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Testy Tuesday – Dow 9,650, Berkshire $60 Edition!

Wheee, this is fun!

Just two weeks ago, on October 17th, I warned in the Weekly Wrap-Up that it was "Dow 10,000 or Bust" for the next week and we failed that one and last Wednesday we were looking to hold NYSE 6,900 and THAT failed too.  Now we enter into the second phase of our limbo game where the deep-voiced guy asks the question "how low can you go?" and we’ll be setting our next bar at our long-standing 9,650 target for the Dow,  which we are already hitting in pre-market trading.  If that fails, we’ll have to look down to S&P 1,000.  As you can see from Jesse’s Chart, we took a nice bounce off serious resistance yesterday but we’re just not feeling it yet, even though the market is now as technically oversold as it was in March

Yesterday was like a roller coaster and my first Alert to Members of the morning targeted 9,775 as the on/off line for our bullish/bearish posture on our DIA covers.  We whipped past that line right about 10 am as we got good reports from ISM, Pending Home Sales and Construction Spending but by 12:45 we had broken back down so I sent out an Alert calling to refocus back to 55% bearish by adding the DIA Jan $100 ($5) and Jan $102 puts ($6.20), already covered by the Nov $99 puts ($2.50). 

The reason we mess around with our covers is we don’t want to flip in and out of our option positions, which are generally either straight bearish or well-hedged long positions, is because options carry a relatively large bid/ask spread and cost you money every time you get in and out.  So, on the whole, we’d rather let our over-riding cover plays, like our DIA spread, adjust our stance as conditions change, making a single adjustment that keeps us balanced as we ride out the market waves. 

It’s been a couple of weeks since we had a good, old-fashioned stick save but we got a mother of one yesterday (as seen in Dave Fry’s chart) which was right on schedule as Kustomz bought it up in Member Chat at 3:09 and I agreed at 3:19 that "It does feel like a pre-stick move" and we grabbed VIX $25 puts at .85 to protect ourselves from a sudden surge in complacency.

By 3:33, my next comment to Members was: "The stick lives!" but we gave a little too much credit to the move and grabbed some DDM $39 cals for $1.25 for those of us who were worried we were too bearish.  Again, the idea is not to shift our existing bearish positions but to cover against something catastrophic, like a 200-point gap up at the open over some stimulus nonsense. 

We also have a Fed meeting tomorrow and lots of jobs numbers – with the markets this oversold, it pays to be cautious.  If we are really going to break down, we have a LONG way to go.  Note that the oversold condition of late February was actually improving into March 9th WHILE the Dow plunged from 7,500 to 6,500 (13%) in 3 weeks. 

So we will be rolling our upside protection even as we enjoy the ride down, just as we rolled our downside protection all the way to DIA Jan $103 puts (which we sold on the spike down) after starting with Dec $96 puts back in early October.  We did a tiny bit of bottom fishing yesterday with option plays on AIB, ARNA, VLO and YRCW but, other than that, we were not very enthusiastic about the buy side and AIG, ARNA and YRCW are all speculative plays while VLO is the only one we are really looking at as a long-term investment (we always do if we can net a $16.50 or less entry).  

VLO is our value investing play but a bigger value investor than me was on the prowl yesterday as our man Warren Buffett just announced a $34Bn buyout ($100/share) of the 76% of BNI he doesn’t already own.  That’s roughly 33% over yesterday’s close and Buffett also has a good portion of UNP (one I would buy on this news) so someone is believing in a recovery down here (or at least a massive pending chunk of government funding for rails next year).  That should save the Transports from breaking below the 200 dma at 1,725, a level they were testing in pre-market trading as we’ve been selling off sharply since 2am.  

I’m also excited that Berkshire’s B-shares are being split 50 to 1 to smooth out this cash and stock deal ($40 cash + 1 BRK.B share at $60 for each BNI share) as this will finally stimulate option trading in the very thinly traded Berkshire stock.  At $3,265 a share, there are only 19 open March $3,300 contacts at $160 – that’s no fun at all!  At 40% off the 2007 highs, Berkshire is one of my favorite stocks but, due to lack of options, we haven’t bought it since it was $2,750 in the spring as it’s simply too dull to hold.  This stock split, more so than anything else that’s happened lately, may be one of the single best investing opportunities of the decade.   Stay tuned as we will be all over this one as the options are issued – there is nothing I’d rather put in a solid long-term buy/write virtual portfolio than Berkshire Hathaway stock! 

Will it be enough to save our futures this morning, which, as I mentioned, fell off a cliff at 2am?  Hopefully not, as we need a proper test of 9,650.  What killed us this morning was YET ANOTHER 1.8% drop in the Hang Seng, which finished back at the low of the day AGAIN in one of the most manipulated, BS market moves I’ve ever witnessed.  It is very clear at this point that China simply will not allow more than a 1.8% daily loss (and the more controlled Shanghai Composite was up 1.2%), which means it will take 13 down days to level test 16,000 and if we assume a normal distribution of positive days, we’re probably not going to be getting lower than 18,000 this month, regardless of the actual selling pressure that will mount if they blow the 50 dma at 21,000.

This was a very poor showing for a low-volume trading day (Japan was closed for a holiday) as the Dollar sank below 90-Yen again once the BOJ took their eye off the ball.  “We’re tending towards the view that we will see some relapse next year as people basically lose faith in governments’ ability to continue to come to the rescue,” said Peter Elston, a Singapore-based strategist at Aberdeen Asset Management.  Investor concern about the withdrawal of stimulus policies has helped drag the MSCI Asia Pacific Index, which includes Japan, down by 5.8 percent from this year’s high on Oct. 20. The U.S. must increase stimulus spending or risk “many years of high unemployment,” Paul Krugman wrote in the New York Times yesterday.  

Europe is down 1.5% this morning, led down by the continuing bank panic (which is why we gambled on AIB) as RBS and LYG get ANOTHER $51Bn of bailout money.  We’ll be picking up more LYG as they near $5 but not RBS, who are kind of scary.  Both banks are now controlled by the British government but LYG is getting relatively minor aid as the bailout funding in this round is the government buying about 1/4 of their $35Bn fund-raising that will, if successful, take them OUT of government control.  “There is now a very fine line between RBS being nationalized,” said Danny Gabay, director of Fathom Consulting in London and a former Bank of England economist. “This contrasts with Lloyds willing to fight harder for its independence.”  

Also on the International front (sort of) the IMF is selling 200 metric tons of gold to the Reserve Bank of India for $6.7Bn, which works out to $1,042 an ounce.  That should knock gold off the $1,060 mark and give us a good test of $1,050 and, failing that, could send gold lower which would push the dollar higher which would push oil lower ($78 at yesterday’s close), which will damage the markets so let’s keep a close eye on this little drama as it plays out.  Gold bugs are actually very fortunate that the IMF found a large buyer for 0.125% of the world’s total supply of gold or things could have gotten nasty on the open market.  Is the IMF calling a good top?   Maybe but they still have another 200 tons to sell based on their September announcement. 

Overall, I’m still very worried about consumer spending.  JNJ just announced they are cutting 7% of their work-force and if people are cutting back on Band-Aids, then we really are in trouble!   We already knew people were cutting back 5% on their food spending (which is 15% of all consumer spending) and ADM just announced still-soft earnings, down 53% from last year on significantly lower margins (6.5% vs 8.8%).  There are only 50 shopping days until Christmas and ICSC Same-Store Sales plunged from an annualized 2.8% improvement last week back to a more realistic 1.9% level.  Redbook Retail Sales (which are not spun by Goldman Sachs like ICSC are) show just a 0.9% improvement over last year’s horrific crash

We get Factory Orders for September and they should be up 1.2% because retailers, who use CIT to factor, would have lined up to max out their lines of credit ahead of that bankruptcy, which will make it impossible for tens of thousands of retailers to factor their receivables until they get new financing (good luck!).  We also get our first full month of post-Clunker Auto Sales during the day and tomorrow is going to be wild with Challenger Job Cuts, ADP Employment, ISM Services, Crude Inventories and the Fed so we’ll be holding onto/rolling our DDMs, looking for a good bounce off 9,650 if the Dow would be so kind as to give us a test today, once again betting on a nice 200-point Dow move in either direction to pay off our spreads

Buffett’s big bet makes me think a second round of stimulus is right around the corner so we will be very mindful of our levels and the possible snap-back from oversold as we now look to see if our downside levles hold up.


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  1. Good morning Phil,
    With the market as oversold as it is, and looking like it wanted to move up a bit yesterday with some follow-through today, I bought some TNA @ 35.70.  I tried to sell it at 36 on the close, but didn’t get it.  Now it looks like a 35.50 or so open.  Would you just take the loss, hold it (because we are oversold) or is there another mitigating play to protect me frmo a 200 point downdraft?

  2. MA with a nice beat, we’ll see how much of that was priced in. RL with a beat too, but I doubt it goes much higher.
    BNI shorts just got killed; I bet there were a lot of them because it had been a good ride.

  3. GS raises F price target to $11 from $9.50 and raises HGSI from $24 to $30.

  4. Phil
    What is the trade on HGSI today; I was traveling and missed the post  Yesterday

  5. Hi Phil HGSI Jan strangle short 30/20 call/put 2.35 credit break even 17.65/32.35 margin 1224.00 your thoughts pls thanks

  6. Being long in the DDM Nov 38 Call with a basis of $2.30  do you have a preferred roll or move for this one?

  7. Phil, what are your thoughts on YRCW – what do you think their odds of going bk are?  Is there really a huge paradigm shift towards the rails etc?  It seems like FEDex should be buying yrcw on the cheap?

  8. qcmike
    HGSI last 25.28 now 24.26/24.30

  9. Guys, could you show me what kind of play we had yesterday for LTP  VLO, looks like I missed it

  10. VLO/tchay – Of course, since $16.50 is our target entry and you can sell the Dec $17 puts naked for .95, that’s not a bad spot to start scaling in but if oil crashes, they could be back at $13 so you have to REALLY want them.

  11. SPPI – just moved above their 200d MA.  I still like the 2.5 Jan11 for 2.3.  For shorter term, 2.5 Jan10 for 2.1, but why not buy 12 mo out for 20c more.  I have been selling 5s for 20-30c on spikes.

  12. TNA/Jcm – I think you want to sit out the test of 9,650 but not if we break down from here.   Tomorrow is a Fed day and we’ve already seen the stick save come back yesterday so someone wants the market up (and we can even question the timing of Buffett’s blockbuster announcement as a possible government-sanctioned market booster). 

    RL with a crushing beat!  How do they do it?  MA report was upbeat too – it will be interesting to see how this shakes out in the market. 

    HGSI/AC – Well we expected that, that’s why I was against shorting them, even at $25 but now we can see how much gas is left in that tank.  F is crazy to play while they are fighting with the unions. 

    HGSI/QC – No trade, we were bullish into the announcement and won on an artificial buy/write. 

    HGSI/Yodi – With a $30 top I kind of like it as long as you are prepared to cover with long calls if they take off (I can’t see worrying about the downside too much). 

    DDM/Sarah – I’d sell the Dec $37 for $3 and roll to the Jan $35s at $4.70 which costs you about net .20 and puts you in a $2 spread for $2.50ish with a month to roll.  If you get more bullish you can always add some higher calls as you are now well-hedged to the downside. 

    YRCW/Jo -  If I were Buffett I would buy them next and creat a coordinated trucking and rail powerhouse.  I don’t think they’re going to get all that much pressure from banks who certainly don’t want to take possession of 80,000 rigs and Buffett believes the transports are coming back (DJT up 4.3% this morning) so I’d say less than 50% chance YRCW fails, maybe as little as 1/3. 

    VLO/Tcha – You didn’t miss anything as they are down again!  We like them at $16.50 so selling the Dec $17 puts naked for $1 is a nice EARLY, SMALL entry.

    Oh thanks, Pharm!

    Nice recovery already on the Dow – see, nothing to worry about.  Volume is pathetic…

    Still looking to retake Thursday’s close if they want to look bullish:  Dow 9,962, S&P 1,066, Nas 2,097, NYSE 6,955 and Russell 580.   SOX 300 is needed to the upside too. 

    All we care about to the downside is 9,650 as that is a VERY big failure.  We have RUT 550 to watch too and 6,700 on the NYSE

    Oil $77.50 is a good up/down indicator and gold is still holding $1,060 so they can’t blame the dollar for this market move down.

  13. thanx Pharmboy

  14. MA breaking down hard. I’m getting very careful here because the risk of a bigger breakdown in the broader markets is high, IMO.

  15. LYG at $5.58, selling Dec $5  puts and calls for $1.30 nets $4.28/4.64.

    Lloyds (LYG +2.2%) opts out of the expensive U.K. asset-protection scheme, saying it will raise £21B, including a £13.5B rights issue. Gov’t to maintain its 43% stake in the bank. The move subjects Lloyds to more modest EU demands: Lloyds said it will dispose of "a retail banking business" with a 4.6% market share and about 19% of its mortgage portfolio; sell £180B in noncore assets; and limit acquisitions over the next 3-4 years.

    20-minute volume is 20M – 1M per minute is not going to do it if they want to prove something. 

  16. RL pulling back, I’m taking the chance to get out of yesterday’s short call calendars for a small (.15) gain. Keeping some long-dated put calendars going there though.

  17. SNDK broke down across the 50dma, does that mean anything? 20/19 put vertical for .44?

  18. ENR, which is a GS Conviction buy (probably not after today though), is getting hammered for missing earnings. Any thoughts on this stock, Phil?

  19. DIA – Don’t forget, ideally we are 1/2 covered with Sept $99 puts ($2.50) against a mix of Jan $100 and Jan $102 puts but, of course, our goal is to roll the $100 puts, now $5.45 up to the $102 puts, now $6.60 for .50 per $1 so we have all Jan $102 puts

    On the DDMs – if the Dow is rejected at 9.780 again, better off taking a small loss (in at $1.25) than letting it fly down on us again.  That play was to cover a poosible gap up, during the day we can always add DIA puts if we break higher again.  To be clear though, I’m fine with the DDMs if we do break up over 9,780 and hold it as that was what we thought would happen when we got them yesterday

    RL/Eric – I’m still liking the calendar, it’s very hard for them to justify $75 but, overall, aren’t you glad you ddn’t go straight short?

    PEET STILL going up!!  SBUX making some progress from yesterday’s pick…

    You can still sell BNI 2011 $95 puts naked for $4.  The nice thing is, if the deal is done at $100 this Jan, you are out of the trade 12 month early.  You can eliminate most of the margin req by buying the Jan $90 puts for .40 but you’ll have to roll if the deal isn’t done by Jan.

    SNDK/Blair – It means they are either in big trouble or they are flushing out.   I can’t see shorting them here fundamentally, too much good news in that space.

  20. ENR/Ac – Huge miss and a punishing drop.  I think you should wait for the downgrade police and they will have a tough time getting back over $56 anyway (200 dma) so hopefully you get an entry back around $50 as they aren’t a bad long-term play (we NEED batteries) but look at this statement regarding overall market fundamentals:

    Overall, we remain cautious regarding consumption trends in most of our categories in the near term as retailer inventory investment remains uncertain, the speed of the economic recovery, especially as it relates to consumer spending, is slow, and device trends in the battery category remain difficult to assess given the recent economic downturn. In the beginning of fiscal 2009, we indicated that achievement of our annual earnings per share growth target, which remains our key focus, was highly unlikely given the currency headwinds and the economic downturn. Directionally, fiscal 2009 turned out about as expected. We expect a more stable global economy and somewhat stronger brand categories in 2010 as consumer confidence and spending are expected to recover over time.

    "Good" news from the EU is boosting the market:

    EU lifts its 2010-2011 growth forecast to 0.75% and 1.5% respectively, but cautions its outlook is "highly uncertain" given that "significant fiscal and monetary policy measures" are supporting the recovery. Predicting government deficits will swell to 7.5% of GDP, Commission says a "protracted period of fiscal consolidation will have to follow at some stage to put public debt back on a sustainable footing."

    This is the cheapest way to pump the markets, just say nice things – literally filling the market bubble with hot air.  At least Buffett put his money where his mouth is but I am virtually certain he expects to benefit from either a direct bailout of the rails or line leasing fees as we move to put up some high-speed rail projects.  BNI has 32,000 miles of tracks in most of the Eastern US so they are in prime position to profit from a high-speed rail system utilizing their tracks.

  21. phil,
    sndk cut from neutral to underperform by webush securities

  22. After watching AMZN Phil, it will be a long time before I’m naked short straddles ahead of earnings, if ever. I don’t think RL is going to hold up, but I am amazed they beat that big.

  23. A picture is  worth a thousand words lol launch of iphone in China:

  24. phil:
    have stocks in KBR,MO,PGH,SPWRA: what covers for those ?

  25. This is really crappy market movement considering we have a $34Bn acquisition in the transport space PLUS the BDK acquisition – those two deals were almost tailor-made to boost confidence in the economy don’t you think?

    SNDK/High – Well they get very tempting as a long soon. 

    RL/Eric – Purely an earnings beat.  Sales were down 4% from a crappy Q3 last year that sent them down from $45 to $31 and is off 6%.  They are still projecting continued declines for fiscal 2010 and it doesn’t sound like they have any more to give on the cost-cutting side.  Profits on $1.37Bn in sales are just $178M, up from $161M last year on $1.43Bn in sales so all they had to do was save 5% of costs and there’s your number but this is nothing to get excited about. 

  26. Gold – Phil, would you short it here?

  27. IBN – Good Put spread. Sell Nov 33 Put and buy Jan 29 Put for  a small $0.10 credit.
    I own this from a few days ago at better prices. I expect IBN to go higher (35-36) in the next month or so – along with $SPX going higher in the 1050-1080 range.

  28. Phil, I totally don’t get what you are advising Jcm…..r u saying don’t get involve since market going down to test 9650? or u expect market up tomorrow, so stick with TNA
    TNA/Jcm – I think you want to sit out the test of 9,650 but not if we break down from here.   Tomorrow is a Fed day and we’ve already seen the stick save come back yesterday so someone wants the market up …..

  29. BEAT has been taken to the wood shed.  What’s the deal?

  30. Unfortunately. I already had sold a naked Nov 65p on them thinking the same investing premise regarding long-term potential and the need for batteries but this is a little more than I expected.  There are no Dec 50 p but there are Feb ones. I’m thinking at least sell Nov 55c to offset the loss then take possession of the stock and write covered calls against it ad nauseum. I would not mind rolling and doubling down but not in order to take 200 shares of stock only to recoup my money through an option play. What do you think?

  31. Lynn,
    FWIW, I sold the TNA for a B/E.  I bought it yesterday for a short term play and didn’t really want to hold it overnight.  I certainly don’t want to hold it for a test of 9650.  I can always buy them back when I’m more confident of an upward move.  The market is just whipsawing all over the place and I dont’ have the stomach for a naked long or short of anything right now.

  32. lynn,
    If you have it, sit tight unless we break levels. (555 on the Russell).

  33. Gold – so it has moved another $10 since my last post..

  34. Huge dollar drop just now; it’s looking like it will fill the gap. That’s keeping us propped up but not sparking a rally yet.
    Gold about to test the all time highs.

  35. Gold jumping, bonds getting killed, they have to calm things down some how. Nothing easier than a little panic in the market to make it look like a false breakout.

  36. Really dicey situation here. All the conditions are in place for the market to rip higher (dollar down, commodities up, oversold, buyouts, etc.). But it can’t yet.

  37. Cap,
    They just called a bottom in CRE, and I’m in that April 9/14 SRS !

  38. China/Steve – Yep but if you read the hyena press here you would think there’s not a single person buying them.

    Covers/RMM – With KBR you can do the Dec $20 buy/write for $2.70 (assuming you want these long-term), MO Dec $18 puts and calls pay $1.10, PGH Apr $7.50 puts adn calls are $2.35 and that one is a dividend play and SPWRA I love down here so I would not cover and just sell the Dec $24 puts for $1.65.

    Gold/Fab – I’d go for the GLLs as you get the most bang for the buck.  You can pick up the Apr $11/12 bull call spread for .50 and even fund it by selling the Apr $11 puts at $1.50 (sell one put, buy 3 call spreads).  I’m always encouraged when there are no puts priced lower (like the Apr $11 puts) as it indicates NO ONE believes they are needed.  If you go for the spread you need to take the downside seriously and always consider covering a move under $11.  You can offset with some UGL Apr $35 puts sold short at $1.85 as it’s possible to win on both ends but this can be confusing if you are not used to dealing with volatile ultras.

    Holy cow, gold rocked up to $1,080 as the dollar was attacked just then.  Oil touched $78.50 and that was shortable but I missed it.   This is pure BS and should be ignored. 

    IBN/M2 – Why not just sell the naked puts?  You can always roll them down and, if you like the stock long-term, there’s really no downside to owning them cheaper than this. 

    TNA/Lynn – At the time (the open) I was saying don’t get spooked by the move down.  Now that we had a nice run up, he needs to decide if he wants to stay in the risk or get out as we could go either way from 9,780.  As I said, our position should be long and short – looking for a Dow move up to 9,950 or down to 9,550 over the next couple of days.  We very well may get both…

    BEAT/SS – A $100M company doesn’t need a reason to go up and down 5% a day!   I think there are comptitive concerns and also dillution concerns as they are raising more capital at the heart of the dip. 

    ENR/Ac – Well, like I said I expect more downside so you have a $11 putter to dispose of.  You will not get a better price on the Feb $50 calls than you will right now ($6.30) as the premium is still high from the sudden drop.  That and a roll to the Feb $55 puts at $5 and you have taken the $11 putter and made a $5 spread between $50 and $55.  If they head higher, you can buy more calls or if they head lower, you can buy more puts. 

    Volume 64M at 11:10 – in our normal range and 9,780 does not look like it’s breaking.

    Gold move up is based on India’s purchase.  Not a word about how the IMF sold….

    ERY $13 puts can be sold for $1.50 if you want to own ERY at $11.50.

  39. JRW — who called a bottom in CRE?

  40. Phil,
    what do you think about ENR buy May60s @3.25 and sell Dec55s @2.2 ?

  41. Santelli busting a vein.

  42. JRW — who called a bottom in CRE ??

  43. SRS – Glad to be out…..

  44. RIMM on its way to fill the gap

  45. Head of research at MIT

  46. Chart wise; it looks to me like SRS is in the process of breaking out; IYR breaking down; and those areas are being tested today.
    I think this is a great time to get short CRE.

  47. RIMM having a nice day today. 

    Landry’s Restaurants (LNY) accepts $1.2B offer from its CEO, Tilman J. Fertitta, to be acquired for $14.75/share in cash – a 37% premium to Monday’s close. Fertitta already owns 55.1% of the company. Shares +27.9% to $13.76.  That’s a big consumer bet.

    Prices of investment-grade commercial real estate rose 4.4% in Q3, according to MIT CRE’s transaction-based index, possibly signaling an end to the sector’s year-long downward spiral. "One quarter does not a trend make and we are still well below normal trading volume," David Geltner, director of research at MIT/CRE, said. "Nevertheless, this is the strongest sign of a bottom that we’ve had in two years."

    ENR/Tcha – I’d let them come down first.  They are almost certain to get a downgrade and test $50.

  48. S&P Raises Ford Motor Co. Rtg To B- From CCC+

  49. GLL $11s for .40 are a very fun play on gold selling off.  They were $1 last week.

  50. Hi Phil PGH Apr 7.5 short put and call  break even 9.82 on the call side surely does you not leave with much margin as the stock trades now for 9.21 You obviously need to hold the stock to give it away so where is the beef ? thanks

  51. Phil what are you advising with BNI if anything?

  52. Phil: have stock FCG, IHI, LDK, MDT, SAP: what covers, if any,  please ?

  53. Phil, I have a synthetic long in INFY for NOV09 – short 47.5 put and long 50 call. I also have long 40 put for margin cover. Any ideas?

  54. GDX Nov 46 calls spreads on TOS are 1.88/1.92 and   1.92/1.98 on IB….any one can explain.

  55. Phil, GLL $11 at .4? i check, the $11 call is at $1.4.
    am i not understanding what you’re talking about?
    Also, on ur first post of Gold. u mean buying the April 11 and 12 call then sell $11 put and (why u said sell one put and buy 3 call spread this one? is it buy 2 call, sell one put?). Plus sell UGL april put at 1.85
    I am not trading, I am trying to learn your language and strategies by following what you say.

  56. WB sees high oil prices killing the trucking industry, that’s why hes placed such a huge bet on BPI…..time will tell if he over payed….BPI is a commodity mover…ask buffet if he’d place such a huge bet on manufacturing in this country..what a American my arse

  57. Magret on TOS 1.93/1.99

  58. Phil any plays selling GLD calls?

  59. PGH/Yodi – What?  PGH pays an 8.5% dividend, that’s the whole play. 

    BNI/Red – I liked the idea of selling the 2011 $95 puts for $4 as it’s likely that Berkshire completes the transaction and likely it gets done in a few months. 

    Covers/RMM – FCG was a take the money and run play when nat gas hit $5.  If you are going to stick with it I’d take the $3.50 for the March $16 puts and calls so you can ride out a drop back to $13.  IHI I’m looking to get back into now that they’ve come down but still worried they may sell back to $45.  Since you arleady have it I’d go with the Feb $50 calls at $1.45 and the $45 puts at $1.60.  MDT is a great entry here at $35.80 and you can pick up $3 for selling the Dec $36 calls for $1.50 and the $35 puts for $1.25 but you are better off owning the 2011 $27.50s for $9.20 (net $36.70) than the stock for $26 more.   SAP missed and I don’t like them, you are better off with MSFT long-term.  On the bright side, if you want to keep them, you can get $5 for the Jan $45 puts and calls.

    INFY/EMC – They will get ugly fast if they turn down.  I don’t understand how this is a synthetic long when all you really did was bet twice in the same direction (the short put and the long call) and then, just to make sure you spend even more premium, you take a long put too.  If you want to be bullish on INFY, take the $2.10 you owe the $47.50 putter and the .30 you have left in your long call and whatever you have in your put and just take the Apr $42.50/47.50 bull call spread for $3, which pays 66% if INFY goes up $1 and has no margin at all.  You can offset that by selling the Apr $37.50 puts for $1.60 but not if that causes margin issues.   I do not like this play overall because INFY is very toppy after a more than 100% run – this is just how I would play it IF I were bullish. 

    "It’s increasingly a more important factor driving the foreclosure crisis," Moody’s Mark Zandi says of the growing uptrend in walkaways, also known as strategic defaults and voluntary foreclosures. According to Citigroup’s (C) mortgage unit, one in five borrowers who defaults is able to pay his mortgage.

    Wow, oil up to $79, following gold and THAT is a short on the futures (now $78.85) with a stop at $79.22 looking for $78.10 with a .20 trailing stop starting at $78.55

  60. Yodl, obviously they keep changing but there is always a diffrenece .05 to .1 between the respective bids and offer…..

  61. GLL $11s are at $0.40/$0.45.

  62. o, he meant GLL nov $11 calls!
    confused since he was talking about April 11 call earlier

  63. Head scratcher

    Audi today reported October sales in the U.S. of 7,358 luxury performance cars and SUVs, a result that approached the all-time October record set by the brand a year earlier.
    The latest full-month sales only trailed the 7,443 Audi vehicles sold in October 2008 following the introduction of the all-new Audi A4, and the 7,420 sold in October 2007, when the U.S. luxury car market was nearing its sales peak in the U.S.

  64. magret
    It differs from stk to stk  and on the supply and demand

  65. Phil: with market scratching lower, my FAZ stock and AMZN short calls dec 110 have recovered but have now "only" a loss of 1500$ together:should I just take the loss and close or what ?

  66. GDX/Magret – IB does their own internall clearing and the entire process is very inefficient.  I have no hard evidence but I have gravitated to TOS because I tend to feel I get better fills there. 

    GLL/Lynn – OK, you  need to change brokers right now!  The bid/ask is .40/.45 on TOS and even Yahoo Finance so you are getting massively ripped off if that’s a quote you are seeing for the Nov $11 calls on GLL.  The price of the Apr $11 put is $1.50 so you sell that put for $1.50 and that $1.50 pays for (and here’s where calculus comes in handy) 3 spreads that have a net cost of $1.50.  We arrive at this number by taking .50 on one spread (.50) and adding it to the cost of a second spread (.50 + .50 = $1) and then adding that sum to the cost of a third spread (.50 + .50 + .50 = $1.50).  Then we look at the $1.50 we get from selling the Apr $11 puts and we find (after much calculation and testing) that $1.50 = $1.50.  Since we sell 1 (one) Apr $11 put for $1.50 and we have determined that $1.50 can also be expressed at .50 + .50 + .50, which we will call "3 .50 spreads," then a savvy mathematician can postulate that you can sell one (1) April $11 put to pay for three (3) April $11/12 call spreads.  This is, of course, just a hypothesis and has yet to withstand the centuries of rigorous testing that would be required before it is labeled a theorem but by then the options will have likely expired…  8-)

    As to the UGL sales.  UGL is the opposite of GLL and the above bet is a very bullish bet that GLL will NOT go down.  Should GLL go down then UGL will go up so selling the UGL put that is 20% out of the money for $1.85 means that if GLL does fall 20% to $9, you willl owe your putter $2 but you will NOT owe the UGL putter his money back so you are near even.  If, on the other hand, GLL goes up 20% to $13, you will have 3 times $1 for the $11/12 spread and you will not owe the $11 putter anything.  20% off UGL’s price of $44 would be $35.20 so it would take MORE than a 20% move in GLL before you owe the UGL putter any money and then, of course, you can always roll the putter along and make the whole play again since you have to win one side or the other (and possibly both). 

    Wow, yet another attempt at 9,780!   They popped oil over $79 and gold over $1,080 so it’s now or never!

  67. BNI: Is there a possibility that Buffett runs into any issue on anti-trust?  Doesn’t he also own stocks on other railroad companies?  Or, if it is not anti-trust, some other issues?
    Just want to see what are the down sides?

  68. Out of TNA from yesterday afternoon at 36.60, +3% and feeling good about it !!

  69. GLD/Foss – I like the UGL/GLL spread better.  Selling GLD short in a run away move like this can be suicide. 

    HGSI popping. 

    DIA $99 puts are still $2.67, if we move up, the $100 puts can be sold (to make a full cover) for $3.10 (now $3.25) as a momentum play with tight stops.  I’m still thinking we don’t break over so I am a little slow on the trigger but clearly they are giving it all they’ve got and I won’t be too surprised if we do pop up here

    Porsche (POAHF.PK) October U.S. sales: +15% to 1,642 vehicles, its third straight month of Y/Y increases. Since Oct. 17 launch, 360 Panamera sedans sold. Boxster/Cayman sports cars up 77%. (PR)

    FAZ/AMZN/RMM – If you are not comfortable with them, of course get out.  As I mentioned in the post, I’m leaning towards just covering with upside momentum plays as there are no short positions I don’t think will pay off by Thanksgiving. 

    BNI/Cwan – I doubt it, he may have to divest UNP but no reason he can’t own BNI.

    TNA/JRW – Nicely done!

  70. RIMM on its way to fill the gap  how do we know when its done it? It went into the zone but does it have to retrace more of the gap yet?
    I am believing that a close above 58 (the gap to point) is encouraging?

  71. Oh, Phil, Please don’t be that harsh on Lynn, who is just trying to learn the lingo.

  72. phil,
    that drop in the $ seemed a little rigged!

  73. Disaster protection/Phil – In looking at the "Disaster Protection" plays from Thursday, I am interested to understand the reasons for suggesting longer term calls on the Ultra shorts as opposed to puts on the Ultra longs.  It seems the put spreads can eliminate the slippage risk present in the call spreads. 

  74. cwan -
    Seems like your biggest risk is that the market really tanks – and sends berkshire stock 20% lower -
    If you read the "common questions" section on the BNI site – you will see that they set a collar on Berkshire stock between 80k – 125k – if Berkshire were to fall below the 80k level - BNI shareholders would get a fixed amount - rather than an amount = to $100 per share. 

  75. DIA Mattress: Phil, what’s the general rule of thumb in terms of picking a strike to sell covers.
    Let’s say I have no covers right now, and I want to sell 1/2 cover Nov puts.  Do I pick $99 strike or $100 strike?  And why?

  76. Phil: what is your projection for NG ?
    my FCG is up 16.5 % green.
    With winter coming, will NG not go up ?

  77. phil,
    the dow just completely ignored those last two drops in the $ !!!

  78. Phil,  have some AMZN 100C calenders, Jan-Nov…thinkin of rollin Nov callers to Dec 100 or Jan 105′s?  ..any rec’s here?  TIA. 

  79. Hey Phil,
    I’m a new member here at PSW, and glad to be aboard! I noticed your comments about Berkshire’s B-shares as a good long-term buy/write play when they become optionable; do you currently see any other decent long-term plays that could be appropriate for the LTP strategy as described in the "K1 project," despite the run-up over the last months?

  80. how do we know when its done it?

    When the gap is filled its done

  81. kustomz,
    careful, aapl closed the gap a/h and then a day later during prime time and now is below the gap!!

  82.  Phil
    I’m in the GLD Mar 86′s, full cover with the Nov 98′s – any suggestions for taking advantage of the run up?

  83. Highland I’m talking about the opening gap down on RIMM when it was trading 59 area

  84. When the gap is filled its done you mean it has to trade down to 45.62 close from April 1st?

  85. From Monday: Cardionet (BEAT Quote) fell by 41 cents, or 6.9%, to $5.50 in the premarket session after the company said it was disappointed that the Centers for Medicare and Medicaid Services hasn’t established a national pricing reimbursement rate for mobile cardiovascular telemetry in the Medicare final rule for the physician fee schedule for 2010. Reimbursement for mobile cardiovascular telemetry will continue to be carrier priced by Highmark Medicare Services, the company said. The three-month average daily volume for Cardionet is 996,000, according to Yahoo! Finance. Reimbursement is the crux of their model, and if the gov’t is cutting back or going to decrease their rate, then revenues will get hit.  They still have no debt and a P’E of 10, so I am holding on.
    HBAN CEO bought 140K shares FWIW today.

  86. kustomz,
    understand but gap mechanics are pretty tricky for any stock!

  87. Steve, I’m talking about filling the gap back up to 59.69 on RIMM today….your talking about filling a long term down trend

  88. phew I see!

  89. Ford (F) October U.S. sales: +2.6% to 132,483 vehicles. Fusion +24.1% to 13,445 units; Escape +26.1% to 12,471. Expedition -21.1%; Econoline -32.9%

    Daimler (DAI) October U.S. sales: +9.4% to 18,854 vehicles. Mercedes-Benz +21.3% to 18,193, and Smart -70.4% to 661.

    These are better than expected numbers!

    I’ll be good Cwan – promise!  I just miss math class…

    Dollar/High – The dollar is $1.47 to the Euro and $1.64 to the Pound (and, of course, 90.3 Yen) so not lower than it was.   Copper is $2.95 but silver is back to $17 (up 3%), which is how much gold is up for the day.  I’m pretty sure that they are simply using the IMF deal with India to cause a huge run in gold so they can finally dump it out but it’s a tough posiiton to stick to when a 3% move is $30. 

    Disaster/SS – Because you tie up margin and don’t get 177% returns, you get a loss less bang for your buck.  Ideally, if you have $80K bullish and fear losing $16,000 on a big drop then you can cover a 177% positon with $5K that returns $13K and eliminates half the downside while a continued move up should net you much more than $5K between now and April.  If you wanted to make $8K selling puts, you’d have to sell $8,000 worth of perhaps $1 puts (80) that have perhaps a $5 margin requirement or $20K to accomplish the same thing and, of course, if your bullish plays are doing VERY well, you don’t have to worry about having a ton of ultra-short ETFs put to you when the market is going the wrong way. 

    Covers/Cwan – It depends how certain you are about the move and what your intention is.   Before I said we could move to full cover on the $100 puts IF we broke up, as we want a better delta for the momentum play as we have no intention of being full covered into the close (or maybe even an hour later).   If we were zooming down and we had our $99 puts half covered and they went to $4, then I might want to roll to 2x the $96 puts at $2 to buy ourselves another 500 points before we have to give our putter their money back. 

    NG/RMM – I wouldn’t touch it here.  There is simply far too much nat gas in storage and who knows how that will be resolved?  CHK’s Q3 net fell 94% despite a 7% increase in output from last year so they can’t afford not to sell gas.  We’ll see tomorrow if they get a draw-down but they’d better start soon.  Also, it’s all the same weak-dollar play – how many weak dollar plays do you have going on right now?  Commodities, stocks, lack of cash on the side??? 

    AMZN/Oncmed – You can go to 2x the Apr $125s at $11 and roll the callers to 2x the Dec $115 calls at $8.75 and sell 2x the Dec $100 puts for $1.70.  If you keep working them up $10 a month (or if AMZN sells off) you’ll be in good shape. 

    Welcome JS!  There are lots of good long-term plays.  At the end of Thursday’s post there are several buy/write plays along with the disaster protection plays we’ve been discussing.  Due to the much more volatilie nature of the recent market, we like the buy/writes better than the leap spreads as the leap spreads burn you if the maket moves 20%, which it does pretty often these days.  

    Dow volume 100M at 1pm, not very strong, about the same as yesterday.

    Senate probe finds U.S. health insurers (AET, CI, CVH, HUM, UNH, WLP) are spending considerably less of their premiums on medical care than official industry estimates – an average of $0.70/dollar instead of the $0.87 cited by AHIP. The report also singles out Cigna for mislabeling $5B worth of clients. Sen. Jay Rockefeller: "While health-care costs are spiraling upwards, consumers are paying more and getting less, and the health insurance industry doesn’t want anyone to know what they are up to."

    Sector ETF strength: Gold Miners– GDX +7.1%. Transports– IYT +4.8%. Silver– SLV +4.3%. Heating Oil– UHN +2.5%. Solar– KWT +2.4%. Gold– GLD +2.4%.
    Sector ETF weakness: Semis– SMH -1.5%. Commercial Banks– KBE -1.2%. Regional Banks– KRE -1.2%.

    Great, so semis and banks are selling off but commodities are flying along with Transports (all Buffett) so everything must be great (as long as you are not the consumer who has to allocate more of your discretionary income to food and fuel). 

    GLD/Deano – I’d just roll out to the June $103s for half price ($10.50) and push the callers up to the Jan $100s about even so you have 1/2 off the table and you can always add to the June position if they keep going up but a turn down will wipe out the callers and let you reload. 

    Nissan (NSANY.PK) October U.S. Sales: +5.6% to 60,115 vehicles. Nissan brand +7.7%; Altima -16.8%, Maxima +5.8%. Infiniti -9.3%.

  90. ZION on the move up!  That is often the sign for a rally.  DDM $39s are a re-entry at $1.15 if you want to play a move up.   

    Chrysler (FIATY.PK) October U.S. Sales: -30% to 65,803 vehicles, vs. estimate of -29%. Dodge brand -22% to 26,265; Jeep -37% to 13,500; Chrysler brand -36% to 12,815; Ram -32% to 13,223.  Finally a poor report – that was strange with the others

  91. Auto sales numbers are shocking, great sales across the board…wtf happened

    If your to my east and the wind is blowing from the west the tree falls down on you…LMAO….SL is a schmuck

  92. Long play/JS – You can buy SRZ at $4.15 and sell the Apr $5 calls for $1.10 and the Apr $2.50 puts for .50 and that puts you in for net $2.55/2.53 with up to a 96% profit if the stock is called away at $5 or you will have a second round put to you at an average cost of $2.53, which is a 39% discount to the current price.

  93. Pharm,
    I’m long CEPH and I know they had good earnings but is there a catalyst for today’s move? maybe an upcoming upgrade?

  94. BNI / Samz: Thanks for the info!

  95. California sells $908M in taxable three-year Build America Bonds at 7.263%, though after a federal subsidy, the net yield to the state is 4.74%.  That’s the REAL cost of money!!

    Looking to pair DDM $39 calls at $1.15 with DXD $35 calls, now $1.10, but holding out for $1 on DXD hopefully – maybe less.  This is a play on a big Fed move tomorrow. 

    Toyota (TM) October U.S. sales: -3.5% to 152,165 vehicles. Toyota brand -5.8% to 132,633; Lexus +15.5% to 19,502. Passenger cars down 3.3%, light trucks down 10%.

  96. Phil,
    Thanks for SRZ; I will take a look at it and Thursday’s post for other long-term plays!

  97. This is the my car is better than your car effect after cash for clunkers, imagine you come home in your old dirty 2009 Cadillac and WHAM!!! there in your neighbor’s driveway is a brand new 2010 Audi!!! O the horror..

  98. IBN – I am doing a Nov $33/Jan $29 Put spread (instead of a simpled naked put sold) as that is less risk (IBN was $40 just a few weeks ago – a full 30% higher) and to reduce margin requirement. Also, the IBN options are not traded in a high volume, so you tend to have wide bid-ask…
    Sure, once you get into such a credit spread, you can always ‘move-around’ and roll your long/short end as the price moves.
    The same trade as suggested earlier is still good. I plan to add to this later today, or more likely tomorrow (after Fed)

  99. I think we need to take a breakout over 9,780 seriously

    We can cover the DIA Jan $100 and Jan $102 puts with 1/2 the Nov  $99 puts (already on at $2.50) and 1/2 the $100 puts if they fall to $3.10 (now $3.30). 

    Our speculative upside play is the DDM $39s at $1.15 and that puts us about 60% bullish overall (ABOVE 9,780).

    As a downside hedge to that we can take the DXD $35 calls for $1 or less but that’s more of a Fed play.

    At the end of the day we want to be back to a half cover on the DIAs so keep that in mind as we want to take a .50 or better profit on the DIA $99s or $100s sold. 

    This all hinges on the 9,780 spot on the Dow, where we are at right now.  

  100. Phil,
    Oh no, do I have to go long AGAIN, so you think UP today and/or tomorrow, but all of our short plays will be good by Thanksgiving ? I hate being long.

  101. Good volume last few minutes

  102. the 100k C Nov 5 put is within 2-3 cents of possibly being called away. Any roll here?

  103. Dollar down everything else up

  104. Dollar has been pounded down all day to finally get things going. There are a lot of dollar shorts that have a lot riding on the dollar staying weak (see the Roubini article I linked to yesterday).
    This has been a really tepid response so far. While we may get an explosive rally tomorrow, any big rally will be a nice chance to unload any longs you’re uncomfortable with, IMVHO.

  105. TRMA has found a bottom (maybe)….I am long the stock.

  106. Is it just me or did UNG suddenly go to one-cent spreads? I like it.

  107. One-cent increments, I mean. Even the LEAPs.

  108. Phil: need help with my BIDU puts sold for 9.64$ ?????

  109. PharmBoy, ITMN had some good news today.  I’ve been riding a JAN 15/17.50 spread down and back up on this one.

  110. GM October U.S. sales: +4.1% to 177,603 vehicles, vs. estimate of +4.6%. First Y/Y gain since January 2008. Car sales -13% to 63,935 vehicles; trucks sales +17% to 113,668.  Holy Cow!  Even GM sold cars!!!!

    Now THAT’s bullish….

    Long JRW – I’m in no mood either but those car numbers are solid (Chrysler just sucks) and can be interpreted as a legitimate kick-start of auto demand (and Kustomz makes a good point where one person gets a new car and starts a domino effect). Factory orders were a little light but a big improvement over August and commodities are breaking out, which we know actually sucks but it’s still goosing the hell out of those sectors. 

    This can all come crashing down if the Fed does anything but stay loosey-goosey tomorrow but, as I said, I can only justify Buffett’s purchase of BNI by thinking he knows something about another massive stimulus program that’s going to bring back the transports.   Just charging a lot for coal doesn’t help the rails, there needs to be a volume movement of product for BNI to pay off.

    Behind gold hitting a nominal all-time high (futures now +2.9% to $1,085): India’s central bank buying 200 metric tons from the IMF, which may clear the path for more official purchases. "It is but a matter of time until China and the IMF announce much of the same," says Dennis Gartman.

    Is it really possible that Dennis Gartman doesn’t know that the IMF is SELLING the gold to India.  That makes it VERY unlikely that they will be buying it for more than they just sold it for….  Gartman is one of the usual commodity pumpers but here he’s willing to look stupid just to get his sound bytes in – just let’s you know who the gold-buying audience is. 

    Wow REJECTED again!!!  This is some amazing stuff and the rejections are coming on volume.   Maybe we don’t need to get bullish after all….

    C/Drum – What does that mean within 2-3 of being called away?  Is that because it has no premium?  We want C at $4 so no big deal if it is put to us, we can just turn around and sell Dec $4s for .27 if so. 

    Unload longs/Eric – I think that’s what’s happening at 9,780!

    Pennies from heaven/Eric – I think 1,000 more stocks have been approved for penny spreads.

    The climate story of the day, Clean Air Watch president Frank O’Donnell writes on his blog, isn’t the psycho-drama being played out in the Senate Environment and Public Works Committee (webcast), but rather Warren Buffett’s (BRK.A) decision to buy the coal-hauling Burlington Northern Santa Fe (BNI) railroad. "This is a $34B bet that coal will remain the centerpiece of American energy policy in the future. Buffett clearly believes that coal use will remain strong – and possibly grow."

  111. BIDU/RMM – I’m going to guess you sold the $2,000 puts and they are now $1,618 in the money so I would say maybe roll down to the Jan $1,980 puts and hope BIDU makes a nice recovery…  8-)

  112. Buffett / COAL
    If the plan is a VERY weak $,  then we can’t afford OIL;  except for gasoline, that leaves COAL!!

  113. RIMM $60 – Kick Ass!!!  Wasn’t it just yesterday everyone said it was over for them?   I love over-reactions, they are the most profitable trades in the market. 

    Today’s pattern is very similar to last Tuesday’s pattern and last Wednesday did not go well!

    Kia October U.S. sales: +45.3% to 22,490 vehicles. Rio +75% to 4,005 vehicles. Optima +84% to 3,075 vehicles. New compact sedan Forte leads sales with 4,984 units, from month-ago 4,449.

  114. Hey, lynn2long, I hope that you didn’t get p*ssed off by Phil’s comment.  Ignore that one, and don’t go away.  He is generally a nice boy.  You’ll learn a lot here.

  115. Phil: sorry, Bidu puts are nov 380.

  116. This really is looking pathetic. Someone is selling a lot of dollars and it’s only just holding the market green.
    Hypothesis: funds that have borrowed (shorted) dollars to make leveraged bets on equities are now looking to get out. They know that pushing the dollar down can hold the market up long enough to allow them to unload their stock. Then, in the coming days, they will try to unwind their short dollar trades.
    These guys were getting into a precarious position. If fundamentals actually start looking good, the Fed may start making more convincing noises about tightening, killing the dollar carry trade. If things start looking worse, the market is going to have trouble running much higher, so from their perspective, they might as well try to take profits now. Not for nothing did the better-than-expected GDP number trigger a lot of selling, I suspect.

  117. Coal/JRW – Just like Germany in WWII, they ran their cars on coal and wood because their currency was useless and look how well they did at expanding their markets!  Also there may be the plan to literally be the Saudi Arabia of coal, where we prop up our economy by stripping all of our natural resources and turn ourselves into a single-industry country.  I guess we should start investing in burka manufacturers – it’s all the rage in religious monarchys… 

    I hope Lynn knows that was tongue in cheek…

    BIDU/RMM – Oh, well those are much better than the $2,000s!  What’s the big deal with the $380s – they are on target and all premium.  Worst case is you roll when you have to but you certainly don’t have to yet. 

    Dollar is still 90.3 Yen, that BOJ has a target and you are not going to get them off it!   $1.47 to the Euro and $1.64 to the Pound, not the sort of thing that should justify oil at $79.40 and gold at $1,085 so I’m inclined to think this is all about India buying gold for $1,042 an ounce being spun into some uber-bullish scenario for gold when, in reality, it means that 200 tons of gold held by speculators will NOT be sold to India down the road. 

    Kia October U.S. sales: +45.3% to 22,490 vehicles. Rio +75% to 4,005 vehicles. Optima +84% to 3,075 vehicles. New compact sedan Forte leads sales with 4,984 units, from month-ago 4,449.

    Market still could go either way tomorrow but that multiple rejection had to hurt the bulls feelings.

  118. MrM – I sold a ton of ITMN 12.5 Nov. puts betting they would move.  I still like them here for a LT play.

  119. BMW plummeted 6.3 percent to 31.50 euros, dragging an index of automakers to the biggest decline among the 19 industry groups on the Stoxx 600. The world’s largest maker of luxury cars reported a 74 percent drop in third-quarter profit as the recession sapped demand for higher-priced models.

  120. Anyone have any thoughts on PARD going into earnings?
    I am short the Nov 5 Puts @ $1.45…now $0.90 X $0.95
    Take the money and run or wait for the post earnings volatility crush?

  121. My remaining C short straddles are up today, so I’m taking the chance to sell most of them (at a small net loss) since C seems unable to hold the lower-end of my $4-5 range for that trade. Keeping a few token straddles short to watch for a possible future selling opportunity.

  122. kustomz,
    bmw biggest mkt (outside europe) is us and japan and currency rate is killing them as you cant raise prices in times like this. still best car in the world though. love mine especially when i get 34 mpg @ 85 mph in texas which beats my neighbors priese unl;ess he turns a/c off.

  123. phil,
    did bob say the market had a floor at this point. why dont they ever talk about the ppt?

  124. dollar gaining ground!

  125. Phil,
    So you’re suggesting that we invade Poland ?

  126. PARD/CX – I don’t think the earnings will matter unless something really surprising happens.  It’s all about the trial results and those don’t come until next month most likely.  I sold the $5 puts and calls naked but they already lost a lot of value so not as attractive now.  With just the short puts up 35% into earnings, I think I’d get out as you have a bird in the hand and less than 2 in the bush. 

    And the man behind the curtain is:  After advising Burlington Northern Santa Fe on its buyout by Buffett and Stanley Works on its Black & Decker deal, Goldman Sachs (GS) solidifies its No. 2 spot in global M&A advice – with an estimated 30.9% share ($503.5B of $1.63T), closing the gap on Morgan Stanley’s (MS) 33.4% share.  Don’t forget Buffett took $5Bn of GS at $85 too!

  127. Poland/JRW – Nah, you need to be more creative than that.  We could roll Canada and Mexico over a long weekend and then on to Brazil so we can start putting sugar in our tanks.  That would give us tons of oil, ethanol and enough coke to throw a hell of a party as we pick off Columbia and all those other little countries.   We could do the whole exercise under the premise of a NAFTA inspection and I’m pretty sure that with satellites, it would be virtually impossible for Europe or Asia to liberate the conquered territories by sea so we could defend North and South America by air indefinitely. 

    4pm Commerce Secretary Locke will be discussing possiblility of 2nd stumulus – told you so!!!

  128. Phil, if the fed doesnt mention anything about raising rates tomorrow, do you think we’ll have a big up day tomorrow?

  129. Phil Like your comments on RIMM I am short since sept march 60 put  sold at 4.40 I took your advice and stayed cool now I am even thinking of selling more puts at 7.50 as they still not going down . what do you think?

  130. Yes invade Poland, and lets replay the circumstances that lead to WW2, should be a fun little game this way GS has a another mode to profit

  131. Phil, what is your 3pm view of oil… it extended or do we stay away for now?

  132. Phil,
    Rather than spend all it would cost to conquer North and South America, why not just take Poland……………and then trade it to Russia in exchange for letting Alaska annex the Siberian oil fields ?

  133.  Pharmboy – Are you participating in this HGSI rally?

  134. Lots of vibrfations in respect of Phils explaination to Lynn This was a very clear explaination I must say Phil is improofing his short hand  Me gusta

  135. Anyone who knows,
    I use Interactive Brokers but my hunch is that this is a "standard practice" question. I’m a little unclear on when one would get a margin call regarding the way we trade (options margin as opposed to buying stock on borrowed money). Is it when the "available funds" goes below the "maintenance margin requirement?" Or is it when available funds go to zero? Or is it something else? I’ve always been uber-cautious just to make sure but I feel like it is limiting me now that I have a good feel for how my account moves.  Thanks for the help.

  136. look at BAC climbing out of the woods!!

  137. trying to break 9780 again but looks to be failing

  138. It’s going to be very hard to relax until we work off these hideously oversold levels.  It doesn’t matter where we SHOULD be, the velocity of the movement that got us here was just huge.  A consolidation day like this still works off the oversold condition and the bulls really do not want to see consolidation when the $NYMO is at -100.  Yesterday we gained 15 to -85 and today we are adding another 10-15 so we’ve gone from -100 to about -70 yet we’re still heading lower – that is a bad thing.  Think of the oversold number as potential rally fuel you are burning up just to tread water! 

    From the 19th to the 26th we dropped 300 points and ran the NYMO from 0 to -114.  We went from -114 to -70 as we gained back 150 points but then lose 200 points and only moved back to -100 and now no gain at all is working off 30 oversold points and we’re back to where we were last Thursday at -70.  We’ll be keeping an eye on this one all week as I think it’s going to be key as this is pretty unusual behavior if we trend even lower from here. 

    Volkswagen (VLKAY.PK) October U.S. sales: +7.2% to 17,037 vehicles. Jetta +25% to 9,076. CC +256.4% to 2,349. Beetle -22.4% to 1,168.

    Rates/Jrom – I think the danger is the other way.  Obviously from commodities and the dollar, the last thing they are expecting is anything supportive of the dollar tomorrow.

    The later they start these sticks the less ability they probably have to push them up.  If they had the ammo, they wouldn’t wait until the last half hour

    RIMM/Yodi – LOL, how about just be happy it didn’t kill you? 

    Oil/Ocelli – Stay away (but I have the ERYs).

    Margins/Ac – I’m sure IB has a margin specialist you can talk to about the specifics of your account because so many things depend on your own situation and your broker’s practices.

  139. 2nd stimulus….HOLY CAHUNAs Batman.  UGL it is….That’s why gold popped today.

  140. Oh, and as a long time resident of WA, I can tell you that Locke doesnt know his elbow from his….Im really curious how he got the job….

  141. Pharm second stimulus what second stimulus, i will not have you tarnish this good board with speculation and rumors!!!

  142. Pharmboy – What’s going on with CLDX today? I couldnt find any news but they are up huge….

  143. Aviv REIT postpones a $315M initial public offering, the second company in the past week to withdraw. AEI, the former Enron business, put off its IPO last week on low institutional demand.

    BAC.PR.J hit 52-week low!

    2nd stimulus/Kustomz – It’s the only thing that explains this idiocy. 

    DDM $39s are still $1.10 and it’s a good idea to have SOMETHING that will do well if they announce a new stimulus and rally the markets 300 points before you can sell a put

  144. jromeha – same reason they elected him in WA, he fits the "diversity" and "globalization" profiles.

  145. Leisman sais upside surprise on job loss

  146. Hi, Peter D, are you around?
    A question for Peter or anyone who knows: As far as trading strangles, is there a difference between SPX and SPY?  Margin-wise or anything?

  147. Kust – isn’t that what we are all about.  Cramer herds them, we just slaughter ‘em.  ’nuff said.
    MRK deal closes tonight.  Welcome back to the party CLDX.  OGXI has an uptick on the daily charts.  Let’s see tomorrow what they decide to do.

  148. CLDX had positivt Phase I data.  Big woop.  Show me Phase IIb, then I will get excited. Still like them though.

  149. aclend  -
    If you hit account from the trading window – your margin information pops up. If you put your mouse over the different options – "current excess liquidity" – it will give you a definition – know this does not answer your question.
    I think it’s your current excess liquidity that you should be looking at – if that were to go below zero – think you would get a margin call – with IB – they would just start selling positions.
    They are pretty good about how they calculate your margin – I think selling the bni puts – only added the cost of the puts to my acount or a little bit more.
    As Phil said – you should call and ask them.

  150. I got to say, i have traded RIMM the past 2 days and im very happy with the outcome. I couldn’t have traded it better if i had a crystal ball.

  151. AIG up 15% today?   Must be more government largess on the way!

  152. Well what do we make of that.  Transports up 5% but the Dow is red…

    Man I love it when a level I set in the mornign holds all day – it reallly gives us confidence in the 5% rule! 

    NBG.PR.A hits 52-week low.

    BAC.PR.D hits 52-week low.   Come on, this has to mean something….

    RIMM/Kustomz – Balls of steel more useful than crystal for trading that one but I’m very pleased with the outcome.  8-)

  153. jrmo – Yeah I’m worried about  that Locke too, wasn’t he the one who said "
    Where there is no property there is no injustice.
    Bit of a raving socialist if you ask me.

  154. Just bought a couple of SPY straddles AH for laffs. Seems like the kind of environment where they might actually work.

  155. Phil,
    so where did you get the majic number 9780 for the dow today and why was it rebuffed so many times??

  156. ARNA / Pharm – What is your timeframe on this for a move up? 1 month, 3 months, 1 year… ?

  157. Come on already with this railroad crap, WB already owned 20%+ of  Burlington and lot of the deal involves stock…so i don’t see what the big deal is, he probably payed 60 a share to buy Burlington and all i hear is ohhhs and ahhhs over this….he got the deal of a lifetime….it was strategic on his end…..i would be bullish BRKA

  158. stevenparker / Gary Locke
    Have you ever been to Seattle, known locally as Leningrad on the Pacific!!

  159. Locke would roll over in his grave.  He said: "All wealth is a product of labor" and I don’t think he meant the labor of repackaging derivative contracts….  Locke (John) was actually a Libertarian who felt the only function of government should be the guardianship of property rights. 

    Gary Locke, on the other hand, is saying nothing that sounds very exciting.  His plan seems to be to sell stuff to China. 

    KFT blew revenue by a mile but they are raising guidance.    Seems to be a lot of bad luck in currrency conversion. 

    CCI misses by a mile too!  What happened to the days when everyone was beating?

    Long-term Treasurys headed lower on a heavy supply of corporate debt, and with key interest-rate hints to come from the FOMC. The 30-year yield +0.08 to 4.34%; 10-year +0.06 to 3.48%; 5-year +0.03 to 2.36%; 2-year -0.01 to 0.92%. Dollar +0.4% against euro; +0.1% against yen; +0.5% against Swiss franc.

    STEC also sucking big time. 

    9,780/High – It was one of the 5% crosses (actually 9,775 but I bumped it up by 5 because too many people take my levels too literally and buy right there).   It was rebuffed because, according to the 5% rule, the theoretical result of the random design of hundreds of different trading programs following dozens of different trading styles coupled with natural (fibonacci) number theory as well as the human nature to gravitate towards round numbes causes trading to coalesce at various inflection points that occur in 5% incriments after consolditations over time.    When we see a level like 9,775 hold up for several days, it becomes a new consolidation point from which we can establish a new set of probable targets at 1.25, 2.5, 5%, 7.5%, 10%, 12.5%, 15%, 20%, 25%, 33%, 40 and 50% moves. 

    So 9,775 would lead to watch levels at 9,900 (rounded from 9,897, which is 1.25% up), 10,020 (2.5%) and 10,263.   On the downside (1.25%), not at all surprisingly, is our 9,650 target.  9,650 x 1.05% = 10,132 and our high was 10,119 on the Dow so close enough to tell us that we are obeying the 5% rule above 9,650 and that consolidation along the 1.25% line is nothing more than the expected bounce that the 5% rule predicts (20% of the fall retraced) in a move that is likely to continue to the downside. 

    EXM with a huge beat!  That’s one of the shippers we like.

    ONXX did well. 

    HIG with a nice beat!

  160. From the biggest pumpers of WFMI, Pali Capital; previewing earnings of a company with a seemingly insane valuation; trading at about 29X 2010 estimates; and about 40X 2009:
    We continue to believe that opportunity for upside in WFMI exists and believe positive catalysts will include a return to positive comps in 1Q10 (that should improve sequentially through the year in our view), continued expense control, and subsequent EPS upside.  Whole Foods’ brand strength, improving prospects with regards to comps, EPS and ROIC, along with the prospect of a second leg of unit growth will continue to facilitate a significant P/E multiple premium.
    §         Estimating EPS of $0.18.  Our EPS estimate is in-line with the Street estimate and management guidance of $0.16-$0.18, and assumes gross margins expand 50 bps to 33.8% and store contribution margins expand 70 bps to 7.4%.  Further, management’s conservative approach to store level margin guidance over the prior two quarters would suggest upside exists. 
    §         Identical store sales projected negative 1.5%.  We believe that comps will continue their sequential improvement given easing comparisons and our estimate for 4Q implies 130 basis points of sequential improvement.  We continue to anticipate comps turn positive in 2010 which will serve as an additional and meaningful positive catalyst.  In addition, we are anticipating both constructive commentary regarding traffic trends as well as greater insights into the company’s value initiatives and “Whole Deal” program which should provide better visibility into an ultimately improving basket size.
    §         Continued improving returns.  We anticipate a continued focus on improving returns on investment characterized by reducing unit development costs, store opening expenses, and operating costs (labor expense) within a more manageable 30-35K square foot store.  Greater capital and operating efficiency combined with an improving value proposition should dramatically increase Whole Foods potential retail footprint.  Said another way, at some point in the not too distant future, we believe we will see a second leg of unit growth materialize.
    §         We remain confident in our $1.11 estimate for 2010.   WFMI will give 2010 guidance for the first time and we anticipate it will likely be conservative as we believe management remains committed to “under promising and over delivering”.  Our 2010 estimate assumes 4.6% sales growth and only 10 basis points of operating margin improvement, which we view as very achievable.  Stronger sales momentum and/or margin expansion could facilitate considerable upside.
    §         Valuation not an obstacle yet, in our view.  We do not believe WFMI valuation will prove an obstacle, over the near term, to further upside in the stock as we believe continued comp strength and positive news flow will sustain investor interest.  Historically, WFMI has exhibited a very wide P/E range of 11x-53x NTM estimates.  Further, we believe many investors are looking to value this stock on “normalized” earnings, limiting the relevance of FY1 or FY2 P/E multiples.
    Market Making
    Pali Capital, Inc. currently makes a market in WFMI
    Valuation & Risks
    Our price target of $35 is based on 31.5x our 2010 EPS estimate of $1.11, and 28x our estimate of normalized EPS of $1.25.
    Risks to our valuation and price target for Whole Foods Market include: greater than anticipated comp erosion on the heels of a further moderating consumer and rising unemployment and gross margin erosion.
    Risks to our rating and price target include a greater than expected slow down in the US economy, restaurant sales, and consumer demand.  In addition, should inflation trends meaningfully re- accelerate and or should diesel fuel prices rise significantly, the company’s ability to absorb and pass through those prices becomes more difficult and may result in margin pressure.  Should the company proceed with an aggressive international expansion plan, with few major acquisition opportunities big enough to enter a major market as a dominant player, we believe the effort would involve years of development costs.  Finally, if the company is required to accelerate the payment of the tax liabilities, as well as pay related interest expense, it would be a negative.  If they were to raise additional capital through debt financing, additional interest expense would be a drag to EPS.  Additionally if the company were to forego share repurchases or defer planned capital expenditures both would be negative for shareholders.

  161. in case you I need to spell it out; WFMI is a sell; I think it will finally dump post earnings (like everyone else has – except AMZN – yet).

  162. Bespoke: The average S&P 500 stock is down 6.75% since the 10/19 closing high for the index. We broke up the index into deciles (10 groups of 50 stocks) based on stock performance from the 3/9 low through 10/19 to see how these stocks have performed during the pullback. As shown below, the 50 stocks that were up the most during the rally have averaged a decline of 12.6%, which is the biggest decline of any decile. Clearly investors have been selling the big winners recently.

  163. Thanks Samz,
    I called after I posted and the Eastern European-sounding gentleman on the other end told me that when Equity w/ Loan Value pulls within 5% of Maintenance Margin, I would get a warning and I would have liquidations if they meet. Looking at these figures, I see that the magical Excess Liquidity value is the difference of these, so the formula is: Excess Liquidity = Zero = Bad woo-woo. However, that is very good news for me as I have considerably more leeway than I was allowing myself.

  164. Phil, is BAC.PR.D the BAC prefer stock? how could one check its value?

  165. WFMI/Cap – I sold the $35 calls and got out already, didn’t want to chance earnings but would love to sell more if they go up for some reason.  Valuation is insane but I got burned on BWLD using the same logic last year so not again (oh yes, and AMZN!). 

    BAC/Lynn – In Yahoo it’s BAC-PD, PJ….  They are down 5% today, that’s a huge move for preferred shares.   I don’t trade them or anything but they just catch my eye when they flash by with big red bars (52-week lows) on my hi/lo screen and, usually, when you see preferreds getting dumped, it means there is a rumor that there is a fundamental issue at stake but all I see is this:

    Rochdale Securities’s Dick Bove writes in a research note today that some investors fear BK is exposed to losses from the impending bankruptcy of struggling small-business creditor CIT Group (CIT), even though, as Bove points out, BK insists this is not true. Also, they fear Bank of America (BAC) will lure away Bank of New York CEO Bob Kelly. (CNBC repeats the rumor today that Kelly’s interested in the job, even though WSJ quotes him earlier in the week as not being interested.) Bove points out it makes no sense for Kelly to give up his free hand and generous compensation at BK for a government-regulated job at BAC, but that BK is “strong enough” to survive even without him. Lastly, Bove points out some analysts on the Street feel Bank of New York’s core business of custodian offers little growth. Bove believes the firm’s business can increase along with the global money supply.

    Doesn’t seem to be something to panic out of preferreds over…

  166. cwan/SPX/SPY, I don’t see a difference in margin when trading SPX and SPY.  The main differences are:
    - SPX Bid/Ask spread is usually wide $1 or more (cons)
    - SPX volume is much less liquid than SPY (cons)
    - SPX requires 10x less in commission for the same amount of dollar invested (pros).  As the option value is 10x larger, SPX supports wider strangles.  For example, we’d get $1.4 for selling SPX Nov 880 PUT, but only 14c for SPY 88 PUT, so not worth selling SPY 88 as commission will eat up a large portion of the spread.  If you have Portfolio Margin, the margin for wider strangles are much less, so you’d have less cash tied up in margin.  To make it short, SPX favors Portfolio Margin spreads as you can get a high percentage return and take less risk with wider strangles.
    - SPX is a cash settled option, so there is no stock is put to or called away from you prior to expiration (big pros)
    - SPX expiration is a day earlier than other options (neutral)

  167. Margin Call/Interactive Brokers – you don’t really get a margin call.  They monitor your account during market hours and sell you out as needed to bring you back to sufficient margin situation.  You get about a 5 minute warning to decide what to sell, or they sell you out of a few contracts at the market price.  This is unlike other brokers I have worked with, where they send you a letter and you have a couple of days to deposit additional funds or sell as needed.

  168. "Interactive Brokers uses real-time margining to allow you to see your trading risk at any moment of the day. Our real-time margin system applies maintenance margin requirements throughout the day to new trades and trades already on the books and enforces initial margin requirements at the end of the day, with real-time liquidation of positions instead of delayed margin calls."

  169. Thanks as well Jordan. I read all that stuff but it was not clear what the specific criterion/key indicator was and what I should be watching (i.e. Excess Liquidity).

  170. balancenv/SPX Dec crazy spread – I ordered the following spread this morning at $4.25 credit, but it wasn’t executed. When I came back in the afternoon, it’s now $3.25 credit:
    - Sell 1x SPX Dec 925 PUT, buy 2x SPX Dec 1,020 PUT, sell 2x SPX Dec 1,010 PUT (2 long verticals and 1 short PUT) for $3.25 credit
    With the high VIX, it’s possible to buy 2 longs for every 1 short!  The profit is $3.25 for SPX above 1020, max profit is $23.25 between 925 and 1010 (which is awesome), break even is around 902.  We’d also want to sell Dec 1150 CALL for $2.6 right away.  1150 is approx 5% over the October top.  If the market stabilized, the VIX would go down and we pocket the decaying premium.  If the market goes down, we can a) roll down the short CALL and use the money to roll down the short PUT if neccessary, or b) take early profit on the 1,020/1,010 PUT spread.  If the market goes up, we pray that it won’t overshoot 1,150.  Just kidding, we can roll the short PUT up (carefully) and use the money to roll the CALL up.

  171. Crude expectations for tomorrow are up 1.4M in oil (this is nonsense as imports are off 2Mbd from last year = 14Mb/week less oil!), Gasoline is expected to build 300Kb and distillates are expected to decline 1Mb. 

    Last week, there was a surprise build in gasoline but the BIG deal is that we had just 8.4Mbd of imports last week vs 10.4Mbd last year.  Imagine the BS of this number then when we are importing 14Mb per week LESS oil than last year and they act like a draw of 1Mb is a sign of demand returning and use it as an excuse to jack the price of oil up.

    This is the biggest con game in the history of the universe.  It’s a Madoff-sized $50Bn theft of global consumer income every 8 days!!!  It is destroying the global economy and it is supported using your tax dollars as sleazbags like Goldman Sachs use their own offshore trading platform (ICE) to falsify contract demand and pump up the price of oil which they, JPM and others store offshore in hundreds of 2Mb tankers that they loaded up when oil was $45 (using your TARP money) and then diverted to ports around the world where they sit undelivered until they can squeeze you for a good price.  They didn’t get their hurricane this year but they don’t care – despite the record builds, despite the record inventories, despite the 10% drop in demand, they still have the nerve to charge double the fair-market value.

    Yep, your tax dollars at work…

  172. yeah; like OIH up $6 from today’s lows.

  173. Phil – WFMI – I still hold short NOV $30 call – cost 2.45, current price 3.25. What do you recommend?

  174. BNI – does anyone know what happens to out of the money puts when a comany is aquired for a combo of stock and cash.
    I had two people tell me that it’s possible that a ratio of the puts get converted into puts on the aquiring company -
    This seemed crazy to me – anyone have experience with this.

  175. Not a good night for your boys Phil …. throw the bums out !

  176. OIH Cap – Let ‘em run, I can’t wait to short them again…

    This is interesting:  The Treasury invited a small group of bloggers for a “discussion” with senior officials on Monday. Initially, the meeting was to be background, which is a sort of journalistic “FYI but you can’t use it” but we were told at the meeting that we could discuss the meeting as long as remarks were not attributed to particular individuals.

    Boy they are lucky they didn’t invite me, I really can’t even think of a better first question than WTF? and the conversation would certainly go downhill from there…  Financial Armegeddon had better commentary than Yves (sorry Yves):

    • In response to the question about what would happen if, as Reinhart and Rogoff had concluded about past financial crises, the current episode also proves to be a "protracted affair," it wasn’t clear that there was a "plan B" in place if things do not recover in 2010 as many mainstream analysts expect. In fact, the suggestion from one official was that the tenure of the current crisis would likely be nearer the shorter end of expectations.
    • There was also a bit of a disconnect between the remarks various Treasury officials have made in public forums and what was said at the meeting. Last Thursday, for example, Bloomberg reported that Treasury Secretary Geithner spoke to the Economic Club of Chicago and said:
    “You can say now with confidence that the financial system is stable, the economy is stabilized….You can see the first signs of growth here and around the world.”

    Yesterday, however, a number of those present clearly acknowledged that things could (still) go wrong and said such fears kept them awake at night. While that is not unusual in and of itself, at the very least it adds to doubts I and others have expressed about the true state of the financial system and the economy.


    • Finally, the meeting seemed to confirm the strong grip that Wall Street has on the levers of legislative power. In response to a throwaway remark by one of the bloggers present that discussions about the overly large size of the financial sector relative to the real economy were "not politically correct," one official suggested the reality was just the opposite, and that a substantial majority of the public agreed with that assessment.

      If you take that together with the assertion that the Treasury Department — and, by extension, the Obama administration -- is fully committed to financial sector reform, as well as the fact that the Democrats dominate Congress, the implication is that other forces — namely, the moneyed interests and their lobbyists — are standing in the way of necessary change. Nothing new there, I guess.

    WFMI/Concreata – We’ll have a better idea in the morning, after they report!

    There are two ways to look at the record daily bankruptcy rate of 6,200 filings (up 25.3% Y/Y): The glass is half-empty (the jump fits seasonality and is the second-smallest Y/Y increase in the past few years, but it’s still grim) – or the glass is entirely empty.

    Will we soon be daytrading Berkshire? The flipside of the 50-to-1 split in Baby Berkshires (BRK.B): So long mystique. This from Berkshire’s "Owner’s Manual": "Charlie and I hope that you do not think of yourself as merely owning a piece of paper whose price wiggles around daily and that is a candidate for sale when some economic or political event makes you nervous … "

    Out of money/Samz – It’s a crap shoot, you generally want to close those out before they become a huge pain in the ass.  Generally you get a good heads up before they close and the premiums squash across the board, even on the leaps.  The worst thing is if they close option trading you can be stuck for a month or two waiting to find out what happened – that’s very annoying too. 

    Bums/Cap – Bloomberg only sqeeked in with 51%, that’s pretty sad after outspending Thompson 100 to 1.   Corzine got his butt handed to him by Christie, I’m not happy about that but Corzine ran a crap campaign and NJ is spinning out of control so not unexpected.  I’m not unhappy we got stung here, it will get people to take next year much more seriously.  Only 1/3 of eligible NJ voters even bothered today – very sad…

    Meanwhile, futures up about 0.3% with the Nikkei flat and the Hang Seng recovering that 1.8% from yesterday.  Dollar is flatlining and gold and oil are holding up despite this story:

    The International Energy Agency next week will make a "substantial" downward revision to its long-term forecast for global oil demand, a person familiar with the matter said, marking the second year running the group has slashed its view of the world’s thirst for oil.  The forecast of slower growth in oil demand puts the IEA increasingly in a camp of contrarians bucking the popular view that crude demand will grow briskly in a postrecession world. That view holds that long-term demand will grow at a fast clip because of rising emerging-market wealth and consumption in places like China and India.


    The IEA, which advises rich nations, such as the U.S., on energy matters, is set to use its closely watched annual World Energy Outlook report to forecast that improved energy-efficiency measures in developed nations, as well as climate-change legislation, will help to slow the rate of global oil consumption.  A person familiar with the Paris-based IEA’s plans said "demand-management policies" are having more impact than previously expected in the developed world, which accounts for about 55% of world oil consumption. The IEA outlook, a guidepost for industry trends, is scheduled to be released Nov. 10.

  177.  Peter D,
    I am more bearish than you. I was thinking of 900 and 1000/1010 :-)  

  178. Damn you China!

    Atul Bagga, an analyst with ThinkEquity, said that if World of Warcraft were disrupted for two months in China, he would lower his NetEase Q4 revenue and earnings per share estimates by $50 million and $0.09.
    Bagga said such a shutdown would cause him to adjust estimates of Activision Blizzard Q4 revenue and EPS estimates by $20-25 million and $0.01

  179. Phil – VIX hedge – the long NOV 25 put (cost 1.00 , now 1.80) - would you hold, close out or roll?