get together with a few other large banks, manufacturer a rally with plenty of free cash and use market money to repay the loans.  All the banks were/are in the same boat so why would there be sellers bigger than the collective group?  Odds are there wouldn’t be.  I’m not saying this happened, just that if I was a bank, it would be awfully tempting esp. with when we had the blessing of the govnmt. 


  137. FYI: June 4th will be the 1 year anniversary of the 08 Spring top. 


  138. phil – u still watching the TBT – where does this end I.Y.O.


  139. Also, if anyone can help me out with this situation I would greatly appreciate it.  My father is retired and has a 401k that he would like me to manage a small part of.  What is the best way for him to go about doing this?  He is currently paying someone to manage the money but would like to split a chunk off.  Is it possible to split a chunk off into some kind of rollover IRA with TOS?


  140. craig
    I know with OXPS I had a friend setup an account for himself and give me the passwords.  Because you need a seperate PIN to do any transfers.  I assume TOS is like that. 


  141. craig, you’re dad could open an IRA with TOS, rollover his money, and then give you trading authority.


  142. Stick save – they just lifted SPY +$0.3 in 60 secs


  143. Treasury Note Auction Calendar…randomly found this…
     
    http://www.treas.gov/offices/domestic-finance/debt-management/auctions/auctions.pdf


  144. You should also ask for your commission schedule (assuming it is preferred) on his account, even if you won’t be trading it that often.   They’re pretty reasonable about these things.


  145. yes, craig…when he processes the rollover (also known as an ‘ACAT’), he can choose the percentage of the account he wishes to move


  146. Not making any money today but then not loosing much either.  Rolled my DRYS callers up from 6 to 7.5 yesterday and that really saved me soem dough.  Kept my delta advantage and 80% covered.  Time to just hold them and roll before OE.  Anythng else is over trading. When my callers go higher in Delta, that is usuallty a signal that you need to take some action, either roll up, out, or close.   My GS, AAPL, RIMM plays today are fairly static. only giving me heart burn.


  147. DRYS/Craig – Cool!  I love those guys when they get beaten up…  AFL I do like a lot but don’t jump the gun today as we may get to $30 next week.

    Funny dynamic today.  Now oil is staying up while the market goes down.   Before they went down when the market went up.  If the market is starting to react to oil at $66 as a bad thing, that could put some pressure on contacts earlier than the oil boys planned.

    Good play Peter but people need PM I think.  Have a great weekend.

    Blessings/Brian – That’s pretty much what happened and then all the poor bastards who cashed out at the bottom and put their 401K into TBills at 1% now have to take a haircut to cash out and buy back in 30% later before "it gets away" because Cramer and CNBC are telling everyone to bet it all on oil and everything else that touches it "because it worked before."  It’s really sick – when people get burned by Madoff they don’t let him open up again 6 months later with the same scheme do they?  Why is this different?

    $75,000 an episode 40 times a year for "John and Kate + 8!"  That’s $3M a year.  Quick, one of you doctors – I’m going to need some fertility pills and Viagra – I’m going to grow me a TV family!  8-)

    TBT/BC – Holy crap!  That is a shocker.  I think it means that they are going to keep rates down at all costs as that is just an insane move.   How can that even happen on a non-auction day?  Where is the money coming from?   Kind of keeps me on track thinking commodities will soon colllapse and/or dollar will bounce.

    We’re getting that flatline into the close, I wonder if they’ll push for 8,412 and 908?

    401K/Craig – Sorry no clue on the mechanics.   I would think he can just open a TOS account and give you the password though.  It stays in his name, his taxes etc.  You can get trading authority so you can talk to tech support. 

    29% gain for oil on the month.  The biggest month in history. Doesn’t that just make so much sense with 9.2% unemployment and 40% less autos being sold and housing construction down from 2M to 300K and OPEC holding 4.2M EXTRA barrels of spare capacity and inventories at record high with usage down more than 5% over last year?

    So still short on Oil over the weekend.  Also good with naked DIA puts, both the Sept $86 puts and the June $81 puts at $1, but those are speculative of course

    We’ll look over the $104K portfolio on the weekend and see how it’s doing, probably officially add some dividend plays for next week.  Still no Buy List items unless we either get a sell off or break out and, of course, I’m still betting sell-off on next week’s data.


  148. Ok guys… Taking the big guns from Blue Cross Texas and Illinois to The Colonial today to watch some golf and bet on caddies first to the green.  If you are watching on TV, our box is on the 13th.  I’m the bald guy with the white polo (cold beer in hand and BIG smile)… see ya’ll later.
     
    BTW, healthcare grenade of the day:  BCBS/Hallmark HCSC (IL,TX,NM,OK) has no debt and sits on billions in reserves, cash and assets.  The Fed wants your premium dollars in the form of Taxes.  Which do you "believe" will be more efficient and provide the best service?  One of the oldest Blues in the USA or the debt filled heart attack waiting to happen we call the US Government?  There is a better way and we will find it (Regardless of what Phil thinks).   The USA does it better the the world… think different folks.
    Have a nice weekend :)


  149. XOM negative with oil up 2.5% – What a country!

    Treasuries/New – That’s a good one.  We should have a post for "useful things"

    Neutral/SSteve – Congrats!  That’s the way to be in this market. 

    Have fun Texas!

    They need a stick in 10 mins or people might start cashing out into the weekend.  USO flat as a pancake since NYMEX close.


  150. texas, let me come join you.  Im bald too. We can be like bookends.


  151. You would think that the last day of the month there would be a pump into the close.


  152. Haven’t done this for ages – Abracadabra – for the Bears !!! :-)


  153. Phil, If as you think 8412 and 908 are the targets, there has to be some massive collusion in order for this to work? How the hell do they do it?


  154. SingaSteve:
    would you go with AAPL jul135 call into weekend ?


  155. MCO – Einhorn disclosed a sizable short position in Moody’s.  How about a 2x Jan 25 P and -1x Jun 26 P?


  156. Phil: how much does DIA jun 84 putter, (which now is 2$ which is all premium) drop in premium until Monday ?


  157. FSLR – Phil I entered a Long Jul 180 P and short Jun 185 P the play is doing well, I was curious if you’d roll up the july puts though or jus leave it alone?


  158. It does look like they are working very hard to hold S&P and Dow levels.  You would think they want to hit 500 on the RUT but no. 

    Man, if they say on CNBC one more time that Consumer Confidence looks good I will throw up!  Income and Spending is MONDAY MORNING AT 8:30 AM, THEN CONSTRUCTION SPENDING AND ISM AT 10AM – BE WARNED

    How/Jaimie – It’s very easy when you have a low volume market.  Figure buyers and sellers generally equal out so it takes a very small imbalance to move the market.  If you wait until the end of the day you can probably trade just 1% of the day’s volume (maybe $200M) and pretty much get the indexes to finish wherever you want with a simple program as long as you don’t face huge opposition. 


  159. RMM
    Anything could happen.  North Korea could luanch a nuke.


  160. Who said you can automatically delete temporary internet files & cookies when shutting down?  How do you do this, I am running XP?


  161. AAPL also seems to be fairly safe though.  Like I said this is the end of the month.


  162. I cannot get on Options Express website
    Anyone else with same problem
    I get file not found message
     


  163. SingaSteve: why would N-Korea do this and to whom ? Only if they want to commit suicide.


  164. had to go out … window dressing … risky play … short SPG into the close; possibly hold for the weekend.


  165. RMM
    They are more bark than bite.  But they can ship to countires that would.


  166. MCO/Bigs – I like that, I wouldn’t even sell the put unless they hold the 50 dma at $26.35 and then the 200 dma is right below it at $25.35 so very easy watch levels.

    DIA/RMM – figure 1/10th of the premium if you are lucky.  Depends on Monday’s open and the VIX.

    See, it only took 10M shares to jack the Dow up 35 points in 10 mins!

    FSLR/Bigs – I wouldn’t pay today.  Wait and see what happens Monday.  If oil goes up, they go up.  Not likely but not worth a risk if the position is currently working.


  167. This finish just about sums up my week. :-(


  168. Deleting/Grant – I don’t think it’s what you’re asking but I hit CTRL/ALT/Del and get the Task Manager when my system is dogging and then sort the processes by CPU usage and if I see an exporer window taking too much power or some wacky program that may be a virus I hit delete.  Sometimes it crashes you but then you learn not to delete that one next time.  I can keep the machine running for a week without rebooting doing that and I run like 12 windows on my main computer. 

    You’ve gotta love the stick!


  169. Just outrageous.


  170. Looks like they’re gunnin for 922 in the SP but no way they get it.  Damn close though (Cheney).


  171. LOL Russell 500 – a level it had no interest in at all up until this minute!

    Wow, being a bear just sucks!


  172. Chinese friend and Shanghai native emailed me today — she says things are buzzing, RE seems to be picking up, people seem confident, etc. No idea whether this extends outside the city, but FYI.


  173. Big stick save!!!


  174. LOL.  Now that’s a close!


  175. Look at the /ES one-minute. That’s the wall of worry over on the far right, lol.


  176. What kind of BS is that ???
     
    Talk about illegal ……  WTF ?


  177. Being a bear does suck and to be honest that finish has completely f*****d me up :-(


  178. Judging from the close it seems that a good GDP number is expected from China on Monday.


  179. Looks like they went stop hunting


  180. ROFL 8,500 – up 100! 

    Transports up 4%, oil up 3%, Gold up 2%…

    NYSE punched 6,0000, S&P 920, Nas 1,774. 

    That was simply amazing! 

    Holy crap if a horse race finished that way they would shut down the track and start an investigation….

    That was just so funny I can’t be upset about the shorts, got some good fills into the close..

    Have a great weekend everyone!


  181. Frick, let them take it up.  The faster the better.  Hurry up, go kiss 1000.  It won’t sustain.


  182. That was major shenanigans …. hey TIMMEH told GS its perfectly ok.


  183. A good lesson on why to try to avoid trading the last 1/2 hour; especially the last 10 minutes on a month-end.


  184. Dow 8,500

    S&P 919 (what happened)

    Trans 3,200

    NYSE 6,003

    RUT 501

    SOX 271

    Nas 1,774

    Do people in foreign countries really think this is natural?


  185. "A good lesson on why to try to avoid trading the last 1/2 hour; especially the last 10 minutes on a month-end."
    Yes!  I would just add "against the trend".  LOL.


  186. That is insane … flatline all day; pump 175 points last 20 minutes


  187. "a good GDP number is expected from China on Monday"
     
    If the world was hit by a meteor that wiped out 95% of China they’d still report great GDP data… They make the US guys look like bastions of honesty and integrity, which is some achievement! 


  188. Phil – Thanks for the tip.  I found where I saw the comment…
     
    RMM
    May 28th, 2009 at 5:33 pm | Permalink  
    "Also: make sure you have the settings on to delete Temp.Files, History when the PC shuts down,"
     
    RMM how do you do this?


  189. Does anybody notice the 2-bot the NQ daily is putting in projects to roughly 1500?  (Unless it fails of couse.)


  190. Phil – Thanks for the tip.  I found the comment I was refering to.
     
    RMM
    May 28th, 2009 at 5:33 pm | Permalink  
    "Also: make sure you have the settings on to delete Temp.Files, History when the PC shuts down,"
     
    How do you do this?


  191. I was listening to the S&P pit –  JP Morgan came in and bought huge in the last couple of minutes. MM’s on futures and options seemed to be caught short.


  192. Chigurh – LOL… I couldnt find anything else to justify this runup.


  193. I’ll tell you one thing that is a certain.. I will be a BULL on June 30th.


  194. Phil        What companies are the best play for this cyber security  sorry if I miss it


  195. Well bears, volume got huge (comparatively) in last 10 mins but there was a lot of dumping into that stick.  Looks like someone took advantage of someone else who had to hit those numbers at all costs as volume doubled for the day since my 3:48 comment when I was looking at how many trades it took to move the Dow up 35 at the time.

    China/Anton – If I were them I’d announce a lower number because they can’t afford to boost their economy with $70 oil since the subsidize it. 

    That has to be the biggest BS move I’ve seen all year.  How can anyone take trading seriously when crap like that can happen? 

    1.500/Brianna – How can you trust a chart based on a move like this though?   They were red until 3pm then up 2% from there.

    JPM/Anton – Yep, one of the hitmen.  I’m sure MS was in one and GS in another and C in another…  No, they’re not colluding, they just all decided to buy at 3:50 and none of them happend to want the same index…  Move along folks, nothing to see here…

    Cyber security/Bill – Oh I have no clue.  It’s usually such a minor sector it’s not worth following, generally just goes along with PC sales.  MFE is the best to me from a user standpoint but a p/e of 31?  Not too interesting. 


  196. Phil!  You’re starting to sound like me (Cheney)


  197. Anton
    How can I listen in to the Pits? 
    That sounds very interesting.


  198. Oh wow, I doubled my short position on SPG into the close.  That move was just retarded.  Hey Phil, can you figure out how much money was thrown at the /es into the close?


  199. Chuck, I get a feed from guys on a trading floor upstairs, which is free for me. There are a few operators online who charge for a similar service "tradersaudio" and "squawktrader" both do it. They both do free trials and squawk is probably more "user friendly". I don’t listen to mine all the time – it gets distracting at times – but today was such a nothing day I turned it up to see if there was any action in the pits… If you trade equity futures I would guess it would be incredibly helpful, but if your an equity options man then maybe less to gain from it. Well worth giving the free trial a spin though.


  200.  whooooaaaaaaaa…. d-d-d-duuuuuuuudessssss….
     
    I spend the day doing errands thinking the market would finish flat and tohhhh-tally booooring and guess what???  
    MR. STICK showed up!!! He even made it to 8522 to trigger my 8520 auto put buy!
     
    Yeeeeeeeehawwwwwhhhhhh !!   BRRRRRRRRRRRRRRRRRING IT ONNNNNNNNNNNNNNN !!!!    
     
    Just one more trigger to go at 8600 to finish building by bear position. Maybe they wanna sell ‘em to me on Monday?!?!


  201. Phil : National Review/Cap – It’s crap.  There are you happy?
    LOL.
    Just what I expected you would say …..
     
    :grin:


  202. Dear Leader sez:   "You anti-socialist bloodsucker! "    
     
    That was my Kim Random Insult Generator speaking , but it could well have been Obama !


  203. The real pump job today wasn’t at the end of stock market, it was at the (long) end of the treasury market. Really doubt that move was simply caused by agency bond buyers suddenly desperate to hedge off interest rate risk.


  204. Phil – OK, TBT…I am a bit unnerved on this trade so feedback will help
    so on the one hand, the move seems not to be grounded in any fundamentals, and at least that makes sense…however, the shares are expensive and thus, I have a ton of $ tied up in them and now off $3/share – although, I am covered, the unrealized profit on the june callers has only  eased about 1/2 of the drop so far…
    I can live with the 5% today, what I am concerned about is how fast this moved and the potential for another 6-7 points down
    where do I go with this – I am outside of my comfort zone on this trade, given the bizarre movement and before I close this out, I wanted to see if feedback from you or others on a repair makes sense…Sssume my time horizin does NOT account for owning this longer than July
    thks in advance


  205. I was just a guest "judge" on a show and I’ll put up that link when they put it up but yesterday’s debate on oil was interesting as they promoted both sides.   If someone figure out how to find a link to today’s show, please let me know but it seems this is all delayed.

    S&P/Craig -  I believe the Cap of the S&P roughly is $1.3Bn x the index number so $1.2Tn but it’s very rough as it was $3Tn when the S&P was 1,500 so it’s a strange scale and may be 1.4x up here.  About 1Bn shares are traded in an average day and I believe that $92.53 is a fair representation of the weighted average price per share so figure around 10% of the index is traded in a typical day.  So if $130Bn is traded in a normal day and we were 1/2 normal at 2:50 then about $70Bn was thrown into the S&P in the last 10 mins. 

    Now, here’s the interesting thing:  If we assume in a typical day that there are a fairly even number of buyers and sellers then a small imbalance should make a big difference as $6.5Bn on one side or the other would lift the $130Bn worth of shares that are traded by 5% or 2.5% (I’m not sure how you’d calculate it).  So it would take very little of that $65Bn to push the S&P up 2% into the close and that barely happened so we have to assume that there was a rush of buyers AND sellers.  That explains the INTENSE volume spike in the last hour of trading on SPY that ended up in a very flat range.  Kind of like someone was very determined to dump everything they had into that buy program right at that spot and the buyer just kept buying and buying and buying.

    Of course, they buyer could come right back and attack in pre-markets on Monday and it’s doubtful the seller would be there so it will be very interesting but, generally, the PPT seems to finishe EOD and there isn’t a lot of follow-through.  Of course if we get bad data Monday morning and our super-confident consumers turn out not to be actually spending (like our countries, maybe they’re all counting on the other guys to lead the recovery), then, TERRIBLE things may happen.

    Treasury/Eric – Good point.  I’ve never seen anything like that without a massive catalyst. 


  206. this move eod made our PPT discussions from last evening apropos, huh


  207. TBT/BC – What is your actual position?  It doesn’t matter what it drops to.  You are going to sell $2 per month against the $52 and that’s a return of $24 a year (about 50%).  As long as TBT stays above $20, you should get your $2 so don’t let a $3 drop bother you.  If anything, it’s an opportunity to set stops on your callers and take them out and wait for a bounce to sell more.  Also, you should never have a "ton" tied up in anything unless your portfolio is 20 tons or more….


  208. Hey Phil congrats for making it on to Zero Hedge today … .good publicity for PSW.


  209. phil – ur right, it was bad move and from a percentage loss standpoint, it will not violate the 2% rule (or at least I will not let it get there)…I actually had a range of moves either way in mind and the reason I chose the cov call trade…in any event,  i get the point – it’s just the size of the positon and the irrational move in something I thought I had a good "sense" – yes, famous last words…
    position: cost basis now about $55 on400 shares covered with 4 June 57 for about $1.80…the trade was about the premium in June and I did not expect to be called away and would be fine rolling to July, but if I did get called away  fine…i justs did not want to turn this into a long-term play, which is what I think you are saying by collecting the premium.?
    As Buffet has said, the best way to get out of a hole is to stop digging, so that is my thinking now -
    thanks – I will stay calm for a few days and see where this goes after some of the nonsense stops at long end of curve – will check in with you on  it next week


  210. 0Hedge/Cap – Is he that popular?  I thought it was good publicity for him to be on my site?  I’ve gotta get me a better agent!

    TBT/BC – OK so you are in for net $53.20 or is that $55 after the callers?  Well the $57s are now .75 so congrats!  You beat them good.  Certainly put a stop on them at .90 or you can just take them out for .75 ($3) and replace them with 2 $52s at $2.40 ($5) which can be rolled back to 4 $55s at $1.20, which is your basis and if you get called away for a $1.20 profit so what?  So you beat your callers for $1.05 x 4 = $420 and you will sell 2 more for $500 and use $300 to buy back the originals – that’s now $620 you’ve collected against the 2 $52 calls.  If it heads lower, you can sell more, if it heads higher, we have our rolls.   You don’t HAVE to execute, but it’s good to have a plan of the moment…


  211. i’m in at about $53.20 after callers…
    good stuff, phil thanks again…
    in addition to trade talk, getting a huge  of value from the discussion and the screening of the blogs – to me, that is almost worth the price of admission…surely, you already know this -


  212. My perception is that ZHedge has become a popular read in the Hedge Fund community for digging into and exposing unusual and controversial info.
     
    As to whether he (whoever he is, you might know, I don’t) is more popular than you/PSW, that I don’t know.  You probably cater to somewhat different audiences w/ some overlap.


  213. TBT/BC – By the way, I will point out that collecting $620 in one month against $22,000 is still a 34% annual return.  I was wrong before, TBT doesn’t have the IV to pay you $2 so your goal is pretty much to collect $600 a month.  We decided we felt pretty safe that TBT wouldn’t take any major tumbles (more than 20% is major not 2%) so it was a fair trade-off for the lower collection rate. 

    Every month you need to look at your options and say "what can I do to make $600 in premium at a strike I won’t cry if I get called away."  Of course TBT is not going to get bought out or merged and blow you out either so, again, not a bad long-term play.

    So, going by today’s price of $52.64, I would take the stock and first decide where I think we’ll be on June 19th.  The 200 dma is 51.42 and the 50 dma is $48 and rising and we are fundamentally bullish so I would not be too worried about a big downside.  In fact, for $1, I’d be very tempted to sell the $50 puts.  On the call side, I want to collect $600 so I’d sell 3 $53s for $2 and, if we fall to $48, I would certainly sell the $45s for $1 ($400 more) and roll my callers down to 1/2 whatever gave me $400 so my net collections would be about $1,200 for a 1/2 cover on the $48s maybe.  Since I’m in for $21,056 less the $1,200 at that point, my basis is $49.64 with 2 called away at $48 and 2 open.  I can live with that so that’s my trading plan for this position off today’s close. 

    You should pretty much have a trading plan for every position.  At first it’s very tedious but, once you get used to them, you have them in your head as the situation changes… 


  214. Threw on a small WFC short after hours on general principal …. striking back at the blatant manipulation into the close.
     
    I’ll show those bastards what I think of their little game …


  215. SPY – The manipulation continues after hours.  It took 260,000 shares for SPY to plunged from 92.56 to 92.3.   Then it took 15k shares to move it back up to 92.37.  In the regular hours, 21M shares were needed to move SPY by $1.1.  Someone can’t wait to cash in.  Our "ronald" would have had fun with his strategy.


  216. phil- you’re the man…enjoy the kids and weekend


  217. Watching Meeting of the Minds on CNBC right now.  Pretty interesting stuff.  The CEO of Blackrock is on there and talks like he’s speaking for the Administration.  I’d be afraid to know how much he really is.


  218. "1.500/Brianna – How can you trust a chart based on a move like this though?   They were red until 3pm then up 2% from there."
    The idea of trust in trading is an interesting concept.  Trust in the markets doesn’t exist only possibilities.  Thus all I can do as a trader is trade what I see and what I think it portends.  Thus what I see in the NQs is a double bottom and firm price action.  I see several leading stocks trying to put in higher bottoms (i.e. apple).  I see the NQ’s suddenly leading the market higher as was the case for this entire move up and after lagging it last week.  All bull confirmations.  Does this mean were going to 1500 next week?  No one knows though I would rank higher bottoms and double bottoms among the more reliable price patterns so the probability that we’re going there is higher than a failure though I certainly am not going to rule that out.  Markets LOVE to poke through old highs at week’s end only to turn around for good the next week.  We need price action for indication of a failure though and right now it isn’t there. 
    I don’t think it’s coincidence this price pattern projects to an area of the chart of stiff resistance (1483-1532).  This firm price action we’re seeing (i.e. market willing to take out old highs) indicates we will go there earlier rather than later but that could change.  We need price action to tell us that though.  The EXACT same bullshit happened last year around the same time and we know how that ended.  My feeling is we’re near the end of this run just like we were last year this time.  There’s  a possibility we could in a flurry run up to around 1500 then come back down to 1350 and lower.  Actually that would be quite an easy trade because there is NFW this market is going past 1500-1538 given how hard it has had to work to get through 1430′s.  The assessment that this is a bear market rally is correct IMHO.  Markets aren’t going to let stupid bulls of the hook that easy.  The question is timing.  Right now however 1483 in the NQ is like a magnet because we’re that close.  Besides the higher we go the more $$$ the JPMorgans and Cs and GS can make putting out shorts at higher prices for the inevitable plunge down.  They have probably done the math and know where they have to take the market in this rally to make X dollars on the way back down.  That wouldn’t surprise me in the slightest.  

           


  219. Phil,
    I was channel surfing on the AM dial this afternoon and came across Michael Savage, someone has sent him the following editorial from Pravda. He read it on air and it got my attention for a minute.
    Well, here I sit tonight catching up on my reading and there’s Tom Burger’s artical, ’Trouble with our Banking System’, and I’m thinking in the back of my head this sounds fimilar, then I go to Savages’ site and read the Pravda editorial that was published a month ago and all I want to do is buy gold. :o )
    Long story short, I though you might enjoy the read from Russia and might wish to share with the others.
    (http://www.philstockworld.com/2009/05/29/the-trouble-with-our-banking-system/
    http://english.pravda.ru/opinion/columnists/107459-0/
    Have a great weekend,
    Jeff


  220. Great work Phil i feel like a proud son!! Not to imply your an old man :-)




  221. Interesting article in the WashingtonPost today about where the Fed got its authority to backstop investment houses.  Prior to this law, they could only backstop banks.  It wasy way back in 1991.  Sen Chris Dodd introduced the bill upon the request of GS and other firms.  What a friggin suprise.  They wanted it for a safety net after the 1987 crash of Drexel Burnam.  No one really knew the impact of it at the time.  Today we know it’s in the trillions of dollars.  Some might say it makes sense because we have it for banks.  Only problem is, banks are highly regulated to protect the Fed from paying out.  Investment houses are not.  Therein lies the problem.  Today, the Fed seems intent on digging a bigger and bigger hole for itself.  Accepting everything from CDSs to baseball cards for collateral from banks or bank holding companies in exchange for cold hard cash.  And no way to actually get them to lend it.  Instead, they can just go out and play in the equity markets with it.  Brilliant.
     
    http://www.washingtonpost.com/wp-dyn/content/article/2009/05/29/AR2009052903403.html?nav=hcmoduletmv


  222. brianma I agree with your assessment of the possible situation.


  223. Interesting read on Investment banks, Matt
    Here is something interesting – bearish – from barron’s…It is a Q&A with the guy who runs Eliot Wave International, Robert Prechter…Essentially, he is pointing out, the best investment approach in his eyes, is safety first because another storm is coming
    "Elliot Wave Guru Sees Dark Days Ahead"
    http://online.barrons.com/article/SB124275522397735517.html
    Here is what i thought was the best line:   "Cash has been good. Today you can buy twice the house, twice the stock shares and twice the gasoline that you could a short while ago."


  224. This is why the Pound is gaining on the dollar,
    "The International Monetary Fund estimates that gross U.S. debt will reach 97.5 percent of the country’s GDP in 2010, versus 72.7 percent of GDP for the United Kingdom."
     
    That’s an unfriggin believable statistic.  We’re hosed.
    http://www.cnbc.com/id/31031745