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Wonderful Weekly Wrap-Up

I love it when a plan comes together! 

Last week, I felt like I was going to have to call Animal Control to help me fight off the bears.  As I mentioned in last week's Wrap-Up, all 14 misses (out of 55 trade ideas for the week) we had were bullish plays that we were grabbing on the way down.  On Friday we went bullish on USO, SSO, DIA, TBT (well, we're always bullish on TBT), AET, ABX, Copper Futures and even poor BP.  Those followed up on bullish plays we had taken on Thursday on TSRA, USO, MEE, FCX, EEM, ERX and XOM.  We went into the weekend still bearish but we were excited about flipping back to bullish.  My closing comment in the Wrap-Up was: " I’m hoping for a blow-off spike down on Monday with heavy volume, hopefully followed by a recovery over the next few days" and, gosh darn it, wouldn't you know that's EXACTLY what we got.

I don't MAKE the markets do these things, I simply tell you what is going to happen and how you can make money on it…  Needless to say, we had a LOT of fun this week at PSW!   Last weekend, however, was such a bearish frenzy in the MSM that it was making our Members nervous and THAT I do not tolerate so I wrote : "The Worst-Case Scenario:  Getting Real With Global GDP!" to illustrate why I felt our bottoms would hold and I began a Top 20 Buy List on Sunday and boy did we get some fabulous entries this week! 

Monday Market Movement – Will We Survive?

As I said on Monday Morning: "I already stuck my neck out calling a bottom so now we're just waiting patiently."  We were disappointed to have not gotten a stronger statement from the G20 over the weekend but it was just the Finance Ministers, so we weren't expecting too much until the big boys meet at the end of the month.  While we were in a buying mood, I cautioned against getting too bullish until we took back our anticipated "weak bounce" levels, which were the orange lines on Monday's Multi-Chart:

I pointed out (on another Multi-Chart) that Europe was already gathering strength so we were pretty confident things would go our way but, as I said in the 9:50 Alert to Members, SOX 340 and TRANQ 2,000 had be taken back before we could feel confident.  My outlook for the day was: "On the whole, I think this is a flush ahead of the real buying.  The futures were doing well and now they are trying to shake out the retailers before hitting the buy button.  At least I hope so."  Here's how the week ended up on the same Multi-Chart:

Notice how the 20 and 50 dma lines are converging on our trend lines.  That's not a good thing at all if we can't take those weak bounce levels, not just next week but – EARLY next week.  Right now, those 50 dmas (red) can still be turned up by a strong move (over our greens) by the end of the week but if we don't break on through to the other side then we may end up consolidating at the bottom of our range for quite a while, perhaps all month…

I do have hope as even old pokey, the NYSE, has made a nice move over the 20 dma and is ready to rumble over our 6,820 target with just the smallest of pushes on Monday.  The Dow is squished right between the 20 dma and our line of resistance, which makes perfect sense and, as I pointed out in yesterday's post, is EXACTLY what we expected to happen based on our observation of of Friday, February 13th.  Monday was a watch and wait day but we did do a little more fishing:

  • USO June $31/34 bull call spread at $1.80, now $2.48, up 37%
  • USO $31 puts sold for $1.20, now .50 - up 58% (pair trade)
  • Oil futures at $70, finished the week at $74.20 (many entries were made) – up $10 per penny per contract!
  • Copper futures at $2.775, finished the week  at $2.9265 (only entry for week) – up $12.50 per 0.0005 per contract!
  • DIA $103 calls at .53, out at .80 – up 51%

What's cool about the above set is – THAT WAS ALL IN MY FIRST ALERT OF THE WEEK!  I do so love it when a plan comes together!  As I said last week – whatever you do, DON'T refer your friends to our Newsletter, where we tell you what's going to happen in the markets every day, it's better for us if you wait until fall when prices are up 100% and this is most likely the last time you'll get this warning before the "I told you so's" begin!  Anyway, as I said, that was only the first Member Alert of the week:

  • BRK.B 2012 buy/write at $48.45/59.23 - on target
  • HMY 2012 complex spread – on target
  • VLO July $17 puts sold for .97, now .82 – up 15%
  • VLO 2012 buy/write at $9.96/13.73 – on target 
  • GLL July $39 calls at $2.20, out at $2.40 – up 9%
  • TBT June $39 calls sold for .90, out at .60 – up 33% (cover to our longs)
  • QQQQ $45 calls at .75, out at .90 – up 20%

Just as important as my ideas on what to buy are my ideas on what not to buy.  At 10:09 I told Cwan I did not like a new SDS entry, saying: "No, I don’t like any short-term hedges right now.  I said to cash out Friday as we should be at bottom here and, if not, THEN we can reposition but VIX is "only" 35 right now, which means we’ll still get good entries if we fail last week’s lows."  At 10:50, Sean asked about a cash position and I said: "If you have too much cash (+75%), then BUYBUYBUY.  THIS IS WHERE WE THINK THE BOTTOM IS!!!  We may go lower or this may be the last time you get these entries – EVER."

I cannot emphasize this concept enough.  Berkshire, for example, was at $70.45 when we bought it and we hedged it with the sale of the 2012 $70 puts and calls for $22 which dropped our net entry to $48.45 with a $21.55 profit if called away at $70 (up 44%) and an obligation to buy another round of Berkshire at $70 should they fall below that line at Jan 2012 expiration for an average entry of $59.23.  That's STILL 16% below the current price on a stock that tracks the S&P VERY WELL.  Sacrifice just $1.50 of that upside on a 500% S&P hedge and we're covered for another $7.50 drop, all the way to $51.73.  If you don't WANT to own 200 shares of BRK.B for $51.73 a share then DON'T buy ANY now for $70.45 but we are making long-term plans here and we are accumulating our first round of stocks at a possible bottom.  This is not complicated folks

 Hayek vs. Keynes – An Economic Smackdown (Redux)

The Keynesians were on the run and the belts were being tightened in Europe and the market was freaking out – although it was freaking out about stuff we have been talking about for months!  This is the problem with being fundamentalists – sometimes we are so far ahead of the market that we can't believe the reaction we see when things that are old news to us finally get the attention of the MSM but I have greatly improved my market timing this year by assuming that the average investor is a Cramer follower (something I previously refused to believe) and that the average fund manager is no smarter than Cramer himself.  Yes, I know that makes you wonder how they can possibly walk AND chew gum at the same time but, sadly, this seems to be the case as there is no "smart money" on Wall Street anymore

Wall Street has become such a blatantly rigged casino that all that is left under the tent are "rubes" (and there's one born every minute) that are pulled in by the carnival barkers like Cramer and his ship of fools at CNBC and, even worse, the "professional" gamblers (fund managers) who think they have a system which, like all systems, works until it doesn't.  Look, even SELMA Hayek laughs at all the suckers.  She knows that the game is rigged as well as the fact that you can't spend your way out of debt – it's asinine! 

You can spend your way out of a recession IF YOU HAVE BEEN SAVING but, if your recession is caused by excessive debt – then you are simply in denial.  Imagine if the bible story had Joseph interpreting the Pharaoh's dream and telling him – "What you need to to is party for seven years like there's no tomorrow and then, when the drought comes – we'll all be so fat that we can sell it as a diet program."  That's right, even thousands of years ago they had economic cycles and Joseph did not get famous for his tax cutting programs – Joseph advised Pharaoh to SAVE during the good years – to put the surplus in a "lock box," so to speak, so that it would be available in the event of a real emergency.

Testy Tuesday – Gentle Ben vs. Reality

Nothing sums up the US Economic policy better than this picture of Ben praying.

Even in his upbeat speech on Tuesday, Bernanke said he is "hopeful" the economy will gain traction.   Hey Ben – "hopeful" is how the people are supposed to feel – you are in charge of MAKING IT HAPPEN!  We are the friggin' United States of America for goodness sakes – why can't we remember how to act like it?  "My best guess is we will have a continued recovery, but it won’t feel terrific," Bernanke said. 

Whuck???  Surely this man can be fired and replaced with someone who has a spine…  I don't know if many people realize this but we are currently following the VERY DANGEROUS economic path that Bernanke laid out in this thesis paper (Philosophy, not Economics) at MIT in 1979.

Chapter 1 analyzes "the problem of making irreversible investment decision when there is uncertainty about the true parameters of the stochastic economy."  Chapter 2 claims that: "Dynamic considerations can make periods of unemployment and excess capacity part of an efficient growth path" (whuck again!) and Chapter 3 drives it home by claiming that labor contracts can be broken during long-term periods of "apparent labor market disequilibrium."  On page 107 of his dissertation, Bernanke says (and I kid you NOT):

Because of the prohibitions against slavery or indenture, and because of difficulties in setting a legal standard of worker compliance, labor contracts are not fully enforeceable on workers.  This incompleteness causes observed contracts to differ from the IDEALIZED model in several ways.  Contracts must be structured to make voluntary compliance attractive.  This may involve staggering benefits towards the end of the working life (through seniority rules, for example) setting up artificial barriers to mobility or giving workers firm-specific training which is not easily used elsewhere

In other words, Dr. Bernanke is a doctor of totally screwing over workers – the perfect man to head the Fed, an organization that was designed from the outset to hand control of our nation's wealth to the bankers – who have been sucking it dry ever since.  I won't get into it here but either read or watch "The Creature from Jekyll Island."  Pat Buchanan says

Once you do, you will fully understand what is really going on with the banking bailouts and our current economy. Bottom line? Everything you hear on TV or read in the press regarding the bailouts and banking system is a lie. This video is possibly the most important you will ever watch – so much so that you may want to view it several times. As more Americans finally figure out what is really going on I expect to see some aggressive action against the Federal Reserve and their cheerleaders in Washington.

How many people in Congress do you think even bothered to read Bernanke's thesis before approving him?  Did Obama?  Let me in there to ask some friggin' questions – I'll make Ron Paul look like he's been serving Ben tea!  To some extent, I often wonder if this whole thing – this economic collapse of ours – is nothing more than a grand experiment to Bernanke to see if he can bring about a repeat of the Great Depression that he loves so much to study.  Remember, Ben doesn't have to be involved in a conspiracy to debase our currency and drive down labor costs so the top 1% can transfer wealth up the ladder – he only has to be the right tool for "THEM" to get the job done.  Anyone who actually reads what Bernanke spent his college years writing can see is is the perfect man for that kind of hack job! 

Ben did use the term codependency to describe our relationship with other countries.  While the good doctor seemed to intend it to be "the good kind" of codependent – I thought the bad kind was a very good description of the current global crisis.  Still, Bernanke's statement was SO panic-inducing and the news was SO negative that I put our a hyena alert that morning as I warned:

At this point, this is nothing more than what we call hyena attacks, which happen when the bearish investors send their media hounds out to attack any weak prey in an attempt to foment a very profitable panic in a stock or a currency and you will often see them at key turning points, as it’s often the bears who are panicking as they reach the bottom and they are desperate to get out of their short positions before the situation turns around.  This does NOT mean that we go cotnrarian to the Hyenas, though – we learned in 2008 just how effective these attacks can be but they are a good sign that a stock or, in this case - a country, is under attack.

Despite all the gloom and doom in the MSM, we continue to steer more bullish at PSW.  We have been dipping our toes in the water and bargain-hunting blue-chips and even this morning I posted a long on both oil and Dow futures, which are both up nicely at 9:15.  We got a nice penny spike on copper futures yesterday (and that’s plenty for copper!) and we added longs (well-hedged still) on BRKB, HMY, VLO and TBT and, after hours, I laid out a nice SSO (ultra-long S&P) option spread that has 700% upside if the S&P can hold 1,050 through January.

That SSO spread had been discussed in Monday evening's Member Chat and we had VERY easy entries thanks to Tuesday morning's panic drop.  It was a Jan SSO complex spread at net .50 that makes a 700% profit for our Members if SSO is over $33 (now $36.32) at Jan expirations but, due to this week's quick little bounce, the spread is already at $1.40 and up 180% in the first week – not too shabby!  Always keep in mind that that's the kind of insurance we like to have IN CASE we are too early with our bullish bets.  Fortunately, it turns out we seem to have timed them just right this week:

  • SSO Jan complex spread – on target
  • UNG 2012 buy/write – on target
  • UNG Oct complex spread – on target
  • OIH July $89.10 puts sold for $5.70, now $2.30 – up 59%
  • RIG 2012 $35 puts sold for $9.20, now $9.10 – up 1%
  • GLL July $39 calls at $1.65, out at $2.40 – up 31%
  • FAS Jan $10/20 bull call spread at $3, now $6.30 – up 110%
  • FAZ Jan $23/32 bull call spread at $1, now .90 - down 10% (brilliant pair trade!)
  • C 2012 complex spread – on target
  • SDS Sept $38/42 bull call spread at $1.05, now .82 – down 22% (still good insurance!)
  • SSO Jan complex spread – on target
  • MTN stock at $38.50, now $39.09 – up 1.5% (Oxen idea)

All those trade ideas came by 1pm.  The rest of the day we watched the action.   At 2:17, with all of our bets bullish and the Dow barely holding the 9,800 line, I said to Members: "We are right on track to hit 10,000 tomorrow by the way…  We’ll need good consumer confidence numbers at 5pm but then we have wholesale inventories and the Beige Book at 2pm that Bernanke thinks looks pretty good.  Friday is May retail sales and expectation have now crashed for those (0.2%) but gas sales will drag them down.  To me, it looks like a major seller, not major selling and when this guy is done, we can move up pretty quick."  Here's the chart of the future I predicted:

We didn't make any momentum bets into the close as I'm never THAT confident and we already had so many bullish positions it was silly to add overnight risk to our list of crimes if the whole thing hit the fan but, then we got (at 8:59 pm) a very odd, very wrong looking push lower in the futures that I decided was Japan reacting to what was now day-old news (Fitch downgrade) that we had already shaken off in US trading so we went long on Russell futures at 612.  Those are now trading at 644 but, of course, we took that money and RAN!   We also added the PGH trade but I'll put that under Wednesday's list…

Which Way Wednesday – Beige Book Edition

We love our Beige Book days – they are always good for wild rides.  Wednesday was the beginning of our pattern recognition days, where I pointed out that the reason we had flipped bearish in late April was simply that we had gone over the top of our predicted trading range and the reason we flipped bullish this week was because we were below the bottom of our trading range.  Unlike TA people – we don't just keep extrapolating every trend to continue forever…  As fundamental investors we believe there is an actual value to the stocks we are trading and sometimes they are priced to high (and we sell) and sometimes they are priced too low (and we buy).  

I laid out my rangeish (not bullish) premise in Wednesday's post so I won't rehash it here.  The very interesting thing about Wednesday was that I LIKED the Beige Book report but we sold off so I had to go against my original plan and stay bullish into the apparent rejection.  That was hard but it paid off nicely the next day.  We didn't know that in the morning but my closing statement to the morning post was great advice:

We’re very bullish here UNLESS we fail to retake our weak bounce levels – then we’ll be getting the hell out of our short-term bullish positions and thinking long and hard about the next move.  Copper zoomed up to $2.87 and oil is up to $74 pre-market so congrats to all who played there but – DON’T BE GREEDY!!!  Use stops and remember that cash is still king - we are finding great opportunities every single day in this crazy market so why lock into one-way bets until things settle down?

I amended the statement in my 9:51 Alert to Members, where I added: "If we are going up, the market will probably buck like a bronco because they don’t want to give the retail longs and easy ride so be very careful out there!"  As you can see from the week's chart above, the movement of the day certainly bore me out.

  • PGH Jan buy/write – on target
  • USO June $35 puts (rolled) at $1.10 avg., out at $1.40 – up 21%
  • ATPG 2012 buy/write – on target
  • BTU 2012 buy/write – on target
  • QQQQ July $45 calls at $1.08, now $1.65, up 52%

Since we had run up so much into the book, I had warned members at 12:22 to cover our long DIA positions and at 1:51, just ahead of the book I said: "Well I flipped bearish on those DIAs and then went to go eat something so I’m guarding against a sell-off and I’ll eat the delta difference to the upside until I lighten up on the callers so I’m kind of ready for anything.  This BBook covers mainly May, when we know consumer spending slowed down but oil prices really plunged and that should have perked up outlook for a lot of people.  If we got a nice pullback ahead of the book, I’d risk long but we’re at the top of a 2.5% run here so I’d rather guard against a pullback and be pleasantly surprised if we break higher."  Again – I can only tell you what is going to happen – what you do with that information is up to you! 

At 2:04, I got a quick glance at the headlines and warned Members: "BBook is here!  Nothing too exciting at a glance but markets will do what they plan to do anyway.  If we don’t pop new highs soon, most likely we sell off."  That was followed with my full review for Members at 2:30, where I decided it was bullish enough to fight the tide of selling but not bullish enough to support oil at $75.  By the last 15 minutes the selling had just gotten silly so we got bullish on our DIA hedges and added the above QQQQ play into the close.

This is NOT David Ristau's graduation party!Thrusting Thursday – Where's Our Rocket Fuel?

I was a little worried early in the morning as we weren't getting the big bounce I'd hoped for in the futures so I sent out an early, 8:01 Alert to Members where I said: "Futures are up but weakening as Euro is still testing that $1.20 line.  Copper is $2.85 and over that line is good and oil is still high at $74.76 but too dangerous to short futures.  We are in the same position as yesterday and needing to do the same thing as yesterday so those are the morning levels, pretty much we need a 2% move up and, if we don’t get it today, I’m going to get a bit nervous into the weekend."  You can tell from the post's title (published at 8:29) that we still weren't getting much action just one hour from the open

By the way, this is NOT a picture of David Ristau at his graduation party as many have suggested…  8-)

We discussed how fear was driving the markets and how we had to stick with our plan (well-hedged, long-term entries on blue-chip stocks) and BE PATIENT.  You know I'm serious about patience when I start quoting Mr. Miyagi and telling people to chill out and go watch  "The Man Who Planted Trees" again.  I would urge anyone who was impatient to read Thursday's post – especially now with the retrospect of what actually happened the next two days.  As I said at the time:

There’s an old saying that goes:  "Patience is waiting. Not passively waiting. That is laziness. But to keep going when the going is hard and slow – that is patience."  Teaching options strategies is easy – teaching people how to patiently wait for the right opportunity to deploy them is the real challenge!  We went to cash early (see yesterday’s post) at the top and had to wait for a clear signal to go short and now we are PATIENTLY waiting for a CLEAR signal to go long.  Right now, the going is certainly hard and slow but this is the low-end consolidation that we didn’t have before the last rally and it’s just what we need in order to fuel up for a real move up to new highs once we see some real signs of a recovery.

 

  • AAPL June $260 calls for $1.10, out at $1.50 – up 36%
  • DIA July $105 calls at $1.10, now $1.30 - up 18%
  • DIA June $104 calls sold at .43, still .43 – even (pair trade)
  • QCOM Jan artificial buy/write – on target
  • OIH July $89 puts solf for $3.25, now $2.30 – up 29%
  • VLO Jan buy/write – on target
  • ERF Jan buy/write – on target
  • FDX 2012 buy/write – on target
  • TNA stock at $40.70, out at $41.70 – 2.5%
  • TNA June $38/41 bull call spread at $2.20, still $2.20
  • TNA June $38 puts sold for $1.80, now .90 – up 50% (pair trade)

Turning $10,000 into $50,000 by January 21st! 

We were so pleased with the way the week was going and ready to add a new set of disaster hedges (to lock in our gains) at Dow 10,250/S&P 1,100 that I decided we needed some upside hedges as well.  That led to another round of our upside hedges, plays that return 500-1,000% in a rising market in a relatively short time-frame.  This is NOT about taking your only $10,000 and rolling the dice on making $50,000, this is about taking 10% (or less) of a $100K virtual portfolio and adding some risk, that we intend to hedge with a $1K, 5x downside play that should cover ALL of our losses with 50% stops

The last time we did this was in February and, of course, all of them worked on that crazy run we had so this is more like a re-load of similar plays at a similar spot. 

Flashback Friday – Pattern Recognition 101

This time we focused on the S&P chart and how similar the current pattern of trading is to the pattern we saw in that February sell-off.  I posed the question:  "Is it possible that when computers do almost all of the trading that the market begins to fall into highly repetitive patterns or is is just some huge coincidence?"  I pointed out that the pattern of Friday, Feb 13th had a dip in the morning followed by a recovery to a flatline into the close and we almost repeated it exactly except for the late-day stick, that took us to 10,211 at the close.  I'm not sure if that makes me happy or not – we'll see on Monday but we were already so loaded up with bullish plays that there was little for us to do on Friday but sit back and watch the fun – a very nice way to finish a successful week of trading!

We did, of course, stick to our guns and take advantage of the morning dip with the pickup of the July $105s and the sale of our USO puts, which we had picked up on Wednesday and rolled on Thursday - we love to take quick profits and run…

  • DIA July $105s at $1, now $1.30 – up 30%
  • XOM 2012 buy/write – on target
  • XOM 2012 complex spread – on target
  • FAS/XLF Jan complex spread – on target

So, all in all, an amazing week with just two misses, out of 44 trade ideas and both were hedges on Tuesdsay (FAZ and SDS)!  We are too bullish but we closed all our June calls and it's not likely even a drop on Monday will force us out worse than even on our gains so we could afford to stay bullish into the weekend but I did not like the action into Friday's close which was, as I said, an unnecessary stick.  

We did NOT hit our weak bounce targets and we are ready to slap out TZA and SDS disaster hedges down hard on Monday if we can't hold 10,000 on the Dow or 1,070 on the S&P and we'll find out tomorrow night if Europe survives the weekend so tune in for that news in Member Chat.  So far (9pm Saturday), no one seems to have said anything particularly stupid (in the EU I mean – not on Fox) and that's encouraging at the moment but they're probably all watching the World Cup and staying out of trouble

 


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  1. XOM- Phil, variation on an XOM play you outlined earlier in the week/ your comment?
    Jan 12 vertical call spread $52.50/60 for $4.45 plus equal number of short puts- Jan 12 $50′s at $4.45; TOS PM margin is $437/contract. Pays $700+ at $62/share with a b/e down to $52.50 or about 15% cushion.


  2. Phil – Yesterday you mentioned: "July 4th is next and we have the 2nd off."
     
    We are going to miss you July 2nd, but the rest of us (and the market) will be off on July 5th. ;-)


  3. Hey Phil – we need to set up a spreadsheet for FDA dates on the site somewhere (Kinda like Opts and Biomed Reports), as I need to do a better job at keeping track of these and if I am not around for others to reference.  Otherwise, I may try to link it somehow to my site.
     
    I have the TA book available for anyone who wants it in PDF format, so email pharmboy123 at gmail.  I have to apologize, because acrobat moves things around when PDF’d.  Give me a few days, as I would prefer to send out a bulk email (it will be b’cc).  Thanks.


  4. Phil…. I thought I would save this comment for the weekend, as the market volatility has us concentrating on the opportunities for day trading. I know you welcome ideas on long term buy/write candidates, and I would like to suggest one that I bought last week. It is SI ( Siemans ) I have invested before with this multi-national giant in the past, but have re-entered buying the stock, and selling a short straddle of Jan p&c @90.. I see big growth going forward, as they are dominant in the healthcare sector (my company used to compete with them, and they are formidable).  They have recently partnered up with Accuray and the Cyber Knife product.. Based in Germany, they are in a terrific position to advance their massive export business with the Euro weakness. The icing on the cake is they are the largest providor of high speed train that are in use in so many countries ( China has 60 of them, and 100 more on order. This company is to high speed  trains as BA is to aircraft., as they have a substantial backlog of orders. By theway, they pay a 2.5% dividend, and my discount entering the B/W was 24%. I some ways, they are similar to GE, but without all the financial baggage. Just a thought and hopefully a contribution!.


  5. PhIl: I truly enjoy your site, but do not have the time to stay on it every day.For subscribers like me that don’t day trade & may not even look at your site for several days, it really would be helpful if you:
    1.Summarized the new daily buy/writes at the end of the each day so the subscriber does not have to read thru all of the several hundred comments to find your recommendations and 2. Have a chart or graph at the begining of the page that shows,on a daily basis, your current recommendation for cash positions and 3.Show your active hedges/mattress plays you are still in favor of in a table format.
     There is so much activity on a daily basis,it can get confusing.For example, a few days ago, you told me nmot to reenter the SDS spread but you preferred the TZA hedge,but above you say  the SDS hedge is still viable.It’s very confusing & by the number of repetive questions ,I’m sure other subscribers get confused.The above summary would be very helpful & your subscibers can get all the basic info they need in less than 5 minutes.It would also save you the trouble of repeating answers to the same question.As always, I appreciate your insight and efforts.Thank you.
     
      


  6. FYI: For those having trouble keeping up, Evelyn Wood is here to help. ;-)  


  7. gel1
    I was wondering if Siemans still makes telephone switching networks? Around 1981 I decided to try selling istead of technical and sold a few of them. Never ever heard of a problem after sale, one was Blue Cross Ins., a very big one.


  8. Guys
     
    SI is one of the biggest players in wind energy as well.


  9. Hi gel1 
     
    As a good old German I have to correct you on the SI spelling as I myself could not figure out what company you are talking about untill you mentioned High speed trains The company’s name is Siemens AG and is in deed one of the larger companies in Germany.


  10. gel1
     
    You can as well enter a Jan11 75/95 vertical at 11.90 and sell a jan 11 90 put against it for 11.20 would cost you only .70 per contract but you stuck with a 3,000.00 $ margin!!!


  11. gel1
    checking some charting of SI their low was in Sept 09 about 83 and up to now they moved between that and 103 So by setting up the above play you would only loose money on or about at 83. Interesting play


  12. XOM/Pstas – That absolutely works.   It’s just a question of your comfort with a put-to price and, keep in mind what happened to "ultra-safe" BP owners!  As long as you REALLY want to own the stock then getting a margin call isn’t an issue.  Of course if you get jammed up with XOM like BP (50% drop) you could always roll out to 2x XLE or something rather than a specific company on the put side to distribute the risk.  As long as you never sell a put you aren’t ready willing and able to roll down to 2x a lower strike – you are very unlikely to experience heartache – even during a "flash crash", which now should not happen with the new rules.

    July 5th/Diamond – Thanks althought an extra-long weekend there is very tempting then..

    TA Book/Pharm – If you let Greg know I’m sure he can hook up some kind of downloadable doo-hickey like Sage’s book has.

    SI/Gel – The EU’s version of GE.  I like them in general but haven’t looked at them lately.  Very good idea!

    Stuff/Dflam – Seriously the blue background and the bold letters are too difficult for you to bother with?  The bias thing is a good idea if we could set it up in some easy change (for me) format but I don’t think you get the concept that I DON’T want everyone in the same positions and I certainly don’t want to be putting up lists so sharks know where to attack us.  As you noticed, I already stopped listing our buy/write positons and complex hedges both to allow our members time to fill as well as to not let MMs and funds know what we’re trading and when we’re exiting.  What you want to do is put up big neon signs that telegraph everything we do – no thanks. 

    If you need the handholding, there’s lots and lots of sites that will hold your hand and give you spreadsheets but I’m looking for guys like Gel, and Pstas and Pharm (comments right above you) who bring trade ideas TO THE GROUP that ADDS to our DIVERSITY.  If you want a list, stick to the buy list top 20, which will be updated as needed.  The SDS spread is still viable and NOW (at my 10,250 target) is a good time to enter it, a few days ago it was not but, since I put it up and failed to mention not to enter it (as I did with TZA at the time) then I figure I should count it as an open trade in case anyone is in it. 

    Meanwhile:

    The Coast Guard hands down an ultimatum, giving BP (BP) 48 hours to boost its oil containment capacity. What exactly will happen in 48 hours if BP fails to comply is not entirely clear.

    Just one FDIC-insured bank failure to report, but not a small one: Washington First International Bank of Seattle, with $520.9M in assets, becomes the 82nd to fail this year.

    Seven states – Illinois, Connecticut, Indiana, New Jersey, Hawaii, Louisiana and Oklahoma – will run out of money to pay public pensions by 2020. That hasn’t stopped them from hiring new employees. While the private sector has only recently begun hiring more than firing, there’s barely been a whiff of recession in the public sector

    Buy-and-hold will suck your portfolio dry because the majority of stocks, given enough time, lose money. The top-performing 25% of stocks are responsible for all the gains in the broad market. Your only chance to win in this loser’s game: active management using systematic relative strength weighting.

    An argument that despite headlines about their excesses, hedge funds – managing around $2T in assets – are the structural key to a stable financial future.

    U.S. companies are holding more cash in the bank than at any point on record: $1.84T, a 26% increase from last year and the biggest jump since the Fed began keeping records in 1952. But not all are hoarding their cash; they’re returning it to shareholders through repurchases.

    Delinquencies for U.S. commercial real estate CDOs declined again in May to 11.6% from 12.1%. Fitch notes the index likely understates the extent of credit risk assets, "as managers continue to pursue resolutions and/or trade out potentially troubled assets at losses to par, often prior to actual default."

    Taken together with the jump in consumer confidence, some economists see the sharp decline in retail sales as a "one-month anomaly." And the numbers aren’t out of line with the cautious outlook held by most Fed officials.

    We need more, not less, deficit spending to keep the economy afloat, David Levy argues. "We’re going through a period of enormous weakness in business investment, household investment," he says, and "we should do… much more long-term federal investment." Deficit hawks are "taking the Hooveristic, Euro-masochistic type of approach."

    A Goldman Sachs (GS) settlement over various investigations could reach $15B, according to Execution Noble, which makes trades on behalf of big investors. An analyst at Execution estimates such a figure would knock down Goldman’s share price to the $105-$110 area.

    It took until the last hectic half-hour of bidding, but the eBay-auctioned (EBAY) lunch with Warren Buffett drew a record $2.6M bid.


  13.  Phil, i need your opinion on a particular trade.  I sold BP 2012 50 puts at around 11$ towards the beginning of this crisis.  So a few questions – what is your opinion of the whole thing.  Do you think they could go bk? or is that just silly.  So my choices are to kill the trade and take my medicine which would be 19k at the moment buy some puts and decrease my risk and margin.  Your thoughts/opionion on this would be appreciated.  I underestimated (along with other folks) the lingering potential of this oil well.   My unemotional side says that BP stays solvent, this will take years to litigate, and there will be shared liability but at the same time, if the relief well doesn’t work or this takes longer than bp is history.  thanks.


  14. yodi/SI
    Danke shoen.. Yes, you are so right – they are Siemans AG, and based in Bavaria, home of the Ocktober Fest, which I have attended 7 or 8 times. Definitely one of the best festivals in the world.  For many years, I would attend an annual conference in Garmisch, and then spend a day or two in Munchen. I know this company well, as I competed against them for many years in the medical/dental equipment business. They are one off the best companies in the world, and now they are the largest manufacturer of high-speed trains worldwide. Additionally their healthcare products are some of the best, and wilth Accuray, will be on the "cutting edge" with the Cyber-Knife.. The high-speed train growth is quite amazing and understandable. In terms of pasenger miles per gallon of fuel, jets get 36 PMPG, whereas the trains get 725 PMPG. These trains travel at 250 mph.
    You have structured a very nice vertical spread, and it would be a great way to play it. I bought the stock, as I want the dividend, and with the short put, it gives me a nice discount, as either way I would not mind the assignment. I love the findamentals of this company, and I know they are very good at the execution of their business plan. The charts and Euro weakness are the additional kickers. Guten abend, and thanks for the input! 


  15. Jo/BP
    I did the same in buying at about the same level. I took my loss and placed the money on something that is better positioned for success. I made the decision when I saw the whole fiasco turn into a political "witch-hunt", as this could really become nasty. The risk-reward ratio was just not worth it to me….. plus every bit of news that comes out puts you on edge, and disrupts the needed positive mind-set for successful trading. I’m not saying I’m right, its just what works for me.


  16. thanks gel – probably gonna close it out and take my lumps.


  17. To all – BA
    I know some of you are from the Seattle area and may be well informed, but since I live in the Wichita, Ks area I wanted to pass along some info that may or may not be well published in the national media. In 2005 Boeing sold the Wichita division to the Onex Group. Onex subsequently went public with Spirit AeroSystems. In 2 weeks the contract expires for the largest union, the machinists. If there were to be a work stoppage, the entire 787 and 737 line would be shut down and Boeing would be severely impacted. Will it happen, who knows, but it might be worth considering in the short term.


  18. Good morning!

    BP/Jo – Whitney Tilson, a value hunter I have a lot of respect for, thinks BP is stupidly cheap here.  What I’m worried about with BP is a strategic bankruptcy as opposed to an actual one.  They are not a bank, so investors can’t run them out of business and they don’t even need money to borrow as they make another $2Bn every month.  You have to put the whole thing in context.  Let’s say that they amortize their damages over a 15-year loan.  In 15 years (180 months), with NO inflation, they will make $360Bn so, even if this clean-up costs them $100Bn – the net impact on future earnings is just over 25% and far less assuming growth and normal inflation. 

    Due to the current uncertainty, the stock is off about 50% (that’s where I called the buy, once they hit 50%) so I’m thinking 25% undervalued at least ($45 being fair this year) but the uncertainty will persist, possibly for years.  Your real danger here is that the Administration starts passing anti-BP laws that uncap all liabilities and speed judgements somehow to the point where BK is forced to do a pre-packaged BK but it’s not terribly likely.  Since it sounds like you sold about 20 contracts and that’s $100,000 exposure to a BK, I’d (assuming that’s not out of $10M) roll to 2x the OIH 2012 $75 puts at $10.40 or at least roll 1/2 to those and 1/2 to the BP $37.50 puts at $11.50 to cut down on the BP exposure.

    In a logical world, BP will go to some kind of bulk arbitration but it will take YEARS to settle so the play on BP I do like is buying 2x the 2012 $37.50s at $7.20 ($1,440) and selling 1x the Jan $29s for $9.20 ($920, net $520) and selling 1x July $37s at $2 ($200) so your entire risk on BP going BK is $320 but you are in position to sell $200+ in premium for the next 18 months ($3,600) against $320 in cash (to start) and $750 in margin.  The expectation is there will be little change in the $2 cash spread between the 2012 and Jan caller and, of course, you have 12 months to roll them too! 

    BA/RJ – I hope that strike happens as I’d love another crack at BA in the low $50s!


  19.  BP/Phil – Phil, please explain a little more how this trade would work. Suppose BP caps the well by early July and the stock rises back to $40 by July expiration. You’re on the hook for $3 for your July caller. What would you do then? Cash out 1 of your 2012 calls to cover the difference? Eat it? Roll- to where, and why? Same question assuming BP is $40 by Jan 2011 expiration. 


  20.  Phil…..What would you do with the following AAPL setup?   Long October 250c (20), long October 26(30), and short June 250 (50).  Thanks.  


  21.  typo,,,,,,   October 260, not 26.


  22.  I too have a sense that BP is going to come out of this in good shape.  Once the geyser is capped, and it will be, possibly within 2 months, things will settle.  And I don’t think we will stop drilling for oil offshore.  We are too addicted to the stuff.  They will just put down more stringent laws regarding disaster plans, and try to get them enforced.  I’m playing BP long-term long.  


  23.  finance.yahoo.com/news/Obama-and-GOP-bicker-over-apf-288048097.html
    Here’s an interesting article concerning increasing doctor’s payments for taking care of medicare patients.  It’s not really an increase, but rather a catch-up payment increase.  They bring the payments back up to proper levels based on inflation etc. every few years and they always argue beforehand whether this is a good idea.  Interesting primarily because the parties are switched.  In past when this has come up, and it does every few  years, Republicans have wanted to pass the measure, Democrats have balked.  Now it’s reversed.  But Obama is right on this one.  If you cut back doc’s pay for these patients the docs will, in many cases, just stop seeing medicare patients.  The pay for these patients is already so low that some docs have already stopped seeing them.  We’ll see how it plays out.  


  24.  Payments to doctors varies considerably by region. For example, here in DC it’s a very competitive market, so most private insurances are about as bad as Medicare. Worker’s comp, auto, and trade union insurance is a lot better, but less common. In some parts of the Southeast, South, the midwest, and mountain areas private insurance exceeds Medicare by a large margin, and doctors frequently talk about limiting Medicare access if rates drop 20%. Historically, incentives in medicine have been totally backward, and with declining reimbursements it only gets worse as doctors scramble to provide more of the same inappropriate services for less money to maintain their income levels. What is needed is some kind of shift to payment for ‘performance’, but I wouldn’t bet on anyone with the power to implement it figuring out a fair system that achieves it’s (stated) goals. More likely than not "pay for performance" implementations will simply shift the risk of patient lifestyle choices from the insurer/government to the doctor (to which I wholeheartedly say, f you). The only fair way to fix the system is to shift the risks for lifestyle choices back to patients, and stop providing incentives to corporations to profit from making us sick and dependent on the system.  I treat chronic pain and a large segment of my patient population provides a great example of what’s wrong with American culture (entitlement, dependency, short-sighted thinking, laziness…). 


  25. A couple of items for weekend reading/drinking pleasure…
    First, Shadowfax – I misspelled that brand of Scotch – it’s Finlaggan –
    http://www.whisky-distilleries.info/Finlaggan_EN.shtml
     
    And Phil – a local (LA area) viewpoint on the mortgage problems and the effect on municipalities from one of the (rapidly shrinking & badly mismanaged) LA Times’ few remaining good columnists:
    http://www.latimes.com/news/local/la-me-lopezcolumn-20100613,0,275932.column


  26. thanks phil, i have 10 contracts of BP Puts that i have sold (10 2012 BP Puts at the 50 strike) to be precise.


  27. phil, on the bp explanation, i was a little unclear on the OIH 2012 75 put roll?


  28. dr craig are you an anesthesiologist who does pain? iflan, anesthesia medicare rates are about 18$/unit vs about 70$ a unit for commercial/private insurance. i would rather go to starbux than do a medicare case – hospitals have to subsidize anesthesia groups that have a high medicare mix. IMHO – payment will evolve into a single payment bundle to a hospital/system that will inckude everything from physician services to the hospital stay. it will be easier to control cost when you send one payment. all of medicibe will move to a anesthesiologist – crna model. surgeon- physician assistant, family dr – nurse pract. I took care of a malpractice attorney who told me that PA’s and nurse practioners are the gift that keep on giving for trial attorneys. they are being given increased autonomy and minimal training. not a good time to be sick.


  29.  Phil,
    My question/comments pertain to SVNT  &  NLY
    SVNT – I think that possibly the extreme option premiums in the stock might make it an interesting candidate as an addition to a longer term portfolio.  They have an approved drug for the treatment of Gout and the the company has been around for quite a number of years so I don’t see bankruptcy in their future and a takeout more likely.  With the stock at $12.05 and the 1012  $12.50 strike Calls/Puts just traded at a combined $9.69, the cash into the combined position is: $2.36 which is 20% lower than the low of the Great Recession.
     
    NLY – This much misunderstood Mortgage REIT is run by a very smart guy named Mike Farroll who also indirectly runs CIM.   In any event, since their entire income stream comes form Fanny, Freddy & FHA, in my view they have no revenue risk and their only real risk is cost of funds (since they borrow short term) With the global situation as we currently see it, I see the FED on hold for at least the next year which bodes well of the the cost of short term money for NLY.  The shares pay 16% dividend quarterly.  Stock is currently at $17.50 and the 1012  $17.50 strike Calls/Puts are $1.10 & $4.60 respectively for a combined $5.70 taking the cash into the positions down to $11.80.  Since there are 7 dividend cycles before the options expire the cost will further decline by 7 X $0.65 = $3.90 for a cash invested at expiration of $7.90. 
     
    Do you see either of these as worthwhile?


  30. "The Chicago Board Options Exchange is expected to move ahead with its initial public offering on Tuesday, despite the current rough market. CBOE Holdings Inc. is launching its deal when many IPOs have been struggling due to broader market volatility. Analysts say the CBOE will likely fare better than most offerings because of its relative rarity: It is the last large member-owned U.S. exchange to demutualize and go public, and it is the U.S.’s largest options exchange."
     
     
    Phil – Do you have any opinion on this IPO? 


  31. On the BP subject:  The 2012 Puts at $5.00 strike price are bringing $0.65 which implies a better than 1 in 8 chance that the Company (or at least the Common Stock) will cease to exist.
    Phil – do you think this is reasonable or is this hysteria providing a low risk premium collection opportunity?


  32. Phil/Bernanke: Are you joking when you said his PhD is not in economics? All PhDs are "doctorates of  philosophy" by definition.Also, since his thesis is based on a math model, I would give him the benefit of the doubt and say he meant "idealized" in the mathematical sense – and not that slavery, etc. is the basis of an ideal society as normally understood.


  33.  jomama……good point about PA’s and Nurse Practioners.  They are given lots of autonomy.  They make frequent errors.  They are good people,, and educated well, but they are not educated nearly as intensively as physicians, and even they make errors frequently.  It basically boils down to ‘You don’t know what you don’t know’.  As my uncle, who used to be a carnival worker, used to tell me…. ‘You pays your quarter and you takes your chances’.    This applies to patients who see these health care workers for their medical care, and there are millions of them.   A medical trial  lawyer’s dream, indeed.   


  34. A follow up to my comments made earlier to Jomama regarding the prognosis for BP. I closed out my position and have researched a much safer oil and gas play that has far more upside potential on a percentage basis.The company is VQ (Venoco, Inc ), a Denver based small producer extracting oil in the state of California. (onshore). It has 300,000 acres under lease and in excess of 10 Billion barrels available for extraction at its current sites.This area of California is referred to "the Monterey Shale", and it extends from northern California, down through the Los Angeles area.. California production has been dropping over many years because most of the wells are referred to as "stripper" wells that are no longer efficient. The Monterey Shale contains 500 Billion barrels of proven reserves, and in 2005, the Dept of Energy endorsed a new process of extraction called  "managed pressure drilling" that uses  air injection, in order to release the oil in large amounts – ie, no environmental issues.which is a big deal here in CA.. Cost of lifting the oil is $10.00 per barrel. This company has seen its shares continue to rise, when at the same time the big players are seeing the inverse. I placed an order for a buy/write buying the stock, and selling the December short straddle @ 17.5, for a 33% discount. Just my personal opinion – this small producer, with the reserves tied up, could be a takeover candidate. The other significant player in this area is OXY, but I did not research them yet.


  35.  jomama- I was trained in anesthesiology but went straight into a pain fellowship, and now I do 100% pain. I agree Medicare/Medicaid pays peanuts for anesthesia- however private groups usually get a large subsidy from the hospital to compensate for a poor payor mix. For those who are interested, anesthesia fees are calculated in units. You typically get 5 units to start a case, and 1 unit for every additional 15 minute block. Additional units can be added for certain case variables that add complexity. A non-emergent appendectomy would bill for 5 + 2-6 units depending on how fast the surgeon is. Medicare pays about $19/unit, Medicaid something like $5-10, and private pay $40-90/unit. So for the same work, you could make as little as $35-55, or as much as $630-990. Pain pays a bit more like surgery. we get $100-200 for a consult, and then fees for interventional pain procedures like epidural, joint, muscle, and bursa injections, heat denervation of joints, as well as spinal cord stimulator or spinal drug pump trials and permanent implants. Fees are quite variable for pain. Medicare is pretty much the low end payor, and private insurance can pay as much as 3-4x Medicare in some places. <br><br>
    Regarding midlevel practitioners, I agree that they are the future of medicine. While many are well trained, there is a lot more variability in quality of training, and ability of the practitioner in the midlevel community versus the MD/DO community. I’ve seen lots of good work done by midlevels, but also plenty of colossal mistakes. As their workload increases, true supervision will be impossible, and many patients will fall through the cracks. 


  36. drcraig
    Your 10:00 post is exactly the summation I have thought to be accurate. Our "culture" has been molded by our flawed political system, wherein we cannonize their beliefs that "all members of our society" are deserving of whatever one can imagine. Sen Harkin recently said "health care is not a priveledge, BUT A RIGHT". This then becomes an entitrlement, soon to be financed by more debt, and not even appreciated, as it is OWED to you. The masses like ithe sound of this, and the masses re-elect the nitwit that spoke the words. This "culture" and core beliefs keep feeding on this kind of rhetoric and metasticizing into what looks like a "death wish" of massive debt. We need to teach ecomomics at all levels of education, and embarass the politicians for their selfish motives.


  37. BP/DrC – There’s no such thing as "on the hook."  Each month you roll and adjust.  Unless BP moves violently higher, you should always be able to roll your front-month caller and your Jan caller higher.  The 2012 $37.50s have  a delta of .51, which is pretty high.  The Jan $29s have a delta of .67 (so they will outgain you by .16 per $1, less theta decay) and the July $37s have a delta of .39 so the average delta against you is .53 putting you almost dead even to the upside.  This is a time and patience position.  You are hedging out the establishment of your net $320 position in the hopes that BP steadies out and you are able to enjoy many months of collecting $200 from the callers.  If you do not believe in that premise or are not totally comfortable with managing a positon like this – DO NOT DO IT.  I would suggest to any member though, that they paper-trade this position to get used to it because I am showing you a way to make $3,000 in 18 months by committing $320 in cash now.  Even a small portfolio can afford a risk like this!

    AAPL/Iflan – I don’t know what you hope to accomplish with the 2 different strikes.  I just have a general objection to paying $6 a month in premium for a stock I don’t think is going up.  You can only sell the July $260s for $8.30 and if AAPL doesn’t put those $260s in the money by July expiration, your calls will be down $5 or $6 anyway – it’s just not a play I’d have ny interest in.  If you are confident AAPL will hold $260 by Oct and you want to make $24 selling premiums, then just sell the Oct $260 puts for $27 and stop messing around.  On the whole, AAPL is in a "no touch" zone for me but if they spike up you could interest me in a ratio backspread if a 3:5 July $270/Oct $290 spread worked out close to even.

    Medicare/Iflan. DrC - One of many, many problems that need to be addressed.  Incentives would be a great idea, on both parts.  UK has incentives all on the Dr. side and it seems to be working well.  I think on the consumer side you kind of have to go with sin taxes – which are also voted down all the time.  Health care should be free and a coke can be $3 and a pack of cigarettes can be $20 – all paid for!  I was just at the supermarket and it costs me $1 per bottle to buy vitamin water (and that’s on sale!) with zero calories but, right next to it, 3 cases (36 cans) of coke was $10.  We just have totally screwed up priorities in this country.  By the way, parents, my kids LOVE the vitiamin water – especially lemonade and berry as well as the zero cal iced tea drinks – I’m sure there’s chemicals but I figure better than sodas

    Home fines/Snow – That’s a great idea.  Also a back-door incentive for the banks to work to keep people in their homes, which I like!

    BP/Jo – Don’t get locked into thinking you have a BP problem, you have a problem that you owe somebody $20,000.  So it doesn’t matter whether you owe $20,000 to a putter on 10 BP 2012 $50 puts or if you owe $20,000 on 20 Jan $94 puts ($11.20) or 20 2012 $75 puts – it’s all the same $20K but OIH is down on essentially the same issue as BP – so it carries the same upside premise for you with a more diffused risk as one company failing won’t zero out the ETF. 

    SVNT/Cslanson – I like those ideas and NLY was on our previous buy list but, from my point of view, we missed a re-buy on them at $15 so I’m not as interested at $17.50 but, with the dividend, it’s a compelling play!  SVNT is very erratic and I don’t know them well but I agree you can take advantage of the volatility and that makes a very nice spread but keep in mind you are getting that premium because the stock is that wild.  The buy/write strategy is best used when you are fairly certain the stock won’t drop more than 40% AT WORST.  We don’t care how high it goes because we just get called away – just make VERY sure you WANT to own 2x at $2.36 + $12.50 because that is what you are promising to do if the stock is even a penny below $12.50…

    CBOE/Diamnond – I think they are pretty hyped up and I’m concerned about regulations so I wouldn’t want them.  They might make a fun short if they go crazy to the upside but a dangerous play in either direction. 

    BP/Cslan – It seems like a good bet (see above) but you are tying up the margin for a year and a half (about net $50 per) to make 130% ($650) when I’d rather tie up $300 for 5 days selling the June $30 puts for .70 to make $700 and get my margin back.  If that fails, you still have a fairly even roll down to the same 2012 $5 puts but my way you can be done in 5 days vs 540.

    Bernanke/Chaps – Yes, probably should have phrased that better as I’m sure many don’t know the conventions.  I read through it and he means idealized as in "efficient use of labor capital" and you can say that’s an academic way of looking at it but then, isn’t that how Capitalism justifies all sorts of immoral action?  He was talking about how the ideal situation for coprorations is to have slaves but, SINCE THERE ARE LAWS AGAINST IT, then the employers should do A, B and C to effecitively trap their workers into effective servitude so as not to allow them to walk away with skills and training…

    VQ/Gel – Thanks, that sounds like a very good substitute and worth loking into who else will be employing that process.


  38.  Thanks Phil, I believe your view of the bigger picture is the reason I subscribe to you instead of you paying to listen to me.


  39. SVNT/cslanson – we played them last year on the run up, and they have fallen back due to manufacturing issues.  Yes, they have large premiums, and remember why – their final OK is coming up.  Any delay by them or the FDA and they will fall.  This company is VERY manipulated by the hedge funds (look at QCOR and DCTH now)!  I would be careful with them.  Also, there are 3 other gout drugs (pills) coming down the pipe, and one is stellar if everything pans out.  SVNT is an IV treatment, and while OK on the front, they will get crushed if either of the other two come to fruition.  Look at Ardea and BioCryst.  RDEA is a small molecule that is a metabolite of an AIDS drug (I believe) that they found in their clinical trials with AIDS patients who had gout (pretty darn good drug also).  BioCryst is a PNP inhibitor and I like them better, but they are about 2 yrs away.  Phase IIB data is due out later this year.


  40. Phil,
    How do you feel about BRCD?  They turned out to be a pretty decent play after their Q1 earnings troubles.  The broader market and a less-than-impressive Q2 has brought them back to the 5.30s, where they were after Q1, but they haven’t adjusted their guidance for the rest of the year downward and there are plenty of reports of IT spending increasing.  I’m wondering whether you think this might be a good buy/write again, especially if the market convincingly breaks above the top of its range (e.g., 1100 S&P) early this week: buy BRCD @ 5.32, sell Jan 2011 6 call @ .51, sell Jan 2011 5 put @ .63.


  41. Phil – I hold the MEE Jun 45 puts short (now $14.00). Planning to roll them to 2x Jan 34 puts (now $7.40) and 1x Jan 40 calls (now $2.50). Will buy additional Jan calls, if MEE goes up in a hurry… It stretches it out a bit, but has a 40% net reduction in margin. Would you recommend this…?


  42.  Phil, thanks for your help/advice on BP –  the put selling premise goes to the shitter if a company has a chance of going bk.  I think i’m gonna close it out and sell some OIH’s put – 20 contracts at the 20 strike.  This is probably a better risk/reward as you suggested since i think the ADR’s have a real chance of going to zero if the administration follows through with their rhetoric.
    I agree with you on the vitamin water issue, but i disagree on the incentives.  You can tax sodas or anything with corn syrup but what are you gonna do about fried food.  All the patients CHOOSE the fried food instead of the grilled chicken, soup or salad bar at the hospita cafeteria.  We incentivize a sedentary lifestyle, by having medicare purchase scooters – may i direct you to the "Scooter Store" commercial.  Until we change our culture its gonna be like spitting in the wind.  In the mean time, we wil continue to order larger surgical instruments, larger beds, larger wheel chairs and massive amounts of anticoagulants in an attempt to prevent pulmonary embolisms.  I wish i could be more positive about this, but after taking care of four ten year olds last week who weighed over 180 pounds, i am really discouraged. 


  43. Get ready for all out push to take out SP 1108


  44. SPX- so, the futures looking good- what do you see as key resistance levels over the coming weeks- assuming this is the start of a new uptrend? Accprding to one chart I saw, projecting resistance at 1110; 1130 & 1150. What say you?
    I am planning on adjusting some strangles and I use these as guides.
    Thanks,