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Toppy Tuesday Morning

Can we break higher on this low volume?

We've been waiting for traders to come back from their summer breaks but no sign of them so far.  Sill the market volume is at historic lows and still 80% of that volume is concentrated on a dozen financial stocks that simply get traded back and forth by robots every time the market needs a push in one direction or another

As David Fry's chart indicates, the only big volume stick we've seen in the past two months have come attached to big sell-offs.  In mid-August we were "just about to break higher" but gapped down instead and then again at the end of August, we reversed our low volume "recovery" with a big sell-off.  Here we are in the middle of September (that every two week thing) and THIS TIME, the analysts say it's different.  Different I guess because the volume has dropped by another 1/3 since our last fake rally. 

This, of course, does not stop us from "going with the flow" as running with the bulls can be very profitable but we are hedging A LOT and very cautious in our trade set-ups as we know how fast this can all turn around.  We took our short profits at yesterday's morning dip and added a mix of long and short plays during the day.  We did put our foot down on SRS and the Russell, playing the SRS to go no lower than $10.25 and the Russell not to break $600 this week and we'll be sweating out that one this morning as the pre-market pump has already jammed the futures up 40 points since Europe's open. 

Asia was mostly flat this morning but that does little to describe the madness at the Hang Seng, which was closed for the morning due to a Typhoon and opened for just 90 minutes in the afternoon where they dropped like a rock that was tied to a rock that was wearing cement shoes into the close.  Still, thanks to a 200-point gap up into the delayed open, the Hang Seng managed to finish the day down just 68 official points.   As soon as the US markets closed, dollar repair crews were rushed to the scene and they managed to get it back over 91 Yen in time for Japan's open and that helped the Nikkei stay above that critical 10,200 line we've been watching for over a month, but just barely

Europe is flat against our open as we await Retail Sales numbers and other data which was our big worry for the week.  It looks like Retail Sales ex-auto is up 1.1%, very solid and 1,000% higher than the 0.1% estimated by "experts." The PPI is up a whopping 1.7% as we expected but more than double the 0.8% increase expected by experts – who clearly do not live in this country!  Core PPI was up double expectations at 0.2%.  So much for deflation worries in August with a huge snap-back from -0.9% in July (-0.1% core).  I really would like to sit down with some of these economists and ask them what the hell they do to determing these numbers – they are clueless!  The Empire Manufacturing Index was also a huge beat at 18.88 vs 13 expected (off by 45%).  This should give us a decent open but the question is – will we have enough to sustain it or will this be a great time for people to take some off the table?

[5-yr+swap+spreads]Another encouraging sign was noted yesterday by Calafia Beach Pundit, who noted that swap spreads have come back to pre-crash levels.  He has an excellent explanation of them on his blog but I do have to wonder whether it's possible that they are down due to lack of demand more than lack of concern?   Clearly things are much better but are they really early-2007/Market Making All-Time Highs/Not a Care in the World better?  That just seems to be a bit of a stretch…

Speaking of things not being better – Dylan Ratigan, who is now on MSNBC with a morning show, has come out swinging with a statement that "Americans Have Been Taken Hostage:"

The American people have been taken hostage to a broken system.  A system where bank lobbyists have been spending in record numbers to make sure it stays that way.  A system that corrupts the most basic principles of competition and fair play, principles upon which this country was built.

It is a system that so far has forced the taxpayer to provide the banks with the use of $14 trillion from the Federal Reserve, much of the $7 trillion outstanding at the US Treasury and $2.3 trillion at the FDIC.  A system partially built by the very people who currently advise our President, run our Treasury Department and are charged with its reform. And most stunningly — it is a system that no one in our government has yet made any effort to fundamentally change.

It has become startlingly clear that we as a country, and I as a journalist, had made a grave error in affording those who built and ran those banks and insurance companies the honorable treatment of being called capitalists. When in fact the exact opposite was true, these people were more like vampires using the threat of Too Big Too Fail to hold us hostage and collect ongoing ransom from the US Government and the American taxpayer.

This was no unlucky accident. The massive spike in unemployment, the utter destruction of retirement wealth, the collapse in the value of our homes, the worst recession since the Great Depression all resulted directly from these actions.  Even with all that — the only changes that have been made, have been made to prop up and hide the massive flaws on behalf of those who perpetuated them. Still utterly nothing has been done to disclose the flaws in this system, improve it or rebuild it

See, when I get tired of telling you this stuff someone else steps in to take up the rabble-rousing slack – it's a team effort!   I've taken time off from complaining about the market this week in order to not distract myself from the bullish positions we've had to take but it's nice to know someone like Dylan can keep things real while I'm working on other projects… 

In our $100,000 Virtual Portfolio Review for Members on Sunday I added a bunch of new bullish plays, mostly short sales of puts (9 plays) for yesterday's dip.  We also took a double diagonal spread on BBY, hoping for a flatline with 5 Oct $41 calls for $1.60 and 5 Oct $38 puts for $1.60, Selling 4 Sept $39 calls for $1.90 and 4 Sept $40 puts for $1.65 for a net cost of $180 and it looks like we hit it on the nose as BBY missed by .05 with comp store sales down 3.1% but did leave full-year guidance in-line. 

We expected oil to get jacked up today and they already hit $69.75 into the futures.  If someone will pay us $1 for the USO $36 calls, we'll be happy to sell them naked so that's the way I would play that one.  We're still watching gold near $1,000 but we cleaned up on last week's sale of naked calls as they broke $1,000.  Another nice opportunity for a naked call sale should be the DIA today as we can likely sell the DIA $96 calls for $1.20 with 50% premium so I like that play, as well as buying the $96 puts for .60 but both are, of course, dangerous trade. 

Let's go have some fun!


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  1. Interesting Reads:
    COF … Credit Card Delinquencies rise in August   (COF, AXP getting hit pre market)
    Fed’s Yellin:
    BIDU now up $63 in Sept so far. 

  2. Dynlan Ratigan for president! 
    George Bush handed us our first (1/2) African American president.  Our first (1/2) African American president may well hand us our first Independent president.  There are more people who call themselves Independents in this country now then has ever been registered.  There is TREMENDOUS anger out there.  All we need is a populist to tap into it and I think Dylan Ratigan could be that person.  He is one to watch.
    Someone has got to rip the power in this country from the hands of the Democrats and Republicans and start putting America first.  The two party system has failed us.  Time for a fresh start.

  3. Dylan Rattigan ?   Matt, are you ok this morning ?   :grin:

  4. Hi Cap!  Just fine.  I’ve got no beef with Dylan.  Anyone that speaks the truth in the MSM I’m a big fan of.  I saw him tape Fast Money in DC last Spring and liked what he had to say before the cameras started to roll.  He is genuinely concerned.  And willing to rock the boat to get the message out.  That takes courage and I applaud it.

  5.  matt – are you having a serena moment?

  6. Phil,
    I have a position in UNG as follows;
    Jan. 2011 $6 call bought for 4.10
    Jan. 2011 $10 put bought for 3.10
    Jan 2011 $14 caller sold for 1.65
    Is it time to take out the $6 calls for 5.30 to 5.40

  7. COF/Cap – Not hurting them too much.  AXP is already up half a point – amazing disregard of fundamentals…

    Good luck with that 3rd party Matt…  8-)

    Dow Transports are over 4,000 and Nas Transports just under 2,000 (and they will confirm a breakout) with FDX still leading the way.  YRCW up another 8% this morning at $4.39!  Of course the BDI is still under 2,500 and was down today but we’ll pretend that FDX is going to fly all those toys to the store in time for XMass and not make any logical observations like no one seems to be really buying anything as shipping rates languish at 1/4 of where they were when the market was making highs and 1/2 of what it was in "normal" years.   

    Looking for the NYSE to make a big, confirming move to 6,959 (33% off level) along with S&P 1,056, which is closer. 

    Otherwise, our failure levels are still: Dow 9,600, S&P 1,030, Nasdaq 2,038, NYSE 6,700 and Russell 577.

    We’re also watching Nas 2,100 for that upside breakout (42 on the Qs) and XLF $15 would also speak well for the banks but, without those, I’m more inclined to look down and I like those DIA $96 puts at .60 still as a fun way to play the downside for a quick ride.

    There were several inflation-protective treasury plays discussed after hours in yesterday’s chat as well as a a couple of TZA shorts as well as 6 companies with very low price/book and price/earnings we’ll be watching.

  8. jomama, lol, that depends.. what the hell is a OH!  That Serena.  Thought you were talking about some symptom of taking too much thorazine!  Again, I’ve got nothing props for Dylan Ratigan.

  9. I’m almost reluctant to admit it on this site, but I’ve been long URE now for several weeks, owning a substantial amount of  the stock and selling short-term calls.  My short-term calls come in on pullbacks, and the stock price contiues to rise.  I’m up 40% on this play in the past 6 or 8 weeks.  I’m interested in responses.  Anyone else long on real estate?  Am I riding a bubble? 

  10.  yes, ms. williams – who recently became unhinged.

  11. RIMM seems to want to go up. The RIMM straddle is underwater. Should we close it?

  12.  what  is up with wmt?

  13. Wow, what a house of cards!

  14. Phil, I have the RIMM play outlined Sunday.  There is still a lot of time value in all 4 legs, but I am up 150% on the long 85 call.  Is it time to take it out or adjust?

  15.  phil,, what are your thoughts on c?  has it changed at all – i saw all your plays from yest – is your thesis still the same?  do u like c 2.5 2011 calls for 2.3?

  16. Before anyone goes crazy with inflation hedges, remember that the PPI is just recording the run-up in commodities, which we already know about, and which seems to be a speculative play made with lots of ‘cheap’ money provided by the Fed. We’re still waiting for evidence that lending is expanding instead of contracting, and that all this Fed-induced liquidity is making its way out of asset class bubbles and into the real economy. There won’t be significant real inflation (= expanded monetary base plus increased velocity of money) unless and until that happens.

  17. Iflan – I’m long too…sot of.  I’ve had short straddle on IYR initiated when it was around 38.  I sold the Sept 43 calls when it was bumping 42 and while yesterday and overnight made me question things it looks like I’ll collect.

  18. UNG/Bass – I’m not sure what you are trying to accomplish?  The set-up is to lock $4 on the spread after laying out net $5.55 so you have a max loss of $1.55 and a max gain of $2.45 (44%) if UNG holds $14 for 15 months.  If you sell your calls for $5.40, you have nothing on the table but you have turned the bet to long-term bearish.  If that’s what you want, then fine but if you want to flip more bearish you can roll your caller to the Oct $9s where they would have a .86 downside delta but, of course, a hurricane in the Gulf could make you regret it (but no more than leaving a naked long caller).

    BBY is a huge winner.  Our original play was:

    • Buying 5 Oct $41 calls for $1.60 (debit $800, net $800)
    • Buying 5 Oct $38 puts for $1.60 (debit $800, net $1,600)
    • Selling 4 Sept $39 calls for $1.60 (credit $760, net $840)
    • Selling 4 Sept $40 puts for $1.65 (credit $660, net $180)

    Now we have:

    • 5 Oct $41 calls at $1.35 (credit $675, net $675)
    • 5 Oct $38 puts at $1.25 (credit $625, net $1,300)
    • 4 Sept $39 calls at $1.10 (debit $440, net $860)
    • 4 Sept $40 puts at $1.00 (debit $400, net $460)

    That’s up 155% in a day!  Don’t be afraid of these plays, they make huge money and, even if you get burned, you can still roll around and adjust to mitigate the damage.  Our goal was $39.50 on the longs and we’re right there so really no sense in being greedy.

    URE/Iflan – Actually I have always suggested URE as a hedge to SRS.  Back when we first started playing SRS, URE was below $5 and the plan was to cap SRS losses by buying URE over $5.  It’s been high for a while now and hopefully topped out here at $6.

    RIMM straddle/Stock – Yes to buying back the $80 calls for .66.  Hopefully we get a nice pullback on the rest.

    WMT/Jo – That’s interesting.  Bad KR results I guess. 

  19. Hey guys, I read through all of your kind words of support from last week and especially to you, Phil. It really meant alot to me. It spoke volumes about the good nature of everyone here. Thanks, so much. My wife got out of the hospital yesterday and is doing well. Some physical therapy ahead but not as much as expected. We got the bills taken care of by emptying brokerage account (bummer) and savings but she’s well and that’s the most important part. Gotta love that pre-existing clause as they applied it to a CAR ACCIDENT… Greed. Pure and simple. I’ve put UNH on my list of companies I’d love to buy a a profitable put on one of these days. ;) Thanks, again everyone.

    Looks like this market still makes no sense. Nothing changed since last week…

  20. Phil,bad KR results probably is good for WMT, eh?

  21. Phil – Still hold short  Sept CAT $46 calls naked at 1.55 cost from last week hoping for a sell off and now they are are now 3.15.  Is there a danger in holding underwater short positions until day before expiration?  I was thinking of rolling my short position to the Nov $48 call but waiting for more of a sell off ?

  22. Phil, did you mean the 85 call on RIMM?

  23. Actually, I think you meant the 80PUT for .66.

  24. RIMM 80calls for .66? Did you mean the puts? The calls are at 2.75!

  25. Real Estate .. no reason to be long real estate (other than it keeps going higher !).
    Seems to be a major engineered short squeeze, fueled by a lot of the stocks being difficult to borrow.

  26. Phil – the RIMM $80 calls are trading at $2.77. Its the $80 puts that are trading at $0.62. So your recommendation is to buy back the calls? If we get a pullback after buying back the calls, won’t the put positions get hit?

  27. More of the same BS in this market – what a crime …

  28. Phil – what do you think of doing a short straddle on WMT? Sell Oct $50 puts and calls for net $2.14 credit. Breakeven at $47.86/52.14. The stock has been trading between $47.5 and $52.5 since April. Looks like there’s not much chance of a big move either way from here in the short term.

  29. On the RIMM play just curious what would be the next adjustment point if RIMM keeps going up?

  30. Pharm,
    ARNA received a downgrade this morning. Any thoughts?

  31. C/Jo – I still like C to get between $7.50 and $10 by 2011 so I do consider sell-offs an opportunity although they sure do test your faith…

    Inflation/Eric – I agree but it does outline the danger of it in the system.  We’ll see what CPI looks like tomorrow, if they can’t pass those costs through then there’s no risk of inflation in the near-term.

    Welcome back Josiah!  Very glad to hear your wife is doing well and very disgusted (as usual) about the health care status quo so many seem bent on defending…  That’s the problem with health care – everyone thinks it’s "great" until they themselves fall through one of the many cracks in the system – the fact that it happens to thousands of people every day doesn’t seem to have any impact – thanks for sharing what happened to you, maybe it will get some people to think twice about the issue. 

    KR/Jo – I wouldn’t think it’s bad but KR is saying people are just cutting back to the bone.  As usual, we like WMT at $50. 

    CAT/Concreata – You’re not likely to get assigned early but that is a nast run they’ve had.  If they are naked you can roll them to 2x the Oct $50s at $2 each and you can always cap the upside (and margin) with the 2011 $60s at $4.70 so, worst comes to worst, you’ll only be stuck rolling them up in the future.

    RIMM/SS – Oops, no I meant the $80 puts!  The play was a short straddle of the $80 puts and calls for $3 and now the $80 puts are .50 and the $80 calls are $3.20 so we take out the puts and hope for a pullback to get out of the calls.  Otherwise, we roll to next month, where the $90 calls are $2.75 at the moment.  

  32. Phil, what is your opinion for the medium term on JOYG ? Thx

  33. I don’t know how I missed the BBY reco but now I’m pissed!  :-)

  34. Phil : Your BBY trade was too complicated for me.Got a simplier trade?

  35. Phil, the RIMM play also had buying the Sep 75 puts and the Sep 85 calls.  I am now out of the Sep 80 put and the 85 call for a nice profit on both.  I still have the long Sep 75 put and the short Sep 80 call to deal with hopefully on a pullback.

  36. ARNA/allen – someone else upgraded them.  Hold steady, young Skywalker.  They will be much more violent one way or another in a few weeks (if not sooner).  FWIW, I am short ARNA just because….I have been trying to sell a Sept/Oct call side even, but it has not filled.

  37. WMT/Stock – I agree, that’s a good one for that play.  You can also cover the upside with 2011 $50s at $5.30 which isn’t too expensive and eliminates marginrequirement on the upside so a good use of $5. 

    RIMM/Steve – RIMM being one of those stocks that just isn’t living up to the hype, I’m happy to roll it to Nov $90s ($2.70) and then Dec $100s ($2.80), Jan $105s ($2.65) or March $115s ($2.40).   Should I run into real trouble, then 2x the March $125s are $2.80 and it would be quite a trick for RIMM to jump 50% by March.  Also, along the way, you can always sell some puts to offset, like the Oct $70 puts at $1.20 now.  Since you already have a naked $90 call, it simply gives you more buffer or you own RIMM for $67ish…

    JOYG/Jrom – I think the mining sector excitement is way overdone and we’ll see a big pullback.  I would like JOYG at $30 and I’m not big on shorting them as they are a great company so they are more of a "no-play" for me at $45.

    DIA $96 puts .60 again.  Quick .75 last time!

    BBY/Aclend – Just keep your eye out for earnings coming up and we can look for good plays.  Works best with high-volume shares though as you get less sharp moves. 

  38. Phil, I need a little education here regarding the GE short calls in the 100KP.  It’s been my understanding that when an option runs out of explicit value, then it’s subject to being exercised at any time, with puts being more likely to be exercised then calls because of arbritage.  However, it doesn’t appear to me that you are concerned that they will be exercised, as you haven’t put out any advise to cover or roll them, and find the risk acceptable.  So I feel I must not have a good understanding of the exercise risk I’m facing today.  Hope this is clear!

  39. Phil, if CPI comes in really hot it may be stagflation time, as wild-eyed speculation by the lucky few who have access to nearly free borrowing from our govt.  jam the price of commodities up for the rest of us. Lovely.

  40. Phil,  Good morning,  given today’s data " they " shouldn’t be having this much trouble getting to 1056 on the S & P ; Are we long or short on the day ?

  41. Simple/Dfalm – Well the DIA pus are simple…   Others will come up.

    RIMM/SS – Perfectly played (we hope!).  Don’t be greedy though, we always have to fear the pm stick.

    KFT with solid 200 DMA support at $25.50. March $22s at $4.30, selling Oct $26 puts and calls for $1.50 nets a virtual $24.80 for the entry.  This is not the same as a buy/write – it’s a riskier bullish play

    Exercise/Java – When a putter puts a stock to you – YOU give THEM money for stock they don’t want anymore.  When a caller exercises you early, they waive their premium, pay an exercise fee and hand you cash for the same stock they can buy on the open market for the same price now so they can assume 100% of the risk of ownership between now and expiration.  That is why calls are rarely exercised early, even when deep in the money (other than dividend issues).

    Stagflation/Eric – That was my prediction early on in this crisis.  Still very likely as we are not like Japan and our governement will pump and pump long after most would give up on reviving the patient. 

  42. Does that BBY play have an official name? (e.g. ratio double vertical…or some such craziness). I have to say that trade was sexy!  Beautiful work, Phil.

  43. GE – got it – thanks.

  44. DIA/Phil – When you said quick .75 did you mean gain or top?

  45. i have an old favorite, TIE, with the buy-write of 8.34 with the September 7.5′s. The call is underwater. Would you simply continue the October 10s?

  46. It would make perfect sense for this market to correct on the day the recession is declared over!

  47. Phil/Healthcare – Thanks. The systems a mess. Added so much to my stress over the past week. I was pro-reform before, now I’m even more convinced and adamant. I hope my story makes people think.

  48. VIX barely budging. No one takes this selling seriously, apparently.

  49. Phil,
    What do you think of starting a half position of Jan puts on CHK??

  50. Can you believe BIDU ??  They may shoot for $400 this week.

  51. COF got a downgrade intra-day after they pumped it back up.

  52. josiah, glad you are doing better.  systerm is a mess – the fix will be very complicated, but hopefully can happen in small steps that will encourage common sense.

  53. Day/JRW – Yes, I’m still expecting a pullback.  1,056 on the S&P and 600 on RUT is too hard to hold on this low volume.

    BBY/Aclend – It’s a double diagonal or an extended butterfly.  They work when there’s a lot of uncertainty about earnings and the premiums on the longer month are not too outrageous.  It also helps if you have $1 strikes to set up and it must be $2.50 incriments otherwise the rolls are generally too dangerous.   Of course, once you get up to $100+ stocks, then you may be OK with wider strikes.

    Quick .75/Josiah – Oh just .75 total – making .75 on that trade would take quite a castastrophic fall in the Dow. 

    TIE/Drum – They went crazy with the rest of the metal stocks.  I would not put more money into it, you can just roll out to the Dec $10 puts and calls at $2.50 if you want to stick with it. 

    USO $36 calls back to .50 – too risky to stick with now so should be bought back…

    IATA now sees global airline losses hitting $11B in 2009, $2B worse than its previous estimate. Group also revises its 2008 loss estimates to $16.8B from $10.4B, reflecting a large change in goodwill valuation and fuel hedges. "The bottom line of this crisis," group says, "is larger than the impact of 9/11."

    Fed buys $2.05B of the $7B in mid-range Treasurys submitted by dealers, with maturities from 2021-2026. Last time the Fed purchased in this range, it bought $2.6B of $13.1B offered. 10-year Tsy futures -0.24%.

    OPEC leaves its global demand forecast unchanged at -1.6M b/d for 2009 and +0.5M for 2010 in its September oil market report this morning (contrast with). "The rally in equity markets seems to be factoring in higher growth than the real economy can support and it is therefore likely that markets will remain at best within the current range for some time," OPEC says. Sep. crude off early highs of $70.06, currently +0.3% to $69.08.


  54. CHK/HP – Too dangerous.  The whole thing is a farce.  Oil is way too high, nat gas is low and the economy is propped up but only machines are actually investing in the market.  That’s just not a sector I can get long on but shorting is way too dangerous.

    BIDU/Cap – If we don’t close red today China will  probably have a fat down day tomorrow.  Meanwhile though, SRS at $10.10 and TIL is flying.  AAPL hitting $175 and MCD on the mend so all must be well in America…

    Gang of 12 activity:  In addition to the Fed buying $2Bn in treasuries, BK bought $2Bn too. 

    How many people have to say this before someone believes them?:  Salomon Brothers mortgage-bond "godfather" Lewis Ranieri says the system "isn’t fixed yet, it only looks like it’s fixed," and that commercial property value is beginning a cycle that will deal a blow to banks.

  55. Bernanke says the recession is over and the good little buy bots jump in to support him but let’s remember who this guy is.  He either A) has absolutely no compunction about lying his ass off to the American people or B) is totally clueless and should not be listened to.

  56. DNDN
    Hi Phil-
    I have a profit of about $30,000 I’d like to protect yet still participate in any upside.
    Current position is  25 2011Jan7.50C

  57. Don’t understand why everyone’s so upset, WE the congress gave the power to the Fed to protect the American people.

    This afternoon should be fun but i doubt it will be the climax for the week. Look at the way they are flat lining the S&P..its like magic :-)

  58. Phil, with regard to the short GLD calls, I think you decided to buy them back, but what was the reason?
    When you sell a call or a put (just one leg) and the stock goes against you, at what point do you cut the loss?

  59. The U.S. Treasury Department adopted rules allowing lenders to revise commercial real estate loans without triggering tax penalties in an effort to stem a rise in defaults.
    The regulations, urged by trade associations such as the Real Estate Roundtable, would ease requirements for collateral and other guarantees in many cases. Borrowers in investor pools known as Real Estate Mortgage Investment Conduits and Real Estate Investment Trusts wouldn’t be subject to tax penalties.


  60. Phil/Bernanke   Could this be the "top in the market" ???

  61. Is your plan to re-evaluate the GE play later in the week?

  62. IMMR – nice move today to break out.  They have a gap to fill up to 4.5 where OH resistance is stiff, but still 5-7% away.  Options are light and not a big trader < 1M/day.  they make touch technology…..

  63. Phil – X – Holding Sept vertical Long $48 call (2.30 cost, now .90) and Short $46 call (3.00 cost, now 2.35) so I am sitting at (.75) loss. Like CAT, X has had insane run-up, but now I am stuck in this vertical expiring in 4 days. If I am still bearish and willing to invest more, what is the play?

  64.  Phil, nice pop on JRCC

  65. Does anyone have a projection on how looooow SRS can go.  Its killing me. Were at 9.85. DD?

  66. Phil, my CROX short Sep 7 put is up 72%.  Is it time to cover and roll? And what about the Sep 6 call?  I may be jumping the gun on this exp. week, but just trying to see what’s next on this one.  Thanks for the advice.

  67. I can only imagine that at some point in the next few months that this fantastic house of cards is going to crash down again like before.  This is still just a stupid technical rally. 

  68. Zuko775: I was asking that back when it tanked below 14. Phil told us to remind him if he started playing with it again. It’s burned so many people. As long as the market wants to ride to the moon this piece of crap stock will continue to go down.

  69. Does Obama ever sleep.  He is on TV morning, noon and night.  If he could only sell his words this whole mess would be fixed.

  70.  ssdirk-  Ain’t that the truth.  I think they elected a TV commentator.

  71. Phil:  I don’t believe it. Birinyhi is now bullish & recommends WFC and JPM.
    Seriously,I bought Cat at $38.81 (now $50.71) as a dividend play with potential upside. .I sold Jan $ 36 puts for $1.98 (Now .87) and Sept $46 calls for $1.52 ( now $4.80) for net of $35.31
    I’m thinking about selling Nov. $52.50 calls for $2.70 & rolling Jan $36 puts to Jan. $40 puts for $1.50  My concern is that Cat has basically doubled since March 8 & may be getting ahead of itself..What" your recommendatuion.? Thank you

  72. KFT/Phil: I wonder why you recommend a "pseudo-buy/write" (long March calls & short Oct calls+puts) as opposed to a plain buy/write?  Whare are the rules of thumb here?

  73. DNDN/Edro – You can take it off the table and sell 25 Jan $30 calls for $3.60 and 25 Jan $24 puts for $3.60 so a $7 credit which means if you are forced to re-enter, it’s at net $17.  To the upside, you buy 2,500 at $30 with a stop at $30 (or you can buy Feb $24 calls, now $7.25) and that puts you in for net $24 with a $30 call away – not so bad either.  If the sale goes well and you are up $7, you can then take half of that money (another $17,500) and put it into 2011 $35s, now $6.30 for a free ride on a year’s gains.

    Andrew Ross Sorkin describes the Wall Street peanut gallery during Obama’s stern message on financial reform yesterday: "The audience offered up only one round of applause … They came, they listened, they left. There was little sense that the country was any closer to reforming Wall Street. After the speech, they all departed for their real power lunches."

    One step the Treasury is taking to prevent a wave of commercial real estate defaults: easing tax penalties on loan revisions – which may soften the blow of $1T in difficult refinancings to come over the next decade, according to Deutsche Bank (DB).

    That may be what’s supporting CRE – the expectations of a massive bailout with restructurings. 

    GLD/Jordan – In this market, it pays to take profits quickly – that’s all.  If you make a quick 20%+ it’s best to cash it out and look for the next play – there are not too many moves that sustain more than a couple of days – especially if they are bearish ones. 

    Ah, good find Kusomz – I just saw that too. 

    Top/1020 – I will be pathetic if they can’t get the S&P over the line on all this "great" news today. 

    While global wealth declined 11.7% ($12.3T) in 2008 to $92.4T, North America – land of the (brave) stock market investor – led the way with a 21.8% plunge, knocking the region off the pole position for the globe’s wealthiest in favor of Europe. In Latin America, wealth grew by 3%. Much more of interest in this morning’s report from BCG.

    GE/Aclend – The $14 calls, now $1.88 can be rolled to the Oct $15 calls at $1.27 and the Oct $16 puts at .92, which puts .50 in our pockets and we don’t owe the other $1.88 back unless GE goes over $16.88 or under $14.12  so hard to get all worked up at the moment.  If they head higher, then the Oct $16 calls and $17 puts will do the same job.  If you feel like betting that there is no way GE will finish below $15 between now and expiration – you can always roll now and save yourself the stress but boy would you feel silly if they drop back to $14.50 on Friday.

    Volume 100M at 1pm so amazingly low.  The value of the S&P is about $10Tn so in the last two weeks the S&P has gained $700Bn in 8 trading days.   With about 1Bn shares traded a day, there would have to be a +$80Bn PER DAY positive trading balance ($80 per transaction) for the amount of money to flow into the S&P to match it’s new value.  Instead, if you look at up the very close up and down volume spreads it’s more like $7Bn flowed into the S&P to cause a $700Bn gain in "value."  This is how you get bubbles – sure there are real transactions going on but they don’t represent any real attempt by people to sell their shares so the auction pricing you’re seeing is artificially low by a mile.  A $7Bn inflow on perhaps $300Bn worth of shares traded out of $10,000Bn total shares caused all $10Bn to be marked up by $700Bn.  Should $3,000Bn of those shares try to cash in – do you think they will get that value?  1.5Tn?  $700Bn? 

    So that’s my concern but it doesn’t matter if no one ever tries to sell and as long as the media has this non-stop good times outlook and the governemnt is going to back them up with high-profile statements like "The Recession has ended" two days before another 500,000 peoples jobs are counted lost – then there’s no point in fighting it.

    X/Concreata – Notice I never do those plays.  This is why…  I’d say the simple answer is sell your calls and roll the caller to 2x the $48s for about even and hope they don’t go higher but, if they do, then the Oct $50s are $2.60 for a naked sell.

    JRCC/Soul – Coal will zoom if nat gas keeps going. 

    SRS/Zuko – LOL – Why did no one remind me not to trade them yesterday?   I wouldn’t DD here as they can pop back $1 real fast.  At $8.50 (assuming you are in around $10.50) it’s worth doing because then that $1 can get you even. 

    CROX/SS - I wouldn’t pay .25 but, then again, I would have bought them back for a dime when I had the chance!   Obviously, since you have the $6 call, there is no point at all in paying that premium. 

    CAT/Dflam – If we’re holding these levels, once the NYSE is over the bears have to wave their white flags and we’ll have to look at the range that takes us to the 20% off (the highs) mark – that’s a 15% rally from here.  It was the NYSE that was the ONLY index to fail at 6,323 (40%) before the last big sell-off in June and now they are the lagger at 33% so I would feel good if we got a similar 10% pullback here, back to hold that same level on a pullback.  Then we could go crazy with the buys

    KFT/Cwan – I feel safe enough about their lower level holding that we can tie up less cash to do a higher % play to the upside. 

    Obama really rousing up the AFL-CIO! 

  74. PALM releases earnings on Thursday.  My opinion is Apple has taken the wind out the PALM sales and expect to see the stock take a hit on Thursday or Friday.  Are the 13 puts the trade you would make on PALM or do you have another strategy I should consider?

  75. Obama really rousing up the AFL-CIO! 

    No shit i thought Obama was going to lead a march on DC

  76. The pumping of the Real Estate stocks is beyond insanity at this point,..

  77. PALM/Sarahd – A good one to play.  You can sell the Oct $15 calls for $1.30 naked, that’s a fun play.  They can be covered with Jan $17.50s at $1.40 if you have margin issues (or nerves) but they beat last Q by 35% and that only took them to $16.80 and I doubt they do it twice. 

    LOL – Listen to the morons on CNBC backpeddling after that speech.   They’ve been saying health care is dead and Obama’s out of gas and this is only the beginning of the blitz that I told you guys was being planned last month when we had that strategy meeting.  Obama is going to be all the news on Sunday and Monday he’s doing Letterman and this is going to become a huge election issue and with more and more unemployed people – there will be a lot of voters who hear stories like what happened to Josiah and once again the Republicans will be sitting around on a Wednesday morning wondering what happened to them.  This is not a political statement – just an observation….   8-)

    Well the markets are flying after a union-rousing, pro-health care rally, I guess Wall Street loves it?

    March/Kustomz – Towards the end there I was half expecting him to call for us to take up arms against the man! 

  78. Uh oh: "James McDonald, CEO of money manager Rockefeller & Co., has died in an apparent suicide. Rockefeller administers $25B in assets."

  79. Re: Obama speach to AFL-CIO: He clearly is trying to close out the war on terrorism in exchange for a class warfare at home. This is not good for investments of any kind as taxation will take center stage.

  80. DIA $96 puts now .38, that’s a DD if you were in at .60 (then half out at .50) or a nice new entry.

    Dollar back below 91 Yen, oil back to $71 and gold at $1,009.  GLD $99 calls make a nice naked sell at .80.

  81. DNDN
    Thanks Phil – good trick !!

  82. HERO- anyone know on rumors/news on HERO? Up about 30% – can’t find anything specific.

  83. i think they said he was also on board of cof??

  84. j mcdonald that is

  85. Phil:
    frequently you say: that’s a fun play,
    if it works out then its fun, if it does not, it surely is not fun,
    what do you mean when you say "its a fun play "????
    what coal play do you recommend ?

  86. Speech/Healthcare – indeed. The truth is you can’t trust life and death decisions to unfettered capitalism.  But so few things are life and death. Let’s have him get healthcare sorted then boot him out pronto. I’m with Matt. All this dogma and posturing over actual real issues drives me sick. Time to stick it to both parties. Radigan will do.

  87. Hey Phil – I still have the OIH Oct $100 puts I bought last week. Any thoughts on what to do with’em?

  88. Buffet going to talk about GE and GS tonight on CNBC no wonder the huge pump on GE

    Look at TXT… yest news

    Defense contractor and aircraft maker Textron Inc. (TXT) is offering to buy up to $650 million of debt issued by it and its finance arm, becoming the latest company looking to pare debt levels.
    The offer comes four months after Textron, which has battled slumping business-jet orders and canceled defense contracts, raised $821 million from a stock and bond offering. That offering came on top of Textron’s 91% dividend cut and the drawing down of the balance of its $3 billion committed credit line early this year.
    The tender offer is on five separate note series totaling $1.73 billion which mature within the next three years. Including a $30 early tender premium on each $1,000 of notes, holders of four of the five series would get slightly more than face value if they tender by 5 p.m. EDT Sept. 25.
    Textron, which makes Bell helicopters and Cessna jets, is in the midst of cutting 19% of its work force and has shut most of its commercial-finance business. In July, it swung to a second-quarter loss on continued woes at its aircraft operations, but posted a surprise profit excluding restructuring charges. Revenue fell 29%.
    Chairman and Chief Executive Lewis Campbell said at the time that, despite cancellations, the company saw early signals of stabilization in the business-jet market late in the quarter.

  89. no reference to J mcdonald and COF /cap. one on Google, sorry thought i herd it on CNBC

  90. p.s. would you roll RIMM short call up/out yet? I haven’t on the assumption that this move is BS. But the bottom line doesn’t care….

  91. $100KP/Phil – Some of the short puts, such as TWM, are under water.  Roll now or wait?  Expiring in 2 days.

  92. Uh oh: "James McDonald

    they took that guy out, he knew too much..

  93. Phil: looks like taking a chance and get DIA 96 puts for 37 cents ??

  94. Phil: looks like taking a chance and get DIA 96 puts for 37 cents ??

  95. Phil or anyone, I need a little fundamental teaching here.  I understand what happens on a buy/write when you own the stock, and you either have the stock taken from you or more stock put to you at expiration.  However, I am a little confused with the CROX play for example.  I have long Mar 4 call and long Mar 5 put.  I also have short Sep 6 call and Sep 7 put.  What happens if on Friday the stock closes at 6.50 and we did not roll.  How would my account be affected?

  96. Phil: looks like taking a chance and get DIA 96 puts for 37 cents ??

  97. Class Warfare/Gel – Class warfare was already declared when $1Tn in tax cuts were delivered to the top 1% of the people in this country.  Where do you think that money came from?  In order to give TBoon and  an extra $500Bn in take-home pay, you have to rip a $10,000 hole in the average $48,000 income of 50,000,000 families.  That is war and the casualties are 18M unemployed and 50M uninsured and an entire nation who’s seen their standard of living drop for a decade.  Look at Detroit – that’s an economic war zone and now the battle has moved on to Stockton (28% unemployed), NY (10.5% income tax to make up for government shortfall), Philadelphia (11% foreclosure rate), Chicago (violent crime now hits 1/100 people a year, a statistic now shared with Charlotte of all places)….  LA is falling apart too as is the whole state of California with Nevada not far behind. 

    It’s never "warfare" until someone fires a couple of shots in your direction is it? 

    HERO/Pstas – Maybe a hurricane coming, that’s good for business for them.  They are presenting at a conference on Thurs, maybe something good leaked or maybe just a rumor.  I like these guys.

    USO $36 puts can be sold naked for $1 again!

    Fun/RMM – Small bet, high payoff but not something you want to bet more than you’d put down on a craps table on.  For some people that’s $100 and for some that’s $5,000 but if it’s not fun for you to play and lose a bet like that, then you shouldn’t be making them.  As to coal, you are miles to late.  This is beyond chasing, this would be bag-holding.

    OIH/Morx – Those were supposed to have been a roll to the $105 puts ages ago.  That roll is just .80 now and that brings them back to net $3.05 in the $1.80 posiition.  From there I’d spend $3.30 to roll to the $115 puts (net $6.35) and sell the $105 puts to bring the net cost back below $5 on the $10 spread but there’s .50 of leeway so no hurry on the sale. 

  98. RIMM/Steve – That which were easily done can be easily undone.

    TWM/Cwan – see above comment to Steve.

    DIA/RMM – Yes, that’s what I said.

    CROX/SS – You MUST roll or you get it put to you long and short!

  99. Hi Phil, I have sold GE $14 Sept caller for 0.63, now 1.90.  Would like to roll, but debating what to.
    On one hand, with GE at $15.90, I can roll to a short $16 Oct put and $16 Oct call for a cost of 0.25.
    On the other hand, I can simply roll one month out to an Oct $14 call for a credit of 0.15.
    Which do you think is the better move?

  100. If most of this volume is robotic, at what point would they start going the other way, I wonder? Technicals, or whenever their overseers decide to flip the switch because down makes more money? It seems so very sinister in a Terminator sort of way.

  101. Phil/GE:  I also see you commented to Aclend, using $15s and 15s, but I don’t understand why you are crossing them like that, i.e. you are overlapping them by $1.  Why is this good to do in this case?

  102. Cant pump the DOW with out WMT

  103. I know I keep coming back to the PARD play, but the stock is stil 7.85 and the DEC 5 call and put can be sold for 6.20.

  104. ssdirk – isn’t it amazing. The stock doesn’t budge an inch and the premia just go up and up.

  105. josiah if you look at the macd on the dow chart you can see no one believes the move since around August 10th i would say the top should have been 9400 add 10% to that number for a possible top, we all know the markets are that crazy..dont we?

    Phil how do you feel about SCHW would you trade them at this point?

  106. $100KP:

    AIG – No change

    AMZN – No change

    BAC – No change

    C – Rolling 5 short Oct $5 puts, now .88 to 10 short Dec $4 puts now .48. 

    CROX – No change

    FAZ – No change (close one!)

    GE – Selling 10 Oct $16 puts for .90.  Selling Oct $16 calls for .75.  Stop on 10 Sept $14 calls at $2.20 (now $1.95)

    HIG – On Sept $25 puts, setting stop at .65 (now .50).  If you sold the $25 puts, stop not needed.

    LZB – No Change

    MHP – No Change

    PSQ – Buying back Jan $55s for $1.30.  That leaves 10 naked Jan $50s.

    TWM – No Change

    UYG – No Change

    XLF – No Change

  107. Phil,  Since 1/2 the market moves are after hours,  any anticipation of tomorrow’s open ?  CPI at 8:30.

  108.  Phil,  I have been trying to figure out where SUN’s dividend is in any danger of being cut.  Are there any sites you recommend for digging into a companies financials so I can figure this stuff out.  Also,  what is your opinion on the security of their dividend? 

  109. Monsanto looks appetizing again.  Buying 70 Apr10 C, Selling 80 Oct09 C.  Also trying to sell the 75/70 Vertical Oct09 P for $1 credit.

  110. Phil: my LDK stock , base 11.04$, so some loss, should I sell CC ?

  111. I haven’t gotten any kind of alert on the 100KP 3:00PM update…..that’s disappointing.  Just happened to come by the site just now and saw it.

  112.  Phil:   When Oxen Group recommended ERY at $18.32 (now $14.60), I bought shares at an average of $17.68.  I also sold September 16 puts at 1.08, and September 15 puts at .65.  I am trying to decide where I go from here.  Any thoughts would be appreciated.  Thanks.

  113. Rookie Question… Could someone please break down the daily DIA plays for me? I feel like Im trying to jump on a moving train here.  Phil | Anyone.  Should I enter with a 96 Long Put  at .38.  Whats my goal here? (Other than making money)  This seems to be a basic play, but Im a fraidy cat.  Looks like its played daily. 

  114. Zuko – paper trade it for now…not worth the risk if is doesn’t make sense….

  115. Thanks P

  116. Zuko / DIA   Phil is expecting a pull back; if so, you will make money !

  117. Phil – No cover on DIA puts for tomorrow, correct?

  118. Re trade notification – I think there was a proablem with my BlackBerry, so not your site’s problem.

  119. It’s amazing how much CNBC pumps Gasparino’s book.

  120. Sept. 15 (Bloomberg) — Citigroup Inc. and JPMorgan Chase & Co. led companies planning to sell at least $20.6 billion in debt today, the most since February, as financial firms take advantage of falling yields that show credit markets healing one year after Lehman Brothers Holdings Inc. collapsed.
    Citigroup, the third-biggest U.S. bank, is marketing $5 billion of government-guaranteed securities, while JPMorgan, the second-biggest, plans to raise $1.5 billion in its first U.S. note offering since May, according to people familiar with the transactions and data compiled by Bloomberg. At least eight other companies are offering debt today, including Royal Dutch Shell Plc with a $5 billion deal.

    Yields on financial debt fell to 5.73 percent yesterday, or 329 basis points more than Treasuries of similar maturity, from 6.18 percent, or a spread of 360 basis points, a month ago, according to Merrill Lynch & Co. index data. The average yield was 11 percent, for a spread of 881 basis points, on March 11, Merrill data show. A basis point is 0.01 percentage point.

  121. javaben I got the email at 3:02pm for the 3pm update

  122. Is this fake market overbought yet ?

  123. Phil we are getting quite overbought on a short term basis. What do you think of shorting UYM for a quick buck?

  124. Class Warfare/Phil  Not to be a parrot  but, SQUAWK!! I could not agree more!  I have many freinds and family members who still think they were given back "their" money!  What crap!!!  Most people who bitch about taxes don’t understand it is not the federal tax they should complain about, but their growing state and local government taxes!!! HARUMPHHH….

  125. GE/Jordan – See $100KP move.  Selling the $16 puts is a free ride as you already owe that $1 to your $14 caller so who cares if they go in the money?  The next move is a standard 2x roll with the joys of scaling in.  If we stop out, then we sell 10 more $16 calls for more money. 

    Sinister/Josiah – The government is convinced (by their GS advisors) that the stock market is the economy so they are willing to do whatever it takes to prop them up.  This can go on for quite a long time before the party ends and we can even get a false sense of recovery as 1 in 6 then 1 in 5, then 1 in 4 jobs are government jobs and 20% of GDP spending is government spending – this works about as well as running a restaurant where the owner takes money out of the register, sits down and has a nice meal and insists on paying for the food – the only guy who makes money is the waiter who gets the tips (Goldman).  The employess may think the restaurant is busy (as you are filling up tables and using food) and it looks busy to curstomers while you juggle your mortgage and payments to the suppliers until suddenly people show up and the whole place is boarded up as the house of cards collapses over "just one thing."

    GE/Jordan – The Oct $15s are $1.45 and the Oct $16 puts are .82, selling both for $2.27 means we collect money on the roll and move our long loss (or further losses) to $17.27.  Anything in between the two numbers is going to be $1, which we’d be happy to pay.

    PARD/SS – Always worth mentioning!

    SCHW/Kustomz – No way to know how those brokers are doing.  They could have exposure, loss of clients, lower margins (fee competition)… 

    Tomorrow/JRW – I can’t believe we can go higher but so far, so wrong…

    SUN/Craig – I would think it’s not so much the dividend danger as the cap in trade issue you should worry about.  I use Investools for financials but Yahoo is fine and then there’s always looking at the actual SEC filings, which is very helpful.  I think that you can’t count on the dividend at all as we may have another big oil sell-off into the winter. 

    LDK/RMM – Why not sell the Dec $10 calls and $9 puts for $2.70 to drop your basis to $8.34/8.67, which is 20% lower than you are now with a 20% profit if called away at $10?

    Alerts/Java – That’s strange, it hit my box at 3:01.  What Email provider do you have?

    ERY/John – I’d roll to the Oct $15 puts at $1.60 and sell the Oct $16 calls for $1, which drops your basis to $16 and you should be thrilled to be called away even.  

  126. LMAO, this should have been added to the link above

    NEW YORK (Reuters) – Bank of America Corp and Citigroup Inc customers defaulted on their credit card debts in August at the highest rates since the onset of the recession, a sign that the banks’ consumer lending woes are far from over.

    Cap do not underestimate the stupidity of highly educated people
    I had dinner last night with the Pres of a University here in Florida, his wife is a scientist with the water company and she cant wait to get back into the market…  Im not talking chump change either :-)

  127. And another thing :)   Why are so many so eager to protect the "fat cats" and the big corporations???

  128. 100KP – I have an open order that I don’t see in your update nor on the WSS sites: Buy 2 strangle Jan 11 6/12 c/p @8.30 lmt gtc.  Did I miss something on this?

  129. DIA/Zuko – Those front-month puts are just daily gambles we do on epiration week.  See the strategy section but you must use tight stops or rolls to stay with them.  If you get out with a 20% loss, you lose .15 here and .10 there and then sometimes we hit for .80 gains.  The trick is to play them consistently and with discipline.

    DIA – In general, I’m naked on the DIA $99 puts.  The Oct $95 puts (1/2 cover) are a buy back at $1.50, having given us .75, which is most of what we need to roll up the longs $1 so mission acccomplished there

    Selling debt/Kustomz – See how that works.  1) Drive up the markets 2) Have your government partners drive down rates 3) Use the up markets to drive down CDS swaps back to lows 4) Use the low CDS rates to make it attractive for people to buy your debt.  5) Use tons of new cash to foreclose on everyone and short the market…   What a joke!

    Overbought/Cap – See David Fry’s lead chart.  If not today then tomorrow but they can keep this up through Friday.

    UYM/Soul – That’s interesting!  The Oct $30 calls can be solf ro $1.30 and the Feb $33/29 put spread is $2.40 for $4 and $1 in the money to start.

  130. DIA puts…DD, DD, hold overnight…DD, DD…Roll up, Roll out..PUT,PUT,PUT

  131. disappointing if they dont spike the S&P to 1055 at the close :-(

  132. 100KP GE 15 put – TOS shows these at .06/.07 b/a.  Do y’all buy these back at .07, or just let them expire? 

  133. Phil:
    does it make sense to keep the DIA sep 96 long puts for tomorrow or close out ?

  134. Harumphhh/1020 – Harumphhh harumphhhh!

    Defaults/Kustomz – Please don’t confuse us with facts…

    July’s positive credit-card charge-off data may have provided a false sense of security, as Bank of America (BAC) and Citigroup (C) customers defaulted at recession-high rates in August. BofA’s charge-off rate rose to 14.54% from 13.81%, and Citigroup’s to 12.14% from 10.03%. American Express’ (AXP) default rate declined to 8.5% from 8.9%.

    $100KP/Java – I was just updating the positions that are open, not the open orders.

    Regions Financial (RF) shares now up 8.9% as CEO Dowd Ritter says "absolutely not" to whether the firm needs more capital. Ritter said nonperforming loans should decline within the next several months.

    Another sign that investors feel risky as ever: The TED spread (the gap between 3-month borrowing rates that Treasury and the banks pay) is at its lowest level since 2004, just 16 basis points.

    Well, another winner in the markets!  Amazing..

  135. I have a fifth of tequila with a worm in it around here somewhere.

  136. GE/Java – With 3 days to go too much can happen so better to pay .07 (or at least offer .05) than take a chance. 

    DIA/RMM – I think so but, of course, it’s a gamble.

  137. Harumphhh Harumphhh

  138. Phil, what should we do about  ERY and TWM in the $100KP since these orders were executed?

  139. ‘It’s like a restaurant owner taking money out of the cash register to pay for everyones dinner.  Only the waiter makes money.’
    Another great Phil-ism!

  140. 100KP Re my open UNG  Buy 2 strangle Jan 11 6/12 c/p @8.30 lmt gtc.  I realize you didn’t update this site with any trade info on the open trades, but aren’t your existing open trades tracked on one of the WSS sites?  Or is that just the position balance and executed trades?

  141. Phil, what about amzn Sept $85 puts that I filled according to your first update to the $100KP? Should I roll it?

  142. Phil/Matt – Excellent analogy! I agree with Matt, that’s a great line. I’ll just take this sage advice from Team America (not safe for work, folks) and paper-trade more while I try and understand this madness.

  143. TWM/Jlui – See above (nothing).  On ERY, what are you in for – I didn’t fill. 

    $100KP/Java – Huh?  Yes it tracks open orders but I don’t feel the need, during the trading day, to review open orders that never filled.  If you completed an order that I didn’t mention then just ask.  I’m still not sure if there’s a question in there?

    AMZN/Jlui – Did we sell $85 puts?  That doesn’t sound right…  What do you have on each side of AMZN.

    Someone just asked me about this article I wrote back in 2007 when I said that the whole scam was about to fall apart.  Funny how things come around again:

    We have taken a couple of Trillion dollars of discretionary income out of the hands of average Americans and put it into the hands of wealthy people who put it into the hands of brokers who put it into the hands of oil companies who buy back their own stock and employ no additional workers and produce nothing new other than better balance sheets! This is not a platform for long-term economic growth!

    In short – nobody EARNED those dollars your portfolio is stuffed with.  No goods and services were created, we simply decided that a $200,000 home was "worth" $500,000 and that a $45 barrel of oil was "worth" $70 while simultaneously telling employees that their contributions were worth less.  That was OK(ish) as long as employees had the illusion of wealth because their primary asset, their homes, was increasing in value and low rates let them borrow against them (in $Trillion$) but now it turns out those fully leveraged homes may NOT be worth $500,000 which puts both the consumer AND the lender in a bit of a bind.

    When the banks phony-baloney balance sheets are full of assets that are backed by securities that may be overvalued by 15-20% and some joker says "show me the money" – well, funny story actually…  There isn’t any!

  144. WOW we have been bearish on the economy and the markets for years, just went back and read some comments and articles from 07, i got to say we are a smart bunch…..:-)

  145. 100KP – GE – I offered 0.05 and bought it back today.

  146. Phil – CAT – I rolled short $46 calls to 2X Nov 52.50 at cost of 4.55 – my new B/E is 2.35 (vs 1.55 previously). I am hoping for some sell off tomorrow to cap the upside by buying an equal number of 2011 60 or 65 calls(see your comment below). So do I understand correctly: if CAT goes up from here, the leap protects me, when CAT declines to about $48 between now and Nov 21, I can buy back NOV calls for even $. Then what would be the plan for the leaps at that point? Thanks
    CAT/Concreata – You’re not likely to get assigned early but that is a nast run they’ve had.  If they are naked you can roll them to 2x the Oct $50s at $2 each and you can always cap the upside (and margin) with the 2011 $60s at $4.70 so, worst comes to worst, you’ll only be stuck rolling them up in the future.

  147. Cramer pushing those REITs big-time.  He has a good point about GE, that does explain the surge today:

    Treasury Gives You the Go-Ahead on Real Estate
    By Jim Cramer
    RealMoney Columnist
    9/15/2009 3:13 PM EDT
    Go buy the IYR, the iShares Real Estate (IYR) ETF. Go buy it because Tim Geithner, the Treasury secretary, just slapped a super-de-duper buy rating on it.
    Well, not actually, but he might have done so in not so many words. He also may have solved the so-called commercial real estate crisis. This morning Bloomberg reported that Treasury is adopting rules that allow lenders to revise commercial real estate loans without triggering tax payments to head off the escalating defaults in the industry.
    This commercial real estate issue has dogged this market for too long. Everyone I ask on TV about whether we can get past the trillions of dollars in alleged liabilities says no. We can’t. Bill Gross told me last night that no amount of forbearance can make this problem go away. Have you read a single story that doesn’t mention the ability of commercial real estate to sink hundreds and hundreds of regional banks?
    This is huge. This is fantastic for the industry because it allows banks to modify loans to real estate investment trusts (REITs) in their favor without the REITS having to pay taxes on the economic benefit of the loan modification (or whatever you want to call the changed terms of the loans). No wonder the REITs are flying today.
    The big thing that many people will not get right away is how good for banks this us. Otherwise deals would not get done and bankruptcy might happen.
    I think this is such powerful news that it is making up for the not-so-hot master trust data for credit cards.
    Now, I know there is a lot of securitized commercial mortgage debt out there that won’t be unwound easily, just like securitized single-family home debt has overwhelmed owned home loans from banks. But it doesn’t matter. The publicly traded REITS should roar here and they can absorb a lot of bad loans, and the banks will be able to work out a lot of deals, which will keep the vacancy drag down.
    This is the beginning of the end of the commercial real estate time bomb. A lot of people are apparently playing commercial real estate stabilizing through GE (GE) , too.
    I say buy the IYR to play it. And watch the shorts scramble on this one.

  148. Cramer is an idiot.  REITs don’t pay taxes.  Forgiveness of debt income (phantom income) would not matter to a REIT.
    Who it would matter to is you and me.  If you own a property and are underwater on the loan, and renegotiate it to a lower loan, or pay it off at a discount, your partnership would recognize income in the amount of debt forgiven, which would pass thru to the individual owners.
    Cramer telling people to buy IYR NOW ??? That is full on crazy talk.  That man should not be on the air.
    Frankly, this will help the individuals who are losing their properties from getting a double whammy on their taxes.
    I don’t see that this helps banks.  They still take big losses, maybe it will be easier for them to foreclose, but that means no more hiding losses.
    I don’t see how this helps REITs at all either.  Their problem is that their properties are worth 30-50% less than they were last year; their occupancies are down, their tenants going out of business, rents are down and they can’t get financing.  This change discussed above will do nothing to alleviate any of that.
    Cramer’s piece above is so stunningly bad and full of crap I almost can’t believe it !

  149. Phil,  I had the AMZN Sept $85 call and Sept $85 puts for $3 filled. Do I need to roll the $85 puts?

  150. Phil, I sold  ERY Sept $15 puts for $0.60

  151. Phil:
    Re: response to earlier comments today I made about Obama’s speach and the connection to " class warfare"  and of course the response. I thought it would be best to revisit the subject matter after the close of the market.
    I made the comment, in concern for the long term effect that might evolve relating to taxation policy and the resulting effect on the economy in general, and employment specifically. My past experience as a lawyer turned entrepreneur, having created four very successful businesses, one of which I took public and traded on the Amex, I have to offer the following: Capital is the "mother’s milk" of business creation after creativity, followed by monitary incentive. Employment of the personnel needed to achieve the business model is the last ingredient to be added. The toughest struggle is at the outset, ie. capital availability and profit incentive. Hiring the worker-bees is the easiest and can be achieved through negotiation and compassion for their needs. If the business model has merit, there is no financial concern in this area.
    If the capital markets are stressed through over-reaching taxation, then the capital is not available to entrepreneurs and the new businesses are not created, therefore no new employees are created. If the entrepreneurs are over-taxed, then say good-bye to the incentive component. Hello… increasing unemployment.
    Detroit is a great example (you brought it up) of labor laws gone amuck. The government supported labor laws have encouraged, over many years, to achieve the "legal extortion" of benefits that the auto companies could never afford. They accepted the results (strikes would kill them) and kicked the can down the road, only to die a death that was forseeable. Tax cuts to the wealthy had no effect on this result that was in the making for many years. So what is the government’s solution…. give control of the entities to the same people who caused the problem in the first place along with $80 Bil gift of our money and to try again. Is that dumb or what?
    Phil, I do not believe in the concept of creating acrimony between the classes,  as I observe today, as a solution to today’s problems. Great societies have worked together to achieve success and greatness. Riling up one class to piss off the other is counter-productive, and achieves nothing. I do not mind taxation in any form as long as it is spent wisely and is used for beneficial purposes. That, today is not the norm (see fiscal stimulus)
    Enough of my editorial for the day…. I celebrate today, having reached my goal for the year,  trading in sinc with your education and guidance, of 1 million in profit. I learned a lot, achieved much, and am profoundly grateful.

  152. LOL Cap!

  153. Cap, good points.  Although I admit I don’t know the intracies of how REITs work.  I think the change is akin to not having to get hit over the head twice.  The second time being when you would have had to pay taxes on a break you somehow got cut.  Speaking of which, why would they get a break?  So far, residential mortgage reworks are mostly for interest and extending maturity, not principal reduction.  Would commercial loans get anything better if / when they’re reworked?
    One thing is for sure.. it’s not a negative for the sector.  But both IYR and FAS sold off this late afternoon on cue with the indexes.  So it’s not like commercial real estate outperformed the market.  In fact, banks did better.  And they’re the ones who would be having to ‘give’ in any loan modification before the borrower could realize any ‘gain’.

  154. Gel1- well stated re: taxation/capital formation.
    More importantly, congratulations on your achievement. Sounds like we could all learn a few lessons from you also.
    If I may ask, did you follow any particular strategy / tactics?

  155. Headlines say "Buffet sez he;s buying stocks".
    What did he really say ?  That he is talking his book, and is buying ONE of EITHER AXP or WFC, but won’t disclose which.
    Among the highlights:

    Berkshire has no direct currency plays right now, including no bets against the U.S. dollar
    Repeats his belief the U.S. economic downturn will be longer and deeper than many people think

    The economy won’t be better five months from now, but will rebound within the next five years

    Fed has a very tough job fighting inflation, which he expects will continue to rise

    No immediate interest in making an investment in Canadian oil sands, although he did find his tour of northeastern Alberta this week very interesting
    In retrospect, he made a mistake when he sold a large chunk of his Anheuser-Busch
    [BUD  68.75    0.17  (+0.25%)   ]


    stake before the brewer agreed to a friendly deal with InBev.  Buffett said he wasn’t sure the deal would go through given Anheuser’s initial resistance to InBev’s offer
    Made a $500 million bid for a Chinese asset that was rejected, but won’t say what it was
    Expects government action to bail out Fannie Mae
    [FNM  1.63    -0.03  (-1.81%)   ]


    and Freddie Mac
    [FRE  1.82    -0.08  (-4.21%)   ]


    , although there’s a "reasonable chance" shares of the two GSEs will eventually go to zero
    Urges contributors to the John Edwards presidential campaign to file a class-action suit seeking the return of their money because Edwards "misled" them about his extra-marital affair

  156. Matt, I just read the treasury article, and its less relevant than I previously thought.
    It appears to benefit the bond investors in CMBS pools.  Apparently, a loan resturcture in the pool might trigger a tax consequence to the bond investor.  This rule change is designed to remove that obstacle so that loan special servicers might be more willing to engage borrowers in a loan restructure; which has been a big problem for CMBS loans.
    Again, not sure how this benefits REITs (maybe the AHR and GKK mortgage REITs a little, since they own CMBS); doesn’t benefit an SPG VNO SLG KIM type.  They typically are not CMBS borrowers to begin with.
    At best, this encourages some additional loan modifications in the CMBS arena; as opposed to foreclosures  (effectively kicking the can down the road).
    It does little to help CMBS borrowers like me !

  157. Matt … its not the banks that benefit … they are not CMBS lenders.   CMBS was created when I-banks like Lehman and GS originated real estate loans, held them on their balance sheet, then packaged them up and sold them as securities to various types of bond investors.
    Again, not sure that there is a tremendous benefit to anyone here; its not a negative, true; but again it does nothing beneficial for the REITs.  Doesn’t really affect them; does not help property values except to the extent that some foreclosures are prevented that would otherwise drive everyone else’s property values down.

  158. Gel/Class warfare – Some good points, but I’d like to counter a bit. A band I listened to in high school had a great line about how societies never recognize class warfare until their doors have been bashed in. I would suggest that, historically this seems to be the case. The French revolution with the storming of the Bastille is a perfect example of what happens when people see wealth concentrated in such an unfair fashion. They stop buying the notion that the other class has some “divine right”, which is a mentality that I would argue the Fed shares with the final French monarchy. I’m not calling for guillotines, but it’s important to look back and see what has happened in the path when wealth disparity grows too large and hard times befall those who aren’t pulling the strings. History has taught us that it doesn’t end well and we’d be foolish to ignore it or think otherwise. I don’t personally think that a little bit of socialism is a bad thing (probably the minority on that one but there I said it)… especially if it prevents us from falling apart. That’s my take. Also, congrats on the goal- you should certainly celebrate, you’ve earned it!

  159. gel1 – Wow!  Hope it’s not considered rude to ask what you started with, when you started with it in  order to reach the $1 mill in profit.

  160. Pstas, Josiah:
    Firstly, many thanks for the congrats. Your comments have added to my elation. To be honest, when I set the goal I thought it was daunting, as I have for many years been an investor in equities but did very little with options. Learning and doing has for me been a blast!
    I reached my goal by following Phil’s strategies – lots of Buy/Writes, covered calls on equities , naked put entries for income production. I also have been very consistently bullish since mid March (that helps) and did not hedge as much as was maybe prudent (sorry Phil). I did it with 2.5 mil and kept 600,000 in cash in case I got in trouble. I concentrated on stocks (many of my own choosing) that had decent dividends and wrote front month calls against (OTM) which has worked well in this market run. 25% of my gain is in dividends and premium selling, with the balance in appreciation. I also get some of my leads ( Insider buying tips and momentun plays) from outside sources and try to work them into option plays for leverage and hedging.
    In my earlier post, I commented from my experiences in the trenches,  which is so different from theoretical prognostications that might be envisioned by many who have not had the benefit of "real life" experiences. Josiah, I follow your reasoning and historical references, however United States today is unique, inasmuch the system prevailing in todays’ economy is "free market" and is available to all who seek it. We do not have a ruling class as it prevailed in Europe, and I believe opportunity exists for everyone, if effort and the desire to succeed is part of their matrix. Our system, in many minds is unfair – 1% paying 90% of the tax load. In spite of this oppression one can still succeed, even if you are not on the winning side of the equation. Hey, Obama did it – and without a family that was endowed with money. Our country suffers, I believe, when the government tries to place everybody in a direction that they believe is best for them, and in doing so gives these elected few the thrill and drama of acomplishment, and thus creating and perpetuating a dependant society that contimues to grow from one generation to another.

  161.  Phil,
    I had the following question below on CAL that you answered earlier today. My question now is it a good plan to move the Jan 12.5′s to the March 13′s for .25 and then buy 1/2 again as much March 15′s and roll the Sept 11 & 12.5′s even to Dec 15′s?
    September 14th, 2009 at 10:25 pm |
    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).
    September 15th, 2009 at 7:38 am
    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.

  162. Smart bunch/Kustomz – You know it!   8-)

     ABC Consumer Confidence Poll: -49, down from -48 for its second straight weekly decline. This week 43% of Americans feel the economy is getting worse, up 12 points from last month. Only 44% rate their personal finances positively and only 24% think it’s a good time to buy things.

    This, obviously, means we can expect a higher open tomorrow (we are also smart enough to know to expect the opposite of what would be a logical reaction).  Here’s more bad news that won’t bother anyone:

    The Fed is likely to stay the course in its $1.45T program to buy mortgage-backed securities and GSE debt, despite resistance from some regional presidents. Heidi Moore thinks that’s a terrible idea: "If you thought U.S. banks holding all those sketchy mortgages was a bad idea, wait until you see what happens when the center of our country’s money supply is saddled with bad debt."

    Ambrose Evans-Pritchard suggests the recent, unprecedented drop in bank lending is a harbinger of a double-dip recession and a slide into debt-deflation, quoting David Rosenberg: "For the first time in the post-WW2 era, we have deflation in credit, wages and rents and, from our lens, this is a toxic brew."

    Warren Buffett says the "terror" is gone, but contrary to many opinions, the economy hasn’t yet turned up. "At the moment we don’t see it getting better or worse, but that’s better than you could say six months ago."

    Gosh I do try to get more bullish but then I read the news and IT IS SO DAMN HARD to shut off my brain….  Today’s data (as if it matters what it says):

    Wednesday’s economic calendar:

    7:00 MBA Mortgage Applications

    8:30 Consumer Price Index

    8:30 Current Account

    9:00 Treasury International Capital

    9:15 Industrial Production

    10:30 EIA Petroleum Status

    1:00 PM NAHB Housing Market Index

    Oil futures are back at $70.63, Gold is $1,010, the dollar was jammed back up to 91 Yen just in time for the Nikkei’s open (9pm) and that gapped them up 100 points, now 156 in their afternoon.   The Hang Seng rose so fast they gapped up during the session – from 21,075 at 11:06pm to 21,212 at 11:08, the graph couldn’t keep up with the buybots on that one

    Toll Brothers is Overvalued, Just Ask the CEO

    Last week, Toll Brothers Inc (TOL) chairman and CEO Bob Toll sold 791,000 shares from his vast portfolio of TOL stock. He still owns nearly 16 million shares or close to 10 percent of the company’s stock, but he has a history of lightening up at the opportune time. He has sold about $50 million worth of stock this year. I can’t say that I blame him, as frequent readers of this blog are aware, at Ockham we believe that Toll Brothers is Overvalued.
    In a conference call with investors, he said stronger housing demand in recent months “makes us feel a whole lot better.” In response to questions about the outlook for the economy and further waves of foreclosures, however, he said Toll hadn’t purchased much land recently. “So while we’re optimistic,” he said, “we’re also unwilling to make bets on the future being much different than the current market."

  163. CAT/Concreata – That’s a good choice, the Delta isn’t too much lower than the Octobers but the theta is, of course, 1/2 so you’ll get a little more erosion on your leap than planned.  My plan was to sell the $50s based on a shorter-term pullback (and if not, we could have still rolled to Nov $52.50s as a back-up plan).  Now the 2011 $60s may be overkill as you dropped the delta on the caller from .62 to .47 (plus the 1/2 theta) while the 2011 $60s have a delta of .42.  That means a drop in CAT will cost you as much on the leaps as it does on your caller (.05 less).  There are no 2011 $62.50s, which is what guided my choice of the $60s and then the Oct $50s to sell but I would feel better if you were in the 2011 $65s at $4.30, you can always spend the other $1.40 to roll later.  Keep in mind you did collect $2.35 already and that pays for most of a roll down to the 2011 $55s (now $7.50) so no need to overcommit to a leap when your goal if for CAT to go down, not up. 

    Cramer/Cap – Great analysis!  We need to wait for the sheeple to overbuy and then we can short the crap out of this sector as there will be a lot of disappointed Cramerites who will be very confused when they hear bad news from the players.

    AMZN/Jlui – You may be right on target with the $85s – it depends if we hold up today but why should today be different?  The plan was always to roll but certainly not when your putter and caller still have premium to give you. 

    ERY/Jlui – Unless you REALLY didn’t want to own them for net $14.40 then this is not a problem.  You should be able to roll those puts to the Oct $12.50s, now .40 even if you wait.  At worst you can roll to the Oct $14 puts, now $1.05 for a credit so I would be not in the least worried about that one – which is why selling puts is a fantastic way to be long on something!

    Mega Congrats Gel!  I am thilled to do my part to keep you in the top 1%.  I have built and sold companies myself (last was a title corp, we should talk!) and I do not dispute your concept of taxation but I simply feel that the line should be drawn at a different place.  What we lack in our current system is the concept of enough being enough.  A business earning $1-5M a year needs every single dollar and there should be huge incentives for reinvestment, especially for hiring but a business earning $1-5Bn a year is not at all the same thing.  By taxing the $5Bn business 20% more you can give a 20% tax break to 1,000 smaller businesses – that keeps competition thriving and ensures a healthy base of new enterprise which drives the next generation of prosperity.  The same goes for taxing the uber-rich.  As I said above, it’s not about getting another $200,000 of your $1M but TBoone made $3.6Bn last year and it may be a stretch but that’s probably more than he needs to scrape by. 

    Taxing TBoone and the other 3,000 people at the tippy top who pocketed about 10% of this country’s GDP an extra 20% (the same 20% they used to pay pre-Bush) is $300,000,000,000 a year for the rest of the country.  That still leaves them with $1,200,000,000,000 and I know it would leave a terrible hole in their hearts to see all that money go towards silly things like health care and schools when they could have trickled it down on some Yacht maker in England or maybe given $1M to a South African mine owner for a pair of earings…  Heck, those 2 items alone could employ a dozen boat builders, a jeweler and a few mine guys for under $10M as oppsed to the the average of 1 job created per $75,000 spent by the government (133 on $10M) which also, by the way, goes back into the pockets of various businesses anyway. 

    The idea of taxes IS to help redistribute wealth.  Some years some will do better than others and it the banking sector has a fabulous year and companies make $2Tn in profits (they did in 2007) then perhaps it isn’t the worst idea to take an extra 20% of that money and put it away for someone else’s rainy day.  Who knows, maybe one day in the distant future, the banks themselves may find a need to ask the government for help?  Having a strong, well-funded governemt allows them to be there for you when you need them and allows them to engage in the sort of long-range planning that is very out of vogue with American corporations like building infrastructure and encouraging long-term research to solve long-term problems like running out of oil and climate change. 

    Unions are a whole different issue.  They are necessary when you have a weak government that is corrupted by business interests and doesn’t look out for it’s own people.  If there were strong labor laws, the people wouldn’t have to organize and take things into their own hands but the unionization of this country was a reaction to the despicable conditions that existed at the turn of the century that reached a crescendo in the 50s when a lot of pissed off ex-soldiers came home with a little more of a sense of entitlement than usual and the AFL merged with the CIO and really stuck it to the man.   Unfortunately, once you let that genie out of the bottle, it’s hard to put it back and the pendulum swings too far the other way, as it did in Detroit. 

    Unfortunately, when you have 300M people who are worried about their retirement and are struggling to pay their bills and all they read about in the papers is the government tossing $20Bn here and $100Bn there to bail out rich guys, you are going to eventually get a reaction.  We can choose to wrap ourselves up in our sense of entitlement and wave the flag at them, hoping they will shut up and just go bankrupt quietly or we can work to address some of the imbalances of the system with the long-term outlook that the growth of the lower classes does eventually trickle UP to those of us in the top percentiles.  That’s just my .02…

    When they kick out your front door
    How you gonna come?
    With your hands on your head
    Or on the trigger of your gun

    You can crush us
    You can bruise us
    But you’ll have to answer to
    Oh, Guns of Brixton

    The money feels good
    And your life you like it well
    But surely your time will come
    As in heaven, as in hell

    You see, he feels like Ivan
    BORN under the Brixton sun
    His game is called survivin’
    At the end of the harder they come

    You know it means no mercy
    They caught him with a gun
    No need for the Black Maria
    Goodbye to the Brixton sun

    You can crush us
    You can bruise us
    But you’ll have to answer to
    Oh-the guns of Brixton


  164. Thank god you quoted the Clash. That band shaped my life and the way that I look at the world. They, The Who, The Beatles (Gotta love Taxman, even if I do lean left) and so many others have some great songs that will always be relevant.
    Trade Wars – For those of you looking for a good laugh and a refreshing way to look our potential trade war with China, look no further than this petition on behalf of the witty and satirical enlightenment thinker, Bastiat. Seriously, it’s still so relevant. It could be in The Onion.

  165. Buffett/Cap – That’s the media these days – they just want to get someone talking so they can chop up the words and spin something that sounds good out if the sound bytes…  Of course Buffett is a willing participant.  He can get airtime anywhere he wants and say "that’s not what I said" (not that it worked for Roubini) but this way he gets to go on record as being wisely cautious while the MSM can use his reputation to push their party like its 1999 message through.

    CAL/Calch – Jan to March is a good roll.  Any roll where you spend less than you are likely to collect given the extra time is a good move.  Overall, it’s a good plan.   I would rather see you first roll to the Oct $15s if possible as you are still selling .70 in premium and they can always be rolled to Dec but they’ll pay much better on a dip.  You can add the sale of the Oct $15 puts for .75 as those can be rolled to Dec $12 puts (even) and that way you are selling $1.50 in premium for the month. 

    Clash/Josiah – I remember seeing the Clash open for the Who at Rich Stadium in Buffalo when I was in college – That was a worthwhile road trip!  I also saw the Clash at Bonds in NYC and that was one of the best concerts I ever saw in my life – they even made a wiki of it!  Here’s a cool video leading into London Calling.

  166. Hey that reminded me of another totally great show at Bonds - The Blue Oyster Cult booked themselves as Soft White Underbelly, which was their original name so only their real fans would get tickets (BOC is a Long Island, NY band).  I will never forget this huge Godzilla they rolled out on stage and the very wild drum solo with the flashing lights and the drummer wearing a giant Godzilla head.  At the end of the solo, where the lights were low, they blew up the stage with gunpowder and blinded the audience.  After the first night show we saw, they didn’t do it again as I think they actually burnt people’s hair in the front rows  Ah, good times….

    Interesting tidbit – BOC lead singer, Eric Bloom is Howard Stern’s cousin but, of course, it’s all about the cowbell

  167. You people should be sleeping!  I’m only up to try and catch up on some code I never seem to get written fast enough during the day because of.. uhhhhh.. my phone ringing off the hook.  Yeah, that’s it!
    Cap, didn’t they talk about doing the same thing.. and maybe they even have.. on the residential side?  I remember hearing about the tax consequences of having your residential mortgage reworked and remember it coming sorta as a shock.  They were talking about relieving that tax burden for the residential borrower some time ago in one of the myriad of programs that have been set up to deal with the residential mess.  So, it’s a benefit, but no guarantee that loans will get reworked and properties will get saved.  Banks will still wind up holding alot of these foreclosed commercial properties.  But evidently, only until the Fed comes and buys them from them.
    The $1.45T for moving bad private sector bank debt onto the public’s balance sheet makes me boil.  I know it’s been announced for a while.  But to hear that there is dissension among the ranks of the Fed REALLY tells me how bad an idea it is..   like I"ve said before, they are willing to bring down our country to save these greedy fools’ asses.  Shame on them.
    As for Ambrose Pritchard’s article, I read it yesterday off the DrudgeReport.  I meant to comment but forgot. What is important is that David Rosenberg suggests the Fed will need to resort to outright ‘monetization’ to combat deflation in the next year or so.  I can just hear them now.. ‘Our backs were against the wall!  We just HAD to run the presses 24 hours a day or we would all have disintegrated.  So don’t look at it as a $10 cup of coffee.. look at it as us avoiding a catastrophe!’  Knowing they have this ace in their hole to throw on the table down the road (once China stops buying) must have them just licking their chops over there.

  168. Hi Phil, looks like it’s just you and me..  Nothing like reminiscing about the good ‘ol days at 3am with coffee coursing through our veins!  I’ve been a Stern fan since he had a show in DC MANY years ago (80′s).  I’d never heard him mention his cousin in BOC?  Interesting!  But then, I’ve never heard of Bonds Casino either.  Those sound like classic times.  My closest adventure (not really) would be seeing the Tubes at the Tower Theater in Philly back in college.  But that was more like a circus then a punk rock show!  They were a real spectacle.

  169. Hey Matt – I’m up again now but you lost me after 3 – just one of those days I ended up going late…

    Now Greenspan is spouting off this morning and goosing the markets with inflation talk

    We hit the 2.5% rule in China but the Nikkei fell 100 into the close (up 53 net) as people bailed on the dollar right around 1am and we blew 91 Yen again (now 90.36).  The Hang Seng was the opposite, the Bots came right back on after lunch and the Hang Seng gained 200 points in the last hour for a 536 gain on the day – back to early Aug ’08 levels. 

    For other global markets to catch up to China now, at Aug ’08 levels, they would have to gain roughly 10% very quickly!

  170. Phil: I hold FRO for 25.80. should I write calls and puts on the stock and if so, which ones would you recommed?

  171. I want to buy atpg. Is tthat a smart bet? How should I do this? buy write? other