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Testy Tuesday Morning

Our levels are holding so far

We came right back to 1,000 on the S&P yesterday but it held like a champ and that gave us the confidence to take a bullish cover on our longer DIA protective puts, right at 3:04, ahead of the usual 50-point stick save but it was a move we initiated right at the bottom at 2:30, catching almost the dead bottom on our roll.  Of course it's total nonsense but it's total nonsense we can count on with 8 stick saves of at least 50 points in the last 90 minutes coming in the last 10 market sessions accounting for 400 points of Dow gains or ALL of our gains since July 20th when we "broke out."

As illustrated in David Fry's SPY chart, the only exceptions to the stick save were the last two Fridays and I said to members in yesterday's chat, perhaps that is somehow significant that the collective we call "Mr. Stick", does not feel confident enough to make bullish plays into the weekend anymore.  Today we should head right back to re-test 1,000 on the S&P but we are much more bearish overall, having taken profits yesterday and covered our unrealized gains in our $100KP - the plan we discussed in yesterday's morning post.

We got a re-test and a re-failure of the Russell at exactly our 574 target right at 11:15 and the the Qs never even mounted a serious threat on our 40 line so it wasn't a tough call for us in the morning.  The other levels we are watching, Dow 9,297, S&P 1,000, Nasdq 2,017, NYSE 6,438, Russell 562 and SOX 308, are looking shaky and may not stand up to another test, especially if we get any bad news on our upcoming data with Wholesale Inventory and Productivity Reports on deck this morning.  Our bearish additions were an ERY spread (3x Energy bear) and COF Sept $40 puts, which are already up 10% from our 12:17 pick.  It wasn't all negative, we liked a couple of buy/write plays and we took a very bullish spread on FRE, which should do very well this morning.  At 12:57 we had noticed FRE moving up and, in Member Chat, we were discussing the merits and my take was this:

FRE/Ifl – The float of FRE is just 650M shares and they are capable of earning $5Bn a year in a stable economy so that would be about $7.50 per share.  If we ignore the fact that they lost $50Bn (10 year’s earnings) by virtue of the fact that it’s been swept under the rug by the government.  Even if you think it would take them 10 years to pay Uncle same back you still paid $1 for a stock that will let you retire on $7.50 a year in earnings.  FRE is not going away, the common stock may end up being liquidated or whatever but, on the off chance it’s not – we were buying them in the spring at .60 on this same premise.  What the hell, you put down $1,000 bucks and maybe get $15,000 a year off it down the road – that’s worth a toss.  Less so at $1.30 but now options come into play again so a world of possibilities like buying it here and selling the Jan $1 puts and calls for .95 for net .45/.73.  You can also spread the Jan $1s with the Jan $2.50s for .34 with a $1.50 upside at $2.50 and in for the same $1.34 as it would cost to buy it now but with less downside delta.

Those $1s should be looking pretty good this morning as FRE reported earning $768M this Q ans said they do not need any more bailout money.  Of course, this ignores the fact that the Fed is buying hundreds of Billions of Dollars of the company's debt at close to face value - THAT they do need to continue or this company will vanish in a puff of smoke so be aware of that before you start chasing them uphill!  Still it should make for a fun short squeeze this morning and, like I said, what a payoff if it hits…  EOG also caught our attention and we put a bearish backspread on them but the margin requirement was too much for the $5,000 Virtual Portfolio, which could use a good sell-off to push WHR and VNO below $59.

Of course the news isn't all bad.  The Wall Street Journal is running a heart-warming story this morning about how cities like Nashville, Tampa and Ontario California are all part of a growing movement of cities who embrace the tent cities that lie on their outskirts as they clearly have no better idea of what to do with the rapidly growing population of homeless people.  According the the WSJ: "After years of enforcing a tough anticamping law to break up homeless clusters, Sacramento recently formed a task force to look into designating homeless tracts because shelters are overflowing. One refuge in the California capital, St. John's Shelter for Women and Children, is turning away about 350 people a night, compared with 25 two years ago, said executive director Michele Steeb."  See – it's a growing business!  Who says this economy doesn't have any thriving sectors?

Actually, the homeless may be the fastest-growing segment of our economy with almost 25% of all US mortgage holders currently owing more money than their home is worth, a figure that is projected to rise to 30% by mid 2010.  Wow, what's the name of the company that makes Gortex?  “The negative-equity rate will rise and spin off more foreclosures,” Stan Humphries, Zillow’s chief economist,  “I see a substantial downside risk to prices and don’t think we’ll see a bottom until the middle of next year.”   A glut of unsold homes is also pushing down prices. The 3.8 million homes for sale in June would take 9.4 months to sell at the current pace of transactions, according to the National Association of Realtors. The inventory turnover rate averaged 4.5 months in the six years from 2000 to 2005.  More than 18.7 million homes, including foreclosures, residences for sale and vacation homes, stood vacant in the U.S. during the second quarter.  

So, let's do the math:  There are 3.8M homes for sale and that is a glut of homes that is more than double the rate we had in the "healthy" economy we had in the first half of the decade.  BUT, that does not include at least 14.9M VACANT homes that will, one assumes, either have to be sold by the banks or written completely off to the tune of (at the $186,000 national median) $2,771,400,000,000.  These are real numbers folks, no matter how much you try to sugar-coat it, these numbers eventually come back to bite the economy in the assets.  “We haven’t seen a bottom in home prices, and it could take into 2011 before we see equilibrium in the market,” said Michelle Meyer, an economist at Barclays Capital in New York.

I know – Ouch, ouch and ouch!  You may say: Phil, how can you point to these things and not be reporting from a fallout shelter in the backwoods of Canada?  Well, for one thing, I have faith that all this can be fixed over time – we simply lack the political will so far.  I solved this housing crisis 2 years ago and some of my proposed measures have actually been implemented but not my biggie, where I last posted in February "How to Solve the housing crisis TOMORROW."  Fortunately, I'm not the only problem solver in this country.  Our friends at GM, just 3 years after gasoline first hit $2.50 per gallon, is ready to go to production with a car that gets 230 miles per gallon (city)!  Automobiles use 40% of the world's fuel or 33M barrels of oil a day and most of that is city driving.  Make no mistake about it, OPEC is terrified of this and they have now lowered their forecast for 2009 by 480,000 barrels a day, not based on the GM Volt, but on the already rapid trend of permanent demand destruction as global consumers just say no to conspicuous consumption in a jobless (and homeless) economy.

Another reason you have to love this country is we sure can pull it together when we have to.  Productivity is up 6.4% in Q2 as a frightened worker turns out to be a highly motivated worker.  This was up considerably from the 5.3% gain expected but, unfortunately, Q1 productivity was revised down by 81% from 1.6% to 0.3% so it kind of calls into question yet another set of vital government statistics.  Hours worked dropped an average of 7.6%, something we discussed on the weekend as I had pointed out that the 150M people who do have jobs in this country are making 5-10% less for doing them and that is just like having another 15M people out of work.  Oops, sorry – this was supposed to be the bullish counterpoint…

Well, sorry but, while we're on the subject – I must share.  This was my favorite news item of yesterday as VLO is being sued for cutting their costs by cheating their workers out of millions of dollars in overtime wages and it is just the perfect microcosm of what's going on nationally in the Q2 profit picture.  The class-action lawyer is a vertitable quote machine so I'll let him have the last word on this subject:

"To keep its gas pumps flowing, Valero virtually pumps the lifeblood out of its workers who are expected to be on call 24-7, but are only paid for a fraction of the time they spend working.  This class action aims to turn off this oil Goliath’s unfair pay practices…  When it comes to its employees," adds Mr. Wittels, "the only thing Valero has refined is how best to fleece its employees out of their wages."

So now I've gone on too long and run out of time but Asia was up half a point and nothing interesting happened there.  The BOJ held rates at 0.1% but they won't give us home loans at that rate so what do we care?  Europe is down half a point at 9am with Latvia's GDP falling 19.6%, keeping our premise alive that the Baltics may still sink the EU.  The IMF was forced to lower Romaina's budget limits as well in order to keep that country running on life support and, of course, on a day when oil was testing $70 and OPEC lowered their forecast, it was inevitable that Rent-A-Rebel would come to the rescue and attack a pipeline in Nigeria.  This time it was Shell's turn to knock off a day's production in order for NYMEX traders to have something to hang their hats on as they desperately attempt to talk up the price of oil before it falls off a cliff. 

We're just waiting for the Fed tomorrow and then it's July Retail Sales on Thursday so nothing that happens today matters all that much but the Nasdaq already blew it's levels and we have some serious tests coming up on the rest.  We're already bearish so it's the bull plays we'll be eyeing today, especially the ones we reviewed over the weekend but, as I said last week – watch the newsflow in the MSM.  If it starts to get negative, look out below!

 


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  1. Good morning from the beach all!
     
    Phil, where does your number of 14.9 million vacant homes come from?  That’s a tremendous number…


  2. Phil:
    I have a UYG buy-write with $4 Aug calls/puts (like in the $100K portfolio) with a $2.11 basis. UYG is currently $5.47. What do you think of DD and rolling to Sept $6 calls and $5 puts for $4.19/$4.59?


  3. Beach.  okay, matt.  thx for the reminder its August in DC, man.   I’m gonna roll to the beach for a week or so this weekend.  So lets make some vacation bread, PD.  what beach, matt?  (Maybe in between throwing money into the trading pits today we can compare best beaches – yeah!)


  4. with FRE now at 1.74 that’s what you would call chasing them up hill? I must a been worrying over something else at 12:57. Probably lunch with my wife. Got to tell her no more of that nonsense! :)


  5. Phil-  Is the current outlook on SRS the same as your earliers post (could go to 14-15 in the next two weeks)? 
     
    Also, I’ve got 10 $90 and 10 $91 DIA puts that are currently worth about a third of what I paid for them.  Kept holding them expecting the correction last week and then today.  Thoughts on what to do with them?  If I get lucky tomorrow, they could go up 50% from where they are now….just as they did today….before the stick came in.  Would you suggest selling them at that type of opportunity or holding on in anticipation of a 2-5% correction this week?


  6. dstillwe, I’m at Nags Head and not DC, thank g.  I hear it’s hot 8-)


  7. "Good morning from the beach all!" Oh no, matt!  You’re living in a tent-city too? :)


  8. SRS in 5KP
    Phil, did I miss something or do we still have those SRS Aug 13′s in 5KP (I saw some discussion but didn’t think it was about that particular trade)? If so, shouldn’t we roll them soon?


  9. Good morning all!

    14.9M Matt – that’s the 18.7M home vacancy rate (and that’s not counting new homes unsold!) less the 3.8M homes that are actually for sale.  It means 14.9M of the 18.7M aren’t even being offered for sale yet. 

    Check it out – the DIA $93 puts held up before triggering the $1.50 stop on half the covers and the S&P bounced again!  It’s an early stick today! 

    Boring but the same old levels of: Dow 9,297, S&P 1,000, Nasdq 2,017, NYSE 6,438, Russell 562 and SOX 308 and SOX below 300 is going to stay bearish of course.  Other nice levels to watch are good old QQQQ 40 and XLF 14, which would be a very dangerous failure if we drop that.  Dow touched 9,297 almost on the button just then so keep in mind that less than 20% retraces off resistance are not a turn so we have a fall from 9,450 to 9,300 (exact isn’t as important as round numbers on the Dow) so 9,330 is now the LEAST we need to see to say the decline is abating.  On the S&P we hit 1,020 and fell to 1,000 so 1,004 is the upside point to get back over. 

    RUT did our 574 test and here we can look ahead to their test of 562 resistance, which is 12 points so a 2.4 bounce is 564.50 so below that will signal some serious weakness (now 568.60). 

    Oops, oil just fell below $70 as Nigerian rebels can’t trump a downward revision by Opec so the wheels start coming off the bus!  Wartch OIH, still $102 and $100 will mean BIG TROUBLE for that sector as would breaking $50 on the XLE and there is no chance that the broader market can withstand an energy sell-off right now.

    If we do hold our levels – great!  But, if not, then probably a big sell-off ahead of the Fed, maybe 200 points by tomorrow morning. 


  10. Question on the mechanics of the E-Mini futures – during trading hours, shouldn’t one match the other? Eg. Right now /ES is down 8+ but the S&P is down less than 5.  Should they match?


  11. Phil,

    I woke up to WFR dropping – I had bot 4 Jan $14′s for $4.90 so I sold 4 Jan 17.5′s for $2.35 – was this OK IYO


  12. re DIA, those of us without triggers should have gotten out of the Aug 93′s by now?


  13.  QQQQ approaching minor support at 39.25 where it bounced on Aug 7th.


  14.  Phil
     
    I own BAC at net 13.25, fully covered by Aug 13 calls – deeply buried now, any suggestion on how to roll? I can increase position here, but should I at this point? Thanks


  15. matt, where in Nag’s Head are you?  I’m jealous, I went there for about 10 years in a row staying everywhere from Duck to Kills Devil Hills.   I can’t think of a better place to be than here in hot NYC.


  16.  Nice lil run on SRS during last two days fron less than 11….   to now over 12 and still rising


  17. Uh oh, S&P has failed its levels and looks to be dropping fast! 


  18. $ is still going up, except against the yen and oil testing $69.  Gold also selling off.


  19. Is anyone getting any options fills on Pharma’s ONTY choice?


  20. Bit more volume on this sell-off, but I’d say it’s still not convincing.  Keep up this rate and we’ll stick right back to open starting at 2:30PM.


  21. Good morning
    Phil I have 2 questions. First, why is it that when a call option goes up, they all don’t go up around the same percentage. For example, xyz is selling its stock for $5.00. There are 2 options both in the money to choose from. One is $1.00 at the strike price of $4.50 which would require the stock to go up at least .50 to break even. The other is $2.00 at the strike price of $3.50 which would require the stock to go up the same .50 to break even. Now the stock price jumps to $6.00 and only one of those options go up in value. What gives? Secondly, I once asked you how I could tell if the calls or puts on a stock were bought or sold. You said it had to do with the open interest. Could you elaborate on that. I can’t seem to understand the correllation and formula. Thanks!


  22. UYG/Chaps – Too aggressive!  Look at what you’d be doing.  You have a 100% guaranteed winner next Friday and you want to raise your basis by 79% to $3.79 and spend .90 more to roll up the caller and putter to a place that offers just .50 in protection which is actually $4.69/4.80 and you would have 4x at $4.80 if they drop.  So at most you can make 2x $1.39 rather than 1x $1.89 if you just quit now.  You are far better off, if you want to try to make an extra .80 at $6, cashing in your win and buying 1.5x the Sept $5/6 vertical call spread for net .40.  That way, even if you are wiped out on the spread, you are still up $1.29 and, if you get to your $6 target, you make your extra 1x .80 without committing any new capital.  Of course, as I think we’re pulling back – I’d just take the money and run.

    Beaches/Dstill – That’s kind of subjective isn’t it?  I love Brighton, which is all rocks but is one of my favorite places to walk in the world.  I also love Lerici, which is another city beach but it’s a fantastic town and great for the kids.  Then there’s Fire Island, which I like for the opposite reason as it’s close to home but out of civilization.  Mainly I like either beaches with huge waves or good food – as you can imagine, I’m not one for sitting in the sand and staring at what my daughter calls pom-pom trees…

    FRE/Morx – Yeah those women will cost you a fortune!  I wouldn’t play them higher here, there’s just so much overhang in housing and they are still running entirely on government subsidies.  If you want to get into yesterday’s spread, you can (risky) sell the naked 2011 $2.50s and buy the $1s on a pullback but you must manage that carefully in case they get some kind of GS upgrade. 

    Inventories down 1.7%, double expectations and I remain hugely concerned that this accurately reflects demand destruction for goods, not "pent-up demand."

    SRS/GS – LOL, looking good right now isn’t it?  I wish you had asked me yesterday because I would have said go for it with a roll up to the $92s and a DD as they had a .42 delta and picked up about .75 this morning (on 2x), which would have solved your problem.  Chasing here is tough but still look ahead to selling the $92 puts if we hold 9,220 again and using that $1.20 to roll to the Sept $91 puts, now $2.10 (combining your 2 puts for .90).  The play would be to do the sell first on upside momentum and then use your $1.20 to roll when it’s cheap(ish).  If you have the Sept/Aug spread and we head back down, you should be able to roll to a $2 vertical which, I think, would get you about even. 

    SRS/Allen – Still sitting with the damned things but almost able to take 1/2 off now.  Not sure I want to roll, depends how things go today.

     

     

    Even CNBC is making fun of the new Republican buzzword – Death Panels! 


  23. Phil: could not get SDS and TWM this am and they are up 1$,
    DIA puts went from 5.9$ to 6.75$ and putters from 1.22 to 1.62 $,
    tough to make any decisions right now, market could drop more,
    what’s your take  now ?
    PAAS does not look good at all.


  24. SRS – all out!


  25. Dear David,
    I don’t get to make all the trades discussed but so far I made 2 trades with you. The prxl from yesterday (which is getting killed), and I think your first one. Not doing good but do you think I should sell the prxl or wait and see if it goes back up? Thanks


  26. Beaches. (Trade bitches later)  Oh, alright, PD, go all Euro on us – you big show off.  Fine – Sorrento on down the Amalfi coast – rent a pad in Sorrento or lodge down the highway (hah!) somewhere – wayyyy goooood.   Since I think ur a Jersey guy (otherwise I can’t imagine why you’d voluntarily fly out of Newark), I’d suggest Fire Island is an escape TO civilization for you, no?  My picks – and next weeks trip – coming up.  [They wait breathlessly...]


  27. Miracle, you basically cannot tell during the day whether an option was bought or sold.
    If you watch the trades as they happen, then you can guess based upon price if it was a buy or sell. If an option is listed at 1×1.20 and a trade takes place at 1, it was most likely a sell. A trade at 1.20 is most likely a buy. A price in between could be either, although a price above mid is probably a buy and a price below mid probably a sell.
    There is an open interest reported for options that is updated nightly. If the open interest went up, people were opening option positions. If the open interest went down people were closing positions. Even then you can’t tell if they bought or sold. You need to understand the difference between an opening/closing versus buying/selling.
    If I have nothing and either buy or sell an option, the open interest of that option is increased.
    There is a brief description of open interest here: http://daytrading.about.com/od/mtoo/a/OpenInterest.htm
    There is no way of reliably determining open interest during the day, because the market does not know at the time the trade is placed whether it was an opening or closing transaction. This is because the market only sees your broker it does not see you. Your broker will have customers buying and selling. The market does not know which individual customer any given order was for, or whether that customer already had an open position in that option or not.
    Your broker will tell the market by the end of day how many positions are left open. The market then aggregates this information across all the brokers, and distributes that information overnight.


  28. Futures/SS – Futures are based on expectations of finish at expiration, not current price.  They do usually track but take this divergence seriously as it means faith is being lost in the S&P.

    WFR/Red – I think it’s a fine spread but WFR is a wild ride so if you don’t have the stomach for a retest of $15, get out now.  The problem with vertical spreads is your caller has a lower delta than you so you are effectively trapped when the stock heads down as the spread just gets worse and worse.  If you are scaling in and have cash to roll or DD, then that’s an opportunity (assuming you still have faith) but if you are fully committed, verticals can be a hell of a trap. 

    DIA/Morx – Right now the correct stance is the Dec $95 puts, now $6.80, 1/2 covered with the Aug $93 puts, now $1.65 after stopping out 1/2 at $1.50 (.10 loss).  The Aug $93 puts can be rolled even to the Sept $90 puts so no worries at all there as we still have 250 points to go before puttiing that 1/2 sale in the money and that should be a 25% gain on the long puts by then.


  29. Phil – You still waiting on the MOS puts to make hay?  I’m thinking about getting out here as they are up 25%


  30. There were a few insider buys last night but I didn’t write them up as buys for today because there were problems with all of them.  It’s also harder to time entries when buying is reported after trading hours because there’s no edge to getting the information early.  So just for informational purposes, here they are (courtesy of Insider Expert Dave):

    INFN — too small to bother with now that the market is sensible about these things.

    CAB — Looks good, but this and another director have made 7-figure purchases there in the past without much reaction.  It goes up, but not by much.

    KPPC — 100k share $510k President, COO ibuy at current prices.  Why didn’t you [me] mention it?  Too thin?  Unfortunately, it’s a Form 4A, which a lot of ibuy services don’t report.  But it’s a real purchase. Closed at 5.08.  I bought 900 at 5.12, hoping reality catches up with traders. – It’s at $5.09… reality not impressing other traders. 


  31. PRXL.   See that?  You know what that is?  That’s my chewed up arse on the floor with my $14.90 buy-in.   Got close to buck back on calls already.  Maybe write a few more.  Should I buy-write some add’l shares here?   i don’t know or love this stock – just acting on Dave’s reco.  Soooooo?


  32. Hi Phil, are we worried about our MBI buy/write pls? Thx.


  33. Too late someone grabbed them from me at my 1.20 ask!


  34. MDAS.  Since my PRXL post would suggest a trashing of Dave’s pick (it’s not), I must say that holding onto and adjusting MDAS calls for a bit resulted in selling 1/2 last week and 1/2 this week with close to 20% gain.  


  35. Phil: my SEP callers have run up and show a gain of typically 35 %, there is plenty of time for further changes, so, I assume, you would continue to ride the premium decline in combination with the market dropping ?
    what about the AUG caller DE aug 45 which moved from 2.14 to 1.5$, also 30 % gain ?


  36. ERY.  Good Moooooorning, Vietnam!  (Or Nigeria or whatever) – Here comes my ERY breakeven.  With calls written, I think my average is down around $18.25.   Get out soon or whats ur thinkin’ on ERY forward? 


  37. BAC/Deano – I think BAC is good for the $20s at the end of the year so yes, I like sticking with it.  The Aug $14s are $2.65 and the Sept $16s are $1.41 so it will cost you $1.20 to push them up $2 but you can also buy 1x the Feb $17s at $2.40 and roll the caller up to 2x the Sept $16s for +.15 so that’s really a net cost of $1.05 for the long $17s as you would have spent $1.20 anyway.  Your upside delta is 1.55 and the callers have a delta of .94 so your worry is to the downside but if you set a stop (assuming you can have the naked calls) on 1/2 your calls at $16.50 as an on/off line, you’ll be flipping to a backspread on weakness automatically. 

    Oh nooooooooo!  And down we go……….  Now it’s just the NYSE holding 6,438 at the moment – how quickly the worm turns! 

    A lot of this is sentiment the Fed will either tighten or indicate tightening tommorrow and the markets don’t like that (the end of free money) one bit.  That means the lower we go the more possiblility of a relief rally tomorrow if the Fed says "the economy still needs work and we’re still running the presses 24/7," which is more likely than Bernanke chancing a melt-down right after the Prez took a victory lap on the economy this weekend.

    Volume is a hugely anemic 40M on the Dow after an hour of trading.   Simple lack of buyers at the moment. 

    SRS – Oops, I was looking at the $12s, which I rolled down to, not the $13s of the $5KP.  So decision process is that we DD’d at .35 and they are now .65 but our basis is $1.08 on 16 so a nasty loss if we quit.  Delta is .44 so a $1 move up in SRS will save us and we’re already up $1 since yesterday.  The Aug $12s can be sold for $1 and the Sept $12s are $1.80 so it would cost us about .20 to roll to a spread and that’s our most likely escape plan if things head south

    Pricing/Miracle – Better to go over that with specific examples but that would be the "greeks" of options investing.  Delta value, Theta value, Gamma value and implied volatilitiy all come into play there.  On top of all that, options contracts are also subject to supply and demand.  Open interest in an option is something published right in Yahoo Finance (and almost any option chain) and is simply how many contracts are open.   If there were 20,000 contracts open yesterday and you see 10,000 contracts move today and tomorrow there are 10,000 open contracts, then you know contracts were bought/sold to close.  If you see 20,000 open contracts yesterday and 10,000 transactions today lead to 30,000 open contracts tomorrow, then the contracts were bought/sold to open – that’s all, no tricks..,.


  38. My SRS Sep calls sold on a limit order I forgot to cancel. At least I finally made a profit on an SRS play. :( Should I pick some up again? Octs maybe?


  39. SDS.   Not accurately counting other modest writes, I’m 1:1 (stock to Aug $47 calls) at $47.62 and 93 cents.   Any reason not to just wait thru expiration – if we pass $47 and I get called away, so?   Or should I dump the calls now and look to keep SDS up?  (hah – even as I typed that last part I remembered I hate SDS – it prob teases me at $47 anyway.)  PD-Team?  Thanks in advance. 


  40. That’s a good point Phil re. the Fed. And if you’re right that they won’t indicate further tightening, and I think you are, then the dollar might get hit again too, with the ususal corresponding up moves in gold and oil.


  41. Phil, any interesting bearish plays on BIDU (at 345 today)?


  42. If you have any questions about my picks please communicate on my oxen reports. I think I have seen a couple questions come through and I want to post on here as little as possible because of the "coloring" issue and overcrowding.

    Thanks


  43. Why do you think the dollar is tanking again today ahead of the FED?


  44. Phil – Advice on GLD Bull Put vertical:  Short AUG 93 put – Long AUG 90 put? thx


  45. oops, re GLD above – I currently hold these positions,


  46. Phil: I believe I ask this yesterday and I do not know whether I got an answer:
    assuming oilprice will decline more, would you buy ERY or something else ?


  47. CMCSA.  Well, this will bury DTV’s NFL package for sure:

     
    Comcast Brings Exclusive Wiggles Content To On Demand


  48. FMD to downside developing.  The key from here will be what plays out at DA 92.60, which is about S2.  That battle appeas to be playing out right now.
     
    Absent any news (or BS Stick), could be heading lower.
     
    I would like to see pullback to 8800 or so over the coming days / weeks.


  49. Looks like we are getting an answer !


  50. Phil-  How could this development potentially affect SRS over the next week?  Thanks in advance.
     
    Aug. 10 (Bloomberg) — The collapse in commercial real estate is preventing Federal Reserve Chairman Ben S. Bernanke from declaring the economy and financial markets are healed.
    Property values have fallen 35 percent since October 2007, according to Moody’s Investors Service. That’s making it tough for owners to refinance almost $165 billion of mortgages for skyscrapers, shopping malls and hotels this year, pressuring companies such as Maguire Properties Inc., the largest office landlord in downtown Los Angeles, to put buildings up for sale.
    The industry is likely to be high on the agenda when Bernanke and his colleagues sit down in Washington tomorrow for the Federal Open Market Committee meeting on monetary policy. Lawmakers including Barney Frank and Carolyn Maloney are pushing the central bank to extend an aid program designed to restore the flow of credit.
    If nonresidential real estate remains in the doldrums, the Fed may be forced to leave emergency-lending programs in place and keep its benchmark interest rate close to zero for longer than some investors expect, given positive signs elsewhere in the economy.
    Commercial property is “certainly going to be a significant drag” on growth, said Dean Maki, a former Fed researcher who is now chief U.S. economist in New York at Barclays Capital Inc., the investment-banking division of London-based Barclays Plc. “The bigger risk from it would be if it causes unexpected losses to financial firms that lead to another financial crisis.”
    ‘Close Attention’
    The Fed is “paying very close attention,” Bernanke, 55, told the Senate Banking Committee on July 22, the second of two days of semiannual monetary-policy testimony before the House and Senate. “As the recession’s gotten worse in the last six months or so, we’re seeing increased vacancy, declining rents, falling prices, and so, more pressure on commercial real estate.”
    The pressure may be easing in other areas of the economy. Gross domestic product shrank at a better-than-forecast 1 percent annual pace in the second quarter after a 6.4 percent drop the prior three months, and residential housing starts rose unexpectedly by 3.6 percent in June as construction of single- family dwellings jumped by the most since 2004, according to data from the Commerce Department.
    Employers cut fewer workers than anticipated last month as the jobless rate fell to 9.4 percent from 9.5 percent in June — the first decline since April 2008, based on Labor Department figures.
    ‘Danger Zone’
    Amid such glimmers of improvement, commercial real estate is a “particular danger zone,” said Janet Yellen, president of the Federal Reserve Bank of San Francisco, in a July 28 speech in Coeur d’Alene, Idaho. The market may be “under stress for some considerable period of time,” William Dudley, chief of the New York Fed bank, said the following day in New York.
    Nonresidential construction may decline as much as 9 percent this year and another 5 percent in 2010, predicts Kenneth Simonson, chief economist at Associated General Contractors of America, an Arlington, Virginia, trade group whose members include Essen, Germany-based Hochtief AG’s Turner Construction Co. in New York, one of the largest U.S. builders. In the second quarter, it accounted for 3.6 percent, or $509 billion, of U.S. gross domestic product on an annual basis, down from 4.3 percent in the final three months of 2008.
    A dozen lawmakers questioned Bernanke on the topic during his July testimony. Some asked about extending the Term Asset- Backed Securities Loan Facility, the emergency program the Fed began in March to restart the market for securities backed by auto, credit-card and education loans. The central bank expanded the facility in June to cover as much as $100 billion in loans to support commercial mortgage-backed securities.
    One-Year Extension
    Forty-one House members — including Frank, 69, a Massachusetts Democrat who chairs the Financial Services Committee, and Maloney, 61, a New York Democrat who heads the Joint Economic Committee — signed a July 31 letter seeking a one-year extension through December 2010 and asking for a decision by mid-August.
    Fed policy makers will prolong the program if they judge financial markets are still “some distance from normal operation,” Bernanke said during his July 22 testimony. “We will certainly be monitoring the situation.”
    The Fed likely will change the end date — just not right away, said former central-bank Governor Lyle Gramley.
    Market Developments
    “They’re probably going to want to wait a while to see how markets develop,” said Gramley, 82, now senior economic adviser with Soleil Securities Corp., a New York-based investment- research firm.
    A six-month continuance is more likely than the one year industry officials want, said former Fed Governor Laurence Meyer, Washington-based vice chairman with consultant Macroeconomic Advisers LLC of St. Louis.
    That would still be useful and “provide more of a runway” for the TALF to be effective, said Jeffrey DeBoer, president of the Real Estate Roundtable, a Washington group representing 16 trade associations and property owners including New York-based Vornado Realty Trust, the third-largest U.S. real-estate- investment trust by market value.
    Any sales of mortgage-backed bonds would be the first new issues in the $700 billion U.S. market for commercial-mortgage- backed securities since it was shut down by the credit freeze in 2008.
    About $3 billion are in the pipeline, and the success of these sales may foster as much as $25 billion in total deals in the next six months, said Kenneth Rosen, who runs a $310 million hedge fund in real-estate securities and heads the University of California’s Fisher Center for Real Estate and Urban Economics in Berkeley.
    Signs of Improvement
    The market is showing some signs of life: The Bloomberg REIT Office Property Index of 14 companies, while down 56 percent from its February 2007 peak, has gained 41 percent in the past six months. Also, the yield gap, or spread, on top- ranked commercial mortgage-backed bonds relative to U.S. Treasuries is about 4.49 percentage points compared with 8 percentage points at the start of May, according to Barclays data.
    The Fed’s efforts to revive credit may be overpowered by continuing job losses, even as the pace of those losses slows. U.S. employers eliminated 247,000 workers from payrolls last month, according to an Aug. 7 Labor Department report, bringing the cumulative reduction to about 6.7 million since the start in December 2007 of the worst contraction since the Great Depression.
    ‘Negative Fundamental’
    “Demand for commercial space comes from employment and the income generated by that employment,” said University of Pennsylvania Professor Joseph Gyourko, director of the Wharton School’s Samuel Zell and Robert Lurie Real Estate Center in Philadelphia. Mounting job losses are a “really significant negative fundamental,” signaling that “conditions are going to be tough for the industry for a while,” he said.
    That may spill over into mounting losses at some banks. Forty-seven percent of loans at the 7,000-plus smaller U.S. lenders are in commercial real estate, compared with 17 percent for the biggest banks, according to New York-based Goldman Sachs Group Inc.
    Regions Financial Corp., the Birmingham, Alabama, lender that accepted $3.5 billion in U.S. rescue funds, had $36.9 billion in nonresidential real-estate and construction loans at the end of the second quarter, 38 percent of its overall total. Regions posted a net loss for the period of $188 million compared with a profit of $206.3 million a year earlier as more developers and home builders fell behind on payments.
    Third Straight Loss
    Salt Lake City-based Zions Bancorporation, which operates in 10 Western states, reported its third straight quarterly loss July 20 on a surge in commercial-property defaults. Thirty-five percent of its loans for the period were in nonresidential real estate and construction, and its provision for loan losses rose to $762.7 million from $297.6 million in the first quarter.
    One developer based in U.S. Representative Walt Minnick’s district is in a bind because a lower appraisal means he can’t renew the full amount of a $10 million, three-year loan he took out for a recent project, the first-term Democrat from Idaho said in an interview last week. The person may be forced into bankruptcy, said Minnick, 66, without identifying the developer.
    “That is a microcosm of what is happening to commercial property” everywhere, he said. “It’s the next shoe to drop.”
    Relinquish Control
    Maguire bought 24 properties and 11 development sites for $2.88 billion in 2007 from New York-based Blackstone Group LP, the world’s largest private-equity company. Later that year, credit markets froze, blocking the Los Angeles-based company’s efforts to refinance its mortgages. Now Maguire may relinquish control of seven Southern California buildings with $1.06 billion of debt, the company said today, adding it’s not planning on filing for bankruptcy.
    New York-based Brookfield Properties Corp. faces a $1.8 billion debt maturity in October 2011 arising from the 2006 purchase of Trizec Properties Inc., which made it the second- biggest owner of U.S. office buildings by square footage. Brookfield has said it expects to refinance some of its obligations and sell buildings to cover the rest.
    Commercial real estate remains “an important downside risk,” said Gramley, a Fed governor from 1980 to 1985. “I don’t think it’s going to be a blockbuster negative, but it’s one additional reason why this recovery is going to be of modest dimensions.”
    To contact the reporter on this story: Scott Lanman in Washington at slanman@bloomberg.net.


  51. Phil-  Thoughts on how this could affect SRS over the next couple of days or weeks?
     
    Aug. 10 (Bloomberg) — The collapse in commercial real estate is preventing Federal Reserve Chairman Ben S. Bernanke from declaring the economy and financial markets are healed.
    Property values have fallen 35 percent since October 2007, according to Moody’s Investors Service. That’s making it tough for owners to refinance almost $165 billion of mortgages for skyscrapers, shopping malls and hotels this year, pressuring companies such as Maguire Properties Inc., the largest office landlord in downtown Los Angeles, to put buildings up for sale.
    The industry is likely to be high on the agenda when Bernanke and his colleagues sit down in Washington tomorrow for the Federal Open Market Committee meeting on monetary policy. Lawmakers including Barney Frank and Carolyn Maloney are pushing the central bank to extend an aid program designed to restore the flow of credit.
    If nonresidential real estate remains in the doldrums, the Fed may be forced to leave emergency-lending programs in place and keep its benchmark interest rate close to zero for longer than some investors expect, given positive signs elsewhere in the economy.
    Commercial property is “certainly going to be a significant drag” on growth, said Dean Maki, a former Fed researcher who is now chief U.S. economist in New York at Barclays Capital Inc., the investment-banking division of London-based Barclays Plc. “The bigger risk from it would be if it causes unexpected losses to financial firms that lead to another financial crisis.”
    ‘Close Attention’
    The Fed is “paying very close attention,” Bernanke, 55, told the Senate Banking Committee on July 22, the second of two days of semiannual monetary-policy testimony before the House and Senate. “As the recession’s gotten worse in the last six months or so, we’re seeing increased vacancy, declining rents, falling prices, and so, more pressure on commercial real estate.”
    The pressure may be easing in other areas of the economy. Gross domestic product shrank at a better-than-forecast 1 percent annual pace in the second quarter after a 6.4 percent drop the prior three months, and residential housing starts rose unexpectedly by 3.6 percent in June as construction of single- family dwellings jumped by the most since 2004, according to data from the Commerce Department.
    Employers cut fewer workers than anticipated last month as the jobless rate fell to 9.4 percent from 9.5 percent in June — the first decline since April 2008, based on Labor Department figures.
    ‘Danger Zone’
    Amid such glimmers of improvement, commercial real estate is a “particular danger zone,” said Janet Yellen, president of the Federal Reserve Bank of San Francisco, in a July 28 speech in Coeur d’Alene, Idaho. The market may be “under stress for some considerable period of time,” William Dudley, chief of the New York Fed bank, said the following day in New York.
    Nonresidential construction may decline as much as 9 percent this year and another 5 percent in 2010, predicts Kenneth Simonson, chief economist at Associated General Contractors of America, an Arlington, Virginia, trade group whose members include Essen, Germany-based Hochtief AG’s Turner Construction Co. in New York, one of the largest U.S. builders. In the second quarter, it accounted for 3.6 percent, or $509 billion, of U.S. gross domestic product on an annual basis, down from 4.3 percent in the final three months of 2008.
    A dozen lawmakers questioned Bernanke on the topic during his July testimony. Some asked about extending the Term Asset- Backed Securities Loan Facility, the emergency program the Fed began in March to restart the market for securities backed by auto, credit-card and education loans. The central bank expanded the facility in June to cover as much as $100 billion in loans to support commercial mortgage-backed securities.
    One-Year Extension
    Forty-one House members — including Frank, 69, a Massachusetts Democrat who chairs the Financial Services Committee, and Maloney, 61, a New York Democrat who heads the Joint Economic Committee — signed a July 31 letter seeking a one-year extension through December 2010 and asking for a decision by mid-August.
    Fed policy makers will prolong the program if they judge financial markets are still “some distance from normal operation,” Bernanke said during his July 22 testimony. “We will certainly be monitoring the situation.”
    The Fed likely will change the end date — just not right away, said former central-bank Governor Lyle Gramley.
    Market Developments
    “They’re probably going to want to wait a while to see how markets develop,” said Gramley, 82, now senior economic adviser with Soleil Securities Corp., a New York-based investment- research firm.
    A six-month continuance is more likely than the one year industry officials want, said former Fed Governor Laurence Meyer, Washington-based vice chairman with consultant Macroeconomic Advisers LLC of St. Louis.
    That would still be useful and “provide more of a runway” for the TALF to be effective, said Jeffrey DeBoer, president of the Real Estate Roundtable, a Washington group representing 16 trade associations and property owners including New York-based Vornado Realty Trust, the third-largest U.S. real-estate- investment trust by market value.
    Any sales of mortgage-backed bonds would be the first new issues in the $700 billion U.S. market for commercial-mortgage- backed securities since it was shut down by the credit freeze in 2008.
    About $3 billion are in the pipeline, and the success of these sales may foster as much as $25 billion in total deals in the next six months, said Kenneth Rosen, who runs a $310 million hedge fund in real-estate securities and heads the University of California’s Fisher Center for Real Estate and Urban Economics in Berkeley.
     
    http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aFp6TE9kWkqk


  52. Fed focusing on Commercial Real Estate at FOMC meeting.
    http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aFp6TE9kWkqk
     
    How would this impact SRS?


  53. The computers aren’t playing today. Surely they are not just programmed for UP ?


  54. Phil u wrote
    "DIA/Morx – Right now the correct stance is the Dec $95 puts, now $6.80, 1/2 covered with the Aug $93 puts, now $1.65 after stopping out 1/2 at $1.50 (.10 loss).  The Aug $93 puts can be rolled even to the Sept $90 puts so no worries at all there as we still have 250 points to go before puttiing that 1/2 sale in the money and that should be a 25% gain on the long puts by then."
    Qn : Just want to clarify the post as I am trying to get the language right.
    LONG Dec 95 PUTS
    SHORT AUG 93 PUTS
    Qn: When would we roll it to the Sep 90′s or is this how you would want someone to start with a clean slate?
    Qn: Why Dec 95 PUTS i.e. why not anything earlier?
    Sorry for the barrage. I am soaking up your articles on the mattress play but still have many qns.Thanks.


  55. If I wanted to go short on the Chinese market, what’s the best way to do it? FXP calls? FXI puts? Something else?


  56. Okay thanks for your help. Here is my question with an example. Stock vari with the option iuakk was has lots of action. According to what you are saying, since they are closer to the ask price than they must have bought the calls. sound right?


  57. DIA/RMM – As above, you should have stopped out on half, that was our plan from yesterday and reiterated earlier.  Notice now the Aug $93s are $1.70 and can no longer be rolled even to 1/2 the Sept $93s, now $3 – it makes a very big difference if you don’t stick to the plan with the DIAs.   If you are going to make changes, you must make all the changes, not just random ones.  Otherwise, you are better off leaving it alone. 

    LOL Dstill – As an actual New Yorker who "accidentally" lives in Jersey, I find that hilarious!  Sorrento very nice, Italy very underrated in general.  Of course, once you are down there then why not go to Greece?  How about Mauna Kea?  Have you been there?  They have the most amazing bay near the Fairmount and a very cool golf course that overlooks the whole thing (but you lose a bucket of balls!). 

    Good O/I explantion Steve. 

    MOS/Where – Don’t forget they are up on buyout rumors more than actual earnings or potential.  At some point people get tired of waiting for the mystery buyer to show up and realize they overpaid for the stock by 30% but there’s always the danger it’s real too. 

    Buys Ilene – Very good to know regardless of if actionable or not.  Even just to get a hint of interest in a sector. 

    PRXL/Dstill -  I don’t think you should ever buy something anyone recommends unless you really want to own it long-term, which is the ultimate fate of any bad trade.  Buying stocks that you have no belief in leads to a series of difficult decisions that you are forced to make on limited data down the line.  If you bought a 25% scale on PRXL because you wanted to hold them through the next trial results (a year) and intended to sell calls, then this would be nothing more than an opportuntiy to sell the Dec $12.50 puts for $2 which would give you back almost all of what you lost on the stocks and put you in 2x the shares at net $13.50 if they don’t improve by then.  Since you own 1x the stock at $14.50 you could also sell the Dec $12.50 calls for $1.70 and that would drop your net from $14.50 to $10.80/11.65 and you should be thrilled with the prospect of having 2x at $11.65 in December if you like this stock – especially as that means you can then sell the March $12.50 puts and calls for another $3.50, which would drop your basis to $8.15/10.32, which would be a full 4x position at a 40% discount to yesterday’s price while you wait for the study results.  THAT’S the difference between buying something you believe in an buying something for a bet. 

    MBI/Steve – JPM cut them to neutral.  I don’t think neutral is bad but people seem to disagree.  Anyway, I think last Thursday, when they were at $7, I had said to take the money and run on that play.  Where are you with them?  We entered that position because they were heavily shorted and expected a squeeze – this is a great example of Rule #1 – ALWAYS sell into the initial excitement…

    SEP/RMM – Sure, we’re still worried about a much bigger correction than this between now and expiration day.  Same for DE, let the market show you it doesn’t need your protection first.  Of course it makes sense, after getting $1 back on your callers today, to set a stop on at least 1/4 to 1/2 of them down here (as we are supposed to do) to avoid getting back to being as screwed as you were yesterday.  You are going to roll at some point anyway and that involves buying out your front-month callers and then selling longer calls so buying 1/4 to 1/2 your callers when you think you have a bottom and selling the Septs if it turns out you were wrong is a pretty low-risk strategy.

    ERY/Dstil – I think oil goes back to $65 but I am woried about the relativley low barrel count at the NYMEX allowing for shenanigans so I wouldn’t be swinging for the fences on this one ahead of inventories tomorrow.

    SRS/Blair – I think if the Fed disappoints tomorrow we can go down and down and down and THAT would be a good time to re-enter.  Today you are chasing into a possible stick this afternoon as the volume is still so light.  Of course, if you have long-term faith, just start building a long-term bullish position but don’t mess around with front-months. 

    SDS/Dstil – ANYONE who has an Aug put or call that they bought (not sold) after tomorrow is a fool as the premium deteriorates at a rate of about 15% per day and any move that goes against you leaves you with no time at all to adjust the position.  If you don’t like a positiion enough to roll it to September – CLOSE IT! 

    BIDU/Mampcs – Tempting though they may be, I’ve stayed away from shorting them beause you have the dual issue of China’s stimulated market (which BIDU is lagging way behind) and the Nasdaq manipulators, who use BIDU to goose the index.  That makes them a pretty bad stock to short. 

    Dollar/Roam – They are not tanking, just bouncing off the 5% rule.  $1.70 for a Pound last week (when I drew a line in the sand) and 1.64 yesterday is just 3.5% so a bounce there would be to about the 2.5% rule at $165.75 – anything below that is still part of a bullish dollar trend. 

    Oil hitting $69!

    GLD/Concreata – You are at the mercy of the Fed on that one.  You can roll the caller to the Sept $91s at $3.05 (+$2.10) and that takes almost everything off the table.  Their delta is .63 and yours is .85 so no issue to the upside and, if it heads down, you can use that $2.10 to roll below the Sept caller (Sept $89 calls are $4.40).  So that’s what’s in the bush – you have $2 in the hand and this, in a nutshell, is exactly what’s bad about verticals – the trap, even just a week before expirations…

    ERY/RMM – Yes there was an ERY play in yesterday’s post.   A bit chasing now but not too bad on the spreads. 

    Wiggles/Dstill – Not for me, my kids are off them.  I was recently informed they are totally uncool by my 1st grader. 

    Commercial/GS – If they are honest about it then SRS should double in a day.  Don’t expect that.  There is nothing more insane in the market right now than this ostrich stance on commercial real estate.  10% less workers means companies need 10% less space.  Not only that but I don’t think there are any big plans for expansion so, even if jobs do come back over 2 years, it’s still very unlikely companies will be making any new 5-year commitments to space until they are literally stacking workers on top of each other.   We’re not even getting into the retail arena, where you could probably just demolish half the malls in America and they’d still look emptier than they did two years ago.   That means commercial real estate stays down for a couple of years at least and this return to the 40% line by VNO and BXP is very irrationally exuberant.

    ZION is a good case in point.  You guys know I was banging the table on them at $10.70 but they went way past a rational valuation last week and earnings just proved it out.  That’s the way I look at stocks, I try to figure out what they’re really worth and then see which things are trading at the "wrong" price.  Unfortunately, sometimes it takes the market a long time to realize I’m right.  8-)


  58. PRXL – "THAT’S the difference between buying something you believe in an buying something for a bet."  Dude (! – stop with the !s) it’s called the Oxen GAMBLE of the Day.  lol.


  59. Beaches.  First of all, I play an actual sport on vacation: tennis.  Games are fine tho.   No re Greece – GNK has soured me on the Greeks.  (Still like delta tho, of course).   Compared to various worldwide contenders, hard to love any Cali beaches, but we just spent a couple weeks at Rancho Valencia outside LaJolla and Del Mar Beach is cool.   But Tuesday (drum roll – and, no, I don’t care about the heat cuz in truth the temp down there is virtually the same all year), before the big daughter starts middle school, we’re off to…


  60. MBI - oh well I musta misread the posts. Long stock at 5.41 sold sep 5′s for 1.65 so I have room. Am thinking todays move is overreaction and just ride them out. Was curious if you read it different.


  61. Commercial/GS – If they are honest about it then SRS should double in a day.  Don’t expect that.  There is nothing more insane in the market right now than this ostrich stance on commercial real estate.  10% less workers means companies need 10% less space.  Not only that but I don’t think there are any big plans for expansion so, even if jobs do come back over 2 years, it’s still very unlikely companies will be making any new 5-year commitments to space until they are literally stacking workers on top of each other.   We’re not even getting into the retail arena, where you could probably just demolish half the malls in America and they’d still look emptier than they did two years ago.   That means commercial real estate stays down for a couple of years at least and this return to the 40% line by VNO and BXP is very irrationally exuberant.
     
    Phil- I was thinking the opposite.  The discussion of how CRE  could hurt the economy could potentially cause the gov to bail them out by buying their current loans and refinancing them when no one else in the world would….no?


  62. Jersey.  Accidental resident.  If it’s not at least Montclair, I’m not buying it.  Took daughter to see Rock of Ages two weekends ago and she had to visit the Cake Boss (TLC channel i think) location (Carlo’s Bakery) in Hoboken.   I won’t get into how our driver got lost on the 7 mile drive to catch the Acela at Newark’s Penn Station (I figured why drive back into Manhattan), but that station makes Newark airport look like the Taj.   Jesus.  Carrying a ton of FAO and American Girl crap and a hundred bucks worth of "fresh" canollis – good god.   What a horror story.  But Rock was great!


  63. Phil: how does the yesterday’s MRK play look today, I did not get filled yesterday ?


  64. SDS.  Okay – as a "fool" (by implication) I’m gonna roll-up my Aug 47s (more conservatively than you’d like) to September $?? for a net credit at least.  I might go as wimpy as 49.  


  65. Beaches.  Ten years and counting, baby, the best:  http://www.caneelbay.com/.   A little day trip or two to Little Dix and-or Jost Van Dyke (including a few communist cigars) and yessiree.  Caneel?   No phones or TVs in the rooms.  Great family therapy and some adult-only beaches.  BUT fricking girlz (at  8 and 11) are big enuf to require two rooms.   Let’s get them paid for this week, Daddio. lol


  66. Phil: when is it opportune to roll caller WMT aug 50 to sep50 ?


  67. Phil – my GLD vertical are spread puts, your rolls were to calls, did you mean that, does it make any difference? see below?
    "Phil – Advice on GLD Bull Put vertical:  Short AUG 93 put – Long AUG 90 put? thx"
    GLD/Concreata – You are at the mercy of the Fed on that one.  You can roll the caller to the Sept $91s at $3.05 (+$2.10) and that takes almost everything off the table.  Their delta is .63 and yours is .85 so no issue to the upside and, if it heads down, you can use that $2.10 to roll below the Sept caller (Sept $89 calls are $4.40).  So that’s what’s in the bush – you have $2 in the hand and this, in a nutshell, is exactly what’s bad about verticals – the trap, even just a week before expirations…


  68. SDS/Dstil – ANYONE who has an Aug put or call that they bought (not sold) after tomorrow is a fool as the premium deteriorates at a rate of about 15% per day and any move that goes against you leaves you with no time at all to adjust the position.  If you don’t like a positiion enough to roll it to September – CLOSE IT!
     
    SRS August calls are an exception to this rule….aren’t they? 


  69. Up/DB – You don’t need computers for down, that happens naturally.  Don’t forget the old car lot model.  They pushed the market as far up as they could and they hit the point of diminishing returns on the buy programs.  Once GS sells enough shares at 150% off the bottom to hit their goal on the rest (and I’m sure they are thrilled to make 10%) then they can sell the other half for an average of just 60% of what they paid and they are still up 10% overall so there is no need to keep goosing the markets and they can just sell and sell and sell until they are cashed out, where they have created a nice bottom to buy in again and "turn those machines back on."

    DIA/Sudhar – Generally, our current stance on the DIA spread is good for an initial entry.  At the moment, we just held our 9,220 target and that means we should now be covered on our Dec $95 puts ($6.90) with 1/2 the Aug $93 puts (now $1.70).  If we bounce more than 20% (9,270), then we need to ALSO 1/2  cover with the Sept $93 puts (now $3.05) with a stop on the Aug $93 puts if we fall back below 9,220.  As to the other quesitons, better discussion for after hours or weekend.

    China/Blair – FXP for sure, we just has a couple of spreads on them the other day. 

    VARI/Miracl – I have no basis as I don’t know how many were open yesterday but it looks like a buy to me as we started the day at .20 and about 3,000 transactions brought us to .30, not lower.  So it’s my guess that tomorrow you will see the 3,746 reflected in the open interest (now 20), not that the open interest was 3,766 before today’s move.  Again, this is interesting but not the kind of thing I care about as I look at stocks because I see a funamental mismatch between actual value and current value and THEN I look at options.  I don’t look for option activity of others as many, many of those others are idiots and the guy buying 3,746 $55 calls on a stock that was $50 pre earnings and is not $52 after is probably just some idiot gambling $93,650 the same way you would gamble $93 on something else.  VARI has an offer on the table at $1.5Bn, which is $52 – did you even know that?   What’s more important – knowing that the company is virtually certain to be terminated at $52 or chasing some guy who seems to think the offer will be raised by about 7% or more?

    !!!/Dstil – Sorry, I do that al lot.  The WSJ even criticized my writing style for overusing exclamation points (but, otherwise, they liked it) and I do try to be more dull, really I do…  Anyway, yes, it’s called the GAMBLE of the day which is why it merits little more conversation than discussing why you pressed the 6 on the craps table just before the shooter rolled 7, right?

    MBI/Steve – No big deal as it’s a long-term hold that we simply expected not to have bad earnings.  The big move up was a surprise to be taken advantage of but $5 does seem like a fair enough price and you’re in for under $4 with years of rolls a head.  The only real worry was they get slammed down below $4 – didn’t happen so you have a nice stock at a discount, which is the entire point of the buy/writes.

    Watch that 9,270 line for selling the DIA Sept $93 puts to cover.  Volume at 80M after 3 market hours, still very low and still very stickable!


  70. Phil:
    SRS, my calls sep 10 are green, went from 2.3 to 2.75$: will this run more or take the 20% ?


  71.  Phil.  I’m confused also about your recomendation on the DIA puts – could you clarify.


  72. Phil - Good call on Lerici, I have a photo on my office wall that I took there in the 80s – colorful buildings and boats, makes me smile every time I look at it.  La Spezia is paradise.


  73. Phil,
    I haven’t heard anything about the MOS Aug. $50 puts lately, can you update please?


  74. Phil, have been a basic subscriber, now added premium and canceled basic.  Will I get any credit for the remaining basic period, which ran 07/22/09 – 08/22/09?


  75. Hey Folks

    I don’t know if anyone took that DIG short, but based on my entry at 28.80, we just hit 2% at 28.24. I think an exit here is strong, we might even be able to get to 28.10 area.

    You can see more on my DIG and PAAS trade in my Midday Alert I just put out.

    David


  76. !!!  LOL.  Anywho, craps may appear to have decent odds, but its too fast to actually win.   And take it from a former (wayyy former – back in the single and 3-4 deck days) card counter, never bother to play blackjack in AC (the non-Vegas-Strip rules are not player friendly) – so both games are brutal gambles.   So I guess we’ve resolved to drop PRXL for discussion purposes and classify David’s related picks as throwing the dice.  Okay.  I can live/die with that.


  77. EOG/Phil – The bearish EOG play was a good call!  I first had some question on how to do a backspread on TOS’s platform.  And then I hesitated.  And the market closed, and I missed it.  I’m not going to chase it now.
    Oh, well.  It’s always that way, isn’t it?  When I hit the button real quick, the price goes against me.  When I hesitate, I miss it.


  78. Nibbling at BAC 17 calls here for a quarter just for fun in case it has a gangbusters OpEx week…


  79. On the Oxen Gamble, it is not like I just throw darts at 20 stocks and which one I hit I pick. A lot of logic and care goes into the pick. It is very high risk sure, but it is more like if you played poker and knew what everyone else had and then guessed on your hand based on that.

    PRXL taking out the one time charges hit its EPS expectations, so I mean it wasn’t as bad as things are showing. The accounting mistakes just really overshadowed this fact as well as lowered FY revenues. Nothing that we saw in any of the other three companies I compared PRXL with. Totally a miss, and I apologize.

    David


  80. Okay thanks for your help. Here is my question with an example. Stock vari with the option iuakk was has lots of action. According to what you are saying, since they are closer to the ask price than they must have bought the calls. sound right?
    Miracle I think this is a safe assumption, especially if the option trades were under 500 contracts each. I *think* over 500 the ISE for one might allow "block trades" which are agreed off the exchange then subsequently reported to it. These could be buys or sells as they are allowed to be agreed at prices outside the bid/ask shown.


  81. PharmBoy - this is about where I got stopped out of ARRY yesterday so I’m getting back in slowly but using the SEP 2.50 calls as they have almost no premium.  Thoughts?


  82.  die OIH, die !!!!!


  83. The giddy euphoria of yesterday seems to have faded quickly, check out AIG, CIT, MBI, and THMRQ.  A person could make a lot of money shorting giddy euphoria!


  84. MBI
    The only real worry was they get slammed down below $4 – didn’t happen so you have a nice stock at a discount, which is the entire point of the buy/writes.
    Understood. I remember staring at them at $7 thinking it was rich, but I am still learning not to over trade!!!!
     
    I love these buy/writes. I started off my own "investing" selling index spreads. If these went against me I booked a loss and ended up with no stock. Thankyou so much for converting me to these buy/writes, they suit me much better!


  85. MBI: From seekingalpha:
    12:36 PM MBIA (MBI) now down 16.2% after JPMorgan Chase cuts the bond insurer to "underperform," saying it thinks the company’s tangible book value is negative, contrasted with MBIA’s own BV report of $2.8B ($13/share).


  86. Phil,                         re:Lerici should also try Levanto first town north of Cinque Terra  on a beautiful bay  with a great beach


  87. Phil, How do you measure relative premiums in a futures contract -- is it currently high or low?  For example some have stated that the


  88. Hmmmm.  The speculative AUG calls I own are grinding down in value today and as I thought about Decision Day looming tomorrow (the Wed before OpEx week) I felt some deja vu about July OpEx.  So I looked back at that chart for a reminder, and recalled that last month the week before OpEx was a slow grind down which convinced me to dump my JUL calls on Decision Day, only to see them soar the following week when we exploded upwards.  So the big question you and I must ponder this month is: are we setting up for the same pattern, and do we hold-em, fold-em, or roll-em tomorrow… 


  89. CRE/GS – I don’t think people are ready to swallow another massive bailout.  Anyway, who are you going to bail out?  There are some REITS but most commercial property is locally owned by tens of thousands of investors around the country.  Housing is easy to fix because you can encourage buying with incentives aimed at the buyers but you can’t do that with commercial because you’d end up giving XOM $500M to expand their office plaza in Irving or GS would be able to buy another building in NY with government subsidies – there would be a lynch mob…  You can’t bail out the owners of buildings because there would be tons of poor schlubs who fall through the cracks while the Donald cashes a check for $50M – very bad options…

    Jersey/Dstill – You took the Acela from Newark to NY?  I didn’t know you could do that…  Newark does generally suck but we have two very nice train stations at Montclair State and Upper Montclair and we only have to deal with Newark in passing.  The airport’s a differernt story, I don’t think 3 weeks go by that we don’t end up there either picking up or dropping off as it’s the hub of the universe apparently. 

    MRK/RMM – It’s still the same.  It wasn’t a day trade and the entry is still good if it fills for you. 

    Oooooh, Dow rejected right at the bounce zone – not good!  Watch that RUT 562 line now, don’t forget bounce zone there is 564.50 but nothing means much if the S&P fails to retake 1,000

    SDS/Dstill – Oops, I misread.  If you have the stock and SOLD the calls then you WANT them to bleed to death next week.  It’s the opposite than if you own the calls.  I thought you owned the calls in a spread.  The Aug $47 calls are $1.20 of pure premium with 8 market days left, there’s no reason to buy them back now but I don’t like the play in general as you have plenty to lose and little to gain.   As to the girls – mine are 7 and 9 and we already stuff them in an adjoining room when we can so I can strongly identify! 

    WMT/RMM – Same as Dstill, why would you pay .94 for the $50 caller?  You know it’s very likely they pin $50 at expiration and, even if they don’t, they still have .70 in premium to give up and you’ll either roll to the Sept $50, now $1.50 or the Sept $52.50, now .55, most likley the $52.50s even if they head up a bit more.

    Puts/Concreata – Oh yeah, big difference!  So far, you are in luck and your putter looks like he’s in trouble.  If you are ahead on this trade though, safer to kill it than chance the Fed but you are doing the right thing here, which is selling the max amount of premium.  You are out-delta’d by a mile there so a big downside risk and you can mitigate that by taking a bear spread like the 6 Sept $94 calls at $1.70 ($1,020), selling 10 Aug $93 calls for .95 ($950) and that should protect you from a sell-off while a flatline pays you on both ends and a move way up has you on par with your caller by the time they are in the money at $93.95 so not too much downside there but you would want to add Oct calls (with the money from your winning put play).

    SRS/GS – No exception, they must be rolled or killed tomorrow.

    SRS/RMM – Do not be greedy, to much wildcard with the Fed tomorrow.  Take some profit at least. 

    DIA/Kels – Right now our mattress cover is the DIA $95 puts which are, in turn, covered by 1/2 that many DIA Aug $93 puts.  IF the DIA goes over 9,270, THEN we would cover with another 1/2 the Sept $93 puts (now $3.10) and THEN put a stop to buy back the Aug $93 puts if the Dow falls below 9,220

    Lerici/Mr. M – Last time I was there I was seriously considering getting a condo. 

    MOS/Maxt – Dont’ expect to hear about every play I mention.  If they make 20%, they are done, if they lose 20%, they are done and, otherwise, tomorrow is rolling day for whatever you have left.  The only trades I will follow up on without promting are day trades and official portfolio moves. 

    Premium/Java – You should!  Contact Greg and check with him:  admin@philstockworld.com 

    RUT broke down!

    Treasury Auction went off at 2.89 bid/cover at 1.78% on $37Bn in 3-year notes.  This is meaningless as it’s short-term but still an excuse for a little sticking...


  90. Phil, how do you measure whether premiums in futures contracts are high or low? For example, it’s been stated that the Sept, Oct and Nov VIX futures are all carrying "very large premiums". How do we know the premium is "large"? Is the measure of "very large" premium being compared to the CBOT VIX we watch each day? Is the amount of premium in a future always measure against cash market or some other way? Thx, brianma.


  91. Jersey.  No – Acela back to DC.   By the time it got to Newark, tho, totally packed.  In response to my very nice request for help in finding two seats (since with kid), he said: "You’ll just have to find two sep seats…"  Needless to say, if you can surmise from my demeanor here, our relationship soured from there.  [We flew up and thought itd be fun for her to train down - if theres a fly leg, best to do it the other way tho - empty train in DC]


  92. Looked Like a Little burst of buying on the indexes at the anouncement of the Bond Auction.  Any thoughts as to how this will effect the rest of the day?


  93. John Harwood (cnbc) is such a hack and Obama fanboy.  Obama gives him a tingle up his leg.


  94. David.  No apology needed, man.  I’m a big boy – I’m hangin’ in and will work my way back out with this one.  Hey, I praised MDAS earlier.  lol  DS


  95. FXP Jan 10 calls are showing a huge spread for me, 2.00/2.45. How would I place an order on that? Split the difference and bid 2.20?


  96. Anyone able to short WFMI ?  


  97.  Phil,  With RUT breakdown would you buy out the AUG DIA covers or wait til 9220 is broken?


  98. one more posn check pls VIX Spread (short Aug 27.5 put long Aug 30 put) – can I assume we are holding through expiration?
    I expect the close or roll by tomorrow applies to naked longs, but not necessarily spreads?


  99. Oil.  "Here comes ERY’s doggggggg…"  (to the tune of Mr. Bill’s dog)  With props to SNL. 


  100. Hey all.

    Portfolio Results are updated for the day here.

    Buy Pick Portfolio almost to $5000.

    David


  101. Phil: now all comments but mine are shown, what is going on ???


  102. MrM – ARRY should be fine for a scaled entry.  BIG volume on 6/8 that has kept them in a channel.  Support is 4 and they have almost filled that gap back to 4.25.  ARRY was upgraded today/yesterday (?) by one analyst.  Mid is 8, high is 15.  This analyst noted a glucokinase activator (ARRY-403.  Press release below.   Along with the MEK inhibitors for cancer, they should be ok.  I would expect either a purchase of them or a shelf registration as they are moving ~ 30M a quarter, and have 3-4Q left of cash (if I am reading it right).
     
    The drug was well tolerated at all doses, demonstrated a PK profile consistent with once-daily dosing, provided a dose dependent reduction in glucose excursions (changes in glucose concentration) after a standardized meal, and reduced 24-hour fasting blood glucose. ARRY-403 provides a dual mechanism of action both enhancing insulin production in the pancreas and regulating glucose metabolism in the liver. Array is initiating several ascending dose studies to evaluate the safety and efficacy of drug over a 10 day period.


  103. Phil, picked up the Dec 102 SPYs at 5.1 and sold Aug 101 SPYs at 1.7 yesterday. Both are down today around .80.
    Does it make sense to roll my Dec 102 to Dec 100 for $1 and then swap the Aug 101 callers with Aug 99 callers to pay for the roll?


  104. Phil: note says: comment waits for moderation.


  105. Blair, it depends on your urgency.  If you want it right now, splitting the bid/ask in wide spreads is a good place to start, then go up a nickle every few minutes until you get it.  If you want it today and are willing to miss it, put in at the bid and just wait for it to come to you.  Also you can look at the last price; if it’s an hour old it’s not much help but if it’s a minute old it should give you some pricing clues.
     


  106. Man, 1.88 for the WMT Aug 50 straddle.  Is there any news? Is this stock suddenly going to finally do something? Puts way ahead of calls too.


  107. EOG/Cwan – No sweat, there are plays like that all the time.  Just find things that seem to be too high or two low and we can construct a backspread until you get so good you are doing them on your own. 

    OIH/Jo – Oil hodling $69 so no dying at OIH today and hope springs eternal on inventories. 

    AIG/CIT/Mr. M – We did short them! 

    MBI/Steve – It’s not overtrading if you have a Sept buy/write with a max gain of $1 and you are up .80 on Aug 6th.  It simply becomes not worthwhile when your "bird in the bush" is worth only 1.25 times what’s already in your hand. 

    MBI/Blair – That’s interesting as they just downgraded their prior downgrade.  Sounds like an attack to me, JPM says they know the books better than the guys who file it to the SEC so they are essentially alleging fraud at MBI…

    Levanto/Potter – I hope I get a chance to spend more time out there.  With the girls in camp and stuff now I don’t see any long trips in the near future.

    High/Low/Bri – It’s subjected and relative to what’s "normal" and what you consider fair based on experience.    A large premium is large relative to the expected (realistic) move.  I may think the VIX will rise by Dec but do I want to pay $3.50 for the $30s?  That’s a 40% increase just to break even. (notice no exclamation so Dstill doesn’t get nervous)  So you can say to me: "Phil, I don’t call that a lot and I will buy that premium" and I will say to you "How many can I sell you?"  BAC, on the other hand, has 2011 $12.50s for $5.80, that’s $2.34 more than the current price or about 1% a month before going in the money.  You may say to me: "Phil, I will sell you that call because I don’t feel BAC can gain 15% in 15 months" and I may say "I’ll take 100 of those and I’ll sell you 75 Nov $16 calls for $1.85 as that lowers my basis to $16.95 so I can’t lose to the upside and I have 25 open calls that will gain the full upside regardless so thanks a lot."

    AUG/Mr. M – It’s not about killing the calls by tomorrow as rolling them to Sept if you want to stay in them.  With Aug, one wrong move and you are done.


  108. PharmBoy – thanks. Know anything about ARIA, some big buying there lately and last week the CEO bought 2M shares at 1.75?


  109. Brianma I think you meant the VIX futures. Perhaps people are referring to the "curve"?
    Current VIX 26.66
    August Future 26.95
    Sep 28.95
    Oct 29.9
    Futures are pricing in that VIX will rise and are therefore priced at a premium to current vix…..


  110. Phil: looks as subscription expired a moment again, I sent a mail to renew at same terms.


  111. Phil: have just renewed, need to make mor $$$ as your price went up.


  112. Phil and Steven, thx!! 
    Steven/Phil…in physical futures markets (CC, Surgar, Soybns, etc.) further out contracts are typically priced higher since the price includes the cost of carrying (storage, etc.) and I have tended to discount higher prices on further out contracts.  If volatility futures do not a have a carry charge can a higher price for farther out contracts always be interpreted that way?  Is the reverse true?  Lower prices below VIX in farther out contracts means often higher index prices, etc.? 


  113. Acela/Dstill – I think you need to get on in NYC.  It must go from there through Newark so you are way too late trying to get on in Newark. 

    Bonds/Chuck – Not exciting enough to do anything real but it does look like we’re holding this bottom and the volume is low so an easy stick up from here back to 9,300 is very possible.

    FXP/Blair – Yeah I split the baby if I really want something.  Of course if you are doing a spread you offer the spread net and who cares what fills where?

    WFMI/Cap – They have been unshortable but I agree, very pricey for a supermarket.  Remember I said last year that food inflation was great for them as it brought the price of their local stuff more in line with the national distributors and the quality is not even comarable.   Whole Food’s are busier than most supermarkets I go to and down in Florida, the local gourmet places were also busier than the big stores so I don’t think it’s a fluke.  I think it kind of falls into the line of "comfort foods" in a downturn like – I can’t go out to eat for $100 but I’m happy to buy my family $40 worth of free-range chickens and grilled vegetables from WFMI so I feel like I’m eating well and saving money… 

    DIA/Bigs – Rules is rules.

    VIX/Steve – If you are still in you can ride it out at another $1 on the VIX would mean we’re really breaking down but make sure you have an eye on some Sept calls to cover or stops on the $27.50s, just in case.

    ERY/Dstill – Good catch and don’t you wish there was an easier way to grab soundbytes for things like that?

    SPY/Mampcs – If you are bullish on SPY you beat the caller so take $1 of the $1.70 and roll yourself to the Dec $99s and let the last .90 on the $101s expire.  You can always sell Sept $101s, now $2.31 or Sept $99s, now $3.40 so why put your caller $1 in the money for $1 more?

    WMT/Eric – They no longer report monthly sales but I think the quarterly report is pending so it’s been 3 months with no clue from them.

    Welcome back RMM!  I shall endeavor to make it up to you!  8-)


  114. They were part of my writeup MrM, I am so sad…..http://www.philstockworld.com/2009/08/08/pharmboys-phavorite-phings/
     
    Meanwhile, anyone need a little Zenvia?

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    Avanir Pharmaceuticals Inc <AVNR.O> said on Tuesday a reformulated version of its Zenvia drug reduced emotional outbursts tied to a neurological disorder, meeting the main goal of a late-stage study and nearly doubling the tiny company’s stock price.


  115. PharmBoy - never mind my ARIA question, I just discovered your weekend post and coincidentally it’s there. Cool stuff!


  116. What’s up with that post?


  117. Now I am :) MrM.


  118.  Hey Phil;
     
    how about some thing closer to home ? OC NY  been driving up there from DC as long as i can remember, its such a nice quite city, safe, its some how frozen in time. my father used to own a doughnut shop there when he was young, he didnt buy the place, something about not wanting his kids being filthy rich :)
    I have also been to san sebastian spain, very beautiful. tiny little city wraped around this tiny bay. its such a romantic city, but i was single when i went there so must revisit the wife now :)


  119. Futures/Bri – VIX futures are simply bets.  They are not connected and there is no underlying value at all.  It’s like taking the over/under on a football game and asking if knowing which over/under was popular would tell you which team will win the superbowl – they’re just not related.   Of course you could say people seem to think we’re heading into more volatility but compared to what?  The VIX was at 80 in October  and 50 in March, it’s statistically insignificant by comparison whether people think it will be at 20 or 30 in January as it’s all relatively flat compared to last year. 

    Nice spots Micro – how about Lake George?  I always liked that place and Saratoga turned into a really nice little town over the years. 

    Dow keeps failing at bounce point (9,270) and that will be bearish overnight, as would S&P failure to get back to 1,000.  RUT right at 562 but XLF stuck below 14 and Qs may fail 39 at this point

    Stick play of the day is the DIA $93 calls at $1.05, out at .95, looking for $1.30+.


  120. KBH back from the dead today !


  121. stevenparker
    Thanks for your help. I have been trying to play this option game for quite some time now and thought that its better to try and follow the big traders than be left a loser most of the time. I find it fascinating how the prices for the options fluctuate in different percentages and how some people could figure out exactly which option will increase or decrease in price. You sound like you know what the heck is going on and I wish I could have some of your knowledge.  Maybe you could give me some kind of course. All the reading I did really hasn’t help me much. A one on one is much more beneficial.


  122. ERY.  I could sing it.  My daughters hear it all the time.  (not ERY)
    Acela.  I’ll stop boring everyone.  But we had the driver take us out to Hoboken from mid-town about noon on Sunday.  Train at 3:14 Newark Penn.  Carlo’s is 7 miles away – seemed easy and less hectic than back in manhattan.   lesson learned.
    Micro – OC NY.   Cool.  But my fricking daughters now think the beach and water around USVI and BVI are normal.  Imagine their horror when they meet the, re, it meets them, the "dirty and cold" Atlantic.  lol
    Ciao ciao for now, gents – and ladies (esp ladies).


  123.  QQQQ’s now back over 39.25 on a stick


  124. DIG vs DUG / David R. – Hi, David, I didn’t play DIG today.  It was too late by the time I saw your recos.  But I am just wondering shorting DIG is the same as longing DUG, no?  I just want to see if there is any advantage playing one versus the other under various circumstances so as to get ready for the next opportunity.


  125.  Phil are you covering DIA here?


  126. miracleniss: I was offered something interesting from Zack’s, (that i didn’t do). You give them a certain amt of $, i think it was abt $6k, and they give you a personal trainer and guarantee that you will make your money back and the same amt more by the time the program is over. I forgot the time frame.
    unless you just want to hang out with Parker all day. :)


  127. Phil – DIA Sept 93 1/2 cover – my conditional order triggered at 1:53. I set the BTO at 92.70 DIA not the index – mistake? Now I am full cover 1/2 AUG 93 and 1/2 Sept 93 against the DEC 95′s.


  128. morxintway
    Thanks! Whats the website or connection?


  129. Fabulous beaches, crystal clear water – Four Seaons, Exuma.  Opened 2004, closed 2009.  Cost 450 million to build, currently in negoitations with Sandals Resorts for 30 mill.  This includes Marina, Greg Norman golf course, Casino, Spa, Shopping center, etc.  What a crime.


  130. it’s zacks.com You probably should get the ph # & call them.  I have never seen  it advertised. they called me, i guess cause i subscribed to one of their services.


  131. Oxen Gamble of the Day, check it out!

    I am excited about this stock…very, very. I think the stock is a give in.

    Too good to be true…more like too good to be passed up.

    David Ristau

    PS if you have questions about it, ask on my board.


  132. I havnt been able to get the DIA call to trigger at 1.05.
    chase to 1.10 or be patient. deep breaths… exhale…


  133. Looks like MR Stick is too afraid to play today !


  134. Oil back to testing $70, still 20 mins to NYMEX close.  Mexico helping out by saying oil production will fall of 4.9% in 2010 – very timely, although the same story they trot out every time they want to cry "peak oil." 

    DIG/DUG/Cwan – Strong inverse correlation on those two, interchangeable mainly. 

    DIA/Bigs – Yes, covered as planned and supplimented with the calls (now stopped out).  At this point we want to have ONLY the Sept $93 puts as covers (1/2 x) if  we break back below 9,250 on the Dow

    DIA/Concreata – That’s the right coverage but with the above stop on the Augs. 

    Exuma/Lindsay – That’s a nice place.  Was silly to compete with Atlantis though by building a big place.  Used to be just a super-exlusive spot and that 4 Seasons was a big over-reach, as were many of the luxury hotels that popped up the last 5 years on the theory of unlimited growth of the upper class.

    LDK/David – I always like them when they get cheap.  They are my favorite solar after FSLR and much cheaper right now.  Good entry for a buy/write at $11, selling Sept $11 calls for $1.20 and Sept $10 puts for .80 is $9/10 with a nice 20% call away.   


  135. DIA/Morx – You don’t want it now – it went up and down and it’s done. 


  136. "They are my favorite solar after FSLR"
    Do you forget the irony font?


  137. Phil, for a cheaper LDK play, what do you think about buying the DEC 9 calls and selling the SEP 11s.  $59 to get in, 4x win at $11, start losing money below $9.


  138. LDK.   Remedial/Brainlock question: Am I selling calls/puts at 1:1 versus stock?    If so, that makes one leg naked for me, unless I reallocate to 1/2 calls and 1/2 puts, but that prob defeats ur immediate and intended purpose.  [Actually, I'm going ask those bast***s at ETrade to let me naked some puts in my IRA account - they make a mint on me these days.]


  139. ROFL Eric!!!  DANGER ALL, my brain has officially entered stage 1 dementia!   I meant SPWRA is my favorite and in no way, shape or form would I ever knowingly buy FSLR (the LDK play was right though).  That is very scary for a guy like me a guy who counts on his brain for things…  


  140. Thx Morx/Miracle -  Saves me working out how to be flattered but recommend an actual professional all at the same time :)

     


  141. Didja know … I am commenting from Cap’s Global HQ today !


  142. PAAS or take a pass?  A few Sep 19s or 20s into earnings?


  143. ET Naked Puts.  Done!


  144. Naked-ish is more like it and good enuf.


  145. I wonder what the Fed is leaking to GS right now about the ongoing meeting …. I wonder…..


  146. Dementia- now I understand the leftist rants. It’s sympathy you need my son, not conversion.:)


  147. PharmaBoy - someone just bought 250K shares of ARRY at 4.25, was that you?  (I owe you this comment from yesterday 8) )


  148. Phil Just figured you meant favorite to short!" 
    ROFLMAO!
    Quoter Phil! "I meant SPWRA is my favorite and in no way, shape or form would I ever knowingly buy FSLR (the LDK play was right though).  That is very scary for a guy like me a guy who counts on his brain for things"


  149. LDK/Mr M – After that last slip, I’m not sure what I think…  Next thing you know I’ll be living in Florida and voting for Bush by accident!  Dec $9s are $3 and Sept $11s are $1.20 so in for net $10.80, not sure where you get your numbers.  Here’s an example of where you can bullishly backspread by selling 5 Sept $11 puts at $1.30 ($650) and buying 3 Dec $10 puts at $1.80 ($540).  Very easy to add more Dec puts but probably no need with 2 more months to roll

    LDK/Dstill – Yes, buy 100 shares at $11 ($1,100), sell 1 Sept $11 call at $1.20 ($120) and one Sept $10 put for .80 ($80) for net $900.  If it’s put to you at $10, you will have to pay $1,000 for 100 more and you’ll be in 200 for $1,900 ($9.50, not $10 so that’s 2 mistakes on that play – maybe I had a stroke!).  LDK is nice as they have $1 strike increments to roll around in from month to month – that makes them easy to adjust. 

    Global HQ/Cap – Oh?  Say high to Sarah Palin for me then…

    Interesting – if you look at a 15 min chart, today’;s pattern is (so far) very much like yesterdays with the same afternoon stick that doesn’t quite turn things bullish.  We have, at least, filled the gap from last Thursday so the Fed could still get us going tomorrow but they can also slam us down, we should be good for at least a retest of 9,100 in a proper sell-off (5%). 


  150. Phil, my LDK numbers we based on buying the DEC 9 calls and selling the SEP 11 puts and SEP 11 calls.


  151. Phil : Bought STT at $46 .Now $51. closed  both AUG. puts/calls at profit. Considering selling Jan,2010  $50 puts & calls for net $13 which would give me net $38 and 34 % if called. Your opinion?
    dflam  


  152. Phil i have 2 accounts at Etrade. One is my long term acct & one is for loosing, i mean trading.  when i do a buy write, i buy the stock & sell the call in one accnt then i sell the put in the other. Do you see any reason that could be a problem? The longterm account is a joint accnt w/wiffie so i  cannot do any of the schananigans. (sory i dont do spellin.)


  153. Phil:
    DIA situation:
    DEC 95 longs
    1/2 cover sep 93
    1/2 cover aug 93, buy back these at 1.?????


  154. LDK.  lol but is it $9.50 or $10?  Are u actually in Negril today?


  155. STT/Dflam – It’s down on some pretty short-term bad news (they need more money in a legal fund).  I would do nothing and give it a day or so in case they get a downgrade and fall further.  If not, then maybe sell the puts first and wait for a bounce to sell the calls.  Just make sure you can get at least $11.50 for the puts and calls as a combo and that ($1.50) is your only risk. 

    LOL Morx!  Only a problem if you have margin issues or lose track of what you are doing.  So long-term you are doing covered calls essentially and short-term is your hedges.  Well if the market crashes, your big issue is your wife is protected but your trading account will be your losing account and I doubt she’ll bee looking to replenish you if you explain to here after the fact how you were only doing it to protect here long-term investments.  8-)

    DIA/RMM – Yes, let’s buy back the DIA Aug $93 putter for $1.  That leaves us in DIA Dec $95 puts with a 1/2 cover of Sept $93 puts.

    Negril/Dstill – No, Amsterdam actually!  It’s $9.50.  $9 net entry and another round put to you at $10 is 2x at $9.50.  Backup brain seems to be kicking in now…


  156. SPPI – fallin g back from the weekend write up.  Holding 5 and 20 day MA.  I am going to buy here and sell a strangle 5 Sept P for 40C and 7.5 Sept C for 1. 


  157. Phil, i certainly would not lump the Four Seasons into the same camp as Atlantis -mon Dieu!   On another note, does anyone have any info. on  SPEX?


  158. LDK.  Well, acted too fast this time – usually I’m slow to check back.  So I sold the $10 putters – do anything?   (Ur favorite coffee shop? – and those that serve booze prob shouldn’t count…)


  159. Phil: how can I get the DIA buyback of aug 93 putter for 1 $ ?


  160. ERY.  Man – ET is no damn help cuz they don’t figure option moves that affect per share cost – but my new little spreadsheet seems to indicate with all the premiums in and out, my per share average is $18.58.  Tho it prob requires my 20s and 21s to expire this month.


  161. SRS- still got room to run here? I am closed/up on the calls from earlier in the week but still holding short puts – Sept 13′s @ 1.90.


  162. Large volume SPY stick at 3:42 got sold into.


  163. A good old fashioned selloff – Just what the doctor ordered


  164. Was that a reverse stick?


  165. Seems like a classic battle today …. not just a Stick!
    Favorite vacation spot Abacos!
    see my vid!  It brings out the hunter gatherer in me
    Link: http://twurl.nl/4b1ryf
    I Like big waves too Phil!


  166. 4 Seasons/Lindsay – It is the same category as in "Luxury Hotel/Casino Bahamas" and they just suck up too many of the destination dollars.  It was a 200-room resort, which is a lot to fill.  It was right next to the Grand Isle, which had a long-standing clientel and they (the old-time guests) were not too pleased with the 4 Seasons spoiling their spot by inviting a ton more people down to the island.  Hotel marketing is a very strange dynamic and the old English yachting crowd on Exuma weren’t looking for a "nicer" hotel, they just wanted to be left alone so that left 4s to have to poach the Atlantis crowd in the middle of a bear market – didn’t work.  SPEX is too small cap for me, maybe Pharm follows them…

    LDK/Dstill – It’s fine.  You should be thrilled to have them put to you at $10, although RMM wasn’t as he rode them straight to hell and back this year if I remember.  I didn’t know the coffee shops had booze - never occurred to me to ask!  Grasshoper, Bulldog (the one in the square) and Roekerij were our favorites — nothing like a nice cup of coffee…. 

    DIA/RMM – Oops, I was looking at the $92 puts.  Well whatever they were then.  At this point, if you didn’t buy them out you may want to roll them down instead.

    SRS/Pstas – Loads of room to run if the market breaks.  VNO and BXP finished the day at the 2.5% rule, good sign for follow-through.

    Abacos/Chuck – Those are pretty good for that part of the world!  Nice video work… 


  167. mr. stick either started too late or ran out of $ due to volume


  168. chuckb74: surfer, cool,
    I have videoclips which I like to show here:
    what are the steps tp get this videoclip appear here ??


  169. correct that to  ‘started too early and ran out of $’


  170. Phil: on LDK earlier this year, lost 600$, baseprice was too high then at 14$,
    now I am long again at 11$, earnings coming, will see,
    LDK, I dug this out of briefing.com and discussed with David who supported the trade.
     
    DIA putters: wow,,,,,,,,,,,,,


  171. Getting off this train immediately after this post – but the Bulldog is like McDonald’s with booze and, um, coffee – big chain.   Grasshopper, yes, veddy nice.   "Snatch the xxxx from my hand…."
    I’m fine with the $10 puts.   Laters.


  172. RMM …. video, I have mine sitting on my on server/site.
    Youtube it!  and post the link!


  173. phil, i agree with some of your premise, and  I am very familiar with Grand Isle,  etc., though without Four Seasons there would be no Grand Isle. Who do you think built the water treatment plants?


  174. JAZZ : they beat, but take a look into diy chart: Volume expleded in last hour.  Leaked report? crooks!!! :-D


  175. Spider-  Did you have calls or Jazz stock?  Great win either way.  Congrats.


  176. I have no position on them… I just was looking into today reports and aftermarket reactions, stock performance before report,and such things, only  looking and maybe learning something about that.
     
    JAZZ volume on last hour was very important, and then, aftermarket they beat.  hmmmm 


  177. Phil, admit it, you have the HOTS for Sarah Palin.  You pine for her in secret.  Your screen saver is a photoshopped iconic Farrah poster with Sarah’s behive head superimposed on Farrah’s bod.
     
    :grin:


  178. Good morning!

    Big sale in Asia but Europe standing its ground and our futures bounced off a big dip.  It’s all about the Fed today anyway and they’d be better off letting us complete the 2.5% down move to 9,165 (need the NYSE to test it’s mark at 6,438 too).  Then we could reverse more than 50% of it on the Fed and it would look legit. 

    Stick/High – I agree with that, they tried to stop it from falling and ran through the budget for the day.  That’s what I’ve been observing re. volume – it indicates they don’t have unlimited funds to boost the markets with.  Overall, it was a low-volume day and they should have held it together unless the sellers were simply overwhelming the buyers (likely). 

    LDK/RMM – That’s great.   You did a good job gutting it out through the downturn. 

    Water treatment/Lindsay – There I have no clue.  I show up and expect there to be water.  8-)

    Sarah/Cap – OK, you got me


  179. LOL – That palin thing led to this classic video, which I almost forgot about.  What’s really funny here is her dancing and smiling while Amy makes fun of her – so amazingly clueless!


  180. Eph, sorry for my tardy response.  I’m in Nags Head, NC.. as in ‘the’ Nags Head.
     
    Had some fresh Spanish Mackrel for dinner last night.  They run for only 3 weeks a year.  A real treat.  Fried it up right!  MMMMmmmmm.
     
     
    Camille Paglia with an excellent summation of the travesty that is healthcare reform.  What a show!  There is only one choice for sane concerned citizens in this country.. and that is to be an independent.  The Republicans and Democrats are destroying this country.  Plain and simple.  And Congress, while blasted since it’s inception for incompetentness, is reaching a new low?
     
    http://www.salon.com/opinion/paglia/2009/08/12/town_halls/


  181. Amen, Matt …