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Freaky Friday – Options Expirations Promise a Wild Ride!

As Jesse notes over at Cafe Americain, it's shenanigans central today.

We are mostly watching the action with a detached interest.  As I said to Members in yesterday's morning Alert: "Tomorrow we have CPI, Business Inventories, Industrial Production, Empire Manufacturing (which was awful last month) and Michigan Sentiment and then the 3-day weekend so cash will be comforting until Tuesday at least!"  Yesterday was an excellent day to take the money and run on our bullish positions, even though we did finally make our levels, my final word in that Alert was: "Be very careful today, I still feel like this whole thing can snap on one bad news story." 

We did take earnings spreads on JPM and INTC, both of which seem right on target at 7:30 (see this morning's Alert for adjustments) with INTC giving us the strong numbers we expected and JPM doing well, but not well enough to live up to the hype. 

Earnings season is like party time for options traders, especially on expiration week where we can take advantage of low premiums on the things we buy while still selling high, earnings-inflated premiums on the things we want to sell.  The INTC trade was taking the Feb $22/23 bull call spread for .27 (a cheap way to make $1) and reducing our basis by selling 1/2 that number of Jan $22.50 calls for .12 (a ridiculous price for a call that was $1.20 out of the money when we made the trade in the morning but we only sold half, just in case!) and also selling the Feb $19 puts for .17.  Those we sold the full amount of as we REALLY don't mind having Intel put to us at net $19.04 as .17 and 1/2 of .12 = .23 off our net .27 purchase of the bull spread so we're in for a grand net total of .04 with the upside potential of making $1 if INTC makes it to $23 by Feb expirations.  Even if we only cash out our Feb spread for .12 (less than half of what we bought it for), that's still a 200% profit on the net spread!  This is why we LOVE earnings season!

Our Trade Idea for JPM was in that same 10:47 Post and in that one I said to Members: "JPM – Great Expectations so I like the $44 puts for .55, selling the Feb $41 puts for .52 on the premise that I make $3 fast on the way down to their level (so rollable) and, if it goes up, I never have to pay them.  Consider that $1.50 of downside protection on the spread so the Feb $43/45 bull call spread for $1.10 seems like a good deal as a pair trade."  So our goal is mainly to take the bullish spread but we're hedging for short-term disappointment, just in case, with the put spread that works out to free (net .03) protection if JPM does not disappoint.  As this one stands, we'll be cashing out the Jan puts into an early sell-off and letting the rest ride as we are happy enough with the .74 profits (.60 expected) to ignore the 6% revenue miss

We took much longer term bullish plays on C, BAC, JPM, and FAS yesterday but all hedged as we certainly don't believe we're heading up in a straight line.  Shorter-term, we took advantage of expiration day with plays that are likely to make 100% in 24 hours like selling FXI $42 puts for .27, selling SMH $27.50 puts for .20 (another bullish play on INTC).  Trades like that pick up $270 here and $200 there and, before you know it, you are talking some real money!  1,150 is our next critical test on the S&P and we briefly touched it yesterday.  As you can see from Jesse's chart, we are forming weaker and weaker tops to our pyramid of nonsense, which means our foundations are very poorly constructed and the whole thing could collapse – but when?  

Is this similar to early 2004 (our current theory) where we ramped 50% off the bottom of the S&P and then trended down for the year but eventually went on to form a real bull market or are we in another bubble top, repeating all the same mistakes of 2007 and about to suffer the same consequences? 

It would be wrong of me to say we are repeating the same mistakes we made in the past.  We are, in fact, making much bigger mistakes and doing so at an even more frenzied pace.  There is no real doubt that the major financial institutions, through market manipulation and derivative trading that fulfilled Warren Buffett's 2003 prophecy and became "financial weapons of mass destruction."  

So what have we done to "fix" our problems – clearly we have handed the inmates the keys to the asylum, giving the SAME idiots who wrecked the economy the first time $700Bn in bailous money and, just yesterday, the Fed announced that they have given them an additional $1,137,000,000,000 since last January after giving them anoher $14Bn just yesterday in exchange for their possible worthless MBS paper.  That's right, the Fed gave GS and company $1.1Tn in cash to play with in exchange for $1.1Tn worth of mortgages they were stuck with AT FACE VALUE.  No wonder these guys are making record profits and taking record bonuses - they were given $2Bn in taxpayer money to play with.  As I mentioned yesterday, they repaid our kindness by doubling the price of commodities in 2009, costing US taxpeyers alone over $400Bn and costing global consumers over $2Tn of their "disposable" income.

Isn't that great?!?  We're going to make a fortune on our bank bets and XOM (Monday's pick) is holding up nicely and it looks like 2010 is going to be a great time to be a bull as I think we can squeeze another $2Tn out of the bottom 90% and the best part of it is – THEY AREN'T EVEN SMART ENOUGH TO GET UPSET!  That's right, I can write these articles and call them sheep and tell them the oil companies are ripping them off and even give them a link to write to Congress (who were paid $114M to take those letters and drop them right in the shredder) but it changes NOTHING!  As Samuel Jackson said in Pulp Fiction – I do try very hard to be the good shepherd but the flock seems to be hopelessly lost and lamb stew sounds pretty good right now.  

As other "good shepherds" have learned in the past, there is no profit in preaching to the masses and you don't have to nail me to a cross for me to get the message that it's time to give up on reform and join in with the wolves to devour the flock.  Speaking of crosses – there was a little crossed signal on someboday's trade-bot Wedneday as an HFT program misfired at 11:03, as the same "market particpant" bought and sold 200,000 shares to themselves in 2 minutes.  Of course, this is the kind of BS that goes on every day only Rule #1 of market manipulation is "Don't be so friggin' obvious!"

Karl Denninger does a good job of sussing out the details of how the market breakout we had on Wednesday was prompted by the action of a single buyer, who placed a MASSIVE buy order on the S&P while SIMULTANEOUSLY selling himself all the shares as well, which created the impression of a surge of buying interest at "the bottom" and dragged a fresh round of suckers retail traders suckers into the market for another round of "bottom fishing" at the 52-week highs.

Karl suggests we follow the money to find out who has $562.5M to trade on each side of this trade but, sadly Karl, the answer is: dozens of people – more like SCORES of people and that's why we are giving up and dining with the wolves because the sheeple really are just that and they will keep chewing grass and getting fleeced until the next time they look fat enough for the slaughter and that's when Da Boyz will flip short and whack their pension funds for another 50% loss while the government comes running with bags and bags of money to make sure the wolves weren't injured during all their feasting.  Happy 2010 – meet the new boss, same as the old boss and you WILL, apparently, get fooled again

Asia was full of mixed signals this morning with the Nikkei continuing it's run (up 0.68%) and the Hang Seng continuing it's decline (down .28%) but the Shanghai had an up day (up .27) but the BSE was down (.17) with the Tech sector generally leading both on INTC news as well as an NPD report showing record video-game sales of $5.53Bn last month (and I will remind Members that we have several game plays on our Buy List!) led by a 77% increase in Wii consoles (3.8M) and an 87% jump in SNE's PS3 (1.36M) while MSFT, of course, manages to screw up and drops XBox sales 9% to 1.3M units once again spurring calls to replace Steve Ballmer with a Magic 8 Ball or perhaps a gecko (it doesn't even have to be the smart one on TV, putting any small lizard in charge of MSFT would be much less harmful to shareholders).

Rumors that Angela Merkel is actually a giant lizard or will be quitting her post as Chancellor were denied this morning as "absurd" but that didn't stop dollar manipulators from getting a lovely half-point pop against the Euro, putting them into early consideration for the most money made on the stupidest rumor of 2010.  The obvious move here is to now go long on the Euro at $1.435 to get back to $1.445 on the bounce but I never play the currency markets for precisely that reason.   

So hopefully next week we can get back to pretending that fundamentals matter as we get earnings reports from over 200 companies in just 4 days (Monday we are closed).  We are playing some speculative bearish bets over the weekend as this house of cards can collapse at any moment but our hearts are no longer in it as it is clearly going to be more rewarding to run with the wolf pack – at least as long as it lasts…

Have a good weekend,

- Phil

 


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  1. Good earnings + improved manufacturing = rate hike maybe sooner than later = market goes down today


  2. Good morning Phil. Thoughts on a short COF position given JPM’s numbers (especially personal card performance and negative forecast for that business)? COF announces on 1/21 and recently communicated a drop in deliquencies but an increase in charge-offs. The thought is that a beat is highly unlikely given JPM’s numbers and the street is already seeming to get a sense that Q4 earnings won’t be blowing anything out of the water.


  3. "delinquencies", that is. Or do you prefer another financial to short like MA after their run up over $260?


  4. Here come the future’s pumpers. Can they get it to even in 3 short minutes before the bell?


  5. TBT getting killed again…


  6. VZ taking a nice dip today. Will it break 30?


  7. JRW/judah – caught the TZA train out of the gate.


  8. Good morning!

    Well, it’s crunch time – can we hold our levels for the week? 

    Levels remain Dow 10,549, S&P 1,135, Nasdaq 2,314, NYSE 7,389 and Russell 638 so let’s see if it all sticks but INTC was just what the Nas needed to justify 2,314 and it will take a lot of selling to blow the others. 

    Upper defense levels for the bulls should be:  Dow 10,700, S&P 1,150, Nas 2,315, NYSE 7,450 and RUT 645 – that’s what we need to be truly impressed.

    Of course, I’m favoring cash into the weekend and it’s possible some fund managers will too so we’ll see how low we can go this morning and maybe cover those naked DIA March $108 puts into a big sell-off, hopefully getting $2+ for selling the Feb $105 puts (now $1.30) if we get a good move down.  That means, of course, that at the moment – I think they are a good buy but bearish bets have not worked at all lately so very high risk!

    We’ll be watching for a chance to jump on some quick Dow plays but, right now, I’m just hoping we get a nice 100-point dip (the one we’ve been waiting for all week!) and I still like those $106 puts at .10 as a speculative play and then maybe going for the $107 puts when they hit .10 or less if we look bouncy.


  9. SS, Nice. I was thinking of it, but turned to things related to closing out/rolling options, and when I turned back the train had pulled out.  I may look for an afternoon ride.


  10.  looks like someone is trying really hard to keep OIH at exactly 130.  Which is great for us.


  11.  looks like someone is trying really hard to keep OIH at exactly 130.  Which is great for us.


  12. JRW – i am liking the ride on TZA.  Looking for a stopping point, what do you see?  I see us at the lower channel of the flag already.  The 10dma at 64.15 and 15dma at 63.77.


  13.  Phil, how much money does it take to move the oil futures say $1, versus how much market cap is added to OIH.  The point is, could you purchase a large chunk of OIH calls, then spend just a little to goose OIL, then cash out your calls for fun and profit?


  14. ss
    Nicely done, I waited a little too long, in at about 9:50


  15. ss
    I’ve got 63.79, 63.55, and 63.28, but I’m thinking this reverses off one of these.


  16. Good news is bad news Bord!

    COF/Llorens – We’re already short them (sold calls) and I’d rather catch them later on another run-up than try to bet them getting to $40 (especially not by paying premium).   Keep in mind that today is expiration day and you can’t trust anything that happens today not to fully reverse on Tuesday.  COF beat last Q by a mile and still have very low expectations for this quarter so be very careful with them.   On MA, they don’t suffer from delinquencies directly but long-term, I think the banks are going to do something about this as it makes no sense to pay transaction fees on 8% of their charges that are uncollectable. 

    Michigan Sentiment 72.8, lower than expected and .3 better than last month – no real surprise there. 

    TBT – Don’t forget we wanted to sell those Feb $48 puts for $1+ and they are $1.12 now!

    DIA puts – If you take 1/2 off the table at .20 it’s a free ride on the other half and you lock in a 25% profit even if you dump out at a nickel when they spike back so DO NOT come crying to me if you blow this trade – greed kills!

    OIH/Craig – Gotta love the pin action!

    Futures/Craig – As you can see in Denninger’s article, you can create $500M worth of trading by just trading 1,000 or 2,000 contracts back and forth 100 times and presto, you have a rally.  This happens every day as oil is the most grossly manipulated POS in the world, which is why I like going short on OIH when they follow a silly spike in oil. 

    Oh, and did I mention – Wheeeeeeee!


  17. JRW, I would think if it breaks 63.77, you have a ride back down to 63.25.  Enjoy.


  18. Hey Phil – I am long 2000 VZ and short  20 April 33 Calls – what would be your adjustment on this weakness in the stock?


  19. JRW – took 1/2 off.


  20. SS, Since I missed the ride, I’m taking the opportunity to sell some RUT puts to finish the second leg of a strangle that I started to leg into yesterday.  go go go.


  21. Phil -
    Will they try and pin spy at 114 / what’s the chance of the stick save at the end of the day ?
    Holding longer dated puts is sure fun during expiration week when you can sell premium – making up for some of the recent pain


  22. BIDU -
     
    Pali Capital came out with a downgrade on Jan. 12, right before the GOOG China news came out.
     
    I emailed the guy last night; he still stands by his downgrade and says its a sell.
     
    FWIW.


  23. 10 am Dow volume 145M, my theory that this market only goes down on strong volume continues to work.

    AMZN bucking the trend at the moment but not for long probably.   AAPL just went red.

    DIA $106 puts crossing .30 so we should raise that stop on 1/2 to .25 – that’s a 12.5% profit with 1/2 still on the table!

    Dollar getting stronger as Europe is panicking.  We may not bounce until they close at 11:30 (if ever).  


  24. Cap/BIDU – did Pali Capital give any reasons or is there a link to an article somewhere?


  25. JRW – RUT is down 1.35%. Everything else around .9%.  They may defend the lower channel.  I am taking the rest off for safety.


  26. ss
    Switching to TNA


  27. In behind you.


  28. morning Phil; the sheeple are hopeless, but we don’t have to join the dark side either :)
    I wanted to get a little clerafication because i wanted to deply some cash, although if the time is not right i don’t mind waiting indefinatly until time is right.
    1. you have written that the last 3 months worth of gains will be wiped out with a correction soon, this morning you say that it will be a good year for the bulls. so as far as starting to invest in the buy list, start scaling in now ? or wait and see if things crack ?
    2. the bank playes you mentioned yesturday C BAC JPM and there was another one, they are good enough to be in the buy list ? you did mention they should do well this year.
     
    i know i am over simplifing but you get my point.
     
    thanks
    David


  29. cwan, judah, ss & Phil – Whee on full profit for those SPX Jan 1030 short PUTs.
     
    Don’t forget to start the March spreads while VIX is going up.  Scale in slowly just in case we drop further in the next week.


  30. Peter – Great job!! What strikes you looking at on March RUT and SPX?


  31. JRW – since following you I have mainly played TZA.  Now in TNA…it is like holding a tiger by the tail.


  32.  Phil,
    Bought some GS Feb Puts several days ago. Is it time to sell them or hold.


  33. Im in too JRW


  34. Stranglers: FYI – I am in :
    RUT- Feb 680/520; Mar 700/540 Put verticals on the Feb only at this time.
    SPX Feb 1225/910; Mar 1250/950 Order in for Feb put vertical-not filled


  35. Pstas, Thanks. BTW, did you ever find out the answer to the portfolio margin question you posed some time back (if that wasn’t you, pardon me, my memory may be faulty).


  36. JRW/SS. Joined you gentlemen at 63.50. May DD if it drops to 63.20.


  37. DIA FEb 105p are up to 1.65


  38. On the DIA $106 puts, we should be raising the trailing stop to .30 now so 1/2 out at .30 and 1/2 out at .25 and every nickel we gain (now .35), we raise those two stops.  We don’t look bouncy enough for a bullish play yet and $107 is now far away so I’d rather look at the $106 calls (now .30) as a mo play if we hold 10,600 but not as easy a call as the puts were.

    VZ/Hunter -  I assume you are up on the $33 calls so I’d take them out (I’m bullish on VZ) and wait for a chance to reload at a higher price, maybe selling the Feb $31s for $1.10+ (now .70), when you get back to $31.50.  If you are just in it for the dividends and want to be safe, you can always sell the 2011 $30s for $2.55 and buy the 2011 $30/25 bear put spread for $1.90 which covers you all the way down to $24.50 but I’m much more bullish than that on these guys.

    Stick/Samz – It’s hard to say as it is possible for determined funds to override the stick if they really want to.  A big loss by us today can send Asia into a nice tailspin on Monday AND Tuesday (because we won’t be open to dispute it) and that would lead to a gap down open for us on Tuesday and then the guys who are selling today can buy back the same shares into the retail panic on Tuesday, before resuming business as usual after once again teaching the bears a lesson that they can never win. 

    If we hold up here at 10,600 and 1,135 - it’s hardly a win for the bears as that’s closing the week above our levels.  The Nas is the big concern as they failed 2,300 yet again and that’s WITH INTC’s huge earnings.  XLF is skating on $15 – if they fail there, we could get another leg down.

    CRE is also holding up so that worried me (from the bear side) and I want to see VNO fail $70 again to think there is some rational selling going on.

    BIDU/Cap – Well hes’ not looking all that clever just now is he?  He was probable right pre-GOOG news but it’s silly to stand by it under the new circumstances. 

    Buy List/Micro – I’m not too gung ho on buying until late next week, especially if you didn’t catch the entries we had earlier in the week.  The best thing to do is PATIENTLY wait for earnings and if some of our favorites have bad earnings that we can forgive (like GME), then it’s a good time to move in (scaling of course).  We don’t care if the market drops 30% if we are scaled into round 1 as it gives us super-cheap round 2.  Yes, I like the bank plays long-term and those were all hedged to ride out a drop (which we expect). 

    Cool Peter!

    GS/Jced – Take the money and run is the only working rule for bears since July, don’t fool yourself into thinking "this time it’s different" and keep in mind, we only have 2 rules and Rule #2 is "When in doubt, sell half."


  39. Phil
    Seems like JPM has stabilised. Thoughts on getting out of the Jan 44 Put currently trading at .34


  40. Juda- There was a "dispute" on the correct answer for one of the TOS test questions. I never got a definative answer but since I was approved for PM I did not follow up. Don’t feel bad re: memory. I often think of my pea brain as a full hard drive where something must be deleted to add new info :)


  41. ss/pstas/RUT, that Mar 700/540 short strangle is a good one as the price is comparable to yesterday.  This shows that the price yesterday had some "excitement premiu"m in the short CALLs due to the surge in RUT in the past 2 weeks, that has gone today.  This usually accompanies a turn.  If we are not sure, adding at different strikes like 710/530 or 710/520 is also good.
     
    SPX is a much better entry today as the SPX Mar 1240/950 short strangle gets us more credit than yesterday.


  42. Phil, Cap
    Re BIDU: Its current runup of $75 since the GOOG news has increased its market cap by roughly $3.5B. Given GOOG makes 100MM in profit, even if BIDU takes all off GOOGs business, the current price rise reflects almost all this upside. This is assuming that GOOG actually leaves.


  43. DIA/Yodi – When in doubt, sell half!

    JPM/Oncmed – I’m seeing .45 now and if you are still in them then 1/2 out is smart with a stop on the rest at .35.  We might break lower but it’s all gravy so why blow it?

    BIDU/Onc – I’m all for shorting them at $500 but $466 is too in between for me.  That’s the thing about shorting – you should always have 10 stocks you WANT to short and the one that goes up another 10% is the one you should actually short (assuming nothing funamentally changed), not the others! 


  44. Guys,
    Finger on the triger if you see a spike down, support at IWM 63.28 or so; I hate being long.


  45. judah,
    Nice entry !!


  46. Peter, Thanks. I think I’ll stick with 710 on the March calls.  The relentless run-up in the RUT has me thinking that if it gets past 650 next week, 700 starts to look vulnerable. 


  47. CF up 4.11


  48. Peter -
    Do you trade futures options on the cme or the globex and why one over the other?
    Thanks


  49. JRW – Yeah, I have never wanted a stick EVER, till now.  LOL.


  50. JRW/judah – I have great gains today on my TNA play earlier and my strangles, so riding TNA now is like protecting my profits.  No worries.


  51. Volume has trailed off considerably at 186M on Dow at 11 and, of course, we expect 10,600 to provide some support so let’s switch our attention to 1,135 on the S&P and 638 on the RUT and 7,350 on the NYSE and 2,300 on the Nas to see which way things are leaning using the 3 of 5 rule

    Sector ETF strength: Livestock– COW +0.5%.
    Sector ETF weakness: Solar– TAN -4.3%. Gold Miners– GDX -3.1%. Semis– IGW -2.9%. Coal– KOL -2.6%. Clean Energy– PBW -2.6%.

    Dow leaders early on: PFE +0.3%. PG +0.2%. HPQ +0.2%. HD +0.2%.
    Dow laggards: BAC -3.3%. JPM -2.9%. TRV -1.8%. T -1.7%. BA -1.6%.

    Now that full-year foreclosure numbers are in, figuring out which state did the worst depends on how you measure it – but however you do, the top of the list isn’t surprising: California, Florida, Nevada, Arizona.

    Chargeoffs at Capital One’s (COF) U.S. credit card unit rose to 10.14% in Dec. from 9.6% last month. Delinquencies eased to 5.78% from 5.87%. For auto loans, delinquencies rose to 10.03% from 9.57%. (8-K)

    JPMorgan (JPM): Adds $1.9B to consumer loan loss reserves, resulting in firmwide credit reserves of $32.5B and loan loss coverage ratio of 5.5%. "Though these results showed improvement, we acknowledge that they fell short of both an adequate return on capital and the firm’s earnings potential… While we are seeing some stability in delinquencies, consumer credit costs remain high, and weak employment and home prices persist. Accordingly, we remain cautious." (PR)

    Jan. Reuters/University of Michigan Consumer Sentiment: Preliminary 72.8 vs. 74 expected, up slightly from December final of 72.5.

    Dec. Industrial Production: +0.6%, in line with expectations and compared with +0.8% in November. Capacity utilization 72% vs. 71.8% expected, 71.3% prior.

    Jan. Empire State Survey: Manufacturing 15.9 vs. +12.8 expected, +4.5 in Dec. Employment 4 vs. -5.3 prior. New orders 20.5 vs. 2.8 prior. Prices 2.7 vs. -9.2 prior.

    Dec. Consumer Price Index: +0.1% vs. +0.1% expected, +0.4% in Nov. Core CPI +0.1% vs. +0.1% expected, 0.0% prior.  This is amazing with gasoline up 20% and nat gas up about the same.

    Global oil demand this year will reach the highest level since 2007, the IEA said (.pdf) this morning. After its upward revision of 10K barrels/day, the IEA now expects demand to increase by 1.4M barrels/day in 2010. (ETF: USO)

    Moody’s is upgrading the debt of more U.S. companies than it’s downgrading for the first time since Q2 2007, underpinning a surge in bond sales. Yesterday, Ford (F) sold $500M in following a two-notch upgrade by Fitch. The spread between corporate and Treasury bond yields of 160 bps is the narrowest since 2007.  Yes, because they were so right last time

    China continues to heat up, reporting this morning that foreign direct investment more than doubled in December Y/Y to $12.1B. Total 2009 FDI was down 2.3% to $90B, but that’s still a fairly good showing considering the state of the global economy over the past year. (ETFs: FXI, PGJ)

    Meanwhile, China’s foreign exchange reserves swelled to record levels in December, up 23% from a year ago to $2.4T. Chinese banks extended 379.8B yuan ($55.6B) in new loans, taking the annual total to an unprecedented 9.59T yuan, and stoking further fears of an asset price bubble. (ETFs: FXI, PGJ)

    Now it’s worth trying the DIA $106 calls for .30 (totally out of the puts) with a stop if we break below 10,600.


  52.  BIDU:
    Interesting WSJ report: A Heated Debate at the Top: Co-Founder Brin Pushed for Strong Condemnation of China, While CEO Schmidt Argued to Stay". 

    Credit Suisse expects Google likely to terminate China operations in February and for Baidu to gain about one third of Google’s market share.     (from TOS news).
    I have a Feb 410/510 strangle, and a 470/480 bull call spread, to save the 510 calls in case it keeps on going up. 
     


  53. any reason not to short PALM here at $13.58?


  54. Phil,   I can understand how commodities can be manipulated, and even with the broader market, but what am I missing with retail?  Shouldn’t yesterdays news have slammed the RTH? What am I missing? 


  55. VZ / Phil – Time to load up on your last play? Or will VZ fall further?


  56. sam, these are index options on SPX, RUT, NDX, but are not futures options on /ES, /TF.  Futures options are cheaper than index options (in terms of margin requirement) for Reg-T accounts, but the reverse is true for Portfolio Margin accounts.  We haven’t graduated to the /ES futures options yet, but may be in the future when we are keen on trading after hours.


  57. Signing off until later – all Jan’s options are done.  Actually, they were done yesterday and just expired to day (SPX, RUT).


  58. All of the indexes are sneaking a peek below the lower channel of their shrinking wedge.  Seems like a good time for another fat fingered 200K contracts on the /ES.


  59. Llorens, I agree, though first I think I’ll pop down to my local VZ store to see how their sales are.  Since there won’t be a CDMA NexusOne in first quarter, PALM might have good numbers over the next few months.


  60. short PCX again for the following reasons:   1) broke its mini-trend upward, 2) looked like a double-top, 3) broke below what would have been support at $20.10, and most importantly 4) I’d like to make some money on it.


  61. tradansh – I am planning on selling 2012 Jan VZ 30 puts for around 5 & will buy Jan 2012 25 Calls when VZ hits 29.  At 29 the yield for VZ is ridiculously impossible to resist…IMHO.


  62. Hi, Peter,
    Thanks for the recommendation on SPX Mar strangles.  I’m putting in a limit order to see if it fills.  I have an appointment in the afternoon, and won’t be able to see what happens until after market close.
     
    BTW, when you said: "Futures options are cheaper than index options (in terms of margin requirement) for Reg-T accounts, but the reverse is true for Portfolio Margin accounts."  Are you saying that those index options require LESS margins in Reg-T but MORE in PM??
    Look forward to a graduate level course on those!  Professor Peter!!  Whenever you are ready, we’ll follow ya!


  63. Phil – Govt Sachs has forced us all to become TA traders.  Some day fundamentals will rule again……I hope.


  64. While corporate bonds are on the mend, NY State’s bond offerings aren’t privy to the same treatment as the banks it hosts. Struggling to bridge a $7.5B deficit, the state’s borrowing premium is at a 15-month high.

    PALM/Llorens – Well it’s a stock and stocks are dangerous to short in general…  Other than that, I think $15 would be the magic number to take a poke at them but they just got a good rejection off $14 so they may not make it. 

    Retail/JCM – It’s the same as CRE.  We hear nothing but dreadful stories but they keep going up and up and up (and please, if anyone has a positive CRE story, please post it here for balance).  The less people there are in a sector (and who the hell is in retail this year?) the easier it is to jack them up with a tiny bit of index buying.  News doesn’t matter because all I have to do is stuff the RTH up past a resistance level (and resistance is know to be futile – Borg fact!) and that then triggers a bunch of robo-funds to pull money out of the 401Ks of tens of millions of people who have no idea they just went long on M – they just followed the advice of the guy who came into the office 5 years ago and told them to check off the box to put money into Diversified Fund A or Diversified Fund B so their retirement would be safe and sound. 

    Former Fed chairman Paul Volcker tried to rally troops at the Economic Club of New York against the "reform light" promoted by the bank lobby: “If you agree, make your voices heard somehow or another." But with Volcker looking increasingly out of step with the administration, does he still have an ear in the White House?

    VZ/Trad – I think $30 will hold but I’d wait until next week to see if that theory holds up. 

    11:30 and no stick so far but 10,600 is holding at the moment BUT we lost the NYSE for a moment so be very careful!

    Nice job this month Peter – an excellent round of picks!


  65. Check out TSL. Six weeks of steady gains wiped out in three days on no particular news.


  66. emcginley … I don’t have the write up; they did give reasons.  I saw the write up last nite on Yahoo msg board in yesterday’s comments, someone posted them, along w/ his name and tel # and email.  So i emailed him.


  67. COF … those #s were pretty ugly.  I am still short some; inc 42 and 43 calls that likely go out worthless tonight.
     
    BIDU, I don’t know, this move during options expiration week seems way overdone.  They could pull the plug on this stock at any minute (or not !).
     
    Could drop 20 today from here if they let it go; that would be fun !


  68. Hi Phil, I had sold ERY JAN $11 puts @0.70.(now 0.8) Should I close it for a loss or should I roll to Feb $10 for $.10?
    thanks


  69. ss
    I;m back out.


  70. JRW – me too.  Wait to see what settles.  My strangles are running wild.


  71. Cap – some option traders must have lost their ass on the sharp move in BIDU.  The short sellers, must be going postal.


  72. Jamie Dimon softpedaled JPMorgan Chase’s (JPM -1.7%) $12B earned in 2009 as inadequate, but the actually quite strong figures show that however JPMorgan should have performed, it’s a phenomenally good time to be a bank.

    The Treasury reports that permanent mortgage-modification approvals have crested the 100,000 mark; the median payment reduction is $500 (full report, .pdf).  What a crock!

    TA/SS – Well a TA market is much easier to manipulate – that’s why they push TA so had over fundies (and fundies are just soooo dull anyway..).

    AXP making 52-week highs – funny day for it. 

    Woop, down we go again! 

    ERY/Jlui – I’d do the roll, oil is in a downtrend and was saved today by the IEA demand upgrade that’s total nonsense.


  73. What’s the plan on the Jan FXI puts? I ALWAYS pick the wrong short-term ones! …so frustrating.


  74. VA / Phil, jomama – Good advice. Need to wait for the earnings to see if we do down further. 29 has been a good floor for them.


  75. TSL/Eric
    TSL’s dip coincided with the announcement that germany and France are reducing their subsidies for solar.


  76. Mortgage modification: Where’s my damned $500 a month?!?! Oh that’s right, I forgot, I did not lie on a loan application, I did not try to flip a house, I did not live beyond my means, I did not buy a bunch of toys using home equity loans…. I played straight, saved and invested in the stock market and got my ass handed to me. My taxes are sooooo well spent.


  77. Phil, I need to roll VLO 17.50 to next month. Would you suggest selling 18 or 17 calls?


  78. Intel, JPM: Is the Market Already Pricing in 2010′s Growth?

    Social thought of the day:  I wonder, to what extent, that video games are useful in keeping the sheeple in-line by giving them cheap entertainment to spend their days on (as well as an outlet for violence), which keeps the MTV generation from rioting in the streets despite the fact that 25% of the people 16-25 have no jobs?

    FXI puts/Ac – The $42 puts can just roll over to the feb $39 puts for better than even so no worries there.  FXI isn’t leveraged so 39 is a long way down for the World’s mightiest economy.  That’s why I like shorting ETFs with $1 incriment rolls.

    Fogot to look at noon but volume at 12:20 on Dow is 220M, which is more than we finished at any day this week!   Still that’s just 34M since 11 so very slow again but they’re still having trouble holding the lines (failed at the moment) so we’ll have to see what happens at 1:30 now, when many traders call it a day after lunch and the volumes drop to nothing.  Keep in mind that any Jan premium you own is now decaying at a rate of 30% per HOUR! 

    $500/Bord – All the Fed has to do is lend money to people at 3% instead of to banks at 0.25% and we can all knock 1/3 off our mortgage payments!  It’s amazing to me that we are taxed so the banks can be given free money, which they turn around and charge us 5% to borrow back.  No wonder at all that they are having a great year is it?

    Wow, good thing we watched those signals – another whopping leg down!


  79. onc, I know, but the other small solars haven’t been smashed nearly as hard — off 20%. TSL got an upgrade a few days ago, and after the Germany announcement Lazard defended their high valuation of them (and of FSLR). No use.
     
    It’s just a nice example of how easily these low-volume gains are reversed, even when they seem to never go down, IMO. I bet we see a lot more of this in the months ahead.


  80. Coming into some support here on the /ES.


  81. DIA feb 105 up to 1.76


  82. Its all lies, from 2003 until 2007 we had the housing, building bubble (money actually had a place to go). What in the world will drain all the money that’s in the system today besides commodities……nothing… there will not be another housing bubble for a long time to come. Its a mess people i dont care what INTC or any other company does in the short term there is nothing on the horizon thats going to soak up all the free money thats out there besides the markets…another bubble…anyone…anyone…. All i hear is hype, echos of the late 90′s

    GS is the only monster that can turn crap into profits….my investment for the next decade.


  83. Phil, video games have definitely helped surgeons develop dexterity for laparoscopic surgery.


  84.  Phil, so far you have been right on the GS spec, but Im waiting for further weakness into the close…is that how I should play it?? Also, could you tell me how your net result on your JPM and INTC complex trades…too complicated for me to work out.


  85. Man, I just love the smell of burning premium.


  86.  Phil…I TOTALLY agree w/ your sentiment of how the Fed is just a pimp for the banks…it makes me sick.


  87.  Or should I also say Congress is a whore to them…


  88. What are the chances of a stick today?   I have a meeting at 3:00 and am not sure I’ll make the close….I’ve got several callers that are set to expire, but I’d hate to not get back and then find that they finished ITM.


  89. Phil, thanks for your advice on VZ the other day. I DID sell the April 31 calls. Bought them back today and netted .67. Sold April 29 puts today.


  90.  Hey Phil…where you be?


  91. In TNA at 44.65 ( 63.28 on IWM )


  92. JRW – Let’s roll.  IWM kissed the 20dma and held tight.


  93. gotta agree with you there kustomz.  Where else is all that money going to go? 10 year trasheries at 3.6%?  Please.  Nowhere else to go into but financial assets. 


  94. Oh oh Phil – all the FM traders are sellers.


  95. ss does that mean the market comes back today??


  96. Here’s a little anecdote about the foolishness of "savings" accounts.  My 9 year old and I opened a savings account for her after she had accumulated $150.  Brought her to the bank and we went through the process together.  She was very excited and I was proud to teach her what my mother taught me "Save your money for a rainy day"   Well, image my shock when a week later I checked her account online and noticed they had charged her a $4 service fee for some bs.  It’ll take her two years of interest payment to make up what they wacked her with right off the bat.  How’s that for providing a disincentive to the kids to save.    I got them to reverse the charge after shouting loud enough but the fact that they did it in the first place is very telling.


  97. VLO/Foss – Well they are upgrading demand (and gas is holding $2) and oil is trending down (now $78.36) and we have SUMMER DRIVING SEASON (which surprises people every year) so I’d stay on the more bullish side at $18.

    Wow, where is our buyer?  12:45 and volume is now 228M on Dow, just 8M in 25 minutes abut it cost us 50 points.  Perhaps they used up all their ammo trying to stop the slide earlier?

    DIA/Yodi – Absolutley set stops at $1.65 (.10 trailing) if you bought them earlier and, at this point, we shouldn’t be greedy and can sell the Feb $105 puts as a FULL cover of the June $108 puts as that pays for 3 rolls (to the $111 puts) which is plenty.  In fact, you can even take $1 off the table and roll down to the June $106 puts if you want as there is very little delta difference between the two (just .06).

    LOL Kustomz – thanks for the pick, I guess….  8-)

    Games/Jo – Oh they are very useful but I see my kids sit on a couch like zombies and they don’t care what’s going on in the world as it is boring in comparison to the great worlds inside these games and I wonder how many tens of millions of people are doing the same thing on couches all across the nation.   These are the people who may have marched in the streets in the 60s to oppose social injustice but now they are perfectly content as long as 7-11 has $1.19 Big Gulps and the electricity stays on. 

    GS/Big – They have all the good features of JPM and not the bad, they should do fine and this is a buying opportunity but I wouldn’t hurry into bullish plays right now if we are going to finish down 1.5% or more.  Like I said, Asia will freak out and Europe will trade without knowing what we’ll do all day Monday and by Tuesday we could be gapping lower.  If you are dying to enter GS, you can sell the Apre $155 puts for $6.20 as $148.80 is a nice net entry on them.   As to the other trades, they are both still in progress but both on target. 

    Pimps, whores/Big – It’s all just one big prostitution ring isn’t it?

    Stick/Eph – I wouldn’t risk it, pay the nickels and sleep soundly on it.  Volume is very low now but we’re still falling so Mr. Stick is either spent or waiting for that last-minute strike…

    Take heed bulls!  DealBook notes in the World Economic Forum’s Global Risks 2010 (.pdf) not only the systemic risk of ailing public finances, but also the chance of a collapse in swollen asset prices (it’s not just about China anymore).

    VZ/JB – Oh great, congrats!

    Where/Big – NJ, why?


  98. Theres one helluva battle going on to keep AMZN from dropping. Normal volume is 7M shares/day and its only 1pm and we already have 10.5MM shares traded.


  99. jomama … BIDU … yeah no kidding; people made and lost fortunes on this.


  100. Damn, those $106 puts are .50 now!  Oh well, gotta be happy with 200% gains, right?

    Here comes Obama – can he give us a boost? 


  101. Phi; — are you in the DIA Jan 106 calls?  I just bought some at $0.66 as a spec.


  102. pstas, cwan, stranglers – Anyone getting filled today on strangles.  I bid on the mark a couple hours ago and no fills.


  103. Haiti is not a topic that’s going to get the markets going.  Did you know the per capita income in Haiti is $738?  That’s 400 miles from Florida and that’s what they live on!

    Damn, now Venezuela got hit with a small quake and CA was last week, there’s some major plate movement going on it seems…

    Dow leader: HD +0.4%.
    Dow laggards: BAC -3.4%. CSCO -2.4%. MRK -2.4%. INTC -2.3%. CAT -2.3%.

    On interest rates going up:  It seems the Fed knows they will be delivering a contractionary blow to the economy just by ceasing balance sheet expansion – indeed, everyone (except maybe your local realtor) knows the housing market is being held together by little more than bailing wire and duct tape. Hence why some policymakers are troubled by the impending exit.

    Stiglitz:   What happens when reward is decoupled from risk? One cannot always distinguish between incompetence and deception, but it seems unlikely that a business claiming to have a net worth of more than $100 billion could suddenly find itself in negative territory. More likely than not, it was engaged in deceptive accounting practices. Similarly, it is hard to believe that the mortgage originators and the investment bankers didn’t know that the products they were creating, purchasing, and repackaging were toxic.

    DIA/JCM – I’m playing around with the $105 calls, not the $106 calls, just fishing for the stick man at 1:30 but it’s uber risky! 


  104. YEAH for MNKD…..In this market, it us up 30% sinice Tuesday….


  105. Phil – every generation thinks the following generation is much more lame.  I think it’s one of the first signs of aging.  :)


  106. Phil DIA 105p I am trying to sell them against the Jun 109 matress sold first lot at 1.77 but looking for up to 2.00 as you said this morning


  107. So funny, a whole week of gains I thought were ridiculous wiped out in 4 hours…

    The Fed buys $1.442B in agency debt, of $4.809B submitted, bringing the cumulative purchases to $162.3B since December 2008.

    Aging/Jo – Are you sure their music doesn’t really suck?


  108. Guys – are the markets closed on Monday?


  109.  market closed monday


  110. DIA/Yodi – No, I flipped, my 1:04 comment was not to be greedy for $2 and take the full cover at $1.75.   No big loss, it’s still that price..


  111. Did I say I HATE to be long ?


  112. Does anybody use the Netflix streaming – i just resubscribed to netflix after getting a sony ps3.  It is very easy to use and quite slick.  The sony playstations are all sold out here in phx – i think this may bode well for sony, but their psp model is a long term loser due to the itouch.


  113. JRW – yeah man.  Opposite of months past, every buying is met with bigger selling.


  114. JRW/SS. I had a lunch meeting, so I couldn’t manually pull the trigger at 63.28.  Had a limit order for 44.60.  As Maxwell Smart would say--Missed it by that much…Back to where I first got on the train.  Putting my faith in the stick. 


  115. judah,
    As Phil sais, " The Stick will set you free "


  116. jomama/netflix streaming:
     
    i set it up about two weeks ago. bought a high-end cisco router that allows you to segment your video streams from your other traffic. i’m actually transmitting the video signal wirelessly from the router to the video system. so far, so good.


  117. SONY/ JO-- there was a one page piece on Sony in Fortune or Forbes this week. I love my PS3 and netflix streaming. But the PS3 is a very small part of the Sony business complex, and PS3 sales were down last quarter. They have not been hugely profitable in years and it is unlikely that they will reach the hey day of the Sony Walkman soon. Also, you can stream with a number of BlueRay disc players that have built in wireless. Don’t know it this helps…


  118. Classic Dylan video ripping into Ed Perlmutter on BS loopholes in financial reform

    SNE/Jo – They’ve been hitting 52-week highs lately, things are looking up for them.

    Nice DIA entry JCM!  Cashed out at .80 though, does not pay to be greedy with 120 mins left to trade.  Will be happy to go back in if we bottom out on my 3 min chart….


  119.  Phil,
    What do you think will happen long term to TBT if we start to get an avalanche of soverign defaults?


  120. Will you be loading up on DIA puts over the weekend? 


  121. thanks jb – i got burned on sne on the last go round.  they can have a great year and can still be burned by currency plus i’m not a big fan of that stringer guy.


  122. 2pm Dow volume is 250M so that’s 22M since 1:04.  I’m starting to thing that WE are 10% of the markets volume (we probably are 10% of the options volume).  Seriously, think of 22M total shares, that’s 1M shares in 3 mins or 300,000 shares a minute and I know I trade 10,000 share blocks and I’m sure other people here do so that’s 10% of the market volume with just a few of us making trades….

    INTC has got to be kidding at $20.97, nice opportunity to sell Feb $21 puts naked for .72 for a nice net $20.25 entry

    TBT/JcEd – It would only take one to give them a nice pop although there may be an initial flight to the dollar.  My favorite play on them is just sell puts naked to collect monthly premium as rates can’t really go any lower and, one day, they will go up.

    Puts/Jtiff – No, you have to be satisfied that we got this sell-off.  We cashed out the longs (naked ones) yesterday as we were stupid high and today we were able to cash out of the shorts and now we are cashy and flexible into the weekend, which is sooooooooooo nice!  No sense in risking anything now that we already had a sharp 150-point drop.


  123. Phil – mattress cover – what’s the official stance – also I am still in March 108 puts


  124. Phil – Cool.  Set a time for us all to buy DIA puts.  Ready, Set….


  125. BIDU breaking down; this could get interesting….


  126. SS/filling strangles.  I’m trying to get some SPX strangles filled today.  Not yet, though it seems like I could have gotten my price today had I legged in.  I dunno.


  127. The guy CNBC just interviewed thinks a corporate upgrade cycle will generate as much revenues for IT as it did in 2003-2004.  Perhaps someone should point out to him that equipment costs are about 1/5 of what they were then, not to mention you get about 100x more processing power per dollar so it’s really not likely that we’re ever going to match those spending levels again. 

    Mattress/Concreats – The June $106 puts (now $5.55) fully covered with Feb $105 puts (now $1.75) is the official stance, which is pretty much delta neutral so if you have a lot of bullish positions and are not mainly cash, then a 1/2 cover is the way to go or, possibly, stay in the June $108 puts (now $6.55) instead.

    Buying/SS – That would be wrong…

    No 2:30 stick action, volume at 2:38 is 264M so 14M in 40 minutes – no excuse if they have any firepower left but they may be saving it up so they can jam us green in the last 15 mins (wouldn’t that be amazing?).

    It does look more like everything is flatlining ito the close now.

    Positive spin from The Economist:   Bears who like to point to the similarities between today’s China and 1980s Japan can growl all they want, says The Economist: A close inspection of pessimists’ three main concerns – overvalued asset prices, overinvestment and excessive bank lending – suggests China’s economy is more robust than they think. (ETFs: FXI, PGJ)

    Richmond Fed chief Jeffrey Lacker says a successful "audit the Fed" movement would mean "serious risks" to monetary policy and stability. While acknowledging "policy mistakes," he points to three decades of a good record and urges leaving the bank’s balanced governance alone.   An Audit would pose serious risks to monetary stability???  What is that telling us???


  128. I love it when the TD Ameritrade online trading system BREAKS DOWN 2:45pm of expiration Friday!


  129.  Phil….trading question..I own PCLN     puts Jan 220 covered with Jan 210s.    TOS says I have to do nothing with these today, and that if PCLN closes below 210 they’ll automatically deposit 10.00 to my acct?  Is this right? I don’t have to close these out in some way?  


  130. Bord better run with TOS


  131. Bord/ things looking good on InteractiveBrokers.
     
    What exactly is the malfunction with TD Ameritrade?


  132. Phil DXD holding long Apr 27call at 4.00 now 2.62 tried various time to roll down to 25c and sell Feb put 28 as you suggested some time ago without succeding , would it not be better to close?


  133. Phil your thoughts on dollar for next 2 months, quick and witty if you will


  134. Jordan
    Command Center, their trading platform unavailable, then look to trade order status and position page on the website, its not available too.


  135. Stick time?


  136. Phil / Fed audit
    It would be destabilizing to see $ 1.7 Trillion  paid for paper worth $2.5 Billion don’t you think. But hey, they could focus on all the profit they made in THE FUTURES MARKET !!!!!!!!!


  137. short strangles fills – guys, my March short strangles have many fills today, many above the Mark price, so instant profits.


  138. Ameritrade/Bord – As a TOS prisoner of Ameritrade I find that very disturbing! 

    Go Stickman!!!

    PCLN/Iflan – They have told me that but I’ve never trusted them to let it happen!  In theory, that is what they do, automatically wash the spreads.  Let me know what happens.  8-)

    DXD/Yodi – I’m not giving up on a market crash between now and April just yet.  Rolling to the $25s for $1.30 puts you $3.40 in the money at net $5.30 and you need a less than $2 move in DXD (about 300 Dow points) to get even.  If you don’t think that can happen, then get out. 

    Dollar/Kustomz – UUP! 

    Fed/JRW – Yeah but when a Fed boss says "If you actually audit us you’ll crash the global currency markets" maybe it is time for the BBB trade (bullets, bean (canned) and bullion)!


  139. jomama/netflix streaming:
    I use the streaming on a PS3 with just 3 Mbit DSL (all ATT offers in my location). Still it works fine and picture quality is okay. So I am sure all is not lost for NFLX when streaming becomes more widespread. They have a large customer base and a well respected brand.


  140. The TOS interface to Ameritrade is working – just slow – posting of orders to the working queue (happens quite often when volumes are heavy) their server capacity is not keeping pace with their volume (the TOS side)


  141. TOS/Ameritrade – I see what you mean now.
     
    With InteractiveBrokers you almost every day get messages that one or other exchanges has problems, these usually last for less than 10-15 minutes, but at these times, other exchanges are working.  have never had to wait to execute a marketable order.  Their interface, though is far inferior to that of TOS.


  142. Finviz’s market heatmap is nice specially historical look.


  143. cwan/margin on /ES options, 11:41AM question – Take a look at the margin comparison between SPX and /ES options below for Reg-T and PM accounts, and you can see what I meant:
    Reg-T Accounts:
    /ES Feb 1130 short PUT (ATM), $63 margin
    /ES Feb 1020 short PUT (-10% OTM), $40 margin
    /ES Feb 910 short PUT (-20% OTM), $18 margin

    SPX Feb 1130 short PUT (ATM), $208 margin
    SPX Feb 1020 short PUT (-10% OTM), $108 margin
    SPX Feb 910 short PUT (-20% OTM), $91 margin
     
    Portfolio Margin Accounts:
    /ES Feb 1130 short PUT (ATM), $51 margin
    /ES Feb 1020 short PUT (-10% OTM), $32 margin
    /ES Feb 910 short PUT (-20% OTM), $14 margin

    SPX Feb 1130 short PUT (ATM), $34 margin
    SPX Feb 1020 short PUT (-10% OTM), $4 margin
    SPX Feb 910 short PUT (-20% OTM), $1 margin


  144. Netflix – I love it too and now time warner gives me 10Mbit it’s really great!
    I love AAPL products, but I don’t think the iPhone automatically kills PSP anymore than a $1000 iSlate automatically kills a sub $200 kindle, but I think I may be the only one who thinks the future is still up for grabs on this.


  145.  Phil how about some DIA jan 106 calls NOW?


  146. Phil, you’d love this one.
    http://www.businessweek.com/news/2010-01-15/obama-s-mortgage-modification-recipients-fall-short-drop-out.html
    Obama’s Mortgage Modification Recipients Fall Short, Drop Out
    January 15, 2010, 03:03 PM EST
    Jan. 15 (Bloomberg) — About 25 percent of homeowners who received trial loan modifications through President Barack Obama’s main foreclosure prevention plan are failing to keep up with their new reduced payments, the Treasury Department said.
    At least 196,000 borrowers have missed some or all of their required payments, according to comments Treasury officials made on a conference call today and calculations from government data. An additional 115,000 homeowners who started trial repayment plans last year have either dropped out or been kicked out of Obama’s Home Affordable Modification Program, the officials said.


  147. See it is fun playing for the stick – look how happy we are when he makes his daily appearance!

    Not the best attempt to get us back to 10,600 though, really fizzled out there on the mark…

    Maybe another try once they get rid of this seller or maybe it’s a 3:30 launch window but I was thinking 3:45 today….

    Dow volume now 284M at 3:27 so 20M in the last hour.

    Sector ETF strength: Livestock– COW +0.1%.
    Sector ETF weakness: Solar– TAN -4%.Semis– IGW -3.3%. Clean Energy– PBW -2.9%. Gold Miners– GDX -2.7%. Regional Banks– RKH -2.2%.

    Copper $3.36, silver $18.44, gold $1,130, oil $78, Nat gas is the star at $5.69.

    Grabbed some DIA $106s for .10 for fun.


  148. Peter, Out of curiousity, I just checked the price of those Feb RUT strangles I sold for $6.  One month later, the RUT is up 3%, the calls are down to $2.  The puts are below $1.  It’s a beautiful thing.


  149. FXI – don’t know if it makes a difference, but here is a chart on FXI.  They are making lower highs…and it appears if they break through here, higher lows. 


  150.  Phil, in DIA @ .1 also! Will we see a big sticK? What is exit point?


  151. Sorry, that would lower lows.  RSI and MACD are also moving down…


  152. DIA/Big – Good timing!  Just make sure you take that nickel.  Don’t forget it’s all premim and you only have 30 mins!

    Mortgage/Jordan – That’s becasue they didn’t follow my program so I wash my hands of the whole thing.  As I keep saying, it’s a total disaster but no one seems to care so we’ll party on until it all collapses again and then we’ll certainly know who to short…

    Whether spurred by government "encouragement" or not, JPMorgan Chase (JPM -2%) has seriously stepped up its mortgage modification program – raising conversion rates to 15% from 2%. And in this morning’s earnings call, Meredith Whitney raises the principal-forgiveness question, which could dent the bank’s whopping loan-loss reserves (chart).


  153. Mortgages – total disaster, I feel another rude awakening.


  154. Judah, yeah, good that you find out the inner working of the play, as its nature is to have many small wins most of the time.  There are occasional big losses that would wipe out the many wins, but we are here to limit those losses.  We also use ToS Analyze Tool to see what the margin and P/L are if the market goes +/-5%, 10% and heaven forbid +/-15% a month.


  155. We are so close to having 3 of 5 down… and one of the up ones is DOW.


  156.  Phil, missed the nickle…wait for the last 15 min stick?


  157.  " … hold … Hold … HOLD …"
     
    Phil, I’m still holding! ;-)


  158. JRW/SS. You riding this one to last station?


  159. JRW/judah – just back.  Had to pick up the kid at school.  Not on a train.  Good luck to you 2.


  160. DIA/Big – .12 is plenty once it turns back down.  20% is 20%, just because it’s .02 is no reason to let it go!

    Hold/Diamond – LOL!   It’s hard to have convictions isn’t it?


  161.  Phil…Got out of DIA @ .11


  162.  Phil got out of DIA @ .11  last 4 minutes too scary to hold!


  163. Phil,
      I’m up 50% in my retirement account and thinking about liquidating to a cash position until the market corrects. Any thoughts? I’m guessing you’ll agree. Only question should I go to cash or to a bearish standing (maybe 50% cash, 50% bear).


  164. Wow, most stocks I’m watching pre-pinned at 10am, this is the dullest OpEx day I can remember in a long time.


  165. DIA/Big – Better than the alternative.  Those calls are only really worth a nickel and you’d be stunned how fast they can get cut in half if the Dow ticks down.  Once the MM sees you they’ll make you sweat and then they let it go up usually.  I’m out now so I expect it to go up but plahing the last few minutes is Russian roulette with 5 chambers loaded.


  166. Phil/JRW/Faith in the Stick.  My faith has set me free!


  167. Out of TNA at 45.70; $1.05 x 12000 + 17,500 from TZA. Nice


  168.  Phil..Bot some Mar UUP 23 calls, decent play?


  169. Wow, I just got filled on a RUT Put vertical after the close.  1st time that happened.
    JRW – Nice.  Wish I could have joined till the close.  All indexes except the RUT closed back in the flag after peaking out of it.


  170. Retirement/Japar – Since it’s retirement, I’d say cash and bargain hunting (unless you are already old!).  Time is your friend over the long haul in the markets and we have earnings coming up so we can grab stocks that disappoint like INTC, that have earnings we like (actually INTC is baffling but we’ll take it!). 

    You can make bear bets but make long-term ones like EDZ (selling Apr $5 puts for $1), which will always make a good cover for your longer bets as well as being an income producer you can sell against (Apr $6 calls, for example, can be sold for .55, which is 13.7% in 3 months against a $4 entry and you still have a 50% upside before you get called away – isn’t that NICE insurance?)

    LOL Judah – Love the stick, the stick is good, the stick shall set you free!

    Wow, that was a fantastic way to end the week.  We made 200% on the DIA $106 puts and 35% on the Feb $105 puts and then another 8.5% already as we turned around and sold them to cover!  Plus the nice extra dime on the $105 calls which offset a couple of misplayed entries that cost us nickels and all is good on a Friday!

    I hope everyone has a great holiday weekend.  Hopefully I can get more of the 2009 review done and we’ll be all prepared for next week’s very exciting earnings trading.

    Have a nice weekend,

    - Phil


  171.  JRW…what was the option you bot in TNA??


  172. TD Ameritrade came back up about 3pm, then went down again at 3:45…. this is not the first time this has happened with Ameritrade so all you TOSers be aware. I guess the trade off of getting .75 cent per contract options with no ticket fee comes with the fact that the system crashes at pretty critical times. I remember during the crash last Fall, the damn thing seemed to be down half the time. 


  173. BigPinot,
    Bought the stock, twice today, after buying and selling TZA this morning; just daytrading  the direction. Out of both now, it gives me something to do while I wait for my long term plays.


  174. Have a great weekend all !!


  175. Folks could I have the email and name of the TOS contact for PSW to set up an account there. Thx.


  176. Bord,
    You can sign up on line at thinkorswim.com- all the forms for a/c transfer are available. Once you get set up contact scott@thnkorswom.com for your "discounted" PSW rate.


  177. How much is the discount at Thinkorswim?  I am using Options House now and am very pleased with their pricing.


  178. TOS: I think 1.25 per contract, flat.


  179. Anybody,
    Did you guys kill it selling premium when the VIX was super high or did the unpredictable drops and necessary damage control offset that advantage? I’m just curious how this style portfolio would perform in an that environment. Does margin double or triple on you or is it just fractional but significant? I need to know what to expect if we drop 20-30% so I don’t hit the panic button. :-)  
    Thanks, Aaron


  180. ORF Fee – got the following from IB:
    "Starting February 1, 2010, a new pass-through exchange fee, referred to as the Options Regulatory Fee (ORF), will be collected by IB on behalf of the U.S. option exchanges. The fee will be assessed to customer orders at a rate of $0.014 per U.S. exchange listed option contract and is in addition the IB commission charge as well as any existing exchange fees. Its stated purpose is to assist in offsetting exchange costs relating to the supervision and regulation of the options market (e.g., routine surveillance, investigations, and policy, rulemaking, interpretive and enforcement activities).

    It’s important to note that while only four of the seven exchanges (BOX, CBOE, ISE & PHLX) have implemented the ORF to-date, each is assessing a fee regardless of the exchange on which the transaction occurs. Accordingly, the $0.014 fee represents an aggregate of each of the four individual exchange’s fee and is applied regardless of the market of execution. This charge will be reflected on the Activity Statement as a Regulatory Fee. In addition, while it is not known at this time whether the remaining three exchanges intend to implement the ORF and, if so, at what rate, the aggregate fee is subject to change should any elect to do so."
     
    This ORF fee could kill small value options as 2.8 cents a round trip is a lot for a 30c options.  Another reason to move to SPX and RUT options as they are larger than $1.5 usually.


  181. …"kill it" means "do really well", just in case you are not hip to my generation X Florida surfer-punk verbiage. (didn’t want you to think I meant kill the trading activity for a while) Thx.


  182. On BIDU and GOOG: There’s a conspiracy theory circulating in local Chinese and Taiwan forum, i.e., the incident was originated by a spy (from China’s information security dept, the ‘CIO’ of China) working in Google Shanghai office. Google HQ found out in the past few weeks he visited the central code repository and allegedly stole the core software of Gmail, for the purpose of for Chinese government to break into the Chinese dissidents’ gmail accounts… 
     
    I think there’re certain truth to this, since Google CEO visited Hillary a couple of days ago and now the US government is officially sending inquery to China..
     
    You can use google translate to read this, http://www.brookswelding.com/
     
    A couple of yrs ago same thing happened to Cisco by Huawei engineers. There was a joke circulating back then as: 

    During a court hearing of Cisco’s case against Huawei, Cisco was able to demo a Huawei router responding to a (purposely) errorous IOS command with the EXACT same error msg as a Cisco router will do!  (IOS is Cisco command line language, Huawei ‘happened’ to be compatible..) 
     
    Now Huawei is a >$20B annual revenue company (http://www.information-age.com/channels/comms-and-networking/news/1107138/huawei-grows-revenue-17-in-2009.thtml). And surprisingly enough, it’s still private! 
     
    Welcome to the world of communist capitalism, Chinese style!
     
     

     


  183.  CIO -> CIA