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Manic Monday – Just Another (Million) x (Million) Dollar Bailout!

Another day, another Trillion dollars for the banksters!


I mean really – how much money did you loan Greece?  Perhaps you wrote Spain a check?  France???  Well, you did now!  $220Bn of that money came from the IMF and 20% of the IMF's money comes from the USA as we once again paper over the global financial crisis for another month or two – whatever respite $1,000,000,000,000 buys us these days

So YAY, I guess.  We couldn't be more thrilled for ourselves as we cashed out at the top and went short, then we cashed out at the bottom and went long.  We've caught moves in the market from top to bottom that used to be considered two or three good years of trading in the past two weeks – that's nuts!  We went up so fast that there was no point in putting plays on our new Watch List (can't be a Buy List yet because we don't like chasing) as we'll be up 5% at the open today. 

In addition to the DIA $107 calls (my comment into Friday's close as to whether I would keep them into the close was: "Not if I can get out even but they are gambling money so I won’t take a small loss (not when I can have a much bigger one!)" – we also picked up very nice entries on BAC, BRK/B, C, CAT, ERX, GOOG, LVS, MEE, MON, RIG, T, TBT and TZA (shorting it).  How long we stay in those after the instant gratification of a 5% bump in 8 trading hours remains to be seen, as I said in our Watch List post:


There are two major forces at work there – the NEED to OVERCOME GREED and the TOOLS to OVERCOME FEAR.  At PSW, we have a 2-step program for overcoming greed.  Step number one is "Taking the money" and step number two is "running."  The people who master these two complex steps find they have lots of cash at the bottoms and the tops of the cycles – they find that you can buy low and sell high once you realize that you don’t have to wait until the top to sell nor do you have to wait until the bottom to buy – especially when we can go from top to bottom at the lightning pace of today’s crazy markets.  That’s where our TOOLS come in. 

Having the right hedging tools lets you take advantage of these crazy market moves.  Options provide us with fantastic cushions to make speculative entries, even when the rest of the market is in panic – ESPECIALLY when the rest of the market is in panic.   Today we'll be taking advantage of the panicking shorts the same way we took advantage of the panicking longs on Thursday and Friday (thank you Cramer!).  Ordinarily, I'd feel kind of bad about it but "I told you so" doesn't even begin to cover it – we've simply done exactly what we said we were going to do, which was pretty much the exact opposite of what the crowd was doing for the past few weeks, the past few days was just the whole thing in a microcosm but more of the same to us.

So, getting back to fundamentals for a moment – THIS SOLVES NOTHING!  I pointed out last week that giving Greece $140Bn was not going to cut it and, fortunately, I have a lot of influence over in Europe and they listened to me.  The chart I featured in Thursday's post showed the terrifying web of entangled loans that made the Greek bailout a very small drop in the bucket.  Now, not only has the EU, ECB, and the IMF (20% of that is our money) all coordinated their actions to fight off the vultures that were circling their weaker members but the ECB is not jumping into the bond market and buying those up at face – totally screwing over short speculators while our Fed piles on by restarting their own infinite emergency swaps for Europe but….  how long will it last?

While $1Tn buys you a very impressive looking scarecrow – it's a scarecrow nonetheless and, after a while, the scavengers will get used to it and they will once again circle close and closer, looking to take a bite of flesh from the weakest targets.  After all, it's all relative – drop everyones rates back to 3.5% and, sooner or later, the PIIGS will still look riskier than Germany (and, once again, the arbs come into play) as the piggies still have $4Tn in debt and are running a combined $650Bn annual deficit.  $1Tn will tide them over for about a year – and that's assuming the UK doesn't need any cash when their new government has a look at the books (which is what kicked off the Greek disaster). 

Look, I don't like pooping every party that comes along.  I told the bears to take money and run last week, I told the bulls to take money and run 2 weeks ago and today I'm going to have to tell you, in good conscience, NOT to chase this move up.  If we let the markets settle, there will be plenty of opportunities to identify strong companies and invest in them but the data has turned south recently and, just this morning, the OECD has finally admitted the global economy may be slowing down.  As I have pointed out before, the OECD is like your local chamber of commerce so it's a big deal when they are forced to admit that business sucks since it's generally their job to tell you how great things are and what a marvelous day it is to come downtown and do some shopping. 

While the 31 OECD member nations' composite indicator rose from 103.3 to 103.9 in March (which we already know was a better month than April), China and Brazil, who are not members, fell slightly for the first time in over a year.  "OECD composite leading indicators … point to a slowdown in the pace of economic activity," the think-tank said. "In most OECD countries signs of slowing growth are tentative, but stronger signals have appeared in France and Italy, and some evidence of a potential halt in expansion is emerging in China and Brazil."  So caution, caution, caution (sorry).

I wish I could be more bullish.  Heck, we have naked DIA $107 calls from Friday that are possibly going to be triples at the open (although a falling VIX may limit us to doubles) and, if we get back to 11,200, we can all take the rest of the year off.  But, what we are going to do is sensibly take our money and then we're going to run and, IF the markets squeeze over the 5% Rule – THEN we'll consider some new longs - most likely spreads, not naked options, which are going to be very risky as we zip back to the middle of our expected range (10,200 to 11,200).  So far this morning (8am) the futures are looking very bright indeed:

Is this all you get for $1Tn???  If Greece is "fixed" (again) and the entire EU is out of trouble then why only 10,730 (and we're fading those numbers a bit now)???  We're going to be zooming right back to the 1,155 breakdown line we pegged for the S&P so all we have to do is go back to our last 5% Rule Review and use those charts today to see how "real" this rally is going to be.  My comment to members last Tuesday on a possible S&P recovery still hold this week:

So what lies ahead?  Most likely a retrace back to 1,100 (25% of our run) but if that holds and we consolidate a bit, I will be downright bullish.  I will also be impressed if we hold 1,145, which was our last breakout line but, for now, we have a 3.75% drop from 1,218 but a poor bounce yesterday indicates we are likely to get down to a 5% pullback from 1,218 to 1,157 and not holding that is going to be nasty.  For now, we have the rising 50 dma and the 2.5% line at 1,170 so VERY BAD if we can’t pull a bounce together here.  We’ll call it a 50-point drop from 1,220 and figure a 10-point bounce to 1,180 would be lame (a very important 5% rule term) and 25 points, 1,195, has got to be retaken before we get all impressed with a "rally."

We got our retrace but NOT our consolidation so it's a paper tiger of a straw man we're building for $1Tn but you HAVE to respect $1,000,000,000,000 – you just have to…   Our 5% Rule series for the S&P over the 1,155 breakdown line is the very critical 1,170, followed by 1,185, 1,200 (critical), 1,215 and 1,230 and THEN we are on the way to recovery.  Below that, we're not too impressed but it also won't be very surprising if all $1Tn buys us these days is some moderate lift that isn't strong enough to break our major technicals.   

Can the Euro get back over $1.30 on this "great" news?  Will the Pound hold $1.50?  The Yen is back to 93 to the dollar, up from 90 on Friday so Japan will have something to celebrate tomorrow, despite their fairly wimpy 166 point gain (1.6%) this morning to "just" 10,530.  EWJ ($10.20) is a good way to play Japan up if the Yen holds up and the S&P holds 1,155.  The weakening dollar should give a boost to commodities so we'll see how copper handles their breakdown line at $3.20 ($3.40 is bullish) and also oil should be slow out of the gate around $76.50 on continuing demand worries but ERX ($37.25) is still a good way to play them up.  We'll also keep an eye on how well gold holds 1,200 in the face of a dollar pullback – it's really hard to see what keeps them afloat at this level.

Asian markets were all up with the Hang Seng gaining the expected 2.5%, back to 20,426 but the Shanghai is stuck in the mud at 2,698.  The Nikkei, as I mentioned, gained 1.6% and needs to catch up while the BSE added 3.35% (561 points) to 17,330.  Europe is going CRAZY with the FTSE and the DAX testing the 5% Rule for the day but the CAC is so thrilled that French banks just effectively got a bailout equaling 1/3 of the nations' GDP that the National Index of French stocks is up 8.3%, led by "Le Banksters" but of course! 

Keep in mind that, other than bailing out investors who led money to the PIIGS, this $1Tn taken from the taxpayers and given to the banks doesn't do a thing for the people.  It won't create any jobs or build any roads or fix any bridges – this is $1Tn to service debt and allow the creation of additional debt – effectively a golden shovel so the EU can dig itself a deeper hole.  We have our own Retail Sales Report for April on Friday and that should be a market mover (up 0.6% expected), especially if we miss so get ready for another wild week – business as usual…

And be careful out there!


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  1. Phil,
    Have QQQQ July 2010 puts, entry 2.73…thoughts?

  2. Phil:
    going to be wild today again,
    your recommended TNA plan from last week was only partially executed:
    closed the 1x june65 callers (6.8$ to 2$), opened 1x jan 35 putters  for 8.7$, still have the TNA stock (base 71$),
    the jan 35/55 bull call spread did not trade so with the expected market move UP, this is a new constellation,
    WHAT is your good advice for this new situation ???

  3. That cartoon is a classic.
    I hear ya about being cautious.  I sold all my DXD Friday (thankfully) and I feel naked.  I’m fighting the urge to buy some back when the shorts run for cover this morning. 

  4. For a while there, it looked like we were going to swing from a "no-bid" market on Thursday to a "no-ask" market this morning. That should restore confidence, lol
    I thought the CDU would win in Nord-Rhine Westphalia, and that would leave Merkel strong enough to compromise with the French on a moderate Greek bailout. Instead, they lost and Merkel was too weak to prevent the French from steamrollering Germany into a huge Greek bailout.
    I will be watching gold with interest this week. It’s holding up well so far. If it breaks down, there is some support at 1170 that might hold; we’ll see.

  5. phil,
    holding 20 naked contracts of aapl jan 240′s from last friday with a margin call of $22,118 from the buy back of my oct 240 callers on last thursday. what is my next move?? help!

  6. DIA Mattress:  I’m thinking of rolling the long Sep 107s to Sep 110s for $1.33.  Sound good?

  7. Good morning! 

    It’s all about the 1,155 line on the S&P this morning, we either make it or we’re not at all impressed so very simple really.  Consider we fell from 1,220 to 1,100 so 1,155 is about the 50% bounce zone we look for AT MINIMUM if we are going to be showing any strength so it doesn’t pay to be forgiving.

    The VIX flew down to 28 (down 30%) this morning so that’s trashing your long calls so it will take a real move to achieve real value but I do expect to test 5% gains (SOX is over it already), which brings us right to 1,166 on the S&P and, of course, since 1,155 is 4%, that will then become the critical pullback sone we don’t want to fall below. 

    Don’t be greedy, 5% in a day is A LOT but if we close above 4%, we are very likely to see follow-through this week probably all the way back to Dow 11,000 and S&P 1,200 where we get a big test into the retail sales data.

    If, for any reason, a $1Tn EU bailous fails to buy us AT LEAST a 5% move up that holds through tomorrow – go to Home Depot, buy supplies and start digging a shelter – we’ll probably need it! 

    Other than that – Have fun!

  8. Hi Phil – Faz from Friday – Oct 9/11 – would it be smart today to roll the 11 short call to a 12?

  9. DIA Mattress:  Got filled at 1.35 for the roll from sep 107s to sep 110s.  Also bought back 1/2 of the June 105 putters.  .25 trailing stop on the other 1/2

  10. QQQQ/Nols – In situations like that it’s best to sell front-month puts as momentum plays.  It takes a little time for the premium to bleed out as their internal VIX can hold up for a long time.   I don’t know which July puts you have but you can sell the May $48 puts for .98 and those can be rolled down to the June $45 puts and the July $43 puts (most likely) so that’s not a bad spread at worst.

    TNA/RMM – Aren’t you glad you killed those callers?   Let’s watch for a while and see what happens, you are very, very bullish and down to about a $68 basis (profits from callers) so our goal should be to knock another $5 off but if we get to $60, maybe we can get the whole thing.  Let’s watch our lines carefully today.  700 on the RUT will be hard to get over and any pullback below 680 is a breakdown now.

    Caution/Exec – Sometimes it’s nice to have nothing in the game and just kick back and watch the action. 

    5% lines look like Dow 10,900, S&P 1,166, Nasdaq 2,380, NYSE 7,250 and RUT 685.

    Gold/Eric – Yeah, if this one fails, even I may become a "gold bug."

  11. Sold the USD against the MXN ( Mexican Peso) Stop @ 12.98 – take profit at 12.00

  12.  Nasdaq reversed exactly at 5%, so that must be a important indicator as you said
    Phil what do you think of LIOX, they signed a long term deal with IBM a while back?

  13. Volume sucks for this "rally" – VERY DISTURBING!  Just 58M on the Dow at 10.  Bigger than usual (30M) but nothing considering the move up – it’s all air.

    Time to take money and run at 5% rule – we can reload if 4% holds.

  14. Liquidated my GLD plays last week – will wait for a nice drop and will get back in.

  15. Phil: please recommend an action if any:
    BIDU jun650 naked puts – sold for 22.39$, now 31.4$,
    AAPL july250 naked calls – bought for 21.73$, now 18.1$
    DIA may110 naked calls – bought for 0.83$, now 0.63$.

  16. Phil….Accumulated AAPL July 250 calls Thur and Fri during the downturn.  Today selling 1/3 covers, May 250, which have about $7 time value.   Good plan?

  17. Not getting usual Obama rally.  Failure at 1155?

  18. NFLX
    The premium on our $95 short May calls is still about $3 but the June 100 calls can be sold for about $5.5 and they are OTM?
    Is it time?

  19. PHIL- MCO GETS SERVED A WELLS NOTICE. Stock down 11%. Not good for confidence…

  20. Executed a Buy/Write on STD ( Banco Santander ) Spain’s largest bank. Sold the Dec 12.5 p & c  for 33% discount. Yield is 6.8%. 35% of revenue comes from South America.

  21. hi, phil, any brand new TBT or TZA position you can recommend to establish now?
    how about  buy TZA and sell the 6 puts and 7 calls for May for net of 6.03 cents in the trade?
    and TBT  buy Sept. 40 and sell Sept. 42 for $1.32 and sell the Sept. 39 puts for 1.34 so net in at zero for the 2 dollar spread?
    and you have to buy more below 39 ?

  22. gel1 – did you do that today?
    and p;hil – how about a trade on UNG?

  23. AAPL/RDR – Just re-cover.  That was nicely played and now AAPL is back to $250 so now you can sell $250 callers (if you are feeling braver) for $27.50.  If you are more bullish than that, do a 2/3 sale and that way, if AAPL falls lower, you can cover 1/3 at a lower strike. 

    DIA/Daveo – Yes, whenever we can roll up $1 for less than .50 we generally want to take it.  The reason I started low in Sept was BECAUSE we thought we’d get a pop that we could cheaply roll into.   So yes, Sept $110 puts, now $7 are our new targets for the long end of the Mattress play and they should be NAKED unless we pop 5% on all our levels, at which point we can sell 1/2 $108 puts, now $2

    FAZ/Morx – That’s a good idea because it costs you .85 to roll down (way too much) but only .30 to roll him up! 

    Good adjusting Daveo! 

    LIOX/Chyer – Don’t know them but remind me after hours and I’ll be happy to look.

    BIDU/RMM – BIDU is at $676 and the puts are $26 out of the money.  Surely you know the answer to that one!   AAPL not much different although it’s a shame you were greedy last week as you were very lucky to get that sell-off so early in your cycle when they were down at $13.  I think $250 is a realistic top for AAPL until July earnings and, of course, you can roll them up and out so it’s really up to you and how much you want to be long-term short on AAPL.  On the DIAs, you should be THRILLED to be back to .70 (now) and get out.  The time to take a chance was when they were .25 on Friday and you could have DD’d or rolled but now we got a 5% jump so I’d keep a very tight stop on them around 10,800. 

    AAPL/Iflan – Just make sure you are ready to use that $7 to roll down if AAPL pops $255.

    Obama/Nols – It doesn’t work when he’s doing business (nomination right now) – it’s when he does the policy stuff that they like to give him a rising market background and, of course, that 5% rule is a tough nut to crack – even for POTUS.

    NFLX/Edro – Tempting but with 2 weeks left and the May calls still over 50% premium, we’re just not doing our job if we don’t let it wear down a bit.  If you didn’t take them off the table on Friday at $3, I assume margin is not an issue for you so it’s really the 2x roll to the May $100 calls I’m looking at and, after that, the June $110s.

    MCO/SNS – I don’t know, the only way to make this con work is to shut down the ratings agencies.  The EU already threatened them with some sort of action if they badmouth their debt and now they are (coincidentally, I’m sure) being slapped around over here.  It’s sort of a global version of "don’t ask/don’t tell" regarding debt ratings…

    STD/Gel – I wish we had jumped on those last week!  Was just too scary…

    TBT/DMan – No thanks!  I forgot to mention in my last comment that the Euro got slapped at $1.30 and is diving into the last hour of EU trading at $1.283 at the moment.   Friday’s low was $1.27 so NOT FIXED AT ALL!

    Too scary to short but no way do I want to go long here at the moment

  24. Phil, we put on a C Jan 2012 spread a while back for long term.  Time to DD  with a .03 credit?

  25. thanks, phil, i’m with you, the euro could not hold ev en 129,  this whole thing may peter out and now we trade sideways for a while, but do you think the FAS is a good buy here? 

  26. dman….yes

  27. UNG/DMan – I like the Oct $6/8 bull call spread at $1, selling the $7 puts for .80 so net .20 on the $2 spread (900% upside) but you have to REALLY want to own UNG for net $7.20.

    DIA $105 puts at $1.16 for downside protection or fun.

  28. Phil….."Just make sure you are ready to use that $7 to roll down if AAPL pops $255"     Sorry I’m so numb Phil, but I’m not sure what you mean by this.  Could you clarify? 

  29. Phil: your 10:23 comment: from last week’s nightmare, my brain is so low in blood, I cannot figure out what rolls or covers for my AAPL naked calls and the BIDU naked puts to execute.

  30. C/Phlit – If you can get the credit then sure, why not?

    FAS/Dman – No, I do not.  If you are going to gamble on Financial stablity then I’d go with an XLF spread like a buy/write at $15.85, selling the Jan $14 puts and calls for $4.20 for net $11.65/12.83 and up 16% in 8 months if called away.  I’m not confident enough to take the $15 calls though but you can do an artificial with the 2012 $12s at $5 to save cash and give you a long-term position to ride out. 

    AAPL/Iflan – You have $7 from the caller and you are in the July $250s with LESS delta than your caller.  That means, if AAPL starts shooting up, the caller will kick your ass so, rather than take a loss buying him back, you spend his $7 to roll down to the July $240s (just +$6 at the moment) and then you have better leverage (delta .64) than he does and you can let his premium wear down and then roll him along to the June $270s (assuming AAPL keeps going up), which keeps you pretty safe with a nice $30 spread. 

    Volume now 92M so a respectable 2nd half hour but no progress off the open.

    BIDU/RMM – DO NOTHING!  AAPL/RMM – DO NOTHING!  They are 100% premium – leave your damn trades alone! 

  31. sold EDZ Jul 40p for $4 as I had cashed out most of my hedges…seemed like good money!

  32. Phil,
    DIA 107 Calls. As suggested I am taking the money and running to home depot for some shelter supplies! This is the grand finale of several successful trades from you through this roller-coster and as you have further suggested it is time for me to sit back and relax in cash. May even be able to talk my wife into the premium membership after these intelligent trades in a stupid market.

  33. Good morning,
    IWM 66.85, 67.99, 68.34, 69.44, 70.17; I’m in cash, waiting for direction

  34. Banks are surprisingly weak. XLF touched the 50 MA from the underside and has been pulling back since. KRE riding the 50; also off the early highs.
    Too early to draw conclusions, but we need some more buying here.

  35. Phil, I bought the DIA 107 puts at open and am up 43%, feels like I should take the gain and fight for another day.  thoughts?

  36. Phil, your current thoughts on C ?

  37. SS, You around?  Given the huge jump in the pre-market, I figured the 8 period ema would take a bit to catch up, so I went with the candles and bought a small number of puts at 9:42.  I’m putting in a stop at 69, but otherwise I’m just going to hold them through the day.

  38. Thanks for the explanation Phil.   Makes a LOT of sense.  You are a friggin genius.  I should be sending you some of this cash that’s accumulating in my account.    :)

  39. Phil – anythoughts on FGP as a dividend play ? Thanks

  40. Phil,
    I panicked out of my BIDU shorts and closed for a relatively big loss…before the drop. I couldn’t risk it taking off to the upside after the split. Now I am kicking myself but if the VIX would’ve continued to fly up with crash-type velocity, I would’ve probably ended up with a margin call. Can I get back in? The May 720s look tempting with only two weeks to go. What do you think?

  41. Hey Judah – exactly right on the chart needing time to catch up.  I just cashed out a little early with a nice 10% gain on the puts.  But the trend is still intact.  Wishing I would have sold 1/2.  Will reenter on another cross.  3m8p is a little gem.

  42. phil, anything interesting to do with the TZA right now?  how about buying TZA and selling the 7 call and 6 put for May?

  43. SS, I’ve drawn JRW’s lines on my chart as well.  So, I just sold half when it held the 67.99 support line.

  44. French banks/ Greek bonds
    Out of ACA play.
    ACA went up too fast too my liking. I sold the buy write and kept half of a almost free SEP call spread 10-11.
    Out of GBBs (bought at 81.05 sold at 89.25)

  45. JRW, Thanks for the lines this morning.  BTW, when you decide to move out of cash (other than the day trades, of course), please let us know.  :)

  46. JRWIII: you once talked about meeting, I have to travel out to the coast soon, Bodega Bay and all along coast,  so we can talk, maybe send a mail to me at wp2hb@coxnet, if not that’s ok too.

  47. Well we held 4% so far.  If we get over 5% have to kill the DIA puts and, if we consolidate in the 4-5% zone, that’s bullish if it holds for the day.  DOW and S&P are below though – one more below will be a bad sign. 

    Euro holding 1.283 with 30 mins left in trading there.  Copper holding $3.20 ($3.225) and oil right at the $76.50 line with gold right at $1,200 so a little scripted for my taste…

    Now John Paulson is boosting housing – must need something to short but it’s going to give us a lift (they are pulling out all the stops to get us over 5%). 

    April Employment Trends Index: 94.7 vs. revised 93.9 in March, the eighth straight month of increase. "The employment trends index continued to rise in April, but its rate of growth has slowed in recent months," The Conference Board says. "Going forward, we do not expect job growth to accelerate much beyond this month’s rate."

    “The crisis came from debt and you don’t escape it with more debt,” Nassim Taleb says. “My fear is if we don’t stop [the U.S. government] now, they’re going to create hyperinflation,” adding, "Nobody has confidence in a guy like Bernanke."

    Royal Bank of Scotland (RBS) plans 2,600 job cuts in its insurance and consumer banking divisions. The U.K. government-owned bank, recipient of the world’s largest bank bailout, has cut 26,000 jobs since the start of the crisis.

    Premarket euro area bank gainers: BBVA +23%. STD +23%. ING +22%. IRE +21%. AIB +19%. NBG +18%. BCS +18%. RBS +16%. LYG +15%. DB +13%. UBS +10%. CS +10%.

    Goldman Sachs (GS) traders made at least $25M every single trading day in Q1 – an unparalleled feat even for Goldman (eat-your-heart-out chart). In its quarterly SEC filing, Goldman also said it expects more lawsuits related to sales of CDOs. GS +4% premarket.

    Goldman Sachs (GS +3.6%) expects further CDO-related litigation, and an SEC settlement could "result in collateral consequences to us that may materially adversely affect the manner in which we conduct our businesses." (10-Q filing)

    Lawmakers are considering legislation that would bar investment banks from betting against their own clients in many cases. The goal is to reduce conflicts of interest, but the ban could be easily side-stepped unless the bill’s language is airtight.

    Transocean (RIG +2.9%) has been honored by regulators for its safety record, but a closer look shows Transocean has been involved with nearly 75% of deepwater rig incidents that prompted federal investigations since 2008.

    People still not eating:  Dean Foods (DF): Q1 EPS of $0.23 misses by $0.05. Revenue of $3B (+10%) in-line. Shares -5.5% premarket. (PR)

    GGP (GGP): Q1 Core FFO of $0.78 vs $0.38 in Q1 2009. Consolidated property revenue -2.8% Y/Y to $734M. Confirms agreement with Brookfield (BAM). Sees "signs of recovery and growth in a number of our markets. Even previously hard-hit markets like Florida are showing positive trends." Shares +2.8%. (PR)

    Meanwhile, on some other planet:  Fannie Mae (FNM): Q1 loss of $13.1B, or $2.29/share, vs. a $23.2B loss a year ago. Results "reflect the continued weakness in the housing and mortgage markets, which showed some signs of stabilization in the first quarter of 2010 but which remain under pressure due to high levels of unemployment and underemployment." Shares +4.85%. (10-Q)

  48. Phil,
    I have the CME Jun 270/290 bull spread. Looks like $320 is fairly solid support. Would you recommend moving the caller up a notch or two?

  49. Executed a Buy/Write on CY (Cypress Semiconductor) buying stock and selling c & p – Jan 12.5′s. 32% discount on one of my favorite tech stocks that I believe have a way to run.

  50. Phil- Dean Foods sells branded milk. They said that WMT and TGT are selling private label milk at virtually no margin to get foot traffic in the door.

  51. Phil – how much lower do you see DF going? Down 25%!? How would you play this move?

  52. EDZ/Ac – I agree, things are not THAT much better. 

    Thanks DOS!  Glad to be of help.  Go have a nice day out with the Mrs. and tell her I said "hi."  8-)

    Cash is a good plan, JRW.

    Banks/Eric – I don’t know what else they can throw at this thing but this might just be some profit taking (or loss cutting) from EU funds at the moment and we might punch up once they close.  Of course, this also may be euphoric buying by EU funds that evaporates at 11:30 and then, once again, our sellers find there are no buyers.  Oh yes, cash is good!

    DIA/Trad – Yes, taking the gains was the plan 50 points ago! 

    C/Phlit – I still like them.  They are way too big to fail and I like giving them until 2012 to get their act together but they can go back to $2 or even $1 in between so always make sure that you don’t have any amount you are not willing to DD at both of those points. 

    Cash/Iflan – That’s OK,    I take checks too!  8-)

    FGP/DK – I love them, they sell propane and propane related accessories and they seem like good growers but a little high here so I think growth is priced well in and options too thin to trade comfortably but if you could somehow sell the Nov $22.50 puts and calls for $4+, that’s worth the risk, I think.

    BIDU/AC – If you have ANY sort of potential margin issues, you shouldn’t go near them with a 10-foot pole.  They could go up or down $100 in overnight trading for no actual reason.  I agree that if some fool want to give you $8.50 for the $720 calls you should take it but I’d rather sell the June $720s ($27) as 2 weeks should knock $8.50 (1/3) off their premium anyway and you have more cushion if BIDU makes a big move. 

    TZA/DMan – We are dead in between 11,200 and 10,200 so we could flip 500 points either way (overnight apparently) depending on events that happen while you sleep.  This may not be the best time to tie up money taking risks when it’s so much easier to wait a day or two and study the market to get a handle on the direction.

    Here’s the Russell Pivot chart – Top line is 69.24.  The Dow, S&P and NYSE are above theirs and the Nas is about the same as the RUT – halfway in between:

  53. CME/Pyern – It would cost you $8 to buy $10, surely there are better ways of making a 25% profit than this?  It only cost $7 to do the Jan $270/280 spread and that pays 42% at a $10 lower strike. 

    CY/Gel – I like them and SPWRA down here.  WFR too but they popped 7% already.

    DF/SNS, Jrom - I know, it’s just the general price wars that are hitting those that service the bottom 90%.  It’s so bad in Europe that the farmers had one of those milk dumping parties they do once in a while when the government won’t give them increases.  Still, it’s the kind of thing that will pass and that’s why I like DF down here once they calm down.  I don’t want to guess the bottom because the downgrade police will come and the market is not really that strong today but this is their 2009 spike low at $11 so I’ll be wanting them if they look even a little steady tomorrow.

  54. Gold just won’t break down. I may break down first and add to my longs again before the close. I’d really like to see it pull-back to 1170 and find support there, though. Second-best case is a retest of 1150. Either of these would be healthy for the gold rally.

  55. RMM
    I’ll send you an e-mail

  56. Phil:  What are your current thoughts on MHP?  I’m in the stock at 24.  Do you feel that the liability issues will die down and thus is this a time to sell puts, or rather to simply sell the stock and get out?  Thanks.

  57. What a pattern.  The market goes down then the retail players are around to get spooked into selling their shares and it goes up in the Futures when only the funds can profit.  My big concern is the suckers will wise up and stop playing – then who are we going to sell options to? 

    I for one, can’t wait for Cramer to tell me what to do…

    5% and 4% lines being obeyed so far.  Dow is closest to failing at 3.87%, being held up by Transports who lead up 5.05% so watch out if they break.  I am not at all thrilled with this action.  Dow volume at noon is 140M, about what we usually have around 3 pm

    A violent swing upward in stocks is matched by big declines in VIX (-32%) and Europe’s VStoxx (-24%): "The big brick in the wall of worry has been Europe and that short-term problem has been solved," says one strategist.

    The ECB’s decision to buy government bonds in a sort of quantitative easing wasn’t a unanimous one among the 22 members of the Governing Council, President Trichet says, but there was an "overwhelming majority." RBS economist Jacques Cailloux isn’t surprised there were objections: "The ECB has crossed the line, a line that some members thought the bank would never ever cross in its entire life."

    U.K. Prime Minister Gordon Brown says that the Labour Party will enter formal talks with the Liberal Democrats about a coalition to end a hung parliament situation, but that he will step aside as party leader in any case. 

    John Paulson says he’s closing his firm’s largest hedge funds (the Advantage funds, overseeing $19B) to new investors later on this year, and will only have space for newcomers if current investors redeem.

    Android (GOOG) has passed the iPhone (AAPL) in U.S. mobile market share, thanks to heavily promoted sales of the Droid phone at Verizon (VZ, VOD), NPD Group says. Android surged to 28% share in the first quarter, compared with iPhone’s 21%; BlackBerry (RIMM) still leads at 36% of the market.

    Three lunchtime reads:
    1) Cuban: What business is Wall Street in?
    2) The pros and cons of financial innovation
    3) Roubini & Mihm: Time to break up the banks

  58. Here is a new TA on reversal signals….too bad we cannot trade options AH!
    QCOR gaining support after all the hogwash from last week.  No debt, PE of 21….QCOR Stock at 8.75, selling the less aggressive Oct 7.5 straddle for 3.4.

  59. Phil:
    would it be attractive to take the AAPL jul250 calls and create  spread ? if so, which one ?

  60. FAZ — Hi Phil what should I adjust this July 13 long call and July 14 short call, forgot to roll down the long call when I rolled downthe short call … having TIA when I rolled the July 16 to July 14 short call on april 27. thx

  61. Executed a Buy/Write on PAA ( Plains All american Pipeline) for a long term hold. Good chart – pays 7.1 % yield. Bought stock and sold the Nov c & p @ 57.5 straddle for a nice 13% discount

  62. Phil/SPWRA
    I totally agree – I’ll do the Buy/Write strategy for a discount.

  63. AAPL – Hi Phil what would a good aapl bull call spread to start scalling in with minimal margin requirement  thx

  64. Being distrustful of this market I’ve cashed out most of my July 250 AAPL calls, which of course went up significantly today.  I’ll be interested in Phil’s answer to your Q RMM.
    I’ve opened a small bull call spread on SPRWA…earnings tomorrow. 

  65. hi phil – i am still short from friday unfortunately .  what do you think here .? what if the euro goes negative today, shouldnt stocks fall also?

  66. LF: yes AAPL jul250 calls went up but I still have a 13% loss, what about you ? why did you sell ?

  67. RMM….I sold AAPL because I have a huge gain on the July 250 calls I bought last week during the severe downturn  ( over 50% gain), and I had a LOT of them.  I was literally pushing the button on AAPL calls all the way down to a stock price of about $210 on Thursday.   So I had to follow Phil’s rules:    1.  Take the money    2. Run     No really,  I couldn’t rest easy letting such profits ride overnight in this precarious market.  I believe AAPL still goes up, but I want to be in cash (mostly ) overnight and think about my next ‘AAPL move’, and think about the markets in general before I get back in heavily. 

  68. MHP/John – Oh no, we’re done with them!  Print is dead and we liked them because they own S&P, which was being beaten down with the ratings agencies and unfairly hitting MHP last year to crazy lows but, overall, this is not an exciting long-term business. 

    What a great guide Pharm – Thanks!

    AAPL/RMM – The premiums are too crazy.  Shorting the $250 calls is the way to go as long as you have the margin to deal with them.  It’s not likely AAPL will be annoucing anything that kicks them up to $300 ahead of earnings and, hopefully, your caller expires before then or maybe you take a 50% profit off the table. 

    FAZ/Gucci – Well I assume you picked up .50 rolling the caller so I assume it’s a good idea to spend .85 to roll down $2 to the July $11s as you’re buying $1.75 of intrinsic for .80 but I wouldn’t do it if you are speculating, only if it’s for protection. 

    SPWRA/Gel – I’d wait for tomorrow.  They are up with markets but no real strength.

    AAPL/Gucci – If you have $4.3K to set aside I’d just go for the 2012 $175/250 bull call spread, which returns $75 and you’re up 74% in 18 months if AAPL just holds $250.  You can get fancy and sell 1/2 June $270s against it for $6.20 and if you collect net $3 10 times against the long spread, you have an almost free play.  That sale assumes you have PM which woud look at the whole play and not zap you for the naked calls (since your longs are $150 in the money (2x $75) before you owe the caller his $6 back). 

    Euro cannot keep it together!

    Brown/Kustomz – I’m sure many World leaders are gettin’ while the gettin’s good! 

    Short/Trice – We are not holding our levels and the EU is still falling apart – I’d hang tough for now but lighten up if you get anything close to where we were Friday as that may not be seen again. 

    Census bureau numbers say migration is up, but it’s all intracounty moves, suggesting that foreclosures and the job market are turning homeowners into renters.

    The risk of a double-dip recession is higher, not lower, due to the European debt crisis, says Morgan Stanley Asia Chairman Stephen Roach. Every "fix" is followed by an adjustment to the real economy: "We saw that in Asia in the late ’90s, we saw that in the U.S. in ’08, ’09, and we’re going to see that in Europe, certainly in the peripheral countries, with significant multiyear contractions in the years ahead."

    Philly Fed President Charles Plosser says he’s not ready to sign on to Thomas Hoenig’s call to begin increasing policy interest rates, "but I certainly am prepared to say that we need to better articulate what that strategy is and what it will take for us to begin to move."

    On the hour: Dow +3.77%. 10-yr -0.69%. Euro +0.51% vs. dollar. Crude +1.62% to $76.33. Gold -0.84% to $1200.20.




  69. phil, how about goiing long SRS here at this level?

  70. LF: impresssive, at what price did you catch the jul250 calls when the dip occurred ? There was such little time but you did get the purchase order executed.

  71. dmankoff – most of us won’t touch SRS anymore. such painful memories…

  72. Watching BIDU today is like watching musical chairs, it walks around a little and then the music stops and boom, it’s frozen until the music returns!

  73. Phil: your 1:19,  you are for selling AAPL call against my jul250 calls and create a spread ? which call to sell ?

  74. RMM   I caught them at 3 levels:    16.80, 13.99 and 13.35.  They got to 10.00 but that trade would not go through.   I was working on 2 acct.  TOS, and TDA.  I had the screens up and just started pushing the buttons.  It was serendipidous  (sp.)  because 10 minutes earlier I wasn’t even in front of the computer.  I bought AAPL during the downslide because I knew the options were liquid, and that AAPL going to 220 or below was total b.s.  I just got lucky.  

  75. With record sales of Sovereign debt within the past 12 months i think this is fahahahar from over and Europe’s response is just a drop in the bucket. We are close to the point of no return, if countries cant fund the lie then of course global GDP will be affected in a very bad way. They will prove that Gov funded GDP expansion in a deflationary world is/was futile (Japan). What happens when China and SA blow up, you cant tell me Brazil isn’t in a bubble. If oil continues its decline your going to see all hell break loose. The world has been funded by easy money, i truly believe those days are coming to an end. How in the world can we determine what true value is anymore?

    I have to agree with Paulson, creating another housing bubble is the only way to create jobs….and that’s why I’m buying real estate!

  76. Phil / maybe short euro stocks via an ETF?  Congress initially rejected Tarp and mkts fell.  Not convinced the trillion will be ratified by ALL the EEC governments, espec after German elections.  Euro at 1.28 and rising interbank rates signal scepticism.  Trillion is just a promise, not cash, and the IMF conditionalities probably unacceptable to recipients. Is there a 1x bear etf for Euroland stocks?

  77. Phil/SPWRA
    I caught your comment a little too late, as I got filled on the Buy/Write. I however was able to get a 45% discount, selling the Jan 17.5 puts and calls. Almost like buying Nieman stuff at JC Penny prices.

  78. LF:  PHANTASTIC, you are good.
    I seem to remember that you had commented about openeing AAPL jul250 calls but that was before the crash.
    Still, the reaction had to be fast as the  crash recovered within minutes.

  79. Phil – with oil up only 1.5% today while the market is 3%+, is this a sign we can get short oil near-term?

  80. RMM you are right.  Good memory.   I was talking about buying July 250 calls as AAPL pulled back, planning to scale in starting at 260 then scaling in ,more vigorously under 255.  So,  yeah, I scaled in big time.  I guess I was ready for the trade and when I saw it coming I just went nuts buying the calls.  I’m out of most of those now, as I said.  I want to study the situation overnight while sitting on mostly cash. 

  81. kustomz….. when looking at the Sovereign debt that exists today, and the required GDP needed to service this debt, there is absolutely no way any economist would be able to imagine the debt could be serviced, as the interest rates on this debt will be climbing soon, exacerbating the whole mess I believe the master plan is to inflate through dilution of the currencies, just to meet the obligations. Inflation is the only possible solution, and the policy makers are now faced with the alternatives (increased taxes) that if implimented will kill the economy. The best assets to hold, IMO is real estate, as you have stated, or precious metals, and maybe even a winery, as people will just get drunk, and say "to hell with it" when the realization sets in.

  82. Hey all,

    i have just posted a new long play of the week in JC Penney. We are looking for 4-6% in gains this week on our suggested entry. Read my analysis, entry, and exit here

    Thanks and Good Investing

  83. SRS/DMan – You are a braver man than I am.   We stopped trading them long ago.  We had a great short play on IYR though and maybe they’ll get pumped back up.

    BIDU/Mr M – LOL, good description!

    AAPL/RMM – You own $250 calls?  I thought you sold $250 calls naked?  Why would you own $250 calls and pay all that premium?  Sorry, it didnt’ even occur to me you would do something like that…  Luckily, you still have a 30 VIX so they haven’t lost all their value yet…

    Housing/Kustomz – Hyperinflation is the only palatable way out of this mess.  Europe resists the concept, Ben favors it, Japan can’t even understand it and China just want’s someone to keep buying the junk they make for the dollar store, even if it turns into the $100 store…

    Europe/Tusca – There is the EUR (long) but they have not options (no active ones anyway).  I don’t know of another or a bear fund as it’s not something I usually bother with. 

    SPWRA/Gel – As long as you have dry powder, there’s certainly never anything wrong with a 45% discount.  Feels good doesn’t it?

    Oil/Chuckerd – I would think oil will hold $75 and its very easy to scare up from here.  After Weds inventroy I’ll have more of an opinion as to direction but very tough to short with Memorial day coming up.

  84. Pharm – What do you think about SPPI earnings? Looks like the market didnt like it, stock down in today’s up market.

  85. Phil: yes I opened these JUL250 a tad too early at 21.73$, now they are 19$, so about 12 % down, they have not lost all their value, and all morning I ask you about making a spread out of it.
    BTW: these calls were bought only minutes before the crash, wish I had DD when the big dip occurred.

  86. Winery gel hold onto your money, there will be deals to be had. I love the argument of cheap Euro = more exports. Exports to who? Gov’s that cant fund themselves? I wonder why the reality of the situation is so illusive to those who’s understanding should be much greater than my own. Perplexing to say the least, or is it they just dont want the party to ever end….do they not know they draw us closer and closer to the abyss with every push back? My biggest concern, how in the world do we price stocks in this type of atmosphere?


  87. SPPI/Trad – revenues beat, charge somewhere in there (I think R&D and aquisition expense, but I cannot tell for now).  CC is tomorrow.  We will see then, but the Jan12 $2.5s are 2.45, so those could be bought reducing the risk on the stock.  Insiders have been buying this year, so I am inclined to just stand pat.  Profit takers have come and gone, and I am just waiting for now.

  88. phil, any good trade idea for TLT , the 20 year bond?
    and TBT is going lower now, time to put on my spreads yet?
    or should I wait for it to actually go down in a day, like it did last week to buy?  i think i know the answerw

  89. RMM…..Here’s what I would do to straighten out your AAPL position.  Sell the July 250s toward the end of the day (I’ll be they get to about what you paid for them).  Then buy ITM AAPL calls several months out.  Perhaps October 200′s, which can be gotten for about $60, so you can get 1 for every July 250 you’ve sold.  Now you are set up to SELL PREMIUM against those October’s.  And selling premium is what Phil teaches us to do.  You could sell short term premium, for instance 1/2 May 250 calls with plan to roll up to 2/2 May 260s if AAPL bounces.  That’s one way to do it.  There are many, but the point is to set it up so you can sell premium. 

  90. Winery/Kustomz – It’s all about the lupins actually….

    MEE finally showing signs of life. 

    Amazingly, volume has ground down to 188M on the Dow at 2:30 so sleeping since noon (140M) so we’ll see if Mr. Stick is waiting in the wings or if he spent himself in the pre-market frenzy.  I have to ask myself what is the purpose of jacking up the futures and then asassinating the VIX the rest of the day?  I suppose if you sold puts it’s a great deal, then you can buy back the puts and ram the market lower after you sell a bunch of calls, which will expire worthless in 2 weeks…

    U.K. PM Gordon Brown’s news that he’d step aside to enable a possible Lib Dem-Labour government has pushed the pound to give up gains; is news of a wobbly coalition really worse than the hung parliament of before? Sterling +0.6% against dollar, -0.4% against euro.

    "The broader concern about deficits in the euro-area make it unlikely that global investors will be appeased by a large bailout of Greece," John Hussman writes. "The window of relief about Greece (and the euro more generally) is likely to be much shorter than 18 months."

    Minneapolis Fed President Narayana Kocherlakota calls for a bank tax to limit the cost of "inevitable" future government bailouts. Governments will inevitably bail out major financial institutions because they cannot afford to let a run on a healthy firm take down the entire system, he argues.

    Moody’s (MCO -8.4%) CEO Raymond McDaniel dumped 100,000 shares of company stock the day the Wells Notice arrived, and Berkshire Hathaway (BRK.A +4.5%) sold 678,000 shares that day and another approx. 300,000 in the following week. "Did Raymond McDaniel and Berkshire know about the Wells Notice when they sold their stock?" Henry Blodget asks.

    I love that last one, especially as Henry Blodget is outraged by the shenanigans!  This is what happens when you have a total lack of enforcement – the crooks get more and more blatant!   I think they are just now disclosing to "regular" shareholders that they got a Wells notice in March.  I guess McDaniel thinks the term "looking out for your shareholders" means – "to make sure they’re not watching."

  91. Gel
    A week or so ago, you posted a trade in EUO. Does any of this today change your game plan on this instrument?

  92. Executed a short straddle, selling p&c on HLX (Helix Energy Solutions) Heavy insider buying, and IMO Gulf of Mexico oil production will not be going away, as it represents 30% of all oil production in the US. The CEO recently bought 1,200,000 shares at $14.75. Stock is up today, and I will wait for a pullback to buy the stock and sell some more puts. The company operates in the Gulf, North Sea as well as Asia..

  93. Phil – I’m not so sure about Warren anymore……

  94. LF: you are correct,
    long time ago I learned and accepted to buy options about 2 strikes ITM, how far out depends ,if I want a ST trade, not far out,
    most of times, I go out at least 3 months and sell premium against the long position, same with stock positions/covered calls.
    Up to this point I never have an issue: what experts typically insufficiently describe how you mange options positions when they go against you. I learned from PHIL, if it bounces, roll up, if it drops, roll down, A KEY question is : WHEN ? Phil is correct when he says that I react too fast.
    Another issue is : when just to open the call or when set up a spread: if its a really bullish situation, no spread, if mildly bullish, set up a spread. I am not so sure you experts would agree with this.
    Certainly, appreciate your explanations, your success proves yopu know what you are doing.

  95. drum/EUO
    I am keeping my position long term. The Euro has some long term problems that will bring it down to the 110 level by year end, and will reach parity with the dollar sometime next year. Yesterday’s loan policy to the troubled countries does not help the Euro, but will weaken it as this represents dilution of the Euro.

  96. "I love the argument of cheap Euro = more exports. Exports to who? Gov’s that cant fund themselves? I wonder why the reality of the situation is so illusive to those who’s understanding should be much greater than my own."
    Kustomz, I think it’s just fear; leaders are grasping at straws, and as soon as there is enough panic and political pressure, they cave in and do the expedient thing, even though everyone who isn’t out of their minds knows it cannot work. We saw it happen again this weekend with the Germans, I believe.
    Another trillion dollars that we don’t have and can’t raise is the ‘solution’.

  97. Kustomz / Skynet
    The governments of the developed world, like anyone in a sinking ship, will do whatever it takes to survive; in the past that usually meant creating a war, so creating some inflation is mild by comparison. I believe, like Skynet, our government has reached self-actualization; they think they can fund themselves, in fact they already are ( the Fed printing dollars to by Treasury paper )
    As to valuing stocks, the value is whatever the government agents ( GS, JPM, et al ) say it is !!

  98. Phil, I have ISRG May $340 Puts short.. I sold them for $5.10 when ISRG was at $375, but now they are $8.40 with ISRG around $344.. After further thought, I wouldn’t like to own these guys at $340 since they are still a bit expensive to me. Given how shaky the market is right now, no matter how strong these guys are fundamentally they still get dragged down with the market, so I was thinking if it’d be wiser to buy back the puts and sell short calls for the same amount of premium (inherently changing my perspective that at least until May’s expiration the stock presents more risks to the downside than to the upside). Would you agree/recommend this? Thx

  99. Kustomz….. with all these houses you are buying… are you accumulating an additional wife with each purchase, to keep them filled?

  100. DNDN getting hammered.

    AAPL/RMM – I suppose if you want to stick with them you can sell the May $250s for $8.70 but I don’t feel very safe with that play as you’ll probably only get $6 for the June $260s and that leaves you in for $7 on a $10 spread and I’m pretty sure earnings are after your expiration so no guarantee you’ll hold value.  Clearly, as you saw last week (and as I’ve said many times) AAPL is not going to fight the Nasdaq in a downturn.   Today, AAPL’s 7% gain accounts for 1/4 of the Nasdaq’s total gains so the rest of the Nas is severely underperforming at +4%.  AAPL can’t just hold up the Nasdaq (and look at BIDU, GOOG, ISRG, PCLN – they have a lot of high flyers that aren’t giving them 5%).

    Of course they mean only down moves!   Regulators and stock exchange officials are considering the creation of a market-wide circuit breaker system for all exchanges to halt or slow trading during a massive market move, sources say.

    TLT/DMan – That’s just the TBT play on the other side.  With the Euro failing today, we may still be in crash mode, which will push TBT down again and THEN hopefully we have a buy entry again.  I know you keep asking about TBT but I can’t, in good conscience, tell you I think it’s a good idea to buy something I just sold after loading up last week.  All that’s going to happen if you buy here is that you will end up selling again when I’m buying again on the next dip.  That’s just not the way I like to play things…  I don’t know how many times or different ways I can say this – TBT (and many stocks) moves in a channel.  If you buy at the bottom of the channel and sell at the top of the channel, you can do quite well.  If, however, you insist on buying in the middle of the channel – you will do quite poorly because it’s a 50/50 proposition which way it moves and any time you stop out over fear or margin issues, you take a loss that you won’t recover easily.  While it’s possible TBT is back to $42.50 being a buy point, we only have 6 hours of evidence so far and if there’s ANY doubt about an entry – you simply shouldn’t do it.  Believe me, we make enough entries with no doubts that we blow that we don’t need to add ones we’re not sure about too…

    EUO/Drum – I think $1.25 should hold for a while so not much room left for them to run near-term.

    HLX/Gel – Solid logic on that one. 

    Warren/1020 – Yeah, he’s been a big disappointment lately…

  101. RMM  When Phil talks about rolling up or down, my take is that he’s usually talking about short calls or short puts that are going against you, but that’s a question for him.  Everyone has their own personal trading style.  Mine is akin to David’s from Oxen, except I use options instead of stocks.  I tend to do momentum trading… fast….out fast….usually with ATM or slightly OTM options. I’ve had success with this.  But I also do spreads if I don’t feel like watching the trade too carefully.  Phil is very very good at these.  Watch how he does it.  For stocks that I beleive are going to go up slowly, steadily and ?forever, I like bull call spreads.  AAPL fits the bill for this.  Buy far out ITM options and sell premium every month is the way I like to do this.  It’s very similaar to selling covered calls because a deep ITM far out option is similar to owning the stock.   Many ways to trade successfully.  They have to fit your own trading personality. 

  102. LF: TXS, everything you said I agree and I am comfortable with  TXS.

  103. Phil, you still like that RIG play from last week (Buy 60 Jan 11 calls, sell 75C and 50P)?   I think RIG is oversold, but it’s getting pretty darn close to the long-term breakeven stock price, and was a heck of a lot lower in 2009.

  104. An old favorite of mine PAY (Veriphone Holdings) will report earnings on May 26. I’m optomistic. Bought the July 20 calls for .85

  105. Phil: on 9:18 I said.

    your recommended TNA plan from last week was only partially executed:
    closed the 1x june65 callers (6.8$ to 2$), opened 1x jan 35 putters  for 8.7$, still have the TNA stock (base 71$),
    the jan 35/55 bull call spread did not trade so with the expected market move UP, this is a new constellation,
    WHAT is your good advice for this new situation ???
    Your response was:
    TNA/RMM – Aren’t you glad you killed those callers?   Let’s watch for a while and see what happens, you are very, very bullish and down to about a $68 basis (profits from callers) so our goal should be to knock another $5 off but if we get to $60, maybe we can get the whole thing.  Let’s watch our lines carefully today.  700 on the RUT will be hard to get over and any pullback below 680 is a breakdown now.
    With TNA UP over 13% and the jan35 putters green, what should be done now ?

  106. Phil,
    I saw from a archives a few months ago you were on a trade in AMED, do you still like them long term or not?

  107. Eric…JRW lll, im just thinking maybe China Europe Australia and high price of commodities not to mention all the risk that has been pulled into the debt market have thrown a monkey wrench into future growth prospects. JRW I’m not comfortable that the Fed has to step in and buy 90% of the stock market. Money printing….. I think the world is turning Japanese..

    gel i just got engaged! I buy properties for income.. i think the prospect of letting my wives live in them defeats the purpose…LOL
    wait was that a question or a suggestion?

    Monty Python :-)

  108. In case anyone is interested, I’m been closing down all ‘disaster hedges’  that rely on ultra ETFs. In my case, they were call verticals on EDZ and FXP which I had in IRA accounts.  On paper, Phil’s plan for trading them is great, but I did not realize that they would become completely untradeable in a panic. In retrospect, I should have foreseen that this could happen.
    Also, I keep reading scary things about these ultra ETFs, such as their exposure to counterparty risk in a crash. They use swaps and other derivative instruments to get their leverage. And as we know, many of them were completely locked-down during the crash on Thursday; it was impossible to sell even the stock at a profit.
    I’m replacing these with long-dated puts on regular ETFs like XLF, FXI, and SPY. Options on these ETFs remained tradeable during the crash. I use partial cover by selling front-month options against them to keep the theta positive.
    Obviously everyone must make their own call here, but in my opinion the ultras are too unstable to protect an account. I’m now grateful for last Thursday’s wake-up call.

  109. kustomz,
    Congratulations!  I agree that future growth prospects look poor (for the global economy, not your relationship. :)   ). I’m now waiting to see if we are going to get a last blow-off move in the stock market.

  110. Kustomz… oh yes, property ownership and domestic retations requires much skill… you seem to have it all under control!

  111. They’d like to get IWM over 68.75

  112. OK, here’s one I’ve not seen before.  Perhaps someone can explain it (the TDA trading rep couldn”t).   Bought a few hundred  shares of BCP today (David’s rec) .  I look on the screen and see  MAINTENANCE. REQUIREMENT totalling 25% of the purchase price ot the stock.      Called TDA, and asked……… what’s up with this?   Maintenance on stock paid for with cash???  He couldn’t explain it and wouldn’t remove it.  What the hey???

  113. Phil…. another great trading day at PSW – learned much, profited much, and to you Phil – "thanks much"

  114. Phil – can you look into your crystal ball and make a prognosis for tomorrow? Will we hold this or go down tomorrow?

  115. 10,700 being defended at the moment – very important to someone.

    ISRG/Rav – I don’t believe in completely reversing on them unless you have good reason to turn bearish.  The May $340 puts are 100% premium, which expires in 2 weeks and they can be rolled to the June $310 puts, and those to the July $290 puts so, if you have the time – the question is do you want ISRG for net $285?  If you are worried you can sell the calls TOO and that gives you a lot more rolling power.  There’s a reason a short strangle has a LOWER margin requirement than either naked side.  Perhaps sell the $370 calls for $1.60 as that’s pretty unlikely or sell the June $380s for $4.50 – they can’t both hit you and $4.50 would pay to roll you to June $290 puts…

    RIG/Wassel – Sure I still like them.  I like MEE too under similar circumstances and you need to SCALE IN to the position and then you’ll be HAPPY when it goes lower.   Does the current catastrophe prevent them from doing business in the future is the main question you need to ask.  With MEE and RIG, no it does not.  With BP and GS – maybe….

    TNA/RMM – We are NOT breaking though so tough call.  I think the idea was to take the now $14 net loss on TNA and to get it back with the Jan $35/55 bull call spread at $8 now and that’s either a $20 gain over $55 (or a $10 gain at $45) and worst case is you own TNA again at net $35 so you still need to fill that spread and sell the stock.

    AMED/Kurur – I’d wait for a proper test of the 200 dma at $50 and then I’d be interested again. 

    Ultras/Eric – I think they were stress-tested enough in the last two crashes.  If something worse happens, then we’ll see but the problem is expectations.  We took October hedges because we wanted to get bullish and the October hedges would hold value well but, conversely, they also don’t gain value well in a May drop and, of course, the hyped up VIX plays hell with the short sales but notice it reverses very quickly too.  The higher the VIX goes, the more in the money the disaster hedges go and the less danger they are of being exercised.  Probably a sudden, 10% drop is the worst possible downside action against them.  The next 10% would have been where the money started coming or, of course, a flatline from here. 

    Congrats Kustomz – That’s a lot of thresholds you have to carry her across….  8-)

    Very indeterminate close.  Cash still king.  Europe does look like they can follow through and Asia has to catch up so we SHOULD get a nice, up open tomorrow, gapping back up to and maybe over today’s highs but I’d be more inclined to come in on the short side there. 

    JCP/Iflan – I don’t get a message from TOS on a straight buy. 

    Good job Gel, thanks!

    Oops, spoke too soon – big stick to get the Dow over 4% – running into sellers though, I don’t think they make it.    RUT 5% on the button!

  116. Iflan, its a mistake since you didn’t buy on margin…make sure you speak to management and not just schlep

    Thanks Eric
    gel, your one of the savviest and take that as a great compliment

    Bought GS and some GILD…going to pick up some DXD at the close

  117. lflan – the maintenance number from TDA is what they would require if you were borrowing on margin. The number itself means nothing if you have cash in your account.

  118. Well everyone finsished strong but the Dow, who just missed. 

    At the close: Dow +3.9% to 10786. S&P +4.39% to 1160. Nasdaq +4.81% to 2375.
    Treasurys: 30-year -0.97%. 10-yr -0.68%. 5-yr -0.33%.
    Commodities: Crude +3.02% to $77.38. Gold -0.71% to $1201.80.
    Currencies: Euro +0.28% vs. dollar. Yen -1.9%. Pound +0.36%.

    "The fundamental cause of the financial crisis has been people and institutions thinking they are more wealthy than they are; this spread to Europe as well and now we are seeing the comeuppance," Tyler Cowen says. He characterizes the Greek bailout plan as "a version of TARP in advance of the panic [which] would have come today."

    Rather than risk another shock to the global financial system, the Fed decided to help the Europeans try to get out in front of it by reopening swap lines with the ECB and other central banks. But some lawmakers view the overseas lending program as a bailout of foreign banks.

    Felix Salmon is concerned that the bailout’s "enormity will only exacerbate tensions between the euro zone countries over the long term. They’re not all partners together anymore: now they’re bifurcating into the rich lenders, on the one hand, and the formerly-profligate debtors, on the other."

  119. Phil, was curious what you thought of ES? I think I mightve asked you about them last week but there were a lot of questions at that time and I think the ES question *may* have been overlooked. Thx!

  120. I am throwing out an idea to TBTers out there trying to figure out how to hedge their positions. Phil can send out a smack down if it makes no sense.  Try going long on ABX as a TBT hedge. Seems that during this period when panicked people herded into the treasuries and gold, so maybe a long ABX holding may counteract any TBT pain. Conversely, if stocks resume upward and TBT goes up, it’s hard to envision ABX collapsing like a GLD, EUO or TLT position potentially could. Just an idea.

  121. IWM successfully above both trend lines; resistance now at 69.27 and 70.89. See you all tomorrow

  122. Thresholds.. She’s 6 ft tall won’t be easy but think I can manage ;-)

  123. phil . is it still ok to be short here ?

  124. "As to valuing stocks, the value is whatever the government agents ( GS, JPM, et al ) say it is !!"
    JRW, I marvel at your ability to remain agnostic.  A truly valuable trait to have in this market.

  125. kustomz,
    Just remember if you cant YOUR FRIENDS will put you up to it!   LOL.  Good Luck.

  126. Kustomz,
    Just remember – you still got time to reconsider! Since Phil states most of us are the top 10% income earners  and you are one of them Im gonna have to quote Kanye and holler PRENUP!!!! :)

  127. Thanks philit!!

    jromeha…i want children.. there’s no going back my friend, we’ve been through mediation and our lawyers are working on it. Disturbing but necessary.

  128. CaFords….I think you are right.  I looked back and it didn’t change buying power.  I know you are right. 

  129. kustomz, mediation for a prenup?  Talk about a buzz kill!  But, sure beats the hell out of mediation for a divorce.  Hey, if you aren’t open to adoption and she isn’t already pregnant, you may want to put a fertility clause in that thing!  Good luck-

  130. kustomz
    Good call on kids; they are THE BEST INVESTMENT in life !! Congratulations

  131.  Kustomz – good luck with kids and marraige.  Both are worthy of a heavy investment.   Good luck with GILD – it has been a huge drag on my portfolio – continue to be a believer in its fundamentals, but waiting for Mr. Market to come aboard – Market ignored aussie competitor who threw in the towel.

  132. Kustomz – Good Luck – a great marriage is the best investment you can make but it requires just as much work as managing any strong portfolio. You’ll win some and loose some but in the end it hoefully grows and supports you the rest of your life.

  133. Phil / MON : Any opinion on MON here? Was very weak today given the 4% run-up in the markets? I know your not a big technical guy, but do you think the weakness in a strong market signals that it continues lower?; i entered at 63.5. Would you add here, or wait? Thanks

  134. Jomama:
    Reading Barron’s this weekend I noted that GILD, a company you are deep into was rated #2 in the Barron’s 500. Good choice; sorry to hear it’s been a drag on the portfolio. When and if you buy again, please update us. Thanks.

  135. Gel: Just a few comments, first, thanks for sharing your many ideas and trades with us. It’s good to hear and see what a seasoned and successful  stock and option trader is doing.
    Second, I’m impressed with how, when the market was down and the VIX skyrocketed, you got really busy, really fast and started taking positions and selling theta… no hesitation on your part… bravo.

  136. Hey Kustomz, sorry for being so pessimistic – Im in the military and just seen too many guys who deployed only to come home and find their wives cheating on them… That being said, I have a 2 y/o daughter and understand why you want to have kids!

  137. jomama – U ain’t kidding on the GILD blues.  My account was crushed by them (and SPWRA), but they are sure to turn around (sometime). Healthcare in general is down due to the reform (see them at the bottom in the sector performance below).  They will pay off, its just a wound that needs to heal.

  138. matt, I have many single friends that weren’t always single. I’m 39 so its time to you know what or get off the pot!! I’ve always wanted children and feel I’ve been selfish in not giving my kids the best years of my life. I was too busy gallivanting, worrying about business and money. . :-(

    JRW lll, i can picture you sitting in a throne like chair in a smoking jacket while clutching your pipe and reciting these words :-)   "kids; they are THE BEST INVESTMENT in life !!"

    Jomama thanks for the kind words, GILD i like to buy good stocks that trade weak in a strong market, they usually find buyers the next day when all the other stocks suffer from profit taking.

    Dk…right on…my grand parents were married for 79 years!! Family always came first.

    jromeha,.. thank you for your service! Think im too old to get drafted…LOL..sad in a way. My nieces are teenagers now, but when they were little babies you couldn’t to tear me away from them. I think kids mature far too quickly these days.

    Thanks again for sharing your stories`and well wishes