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Tuesday: The Brown Booster Shot

What a morning already!

The futures were drifting along until 3 am and the Shanghai Composite had closed down 2.3% at 2,897.  At 3:23 the Hang Seng was looking to close down as well but then Gordon Brown, the UK Prime Minister, on his way to the G20 meeting in Pittsburgh this week said:

The stimulus that we have still got to give the world economy is greater than the stimulus we have already had.  What we want to do is safeguard a recovery from a recession we feared would develop into a depression… By meeting at Pittsburgh, we are looking at how we can put in place for the future the mechanism or path that can lead us to either making decisions about better ways of creating growth that is sustainable in the future, a better early warning system for the world economy about potential crises, a better way of resolving difficulties or imbalances around the world..  I have been talking to many countries in Asia as well as in Europe, and I have been talking to President Obama and others, and I believe that there is support for that framework

WooEee!  More free money!!!  No sooner did the words come out of Mr. Brown's mouth than the Hang Seng began to climb, reversing a down day to finish up 228 points, right at the 21,700 line they have been struggling to hold since last Thursday.  Gold flew up to $1,020 and oil jumped to $71 worthless-looking dollars and, as usual, once Asia closed, the dollar was free once again to drift down to 91 Yen (Japanese markets were closed today).  But, despite his performance, Gordon Brown may not win today's Globey Award for blatant market manipulation. 

Brown's performance was great – make a bold statement that indicates another $13Tn or more may be dumped on the Global economy and insinuate the the whole G20 is behind him before jumping on a plane, leaving the British tabloids (owned by Gang of 12 member Rupert Murdoch) to boost the market for 2 days in a row – BRILLIANT! 

But, he does have serious competition this morning by not one, not two but THREE Gang of 12 members as UBS, GS and JPM triple teamed up and all issued reports saying "Russian stocks are poised to surge, extending an 88 percent rally this year, as the economy’s recovery spurs profits."  "Earnings growth is set to be explosive,” wrote UBS’s Moscow-based economist Clemens Grafe, who predicted profits will exceed analysts’ estimates by about 30 percent as companies cut costs and revenues rebound. “The market rally is fundamentally justified. Some scope for multiples expansion still remains, given attractive valuations."  In a supporting role, the IMF also issued a statement saying it expects Russia will see a “fairly rapid recovery." 

Surely this can't be the same Russia that's making headlines this morning as their government is selling off assets to cover their budget deficit?  The public deficit, the first since 1999, may reach 8.9 percent of gross domestic product, or about 3.4 trillion rubles ($112 billion) this year, the Finance Ministry said on Aug. 18.  

Russia’s economy shrank a record 10.9 percent in the second quarter as industry floundered and companies struggled with slumping demand for the their products at home and abroad.  Retail sales fell 9.8% in August and disposable income shrank.  Overdue bank loans reached 5.5 percent of total lending in July, compared with 5 percent a month earlier, according to the central bank. Overdue corporate loans jumped to 5.3 percent in July from 4.8 percent in June.  Well, at least they are in much better shape than we are in that regard…

This folks is news.  Despite the cynicism, THESE STORIES are moving the markets today but if you look at Mr. Murdoch's Journal or watch CNBC you won't even know they happened because they don't fit the current story that our economy is recovering and doesn't need more stimulus.  We won't say the nonsense was unexpected by us though - At 10:51 yesterday the combination of a low volume and holding our Tuesday levels led me to say to Members:

Note to all.  If you are up 20% on a bearish position then you need to be satisfied with it and either lighten up or set stops.  You can always get back in if we break through (in this case last Tuesday’s closing levels) but don’t assume the entire market will now turn on a dime and go down for days…  Make sure you are balanced above all other things and knnow which bullish or bearish positions are your favorites – so you can press the right buttons as we get a better sense of direction.

We caught that just right as the market headed straight up from there and now the futures are testing last week's highs.  And all it takes is a few kind words from the British Prime Minister and some emerging market cheerleading from the Gang of 12.  This has given the emerging markets a positive move for the first time in 3 days as investors scramble to guess who the upgrade fairy will visit next.  Of course it's a powerful thing to have the G20 (through Brown) promise Trillions of additional stimulus, which inflates commodities at the same time as the IBanks are upgrading commodity producing countries – not a train we want to stand in front of this morning.  Later, on the other hand, we may want to get back into EDZ (Emerging market ultra-bear) as a nice hedge, just in case all this turns out to be BS…

EU markets got off to a rockin' start but haven't done much since and are drifting back down to about +1% with an hour to go before the US open.  "Policy makers remain in a 'do-whatever-it-takes' mode to stimulate the economy and the financial markets, and we believe it is safe to say that the risk of sinking into a depression has been taken off the table," said Bob Doll of Black Rock – spreading the word for the Gang of 12 in Europe.  

We wisely picked up long positions on CAT and VZ yesterday.  This is the norm for us in early bargain-hunting mode as we're happy to buy more of quality stocks like those if the fall lower, plus we are hedged for 20% drops anyway so we're happy to add a few quality names.   The only other play we made was shorting GLD and that will hurt this morning but we planned on rolling into a higher strike if gold rose and now, painful though it may be, we'll already have that opportunity this morning.

LOW did not have good things to say in their outlook this morning ahead of an analyst meeting and the CEO of French luxury-goods maker Hermes says he isn’t optimistic about the next six months because of a delayed economic recovery in Japan, their biggest market.  “I’m not expecting to see the light of the tunnel before 2010,” Thomas said in a telephone interview yesterday from Milan, where he reopened a flagship store for the Paris-based company. The global financial crisis has a “good year to go, maybe more,” and he was “not optimistic at all” about the world economy, he added. “The Japanese economy is not good and we all feel it.”  I guess he missed Gordon Brown's little pep talk this morning….

However, Hermes may know what they are talking about as the ICSC Chain Store Sales Data shows that sales fell 2% last week (ending Sept 19th), erasing all the gains of the past month and then 100% more (less) than that!  Of course, no mention of this on CNBC or in the WSJ as it's not good news so nobody wants to hear it.  Isn't it nice that you are protected from this nasty data by the people you turn to for investing information? 

The Goldman Sachs sponsored ICSC index has been "surprisingly" more positive than the independent Johnson Redbook index all summer and has really helped to boost the retail sector despite the really poor actual numbers coming from the retailers themselves as statistics – even bogus ones – trump fundamentals in this market hands down.  The Redbook sales are out as well and they are headlining a 0.3% rise over the first 3 weeks in August, which sounds good but that's because of back-to-school shopping and the seasonally adjusted number is -2.3% from last year, so a little worse than the GS-sponsored version of sales.  Redbook said sales weakened in the latest week as back-to-school boosts faded. It noted discounters continue to perform well amid food and household-supply sales. In general, apparel remains weak as such chains and department stores saw "thin" traffic and "disappointing" volume. 

We are waiting on the Richmond Fed at 10am and at 5pm we get the Consumer Confidence numbers from Disney/ABC (aw gee fellahs, I wonder what they'll say).  The Fed begins their secret 2-day meeting at noon and they should be feeling good after telling our government to piss off when it was suggested by Congress, the President and Treasury that it would be a good idea to conduct a public review of the central bank's structure and governance.  I mentioned this yesterday but it's good to keep in mind who's wearing the pants in this relationship

Don't worry though, my favorite story of the morning is a happy one as the banks that we bailed out with Trillions of dollars of loans and guarantees are now going to return the favor and bail out the government

Senior regulators say they are seriously considering a plan to have the nation’s healthy banks lend billions of dollars to rescue the insurance fund that protects bank depositors. That would enable the fund, which is rapidly running out of money because of a wave of bank failures, to continue to rescue the sickest banks.  The plan, strongly supported by bankers and their lobbyists, would be a major reversal of fortune.  Bankers and their lobbyists like the idea because it is more attractive than the alternatives: yet another across-the-board emergency assessment on them, or tapping an existing $100 billion credit line to the Treasury.   

Sheila Bair would take bamboo shoots under her nails before going to Tim Geithner and the Treasury for help,” said Camden R. Fine, president of the Independent Community Bankers. “She’d do just about anything before going there.”

Borrowing from healthy banks, instead of the Treasury, has the advantage of keeping this in the family,” said Karen M. Thomas, executive vice president of government relations at the Independent Community Bankers of America, a trade group representing about 5,000 banks. “It is much better for perceptions than having the fund borrow from somewhere else.”

Since January the F.D.I.C. has seized 94 failing banks, causing a rapid decline in the deposit insurance fund. Despite a special assessment imposed on banks a few months ago to keep the fund afloat, its cash balance now stands at about $10 billion, a third of its size at the start of the year. The fund, which stands behind $4.8 trillion in insured deposits, could be wiped out by the failure of a single large bank, although the deposit insurance corporation could always seek a taxpayer bailout by borrowing from the Treasury to stay afloat.

So you see – everything is just fine!  The government goes $1.5Tn into debt and prints $2Tn in new money and takes on $8Tn in loan obligations and then the banks turn around and lend our government some of that newly printed money at a huge profit.  CAPITALISM – how could Michael Moore not love it

 


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  1. $ getting whacked so market is up.
     
    SLG gets downgraded to underperform …


  2. Singapore cuts stake in C by 45%.


  3. BXP downgraded by FBR.
     
    Everyone not on the take (cough, cough, Cramer) knows the REITs are wildly overvalued at these levels and that the fundies stink.


  4. Phil, its kind of shocking that anyone would listen to what Gordon Brown says !


  5. RSX will be a fan-fricken-tastik short eventually, but not yet. I bet it at least fills the gap into the low 30s from last Sept., but that might be a good first entry short position (using OTM calendars or something conservative).


  6. Phil:
    Confused about "intended positions" in the $100K portfolio. For instance, we were originally interested in a long put position in CROX at the right price. These intended trades aren’t available on Wall Street Survivor and didn’t show up in the last update posted here. How are we tracking them?


  7. So much for my stinking gap down open.  There’s a gap, just the wrong way!
     
    I think this guy has got it right.  The G20 should concentrate on getting a handle on derivatives.  But it’s probably too complicated for them to talk about.  All so called ‘leaders’ know how to do is spend money.  Looks as if they are going to their old playbook.  And as a result, we just continue our asset bubbles.  Stocks, bonds and commodities.  How does this help the economy?  It’s madness.
     
    http://www.cnbc.com/id/32952664


  8. Phil – is there any adjustments to make to our AMZN short calls since the stock is breaking out.


  9. Madness is all I have to say!

    $100KP AIG – Let’s take the 2011 $30 calls off the table for $27 ($2 trailing stop).  My reasoning is we can always add any two leaps but this is a 100% profit we can take off the table now and $53 is a ridiculous price for AIG.  That will leave us with a naked caller but we’ll roll them and split them into a put/call combo later (it’s just one contract). 

    Our levels are al gone and I don’t even have upside targets other than watching last week’s highes of Dow 9,850, S&P 1,075, Nasdaq 2,142 (past it), NYSE 7,065 and Russell 622 – if we break those we can take bullish plays and use the 3 of 5 rule for downside stops.

    Don’t forget we have the Fed tomorrow so anything can happen.  Nothing wrong with starting a scale-in on DIA Sept 30th puts and calls, looking for a violent move this week.  The $97 puts are .62 and the $99 calls are .67 so a 200-point move in either direction makes a winner but small entries as we’d love to roll down (or up) $1 for +.30 if we have an opportunity.

    EDZ is a buy at $6.97 for good portflio protection.  The Nov $7 calls can be sold for $1.10 and the Nov $6 puts can be sold for .55 for a net $5.32/5.66 entry which is 19% down from here (6% gains in emerging markets) with a 31% upside if called away at $7.


  10. AMZN looks like the pump du jour …


  11. DIA – Starting with the puts as there is no volume to this up move – just a load of pre-market BS so far


  12.  Phil,
     
    I don’t see dia puts and calls earlier than Oct 17. Help!


  13. Oldgoat – they are the Quarterlys.  Some brokers post them, others dont.  TOS puts them in red in the trading screen. Otherwise, don’t bother…..FWIW


  14. Phil:
    What are you DIA put interests?


  15. Out of TZA, small profit from yesterday afternoon, but NOT what I was looking for !


  16. FYI - Fed got $55.8B in bids from 83 bidders for its $75B, 28-day TAF auction (bid/cover ratio of 74%). Demand has grown significantly over the past two auctions (73% and today’s 74% vs. 0.66%, 0.38%, 0.58% and 0.32% in the previous four auctions).


  17. Phil, for the newcomers – when you add/remove positions to/from your 100k portfolio how do you anounce it? Via email, in the chatroom, or both? Thx


  18. I think we need to be ready for some possibly explosive breakouts in the commodity sector. I think gold might be about to break to new highs, and then copper, which has been pretty well-behaved, may follow. (I would not be short any of them here, needless to say.)  Brown’s kind of stimulus talk is all the pushers need and they could have gold at $1200 real fast.


  19. What do you think about rolling to 2x AMZN Oct 95c about now? …or better just to wait it out?  I don’t want my strong desire to be out of this trade get in the way of making the best decision. Thx.


  20. Dollar still way down but markets not holding it together.  Did they think Obama was going to reiterate what Brown said???

    LOL Cap!  You almost forget there are some real analysts out there like FBR who do their jobs…  Brown and Merkle both may lose their jobs this year.

    RSX/Eric – I agree but I find the EDZ a safer bet. 

    Richmond Fed disappointing – flat for the month at 14.

    CROX/Chaps – There is an order history tab and it does show the open orders.  Some do get earased and I do need to go through them to reup the positions.  I’m still getting used to this systems but you can see the CZL-OA March $5 puts with an offer for 5 at .70 – it just hasn’t filled yet and I’ve had no reason to chase

    Derivatives/Matt – They do have a handle on derivatives.  That’s why they are willing to up the bailout to $30Tn because they know if they don’t jump-start the economy, then there could be about $300Tn worth of derivatives collapsing down on top of them….

    AMZN/Stock – No change, they are at $90 and they are not worth $90 and the caller still has $2.50 of premium and the calls can be rolled to the Nov $95s better than even.  As long as we can roll up $5 even then we have no worries as that logic takes us to AMZN $95, $100, $105 (Jan), $110, $115, $120, $125, $130, $135 (June), $140, $145, $150, $155, $160, $165, $170.  When our price target for Jan 2011 on AMZN goes higher than $170 – then I will become concerned but, meanwhile, if they EVER fail to make +$5 over 30 days – we get to keep the money…

    DIA/Oldgoat – The Sept 30th $97 puts are BQDUS and they are now .65 but we’re looking bouncy so I’d still offer .60.  The DIA Sept 30 $99 calls are .59 so good to enter there.   The idea is to try to wriggle down to .50 each and then a 150-point move in either direction should be a profit.

    Volume even lower than yesterday.  May not hit 40M at 10:30. 

    CVX is shaping up to be a nice-looking short.  They ran ahead of XOM on the nat gas rebouind but that may end soon and they usually run neck and neck.  This is complicated as it’s an artificial sell/write where we take the March $80 puts for $10.50 and sell the Oct $70 puts for $2.10 and the Oct $75 calls for $1.70.  That puts you in the $80 short position for net $6.70 with a "call away" at $70 with a $3.30 (50%) profit and otherwise, of course, we roll the calls higher


  21. …answered my question in the above post. Cool cool.


  22. CVX – I think those would be Nov on the sell P/C side for those wanting to play.


  23. SNY – The maker of H1N1 vaccines and big drug maker has been making new highs past few days.
     http://finviz.com/quote.ashx?t=sny
    Likely a good buy here at $37.70 and selling the Nov $37.50 call now for $2.00?


  24. News we can use department:

    Life insurers, hit hard by soured real-estate investments, are trying to recoup their losses by boosting prices on life insurance while selling less of it, and by charging higher premiums for risk factors like obesity and hypertension. The moves, along with a more frugal consumer, contributed to a 23% drop in sales in H1, the worst in nearly 70 years.

    Lloyds (LYG) will sell residential mortgage-backed securities to investors this week, the first such deal from a U.K. lender in 16 months. "The deal is the latest sign that the market for European asset- and mortgage-backed securities is starting to reopen."  We’ll see how well it goes first. 

    Carnival (CCL): FQ3 EPS of $1.33 beats by $0.15. Revenue of $4.14B (-14%) vs. $4.06B. Sees Q4 EPS of $0.16-0.20 vs. $0.22 consensus. Shares +5.8% premarket.  Now that’s surprising!

    Macy’s (M +4.5%) efforts to ‘localize’ stores and empower regional management continues to gain traction, Citigroup’s Deborah Weinswig says, bumping shares to Buy from Hold while doubling price target to $30. The company launched its "My Macy’s" strategy last year.

    July FAHA Housing Price Index: U.S. home prices rose 0.3% vs. consensus of +0.5% consensus, and June’s 0.1% gain (revised from +0.5%). Pacific region was strongest at +1.6%. East South Central was weakest at -0.9%.

    A remarkable rise in Chinese imports means the global exporter may be running a current-account deficit by year-end.

    $100KP/Jrom – All moves are mentioned here when I make them but if the price isn’t met they can sit there for a while and I don’t announce when they fill.  That you can get by checking the portfolio.  Usually I send out moves by EMail as well and soon WSS will have some sort of notification system, which will really take the pressure off.

    Gold/Eric – I simply don’t believe it.  I’m worried now but I don’t see how they can possibly double the stimulus – it’s insane.  This may have more to do with the CBs dumping gold this week and trying to keep the price up than any real long-term bullish outlook for gold. 

    AMZN/Aclend – As I said above, they are still about 1/2 premium and they can be rolled to Nov $95s without DD so I wouldn’t jump the gun.  Margins are pretty high on a 2x roll so I would avoid it unless the action forces the move.   Yes, cool…. 

    CVX – Yes, sorry that was Nov puts and calls, the Octobers don’t pay well enough.  Thanks Pharm!

    Hey the Dow fell red!


  25. I agree fundamentals for gold don’t support such a  price Phil, but if there is enough money looking for a home, even the rumor of a big stimulus could cause a huge pop. Remember that the big players: banks, funds, etc., have access to a lot very cheap money right now, so if they see a way to speculate with it you can bet they will take it. I have no idea when that stops, but it could run a lot higher first.
    FSLR looking to fill its gap open, which could be a good entry for the brave (day trade only, though).


  26. $100K Portfolio/Open Orders in Wall Street Survivor: So under "Transaction History" those with "Type" equal to "TRADE" have filled, whereas those with "Type" equal to "RESTRICTED FUND" are open orders?


  27. TASR:
     Phil, Back on 9/6 you suggested a trade in the 100KP to buy 500 shares of TASR and to sell 5 Oct puts for .60. I was filled on that soon after but it is not listed in the portfolio on WSS.. Shouldn’t that be included or did you cancel that trade?


  28. Eric, you may want to take a look at TRF. It’s trading at a 23% premium to NAV.  The premium/discount on this one tends to fluctuate a lot. 


  29. Wow, that’s interesting soulfly thanks. It would have to be a straight short though since no options. Wouldn’t touch it yet in any case: I think there may be considerably more upside.


  30.  Phil,
    How about a longer term USL (or oil related) call? I think an attack on Iran is a real possibility.


  31. SNY/M2 – A little chasey up here but they are a really good company if you don’t mind the long-term hold.  If you buy them here and sell the Nov $37.50s, you are in for $35.75 with a max gain of $1.75.  If you sell the same calls and also the Jan $35 puts for $1.30 and DON’T buy the stock unless they break $38, you are in for net $34.25 and you stop out below $37.50 (.50 loss) which would put you in the stock for net $33.20 if it falls.  Of course that gets .50 more expensive each time it bobs up and down on you but it would have to cost you $2 more before it was worse than the covered call.

    ZION on the move again – that is often a rally sign (last time was last Wed, when we gained almost 200 points from the open to the next morning’s open). 

    Homeless money/Eric – I think oil makes a better looking speculative play than gold as oil is lagging gold by 100% since last summer so I don’t see it being widely selected as a relative upside play.   Almost the entirety of gold’s recent run from $890 in May to $1,020 now (14%) is attributable to the fall in the dollar from 87 to 76 (13%) while oil has gone from $52 to $72 (38%) in the same period.  So I think a rise in oil to 1,200 (20%) would have to be accompanied by a rise in oil of at least 40% to $100 and, since I think that is ridiculous and would destroy the global economy and send us reeling into a massive depression that would spur deflation and send gold back to $600 – I’m comfortable shorting gold a bit here.

    FSRL $170 calls can be sold naked for $4.80 and those can be rolled up to Nov $195s, which are now $4.50 so I like that short sale.

    WSS/Chaps – Yes, the "Restricted Funds" are for open but unfilled orders.


  32. Hi I lost the wall street survivor links and can’t find them, could somebody pls repost?


  33. VNO BXP SLG  all going crazy up today.
     
    Never mind that they have all been getting downgraded like crazy the last few days to sell or underperform.


  34. Phil – is FSLR the only play in the solar sector you like? What do you think of the more solid chinese companies like STP, YGE, and TSL? Do you think they are a good play now with climate change next on the docket (after health care)?


  35. ARNA:
    Phil, I have an ARNA calendar spread, long April 6 calls (bought for 1.64), short Oct 6 calls (sold for .93). The Oct’s are now .25 so I should take some profit and roll them but the Nov. 6′s are only at .60. Does that make the most sense, given the alternatives?


  36. TASR/Allen – I don’t remember that being for the $100KP, if so, I seem to have lost interest in it for some reason as they are no longer open but I really don’t think I intended them for that one. Perhaps I put in day orders but I do still like the play and that was a light entry where I believe we were waiting for a bounce to sell the $5 calls but .60 is a good price to get for the Oct $5 puts.  Note that those puts fell to .35 (up 42%) on the 14th and the $5 calls were .30 that day but the original play was a buy/write of the March puts and calls that was net $3.94/4.47.  As it’s still October, I have a hard time getting worked up about them at $4.64 on the long trade.  TASR is a 10-year hold to me, always a buy on the dips as they get sued or whatever (like BA). 

    USL/Oldgoat – If you must play oil bullish I would prefer the Apr $33s for $6.50, selling the Apr $37s for $4.30, which is $2.20 on the $4 spread so 82% if USL stays flat or goes higher and you can withstand a drop to $35.20, which they’ve pretty much held since March. 

    Did anyone notice that CNBC had analysts on pushing coal, interviewd the Peabody (BTU) CEO, who was bullish on coal and now have coal commercials running during spots – can they be more blatant sell-outs?

    WSS links/Steve:

    SRS back at $9 for all you cowboys out there:  You can sell naked $8 puts for .80 and that’s a nice start.  Also, the Jan $6/8 bull call spread is $1.10 (easier to fill on the way up) and that gives you a 20% downside protection for free


  37. ARNA/Allen – I would definitely take out the caller.  You can also sell the 5 Oct09 P for 40-5c.  I don’t see them failing here as they have a ton of support at the $5 area in the 3mo chart.  OREX and VVUS are 2X the share price compared to ARNA.  I think that they will all meet somewhere in the middle.


  38. A few months ago or so, I went long on the UNG Jan10 call at $4. Right now i have no callers or putters.Any recommended plays? thanks


  39. MPEL – if you missed the run in LVS and MGM, look at MPEL, Asian casinos.  I got in last month and it’s starting to move now.


  40. Hi PHIL: I have the Oct. $97 puts at $1.90,currently at $1.46. Should I roll up to Oct. $98 for $1.87 ?
    dflam 


  41. Chinese solar/Jrom – STP and LDK are the only solars I like other than, of course, my beloved SPWRA.  STP is in an iffy spot but LDK is still cheap and you can buy them at $9.43 and sell the Jan $9 calls for $1.50 and the Jan $8 puts for $1.20 for a net entry of $6.73/7.37, which is 33% up if called away and 20% down if put to you but you HAVE to be willing and able to DD at $5, just in case.  My picks don’t relate to like and dislike so much as timing and opportunity.  I pick stocks I like when they are beaten up and I short stocks I don’t like when they are flying too high (like FSLR today).  You can ask at any time about whatever but don’t take my silence on stocks as meaning anything other than I either haven’t noticed them or didn’t see a play I wanted to make…

    ARNA/Allen – I agree with Pharm.  That last .25 is going to still be .10 in 3 weeks so you have .15 to gain or .05 per week if all goes great, which means those puts are now pointless and can only stop you from getting gains.  You are in for net .71 so I would buy them back for .25 (net .96) and sell the Nov $5 calls for $1 (net -.04) and then spend $1.20 to roll to the Apr $3s (net $1.16) where you have a 72% upside at $5 and you are protected down to $4.16 at no additional cost.  If ARNA moves higher, you can roll the caller to the Jan $6s (now $1.05) and that would give you a $3 upside spread.  Put selling is not necessary but fun if you don’t mind owning them long-term.

    UNG/Drum – I recommend that next time you buy a call and it goes from $4 to $1, you either DD or roll, either one of which would have gotten you out of trouble.  If you are not prepared to DD or roll at $1, then you should have been out at $3.50.  Letting it sit meant you weren’t able to be happy when they came 150% off the bottom last week and now they are back down to up "just" 100% and no particular help to you.  If you don’t mind staying with them long-term you can roll to the 2011 $7s for $4.80 (+$2.80) and sell the 2011 $11s for $2.80 (+0) and you are in a $4 spread for $2 net but it’s a long way to go to get even.  I’d sell the Jan $10 puts for .90 and spend $1.45 to roll down to the Jan $8s and sell the Nov $11s for $1.20, which puts you in a $3 spread after taking .90 off the table so net $3.90 if UNG holds $11 but not a very nice downside if they fail so keep that in mind. 


  42. PALM is going haywire again today, any suggestions?


  43. CCL that is curious they are close to their year ago highs yet, Carnival expects earnings to be between 16 cents and 20 cents, down from the 47 cents per share logged a year earlier. Analysts on average expected 23 cents per share


  44. Nat Gas – Wonder what T. Boone pays networks to keep them quoting him on the NatGas based trucks. Bloomberg at it repeatedly today and CNBC was doing so past weeks.
    They should really run this with a disclaimer ‘Paid Segment’ – perhaps no one has more to gain personally if such a proposal were adopted than Boone…


  45. FAS   $2.70 for selling the Oct 100 calls …. seems like a gamble worth taking


  46. GLD  My position is +3 Jan 85 / – 3 Oct 97.    I’m planning on keeping the trade open for a while, does it makes sense to roll my longs from Jan 85 -> Jun 90 for a $1 credit?


  47. MPEL/Mr. M – fun idea!  Bearing in mind this seems to be a REALLY speculative play, you can sell the 2011 $12.50 puts for $6.20 and buy the 2011 $10 puts for $4.20 (and $2 net spread) and you are in for a $2 credit with a max loss of .50 and a possible $2 upside (400%) if things go well.  If they do not, the 2011 $20/17.50 bear put spread is net $2 so you could probably get out with a very small loss for quite a while if you change your mind.

    DIA/Dflam – Those puts are down to $1.35 now and no, I wouldn’t do the roll as it costs you .40 and you gain just .12 in delta so not worth it yet (and so much time to go).  I’d rather see you focus on selling 1/2 the $98s, now $1.75, for no less than $1.60 and then use that .80 per share to roll up to the $99 puts (that spread is currently .85) if you have to.  Those have a .56 delta and, of course, you can always roll the 1/2 cover of the $98 puts to a full cover of the $95 puts (now .80) which would put you in a $4 spread for the same net $1.46 if DIA hits $95, wheras now you would need $93 to get $4 back.

    PALM /Blair – Way to crazy for me.

    CCL/Kustomz – I can see buying them though as they’ve obviously done an amazing job of managing costs and beating expectations in a really rough environment.  That gives me faith that they’ll get back to the $50s one day so not a bad long-term addition.  Not that I want them particularly but I can understand where they fit in a diversified portflio.

    TBoone – Paid by doing a $3Bn wind-farm deal with GE last year.  They owe him forever now.

    FAS/Eph – Don’t do it!!   That is just 3% on the XLF away and a 10% move in XLF (say they do another bailout or change a reg) would shoot FAS up $27.  This is like shorting SKF at $90 last year - it seemed like a good idea but it bankrupted many traders. 


  48. I have a new computer.  Can you post the WSS links? I’m trying to see if I have some incorrect positions – I have 5 short Oct $90 puts and calls, plus  5 short Jan $80 puts.


  49. Phil – advice on  Baidu OCT put spread which is down 50%: short 370 put (initial 21.5 now 7.80) and long 390 put (initial 33.07 now 13.90.) If sentiment is bullish, shouldn’t best course be to roll or close out?


  50. RSX bearish plays:  Jan $29/27 bear put spread for $1.  Also, buying Jan $31 calls for $1.25, selling Oct $28 calls for $1 (Nov $30 calls are also $1 if roll is needed). 

    Volume just 75M at 12:30, so so low and we’re hitting resistance at Friday’s highs but with the Fed coming up, anything can happen.  Best to keep balanced and ride this out for now. 

    The DIA $97 puts can now be rolled up to the $98 puts for .30 and that’s a worthwhle move as it puts us in the $98 puts for .90 and the $99 calls for .60 so $1.50 and a 200-point move in either direction is a 33% profit at least

    MSFT flying on this news:

    Bing (MSFT +1.1%) took 9.3% of the U.S. search market in comScore’s August survey, with total searches up 6.7% from July, while Google (GOOG +0.9%) and Yahoo (YHOO -0.7%) were both down marginally. Goldman Sachs is impressed: "We believe that Microsoft will continue to build on these early gains to form a strong presence in the online advertising market, a potentially needle-moving success for the company."


  51. Phil, I just posted a question.  It says it’s "awaiting moderation".    Here’s the question:
     
    I have a new computer.  Can you post the WSS links? I’m trying to see if I have some incorrect positions – I have 5 short Oct $90 puts and calls, plus  5 short Jan $80 puts.


  52. FAS   I did a 1-lot trade already, but will heed your cautious words and put a stop in at 3.20.   I’ll risk $50 (maybe $100 on a real gap) for my education.  


  53. Phil – TZA  – already DD and rolled and now hold OCT spread Short $15 put, Long $10 put. Current price puts me -3.90 less 1.77 credit means I am sitting on 2.13 net loss – about 2/3rds buried. Would you recommend holding, rolling or just get out. thanks


  54. phil,
    what would be a good new entry play for aapl?


  55. What a huge imbalance between SRS and IYR today.  No one wants IYR so they just kill SRS.  I don’t know how they get away with this stuff.


  56. Phil – I have been in/out today and yesterday could you pls clarify this trade: The DIA $97 puts can now be rolled up to the $98 puts for .30 and that’s a worthwhle move as it puts us in the $98 puts for .90 and the $99 calls for .60 so $1.50 and a 200-point move in either direction is a 33% profit at least. Right now I hold DIA DEC 99 Mattress puts and DIA OCT 98 puts – no covers.


  57. I see SRS leading the S&P.  Moves in SRS are coming before the S&P reacts.  This is the most bogus $ I’ve seen in a while.


  58. ok; 2 headlines:  P&G quitting US chamber of cmmerce over climate views;  and GM shutting a TN plant in NOV.  Both hit at 1:12; market dropped a quick 20. 
     
    Can either do that ?  GM maybe; we know car sales are gonna suck.


  59. Pontiac MICh plant to close end of Sep


  60. Phil,
    Would now be a good time to press my bearish bets? I’ve had a few short (long put) positions going against me for the last month, all off about 50-60%. I’m thinking I should DD here. Any other advice?  :-)    Here they are:
    WOR Dec 10p; DRE Dec 7.50p;   ESS Jan 50p;   FII Jan 20p;   NVLS Dec 15p


  61. Phil LeBeau … a disgrace; talks about a 3rd shift at GM plants but doesn’t mention plant closings ??


  62. GILD, is a great leap to sell calls against.  It is channeling between 45 and 47 with some juicy premiums.  Sell current month 46′s and then buy back when it drops by 50%.  Oh yeah, the company also is very fundamentally sound.


  63. GLD/Eph – That roll makes no sense at all as you are giving up $5 in position for $1 and losing upside delta while you currently have callers that are protecting you well and you may have to roll to a 2x if gold keeps going higher.  Right now the Oct $97s are $3.70 and you can roll them about even to the Nov $100s, which are out of the money so no danger yet.  IF GLD flies up, then you look at a possible 2x roll to the Nov $104s (now $2.20) and THEN you want to look at a roll-up to 2x the March $98s (now $8.20) as you’d still have a $6 advantage on your callers with +3 months to roll and that’s a $6 advantage on 2x vs your curreent $12 advantage on 1x so a good trade-off IF you have to.  Overall, I think if the Fed and the G20 don’t give inflation hawks some real meat this week, then gold will drop off fast.

    WSS links/Java – See 11:38 comment.

    BIDU/Concreata – For sure buy back the $370 putter for $7.80.  That leaves you in the $390 put for net $19.37 and down $6.  If you can roll up to the $400 puts for $4 or less, I would do that too but this will not go well if the markets keep rising and then you would have to sell $390 puts to someone else for $12 and roll out to the Nove $400 puts and hope for the best. 

    Moderation/Java – That’s because you weren’t signed in. 

    FAS/Eph – Should be fun to play – crazy assed ETF…

    TZA/Concreata – You effectively have a naked putter that can be rolled to the Jan $12.50 puts around even so I’d ask for the even roll and see if you get it (if TZA goes up about .50 you should).  There’s nothing wrong with the play as long as you have time.

    AAPL/High – $145 is where I want to enter.  That means I’d be willing to sell the Jan $165 puts naked for $7 as they can be rolled down to Apr $150 puts and then I’m fine.  That’s about the only way I’d play them at the moment.

    SRS/Matt – That’s all the fun of they system isn’t it?  Actually IYR is $40 with 12M in volum ($480M) and SRS is $9 with 20M in volume ($180M) so it’s pretty balanced. 

    DIA/Concreata – Sorry that was just today’s Oct put and call spread ahead of the Fed.  Yours is fine but a more bearish play so hopefully you have some bullish offsets.


  64. Phil LeBeau is a apologist (homer) for all of the industries he covers.


  65. have stock long 68.90 want to sell oct 70c against it. what do you think


  66. Phil, usually SRS has twice the move of IYR in the opposite direction.  Today, SRS has 3x the move of IYR.  And of course, it’s to downside.  That’s why I’ve gotten away from hedging SRS with IYR and just short SRS directly.  I’m convinced there is plenty of naked shorting going on with SRS.. which drives up IYR.


  67. INTC CEO says China is the engine of strength at the moment, amazing how no one finds that disturbing…


  68. Phil:
    Lots of volume in SII Oct $32 calls.  Do you follow this outfit?  Possible buy-out target for bigger servicers??


  69. Hi, Pharmboy,
    (1) Is ARNA still a good buy?  What do you suggest for a scale-in entry?
    (2) I read your comments on VNDA a few days ago.  I wasn’t sure whether you liked or didn’t like VNDA.  Can you clarify?
    Thanks!


  70. jomama, weren’t  you the one who drinks Pappy van Winkle bourbon?  This month’s Gourmet mag has a picture of a guy drinking some with the bottle next to him.  Not sure what it has to do with the story but the bottle is clearly Pappy.  It’s the first I’ve seen of it.


  71. PG/Cap – They also just signed Serena Williams as their Tampax spokesperson, I guess girls can relate to her having an "off" day.  As to GM – I didn’t even know they still made Pontiacs…

    Puts/Aclend – Well I wouldn’t make a blanket statement on those.  WOR is strong and miles away from $10 so I wouldn’t put a dime into those.  DRE is overbought but the stock has to drop 40% to put you in the money and your delta is .07 so not sure what your plan would be.  ESS also caught up in the REIT run and you are miles out of the money in a hopeless position, FII is in a very strong uptreand and the Jan $20s have a 100% spread between bid and ask so you lose 50% as soon as you buy more.  NVLS is also on a strong trend in an up sector and the Dec $15 puts are 30% out of the money with virtually no chance of recovery.  On the whole, hopefully this is a good lesson on why you should always sell premium and never buy it.   Also, you need a miracle to get even on these and you need the same miracle to get even if you DD a 50% loss to drop it to 25% so you would be better served taking the cash (another 50%) and putting it into something like an SDS Dec $35/37 bull put spread that pays 100% if ANY part of the market declines  between now and them.  The TWM Jan $23/25s also work at $1.

    GILD/Jo – Nice trade!

    Mystery stock/Yodi - I would go more conservative at the moment, I think this rally is BS and I know I always say it and that’s because it’s been BS since 9,300 at least. 

    SRS/Matt – Good point.

    INTC/Matt – Well they usually chime in when Goldman needs some "official" confirmation on the economy.  Don’t forget AAPL doing well in China with Intel chips.  I think AAPL is pretty much driving half of what the chip sector sees as demand this Q. 

    SII/Bvar – I don’t like that whole sector and their business is in decline so I wouldn’t buy them but I wouldn’t have bought PER for 70% over trade either so what do I know? 

    Bye bye FSLR – thanks for playing our game again.  Better luck next time!


  72. If anyone is interested in prop trading (trade firm capital, get paid only on% of profits), let me know…newparadigmz@hotmail.com


  73. Hi Phil, been traveling. My new Iphone is great for tracking but slow & cumbersome for actual trades (while driving down the freeway). I would hate to have to rely on it on a day when much quick trading might be necessary. therefore, vacation proofing ones porfolio is still important.
    Re 100K, for some reason i didn’t get the C Dec 4 short put, for $.46. now at $.29. What do you think abt selling the Mar 4 put, now at $.53?


  74. Does anyone know what is going on with PALM the last few days? I thought selling shares into the market diluted the price, not jack it up 20+% in two days.


  75. INTC …didnt think my statement was that bearish


  76. Phil,
     
    What do you think of BXP Apr 75/ Apr 60 put spread for 6.75?? I know that you are not a fan of spreads. BXP is at 70.
    thanks


  77. ATVI
    Activision has ordered a recall of Wolfenstein in Germany and while nobody seems to be quite sure why, I think we can all make a pretty good guess.
    It’s been more than six decades but Germany is apparently still a bit touchy about all that war business back in the 30s and 40s. It turns out that touching off a world-wide conflagration that consumed 60 million souls is the sort of thing that weighs a little heavy on the national psyche and thus, images of swastikas and other Nazi-related symbols are strictly verboten in German videogames.

    This should not come as a big surprise to anyone; German authorities banned the original Wolfenstein 3-D in 1994 due to the presence of swastikas and the use of "Horst Wessel Lied," the official anthem of the Nazi party, as the game’s theme song. It doesn’t seem terribly likely that Activision would overlook all that history prior to launching Raven’s recent namesake shooter in the country, yet speculation is that some sort of Nazi connection managed to slip through the cracks and into the German edition of the game.
    http://www.escapistmagazine.com/news/view/94909-Wolfenstein-Recalled-in-Germany


  78. Yep, that’s about what I was expecting!  :-)    …point well-taken


  79. Phil: my SPWRA position needs action,
    have stock with gain (25 to 32$),
    have callers with oct 25 which are DITM, coverage is 2 for 3,
    no putters,
    how about rolling out to jan 33 or so to get coverage 3 for 3 ???


  80. Quite a few Nas leaders look like they are running out of steam right here (BIDU, FSLR, AAPL, etc.). We should, in a rational world (ROFL), start to see some nervous selling before tomorrow’s report.


  81. ARNA – so I was down on them after approval, and this weekend turned me on an about face. I think long term with them, so this little pullback is fine.  I entered @ 5.16 and have also sold the 5 Oct09P for 55c on the same day.  Note how those Puts have not MOVED much at all, and the stock is down almost 8%.  No calls to cover yet, b’c I think a deal is now eminent.  VVUS and OREX are both 2X the price of ARNA.
     
    VNDA – well, speculation continues on a buyout of them for fanapt (schitzophrenia).  Market cap is 350M or so, and if their drug gains steam (has lost a lot on the rumor mongering), then they could move higher.  there is a big gap there, but I cannot see them filling it unless disaster happens and they miss something, someone dies, etc. on the drug.


  82. More junk stocks moving big… AHR, GKK.   Their businesses are (unfortunately) dead, dead, dead.


  83. Phil
    DIA SEP PUTS- Would appreciate your comments on the trade expecting a sell off after this week.
    SELL DIA SEP 97
    BUY DIA SEP 98


  84. matt, yeah – i am a big pappy fan. need another bottle.


  85. Pharmboy, how many contracts did you end up getting of CLDX?


  86. Phil – BIDU – I admit I don’t get it - Why buy back the short $370 put – shouldn’t I wait until Fed report is out tomorrow because Baidu could continue its insane run higher? (If anything, shouldn’t I sell maybe half of the long 390?) or maybe just sit tight?
    BIDU/Concreata – For sure buy back the $370 putter for $7.80.  That leaves you in the $390 put for net $19.37 and down $6.  If you can roll up to the $400 puts for $4 or less, I would do that too but this will not go well if the markets keep rising and then you would have to sell $390 puts to someone else for $12 and roll out to the Nove $400 puts and hope for the best. 


  87. Edmunds.com predicts September car sales of just 8.8M/year, a 28-year low and a 38% plunge from August’s CARS-induced 14.1M blowout. "Cash for Clunkers was supposed to prime the pump," Edmunds’ Jeremy Anwyl says, "but that is a physics concept, and economics is quite different. Demand has dropped off significantly since the program ended."

    A smaller share of Americans married, drove to work alone, owned their own home or moved to a new residence last year than the year before.  More lived in overcrowded housing. Property values declined.  Those were among the findings released Monday in the Census Bureau’s annual American Community Survey,  The statistics also showed that real median household income declined nationwide, rising in only five states — New York, New Jersey, Kansas, Louisiana and Texas — compared with 33 states in 2007. Income inequality was highest in metropolitan New York, where the top fifth of households received 20 times as much as the bottom fifth. 

    C/Morx – I’d sell the Dec $5 puts for .80, that’s a nice entry anyway and then you can roll down if you really have to.

    PALM/Sthom – Selling shares to raise cash at full value is not really dillutive.  It all depends what they do with the cash next.  Of course the move up is overdone but why should they be different?

    BXP/HP – Actually, the way the contracts are running, we’ve done a lot of verticals lately.  BUT, the idea of doing a vertical is to PROTECT yourself and NOT pay premium.  You do not accomplish that with the Apr $75s at $12.50, selling the Apr $60s for $5.75 for net $6.75 on the $15 spread as your b/e is $68.25 with a $15 max return at $60 or lower.  I’d rather go for the Jan $90/75 puts spread for $11 and sell the $75 calls for $4.75 too as that puts you in for net $6.25 with a break even at $79.38 (because you’d owe the caller money) and a $15 payback at $75 or lower, which is higher than your starting point for getting a penny back on the other trade.  Since it’s Jan, you can also roll the whole set back if there are problems

    ATVI/Kustoms – I used to love that Wolfenstein game, haven’t played it in many, many years but it was very cool when it first went on-line and you would join up with random sqads…

    Point/Aclend – Great, hopefully after a while you’ll be expecting it BEFORE you get into the trade in the first place.  8-)

    SPWRA/RMM – Let’s say you don’t mind owing more at $26.  You can sell the Jan $29 puts for $3 and use that money (when appropriate) to roll the Oct $25 callers ($7.60) up to Dec $31s, now $4.40, which is buying you $6 more upside for net .20 (plus the risk of assignment). 

    Nervous/Eric – What is there to be nervous about?   It’s everybody’s pal, the Fed, coming to make a statement on how much free money we’re going to be getting for Christmas.

    DIA/Chakra – Those are tough veritcals as you are either going to win or lose, there isn’t much escape if you are wrong.  From a targeting standpoint, keep in mind that Sept 30th is the end of Q3 and there may be all kind of reasons they get pumped up.  I’d rather see you selling the Sept $98 calls for $1.10 against the Oct $100 calls for $1 as the Dow has to hit $99 before you owe back $1 and the Sept $99 calls are currently .60 so it looks like you would lose .30-.40 if they jump higher vs the .40 you lose if the Dow simply doesn’t go down in 8 days.  On the downside, anything you have left is profit and you can always sell again in October for a bearish vertical if you want. 

    BIDU/Concreata – Because you made more than 50% with more than 2 weeks to go.  That means in the next 4 weeks you will make less than 50%, which means it’s no longer good protection and, if BIDU falls again, you would not benefit as the putter would gain with your own long put.  There is no point in playing a volatilie stock for a spread if you don’t have the convicition of your position to take advantage of 50% gains in the options you sell or rolling opportunities – by sitting in a vertical and taking no action at all, you may as well have just placed a simple put or call bet and waited to see what would happen.  Had you rolled up to the $400s for $4 you would now be in the $400 puts for $19.37 and even right now and then you could have sold the $380 puts for $11 and been in a $10 higher spread for net $8.37 – that wouldn’t have been a terrible adjustment…

    Corporate insiders continue to sell heavily into the rally, dumping 6.31 shares for every one they bought in Vickers’ latest tally. That’s up from 4.16 two months ago, and a March low of 0.34. Jonathan Moreland, who analyses these things, says he’s even more concerned by a complete lack of significant new purchases by insiders.

    In another "lost decade" look, the Atlantic depicts how the jobless recovery is worse than just "without precedent" – it’s becoming the trend.


  88. CLDX/jromeha – 1/2 position…..5


  89. Phil – DIA cover – Well, I am too bearish with my DIA position ,would you recommend anything before today’s close?, Right now I hold DIA DEC 99 Mattress puts and DIA OCT 98 puts – no covers.
    DIA/Concreata – Sorry that was just today’s Oct put and call spread ahead of the Fed.  Yours is fine but a more bearish play so hopefully you have some bullish offsets.


  90. Phil
    Any trade on e- trade ETFC stock on buyout etc.?


  91.  Phil, at what point would we roll our DEC 100 puts out to JAN 100 or even further?  


  92. Phil,
    Since I cannot sell naked calls, how can the BXP play be restructured??
    thanks


  93. I don’t know about the rest of you.. but I’m about at my wits end with this casino.  There isn’t enough bogus in bogus to describe it.
     
    Notice how we don’t need news anymore to move us.  They’ve given up trying to explain why we just go up.


  94. Phil

    don’t laugh  but I’m worried about the OCT 5 UYG short calls – I sold them too cheap at .55cents – what should I do?


  95.  Does anyone on here trade FOREX very much.  I am in graduate school and I share an office with several people.  The guy behind me used to be a Banker in Russia and just finished up his Phd in math and he trades the dollar/euro and dollar/pound all the time.  


  96. Pharmboy – ARNA: BUY NOV7C & SELL NOV5P is a good way to finance upside potential (and/or get discount on stock) … AND being paid to wait.


  97. cwan120 - re. VNDA, I have posted here a few times in the last few months about how I play this roller coaster different ways.  I did well day-trading this stock in August but no longer have the time, but it has frequent and large moves to play if you’re bold.  Currently, I hold the next month’s 10 calls and then when the stock hits 15 I sell the current month 15 calls, and close them out when the stock crashes back down and the shorts are up 80%+.  This worked perfectly two times in September.  I just rolled my OCT 10s to NOV 10s so I’m ready to cover on the next run to 15. 


  98. This market is so messed up;  they (Fed, Treasury, SEC) have allowed it to become an irrational casino.


  99. Matt … funny, I did not see your casino comment until just now — I am right there w/ you brudda.


  100. I am an infrequent poster, but thinking with my brain we should correct. But looking at the calendar, I see end of quarter looming as a big EMOTIONAL road block for fund managers who are going to have to show their hands soon, so I don’t feel like a correction is likely till early October.. Just my thoughts


  101. Phil,
    How’s the close looking to you ? Do they break through today or pre-market tomorrow ? Or NOT ?


  102. ARNA/Diamond – I like it! 
     
    Look at that straight line on FOE.  Still has a ton of upside potential….


  103. Cap / Craigzooka:  It’s becoming common knowledge.. and really the ONLY explanation, that the reflation agenda of the gov’t is boosting asset classes.  There really isn’t anything we can do but either buy assets or short the dollar.  I don’t trade FOREX and I can’t seem to buy anything because I don’t want to partake in the bubble .  But that Russian is probably making gobs of $.


  104. DIA/Concreata - It’s very hard to take a bullish play but something like the buy/writes we’ve looked at the last couple of days or long-term play on PFE or C or something else we don’t mind owning for the very long-term.

    ETFC/QC – There’s always a rumor but nothing ever happens.  I never play them but you can buyy them for $1.90 and April $2 calls fror .55 and Apr $2 puts for .55 and that’s net .80/1.40 with a $2 call away and a b/e 25% below here.

    Dec $100 puts/Craig – I give up, what stock?

    BXP/HP – You can buy the $90s to cover for .90.

    Bogus/Matt – Roll with it baby!

    UYG/Red – You sold them naked?  Well, you just have to work them off, maybe split them up by selling the Nove $6 puts and calls for $1.20 and then see where you are in Nov for the next roll. 

    Forex/Craig – Too crazy for me!

    Speaking of irrational casinos – check out who’s winning all the money:

    Sources say the Fed is in secretive talks with bond dealers to restart "reverse repurchase agreements" in an effort to siphon some of the $1T-or-so it’s pumped into the economy. Unused since last December, reverse repos take cash out of circulation when the Fed sells securities to its 18 primary dealers for a set duration.

    Morgan Stanley (MS) and Goldman Sachs (GS) may be the biggest beneficiaries of the recent upturn in M&A. Morgan has advised on 90 U.S. deals totalling a surprsing $270B this year, making it #1. Goldman is #1 worldwide, but #2 in the U.S., with 80 deals worth $239B under its belt in 2009.

    Even if they are "only" getting 5% on these deals (doubt it) that’s $25Bn going to Paulson’s pals now that the competition has been eliminated! 

    EOQ/Jamie – I agree, lots of motivation to keep things up for 8 more days. 

    Close/JRW – Voluem still very light so very stickable into the close.   Just 120M at 3:30 is super low.  NOT breaking higher is not a good sign for the bulls – basically, they are doing everything they can to keep us where we were last Thursday – not too impressive.


  105. Phil/UYG

    no not naked – not quite – half covered with Jan 11 4′s

    but I’m not sure what is meant by "split them up"


  106. LOL – This is funny, I’ve been invited to speak at an International Swine Flu Conference in Canada in November.  If I’m worried about swine flu – the last thing I want to do is travel to Canada and get in a big hotel with hundreds of health workers from all over the world!   8-)

    UYG/Red – I mean roll the call to the Nov $6 puts AND calls.  That way you can’t lose on both sides and UYG doesn’t usually make such a big move that you’d end up owing the same.  Let’s say you sold 10 Oct $5s at .55, now $1.25.  If you roll them to 6 Nove $6s at .70 and 6 Nov $6 puts at .50 it’s an "even" roll and UYG would have to move higher than $7.25 or lower than $4.75 for you to owe the same $1.25 that you do now but, even then, it would be on 40% less contracts – see how cool that is?


  107. Well.. this was an unusual close.  It’s rare on a day like this we don’t close damn near the high of the day.  Of course, they still have a minute!
     
    Phil, I didn’t know you were an expert on pig flu?!


  108. Well, we made back yesterday’s losses – that’s something I guess but not much with all the stimulus thrown at us today.  CNBC even had Canada’s PM saying stimulus over and over. 

    Flu/Matt – They want me to talk about economic consequences.  I’ll be in Texas for Thanksgiving otherwise it would be fun – I love Toronto…


  109. Well, what a fitting finish for the kind of day I had.  Earlier in the day I’d set a stop limit to short SRS if it dropped to 8.76.  After that, I decided to cover my long at a higher price and did so.. but didn’t cancel the stop order.  Wouldn’t you know they dropped SRS in the last minute down to 8.76 triggering my short only to spring back up to 8.8 at the close.  I’m now overweight to the short side. They are some greedy bastards.  Those programs don’t leave anything on the table they don’t have to.  They’ll take anything.  Even if it’s $40.


  110. Simple question Phil RSX bear spread do you buy the 29 put or do you sell the 29 put


  111. just sell naked index puts at the money. Ive done my SPX, but the DIA 100s for the quarter have to be pretty attractive.


  112.  woopsy, sorry Phil, I must have lost my mind there.  On our DIA mattress.  We are currently in the DEC 100′s.  The roll up to the 101′s isnt really close as TOS showed me $.60 for most of the day.  As we get closer to DEC expiration, I was wondering when we would roll them out to JAN or even further?


  113.  Phil, Sometimes I forget that your not a part of the conversation I have going on in my head.


  114. RSX/Yodi – Buying the Jan $29 puts, selling the Jan $27 puts for net $1.


  115. DIA/Craig – Oh those Dec $100s.  I’m still in the $99 puts for some reason, didn’t fill the roll so I couldn’t think of what $100s you meant…  Anyway, yes when you are down to a 45 day spread to the front-month, it is always time to roll – sooner if the opportunity presents itself, which would be a big drop that puts you in the money so you take some off the table and roll out to a lower put.  If that never happens over 3 months – it’s a hell of a market! 

    As to conversations in your head.  I find it helps to have one of them take notes for the group…  8-)


  116. Ahh thanks for the heads up.  On the DIA’s I never got a fill on the roll for $.50  but I did get a fill at $.55.  Which I paid for by keeping half covered with the oct 96′s.  I chose the 96′s because they could be rolled to the Nov 90′s which could be rolled to the DEC 80-somethings all before doubling down.  Given that there is such a large escape route,  I was wondering why you stayed fully uncovered as opposed to half covered.  I was also wondering why you always choose to cover with the at the money puts as opposed to something out of the money which seems to give a little better cushion. 


  117. Phil
    Thanks for the DIA SEP98/OCT100 Call  strategy. In addition I plan to BUY the Oct 97 DIA PUTS as this would atleast allow me some wiggle room. Any comments or improvements on that?  
    BTW do we get any discount at TOS. I opened a new account but could not find PSW in the drop down list of News Letter providers.


  118. Phil……Holding URE (closed today $6.73) and have it covered with Oct $6 calls at $ .90, with a time value of  16 cents.  Shouldn’t I be rolling these October calls out to a later month at a higher strike, or getting rid of them altogether?  At this point, if URE continues to push higher I won’t reap additional profits with this present setup.  


  119. Phil
    The Canadian swine flu conference is a Bilderberger setup.  Decline the invite !


  120. DIA/Craig – I choose covers near the money because I’m actively trading them and looking to pick up .25 or .50 whenever I can.  If I were going away for a few days, I’d go with covers that are about 200 points down, just in case.  As long as you don’t sell a delat higher than .50, you can’t get in downside trouble and generally you can roll down $2-$3 to the next month so if I have Dec $99 puts and I’m selling Oct $98s, I know I can roll them to Nov $95s and Dec $92s at worst.  If it’s a 1/2 cover, then I can, of course, roll much lower and as long as I can get a double on the leap, I’m happy. 

    DIA/Chakra – Just be careful you don’t end up betting against yourself.   As to TOS, just email scott@thinkorswim.com, he’s our rep and ask him for the PSW discount rate. 

    URE/Iflan – It depends what your goal is on this one.  You can take a lot off the table and roll to 2x the Nov $6/7 vertical at .50 if you are still bullish as that puts $5.75 back in your pocket with a .50 upside.  I’m not so bullish on CRE though so I’d be more cautious.   At the moment you are well protected and you will pick up that .15.  Better to wait and see as you can always spend .20 to roll them to the Nov $7s if you really feel that bullish or you can pick up another .30 in premium rolling across to the Nov $6s.  Also, you can roll to the Nove $6s and sell the $6 puts for .50 and you don’t lose that .50 until your $1.25 caller is wiped out.  So many fun things you can do!

    Bilderberger/Hinners – You mean I’m finally in?!?  That’s great.  Hopefully I don’t come back all brain-washed or something…  8-)


  121. Phil, you said VZ/Red – I think we did this in the weekend wrap-up but, with a 6.4% dividend, the play is to buy them for $29.50 and sell the 2012 $25 puts and $30 calls for $7.75 for net $21.75/23.38 so that’s 38% if called away and their $1.90 dividend is like getting another 8.5% a year which, on the whole, makes it a very nice place to park your money for 27 months.
    What do you think of a similar play with T.  Buying the stock for $27 selling the 2011 25p and 30c for $4.81 net $22.14/23.57.  If called 35%, annualized to 26% with a 6% dividend.  I think you mentioned T before, but I don’t remember if you like them as much as VZ or not. (T is not a good symbol to do a search/find in text)


  122. Phil – thank you for explaining "split them up" – it changed the way I look at it – but then it occurred to me – why didn’t you suggest buying some more Jan 11 $4 calls for cover? In any case I have been wondering how a leap can in practice act as a cover for a current month short call – wouldn’t the exercise of a leap incur prohibitive expenses? Perhaps you have already explained this somewhere else?


  123. Oh – I forget – I’m thinking about UYG


  124. Does anyone know how to get rid of the annoying "Alert" that ToS sends me whenever I log in telling me I’m a pattern day trader and the reason why they are calling me that. None of which is true by the way. I did ask a ToS trade desk guy one day but he said he didn’t know and to just ignore it and he hung up.