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Monday Market Movement

Asia exploded out of the gate today! 

The Hang Seng is up 2% at 21,196, gaining 408 points on the day along with a 2% gain on the Nikkei (216 points), taking them over the 10,500 mark to 10,585 as they play catch-up to the Dow, which topped out at 10,566 last week.  The BSE keeps going higher, adding 0.6% for the day, back over 17,000 at 17,108 and the Shanghia added 0.7%, finishing the day at 3,053

The Hang Seng's incredible morning gap up and 100-point follow-through, though impressive, is only a "good start" to getting that index back on the road to recovery as they had topped out at 23,000 in November and flirted with 22,500 in early January so we'll need some sustained conviction before we get all bullish on China but, for today, we can just say "WOW" – it's amazing how much a market can move when it's closed!  

We're closed as well but our pre-markets are looking strong although Europe is kind of flat-lining.  They are all upset because the 300,000 people who live in Iceland took a vote and decided they didn't have $5.3Bn to bail out failed Icebank, which kind of leaves the EU investors, who deposited money into an internet savings account that promised 8% returns, in a bit of a lurch becuase (surprisingly, I'm sure) it turns out the bank took a lot of risks to get those returns and (even more surprisingly) THEY BLEW IT!   Even more surprisingly to European investors, 93% of the voters said: "No thank you, we will not agree to pay $17,666 per person (about $58,000 per family) to make foreign investors whole."

What I find most funny about this is that the UK and the Netherlands had the nerve to ask Icelanders to repay this money.  $5.3Bn is 1/2 of Iceland's GDP – that would be like countries who lost money in the Lehman collapse asking US taxpayers to kick in $6.5Tn to make them whole.  What do you think our vote would be?  Sure we are numb to our own debt level but are we that numb?  Possibly so as we seem to be happily buying oil at $80 a barrel again – sending $321Bn American dollars out of the country in exchange for a product we burn up and need again the next day.  I wrote about this disaster over the weekend so no need to re-hash it here. 

Also a disaster was our too bearish stance last weekend as we missed (are missing?) a big move up.  I went over that in our Weekend Wrap-Up and, as to the current chart – Market Tamer has an excellent video on the "cup and handle" formation in the Dow and I am not, in any way, shape or form, saying we don't have bullish techincals – we do.  What I am saying is that we are ignoring A LOT of fundamental issues that cannot be papered over by a low-volume stock rally – no matter how good it makes us feel in the short-term

 

Everyone is flying off of Friday's big move and look at those rising 20 dmas – if they cross over the red lines (50 dmas) they make for very bullish indicators so let's keep a close eye on oil ($81.50) and the Russell (666) - which both need only very small moves up to give us "Golden Crosses" that should get the TA guys salivating.  Of course failures to advance here, especially after this morning's huge boost from Asia, would be a cause for concern. 

As long as we hold our red lines this week, all shall be well and we'll have entered into, in the very least, a bullish consolidation pattern that will indicate we were betting on the wrong end of that 5% line and our range will be more like 10,165 to 10,700 than the 10,400 top we were predicting.  As I reminded members this weekend though, all this bullishness is based on a 150-point gain for the week that took 5 quick moves totaling 400 points last week, just to get those 150 points to stick. 

Still if "THEY" are "faking it" then they are very good at it and we may as well go with the flow, right?  Sarkozy says the EU is ready to help Greece and he seems to be in charge over that.  That sent Greek (and Dubai's) CDS's to a 6-week low.  Our own Paul Volcker criticized Greek derivative abuse but the IMF seems ready to step in and act as a bank to lend Greece whatever they need to see them through the year

I am trying very hard NOT to have an opinion on the markets as we're already above where I though we should be and I also thought that China moving to nullify all guarantees local governments have provided for loans taken by their financing vehicles would have spooked investors this morning but the Hang Seng and the Shanghai are up strongly despite the potential for a $1.7Tn default.  “China’s sending a very strong signal that this kind of financing is over,” said Patrick Chovanec, an associate professor in the School of Economics and Management at Tsinghua University. “It raises the specter that China’s banking system has a lot more risk in it than people previously thought.”  Blah, blah, blah Patrick – all we hear is BUYBUYBUY!!! 

See – I'm getting the hang of this market now!  The NY Times reports this weekend that our own municipalities, school districts, sewer systems and other tax-exempt debt issuers are ensnared in the derivatives mess as well with New York State on the hook for $3.74Bn worth of swaps outstanding.  Hmm, must be time to invest in NY savings bonds! 

So everything must be great because the markets are going up – that's our story and we're sticking to it at the moment.  We're already way too bearish if things continue higher so we'll be watching that Russell line closely, as well at 1,140 on the S&P but 1,150 should be the real resistance along with 2,250 on the Nasdaq but, even testing those levels is going to be a pretty bullish indicator so we'll watch and wait and see what sticks

 


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  1. Phil -
    Just read the weekend recap -
    When I see people parading around with guns strapped to their legs because they think they are making an important political point (FYI I grew up hunting and love taking target practice), I know the barbarians have won.
    When we have to spend time fighting off creationists to keep religion out of science classrooms, I know the battle is over.
    The U.S. is dying and its going much faster than I thought – if I could only get me wife to move – I would be on the next flight to New Zealand 
    Just figure out where you want to move.
    My goal is to make enought money trading that New Zealand or some other country will take us.


  2. With commodities on the march; what are we going to do with April USO 38  puts and our FCX bear call spreads and naked calls looks like they take it on the chin today.


  3. samz, yes I saw one of those gun toting nutjobs in the store this weekend….with his 10 year old daughter in tow who has now learned the lesson that a gun is a toy (like a purse) to be paraded around and shown off. Some tragedy is gonna befall that family… I think this would go away quickly if every time someone saw a person with a gun enter a store, they should call 911 and report "a man with a gun has entered this location…" so that it gets thrust forward as the public safety danger that it is…..and that’s what everyone should probably do anyway (call 911) because YOU DONT KNOW if he’s just a clueless yet legal firearm bearer or if he a robber or some disgruntled employee coming back to take revenge on his bosses and coworkers!


  4. I’m long  the GOOG March 2010  $550 Call with a basis of $33.49.  Friday’s price was $19.90.  I’ve recovered quite a bit of this loss but not sure of the best way to recoup the remaining loss.  Would the spread you mentioned Friday be a good solution or would you suggest a different route?


  5. For everyone’s information -
     
    I will be available all day to answer any questions about stocks, ETFs, bonds, the market, oil, etc. Let me know if you have any, and I will get back to you ASAP. Post your questions on my article here.
     
    Thanks!
     

  6. In TNA at $ 51.51


  7. Good morning!

    Russell breaking over 666 and S&P over 1,140 are both very bullish signs.  That should line up with Dow 10,600, NYSE 7,300 and Nas 2,325.  

    If we are going to get upside reistance after that it will be back at Dow 10,700, S&P 1,050, Nas 2,350, NYSE 7,400 and Russell 750 so a long way to go to the upside before we can count on a pullback once they break away from this morning’s levels. 

    Transports are, of course, rocketing on $82 oil but the SOX are subdued and usually they both move up to lead the indexes.   I don’t want to be bearish – my bearishness is based on the fundamentals and fundamentals are out the window at the moment. 

    With the Dow over 10,550 we should be full covered on the DIA June $106 puts with the March $105 puts, now .75.  If we break below that mark, it’s a good idea to take 1/2 off

    I’m not adding any bullish plays here but I’m not rolling or changing the bearish ones yet.  Tomorrow is the day we expected to begin falling, not today but I’m a lot less confident about it now than I was when punching up to 10,700 was an abstract concept….


  8. Phil;
    is there a trade in PG ?


  9. And out at 52.16; Line of the day is IWM 66.72, 66.46


  10. Guns/Samz, Bord - Leave it for the after hours please.  Markets a little to active to start debated the 2nd ammendment…

    Commodities/Humvee – As I said in the Alert, I HAVE to stand by my convictions until tomorrow.  Of course the market can keep going up but I still believe in the premise enough to roll out and buy more time for it to work – I have no intention of abandoning the short position just because it didn’t work in week one of six.  What I will do is look to make some offsetting bullish commodity bets to balance things out if we keep going but at 9:49, we’re still in the BS pre-market pump zone and GS just upgraded X and there were a couple of mergers… you know, the normal Monday BS.

    GOOG/Sara – Yes I like that spread as a more rational way to play GOOG up.  Your March calls are 1/2 premium and you just blew $5, don’t let the rest go if GOOG is going to break below $560. 

    PG/RMM – Not my favorite up this high but back at $62 I would like them which means, if you are keen on them, that selling the Apr $62.50 puts for .85 is a way to initiate an entry, even though it’s not a great premium. 

    Dollar down a bit but not too much at $1.368 to the Euro, $1.514 to the Pound and 90.32 Yen.  Copper is $3.44, silver is $17.39 and gold is $1,130.  Oil is at $81.81 after touching $82.40 during Asia’s session and Nat gas is flatlining at $4.50.


  11. Back in TNA at $ 51.45


  12. phi.l, any new trade ideas to establish new position on TBT?
    and how about USO ?  how about selling the March 41/42 call spread for 20 cents, figuring we won’t get above 41 in 2 weeks time, oil would have to go up a lot for that


  13. Phil:
    DBA very low, should this be good for a bullish trade ?


  14. Phil,
    …anything to dissuade me from selling some AAPL 210 putters here?  Also, what u think about MCD sss and MCD in general at this level?    TIA


  15. Phil — I’m short the ERY  march 12 puts at 1.08, now 1.80.  Not a big position but would you roll to anything or adjust in some other way?


  16. Good news for XLF:   The Fed wins a partial victory in its battle to retain broad regulatory powers, as Sen. Chris Dodd is ready to propose the Fed retain oversight of the 23 largest banks. Still up in the air is who will oversee several hundred state chartered institutions.

    The White House turns to short sales to help stem the foreclosure crisis, allowing delinquent borrowers to sell their homes for less than the amount owed and forcing banks to forgive the difference. To speed the process, the government will hand out cash to both mortgage servicers and homeownersFree Money!!!

    France’s Sarkozy threw his full support behind Greece this weekend, saying the country is "under attack" by speculators and that while Greece doesn’t need assistance right now, the eurozone members "have measures, we are ready, we are determined." No word, however, on what those measures might be.

    France and Germany are working on new ways to reinforce eurozone cooperation, including the creation of an IMF-style European Monetary Fund. Aimed at preventing a single nation from destabilizing the eurozone, this would be the most radical overhaul of euro rules since the currency launched in 1999.  Free Money!!!

    The cost of insuring Dubai’s sovereign debt against default falls sharply on signs that Dubai World will approach creditors this week with a proposal for restructuring $22B in debt. Sources say Dubai will ask banks for permission to delay loan repayments.

    McDonald’s (MCD +0.8%) same-store sales rose a stronger-than-expected 4.8% in February, with most of the gains coming from Asia, the Middle East and Africa. Analysts had expected a 2.1% gain.  Investing idea:  Heart stents, diabetes treatments, the Asian version of "Big and Tall" shops (do you ever notice hardly anyone in those stores is actually just tall?)

    China plans to nullify the guarantees local governments gave for their loans amid growing concerns about credit risks on such debt. But a crackdown on what’s estimated to be 24T yuan ($3.5T) worth of local gov’t borrowing could trigger a “gigantic wave” of bad loans as projects are left without funding.

    Canada may have weathered the financial crisis better than most other rich nations, but still faces a record C$53.8B ($52.2B) budget deficit this year. Finance Minister Jim Flaherty says the country may end up selling some of its government assets. (ETF:EWC)

    Investors have been willing to take on risk in the past year, buying junk bonds and emerging-market stocks, even as they shun their old bread-and-butter stock holdings. But it’s hard to see much buying power left in the current rally after the fastest mutual fund cash depletion since 1991.

    Feb. Employment Trends Index: +0.003% to 93.5 vs. 93.2 in Jan., the sixth straight month of increase. "The continued rise in the ETI suggests that job growth is about to begin," Conference Board says.

    In technology, start-ups are getting funds – and funding means they can hire. Employees are getting placed in new jobs in weeks instead of the months it took last year. "Recruiters are the canaries in the coal mine. We’re the early bellwethers," says one placement principal.

    China Unicom’s (CHU) iPhone (AAPL) sales may get a boost in China if it’s successful in introducing iPhones with Wi-Fi capability. The iPhone went on sale in China in October, but government regulators demanded the Wi-Fi be disabled, frustrating many consumers.

    Panasonic (PC) is pushing hard to help 3-D take off. Starting Wednesday, Panasonic will put promotional displays in Best Buy (BBY) stores for its new 3-D TVs and will offer discounts of nearly 50%. Samsung, LG Electronics and Sony (SNE) are also trying to tap the 3-D market.


  17. Phil/T.  Do you like selling puts on T here?  Maybe selling Apr 26 puts for $1.35 as a way to enter a position.  There may have been a question at one point about what happens to T when its exclusivity on the iPhone ends, but I just don’t see VZ chasing T for iPhones and T seems to have solidified the APPL relationship now with the iPad. 


  18. AKAM- Phil, need your thoughts on this. I have 5 AKAM Jan 11 17.50′s (basis $10.70) with 3 Mar 26 callers (basis $ .74). Looking at rolling the Mar callers to Jan 11 35′s about even for 5 vs. 3 now; Rolling the Jan 11 17.50′s up to the 20′s or 22. 50′s?
    Comment?


  19.  Phil, going back to your MCD theses.  Recently, on a trip back to india – my dad was shocked by the amount of rising obesity within our own family.  Cars, new sedentary lifestyle plus the adoption of western diet and packaged foods.  I don’t know what the play is but we are doing a good job of exporting our problems.


  20. Phil, the last time we shorted FCX I never got out in time so I am stuck with a loss (abt $2200) however I did buy the April 80 call so I have capped my loss at $2200, since I sld the April 75 call to go short .  I think copper should go down  and I have some time to play this pos.  But HOW best to do so?  Thanks for your time.
    phlit


  21. Hi EricL,  our V condor is turning negative shall we still hang on or close? Closed SPG with a small profit


  22. Hi Phil, holding AMED Jun 50 short sold for 5.90 now 2.55 thinking of roling to Sep 55p for an additional credit of 4.75 what would you do? thks


  23. Phil – what is your opinion of the oxen SRS trade? Seems like they will trickle down to nothing with our so called stable real estate markets.


  24. Hi yodi,
     
    The safe thing would be to close. I sold some for a profit last week and am holding the remainder for a pull-back, but that’s getting increasingly risky since the stock is looking strong and time is running out. But I’m betting on a little shake-out this week.


  25. TBT/DMan – Not really.  They usually top out at $50 so maybe up there it’s nice to start selling some calls in an bearish ratio spread that can be flipped bullish if they cross $50.  That’s a nice way to initiate a leap position but we’ll have to see what kind of premiums there are as right now there’s not much attractive to sell with the VIX so low.  I like the USO idea – if it fails, you can just treat the $41s as a naked short call and roll them along

    DBA/RMM – Yes, I still like them long-term and they are stable enough to do an artificial buy/write with the 2012 $20s at $6.40, selling the July $25 puts and calls for $2.20, which is net $4.20 on the $5 spread

    AAPL/Oncmed – Not if you REALLY want to own AAPL for net $209 but even with PM, it’s a lot of premium to make $1.  I’m just spoiled really, if we are going to keep rallying, we are going to have to get used to these rotten premiums…

    ERY/JCM – Nice play but my adjustment would be to take a 70% profit and be happy.  If you want to press your luck, why not take 1/2 your profits (.35) and put it on the Apr $9 puts, which should double at least if ERY drops another buck (the $10 puts are .70).  You can also do the $10/9 bear put spread for .35 and that makes .65 if ERY drops to $9.

    T/Judah – I never have a problem selling T puts because T is always great to own.  I’d sell the July $25 puts for $1.45 (just selling more premium out of principle plus I still think we’re going to dive at some point) and you can take 1/2 of that money and buy the Oct $24/25 bull call spread for .55 so if T "gets away from you" you still make a nice $1.90 and you can use that to buy some 2012 $25s, now $2.10 to start a longer position

    AKAM/Pstas – If you are in AKAM for the long haul, why not roll the 5 $17.50s to 6 $22.50s ($8.40), which only have $1.40 in premium and then you can roll the 3 $26 callers ($3.55) to 6 April $29s at $1.50, which costs you a little but has $1 of premium and still gives you nice, 20% coverage on your longs (and it should be enough to pay for you to roll to the $20s if things head lower). 

    Obesity/Jo – It’s terrifying.  It goes back to my favorite growth area, which will be medical testing and equipment.  We may not have health care coverage here but other countries do and they are not going to be voting to give it up just because a lot of fat people need bypass surgery.  That plus an aging global population and they guys who sell disposable supplies should be able to do very well for a long time (kind of like investing in arms dealers but the war is against disease and that enemy will keep fighting across all boarders for many, many years).  You would be a great guy to take not of what gets used a lot and maybe some companies we should be looking at – especially non-marquis names…  Maybe save a few wrappers and do a little research?

    Capping/Phlit – Excellent defense but make sure you TAKE those gains on the calls you don’t believe in.  April is a long way out and you can always sell the Apr $80s (or $70s) to stop losses rather than buying premium.  The Apr $75s can be rolled up to the May $80s for about $1.50 and you can get $2.15 for selling the May $70 puts so that’s another way to cap things – sell something that can only hurt you if you wipe out your caller…  If not, the May $70s expire worthless and you use that $2 to push the May $80s up to the Aug $85s (now $6.75) and sell the Aug $70s and just keep going until FCX is kind enough to pull back.  We did that with AMZN and it took us from Nov to Feb to get our money back but it did finally work!

    V is really flying, up 2% today.  MA is also taking off as reform seems to be going up in smoke and everyone is thinking the consumer is back – mainly because they are spening 20% more money on gas.  Still, I was in another packed mall this weekend and this one (Paramus Town Center) had no movies and not much of a food place yet you could not find a parkinig spot at 4pm on Saturday.  I think it’s time for a shopping survey to see what our members are seeing out there but that’s 3 malls in a row that seemed pretty busy to me


  26. Hey all,

    I just wanted to let you know that we have gotten out of our STP Short Sale position for a 3% gain on the day. We got in at 15.20 and sold out at 14.76. 

    I am still involved in my SRS position. We are down a little under 1%, and we are going to need a market drop to help get this one going in the right direction. I also just found an S&P upgrade on a holding of SRS that is negative for it, which I posted on my article.

    You can read my positions and information on my post for today. Additionally, I am available all day to answer any questions you have about stocks, ETFs, commodities, or anything else. Let me know.

    Thanks!


  27. ERY/JCM – Nice play but my adjustment would be to take a 70% profit and be happy.
     
    Sorry — I’m short the puts.  I wish I was long.  I’d be long gone if I was…


  28. Malls:  Well, when you stop paying your mortgage you suddenly find yourself with a lot more disposable income.


  29. guys who sell disposable supplies should be able to do very well for a long time
     
    I’ve thought this for a long time as well.  Do you have any favorites and have you ever heard of Angeion (ANGN) – lots of cash, no debt.


  30. Stranglers – I admit to feeling like I am athwart the dike watching the flood waters rise. I am in March RUT 670; SPX 1150 & SPY 112 and 113′s. Holding and watching for now. Anyone else with me on this or have you all rolled ?


  31. Phil,  This by Kevin Haggerty at Fidelity Capital Markets: "what the CNBC empty suits neglected to say was that that number included 15,000 census workers, and a Birth/Death Model estimate of 97.000 jobs, and that number is usually pure fantasy. If you add both off those back in you get a more realistic number of -147,000, and if we say the BLS estimate is right for at least 50% of the estimate you still get a -100,000 number. The government is expected to hire close to 1 million census workers, so that will be inflating the numbers in the months ahead, but Obama and Reid will still jump on the TV and tout the number without the adjustments, just like they did first thing Friday morning."
     
    So, throughout the year, as a consequence of the inaccurate birth/death model, the BLS artificially inflates the number of employed and then a year after the fact acknowledges that employment for the prior year was much worse.  At which point, the mainstream media analysts all say, "Well, that was last year, so it doesn’t matter."  Do I have that right?


  32. And out of TNA at $ 51.85 for $ 0.40


  33. AAPL – any apple watchers think that the stock is likely to pull back after the release of the pad? I want to own long term but hoping it will pull back
    guns – phil – sorry – nyt front page just set me off – but no excuse


  34. pstas – this RUT runup has been unbelievable.  I rolled my Mar 660′s to Apr 680′s.  I closed my SPX Mar 1180′s for an actual profit.  It seems the RUT has been the biggest pain in the butt for strangles.


  35. phil
    i have the april EDZ long at 2.17 and short the march 5 at .95. what’s the best next sale recommendation?


  36. Phil,
    I didn’t get into your DT play awhile back but last week sold the July 12.50 puts for 1.35, now .85
    Should I sell some calls her now? Or what would be your move from here? Thanks


  37. Pstas/strangles.  The only ones I have left similar to your strikes are a very small number of March SPX 1160 callers.  I am still watching to see if SPX can break 1148, at which point I’ll roll up 2x to 1175 and sell 1x putters to pay for the difference.  And if we march higher than that, I’ll roll away to April.


  38. AMED/Yodi – The June $50 puts is $9 out of the money and will lose about 10% of their value per week so about .25 a week if you leave them alone and you have a 20% cushion.  The Sept $55 puts are 12 more weeks out for $4.75 more over 24 weeks or .19 per week and you have a 10% cushion with twice as much time for something bad to happen and wipe out your gains.  On the whole, you would be better off doubling down on the June puts. 

    SRS/Morx – I hope David is wrong bu tthe technicals sure are ugly on SRS.  VNO punched $70 (where I like to short them) and SRS is holding up pretty well considering.  Last time they were this low was December, which was when everyone was throwing up their hands and deciding it was time to go bullish on CRE into the "fabulous" holiday shopping season.  The numbers didn’t support CRE then and SRS went back to just under $9 in Feb so I think they have a bounce to $8 left in them at some point. 

    Poor Pound fell down again, back to $1.506.  Euro and Yen holding steady but copper dropped back to $3.414 and gold’s at $1,125 with oil at $81.74 so interesting trends shaping up.

    ERY/Jcm – Wow, that is different then!  OK then, 2 weeks left and you need to keep in mind that they are really $1.35, not $1.80 so paying $1.80 is not a good idea since you will get .45 in 2 weeks if they flatline.   That means, unless you think they are going to drop .45 more (below $10) in 2 weeks, it would be silly to buy them back with this much premium.  An even (ish) roll to 2x the Apr $10 puts at .75 is a different matter as it drops them 20% and puts them in 100% premium so a worthwhile move.  What I would do is offer to sell 1x the Apr $10 puts for .85.  IF it fills, then you want to see about taking out 1/2 of your March $10 puts, either setting a stop at $10 or offering to buy them for $1.70.  Since you collected $1.08 for the $12 puts and .85 for the new Apr $10 puts, that means you have the Apr $10 putter at net .23 so your b/e is way down at $9.77.  Working into a roll like that prevents you from overreacting on a dip…

    LOL Daveo!

    ANGN/JCM – I don’t know that space but it’s worth learning.  If you don’t mind, please drop suggestions on the Buy List, which will be up for review shortly. 

    Birth/death/Judah – Yep, that’s a good summary.  Barry and I both write about the B/D model from time to time but it gets no traction at all from the MSM, who are happy to just report whatever statistics they are fed. 

    AAPL/Samz – I think their usual pattern is to pull back once the actual release happens but I don’t think expectations for IPad are as runaway as they were for IPhone so they may get an upside surprise. 

    EDZ/Drum – I’m not sure what Apr that is but best to cash those as they will become less and less liquid and flip to the very nice bulls that we’re seeiing on the new stuff.  As a long-term hedge against anything going wrong in emerging markets, I like selling the Oct $47s for $12 and buying the Oct $35s for $16.70 and selling the $35 puts for $4.50 for net .20 on the $12 spread that is 100% in the money NOW and worst case is EDZ is put to us at $35.20, which is 25% lower than it is now so Emerging Markets would have to go up about 8% to make that happen and, of course, there will be rolls.  This trade will be difficult to fill as the new contracts are not liquid yet but it never hurts to offer.


  39. New subscriber question here:
    In the 100k portfolio, if I wanted to duplicate the positions, would I only want to open those positions that are down form original entry or would I also want to add the one that are up also?  If I only add the ones that are down, the portfolio would be imbalanced.  Any suggestions?


  40. Morning Phil.   Would it make any sense for me to buy back my T Mar 26 p, sold at 1.05, now .81 to put on the T trade (July 25 p + oct 24/25 bull call spread)? I could use a little help with the logic. Thanks.


  41. Executed a new buy/write on CFR (Cullen Frost Bankers, buying the stock and selling a short straddle – July 55 p & c. It pays 3.15% dividend and has seen a lot of insider buying at this price. Rock solid Texas bank with no exposure to residential real estate. 33% operating margins


  42. Hey all,

    I wanted to give you a preview of what one of my alerts looks like. This is a Midday Alert I just sent out:


    Oxen Report Midday Alert

     

    SRS - We are a little under on this one still about – 0.75%. The market has turned red, but we are yet to get the movement from SRS I had been hoping for this morning. The market is only under a tenth of a percent, so it is nothing major, and I mentioned that Ventas story in a post earlier. So, we are still looking for more movement downwards. The market appears to be recovering slightly from the Obama speech, but we have the lunch hour coming up in 15. I want to see some movement there.

    I am recommending to hold this one for now. I am pretty confident that the market is turning down this week, and if I don’t get the 2-4% I am looking for in the trade, I will probably want to hold overnight.

    Current Position: HOLD

    STP - We are out of STP for 3% gain. We got in at 15.20 this morning, and we exited at 14.76. STP has paraded down to 14.50 and is on its way down further it would seem. If you are still holding, it is a good time to get out in the 14.50 – 14.40 range. I don’t think we have too much further to go past 14.50.

    Current Position: SELL, We are out for 3% gain.

     

    Good Investing!

     

    Let me know if you have any questions. I am available.


  43. Phil.
    I sent an image for your next Big Oil article to your e-mail.


  44. Rimm – up 5% and closing in on 75 – about where the stock tanked after earnings – 2qs ago


  45. SS/RUT.  It is just in its own atmosphere.  Have you looked at other indices for the strangles to complement SPX?


  46. judah- I have not, but it would be worth researching.


  47. Hi, pstas,
    I have RUT March 660 & SPX 1150.  I rolled RUT 660 out to 2x May 700.  I’m still holding onto SPX 1150.
     
    Per Peter D’s Friday night comment, I also sold a small number of March SPX 1050 PUTS, as my delta is too negative.  I might add more March puts with strikes -8% away.  Peter seemed to suggest that, with 2 weeks left, -8% is relatively safe.


  48. You’ve got to love AIG going higher. They have sold off all their main money-making units and apparently have no viable means left to make enough to pay off the $50bn plus they still owe. The stock is just a pure trading vehicle at this point.


  49. aig – or you might just find it depressing – if you remember the glory days when the pre-reverse split shares hit 103


  50. Phil, thk for the advice on AMED just to clear DD on the Jun 50p meaning I should sell the same amount of puts I hold now for a credit of 5.90 for a credit of 2.40 ????


  51. Phil…..pls. comment about  IBKR  and whether you would play it…..Tks., GABBY


  52. phil, on this trade of EDZ, looks like it starts losing money at Expiration at about 41, is that right?  and makes the most money way higher?  EDZ/Drum – I’m not sure what Apr that is but best to cash those as they will become less and less liquid and flip to the very nice bulls that we’re seeiing on the new stuff.  As a long-term hedge against anything going wrong in emerging markets, I like selling the Oct $47s for $12 and buying the Oct $35s for $16.70 and selling the $35 puts for $4.50 for net .20 on the $12 spread that is 100% in the money NOW and worst case is EDZ is put to us at $35.20, which is 25% lower than it is now so Emerging Markets would have to go up about 8% to make that happen and, of course, there will be rolls.  This trade will be difficult to fill as the new contracts are not liquid yet but it never hurts to offer.


  53. Phil, SONC an other problem child when we started this play I bought stk at 10.35 now 8.71 and a straddle closing the call when the stk waqs even more down at agood profit but still stuck with the Jun 10p sold at .85 now up on me 1.50 showing loss on stk and put what correction do you suggest, hang on and wait for recovery?


  54. Judah, RE other indices,
    I asked the same question to Peter a while ago.  SPX and RUT are the most liquid and have good premiums.
    Below is Peter’s comment regarding NDX:
     
    Peter D
    February 8th, 2010 at 12:37 pm | Permalink
    cwan/NDX
    I found that NDX is worse than RUT as its strikes are $25 apart and the option values falls sharply away from the money, meaning adjustments can be very costly.  TOS also wants more money for NDX margin too. The good side is NDX may be used as a bullish hedge where we sell more puts than calls.
    OEX is good, but it’s the same as SPX.
     
    I then ask Peter what he meant by NDX being a good bullish hedge, and he clarified:
     
    Peter D
    February 8th, 2010 at 3:44 pm | Permalink
    cwan/NDX,
    NDX is not better than others, just that we can use it to avoid the 35% concentration rule.   Since the Nasdaq was out performing last year, we could get blown out to the upside and hence the suggestion to sell more puts than calls.


  55. RIMM -
    If you don’t mind owning at 67 – can do a buy-write selling April 70s for $6.20 – 4.5% over six weeks if called away – with 8% downside protection -


  56. phil, any way to play with FAZ or FAS ?


  57. also, with SKF, we can sell the 21 puts for March for 46 cents and can always roll if financials keep melting up to April 20


  58. Cwan, Thanks. Your re-post jogged my memory.  I know Peter has also simply recommended much more cushion on RUT (which is why I have ridiculously high 710 March strikes), so perhaps I’ll stick with RUT, but keep the cushions fat and avoid the temptation to roll the callers down.


  59. JRW, Peter D,  I just read your back and forth from Friday evening.  Since the strangle strategy requires keeping a lot of cash on hand, between Peter’s strangles and JRW’s day trades, you guys could have a helluva profitable fund.


  60. DT/Jomp -  There’s a lot of positives on them at the moment so you don’t really want to short them if the Dax is holding up (over 5,750).  They should have some resistance at the falling 50 dma at $13.70 but the premiums on the calls are awful here so I think you should just let the calls expire and be happy or, you can add the low-premium Oct $12.50s at $1.10 (.40 premium) with a stop if they can’t hold $13.25 as they should get almost all of the upside from here. 

    $100KP/Salvum – I think the best thing to do there is wait for expirations when we’ll be re-balancing.  Meanwhile though, if there’s a losing bet we are pressing (like the FAZ calls) it may be worth taking a chance on a small entry. 

    T/Jbur – Since you already sold the $26 put and they have a small bid/ask spread (.02) then yes, it makes sense to buy them back, especially off this nice run.  You could also just leave it as an aggressive sale as you can always roll it along to a July put if T turns down. 

    CFR/Gel – Sounds very good.

    SRS/David – Keep an eye on VNO and BXP.  If they fold, they are very likely to signal a turn back up in SRS. 

    Noon volume is 75M on the Dow, even lower than "normal" 90M. 

    AIG/Eric – I agree, investors are simply insane with these companies.  Girl on CNBC right now is talking about AIG’s value. 

    AMED/Yodi – I was saying if you currently have sold the June $50 puts, which are $2.55, then I would sell another round (1x) of those rather than mess around and rolling out to the Sept $55 puts (now $7.20).  It doesn’t give you as much money ($2.55 vs + $4.65) but it’s a safer and FASTER trade so, considering you can reload for another $5.10 sale in June for Sept, it is more money too! 

    IBKR/Nobhar – They have a lot of debt and trading volumes have been very low so it’s not a company I would play as this time.  NDAQ was my favorite, we played them last month but they jumped 15% since then so I’m not sure about an entry here. 

    EDZ/Dman – No, it’s a $35/47 bull call for $4.70 offset by the sale of the $35 puts for $4.50 so that’s net .20 at $35 – you don’t lose a penny until $35.20 and below $35 you are forced to own EDZ at $35. 

    SONC/Yodi – They are just starting to gather strength again.  I wouldn’t sweat the June $10 puts but you do want to cover the stock when (assuming) they test that 200 dma at $10.  Would be very nice just to lower the basis a bit more at this point.

    FAZ/Dman – I like the July $14/16 bull call spread at $1, selling the $12 puts at .60, which are more than 20% out of the money and pay 500% at $16.  You are good for a 7% run in the financials – a nice offset to bullish bets on XLF or other financials.

    SKF/Dman – Yes, it’s good with the roll but do keep in mind SKF is down $1.50 in 3 days so a very volatlie stock. 


  61. ANGN – problem I see with them is two fold:  they are competiting in very competitive space, and their YOY revenue growth is negative.  YOY they have not increased sales, and their AP has increased 2-3X.  They do have 2.7 in cash on hand, and book value is 3.98.  Volume is very light on the shares w/ no options to protect, so enter carefully.


  62. Phil: if a stock is very low such as DBA, ( SEE YOUR 10;53) and if chance is that it will hardly go lower, why does it make sense to sell calls (puts yes), if stock moves up how would you roll those july calls ??


  63. RUT 666, IWM 66.66, SRS 6.66  Is this an omen?


  64. ss / omen
    That’s the kind of disciplined analysis I like in my technicians !!


  65. In TNA at $ 51.90


  66. The census spokesman isn’t very amused. 


  67. DBA/RMM – I prefer to assume that a stock could go either way.  The cover lowers the net cost of the long $20s to $4.20 so selling the July $25s is safe to the upside because, clearly, they can be rolled to the the 2012 $25s to make a veritical, WORST CASE, and then you will be up .80 if called away (20%).   You can obviously roll or do 100 other things in between but the key is to understand, to really, internally know and understand, that you CANNOT lose to the upside if you have the $20s at $4.20 and you sell $25 calls.  That should NEVER be a reason not to sell a cover and you must UNDERSTAND that relationship or you are doomed to make poor coverage decisions. 

    Signs/SS – I do believe it is

    The 5.9% surge in Q4 GDP was powered more by exports and business investment than the traditional drivers of consumption and housing. This "new mix" is the "new normal," says economist Joseph Carson, and will boost the economy by 3.7% in 2010 and perhaps 3.5% annually thereafter. “What’s going to change is how we generate growth, not how fast we can grow."  This makes sense with our top 10% theory as corporations are "rich" and able to spend, even if the workers cannot.

    Semiconductor tool spending will soar 76% in 2010, to $29.4B, Gartner says, due to dramatic industry recovery with growth expected through 2012. But the firm expects peak revenue to fall short of previous growth cycles, which might soften the typical boom/bust patterns. (ETFs: IGW, XSD, SMH)

    Unemployment isn’t going to exceed the 25-year high of 10.1% it hit in October, says ECRI’s Lakshman Achuthan. Recent improvement isn’t ringing true because long-term unemployment’s still high, but since the end of World War II: “You have never had a four-tenths-of-a-point decline in the rate and then see it go up to a new peak."

    Chatter is that things are different now, and temp hiring no longer presages nonfarm payroll gains, but a couple of charts suggest the correlation is still alive and well.

    Another baby step toward tightening policy as the Fed expands its reverse repurchase plans to include domestic money market funds as counterparties. Firms beyond the primary dealers would be used to help drain liquidity but wouldn’t be eligible for other New York Fed transactions.

    Boosing the financials – more Free Money!: FDIC’s Sheila Bair says a low interest rate – not pressure from regulators – is what’s required to get credit flowing. Total industry loans fell 7.5% last year, the most since 1942.

    Goldman Sachs’ (GS) list of the 10 most-loved hedge fund stocks: Apple (AAPL), Pfizer (PFE), Bank of America (BAC), Google (GOOG), JPMorgan Chase (JPM), Microsoft (MSFT), Mastercard (MA), Directv (DTV), Wells Fargo (WFC), CVS Caremark (CVS).

    Greek Prime Minister George Papandreou says a wider crisis could threaten the U.S. due to a rising trade deficit, and his office says he has no plans to meet IMF officials despite meeting with France’s Sarkozy and Germany’s Merkel in the past few days.

    Eurozone’s two-class future: grown-ups and children


  68.  How about just having Obama talk about the census every time he mentions "health care"   


  69. Pharm — thanks for the thoughts on ANGN.  The competitive nature of the product line is what has kept me out of the stock, but isn’t that the case with most medical device mfgrs?  I’m looking for something along the lines of what Phil was highlighting, some device maker that caters to the growing needs of an aging population and the many medical problems they have.  Preferable something with writeable options.  If you’ve written on that in the past, my apologies, but any thoughts?


  70. Phil- can you remind me why again you said you had felt that tomorrow would be a down day?


  71. Phil,
    On DT, I sold the July puts for 1.35 and wondered if I should let them expire or take possession or even it out with sold calls. Does your answer men I should short the calls at 13.70? Sorry, a little unclear. Thanks
    March 8th, 2010 at 12:40 pm | Permalink  
    DT/Jomp -  There’s a lot of positives on them at the moment so you don’t really want to short them if the Dax is holding up (over 5,750).  They should have some resistance at the falling 50 dma at $13.70 but the premiums on the calls are awful here so I think you should just let the calls expire and be happy or, you can add the low-premium Oct $12.50s at $1.10 (.40 premium) with a stop if they can’t hold $13.25 as they should get almost all of the upside from here.


  72. Phil,
    DT
    I think I get it you meant let the puts expire right (not the calls)?


  73. JCMN - try this one….from last week.


  74. PDLI / Phil – What do you think about buying the stock (currently at 7.1) + 7.5 March Put (currently at 50c) for 7.60 or better. Maximum risk 10c. Hold for 1 week to collect 50c dividend and then exercise the puts for 7.5 next week before March Opex.
    Net 40c guranteed profit. What am I missing? Over 5% profit in one just week for conservative people like me, and that too guranteed. What’s wrong?


  75. STEC is now popping…..oh my.


  76. Does anybody know if their is an ETF for stocks in Spain? With an economy contracting .4 % this year and 20% unemployment, a short position would be a winner.


  77. HK back down to lows.  Should they break 20.5, then down to ~ 19.5 or a bit lower.  Gonna sell some 20 Apr10 P for 85c or better.  Starter position.


  78. gel 1
    EWP


  79. gel – EWP


  80. Phil:
    yes you are right, the best way for me is to run the numbers:
    TXS.


  81. Tomorrow/SNS – That seems to be how many days it takes a poor Beige Book to sink in. 

    DT/Jomp – No, I’m saying be happy with the sold puts.  I was just pointing out that they SHOULD have trouble getting over that mark but with the low premiums, it’s really not worth selling anything but I do like buying the calls as a long-term play.  If DT gets to $15, THEN there should be calls worth selling.

    PDLI/Trad – If you are right about the ex-dividend date and the amount it seems nice.  I do find it hard to believe that you ar right with the timing or the arb guys wouldn’t let it happen.  For that matter, you can buy the Jan $10 puts for $3.20 so that’s a .29 premium and you can collect multiple dividends…  Too easy – must be a catch…  Go ahead and do 100 and let me know how it works out  – I’ll be pissed if it was that easy and we didn’t go for it!

    Spain/Gel – EWP just popped 10% last week.  That boosted their volatility and you can sell the July $45 calls for $2.20, which is pretty good since they topped out at $51 last year.  The declining 50 DMA (death cross) is going to hit them at $44.50 so you could even do a mo play above it to cover.

    Cisco Systems (CSCO +3.1%) says it will make an announcement Tuesday that "will forever change the Internet," sparking speculation that it will introduce new gear to help wireless phone companies cope with rising video web traffic. Cisco has learned lessons from the dot-com bust.  Maybe they figured out how to charge a toll

    Given the timing of resets on ARMs, the rubber should hit the road on a second wave of foreclosures within the next 2-4 months, John Hussman says. "I do not expect quarters upon quarters of uncertainty… We are at about the point where the data would depart from the market’s ‘all clear’ expectations if credit pressures are likely to resume with force."   Move along, nothing to see here – somebody else’s problem

    Another thing to ignore: CBO director Douglas Elmendorf comments on the national deficit: "U.S. fiscal policy is on an unsustainable path that can’t be resolved through minor tinkering… We’ll have to pay for future growth in Social Security, Medicare and Medicaid through a visible increase in the tax burden, a visible reduction in other programs or a visible reduction in these programs themselves." A Friday report said Obama’s budget underestimates deficit growth by $1.4T through 2020.

    Simon Johnson at Baseline Scenario says we should worry more about ‘too-big-to-save’ than about too-big-to-fail: "If we continue to allow banks to grow… we head towards a day when Mr. Geithner or his successor will try to save the financial system and will fail."

    Following Greece down the austerity path, Portugal says it will cut its deficit through raising taxes and reducing public-sector wage growth. The plan to be submitted to the European Commission projects the deficit will shrink to 2.8% of GDP in 2013 from 8.3% now. But success depends on economic growth in a country whose GDP fell 2.7% in 2009. Next on the docket: Spain.

    Commitment of traders report shows that small speculators are still heavily net short, despite reducing short positions marginally.

    Applied Materials (AMAT +1%) announces a dividend raise and stock buyback, adding to pressure on other chip stocks to do the same.

    Online retailing will grow 60% over the next five years, to $248.7B, Forrester says. Revenues growing 10% annually should make up 8% of total retail sales by then. (ETFs: XRT, RTH)

    Listen to Cramer defending Goldman yet again!


  82. And out of TNA at $ 52.18; feel kind of spooky up here !!


  83.  Oxen Alert Update 

    (This is another preview of an alert that I send out to my Oxen Alert members)

    Update on SRS -

    We are going to continue to hold overnight unless we get stopped out at 3%. We are down about 1.5% right now at 6.64, and I have a good feeling about the markets continuing to decline throughout this week. So, I am going to recommend we maintain a Hold on SRS to take advantage of tomorrow’s hopeful turnaround.

    Good Investing!


  84.  Phil
    I sold 10 FAS 80 calls naked last Friday @4.00 and now am worried these will get away from me. (now at 6.00) Would like to sell some puts to protect further loss any suggestions? 
    The CSCO concall with Chambers  tomorrow at 1:30 worries me that market might bounce hard if he has much to say about changing the net..
    Understand Csco pushing out lead times because of hard to get components; stk at a new high today, JPM gave an upgrade;  Dr J says he’s long CSCO and long into the close ( this guy seems on his game 7/10)
    Maybe a sell on the news but maybe a push to new heights before that happens.
    Think this will be a push till 1:30 then sell the news or 


  85. The RUT stranglers,
    Nothing to do but making a poem (I’m not known for making those):
     
    RUT just doesn’t budge (to the downside)
    Making it hard to sit on our butts
    Watching the margin going down to the rut
    So let’s move some up some putters
    Up up up to catch up with the rut!


  86. Peter – what RUT strikes do you have?


  87. Peter – BTW, I can’t believe you aren’t known for making poems.


  88. ss, you wouldn’t believe how many strikes that I have:
    - March 670, 680 short calls, and 600, 610, 620 and 630 short puts
    - April 690, 700, 710 callers, and 550, 560 putters (I’m moving these to 590 and 600 – hence the poem)
    - May 710, 720, 730 callers, and 530, 540 and 550 putters


  89. FAS/Ban – As I said on the weekend, you don’t short 10 $80 calls unless you REALLY want to be short 1,000 shares of FAS at $80.  Still, they are only $6 and you can sell the $81 puts for $2, which is what you would do anyway if they were assigned to you short, right?  Tons of room to roll in either direction and the Apr $88s are $4.35 if you have to roll that way.   On CSCO – I have to think we are having the rally on the rumor that is likely to be a sell on the news event with the Nas up 10% in a month. 


  90.  thanks --always had trouble listening!



  91. JRW/Pharm/Phil
    Thanks !… EWP for a short position is compelling, IMO. I am also shorting the Euro vs the USD and CDN as the major hedge fund are doing the same – even Soros Management.! Don’t bet against the house.


  92. Phil I am 1/2 cover on DIA mattress Mar 105p are we still buying back any puts have order out to buy 50% at .75 but at present no takers as it is .79 thks


  93. gel – what do you use to short the Euro vs. the USD?


  94. Peter D,  As a poet, you’re a great trader and very decent person.  I’m giving the chance for a sell-off one more day before rolling up the RUT putters (Phil’s theory that the beige book hasn’t yet sunk in) in order to try for better price, and then I’m taking your poetic advice.


  95. CSCO is jumping today … sold one of my long positions and moved the money to JNPR, which is in second position to CSCO and has great growth potential. Sold july 31 puts for entry.


  96. PDLI/Trad – Well you are right, it seems like the stock at $7.10 plus the Jan $10 puts at $3.20 is net $10.30 with $1 in dividends coming for net $9.30 where you WILL get at least $10 back.  

    DIA/Yodi – We should really be full covered up here (over 10,550) but it’s a judgement call into tomorrow.  I’m in favor of 1/2 cover but this will be the 5th time I’m wrong in 5 sessions so I’m less than thrilled with it…

    Poetry/Judah: I shall endeavor.  Henceforth – to keep my ideas.  In poetic form.  8-)


  97. I think the art of options trading is poetry in motion.


  98. Phil/poetry.  Maybe then you can avoid the censoring of your work, as it will be Art.


  99. CSCO/Gel – Remember when everyone was all excited about "it" and how "it" was going to change the world and "it" turned out to be a Segway?  Sometimes companies get a little too excited about things…

    The state of the U.S. banking system isn’t as rosy as Wall Street is saying, market strategist Richard Suttmeier says, "particularly when you get beyond the ‘too-big-to-fail’ banks." More than half of the nation’s 8,000 banks can’t lend anymore because of rising levels of bad loans on their books.  Is there really any point on commenting?  

    An FDIC plan to auction $1B+ in assets seized from failed banks next month may trigger writedowns that weaken lenders nationwide. Many small and regional banks are carrying loans above market value; the auction will establish that value and possibly lead to significant losses and more bank failures.  La di dah

    Getting too big to fail: Bank of New York Mellon (BK -0.3%) will spend $343M to acquire Germany’s BHF Asset Servicing, which will bump it up to No. 2 in fund administration in Germany, "a very important and strategic market for us." The move follows BNY Mellon’s purchase of PNC’s (PNC) fund services business last month, as it looks to expand its global market share.

    Already too big to fail:  JPMorgan Chase (JPM), through its Highbridge Capital Management subsidiary, managed $53.5B at the end of last year, making it the world’s biggest hedge-fund firm by assets, says Pensions & Investments magazine. But despite all its successes, shares still trade at roughly book value.

    Sources say Northrop Grumman (NOC -0.1%) will not bid against Boeing (BA -1.1%) in the much-contested ~$50B U.S. Air Force aerial tanker contract after concluding a bid "would be too risky." Northrop and partner EADS won the last bidding war in Feb. 2008, but the decision was scrapped following a government audit. An announcement could come after the close.

    That last one is actionable.  I like selling the BA Apr $62.50 puts for .78.  I also like the Jan $55/65 bull call spread at $6.50, selling the $55 puts for $3.20 for net $3.30 on the $10 spread with a put-to price on BA of $58.20 (13% discount) and rollable of course


  100. Well, I have tried to dig into the ITMN data, and I am less than enthusiastic about the final data.  I have been trying to sell the bull call spread I have with no avail.  Many of the docs in the area are less than impressed with the data.  Primary endpoint was mortality….didn’t meet it.  Seconary endpoint was FVC, and it did marginally at best.  Will it get approved, I don’t know.  As I have noted before, there is nothing else out there for IPF on the market.  I am going to get out of my spread with a nice profit and buy a few puts with play money now.  Looking at the 11 Mar for $1.15 FWIW.


  101. ssdirk
    The best way to play this is through FX trading. Select the pairing such as EUR/USD, or EUR/CAD and place a sell order on the EUR. To me the trade is long term withathree month window, so I place it and forget it. You will be riding the typical anticipated ups and downs, but the long haul your directional predictions will play out. I did this with the strengthening CAD a few years ago, and rode the CAD from .64 to parity with the USD and pocketed a cool $ i mil. My stops were in place and I just sat our the inevitable outcome. To me, this is the best way to play the Forex. I do my trading through Global Forex Trading, because they are set up for this only and have the best trading platform. Check it out by logging on to http://www.fx360.com. They will set you up with a $50,000 paper trading account complimentary. They have the best charts and also the premier research. The leverage is 20:1 and this way you can bet alongside Soros annd other hedge funds that are deep short the Euro.


  102. Art/Judah – Yeah, me and Mappelthorpe!  8-)


  103. Pharmboy, I had CTIC when it dropped, I think you got out at that point but I did a DD at .70, should I get out now that I’m ahead or has something changed and I should just put a stop loss at breakeven and see what’s coming next?


  104. Hmmmmmmmm…….IWM 66.72, who would have thought ??


  105. Wow, a day that acted kind if like it should – that’s interesting…


  106. JRW, I recall someone posting that one of the lines of the day was to be 66.72.   Nice.  Keep it coming, I’ve got bills to pay.


  107. Strange day, still made $ .65, .40, and .28 for $ 1.33 or 2.5%; better than a poke in the eye !!


  108. could you kindly clarify exactly what you did and what’ you’re suggesting here? thanksDavid

    gel1
    March 8th, 2010 at 3:58 pm | Permalink  
    ssdirk
    The best way to play this is through FX trading. Select the pairing such as EUR/USD, or EUR/CAD and place a sell order on the EUR. To me the trade is long term withathree month window, so I place it and forget it. You will be riding the typical anticipated ups and downs, but the long haul your directional predictions will play out. I did this with the strengthening CAD a few years ago, and rode the CAD from .64 to parity with the USD and pocketed a cool $ i mil. My stops were in place and I just sat our the inevitable outcome. To me, this is the best way to play the Forex. I do my trading through Global Forex Trading, because they are set up for this only and have the best trading platform. Check it out by logging on to http://www.fx360.com. They will set you up with a $50,000 paper trading account complimentary. They have the best charts and also the premier research. The leverage is 20:1 and this way you can bet alongside Soros annd other hedge funds that are deep short the Euro.


  109. Peter: Is there a reason you strangle RUT as well as SPX? Is the execution comparable? I once tried NDX in addition to SPX, and I never could maintain the feel for both.


  110. It is amazing – I have tried all day to figure out the probability of passage of the health care bill, as written, in order to take an investment position in a few health insurance carriers. It is confusing at the least, as the (Pied Piper) President keeps trashing the carriers as a reason for passage. Would it not be a lot more simple to just regulate the insurers in a fashion similar to the utilities ( profit to not exceed 11%), and leave the few other issues to be targeted (tort reform etc ) adjudicated on an individual basis.There is something very "fishy" with all of this, that is not being said. Congress ( the ship of fools) should be looking beyond the rhetoric IMO, as it appears they are being played by the WH, and will soon be gone unless they wake up.


  111. David,
    Documented the trades all day; TNA ( triple leveraged long Russell ) ; Three trades, gains of $ .65, .40, and .28, or
     
    $ 1.33 total on a stock price of $ 51.00, so 2.6 % for the day !!


  112. Gel- FX- I went to their site and downloaded the free basics guide. This is something about which I know nothing but am curious. Any other info source you can suggest for a complete novice to learn the basics? Thx.


  113. barfinger,
    There is a 35% concentration rule in Portfolio Margin (PM) accounts.  If you have PM, and if more than 35% of your portfolio is concentrated on one "asset class", your broker, eg, TOS, will increase your margin significantly.
    I don’t know how this 35% concentration is computed.  I asked once someone at TOS, I hadn’t got a reply.  The person handled my PM application before.  She must have left the company or something.  I didn’t pursue.  I just got too busy.


  114. MrM – I would say thank you very much.  With CTIC, the lead candidate is already on the market – paclitaxel.  They are trying to improve the target of the cancer drug using the inherent nature of the cancer and what it produces.  I like DCTH better because they deliver the drug directly using their proprietary pump.  At least sell half and if they break up more….then you are a very 8) camper!


  115. Pstas & All, regarding forex trading,
    I started forex trading several years ago.  I’d like to share a bit of my experience.  You can google forex and you’ll get tons of info.  Try to find some intro stuff.  Read some books, etc.  And paper-trade for a while.  You have to get used to the lingos, etc.  For example, you have to get yourself to the point where you can answer the following questions quickly without making a mistake:
    If you want to short EUR, do you BUY or SELL EURUSD?
    If EURUSD goes up, is EUR strengthening or weakening?
     
    I won’t give you the answer so as not to spoil you.  (It’s like giving you the plot of a detective movie.)  It’s not hard, but you have to get to the point where you don’t hit the wrong button when you trade with real money.
     
    I do have one advice: Do not gear too high!  (Gearing means leveraging.)  Gel1′s 20:1 gearing is way too high for my taste.
     
    I also have to admit one thing though: I haven’t been too succeessful in forex trading.  I play small positions just to get a feel of the forex markets, which helps me in my options trading.


  116. Judah, thank you for the kind words.  I agreed with waiting for a drop, but just need to make a move with where my positions are today.  I figure that I can deal with the putters by watching JRW.  Whenever he hops on the TZA train, I can cut some of the putters and sell them back once he’s off TZA.  As you know, he’s been TNA a lot lately, which is a sign that I may be just a bit out of position.
     
    Cwan/Barf, cwan answer is correct with the portfolio concentration rule.  With all this 2X and 4X rolling, I actually hit one of those concentration limit and my margin would have been doubled on RUT on rolling just a few contracts.  Luckily, I checked before hitting the Send button. 


  117. Hi, Peter,
    If you are watching JRW, does it mean that you are day trading SPX/RUT strangles?  How do you use JRW’s trades in your strangles?


  118. Peter,
    It’s true, I have been on TNA a lot lately, but it’s a great place to be while you’re waiting for the market to get too high. I think we’re about there; I think "they" are going to try to break SPX 1148, but I don’t think even MR Stick can pull that off, so I see some TZA profits in our future.
    BTW, I replied to your Saturday post on that thread, thanks again !!


  119. EDZ – I think I have learned a lesson not to hold options through a corporate action, the bid/ask spread on the old options is much wider than on the new options. Do other people see this as well or am I imagining it? Any sepcial tips other than just avoid this circumstance where possible?
     
    Thanks all :)


  120. Cwan, I wish I’m good enough to day trade the SPX/RUT strangles.  What I’m trying to say in the 5:03 comment is that I can afford to roll up the putters closer to the money (still 10-12% cushion instead of the usual 15%), because I could get out of trouble by buying them back, driven by JRW’s signal when he gets bearish (even if it’s for a day trade).  Usually, the day traders would follow trends and when we are seeing that they have more bearish bets then bullish bets, it’s a signal that the trend has turned bearish.  Nothing in concrete, just have my antenna out for a possible reversal.  If there is no reversal, the new closer to the money putters would be good to go.


  121. JRW, thanks for pointing to the comment, and yes, we like your one very good trick very much.  Many of us would love to master that trick, but it takes good skills, decisiveness and strong emotion to execute those trades.  Does our hearts beat faster once we initiate a trade with 20%, 50% or even 200% of the portfolio money?  I for sure couldn’t do it, but I think I’m ready for it now.  Once RUT is back down a few percent, I’m ready to set aside 20% of the portfolio for this exciting piece of trading.


  122. Peter,  I have had the same impulse that you describe--to use JRW’s brilliant trade lines in order to inform my decisions as to when to roll the RUT strangles.  Part of the reason I have been following and trading JRW’s plays is that it gives me a better feel for the RUT and when it is time to enter the strangles, roll, buy them back, etc.


  123. Pstas
    Re Forex trading… I can only recite my experiences and sentiments. Cwan has some good points as well. I have been trading currencies for many years, as my businesses were focused to a great extent in foreign markets, so I did a lot of hedging. I was always facinated by the liquidity and market dynamics that exist.  If you study the fundamentals of what drives a currency’s value, either up or down, and also the correlation between two currencies and the causes of strength differences between the two you are in a position to play the Forex markets with confidence. It is really not that hard, and executing the trades are very easy. I love to invest following Phil’s terrific strategies, as they are probably the best that exist, and I have found that I am a much better trader in equities by following the currency markets. I think Phil would agree with me, the two are connected in various ways. The falling dollar or a appreciating dollar has much to do daily with equity valuations. My trading style is different than most, insofar I trade only with a macro bias, and usually take long term positions, and do not get up at 3:00 AM to check the markets. The Forex market is 24 hours and the Asians are big Forex traders as well as the European currency traders. I am just not a day trader, but many who are make fortunes if they have the time and fortitude.I have to say, this market is the place to get very wealthy, if you have the desire and are willing to follow the necessary research.. Soros made $ 1 Bil in one day shorting the GBP. It was not luck, but just a very logical understanding of the market dynamics. I am looking for the same opportunity, and following the same stalking procedure he is known for, however my target is the USD as it takes a very serious tumble 8 to 12 months out. I will go "all in" shorting the USD against the strongest currencies in the world when this event takes place.I can assure you I will not be alone, so I am watching all signals. I like the 20:1 leverage ratio – it just means for every 1 dollar you have in your cash account, you have 20 dollars to place against a currency move. I usually play $50,000 to $100,000 positions, either short or long, and that means I have only I/20th of my cash at risk. So for example if you have $100,000 in a position (10 contracts as each contract is $10,000) your cash committment is only $5000. You can see how profitable it can be to be in a currency trade that sees the currency move 10% against the opposing currency. A 10% move with 20:1 leverage can really be profit city. I have this plan for the USD short when all the stars and planets line up, manybe later this year. What an opportunity ! Books …. there are so many as Cwan has suggested. The only bookI would recommend would be a book that I received from GFT – "Foreign Currency Trading" by Gary Tilkin. Upon opening an account ( I think it is $500.00 minimum), they will send you the book. Read it over and practice with the paper trades and you are ready to roll. Check out Kathy Lien’s commentary, as she is one of the best traders in the business. It pays to get comfortable with the GFT charts and platform before the "mother of all opportunities" surfaces later this year. Like TBT it is not if, but when. As we go forward, I’ll post anything I think is relevant. Check out http://www.gftforex.com or give them a call at 800-465-4373. My disclosure – I am merely an account holder that is pleased with their professionalism.


  124. I know many asked about DNDN a while ago…here is an OTC company that has a similar technology as DNDN  —  ABPIQ.  They are up big from the doldrums (and bankruptcy), but more upside could be in store if their vaccine is approved.  Who knows, DNDN might just buy them out!!!  Not for the faint of heart, but if you just forget about them….might be interesting. 


  125. Gel /GFT- I registered on the site and within a 15 minutes, I got call from them which was the followed up by them within minutes with additional info I requested. A tad aggressive but good customer service none the less. It’s a good start and I am going to dig in. Appreciate you and others sharing experiences  from the pit. I wonder if you could generally outline what you are looking for later in the year?


  126. Pstas
    GFT is a well managed company with a fantastic  trading platform – Dealbook 360. They have a trial version that allows you to familiarize yourself with the platform, and they are happy to walk you through it or answer any questions by just calling in. The guy I deal with is Jamie  Spoors, and I can not say enough positive things about him. Their attitude is much like Phil’s – anxious to see you successful, and very responsive to any questions that might come up.
    Later in the year, I am anticipating a dollar weakness, as the traders around the world come to realize the level of debt we have and the deficit projections, both currently and long term. Both projections are "mind blowing", and historically is the " kiss of deaath "when it comes to currency valuations. Case in point is the current problem in the Eurozone – the EUR is suffering and it will get worse as the chickens come home to roost, as regards the debt of not only Greece but also Spain, Ireland, Italy and Portugal, which will have to be back stopped by the other Eurozone members. United States is in an equally precarious position, and will follow the Eurozone eventually, reflecting a weaker currency. On the other hand, Canada has a very small deficit in comparison ($54 Bil), and is taking steps to liquidate it. Compare that to the US which is 1.5 Tril., and no plan to liquidate anything, but instead attempting to double it. The handwriting is clearly on the wall, and I believe the USD will drop like a rock, and commodities will fly upward as a result.  Canada’s currency will appreciate precipitously when this event takes place, as commodities drive their currency. When this plays out, my currency play will be the USD short against the CAD, AUD and NOK. I feel as strong about this scenario as I feel about the end game we have structured for TBT. TBT, of course has different drivers – rising bond yields. I’m curious what Phil might think of this, and of course his take on the time line. I will continue to pass along any relevant research data that comes my way, that provides clarity to this position.


  127. Gel, regarding your 4:39 pm post on Health Care and Why ?   Here’s why:
     
    http://hopeychange.blogspot.com/2010/03/what-obama-radical-left-are-up-to-w.html


  128. Cap
    If dependancy by the masses on government entitlement programs is their objective,then this cuntry is screwed. Obama stated unequivocally before the country that the health care legislation is not being offered to illegal aliens maybe so….. but I just read yesterday he will be very soon presenting an immigration bill that converts the illegals to full citizenship. Therefore, with the passage of the immigration bill, the illegal aliens have full health care benefits. With a couple of quick calculations, this means Obama will have no problem getting re-elected, with an additional 25 million votes. This really scares me. http://www.snopes.com/politics/soapbox/youscareme.asp


  129. Pstas
    Here is a good source for accurate commentary – http://www.everbank.com You need to register for Chuck Butler’s morning comments in "The Daily Pfenning". This guy has been around forever and is almost never wrong is his assessment..
    He is President of Everbank World Markets and the Tel. # is 1-800-926-4922. It might be free. He also is a believable source for prognostications related to US bond yield rate changes.


  130. Hi, Gel1,
    I read your analysis of currencies with great interest.
    So, what do you think of JPY?  Why is JPY so strong vs USD?  Do you think the trend will reverse and USDJPY go back to 100?


  131.  Pharmboy, or anyone,
    Can you give the link again to Pharmboys article on medical devices – or where to find it. Thanks


  132. Phil- Currencies – your thoughts on Gel’s premise and time line?

    Later in the year, I am anticipating a dollar weakness, as the traders around the world come to realize the level of debt we have and the deficit projections, both currently and long term. Both projections are "mind blowing", and historically is the " kiss of deaath "when it comes to currency valuations. Case in point is the current problem in the Eurozone – the EUR is suffering and it will get worse as the chickens come home to roost, as regards the debt of not only Greece but also Spain, Ireland, Italy and Portugal, which will have to be back stopped by the other Eurozone members. United States is in an equally precarious position, and will follow the Eurozone eventually, reflecting a weaker currency. On the other hand, Canada has a very small deficit in comparison ($54 Bil), and is taking steps to liquidate it. Compare that to the US which is 1.5 Tril., and no plan to liquidate anything, but instead attempting to double it. The handwriting is clearly on the wall, and I believe the USD will drop like a rock, and commodities will fly upward as a result.  Canada’s currency will appreciate precipitously when this event takes place, as commodities drive their currency. When this plays out, my currency play will be the USD short against the CAD, AUD and NOK. I feel as strong about this scenario as I feel about the end game we have structured for TBT. TBT, of course has different drivers – rising bond yields. I’m curious what Phil might think of this, and of course his take on the time line. I will continue to pass along any relevant research data that comes my way, that provides clarity to this position.

     


  133. jompt -  link