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Jobless Friday – US, Japan and Europe Add More Stimulus

Wheee – more free money!

The money train left the station just ahead of the US market close yesterday when the House passed a $15Bn Jobs Bill although it remains to be seen if Jim Bunning will pass it.  China doesn't need Bunning's permission to hand out free money and they will be "allocating 63.2 Billion Yuan" to fight high housing prices by SUBSIDIZING low-cost housing.  Come to think of it – I object to that!  Someone in China needs a lesson in some basic economics

The big boost this morning came from Japan, where bonds hit the highest level of the year after the Nikkei newspaper said the central bank at its March 16 meeting may discuss additional monetary easing steps.  It doesn't matter whether this report is true or not as it already did it's job and shot the Nikkei up 223 points for the day, erasing two week's worth of losses in a single session.  It's hard for the BOJ to get easier than our own Fed but Chicago Fed President Charles Evans said yesterday he needs evidence of “highly sustainable” growth before supporting tighter monetary policy, while James Bullard of the St. Louis Fed said the central bank should remain “accommodative” – these are, of course, the Fed's code words for MORE FREE MONEY! 

Of course, our Futures are up 1% from yesterday's low and the commodity markets LOVE IT and oil is back at $80.65 with copper back at $3.40 despite "weak" demand in China, where stockpiles of copper are now at 7-year highs and even Goldman Sachs has withdrawn their buy recommendation on coppper because of concern that economic recovery in developed markets isn’t on “solid footing.”  “About 60 percent of China's copper is used in the power industry, and our sales to wire-and-cable users reflected that demand is rather weak,” Chairman Wei Jianghong said, while attending the National People’s Congress.


The demand is not very strong in the first place,” Jiangxi Copper Chairman Li said in Beijing while at the congress. “But a lot of people have long positions in the market, so I think in the first half of this year, copper prices will be good.”  Copper stockpiles in China jumped to 149,478 tons for the week ended Feb. 26, 28 percent more than the week ended Feb. 12, according to the Shanghai Futures Exchange.  Demand from China for global supplies may weaken because prices on the Shanghai Futures Exchange are now close to those in London, discouraging arbitrage trading, Goldman Sachs analysts said in a Feb. 24 report, when copper was 10% lower than it is today.  

Disclosure:  We're short copper at $3.40, short gold at $1,140, short FCX at $80 and short oil at $80 so wish us luck!  They say "you can't fight the Fed" but how do you fight the combined will of the G20 as their Central Banks coordinate these little stimulus boosts that routinely punish anyone who might be so bold as to short the markets?  I'm not a perma-bear, we were long off the dip to 9,900 and our Feb 6th Buy List had 42 bullish trade ideas (all doing very, very well thank you) and our brand new $100K Virtual Portfolio was initiated on Feb 24th, with the Dow at 10,300 – also bullish (but well-hedged).  So this is not about me having sour grapes – this is about me seeing SERIOUS, MAJOR issues that are being ignored by the market and the media and I AM CONCERNED!

PSW has hundreds of members and I chat with them during the day and when I see people getting too bullish on what I believe to be a shakey market foundation, I do tend to go into Chicken Little Mode and point out more of the underlying problems than usual.  Also, taking short bets on runaway commodities makes for a very nice downside hedge to a generally bullish (long-term) virtual portfolio.  The key is to try to maintain balance and we find it wiser to play our resistance lines (and 10,400 is a big one) for a pullback until proven otherwise.  Sadly, a low volume rally, like the one we've had so far this week, proves nothing at all…

8:30 Update:  Non-Farm Payrolls were down just 36,000 in February with a 124,000 drop in Construction and Goods Producing jobs being offset by 42,000 Service jobs and 47,000 Temporary jobs.  Net government hiring was actually down 18,000 as layoffs at the post office offset expected census hiring (see yesterday's post).  These are GOOD numbers but now the question is:  Will good numbers be bad for the market?  We are running a hyped-up market based on projections of non-stop stimulus and low interest rates.  Low unemployment or (gasp) actual hiring may mean it's finally time for the Fed to tighten so we'll see if the dollar punches out to new highs today with the Euro poised to test $1.35 and the Pound looking to test the $1.50 line.  90 Yen is a given so more good news for the Nikkei regardless.  If the EU currencies can hold, then commodities can stay in rally mode. 

The bulls have no excuses now – massive stimulus and an easing of job losses should give us a nice pop but we also had a nice pop on Dec 4th, when the NFP showed a surprising gain in November's jobs numbers and we spiked up from 10,366 all the way to 10,550 but finished the day back at 10,388 and were back at 10,200 on the 8th.  AFTER that we did well so I will be waiting until next week to see what sticks but that may be it for our bearish betting until we drop below our bounce levels again (Dow 10,300, S&P 1,105, Nasdaq 2,225, NYSE 7,100 and Russell 625).  

You can see from the chart that we are FAR from recovered.  That entire block of job losses needs to invert and THEN we need to add 4 years of normalized job growth that never happened just to catch up to where the market prices projected we'd be by the end of 2008.  As a fundamentalist, I'll be working this weekend to check our levels and revalue a potentially greater upside if this REALLY is a turning point but my underlying global fundamental concerns haven't changed just because 47,000 temps were hired in January but I am a little more willing to allow for a move back to Dow 10,700 – especially if we can get Greece resolved over the weekend. 

One thing that always disturbs me in these NFP reports is what they DON'T count:

  • The number of persons working part time for economic reasons (sometimes referred to as involuntary part-time workers increased from 8.3 to 8.8 million in February.  These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.
  • About 2.5 million persons were marginally attached to the labor force in February, an increase of 476,000 from a year earlier. (The data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.
  • Among the marginally attached, there were 1.2 million discouraged workers in February, up by 473,000 from a year earlier. (The data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them.

Europe is very excited about our NFP report and markets there are up about 1% but it's going to be all about Greece this weekend with a referendum in Iceland as a side show.  Iceland voters are very likely to defeat a measure to repay UK and Netherland banks for bailing out depositors in the failed Icelandic Internet Bank so I don't think I'd be going long on the Euro or the Pound over the weekend and I will be sticking with my shorts although we can hedge the upside by grabbing the DIA $106 calls for about .75 as a momentum trade above the 10,500 mark

Keep in mind that a momentum trade is a trade where we are very happy to take nickel and dime profits as 10% is PLENTY to make on a day trade and we can always reload the next time we cross over the line.  That will allow us to keep our downside bets and give the market a chance to calm down.  Keep in mind we've already had quite a run leading up to this report and there may be some disappointment that we can't get a proper rally going.  If you have no downside plays, I still like USO Apr $38 puts at .88 and TZA Apr $7.50 calls could be a fun way to play a Russell pullback at .90.  Consumer Credit comes out at 3pm today and could provide reason for a late sell-off if contraction is more than the $5Bn anticipated. 

We could get some wild swings so be careful out there and have a great weekend,

- Phil

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  1.   SPWRA earnings delayed:

    On November 16, 2009, SunPower Corporation (the “Company”) announced that its Audit Committee had commenced an investigation of certain unsubstantiated accounting entries on the books of the Company’s Philippines operations.  In conjunction with this announcement, the Company also indicated that certain previously issued financial statements should not be relied upon.  Management is reviewing the results of the investigation and the impact of certain matters identified during the investigation on the Company’s historical financial statements and in connection with the Company’s evaluation of its internal control over financial reporting and disclosure controls and procedures.  The Company is delaying the filing of its Annual Report on Form 10-K for the fiscal year ended January 3, 2010 (the “2009 Form 10-K”) until all procedures and evaluations relating to the investigation and other procedures necessary to prepare the 2009 Form 10-K are complete.  The Company currently expects to file the 2009 Form 10-K on or before March   19, 2010.

  2. Phil – Irony given my apple post yesterday -
    I am in your recommended aapl jan 2011 artificial buy write
    Jan. 2011 185 Call basis 45.27
    Jan 2011 185 Put basis 18.19
    I pulled the Jan. 2011 calls I was short and started selling front month
    Currently short Feb. 210 cost $1.79
    but i have already collected 13.50 in premium (don’t mind taking current loss in short call bc I have been trading in and out of it for a profit)
    Thinking of rolling to the April 220 call but only selling 1/2 postion bc – already burned off fair amount of premium.
    Any thoughts?

  3. bond pimp on cnbc

  4. well, Phil, time to drop our bearish stance eh?   all is green light to new highs…….
    TBT finally spiking on strong up move in stocks…… 
    do you still recommend oil shorts?  cause better time to short them now?  and also like FCX short here?

  5. Summers/jobs – the good ol’ head fake.

  6. Good Morning Phil  PLS Keep an Eye on DIA mattress positions 104p  1.28 1/2  cover short and Have 105 p 5.43 and 106p 4.95  June long

  7. INTERMUNE up over 60%  ITMN

  8. ITMN 25/22.5 MAR stangle for 6.10

  9. JRW – what do you see today? Thanks. 

  10. Phil, Cramer pumped up AAPL yesterday big yesterday and we’re at 216 this morning. I am an AAPL bull, but not one week ago we were slumming below 200 pricewise,so it is moving a bit quick.  I am using our spreads, particularly the 155-185 bull call and 180-200 bull call (with put sales). I am scaled in only about 1/2 on where I want to be on AAPL. Do you think AAPL is leaving the station and I can scale in 3/4, or is this a good time to actually sell some into the Cramer pump? Thx.

  11. JRW, judah – just go on TZA.  I smell a rat.

  12. Good morning! 

    I’m still a bit skeptical and the play is to buy some DIA calls ($106 calls are .61) if the Dow is over 10,500 as a momentum cover to offset short losses without cutting the shorts.  As I said yesterday, by holding those shorts overnight in the Agressive Portfolio, I was committing to riding out a spike up today and over the weekend.  The NFP report was not strong enough to change my mind but I am, obviously, very worried about those shorts now.

    Oil is also goosed by a Rent-A-Rebel attack this morning so we’re talking MAJOR coordination (including a false earchquake rumor on CNBC) to jam everything up this morning. 

    If everything is coming up roses – why is the volume still low?  Let’s keep a close eye on that one. 

    So 10,500 is a line in the sand as is S&P 1,130, NYSE 7,200 (got it), Nas 2,300 (got it), and RUT 650 (got it).  We’ll just have to watch and see what sticks. 

    Below those levels (3 of 5) we can go with the TZA Apr $7.50s, now .90 and the USO Apr $38 puts at .88 and notice these are Aprils because we may get blown out and have to roll em along!

  13. GOOG launched straight into the 50 ma — see if it can push through and finish the gap fill (my guess — no).

  14. Good Morning!  Sec. Solis sure made me feel alot better about our employment situation. Loved her charts…..

  15. Simon and Mark on CNBC should consider taking their show on the road. And stay there……

  16. Phil, I’m not going to add my comments on the back and forth posted on health care reform.  But I would like to start a dialogue on the common issue for us, which is how do we make money from it.  I assume that Congress will pass a health insurance bill this Spring without Republican support, but with support of the blue dogs in the house, which means the bill won’t be scored as quite as large and expensive.  So, where should we start looking for the market impact as the bill moves closer to passage--the health insurance industry, pharma, health care providers? 

  17.  Does anyone know what happened with SOLF? Their numbers were up, the market is up, so what’s up? Not SOLF.

  18. Out of TZA -0.08.

  19. ITMN – FDA is supposedly posting their info in the coming days.  The bull call spreads that were bought b’f the volitility just doubled, so someone thinks they will get approval. As with MDVN, careful considerations are warrented.  I am trying to sell my spreads now for a little over the double to see if they take.  I think they get approval, but I am not willing to play the game with the data.  There is some concerning info on toxicities that I have learned, and those will be weighed heavily on the risk/beneifit ratio.  There is NO OTHER treatment for IPF, so that is my premise for approval.  Congrats if you followed me on the trades. 

  20. Jcedens – they only beat by 1c and I think everyone was expecting a larger beat. They definitely did not have the impressive #s like STP. Everyone seems to like different solar companies(I know the Oxen Group likes SOLF) - my favorites are TSL, STP, YGE, and SOL.

  21. SPWRA/Deano – Thanks for the heads up.  They seem to be taking it very well…

    AAPL/Samz – Good job!  I’d full cover over the weekend and then you can get brave. 

    Bearish/Dman – As I said earlier, I made a fundamental commitment yesterday fully expecting to get jammed up this moring.  We still need to resolve Greece and see what happens in China on Monday – none of that has changed because "only" 36,000 MORE jobs were lost last month (along with half a million discouraged workers who are not counted). 

    In general, it’s good to roll to April callers on this run up but I’d roll to April callers that provide good proteciton.  Example, AAPL $210 calls are $8.85 and have just $1.60 of premium left (20%) so it is a good time to roll and you can go to the Apr $220s at $6.50, gaining $10 for $2.35 or the Apr 210 calls at $12 – pocketing $3.35 more and keeping great protection.  Also, keep in mind that you can do half of each to create an artificial roll to the Apr $215s at aan average of $9.40 – putting $1 in your pocket and pushing the caller up $5.

    This volume is a joke at 25M on the Dow at 10 – I’m still bearish (sorry). 

  22. Even though volume is low, there is huge buying pressure hitting the momentum stocks. I think bears are capitulating there and that plus chasing is causing pretty insane runs on some already very overbought names.
    This is the kind of lunacy we need to see to start putting in a top, imo.

  23. JRW III
    March 4th, 2010 at 11:11 am | Permalink  
    64.85,  65.15,  65.21,  65.28

    That worked out pretty darn well, even kept 10,000 of my last TNA play overnight;just sold at IWM 66.01. WOOHOO !!

  24. AAPL – Phil – I am full covered – and kind of screwed – sold the march 210s for 1.79 – still ahead in premium -
    are you saying to wait until next week to roll?

  25. Phil
    Do you have a fail line for AAPL? You were on the mark with the last run up with the 5% rule hitting at 213. Thanks.

  26. Phil/ BBBB
    my position: long Jul  30/35 Call spread and short Apr20 put and March 40s Call. How you recommend to make adjustment for Mar40 call?

  27. Hi Ericl Did you buy any V,s condor yesterday  and any others in the pipe line ?

  28. SLG at a new 52-month high. SPG, VNO lagging still.

  29. Erm, 52 week high.

  30. yodi, no, I sold half the V condors yesterday for a 48% profit — I posted it here. I’m holding the others. I will probably exit the EL condors for a (hopefully) small profit today.

  31. Phil / Bearish
    Me too, BUT you can still make money in TNA while you;re waiting for the market to get too high so you can short it IMO !

  32. Hey Phil,
    We’ve been driving our rig across country and haven’t been able to join much of the chat last couple of weeks.  Drove from California to Florida (I bought tickets to see the shuttle 3/18, then they pushed it back until 4/5 right after we bought the tickets--is GS involved in selling tickets??); currently in Tampa and heard a guy on a local radio station who has a stock market show, he’s called Phil and the show is "Off the Wall Street" and he waxed on about investing, swing trading, market manipulation:  it made me feel right at home.
    Anyway, I’m short copper futures and saw all the negative news yet copper continues up to $3.43; it appears that $4.00 is its 10 year high (not sure what it did in the 70′s); I’m convinced it will collapse, but who knows when.  I’m prepared to scale in if it continues climbing higher.   Also short FCX 75 April calls as well as the 80/85 April spread.  Not sure when I should pull the trigger and DD on the futures and roll the spread and naked call?

  33. JRW – what are your lines today?

  34. SLG May 45 strike puts for .80 may not be a bad gamble, IMO. Or August for 2.00.

  35. Phil – that longer term April disaster hedge you had on EDZ (April 4/5 with April 5 putter).  What would you recommend now ?

  36. Taking another whack at shorting oil futures (/CL) at $82.  Loving the USO Apr $38 puts, now .85.

    DIA/Yodi – Same as I said yesterday, 10,450 is the on/off line for a full cover.  If you don’t have the full cover, I’d stay 1/2 covered unless you want to day-trade $106 puts, now $1.65 as a cover using the 10,500 line as the on/off as you have a chance to grab a quarter off them on a 50-point move up. 

    TIVO $17.50!  That is PLENTY!!!

    AAPL/Bord – Hmm, how do we ALWAYS sell into the initial excitement on this one?  Well, you have the spreads which look great so how about setting up to sell a new, higher bull call spread with a naked sale of the July $230s at $10.  If AAPL breaks $218, they should gain about .50 and you can then add your longs EITHER by buying some Jan $210s at $30 or you can roll some of your callers to July $210s to shove them into $12 of premium while still giving your longs good protection. 

    Health care/Judah – Good weekend topic.  I like labs and anyone who makes testing equipment.  Think of things that will benefit from 10% more people going to doctors and getting tested for things.

    SOLF/Jced – Margins were disappointing.   With high-growth companies, that’s not something that should concern a long-term investor. 

    Top lunacy/Eric – Good point!

    AAPL/Samz – As above, I’d roll em out to the Apr $210s and take the $3.30, then see what happens over the weekend.  You can always jam them up to the $220s for $5 later. 

    AAPL/Chakra – I don’t think AAPL will fail anything.  They may pull back to test $200 and holding that would be a new buy signal.  Their 200 dma is way down at $185, which is my old pullback line but I doubt we’ll see that now unless something happens to Jobs, which is the main reason I ALWAYS hedge AAPL.   $220 should give them resistance but this is a $250 stock easy unless something is very wrong with the IPad. 

    BBBB/Tcha – Well the puts are toast and are wasting margin unless you totally don’t need it.  The March $40s have little premium left so no harm in rolling them up to July $40s for + $1 and you can also spend $3.25 to buy some Oct $45s if they hold $42.50 for the day as an upside cover. 

    TNA/JRW – Yep, I pefer the DIA but I’ll have to start joining those TNAs I think – so much fun!

    Hey Humvee!  Glad you are having a good trip.  I don’t find sticking with futures shorts to be worthwhile.  Better to take the penny losses and reload when the upside momentum stops.  FCX is NOT breaking $80 and that speaks volumes for what real traders think of this move.  Somehow they WRECKED the dollar at 10am and we’re down half a point from the open against the Euro and Pound – something about Greece I’m sure. 

  37. ss / lines
    We are above my upper boundary. I closed my long possition at IWM 66, waiting for the start of a blow off or profit taking by GS and JPM. Made a bunch on TNA yesterday and this morning; I should have kept all 20,000 shares overnight but I have that rule, oh well.

  38. JRW, SS, Taking a tentative stab at TZA for a possible mid-morning pullback.

  39. JRW – I know it is speculation, but do you think he head down today at some point?

  40. Phil, I’m long NDAQ with a protective Jan $25 put and short March 19 calls sold for $0.40 (full cover), now $1.10. Would you roll to the April $20s for max premium… looks like there’s some resistance at $20… or hold tight and try to roll on a dip next week, or something different? Thanks.

  41. judah – do you have any short RUT calls?  I already DD from 650 to 660 and now considering what to do?  Still hard to imagine we were at 580 not long ago.

  42. SS, I never got around to rolling my short RUT calls down.  Kept them at 710.   Have you looked at whether it makes sense to buy TNA calls for protection against a close above 660 two weeks from now?  Or does that get too expensive.  I’m going to run some numbers, since I’d like to know what the possibilities are when this happens to me in the future.

  43. SPWRA – The short Apr 19 puts in the conservative 100k were sold for 2 and have dropped to about 1.  Should we buy these back per the 50% rule or just let them expire?  Roll up to the 20s or 21s for more premium?

  44. Also in the 10 GOOG   Jan 420/480 bull call which is doing well, also sold 2 March 540 calls against the spread which is only 2 weeks to expiration and time to roll?  The April 540 roll can had for $6.95 credit, is that the way to go?

  45. Hey Pharm – at what point would you recommend entering MDVN again? Do you think it has much further to fall? Just doing a simple buy/write for April 12.50 calls looks nice…

  46. ss / Direction
    I don’t know, that’s why I’m in cash. I would think that this is a bit much, and should pull back, but I’m Bearish so that clouds my view; I will let the market ( GS ) tell me when it’s ready; it’s better to be Rich than Right !!

  47. AAPL — I have March 220 short call sold at 1.52, should I roll today to April 220 or even 230 short call or wait till next week — thanks

  48. Also in the 10 GOOG   Jan 420/480 bull call which is doing well, also sold 2 March 540 calls against the spread which is only 2 weeks to expiration and time to roll?  The April 540 roll can had for $6.95 credit, is that the way to go?

  49.  JRW
    What is the relationship that you look for between TNA and IWM and TZA? I’ve been trying to follow your posts but I’m unclear on what you watch for on IWM? Also what timeframe charts do you watch 5 minute, 10 minute?? Thanks for any help.

  50. Also in the 10 GOOG   Jan 420/480 bull call which is doing well, also sold 2 March 540 calls against the spread which is only 2 weeks to expiration and time to roll?  The April 540 roll can had for $6.95 credit, is that the way to go?

  51. MDVN Jro – not really interested in them anymore.  Watch the charts, but I think more downside is in store….

  52. Also in the 10 GOOG   Jan 420/480 bull call which is doing well, also sold 2 March 540 calls against the spread which is only 2 weeks to expiration and time to roll?  The April 540 roll can had for $6.95 credit, is that the way to go?

  53. jcedens
    TNA / TZA are triples of IWM; IWM is the chart I watch as it is less volatile and gives clearer parameters for trading. I use five minute to two year charts, mostly ten and thirty minute within six month parameters.

  54. Also in the 10 GOOG   Jan 420/480 bull call which is doing well, also sold 2 March 540 calls against the spread which is only 2 weeks to expiration and time to roll?  The April 540 roll can had for $6.95 credit, is that the way to go?

  55. Also in the 10 GOOG   Jan 420/480 bull call which is doing well, also sold 2 March 540 calls against the spread which is only 2 weeks to expiration and time to roll?  The April 540 roll can had for $6.95 credit, is that the way to go?

  56. SORRY for the repostings!!   In an RV park (trying to save my Verizon MiFi 5 gig monthly download limit) and it keeps dropping me and resending.  Back on MiFI

  57. DF finally coming back.

    Let’s keep an eye on those 5-day 2.5% lines.  RUT and Nas and NYSE are over but others not even very close yet.  So S&P 1,138 and Dow 10,600 are going to be key points to take today while the NYSE must hold 7,200, RUT 655 and Nas 2.307 (about 0.75% gains for the day) each

    EDZ/Partha – On the original entry I’d do nothing.  On the new options, I don’t think they are trading yet but something like July $40/48s for $4, selling the $35 puts for $2.50 makes for a nice $1.50 spread with a break/even at $41.50 and a worst-case put-to at net $36.50 (down 25% from here) so nice if you can get it.

    Momentum is slowing and I’m thinking 10,550 may be a good spot to take money and run on DIA $106 calls, now .73, stop at .70 in any case (.03 trailing).

  58. Eric, are you still in any of the SPG March iron condor?

  59. GOOG . march 510/520/540 bull call spread — I have a question on exit this position-- Phil do you normall exit all three at the same time, or just closed march long 520 and short call 540 and let the 510 short put expired worthless. 

  60. Phil, quick question (I’m Dumb).  My account is still just under the $25k day trading limit, so I am restricted to 3 day trades a week.  I forgot that I was out of day trades when I purchased the DIA 106 calls at .61, and am unable to get out today.  Would you purchase a put to offset this trade at 10,500 (if so, which one), or would you just hold on to the calls (uncovered) over the weekend? 
    Sorry for the amateur hour question.

  61. Phil, With the heads of Greece and Germany meeting this weekend, could it be risky going into the weekend short? Thanks

  62. Forbes has already decided they only want "focused, short" postings that avoid social and political commentary because it upsets their readers!  ROFL.  They are trying to reach out to bloggers because blogs are kicking their asses but only if the blogs want to look like every other article in Forbes and doesn’t challenge the status quo – they are so clueless!  This is exactly how corporations use the MSM to control the information you read – it’s such a joke.

    I think I will make some posts with plenty of links to real commetary on this site and others.  Perhaps their readers will realize that if they want actual information, their best bet is to read something else!  Anyway, I have now been assigned a handler and I’m sure there are a ton of warning signs that now pop up at Forbes attached to any of my activities…

    NDAQ/Fein – I’d assume they can’t hold $20 without a pullback but, when that pullback comes, then you need to be ready to adjust.  If you can roll the March $19s to the Apr $19s for .30, then it’s worth it but I wouldn’t buy them out for $1.10 to roll to the Apr $20s at .70 as it costs you .40 to roll them $1 and you have no pullback protection – effectively you are paying your gains to the caller and buying him out at a possible top.

    SPWRA/Dave – Since we REALLY want to own SPWRA for $18, we have no reason to pay $1 NOT to own them at net $18.   The $100KP (the conservative one) is pretty much a no-touch portfolio unless something is really off track.  I’ll be updating on the weekend – obviously FAZ is the biggest worry at the moment. 

    GOOG/Humvee – Yes, those $540s have just $3 in premium and aren’t doing you much good.  I’d roll ‘em up $10 to the Apr $550s about even since we have no particular reason to be bearish on GOOG BUT, I’d also wait for next week – just in case.

    AAPL/Gucci – They are still 100% out of the money.  Come on, you know better than that!

    Hey Humvee – Are you also in the 10 GOOG’s??  8-)

  63. Hi, SS,
    Are you still in RUT 660?  I have RUT 660 and SPX 1150 as my lowest calls.
    I’m thinking sticking to my guns and leave them alone.  What do you think?

  64. Hey cwan, I have RUT 660 and SPX 1180.  Not as worried about the 1180. This runup sure seems overdone, but I have been thinking that for a long time now.  I am willing to give it a little more time, but I don’t want to get boxed in either.

  65. GOOG/Gucci – If you are confident enough then sure you let the put expire worthless but, margin-wise, you might want to free yourself up.

    DIA/Palotay – Oh no, I’d get the hell out.  I have no faith in the upside at all.  In fact, I just put 1,000 TZA March $9s at .11 into the aggrssive portfolio at .11.  That sucks that you couldn’t take a 20% profit off the table.  I’d cover by selling the $105s at $1.25, maybe 4/5 cover as that would just about even out your deltas (.55 vs. .39). 

    Weekend/1020 – Yes, very risky.  I would advise being close to neutral, slightly bearish from 10,500 as the risk of no agreement could damage the market far more than an agreement could help it.

    Volume on the Dow is absolutely pathetic at  65M at 11:40.  We’ve seen this movie before.   Relentless day after day of low-volume gains until the sudden, violent sell-off when the real volume shows up.   Of course the potential sellers are thrilled to sit on their hands for as long as people want to keep taking the market up and up and up but the longer it goes on, the more crowded it will be when they all stampede for the exits.  2.5% is a natural profit-taking area and we simply do not have the volume to punch up towards 5% today but finishing up here is still a bullish sign if we hold these levels through the close

  66. Phil, I would take the need for an assigned handler at Forbes to be the ultimate compliment! What they are really saying is that they don’t want an alternative view because the truth sometimes upsets their readers who can’t see thru the hubris.

  67.  Phil how do we access the wall street survivor portfolio and do we have a group promo code?

  68. Phil – what’s the play for covers over the weekend – 1/2 or naked on the dia – or go full with the 104s

  69. phil, how about doing something like selling a FAZ  March15  put for 18 cents, and if it goes down further on a further melt up in financials, we could roll down to the April 14 put and keep rolling
    or on EDZ , selling a March 47 and buying March 46 put spread  for credit of 40 cents… and can always roll to next month if emerging markets keep melting up ?

  70. Short/Phil  Sounds like cash is a place to be……

  71. it speaks well for you that you are not caving in to their pressures.

  72. DIA/Palotay – Oh no, I’d get the hell out.  I have no faith in the upside at all.  In fact, I just put 1,000 TZA March $9s at .11 into the aggrssive portfolio at .11.  That sucks that you couldn’t take a 20% profit off the table.  I’d cover by selling the $105s at $1.25, maybe 4/5 cover as that would just about even out your deltas (.55 vs. .39). 
    Phil I think with TOS you alway can close the position only if you are under 25K you can not take the profit to make a new trade Palotay should check with broker

  73. hi phil ( dump question) I must got the wrong calculation, you mention before if you have about 25% premium left you should roll your caller.  Would you show me the 25% calculation, I thought if I sold march AAPL caller for 1.5 now cost about $3 to buy back, that is already 100% down more than 25% premium left so I should roll to the next mos caller for even or small credit.  I am confused by your comment — please help so I can do it right next time

  74. JRW, judah – you guys in TZA?  Is this the calm before the storm or a reload to take us higher?  To me this feels really overdone and with no volume.

  75. Phil -
    GS – I sold Jan2011 puts for 14.50 – with this run thinking of taking 1/2 off table -
    but they are now 13% out of the money – i don’t need the margin so its hard not to let them just slowly work off premium -
    cannot go wrong with taking half

  76. So far the Obama administration is presiding over a 27% market gain since he took office.  If he keeps this up he may be able to challenge Clinton’s record for the best market performance of any President!  (see, this is the kind of thing that pisses them off at Forbes!). 

    PALM is still stinking up the joint at $5.70. 

    Handler/Ocelli – Oh I’m happy to be considered a threat to the status quo.  It’s amazing how much the MSM just doesn’t get why they are being supplanted buy less-filtered communications.  The problem is Forbes caters to the letter-writers so anything objectionable to anybody gets tossed out so, like most MSM, they end up only catering to their existing readers, forcing people who want any kind of variety to leave them.  Idiocy! 

    Man it’s like someone just discovered AAPL! 

    WSS/BG – I have no idea anymore, that was so long ago.  Remind me on the weekend and I can look it up but surely it was Emailed to you as an Alert at some point?  

    Covers/Samz – Gotta go with 1/2 covers as we are above our levels but we could go either way but the 1/2 covers should be $105 puts unless we get a move down and can sell the $104 puts for $1+

    FAZ/DMan – You do realize FAZ moved $1.50 in 2 days, right?  So you sell the $15 puts for .18 and they have a .20 delta so if FAZ gaps down .50 on Monday, you are down .10 and if they move down another .50 you are down .20 (100%) so just be sure you are ready. willing and able to stick that out.  Other than that, I do like selling them for that price.  EDZ I only like the veritcal. 

    Cash/1020 – Can’t go wrong with cash – especially with the dollar moving up.

    Caving/Morx – Well I do want the exposure, don’t get me wrong but I will most likely make a point of slipping in seditious links as often as possible and now it will be a game to see how far I can push them before I get another phone call…  Fortunately, they need me – I don’t need them.  In fact, one of the guys I talked to said "how can you afford to piss people off like that?"  They just don’t get it at all…   MSM thinks their audience is a bunch of simpletons who have one opinion and don’t like it to be challenged.  That comes from slavish devotion to Nielson, Arbitron and whatever so their company meetings are dominated by nothing but demographic studies and focus groups that tell them how to cater to their own audience and then they wonder why they have trouble attracting new readers…

    TOS/Yodi – That’s good to know!  It does seem kind of strange to say you can’t close a position but maybe it triggers a lock-up that’s unpleasant? 

    25%/Gucci – I don’t care about your profits in that caclulation, it’s the CALLER who has less than 25% premium to give you.  The $210 calls are now $9.90 and $8.40 in the money so about 15% premium.  That means that, over the next 2 weeks you WILL gain $1.50 relative to the position’s movement but that’s not much cushion for you so not worth it.  If you move them to the Apr $210 calls at $13, that ups your premium to $5 over 6 weeks and, more importantly, means if AAPL goes up to $223, you don’t owe your caller any more money.  If there is no dip, you can eventually sell the $210 puts (now $4.40) and use that money to roll the caller up to the $220s.  Don’t think of anything you do as a one-month play.  Think of your next two rolls if AAPL goes up or down 10% and 20% so you  always know if you are comfortable or not.

    Don’t forget those DIA $104 puts at .68!  Lots of fun!  That means I’d also take them out if they are puts you sold.

  77. ss
    I’m still waiting; sorry I pulled the trigger on my TNA early, but it hit my last line, now $ 0.30 over. I’m set up to buy TZA, but " they " do seem to be in control with things going their way globally and no news scheduled until next Friday.

  78. Phil, sorry for the delay, had to run an errand  ;  yes i have 10 goog  420/480 bull call spread in addition to the short 540 March call.

  79. Hi, Peter, SS, Judah, and fellow stranglers:
    While I am worrying about my calls (I’m very top heavy right now), I started looking around to buy put verts, as VIX is low.  I am offering to buy May 1070/1060 for $1.85.  Yes, MAY!  No takers yet as TOS quoted me mid price $1.95.  That put vert is 5% below market and 2+ months protection.  I think we should buy put verts further out since prices are low and we can get max bang for the buck.
    But, SS, speaking of RUT 660, what exit routes are you considering?

  80. SS,  RUT does seem overcooked, doesn’t it?  I took a .03 loss on TZA earlier, but I’m thinking of taking another go at it.  I suppose we could go through the day without any sort of a pullback.

  81. There may be resistance at IWM 66.38

  82. Cwan, I recall in Jan, when the VIX was around 17, Peter suggested just that, loading up on verticals while waiting for a surge in the VIX.  Within a couple of weeks, he got exactly what he was looking for.

  83. Hey Phil…. What would Forbes think of my commentary ? I am still in the "read only" penalty box.

  84. GS/Samz – I agree, nothing wrong with profits, especially when you get a huge win so quick!  On the other hand, they look pretty darn safe and, if you REALLY want to own GS at about net $135 in Jan, then just make sure you have something better to do with the cash and margin than earn $1 per month as those puts expire. 

    Bitchin’ move in TBT this morning!

    If there are encouraging jobs numbers, it must be time for traders to bet on interest rate hikes: Fed funds futures for September are pricing in a 47% chance that the rate will rise to 0.5% by then, up from a 20% chance yesterday. December contracts price in a 75% chance of a 0.75% fed funds rate by year-end.

    U.S. growth is set for a summer slowdown, according to the ECRI’s growth gauge. The group’s Weekly Leading Index rose to 129.8 from 128.4, but the annualized growth rate hit a 30-week low of 13.7%, supporting a view that "U.S. economic growth will start easing by mid-year."

    Forecasters may have overestimated the effects of severe winter weather on February’s employment numbers; consensus estimates were factoring in a 100K weather-related decline. One caveat to today’s numbers: Employment growth was fueled by jobseekers, unable to land full-time work, taking part-time jobs.

    Pimco’s Bill Gross notes that government liquidity programs will end in March and wonders how much the check writing might be missed in April, May and June. He remains skeptical of the economy’s ability to grow without that help, saying it’s possible for "some of these programs to come back."

    Financials are loving this:  Senate Banking Committee chair Christopher Dodd says there’s been no progress in breaking the deadlock over legislation to overhaul U.S. financial regulations. The key sticking point remains a proposed consumer-protection authority, which Dodd believes must be independent, while Republicans and big banks want the agency reporting to a regulator such as the Fed.

    But not this: Fannie Mae (FNM) and Freddie Mac (FRE) may force lenders – including Bank of America (BAC), JPMorgan (JPM), Wells Fargo (WFC) and Citigroup (C) to buy back soured home loans at a potential loss of $7B. FBR’s Paul Miller: "If you want to originate mortgages and keep that pipeline running, you have to deal with the pushbacks. It doesn’t matter how much you hate Fannie and Freddie."

    Somebody Else’s Problem?  The FHA has understated its risk exposure, say economists from the NY Fed and NYU, making it more likely the agency will need taxpayer funds. As many as 40% of homes with FHA-insured mortgages are underwater, and up to 14% significantly so. The FHA puts the latter figure at just 6%.

    M&A activity in Latin America is off to its best start in a decade – and it’s the only region showing in increase in transactions from the end of 2009. Recovery in Brazil and Mexico is spurring consolidation. (ETFs: ILF, GML)

    Greece’s parliament passes a bill covering many of the government’s austerity measures.

    The Baltic Dry Index made another run overnight, up 3.9% to 3,242, above its 200-day SMA – and it’s up 19.8% in six sessions. Meanwhile, though, an armada of new ships coming on line is casting doubts on how effective an indicator it is.  Good for our shippers so far but the new ships are a worry…

    Setting an April 3 debut for the iPad has helped push Apple (AAPL +3.7%) to its all-time high of $218.50. Heavy dollar volume in AAPL is lifting tech as a sector, with the notable exception of Microsoft (MSFT -0.4%) – whose iPhone catch-up "Project Pink" is rumored to be coming to Verizon Wireless (VZ, VOD).  When I say Loo, you say Sirs – Loo-Sirs, Loo-Sirs, Loo-Sirs – Gooooooo Pink!

    Microsoft (MSFT) says it will stay the course in China. Zhang Yaqin of its Asia-Pacific R&D Group: "Regardless of whether or not Google (GOOG) stays, we will aggressively promote our search and cloud computing."

    Barron’s: With robust cash flow, virtually no debt and a rising dividend, Automatic Data Processing (ADP) is poised to benefit from a rebound in the economy. Shares trade 15.5x trailing 12 months, cheap for a stock that historically commands a premium of up to 35% to the market multiple. "It’s not often you get the opportunity to buy such a high quality company at a discount."   I agree with this.

  85.  Hello everyone!  Pharmboy’s great new post on medical device companies is here:

  86. LOL Humvee – I was just joking because you repeated it 5x!

    Comment/Gel – I can’t see it either, I have as little rights as you do…  Don’t go getting me in trouble with my Conservative overlords now!  8-)

    Woo-hoo on oil, just broke below $81.50 so that can be the futures stop with a .15 trail that bumps up .05 per .25

    Cool, thanks Pharm! 

  87. cwan – either a credit for Apr 670 or a debit for Apr 680.  With they way they are pumping up this market neither feels safe.

  88. cwan – that of course is not factoring in roll ups for puts.

  89. Phil… LOL.  Its the penalty box until Monday for me.

  90. Nice post from Trader Mark:  

    The S&P 500 is now up 7% in 3 weeks (the Russell 2000 is doing even better) and continues to steamroll anyone who stands in its way. The 8% correction in late January to mid February? Similary, it took 3 weeks. (Click to enlarge)


    Our "ups" now happen as quickly as our "downs"… and yet again (a broken record) with little volume to show for it on the upswing. You can see that on the bars at the bottom of the chart, the only days the liquidity flood can be contained (selloffs) are on heavy volume days. Almost all lighter volume days mean sideways or upside action.

    The beat goes on; another V-shaped, light volume rally to mimic those of 2009. Anyone using traditional technical analysis (use of volume) continues to look the fool.

  91. That resistance line ( if that is what it is ) is ascending, now at IWM 66.45

  92. Any suggestions then on ADP?

  93. JRW, Time for the old Borg video clip from Phil--Resistance is futile.

  94. AAPL Apr $220s at $8 make a nice naked sell as they can be rolled to the July $240s even.  They were $3.50 yesterday so looking for a quick $1.50-$2 on a pullback

    ADP/AC – I don’t want to chase today’s big move but let’s look next week..

    CNBC: "Oil and gas reaching highs for the year on today’s jobs number."  First of all we LOST 36,000 MORE jobs.  We replaced 124,000 fuel-burning Construction and Manufacturing jobs with 89,000 service and temp jobs…  Oh well, oil futures stopped out with nice .50 profit so hopefully a reload at $82 as they pump it up into the NYMEX close (2:35) and this weekend’s Rent-A-Rebel attack.

  95. Phil / AAPL
    I just afraid a little to sell calls because of split rumor, what do you think about it?

  96. Phil  TBT holding  lonely  Jan 44 calls at 6.42  any suggestions on P or Calls to sell

  97. It’s practically criminal to not buy TBT when it touches low 47′s.
    Per yesterday’s 25-54 men worker numbers: that graph had a long time axis, isn’t the introduction of more and more women in the workforce and more stay-at-home Dad’s helping to shape the numbers there?

  98. AAPL/Tcha – They might but this is a short-term trade, I wouldn’t even want it over the weekend if I could get out with .50. 

    TBT/Yodi – With the VIX at $17.50, call selling sucks but you can get $3 for selling the Apr $48 puts and calls for $2.65 and don’t you feel kind of silly NOT collecting .44 (7%) PER WEEK against your long?  As I said above – keep a BIG picture perspecive.  You will sell $2.50 in April, June, August, October and December for $12.50 in premium and each end can be rolled at least $1 up or down the next month for another $5 of leeway.  Some months you will lose and some months you will win but, if you don’t sell the premium – I can guarantee you won’t win any!

    Women/BDC – Yes, women certainly are a big factor but I was looking more at the last 5 years, not really at the previous 55 and I’m pretty sure women have been working that whole time.  Ancecdotally, how many jobless men 25-54 do you know that are a positive component to our GDP?

  99. Phil,
    Do you plan to update your conservative 100K portfolio each weekend, since I’ve jumped into that.

  100. Did you like any of the picks on the BP Capital list you displayed? Any to keep an eye on?

  101.  I was so screwed up on this.  I dropped almost 5% today and I knew it was going to happen.  I couldn’t even sleep today.  I’ve had a portfolio of calendar put spreads on MNX June/Mar ranging from 172.5 to 185 at each strike.  The VIX collapse and blowing out of the range has destroyed my longs, while my covers have done nothing to protect me.  I’m so sickened.  This rally has been relentless.  I just needed some sort of pullback to get out.  I really am so upset at myself.

  102. ACLEND-- the book you recommended is really, really helpful.

  103. Phil – can you look at CHBT for me?  Good company and stock is still inexpensive.  Back out the cash, and it is trading at less than 10X 2012E EPS (for the fiscal year ending March 2012 – essentially, this year).
    Big run up recently, but premiums look ok.  Thanks.

  104. fellow ss RUT and Peter, should Rut short put side roll up today or way till next week and what strike to roll in, 570, 580 or ….same as when to exit March RUT 660, thx

  105. oh come on now Phil, the 80% who are employed get 15% more done for 10% less pay. This is how you keep the top 10% (er, I mean 0.1%) in business….

  106. Well they popped through 80 FCX, crazy  stuff

  107. Here is the new VOLC trade from the post FWIW.
    I would be a bit more cautious with VOLC for now, as they are at the top of their channel.  Buying a small position here at $24 and anticipating a pullback due to the favorable earnings report, so we can sell the October 25 calls and puts for $2.5 gives you a 17% gain if called away or $21.5 entry if put to you (12% down from here). 

  108. $100KP/Humvee - Notice I did an update in the comments this week.   Updates will be either there or a new post depending on how major. 

    BP Capital/Ac – All a bit high for me now but would be a good list for a sell-off. 

    Relentless/BGB – Sure but June is a long time and you still have Apr and May to sell.  I don’t like seeing a lot of strikes in layers, that’s a mistake a lot of people make trying to "control" the position as it moves.  There is in fact, one strike that pays the most premium and that’s the one you should be selling.  Also, of course, MNX is NOT something I’d be selling calls against because the premiums SUCK!  $2.70 for selling the $187.50 calls with the stock at $188.53 and it just moved up $2.56 today?  Are they nuts? 

    CHBT/Where – Sure, I know whenever I’m in the Jinqiao Export Processing Zone, I like to look in on all the little biotech labs that have offices set up….  Acutally, at least have quarterly reports, which is a big plus for these little Chinese companies but essentially, they make yogurt so nothing to special about them.  It takes them 500 people to make $54M in sales, which would be terrible in a US company but is fine paying Chinese wages and they drop 19M to the bottom line.  As long as they don’t get any silly ideas about expanding and taking on the big boys and as long as they stay away from the FDA – they should be good.  I’m concerned that they not only ran up $22M in debt in the past 2 years but they also grey accounts payable by $12M (with no change in A/R) but they also built up $43M in cash despite building $30M worth of production facility (for 500 people?).  So, on the whole, you can buy the Aug $15/20 bull put spread for $2.50 and sell the $15 puts for $1.50 for net $1 on the $10 spread that’s $2.80 in the money and your worst case is it’s put to you at net $16, which is down 10% from here so not a bad way to take a chance.

    .01%/BDC – Yep, that’s what it’s all about!

    FCX/Humvee – Well this is truly annoying.   Gold is back at $1,134 and copper is $3.42 and oil is just now coming back to $81.50 again but it doesn’t look like we’re going to get a major sell-off today as it’s 2:15 and the Dow volume is 97M – We’ve had half hours that traded more than that! 

    Whee again on oil though, last time they turned at $81.40 – hopefully we can do a little better this time.

  109. Can we get a little profit-taking, sell-off into the weekend?  What do you think, Phil, the Stick sure isn’t needed today.

  110. RUT strangles / gucci – If you think that this run up is all BS, then you may want to wait and see on rolling the puts.  I am taking the profits off the table on the put side (by buying them back).  I’ll wait for a dip and a higher VIX and then reload.
    On the call side, I also have RUT 660, so is SS.  I am now thinking rolling and DD to April 700.  But I am sitting tight right now.

  111. Another reason to like BMY.  I have to look into the possibility of a poison pill on this one, as if someone buys BMY, then PFE gets rights.  This was baked into the MRK/SGP deal with Vytorin a few years ago, which is why SGP lasted so long.
    Apixaban, an oral anticoagulant being developed by Bristol-Myers Squibb and Pfizer, was statistically superior to Sanofi-Aventis’ Lovenox (enoxaparin) in reducing the incidence of venous thromboembolism in patients undergoing elective total knee replacement surgery, according to study results published in The Lancet.

  112. JRW, SS, If it breaks that 66.40 line, I think we might have something.

  113. OOps, that would be 22.5 P on the VOLC trade, not 25s….sorry.

  114. Dude, what the heck is up with SCOK. This stock has been popping onto the biggest gainers board practically everyday wtih an average share volume of like 50k???

  115. judah – I am hoping so!!!

  116. Cwan – I think a DD and roll from Mar 660 would have to be Apr 690 for an even roll.  But let’s hope we don’t have to. :)

  117. Judah- I sure as hell hope so. I’ve been in TZA @ 7.82 for the past 4 hours.

  118. If THE STICK is what we least expect………………………………

  119. Phil- re goog, you may have covered this before, but if you believe price target of 640, how would you play it?

  120. JRW, Good point.  I usually play something for the Stick.  Today, if it comes I’m hoping it helps me fill some SPX put verticals.

  121. What SPX put vertical strikes are you guys looking at?

  122. Robert, Cwan suggested looking at May.  I’m trying to fill Apr 1090/1080.

  123.  Hi all, hope it was a profitable week!!
    Quick question and sorry if I missed commentary on this, I am still sitting on some Jan 11 C 4 calls (rolled down from 5′s), short Jan 11 2.5 puts. I have been ignoring this position and my net basis on the calls is  .77 assuming the puts expire worthless – am just wondering how people feel are the prospects for C over the next 9 months?
    I am trying to decide whether to start working on this position or just scrap it.
    Thanks a lot and happy weekend!

  124. There is just no selling pressure. None. Zero. Zilch.

  125. Hey everyone,
    I don’t know if anyone has Facebook, but I created a group for The Oxen Report. Feel free to join. A good way to communicate with me is on Facebook. So, you can add me as a friend through the group. 
    Thanks and Good Investing!

  126. 1/2 position in TNA about 3 minutes ago

  127. “We must succeed at putting a stop to the speculators’ game with sovereign states,” German Chancellor Merkel says after talks with Greek Prime Minister Papandreou. She dismisses talk of aid for Greece, saying that the stability of the euro region “is a given today, and that’s why the question doesn’t arise today.”

    Profits/Judah – There’s hardly been enough volume for there to be anyone to take profits but yes, I sure would be cashing if I had been bullish this week. 

    SCOK/BDC – Now there is an ADR I would not touch!

    Oil bouching around $81.50 in to NYMEx close. Nat gas $4.59,  Gold $1,133, silver $17.35, Copper $3.41. 

    GOOG/SNS – I’d go for the Jan $480/560 bull call spread at $52 and sell the $520 puts for $32 for a net $20 entry on the $80 spread.   You can then sell 1/2 Apr $580s at $11.50 and those roll to June $610s and Aug $640s and Oct $670s and Jan $700s so not too much worry as you can allso DD!  Any time you win the $11.50 you can either buy more longs (like 1/10 2012 $650 for $55 or you can push your callers $10 higher for $5.  If you have 5 wins over the year you either work your way into a $130 spread or you have 1/2 x of open 2012 $650s in addition to your main play.

    Wow, and up we go again! 

    VIX May $18 puts are .40 with the VIX at $17.42 – that’s how crazy this is!  I like the spread of those against the March $18 puts at .55 but be aware that the two are separate bets that have little to do with each other but you can still roll the March if things don’t work out so I like the risk/reward

  128. C/Steve – I think C should be up around $5 by the end of the year.  Each quarter they survive will give them a boost but so will the way that BAC and XLF is outpacing them. 

    VNO getting near the sweet spot at $70. 

    Selling/SS – What selling?  Was there selling?  I must have blinked and missed it….

    Facebook/David – Tina is setting something up for PSW too but I’m worried if I can keep up as I’m not really a Facebook person.

  129. Darryl Robert Schoon analyzes the various forces at play when evaluating the possibility of a dollar devaluation. (.pdf) "Capitalism cannot function unless its constantly compounding debt is serviced and/or paid down. Today, the U.S., the world’s largest debtor, can no longer pay what it owes except by rolling its debt forward and borrowing more, what the late economist Hyman Minsky called ponzi-financing, financing common in the final stages of mature capital systems."

    Wall Street is far more upbeat than Main Street, and Mark Hulbert says the dichotomy is unsustainable. "Because advisers have been so quick to jump back on the bullish bandwagon, downside risk appears to be elevated."

    Now it’s French debt that’s coming under scrutiny. Its bonds are "being priced as though there isn’t a budget problem" despite debt-to-GDP of 83%, up 20 percentage points in two years.

    Joseph Stiglitz: "Spending, especially on investments in education, technology and infrastructure, can actually lead to lower long-term deficits. Banks’ short-sightedness helped create the crisis; we cannot let government short-sightedness – prodded by the financial sector – prolong it."

  130. Consumer Credit rose $5Bn, was expected to contract $5Bn and Dec was revised up from -$4.6Bn to -$1.7Bn so up we go!

  131. thx cwan — I think this move up is unreal, I buy back majority of my putters and now heavy on the callers, hope we have a sell off next week with profit taking it would be nice balance for my porfolio :)

  132. Phil- txs for the answer…how are you feeling follow through to the upside next week?

  133. I’m with Stiglitz!  It’s time for a revolution.

  134. Huge short squize today

  135. And out with $ 0.64 or 1 1/2 %

  136. Maybe TZA in the last 1/2 hour

  137. RUT devil number 666 is a resistance?

  138.  SPX bottomed at 666 will RUT top at it? :)

  139.  Does anyone else have this issue?  I try to read everything I can about the market and I’ve become firmly convinced that almost everything is being manipulated, either by the trade bots or the government numbers or the hedge funds or whatever. I’ve become so skeptical that I constantly finding myself with a strong bias toward shorting the market, shorting individual stocks, always finding "great shorts" and finding great bargins on the short leveraged ETFs. I’m extremely hesitant to go long on anything because I’m not nimble enough to get out quickly if things head south. On the other hand, I’m getting my head handed to me constantly and have been for several months as things just drift higher.  I think I’ve naturally got a contrarian nature because I just can’t seem to get myself to "follow a trend" when I don’t believe in it. Should I just sit it out and wait for fundamentals to finally take over or is that nonsense thinking in these markets?  Should I just force myself to follow the trend regardless of the fact it is being manipulated? I’ve been investing in the market for over 20 years and I’ve never had such a hard time making the right move.

  140. Sold half my cover of FAS.  Will sell the other half just before 3:30.

  141. $100KP (conservative) – good time to buy back FAZ $17 calls at .95 as they can only give us back .10 per day now so not too much risk to going naked.  

  142. What are we doing with the TZA Apr. 7.5 calls?  Anything? If I missed the post, sorry.

  143.  JCEDENS,  That is exactly where I’ve been for the last 5 months or so also.  Totally destroyed me over time.  I need to learn to shut my mind off I guess.

  144. matt
    I’m originally from Virginia, and Tom Jefferson held that we should have some sort of revolution every 20 years or so to prevent what this country has become, 18th century England.

  145. Jcedens, You perfectly described how I feel about this market.

  146. i got squozen – did not feel good

  147. jcedens, welcome to the club!  They make their money by squeazing the unbelievers.  And there are plenty of us to go around so they’ve been doing quite well thanks to us.  And until sentiment changes, that is more believers then unbelievers, we will continue to go up.  The only way they can make money is when there is money to take from someone else.  They always go the other way.  I would sit out if you can’t stomach it.  That is the last thing they want you to do so give them the old middle finger salute by taking your $ and going home.

  148.  Phil,
    Re your advice to Gucci at 12.14pm
    25%/Gucci – I don’t care about your profits in that caclulation, it’s the CALLER who has less than 25% premium to give you.  The $210 calls are now $9.90 and $8.40 in the money so about 15% premium.  That means that, over the next 2 weeks you WILL gain $1.50 relative to the position’s movement but that’s not much cushion for you so not worth it. 
    Lets say that these were naked calls. Would you still have the same advice. Given that we dont want to buy premium and the Mar 210′s still have 1.50, would you wait till later to see how the stock plays out before rolling. Especially considering that the market has had a good run up and your bias may be that it will pull back some. That way you can at least hope that the Mar 210′s may expire worthless and you dont have to carry the additional risk of 6 weeks. 
    Also, if one were biased bullish on AAPL  would you not recommend rolling up to Apr 220 to capture full premium as well as improve your rollup position even with a 2.50 debit..

  149. I’m long  the GOOG March 2010  $550 Call with a basis of $33.49.  Current price is $19.90.  I’ve recovered quite a bit of this loss today but not sure of the best way to recoup the remaining loss.  WOuld the spread you mentioned above be a good solution to mt problem or would you do something else?

  150. jcedens - count me as one of you.

  151. Hi, SS, re your 2:23 comment,
    This morning, I could’ve rolled RUT Mar 660 and DD to April 700.  I am logged off TOS right now (so that I am away from the trigger).  Sigh…  I’m so afraid to log in!

  152. I think I am just going to give my money to JRW to daytrade.  JRW, I’ll give you 2 and 20 with your results.

  153. JRW, I’m happy to claim VA as my lifelong home.  TJ was an incredibly wise man.  His foresight is just amazing.  But what it really says is that the problems we are dealing with today are as a result of human nature.  And human nature has been around as long as… well, humans!  So his insight was based on his observation of human nature during his lifetime.  Which goes to show we haven’t changed at all. 

  154. JCEdens — you are not alone …..
    The traders that can do this are ones who trade trends / charts only; they don’t care what a company is or does.  They are nimble and cut losses quickly. 
    It is a hard skill and mindset to master.
    Look at the REITs today … SPG, SLG VNO MAC etc.  Talk about a short squeeze !!!!

  155. cwan – LOL.  It has changed by the minute.  Good luck to us amigo.  Trees don’t grow to the sky, but this feels like Jack and the beanstalk with his magic beans.

  156. I think we’re all just chasing ghosts with all this talk of us versus them.  Who gives a shit if the market’s being manipulated?  It’s being manipulated up and it has been for the past two years.  The market walks and talks like a bull market.  Why are we trying to convince ourselves otherwise?

  157. american progress on lack of job creation if anyone is interested -

  158. Wow,  ‘Lil shot of steriods mixed with speed, and you get this ramp up….but the higher we go, the harder we fall…..I am holding naked DIAs until 10,700.

  159. now when all weak shorts was shaked out- time to go down

  160. ss
    Thanks, but I’m not an RIA, and besides I give you my stuff every morning anyway !!

  161. I just read the Schoon article and it was interesting.  One thing he said was that the US couldn’t inflate its way out of its debt burden because half of govt. expenditures are now indexed.  I’ve long thought that in order to get our fiscal house in order we need not only a politican with guts and vision (good luck on finding one of those), but a policy that was easy to understand and had a catchy name.
    I think we should all embrace the Diet COLA:  All US govt expenditures that are now indexed to inflaction will go up 1% less than the CPI.  Everything: social security, federal payrolls and pensions, whatever.   Everyone takes a hit and over time we gradually get things back in balance.  

  162. Hi Phil, saw your comment on GOOG jan bull spread, I do not have jan bull call spread position yet, is it wise to wait for GOOG pull back to the break out level 550 at 50dma and then start the Jan bull spread, or you think it is safe to start the position now.  Second question, is your thesis still bearish GOOG short term, or change now, remember I asked you about my Sept 510/570/550 bear put spread, way pass the sept expiration break even at 556ish, should i wait and see  or adjust it now -thx

  163. JRW – just joking and only showing a little respect.

  164. SS, Even JRW can’t make money on TZA these days.  Even though he’s a PermaBear, his secret is not fighting the rigged system and happily making money on TNA.

  165. only showing a little respect
    cue the Godfather theme…. "Don JRW, I come to show a little respect."

  166. Stranglers, Got my SPX put verticals filled.  End of day is really the best time for getting a decent price on these. 

  167. Got out of the FAZ 17 calls at .97; reviewed this weeks postings and couldn’t find your other conservative 100K portfolio adjustments suggested; do you plan on restating the weekly adjustments,   thanks

  168. TZA/JCM – We never went 3 of 5 below to trigger but if you are in them, there’s no point in adjusting now as a small tick up will get you green on Monday or a move down will give you a much better price to roll or DD. 

    Next Week/SNS – I expected a puch to 10,500 today on an over-reaction to NFP so I’m still bearish until we see some real action next week.  I wouldn’t throw good money after bad here and I’ll take a painful loss on Monday if we still go up but I still have a gut feeling that things are going to fall apart very soon.

    Viva Matt!

    Trends/JC – You do have to learn to accept the BS and play with it.  It’s like saying you have been observing 5 years worth of Globetrotter games and you have come to the conclusion that the Generals aren’t even trying to win!  Well, you can either sit there and wait to see them draft some better players and practice new plays (improving their fundamentals) and wait for their momentum to shift or – YOU CAN BET ON THE GLOBETROTTERS!   See – it’s not that complicated when you think about it….

    Bgb/Agour and I’m sure many more of us.  You really can’t fight the Fed, they have infinite amounts of money and they will grind you down.   Long-term you need to have positive bets like the Buy List or the $100KP on AT LEAST 40% of your portfolio, no matter how bearish you are.  If 40% of your portfolio goes up 10% a month when you are "wrong" about market direction – you can afford to risk 10% a month playing for a big score to the downside.  Of course, this is a bad time to make this speech as we are in a great spot to go short but really, you have to respect the ranges and only go 60% short at the very top of a range (10,700) and only go 60% long at the very bottom (9,900) and never overcommit when we’re drifiting in the middle.  

    AAPL at 3% up is making the whole Nas up 0.45% (they are 15% of the Nas) so 1/3 of the Nas gain today is just AAPL.

    Naked calls/Oncmed – Yes, you can’t play a position based on your loss (but you do take based on your gain), you need to play the position to optimize your chance of turning it into a winner.  Since my upside target for this run on AAPL was $220, I liked selling (rolling) into the excitement IN THIS INSTANCE.  Do not mistake that for a rule!  Yes, I would recommend going to the $220s if I didn’t think there was a much better than 50% chance that AAPL would pull back to $210 or less and the roll to $220 would squander an opportunity to make money off the caller.   You can always give up (over $220) and roll the caller up (as the Apr $210s still have $5 in premium to lose) but you can’t do much about it if you pay cash out of your pocket (buying premium) to pay your caller off at the top of a run, then move to a caller with a much lower % of coverage and THEN the stock pulls back when your delta is far greater than the callers. 

    GOOG/Gucci – I would wait until next week for sure, there is no hurry and the levels can always adjust.  I was only bearish on GOOG re breaking the 50 dma at $564 0 which they are just over now.  They, like the S&P are up 7 straight days without a pullback but hey, you would have gotten burned betting that DiMaggio wouldn’t get another consectitve hit on day 8, right?

  169. It may only be for 5 minutes, but I’m still planning for a TZA play into the close; wait for it, hold, HOLD !!

  170. Hope no one besides me took my SLG short idea this morning. Those little May puts are already down over 30% — relentless. I do think they’ll bounce back though.
    Really, times like this are not bad to buy longer-dated puts since the VIX is so low. However, I think we are likely to push higher from here even if we pull back near-term.

  171. JRW
    Do you ever hold TZA over the weekend? 

  172.  I dont think that the market is being manipulated in the sense that there are a bunch of people who are sitting around a table and deciding to buy or sell particular securities. I do think that there is a herd mentalilty on Wall Street that requires money managers to mimic the performance of their peers. So as Charles Prince famously said, ‘As long as the music is playing you got to get up and dance’ . That explains the crazy volatility that we are seeing, and often small time traders get crushed in the ensuing stampedes. If you’re playing with your own money, at best you are left standing. Of course if you are playing with someone else’s money then you dance on the way up and retire with a posh severance when the music stops. 

  173. jcmcn5 , you are absolutely right.  But it takes a computer to remain emotionless in the face of what we see every day and know in our hearts.  Just sold the other half of my cover.  Will probably have to recover.. but thought I’d give it another shot for Team Unbelievers!

  174. TZA/JCM – We never went 3 of 5 below to trigger but if you are in them, there’s no point in adjusting now as a small tick up will get you green on Monday or a move down will give you a much better price to roll or DD.
    I’ve been in them since they were recommended on 3-01 and 3-2.  Did I miss an exit call?

  175. JRW, My hat is already off to you.  But if you pull that off, I’ll find a second hat to doff.

  176. jcedens
    Yes, I have a rule about overnight much more over weekend, but, on a 3 day weekend when the market is up or down on Friday, I always hold a follow through possition till the following Tuesday. That has made a bundle for me.

  177. BIDU 480 front month puts for 1.60 seem cheap to me. The last time I said this about BIDU (390 calls in Jan), GOOG announced the middle finger to China 5 hours later (in at 1.55, sold at 27 and 34 the next day). Maybe I get lucky again and they announce a ‘reconciliation’ this weekend (hence the recent price movement in anticipation?). China needs GOOG inside their R&D institutions I think I read somewhere. Unless they’re going to reincarnte Mao and march everyone back to the farms, handicapping your scientists doesn’t sound like a good way to be keeping up with the rest of the world’s tech advancements. What,a re they going to use Bing?? Dream on Balmer. 
    I love making up these fantasy theories in my head and then winning on a trade anyway for no particular reason HAHAHA, down, BIDU down!!

  178. Good luck Chris, I’ve been rolling a BIDU put spread up for awhile now, the thing’s a monster!

  179. $100KP/Humvee – Our next move, next week on FAZ, is to look to roll it back and sell more calls (unless we reverse).  The changes to the $100KP, other than this one just now.  Are in the COMMENT section of that post for the $100KP, which is the top item under the Portfolio tab. 

    By the way bears – Don’t forget how "insane" all the bears seemed in late 2007, when the market flew up despite the pretty damn obvious bad news and they squeezed the hell out of some very intelligent short positions before the big drop. 

    Dancing/Oncmed – Long discussion but when they design the maze so all roads lead to the same button – you can be fairly certian which button will get pushed…

    Exits/Jcam – Yes those are just quick trades and we follow strategy rules to give up when they don’t work.  THAT GOES FOR ANY FRONT-MONTH PLAY!  Doesn’t matter though, what’s your basis?

    BIDU/BDC – Fun bet but keep that in mind. 

  180. Well that was a very annoying rally to end the week on. 

    Hopefully sanity will return next week but, if not, we’ll be cashing out longs at 10,700 and back to watching with cash – just like we did in Jan, which saved our butts! 

    Have a great weekend everyone – I’ll be around.

    - Phil

  181. jcmcn5 -
    TZA April 7.5Cs
    You are correct, we have been in them since 3/1,  there were no exits, no good rolls down either.

  182. Well, no TZA play. Oh well, any day you can earn 1/2 a car ( $ 51,000 ) is a good day !!

  183. Got it thanks!!

  184. My basis was $1.21.  I DD at $0.70 so now my basis is .96.    Probably a mistake. 
    I’m guessing that I should not play the front month any more. The strategy rules are not hard and fast as you well know.  Sometime the level you list for a stop turns out to be the level you dd at if you averaged into the position.  My point is the only way to follow them is to watch every comment made and it’s impossible for me to do that and remain employed.  This is the second time I’ve taken a position here and by the time I was down 50% and asked about it, the implication was that I should have been out of the position a long time ago and shame on me for not paying attention.
    I’m not looking to pick a fight, nor do I want to have someone make all my trades for me.  I just seems I need a different strategy for using this website to my best advantage. Not your fault. The issue is mine to work out.

  185. LOL, chaps!
    only showing a little respect
    cue the Godfather theme…. "Don JRW, I come to show a little respect."
    Shall we say the same thing to Don Phil?

  186. lol!  JRW, if you just switched to cheaper friggin cars you could have had a whole one!

  187. I am sure Harry got the talking points memo and just ran with it but this has got to go down in history as one of all-time dumbest political statements:

  188. pstas
    He added later that NONE were in the public sector, and NONE had voted for HIM !!

  189. Strangles – have been out all day and catching up. My strangle callers are all threatened and it seems I am not alone. My thoughts are the same as echoed here , i.e., watch and wait for a pullback?
    Also, not sure I get the strategy on the verticals going out to May? How are you picking the strikes?

  190. jcmcn5
    TZA April7.5Cs
    I don’t want to answer for Phil but April 17th is a long way off.
    The "trick" is to scale in say 1/4 at a time so you can adjust – without having sleepless nights.
    Try some of Phil’s plays with only  1 or 2 contracts and follow them through to the end.

  191. TZA/JCM – Well we’re talking about the Apr $7.50s whihc are at .70 with a .70 delta and they are down .35 today so it would take you a 50% bounce back from today to be even – I don’t consider that a bad thing.  It only becomes a bad thing if you don’t have some bullish plays that are making money while this one is losing. 

    Keep in mind that we opened this week, which was one of 7 weeks you have remaining, at 10,400 and we are finishing the week at 10,566 – that’s 156 points up in 5 days and 122 of them were today.  Is that really a trend?  It has been an annoying week to be bearish but if we are going to consider a 150-point move against us a catastrophe and start pulling our hair out and railing against the unfairness of the system – then I would suggest we stick to the conservative $100KP only, which moved just 1% up and down all week (currently down) but with 10 out of 15 positions winning and 2 of our 5 losers were hedges that HAD to lose if the others were going to win. 

    We still have $164,000 of buying power to deploy to roll or adjust our losers and winners are forever if we cash them but more on that when I do the update. I would really suggest you spend time learing how to manage a balanced portfolio before attacking with front-month, high-risk positions.  

    There are simple rules for front-month trading.  Scale in (1x, 2x, 4x) and any time you lose or gain 20% you have a decision point (not nec. a stop) but you MUST re-evaluate your position at 20% and it’s very rare you sit there without a DD or a roll.  

    I’m pretty sure this is very deeply discussed in the article you follow as a link from the strategy section and the dozens of comments below it.  Feel free to read it over and continue the discussion over the weekend because certainly you are not the only person who would benefit from it.  

    If your agressive plays are 10% of your portfolio and you have a bad week and you are down 15% (I am) then you say, oh damn I am down 15% on 10% of my portfolio, better luck next time.  Especially if the aggressive bets you were making were against the market when the other 90% of your portfolio is positioned very bullish.  It’s all about balance.  If you have balance – then no single trade is going to bother you.   If you don’t have balance – a single trade can sink you.  Why would you not have balance then?

    As I said, this is a good thing to talk about for the weekend. 

  192. jcmcn5
    Do you have March or April calls?  Phil’s trade was the April 7.5Cs

  193. Phil
    We haven’t had a FLY in a long time – some of the new folks might enjoy one …..

  194. And what Edro said!

    Fly/Edro – Market’s not stable enough.  I would have actually have started some if we held the channel at 10,400 but I don’t want to play flys with 10% market swings – look how much of a fuss people are making over 150-point move this week!  8-)

  195. Edro — I have the Aprils.  I know that’s a long way off, but…  and I did scale into the position.  nibble  at 1.35, nibble at 1.20, another nibble at 1.13, then dd at .70.  My basis is .96 ish.

  196. Guys,
    The RUT is just relentless this week, and I didn’t have time to check in today. 
    cwan, yes, always keep an eye out for buying the verticals.  Those are cheap insurance that can be sold off piecemeal to get some of the cost back.
    Gucci, for the RUT Mar 660 short calls, there are a couple of exit routes available.  One is to roll 2X to 670 or 4x to 680 (those extra margin is very handy), along with selling the short puts, may be the Mar 620 (yes, selling the 620 putter wasn’t even an option last week).  Actually, I like the 4X roll to Mar 680 callers as it gives a nice cushion for additional upswing and we’d win it all if RUT moves a little to the downside. The second escape route is to roll to April or May:
    - 1.3X from Mar 660 to Apr 680
    - 2X to Apr 690
    - 2X to May 710.  I like this one too, as there is plenty of premium on the PUT side to sell for May.  See, we are forced to start the spreads in May.

  197. jcedens,bgbgelow,agoargy,    and  matt, ssdirk,   Yes we all know the market is manipulated but that shouldn’t stop you from taking some longs.  Phil said a while back that 80% of your portfolio shouuld be in boring stuff.  Take his example, Exxon.  Where are they going? they have the money to do whatever they want.  We have a buy list that has some pretty good stocks for the long haul,  (Jcmcn5) that you dont have to be here everyday to read all of the posts.  Pharm gives us some pretty info on pharmaceuticals , many that pay great dividends .  All you have to do is sell premium along the way , selling more when the VIX is up and less when its down.  Remenber you win every time.      That is the whole theme of Phil’s site.  
         All of the rest of the stuff is for fun , to keep you entertained while we sitting in front of the computer.  Day  or swing trade USO, DIA, TNA/TZA/IWM,HK,EL etc etc. etc. .   I have some shorts  and longs and puts and calls and strangles and verticals and insurance and in the end I have some balance that I can adjust depending on which way the waves are moving.   I dont gain every dollar in the way up but I also didnt get wiped out  on Jan 20 or in early Feb.   Dont’ let the manipulation get you down!

  198. Jcmcn5,
    If you don’t have time like me, an alternative is to look for a lower return and sell options premium.  Selling something that decay over time gives a huge advantage to the sellers (i.e. we are playing the house in the casino).  Like many others on this board, we found that selling short strangles does not require good market timing skills.  It’s not a completely hands off approach, however.   This month is one in 4 that we need to make many adjustments to the upside.  The other months went fairly smoothly.  Since we are the house in the casino, we need a deep pocket, so it’s advisable to have Portfolio Margin when selling shorts so that we have plenty of margin to roll 2x or even 4x if necessary.  Hopefully, you have read the links under the New Member’s Guide for additional information on this strategy.

  199. the traders on PSW ar e the best ever seen (though I’m just an amateur).
    Something about FUN and PROFITS right? It’s different when you’re actually learning something when you trade versus blindly following a recommendation (cough cough, um, Cramer?)

  200. Well, I think it’s interesting how one can be perfectly balanced and well, I was for several weeks but today I had no plays left. Every long now has a covered call against it. I decided against new longs which looks not-so-smart today. I sold a bunch of Mar SPX puts (one was a roll from Feb) and they are worthless, so I closed out half, taking a 90% profit. On the other hand, my calls are squeezed, and even one position that I rolled a few days back is already in the money for MarQ1, and another one I rolled to April at 1150. So, even that one is looking like a problem. It isnt so much the magnitude of the move, but the relentless nature of it. VIX sinking like a stone, premiums drying up, no put looks attractive to sell (so maybe I violate my religion and buy some?) and no adjustments are left. Today was the first day this year that I took an outright beating. There’s always tomorrow, and I still see an exit somewhere over there in the smoke….

  201. jo & lflan,
    I’m just curious how much are the malpractice insurance that a primary care doctor and a surgeon would need to pay?  I’m just trying to round out the healthcare cost picture in my head.  Most of the new offices around me are either a medical or dental practice.  My kid’s doctor charges my insurance $120 per visit, plus a $10 copay.  He sees at least 6 patients every hour (tell us if there is a limit on the number of visit per day also), that’s $780 an hour, $1.5M per year.  The other costs besides insurance would include nurses (although they charge for shots too), billing staff, office staff, scheduling software and office lease.  He can easily pocket $750k per year as a primary care physician.  Is my number really off? 
    If the number is fair, what happens to the money when HMO pays the same doctors $120k per year, and pocket the other $630k?  The other example I have is from a friend, who is a recently practiced cardiologist.  Their salary in a private practice starts at $400k, and malpractice insurance is paid by the practice. 
    Lastly, I took my kids to the dentist this week and see that they have all kinds of staff, including a full time person doing billing.  If we have a single payer system, then we don’t need thousands of those billing staff.  Just like in Australia, the primary care doctors don’t need any person to do the billing at all.  The software for billing and claim adjudication used all over the country would be much simpler.  Again, I’m not saying that I know how to fix or change anything, just trying to figure out the numbers and the scenarios in my head.

  202. barfinger -
    Well said.  Today was a tough one for me as well.  Feb as a whole was very good but I’ve given back 20% of it in the last 3 days…especially today.  I’m still ok with leftover dry powder but it’s times like this that get frustrating.  When the market does these vicious gaps (up or down) it often throws my balance out of whack and really stresses the trade rules sometimes forcing me to take a loss.  Typically this happens on the upside since I’m more bearish.

  203. Phil
    March 5th, 2010 at 10:01 am | Permalink  
    SPWRA/Deano – Thanks for the heads up.  They seem to be taking it very well…
    AAPL/Samz – Good job!  I’d full cover over the weekend and then you can get brave. 
    Bearish/Dman – As I said earlier, I made a fundamental commitment yesterday fully expecting to get jammed up this moring. 
    I don’t understand why some folks are surprised at today’s action, Phil expected it knowing the probable jobs number we talked about before the Stick on Thursday.

  204. Peter D
    To put Doctor fees in perspective – I just had a checkup because I am on cholesterol meds.  Medicare paid $16.80 for a few minutes of the doc’s time plus various assistants and the bloodsucker (not sure about the lab cause I haven’t got billed for it)
    My daughter, a Family Practice doc at the clinic, said that was usual for medicare.
    A lot of difference between $120 and $16.80, ehhh?

  205. I’m long GS July 160 call and short March 155 call. I sold the call when GS was 156 or so to pay for a roll out of my call from April to July. GS has run up so fast I’m buried by the march caller but figure I have 4 months to roll up so not really worried. However, with trades like this I have trouble figuring out when to roll up/out the caller once the short call gets deep in the money. Usually I roll too soon and miss the full benefit of a pullback on the front month caller. I like the protection of the DITM caller but in a case like this would you sell a put to ease the pain of a continued run and get delta closer to 0, or roll now?

  206. Fannie and Fredie MAY ask for billions back from banks?  MAY ask?  MAY?? 
    WTF?  Why is it that there is ANY room for doubt on their part?  I cannot fathom what is going on in this country when there is this kind of indecision when it comes to doing the right thing by our gov’t!  F**** the consumer protection agency.  That thing will be a piece of s just like all other gov’t agencies.  What caused the housing crisis was cheap money AND LAX UNDERWRITING STANDARDS.  We know this now.  So why are banks still cutting corners in their originations?  To make money!  So who is in a position to hold them accountable?  The loan purchasers!  Who are the loan purchasers?  FRM and FNM (really you and me).  So when we see banks going down the same old road again WE HAVE GOT TO HOLD THEM ACCOUNTABLE!  Where is the gray area on this?  Where is the confusion?  There is $21B at stake here!  Or isn’t that enough anymore to make it worth while.. for the love of Pete.  Of course this news wasn’t enough for the banks to be on a tare today.  Which could just be their last gasp.  I think they are poised for a drop now and it could come on Monday..  That’s why I’m uncovered like a mutha!

  207. Anyone notice the RUT finished today at 666.02? Did’nt the SNP bottom at 666 as well around this time last year? Just coincidence?……

  208. Jcmcn5
    As long as you have sufficient cash left to adjust your position if need be you should be fine.  Your basis of .96 is excellent given TZA’s dramatic move down.  As Phil mentioned the April7.5Cs have a delta of .59 so a move up of just 0.44 will put you even.
    When you get even, sell 1/2 !  This gives you the cash to make future adjustments such as DD again or rolling out.
    If you were uncomfortable with the drawdown then sell 90% when you get even, that makes more cash available and reduces your stress.
    What is your next move if the market keeps going against you??  You should have it figured out already.
    As I don’t know your cash position or margin details it is difficult to plan for you but you can always roll out.
    For example, you could sell 2x you current position in the April7.5Cs and put 1.40 in your pocket (0.70 from selling your long call and 0.70 from selling a short call).  You would the use the 1.40 to buy the July7C at about 1.60.  It will cost you 0.20 but you have moved your long out 4 months and have 4 months to sell premium.
    You could just wait…..  The market is very volatile and can go down faster than it goes up.  If it keeps going up plan on rolling your April 7.5Cs down to April 6Cs for about 0.60 (40 cents per dollar), figure out your new breakeven and sell 1/.2 when you get there.
    You could adjust your position to long the July7C at 1.60, selling your current April7.5 longs at 0.70 and selling short 1/2 April7.5C at 0.70 and 1/2 April7.5P at 0.50.  Then, 1/2 of your shorts will be profitable.
    You could sell your April7.5Cs for 0.70, sell short the July 7Cs at 1.60 and buy the Oct6C at about 2.45
    I’m not recommending any of these adjustments, just using them as examples.  Unfortunately you will probably have to adjust most positions – make sure you keep enough cash around to do that.

  209. JRW,
    Since I’m not a premium member, I can’t see what you guys do all day. What kind of trading are you doing?

  210. acland
    Not an easy answer, I day trade 30% of my portfolio, primarily in the Russell index up or down within predetermined parameters. I usually post before I trade, but sometimes time does not allow. I have had some success over the last couple of years. I don’t know what they let you see with your membership, but if making 20 % on a portion of your portfolio would pay for premium, you might want to think about it. I post my ideas for free so all you need is access. Good luck !!

  211. acland
    Sorry, that’s 20% per month.

  212. Peter/
    when you roll calls to apr. or may what do you do with puts? do you sell them at the same time or wait and sell later when market retrace and Vix will be higher??

  213. JRW,
    Yeah, I used to be Premium but it was a bit of information overload at the time and I wasn’t around much so I scaled back to Basic. It seems like it would be worth an upgrade and I have more availability now. I’m assuming I could scale the trade to fit my portfolio? Options or stock? Could you give me a quick example? Thanks.

  214. Hi, Peter D,
    Thank you for your guidance.  Always look forward to it.
    Do you recommend rolling calls to 2x May (or 2x April) AND selling MARCH puts?
    Another question is do we really want to sell puts NOW?  The market might turn around at time.  This relates to my unpleasant experience just a few weeks ago.  I sold or rolled up puts at fairly low prices just days before the big drop.  And a few days later, just before the market bottomed, I sold or rolled down calls, again, at fairly low prices.  Some of those callers are still in my portfolio, and they are being threatened.

  215. aclend
    On the stock today I made 5% or $51,000

  216. I saw that earlier; I was wondering about the specs of the trade?

  217.  Peter D….I just read your question ( I’ve been on the road most of the day).  It’s late now but I’ll get back with you soon. 

  218. JRW
    Your numbers are impressive to say the least. To confirm, you say you made 5% today and you make 20% per month on some of your portfolio. My first thought is to say CONGRATULATIONS !. I was pleased with my  profits for last year – 80% on invested capital, but compared to your results it is a pikers dream. I did over 2000 trades and most of the time was juggling close to 300 positions. This just not an efficient method to reach my goals. Over the last couple of months, I have been mostly in cash while waiting for the much talked about correction, that turned out so far to be a non starter. I have, during this waiting period, been concentrating on FX trading, which has the "rush" that you seem to be experiencing in your trading strategy. I am not the best currency trader, so I just wait for the "drop dead " opportunities that come along from time to time. Last week one of these surfaced and I went "all in" (shorting the GBP against the CDN and AUD) and I doubled my account value in 5 days. I now am back waiting for the next one to surface – might have to wait until later this spring until the bells go off.  If you have a moment to share your strategy with us here at PSW, we all would be most appreciative. Thanks!  Oh, by the way, we all could use a new car.  Ha!

  219. gel1    I like your  FXC pick, and its up the last few days. The 95 p strike is not that far out of the money so I feel were playing on the edge.  However I will add to this position if VIX comes back up. Thanks.

  220. gel,
    Please don’t give me too much credit, those numbers only reflect my day trades; I’m still 50% cash and 20% PSW positions. cash pays nothing and my PSW positions are net underwater. 2009 I made 68% on the whole portfolio
    ( I was too Bearish ). My strategy is to go with the market, whether it makes sense or not; where it goes, I go. I usually post my positions and trades as I make them, you can check, if you had copied them you would have done as well.
    BTW, sorry you didn’t make it to the Sonoma Coast at Thanksgiving, I still have a fair selection of Scotch !!

  221. aclend,
    Read through the posts from Thursday and today, it’s all there.

  222. tcha & cwan,
    Yes, I sell the puts at the same time.  This is because my Delta already got too negative, rolling 2X doesn’t improve the delta (although it improves the margin when we are sufficiently OTM), so I need to sell additional puts to get the Delta to a more neutral.  In these instances, I sold puts that are sufficiently OTM to limit the whiplash effects (e.g. RUT Apr 560 put, May 530 or 540 puts).  I sold puts in the same month as the calls.
    Let me pause and explain the thought process for this week scenario.  As hit the bullish levels and are holding it, we could feel a short squeeze coming earlier in the week.  You can see that the short sellers need to cover or rolling up.  The more we inched up, the more covers people would need, pushing the market up and up.  So what do we do?  We need not fight the trend, meaning we need to sell puts to cover, until the trend changes.   By that time, we may already done with the March expiration, and into the April already.  So I suggested a bullish flip option, from a March short call to 8X the March short puts.  I jumped on RUT Mar 580 short put on Monday for $1.1 (RUT was 630-640), then needed to go more aggressive with the 600 putters on Tuesday,  was $1.5 now $0.48.  I figured that there are 9 trading days left and a 8% cushion was enough with the bullish train runing.  Today, I paused and thought hard enough about selling the March 620 and 630 putters, but went for them by about midday.  One of the reasons is that the S&P 500 profit is now 25%-30% off the high in 2007, meaning plenty of other folks is thinking that 1170 is fair value (25% off 1576).   I don’t need to question the SPX fair value, but need to recognize what others are thinking.  With most year end projection of 1250, I can afford to sell SPX 1000 or RUT 590/600 short puts as I can roll and roll them as needed.
    For May, I ended up with RUT 540 short puts and 720 short calls, and I can live with those for 2 months.   As we know RUT can have deep correction.  The 540/720 can survive a correction to the 600 level easily.  I would imagine RUT 600 can provide a strong support and the 720 is a loftly level, and can always be rolled higher.  My SPX spreads are doing a lot better than RUT and didn’t need much adjustments.

  223. JRW,
    We always have large margin available while playing short strangles, so combining the TNA/TZA day trading with short strangles can juice the return by a large margin.  I can see folks salivating a possibility of 3-6% a month return with short strangles plus 6% a month from day trading (20% return of 30% of portfolio).  That’s an optimistic 289% profit a year.  Any help you give us is truely appreciated.  Furthermore, anyone can play short strangles, but it’s much harder to day trade, so I better give you my green colored box! 

  224. 666 – RUT close
    It is a sign!  The Heavens have had enough of the financial chicanery in the name of gods work! Expect a Financial Earthquake/Cyclone of Haiti/Katarina – like proportions on Monday.
    There I said it first. 
    If nothing happens I shall be dismissed as a crackpot.  However if I am right I will be famous … and then rich as all and sundry invite me to their talkshows and shower me with corporate sponsorships for my insight in hocus pocus. 

  225. Peter,
    Thanks for the kind words, you are an immaculate technician and your contributions here are greatly appreciated. I, on the other hand, am a " one trick pony ", but it is a very profitable trick which I hope continues to be so !!

  226. JRW
    It was imposible to get away this Thanksgiving. I have a brother in law that lives in Sonoma and is an exec with HP, and it has been a very long time since we have been able to visit  One of these days I will take you up on that Scotch ! I love to hear success stories, in particular from those that share Phil’s wisdom, and are willing to help others that have similar goals. Peter is right – you need your own color – maybe Gold !!!!
    I personally do not engage in much day trading, other than to provide mattress covers for the portfolio. I have taken a very broad approach by trying to hitch a ride on the market trend, and then do a lot of trades that are targeted for the long haul. This involves a lot of research, but seems to work best for me. Down the road I will jump in to the pool with you and strangle a few index opportunities, as it looks like much fun.