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Monday Markets – Mr. Obama Goes to Wall Street

Today should be very interesting!

One year to the day after Lehman Brothers collapsed and precipitated a financial crisis that reverberated across the globe, President Obama will deliver a major speech on the financial crisis at Federal Hall in New York City at midday on Monday.  According to the White House: "He will discuss the aggressive steps the Administration has taken to bring the economy back from the brink, the commitment to winding down the government's role in the financial sector and the actions the United States and the global community must take to prevent a crisis like this from ever happening again."

As I had mentioned in our Year One Review of the Stock Market Crash, Obama and Wall Street did not get off to a great start but, even after the March crash, we are still up 20% since he was sworn in in January as the President has been EXTREMELY accommodative to Wall Street's needs (ie. free money) so far.  That has been the carrot - perhaps now it is time for the stick…

The Treasury just released a document entitled: "The Next Phase of Government Financial Stabilization and Rehabilitation Policies" which, at 51 pages, is a pretty neat review of the crash as well but I still prefer mine as it saves you an hour and has much better pictures.  There are many charts in the government's documents and they are not all that encouraging.  As the report concludes: 

We must address the structural weaknesses in our financial system that this crisis revealed. The Administration is working to gain approval of a detailed set of proposals to reform our regulatory system to address these weaknesses and keep our financial markets and economy on track to a sustainable recovery.

In addition to Obama speaking at noon, we have 3 Fed Governors making speeches today.  Duke speaks on Regulatory Reform at 8:30, Lacker talks about Financial Regulation at 12:30 (right after Obama) and Yellen gives an Economic Outlook at 3:50, just in time for a stick-save into the bell so we could have a wild ride this morning! 

Speaking of the Fed, I just read a great book called "The Creature from Jekyll Island," which our man Ron Paul calls: "What every American needs to know about central bank power. A gripping adventure into the secret world of the international banking cartel."  The book tears down the wall of our monetary system and the secret meetings that started the modern reserve system and looks at the men behind the curtain – very good stuff…  Here's a video of Ed Griffin discussing some of the themes from his book for the reading/time challenged

Asia had a down morning with the Nikkei hitting the 2.5% rule to the downside as the dollar failed 91 Yen.  The Hang Seng fell 1.1%, back just below 21,000 but the Shanghai gained 1.2% and got back over 3,000 so go figure.  There's a huge story about the eruption of the Trade War I warned about last month but the Oxen Group did a nice job of covering it so I'll move along.  Europe is down about a point across the board at 8am so it's up to the US to turn things around this morning.  Moody's says UK banks are likely to face another $215Bn in losses (in ADDITION to the $200Bn they've already lost) because "sustained weakness of the U.K. macroeconomic environment will feed through into higher loan arrears with ensuing pressure on profitability and capital."

The EU believes Europe is on the cusp of emerging from recession but it's still unclear whether the rebound, fueled by aggressive stimulus measures, is sustainable.  As if to make that point, Euro-zone unemployment fell by another 702,000 in Q2, up 2.4% from last year but the OECD put out a report that unemployment in it's 30 member states seems to be "steadying" at 8.5%.  Keep in mind the OECD is like a global Chamber of Commerce so a statement like that from them is like a poster at your local deli promoting the downtown shopping district. 

Eurozone Industrial Production dipped 0.3% in July vs. the previous month and fell 15.9% for the year.  Economists had expected -0.3% for July but somehow (and I can't imagine how this would work) -16.6% year over year so it's a "beat" and is being spun as a win in the press (cough, Murdoch, cough, cough).  Perhaps it's a Monday thing but if the -0.3% is in-line, how could you expect worse than 15.9% when you already know what the other 11 months added up to?  So we're going to score that "nailed it" on the monthly forecast but we'll have to take away points from the economists for taking a previous -15.6% total and subtracting another -0.3% and coming up with a forecast of -16.6%, that is just shameful for a bunch of World-renowned economists! 

It looks like we were right to be short into the weekend but we are BUYBUYBUYing on the dips in our $100,000 Virtual Portfolio, now $101,674 in week 3 as reported on Wall Street Survivor for people who are interested in following the action over there.  We are going to be selling a bunch of September puts on the dip, hoping to scalp a few dollars for the week so our outlook is for a dip, but not a big or lasting one.  I have been trying to finish my Crash Review with an outlook for Q4 and beyond but clearly things are not clear yet – hopefully after expiration day this week and a good look at the data, I'll be able to come up with something intelligent to say over the weekend.  I think all this trade talk is just posturing and that's how we're playing it for now but, if not – then many things change…

It's a data-palooza this week and here's the calendar:

Date ET Release For Actual Consensus Prior Revised From
Sep 15 08:30 Core PPI Aug   0.0% 0.1% -0.1%  
Sep 15 08:30 PPI Aug   1.0% 0.8% -0.9%  
Sep 15 08:30 Retail Sales Aug   2.1% 1.9% -0.1%  
Sep 15 08:30 Retail Sales ex-auto Aug   0.1% 0.4% -0.6%  
Sep 15 08:30 Empire Manufacturing Sep   13.00 15.00 12.08  
Sep 15 10:00 Business Inventories Jul   -1.2% -0.8% -1.1%  
Sep 16 08:30 Core CPI Aug   0.0% 0.1% 0.1%  
Sep 16 08:30 CPI Aug   0.2% 0.3% 0.0%  
Sep 16 09:00 Net Long-term TIC Flows Jul   NA NA -31.2B  
Sep 16 09:15 Capacity Utilization Aug   69.6% 69.1% 68.5%  
Sep 16 09:15 Industrial Production Aug   1.0% 0.7% 0.5%  
Sep 16 10:30 Crude Inventories 09/11   NA NA -5.91M  
Sep 17 08:30 Building Permits Aug   575K 596K 564K  
Sep 17 08:30 Housing Starts Aug   570K 580K 581K  
Sep 17 08:30 Initial Claims 09/12   565K 555K 550K  
Sep 17 08:30 Continuing Claims 09/05   6000K 6114K 6088K  
Sep 17 10:00 Philadelphia Fed Sep   10.0 8.0 4.2

That's going to be three intensive days of data so strap in and be ready for anything as it looks like we're in for a wild ride, kicking off with Obama at noon but Elizabeth Duke has already made her speech this moring and said: "Regulators need to balance much-touted fair-value accounting initiatives and changes to capital requirements with the need to maintain a free flow of credit.  Otherwise, we could be faced with substantially less credit availability."

That's a nice bone for Wall Street already – let's see where they bury it… 


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  1. Legendary investor Jim Rogers is predicting a currency crisis by the end of the year.  He said more banks should have failed and not have been propped up.  So instead of recovering in 3 years like Scandanavia and Korea did.. we’re now looking at zombie banks for 10 years like Japan had/has.

    Phil, what are the ramifications of a short term currency crisis?  A gold spike?  Other things?

  2. FSLR      …..     Seems a good short,…..still .

  3. Good morning!

    Not much of a sell-off unless we have multiple breakdowns (3 of 5): Dow 9,600, S&P 1,030, Nasdaq 2,038, NYSE 6,700 and Russell 577 - Unless we get huge volume backing a move down, that’s not likely to happen.

    On the DIA puts, if you have the $96 puts then we’re going to want to keep tight stops and get to cash.  If you have naked Dec $98 (or whatever) puts, we’re going to want to sell at least a 1/2 cover into a move down with either the $96 puts at $1.50+ (possible, not likely) or the Oct $95 puts, now $2 for hopefully $2.50+ but no less than $2.15 on the way back up.

    The credit crunch in Europe worsened, with net lending by banks down €25B in July, the fifth straight month of contraction. Meanwhile, bond issuance fell for the first time since March by €20B to €27B.

    Good time to mention it’s $1.657 to the pound and $1.458 to the Euro.  They jacked the dollar back to $91 Yen but it was rejected there.  Gold is just over $1,000 but none of this is helping oil as they are down at $68.87.

    Volume is key, we’ll be watching that closely to see if we have a real exit or just some panic on exporters from the trade war crowd.

    I’m seeing $1.20 on the DIA $96 puts so a stop at $1.05 whether you are in for .75 or .85, just to be safe and a .20 trailing stop if we go lower. 

  4. FYI… Dollar Index is dropping hard at the moment  Stiil positinve but three red bars on my 5 m charts….  whoops theres some green  in the next bar.

  5. Currency/Matt – Well, as you say, Japan has had a currency crisis on and off for 20 years, China has had a couple and Europe has has two since the Euro 10 years ago and none of that made gold go to $1,000.  In fact, gold has fallen to $300 more often than gone up in the past 10 years so I don’t buy this as being the "new normal" at this time.  The only currency crisis that will boost gold for real is rampant inflation and you don’t get that with a weak economy and troubled banking – you get that with an oversupply of spending into an economy that is stronger than the government thought – we are so not there yet.  Of course you can also get to inflation through massive debt finanicing paid for by the government running the printing presses but that’s not happening at all – we are borrowing the money every week and we’re paying off our debts so our national "cash flow" is not yet impacted.  Investing in gold with 3% long-term interest rates may not be the best move. 

    FSLR/Iflan – It’s always a good short but I like to wait and see where the top of the new channel is.  A little disappointing if $140 is all the can manage.  

    I know I missed a lot of questions this weekend (got tied up) so feel free to repost anything here.

  6. FSLR had another downgrade today (notablecalls for details)….

  7. What’s w/ this continuing BS crazy ass market …. ???
    COF getting smacked.

  8. I had an interesting discussion w/ Schwab over rolling short buy-ins.
    They basically say its much more difficult to find shares to short and to hold short.  If their inventory of customer long shares in margin accounts suddenly dries up, you can get a random buy in notice that has to be met same day.
    They say this is happening a lot.
    One reason for the continuing rally … shorts getting whipsawed.

  9. $100KP:

    Mixed bag of fills so far.  I don’t know if this will come out but fills are on XJZ IN (.50), HIG UE ($1.35), GEW IN (.77) and QWZN IQ ($1.01).

    Don’t forget you can just link over now so I’m not planning on constantly posting status but I will post new trades:



      XJZ IN -10 LIMIT – SHORT – GTC $0.50 $0.50 OPTIONS 696D66 9/14/2009
    7:07 AM
    9:41 AM
    Cancel XJZ UO -10 LIMIT – SHORT – GTC $0.80   OPTIONS 4CADFA 9/14/2009
    7:06 AM


    Cancel TVF UC -5 LIMIT – SHORT – GTC $0.60   OPTIONS F56C64 9/14/2009
    7:04 AM


    Cancel RF UA -5 LIMIT – SHORT – GTC $0.25   OPTIONS DC6546 9/14/2009
    7:03 AM


      HIG UE -5 LIMIT – SHORT – GTC $0.75 $1.35 OPTIONS E3F184 9/14/2009
    7:02 AM
    9:30 AM
      GEW IN -10 LIMIT – SHORT – GTC $0.70 $0.77 OPTIONS 9F9BDB 9/14/2009
    7:01 AM
    9:30 AM
    Cancel GEW UH -10 LIMIT – SHORT – GTC $0.85   OPTIONS 490E38 9/14/2009
    7:01 AM


    Cancel FTQ UI -5 LIMIT – SHORT – GTC $0.25   OPTIONS 4BA6F9 9/14/2009
    6:59 AM


    Cancel BYO UQ -5 LIMIT – SHORT – GTC $0.70   OPTIONS FF848D 9/14/2009
    6:56 AM


      QZN IQ -5 LIMIT – SHORT – EOD $1.00 $1.01 OPTIONS 0CF65D 9/14/2009
    6:40 AM
    9:31 AM
    Cancel QZN UP -5 LIMIT – SHORT – EOD $1.40   OPTIONS E948DD 9/14/2009
    6:40 AM



  10. Phil – I hold short CAT Sept $46 calls naked at 2.91 cost. Suggestions?

  11. Phil,
    I sold YRCW naked 5 calls awhile back. Underwater alot. What is best course now?

  12.  Phil, is it a good idea to leave my roll up from the DEC 97′s to the DEC 98′s for $.50 in as good till cancel?  That is what I have been doing for the last couple of trading days with no fill, unfortunately.   

  13. BIDU up another $5 +.
    They speak at 2 conferences this week, GS and someone else.
    Sell the news (or sell the conferences) after today or tomorrow.

  14. Phil – oops, correction, I hold CAT short $46 calls (above question) at 1.55 cost.

  15. Phil: Any advice for managing a 401k through work that only has mutual and index funds? It’s worth contributing to b/c of the company match (automatic 50% return), but I don’t like the investment options as they are basically all long-only funds. There isn’t really any way to hedge within that account, other than bond mutual funds and a mm fund option. Does it make sense to put the 401k in an s&p index fund and then hedge with buying puts or selling calls on SPY in another account where I have those options? I try to look at all my different accounts in combination (IRA, Roth IRA, 401K and trading account) to make sure my overall portfolio is properly hedged.  I suppose the other option would be to put the 401k in the mm mutual fund and have that be the ‘cash’ portion of my portfolio, but that still doesn’t give me many options to take that cash off the sidelines if I wanted to as my investment options are still limited in that account.

  16. Cap, the ability to short has been seriously constrained.  That’s why I’m not 100% confident we’ll see a new low in the market.  If we do get there, it will be as a result of widespread selling by holders of long positions.  And when free govt money is being used to buy alot of those long positions.. there is no rush for alot of the big boys to sell.  It’s a crazy mixed up market that has many new forces being exerted on it or in the case of shorting, NOT exerted on it that makes it VERY hard to predict.

  17. Phil did you sell the wrong HIG puts? Above says the 25s but over the weekend you said the 24s. 

  18. Look at CHK go … intraday chart is silly …

  19. matt, no argument there …
    go socialism !

  20. Morning Phil,
    Is there going to be a buy list for the non-$100k portpolio owners or we pick and choose from among those ?

  21. Crazy/Cap – That IS the new normal!  I guess the short issue goes hand in hand with the low-volume rally. 

    Every time a bubble inflates and pops, people argue that this time will be different. But at the end of the day, investors "will continue to be hypnotized by get-rich-quick deals, seeking investments that magically double, double without toil or trouble."

    CAT calls/Concreata – I’d wait on the roll as we still could get hit with a big sell-off.  It sure doesn’t look like we’re about to rally anyway.   The Sept $46s are about even so what do you care?  You may be disappointed they didn’t work this time but you can roll them to any strike, like the Oct $47s at $3.15 and you’re fine.  You have to decide how bullish you are but I wouldn’t go higher than that as CAT was just at $44 last week. 

    YRCW/Jomp – LOL, I marvel at the math that shows how a $3.99 stock can put your $5 calls underwater.  Until YRCW is over $5, your caller is 100% premium and you can always cover by simply buying the stock with a stop if they head lower.  I don’t know what month it is but if you sold the 2011 $5s, now $1.60, you can turn it into a vertical with the $2.50 calls at $2.40 for a net entry (break even) of $3.40 with a 56% gain if called away at $5.  Also, you can still sell the 2011 $2.50 puts for $1.40 and that would buffer you another $1.40 to the upside and, given the $1.60 you owe the caller, is a no-lose proposition to the downside.

    Roll/Craig – Sure it is, that’s a roll you always want to get.  You need a spike up of course – no fill until then. 

    CAT/Concreate – Well the cost basis is different but, as Zeppelin said: "The Roll Remains the Same."

    401K/Roast – Sure, you can select global growth funds and play EDZ or FXP as hedges or tech funds and cover with the Qs or Financial (preferably dividend-goaled funds) and hedge with FAZ or SKF – those kind of things.  The key the same as diversifying any portfolio and then determining (through some experimentation) what is going to give you the best downside protection in a crunch.  In SKF, for example, you can buy the 2011 $12s for $16.85 and sell the 2011 $22s for $11 for a net $5.85 entry on the $10 spread.  That gives you a 70% upside if the financials do poorly but your break-even is way down at $17.85, which is $9.50 below (34%) where you are now so you don’t start losing until the financials rise 15% (although ultra ETFs are a little tricky).  

    So, if you were to take perhaps 10% of your financial holdings and put it into this hedge, you can gain 15% on the long side and still keep your 10% and then down to $12 on SKF, which would be UP 25% or more on the financials, you’d be about even and, of course, you can always adjust your short trade (roll them out longer, sell more calls…).  Short story is, sure you can do it but you need to think of what you want your allocations to look like and plan out your portfolio. 

    HIG/Kwan – Damn, you are right, no wonder I got such a "good" price!   Oh well.  Since the system doesn’t roll I’m not going to take a hit going in and out now so I’ll live with the possible $23.65 entry as the plan was $23.25 on the $24 puts but now I’m more likely to roll to Oct before taking the stock.

    Nat gas coming on strong.  Dollar getting hit again, over $1.46 to the Euro and touching $1.66 to the Pound and 90.74 Yen, which is scary.   None of this is helping oil ($68.79) or gold ($1,001.40) so you can see what BS that is…

    Volume at 10:30 on Dow is 43M – lower than our usual low so VERY stickable.  Obama just needs to smile, wave and make a joke and we can get back to Friday’s highs.

  22. Phil, I’m confused. For $100KP, in your weekend article, you say sell AMZN $85 calls and $85 puts but in your trade order, you put in QZNUP which is $80 puts. ALso for HIG, in the article, you say sell $24 puts and yet you place order for HIGUE which is $25 puts. Which is right? I had placed the orders according to your article and got executed. What can be done since my trade orders were executed already

  23. shorting HAL here, which got a downgrade this morning ..

  24. Buy List/Micro – Obviously anything in the $100KP is a good trade but I will be starting another Q4 portfolio with more aggressive strategies.  I will try to keep all trades to $5,000 or less so a $25KP player can participate too. 

    AMZN/Jlui – See the comments on that post, I adjusted based on the morning move.   HIG was just a mistake – I’m still getting used to entering things on WSS, which is less idiot-proof than TOS or OXPS.  Getting the original trades is fine too, AMZN is doing just what we thought it would and is drifiting back to $85 after a quick dip and the HIG $24s are safer than the $25s.  As my Mom would always say: "Do as I say, not as I do."

    DIA $96 puts dropped like a rock (now .83)!  This is why Rule #1 is: ALWAYS sell into the initial excitement.

  25. PHIL
    BTU any trade  ?

  26. Phil, would you care to comment on this comment by Jim Rogers?  I’m really getting tired of day to day trading and the day will come soon where I’ll be prevented from doing it anyway.  So I’m really looking for something I can buy and hold until sanity comes back to the market.  Could shorting treasuries be the way?  They can’t do QE forever without triggering inflation:
    "What (investors) should do is worry about all the debt developing in the US. They should short bonds because that’s the next bubble that’s building in the US," he said.
    "I own basically commodities where the fundamentals are getting better… I own particularly the yen and the Swiss franc. I don’t own many stocks, only in China."
    "For one of the few times in my life, I don’t have any shorts," he said.

  27. BIDU drifting lower ….DIA being propped up …. no volume other than HAL9000

  28.  DIA/Phil- Where are you on DIA puts currently?  

  29. For $100KP, I had purchased 5 more PSQ 50 calls but I didn’t want to get the BBY to hedge against it since I don’t quite understand how the BBY scenarios work. What other trades we can do?

  30. The way SLG is pumped up on low volume, you would think Obama was coming to NY to buy office buildings !

  31. REIT’s are flying again, sending SRS to $10.65 from $11.50 in pre-markets.  There is simply no fighting this stuff you just have to go with the flow. 

    The peak of Atlantic hurricane season has passed with no major storms so far – and catastrophe bonds, which investors use to bet against natural disasters, have logged a record 10th straight weekly advance.

    BTU/QC – I don’t like them at $38 anywhere near as much as I did at $30 but higher nat gas prices should take the pressure off them.  They have nice $1 incriments to roll to and cheap leaps so the March $25s for $13.60 are nice to sell the Oct $37s against for $2.60, which is $11 on the $12 spread.

    Shorting Treasuries/Matt – That’s a bet I’d take.  For one year, maybe two, they can keep rates down but I don’t see how we can pull off a Japan-style 10-year 0% economy, not unless we totally collapse the markets, housing and everything else first.  Of course, that’s your danger – If the US and the US consumer collapse, it is not possible for the global economy to make up for it and then you have a deflationary spiral that could go on quite a while. 

    Volume looks like we’ll be hitting 65M at 11:30, ahead of the President.

    DIA/Kels – Dec $98 puts with 1/2 sell of Oct $95 puts at $2.15 as noted earlier. 

    BBY/Jlui – The 5 more PSQs are not terribly dangerous and there is no immediate need to cover them unless we break 3,000 on the Nasdaq (now 2,080) so we’ll revisit that if we do.  Keep in mind those are Jan covers so we have 4 more months of protection with them. 

    SLG/Cap – Hey that is a good plan!  They could move 10% of the expanded Federal Government to Manhattan and we’d have an instant office shortage….  8-)

  32.  DIA/Phil  So you OWN the Dec $98 Puts?  

  33. Stanford Investors, Unlike Madoff’s, Get No SIPC Help:

  34. DIA/Kels – No, I got to the Dec $99 puts.

    More snapshots of commercial real estate, where demand keeps falling and the new-office supply keeps growing.

    Analysts don’t expect a Fed rate hike until 2010 or 2011, but when the time does come, the Fed may opt for a rapid and aggressive increase (using what Bernanke calls the "cold turkey" approach) instead of its usual policy of gradualism.

    Obama time!  Volume 72M, Dow at 9,581, S&P at $1,041, XLF at $14.44.  Gold at 1,001, Oil at $68.77.  Dollar at 90.85 Yen and $1.66 to the Pound and $1.46 to the Euro. 

  35. HAL showing pretty good resiliance for last hour or so (going nowhere).  I shorted and covered twice for modest gains.
    I still think its a short here; but no position for the moment.

  36. PCU ( Southern Copper) – Lots of insider buying. Just did a Buy/Write on stock, selling January 30′s for a 25% discount.

  37. I think Obama ought to give up the Presidency and go host the Academy Awards or maybe MTV video music awards; seems more suited to his style.
    Let’s give a shout out to Charlie Rangel !

  38. The "peter principle" is alive and well – Barney Frank will be a chief advisor to the President in formulating financial strategy for the future. I guess history has a chance for repeating!

  39. Phil / T-Bills:  So is what you are saying is that if re-flation works, interest rates will go up and shorting TBills will be a winner.  If reflation doesn’t work and we go into deflation, interest rates will remain at zero and shorting TBills will be a loser?  If so, since we’re at 0% now, isn’t there alot less to lose in shorting if things go the wrong way then there is to gain if reflation works?  Kind of like shorting a stock near the top of the market..

  40. I’m thinking about moving our IRAs from Fidelity to TOS, where I have my trading account – mainly because their trading platform is so awkward.  Anyway, that would put a lot of our personal funds in a single place – TOS.   I don’t know much about the SIPC insurance…….should I be concerned?

  41. The idea of shorting HAL — how appropriate for a HAL9000 market !!  LOL.

  42. What does the teleprompter say ?

  43.  I cant get the obama speach where I am, anyone want to sum it up for me?

  44. Was this morning the dip you were expecting or something more sizable this week?

  45. My play for the day:  Short Strangle on FSLR          Sell Sept 140 calls  /    Sept Sept 125 puts      Premium for this trade is $2.20, with 5 days to expiration.     Margin for each contract   approx.  $3,500.    Est percentage profit if the stock remains between 125 and 140 is 12.5%   Comments? 

  46. That should read "sell" Sept 125 puts.

  47. Obama had virtually no effect on the market.   Text of speech here but nothing important really.  

    TBills/Matt – Sure it’s way better upside reward than downside risk.  It all depends how you structure the trade though.

    SPIC/Java – It depends how much you are talking about.  It is kind of risky to put all of anything with one broker and once you get past $500K I think it’s kind of foolish – at least until we are well past all possible financial crises.  Of course, with TD Ameritrade taking over TOS, it’s pretty doubtful they disappear overnight. 

    Dip/Aclend – It wa a bit more mild than I expected but it was back to good old 9,520 and the damn thing is solid as a rock so I doubt we’ll do more than a slow grind back to 9,200 this week at the lowest if we are heading down but more likely 9,400 holds up.  A lot of data ahead though so a very tough call. 

    FSLR/Iflan – Of course they can move much more than that but as long as you’re willing to roll, no big deal..

  48.  Come on GS, activate the buy program again, there is 0 volume in DIA.  
    Phil,  assuming someone comes along and begins buying tons of DIA,  that means that whoever controls that ETF has to start buying up shares of everything in the DJIA or am I missing something?

  49. Phil – I would like to take some IRA cash and invest in an oil related stock or fund.  My reasoning is, the possibility of a war over the Iranian nuclear ambitions, greatly increasing the price of oil.
    I’ve been burned on DXO mostly due to the infamous depletion of capital in the 2X, 3X and inverse funds.  Maybe I should go with a straight fund instead.
    Would you suggest USO, OIL, UNG or maybe a oil industry fund like OIH?
    I’m open to any suggestions you may have.

  50. Phil / Depends on how you would structure it:  I’m all ears!  8-)
    (actually.. mostly a head and some sun glasses but you get my point).

  51. Phil,
    do you have an opinion on whether HAS could benefit from a trade tussle with China?

  52. AIG is up 7%+ again.

  53. Not much happening here.  Matt, UR fiesty today!  FWIW – my new post is up here.

  54. ITMN pops today due to meeting with EU Respiratory group.

  55. Phil,
    S – There is a rumor of T-mobile making an offer for sprint. how do we play this?

  56. 90M Volume at 1:35.

    DIA/Craig – Yes, they have to buy (or sell) weighted amounts of shares in the Dow as people buy and sell the ETF.  I’m not sure when they settle out, maybe it’s continuous…

    Oil/Rich – Of that set, I think OIL is best but DBC is a good commoditiy fund that is about 40% oil but also gives you a bump on nat gas, agriculture or gold and they are pretty low now.  Also, I like VLO, who fly up with oil but have a nice floor as there’s always money in refining.  What kind of trade are you looking to make (long-term hold, covered calls, leap with short call selling, buy/write…)?

    TBills/Matt – Not my usual thing but remind me later and we can look at some of the ETFs.

    HAS/Maxt – I think most of their stuff comes from China.

    AIG/Blair – See, everything must be fine..

    Amazingly we are creeping to green across the board. 

    I’m sure that I am sending this to friends on both sides of the political isle. I think it is something on which we can all agree. It will take you 30 seconds. You do not have to send this to 10 friends or any of that nonsense. But if you want to pass the word, please do.
    Last Tuesday, the Senate health committee voted 12-11 in favor of a two-page amendment courtesy of Republican Tom Coburn that would
    require   all   Members   and their staffs to enroll in any new
    government-run health plan. Yet all Democrats – with the exceptions of acting chairman Chris Dodd, Barbara Mikulski and Ted Kennedy via proxy
    - voted nay. 
    It took me less than a minute to sign up to require our congressmen
    and   senators to drink at the same trough!  Three cheers for
    Congressman John Fleming of Louisiana ! 
    Congressman Fleming ( Louisiana physician) has proposed an amendment
    that   would require congressmen and senators to take the same
    healthcare plan they force on us (under proposed legislation they are curiously exempt). Congressman Fleming is encouraging people to go on his Website and sign his petition (very simple – just first, last and email). NOTE:  This is not one of those e-mail petitions that are worthless.  This actually takes you to Congressman Flemings website.
    I have immediately done just that at:
    Please urge as many people as you can to do the same!  If Congress forces this on the American people, the Congressmen should have to accept the same level of health care for themselves and their families.  My apologies if you’ve already received this, but it’s too important to let congress just ram this legislation thru – this is the only way they will slow down and think about this!
    PS - it may take a couple of tries to sign onto the petition as the website has been overloaded – just hit the "back" arrow and resubmit until it goes thru.

  58. Phil ,       the CEO of VLO stated that if Cap and Trade passes in its current will raise their costs by 6 or 7 billion a year…… doesn’t bode well for the independent refiners in the US

  59. Phil – Re: type of oil investment
    I’d like to do front month covered calls, but am afraid I might miss the big jump, if there was a conflict in the Middle East.
    I’m thinking long term, but am open to your ideas, keeping in mind the effect of a possible war.

  60. C at $4.43, selling March $4 puts and calls for $1.70 nets $2.73/3.66, which is 17% off if put to you and 46% if called away at $4 (10% down). 

    Citigroup (C -4.1%) Chairman Richard Parsons says the bank will repay TARP with "a decent return" for taxpayers, though he can’t say exactly when. It’ll still likely be sooner than AIG (AIG +6.3%).

    Another C play that’s just a little riskier with more upside is buying the March $3 calls for $1.70 and selling the March $5 calls for .66 and the March $4 puts for .63 which is net .41 on the $2 spread with a break-even at $3.70.  This play requires just $2.41 in margin and cash (at 50%) vs $4.22 on the buy/write and you can make $1.59, which is a nice 66% at $5 but only .59 or 24% at $4.

  61. For those concerned how the passage of Cap & Trade and Health Care legislation might effect your investment choices,, places the odds of passage at 20% for Health Care and 40% for Cap & Trade before the end of the year. I believe this legislation is headed for the trash bin.

  62. HIG 100KP/Phil – For the sake of helping us making the trades, I think you should still put in an order for HIG as you originally intended.  It’s not being filled so far anyway, as far as I can tell.  As for the wrong trade, you can try to manage the best you can.  You can always compute the portfolio’s total gains by excluding the loss (but including the gain 8) ) of the wrong trade.

  63. TMobile/Emo – Play it by ignoring it as this is the 5th or 6th time someone is going to buy S.

    ZOOM is zooming!

    Germany had a very successful bond sale – IN DOLLAR DENOMINATIONS!  People who think we are moving away from the dollar are nuts when the largest country in the EU has to hold their auctions in dollars to raise capital….

    Some are taking the Lehman collapse anniversary as a time to go super-bullish. The Dow returning to 14,000, Jon Markman? "In three years? Not a problem. The signs are abundant, if you know where to look: in the corporate credit markets, in employment trends, in consumer credit trends, in government statements and in corporate revenue trends."

    VLO/Potter – He said that last week, mostly posturing I think.  Of course he’s against it as it will cost them margin but it will all be passed on over time. 

    Long-term/Rich - How about get into DBC at $21.77, selling Jan $22 calls for $1.20 and Jan $21 puts for $1.10 for a net entry of $19.47/20.24.  If you are called away at $22 it’s still a $2.53 gain and if it’s not going to save you as we can take that $2.54 and buy 2011 $22.50s for $2.75.  That puts you in the stock for more like $22.22/21.61 but you won’t miss anything to the upside and once you are successful on the first set you sell, you have a free ride for the next year of covers as the leaps are already paid for with no upside cap. 

    HIG/Cwan – Wrong trades get made, that happens in real life and the decision I make from that point is where I will stand.  If it makes you feel better, you can roll to the $25 puts instead – I’m liking those now anyway.  Following a portfolio, even if it was my own idea, does not mean mindlessly making trades no matter how market conditions change.  At 10:30, seeing I had made a mistake, I took a fresh look at HIG and decided they looked strong enough on the dip to stick with the more aggressive sell.  As usual, this is the same "give a man a fish" issue that drives me away from having active portfolios – the minutia of following trades completely overrides any lessons learned and people are LESS likely to make good decisions on their own – pretty much the opposite of what I try to accomplish in teaching and discussing trade ideas.

    Meanwhile, RUT is testing 600!  Transports ($TRANQ) testing 4,000, Nas closing in on 2,100. 

  64. RUT and all the other major indexes look super-bullish here with no meaningful overhead resistance. This doesn’t mean they’re going straight up of course, but it’s very tough to make a bear case from a chart perspective.
    "this is the same "give a man a fish" issue that drives me away from having active portfolios" Totally agree Phil, but I think you learned the saying wrong. It’s:
    "Make a man a fire, and you’ll keep him warm for a night. Set a man on fire, and you’ll keep him warm for the rest of his life."

  65.  Come on!!!  My rollup from the 97 DIA puts to the 98 DIA puts has been quoted at $.50 for the last 30 minutes without getting executed.

  66.  Phil, how has your experience with TOS been on getting decent rolls.  I understand that there are much larger customers than myself, but should it sit this long?  

  67. Phil – AIG is at 41 — dont you look for a play whenever it goes above $40 ?

  68. Employment trends ?
    Consumer credit trends ?
    Gov’t deificit trends ?
    Tax receipt trends ?
    He must be joking …

  69. GE really took off todday, that’s hurting the $100KP at the moment. 

    BXP over $65, up 2.5% for the day.  VNO at $61.80, up 3%.  SRS at  $10.41.

    On April 1, IYR was $25 and SRS was $55, now IYR is $42 (up 68%) and SRS is $10.40 (down 81%) so I guess you can say it’s holding up well considering…

    SPWRA is flying!  Always good to buy the best quality names when the sector sells off (remember that nonsense about Spain cutting back on funding rocking the global solar sector?).

    LOL Eric – I’ll remember that!

    GS sneaking up to $177.

    Dow board is very strange for an up day.  16 components red but DD up 1%, GE up 4%, JPM 2%, KO up 1.5% and MMM, MRK, MSFT and TRV all up about 1% is all they need to get green.  Some would say it’s the bare minimum they could get green with… 

    Down significantly in the Dow are AA, AXP, CSCO, DIS, and WMT – what exactly are we all excited about again???  BAC and C are red but C has been booted.  JNJ red, MCD red, PG red, UTX red, T red, INTC red, BA red….  It always bothers me when there’s no obvious premise to the buying.

    WYNN is flying.  LVS doing well too.  MGM and BYD, not so much…

    Very strange action. 

    TOS/Craig – Sometimes it takes a long time but you should have gotten it on this spike.  The fact that you’re not getting filled indicates a lot of people are probably shorting this rally.

    LDK still out of favor at $9.46, selling Dec $9 calls and $7.50 puts for $2.35 nets $7.11/7.31.  Make sure you really want to own them!

  70. AIG/Partha – We already played them in the $100KP and I’m hoping they stop here.  As a new play I like the Feb $40 puts and calls for $23.30, selling the Oct $45 calls for $4.15 and the Oct $35 puts for $3.85 for net $14.30 on the spread.  Doesn’t look so great the first month but if AIG is between those numbers you get another $8 of premium sale in Nov and by Dec you have a free ride on the longs.

    GE up ahead of a conference and Immelt’s theme is a "reset" economy.

    In a reset economy,” explained Mr. Immelt in his shareholder letter, “the government will be a regulator; and also an industry policy champion, a financier, and a key partner.” To a European, this sounds a lot like a return to the government-led industrial policy of the 1970s.

    In case the message had not got through to policymakers, Mr. Immelt wrote an article for the Financial Times in July and put the point even more emphatically: “[T]he US government can play a catalytic role. America has a long history of spending that prepares new industries to thrive for generations. Today, my country needs an industrial strategy built around helping companies to succeed with investment that will drive innovation and support high-technology manufacturing and exports.”

    In other, not so green-shoot news – what the hell data is SRS etc. trading on?:

    Moody’s delinquency tracker for commercial mortgage-backed securities ticks up again, though by a smaller margin. But even Moody’s isn’t selling the "less bad" angle: "We expect that the monthly change in the delinquency rate will resume an upward trend over the next several months as troubles compound in the commercial real estate sector." (see chart)

    At this point I must buy SRS for $10.25 out of principle.  Looking for the 2011 $2.50/10 vertical spread for $4 and I’ll be buying back the $10 calls, now $4.20, for $2 and doubling down on the $2.50s, now $8.50, at $4.  How’s that for a defeatist trading plan?  8-)

  71. Phil,               how much can they pass on when they still  have to compete against imported gasoline … the real question is how do the independents remain viable against imported gasoline which will be as much as  70 to 80 cents a gallon cheaper since it is refined outside the US……  maybe the best investments would be the refiners  that import into the US

  72.  Are you using the near month DIA puts for hedging?

  73.  Also is in the money or one or two strikes above  thank you

  74. wall of worry, wall of worry, 1150 by year end.

  75. Phil,    Rode TNA all day; out now. Tza overnight w / retail sales tomorrow ?

  76. Need a little help: I have a short put position.  On TOS platform, how do I buy back the putters & sell DD on a lower strike in the same month?  Thanks!

  77. Refiners/Potter – We don’t really import all that much gasoline, less than 1Mb per day (5%).  I suppose shipping a tanker full of gasoline is a little riskier and, of course, you are not taking into account trasport costs etc so it will be interesting.  I suppose if you know a refiner in Mexico that may be able to cash in but I think the cap and trade is generally going to be globally coordinated so we don’t end up exporting pollution. 

    DIA/Bill – the current hedge is the DIA Dec $98 puts, now $5.40, 1/2 covered with Oct $95 puts, now $1.80.   It’s all up to the data tomorrow so it pays to be careful. 

    Wall of "What, me worry?" Barf…

    Speaking of no worries, RUT at $599.55!  Would seem like a shame to get this close and blow it.  I like selling the RUT $600 calls for $6.50 against the $620s for .70 (just to keep margin down) as the risk is about $14 and that can all be rolled up more than 10% higher than November and you have to figure reality hits at some point in the next few months

  78. I mean doing this in one trade with 2 legs:
    "Need a little help: I have a short put position.  On TOS platform, how do I buy back the putters & sell DD on a lower strike in the same month?  Thanks!"

  79. Reality?
    This is Vegas.

  80. Phil
    Can’t believe SRS is so cheap… Entered with naked puts ( Oct. 10 )

  81. Puts SOLD that is

  82. Boy, did they ever turn HAL9000 on at 1 pm and gun the REITs and some Financials.
    Look at intraday charts for SLG,VNO, SLG, SRS, IYR, COF, AIG.

  83. Yeah, totally believable action.

  84.  Wow, I still didn’t get my roll.  Does TOS use some kind of priority que for which customer gets to roll first?

  85. TZA/JRW – Great idea!  Same as the RUT idea but much crazier…  Oct $12.50s for $1.40, selling Oct $15s for .70 is net $70 on the $2.50 spread and TZA was $13.50 this morning.  Longer term, if you want to guard against a bad XMass sesason, the Apr $7.50s are $6 and the Apr $12.50s can be sold for $3.70 which is net $2.30 on the $5 spread so a nice 117% if called away at today’s price and break/even at $9.80, which is 22% so about a 7% gain on the RUT will start to hurt

    TOS/Cwan – Do the single roll first and then double down is probably easiest.  I never trust their math on uneven rolls. If you have a margin issue and need to do it all ato once, best to call them.

    SRS/Gel – It’s madness but you have to be prepared to ride it out so scale in carefully.

    Nice 100-point gain off the open.  That Obama is just magic!

  86. And now the dump after the close.  Classic.

  87. They didnt close it above 1050 for one reason, they need to do it at around 2:30 to get a pump past 1055 and create a buying frenzy to cement the move

  88. Immelt … yeah, industries like shovel ready road building …. and solar panel installation jobs of course.

  89. Treasuries/Phil – I’m also curious about a short strategy for treasuries if you have any ideas.

  90. Phil,
    Can you explain the RUT play outlined just before the close? I assume you are looking at Sept?
    Also, I don’t get the "$14 at risk"
    Finally, the quotes on the options you cited are well below the targets you listed. I assume you are looking for it to run up some more before coming back to earth?

  91. Phil – What is your feeling for the rest of the week?  Are we going up or down from here?

  92. 100KP – GE.  Not showing any extrinsic now on the Sep 14 calls. 

  93. Phil on 100KP – GE.  Hit submit too soon – sorry.  I’m not long anything in GE; don’t see anything in the 100KP about being long GE anywhere, unless I missed it.  Since there’s no extrinisc at this point, doesn’t that mean I’m at risk for having my -10 calls assigned at any time from the -10 Sep short strangle from yesterday’s update? 
    What’s your suggestion?

  94. Phil, thought this would be an illustrative comparison between your WallStreetSurvivor executions and real ones.  I put in your recommended 100K trades as good-till-canceled trades with a real money account with InteractiveBrokers.  Here are my executions today:

    sold 5 BAC SEP09 17 Put Option BYOUQ for $0.56 at 9:30 AM.
    sold 5 HIG SEP09 24 Put Option HIGUN for $0.75 at 9:30 AM.
    sold 5 AMZN Straddle:  + (1) QZNIQ + (1) QZNUQ for $3 at 9:35 AM.
    sold 10 GE Strangle:  + (1) GEWIN + (1) GEWUH for $1.4 at 9:53 AM.
    sold 5 TWM SEP09 29 Put Option TVFUC for $0.6 at 2:30 PM.
    sold 5 RIMM Straddle:  + (1) RFYIP + (1) RFYUP for $3.356 at 3:58 PM.

  95. Treasuries/Blair

    • PST is an ultra against 7-10 year rates.  You can do the Apr $50/55 bull call spread for $2.70 with an 85% upside if the ETF ticks up just slightly from $53.60, which is already a buck in the money.  Also, with 6 months to sell, the Apr $60s at $1.40 selling 1/2 the Oct $55s at .80 is not bad as you have 6 sales to go for an almost free ride. 
    • TBT is ultra short 20-year and has longer contracts.  The 2011 $38/46 spread is net $4.20 on the $8 spread that’s $4 in the money with a 90% upside.  TBT did go as low at $35.50 in Dec of last year but held $42.65 in March and that is still break-even on this trade so it’s my favorite.
    • TMV is a 3x Ultra bear on the 30-year.  They only go out to Feb but you can just sell the Feb $60 puts for $5 and the ETF has to drop 10% to put you in trouble – possible but not likely.  Going the other way, Feb $83s are $4 and you can sell Oct $75s for $1.40, looking for a free-ride hedge against disaster after a couple of sales.  The Nov $85s are $1.10 so it looks like a good roll path and TMV was $103 in May.

    RUT/Pstas – In that trade you are selling the $600 calls for $6.50 (now $5.50) and covering with $620 calls (that you buy) for .70 (now .60) for a net credit of $5.80.  If Russell finishes below $600, your caller is worthless and you keep $5.80.  If Russell finishes up to $520, where your own calls kick in, you owe the caller up to $20 back, less the $5.80 you collected is $14.20 loss at risk.   As to the prices, that happens to be a super-active contract and tons were sold at $6.50 and they held $6.25 right into the close.  The same goes for the $620s, which went off between .75 and .65 into the close.  Generally, I quote the last sale I see at the time of the play – not the bid/ask as they are less meaningful.  If there are no recent sales, then I’ll quote between the bid and the ask, which is what you should offer, at most, anyway.   If you don’t get a good price on a play – WALK AWAY – there will be others. 

    Week/Grant - I think PPI is hotter than expected and Retail Sales are going to miss but still be better than -0.1% in July (-0.6% ex Auto) so tomorrow is our best chance for disappointment as those are both 8:30 numbers.  We have Empire Manufacturing too and that may be a beat of 15 as NY is recovering better than most places.   Business inventories can be spun positive no matter what.  So let’s say we can get jammed down to 9,400 on poor numbers then jacked back up with a run on oil into the close so back to 9,500.  Weds is Industrial Production which has to be picking up a little  and then oil inventories which may be a draw on the holiday so easy to keep up there.  Thurs is Housing Starts and Jobs and the Philly Fed – unless they are disasters, I don’t see us blowing 9,400 this week but I also don’t see us busting out on what is probably going to not be great data even if it isn’t disappoiinting.

    GE/Java – Once we see what happens tomorrow, then we can decide. 

    INTC/Kustomz – No surprise.

    Trades/Jordan – That’s nice, thanks!  Not being able to put in spreads is a real problem there.   I only filled the call side of GE so I’m getting killed on that. 

  96. Phil: I noticed that you recently recommended a few spreads that are ITM, sometimes DITM.  E.g., the TBT spread above.  Do you always do spreads that are ITM?  What are the rules of thumb choosing between DITM / ITM / ATM / OTM spreads?

  97. Hey Phil, I would be happy to post my executions here, in case people are interested to benchmark brokers, or just to see what executes.  I do not trade during the day, simply best is to enter trades outside hours and just pick up whatever fills.  That is why I am very much looking forward to WSS’s ability to do spreads eventually.  I just cannot afford to enter one leg at a time in something that is intended as a spread, got burned a lot of times.

  98. Hi Phil: I am a new suscriber and I am having  a hell of a time trying to understand de lingo, so that I can proceed to place some trades. Could you please explain in detail the C trade you recommended today. Or is there anyone I can talk to for an explanation of that trade? I will do whatever it takes to understand the strategy behind your instructions. Please help me.  Arbolito

  99. ITM/Cwan – For hedge plays we want to go deeper in the money so that we have a chance of not losing if the market heads up (or opposite of whatever we bet) also, as they have a defined damage point, as I explained above to Roast, we know we can’t lose money on the SKF spread until XLF is up 15% so if you are hedging $10,000 worth of financials to the upside with $2,000 worth of the SKF hedge, you don’t lose a penny on your hedge until your longs are up $1,500 but a mere 5% loss on your financials gives you a double on your hedge.  So, like many things, the choices are situationally dependent. 

    Ececutions/Jordan – I’d say any day after hours or weekends would be fine for that.

  100. Same as Arbolito , new member . Phil , thanks for the education  . Phils Stock World is soo much cheaper and more usefull than university ( I should know after 6 years there ). As a previous captive to my broker I escaped and started educating myself and went from online brokerage in long equities and bonds to my new adventure in understanding options. Enjoy the links and content provided therein , at least a peak behind the curtain and what the hell is really going on .
    I really dont like whats going on with government intervention but there we are and thanks for helping get that into perspective ( your words as long as we know the game is fixed .. ) . How is it that so little is on the media about 10 million or so jobs gone and unemployed are screwed . How about this ( your fixes are great ), take $1 Trillion , offer employment "rebates " for 25% of average wage (say $50k for argument ) and buy yourself  (I could hire a few guys with a subsidy ) 8million jobs for one year and get a lot of that back just through income and sales taxes. Screw the banks and let them write down there losses over 10 years. 
    You’ ll like this my local credit just detrmined that it had excess reserves and is returning the excess proportionally to all residential and personal line of credit on loans oustanding in 2008 .
    How the hell the unemployed can be so overlooked and the big guys bailed is beyond my ability to stomach.
    Thanks again and happy trading .

  101. Still working on my Phd on Phil: On the SKF vertical +12/-22 Jan 2011 calls for Roast above, I see the hedge and downside protection, but most of it doesn’t actually produce any value until 2011.  So if the financials tank, then are you stuck hanging onto these for the next 1.5 years, or do you do something else with them to realize the value now? 

  102.  Phil,
    Need some advice on CAL. I have Jan 12.5′s with a $2.15 basis covered fully with 1/2 Sept 11′s (1.86 basis) and 1/2 Sept 12.5 (.89 basis).

  103.  Arbolito,
    I’ve been here for a about 2 months.  Brand new to options.  The best thing you can do is read these post EVERY DAY.  If your as green as I am than your like a little kid at the Big people table.  A lot of answers are readily available in the guide. Also read all of the sections, and pay attention to Pharm Boy and Phil.  A lot of other good traders here you will start to recognize.  Its hard to rush.  By some books, take some online classes or whatever helps you to internalize this information.  Then get an account with Thinkorswim (TOS).  The software is incredible.  Sign up for the paper trading account and start clicking.  Good Luck.  

  104. Hi Phil, I have been trying to figure out how your 5% technical analysis rule works but to no avail. I know that you watch the 2.5% up and 2.5% down levels on the indices, but what are the rules that you use to interpret the numbers? If you have explained it in the past in one of your posts, I would appreciate if you could point me to the right article. Thanks.

  105. Apple demand causing serious NAND flash shortage in Taiwan
    With major NAND flash chip producers allocating more supplies for Apple, Taiwan-based memory module houses have seen a serious shortage of the memory chips, according to industry sources.
    Samsung Electronics has informed Taiwan module makers that it will halve its NAND flash supply to them in September, and Micron Technology has also told some of its downstream customers that no NAND flash chips are available, claimed the sources. Toshiba and Hynix Semiconductor are also giving priority to Apple, and are offering limited supply to the spot market, the sources added.
    Apple is expected to officially launch the iPhone in China in the fourth quarter of 2009. The vendor is also now selling its new iPod Touch media player featuring capacity up to 64GB


  106. Good morning!

    Sept. 15 (Bloomberg) — Tesoro Corp., Ameren Corp. and Assurant are among six companies highlighted on Bloomberg Television’s “Screening for Value.”  The companies were selected from members of the Standard & Poor’s 500 index based on shares trading below book value, with price-to-earnings ratios less than 10. The companies also had to be profitable last year and in 2009.  Four of the six companies are energy-related: Tesoro, Ameren, Rowan Cos. and DTE Energy Co. The remaining two, Unum Group and Assurant, are insurers.

    Company   Price/Book Price/Earnings
    Tesoro       0.65             5.4
    Ameren       0.77             8.8
    Assurant     0.82             7.5
    Rowan        0.90             5.7
    DTE          0.96             9.9
    Unum         0.97             8.6

    Speaking of the 5% rule:

    Sept. 14 (Bloomberg) — The Standard & Poor’s 500 Index may be poised for a 5 percent retreat, based on an analysis by Schaeffer’s Investment Research using so-called moving averages.  The U.S. equity benchmark, which closed at 1,042.73 on Sept. 11, could drop to as low as 983.36, its average price during the last 50 days, said Todd Salamone, vice president of research at Schaeffer’s.

    There’s some hesitation to commit to stocks at these levels,” Cincinnati-based Salamone said in a phone interview. “Some people are afraid we’ve come too far, too fast.”

    The S&P 500 has rebounded 54 percent from a 12-year low on March 9 amid signs the recession is easing as companies from Johnson & Johnson to Goldman Sachs Group Inc. posted earnings that beat analysts’ estimates. The rally pushed the valuation of the index to about 19 times the reported earnings of its companies, the highest level since 2004, according to weekly data compiled by Bloomberg.

    After the decline, the S&P 500 may rise to 1,053.46, which corresponds to its 80-week moving average, Salomone said.

    That 1,000 area has been a kind of a magnet because it also represents a 50 percent retracement from the March low” he said. “If we get through that level, it will be very encouraging. It would truly be a testament to the market’s momentum.”

  107. Welcome Arbolito!  You are in luck as C was a simple buy/write play and I just updated a whole article on how that works on Friday.  That play is so standard for us that we do have a shorthand for it and it just so happens that C is one of the stocks detailed in that post.

    Welcome 2a3tube!  The one thing I don’t like is giving people money not to work.  I’m in favor of spending whatever it takes on job programs but effectively paying people just to consume does nothing to build lasting value into the economy.  My plan for jobs is to have the government pay to put a solar roof on every home in America.  That’s 100M homes at $50,000 each or $5Tn over 10 years is $500Bn a year.  Figure it takes a 5-man crew 2 days to roof a house so that’s 20 homes a year per person so we should be able to (at $50,000 a job) get 10M roofs done a year with 500,000 unemployed construction workers.  Of course all that spending also keeps our chip plants humming and all the support services etc so well over 1M jobs are created down the line with about $150Bn coming back in tax revenues. 

    Taking the majority of our homes off the grid saves $100Bn a year in oil consumption and that money flows back into the US economy rather than being exported and reduces our import needs by 3Mbd.  Families with lower utility bills are better able to pay their morgages and we also save a good portion of the estimated $1.5Tn that is urgently needed to upgrade the nation’s energy grid and we completely eliminate the need for new electrical plant spending for many years and we reduce the nations carbon footprint by 25% – That’s government spending I can get behind!

    That credit thing is just crazy but it’s a good example of what’s wrong with the system, banks have tons of money and aren’t lending it…

    SKF/Java – If SKF rises $10, you can assume the spread will have the value of the $4/14 spread (the lowest it goes), which is $8.65, a 47% gain if you have ants in your pants and can’t wait a year to collect the other 53%, with your spread over $20 in the money.  You can’t have it ALL – the reason you have downside protection in your hedge is you are buffered by time.   You are being rewarded for being more patient than the average option investor, who tend to take ridiculous risks trying to make a quick buck and often ends up making only a very small fraction of what a patient investor makes for doing far less work.

    CAL/Calch – Well stops would have helped you tremendously here as CAL was $12.50 on 9/2 and has gained about .50 per day since.  You have avg $3.30 of callers so they need to be rolled to 1.5X the Oct $14s at $1.90 at least.  To do that you can roll your $4.10 Jan $12.50s up to the Jan $15s at $2.75 but I’d buy .5x the Jan $15s so you keep the long Delta leverage.  Keep in mind that the $2.75 you spend to push the callers up to the $14s creates $1.50 of buffer on your Jan $12.50s to the callers so it’s not at all wasted money.

    Thanks Zucko – good advice!

    5%/Stockoptions – In the strategy section there’s a link to an article on Scaling In and in the comment section there are lots of little tidbits like the 5% rule. 

    AAPL/Kustomz – I’m starting to wonder if they are the entirety of chip and glass demand for the quarter…

  108. Morning Phil,
    Is there going to be a buy list for the non-$100k portpolio owners or we pick and choose from among those ?

  109. $uko775. thanks for the advice, will follow.

  110. thanks phil, will read and get back 2 U