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Thursday’s Thrills – Greek Tragedies and Wall Street Worries

Obama is coming to Wall Street.

The President will laying out his case for legislation at 11:55 to crack down on Wall Street with new regulations.  "One of the most significant contributors to this recession was a financial crisis as dire as any we've known in generations," Obama will say, according to excerpts from his speech released by the White House.  "And that crisis was born of a failure of responsibility — from Wall Street to Washington — that brought down many of the world's largest financial firms and nearly dragged our economy into a second Great Depression.  It is essential that we learn the lessons of this crisis, so we don't doom ourselves to repeat it. And make no mistake, that is exactly what will happen if we allow this moment to pass — an outcome that is unacceptable to me and to the American people." 

The President needs just one Republican vote (or two non-votes) to pass the 1,336-page Financial Reform Bill authored by Senate Banking Committee Chairman Christopher Dodd which aims to bring new oversight to hedge funds and derivatives while cracking down on risky bank trading and to put in place protections for consumers of financial products.  It will also establish a system for unwinding troubled financial companies to (theoretically) prevent a repeat of past catastrophes with BSC, LEH and AIG.  

The House of Representatives approved a bill in December that called for the most sweeping regulatory changes since the Great Depression of the 1930s. The House bill embraced most of a comprehensive package of financial reform proposals introduced by Obama in 2009.  The Senate version, if passed, would have to be reconciled in joint committee with the House before it goes to Obama for his signature and becomes law.  Meanwhile, the IMF has a proposal on the table to tax bank balance sheets that some analysts suggest will cut pre-tax profits by as much as 20% if the measure moves forward

And speaking of catastrophes that need unwinding – Greece has sent the Pound and the Euro back to recent lows and has Europe down about a point as The EU says Greece’s budget deficit last year was worse than it previously forecast and could top 14 percent of gross domestic product as “off- market swaps” cloud its estimates.  The EU’s statistics office said today Greece’s deficit was 13.6 percent last year, higher than the government’s April 7 forecast of 12.9 percent. The EU forecast a shortfall of 12.7 percent in November.  Meanwhile, Ireland overtook Greece as the EU nation with the largest deficit, with its deficit revised up to 14.3 percent, the Luxembourg-based Eurostat said.

Public services were shut down across Greece today as tens of thousands of civil servants took part in the latest of a series of protests over the government's austerity measures.  Hospitals were working on skeleton staffs and local government offices were closed, while teachers, university professors, customs and tax officials also joined in. Museums and archaeological sites were also shut as culture ministry staff walked out.

The 24-hour strike by Greece's public-sector umbrella union ADEDY, its fourth strike this year, was called to oppose deep spending cuts in civil-service salaries and entitlements—part of the government's efforts to slash this year's budget deficit to 8.7% of gross domestic product.  "The policies that are being followed are leading workers and the society toward poverty, penury and insecurity, while at the same time preserving and increasing the privileges of the financially well-off, banks and businesses," ADEDY said in a statement.  Hmmm, shades of things to come for the US, perhaps?

Back in the US, another attack against big banking has been launched by the Senate Agriculture Committe, which approved derivatives legislation that would require U.S. lenders such as JPMorgan Chase & Co. and Bank of America Corp. to spin off their swaps trading desks with two Republicans joining the Democrats in approving the measure. The provision to make lenders separate swaps trading from commercial bank operations.  “For a handful of the largest banks that would be a major problem — of late the rates derivatives business in particular has been nothing short of an astonishing money maker,” said Raj Date, a former Deutsche Bank AG executive who is now with Cambridge Winter Inc. “I would not be surprised if the equity markets acted in a negative way.”    

Perhaps the next big banking crisis will be in China, where home buyers are cancelling contracts in record numbers, something that we saw at the beginning of our own housing melt-down, as the State Council has approved a real-estate tax trial in four cities and Citigroup Inc. forecast prices may drop 20 percent and China’s property stocks fell to the lowest in more than a year.  

China has introduced “the most draconian” measures in the past week, according to Deutsche Bank, after earlier steps including raising the amount of bank reserves failed to prevent a record surge in property prices in March. Hedge fund manager Jim Chanos said this month China is “on a treadmill to hell” and that the real estate is a bubble that may burst as early as this year.  Bad loans are already putting pressure on Chinese banks, something you don't hear about from the MSM as they tell you to BUYBUYBUY the Chinese expansion story but why should this time be any different from the ridiculous cheerleading they did during our own financial meltdown?  The Shanghai gave up their mysterious gains from yesterday, dropping 1.1% and the Hang Seng dropped another 0.3% while the Nikkei dropped 1.25% but that was all before Greece hit the fan this morning so we'll see what tomorrow may bring…

Europe is down about a point ahead of the US open (9am) and trading at the lows at the moment.  Moore Capital's Louis Bacon warned his investors: "Perhaps the most interesting area for the foreseeable future is in the potential breakdown of the European Monetary Union."  The bailout could have "disastrous consequences" for the European Union and Europe, Bacon warned. Sovereign-wealth funds have bought trillions of euros to diversify away from U.S. dollars. That's supported the euro and allowed European investors to "flee their debauched currency," he wrote.  When sovereign-wealth funds "finally realize what they own, they may stand aside," Bacon went on. "The euro will find a new level while these large funds instead seek currencies in the emerging markets where solvency is not such an issue."

We get housing numbers at 10 and unemployment was slightly improved as "only" 456,000 people lost their jobs last week but the big new is that, once again, Producer Prices are rising far faster than expected with the March PPI coming in at 0.7%, 0.2% above expectations.  The inability of producers to pass these costs down to consumers (who simply don't have the money) has been creeping into earnings reports as we're starting to see margin contraction – especially among those corporations who do a lot of business with the bottom 90%.  Food prices were completely out of control, rising 2.4% month over month taking out food and energy (up 0.7% in a month) and that's 40% of the PPI eliminated and passenger cars fell 1.1% which gave the fairy-tale "core" PPI at 0.1% so this will be considered "good news" by the people who lie to you on TV

Whipsaw Wednesday could not have gone better for us as I had actually called Wednesday's action on Tuesday morning as my first draft of Tuesday's post was the Wednesday title as I got a bit ahead of myself.  We shorted oil (USO), we shorted the Dow, we bought TBT back at our $46.50 target (have I mentioned how much I like them lately?), we shorted OIH, we shorted MS, went long on TZA (ultra-short on Russell) and, as promised, these were our earning plays from my 2:07 Alert to Members (there were a couple of others during the day's chat):

  • EBAY diagonal – July $27s at $1.10, selling May $26s at $1.12 (even is OK).  Looking for flatline.

  • LEG May $22.50 puts at .50, selling LEG Dec $17.50 puts for .50.  The idea of this play is that if LEG does well, you have a probably free play (and you can cash out the remaining value of the May puts and that’s your profit) but you will tie up the margin until Dec waiting for expiration. 

  • NFLX ratio backspread – 3 Sept $105 calls at $4 ($1,200), selling 5 May $95 calls for $2.60 ($1,300).  A little bearish and goal is to just keep the change when we’re done.  4 months to roll if we’re wrong and you know I love my Rawhide plays!

  • SBUX is not as healthy as the stock thinks.  While the top 10% support them, like NFLX, they need the support of the aspirational masses too.  Simple $24 puts for .38 as a gamble

It will be fun to see how we do today – I hope your day is fun too, we'll be sitting back and enjoying the ride down because we saw this one coming from a mile away!


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  1.  Charles Dale from the SEC is giving a talk on "Crisis Management" at my school today.  Anyone have any questions I can fire at him?

  2. VZ/Phil – Dropping off below 29. What do you think about their earnings?

  3. Does anyone have a link to an outline of what the financial reform bill does?  As with most of congress, I don’t have time to read 1336 pages.

  4. anyone else in the SBUX puts?

  5. tradansh  VZ is in line with expectations You need to be a super star to still impress wallstreet. Specially Obama makes an apearence every one is running for the exit!!!!

  6. EBay – Is the idea with the above earnings play to let the May expire and wait for the Julys to go back up?  Or is this a sell into the excitement kind of play?  The diagonal is up about 0.25 at this point.

  7. DIA mattress: Should we sell 1/2 the May 109s or 110s on the bounce?  Or do we expect the Dow to keep dropping?

  8. Good morning! 

    Wow, finally people wake up – amazing!

    Let’s watch those boring old support levels and see what sticks: 

    20% bounce levels are  Dow 11,015, S&P 1,193, Nas 2,479, NYSE 7,588 and RUT 714.

    50% bounce levels, which are Dow 11,065, S&P 1,200, Nas 2,493, NYSE 7,645 and RUT 718

    I don’t want to lecture this morning but do you see how important these levels are.  I know it sucks sitting here for a month watching the market teast the top but sometimes that’s all it is – just a big tease before we break down.  Still, the same skepticism we have on the way up is needed on the way down and, so far, the volume is very weak (22M at 9:47 on the Dow) so we will be looking for support at 11,000 and 714 but if those go, we can fall hard.

    Since we expect 11K to hold on the Dow, now is a good time to sell 1/2 the DIA $111 puts ($2.22) to cover our June $114 puts (now $5) and we can ask for an even roll to the July $113 puts for now

    I also think oil futures are worth the risk above $82 (NOW!) so we play momentum on a cross over the line and take our losses under the line.  There is no shame to taking nickels and dimes to build up some cushion as it’s not likely to bounce back fast with the Nat gas inventories at 10:30.  That may provide a nice move down and I’ll update later if someone reminds me in chat

    10am housing data is critical and other things that matter today are:

    10:00 FHFA House Price Index

    10:00 Existing Home Sales

    10:00 Hearing: Financial Crisis and TARP

    10:00 Hearing: China’s Exchange Rate Policy and Trade Imbalances

    10:30 EIA Natural Gas Inventory

    11:55 Obama: Wall Street Reform

    4:30 PM Fed Balance Sheet

    4:30 PM Money Supply

  9. Mornin Phil, how would play SSO? Thanks.

  10. DIA Mattress: Well at least I had the right idea.  I’m wondering why you chose the 111s instead of 109s or 110s.  Are we looking for maximum premium (111s) or more protection (109s or 110s).

  11. Phil, you haven’t mentioned TBT lately?  What is your favorite way to scale in at this price?

  12. Anyone knows a natural gas company that is mostly not hedged to the price of gas? Idea is to play for NG price rebound in late 2010. All NG ETF (commodity) seem like very broken instruments.

  13.  Phil,
    Are you hearing anything about the volcano ash and how it will affect the growing season? Would this be a good time to enter DBA?

  14. Wow – look at NFLX fly.  Holy crap….

  15. I have SNDK. how high will it go? I want to wait before selling calls off my stock

  16. Dale/Craig – If he’s one of the guys who voted not to go after GS, I’d love to know what his reasons were. 

    VZ/Trad – This is just what we wanted from them but let’s give the downgrade police 24 hours to knock them down a bit more – if we’re lucky they will test $28. 

    Reform/Wayne – I think I’ll have a good idea by the weekend, I got a call from a think tank yesterday and they want me to give them an analysis.  I haven’t done a consulting job in ages but this one might be fun…

    EBAY/Dave – Probably no harm in waiting but a nice profit already as it’s .20 on the spread now so not bad on a free trade.  I’m for taking the money and running on these earnings plays – there will be more every day for a month! 

    Speaking of above earnings plays:  LEG we just take the .20 for the puts and wait for the long puts to expire for +.20 on that trade.  NFLX is popping so we want 5 June $115s ($1.45) ahead of a 2x roll or possibly a cash out of the 3 Sept $105s (now $9.30) if NFLX can’t break $100.  SBUX is just a loss and we take the dime back

    Wow – Mark on CNBC says the Financial Reform Bill should be scrapped because it’s too many pages.  I think that’s what they said about Mozart’s music in Amadeus!

    SSO/Phlit – On the 566% play?  No change as the play is we hold 1,200 and we’re not breaking down yet.  In fact, this is starting to get impressive if we keep shaking off bad news.

    DIA/Daveo – The 1/2 sale of the $111s because if we break back over our levels we can sell $112s for $2 as well and then we’re well covered on our longs.  If the Dow fails, the 1/2 $111 puts can be rolled to 2x the $108 puts (now .95) and that’s a comfortable spread to our July $113 puts as they can, in turn, be rolled down to June $104 puts for a $9 spread on the way down and all we ever look for is a path to a double.

    Don’t forget we EXPECT 20% bounces on the way down, we’re pretty much right in that zone.

  17.  Greece, its solved again!  At least until its not tomorrow.

  18. nflx – wow

  19. Hey Phil – those earnings plays were good stuff, do you have anymore today?

  20. TBT/Robert – Gee, I must mention them more often!  They are right in our sweet spot now ($46.50) so we love to establish a position by selling the June $47 puts at $1.85 and I also like buying the Sept $43 puts for $5 and waiting to sell the $48 puts for about $3.50 (now $2.35)

    Nat gas/Raul – I like UNG for an October move up, you can sell Oct $7 puts for .85 and buy the Oct $7 calls for $1.05 and that’s a $7.30 net entry so you make every penny of upside .   CHK is very clever with their hedging and a great company to own long-term. 

    Ash/Jced – It’s a good thought but I don’t know.  I would think ash is good for crops. 

    11,080 is the critical line on the Dow (yesterday’s low).  On S&P it’s 1,200, Nas 2,490, NYSE 7,600 and the RUT is already over 720.  3 of 5 of those and we’re bullish again

  21. I think the PPT is on the scene today.  Someone is protecting this market.  That was a clutch save just now.

  22. I was thinking something similar matt, very erratic action.
    Regional banks still going up up up.

  23. Phil, I think all that Mark wants back is Glass Steagall. The Financial Roundtable ceo he was interviewing did not like that comment one bit……

  24. Phil, no, How would play SSO NOW, fresh trade?

  25. Phil, how about a similar earnings play like the one we did for AAPL but for Buffalo (BWLD)? In light of the Chipotle earnings, this stock is being bid up ridiculously high already.. I was thinking of selling May $60 calls and buying Jun $65 calls for a 0.17 net credit. At $52.10 today, this valuation is way too high! They announce earnings on the 27th of April.. any better suggestions? thx

  26. Thanks Pharm for DCTH

  27. Phil,
    I’m short CMG May 120c. Please advise.

  28. Do you think this is run-up from a short squeeze?

  29. Phil, how specifically would you advise playing oil now? I assume some sort of options, but what? USO? And does the platform fire affect your thinking on this?

  30. Phil, you have confused me. Not such a difficult task. Yesterday we were buying TBT calls & waiting to sell 2nd leg, today we are buying puts & waiting … Can you clue me in?

  31. thx Phil. I checked UNG for the period April 20-3rd week of October last year. UNG went from about $14.50 (!) to $11, while nat. gas contracts actually went up from $3.75 to $5 in the same period (!). Storage this year is even worse than last year, so it might be similar, until late fall that is. UNG could well be trading around $5 in October. The Canadian version is, same thing.
    I like CHK, and maybe HGT.

  32. March Existing Home Sales: +6.8% to 5.35M, vs. expectations of 5.25M. Months supply drops to 8. NAR’s Yun: "Sales have been above year-ago levels for nine straight months, and inventory has trended down from year-ago levels for 20 months running… [pointing] to a broad stabilization in home prices."

    Feb. FHFA Housing Price Index: -0.2% month-on-month vs. -0.2% consensus, -0.6% prior.

    "The same forward-looking indicators that pointed to the recession are now pointing to economic recovery in both the developed and developing world," Jim O’Neill says, while warning that the U.S. may stumble into a trade war with China. "Political leadership in the west is weak and missing the fact that the Chinese trade surplus is falling."

    The yen slips after Fitch says Japan’s creditworthiness is at risk from the country’s huge debt. The Japanese government "is one of the most indebted in the world," Fitch says. "In the absence of sustained economic recovery and fiscal consolidation, government debt will continue to rise, placing downward pressure on sovereign credit and ratings over the medium term."

    OK, that’s a lot of stuff (including the post items) all aimed at chasing EU investors into the dollar and the US markets.  Keep in mind EU markets close at 11:30.  They are still trading along the bottom and are probably chasing the US earners which is why they are up so much but with copper under $3.50 ($3.48) and oil not able to get over $82.50 (but a great gain on those futures!) and gold at $1,135 again – I’m not really buying this bounce just yet.

    Trade tensions may flare up again between the U.S. and China, after the U.S. launches a probe into whether certain Chinese aluminum products are being sold at unfairly low prices. China, in turn, has imposed anti-dumping duties on imports of nylon 6 from the U.S. and other countries.

    Moody’s lowers Toyota’s (TM -0.8%) credit rating to AA2 from AA1, saying it expects Toyota’s low profitability to continue and recall-related litigation costs could be significant.  Duh!

    IPhone giveth and IPhone taketh away:  Nokia (NOK): Q1 EPS of €0.14 misses by €0.01. Revenue of €9.5B (+2.7%) vs. €9.8B. Media reports say Nokia has slashed the prices of its cellphones, with some smartphones priced 10% lower, and has delayed the critical renewal of its Symbian software to H2 from Q2. Shares -13% premarket. (PR)

    AutoNation (AN): Q1 EPS of $0.34 beats by $0.02. Revenue of $2.8B (+18.6%) in-line. (PR)

    Air Products and Chemicals (APD): Q1 EPS of $1.23 beats by $0.03. Revenue of $2.2B (+15%) in-line. (PR)

    Peabody Energy (BTU): Q1 EPS of $0.52 beats by $0.11. Revenue of $1.5B (-2.5%) in-line. Shares -1.3% premarket. (PR)

    Blackstone (BX): Q1 EPS of $0.32 beats by $0.11. Revenue of $701M (+1462%) vs. $632M. Shares +2.3% premarket. (PR)

    Cypress Semiconductor (CY): Q1 EPS of $0.17 beats by $0.04. Revenue of $202M (+45.2%) vs. $197M. Shares +0.3% premarket. (PR)

    Diamond Offshore Drilling (DO): Q1 EPS of $2.09 beats by $0.16. Revenue of $860M (-2.9%) vs. $851M. Shares -5.3% premarket. (PR)

    Goodrich (GR): Q1 EPS of $0.87 misses by $0.02. Revenue of $1.7B (-0.1%) in-line. Shares -0.1% premarket. (PR)

    Southwest Airlines (LUV): Q1 EPS of $0.03 in-line. Revenue of $2.6B (+11.4%) in-line. (PR)

    Continental (CAL): Q1 EPS of -$0.98 misses by $0.12. Revenue of $3.2B (+7%) in-line. (PR)

    Marriott International (MAR): Q1 EPS of $0.22 beats by $0.02. Revenue of $2.6B (+4%) vs. $2.5B. (PRThey were on of my top 10% plays from the 2010 Outlook.

    Nucor (NUE): Q1 EPS of $0.10 beats by $0.04. Revenue of $3.7B (+37.7%) vs. $3.6B. (PR)

    Old Republic International (ORI): Q1 EPS of -$0.10 misses by $0.03. Revenue of $930M (+5.8%) vs. $945M. (PRFNF was bad too – not good for real estate.

    Penn National Gaming (PENN): Q1 EPS of $0.34 beats by $0.11. Revenue of $592M (-3.3%) vs. $603M. Shares +1.9% premarket. (PR)

    PepsiCo (PEP): Q1 EPS of $0.89 beats by $0.14. Revenue of $9.4B (+13%) vs. $9.6B. Shares -0.3% premarket. (PR)

    Philip Morris International (PM): Q1 EPS of $0.90 misses by $0.03. Revenue of $6.5B (+16%) vs. $6.4B. (PR)

    PNC Financial Services (PNC): Q1 EPS of $0.66 misses by $0.05. Revenue of $3.8B (+62.2%) vs. $3.9B. (PR)

    Raytheon (RTN): Q1 EPS of $1.18 beats by $0.07. Revenue of $6.1B (+2.9%) vs. $6.2B. (PR)

    Textron (TXT): Q1 EPS of -$0.01 beats by $0.02. Revenue of $2.2B (-12.5%) vs. $2.4B. Shares +0.2% premarket. (PR)

    Union Pacific (UNP): Q1 EPS of $1.01 beats by $0.06. Revenue of $4B (+17%) vs. $3.8B. (PR)

    Verizon (VZ): Q1 EPS of $0.56 in-line. Revenue of $26.9B (+1.2%) in-line. Shares +0.4% premarket. (PR)

    Zimmer (ZMH): Q1 EPS of $1.02 beats by $0.01. Revenue of $1.1B (+7%) in-line. (PR)

    WellPoint (WLP -1.2%) has been using a computer algorithm that automatically targets policyholders recently diagnosed with breast cancer for immediate fraud investigations, as the company searches for some pretext to drop those policies, a Reuters report alleges.

    The government is considering a two-year plan to dispose of its stake in AIG (AIG +1.5%), Bloomberg reports. The proposal would involve converting preferred shares into common shares for open market sales. About $47M in investment has gotten the Treasury some 80% of the insurer, thought too much for the market to digest in a shorter time.

  33. morx/TBT – I think Phil meant buy the Sep 43 calls for 5 bucks.

  34. Phil
    I didn’t understand what should we do now with NFLX, we sold 5x may 95 and bot 3x Sep105 and now about $1000 underwater

  35. Phil
    I didn’t understand what should we do now with NFLX, we sold 5x may 95 and bot 3x Sep105 and now about $1000 underwater

  36. Phil/ TBT  If Moore Capital’s Louis Bacon is right about a coming breakdown of the euro group, he may be underestimating the flood of sovereign wealth fund flow back into US$ (rather than just to emerging mkt currencies as he postulates).  I’ve been holding back from jumping into your TBT reco as I feel the euro will be trashed before the dollar (though we’ll be next).  The jury is still out on whether we’ll have short term deflation (like Japan), once the commodity hoarding in China collapses and global Tarp is spent out.  Advice on TBT entry pt timing and price?

  37. Thanks, ss. I guess i don’t expect him to make the same blunders that i would make. :)

  38. test

  39. NFLX – I’m for taking $9.50 and running on the Sept $105s.  Plan is to buy more 5 more June $115s (now $2) and roll callers to 2x the June $105s (now $4.50) if we have to but, for now, I think NFLX is ahead of itself so the remaining spread is a bearish 5 June $115 puts covering 5 sold May $95 puts

    SNDK/Dilbert – We have just 2 Rules – Do I REALLY have to say them?

    Greece/Salvum – Oh thank goodness, I was so worried…  8-)

    Mark/1020 – He’s been the go-to GS apologist this week too. 

    SSO/Phlit – I wouldn’t play it until we get our levels back but the play would be selling the $43 puts for $1.08 to pay for the bulk of the $42/44 spread at $1.30. 

    Regionals/Eric – I think (and this is what the think tank wants me to think about) that the regionals, who don’t mess around with derivatives as much, may have an advantage as the big banks come under fire and will no longer be able to swipe all the plum commercial business in their areas.  Bad PR is bad for their competitors and they will probably be in a good position to leverage the "trust" factor going forward. 

    BWLD/Rav – That is one dangerous mofo stock!  We played them when they fell but I thought $30 was enough and now they’re at $52!  Still, their growth is phenominal and chicken prices are down for them and they have really cheaped out on quality but it doesn’t seem to have impacted them much (but they lost my business).  I think I like the $50 puts at $1.70 paid for with the sale of the Dec $40 puts at $2 but, like the leg play – it could be a long wait to get that $2 so that’s the trade.   They don’t pay enough to sell the calls to make that attractive.

    CMG//AC – Damn, that’s another one that is out of control.  Can you belive MCD spun them out?  Sure makes me love MCD more – can’t wait for their next idea!  Their p/e is 30% more than BWLD so crazy/crazy but you are pretty buried so I’d roll up to 2x the $135s ($10) if you can because they have a pretty good chance of expiring worthless and, if not, can be rolled ot Sept $145s about even.  Since you will be stuck with Sept $145s if it doesn’t work, if you need to cap margin, you can buy 1x the Sept $155s at $6, which will cut about 1/2 the margin on the new callers.  Yes, I think this is a squeeze and you can just sell 1x the $135s into the excitement prior to rolling. 

    Oil/Snow – They broke $82.50 to the upside and I wouldnt’ short them here, just stay away until they get another silly run-up to $84.   Platform is not big enough to have much effect. 

    TBT/Morx – Did I say buying puts?  Damn, I meant buying the Sept $43 CALLS for $5, not the puts!  Of course the puts are $1.35 so not too likely to be confused…

    UNG/Raul – I wouldn’t look for a repeat pattern coming off this base.  We had El Nino this winter and this year is primed for a hurricane or two – that’s the bet but, of course, the volcano could mess up global weather entirely. 

    Moody’s cuts Greece’s sovereign ratings to A3, with a three-month review for another downgrade. The agency says debt may only stabilize at a more costly level than previously estimated.

    Wall of worry: Greek government bond yields skyrocket.

    Industrial bond spreads have shrunk to their narrowest since before the credit crisis, in August 2007 – just 130 basis points over similar-maturity Treasurys. "It’s really crazy how fast we came in," says a Citigroup strategist. "Where’s the value from here? It’s hard to see much value in the corporate space."

    The Treasury announces another $129B round of debt auctions (same as last month) for next week: $44B in 2-year notes, $42B in 5-year notes, $32B in 7-year notes and $11B in 5-year TIPS.  Have I mentioned I like TBT lately?

    NFLX/Tcha – See above.

    TBT/Tusca – We’re getting almost weekly flights to the dollar and that’s keeping TBT down.  There’s not going to be a perfect entry and it may be a year before there’s a good pay-off so it’s a matter of faith in a long-term play that rates may go down but they won’t stay down (althogh they did in Japan for 10 years).

    That’s 11:30 – Europe closed near the day’s lows, down about a point and Obama is about to badmouth Wall Street so probably another test of the lows coming up

  40. Phil Hi Looking at NFLX Jun Stangler sell 115c and 90p for 4.60 break even 85.38/ 93.12 your thoughts pls TOS margin 1010.00 credit 465.00 / option

  41. Phil: upon opening, I shorted SNDK at 39.2$ and it dropped as I expected, then after a few minutes closed to cover, nice gain.
    TNA  gives nice channels today, 15 trades today and all green.
    I have to work hard to make $$ to pay the dentist, this afternoon I am going to another dentist for a second opinion.

  42. NFLX/Yodi – I’d just sell the May $100 calls naked at $5 with a stop at $6.

    Channels/RMM – Nice work for this kind of market!  Good idea to get 2nd opinion, in the very least he’ll be motivated to give you a substantially lower price for the same work to capture the business, your mouth is like a portable gold mine for dentists!   8-)

    Watching sale of FAS $109 puts (now $9.70) on possible relief rally after Obama.  The speech is pretty much known already and probably no surprises and we already had the sell-off so I like selling them at $10 as long as FAS holds $106 (now $106.50).

  43. Hi you guys: please give me hint when its ok to buy some AAPL calls.

  44. Phil/ NFLX
    just to make sure I got it:
    we sell our 3xSep.105s
    Buy new 5x Jun115s
    leave our short May95s for now with possible 2x roll to June105s later
    and open new bearish put spread: 5x June115s put / May 95s put

  45. Same dribble we heard when they passed "Sarbanes Oxley"…….that worked.
    We’re here from the government and we’re here to help. Hold on to your wallets.

  46. Hi Phil That NFLX I sold for 5.30 but with in 15 minutes it was alreay over 6.00 I cancelled the stop as I thought the buying franzy was overheating now 102.35 to 101.89

  47. How is volume so far?

  48. Good speech…..

  49. How is BRK/B down here?

  50. Phil,
    bought AMGN MAY $55 calls @ $6
    how should I roll?

  51. My opinion on NFLX – it is the next BIDU, we must all go Long on this one

  52. Selling DCTH  12.5 May P for 85c.  They are good for a long term hold now.

  53. TBT — Phil I have may 47 short put, and June 47 long call and June 49 short call, should I adjust and roll may 47 short put to june 47 short put. thx

  54. Nice quick buck on FAS, that’s plenty so stop at $9 (.50 trailing, now $8.50).  Wasn’t much of a pop so far.

    NFLX/Tcha – Yes selling the $105s for $9.50.  Yes to buying the 5 June $115s (still $2).  That’s it for now.  We just hope they drop back a bit.  If you have plenty of margin – you can sell 1x the $100 calls for $5.70 and, if we pop higher, then you can roll the 1x $95s (now $9) up to the $105s (now $3.50) which would leave you with the 5 June $115s and short 5 May $100s and 5 May $105s – then we can deal with rolls later.  

    NFLX/Yodi – It’s best not to let yourself get bullied out of those on quick moves.  Always keep in mind that you can roll to the next month (June $105s are $5.20) if you have to.

    Volume/Cwan – Just 95M at 12:30.  Normal prog trading day is 50M at 11 and 20M per hour after so a little warm.

    Interesting that Obama took spotlight away from Blankfein’s testimony (going on now). 

    BRK.B/Cwan – No way!  They are not at all market-proof and not looking good on the chart either (may be telling for the market actually).  I expect them to test $70 again and then I’ll sell whatever puts give me a $65 entry.

    AMGN/Dilbert – Ouch!  I’d sell the June $57.50s for $1.80 and roll to the June $52.50/57.50 bul call at $2.70.

    NFLX/Dilbert – They are getting huge boost from BBI going down.  Not much growth past this.

  55.  Amazon earnings stock movement speculation anyone?   

  56. Phil NFLX no bully Trying to sell an other slice for 6.20 asking 6.10 now

  57. TBT/Gucci – Well we assume outside of a big catastrophe that $46.50 is the floor so we like the $47 puts short and I’d take advantage and spend $1.10 to roll down to the $45s, which is buying $1.70 of intrinsic value for $1.10. 

    General Motors can say they paid us back, but don’t be fooled – they still owe us, says Jerry Flint: The automaker took $50B, burned through some, and paid back $7B from what was left.

    As Obama delivers his pitch for financial reform, political opinions are gathering that show the debate isn’t as polarized as it looks: Bank breakup proposals are making strange bedfellows of lawmakers from different sides of the aisle.

    And the Euro is taking it on the chin, -0.72% to under $1.33.

    It doesn’t matter until it does. Now it does in terms of the market reaction to what’s going on in Greece. Greek yields are blowing out again with the 10 yr yield up 46 bps to 8.53% and their curve has gone firmly inverted as the 2 yr yield is up 140 bps to 9.2%. 5 yr CDS is skyrocketing by 71 bps to 559 and 1 yr CDS is higher by 105 bps to 745 bps. Italy, Portugal, Spain and Ireland are all feeling the heat as bond yields are all higher and CDS is wider. These countries have a combined $4.8T of GDP, 35% of Euro zone GDP and European banks have sizeable exposure and large sovereign bond holdings as part of their capital. The EU said Greece’s deficit to GDP in ‘09 was 13.6% vs their previous forecast of 12.7%. Greece seems to be headed to a debt restructuring where haircuts are going to have to be taken as it seems the only way out for them as it’s impossible for their economy to grow out of their debt obligations. The Euro zone cannot guarantee Greek debt as who would buy a German bund yielding 3.05

    Existing Home Sales totaled 5.35mm, 60k more than expected and up from 5.01mm in Feb. Contracts were likely signed in the Dec-Jan time frame as 1st time buy buyers take advantage of the home buying tax credit before it expires as 44% of buyers were first time, up from 42% in Feb. The NAR said “the home buying tax credit has been a resounding success.” Investors accounted for 19% of sales, unchanged with Feb and distressed sales totaled 35% of sales. The greater than expected sales offset the rise in the number of homes for sale thus sending the months supply to 8 from 8.5. Bottom line, without the tax credit in a week, the industry will be put to its next major test and the NAR holds out hope as do the rest of us, “with home values stabilizing, a revival in home buying confidence will likely help the housing market get back on its feet even as the tax credit impact disappears.” Can we transition without such a popular drug?

    There is nothing like free money and maybe a softening of lending standards to get people to buy things again. is reporting that March 2010 saw a record number of automobiles purchased with zero financing. The total of 22% of transactions exceeded the previous high of 21% in July 2006. The stark difference though of course is the total number of vehicle sales between the two periods. In March 2010 the SAAR was 11.77mm (highest since Sept ’08 ex clunkers) and in July 2006 it was 17.07mm.

  58. BRK/B / Phil: It’s interesting that you said "may be telling for the market actually".  BRK/B has been falling harder than SPX in the last few weeks.  Not sure if BRK/B is some kind of indicator.

  59. Is there anything to be made from the divergence between RUT and other indexes – don’t usually pay that much attention -

  60. Phil ;  Not seeing quite through the TBT play  I hold Jan 44c long bought for 6.42 now 5.95 sold jun10 48p short got 1.49 now 2.30 Jun 10 50c short sold for 1.39 now .61 any ajustment thks

  61. Buying DIA 111 May C for 1.27 for a day trade.  Out at 1.20 or EOD.  I think we finish up today, so welcome Mr. S back home.

  62. Phil,
    I got exercised on the short 10c for the TNK Aug artificial buy write w/  long 7.5c, short 7.5p, short 10c. What do you usually do in this situation?

  63. Ace – I was exercised last week.  Take the money and hold the cash. 

  64. AMZN you got to think with all those IPads sold.. AMZN is probably going to take a hit on the Kindle.

  65. For NFLX, I was able to sell May $100 calls NAKEd at $6. I set my stop at $7.. hopefully this massive short-covering will make the stock go down a bit until may’s expiration..

  66. phil, what’s your opinion on siri?

  67. The banks that are helping California in its bond sales are dealing in $27.5B in credit-default swaps, says Treasurer Bill Lockyer – an amount equal to about 63% of the debt the state has sold since 2007

    VNO back at my "conviction sell" level at $80.  I like selling the $80 calls for $2.30.

    IYR $52 puts are $1.30 and were $2.50 last week – not bad with 4 weeks left!

    BRK/Cwan – I think they are as they are going to be based more on value than hype and, of course, BRK is certainly a very good cross section of how some of the best companies in America are performing. 

    Divergence/Samz – I would love to see a study on this.  The Russell used to be calmer than the others, since March it’s gone nuts.  Maybe more bottom fishing in small caps and now it’s a momentum trade?  Just seems very strange to me, especailly as I see so many smaller businesses struggling. 

    OK – making another run at yeserday’s lows:  Dow 11,080, S&P 1,200, Nas 2,490, NYSE 7,600 and the RUT 720.  

    Would be a damn shame if the S&P can’t make it so it’s going to be up to the Dow to get over this time and drag up the NYSE, THEN we can get back to the bullishness…

  68. Wow, his train came in early today…..

  69. Pharm    Thank for the DIA play  got in and got out….made $$$$$$$$$$$$

  70. Phil, what think you of a naked call sale of AMZN May 165  for $2.05; they just need a little pullback and the call should drop in half.

  71. Crazy moves now. 

    TNA $69 call can be sold for $3.10- dangerous!

    TBT/Yodi – $50 may be a bit aggressive for the June puts sold short, you may want to take them out on the next run to $50.  Otherwise, you are deep enough with the $44s that it’s not worth moving but you could buy back the the caller and look to do better later. 

    FAS flying!

    TNK/AC – They popped because the dividend is rising so you may do better by waiting.  You could just sell $12.50 puts for .55 against your short position as a cushion if you want to hold it for the month – otherwise, you cashed out the caller and there are more calls to sell so no harm in taking a quick exit and reselling. 

    AMZN earnings play – Selling 5 May $150 calls at $7 ($3,500),  buying 4 July $160 calls at $6.30 ($2,520).  Bearish of course and we could get stuck scrambling like NFLX, so be warned but I will be very into cashing out the callers on a big run and going naked on the short calls.   Plan on rolling the callers to 2x the June $165s

    SIRI/Jossie – They were very, very good to us last month as we sold the $1 puts for .15 and they expired worthless so my answer is I  would love to own them at net .85 but they refuse to let me.  I’d rather wait for a dip because the last one was a 6-week play but now we’d need to go to Sept to get .15 so I’d rather keep my eye on the June $1 puts for a sale at .15.  I also like selling 2012 $1 puts for .30 and buying 3x the 2012 $3 calls for .05.  Both hard to fill but if you put in GTC you’ll get some. 

    AMZN/Humvee – With earnings it’s a tough play.  I feel better with the above spread. 

  72. Phil;  thanks.  Do you plan on updating our conservative portfolio soon, after option expiration last week; just wondering what to do with the expired options. 

  73. Who wants to bet we end up 15 points positive on the Dow?  Just a thought….

  74. Finally just closed my SRS long stock position, of course, for a loss.  I am done with it and feel somewhat liberated.  I would have had to sell puts/calls until hell freezes over to recoup the loss.  It is now on my do not trade list.

  75. Phil: am I taking much risk: traded 18 in TNA and all are green.

  76. Looks as if the market wants to go green.

  77. RMM/TNA – 18 times?!?!  How much are you looking for on each trade?  Today would have been a great buy and hold day.  Good for you if you can make that work.

  78. Phil,
    What about rolling the BIDU 630c to 2X May 650′s to increase probability of payoff this month, if margin is not an issue (since it is similar to CMG roll, except it is not yet getting away from me)? How does upcoming earnings factor in? (4/28)

  79. Phil, what’s up with AAPL?? I have a leftover leg of Jul 260 naked callers. Time to roll to Oct 280s for -0.9?

  80. AAPL is flying .. Phil, just to be ready.. when would u start considering a roll for our short AAPL May $260 Calls? At what price?

  81. ssdirk,  they’ll have to pry my SRS from my cold dead hands before I take a loss on it.

  82. ss: 10 -30 cents gain and out, I missed a lot of gain but its to risky to hold longer than a few minutes. Sometimes I get nervous.

  83. phil,
    aapl is trying to test it’s after market high of $264.89. doesn’t look it will make unless someone is trying to boost market with it.

  84. PHil Thanks for the advice on TBT but I do have the Jun 50 caller short and the 48putter short the caller shows a 50% profit but the 48 putter is up on me so I am not to sure to buy the 50 caller back
    April 22nd, 2010 at 12:55 pm | Permalink  
    Phil ;  Not seeing quite through the TBT play  I hold Jan 44c long bought for 6.42 now 5.95 sold jun10 48p short got 1.49 now 2.30 Jun 10 50c short sold for 1.39 now .61 any ajustment thks

  85. ss: #20 with 24 cents gain, it add up.

  86. yodi, I think phil is saying that the 50c isn’t providing enough downside protection now

  87. RMM you’re going to give lflantheman some competition!!

  88. Hi Phil--fcx is crazy today, cause metals went screaming-- do you think fcx may settle back down to the $77-78 area today? thanks--

  89. I would like to get everyones opinion on the following short iron condor on USO
    -1 MAY 42 CALL / +1 MAY 43 CALL
    -1 MAY 38 PUT /  +1 MAY 37 PUT
    $32 collected per condor(after commision), using up only $68 in buying power.
    Profit is from 37.62 – 42.38
    Except for the giant drop in January, USO has stayed above $38 and the 52 week high is $42.19 from 2 weeks ago.  Seems like a good risk/reward to me,  especially since your max loss for each contract is $68.

  90. Copper still can’t break $3.50 (but right there) and oil just touching $84 now for our short entry

    Conservative/Humvee – There’s not too many conservative plays out there with these wild swings but I will get to it by next week.

    Do not trade list/SS – Good list to have!

    This feels very much like yesterday when we couldn’t quite make all our tops. 

    Done with FAS puts at $7.80.

    BIDU/AC - My worry there is that China has been dogging it all week and if we are going to go green then we might have one of those up 500 days in China tomorrow.  If you are not worrried about holding 2x open calls though, then of course it’s a good idea – this is the joy of scaling…  I don’t see how earnings can possibly justify this move as they don’t have time to recognize increased traffic in a no-Google world but they may say nice things on the CC  but the 2x June $650s at $25 can be rolled to 1x Sept $680s (now $45) and those can be rolled to 2x the $700 and then the Jan $750s so, somewhere along the way, you would think you’ll catch a break.   If earnings are good though, you can also sell some puts to offset. 

    AAPL/Ajay, Rav - 5% today is pretty good isn’t it?    I wouldn’t rush the roll, you can sell May $250 puts for $2.53 to pay to roll the callers up to the June $280s if necessary. 

    LOL Matt! 

    TBT/Yodi – Oh you sold $48 puts short.  Those are fine, I have no issue with that.  I still like taking out the caller and waiting to re-sell. 

    FCX/Iprosp – Yes I do but you can’t bet bearish on this market the way it’s going right now.  We just need to watch our levels.  The volume still isn’t very impressive (134M at 2:30) but it’s been all up since our great and powerful President made his speech.  Why, it’s almost as if he had a team that protects against market plunges to help drive the point home that his ideas are good for the markets

    Obama’s generally conciliatory speech – he didn’t threaten a veto, and he acknowledged legitimate use of derivatives – may mean that he senses imminent victory. (text)

    FT reports that Lloyd Blankfein (GS) made a series of calls to clients yesterday to defend the firm from what he sees as politically-motivated charges that ultimately would "hurt America." Blankfein told one person that a female staffer at ACA knew Paulson intended to bet against the transaction, which would contradict SEC charges.

    Producer prices rising 6% year-over-year isn’t necessarily a sign of coming inflation, Mark Thoma writes. Pass-through to consumer prices is never 100%, and it can be close to zero when the change to producer prices is temporary – and that looks like the case, with food prices accounting for most of the gain.  After all – who eats? 

  91. Phil  HOV holding leap plays on this play  Jan 12 2.5 call long bought for 2.44 now 4.55 against this I sold the Jan12 5 caller for 1.23 now priced at 3.10 the difference of my profit seems to be very little the 2.5 caller is worth 2.11 against the 5 caller at 1.87  should I make any adjustment . Obviously I hold the same amount of jan 12 5putters which running to be worthless in the end if HOV is going up but at what stage will the diffrence between 2.5 and 5 caller equal? thanks for your thoughts HOV 6.70 today

  92. matt – After a day like today isn’t it obvious we need an uptick rule to level the playing field? :)

  93. IYR is moving nicely for me. This is my "crazy" play, as anyone that would go long on it must be crazy. I’m making money on it, but worried about my psyche.

  94. Phil, for AAPL you mean buy back the May $260s, sell short the Jun $280s and simultaneously sell May $250 puts? This might put me in a tight margin issue..
    Well I’ve been unlucky since the three suggestions I decided to follow have been losing money so far: ERY May $8/$9 spread with a sell of May $8 puts; sold VNO May $80 calls; and the Apple one.
    I hope this reverses soon but all the indexes already crossed the 50% bounce levels so very bullish that is NOT good! :(

  95. Phil,
    Talking about HD and stripping houses yesterday, do you see a spread for them that works?

  96. Phil… Do you have any sentiments one way or another on RTP (Rio Tinto)?

  97. Wow; I missed most of the day. Incredible resilience in this market; everyone’s trained like Pavlov’s dogs to buy every dip.
    Once nearly every short is blown out there will be no buyers on a really big drop and we could crash. That’s one of my little fears (and a reason I’m still only 20% in), heh heh.

  98. With IV so low I actually have some long gamma, short theta trades. E.g., I’m long Sept. KRE puts and also long May ITM calls. The calls’ delta keeps climbing while the puts delta keeps dropping, so the position gets ‘more long’ as the index goes up and up. I would have made a lot more without the puts, obviously, but it’s hard to sell those damn things, and the whole position is making a (modest) return for me.

  99. AAPL disaster hedge:  If you have AAPL stock and want to protect against a 20% pullback but want to keep some upside, you can buy the Jan $270/220 bear put spread for $20 and sell the 2012 $320 calls for $29.  That’s the kind of play that you can make $50 on a sell-off AND buy back the caller.  Even if the put spread expires worthless then AAPL is at least $270 in Jan and you still have $9 left to spend on another put spread and, of course, worst upside case is you are called away at net $329 (up 25%) in 2012 unless you roll the caller along to the next year and do it again.

    USO/Craig – We are pretty range-bound between $82.50 and $85 so not a bad plan but targeting oil is always a dangerous game a month in advance.  I like it though.

    HOV/Yodi – Yeah, aren’t they great!  That was one of our long vertical plays like the C spreads.  Sadly though, that’s the nature of the play, you don’t really collect until you are close to expiration as the caller tends to do as well as your calls.  I know this part sucks because you have such a huge profit coming to you but unless HOV goes totally nuts and the premium on the $5s wear out, you’ll have to wait for time to do the job for you.  

    Uptick/SS – I think we need a downtick rule!  You can’t buy a stock unless someone is selling…

    Damn, DELL making new highs!  DELL!!!!

    AAPL/Rav – I’d just go for the sale of the May $250 puts as your May $260 callers protect them for a whole $10.50 and the $2.50 from the putters plus the $6 premium on the $260 callers gives you $9 of rolling power come expiration day so you can push your callers up to the June $280s most likely.   The ERY $8/9 spread is .80 in the money and the $8 puts you are short on are .80 out of the money so any losses you see are clearly an illusion.  You have to get used to that with those kind of spreads, they don’t work until the premiums go away (and you are still on target of course).  If you need immediate gratification, these plays are not for you.  VNO $80 calls also are $1.40 of premium at $81 so again, if you are not a patient person, stay away from those plays as they take WEEKS before you know if you are winning, not days.  

    Sen. Lindsey Graham foresees "80 or 90 votes" for his legislation aimed at stopping China’s currency manipulation by imposing duties on Chinese products. "I understand why the administration is reluctant to push China, but unfortunately we’re running out of time. This will be the year" for passage, he says.

    Proposed derivatives reform legislation still includes lots of exemptions and loopholes, Dave Callaway maintains. Firms like Goldman (GS) would be able to register as other entities – airlines, manufacturers, pension consultants – and continue to trade derivatives to their heart’s content.  Of course!

  100. ss: 2 more trades in TNA, 14 cents, that is it, have enough excitement for today.

  101. RMM – good job.

  102. Phil, sorry I meant ERY $9/$10 spread with short $9 puts.. my mistake.
    I have no problem with holding up and being patient until these plays go my way.. I just want to avoid a catastrophe or a margin issue, so I need to be prepared. I would definitely sell the May $250 Puts just for some protection.

  103. Phil:
    CVX with projected earnings next week more than doubled: sell puts or buy calls, which one ?

  104. Phil: with CVX down today, should be a good opportunity to sell puts. But I do not want to own CVX, so I buy calls.

  105. RMM – played IWM calls twice today.  This may be the craziest day yet.  18 RUT points from the bottom in one day.  Unbelievable!!!!

  106. ssdirk: I fully expected all day that the market will end green, its there now, man I left thousands on the table as I was not holding on to any TNA.

  107. Can you imagine the glee traders for the gang must have when they know they can fearlessly jolt the market higher at any whim.  They drop it back as far as possible without breaking technicals and then jam it back up.  Time and time again.  Must feel good knowing you’ve got the biggest gun and most ammo of anyone in the fight.   

  108. HD/Kururi – We played them many dollars ago, LOW too but both are back near the ATH. LOW is still lagging but the p/e’s match so I’m not too keen on either right now.  If you REALLY want to own HD long-term then you can get the Jan $35/40 bull call spread for $1 and sell the Jan $25 puts for .50 so you are in net .50 cash with $4.50 of upside (900%) and your worst case is HD is put to you at net $25.50, which is a 28% discount to today’s price.  Since HD is now $35.62, you are already in the money and will collect every penny of upside between here and $40

    RTP/Gel – I have found them to be too insane to trade so I stick to FCX.  I think they are generally the same overdone as FCX but FCX is much closer to ATH (RTP is 50% below, FCX 30%) so I feel more comfortable shorting FCX when they get too high.

    Pavlov/Eric – I don’t think Pavlov has much to do with it, just a few robots.  If you have a 15 min candle chart for the past week, you can pretty much see there are about 10 15-minute sticks that account for ALL of the up moves in this market, generally followed by relentless selling.  Every day the funds unload 2 shares for every one they buy and this market will crash when they have dumped all the stock on the suckers.  Every once in a while, one of the small funds heads for the exits and that gives them a little sell-off but, as soon as volume dies they get right back to business because they no longer even care how obvious it is. 

    KRE/Eric – I think modest is good.  Oddly enough, after being up and down 200 points this week, we are right back to last Thursday’s close so a whole lotta nothin’ going on….

    Of the 324 companies releasing earnings so far this quarter, 72.2% exceeded estimates, one of the top beat rates in the past 10 years. Although earnings season has a few weeks to go, things look strong for now.  Yet we are not breaking up?

    ERY/Rav – Oh that’s very different!  Well the puts you can just roll along to June or July (the $8 puts are .60) when the time comes and the calls you can move the to the June $8s for .70, which I think is worth it as you are buying all intrinsic value and then, when your May $10 callers expire, you can pick up another .60 or so selling the June 9s (assuming you need to). 

    CVX/RMM – Stay away.  No way to know how that will be taken and no way to know where oil will be.  Clearly the stock price is not reflecting a double but I wouldn’t want to go long on them with low fuel demand.

    Wooops, and we got yet another huge pop! 

  109. ROFL – look at all the excitement over a 10 point up move in the Dow!   It’s all about how you sell it baby

  110. WYNN – shorted some here

  111. QID play – Buying $16 puts for .32, selling $15 puts for .32.

  112. Seems the Telecon industry is ripe for another consolidation.  For a nice little ROI, I am going to sell the 4 May10 P of Sprint for 15c, which is 4% if nothing happens.  Easily rollable to 4 Jun.

  113. ssdirk: just calculated: if my TNA trades today had ended at the price of TNA right now, at 68.8$, I would have made 58000$. But, as my wife says, do not hang on too long, take the 10, 20, 30 cent gains and close.
    You see: Phil agrees with my wife.

  114. ssdirk: lust recognize: TNA can pay for my dentist in the USA.

  115. Phil, that QID play is not on my screen……….

  116. Phil: DVN will reort triple earnings increase: what about taking a position in this one ?

  117. RMM – :)

  118. QID – Sorry that was buying the $16 CALLS!!! 

  119. I got .33 and .70???

  120. Ahh, I feel better now…..up 15 on the Dow.  Good riddance…

  121. The Chinese yuan will surely be adjusted up within the next few months. This will temper the Chinese stocks and accordingly the Chinese stock market in a downward direction. The best curremcy play when this takes place is to sell the EUR/JPY. The strength will be from the appreciation in the Yen, against the ever weakening EUR. The JPY will be a good bet against any of the European currencies, should this occrur. IMO.

  122. Phil,
    What do you think of QCOM here? Seems today’s drop is a bit overdone after an OK earnings report, especially since it hasn’t participated in the run-up like a lot of other stocks.

  123. RMM – This is not complicated.  Since April 1st if you would have waited for the first solid green 15min candle to form after the open and then purchased IWM calls to hold till close you would have made huge money 13 out of 15 days.  I think I will try it tomorrow. 

  124. High Five and a chest pump Pharm!! You da man!! ;-)

  125. chuaeu: what % increase in earnings is good ?

  126. See RMM, we’re a perfect match!

    DVN/RMM – I don’t know where you get these definitive earnings weeks in advance but DVN is a pretty good one to own long-term so why not just go for the Jan $60/75 bull call spread for $7.50 and sell the $60 puts for $4.25 and that’s net $3.25 on the $15 spread (360% upside) that’s already $7.80 in the money?  If put to you, your net is $63.25 so less than 10% discount makes this an aggressive play.

    MSFT making new highs, those earnings better be good.  Gotta sell the $33s for .75 and we can cover that with seal of the Oct $35s at .72 – I think I like selling 5 and buying 4.

  127. RMM – The IWM May 73 calls are up 43% today.  I bet you could have made the +$50K using the calls and a lot less investment capital.

  128. AMZN – Still love seling 5 May $150s, now $8.10 ($4,050) and buying 4 July $160s at $7.10 ($2,840).

  129. ssdirk: IWM does not allow moving in and out within a few minutes, with IWM you need to be much more patient and I am not patient.
    I will follow IWM though. TXS.

  130. Watch this everybody: GREECE!!!

  131. Huh? Strange, that didn’t do anything.

  132. Hi when does this crazy AAPL stops climbing 7.00$ up a day what gives are people loco?

  133. The more time passes the more i like GS, TM killed people and were caught covering up the cause, ripping some people off is the nature of the game and if the hearings go well i think its an easy $10 pop.

  134. Buying MRK 30 Jan12 for 6.05 and selling an Iron Condor 35-36 34-33 C/P for 68c.  C if any of it fills.. 

  135.  The move in the NQ’s has been impressive today though – 40 point range bottom to top.  Now let’s see MSFT miss on guidance and then we can have some more after hours fun.

  136. Phil : On the HD jan 435/45 bull call spread.I’m getting a quote at 42.04 not $1.00

  137. LMAO Eric, you know Greece is done…time to put a fork in er

  138. Phil; That’s $2.04 not 42.04

  139. Phil/RTP
    Thanks… good advice. I am trying to unwind some of my plays that rely on China, as I see a correction coming with the revaluation.

  140. and AMZN gets sent to hell….nice call on that backspread Phil!

  141. RMM,
    The current quarter was OK – QCOM’s net income after one time charges was .59, beating analyst expectations by 3 cents. What hit them was next quarter projections for .51-.55 vs. analyst expectations of .55, which led to some analyst downgrades today. However, I think this could present a nice long-term entry into a quality tech stock.

  142. Phil- based on the strong reversal today but not a close above last week’s high, what are your thoughts going forward? continued strength or have we hit a double top?

  143. Bought another gold miner today (EGO) Eldorado Gold.. With a possible sovereign default ( Greece ??? ) or others to follow, I think there is a big upside potential on this one.

  144. RMM: Is that you who needs some dental work?  You must have made enough money to pay the bills now! 8)

  145. HUGE lots going through on MRK now.  167K, few 57Ks.  Must be ETFs or MFs.  All at $34.  Interesting.

  146. RMM
    See, I told you yesterday that TNA would pay for your dental work. BTW, You’re in Santa Rosa, I’m out by The Sea Ranch ( 1:15 away ); we should get together some time.

  147. LOL Eric!  It did work but it took until MSFT and AMZN slipped on your grease spill…

    TM/Kustomz – I’ve stayed away but was looking for a $65 entry when they ran up.  I still think that’s the right price.  The repairs alone are going to be a $5Bn hit and then the lawsuits.  I wish I had the guts to short them when they hit $80 but I like them too much long-term.

    The futures are barely reacting to MSFT miss so far.  I’m pretty sure that’s mathematically not possible but I already have my QIDs so I’ll justsit back and watch

    HD/Dflam – ???  You are right it’s $2 on the $35/45 spread.

    Thanks Kururi!

    Forward/SNS – I think we keep gyrating around here for a while.

    American Express (AXP): Q1 EPS of $0.73 beats by $0.09. Revenue of $6.61B (+11.5%) vs. $6.34B. Provisions for losses $687M, down 50% year-over-year. Shares +1.8% AH. (PR) (AMZN): Q1 EPS of $0.66 beats by $0.05. Revenue of $7.13B (+45.9%) vs. $6.87B. Sees Q2 operating income of $220-320M vs. $328M consensus. Shares -5.3% AH. (PR)

    Capital One Financial (COF): Q1 EPS of $1.40 beats by $0.82. Revenue of $4.29B (+48.8%) vs. $4.13B. Shares +5.1% AH. (PR)

    Chubb (CB): Q1 EPS of $1.14 beats by $0.19. Revenue of $2.8B (+0.8%) vs. $2.7B. (PR)

    Microsoft (MSFT): Q3 EPS of $0.45 beats by $0.03. Revenue of $14.5B (+6.2%) vs. $14.39B. Lowers expense guidance. Shares -4.0% AH. (PR)

    Market recap: A strong showing by homebuilders and a swing in financial stocks helped the broader market recover from early losses to post small gains. Advancers led decliners on the NYSE by about 3 to 2. Earnings tell the story behind the day’s biggest gainers and losers: Textron (TXT +12.7%), SanDisk (SNDK +12.5%) and Baxter (BAX -13.1%).

  148. Well today’s action was programmed from the get go.  That was not a free market at work.  No how no way.  Unfortunately, I just can’t cozy up to the machine.
    Wonder if Larry Drill Drill Drill Kudlow has looked at any of the pictures coming out of the Gulf of Mexico and the drill rig that exploded.  Pretty dramatic stuff.  Kinda squelches any notion of driling not having an impact on the environment.

  149. Hi, Phil, MSFT miss?  EPS 0.45 beats by 0.03.  And it’s down 4% AH? Is it the classical "Sell the fact"?

  150. matt … no kidding
    AMZN; boy is this one overdue for a gargantuan sell off.
    Tomorrow:  135 ?

  151. Pharm – Why has MRK had a nice haircut (over 10%) in the last few days? Looks like it broke through the 200DMA, moving to 32.

  152. Trad – don’t know why on MRK.  My Iron did not sell, but the 30 Jan12 calls did fill.  The only thing I can think of is the pricing pressure (Vytorin was just announced) and the charges the Pharma companies are taking NOW on the health care bill.  GILD did it, and it looks like it is an industry practice, as the industry has all moved down.   I think there is some sector rotation going on right now, and health care and telecon are out of favor (and were/are the laggers in this rally). 

  153. Phil, looking for ideas on a negative play on china, already have plenty of edz.  Looking for some long term play as I believe that sometime between tomorrow and 2012 China’s market will crash.  They’re real property is definitely in a bubble (11% real estate appreciation during the month of March 2010!!).  I believe that their central planners can only steer the economy to a limited extent, so I think it’s just a matter of when, not if.  I am thinking about a put spread on FXI, but wonder what you suggest.  When they do crash, it’s going to crush industrial commodities and those currencies involved heavily with them.

  154. For those playing IWM and using TOS.
    Try adding 2 pivot point studies, 1 using day, and 1 using weekly numbers.
    JRW has it honed in a bit better but support and resistance is fairly close.

  155. Drilling/Matt – Those 10,000-foot rigs are pushing the envelope of what can safely be done.

    MSFT/Cwan – Miss the whisper, that’s all it takes now.  I wasn’t going to short them but they run up hard at the end and pushed the front-month calls to a silly price so it was too tempting to turn down. 

    Futures holding up well so far, we’ll see what the morning brings.

    Banks may not be lending to consumers, but they’re providing another public service: buying Treasurys.

    Strong March auctions enjoyed a boost from banks, which normally stay away from such events. Some see a gentlemen’s agreement between banks and the government. Art Cashin: "Is the Fed putting on a fake mustache and a raincoat and coming in as an indirect buyer?"

    Russia’s $5.5B bond issue, the country’s first since 1998, was well received by investors who view California as the greater default risk.

    Scary chart of the day: Debt piling up all across Europe.

    BP (BP) was days away from announcing a "commercially attractive" oil discovery in the area where a drilling rig caught fire and sank.

    Losses in Microsoft’s (MSFT) online services division last quarter exploded to $713M, up from $411M million in the year-ago period, and most don’t look like one-time transition costs. It’s "a business with plenty of scale – more than $2B of revenue," Henry

    Blodget says, "that is still losing more than it generates in revenue." MSFT -3.0% AH

    STMicroelectronics (STM): Q1 EPS of $0.07 misses by $0.01. Revenue of $2.3B (+40.1%) vs. $2.4B. (PR)

    Cheesecake Factory (CAKE): Q1 EPS of $0.31 beats by $0.05. Revenue of $405M (+3.2%) vs. $400M. Shares -3.9% AH. (PR)

    Western Digital (WDC): Q3 EPS of $1.71 beats by $0.16. Revenue of $2.6B (+65.9%) vs. $2.5B. Shares -1.3% AH. (PR)

    International Game Technology (IGT): Q2 EPS of $0.20 in-line. Revenue of $498M (+4.6%) vs. $512M. Shares +0.5% AH. (PR)

    Rambus (RMBS): Q1 EPS of $1.28 may not be comparable with consensus. Revenue of $162M (+492.4%) vs. $50M. Shares -0.5% AH (PR)

  156. Take apart Goldmans SEC defense line by line, and it does not look pretty for GS: Fisking Goldman’s latest rebuttal (FT Alphaville)

    The Fed Is All Wrong About Inflation (Yahoo Tech Ticker)

    Why Technical Analysis Matters  (AAII)

    MarijuanAmerica  (Rolling Stone)

  157. Great article by George Will about Gov Christie in NJ taking on the budget deficit and the unions and taxes.

    Of course, Phil voted for the other guy, the ex-GS Chairman rich guy that raised everyone else’s taxes and bankrupted the state while philandering w/ various women.
    If I lived in Joisey; I would have voted for Christie, hands down !
    Phl, what I don’t get about your rebuttals (see last night for example)  are your straw man arguments and your unwillingness to acknowledge the over the top abuses that are exposed daily involving public sector unions gaming the system at the expense of all of us taxpayer ATM machines.  You can be pro-union; but you should also be anti-corruption. 
    The reason that states are bankupt is out of control spending compounded by out of control public sector benefit obligations which are not the result of compensating undercompensated workers, but are the result of corrupt political quid pro quo … benefits for votes at the expense of the public.
    Read the George Will article …

  158. Interesting article by John Crudele today … sez Obama admin doesnt want to declare recession over b/c when we double dip they want to still blame the economy on Bush. 
    How pathetic.

  159. China/Humvee – I like FXP.  You can take the 2012 $25/45 bull call spread at $6 and sell the $25 puts for $4.50 and that’s $1.50 on the $20 spread.  While you are waiting, you can take smaller gambles like the Sept $30/40 bull call spread at $5, which is $8.70 in the money so you only need to sell puts after it drops $5 and we can assume thatwould be the $32 puts for $4.70 (the current price of the $37s) which would then be rollable to those 2012 $25s if you have to.  FXP is a 2x ETF so getting down to $32 would be a 10% gain in Chna and $25 (down 34%) would take a 17% move up to about 25K on the Hang Seng.  Not out of the question if all goes well as they topped out at 32K in ’07 but they’re comming off 13K so that would be a hell of a run.  I’d say give up at 23,500 maybe.

    Christie/Cap – I’m actually warming up to him, he really is trying hard to slog through the mess that is New Jersey.  As to unions in general, I’m not really a big union fan as it’s just another fee taken out of paychecks but, sadly, employees need collective bargaining because you sure can’t trust the employers to do what’s right.   So I am pro-union and anti-corruption and it is sad that those two things seem to be contradictory so often.

    States are bankrupt for a number of reasons like I rememer being at a tax hearing in Bedminster where it was pointed out that Malcom Forbe’s several hundred acre estate paid less tax than a neigbor’s 3 acre house becuase forbes had set aside 10 acres for "farming," which somehow meant he had horses.  Betwen that idiocy and the tax breaks given to every builder or corporation that ever moved into the state – there’s no one actually paying those outrageous tax bills except us idiots who stick around. 

    My property tax (and this is WITH Christie) just jumped 30% for the new year (starting June).  I don’t even know how people with fixed incomes can stay in their homes. 

    As to Obama not wanting to declare the recession over – perhaps it isn’t?  Unemployment still 10%, homes still underwater - is the recession over because Wall Street is rallying?  I’m sure if he said it was over you would blast him for that too so not much point is there? 

    Meanwhile Cap, wasn’t it you who said that Wall Street woudl give the final vote on Obama after America gave it’s final vote?  Well the score so far is GBII 10,600 on 11/7/2000 and 8,000 on 11/7/2008 (-2,600) and Obama 8,000 on 11/7/2008 to, currently 11,134 (+3,134).  Just so I know for future reference – what will be the next thing that tells us Obama has failed?  Oh, wait, I’m sorry, you think he failed because, after 1 year in office, the recession is over but he hasn’t "admitted it."  

    You’re right Cap, he’d better man up and take credit for the economic recovery – maybe that can be the new T-shirt for the next Tea Party Rally:  "Obama – Admit that the Economy Has Recovered" or "Obama Fixed the Economy and Refuses to Stand on the Deck of an Aircraft Carrier to Declare Mission Accomplished" – something catchy like that….

  160. Ok. I’ve looked through all the information i can find re GS case. I find it hard to believe that GS’s actions imply anything other then a strong case. With a weak case they should have hung fabrice out to dry if there was proovable fraud; they should have been concillatory. Ive looked through their earnings releases extensively. The numbers are unbelievable. If this firm was anyone else, they would command a MUCH higher multiple. They even bought back 2 billion in stock (to make up for employee options, true, but at least the stock base isnt growing).
    So, i want some advice on this trade: 
    I did sell the Jan 2012 145 puts on friday, and recently bought the january 2012 160 calls, in something like 5:3 ratio. Sold puts for 23ish, so GS put to me at 122 in 2012 if wrong, with a free ride up if right. Perhaps I should buy the June 120 puts (0.8 dollars) for protection in case something terrible comes out? That would put the trade at 50 puts sold at 24, 30 calls bought at 28, and protection for $0.8/contract at $120 for short term moves. Thoughts? Its clearly a risky bullish bet on GS, but i still think this is a $200 company…

  161. Thanks Phil,  going to research and slowly get a decent sized position.

  162. We missed some "smoking gun" testimony in Congress today:

    The rating companies, Standard & Poor’s and Moody’s, regularly awarded generous grades to thousands of mortgage-related investments that later collapsed and precipitated the financial crisis. Investors rely on the raters’ assessments in deciding what to buy and sell.

    But an examination, conducted by the Senate’s Permanent Subcommittee on Investigations, uncovered internal e-mails and documents that describe the raters as “beholden” to investment banks—firms the raters referred to as their “clients.”

    Both companies eased their standards as they battled for control over the credit rating business, according to the subcommittee. The raters, internal e-mails suggest, knew that some mortgage investments were flawed but gave them good grades anyway.

    "I’m not surprised; there has been rampant appraisal and underwriting fraud in the [mortgage] industry for quite some time as pressure has mounted to feed the origination machine," an S&P managing director  wrote in a 2006 e-mail.

    This time period was crucial for the raters. Between 2006 and 2007, S&P and Moody’s each rated 10,000 mortgage securities, according to the subcommitee. Their revenues soared, peaking in 2007 at nearly $3 billion. But the raters later had to downgrade 90 percent of the risky mortgage securities they awarded top ratings to between 2004 and 2007, according to an analysis by BlackRock Solutions provided by the subcommittee.

    Such downgrades have been blamed for triggering the financial meltdown.

    “I don’t think either of these companies have served their shareholders or the country well,” said Sen. Carl Levin (D-MI), chairman of the subcommittee. “They were excessively influenced by investment bankers.”

    In a 2004 e-mail, an S&P employee discussed “adjusting” rating procedures “because of the ongoing threat of losing deals.”  A new version of the S&P ratings model, “could’ve been released months ago and resources assigned elsewhere if we didn’t have to massage the sub-prime and Alt-A numbers to preserve market share,” an  S&P employee wrote in 2005.

    Funny video of Lobbyists leaving a Republican fundraiser and trying to avoid ThinkProgress.  

    South Park guys piss off Muslims with portrayal of Muhammad.   Aside from the fact no one else complained, I love the fact that Aquaman is included in the group! 

    In the meantime, the battle on the issue is being joined off the senate floor by both progressive reformers and fake grassroots groups on the side of the bank lobby. The Roosevelt Institute put together a letter signed by 36 economists and businesspeople calling for a much stronger bill, while the bankers are funding phony front groups with an anti-bank progressive populist message opposing any bill (their cynicism would be stunning if they weren’t, well, the Wall Street bankers who destroyed the economy and then screamed for a bailout). Check out this unbelievably cheeky ad the bank front groups are running, and check out this superb segment on Rachel Maddow’s show last night where she exposed their game and nailed the hypocrites to the wall. We are going to see a lot more of this faux populism paid for by bailed out bankers before the year is through, and progressives have to be quick to expose it. Thanks to Rachel for calling out their lies last night.

    Already they’re attacking each other?   William Gheen, head of the conservative, anti-"amnesty," anti-illegal immigration group Americans for Legal Immigration PAC (ALIPAC), spoke at a Greenville, S.C. Tea Party rally this weekend and called for Sen. Lindsey Graham (R-S.C.) to "come out of that log cabin closet."  According to Gheen, being gay is "a secret that Lindsey Graham has."  Gheen told the crowd: "I hope this secret isn’t being used as leverage over Senator Graham, so today I think Senator Graham, you need to come forward and tell people about your alternative lifestyle and your homosexuality."  I love the guy in the crowd who yells out "Murder Lindsey Graham" and then some girl goes "wooooo."

    GS/Hanna – I think you need to include what you paid for the calls in your put-to calculation.  I agree with the 60-day protection, just to keep from getting badly burned.  Hopefully, all the bad news will be out by then.  I would not be that aggressive on GS because you have the SEC issue and you have the regulation changes.  Whatever happens, GS will survive and probably thrive but it may be a much smaller version of the company that will never have the opportunity to make those kind of numbers again.  Also, they may decide to go private and kamikazie the stock first so they can take out all the retail holders cheap.  Why shouldn’t they?  Caveat Emptor is the corporate motto….

  163. Hidden costs? State Farm sent my renewal today (Orlando, no claims) the cover letter explains
    a nice simple 5% increase. The reality is a 30% increase as ALL multi line discounts have been
    eliminated. Hindsight, guess I should have made some claims! I guess 20 years with next to
    nothing claims means goodbye.

  164. Interesting news in WSJ tonight. Govt probing GS-Buffet deal.

  165. Interesting news in WSJ tonight. Govt probing GS-Buffet deal.

  166. doro165
    Insurance companies….. oh boy!.  Most folks do not realize their relationship with their insurer is for all intents and purposes not a typical relationship found in most business relationships. The insurer looks upon you as strictly a source of revenue, and if you have a claim you then have a hostile relationship as they see it, as their only interest is to mitigate their exposure. The goodwill that you might expect from them is absent, as one person in a million is insignificant to their overall business objective. In a claim situation, they are only trying to meet the minimun requirement based upon the contractual obligation that exists. The policy is written in their favor, as they wrote it. Caveat emptor!

  167. Phil/GS
    I agree with your advice given to Hanna. The prognosis, on balance, is in my opinion not good for the retail investor. The image of GS is continually exposed in the media as the poster child of greed and corruption. I believe GS will have much difficulty changing this anytime soon. My guess is they will eventually revert back to a partnership, and out of the eye of the investing public, thus allowing them to do in private what they do anyway, and that is to pay out their massive profits to the employees. Other than stock price appreciation, the retail investor does not participate in any of their financial success, so what is the point in paying them for the stock they float?

  168. Humvee
    I saw your post to Phil regarding China. I happen to agree with your thoughts, and am going to lighten up on my conmmodity plays, as they are driven mostly by China trade. The government there is slowly restricting credit, primarily in the area of home mortgages. I think the revaluation of the currency will be the big "wet blanket" as it surely will drop the market value of their stocks, and of course make their exports more expensive. ( not good for Wall Mart). As soon as they revalue ( I think in 2-6 months) I will immediately play the China index, as well as a few currency cross trades.

  169. Gel1,
    Good thoughts you have and I will appreciate your currency ideas when the time comes.  In regards to GS, I would not touch them with a 20 foot pole; they have now become politicized and there is no telling where things will go.  Remember the GM bondholders who got the shaft in deference to other parties.  Politics and investments:  never the twain shall meet.  

  170. Even more to this that meets the eye.