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Freaky Thursday – Foreclosures and China GDP Hit Records

"I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs." – Thomas Jefferson

Poor Jefferson must be rolling over in his grave today one in 138 American homes (932,234) received a default or auction notice, or were repossessed by banks in the firs quarter of this year.  That is an annualized pace of 3% of all homes (ie. one in 33), which means THIS YEAR, someone on your block is having their home taken from them

Foreclosure filings in the U.S. rose 16 percent in the first quarter from a year earlier and bank seizures hit a record as lenders stepped up action against delinquent homeowners, according to RealtyTrac Inc.  Unemployed and “underwater” homeowners, or those who owe more than their property is worth, are driving foreclosures. The U.S. jobless rate was 9.7 percent in March, unchanged for a third month, the Labor Department reported April 2.  More than a fifth (20%!!!) of mortgaged homes were underwater in the fourth quarter, according to real estate data firm  Bank repossessions climbed to 257,944 in the quarter. Scheduled auctions totaled 369,491, also the most since RealtyTrac began releasing data.

Please read that again.  3% of the homes in America are being foreclosed on NOW.  20% of the homes in America are underwater, 10% of the population is unemployed, 25% of the population is "underemployed."  These numbers will not just go away because the S&P hits 1,200! 

Foreclosure prevention efforts such as the U.S. Treasury’s Making Home Affordable Program may have “slowed down the normal foreclosure timeline,” James J. Saccacio, RealtyTrac’s chief executive officer, said in today’s report.  The number of homes seized by lenders rose 35 percent from a year earlier, RealtyTrac said. Auctions increased 21 percent from the same period in 2009.  Nevada has the worst rate in the nation with 1 in 33 homes gettiing a notice in Q1 – an annual rate of 12% of all homes – PER YEAR!  This is exactly what Jefferson was worried about over 200 years ago…

Note from the chart on the right and as we've discussed previously, there is a 10-month gap between missing your mortgage payment and losing your home.  Right now, there are MILLIONS of Americans somewhere in this loop, effectively living rent-free for as long as it lasts.  This is putting over $40Bn a month into the consumer spending pool that otherwise would be chewed up by mortgage payments so we are pretty much boosting retail spending at the banks' expense but, of course, nothing really comes at the banks' expense since they hide all their losses until the government papers it over so this is all just a part of the overall free money party being thrown by the Fed at the eventual expense of the taxpayers

And who, ultimately, benefits from the confiscation of the people's property?  Who are the banks and the corporations that grow up around them that Jefferson warned us about?  If you've been reading my columns, it's an easy answer and I'm not going to get into it here because many of those companies will be appearing on this weekend's new Buy List (which I just updated for Members this morning) as those who have money get to buy your old property for 50 cents on the dollar – maybe less.  This is the game that's been going on since long before Jefferson's time, ever since 1215 when the English Barons (not the people) forced King John to grant them lasting property rights which they in turn used to turn their former serfs into wage slaves by dangling the carrot of property ownership in front of the working man. 

It's a simple method of buying low and selling high.  The landowners play a long game since they start the game with money and can afford to be patient (like poker).  They keep available land scarce and drive up the prices, and they drive up demand by lending money (to buy their own properties) until the value reaches a point at which they begin to dump land on the open market, which then decreases the price and drives the borrowers to default.  At the same time they stop lending money, meaning no new buyers will come on the market at which point the peasants who need to sell their land are totally screwed and are forced to lose substantial amounts – often their life savings – in order to get out of the constant debt burden of home ownership.  Once the properties crash back to very low levels, the Barons (who still won't lend to others to keep out competition) begin to confiscate what properties they can and buy back the rest.  Once they have their land back – they begin the cycle again.  Isn't capitalism great?!?

Speaking of Capitalists who have lots of money – China's economy is growing at an 11.9% pace and that sort of news used to take down the markets as it indicated they would put on the brakes but China is doing a neat trick by keeping consumer price inflation way down at 2.4% while the manufactures eat the rest of the 5.9% increase in Producer Prices - isn't that nice of them?  Some investors, including hedge fund manager Jim Chanos, already see a property bubble in China that could reverberate around the world if it bursts.  “The case for policy tightening remains intact given the risks of China’s economy overheating,” said Brian Jackson, a Hong Kong-based strategist at Royal Bank of Canada. “The additional measures announced today suggest policy makers remain reluctant to use the blunt instrument of higher interest rates, but it is unlikely that extra fine-tuning will be enough to slow down the property market.  Residential and commercial real-estate prices in 70 cities climbed 11.7 percent in March from a year earlier, the most since data began in 2005. ” 

The Hang Seng was pretty much flat on this news and, in fact, fell from 22,338 at the open to 22,158 at the close but that still counts at a +36 day so we put that in the win column for the Honorable Trade-Bot of China.  Shanghai couldn't hold it together but did run up 30 points into the close and finished down just 0.04% for the day – not too bad after spending most of the day falling 50 points (1.5%).  The Nikkei celebrated the usual dollar spike back to 93.5 Yen which, as usual, reversed once the Nikkei closed in what is perhaps the biggest joke in all of investing (buy Yen at 9 pm, sell yen the next morning).

Europe is flat this morning wondering what we are going to do and Greece is off again – scrapping their bond issue due to a seeming lack of demand.  This is the kind of thing we would be worried about if we hadn't switched our brains off and gone bullish and we will keep our brains switched off as long as we are over our levels. 

Sure we dropped 484,000 jobs last week and sure that was 10% more than expected and sure continuing claims are up to 4,639,000, which is 59,000 more than expected and up 70,000 from last month.  Who cares about that, Cramer says to ignore all those funnymentals and we're sticking with Cramer!  Capacity Utilization remains an anemic 73.2% but that makes sense as 25% of the population is underemployed and 10% have no jobs at all so why turn the machines on?  See – we're saving energy! Industrial Production was up 0.1% vs 0.5% expected but that's just an 80% miss so we're not going to worry about that are we? 

The Empire Manufacturing Index was a legitimate bright spot at 31.86, up from 22.86 last month and blowing away expectations (and all logic) of 24.  Do we believe that Manufacturing ramped up 25% in a single month?  Sure, why not – we believe the economy is recovering, we believe inflation is under control and we believe housing is coming back so why the hell wouldn't we believe this – don't forget, we're just 8 months away from our Santa rally too!

So ho-ho-ho we're going to party like it's 1999 for another day at least, the Nasdaq will punch through 2,500 today and the NYSE is over 7,700 and we'll get our Russell 720 too.  All that's left now is SOX 400 and it's the perfect top – oops, I mean mid-point… silly brain, must have had too much coffee this morning… 


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  1. This is straight from the Bloomberg website.  I couldn’t make this up.
    Market Consensus Before Announcement
    Initial jobless claims unexpectedly jumped 18,000 for the week ending April 3 to move back up to 460,000. However, the Labor Department noted special calendar factors for the jump not only citing Easter as a distortion but also the Cesar Chavez holiday in California. Analysts are expecting a dip this week as a technical offset to last week’s upward bump.

  2. ssdirk,  isn’t the Cesar Chavez holiday where people don’t work only a DAY?  If so, why would one apply for unemployment for that?  Besides, it’s a voluntary stop work thing.  You only get unemployment if you get laid off.  Not fired.  Or at least I think… never been on it so not sure.  Surely there has to be an explanation for them citing Chavez.
    As for Easter mucking things up, when o when are they going to make that thing the same day every year? Wall Street demands it!

  3. GENZ – Follow-up data from a Phase II trial of Campath (alemtuzumab) for multiple sclerosis revealed that about 71 percent of patients remain free the disease for up to three years after receiving their last dose of the drug. The study compared Campath to the Merck KGaA’s approved MS therapy Rebif in early, active, relapsing-remitting multiple sclerosis patients who had received no prior therapy. Genzyme presented the positive data at the American Academy of Neurology annual meeting.
    The study results are terrific news for the beleaguered biotech. Genzyme has been locked in battle with Carl Icahn following problems at one of its manufacturing plants last year. Those problems have interfered with production of the company’s top-selling drug…granted, this is only Phase II data, and will be years b’f it makes it to market, but if it does, there are some drugs coming out over the next few years that could revolutionize the MS market.

  4. matt – the Bloomberg site has been updated to the following.  If all of the bad statistics are going to be explained away by some rogue reason why have them at all.  They simply don’t matter.
    Claims continue to pile up due to special administrative factors. Initial jobless claims jumped for a second week, up 24,000 in the April 10 week to 484,000. The four-week average is up 7,500 to 457,750 but is still a bit below the month-ago level. Continuing claims for the April 3 week rose 73,000 to 4.639 million, a level that is also the four-week average. Here too, the four-week average is a bit below the month-ago comparison.

    The Labor Department attributes the rise in claims not to economic factors but to continuing administrative snags as offices catch up with claims during the shortened Easter week and, in California, for the Cesar Chavez holiday. The department is warning the next report may be affected by quarter-end reclassifications for emergency compensation, but that the chances for downward revisions are greater than for upward revisions

  5. I have a sense that the market is going to blow off this news about mortgage forclosures, etc.  just like it blows off everything else recently, and will end up for the day.  My play for the day is going to be GOOG.  They historically go up the last trading day prior to earnings announcement.  There is really no bad news out there for the company, the China censorship issue notwithstanding.   Having said that, I have seen GOOG fall even when reporting stellar results, so there is no way I will play the company overnight through earnings.  Rather, I’ll see if I can get a rise out of them today for a profit, but back into cash before close.  

  6. Lflan, What price are you looking at for a day trade entry on GOOG?  I know you play the ATM May options on these.

  7. Phil: is this really what Jefferson said: how wise.

  8. Phil: is this really what Jefferson said: how wise.

  9.  Hi Phil what do you think about the 200 period weekly for SPX at around 1224. shouldnt that be a point where it filps to bull if closed above.

  10. Phil –  SRS and UYG had reverse splits …

  11. GOOG….I’m looking at the May 600s coming in at about 17.00

  12. ProShares had reverse share splits on nine ProShares ETFs:
    DUG  UltraShort Oil & Gas  1:5
    EEV  UltraShort MCSI Emerging Markets  1:5
    FXP  UltraShort FTSE/Xinhua China 25  1:5
    GLL  UltraShort Gold  1:5
    SMN  UltraShort Basic Materials  1:5
    SRS  UltraShort Real Estate  1:5
    URE  Ultra Real Estate  1:5
    UYG  Ultra Financials  1:10
    ZSL  UltraShort Silver  1:10

  13. GOOG….Careful on this till we see which way the market is going.  Move in slowly, not all at once.  If it ramps, then can move in heavily.  If the market tanks this morning, then out with a small loss. 

  14. FXP has a reverse split too.

  15. was this FXP reverse split announced?? (and if so how did I miss it?)

  16.  Pharmboy – re:  GENZ, aren’t there safety issues with campath?  

  17. Oh, hello there IYR. Good to see you’re awake this morning.

  18. Of course rambling – but if you have cancer or MS, R U concerned wit h the cardiac adverse events (some have resulted in death) when the disease will get you in the end.  MS has Tysabri and the side effect of PML….so pick UR poison.  I would rather go from the cardio – quickly than the other diseases.

  19. GOOG….IT’s done.  Got GOOG May 600s for 17,   set trailing stop at .25     100K   Now walk away.!

  20. Morning Phil;
    what do you think about MBI aug $8 buy stock sell put/calls ?

  21. RHHBY – Roche’s ticker on the NYSE. Stock is at about 41, so buying here for an initial entry would be fine.  Dividend is ~2%. There are no options. 

  22. GOOG…the trade is done.  Kicked out at 18.70 for a profit of 10% or 10% on 100K.  I’m done for the day.  Back to may day job.  :)

  23. NLY Jan 17.5s have a huge disparity between the calls for .9 or so, and the puts, which are 2.5ish. Why the wide gap?

  24. Sorry, hit enter too fast.  I like Roche due to the Genetech pipeline.  Many of their drugs will be the biggest sellers on the market over the coming 10 years or so.

  25.  pharm – exactly because of the experience with tysabri and pml, the fda will be that much more alert for safety when considering new drugs for ms.  campath in that phase ii trial had  had six instances of itp with one death, so that will definitely have to be sorted before campath can be approved, imho

  26. Drum/NLY- I think the answer has to do with the large dividend and the dividend play to take the stock away.

  27. Lflan, Very nice. I traded alongside you with a smaller amount.  Lets do that again tomorrow.

  28. The master manipulators are at it again.  Shock and awe is the name of the game.  With all the algos out there to disguise one’s move on the market, the real power players don’t disguise anything.  They telegraph where they want the market to go loud and clear.

  29. Phil,
    Lookin for some bull call spr for EWY and EWZ….any advice or thoughts?   lookin at Jan11.  TIA.

  30. Good morning!

    Can you believe we have: Dow 11,000, S&P 1,200, Nas 2,500, NYSE 7,700 and Russell 720 already?  And you guys thought I was being too agressive, didn’t you?

    Assuming the S&P actually holds 1,200, I’ll be making a new Buy List this weekend and those will be our new watch levels for breakdowns. Also, I have updated both the $100KP and the Buy List so make sure you take a look if you are playing those and I am very interested in nominations for our new list so please make comments there – thanks!

    The last domino to fall (or rise) is SOX 400 and then we are in technical heaven where we will brook no blaspheme against our rally.  Meanwhile, I’m still skeptical and here’s why:

    Obviously (to me, anyway) "THEY" have pulled out all the stops, ignored every warning sign, done whatever it took to jam us up to these technical levels.  Why?  To pull money off the sidelines.  What if we get to these technicals and the money doesn’t come off the sidelines?  That means "THEY" have made a critical error and overestimated their ability to influence investors who, in poll after poll, are (for some reason) starting to think the market is a gigantic scam and are not too gung-ho to give Goldman-Madoff their money again.

    Over at Phil’s Favorites this weekend (which you all should read once in a while), Karl Denninger pointed out that $421Bn worth of loans went out last month.  His supposition was this money went into some scheme to bail out Greece but it’s much more money than Greece needed for a bailout yet it’s EXACTLY how much money was needed to goose the markets 5%.  Here’s the chart that shows the ridiculous pump of Fed lending right at the exact moment that the Fed was saying they were winding down these free money loans:

    There’s your tax dollars at work, propping up the markets so you can pay top dollar for stocks before they really pull the rug out.  Judging from the angle of ascent – they were not done when this data set stopped and we can see they have another $200Bn to push in at least before we’re back to the March 2009 crisis highs but think about how amazing this is – all the unwinding from the emergency liquidity injection from November – March of last year reversed in one month.  Clearly something is up so forgive me for being slow to pull the buy trigger but Karl and I both find this deeply disturbing..

  31. judah….great fun, huh???   Now remember the rule.  You cannot trade GOOG again today!   :)   I’ll look for a ‘candidate’ for a trade tomorrow. 

  32. Iflan – nice job.  Is the stop loss you set the amount you are willing to lose?  .25 would be around 1.5%, but the spread can be that big on GOOG options.  If it would have made a small move down would you have stopped out?

  33. oncmed,
    I don’t trade EWY, but for EWZ you might consider selling condors in conjunction with whatever bullish position you buy. EWZ has good options liquidity and although IV has come down, it’s still o.k. (EWY is not so liquid). So e.g., you buy 2011 or 2012 call verticals and then combine that will selling near-month condors in the event the index drifts (which it has been doing nicely lately).

  34. Lflan, Same question as SS.  So, we caught it this morning right before it went up, which is a tribute to your feel for the price.  But that means that if you are off on the entry price by a small amount, you get stopped out before it turns up.  Or do you usually buy once the stock appears to have already turned?

  35. Yeah, Phil and Mauldin says 2011 for the correction.  I think gel said it – this year is gonna be free money on the stock side.

  36. My current investment thesis is to buy BIDU at the open and sell it at near the close, this has worked five days in a row (as Phil says, it works until it doesn’t).  I’m making money and I’m getting a lot more work done these days trading one position instead of ten.

  37. ss….GOOG.   I bought at 17, set an immediate stop at 16.60.   That’s what I’m willing to lose to do the trade…about 2%.  After  the option reached 17.50  I put a trailing stop on at .25.  At that point, I’m done.  If it kicks out immediately I make about 1.5%.  If it goes on up I make, ….whatever     Nature takes its course.  The reason this works so well for me is that I see this as my only trade of the day.  If I lose the initial 2%, then fine, I look for tomorrow’s trade today and tonight.  But usually, in my experience well over 50% of the time, my trade ramps up and gives me a profit, and generally much more than 2%.    And the profit is large because my input is large. 

  38. Phil:  I’ve been bearish on the market & have learned an expensive lesson re AMZN:  I’m in too heavy & am being slaughtered (my portfolio HAD BEEN up 1000% since March ’09).  I’ve rolled most of my April 135 short calls (sold for $3.24) to May 145s, however I still have a sizeable position.  I also have April 140s (sold for $1.04) that need to be rolled somewhere.  The problem is that if I roll far out, there is so much time premium in the covers that I am not really bringing in enough premium to cover my losses, even moving from a $10 spread to a $20 spread.  Plus, the widened spread eats huge amounts of margin (and adds to risk), as does selling puts at the other end.  Ideas? Thanks.

  39. Anyone else lose ToS? Oh well, probably nothing happening anyway.

  40. Happy Cesar Chavez Day, SS!   8-)

    Easter/Matt – Try Passover (or any Jewish holiday) they have 6-week swings!

    Campath/Pharm – That’s pretty amazing!  Sad it takes so long to get that stuff in people’s hands. 

    Big nat gas increase at 87Bcf so slippy for them after a nice run-up.  Bad for UNG but doesn’t change the big picture

    GOOG/Iflan – Very nice, you are driving that thing like a sports car!

    Jefferson/RMM – That guy is a quote machine, totally brilliant!  Too bad nobody listened to him…

    SPX/Chyer – Yes, I still think we have that little resistance point to get past but, as I said above, it seems like the money is there to push us over, regardless of any news to the contrary. 

    Splits/Diamond – Thanks for those.  TOS, for some reason, doesn’t notify you of splits.  I got lazy as Options Express would always send something so I never look.  Perhaps it’s a service all brokers have cut back on as none of us seemed to know until I noticed it yesterday? 

    Speaking of TOS – mine seems to have crashed.  Is anyone else having trouble?

  41. Yes, TOS is gone. Datapump does not operate anymore.

  42. TOS is down…..

  43. Everyone hit sell at the same time :P

  44. BIDU: what makes this one go up and up and up ? crazy.

  45. My TOS is down

  46. SNDK has a great improvement in earnings.

  47. Morning Phil, what do you think about doing a buy  and sell call/put for MBI $8 for aug ?

  48. ss, judah….Also note…..These options are now well above 19, whereas they kicked out for me at 18.70.   There is a tempation to get back into this trade, but this must be avoided.  You cannot chase the option after you’ve made your initial profit.  10% in one day on 100K?  Whose not to be satisfied with that?  Even if the option gets to 25 today, I don’t care. I have a very reasonable profit and can do something else. You do the trade, and walk away.  You can trade something else today, of course, but not GOOG, where you just beat the other option traders to the tune of 10%. 

  49.  My TOS is also down

  50. Phil, wasn’t logged into my TOS accnt, but my OptionsHouse accnt crashed at this time. Has happened two days in a row at about the same time!?#

  51. TOS  back up

  52. Wow, this is the first time TOS ever crashed on me.  Not cool at all!

    Bad thing about reverse splits is it really screws up your charting until they adjust.

    HOV having a very nice day. 

    FSLR and SNDK flying and here goes SOX 400!  Thank goodness for those upside plays or I’d be pissed about this…

    MBI/Micro – I’d like to see some earnings from that sector first but I do like them long-term so it’s a good entry point either way.

    NLY/Drum – That’s interesting, just a reflection of supply/demand I guess.  If TOS ever comes back up you can remind me and we can see if there’s a good way to take advantage of it. 

    Shock and awe/Matt – Good analogy.  This is a real show of strength right now.  Bears are being executed…

    EWs/Onc – When TOS is back remind me.  I can go back to OXPS or Investools but I’d rather not as all my little viewers are on TOS now.  As Eric says, I don’t trade those because they are not too liquid and I find EDZ and EDC are just as good for playing them up as it’s not too likely Brazil or Korea do well when China doesn’t. 

  53. if someone is in cash like me, what upside plays would be good now, or wait for the weekend buy list ?

  54. Funny, my TOS through TDA is working fine.

  55. You need to be in Mexico TOS working fine

  56. Phil: here are great earnings improvements coming within the next 10 days: SNDK, COF, AXP, TXN, XOM:
    any trades?

  57.  Phil/ 100k list – in the list you have a bolded rec: "Since we have a ton of margin sitting around doing nothing, l’m going to sell 20 FAZ April $111 puts for $1.10 unless it looks like we’re tanking in the morning.  They can be rolled down to May $84 puts in an emergency and, if FAZ holds up through Friday – it’s a quick $2,200 gain."
    Were you meaning SPY 111 puts? thanks

  58. TOS/Penson gremlins strike again. My PM account was hit with a huge BP adjustment this morning which locked me up. Called TOS and they removed it-said it was an "error" by Penson. Now back to "normal" but what the hell!!!!!!!

  59.  Phil/ Loans: My unerstanding is that the 421b of loans are not new but instead are the result of accounting change that took effect on Apr 1 whereby banks had to take onto their balance sheets credit card debt, etc.  There was a post on ZH I think about it.

  60. Phil, do you see gold and copper retaining their levels? Thanks--

  61. salvum, he prolly meant FAS.

  62. Iflan, I like your discipline.  I also like the 10k you made.  But I REALLY like the 24k JRW made yesterday! 

  63. Nice pullback.  More bear bait?  I’m gonna eat some!

  64. Oil is the only thing taking a break – down to $85.60. 

    Well, this is a nice surprise, TOS moved my EDZ short puts for free but not a small position (5) I had on FAZ so I guess they automatically adjusted larger positions – very nice!

    AMZN/John – Keep your head in the game, AMZN is only at $146 and that’s up 25% since March 1st – something some would consider extremely ridiculous.  They had great earnings in Jan and only made it to $132 and then sold back to $115 and Nov earnings also took them to about $145 before a spectacular failure.  It’s kind of like boxing where you have to learn to take a punch and move on because you WILL take punches – it’s part of the game.  So there is no reason to do anything with the May $145s at $8.90 and 85% premium.  The Apr $140s are $6.50 and you can roll those to the May $150s evenish so that’s the position.  If you want to get conservative into earnings you can sell 1/2 of your total position in May $135 puts for $3.75 as that will help pay for a roll-up if AMZN heads higher but if your gut says not to sell $135 puts – I’d go with that as you can roll the May $145s up to the Oct $160s (now $9.30) and THEN sell Oct $145 puts (now $14.60), which sucks for time but you get my point – we call it the Rawhide strategy!

    BIDU/RMM – There is a legitimate reason for BIDU to go higher.  GOOG had 1/3 of the business in China and BIDU 60% and now GOOG is gone so BIDU can, in theory go up 50% ($750) and maybe even more as they now have a monopoly.  I thought MSFT or Yahoo (Ali Babba) would get more aggressive but they haven’t and more and more business is defaulting to BIDU but it won’t show up in revenues fast enough to justify this run most likely but after an earnings dump, then they will be a solid buy. 

    MBI/Micro – I like it a lot.  You could be a little safer and sell the Aug $8 calls for $1.70 and the $7 puts for .90 for a net $5.75/6.38, which is still a very nice 39% if called away at $8 with a nice 23% downside cushion in a non-greedy play.

    TZA May $6 calls at .42 is my bearish play of the moment.

  65. Phil-
    What do you think will happen to EDZ and EDC if Greece triggers the bailout?

  66. Cash/Micro – I’m waiting for the weekend.  That chart from Karl is very disturbing.  Something is very, very wrong somewhere. Thanks Salvum, I will look into what ZH has to say about this but I don’t know if I’m encouraged that all of the removal of liquidity of the past year has been nothing but accounting BS that is now reversed.

    Earnings/RMM – I’d rather see a couple first and then bet similar stocks in the same sector than try to guess right now. 

    $100KP/Salvum – Oops, that was FAS, not FAZ!!!  Those puts dropped off but let’s wait and see if we get a good price on a little pullback.

    Gold and Copper/Iprosp – I don’t see it at all from a fundamental standpoint.  China has a year’s worth of copper stockpiled and there is no way that the US and Europe are going to ramp up enough to make up for China’s excess buying last year.  Gold is also crazy because it’s not scarce at all and, if the economy is really recovering, then what the hell is all the gold for?  The gold premise is inflation and economic collapse either the gold bugs are right or the markets are right but I don’t see how both can keep acting like they are right for very long. 

    EDZ/Jtiff – That’s a primary hedge for me, I think if Greece fails it will be a big house of cards that comes down.  I don’t play EDC because I think the emerging markets are way overpriced and EDZ is much more favorable to play than EDC (and much more liquid).

  67. Matt, Lflan’s play took less than a half-hour, while JRW’s play took all day yesterday, so Lflan’s $$/hour rate was killer. :)

  68. is IMAX really up .50 because they’re expanding into the Ukraine? Or is it because it was on mad money yesterday?

  69. RMM… Re your 11:07 post identifying the projected "good earnings" on some stocks. Where did you get this information?. If it is accurate, then I would sell some May OTM puts – today

  70.  Phil, any opinion on the April USO puts today?

  71.  Also, I’m currently holding some May USO 41 puts… down about 25% since I got them…. any ideas what I should do with them at this point?

  72. Matt… At the moment I would consider Iiflan and JRW trading "heros" for the brilliant strategy. I did a little better than they did yesterday $$$ wise, but it took me the entire day, jockeying 160 positions. I need to get on their train.

  73.  After another night of obstetric anesthesia – I think our investing premise really needs to be based on the things people buy/consume regardless of unemployment/bankruptcy or any sense of fiscal responsibility.
    The list would include:
    1.  Apple – iphones, laptops
    2. visual entertainment – disney, imax  (people will buy 12$ popcorn even if they can’t groceries)
    3. COACH, gucci, louisvuitton
    4. Fast Food

  74. Phil
    How about a bullish play for MRK, buying Oct 34 calls for 3.7, selling 34 puts for 2 and 38 calls for 1.6, for net .1 on the $4 spread, on a dividend payer that Pharm likes?

  75.  KWAN, Imax isn’t close to maximum expansion.  This technology will eventually be in most theatres.  The ticket premium is incredible.  Ironman 2 on IMAX…..gonna be huge.  sold imax sept 17.5 puts yesterday – initially i was scared away from the large pe but i think they will grow into this evaluation.  Every major movie will come out in IMAX.  Soon all of my cousins in india will watch all of their bollywood bullshit in imax…

  76. Off topic but a great summary of media disinformation if you are interested.  I have been adopted by Ragingdebate as their resident market guy – it’s a pretty good political site balance-wise. 

    China trimmed its holdings of U.S. Treasury debt $11.5B, or 1.3%, in February, the fourth straight drop, raising concerns that the U.S. government could face higher interest rates to finance its budget deficits. At $877.5B, China remained the largest foreign holder of U.S. debt.

    Maybe the euro is saved for now, but a Greek default remains likely without severe austerity. It has been done in the past, Megan McArdle says, but with one key difference: "The countries involved were able to devalue their currencies. This lowered the burden of paying debt denominated in the local currency, and it also made exports more competitive, giving a boost to employment. Greece doesn’t have this option."

    Greece’s debt crisis will push the euro down to $1.19 – the lowest since March 2006 – by the middle of next year, BNP Paribas says. Median analysts’ expectations say the euro will trade at $1.33 in 2011; Current euro trade: $1.3654.

    Weak demand may limit Greece’s upcoming U.S. dollar bond offering to $1B-$4B rather than the previously announced $5B-$10B, a Greek official says. Greece could even cancel the issuance altogether if "the minimum necessary amount can’t be collected."  I heard it’s already dead (mentioned in the post) – think about how NOT fixed this is if they can’t raise money even if they issue dollars!

    Germany isn’t playing its usual role of making concessions, says George Soros, which is "why the European project is stalled. And if it can’t go ahead from here, it will go backwards. It’s important to understand that if you don’t make the next steps forward for the euro, the euro will go to pieces and the European Union too."

    UPS will provide detailed earnings April 27, but says its first-quarter EPS rose to $0.53 from the previous year’s $0.40. Adjusted EPS is $0.71 vs. expectations of $0.58. CFO Kurt Kuehn: “We expected the first quarter to be the most challenging of 2010… As it turned out, revenue was stronger than we expected due to international volume gains, increased yields in the U.S. and growth in Forwarding and Logistics." Shares +4.2% AH. (PR)   UPS: Raises full-year EPS guidance to $3.05-3.30 from $2.70-3.05, vs. $2.95. Consolidated revenue grew 7% in the first quarter, driven by international daily volume: Exports up more than 9%, non-U.S. domestic up more than 24%. U.S. domestic volume grew – less than 1%, but it’s the first Y/Y growth in more than two years.

    A European recovery has pushed global PC shipments up 27% in the first quarter, Gartner says, ahead of its forecast of +22%. Emerging markets and all-in-one computer models are credited with the gains. Hewlett-Packard (HPQ) continues to lead in market share with about a fifth of all shipments, but No. 2 Acer (+43%) is the growth leader.

    No wonder CME Group (CME +3%) isn’t happy about the released details of the Lehman Brothers (LEHMQ.PK) auction: We haven’t seen a giveaway like this since the days of Russian privatization, Felix Salmon says. Essentially, Barclays (BCS +4.3%) walked with $335M, DRW Trading with $303M, and Goldman Sachs (GS +3.2%) with $450M.

    Firms are scooping up assets from the FDIC for as little as 22 cents cash on the dollar as the agency tries to clean out $40B of loans seized from failed banks. But the FDIC, keen to avoid its S&L crisis error, is demanding as much as 70% of any gains.  Note that "as much as" means one guy has to give up 70% while everyone else is more like 30% just so they can say "as much as."

    If you can’t beat ‘em, join ‘em!  Pimco pushes further into equities, launching its first actively managed equity mutual fund.

    Rates on 30-year mortgages fall to 5.07%, the first decline in a month, Freddie Mac says – notable because the run-up in rates coincided with the Fed’s wrap-up of its $1.25T MBS purchase program. Yesterday, mortgage applications slipped nearly 10%.

    Strategist Kirby Daley says the stock market is now enjoying a "Goldilocks rally" but "we are at risk of 30-40% downside from here." The U.S. has taken on "this massive public sector debt" and has "only deleveraged very slightly" on private sector debt, Daley says.

    U.S. rail traffic rose 7.5% in March – the first Y/Y increase since July 2008. "Note, though, that carloads in March 2010 were still 11.5% lower than they were in March 2008, and in all 19 commodity categories carloads were lower in March 2010 than they were in March 2008. Railroads need many more monthly increases to get back to where they were prior to the downturn." (AAR)   See, this commody rally is nothing but speculative BS – it’s a huge bubble with ZERO fundamental support.

    Mar. Industrial Production: +0.1% vs. +0.8% expected, +0.3% prior. Capacity utilization 73.2% vs. 73.3% expected, 73.0% prior.

    April Empire State Survey: Manufacturing 31.86 vs. 23.75 expected, 22.86 prior. Employment 20.25 vs. 12.35 prior. New orders 29.49 vs. 25.43 prior. Prices 6.33 vs. 8.64 prior.

    April Philly Fed Business Outlook: 20.2 vs. 20.0 expected and 18.9 in February. New orders index +5, shipments -8, current inventory +13. "The survey’s broad indicators of future activity continued to suggest that the region’s manufacturing executives expect business activity to increase over the next six months."  How do we believe NY went up 25% when Philly (90 miles away) barely budged?

    Nouriel Roubini doesn’t want to be known as a permabear, but let’s chart Google searches for his name against the S&P 500. (via)

    Activision Blizzard (ATVI) says it’s "tracking ahead" of its estimate of $0.02 EPS on $525M revenue for the quarter, without forecasting specific numbers. The video-game maker did specify a new full-year EPS target of $0.72, higher than a previous $0.70. ATVI announces results May 6.

    GMAC denies a NY Post story claiming it’s having a hard time selling mortgage unit ResCap and that another bailout may be necessary. GMAC, which received three separate bailouts totaling $17.2B, says the story is "absolute nonsense."

    Morgan Joseph reiterates its Sell rating on Palm (PALM +1.9%) with a $0 price target. "Despite speculation that Palm has put itself up for sale… the likelihood of a strategic buyer emerging is minimal, though there could be a possibility of defensive acquirers, and prospects for the company’s survival look grim."

    With roughly 16M new people expected to be eligible for insurance coverage under state Medicaid programs, courtesy of the new health care law, UnitedHealth (UNH) and its rivals (like AGP, CNC, WLP) are all jockeying for a piece of the pie.

    By the way, I forgot to mention it yesterday but we had a massive volume spike into the close that was all selling, pretty much the whole day’s buying was sold off in the last 5 minutes of trading, most of it settling after the close.  That happened on Monday too and Tuesday was mixed.  This is not what had been happening earlier and it bears watching

  77.  jomama – I did the same thing via your logic (sold puts that is). I glanced one time and they were already up 15% which is considered a good return for an overnight hold in most circles. This is PSW though and to us it’s just another day…
    I didn’t realize Ironman 2 was coming out in IMAX. I’ll watch that this summer as soon as I see the new alice in wonderland :)

  78.  Kwan, the other day i took my kids to see "How to Train a Dragon"  - My six year old daughter asked if we could see it in 3D.   We didn’t because i’m a cheap ass and would rather pay to see ironman in 3D but you can see how the consumer trend starts.   

  79. Phil – SPG – I am $3 behind on a short APR 75 C (bought 7.80, now 10.50), and even on long APR 80 C (bought 5.30, now 5.30). Suggestions for rolls, thanks.

  80. gel1:
    I have found the earing projection most useful, but, of course, I ONLY look for significant improvements.
    Then buy either the stock mor sell puts within 5-10 days before earnings reporting,

  81. Peter D or other short strangler TOS users.  I’ve not needed to use TOS to roll any of my short puts or calls 2x (I’ve done it in the past with Fidelity), and while I don’t need to roll anything today, I thought I’d test the TOS functionality.  I wasn’t quite sure whether the best way to do so with TOS was with 2 separate orders or a custom order.  Any advice would be appreciated.

  82. I gave BIDU putters about $2500 this month. Stupid.

  83. Phil – TBT – Also roll advice pls on long APR 48 C (bought 1.11, now .44).

  84. Phil – great point. For some stocks, you can see large spikes after the close. I guess, it could be because of this.
    By the way, I forgot to mention it yesterday but we had a massive volume spike into the close that was all selling, pretty much the whole day’s buying was sold off in the last 5 minutes of trading, most of it settling after the close.  That happened on Monday too and Tuesday was mixed.  This is not what had been happening earlier and it bears watching

  85. judah – I have always used a custom order.

  86. Jo…. Thanks for the "free money" suggestion on IMAX. I jumped on the same short puts for a nice $4200.

  87. IMAX/Kwan – How about the fact that I mentioned I liked them yesterday, before Cramer swiped it for his show?

    USO/Srfrog – I’d sure take the money and run on this sell-off.  I’ve been sticking with shorting the futures below $86 so big winner today that just stopped out.  You can’t mess around with Apr puts as anything can happen tomorrow and this sell-off was a reaction to Nat gas and can reverse into the close.  As to the May puts, I would spend .50 to roll them up to the May $42 puts and sell the May $44 puts as momentum plays (only if you are good at it) whenever USO gets over $42.  On a big move down, you can sell the $40 puts for $1.20 (now .70) and that would put you in the $2 spread at about net .70.

    160 positions/Gel – Do you really feel the energy required to hold 160 positions is worth it?  I would get down to 50 or less "set and forget" type trades and leave yourself a nice wad of cash for shorter-term trading.  There’s just no way to watch that many positions effectively and then what is your plan for adjusting if we have a massive market move? 

    Buy List/Jo – I totally agree.  Top 10% stocks and escapist stocks for the masses.  I got the impression at Disney that some people were blowing their life savings over there – maybe taking the kids to the big show before the house goes away or something…  There were a lot of people we talked to who said things like "this is the nicest hotel I’ve ever seen" and the gift shops were very quiet considering how packed the parks were.  I even had to remind my kids to not get into conversations about all the places they’d been with other kids or say things like "well, the other 10 times we went…" 

    MRK/Deano – Well, you don’t get a dividend that way.  I’d rather buy the stock for $36.12 and sell the 2012 $30s for $7.60 and the $35 puts for $5.40 for net $23.12/29.06 with a 30% gain called away and an effective 6.5% dividend rate

    IMAX/Jo – They need to come up with an "Imax lite" for regular theaters.  The projection area required for Imax is what kills them for mass markets.  Still, they will keep rolling and rolling because the model makes more money for the studios.  I missed seeing Alice in Wonderland in IMax because I waited 3 weeks and it was already bumped by something else – that’s a great indication of how packed their schedule must be this year. 

  88.  gel, still sitting on those puts – thinking about closing SWC puts.

  89. Jo….. I can understand the Apple enthusiasm, but could never understand why women put so much emphasis on $2,000 purses – some even have a whole closet of them. The junk they carry in them can’t cost as much as $100. Oh well, they say the same about our cars

  90. Phil/buy list.  In consideration of the buy list you are assembling this weekend.  VZ, WMT and KO.  Not quite ready yet, but getting close. 

  91.  Gel, i am more interested in profiting from the insanity than trying to understand it :)     Having said that, we have missed the train on COH & TIF.

  92.  Hey phil, I think you mentioned IMAX after i brought it up :)  Let the little guy have a moment of glory.

  93.  Phil, thoughts on AET – they have had a nice pullback?

  94. TM looks like a good candidate to pin at 80, for those who believe in that sort of thing.

  95. Good morning,
    IWM Pivot 72.20; then 72.63 and 74.50, support at 71.88, 70.70, and 69.97

  96. Phil, what do you think of TXP going into earnings ?

  97. Phil/Positions
    Your advice is well taken…. It is turning fun into work having that much to manage. I guess I have never seen a stock that I felt I could not out-guess its movement.  I learned my lesson last January when I lost 150K in one day on a market drop. My memory is short-lived, I guess. I will start today to downsize to a more manageable size, and concentrate on some currency plays, and maybe join JRW and Iflan executing their respective strategies. I really like the statement Iflan made about "setting and forgrtting". Chance for more golf!!!!

  98.  Gel, i just initiated a good long term put sale that you can just set aside.  Citirgroup 4 2012 puts for about .66.  

  99. If anyone would like to play the Russell today, I would suggest the IWM April 72 Puts or Calls. Also be aware that market orders over 100 can be tricky, but 50 contracts or less seems to move at the stated bid. And there is always TNA / TZA. I have to go; see you all tomorrow !!

  100. judah, JRW -  bought the IWM calls.  Looking like a "screen play" day.

  101.  Gel, WMT leaps have been great income generators.  Can buy 45 2012 leaps and continue to sell 55 front month calls or do another set it/forget it by selling 55 2012′s when it gets over 5$.   Walmart  is here to stay.

  102. SS, Good for you.  I was thinking that we would touch briefly down at 71.90 before climbing up, but I see from the 2-day chart that 72.10 was pretty strong support yesterday.  Missed it.

  103. SS, Rather than buy the calls during opex week, have you considered selling the puts instead (and sell calls instead of buy puts)?  Though the upside potential is more limited if IWM runs, for shorter moves it seems like you would get the extra benefit of decay even during the day.

  104. 15%/Kwan – We are way too jaded - What are we going to do if the market ever calms down?

    SPG/Concreata – so you had a bear call spread?  You know I hate those…   Well you need to get out of your $80s and that leaves you with the net $5 $75s you need to get rid of and you can roll them to naked 1.5x May $85 calls  ($3.30) and you can spend .45 to cover with the May $95 calls if you have margin issues.  Above $85 you can momentum sell the $90 puts to work off some cash as they will take a 2/3 hit on any move up and they are spotting you $1.60 in premium.

    TOS/Judah – I usually do the single roll and then DD on momentum. 

    TBT/Concreata – As usual, I advise selling premium, not buying it.  Had you sold the $48 puts (same target) you’d be much happier, right?  So let’s practice turning over a new leaf and trying to get your .70 back by selling the June $47 puts for $1.18 and, if you must, you can cap margin by buying the $44 puts for .38 as you still get your .70 (80 in fact) on the spread.  You can also get more upside with the June $48/49 bull call spread at .50 which is a much easier way to make money (100%) than buying the $48 calls for $1.95 by themselves as you need $50.45 to make the same .50.  It may not seem like much but needing $50.45 to make the same .50 as you can make at $49 is giving up 3% and if you do that with every trade, every month you are spotting 39% in your trading performance before you make any money – you have to be a hell of a trader to overcome that handicap!  Make less trades with higher chances of success – after a while you’ll have more money and can make more trades anyway.

    Purses/Gel – I asked Tina if she would use this service that gives you like a "purse of the month" with genuine desinger bags the way you rent from Netflix and she looked at me like I was from space.  I said, what’s the difference, you like new bags and you empty one out and dump all your stuff in another anyway?  Not a chance in the world…  If they had that deal with cars, we’d be all over it!

    Buy list/Jo – Please add them to the comments on the actual list as I’ll never end up getting back to do it otherwise.

    IMAX/Jo – OK, I’ll give it to you! 

    AET/Jo – I looked at them yesterday and I’m not there yet.   Maybe if they test $30.

    TM/Roast – They are a super-tempting short because that recall is going to kill their profits but no one seems to care so I’m scared.

    TXP/Jrom – I don’t know about TXP but TXN should have good earnings.  Had they not spiked up 10% this week I would want to go long but too scary now.

    Golf/Gel – Yep, if you like something long-term, just run a long-term buy/write and leave it be.  If you have 75% of your positions locked into nice plays that make 20% or so if the market just flatlines, then you have loads of time to make hay with the other 25% and you can just slap on an index put to stop the bleeding on a downturn (and then redeploy the cash to DCA into stocks you love).  It’s not that there aren’t 150 great stocks to buy but that the time it takes to manage 3x 50 won’t really make you more money than cutting it down to your 50 favorites.  Also, keep in mind that, once upon a time, it was a good idea to diversify because not every sector would go up in lockstep – it’s a wild notion but it may happen again one day if people re-discover fundamentals (but I’m not going to hold my breath!). 

    WMT/Jo – One of the best for just selling and selling month after month.

  105. judah – I have thought about that, but have not tried it.  Certainly makes sense though.

  106. Judah: Rolling strangles in TOS.
    You can do the trade as a roll, but you need to be careful and check what the two components  are selling for versus just accepting the "mark" spread that TOS will automatically generate for you. You can then set the roll price to what makes you comfortable (i.e., override the "mark" default.) Often the mark spread is acceptable, but you can’t count on it.
    You need to do this because of the wide spread on the index options.

  107. Rolls on TOS--SS, Phil, Chaps.  Thanks everybody.

  108. Today’s free money boost courtesy of:  Bank of Japan’s Shirakawa sees little risk of a return to recession, "although the pace of pickup will probably remain moderate for the time being." Beating deflation remains a “critical challenge” that will require an "accommodative" policy.

    U.S. mutual funds and ETFs posted inflows of $132.9B in Q1, while investors pulled a record $324.4B out of near-zero interest rate money-market funds. Hot performers that have yet to catch investors’ eyes include Lat-Am stocks and domestic real estate funds. (MorningstarSideline money begins to move in.

    NAHB Housing Market Index: +4 to 19, highest since September – which like today was just prior to the expiration of the last homebuyer tax credit. Current sales +5 to 20, and prospective buyer traffic rose 4 to 14. But six-month sales expectations just +1 to 25. Regionally: gains in the Midwest and South, while the West declined.

    Three lunchtime reads:
    1) Europe’s VAT lessons
    2) The man who cost Merrill shareholders $50B
    3) Consumers come to life; Fed remains on hold

    Five SEC chiefs join Sen. Charles Schumer in a campaign to keep the reform provision that allows the regulator to fund itself from corporate fees. The provision isn’t in the House’s bill and "there are some on the appropriations committee that feel like we should leave it to the appropriations committee to fund the SEC," Schumer says.

    Volcanic ash from Iceland’s Eyjafjallajokull volcano – in a plume miles into the atmosphere – has grounded air traffic across Northern Europe, forcing still more cancellations than planned from the biggest U.S. cross-Atlantic carriers, Delta (DAL -2.4%) and Continental (CAL -2.8%).

    Pharma (PRX) +6.5% after a Delaware court rules five patents covering Santarus’ (SNTS -31.9%) stomach drug Zegerid are invalid due to "obviousness." Analysts say Par Pharma’s proposed generic is Zegerid’s only challenger, and while it hasn’t received FDA approval, the ruling removes a large hurdle.   Hey Pharm – what do you think of "obviousness."  It’s becoming a big thing

  109. From GMak at Seeking Alpha:

    A mortgage consultant from my bank called me and asked me to modify my 30-yr fixed at 5.625% with a lower LTV and decent credit scores. Later I found out this is what they are doing (alternatively) as modifying loans on their portfolio. These "so-called" loan modifications do not go through title company (and something else) to qualify for the government’s "Loan Modification Program".

    Well the bottom line is – bansters are calling some of their best clients and offer them loan modifications when they don’t really need them (much lower default risk) instead of doing what they are really suppose to helping underwater homeowners. On one hand, they have numbers to report to the Gov’t and show they are doing something to help homeowners (whether the homeowners need them or not); on the flip side, they are really screwing everyone because that would not do anything to cleanse the system with defaults and foreclosures.

    From Tyler (good video on the link): 

    the IMF massively expanded its last resort bailout facility (NAB) by half a trillion dollars, in which the US was given the lead role in bailing out every country that has recourse to IMF funding. Yesterday, Ron Paul grilled Bernanke precisely on the nature of the expansion of the US role to the NAB: “The IMF has announced that they are going to open up the NAB which coincides with the crisis in Greece and Europe and how they are going to bailed out. The irony of this promise is that in the new arrangement Greece is going to put in $2.5 billion in. I think only a fiat monetary system worldwide can come up and have Greece help bail out Greece and be prepared to bail out even other countries. But we are going from $10 to $105 billion… We are committing $105 billion to bailing out the various countries of the world, this does two thing I want to get your comments on one why does it coincide with Greece, what are they anticipating, why do they need $560 billion, do we have a lot more trouble, and when it comes to that time when we have to make this commitment, who pays for this, where does it come from? Will this all come out of the printing press once again, as we are expected to bail out the world? Are you in favor of this increase in the IMF funding and our additional commitment to $105 billion?”

    Also, kick-ass video from Dylan if I can get it to work:

    Visit for breaking news, world news, and news about the economy

  110. Here’s a potential trade on GOOG if you want to play earnings.  Buy the Jan 2011 600s for $54 and sell the Apr 600s for $10.    We’re 2 days from options expiration so the theta on the Aprils is $3.11 with theta on the Jans only $0.10.    Profits accrue immediately as long as GOOG holds 580 but remains profitable well beyond the max at $600.  If you are bullish on GOOG then just sell 1/2 the Apr 600s and you  have increasing profits with stock price rise but are still protected down to 585.  I would be very surprised (but not shocked) if GOOG does not hold through earnings.  I probably won’t make this trade, but if I did it would be with no more than 3% of portfolio.  Phil, if you have time, comments?

  111. Phil – just reading about this, and as the blockbusters come off patent, there are going to be a ton of lawsuits – especially Lipitor.  As for SNTS, I think they lose overall now, as the precedent is set.  I cannot find the claims, and am not a lawyer, but once something is generic, it is hard to keep others out unless one has a NOVEL formulary.

  112. Yodi – after we discussed TRMA, up 20%.  How do you like that for coverage?
    SPPI – back to 5.  Jan12 2.5 C never were bought at 2.30….shame.

  113.  Pharm, thoughts on GILD’s earnings next week.  I saw the Barron’s article on them yesterday – they have head a pretty bearish bias on them.  

  114. Oh, can can we say another 30 DOW points by EOD?

  115. GILD/jo – yeah, and they are so right!  LOL.  Oh, and they like PFE!  Talk about a patent cliff!

  116. pHIL AND gel1:
    significant earnings improvements and a trade position might be attarctive: which one to sell puts or buy stock?
    More days before earnings is better as stocks in this situation go up towards earnings. (I missed quite a few in recent days as I was away,)
    4/19: IBM,C,ZION
    4/20: ALTR, AAPL
    4/21: AMGN, QCOM, SNDK,
    4/23: AXP, AMZN, COF
    4/26: WHR, TXN
    4/29: XOM

  117.  RMM, on appl – they should have a nice run up and sell after earnings.  A conservative play is to sell long term puts out of the money and cash out right before earnings announcement.  Worse case scenerio – you benefit from ipad 3g release which has not been truly appreciated by the market (i think its gonna be big)

  118. Sorry Phil, I meant TPX, what do you think of Tempur Pedic (TPX) going into earnings?

  119. Pharmboy  I wonder if we looking at the same TRMA  minus .02 still 3.00  they still under water or TOS is fooling me?
    But thanks for bringing it to my attention

  120. Pharmboy  I wonder if we looking at the same TRMA  minus .02 still 3.00  they still under water or TOS is fooling me?
    But thanks for bringing it to my attention

  121. Phil:  Zegerid is just OTC prilosec and OTC  bicarbonate; patented and costing consumers 20X the price.  This sort of pharm patent nonsense happens all the time.   Actually Prilosec is a great drug, its just too cheap now to make any money.  Rotate into an isomer and now  you have Nexium (the purple pill) what a joke.

  122. jomama: yes, sell puts many days before earnings report, then sell the day before/safe or collect on run-up after earnings.

  123. Have you traders filed your tax return ?? its 4/15.

  124. Just popping in to say "I Hate This Market" !

  125. Sell puts before anticipated SIGNIFICANT earnings increase:
    look at ISRG, earnings were expected to be 1.7$ vs .7$, so significant change up, stock move 40$ before anouncement.

  126. Peter D and other short stranglers.  I’m having a hard time pulling the trigger on any May strangles.  Since it is a 5-week period, and SPX has charged about 70 points every five weeks since the January sell-off, prudence would dictate selling at least 1280 or 1290 on the call side.  Even if we’re aggressive on the puts, say 1090, it doesn’t look like we’d get even $4 out of the trade with the VIX so low.  What are you all doing — waiting, or taking what you can get?

  127. BIDU/
    I just bought Baidu call spread APR 640/650 for $6.20
    Speculative play that Baidu will close above 646.20 tomorrow as an offset of my short may position

  128. Yodi – when we spoke of it last time, it was 2.30 (Tuesday).  That is a good 20% to me. 
    ARRY getting some biotech love.  Gonna pick up a few shares here.

  129. Pharmboy: FEW shares is relative: what is few for you ?

  130. 500….for now.

  131. Pharmboy you got one up on me I was looking at todays movement thanks for correcting me

  132. Judah/Strangles:
    I’ve been in SPX Mays for awhile. Currently at 1250 calls and around 1090/1100 puts. I monitor the calls closely (note the tight upside), roll to keep about a 3-4% gap between the market price and the calls. Meanwhile, I sell as many puts as I can that doesn’t affect my buying power adversely and pays for the roll of the calls. I’m frequently buying back  low-strike puts that have been losing value quickly and rolling them up to higher strike puts, that then lose value quickly…etc.
    It’s becoming more of a "day-trading" system for me with the bull loose in the china shop. But the advantage of being short is that theta still works for you.

  133. Cap, come back tomorrow.  I’ll think you’ll like it.  But you’ll prolly go back to hating it again next week!

  134. Phil:  Getting killed on SDS    have June 29/32 bull call spread  and short June 32 put; what adjustment do you suggest ?

  135. Phil,
    I apologize if this is covered somewhere and I just missed it.  What’s the better play for a directional bet: a spread on the underlying tracking stock (e.g., bear spread on IWM) or a spread on the leveraged ETF (e.g., bull call spread on the TZA).  In the latter case, what is the preferred spread (e.g., bull call on TZA, bear call on TNA, bull put on TZA, etc.)?  Thanks!

  136. Juda- strangles- I am just nursing my callers along as I am near the limit from being too close to the edge against this continuous grind upward. I would go out as far as you feel prudent since the bias is upward and onward. This could go on for a long time.I thought I had been far enough in front of this slow moving freight train. If I had a clean slate I think I would be sitting it out for a while.

  137. Matt, You think we’ll get a little selling tomorrow?  I love your optimism.

  138. GOOG/Iflan – The problem with those trades is you aren’t covering yourself from a big move up or down, it’s more the kind of play people make when they don’t want to spend margin dollars, which makes no sense since you have to lay out net $4,400 just to make this play anyway.  Realistically, the only difference between the Apr $600 calls and the May $600 calls is you have to wait another month for the May calls to expire but they pay you twice as much money on the same play so it’s crazy not to use them. 

    Now if you want to use real logic to make a GOOG earnings play – just sell the May $650 calls for $4.80 and the May $550 puts for $5.40 and you are better than b/e from $540 to $660, which is 10% in either direction and, of course you can easily roll the losing side $50 further out of the money.  This is similar to the SS strategy and very effective

    If you want to play GOOG bullishly with less margin, then I like selling the May $630 calls ($8.75) against the June $640 calls ($9.85) so you are in for $1.10 and, if the move up is stronger than $30, you need to spend very little to roll your caller up or yourself down and it’s very unlikely to burn you.  On a move down, all you need to do is hold $1.10 in value.

    Another fun play on GOOG is the April $580/590 bull call spread for $6.40 and the $590/580 bear call spread for $3.40 which is net $9.80 on the $10 spread and you can’t lose if you get that fill and, if you are lucky, you may get a flatline around those lines or big swings and have a chance to cash out both ends for more than $5 each

    On the whole, though, I don’t see why people don’t just go for the Jan $550/650 bull call spread for $50 and sell the $450 puts for $10 so you are in for net $40 on the $100 spread (150% upside if GOOG gains 10%) and, on a spike up, you can even generate $5+ in bonus money selling 1/2 the May whatever calls.  Do that 8 times and you have a free Jan spread.  Worst case is you own GOOG at $490 – not a bad price.

    Cool Pharm – I guess the future is very bright for generic drug makers then. 

    Wow – any attempt at a sell-off is just beaten to death today.

    Earnings/RMM – Maybe Gel has great insights but I want to see some earnings before I start betting on them.  As I said in the Buy List post, I will be looking for stocks I like that have bad earnings and sell off to establish positions.  The low VIX means we do not have the wide margin for error we’ve been accustomed to so measure twice and cut once is the way to go. 

    TPX/Jrom – They are at ATH and any misstep will knock them down so I would sell the $32.50 calls naked for $1.10 and, if you are bullish, then you can cover all or part with Sept $35s at $1.70 but I don’t think they gain more than 10% (p/e 30) so I’d be willing to rawhide the caller…

    Repackaging/Humvee – This is one of the areas where we could save many billions in medical costs.

    Thanks Cap!

    I hate to say it but ISRG is ripe for a fall.  April $400 calls are kind of silly at $7.50 and you can sell those against a Jan $380/410 bull call spread at $13.50 so net $6 on the spread which is $27.50 in the money before you owe the caller his money back

    And MORE FREE MONEYAtlanta Fed President Dennis Lockhart: Economy’s "well into recovery, perhaps as much as 10 months." Necessary housing stabilization is in progress, but it’ll be slow. We still need "the strong medicine of low rates."

    Homebuilder bonds have recovered to levels last seen before the credit freeze. Yields are back to within just over six percentage points of Treasurys. "It is hard to view this as anything but bullish," Citigroup analysts say.

    Optimism is back and dealmaking is coming, JPMorgan Chase (JPM) chief of investment banking Douglas Braunstein says. Access to capital and the cost of capital has never been better, and corporate America has almost $1T in cash on its balance sheets, he says. Calls from corporate clients discussing deals have “increased dramatically in the last several weeks.”

    Looking ahead six months, 62% of individual investors are optimistic the investment climate will get better, a Citigroup survey finds. But 57% of investors with a portfolio of at least $100,000 describe their current approach as defensive – while only 8% voiced a preference for a high return/high risk strategy. Surprisingly, only 50% believe today’s investment climate is better than it was a year ago.  So funny, JPM only talks to top 10% so everything looks great to them – reality remains a bitch.

    There can be only one!  E*Trade (ETFC +4.7%) shares jump on speculation TD Ameritrade (AMTD +1.2%) may make a move for the discount broker. Late Wednesday, AMTD CEO Fred Tomczyk told Reuters his company has "a lot of firepower" to use for acquisitions; this after saying in November he would consider a bid for ETFC.

  139. Phil: ok, assume the earnings increase is significant and its bullish and I expect the stock to move up, what trade strategy for a few days would you use ? This would be executed many days before earnings reporting.

  140. Chaps, Pstas.  Thanks, guys. I’m going to see what tomorrow brings.  Maybe if we see 17 again on the VIX, I’ll go 1290/1090 and just take what I can get.

  141. Adjustments/Humvee – 60 days away is a long time to start worrying.  If the idea is to hedge and not a downside gamble then you can make an 8-month hedge by rolling the $32 puts (those were very agressive) to 2x the Jan $25 puts about even and roll the $29/32 spread (.74) to the Jan $25/27 spread at .90 so you spend net .20 and add about 30% more margin to gain $2 in intrinsic value (and $4 in position). 

    Better/Wassel – It depends on which has better options and what position they are in.  I prefer the ultras at the moment because they give better premium even with the low vix and selling more premium means more margin of safety.  I love it when an ultra like TZA gets cheap because it lowers your margin requirement and lets you take aggressive spreads like selling the Oct $5 puts for .70 and buying the $5/9 spread for .85 which is net .15 on the $4 spread that’s currently 15% in the money so I know that the RUT has to gain 5% for me to have the stock put to me at net $5.15 which means if I take 40 of these spreads for net $600, I have $16,000 of downside protection with about $5K of margin required so I can use that to protect 50% of $32,000 worth of upside plays that damn well better make $8,000 or more if the RUT flatlines or gains 5% over 6 months

    Significant earnings/RMM  – What stock?  ISRG?

  142. Phil/WMT: would you buy 2011 50 calls and sell 55 calls every couple of months?

  143. Phil;Significant earnings improvements:
    These are all starting next week until 4/29.

  144. 3:17 pm   S&P Downgrades BIDU to sell ….

  145. Juda,  yes I do think we’ll sell off some tomorrow.  Only because of oe shenanigans though.  Not calling for a correction.

  146. ERY- Phil, I am in the May 9/10 call spread for net .45; sold May 9 Put for net .45.
    What’s your crystal ball tell you on this one re: oil?

  147. Well, we’re up 300 since last Thursday. 

    WMT/Sean – Certainly, selling puts and calls and just rolling whichever one doesn’t work. 

    Credit card delinquency rates fell last month at major U.S. lenders, including Bank of America (BAC +0.6%) and JPMorgan Chase (JPM +0.5%). On the downside, credit losses from uncollectable loans worsened for JPM, Capital One (COF -1.9%) and American Express (AXP -0.1%).  LOL – of course they stop being delinquent when you write them off!

    JPMorgan said its charge-off rate increased to 9.51 percent in March from 9.21 percent in February. But its delinquency rate continued to decline, from 4.75 percent in January and 4.67 percent in February to 4.51 percent in March.  They have GOT to be kidding!  So the delinquency rate fell by 0.08% but the charge-offs ROSE 0.3% – Thats 4 TIMES more total write-offs than delinquencies and I’m sure you’ve heard them say over and over again on CNBC how great this statistic is.  I’m telling you – this whole thing is a total scam!

    Capital One charge-offs rose to 10.87 percent in March from 10.19 percent in February. But its accounts at least 30 days delinquent declined to 5.3 percent from 5.51 percent.  Here we have a 0.7% INCREASE in complete losses but 0.19% less people were late paying – woopie, crisis solved!  Really does no one ever read past the headlines on these things?

    Pump it up!  "We believe that the market is set up for another round of very strong reports ?relative to expectations throughout the remainder of 1Q earnings season,” UBS writes, citing fondness for "cyclical" names which are supposed to bounce more as the economy gains steam. Its "best ideas": Amazon (AMZN), Apple (AAPL), Devon Energy (DVN), Ford (F) and Union Pacific (UNP).

  148. Phil… very informative thoughts regarding portlolio management. I fully admit I am continuing to improve my skills with your guidance, however Jo and others keep flipping these compelling opportunities, and I can’t resist. The good news, however, is that my profits are well entrenched so far for the year, and  the potential for another great year is looking possible. Last year profits were close to 80%  ( 1.55 mil ) and have to give most of the credit to PSW.

  149. Cap: where did you find the BIDU sell by S&P ?

  150. RMM…. Good Stuff !!

  151. earlier today, you mentioned doing a trade with NLY because of the 2011 put premiums vs the call.

  152. Strangles- I cannot find it but did Peter or someone write up a post on flipping callers to putters? Any help?

  153. Phil: this may be silly to you, but I have just been thinking this: WMT
    Buy Jan 11 50 calls for 5.6, buy Jan 11 55 puts for 4.35.  Total cost $10
    then sell June 55 calls for 0.85, and June 52.5 puts for 0.88, total $1.7 debit for about two months and roll whichever that doesn’t work, like you said.  If you do that 6 times a year, it will cover the cost of leaps; and you will surely make $5 no matter where the stock ends up. 
    But it can’t be that easy, can it? 

  154. I meant $1.7 credit

  155. Significant others/RMM – I think you are smoking something but if you are that gung-ho bullish then go for the bull call spreads and sell the puts if you want to get really agressive.    The idea is you are eliminating the premium and catching the upside (limited by the caller) so if I think AAPL is goingn to $270, I can simply buy the May $240 calls for $14 and sell the $260 calls for $4.50 for net $9.50 on the $20 spread and, if $10.50 isn’t good enough for me, I can sell the $250 puts for $9.85 and it’s now a $20 spread at $260 and the put-to price is $250.  You can also JUST buy the $250 calls ($8.40) and sell the $250 puts ($9.85) and you are pretty much in the open calls with zero premium and you’ll make as much (or lose as much) as if you actually owned the stock but the advantage is you can roll the putters down and out if things go against you. 

    BIDU/Cap – About time someone had the nerve to say something. 

    Balls/Pstas – Mine say oil had a bad day today and if they can’t make gains in an up 300 week then they are due for a fall. 

    Improving/Gel – It’s a process but just learning what works for you under different conditions will make you a better trader and if you can be consistent and avoid more missteps, then you will get better every year.  I will say though, that I think last year you had fewer positions and more caustion and I think what hurt you in the winter was a little cockiness.  Best to learn to be humble in your trading without having humility forced upon you by the market….

    NLY/Drum – That’s right, TOS was down and I forgot.  Now that I’m looking at it though, the $2.70 premium on the $17.50 puts is a function of the $2.60 dividends that are planned to be paid out which, logicially, should cost the stock $2.60 in gains so it’s really the calls that are overpriced at .85, not the puts.  I’d still sell the $15s naked at $1.20 and you can sell the $17.50 calls for .85 and buy the stock for $17.25 for net $15.20/15.10 with a $17.50 call away and $2.60 in dividends (17%) coming to you – after you roll of course because you missed one… 

  156. Phil, I sold some May $45 puts on MEE as per your recommendations.  My basis is $2.65.  Looks pretty bad today.  Any adjustments?

  157. 6.6 on GOOG thats much lower than 7 expected and down she goes

  158. EZ/Sean – That’s the old butterfly play we used to do a lot when the VIX was super low.  Yes, it does work great with range-bound stocks.  We even did it with GOOG as it also works with stocks that pay a high front-month relative to the spread but I prefer to NOT give up $5 at the outset and finding a long pair that has less than 25% premium. 

    Oops, GOOG disappoints!  Haven’t seen it yet but stock down quick.  Should be perfect for my plays! 

  159. Phil I checked with you yesterday I can not enter the account section it just does not load 10 minutes with no change ??

  160. " I prefer to NOT give up $5 at the outset and finding a long pair that has less than 25% premium" Did you mean that you would not buy the leap put? I don’t understand what you mean by"finding a long pair that has less than 25% premium"

  161. CNBC keep talking about the "great" report by GOOG, so why is the stock down $20??

  162. Maria Bartiromo, on CNBC about 3 minutes ago completely botched the GOOD earnings story, she was confused what the actual EPS number is, then started saying a number that is wrong, then was not sure… it was ridiculous, she ended up confusing the first 3 pundits she had on.  Wow, the incompetence of this woman!

  163. AMD stock is down also…

  164. Phil/Trading Psychology
    You bet… Last year I thought I was the master of invinceability, however the January market drop made for one hell of a humbling experience. I love risk, but have tempered my desire for an unlimited amount of  it. 50 positions is a good number. I have already unloaded my dividend paying telecoms in advance of the tax law changes that are anticipated, and added that capital to AAPL, in an effort to get to 10,000 shares. Better  profit potential with less management.

  165. Phil, your site was down, too… maybe I should short it LOL :)

    Not really a ‘miss’ for GOOG, as much as a failure to ‘blow out’ the numbers.  I suspect they’ll hold at about 590 at tomorrow’s open.   Will be interesting to see what kind of spin we get on this from the pundits. 

  167. ISRG making up for GOOG with a very nice beat but that $400 mark is going to be tough to get over. 

    MEE/Leon – It needs to be ridden out.  The July $40 puts are $3 and the May $45 puts at $3.50 still have $2.40 in premium so LOOKS bad is right but isn’t actually very bad at all at $43.90.  Heck you can sell a May $48 call for $1.40 if you are worried.  It’s always a good exercise to take a look at the calls you can sell and think about how worried you really are that they will keep going down.  If you can’t bear to sell the $45 calls ($2.40) then you are still bearish…

    Accounts/Yodi – I don’t get that, I can still get in.  Try logging out and back in and, if that fails, contact Greg about whatever you need done (admin@ph…)

    WMT/Sean – I mean if you pay $10 for a $5 spread you are guaranteeing you will lose $5.  I don’t like to promise to lose $5 on a trade before I start.  If you buy the Jan $45 calls for $9.50 and buy the Jan $65 puts for $12 then you are paying $21.50 for a $20 spread and now you are just spotting $1.50, which you make up on your first sale.  That’s what I mean by having less than 25% premium on the pair.  By the way, the biggest danger in a trade like this is catastrophic failure or a buy-out, which give you unrecoverable losses so make sure you think very hard about what the long-term possibilites are before you get into one of these trades. 

    GOOG – Earnigns weren’t "bad" at all but just not worthy of 2-day, $25 move up based on smoke blown up the asses of investors by the punditry, who were tripping over themselves to catch the Google wave. 

    Google (GOOG): Q1 EPS of $6.76 beats by $0.16. Revenue ex-traffic acquisition costs of $5.1B (+2.2%) vs. $4.95B. Average cost-per-click up 7%; aggregate paid clicks up 15%. Google-owned sites revenue up 20% to $4.44B. Shares -3% AH. (PR)

    So earnings not too bad looking but not sure if that’s right net of TAC.  If that’s a beat and they are selling off like that then it may be time for the whole Nasdaq to rethink their values… 

    Maria/Jordan – What will happen when her looks fade too?  I dated a CNBC girl many years ago – she didn’t have a clue about the markets, all about looking good on camera which is simply an indictment on their editorial policy in general.  Of course they want uncritical news readers who will simply spout whatever nonsense is on the teleprompter and "sell it" to the audience.

    Good idea Gel – KISS is the word.

    Site/Jordan – Yeah something happened for a few minutes, not sure what.  What you should short is my programmers! 

  168. Just read an article at, saying that the bull market could go on for many days.
    "The bears would like you to believe that the market is overdue for a downturn, since we’ve gone 27 trading days without a 1% move. Let me put their argument in perspective…
    We’re not even close to longest streak on record. Back in 1995, the S&P 500 went almost 100 days without a 1% move. So this "dull" market could keep heading higher for many, many more days."

  169. Lflan/GOOG.  Nice not to worry about holding these positions overnight.  I’m looking forward to your play tomorrow.

  170. pstas / flipping: I asked Peter about flipping several weeks ago.  I usually copy & paste comments into a file.  Unfortunately, I didn’t do the copy & paste for that one.  If anyone can find the link, please post.

  171. Advanced Micro Devices (AMD): Q1 EPS of $0.09 beats by $0.16. Revenue of $1.57B (+33.7%) vs. $1.54B. Expects Q2 revenue to be down seasonally. Shares +0.9% AH. (PRVery pleased with David’s pick on this one! 

    People’s United Financial (PBCT): Q1 EPS ex-items of $0.08 in-line. Net interest income of $160M (+12%). Shares -1.1% AH. (PR)

    Finally!  Boston Scientific (BSX) says it has received FDA clearance for the two validated manufacturing changes affecting its cardiac resynchronization therapy defibrillators and implantable cardioverter defibrillators, and that it will immediately resume distribution of its Cognis CRT-Ds and Teligen ICDs. Shares +7.1% AH. (PR)

  172. Google CEO not a part of the earnings call. what the heck.

  173. Fun – Get Rich Cheating!   Here’s the seminar.

    Yves Smith makes the case that "strategic" defaults are putting money in the pockets of a lot of people that would have otherwise gone to servicing debt. The short-term results are not all bad, as consumer spending gets a jolt. But then what?

  174. RMM – BIDU downgrade … came across news ticker on my trading platform.   Appears to be Reuters.

  175. Echoing Phil’s comment and in Maria’s defense, SHE’S HOT:), who cares what she knows…. I’ll take her over Cavuto, the happy hour crew, or any of Fox’s other goobers…

  176. jromeha, you must be wearing your 3D glasses :)

  177. Phil,
    The  "massive volume spike into the close that was all selling," happened again today for many stocks I looked at. I wonder what the reasoning behind this is because most of the stocks come right back again.

  178. Phil – AMD selling off as well after hours. What’s going on?

  179. All, the flipping has become the most important tactic lately.  The write up is here:
    Make sure you search through the other discussions on 3/22.

  180. Judah, I’m using 1 Custom order for all rolling (2X, vertical or diagonal) and flipping.  Since the volume is not heavy, we always playing catch up with having 2 separate orders.

  181. Having a hard time with Phil and a MSNBC woman dating. Our hero in the dating pool and in the SHALLOW end at that! No swimming with the sharks? jk

  182. Judah, I’m already in May and June a while ago, due to the rolling from March, about 1/4 loaded.  I did reduced the position size, then had to increase it again this week with the 2X rolling when the market broke over the resistance.  I’m adding BIDU, GOOG (with crazy play verticals) into the portfolios and that seems to get around the PM margin issues.  As we know, it’s a random process on which accounts would get affected, so we’d need to check every day.

  183. Phil…. Dating a CNBC gal ?? – It had to be a research only assignment. Unless the attributes were quite different then !

  184. instead of attempting to combine brains & good looks, why not just go the Vannia route, or maybe even a string of cheerleaders like a football team? It would fit right into cramer’s show.

  185. Wow, my TZAs are looking good for a change!  Oil is doing very strange things – it gapped up from $85.30 to $86.60 – that almost never happens, and now it’s dropping like a rock – too late to chase it down but it looks like they just wanted to blow off the shorts before a big move down. 

    Gold back to $1,155 and all indexes at day’s lows.  Copper blew $3.60 ($3.58) and the dollar and Yen are both strong with the Yen winning so far but this would be Yen selling time (92.68) on the FOREX.

    AMD/Trad – That is wacky.  I think GOOG just has everyone rethinking these crazy multiples just a litle. 

    It was a CNBC girl, Doro and, to be fair, she was in my town (Fort Lee) and I didn’t know she didn’t know anything until I got to know here better.   I mistakenly assumed that since she worked for CNBC she must be a really cool chick who also understood the markets.  Sadly, we met in a loud place and it was too late by the time I realized I had assumed way too much - lesson learned there!

    Vannia/Morx - I don’t know who that is but I think it would be better to have a girl (or guy) who says "I have no idea what you guys are talking about" than put in some puppet-head who pretends they understand the words on the teleprompter (and no, Cap, you may not insert your favorite Obama joke here!).   Bloomberg has lots of smart women and CNBC Europe has some really great ones – I guess in the US they are giving the audience what it wants so maybe it’s a poor reflection on US more than anything else. 

  186. We all have our lessons, if not we never learn anything!

  187. I feel quite depressed today. I don’t know what possesed me today but I did the worst mistakes ever with ISRG (I guess I didn’t read ON TIME Phil’s comments about ISRG being extremely overvalued). This will serve me as an incredible lesson but I’m not sure how long it will take me to get over this.. I was learning pretty good from Phil and the strategies followed here until I had a lapsus brutus today.
    I want to take it out of me so I just need to put my stupidest set of actions I did today on this board..
    I started the day entering a position early in the morning (as this was working pretty well for the past three days taking advantage on the bidding up of the stock prior to earnings, retiring them before the close of the day) on ISRG with 4 Apr $340s at an avg price of $51 when ISRG reached an intra-day high of $393.. only to see the stock PLUMMET within minutes  all the way down to $379.. at this point, I got extremely scared since this was the first time the stock took a beat in the last 4 days.. having my mind already blown a bit I decided to switch the strategy and open a long strangle paying (Phil will kill me, but that’s what I need just for today) $10 PREMIUM on each side with 4 Apr $390s and 4 Apr $370 puts.. at the close of the day I didn’t wait enough and retired my $340s at a price of $44.5 incurring a so-far-not-so-bad loss of $6.5.. thinking that ISRG would experience a big swing either down with a slight miss (due to the ridiculous price!) or up with a very good beat (after all, analysts never get earnings right).. as soon as the report came out, I decided to buy 200 shares @ $395 after-hours just to increase the likelihood to recoup the $6.5 loss..
    Only to find out minutes later that investors did not like the "very bright" outlook in growth for the rest of the year (as opposed to the extremely, already overly ridiculous growth rate they were expecting) and beating the stock all the way down to $375.. which at this point I decided to sell my long shares at a loss of $20 per share (or $10 if we base it on 400 shares)..
    So tomorrow, the stock VERY LIKELY will remain in a tight range between 370 and 390, just to cherry top my HUMONGOUS loss making my strangle completely WORTHLESS and not giving any chance to recover since they expire on Friday. So all in all I’m taking a SUPER LOSS of $38 ($15,200) which just shaved 10% of my entire portfolio in one single day..
    I don’t words to describe my feeling.. I’ve been in the market for many years and I thought I was grasping Phil’s strategies quite well until this huge misstep today which I cannot still explain it to myself.. it wasn’t greed after all, it was just PANIC trying to recoup my very first loss in the day.
    Sorry I had to write this here but I needed to get this weight off my shoulder and get over this soon. I KNOW I will learn even more from this and that I will recoup all that loss in time.. I also know that I will not make the mistake to try to quickly recover it, or make back with more stupid bets..
    I will continue implementing the strategies Phil recommends because I know they are great..
    A depressed investor,

  188. Good morning!

    Futures staged an amazing recovery so far and GE put a cherry on top with a good report.   We’re waiting on BAC to tip the balance one way or the other

    $86 is still behaving on oil.  It was strong support all night but just broke for a quick .20 so far, which is a stop at .10 at this early stage.  (the way stops work on the first round is .05 once you get past it, then .10 at .15, 15 at .20, .20 all the way to .30, then you increase your trail by .05 per .10 of progress.  In the 2nd round, you can add .05 trail if you made .10 and add .10 if you made .20)

    Oops, BAC looks good so no excuse for the markets to fail now. 

    ISRG/Ravalos – That sucks but the smartest thing you did is take your losses and get out.  The dumbest thing you did is violate Rule #1 which is: "ALWAYS sell into the initial excitement" - by acting out of fear (and greed) you bought high and sold low and you bought premium instead of selling it and you didn’t REALLY want to own ISRG when you bought it.  I sure don’t want to bust on you as I know this hurts but those are all really straighforward rules to keep in mind. 

    Messing around with earnings, no matter what you think about a company, is a total crap shoot.  You always need to go in and have a strategy for what you will do for a 20% gain, a 20% loss or a flatline and if you aren’t comfortable with all of those situations – don’t play.  Not the GOOG plays above all gave a very wide berth and our fallback plan is the Rawhide Strategy (rollin’, rollin’, rollin’) and the fact that we do WANT to own GOOG at $550 no matter what 1 quarter’s earnings say.  Even so – we sold MAY puts and calls on the SS play because April just had a greater chance of burning us, even on a $100 spread. 

    Our April $590/580 bear put spread should be in the money and if we can get our $10 out early (sometimes you get more with a trick of the spread if you are lucky) we do that and I think if we can get anything out of our $580 calls we should take that too and leave the $590 caller naked with a tight stop.  It’s looking like a broken play but it was, as I expected, ultra-low risk and we were hoping to luck out in a tighter range than this.  We didn’t luck out so play over – you don’t try to turn a play into something it wasn’t

    On Jan bull call spread.  My inclination is to roll down and possibly take out the caller but let’s see how it goes.  The other 2 GOOG plays are easy winners.

    It’s options expiration day and it’s going to be a wild one. 

    We still have: Dow 11,000, S&P 1,200, Nas 2,500, NYSE 7,700 and Russell 720 so everything’s comming up roses for the market for another day (when I get bored saying "for another day," then we’re safely over our levels).

    Of course you didn’t think we’d go a day without MORE FREE MONEY:  The Senate votes 59-38 to extend jobless benefits through June 2, at a cost of $18B. It was originally a one-month measure addressing benefits that were lost on April 5; approval in the House is expected next. (earlier)

    And sneaky free money:  The Fed’s balance sheet rises to a record $2.322T, from $2.290T, reflecting the end of the central bank’s mortgage-backed securities purchases – still being delivered after the March 31 purchase deadline. Discount window lending eased to $6.77B per day from a previous $7.21B/day.

    And the morning pump from the Gang of 12:  BofA Merrill Lynch (BAC) raises its 12-month S&P 500 target to 1,350, and 1,300 for year-end 2010. "Downside scenarios at financials and consumer discretionary are a lesser risk," writes U.S. equities head David Bianco. The firm raised their 2010 EPS target for the index to $80 from $75.

    Advanced Micro Devices (AMD): Q1 EPS of $0.09 beats by $0.16. Revenue of $1.57B (+33.7%) vs. $1.54B. Expects Q2 revenue to be down seasonally. Shares +0.9% AH. (PR)

    Bank of America (BAC): FQ1 EPS of $0.28 beats by $0.19. Revenue of $31.9B (-10.6%) vs. $27.9B. Shares +1.1% premarket. (PR)

    GE (GE): FQ1 EPS of $0.21 beats by $0.05. Revenue of $36.6B (-4.8%) vs. $37.1B. Shares +0.1% premarket. (PR)

    Google (GOOG): Q1 EPS of $6.76 beats by $0.16. Revenue ex-traffic acquisition costs of $5.1B (+2.2%) vs. $4.95B. Average cost-per-click up 7%; aggregate paid clicks up 15%. Google-owned sites revenue up 20% to $4.44B. Shares -3% AH. (PR)

    During its earnings conference call (which was Eric Schmidt-less), Google (GOOG) tried to put the best shine on its mobile ad strategy and China situation. Execs said they’re confident the AdMob purchase will go through despite rumblings of government opposition, and that the company can still sell ads seen by the Chinese audience despite pulling out of the country. Shares -4.8% AH.

    Mattel (MAT): FQ1 EPS of $0.07 beats by $0.10. Revenue of $880M (+12%) vs. $860M. (PR)

    People’s United Financial (PBCT): Q1 EPS ex-items of $0.08 in-line. Net interest income of $160M (+12%). Shares -1.1% AH. (PR)

    Sony Ericsson (SNE, ERIC): Q1 net income of €21 million. Revenue of €1.4B, declined 19.5% Y/Y. Units shipped fell 28% to 10.5M, "reflecting the streamlining of the portfolio over the past 12 months to focus on higher-end phones." (PR)

    First Tennessee National (FHN): FQ1 EPS of -$0.12 beats by $0.04. (PR)

    More Producers who can’t pass-through price increases to Consumers:  Ground-beef prices have spiked in recent months, potentially eating into burger-chain profits. So even as McDonald’s (MCD -0.4%) and Burger King (BKC -2.9%) wage a discounting war, "they’re not going to be able to [raise] prices," according to one analyst. "We don’t have that strong of a recovery yet."

    Friday’s economic calendar:
    8:30 Housing Starts
    9:00 Annual Minsky Conference
    9:30 Hearing: ‘Wall Street and the Financial Crisis’
    9:55 Reuters/UofM Consumer Sentiment

  189. Trading AAPL….This looks to me like the best candidate for my large block option momentum play for today.  They report on May 20th.  Everyone expects the best from them, so I think we will have more of a runup today..   Futures are down overall so we’ll have to see what happens in the first hour or so.  I’m expecting AAPL to pull back a bit, but not much.  Depending upon the overall flow of the market and AAPL’s behavior, I’m going to try to catch the pullback.   If things look good I’ll go in with May 250s, which should be about 7.50, starting with 10 contracts.  If movement seems upward I’ll go with 90 more and set the necessary stops.  Heave Ho!!!

  190. ravalos.  I feel your pain.  We’ve all been there.  One of the trading mantras in my head is "When in doubt, get out."    This means that if you are trading a position and things seem confusing, just abandon the trade.  Take it to cash and do something else.  Today will be a better day. 

  191. Phil:
    Just to let you know that the SSO trade has paid for my subscription and then some.
    Should I wind it up or let it ride?