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Pass/Fail Friday – Europe’s Stress Test at High Noon!

What a way to end the week!

The EU has decided to leave us hanging until the last moment as they hold off on releasing their bank stress test results until after the markets close (11:30 EST) which leads me to believe the results may not be good or they wouldn't be waiting until the markets are closed and then giving investors the weekend to digest the results.  If the tests are good, then the US will rally and Asia will rally and the EU would have to gap open on Monday and that would annoy investors over there (kind of like we were annoyed yesterday) but, if the results are bad, then we can drop back to 10,200 or lower and Asia can sell off and they will gap down on Monday but perhaps less of a panic sell-off than if they got hit with the news on a Friday morning

So, because the results were already delayed and because the ECB has chosen to wait until Friday afternoon – I'm going to have to at least make a small bet that we have a failure.  We already hedged the Dow in yesterday's Member Chat as we weren't sure of the timing and we wanted to lock in our gains for the week but now let's look at a nice, profitable way to play a sell-off in the financials.  

  • FAZ is the 3x Ultra Short ETF on the financials and you can just buy that ETF for $14.62 a share and a 3.3% move down in XLF should translate to a 9% gain to $15.94, not a bad day's work right there!  Thanks to the uncertainty we now have, this trade can be augmented with the sale of the August $14 puts and calls for $2.65 and that drops the net purchase price to $11.97.  If XLF finishes below $14, another round of stock would be put to you at $14 for an average entry of $12.99, which is 12% lower than the current price so this trade assumes the financials don't go UP 4% by August 20th.  If FAZ finishes over $14 (.62 lower than it is now) the net return on the $11.97 is 17%, not bad for 3 week's work….
  • Since XLF is also $14.45, we can also have some math fun.  In theory, XLF should move 1/3 of what FAZ moves so for XLF to fall 10% to $13, FAZ should go up 30% to $19.  That means we can sell the XLF Sept $14 puts for .55 and buy the FAZ Sept $16 calls for $1.52 and sell the $19 calls for .92 which is net .05 on the $3 spread.  So, if XLF falls to $13, you will owe back $1 for the puts (which can be rolled) but the call spread will pay $3 for a nice $2 profit on the .05 laid out (3,900% profit in 2 months).  If XLF does not fall at all, the puts you sell expire worthless and the bull call spread expires worthless and you lose .05.  The most you can possibly lose on this trade is $1 but it's VERY unlikely to happen (more likely we are risking .05 to make $2) vs a $2 reward so a very nice way to hedge financial longs. 

Those are a couple of very basic trades.  We'll find some more exotic combos in Member Chat this morning, taking advantage of the gyrations ahead of the report release.  Regulators are scrutinizing banks to assess if they have enough capital, defined as a Tier 1 capital ratio of at least 6 percent, to withstand a recession and sovereign debt crisis, according to a document from the Committee of European Banking Supervisors. Lenders that fail the trials will be made to raise additional capital.  Analysts’ estimates for the amount of capital European banks will need to raise range from 30 billion euros ($38.7 billion), according to Nomura Holdings Inc., to as much as 85 billion euros at Barclays Capital

We took full advantage of the market gyrations this week with Member Alerts that were profitable in both directions but in yesterday's 9:38 Alert to Members, we couldn't resist VLO, C, BAC and AAPL (3 of which I had mentioned in the morning post) and we added a CAT spread after taking a look at their very lovely earnings.  Between those gains and the spectacular gains we made by being about the only people in America buying at the bottom, we had a lot to protect so these hedges are very important.  Of course we rolled up our Mattress Plays, which automatically make us more bearish the higher the market gets and we added DIA $99 puts at and average of $1.01 as well as an aggressive sale of DXD puts near the close.   We also took some of our wild YRCW gains off the table and the only long we added after the open was XOM so I can guess you'd say we already flipped a bit bearish into the weekend. 

Of course our base of entry on positions is about Dow 9,800 so 10,300 is our 5% rule and we simply expect a pullback of 20% of the gains, back to 10,200, which means we simply are playing the percentages that we will see a retest of our mid-points (notice I no longer have the confidence to call them bottoms) at  Dow 10,200, S&P 1,075, Nas 2,200, NYSE 6,800 and Russell 620.

Obviously, this is a huge data point this morning, getting past this will be key and next week we finish the month with hundreds of earnings reports as well as June Home Sales, Case-Schiller Index, Consumer Confidence, Durable Goods, the Beige Book, Q2 GDP, Chicago PMI and the University of Michigan July Survey.  The week after that we see Personal Income and Spending, Factory Orders, Auto Sales, Consumer Credit and Non-Farm Payrolls so I'm pretty confident that we'll have a VERY good idea of whether 10,200 etc. is a floor or a ceiling by then! 

We will certainly have a lot to think about and we'll have to be fast on our feet as well in today's trading so I'm cutting this short to get ready with our Members.  Asia was good this morning with the Nikkei finally having a good day (up 2.28%) but still miles behind the Dow at 9,430 despite pumping the Yen (desperately) back to 87 to the dollar.  India was flat but over our goal for the week at 18,130 and the Hang Seng (20,815) and Shanghai (2,572) are both comfortably over their targets as well so we'll put Asia in the "win" column for now

Europe was doing well at the open but has dropped back to a flatline ahead of our open (9am) despite a big positive surprise in German business confidence which was backed up by much stronger than expected UK GDP data.  It's going to be a very exciting finish to a very exciting week so let's all be careful out there – the only big surprise would be NOT having a wild day today. 

Have a great weekend,

- Phil

 


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  1. New writeup for all and noted at the end of yesterday’s post concerning GILD.….Here is fruits for all to read


  2. Pharm great insight as usual, any idea on who would possibly be a takeover target? JNJ has taken it on the chin, do you like them here? What are the chances of an HIV vaccine?


  3. IWM traders -
    What would you consider a break-out from this downward channel we are in – anything above 64.50 that we can hold?


  4. IWM traders -
    What would you consider a break-out from this downward channel we are in – anything above 64.50 that we can hold?


  5. Did someone whisper a sweet FAZ recommendation in my ear?  …..ohhhh Phil, why it was you!


  6. Today may be the day Matt is proved right with all his doom and gloom predictions.


  7. Euro just blew through 1.2859 support and dropping in a hurry


  8. Phil, are we still hanging onto those DIA puts from yesterday?


  9. Kust -  GSK and JNJ for GILD, but, I am thinking that the mid-tier pharmas may want to consolidate themselves, so I can see them with Vertex.  It’s a craps roll, but as I thought about it last night and on my morning stroll to work, I am leaning this way (Vertex) as VRTX is remains in the core antiviral arena…


  10. flipspiceland/property tax — I have a tax lot that doesn’t have a house on it and I have it classified as forrest use. What it does for my taxes is reduces the value of the land considerably and if decide to reclassify the land, I have to pay 7 years of back taxes. The reduction in taxable value is something like 98.7%.


  11. Hey all,

    I have two new positions today in DENTSPLY (XRAY) and a Short Sell on Skyworks Solutions (SWKS).

    Check them out here!

    Good Investing!


  12. Phil how does EUO look with a stop at 22


  13. Phil / FAZ  You are concerned about Euro stress tests, but wouldn’t it make sense to recommend a Euro Banks bearish ETF rather than FAZ, as US banks have limited European sovereign debt exposure.


  14. Phil, I’m still in the FAZ Aug 15/7 bull call spread.  I think you posted to exit this but I was right in the middle of closing on the sale of some property and lost track.  I see you have a new FAZ recommendation.  Should I just stick with what I’ve got?  I’m heading out on vacation for next week with limited trading access.  I am nicely in most of the Fab 9 buy/write plays now.  (Although I’ve been very busy and on the road, I did do great on my APPL bull call spread.  It started as 260/280 but I rolled from 260 to 250 on the pre-earnings fear and then sold on the earnings pop within minutes of market open Weds.)


  15. Good morning! 

    Yes to hanging onto DIA puts from yesterday as well as DXD short puts.  Europe seems to be freaking out into the close or maybe it’s US traders dumping the EU ahead of the tests (and after a very nice run, don’t forget) on a "better safe than sorry" play into the weekend. 

    We can get whipped around by EU rumors all morning and it’s all nonsense ahead of the test and then we have to interpret the results so this is really all about just being safe (a little bearish but not to crazy) and watching our levels so see if they can finally act like a floor: Dow 10,200, S&P 1,075, Nas 2,200, NYSE 6,800 and Russell 620.

    Over 630 on the RUT and 1,090 on the S&P, I like the IWM $65 calls at $1.30, maybe a quick .10 or .20 but what’s wrong with that?

    We should be able to fill our financial shorts if we are patient and keep in mind those are HEDGES, assuming you already have financial longs.

    Best financial long is still C at $4.03, you can sell Jan $4 puts and calls for $1 to drop the net to $3.03/3.52.

    Also, a bullish financial play is short selling those XLF Sept $14 puts for .55 and then you can complete the cover if you get nervous.


  16. Also FAZ – 15/17 would it make any sense to buy back the call or 1/2 of it, for the week end as a gamble? or is that dumb?


  17. Why did the IMF need another $250B?  I can’t find the source right now…but something is fishy….


  18. Good morning,
     
    IWM 61.92, 62.34, 62.90, 63.42, and 64.33


  19. Thanks Pharm…

    ARNA up again today 4%

     


  20. The recent pattern has been to release bad economic news into the midst of a strong rally (usually on a Friday).  Lets see if that pattern holds out today or if we finally break out.


  21. UR welcome Kust.  Now, if we can light a fire under CRIS…things would be GOOD!  I am going to continue to accumulate CRIS on the dips, so 1.50 or better…..


  22.  "Best financial long is still C at $4.03, you can sell Jan $4 puts and calls for $1 to drop the net to $3.03/3.52"
    Ok, how do you get to a net 3.52 on the call side? I see the put side: 4.03 – 1 credit = 3.03 net if put more stock but the call side, i am having idiot on the brain.


  23. Someone please fix the site; I can’t see any comments !!


  24. Phil,
    Do you understand what these stress test are supposed to tell us…or them?  How are we supposed to believe anything they say anymore?  It seems like every bit of information out their is manipulated.  Christ…..I just heard some noise about Dell……wasn’t Dell the golden haired boy a while back.  Mr. Wonderful.


  25. Very nice Pharm!

    IWM/Samz – I’d watch that 633 line on the RUT and 1,090 on the S&P for our +/- point.  I think we retest yesterday’s highs ahead of the stress test but then maybe drop like a rock, even if it’s only to shake out the bulls before going higher.

    Gloom and doom/Jimmy – There’s no gloom and doom.  Unless we get spectacularly bad results from the EU banks, it’s just the normal noises and this too shall pass. 

    EUO/Loopy – Well it looks good if you started at $22 but I don’t think they Euro fails $1.25 and it’s at $1.28 and there’s a huge danger of them jamming up through $1.30 on you so it’s a bit risky to me. 

    Euro banks/Tusca – Yes but I’m not greedy and your Euro ETF (whatever that is) is not an ultra and it’s probably not very liquid and, IF WE ARE WRONG, the Euro ETF will beat the crap out of us while FAZ will probably just sting a little. 

    FAZ/Poindexter – Sure that’s fine and you can add the sale of the XLF puts if you are worried because, even if the financials do fall down, XLF is still a nice long-term hold.  Keep in mind you we are very well protected in our buy/writes and it’s not like we think bad EU bank results will crash the entire global market (but you never know).  


  26. ‘The bullish board"  lol even Matt is bullish.  Obvie the stress tests will be good it’s totally manipulated and a bunch of BS.  It’s like auditing the Fed, IF it would have past does anyone actually think the FED would comply, open all it’s books and tell the truth.  LOL sure.  This E stress test will SURELY show improvement which is a bunch of nonsense.  This are all dead cat bounce rallies in a overall downtrend.  
    Where’s JRW, I always like to test my lines against his…


  27. yipcarl
    I saw a post saying fix the site from JRW, it went away so its his system that’s off!


  28. Sorry Matt…I read FAS….no FAZ.  LOL. Thank Goodness your still you!


  29. Shadow…haha.  I see he posted his lines above I don’t think the site was refreshing for me either because I didn’t see his line post till after I wrote mine!


  30. Yip,
    I like that….audit the Fed……why waste time auditing the Fed……Audit for what???….to see if their budget is in tact?
     
    I have a better idea…..take the millions that would be spent auditing the banks and fed……and give it to a deserving group.  Like the members at PSW!!!


  31. May be a low ball figure
    China Banks Said to See Risks in 23% of $1.1 Trillion Public-Project Loans
    http://www.bloomberg.com/news/2010-07-23/china-banks-said-to-see-risks-in-23-of-1-1-trillion-public-project-loans.html


  32. It seems like its just been an endless pattern of trapping Bulls and Bears but never completely letting one side win.  The Street are like arms dealers in this eternal war, selling weapons to both sides, but making sure one never gets the upper hand.  I guess thats why Phil likes to sell them too.


  33. Anyone who sold AMZN at $103 AH yesterday must be feeling pretty good right now. LOL.


  34. Hey all…..I’m sure this is no surprise, but someone put it on paper and emailed it to me.  I asked our accountant if this was true, and She confirmed that most of it was accurate.
    My personal thoughts are that taxes are a way of life and theirs no getting around them…..however…..I just don’t agree with the death tax.  What is up with taking the money that has already been taxed and taxing it again.  Should you be able to give that money to your kids if you want?
     

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    Subject: New Taxes Coming Jan 1 2011 thanks to Obama
    New Taxes Coming Jan 1 2011 thanks to Obama 
     
    In just six months, the largest tax hikes in the history of America will take effect.  They will hit families and small businesses in three great waves on January 1, 2011: 
     
    First Wave: Expiration of 2001 and 2003 Tax Relief 
     
    In 2001 and 2003, the GOP Congress enacted several tax cuts for investors, small business owners, and families.  These will all expire on January 1, 2011: 
     
    Personal income tax rates will rise.  The top income tax rate will rise from 35 to 39.6 percent (this is also the rate at which two-thirds of small business profits are taxed).  The lowest rate will rise from 10 to 15 percent.  All the rates in between will also rise.  Itemized deductions and personal exemptions will again phase out, which has the same mathematical effect as higher marginal tax rates.  The full list of marginal rate hikes is below: 
     
    - The 10% bracket rises to an expanded 15% 
    - The 25% bracket rises to 28% 
    - The 28% bracket rises to 31% 
    - The 33% bracket rises to 36% 
    - The 35% bracket rises to 39.6% 
     
    Higher taxes on marriage and family.  The “marriage penalty” (narrower tax brackets for married couples) will return from the first dollar of income.  The child tax credit will be cut in half from $1000 to $500 per child.  The standard deduction will no longer be doubled for married couples relative to the single level.  The dependent care and adoption tax credits will be cut. 
     
    The return of the Death Tax.  This year, there is no death tax.  For those dying on or after January 1 2011, there is a 55 percent top death tax rate on estates over $1 million.  A person leaving behind two homes and a retirement account could easily pass along a death tax bill to their loved ones. 
     
    Higher tax rates on savers and investors.  The capital gains tax will rise from 15 percent this year to 20 percent in 2011.  The dividends tax will rise from 15 percent this year to 39.6 percent in 2011.  These rates will rise another 3.8 percent in 2013. 
     
    Second Wave: Obamacare 
     
    There are over twenty new or higher taxes in Obamacare.  Several will first go into effect on January 1, 2011.  They include: 
     
    The “Medicine Cabinet Tax”  Thanks to Obamacare, Americans will no longer be able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin). 
     
    The “Special Needs Kids Tax”  This provision of Obamacare imposes a cap on flexible spending accounts (FSAs) of $2500 (Currently, there is no federal government limit).  There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children.  There are thousands of families with special needs children in the United States, and many of them use FSAs to pay for special needs education.  Tuition rates at one leading school that teaches special needs children in Washington, D.C. (National Child Research Center) can easily exceed $14,000 per year.  Under tax rules, FSA dollars can be used to pay for this type of special needs education.   
     
    The HSA Withdrawal Tax Hike.  This provision of Obamacare increases the additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent. 
     
    Third Wave: The Alternative Minimum Tax and Employer Tax Hikes 
     
    When Americans prepare to file their tax returns in January of 2011, they’ll be in for a nasty surprise—the AMT won’t be held harmless, and many tax relief provisions will have expired.  The major items include: 
     
    The AMT will ensnare over 28 million families, up from 4 million last year.  According to the left-leaning Tax Policy Center, Congress’ failure to index the AMT will lead to an explosion of AMT taxpaying families—rising from 4 million last year to 28.5 million.  These families will have to calculate their tax burdens twice, and pay taxes at the higher level.  The AMT was created in 1969 to ensnare a handful of taxpayers. 
     
    Small business expensing will be slashed and 50% expensing will disappear.  Small businesses can normally expense (rather than slowly-deduct, or “depreciate”) equipment purchases up to $250,000.  This will be cut all the way down to $25,000.  Larger businesses can expense half of their purchases of equipment.  In January of 2011, all of it will have to be “depreciated.” 
     
    Taxes will be raised on all types of businesses.  There are literally scores of tax hikes on business that will take place.  The biggest is the loss of the “research and experimentation tax credit,” but there are many, many others.  Combining high marginal tax rates with the loss of this tax relief will cost jobs. 
     
    Tax Benefits for Education and Teaching Reduced.  The deduction for tuition and fees will not be available.  Tax credits for education will be limited.  Teachers will no longer be able to deduct classroom expenses.  Coverdell Education Savings Accounts will be cut.  Employer-provided educational assistance is curtailed.  The student loan interest deduction will be disallowed for hundreds of thousands of families. 
     
    Charitable Contributions from IRAs no longer allowed.  Under current law, a retired person with an IRA can contribute up to $100,000 per year directly to a charity from their IRA.  This contribution also counts toward an annual “required minimum distribution.”  This ability will no longer be there. 
     
    Read more: http://www.atr.org/sixmonths.html?content=5171#ixzz0saAHMP4G 
      


  35. Exec…No argument here!


  36. FAZ/Morx – It greatly increases the risk.   Can’t you just be happy if it turns into a winner?

    IMF/Pharm – Probably prepping for emergency loans to cover bank shortfalls.  If stress tests show Spanish banks need $50Bn, they’d better have $50Bn ready on Monday morning or Spain goes down for the count.

    LOL, will JRW figure out he’s not logged in? 

    EU stress testing rules sound very strict but ignoring Sov Debt is a strange thing to leave out.  That’s not a bad thing, failing strict tests is better than passing wimpy tests like US banks did.

    C/Salvum – You buy 100 shares for $403 and sell the $4 puts for $100 and then the stock is put to you at $4 so what is your average entry?

    Stress tests/Exec – As Simon is saying on CNBC, it’s all about having transparency.  If we get to see exactly what each bank is dealing with, we can invest with more confidence.  US banks are still comparative black boxes, which makes it very hard for major funds to pour money back into them.  If the EU banks do a better job of clearing the air than we did, they could be set up for a nice rally, which will drag our banks higher as well but muted by comparison. 

    JRW/Yip – His post got "held for moderation" as he wasn’t logged in so it treated him like a non-member. 

    Good plan Exec! 

    China/Kustomz – There does seem to be major issues with local governments there.  They all took easy loans over the past few years and many of them are unable to make payments they planned.  If Beijing stops handing out cash, the situation can get bad but that only means Beijing will keep handing out cash (China can print money too and no one there criticized the PBOC like we do the Fed and Treasury so money is money). 

    Arms Race/Kinki – Yep we are very range bound and that means lots and lots of fees for Wall Street. 


  37. In case anyone can see my post, I’m in TNA at $39.52; watching out for resistance at IWM 63.69 or a failure of 63.42.
    Other than that, there’s 11:30 (the stress tests) !!  Good hunting


  38. PHIL – Any chance you could set up a "JRW email" option like you have David and some others, where we as members can select to have JRW’s posts emailed to our own email systems?  That would help those of us, including JRW, who often have trouble posting and refreshing the PSW site.  Our issues are sporatic…many of JRW’s posts don’t show up (plus today he is having connection issues), I get days where I can’t connect consistantly, etc…and the email would solve this issue (my ATT DSL DNS doesn’t seem to like PSW for some reason).  Plus email would be faster as emails show up instantly (no refresh needed), instead of having to wait for a refresh of this forum…which adds a few minutes to the day traders who are attempting to follow JRW.  Seems like an "JRW email" option would fit your bill of having only one forum, yet allow day traders to get daily JRW posts quicker and more consistantly.  Your thoughts?  Thank you for consideration.


  39. This on yahoo re estate tax. I think Phil might be on this committee
    finance.yahoo.com/news/Some-super-rich-say-Please-cnnm-938229520.html


  40. Phil Good morning
    TNA stk at around 40.50  buy stock and sell the Aug 40c for 4.40  your thoughts pls thks


  41. Goldman-Phil
    I 100% agree.   I suggest any others that agree, and I’M SURE there is more than just Goldman and I that agree here.
     
    SPEAK UP if you want a JRW email option!  Why not if you trade TNA and TZA, the guy is the master let’s face it .


  42. Lol…..or founded it!!!


  43. I’m all over the email option!!


  44. Cap – EMIS !


  45. IWM traders -
    Anyone have a hard time with mental stops – I seem pathologically incapable of pulling the trigger on a position as it goes against me -]
    I save so much money by putting in hard stops that seems worth it to accept the risks of getting flushed. It turns me from a loser to a winner


  46. R1 is now support; resistance at IWM 64.01 then 64.33 and 64.76


  47. Augrusot, I sold at 105(but I bought at 101.7), so Im still happy.


  48. Samz,
     
    I fall into that category.  How do you set up your stops.


  49.  C/ Phil
    If I buy the stock at 4.03 and it is put to me, then my average cost is 4.03 plus 3.03 which equals 7.06/200 shares = 3.52…oh i am so stupid.  on the call side, i buy at 4.03 and then have it called from me at 4 but i collected 2 bucks in premium so my net cost is 2.00 – how did you get to 3.03?


  50. PHIL  how many contracts of I W M @ 1.30  would you normally buy? thanks


  51. Surprised to see the Yen weaken, risk on people


  52. LOL……………They canceled my subscription because I hadn’t updated the new expiration date on my AMEX card !!
     
    Well, on to new highs for another 45 minutes !!


  53.  Trading AAPL……..Those July weekly 260s sold yesterday for 1.50 bought back today for .50.  I could ride them further but I’m going boating this afternoon and want to close the position.  I think I’m going to LOVE these weeklies!   :)
    Trading GOOG….Planning to reload some longs around noon if the market surges.  If it pulls back, will move back in 1/3, 1/3, 1/3 as it falls.


  54. z4 – for these types of plays, risk no more than 3% IMHO.  One can also leg into the position by buying 1/4 to 1/2s, and then it gives you the opportunity to DD and get UR money back or just get out.  That’s what I do for most of these plays.


  55. JRW - Any thoughts on having all your posts as an "email" option on PSW, like David and some other members…it would be an account option that day traders could turn on or off?  Thanks buddy…


  56. re: The return of the Death Tax.  This year, there is no death tax.  For those dying on or after January 1 2011, there is a 55 percent top death tax rate on estates over $1 million.
     
    I’m looking into dying this year. Sounds like a good financial move tax wise. :)


  57. samz, it’s good of you to recognize that about yourself.  First step to correcting a problem is admittin you have one!  If it takes a mechanical means to curb manage your inadequacies then so be it-  I think most people are the same way.  That’s why I’m so keen on getting my computer program up and running with different strategies that I can just pick and choose from.  It saves me the time of having to babysit the trade and the difficulty of pulling the trigger(s).
     
    Phil, let’s say your premise is correct that the rise in the market IS on the back of Congress extending unemployment benefits.  That is clearly a temporary thing.  So looking out past it, what is the Dems position on trying to extend benefits again?  Everyone is agreement that not all jobs lost are coming back.  So how low does the unemployment rate have to get to before there won’t be enough support in the party for extending benefits further?  Assuming the rate doesn’t drop.. how long do you see the party pushing for extensions?


  58. Be ready to take profit here if they can’t get over 64.01


  59. PHARM  thanks


  60. Out of TNA at $41.23;  ready to reload on 2, or buy TZA on the 3rd screen !!


  61. Exec – I have been using phil’s rules for futures -
    I have plenty of pm so I trade iwm – i like the execution better and i can buy 3x what I would of tna and get same impact -
    Kill trade if it goes a nickle against me – set stop about even once i get positive by .05 – once I have the .05 locked in profit - try and move to lock in a dime once you get going
    trade in two blocks – and alternate moving stops up. even if we get a big move – on the lowest stop – making sure it is .15 below highest price. and .10 below highest price on higher stop -
    IWM moves from 63.40 to 63.95 – my highest stop would be 63.85 and 63.80 – but if it feels toppy would move them to 63.90 and 63.85 – trying to never let more than a dime get away on higher stop and .15 on lower
    no hard rules  but killing the trade when it goes against you is the thing that makes it profitable


  62. Phil, I bought AMZN $100/120 bull call spread @10.50. With AMZn down so much, should I roll $100 call and keep the $120 as is? Or should I roll the whole thing or should I wait? thanks for your suggestions.


  63. Not that I’m a conspiracy theorist, but let’s not forget that Lloyd and Jaimie already know the results of the Euro stress test !!


  64. JR. 
     
    Well I am a conspiracy theorist……what are they saying?


  65. Plus Obama is going to come out with a speech…perhaps another "P/E ratios are low, now would be a historically good time to buy stocks".  Then the groundhog goes back into his hole, and we get another 9 months of bull market action!


  66. TBT looks good for a trade if European banks are A OK…then again so does everything else..but then again could be a sell into type event


  67. In TNA at $40.96 (1/3)


  68. Z04
    I have no problem with 20 and 40 contracts but 80 took a minute, hope this helps with the refered 3% rule.


  69. Phil
    Nice play on C – 24% discount by Jan.  Calculates out to 48% annually. Sure beats buying bonds!


  70. That’s goal on IWM folks – greed kills so be careful, best to ratchet stops up to 1,095 on S&P and 638 on RUT but if we can’t take $64 on IWM, may as well take $1.52 and run as it’s not bad for an hour play

    Meanwhile, FAZ could not be more cooperative as XLF goes back to test $14.50.

    AMZN/Aug – People don’t get that they are changing their business to more of an infrastructure play for other businesses and it’s going really well but they are building a lot and that’s going to impact earnings and margins.  It’s amazing how scared people are to keep their money in companies that are investing in the future.

    Death Tax/Exec – The "death tax" is one of the most important taxes there is for the long-term health of an economy.  If you allow assets to pool over time in the same family, then you end up with a noble class that lives off their interest income (which we have now) and contribute little or nothing to the advancement of the economy other than loan capital at the highest rate of return they can manage.  If capital is not put at risk, your economy dies – very simple.  Bill Gates has $50Bn – if he sticks it in the bank at 5.25% and lives off .25% ($125M per year) and leaves it to his son who leaves it in the bank and leaves it to his son, then in 2110, Bill Gates the 3rd will have $7,343,970,000,000.  If global GDP expands at 3% over the same time, from $50Tn today, it will be 1 Quntillion and Bill Gates III will have about 1% of all the money on Earth.  Over another hundred years, the Gates family will have 10%, and eventually 100% and that will be greatly accellerated if they manage to average the historical 8% returns capital generally expects so $50Bn at 8% in 200 Years becomes $421Tn or, if the Gates family uses their vast wealth to work the markets and pulls 12% annual returns, theyhave their first Trillion in 2035 and by 2101 it’s already $7.6Tn and $1.175 Quintillion dollars in 2210.  To vote against the "death tax" is to vote for the death of any chance your great grandchildren will ever have a fair shot at being anything more than a vitual slave in some rich man’s factory and I can’t believe how many seemingly intelligent people fall for this line of BS by the top 0.01%. 

    JRW/Goldman, Yip - JRW would have to take on a lot of responsibility to have administrative dutes.  It is an effort on the part of administrators to send alerts so you are really asking JRW to work for you and that’s up to him.  I think if you guys are going to keep demanding more and more of every member who is kind enough to share their strategies with you, that you’ll probably ruin it but that’s up to you guys to work out with him.  My two cents is he’s already taking time out of his trading and watching levels to post updates and that if he starts sending Emails then you’ll start Emailing him back asking for clarifications and better warnings and clearer entries and exits and making sure there is an Alert pre-market ect… 

    TNA/Yodi – I don’t like it as TNA can easily drop more than 10% by Aug expiration. 

    C/Salvum – You are only collecting $1 from the puts and calls you sell, not $2, that’s your problem.

    IWM/Z4 – Day trades should be about 1% of your risk portfolio at most if you are conservative and, as JRW says, 3% even if you are a cowboy.

    Welcome back JRW!

    AAPL/Iflan – Good job!

    Unemployment/Matt – They bought 3 months for $35Bn and they are trying to get the Republican’ts to do the math and realize that we will have to keep spending $35Bn every 3 months unless we spend $100Bn to create some damn jobs.  So, unless the Dems lose Congress in November, this will either keep going with a new drama every 3 months or it will end in a stimulus bill which will either work and rally the markets or not work and crash them.  So, either way, I don’t see this as a short bet until October at the earliest

    IWM $60 puts, now .97 are going to be the way to play a rejection of the RUT at 640, using that as a stop line.  I would think they could be bought closer to .90 so if we assume a spike up that takes us to .85 then you can enter the trade at .95 and DD at .85 (avg .90) with a stop at .75 (20% loss on 2x) but maybe less as we’ll know sooner than that that 640 is holding (S&P 1,100 should confirm and Dow 10,350 will be another warning).


  71. Out at $41.14; I’m waiting for Europe now !!


  72. JRW/ I think we all do.
    Europe was nice up .5% before US pre-open on good business news. My opinion is that banks are not the main concerns in Europe. Soveign debt levels are. And this test is about everything except Sovereign debt holdings (only trading accounts). So it is a no news event.
    But it will be eventually on how the US Financial Media decide to put a spin on this test that will seal the fate of the markets for the next few days until more macro and micro economics data get released.
    In the meantime we add a down and a up so let s wait for a down then up again?


  73. Thanks Shadowfax


  74. I respectfully disagree Phil.
     
    I have a business worth a lot.  My son works for us and unless I gift him my stock…..to the tune of 10k a year….which will get him next to nothing…..he will end up buying the business off the government. 
     
    Can’t say I agree with your logic on this one.


  75.  I am also in on a e mail option for JRW


  76. Banco Santander has been on a buying spree the past few weeks……


  77. Phil / Cash %   Could you update your guidance on what we should be holding as cash % currently.  I’m 50%.


  78. Phil – isn’t that what they passed the $787 billion to do ? So they need $100 Billion more ? I guess I’m just confused……


  79.  c / Phil
    DUH
    Thanks


  80. Thanks Exec, Death tax hurts a LOT of families that sure aint top .1%ers. Primarily Farm families and small business operators! If you don’t like "Corporate farming" then quit forcing family farmers to sell out to the big boys because they don’t have the money to pay off the govt. when Pop dies. This is how the big corps have come into posession of SO much of Americas farmland!


  81. Dude, Im with Phil – don’t ruin a good thing. JRW is kind enough to give us these lines and post when he makes trades don’t ruin it. Besides, emails can often take a little while to process – while hitting the refresh button doesnt quite take as long.


  82. Phil - perhaps I falsely assumed that when JRW posted to the forum, the software could automatically send emails to those who check an "JRW email" box in the account settings.  I did not realize that JRW would have to admin, send a seperate email, take on more responsibility, give out his email (I thought it would route through PSW’s email system), etc.  I thought I was if you could set up a simple check box option in account settings…not have JRW work at PSW for free.  Hell I’m not even sure why he works at this point period…perhaps to keep the CA govt afloat via state taxes…=)


  83. I personally agree with Phil conserning JRW. I think he has given his system out and answers small tidbit details if asked. As I have said before if this goes too far the BOTS will bust it. If you don’t understand you should not play it. My limit is 1-1.5% so I can DD if wrong and that usually gets me back to even. Thanks JRW


  84. exec look into a whole life policy to offset estate tax


  85. There will probably be a flush (opposite direction) before the move; the volume will tell you if it’s a flush, or if it’s real so be careful all !!


  86. Phil -
    I bought vz and sold the jan 2012 25 puts – but did not complete the buy write -
    would you sell the jan 2011 30′s or the jan2012 30′s 


  87.  any news for TEVA? dropped 4% today


  88. DEATH TAXES:  Phil is right on the money with this one.  And, for the average person WITHOUT Bill Gates’ wealth, there are many estate planning strategies to minimize or altogether avoid the death tax.  There’s no excuse for getting caught on this unless you a trying to pool mega-millions of future wealth in the hands of a family unit.  I’m an attorney and do the estate planning for my family members, but each strategy must be customized to the needs & desires of the person who possesses the money.  Any one person with under $1M in assets and any couple with under $2M should be far more worried about probate costs than death taxes.  What’s worse than leaving your money to Uncle Sam?  Leaving it to your probate attorney. Have an estate plan:  a living trust, a pour-over will, a durable power attorney and a family & charity gift strategy.


  89. Good job Samz!

    AMZN/Jossie – I assume August and it’s still $10.70 so lucky you.  Don’t you think you should get the hell out as your bullish premise is blown and you are lucky to be even? 

    Lloyd/JRW – True, I’m sure they’ve been going over the report for a week but the question is, did they tank the market so they could buy ahead of the test or did they boost the market so they could load up on puts and short calls and tank it after the tests? 

    Obama/Goldma – P/E ratios ARE low and now IS a historically good time to buy stocks….

    TBT/Kustomz – They did get a nice pop in the morning but it’s a little early to put on our sanity party hats on that one. 

    C/Gel – Yep.  It’s funny because I was trying to explain this to the radio guy but average investors just don’t get it.  They think options add risk to stocks and can’t see it differently. 

    Business/Exec – LOL, you guys crack me up.  If you want to give your son the business, do it while you are alive.  My kids already have a few companies and all you need to do is give your son options and all he’ll ever pay is capital gains.  If you don’t trust your son enough to give him the business now, don’t whine about what you pay in taxes after you die and you are finally forced to give up control.   Also, no one is talking about taxing anything under $5M and there can be progressive rates up to $100M but, once again – this is about the top 0.01%, who AVERAGE $350M to leave to their kids, making people with $1-5M think this is about them so those suckers vote not to tax the people who suck up all the wealth of our nation and keep everyone poorer (including the rest of the top 1%) than we should be if distribution were more equitable. 

    Cash/Tusca – 35% is more in-line with the assumption that they are buy/writes where you have another 30% committed to DD if the market tanks

    $787Bn/DK – That was a very poorly constructed stimulus package that, unfortunately, left allocation decisions up to Congress and 180 of 210 bills that have been put forward since Obama took office, including the bills that attempted to do something constructive with the money have been filibustered, making a mockery of the whole process. 

    Wow, 1 hour until we get the results now.  They are letting individual banks decide if they want to release them first (with their own spin) so now the band-aid will come off slowly over the next 60 minutes instead of all at once.


  90. Exec…your a realist, not a conspiracy theorist and I’m with you.


  91. Can we stop the myth that the Estate tax hurts the small farmers:
    Back in the day, one of the key Republican arguments against the estate tax was that it forced hardworking, salt-of-the-earth children of small farmers to sell the family plot in order to pay their taxes after dad died. It was a sad story, but with one problem: no one could find even a single small farmer who had been forced to liquidate in order to satisfy Uncle Sam’s voracious maw. Even the American Farm Bureau Federation was eventually forced to admit that it couldn’t come up with a single example, and a few years later the Congressional Budget Office estimated that under the now-current exemption level, only a tiny handful of small farms were likely to owe any estate tax to begin with — and of those, only about a dozen lacked the assets to pay their taxes. And even those dozen had 14 years to pay the bill as long as the kids kept running the farm. In other words, the story was a fraud from beginning to end. 


  92. Phil/death tax  Hmmm, interesting view…..


  93. They’re gearing up for a PUSH !!


  94. Notice on Bloomberg Latin Am ALL SPANISH BANKS PASSED THE STRESS TEST !!!!!


  95. exec
    If you give the business to the kids now they can pay you a nice pention and that would lower the co. tax.


  96. Phil/Death Tax - So what limit do you think is acceptable?  $1m, $3.5M, etc?  


  97. Iflan- what GOOG trades are you looking at? Thanks.


  98. exec
    I believe you are on the right track… Family businesses, like family farms, should be tax exempt, because it is the effort of all that built the business, and should be able to be transferred tax free between the family members. I otherwise, however agree with Phil – my recommendation is to reduce the taxes on the living, and tax the hell out of the dead.  They are gone, and won’t miss the money anyway. I believe everybody should share in the burden of maintaining our economic budget, unless they are incapicated, and wealth dynasties are nothing more than entities in perpetuity rewarding folks for being in the lucky sperm club. Some of the most repugnant people I have ever known are egotystical, narcistic trust fund recipients, that contribute nothing to our economy, but are big time beneficiaries of the work of others. How is that for bait for a weekend debate?


  99. Note on Hedging Silver / In my perpetual search for precious metal opportunities I have been looking for effective hedges, and recently found short spreads on GDX to be effective to neutralize junior mining. I now notice that FAZ (-3X financials) moved pretty much with at beta of -1 with respect to a number of silver juniors (not all, mind you). So over the last 3 to 9 months you will find FAZ moving pretty mucy -1:+1 with such companies as Silver Wheaton (SLW) and Silver Metals (SVM). The lesson is that if you’re nervous about holding silver junior miners, who move about 3X the price of the commodity, then FAZ looks like a good hedge vehicle. As a corollary you can see that the 1X financials (XLF) move pretty much in step with the commodity silver (SLV). That surprises me a bit, any theories as to why? Just coincidence? Something to do with manipulation? Related to currencies?


  100. JRW what do you mean by push?


  101. tchayipov..TEVA all i can find is TEVA paid a $315 million fine in a settlement in a lawsuit filed against it, …chart looks weak may get a bounce at this level


  102. Do we really need to have political debates here?  Really?  You work your ass off your whole life, pay income tax, cap gains tax, interest tax, sales tax., property tax and on and on and on now pay more, wtf man. Taxation was the reason for establishing America?! 
    Now you want to tax the money again once the person dies?  Move to a communist country already, the Estate tax is a joke.
     
    My GOSH I couldn’t disagree more!  Obama sucks!  No I’m not a Republican.


  103.  GOOG …I like the Sept 490 or 500s straight up.   If we pull back I’ll use the 480s.


  104. Phil / Monday    What are the main potential mkt news drivers on Monday?


  105. Nobody is TALKING about taxing estates under $5 million, but I bet they do it anyway.


  106. Here is another one for farmers and death taxes.  Death tax does not really hurt them….article is a bit old, but one gets the point.


  107. Phil
    I have seen some talk about an interview…. could you post a link to that? Thanks!


  108. Congress sucks, both sides lame and or stupid, than Obama!


  109. dbarakat / Push
    At 11:36-7 a Sig rune (buy program signal) formed but the bond market is flat and the program didn’t trigger so just watch levels and VOLUME and let Mr Market tell us which way to go !! R1 seems to be holding.


  110. Stjeanluc,  re: farm loss being a myth,     BULL***T!!!
    Your study group never interviewed MY family, When my grandmother died in 1992, she left 3 mall farms to my dad and his brother.  The taxes involved required the selling of one of the farms into a down market to pay the estate taxes. This is not theory or a "study" this REAL life and it is taking place in rural America every day!
     
    I would have to question the motives of the group conducting this study. Sorry about the invective, but this issue is VERY real to me, so don’t tell me this doesn’t happen…. I’ve SEEN it happen time and time again!


  111. JRW III
    July 23rd, 2010 at 10:49 am | Permalink  
    Be ready to take profit here if they can’t get over 64.01


  112. Death Tax/
    Estate and Gift taxe receipts in 2009 are a paltry $26.3bn..
    Poindexter comments make me think that it must be a tough tax to collect..
    So if it is a small tax that costs a lot of money to be collected so to me  it sounds like a bad tax!
    May be the problem resides not in taxing inheritance transactions but more in taxing income properly in the first place.


  113. yipcarl
    Your post coincides with my view…. don’t tax the living…. tax the dead.  Just think … we would not have to put up with all the Rockefellers and Kennedys in our government.  None of them have ever done a damn thing in their entire life, but are sure willing to dictate how we live ours!


  114. TBT climbing; in TNA (2/3) at $41.27


  115. ARNA rockin’ and volume has reached yesterday’s action.  It could pop higher.  Get ready for blast off…..going to buy some stock here….


  116. GO TBT!!


  117. Gel.. OK that would work but this TAX TAX TAX TAX is horseshi*.  I’m going to stop working and live off my assets if this BS keeps up.  I’m not handing out my money to people who don’t want to work for it.  Let them get up at 530am for 15 years and sweat blood and tears trying to make something of themselves and when they do take it away.  I’m swear to God it makes me want to lose my flippin mind.


  118. Hey did you guys know that we are on target to pull out of Iraq in August?  Got that from a Washington friend of mine but that sure isn’t something that the MSM is chatting about….

    Volume/JRW – Good point.  We’re at 60M on the Dow at 11:30 which is EXACTLY on target for a program trading day only that’s a bit strange as this is not a typical day at all.  C is out but BAC is still a Dow component and that alone should be attracting a lot of action, plus MSFT earnings and AXP - this lack of volume today ahead of the stress tests is VERY strange and makes me think, still, that there are no real buyers out there to take us over 1,100 on the S&P today. 

    VZ/Samz – They have a nice dividend and the 2012 $30s are $1.60 for 18 months while the Jan $30s are .60 for 12 months so is it worth paying spreads and comissions 3x to get paid .20 more?  Not to mention if the VIX goes down, you won’t be getting .60 per 6 months and not to mention, if VZ sells off, you sure won’t be getting .60 per 6 months on the $30s so then you’ll be capping your gains $1 or $2 lower….

    Thanks Poindexter – Estate planning is a terrible thing to ignore!!!

    Interesting view/1020 – You will find my "interesting view" has proven true throughout 10,000 years of recorded human history. 

    Spanish banks/Yodi – If that’s true then the tests were a joke.

    Death tax/Goldman – I think $5M should be exempted.  The reality is if you exempt $5M a person should be able to break up a $20M estate among a wife and 2 kids with a very minimal tax impact if they do so before hand.  I don’t feel bad for people who hang on to every last cent so they can die on it – that’s their problem.  Also, I don’t want to get all science-fictiony but I hope it occurs to all these conservative types that the ideal use of no death tax is to leave your money to your own clone over and over and over again – granting virtual immortality to the super-rich – way to stagnate humanity! 

    I’m with you on that one Gel (scary!). 

    Silver/Tenger – That’s very interesting.  I suppose that metals are moving up and down with the overall sentiment on the health of the financials so that will be interesting to track.

    Getting to .92 on IWM $60 puts with RUT 639.89.

    Monday/Tusca – Not much other than the weekend jawboning over stress tests.  We get New Home Sales at 10 and they expect 338,000 which works out to 18 homes per day sold in each state – not exactly reaching for the stars with that one but we were 10% under it in May. 

    Interview/Gel – http://www.oneradionetwork2.com/mp3/money/economy/davis_phil_july_21_10_options_stock_market.mp3

    ALL German banks passed except one.  NONE of the banks need to raise capital.  This is now just silly.


  119. Yeah, now they’re "talking" 5 million, how long do you think it’s gonna take to get that back down to $685,000 or whatever they decide they need? Yeah, I’ll trust you…. My family has been farming since 1820, and the words "it won’t be like the last time", or some such don’t carry much weight with me.


  120. Wow!  I’m so surprised……


  121. Taxes/Phil…..how are you going to break up a 20M estate with no taxes with a 5M exemption? 


  122. These BOT’s are sick


  123. Getting motion sickness here…


  124. JR…..what are you doing here?


  125. Phil – Im not sure who your Washington friend is but we had a Colonel come in and talk to us (as well as emails from the Air Force Personnel center) telling us that deployments to Iraq/Afghanistan of Company and Field grade officers in the Finance career field is increasing by  roughly 25%+. We were told that it was almost a certainty that within a year of finishing our Grad program we would be over there for 180-365 days. Maybe he meant that we are on track to withdraw troops from combat positions to one of more support?


  126.  Wow basically everyone passed the stress tests. Whats the point?


  127. and change the is after field to ARE – been speaking too much sputnik with my girlfriend, my english is sh!t today :)


  128. TBT out 36.05…so far its sell on the BS
    WTH is up with AAPL?


  129. Phil I can only give you what is on the screen  I think the complete test is a joke you Know what is BBB


  130. I’m out at $41.26; waiting to catch a ride on the winner of this Battle Royale !!


  131. If everyone passed the stress tests, why is FAZ going up?


  132. Who’s surprised that we do all this waiting for the stress test and now they are telling us it’s like asking a heroin addict whether he’s clean.  Another words these tests mean nothing.  LOL. 


  133. dbara – because i just closed my position. thinking we would go up.


  134. I love Euros. They have to do everything Eurovison style! "Spain 1point – Esoana 1 punto – Espagne 1 point"


  135. Exec:
    Thanks for the material regarding taxes, very informational. What values are you putting on 2 houses and an IRA plan?
    However, my understanding is under current law for 2011 and beyond, each estate (Dad and Mom) may utilize a $1,000,000 tax exemption (exemptions have always been in the law) and the start rate for taxation is estate values net of the exemption is 18% graduating to 55% when the net estate amount equals $3,000,000.  So… with equalization of asset values between husband and wife a person could pass 2 million of net estate prior to any taxation and up to 8 million before the 55% rate kicks in.  
    However, as with those who trade with use of option strategies as opposed to "buy and hold", people should advise and educate themselves about proper income tax and estate tax planning through te use of business entity planning, revocable, irrevocable and charitable unitrusts trusts, gifts etc.  Obviously, this planning should be set in motion once early on and especially if you believe you willl leave an estate (Dad and Mom) beyond 2 million net estate.  However, in my experience regarding these issues… most people do not educate themselves to the alternatives as they do not in the stock markets.
    Thanks for the info… gives one thought for keeping track of these issues mving forward.  I believe though passage of these issues lies more on Congress than on Obama, since they are the final arbiter.     


  136. Phil look at VLO heading back down, doesn’t seem like it can break out of a narrow range


  137. So far so good, But I’m still mighty nervous trying to guess about what the bot programmers are doing right now.
     
    Lack of trust?  Yeah.


  138. Liesman – We may have made a mountain out of a mole hill……. :)


  139. Phil / Manipulation   Neither the Fed nor ECB can afford to let us slip into another financial crisis, which could be Depression time.  So, they will fund their banks at zero indefinately.  More relevant to equity mkts, the Fed is probably buying massive quantities of stocks and long Treasuries to prop the mkt.  A mkt decline would kill any potential recovery.  Meanwile Timmy and Larry have probably prepared a massive stimulus program including Pickens Plan etc.  With housing and CRE  dead for years, they know this is the only hope to goose the economy.  Does tend to suggest a floor under equities doesn’t it???


  140. Take a breath Simon, HA!……


  141. Boy that was anticlimactic….thus far.
    Phil, I had an AAPL Oct 230/300 call spread, bought the callers back when AAPL was down last week, so now I have naked 230 calls. My question is at what price should AAPL reach before I re-cover, and at which caller would you sell? I am thinking the Oct. 290s.


  142. Phil, what is your gut on Aug 99 DIA puts ? Hold or sell


  143.  Trading GOOG……Order placed for GOOG Sept 500 calls at 10 bucks.   Won’t fill unless GOOG drops below 477.  Now I’m going fishin’.   See you all on Monday.   Good luck.  


  144. I DO NOT want to see another day like yesterday; IWM in a 30 cent range all day. Just pick a direction and lets have a 500 point day !!


  145. Estate Taxes.  Not sure if people are confused about how it works…
    The exemption is for each individual. 1 million next year.  If your married and you establish and A-B trust you have a 2 million dollar exemption.  Anything above that level will be taxed at 55%. 
    You work your whole life to save 10 million.  2 million is exempt with an A-B trust and 8 million is taxed at 55%.  4.4 million in taxes. 
    My family gets 5.6 million and the gov’t get’s 4.4 million in this scenario.  However the super rich have the money and legal means to avoid this by using off shore trusts and a variety of strategies to avoid these taxes.  The people who lose with the estate tax are those who die with 5-30 million, anyone above that largely get’s out of it.  Again this Estate Tax is smoke and mirrors.  it has people focusing on the Kennedy’s etc and again people with that amount money have enough money to have an army of lawyers and accountants figuring out how to circumvent the estate taxes…  boy.


  146. A key question is how the Europeans will interpret the bank results when trading opens on Monday.  Are they going to focus on the one bank that failed or the many that passed.  Seems like we go higher from here anticipating that.


  147. JRW, passing along a comment from SS — Would have been a good golf day.
     
    Not that you can’t make money, but some days are just easier than others.  Waiting for Mr. Market to tell me the direction.


  148.  kururi / AAPL – i dont know the prices you paid, but selling front month calls is often the most profitable, if you have some time to manage it. i.e. the AAPL August 270s had good premium in them, and if AAPL is over 275 by August, your Oct 230s should be 55 easily. If not, you could resell the Sept and Oct 270s, which could get you up to $20 (or more) back….


  149. JRW/ Why dont you join the tribe, and enjoy the sound of time decay?
    Thia is just another fabulous day when we are all hanging in the warehouse drinking beers with no orders coming down the phone…:)


  150. JRW III  You must have put chewing gum on that 64.01 line !!!!!


  151. judah / golf
    Indeed !!  BTW, is ss not on the board now? He too is a great contributor !!


  152. Yip,
    That’s the way I understand it.  When we set up our estate (between my parents) it was 600K each parent or 1.2M total. 
    So bottom line.  If you bust your ass all your life building an estate, a lot of which is not liquid like a business.  And it is valued at 100M……you kids get exempted 2M and then the get to taxed 55% on the remaining 98M. 
     
    Of course they don’t have it because it’s all tied up in the business……thus……if they can find a bank that will loan them the money, then they can borrow it so they can have the privilege of keeping their business.  If not, then they can sell of the assets to pay the taxes so the government can blow it.
     
    I don’t buy int to this BS for one second about how these silver spoon kids are going to sit on there money and live off the interest so if we don’t have the death tax this country will be overtaken by a bunch of elitist assholes.
     
    The bottom line…..they need the death tax so they can go on there rants about tax cuts for the wealthy…..and perpetuate the class warfare that keeps them elected.


  153. yodi, lionel
    Yeah, 64.01 and 63.69, I’m going to start trading that channel out of boredom soon !!


  154. Exec… Yes… and how do you pay those taxes when their in a business?  You’ve got to sell it or take a loan out, what a fing scam.  You could buy life insurance etc but still it’s a total crock. A TOTAL CROCK.  They can create all kinds of logical baloney that people can understand and say yea see I don’t want the ultra rich continue to run our world.
    NEWSFLASH PEOPLE, the estate tax isn’t going to stop that from happening….just like the two party system…let’s argue about the two party system and not focus on the real issues…  sweet.


  155. This market is going down.  Especially if we are listening to these stress tests it’s obvious they are baloney and therefore it seems the market isn’t going to hold up on this ‘stress test’ a.k.a. the BS TEST>


  156. JRW/
    sma 200 is keeping us well tucked in!
    Let s see how well it holds


  157. In TZA at $34.15 (2/3); TBT failing.


  158. Exec +1, well put.  I’m not all that political outside of mistrusting ALL politicians. It seems that they have created a system in which politics and government is the only growth industry in this country. It saddens me to no end.


  159. Pharmboy,
      Could you look into CBLI this weekend? Fast track of trials on protectan. Could have medical and military uses?


  160. exec- taxes - a good tax attry/estate planner can show you exactly what needs to be done to protect a majority of the 20M. It requires work and some investment of time and money on your part now but the peace of mind the process gave me was well worth it. They will set up a process for you to follow and you will need to do certain things each year from a tax perspective but in the end you will be certain your estate will be handled the way you want it to be. Of course as the laws cahnge your plan will need to be adjusted but there are plenty of things you can do now to get the peace of mind you will need going forward. We revisit our plan every 3 years unless there has been a massive rule change.


  161. Gmart,
     
    You’re right.  Big growth industry.


  162. JRW.  SS is still around.  and yes, he has been a great contributor — TBT as an indicator, 3m8p (he now uses 5min12periods) and others that many on the board are now using came from SS’s fertile mind.  We continue to refine out methods.


  163. Farm/Gmarts – How much was it worth?

    Taxing income/Lionel – Very true but the madness of the system is we tax the top 0.01% at 17% and then let them keep it all when they die – that is just economic suicide for the bottom 99.99%!

    Finally a failure!  A Greek bank and an Irish bank.  

    $20M/Exec – You begin when you are in your 50s, transferring assets to your children and whatever charities you intend to leave money too.  If you have $20M, you sit down with an estate planner and work it out.  I didn’t say no taxes but I can sell my kids the right to buy my shares for $1 and all they pay is capital gains when they exercise anyway.  Heck if I want to cheat I can lend my daughter $10M to set up Maddie’s Comics and Pokeman Cards, Inc and, a few years later, I could have one of my wholly owned corporations purchase her comic collection for $10M and, meanwhile, she could have spent the whole $10M I lent her on all sorts of cool things that would give her assets but no income.  I could also set up a charitable foundation now and put money into that, I can buy real estate in the names of my children – surely you have, at some point, consulted a professional? 

    Support/Jrom – Yes, I am pretty sure they mean ending combat operations.  Of course support is a murky word but I was surprised that we’re doing anything like a withdrawl. 

    What’s the point/Hanna – I think we said the same thing about our banks when they passed.   The upside case is they don’t need to raise capital and the EU is not going to hassle them so that means it’s back to business as usual for the Banksters – that’s great news for the top 0.01% if nothing else! 

    Confusion/Jrom – Yeah those mail-order brides take a lot of getting used to.   8-)

    7 of 91 banks failed the test and the whole gap to be filled is $3.5Bn vs $30 – $90Bn expected so WOW, banking is the best business on Earth and the markets should be back at 11,000 and 1,200 - if we are going to accept this at face value, which is hard to do.  That is going to put us neutral into the weekend as there’s no way to tell what happens on Monday.  Most likely Asia loves it because they tend to take everyhing at face value and I imagine Europe should have a relief rally so if we finsh green – we could gap over 1,100 Monday morning very easily

    VLO/B1 – Yeah, they can’t get out of their own way.  Big build in inventories spells low demand but VLO is a long-term play, owning the nation’s biggest refiner for a p/e of 8.   Since you can own VLO for $16.96 and sell 2012 $17.50 calls for $3 to collect 21% on net $13.96 in 18 months, I like it better than a bond because at least VLO keeps up with inflation over time.  Of course, pair that with the sale of the $15 puts at $2.40 and you net out to $11.56/13.28, which is FREE 22% downside protection and you make $5.94 (51%) if called away in 18 months at $17.50.   Personally, I think that’s a lot "safer" than sticking $10,000 in 2-year TBill for 2%

    Floor/Tusca – Yes, I fully believe there is a floor and the floor was 8,650 last year and is now 9,500 and should be up to 11,000 next year unless something really bad happens.  Of course they have to bring people’s retirement accounts back by 2012 so Obama can point to the huge recovery and the pressure comes off the government to bail out the Boomers – many of whom will, unfortunately, be wiped out anyway as they got out of the markets at lows or had to cash savings to pay mortgages or whatever so the damage is already done and we sure can’t afford to let it get worse.  To me, the funniest thing that the Republicans don’t understand is demographics – the boomers are retiring and there is a very strange things that happens to people (and there are MILLIONS of them) when they retire and income stops coming in – they seek SECURITY!  You can’t sell rugged, self-reliance to people who don’t want to take long trips where there are no nearby bathrooms, but good luck to the GOP for trying over the next couple of decades…

    Simon/1020 – Yeah he is a bit excited, isn’t he?  I guess he was long…

    AAPL/Kururi – I would have covered Wednesday morning.  I don’t know what you made on the first caller but whatever it takes to make the spread free or nearly free should make you very happy.  Then you just wait to collect (hopefully) a free $30 or so and you can take that cash and do something else useful with it.  If you are worried AAPL will go to $300 and you’ll miss all the fun, why not just take a 2012 $260/300 spread at $16, which you can pay for by selling the Oct $260s and you still have $30 to make in Oct and a free $40 a year or so later if AAPL is really going up and up. 

    DIA puts/42/L – Never made 1,100 on S&P, never made 640 on RUT, never held 10,350 on Dow for any significant block of time – no reason to kill them but we’ll take the money and run on a good dip

    Good market fishing Iflan – have fun. 

    Estate/Yip – As I said, I’m for $5M per person and if you have a wife, that’s $10M and it doesn’t take a lot of smarts to give $5M to each kid over a 10-year period at very low rates.  What I think is important is VERY STRICTLY taxing $100M or more and getting rid of those exemptions.  This is very consistent with my general view that $100M is ENOUGH and people with that much money need to give other people a chance to play.  They can continue to build their wealth for fun or for charity or for the benefit of others but if they seek to build their personal wealth past $100M then they can damn well give the government 70% of the income each year as well as when they die.  What if you played Monopoly and, at the end of each game, the winner got to give the money to his kid, who plays the next game.  Would that be even remotely fair to the next round of players?  That’s how simple this concept is – without an equitable redistribution of wealth, the winners – whether through luck or skill – become exponentially more likely to win again and again and again until there is no point to others playing the game at all.  That’s what US Capitalism is now – a broken game that has been exploited by the winners, who now have all the money and make all the rules…


  164. Out of TZA at $34.10; I have no idea where we are going !!


  165. Poindexter:
    Right on…….. the Probate Bar!!!!!!!………. an organization of thieves and liars….. I could tell you many. many stories about my experiences in my past practice with those crooks, BUT, you would need a drink and lot’s of time… LOL  I refer to probate fees as the "Lawyers Relief Act" but really the work is done by secretaries and para legals…. so, when you figure the perfcentage charged on GROSS VALUE and divide it by the hourly rate paid to these assistannts… what a gold mine for the boss!!!!!!!
    Yes… this would be a good discussion for the weekend……….. .


  166. Prices are getting meaningless on no volume at ll. We are entering bot realms…


  167. DK,
    We have a great estate planner and have our assets protected for my generation.  The problem is the next generation.  Aside from the insurance scam…..in which you have to hope they will be around when you need them, I’ve yet to have our financial advisers find these loop holes that prevent us from paying taxes.


  168. JRW   We got in TNA at 40.85  Did we miss something?


  169. 90M at 1pm – Program trading on the button.   AMZN on the march back up, even NFLX coming off the mats so be very careful if you are short.  If AAPL goes green it’s game on for the Nas and that makes QQQQ $47 calls aat .50 a fun play as long as the Qs hold $45.50 (.05 stop).


  170. AMZN going right back to 120

    GE buy back…reinstated and boosts divi to .12


  171. Phil
    I enjoyed the interview… lots of laughs, as I could just imagine this guys face as you described the analogy of the casino and the "suckers"  He was, I’m sure thinking he might be one, but was afraid to admit it. I know we are in the option "selling" business, and I occasionally wear the suckers hat and buy options if the play is compelling.  Actually we do buy them when executing a spread, but they are hedged. 


  172. JRW III
     
    Just watch your chewing gum line !!!!


  173. JR,
    How are you doing today against the Bots?


  174. JRW   Out of TNA at 41.29    Just playing your lines.  Thank You  :)


  175. Poindexter – I agree…avoid probate at all costs, setting up a revocable living trust, S-corp, etc.  Although anything one does is only as good as the latest law changes…this year $7M, next year $2M limit….perhaps back to $600,000 in the future or even ZERO if the US debt becomes too much!  Such absolute uncertainty is unacceptable…
    ————————-
    That said…I’m taking the family out to race go-carts.  Good luck with today’s market.  Everyone have a great weekend!


  176. JRW/ May be this time is the good one. breaking 63.75 and all the way down to 62.91!.
    It has been a good week and we should have a bit of profit taking like Europe did


  177. wilsons
    Congratulations, you’re doing a better job of it than I have since 10:50 !!


  178. Phil, is GE putting a new floor under their share price by raising their divident 20%? Are they worth a look now? 


  179. This Eurozone Stress Test is very similar to the "ghetto proficiency test" – everybody gets an A, even those that are absent.


  180. Gold,
    No kidding.  We went from C-corp to S-corp a few years ago because it was supposed to help with taxes……..which we pay a shit load of…….now they’re telling us that with the proposed changes, that it might be better to be a C-corp.  You can’t count on anything with this government…..they change it on a whim.


  181. this sucks -
    getting whiped or whipped around


  182. VLO at weds low (support?)   IWM broke 64.04!!


  183. In TNA at $41.45


  184. CBLI/Top  – they have a ways to go b’f they get any data as trials are just beginning, I would wait for a pullback to base – ~ $3 in small change.


  185. exec- my daugther already has her estate plan so she is certain that my grandson and any future children she may have get what she wants him/them to get. I used the say estate planners to do a plan for our entire family. So the next step is to set up an estate plan for my grandson but he just turned 2 so I have some time on that for now. In the meantime my daughter knows what to do and can use the same planners to set up his estate plan after I’m gone in the event I don’t get it done.  You can plan for most all eventualities but it doest take time and good help. It took us over a year to put the current plan in place for the entire family.


  186. TEVA having a bad day!


  187. Phil, re: farms,
    There were 3 small farms that had been in my grandma’s family. One was about 140 acres, one was 168 acres, and the other was less than 200 acres. To pay the state taxes, at their lawyers advice, dad and his brother had to sell the smaller of the farms to pay the bill. I don’t remember the actual numbers involved but my guess is at that time they probably got less than $1500 an acre. The same land today, (Prime black dirt) would fetch better than $4000 per acre.
    Here’s what people don’t understand, farmers have no cash money, everything they own is tied up in their land, and in depreciating equipment. Cost of production per acre is higher than ever before, and revenues per acre are much lower than in years past. Break even on a year of hard work is a coin toss. In order to survive, farmers have to squeeze more and more bushels er acre out of their fields leading to the rise of Monsanto because if you can’t get 200 bushels an acre out of you farm (which used to produce 120 bushels in a good year) you’re outta business.
    Farmers live poor, die "rich" and then get taxed like rich people. Their kids get to sharecrop for the big landowner who bought dad’s farm.
     
    I’m done on the subject. Sorry for the rant,
     
    Gordo


  188. IWM resistance 64.33, 64.75, 65.36


  189. GENZ halted?


  190. JR.
     
    are you having problems with SSpro


  191. Finally some sanity coming to the tax code with the child tax deduction being cut.  Maybe we can put a small dent in the deficit.  Why in the world would goverment subsidize a personal decision by one family to have children, at the expense of another family by way of tax policy.  In other words, why would the government take money from me and give it to someone else to support that person’s personal decison to have a child, or three.  Absurd, and contrary to good public policy on a number of fronts that should be obvious. 
    "The child tax credit will be cut in half from $1000 to $500 per child.  The standard deduction will no longer be doubled for married couples relative to…"


  192. Bought GILD on the news


  193. Decay/Lionel – Always nice on a dull day!

    SS/JRW – You never can tell in the summers people disappear for weeks at a time.

    Going down/Yip – I would be much more bullish for our Monday if we do sell off and retest 10,200 than if we drift along up here just under 1,100. 

    Politics/Gmarts – The problem you have is a lack of perspective.  Government grows because rich people who control the government want it to grow.  The bigger the government, the more strings they can pull to get favors done for themselves.  Why do you think the biggest build-ups in size of government happen under Republicans?  You guys just believe whatever crap they feed you on Fox and never look at the actual data, do you?  Note on this chart the big gain under Obama was caused by him moving the war onto the books, that build-up was hidden under Bush. 

    FSLR getting stupid expensive again, might be our next focus short next week if someone reminds me

    Buying/Gel – Generally I buy when I’m looking to sell a short and I think it’s too cheap to sell, that’s when I start considering a buy usually. 

    GENZ is ramping on old news (offer from SNY).   That’s punching everything up on this well-timed "breaking news" so I’ll take this with a greain of salt and we can take the money and run on the Qs at 20% if we even flinch backwards (watch AAPL, now just green).


  194. exec / SS Pro
    Working normally for me


  195. IWM is so manipulated it is just not funny :)


  196. Please not AMZN came very well out of the woods !!!!from -12.00 to now – 3.00


  197. GENZ up $10 today at $64.50 and 2012 $65 calls can be sold for $11.  If they get bought for less than another 20% over todays 20% gain, you cash out with a profit!  Worst case is they announce a deal over $75 and you buy the stock to cover (or lower calls once the premium wears out and then you can arb the short puts too!).


  198. Those QQQQ calls are fun aren’t they!


  199. TEVA  ?????


  200. Pharmboy
    I think we spoke about this before APPY shall I just take the losses .69 for the stock even the best option play could not make any difference . You opinion pls thks


  201. JRW/12:27   I guess who ever you called, "they" decided up…..  :)


  202. 1/2 out of TNA at $43.24; stalling……..WHAT A SQEEZE !!!!!!!!!!!!!


  203. Damn, there’s 1,100 and 10,400 so we now have stop lines for our Qs!  


  204. gmarts:
    I would  you recieved bad advice.  My family has been in farming in the midwest (Iowa) for 75 plus years and my parents just died these past two years.  An estate of 3 M plus was passed without any taxation.  The government used to offer low interest loans especially for paying of estate taxes.  But, with foresight and planning most if not all tax issues can be panned around.  For many years, I saw many attorneys giving bad advice to protect the future probate fees.  Yes, your right farming is the biggest gamble for the family farmer.   


  205. phil, what play for genz other than naked call. do not own the stock


  206. Other 1/2 out at $43.14; nice enough gain for me in 22 minutes !!


  207. Out of GILD….

    .total BS action in AAPL


  208. I don’t see SQQQ going below $52 and they are rollable so I like selling the $52 puts into this excitement at $2 and we can pick up the Aug $52/58 spread (SQQQ now $56.60) to cover a downturn in the Nas over the weekend.  That’s a nice $6 upside on a free trade if we wake up to a down day on Monday.


  209. Humand nature being what it is, I  would bet that if all the money in the world was to be gathered together in one place, and each of the 6 billion people on earth were given an equal share of it, within 5-10 years .01% of the population would windup with 90% of it, and many of that 90% would be the same .01 % that has it now. 
    These prescriptions to redistribute the wealth already gathered ignore one point: in the pre-reagan years when marginal rates were extortionary, a very few still controlled most of the wealth on earth. Thru thick and thin they ALWAYS wind up with most of the booty.
    There are some people on this planet that are extraordinarily fabulous at gaining immense amounts of wealth, not thru inheritance, but their own good fortune and savvy moves within a system, any system, (witness the Russian Kingpins during the rise of communism) because the masses,  the great unwashed are ignorant in matters of money. 
    From my own associations I find that most, if not all those I meet with rare exception are afraid, very afraid of that which they do not, or choose not to understand because they do not love it, the way that the Buffets, Soros’, Davis’, and Ristaus, et al do.
    Any scheme to tax away the wealth of the few, will not do anything to change the result in the long run.  The world will always have poverty and meager living hand to mouth for the masses.


  210. PHIL:
    THERE YOU GO AGAIN !!!!! (As Reagan said to Jimmy Carter)….. Your confusing our members with the FACTS !!!! 


  211. 1100 and no fireworks :-(
    If only they would let AAPL runnnn


  212. Mild Support at IWM 64.79; I’m in cash, finger on the trigger !!


  213. Later Goldman (interesting time to leave).

    GE/StJean – I liked them anyway, raising the dividend doesn’t hurt.  Tell them they can keep their .40, though and you can pick up the Jan $14/16 bull call spread for $1.15 and sell the $14 puts for $1.10 and that’s net .05 on the $2 spread (1,900% upside) and your worst case (if you don’t roll the the .85 2012 $10 puts) is you own GE at net $14.05 in Jan.

    LOL Gel! 

    Farms/Gmarts – Well I am 100% in favor of protecting farms, especially if a working farm is staying in the family but, again, it goes back to scale ($5M per spouse) and planning because cash could have been raised during good times and set aside if you know you need to pay taxes one day or insurance could have been bought (even in exchange for land) or the land could have been given or sold to the kids while the parents were still alive.  If you don’t trust your kids enough to take care of you after you transfer your assets to them – then what do you care who gets it when you die?  I do understand that, due to cash issues, farmers don’t tend to get the kind of legal advice available to most people with assets to bequeath and that’s something that should be addressed too.

    Well that was fun on the Qs – I’m getting dizzy from flip flopping though…

    I still like those IWM $60 puts at .80 now.  DIA $100 puts at $1.05 with stops at 10,400, 1,100.


  214. Phil-
    Interesting graph on govt spending by president’s political affil.  However, it’s CONGRESS that controls the purse strings.  Curious what a graph of spending vs congressional control would look like.
    (I am pretty middle of the road when it comes to politics so I am genuinely interested)


  215. APPY/yodi – not worth it.  Take the losses now…..


  216. It has to be asked… Stickable?  :)


  217. Acobra, I can assure you, your estate passed under a much better tax regime than ours did. I am also pretty sure that Dad and his brother got some bad advice. The farm was sold to another lawyer (very common in farm country). Simple truth, your family got a better deal two years ago than ours did in 1992 or 1993. I wasn’t a party to that decision, but I know that the estate tax and fees were more money than either of them had to spend. You sound like a sophisticated thoughtful guy, and I’m sure you made better plans than my family. Most farmers and their families don’t have that level of sophistication and do whatever the lawyers tell them they need to do. We’re working on improving that situation now. Dad is 87 and has alzheimers, My accountant tells me he doesn’t have any idea what the taxation situation will look like at year end when the 55% comes back in…. we’re scheduled to meet again later this year and hopefully there will be more clarity.


  218. The complaints against the estate tax are greatly overstated.  There is no better tax than one that is paid when the person is dead.  If "x" amount of dollars has been built up in a sucessful business and the owner dies then the new owners, i.e.  the dead person’s son, can use some of that money to pay the estate tax, whether by procuring a loan or by shrinking the business, if that is his choice.  Notice that if the son chooses to shrink the business to pay this ‘oppressive’ tax, then that action will be the basis of an opportunity for some other person to fill that need and perhaps accumulate wealth.  The estate tax has many positives from a public policy point of view, including its acting as a brake on the accumulation of excessive wealth within one family.


  219.  Phil, 
    Are we closing the DIA 99Puts? For a painful loss or what is the strategy with them? 
    Also, can you explain the GENZ covering? How can you buy the stock AFTER they have announced a deal for more than the premium collected?
    Thanks


  220. Are you kidding…. they’re going to push it again?!?


  221. In TNA (1/3) at $42.78 will commit more if we break N of 64.88 then on to 65.36


  222. Hey all,

    I have a new longterm story on Sunpower Corp. (SPWRA). This company has 30% potential at 13 and below.

    Check out my analysis here!

    Good Investing!


  223. 1020
    There is a way to beat the coming estate tax…. Live Hard, Die Broke, and screw the greedy creditors!


  224. Pharm, you were spot on on ARNA….congrats and thanks. Will you keep ARNA long term or you bought them for a day trade??


  225. FJD I totally and utterly disagree.  I really wish we would focus on trading I don’t care what every ones politcal beliefs and that’s not what I’m paying for here.  My problem is that when I hear all this nonsense I feel compelled to respond.
    FJD If you really think this keeps the ultra rich from getting ultra richer in a meaningful way you are wrong. 


  226. ARNA/mag – sell here, or sell the $6 calls for 40c.  If they blow through, let ‘em go.  That is good $$ for three weeks.


  227. "…with stops at 10,400, 1,100." You are saying take the $ etc at these stops?


  228. fjd, nice theory…
     
    I can tell you this much. Back in Dad’s day, a young man could go to the bank, take out a loan, buy a farm and if he was hardworking and lucky he could make enough to pay his banknote, and feed his family. Today this is not possible. The land will not produce enough to pay the note  (which coincidentally you cant get) There are NO new guys getting into farming. The barriers to entry are too high. The land goes to the lawyers who sell it to the developers and you guys get pissed when you have to pay $14.99 a pound for your ribeyes at Wholefoods.
     
    OK, I’m really done


  229. can this rally really continue?


  230. Pharmboy
    Thanks all closed excluding the short Dec 2.5c


  231.  Also the FAZ spread, kill it now that we are passed the EU announcement and nothing doing?
    thanks


  232. Phil / No buyers:  There are no sellers either!  There is no one in this market of any significance besides ‘them’.  When we go down, it’s because they want to take us down.  When we go up, it’s for the same reason.  This market is a total sham when you consider how big they are in comparison to everyone else.  To argue either values or technicals in this market is just ludicrous.  This market is worth whatever they say it’s worth.  And what they say it’s worth is based on what kind of money is coming in or going out. 
     
    So that being said, do you think they’ll take us to the moon today?  I think it’s time for me to burrow a hole again and go hibernate.


  233. gmarts/loan — yeah, and that’s when they checked your credit history not your credit report. I think this whole credit score thing is a scam…


  234. Matt – just buy ARNA…. :)


  235. Out of the 1/3 TNA at $42.89; just doesn’t feel right. But for those following the system, we are still above all the markers (no sell signal); TBT still climbing.


  236. gmarts/loan — and that’s when you had a credit history and not a credit score. I think this credit score thing is a scam.


  237. Good man Matt/ In a world of robots we should all hibernate.
    David/ With all due respect for your analysis, Sunpower is a stock that has been ranging $10 to $15 when the market has been ranging 10%. If we were at $11, I will agree with your pick.
    Secondly you mention Trina in your valuation section, but I guess you meant Sunpower.


  238. MATT….100% correct just like the Estate Tax BS..This market is going to fail miserably by Tuesday….


  239. S reports on July 28th i think they are going to have a pretty good Q


  240. GENZ/42L – I only really liked that play as the math was very good for people who could afford it.  The key to the trade is being able to buy to cover – otherwise, the premiums are ridiculous, even if you are paying as part of a spread.  The bid/asks are crazy too so there’s not much that makes sense here except, MAYBE, the 2012 $52.50/62.50 bull call spread at $7, selling hte $55 puts for $5, which is $3 on the $10 spread and worst case is you own them at net $58.  In this play, if they get bought at $62.50 or higher, you cash out early with a very nice gain. 

    Volume 110M coming into 2pm so that whole rally was 20M shares on the Dow – not all that enthusiastic, on the whole.  RUT is up 2% but none of the other majors are up 1% yet so someone is "wrong."

    Human nature/Flips – You may be right but that doesn’t mean we give up does it?  Your solution is what?  Allow 6.999999 Bn people to be born in servitude to the top 1,000 and say "that’s the way it always was and that’s the way it always will be."  I don’t care if the same 1,000 people win the game every time as long as the game is fair.  If you don’t put the money back up for grabs the game simply is not fair and you may as well raise cattle instead of people for all their lives will matter.  I do find it very sad that you can even feel that way about the human condition – just a planetful of losers who couldn’t find a pot of gold if you gave them a map, right? 

    Facts/Acroba – We report, you decide.  8-)

    Wow, there’s 1% on the Dow – maybe the RUT is just leading the way..

    Copper NOT making $3.20 – that would seal the deal.  Oil $79.25 with half hour left to trade.  Nat gas $4.60 and gold $1,188.  Seeing oil and gold down with the market up is a very good sign as it means equities may finally be considered less risky than commodities and THAT would finally be a way to create higher support levels for equities.

    Congress/Knukl – I don’t see a graph like that but this one is a handy reference for who controlled Congress when.  Also, President has the veto and puts forth the budgets so don’t think it isn’t mainly their baby.  Essentially, American hasn’t let the Republicans have full control of the wheel in Congress since 1947 until Newt and Co. took power in 1995 and immediately moved to impeach Clinton.  He held on for 5 more years but the Republicans didn’t leave until 2007 so 100% increase in Government size and 750% increase in deficit under the "Contract for America," which I always took to mean a hit man was hired to assassinate the middle class – Mission Accomplished there! 

    DIA/Amatta – They are hanging tough but only worth holding if you are protecting profits you don’t want to take off the table.   Othewise, I think we should try to be neutral into the weekend.  On GENZ, you are selling the $65 calls for $11 so as long as you buy the stock for less than $76, you get called away with a profit on the close of the sale.  The way these deals work is the official announcement brings the stock near the price but usually below it.  This is an arb play based on the fact that I don’t think GENZ will fetch an offer over $75 anyway, which would pop their p/e into the low 20s and that’s a lot for what would be a $22Bn acquisition in what is still a pretty rough market.  SNY is a $76Bn company with a p/e of 7 so buying GENZ would drastically dillute their ROI and they only have $7Bn in cash with plenty of debt against it so I very much doubt they have gone cookoo and are looking to pay 40% over today’s open – that’s all. 


  241. gmarts:
    Selling the farm to ANOTHER LAWYER !?!?!? As I said in ealiere post… thieves, liars and crooks.  I practiced tax and estate planning (legal and financial) through extensive use of trusts and life insurance in rural communities as well as urban areas.  My BIGGEST PROBLEM was over coming all the bulls*** and misinformation (mostly by "country and county seat lawyers" given to clients. Probate practice is a LUCRATIVE BUSINESS for these lawyers. As I said earlier, clients need to seek out the information before they are in the later years and obtain more than one opinion. My parents planning was set up in their late age of 60′s. It would not matter what the tax laws are, it was planned for in advance.  Most clients don’t want to talk about death, taxes and dying… that’s why they put it off.    


  242. AAPL not breaking out, buying some VXX here


  243. gmarts
    I, at one time was a big investor in "flat black", and I totally agree with you – there is no way you can pencil out a profit.  I had the huge $50K tractors and Blue silos… all state of the art stuff. Never made a dime on the operations. I always looked at this as a long term investment that would be a hedge against inflation. It was a lousy investment that was high on risk and low on return ( a lot like Las Vegas casinos).  The farmers that made a profit were the ones that inherited the land, and farmed with old equipment, and regarded the experience " as a way of life". This is why all of the farms have gone corporate. The "family farm" concept is part of our history books, mostly for the reason our government never cared about the family input, and did not appreciate the sacrifice one must make to make a go of it..


  244. FJD…..with all due respect…..those were some of the most assinine and un-American statements that I’ve heard in a long time.  I don’t know what you own or what you do, but I can’t imagine that if you built a business, or worked all your life, payed your share of taxes, and saved a decent nest age, that you honestly believe the Government has the right to take it from you.  Or at least the majority of it.
     
    It blows my mind that there are people in this country that think this way. 


  245. Phil / Russell up 2% not the others
    Sorry, I think that was me !!    8-)


  246. Pharm…. Did you have an opinion on TEVA’s drop?


  247. JRW — can you lead them down for a bit, I’ve got some puts I want to dump.


  248. Phil, do you think Obama will pick Elizabeth Warren for the new Consumer Comission or go with one of the boyz.. ie, the guy in Treasury who used to work for Rubin in Clinton’s admin?  I think that choice right there will be very telling.  Not so much if Warren is picked.. but more if she isn’t and that other guy is.  Whadya think?


  249. Rain,
    Funny you should say that.  I used to trade much larger positions a few years back, and I swore when I did a big trade it impacted the market.  I can’t believe that that could happen…..but I swear it did.  I figured other traders saw a big sell or buy go in, and jumped on board.
    JR….do you see this happen when you pile in big?


  250. Hi Phil, Would you have an advice on YRCW: is it better to sell it today before the closing (as the earnings on Monday will probably be anticlimactic) or it makes sense to hold? Thanks.


  251. TEVA – just b’c NVS is entering for one drug, Lovenox?  Shave almost 10% off…..sell the Ps on them but wait for the downgrade police…..I don’t get that one as it has not even hit the bottom line.  NVS is getting heavy into generics (Sandoz division)…that may be the wave as margins are slim, but if you have a process in place to make your big time drugs, then why not? 


  252. Phil, would you care to expand this weekend on European banks. This stress test smells funny to me! Only 2 years ago, 15 banks in Europe had assets higher than their country’s GDP and these assets were mostly sovereign debt. This asset class will most likely continue to increase over the coming years! This cannot be without risks… My guess is that these assets were shifted around as not to be tested. 


  253. Phil,
     
    What’s your feel for the close today?


  254. Pharm- Is TEVA a buy here?


  255. exec, sorry but it is not un american to pay your taxes.  I said a tax that is paid on your death is better than a tax that is paid while you are living.  It is a very simple concept.   What is your answer?   Government has to be funded.   It is not an answer to say "the super rich will avoid it anyway".  I am not for that either.   


  256. FJD…..sorry about the personal attack……this topic just gets my blood boiling.


  257. exec / big
    I usually make 3 trades at a time now so that the Bots don’t see the same 30,000 share and trigger something (maybe shadow has me paranoid, but it makes sense to me) and when I do trade all at once,  and a big move follows, I think it’s more about others with much more capital reacting to the same indicators that I watch !!


  258. Phil, what do you look at or consider when you say a play is "rollable" or not? What factors you look at for this call?
    TEVA is getting ridiculously punished.. I rolled 2x Dec $45 Puts I had sold short to 2x Sep $50 for credit.. I want to own TEVA at these prices..


  259. fjd
    At the risk of pissing off some who might disagree, I do believe you have a good point.  My premise is to get everything into balance – aggressively lighten up on taxes that we pay while we are alive, and move this burden over to the time we are dead. This has tremendous benefit, if one considers the big picture.  Look at the lifestyle you could enjoy if your taxes were far less – Look at the benefits you could bestow on your family at a time in their life when it really has meaning, such as education, travel, better living conditions, and yes, even resources to finance your offspring into their own ventures.  Why wait until you are dead to be able to pass these resources to those that are in need of financial assistance. The government has to be financed by us all,in some form or another and hopefully later than sooner, so why strip it from us while we are still struggling?  Tax us less while we are alive, and we then leave an IOU when we depart for the pearly gates.(most of us anyway)


  260. Hi Phil
    I am long copper futures, would you sell or hold
    thanks


  261. I have a new startegy  buy the same amount of TNA and TZA and wait for the tide to come your way then sell the profitable side…It just work thanks to Microsoft and Linux powering this incredible robots


  262. I’m ~30% down on August puts IWM (60, in at $1.27 now $0.78), SPY (108, in at $2.48 now at $1.79), and DIA (in at $1.09, now at $0.84) placed over the last few days.  Am I better off taking the loss prior to the weekend, or waiting for a pullback next week?  Thanks for the suggestions.


  263. In TNA at $42.89 (2/3); I’ve got a Sig rune on the 1 min and TBT is still climbing,


  264. Pharm/TEVA
    Thanks for the insight…. I was hit pretty hard today….will sell some puts to get it all back, as I believe in the company.


  265. gel1,
    As I read your post I literally started to cry. It’s all true. You’re obviously a seasoned businessman and investor and see things very clearly from a business point of view. I cry because your history books point is true, and that hurts so deeply I could never find the words. To you guys who’ve lived your whole lives in a city, and have never had your feet deep in the dirt, you won’t understand, and I don’t expect you to. ..
    FWIW, I do not farm myself, the family holdings are professionally managed and marginally profitable. But that love of the dirt is down inside of me and my kids and will NEVER leave me. It’s just so painful to see what’s become of a solid and honest way of life, and it hurts so much to see how my government treat’s those who struggle to maintain that simple way of life.


  266. "the markets should be back at 11,000 and 1,200"
     
    Hi Phil, if this is the way you think the market is heading, should we cover our DXD Aug 27 Put?
     
    Thanks.


  267. TBT is about to go orbital!
    I suspect that the same bots that are playing with IWM are playing with a little volume maker like TBT as well.
    Enough non sense for me. I will try to find a burrow adjacent to MAtt’s ….


  268. Why would reasonable people care so much about how much they are taxed once they’re DEAD? I could imagine that the intention is to "protect" the assets that one built throughout an entire life so it can be passed on to children.. but I could also imagine that the best job a parent should do is to properly prepare children to see for themselves and create their own wealth since, ultimately it should be fun for a new person to construct something out of nothing, or out of some meaningful base if you want to give them a nice head start. The goal for a child to seek challenges and accomplish more and more wealth as they LEARN from mistakes and become better people, better prepared and more appreciative of the costs that building wealth brings. Only THEN these same children would have the proper preparation to EDUCATE their own children to achieve the same..
    So out of a $100 million wealth, or even $20 million, 40 – 45% off that should be PLENTY for new generations to start in the right way and build THEIR own wealth..
    Funny how greed becomes so powerful EVENT AFTER DEAD.


  269. exec and everyone, thanks for the thoughts.  I will try to keep all of your points of view in mind.


  270. JRW — I meant down on TNA, not TZA ;-)


  271. "the markets should be back at 11,000 and 1,200"
     
    Hi Phil,
     
    If you think this is the market heading, should we closed our DXD Aug 27 Put??
     
    Thanks.


  272. LOL PHIL! I do not have a mail order bride thank ya very much! She was a citizen before we met, so at least I know she wasn’t looking for a green card. :)


  273. ravalos/tax — I agreee, but don’t forget about the entitlement generation!


  274. BTW Phil, I wanted to relate a conversation I had with my business partner yesterday. I told him that I have been much more relaxed about my investments ever since I joined your site. It’s funny how a 15-20% cushion does to your nerves. My returns have increased dramatically and my risk diminished. Many thanks for the guidance and patience. Good thing I am doing better financially as you might have increased my life expectancy as well! 


  275. TEVA – one can start scaling, but they may have more to go, so be careful.  I thought the same for GILD….and that did not work out so well.  This is their 52wk low….


  276. Hey David discovered SPWRA!  Just kidding, David – it’s a long-term favorite of ours. 

    Beating the estate tax/Gel – How about I build a house for $2M, spend $5M on art and sell it at a loss to my kids for $2M?  Better to do this through shells, of course but there are many ways to "beat" the estate tax laws as they are now structured.  Of course the best beat is still dying by Dec 31st, now called "The Steinbrenner Strategy."  The Donald has already had himself cloned, will be very sad for Donald Jr. when that trip to the dentist turns his dad pushes him into out to be a brain transplant…  8-)

    Stops/Morx – Those are the lines where we want to flip bearish now.  In other words, stop out long trades (short-term, unhedged ones) and put on short-term downside plays.   If we hold 10,400 and 1,100 then we just cash out the long side EOD and stay neutral over the weekend.  Cash is always nice to have anyway…. 

    Farming/GMarts – There’s a sale at Whole Foods???

    Hibernating/Matt – Yes "THEY" now have a story to take us all the way back to 11,000 on if they want to.  I’m back in my comfort zone of 10,200-10,750, which is the upper 5% of our expected range so very happy that I wasn’t crazy when I said everyone else was crazy at 9,700.  If we hold 10,200 next week, I’ll be a lot more comfortable and ready to start looking up long-term – especailly with all this lovely earnings data to pour over.   Despite the fact that I feel being over 10,200 is "right" for the markets, I still think we will get a retest of those levels so the higher we go without a test, the more worried I will be that it’s all BS – especially if we do it on this sad little volume but Monday could be a huge volume upside day as Asia and Europe come off the sidelines so, as I said, neutrality into next week on our short-term trades and we’re so far over our entries on our long-term trades that there’s no pressing need to cover them too much.

    Putting it off/Acorbra – I have always told my kids I’m going to die one day.  A little morbid but they deal very well with that as well as the deaths of family members because they understand it’s a part of life.  I lost my Dad suddenly and I would never want my kids to deal with the numbness I felt for well over a year after my Dad died – better they should be pleasantly surprised (or annoyed) whenever I show up for another year of holidays as I get older…

    AMED hittin new lows in a good market. 

    Money coming out of bonds yet again.  Be even more careful bears!  Check out TBT. 

    LOL JRW – you are blowing the curve!

    Warren/Matt - I think he likes her.  I think he like the fact that the bankers don’t like her too.

    YRCW/Alic – From a .15 avg basis, we were 1/2 out at .29 for a pretty much free ride on the rest.  I have faith in them and if they fall down on earnings, I will buy more again but risking a huge gain is crazy. 

    EU Banks/Stjean – If you remind me but it’s pretty simple.  Just like we allowed our banks to mark real estatee holding to fantasy, the EU has allowed the banks to assume all Sov debt would be repaid.  That debt is 90% of their real risk and no bank would be solvent if a major player like Spain failed but they’re not testing for that.  Now, we could say that with $1Tn of EU  backstopping, Spain isn’t going to fail – certainly not this decade so it is a valid test as the failure of a block nation is probably less than a 1% possibility.  It’s certainly nothing you want to bet against – as I’ve said all along, it’s the ridiculous Doom and Gloom being spun by the MSM in this country that was BS, not the actual stability of the EU and their banking/monetary system

    Close/Exec – I’ll be taking profits off the table and I’ll be surprised if funds don’t do the same.  We’re up 700 points in 3 weeks – who pushes that?  From 9,700, 10,670 is up 10% and if we throw out that idiotic spike down and look at the 10,000 mark, then 10,500 is our 5% rule and from there we very much expect a pullback to 10,400 anyway (and 10,470 would be pullback off the 10% run) so, at 10,425 on a Friday, there’s very little reason to believe we’re going to miss anything by cashing out short-term bullish plays here.  


  277. Phil,
    The mattress 1/2 aug 104 any adjustments thks


  278. ravalos- “Funny how greed becomes so powerful EVENT AFTER DEAD”.
    So true. We are never content!


  279. FJD,
     
    Your right…..Government has to be funded.  Our company does primarily government contracts…….I can go on and on and on about the waste and incompetence in government.  The fact of the matter is government has to get real.
     
    This is the last I’m going to say about this……try to imagine that every single week of your working life, you payed your taxes, then took 50 bucks in cash from the remaining money and stuffed it under your mattress.  Then try to imagine that after your death, Uncle Sam’s henchman convienently show up at your house, just as your daughter and granddaughter are loading up all those 50 dollar bills into a truck…….and tells them…….excuse me……what a cute baby you have there…….now give us 55% of that money because Nancy needs a new jet to fly around in while she runs the House………….
     
    The question is….why have a threshold…..why not take 55% of everyones after tax assests upon death.  Including yours.
     
    I just don’t get how people can think that it is appropriate that government take something from you that is bought and paid for……..that’s a slippery slope FJD.


  280.  Anybody what is EOD?


  281.  JRW, 
    What is a SIG Rune?


  282. Exec,
    You let the government take that money.. but since you are a member of PSW and patience is one of your virtues, you simply teach and prepare that cute baby to get all that money BACK again .. and more. And they will be prepared to pass on that knowledge to get the tax back again and again and again. :)


  283. Phil
    would you get out of the IWM  puts before market closes for a loss? have 20 Aug puts at .87
    Tx


  284. Amatta — EOD =  End Of Day


  285. Out of TNA at $42.90 (even); TBT falling back. It may be prudent to take profits as others may feel the same. 10% on the day, no complaints !!


  286. EOD = End of Day


  287. I fixed my position in TEVA… sold December 50 puts for a 125% return on today’s loss, which puts me back even on my basis.. I am the casino, and I don’t  take any losses. (I think I learned that from Phil)


  288. Greed after death?  HUH?  How is wanting your family to be taken care of and receive what you’ve worked hard for greed?  Can someone explain that to me please? 


  289. @PHIL:   From the Idiot page over at ZH
    "We had to have the garage door repaired. The Sears repairman told us that one of our problems was that we did not have a ‘large’ enough motor on the opener. I thought for a minute, and said that we had the largest one Sears made at that time, a 1/2 horsepower. He shook his head and said, "Lady, you need a 1/4 horsepower." I responded that 1/2 was larger than 1/4. He said, "NO, it’s not. Four is larger than two."
    I rest my case. There’s more evidence over there if you want to see it.


  290. Training our babies to be productive will never be enough to overcome the number of people who are training THEIR babies that the path to success is to have babies of their own and go on public assistance. Something has to change or we’re just flat out doomed.


  291.  Phil,
    On the WFR play, the order only triggered the Call and Puts selling but not the stock… this was already a few days back. Now with these moves, obviously the calls are much more than the puts have depreciated… how can I fix it?
    Thanks


  292.  Phil,
    On the WFR play, the order only triggered the Call and Puts selling but not the stock… this was already a few days back. Now with these moves, obviously the calls are much more than the puts have depreciated… how can I fix it?
    Thanks


  293. flipspiceland/stupid — That’s because our (US) average IQ < 100 and you don’t think a garage door repairman has an average IQ do you?


  294. Sorry, last post seems kind of callous. No more politics for me,


  295. man someone really does not want AAPL to close above 260 today it seems


  296. Phil: with the market today: TNA jan 30 calls are up 22%, 13.5 to 15.5$, jan 50 callers from 5.9 to 7.6$, jan 35 putters from 8.3 to 8$.
    Anything to be done ?


  297. fllip:sad story, but there are lots of such examples.


  298. So, pass/fail Friday….. Do we Pass?


  299. Phil: market high, can hardly hold up that high, what to short ?


  300. Phil – do you like USO puts or shorting oil (for the more adventurous) over the weekend?
    Pharm – Time for my monthly PDLI question – do you like them at these levels? In the past you suggested a strangle, is that the way you are still playing them? Do you think we will see a spike before their Sept dividend?


  301. In TZA at $32.55


  302.  JRW, 
    Would you mind elaborating a little bit for benefit of all on your comment before the EU announcement-- on which you were head on… regarding the Sig rune and the program not triggering.
    Thanks 


  303. jro – should have bought them at 5.  They are ok here, but the option prices change ex div.  They are good here, but the Avastin negative could hurt them in the long run.  I would wait til after ex-div.


  304. JRW was that a sig rune a few minutes ago on the iwm ?


  305. what’s happening to TNK-blown past my 12.5 callers


  306. And back to my original plan, lunch. Out of TZA at $32.48


  307. FYI – I will be spotty next week as I will be in the heartland, building my shelter….I will try to answer things AH.  Good weekend all!


  308. Phil /  RUT  Why is the Russell outperforming?


  309. morx / Sig
    Yes, at 3:30 and now at 3:49


  310. Rollable/Rav – I always look ahead to what my rolls would be if the stock goes against me and I look at the spreads and the open interest to see how liquid something is.  The tighter the bid/ask spreads and the more daily activity, the more "rollable" something is.  TEVA is nice long-term but they were getting expensive. 

    Taxes/Gel – Very nice but if you want to help your kids or family, let them set up a company and buy 10% of it for $1M.  There, done.   Not paying taxes is all about personal greed.  It is very, very easy to help other people, taxes only stop you from sticking the money in your own vault, where it doesn’t do anything for the greater economy.  The reality is there is SO much money pooled in the hands of certain people that there are DOZENS of paintings that individual investors have paid $100M for and THOUSANDS that have gone for $1M or more.  That is excess, that is debauchery.  That is saying you have nothing better to do with your money than spend it to decorate a square yard of your home.  Buying up land so you can get the best view and the best beaches and getting the best seats at concerts and shows and buying up all the best wine and food does nothing for the rest of the economy but what it clearly does do is crowd the other 99.9% out of reach of any of those things and leave them competing for the scraps that are left over.  Taxing less while you are alive lets you accumulate 100 years of crap (soon to be 130, then maybe 150) while your fellow top 0.01%’ers buy a Congressman here and a Congressman and another media outlet and public opinion poll-taker until we’re once again living in a monarchy.  You may be the nicest, fairerst guy with the best intentions – but can you really say that about all the guys you play golf with? 

    Copper/Sydney – I think $3.20 is a good place for a pullback.  You want to see them hold it for a few days and establish it as a floor to go long above there.  EU stress tests don’t add any jobs or increase global demand. 

    Spreads/Lionel – That’s not bad, I’ll be curious to see how long that works without a blow-out.  Do you have a stop?

    30%/Mark – That far down I think it’s worth the risk.  You may get a gap up and take a 50% loss off the table but a gap down can make you more than that so positive risk/reward profile into the weekend but, if that additional 20% will hurt you – not worth risking it. 

    DXD/Bob – Oh yeah, unless you really need a disaster hedge then there’s no need to ride that out

    TBT/Lionel – That’s why they suck for calendar spreads, they are prone to nasty moves up. 

    Partner/StJean – Thanks, I’m so glad!

    Mattress/Yodi – Not worth it over the weekend.  Too uncertain. 

    Slippery slope/Exec – If the top 0.01% gave 50% of their income instead of 17% every year, we wouldn’t need the money when they die and none of the other 99.99% of the people would need to pay any taxes at all yet it would still be dangerous to allow massive accumulations of wealth to be passed on from generation to generation – it’s a mathematical fact.  If you run the scenario out over 300 years, the chance of 1-10 people NOT having ALL of the money at the end is infinitesimal.  What’s really screwed up is how the 1 person out of 10,000 who has all the money also thinks they should be writing the rules that the other 9,999 people will play by.  This is why, at some point in the history of every human society to date, it occurs to some of those 9,999 people that, rather than keeping their noses to the grindstone and playing the game, that they should pick up the grindstone and bash the one guy’s skull in and take his stuff.  Then they divide it all up, write some new rules and start a new game until some other set of jerks rise too far to the top.  THAT’S human nature…

    IWM/Savit – Well the stop line was 10,350 and 640 so at 10,400 and 647 you are better off doubling down if you didn’t stop out and hoping for a sell-off that gets you even and out.  If that fails, then I think it’s hard to play the downside over the weekend. 

    Good job running the casino Gel!

    Idiots/Flips – I don’t need to go there, you should see the mail we get! 

    WFR/Amatta – You can’t "fix" it.  At some point you need to buy the stock if you already sold the puts and calls.  You just need to be aware of your risk tolerance to the upside but hopefully the pull back to test $11 after this nice run.   As a rule of thumb – once you sell the calls, it becomes URGENT that you buy the stock. 

    TNA/RMM – Nothing to be done, it’s a bullish play and TNA is at $43 and seems to be on target.  Your entry on TNA is net $0 so anything over $32.50 is profit in Jan.  The higher TNA gets, the more you might want to consider a TZA cover play or an IWM put to lock in your gains.  For TNA to drop to $32, that’s about a 10% move on IWM back down to about $59 and an IWM $67/62 bear put spread is $2.15.  Since you should make $13 if TNA holds up here, putting 20% of your potential earnings into spreads like this on the way up is a good way to protect yourself

    Pass/Fail/Gmarts – Big Pass.  Don’t be surprised if we get big follow-through on Monday

    Short/RMM – At your own risk but the IWM and DIA puts are the logical way to go as we still have 3 weeks or, of course, our ever-cheaper 5 Plays that make 500% if the market falls. 

    USO/Jrom – That’s too adventurous for me.  We have the hurricane thing and the rally thing and the Euro may rally and jam down the dollar next week.  At $80, I’d be excited to short next week but over the weekend is a bit much. 


  311. JRW
    Didn’t dare say it till out but THANK YOU 7.5% yesterday 18% today! NOFEAR!!!!!!!!!!!!!!!!!!!!!!!!!!!


  312. JRW — what chart do you watch for the sig runes on?


  313. Monday is shaping up to be the most interesting in some time. Take a little time out with the family and have a great weekend everyone!  :)


  314.  JRW:  I’m curious what  signalled you to go into TZA at 3:43?  hope your lunch was good  thx


  315. Great job JRW!!!


  316. TNK/Drum – BDI turned around and somebody upgraded that sector yesterday (it was one of the news items).

    Have a nice weekend Pharm!

    Nice job Shadow! (and JRW, of course)

    Wow big finish too….


  317. gmarts
    Entering the weekend, I’ll leave with a thought – My investment experiences in agricultural land was not profitable, but I will tell you it was one of the richest experiences I have had in my life – I got to know some of the most wonderful people that inhabit this great land of ours. I have never been exposed to such a work ethic, a belief in family, honest values and a desire to be successful through character values, that so many people today do not even know exist. These people for so many years were the backbone of this country.( 80% of our economy was agriculture)   They ask for nothing, but if a neighbor is in need, they are there to help, no matter what.  We all could learn so much from those that are "the salt of the earth"  Whenever I interviewed someone for a position, and on their resume, it revealed they grew up on a farm, that resume went to the top, as it said so much!


  318. Phil/Estate Taxes -  "How about I build a house for $2M, spend $5M on art and sell it at a loss to my kids for $2M?"  Great strategy except if the FMV of the house and art on the date of the sale to your kids is still $7M, then you’ve just made a gift of $5M which you will owe gift tax on.


  319. Wheeee, what ride! 

    Have a great weekend everyone.  Next week should be wild too.

    - Phil


  320. @ Phil
    WE have to pass laws to penalize millions of people from texting WHILE THEY DRIVE!  Presumably many of these people are at least of average intelligence.  And these people you expect to do something constructive by giving them some money someone else earned?
    @rainman:
    My garage door repairman was pretty savvy with math and his neat way of drawing a three lines to form and isosceles triangle to calculate the exact spot to align the center door bracket, so I don’t think certain trades have an overabundance of lower iqs. I know CPAs who can pass the exam on the first try, are well off financially, who can’t do that or change a light switch, or who think stock options are an out and out gamble and wouldn’t listen to 5 minutes of Phil’s radio conversation to learn how beneficial they are.
    My father, had he learned about Buy/Write  options during his lifetime on  a stock he had that did nothing but rise very very slowly, would have had 100 times more gains than he did at his death. I was too young at the time and the ease with which cmputers allow such trading now on Buy/Writes hadn’t been invened yet.
    As I look at the obesity in my town, 3 out of 6 people are vastly overweight. Some of them I know and they are not innately stupid people.  They have done well on life’s journey.  But when it comes to redistributing money from the wealthy with over 5 mm bucks, to ‘give someone else a chance’, I learned a long time ago that giving money to anyone for doing nothing but being born, is a huge mistake.  Certainly the infirm must be cared for, but able-bodied men and women who have bought 5 times the house they could afford because of a teaser rate do not get my sympathy nor do I think those millions of people who did that should get one dime of taxes I pay. Nor should Lord Blankfein, Joe Cassano, or AIG’s counterparties.
    I must disagree with Phil that mankind is inherently to be granted a redistribution as a birthright.  Even he advocates using every trick in the book and some that aren’t to hold on to as much of an estate as he can.


  321. Thanks, as always, Pharm… make room for me in that bunker!


  322. shadow,
    You are most welcome 8-)
     
    rain / chart
    1 min
     
    redlog / TZA
    Sitting on support at IWM 64.59 on a Friday after a 5% move up; Oh I don’t know, PROFIT TAKING !!!!
     
    1020
    Thanks !!


  323.  Phil- When, if ever, do you execute options?  I currently have 3 Oct 3 Calls for ARNA and I was considering converting the options to stock because of the risky nature of the company.  But I really like the company and I believe they can do well.  I realize that this does not really jibe with many of the strategies here and that I should probably follow the rules (1. Take the money. 2) Run 3) Sell into the excitement and so forth.


  324. I missed pretty much the whole day.
     
    Can someone tell me why AMZN is at 119, after being sub-100 after hours yesterday ?
     
    I am baffled ….


  325. flip
    I got in a wreak in April the 2 of us were belted, totaled truck, minivan uppside down, 1 woman airlifted, we both needed new glasses, TEXTING!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! NO SEATBELTS!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!


  326. Hi Phil, when you get a moment… I rolled the DIA 99 P’s to the 100 P’s for .18 just before todays close.  I think I did the right thing to maintain some hedge going into next week.. but not sure.


  327. edro00 …. a big OUCH (big).
    The CEO says this is a wild overreaction (and it is).
    The bigger concern is they need to raise some money and todays news and stock reaction is a killer.
     
    They had plenty of oppty to raise $$ and didn’t; so we’ll have to see what happens.
    Not happy …


  328. Phil,
    Unfortunately, our laws don’t exclusively pertain to the top .01 percent.  They include people who’s income is much lower.  Enough said about this issue. 
    This is a perfect example of how polarize this country is.


  329. Exec — thanks for the tax info.
    Shows what idiot liars Obama and Biden are; claiming that they are in fact reducing your taxes.


  330. JRW:
    You seem to have the touch and system…. could you email me any information on your system… I would really appreciate it.  I have day traded those leverage ETF’s but with mediocre success.  Also: over the period of a month… what do you believe is a successful and reasonable percentage of gain on total amount invested ie if $50,000 is your beginning capital at beginning of month… what is your expectation of ending capital at end of that month…… Thanks for any information you can provide….Have a Great Weekend !!!!   
    REC4Trading@aol.com


  331. Well, 40% on the week for the day-trade portfolio; if you dedicate 5% of your portfolio to work, that’s a 100% annual return ASSUMING THE OTHER 95% IS IN A DESK DRAWER !!
     
    Have a great weekend all !!


  332. JRW,
    I don’t know how you do it.  I struggled all week.


  333.  JRW: sorry for dumb question I was looking at a 3minute chart


  334. flip/IQ — I admit, I was being rash but I don’t think knowledge of a trade is a good indicator of IQ. I does disturb me that the US average is behind 18 other countries and I suppose that’s why I lashed out undeservingly. In today’s climate, where it’s difficult to be choosy, there are probably many over qualified workers IQ-wise. I do think some trades have an overabundance of high IQ’s, for example, rocket surgery. The corrallary would be that the lower IQ’s have to be distributed elsewhere. Certainly there are exceptions but cost of entry is a good screening process, and I tend to belive that human nature will drive workers with high IQs into professions that demand it.


  335. cobra
    My goal has been 2% per day, 10% per week; I have been more fortunate since last fall because I no longer have to be right about the status of the market. I now, just have to be right about where it’s going on a minute by minute basis; and I can sleep well being in cash every night !!


  336. ANYONE USEING etrade pro
    Yesterday at 3:48 it disconnected I sold at less than 10sec. to go, today it happened at 3:35 again waiting to sell, by the time I restared 3 times I missed that out and waited till 3:52 to get out. It is my internet provider or if others also report the same, I will call etrade and give them the group riot act. THANKS


  337. exec,
    Do yourself a favor, pull up a few days of my posts, then pull a corresponding chart of IWM; you know the system, but maybe if you look at it in retrospect, and see how well it works, you’ll have more faith in your trades !! And, it’s OK to be wrong from time to time, just like me 8-) Have a great weekend my friend.


  338. Take a look at this map.  It shows how the unemployment rate has changed over the past several months.  When you get to the map, click the arrow in the middle and watch how things changed.  Incredible what "The Great Recession" has done. 

     

    The old saying, "A picture is worth a thousand words" is never more true than looking at this map.

     

    Viewing it only takes a few seconds.

     

    The darker the color, the higher the unemployment. 2009 has been BRUTAL.  Watch the changes in the map from Dec. 08 to 12/09 – SHOCKING

     

    This is  a startling map.  Hard to believe!

     

    http://cohort11.americanobserver.net/latoyaegwuekwe/multimediafinal.html


  339. JRW…. Congratulations !!!!


  340. JRW — the sig rune is in the candles or one of the other indicators? I guess I might be able to make out the rune in the candles of 3:30 and 3:49.
    Thanks!


  341. Shadow, My E-trade Pro (Schwab) locked up about 3:30 or so, I didn’t note exact time, thought it was me…. I had to restart the computer because I couldn’t get the program to close for a re-login. Fortunately I was not trying to get a trade made at the time.
     
    FWIW,
    Gordo


  342. dezev/unemployment — that sent a chill up my spine. Thanks!


  343. The Russ is not even falling after hours, they keep jammin’.


  344. gel,
    Thanks
     
    rain,
    The 14,3,3 Stoch on the 1 min chart !! Also shows as confirm on the RSI and the Momentum must be pointing Up.


  345. Dezev, that settles it. I’m moving to North Dakota to grow HOPS, because the country is going to need a LOT of malt liquor to get through these times.


  346. Can I offer anybody a frosty 40 of Colt45 ?


  347. @rainman
     
    A great brain capable of 3 dimensional chess, counting cards, and complex quantitative calculations is a wonderful gift.
    However, to see tens of thousands of them squandered by the Squid on Wall Street turning paper into more leveraged paper, producing absolutely nothing, is a mortally grievous injury inflicted on mankind as the last 4 years (and the 20 year run-up to it) have demonstrated.
    Those High IQ characters that used and use their awesome talents to wreck economies thruout the world prove that having a high IQ is no guarantee that one is working it in the interests of anyone but the self, and shows an extraordinary lack of foresight.  It’s like the union bosses in our town who used their power to extort ruinous contracts from area employers only to see their current members do very well, and then watched in dismay as their jobs gradually left for more hospitable environs, eventually closing off all skilled labor opportunities for their children and grandchildren forever. 


  348. TASR…lol.  glad I sold all longs and doubled up on shorts at 4.80


  349. flip, will those children be needing any malt liquor? I feel a business plan coming on.


  350.  Anyone – I received a letter from my broker today (Tradeking) that says "Your account has displayed a high level of commission costs. We encourage you to thoroughly review your account holdings and trading activity to make sure they reflect your financial situation, investment goals, and risk profile… 
    This continues with the roles and responsibilities of Tradeking and its customers.
    Is such a letter expected/common? Is it something to be concerned about. Tradeking customer service said it was solely for informational purposes, but I would double check to be sure.


  351. gmarts
    Thanks a bunch, I only know when I tried to sell it could have been down before. Talked to the local provider and they said no other complaints. The other strange thing was it was still reporting real time but said disconnected and wouldn’t take a sell order 3 days in a row. Please post if anything similar happens Monday. Good plan on the hops, my land is planted in barley, the other part of beer for the masses, Bush buys mine.


  352. RN  it’s totally normal they are covering their A$$.  Don’t worry about it.  This is something I know about. 


  353. rn273
    That is quite strange, maybe they forgot how they make money or its those .01%ers trying to get you on their program, "BUY HOLD GIVE US YOUR MONEY"!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!


  354. devez, that’s pretty astonishing.  Can you attest to its validity?  From the looks of it, Loudoun County, VA, also the one time highest median income county in the country, is the only one on the entire East Coast with less then 5% unemployment. 
     
    Have a good weekend all.  I might be around cuz they’re calling for 101 degrees tomorrow in DC and I am about over being outside.  I really do need to hibernate!


  355. Matt1966,
    I’ve searched around snopes.com seeing if it showed up as false.  So far I do think that it’s correct.  The real unemployment numbers are much worse as people who  have quit trying aren’t counted. (I know most everyone knows that but did want to note it).
    I do realize that unemployment is a lagging indicator, but if the map is correct it just keeps getting worse month by month.  My printing company started in 1946 and this is way worse than the 1974-75 recession. 


  356. Matt1966,
    Is Loudoun County near DC.  If so, perhaps all those people work for the Government. 


  357. Here is a sentence from Wikipedia relative to Loudoun County.
    In August 2008, Census survey data concluded that Loudoun County has the highest median income in the country at just over $107,000.[4] A 2007 estimate indicated that the median income for a household was $104,612, and the median income for a family was $125,381[20]


  358. The left always uses "Bill Gates" or some other poster child as an example of how "the rich" can tolerate, well, almost ANY level of taxation without suffering, and how god awful it is to have some guy like that suck up all those assets and sit on them, instead of all the "hard working" people who right now don’t have jobs spending the money to buy, oh, I don’t know, something useful. 
    But then, the left goes to create laws, and they find out that the top 0.01% may be fabulously and stupidly rich, but in the end, well, you could take all their money and frankly, it wouldn’t even be enough to pay for the recent extended unemployment bill. I continue to use the AMT as an example of how poster children gave us taxes which now raise $1 trillion a year and almost all of that is from people who would have paid plenty without the AMT, but the government has gotten used to taking the big pile, and so they "can’t afford" to undo it.
    Phil and the lefties have a valid point of view that I agree with in part, but as many of you have noticed, it is completely doctrinaire and non-negotiable, and at the extreme, is completely unacceptable and I think , misguided.


  359. dvez matt
    I am one of the older members and what I will add is of all the people I have known that lost a job including my late wife, significant other, sister, father, mother, and many many others 3 collected unemployment compensation, My father, mother, about 90 years old, and Tom the roofer have collected.  That is about 3% because employers discarge with cause to disqualify you from benifits which they at least had to pay half. My oppinion is less than 1/3 ever get it and I think real unemployment is 25 to 33 percent. My first job was ended on Decvember 23 with 25 weeks, at the time you needed 26 weeks, what a christmas present I had to move back to mmy parents house.


  360. Righties
    I know you have your reasons and everyone works in their own best interest but why don’t you understand that this is a consumer based economy, if I am broke the butcher makes less and has to discard unsold meat, he has less money so he doesn’t buy a sink, the plumber is broke and the store that supplies looses money, the supply store lays off employees and they make less, now you have about 6 that stop consumming, the beef grower looses, Kholer plumbing products lays off people and eventually the manufacturer of glazing mud for the sink goes BK and the factories close down. How can that work or how are we going to make money on stocks. This deflation will not stop until everyone is broke. Your ideas are UNSUSTAINABLE!


  361.  Barfinger- I think that the real issue is the extreme degree of influence that the wealthy have in politics and not the logic of a specific political doctrine.  Every presidential administration has increased the size and scope of government.  Bush 43, despite his professed claim for a smaller government, dramatically expanded the size and scope of government and reduced the amount of income in the form of taxes that were coming in.  What is important to note here is that, under the Bush 43, the extremely wealthy managed to be more successful than in previous administrations.  I can see the argument that the far left is uncompromising and I completely agree with it.  However this is because they are the far left.  They have further to go, in terms of the right, to compromise.  It is like complaining that a religious zealot won’t concede a fact contrary to their beliefs.  They are a zealot.  The vast majority of American politics is conducted in the center because some degree of compromise is necessary to accomplish anything.  But Bush 43 pushed that too far, created a glaring inequitable distribution of wealth and have now given their opponents, who are considerably more numerable, a good deal of political and ideological ammunition.  The wealthy have overplayed their hand and the political landscape is now a dangerous place for them.  I would argue that the rich, who do well regardless, would do well to concede and let the pendulum swing back the other way.  Now, though, an overworked and undervalued population can point to the very wealthy and get angry.  The wealth inequity situation reminds me of this scene from the Naked Gun http://www.youtube.com/watch?v=5NNOrp_83RU.  


  362. Jtif
    That’s it nothing to be concerned about!


  363. AWs info – Looks like they are finally coming on to us….
    Arena Pharmaceuticals, Inc. (ARNA) Shares of the clinical-stage biopharmaceutical company shot up 10.7% today to an intraday high of $5.89, inspiring one options strategist to purchase a debit put spread in the October contract. Arena’s shares have increased significantly since an FDA advisory panel said it does not recommend rival Vivus’ (VVUS) obesity drug, Qnexa, receive FDA approval. The bullish options investor prepared for continued upward movement in Arena’s shares by purchasing 3,000 now in-the-money calls at the October $5.0 strike for a premium of $2.45 each, and selling the same number of calls at the higher October $7.0 strike at a premium of $1.45 apiece. The net cost of the transaction amounts to $1.00 per contract. Thus, the trader is prepared to make money should the biopharmaceutical firm’s shares rally 1.85% over the current price of $5.89 to trade above the effective breakeven price of $6.00 by October expiration day. The investor walks away with maximum potential profits of $1.00 per contract if Arena’s shares surge 18.85% to exceed $7.00 by expiration. In the nearer-term September contract, another bullish player opted to sell 2,700 puts at the September $2.0 strike to take in an average premium of $0.30 per contract. The put seller keeps the premium received on the transaction as long as Arena’s shares trade above $2.00 through expiration day in September. Options implied volatility on ARNA is higher by 14.1% to 101.05% as of 2:55 pm (ET).


  364. pharmboy
    Do you have any clue why IXPL is crashing, all I want to do now is cover the putter and sell the stock without continuing spending all day trying to make up for past mistakes, like I made 18% today following JRW’s teachings and net 0 because of these guys, I only looking for an even out?


  365. Phil wrote:
    Those are the lines where we want to flip bearish now.  In other words, stop out long trades (short-term, unhedged ones) and put on short-term downside plays.   If we hold 10,400 and 1,100 then we just cash out the long side EOD and stay neutral over the weekend.  Cash is always nice to have anyway….
    Does this refer to open options and/or stocks, e.g., C, BAC, VLO, AAPL?


  366. I have a real talent for picking the losing day trade ideas here. I presume people who took FAZ and the DIA 99 puts have exited with stop loss around 20%? I learned my lesson this time and only played a tiny amount, still frustrating though to be bearish on a week like this that I don’t understand where all the bullishness came from. Unemployment and housing numbers are still terrible, and those census employees getting dumped just around the corner. Maybe people naively think the Gulf crisis is solved? And that the Fed will save us from any disaster since they pledged to? 
     
    My last gripe AAPL can’t catch a break it’s crazy to see the Nasdaq up 1.05%, and AAPL only up 0.35% after insanely high earnings report. 


  367. Stark, Take a look at the 6 month chart for Shanghai (http://www.google.com/finance?q=SHA:000001) It’s started to turn around. Looks like it bottomed at the beginning of the month. If it really starts to move, I think you’ll see everyone else follow.


  368. Phil, need your opinion:
    RIG at $45.36
    I have 10 of RIG August 65-40 put spread – Currently $19.00 and not doing what I want it to do.
    There is .64 of premium in the spread right now
    Thinking of rolling it out to September and selling 12 of the 65-45 spread for $16 which works out about even after commissions. About the same margin and gives RIG a bit more time to recover.
    What do you think?
    Or is there something better I could do elsewhere?
    Thanks,
    Tony
     


  369. stark
    I do understand your issues. Phil is right 60% or I believe more of the time. That said I have lost following his leads, I also made 1,800 % on his diaster hedge. I have had extreme trouble trying to understand what I call the new english but I promise the intention is golden but not perfect. JRW a few weeks ago said I am teaching you how to fish, not serving you seafood or how to hunt. I actually made 18% on profit today, not my money, profit from the last 2 weeks. If you really listen and realize theis is not a paid dinner you will see the light.Your not the only one who is waiting for baked stuhed shrimp, problem is we are not cooks.


  370. 5% solution reminder/Phil – Hey, Phil, don’t forget to rewrite the 5% article this weekend!


  371. Stark….Unemployment and housing numbers, backward looking indicators..most CEO’s were bullish this earnings season..forward looking. AAPL im with you on that one, cant understand why they are holding it back.


  372. kustomz
     The only thing holding back apple is apple. They have pulled their strings and the bpuppets are tired of it . they are a good company that unfortunately believed they could control everything. Think long term there are lots of smart people working for them, maybe Steve Jobs has met the peter principal.


  373. kustomz
     The only thing holding back apple is apple. They have pulled their strings and the bpuppets are tired of it . they are a good company that unfortunately believed they could control everything. Think long term there are lots of smart people working for them, maybe Steve Jobs has met the peter principal.


  374. sorry about the double it didn’t send for minutes, thought maybe I did not klick send.


  375. shadow, while i respect your opinion Steve Jobs is the only reason AAPL is what it is today. He took a bankrupt company and turned it into the envy of Steve Ballmer..and for that i say thank you SJ. Serioulsy take a look at MSFT. Steve Ballmer has the tools he needs to dominate the same space. A chimp could run that company better, well maybe not a chimp but an orangutane for sure.

    Have you read this article by any chance?
    http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2010/07/06/businessinsider-working-at-apple-2010-7.DTL


  376. kusomz
    No doubt SJ did it but Bill Gates did it and now that is history just like I set up the first satelite interlink. That was then now is what matters, Steve Jobs has some very smart people unfortunately he tried to control everything including AT&T and it didn’t work out. If they start compromizing all might be perfect. Just like the Obama bashers he has failed because the system is rigged against the good guys and I thinh Obama was asell out.


  377. Phil/ARCC, I sold some Sept 12.50 puts a couple weeks ago with a 70% profit so far (I want to own it). Then planned to do a buy/write if assigned. Should I just keep this strategy of selling puts to enter if I don’t get assigned in Sept (looks like I won’t?) Or, just do the buy/write then and keep the Sept premium? Thanks


  378. The Loudoun County data is correct. One of the fastest growing and affluent counties in the US, and it’s NOT government employees but government contractors who are making the big money and moving to Loudoun.  It used to be beautiful rolling hill country and farms out there. Now it’s just ugly subdivisions with no trees, strip malls, roads everywhere and really obnoxious pied noir new money types. Modern day version of paving paradise and putting up a parking lot.   


  379. Phil – AAPL weekly spread – what did you do with this?
    AAPL Aug $250 calls at $11.75, selling July WEEKLY $260 calls for $3.10.  Worth a try


  380. I completely agree with those who observe that the stagnation in the economic circumstances of the average American is a real problem, getting worse by the year. I would like to see something done to generate improvement, because, like the lefties, I understand that we are better off if everybody is winning, rather than some winning big and the rest going nowhere. My problem lies in the methods used, and their justifications.
     
    I know the left actually believes that you give stuff to people who need it as long as there are needs, and that they are surprised when the recipients (as a group) dont seem much better off. I AM NOT saying those needy folks should not have what they need, I just dont believe that raising hell with the government until they give it to you is the correct method. I will not agree that people with money are evil by definition and deserve to be stripped of it.
     
    I would like to know how we can make things better for the average american without simply sending armed IRS agents to the door of the top 1% to steal it on their behalf. And then, can we PLEASE avoid saying how those people are evil, aren’t entitled to keep their hoard or pass it on, and how they DESERVE to be stripped of their property. Its one thing to talk about raising taxes, its another to treat that as if its an appropriate punishment.
     
    Anyway, I don’t understand the fight over financial reform unless you wished for it to be tougher, which I did. I don’t understand the idea of defending fat bonuses for employees of bailed-out firms, which I won’t, and frankly, the nature and structure of the bailouts themselves was infuriating. I have been opposed to almost everything that has gone on for many years now. It just seems a little worse now.
     
    I did nothing wrong, I agreed with nothing that was done, and I am not in the top 1%, but my payments to government are going way up. So, I’m not happy about it all. It does not mean I favor right-wing idiots to become our leaders. The left-wing idiots are bad enough.


  381. Bar – it all comes down to education and a willingness for the parents to instill those values of hard work.  I would gladly pay higher taxes IF I knew it was going to the schools and teachers (that is another subject, but Gates has an experiment going on that one).  I know we are spinning our wheels right now, but it takes a few generations for these things to take place.  That investment needs to happen NOW for the future, for our kids who are in school NOW.  I think our parents (baby boomers – in generalities) lost a bit of their way, and the GenX/Yers are a bit lost as well.  My kids have sooo much stuff, that their is no focus on a few things they really like – except dirt and sticks (go figure).  Video games are the norm, and focus is no longer on outside play and creativity.  We had long discussions the other day on this, so I am not going to rehash it.   The distance b’w families is much greater now as well as we all spread out across this nation and globe, so grandparents spoil rather than also act as a ‘figure head’, and parents are working longer hours and the kids do not see HOW the parent work as they did a few generations ago on the ‘farm’.    OK, I am done…
     
    On another subject, JNJ write-up should be done this weekend and we will have a few picks in it..and I am sure Phil will have some good spreads as well! :0


  382. BTW – I am getting ready to board a SWA flght to KC, and it is packed!  Maybe a spread in them…..who the heck is going to KC in the middle of summer where it is HOT and HUMID….umph!


  383. Pharm – We are certainly spoiled out here on the left coast. I feel real bad for those living on the right coast, but just for the moment, because winter will be here before you know it…… ;)


  384. Phil/anyone- opinions on the drillers not tied to the Gulf fiasco – particularly NE and ESV?


  385.  Phil, 
    I had a very rough couple of days. I thought my portfolio was 60/40 bullish and it turns out that with the markets going up north of 3% I was down about 1%!  
    I have gone over my positions and I don’t see why that was the case-- a partial explanation is that the sold calls on the buy-writes obviously work against me when stocks rise (as the puts don’t depreciate as fast). But I don’t have that many buy-writes (which is something I am trying to work myself into but it still takes a lot of time to figure out what is the right call and puts and at what moment and what expirations, so I have been going slowly). I am posting in the next post the actual positions, I appreciate it if you have a chance to see if the balance is too bearish…
    This brings me to another question: I have a combination (based on your recommendations) of buy-writes and synthetics, on one of your posts a week and a half ago you mentioned that doing buy-writes is preferable to build a long lasting position in a stock (as you go rolling if called away or put and thus lowering your basis), but still there are a lot of synthetic plays recommended, how should you chose between the two? There are sometimes you also recommend only buying puts (I guess these are short term plays? as you can see I have a couple such as VLO). 
    Finally when the long term buy-writes  (such as the one you can see on MON) which is very profitable (+10% in 30 days). and the long term potential is another 25% (all the way to 2012), should you take the money off the table? And wait for a potential pullback to re-establish the position?
    Thank you very much for your input.  Have a wonderful weekend!  


  386. Correction:  29.28%, call it 30, NOT 40% for the week…sorry !!


  387.  I just recalled that last time I posted positions from Excel they got all screwed up by the formatting, and took a lot of the space on your page. Is there another way to do it so I don’t cause that?


  388.  JRW, now that I catch you here a sec… I was going over the posts but can’t figure out the Sig runes that you mentioned yesterday at 2:54 and in the morning at 10:  . I was wondering if you could expand on the Sig rune and point me where to see it on the graph (I am on streetsmart and have the 1 minute chart 14,3,3, stoch, RSI and momentum) 
    Thanks a lot


  389. Pstas
    Thanks for the post on the Eurozone. It is hard for me to understand and accept the idea the banks in Europe are so safe that investors are willing to jump back in as if the storm has passed.  If so, then the bond market will be under pressure.
    My feelings, as related to the treasury bond market, is that it is really ready for a bubble "pop". It is, in my opinion, the worst investment one can make at this time. Like all asset classes that become overvalued, and realistically are "bubbles" they can depreciate very quickly and the drop is precipitous. (Remember 2000 when the tech stuff took a nosedive – fast, eh )  Well, I believe the coming demise of this bond market is not too far off, and if we can get a sustained upward move in the equity markets, then we will see the normal rotation out of bonds and into the more attractive stocks.
    I am still holding TBT in preparation for this coming event – I have the December 32′s, but I think I will roll next week to a higher strike and pick up more contracts. When this breaks, it will be tough to get in a a good price, as it could jump $5 to $10 in a day, I believe. All we need at this point, is to get some news that will drive the equity market – the November elections could be it!  Patience and tenacity is required for this one, but the payoff will be very nice!


  390. Pharm… Hot weather in KC for sure – but underground in the bunker, it should be nice and cool!


  391. JRW
    30% for the week is terrific. There are hedge funds that salivate if they can do 75% in a YEAR – you may very well be THE most successful day trader in the WORLD  You are, I’m sure, very proud.  Me…. I feel just lucky to be able to follow your moves.  Thanks much, for all you do for us!


  392. Well I’ll give it a try, I reformatted to text. I hope it works and doesn’t take space…
    Symbol Name                                 Quantity         Price  Change      Market Value
    AMR A M R CORPORATION 215             $6.89 $0.10 $1,481.35 
    T         A T & T INC NEW                 200                 $25.54 $0.03 $5,108.00 
    NPCUF ALLON THERAPEUTICS 5,000         $0.46 $0.00 $2,291.00 
    AMZN AMAZON COM INC             50         $118.87 ($1.20) $5,943.50 
    AMT AMERN TOWER CORP 200                 $46.77 $0.38 $9,354.00 
    ANH ANWORTH MTG ASSET 2,081.50 $7.39 $0.06 $15,382.27 
    BAC BANK OF AMERICA C 750                 $13.74 $0.08 $10,305.00 
    C         CITIGROUP INC                 4,000         $4.02  ($0.07) $16,080.00 
    TNA DIREXION SHS                 500             $43.24 $2.94 $21,620.00 
    EXC EXELON CORPORATION 300                 $41.02 ($0.78) $12,306.00 
    XOM EXXON MOBIL                 200                  $59.72 $0.34 $11,944.00 
    GSCPF GREENSCAPE CAP         8,000          $0.34 $0.01 $2,700.80 
    JCI JOHNSON CONTROLS INC 300                  $29.11 ($1.37) $8,733.00 
    BOMSF MEDWELL CAPITAL      9,000          $0.28 $0.00 $2,511.90 
    MON MONSANTO CO                 200                 $58.37 $1.71 $11,674.00 
    OGLDF OTIS GOLD CORP F         6,000         $0.41  ($0.06) $2,488.80 
    PTQMF PETAQUILLA MINERALS 2,000         $0.46 ($0.01) $920.00 
    PFE PFIZER INCORPORATED     600                 $14.58 ($0.23) $8,748.00 
    POWR POWERSECURE INTL I 550                 $10.49 $0.49 $5,769.50 
    TBT PROSHS ULTRASHOR            $36.42         $0.79 $10,926.00 
    SVM SILVERCORP METALS 400                 $6.63 $0.22 $2,652.00 
    SWKS SKYWORKS SOLUTI        -900                 $18.75 $0.70 ($16,875.00)
    NZT TELECOM CP N Z S                 1,500         $7.15 $0.06 $10,725.00 
    VLCJF VELOCITY MINERALS L 3,000         $0.08 ($0.02) $245.40 
    VLCJF VELOCITY MINERALS LT 5,000         $0.08 ($0.02) $409.00 
    WHR WHIRLPOOL CORP         100                 $85.97 ($0.23) $8,597.00 
    WLDVF WILDCAT SILVER CORP 7,500         $0.39 $0.03 $2,893.50 
    FAZ 10/16/2010 11.00 C CALL DIREXION FINCL BEAR$11 EXP 10/16/10 4 $4.01 ($0.39) $1,604.00 
    FAZ 09/18/2010 16.00 C CALL DIREXION FINCL BEAR$16 EXP 09/18/10 10 $1.37 ($0.17) $1,370.00 
    FAZ 10/16/2010 16.00 C CALL DIREXION FINCL BEAR$16 EXP 10/16/10 -4 $1.97 ($0.20) ($788.00)
    FAZ 09/18/2010 19.00 C CALL DIREXION FINCL BEAR$19 EXP 09/18/10 -10 $0.84 ($0.10) ($840.00)
    TNA 08/21/2010 35.00 C CALL DIREXION SMCAP BULL$35 EXP 08/21/10 -5 $9.40 $2.50 ($4,700.00)
    XOM 01/21/2012 57.50 C CALL EXXON MOBIL CORP$57.50 EXP 01/21/12 -2 $7.91 $0.16 ($1,582.00)
    INTC 01/21/2012 15.00 C CALL INTEL CORP$15 EXP 01/21/12                          6 $7.25 ($0.10) $4,350.00 
    INTC 01/21/2012 22.50 C CALL INTEL CORP$22.50 EXP 01/21/12                 -6 $2.67 ($0.08) ($1,602.00)
    WFR 01/21/2012 10.00 C CALL MEMC ELECTRNC MATER$10 EXP 01/21/12 -12 $3.65 $0.15 ($4,380.00)
    MON 01/21/2012 50.00 C CALL MONSANTO CO NEW$50 EXP 01/21/12 -2 $14.00 $0.60 ($2,800.00)
    POWR 12/18/2010 7.50 C CALL POWERSECURE INTL IN$7.50 EXP 12/18/10 -5 $3.20 $0.40 ($1,600.00)
    DXD 10/16/2010 23.00 C CALL PROSHS ULTRASHORT D$23 EXP 10/16/10 29 $4.80 $0.00 $13,920.00 
    DXD 10/16/2010 27.00 C CALL PROSHS ULTRASHORT D$27 EXP 10/16/10 -29 $2.15 ($0.35) ($6,235.00)
    SDS 08/21/2010 31.00 C CALL PROSHS ULTRASHRT S&$31 EXP 08/21/10 40 $2.35 ($0.43) $9,400.00 
    SDS 08/21/2010 35.00 C CALL PROSHS ULTRASHRT S&$35 EXP 08/21/10 -40 $0.81 ($0.31) ($3,240.00)
    AA 08/21/2010 9.00 P PUT ALCOA INC$9 EXP 08/21/10 -10 $0.04 $0.00 ($40.00)
    BAC 08/21/2010 14.00 P PUT BANK OF AMERICA COR$14 EXP 08/21/10 -5 $0.68 ($0.07) ($340.00)
    XOM 01/21/2012 57.50 P PUT EXXON MOBIL CORP$57.50 EXP 01/21/12 -2 $7.60 ($0.05) ($1,520.00)
    INTC 01/21/2012 15.00 P PUT INTEL CORP$15 EXP 01/21/12 -6 $1.22 ($0.01) ($732.00)
    WFR 01/21/2012 10.00 P PUT MEMC ELECTRNC MATER$10 EXP 01/21/12 -12 $1.98 ($0.07) ($2,376.00)
    MON 01/21/2012 50.00 P PUT MONSANTO CO NEW$50 EXP 01/21/12 -2 $6.95 ($0.30) ($1,390.00)
    POWR 12/18/2010 7.50 P PUT POWERSECURE INTL IN$7.50 EXP 12/18/10 -5 $0.50 $0.00 ($250.00)
    QID 10/16/2010 16.00 P PUT PROSHARES ULTRASHOR$16 EXP 10/16/10 -20 $1.05 $0.08 ($2,100.00)
    TBT 08/21/2010 36.00 P PUT PROSHS ULSHT LEH20+$36 EXP 08/21/10 -10 $0.80 ($0.46) ($800.00)
    DXD 10/16/2010 23.00 P PUT PROSHS ULTRASHORT D$23 EXP 10/16/10 -24 $0.35 $0.00 ($840.00)
    SDS 08/21/2010 32.00 P PUT PROSHS ULTRASHRT S&$32 EXP 08/21/10 -40 $1.28 $0.14 ($5,120.00)
    XLF 09/18/2010 14.00 P PUT SECT SPDR FINCL FND$14 EXP 09/18/10 -10 $0.47 ($0.06) ($470.00)
    DIA 08/21/2010 99.00 P PUT SPDR DJ INDST AVG$99 EXP 08/21/10 10 $0.76 ($0.36) $760.00 
    TASR 01/22/2011 5.00 P PUT TASER INTERNATIONAL$5 EXP 01/22/11 -20 $1.15 $0.05 ($2,300.00)
    VLO 08/21/2010 16.00 P PUT VALERO ENERGY$16 EXP 08/21/10 -7 $0.33 $0.00 ($231.00)


  393. amatta, a good way to share a portfolio is to enter it as a google docs spreadsheet file and just share the link, set it up so people can view only and do not need to log in.
    One way to track the delta of your portfolio is to enter it in TOS.  That’s what I do, even though I use IB as my broker, I keep a running total of my positions in TOS to calculate my delta and theta.
    If you want, I can enter your portfolio in TOS over the weekend and tell you what I get.


  394.  As each week goes by, I have been trying to decide if I have more confidence in the market (behavior), or less since the bottom in Mar 09.   I’m curious how others feel.   At this moment, I’m actually less confident in the market action than when the severe decline took place, since at least I could rationalize the fear expression to trading actions.  Nowadays, there seems to be little rational justification to daily and maybe even the weekly moves.
    Are the moves simply noise and oscillations within a trading range justified by macroeconomic conditions analysed by rational investors?  Or are we simply witnessing the metamorphosis of the market into automated bots baiting and feeding each other?  I fear the latter, and that we have another ‘systemic’ risk of a market collapse due to the change in market composition.  Perhaps the flash crash in May showed everyone that the liquidity providers and the gang of 12 have so much control now that they can crash the market at will and for their own nefarious purposes.  Does this risk show up in the VIX/VXX?  In other words, has the market discounted this risk….I don’t think so.   
    I’m more confused by what I see now than ever, this after twenty years of investing and studying the markets.   I’m starting to conclude that daytrading (JRW style) with a percentage of ones portfolio, with the rest held in cash may be the most prudent approach now.   I say this because this new systemic risk of the bots and lack of market participants with a ‘buy and hold’ mindset means that any day we could see a 1000 point drop in the market (or worse), with no warning.  Maybe it will be N Korea launching a nuke, or Israel pulling off a surprise attack on Iran or simply a Spanish bank failing in Lehman style – or simply the bots deciding they all want out at once!  At least with JRW’s system, it’s easier to limit risk and flip to the (down) trend if it shows up — and stay out of the market overnight and weekends.
    Maybe I’m just getting paranoid!!   Anybody else drawing similar conclusions that the plug on this market can be pulled at any time?


  395. amatta / Sig rune
    Look at the Stoch at 12:12 and 12:49; those formations are the clearest.
     
     



  396. Good afternoon!

    I’m in stock picking mode now (see new post) so not very interested in politics – maybe tomorrow. 

    Good point on farming, Gel, nice people, noble profession, essential for our nation – but doesn’t make any money.  It would make money, as in farmers working 30 years to pay off their land and building a nest-egg, but the banksters and the government make sure that doesn’t happen by churning interest rates and fees and messing around with commodity prices and taxing them out of their land over time.  I used to care about this but I gave up on farmers when they decided Republicans were their friends, as did most Coastal Liberals because there is just no payback to trying to help people who treat you like the devil.  Sorry, but that’s what happened. 

    So now the farmers lost the Democrats, who fought for their land in the depression (and before that even when Bryan tried to help save their land from bankers) and who fought for unpopular subsidies in the 50s and 60s and who fought to stop Big Business from taking over farming in the 70s (damn hippies and their BS regulartions).   Republicans always supported the "Range War" farmers – those guys were big business but they’ve done nothing but screw family farmers for 100 years but they put on a hell of a tent show and that seems to be all it takes to get them, even today, to put up signs like "Democrats – Party of Parasites."  So the Dems have pretty much given up farmers as a lost cause so they get the government they deserve in the end (and boy are farmers taking it in the end!).  It’s very sad but the Dems have ceded the "moral high ground" to Republicans over issues like abortion and stem cells and, if that’s the deciding factor in the Farm vote – then they shouldn’t complain when they get shafted economically.

    Gift tax/Gra – Yes, you are right, if you leave a very obivous paper trail and don’t set up the right string of transfer corporations to wash the transactions then you will owe a gift tax for sure! 

    Execution/Jtiff – Your Oct $3 calls are $3.60 and ARNA is at $5.91 so if you give them to me plus the $3 you would be paying to convert ($6.60 total), I will be very happy to give you 300 shares of stock.  It almost never makes sense to use a call to buy stock as there is a premim right up until the last moment and that’s just profit you are flushing down the drain.  If you sell a put, on the other hand, and you ride them out to the bitter end and get assigned, that’s just fine as you generally enter the trade expecting to get assigned at the net price and that premium payment is alreay in your pocket so you have nothing to lose. 

    AMZN/Cap – That’s why I don’t touch them anymore..

    DIA/JBur – If those are Augs I don’t think it’s so hot.  You paid .18 to roll the puts up but you only gained 0.04 in delta so what’s the point really?  There’s only 3 weeks left and the puts are 400 points out of the money.  Let’s say you entered the $99 puts at $1 and they are now .77 with a delta of .20.  That means you need a move of about 120 Dow points to get even, back to 10,300.  Adding .18 to roll to the $100 puts give you a delta of .24 and now you need a 100-point Dow move to get even.  Was that really worth putting 20% more money at risk?  It would have been more effective to buy 20% more $99 puts, which would increase your effective delta to .24 (of the original 1x) and you make the same even on a 100-point drop but then you end up benefitting from the additonal puts you bought if we head lower.  Of course, if you want a proper hedge, I’d roll that .77 over to the Sept $106/105 bear put spread, currently .60 and 100% in the money so they then have to move the Dow UP 180 points just to take the money from you and anything less than 80 (10,500) puts you ahead (because you are taking .17 off the table and you get $1 back at 10,500).  Since you can then only lose on a bullish move in the Dow, this is now a real hedge for you – even if the hedge is just getting your 25% back (plus the 17% bounus) and, of course, if the Dow does rocket over and you decide to ditch, you have a WAY better chance of pulling .50 off the table on this hedge than you do with the puts (the Sept $101/100 bear put spread is still .27).  



  397.  Phil- My entry on the ARNA Oct 3 calls was 1.10 and they are now at 3.60 which is why I was asking.  I guess my question is what do you think the best way to play this stock is with their FDA approval coming up?  


  398. Unemployment/Dez – Yep, that’s what keeps me from getting real excited.  Unemployment is like a cancer the way it spreads, with one infected area leading to another and it’s not the kind of thing you can cure overnight and, even when you think it is cured, it can still come back. 

    Activity/Rn – Well you should review what you are spending on commissions and make sure you are getting a good deal as well as making sure you are not trading too much.  Maybe some new FinReg-type thing is prompting them to send out letters proactively – I wish more brokers would do that for people. 

    Misguided/Barf – The top 0.01% make 33% of all income and pay 24% of the taxes.  The top 1% make 66% of all income and pay 50% of all taxes.  You can play all the justification games in the world but those are the facts.  That’s not even including corporations, who made $6Tn in profits and paid $300Bn in taxes (5%).   It’s not complicated at all, only to those who refuse to see it. 

    Consumers/Shadow – Good point. 

    Zealotry/Jtiff – That’s interesting but perhaps there is also the possibility that one party is actually right (as in CORRECT) and the other is wrong.  People talk about general problems in society but one of the biggest to me is this concept of "we report, you decide" as if there is no actual truth – just your opinion of it.  Some things are good for the economy and some things are bad for the economy and you can’t just call everything "an experiment," as if we should keep trying things that are damaging, simply because some people have an opinion that a poor practice should be continues.  This is the nonsense that is being played with Global Warming as well and it’s the same kind of logic that has Evolution downgraded to a "theory" and being given equal time with "intelligent design" as if even our education is now negotiable.  I’m sorry if that offends certain religious people here but you need to teach children critical thinking and logic in school, not acceptance on faith – they can go to church for that.  Anyway, it is not ideoligical "zealotry" to belive it is wrong for 0.01% of the people in this country to have 1/3 of its assets and income – it is ACTUALY WRONG and needs to be fought against by right (correct)-thinking people or this counry, as we know it, will cease to exist.

    Cash/Garbon – Most of us have portfolios that are 35% long-term, hedged positions – mainly buy/writes.  Those plays are designed to make about 20% per year as long as the market simply does not go lower.  If the market does drop, they have 20% built-in protection so we don’t lose money until the market is down about 20% and, due to the nature of the Buy/writes, we will be forced to commit another 30% to the long-term positions if the market is that low when the options expire.  Meanwhile, we can use the 65% cash to make short-term trades.  A lot of the short-term trades we like to take are selling naked puts, which are margin intensive but fairly conservative.  So when we talk about getting in and out of things and going neutral – it’s about the short-term, unhedged trades, which is pretty much exactly what I said there.  Read the new article on how we handle short-term, hedged plays. 

    FAS/Stark – The idea of downside hedges is you are protecting your bullish plays from a drop.  At a certain point, the gain in the bullish plays becomes it’s own protection (again, see new post for examples of that) and no longer need a hedge so when you lose 20% on a bearish cover, that means you gained a good amount on the bull side and no longer need the protection.  Ideally, we try to mitigate about 50% of our expected losses with high/leverage trades so if we have 35% invested which is 20% protected internally (ie. the structure of the buy/write) and the Dow is at 10,200, we are already covered to 8,000 and we don’t lose 10% (which is just 3.5% of the total portfolio) at 7,300 so our total concern, in a $100K portfolio with $35K invested in buy/writes is that the market falls all the way back to disaster lows and we lose $3,500.  How much protection do you really need for that?  Investing $1,000 in a play that pays 5:1 should do it so you put aside $1,000 of the $7,000 you expect to gain if the market holds up (and you collect your buy/writes) and then you are covered to Dow 7,000.  If you don’t think the Dow is going to hold 7,000 then why on earth would you have bullish positions in the first place?  See – it’s really not that complicated


  399. Lvmoda- paranoid- What is the old saw – Just because you are paranoid doesn’t mean THEY aren’t out to get you!
    Good question, however. I have pondered it also. My take is that one’s confidence level rests in one’s perspective. Short term, markets are always less predictable. Long term, the inverse. Buffet famously says he makes a decision to buy a stock and could care less if the markets then closed for a couple of years. As we read the daily blogs and listen to the media prognosticators, we get a lot of jabbering and conjecture about what caused this or that when , in my opinion, they don’t have a clue. They are just guessing like the rest of us. Sure, the charts and graphs can be useful tools but over the long pull, it is fundamentals which will out. Certainly anomolies exist and often so for extended periods but things always correct in some fashion. We should be happy as such as that is where the profit is.

    As to the the common references of wizards behind the curtain pulling the levers, well, color me skeptical. These conspiracy theories always collapse under casual scrutiny. Ask the essential questions – Who, what, where and when?
    Who are the perpetrators? No not just GS et,al, – give me individual names and addresses.
    What are they doing? Is there a written plan? What is in it? Who writes it?
    Where is it kept?
    When is it used? Who gives the orders and to do what? Who gets the money and how much? How is it split? Etc, etc.
    Lots of people would have to be involved to make something like this to work and THEY all have to be on the same page and no one has ever broken the code of silence?
    Like I said, color me skeptical.
     
    Oh, one may say, I don’t mean that. It’s the system that is rigged and they have powerful computers to do their work. True, perhaps but maybe that is just technology speeding up the process and exploiting  the old as dirt herd mentality. Many years ago I worked on downtown Chicago and one could wander over to the Board of Trade or Mecantile Exchange and view the trading pits in action. Dozens of frantic looking people in brightly colored jackets waving their hand singnals and scribbling on cards. I could easily imagine one or two well known successful traders going in to action and creating a frenzy by buying or selling and the herd following because THEY must know something. Manipulation? Collusion? Or just human nature playing out and figuring out and edge?

    In any event, the winners in the game are evil exploiters and the losers have a universal excuse for failure.

    Back to reality.

    There always has been and alway will be potential for a collpase and it will not be because some wizard pulls the plug. The only way to guarantee it will not affect you is to stuff your cash in a mattress. So, what to do? Follow the tried and true rules of investing. Know your tolerance for risk. Keep the majority of one’s assets in whatever that tolerance says is safe. Apply a portion to more risky endeovors and sit back and enjoy the ride.
    Besides, no reason to sweat it. If you make too much, Phil and his friends are just going to come and take it anyway. :)


  400. Phil,  do you have a reference to support your Total US Corporation Profit of 6 Trillion ( I can’t believe it is that high).
     
    Thanks


  401. RIG/Aug – I’m not very comfortable with the whole play as I’m not sure what’s going on with BP, damage claims etc.  Keep in mind that if RIG is found even 5% responsible for damages, it will break them and if BP defaults then RIG becomes the next target for suit.  Also, we don’t know how long the moratoriam on drilling will last and that impacts RIG long-term too.  You have a $19,000 obigation tied up there with $6,000 more to lose, which makes it a pretty big one-sided gamble and, as you can see they are difficult to work out of.  Why?   You bought premium, didn’t sell it.  If you want to bet on the long-term health of RIG and other drillers, safrer to short the OIH 2012 $99.1/70 spread for about $11 that’s already $5 out of the money.

    5%/Snow – Damn, I forgot that.  Hopefully I’ll get around to it tomorrow. 

    ARCC/Jomp – Well don’t jump to conclusions 3 months in advance but, yes, that’s the idea.  If they want to keep paying you NOT to own a stock, so be it.  They’ll pay you another $2 not to own the for $13 in March.  If you can get paid $2 per year not to own a $13 stock, that’s a pretty good rate of return!  Unless the stock pays a dividend or is something you intend to own for a very long time, there is no point to owning it.  If you want to leverage your play, take the $1.50 you make on the Sept puts and buy yourself a March $10/13 spread along with the March $13 put sale and you still end up owning the stock for net $11.50 if assigned but make a whopping $3.50 more at $13.

    TBT/Pstas – One day my friend…

    AAPL/Edro – That one couldn’t have gone better as the weeklies expired exactly worthless and the Aug $250s hit $14.35 so that was done with a better than expected $6 profit on net $11.75 in a week!  Now the differential isn’t worth it as you can only get $3.50 for the $260s and we’re at $260 so a totally different trade.   Still, I’m happy with our first experiment on the AAPL weeklies.

    Drillers/Pstas – I like OIH at $90 but I will be shorting them again at $115 and I don’t like anyone in between.  I like XOM, CHK, UNG and VLO and that’s about it in the energy sector. 

    Portfolio/Amatta – Keep in mind that it doesn’t matter what your callers think they are worth – you go into a buy/write with a set amount of money to make and that’s what you make if you are on target.  What happens in-between is just noise.  On any portfolio, you need to look over every position at least once a week and decide if they are worth keeping or if you have something better to do with the money.  There is no right or wrong on MON, for example.  MON made you 10% and can make you 25% more in the next 18 months.  If you cash MON now can you find a position you think is more likely to make you 25% or more in 18 monhts or less.  If so, dump MON and buy the new position, if not, stick with MON – not complicated.  Don’t forget to calculate switching costs as well as you pay a lot of different bid/ask spreads and commissions to go flipping out of buy/writes 18 months early and into another one so it better be a BIG difference

    Excel/Amatta – Optrader uses EditGrid to post sheets, I’ve never tried it in the comment section though.  You could use an on-line sheet and post the link instead…

    And what Jordan said! 

    TBT/Gel – Amen!

    Markets/LV – Yes, they are totally nuts and out of control and the only truly sensible system is to SELL bets to other suckers who think they know what is going to happen.  By selling options you can BE THE HOUSE and when the markets have turned into a casino, being the house is the logical thing to do, isn’t it? 

    Pstas is right, it’s not paranioa when people are being paid to write little StockBot programs which drill down to the individual transactions and literally ARE OUT TO GET YOU!   He is also right about Buffett – what do I care what you (or the broader market) think the price of T should be if it’s paying me a 6% dividend and earning 10% of the $20 I gave them every year?  Just put the stock under my pillow and wake me up when the world is sane but, in between – I don’t care if the market prints $10 or $30, I still think it’s worth 10x earnings based on my own projections for their growth and, unless that changes, then I’ll buy when it’s near $10 and sell when it’s near $30.  This is not complicated, folks! 

    Pstas is not right about conspiracies.  I do not believe that there are 30,000 people in a room or even 1,000 people at the Bilderberg Club plotting every twist and turn of the economy but I do believe that 30,000 people in this country and 100,000 people in this world exert intensly undue amounts of influence over the other 7Bn people and each one of them has their own self-interest at heart when they push for a law or a reform or a regulation or a tax decrease that is generally going to end up being bad for you (people who don’t make $10M a month) and good for them.  If you think that isn’t happening then whatever the reverse of paraniod is is what you have (blissful ignorance?).

    If there were 100,000 people named ZZed in the world and they had 1/3 of the world’s money and they had incredible amounts of influence over politicians in their own countries – would it require a vast Z-wing conspiracy for them to start pushing for lists to be made in reverse-alphabetical order?  People will act in their own self interest and if you let people whose interests contradict yours write the rules long enough – you end up with an entire system that favors them and not you.  They don’t NEED to have meetings – one of them equals a million of you in wealth and power – YOU are the ones that need to have meetings if you ever want to be treated fairly but the top 10% all want to think that they are included in the top 0.01% – all part of the greater fool theory with the greatest fools being the ones nearest the top, fighting to maintain a system that keeps them the court Jester.  Better to serve in hell though, I guess….

    Corp Profit/Humvee – It is very odd that there is no link to this data.  So odd that, if Pstas didn’t tell me that there’s no such thing, I would think there is a conspiracy.  You can find statistics about all sorts of things but nothing on total US corporate profits – almost as if someone doesn’t want that number up there.  I can’t find it going though Google at the moment but I have, at various times seen these numbers and I have linked to them in the past but I can’t find the links now and it’s time to barbeque….


  402. Profits/Humvee – Oh a quick note.  XOM makes $12Bn a quarter and CVX makes $7Bn and BP makes $6Bn and COP makes $5Bn a quarter… before you know it, there’s $100Bn and another $100Bn…. it adds up really fast and the real joke is that they declare those profits (XOM, for example) on $90Bn in sales yet XOM ends up paying $5Bn in taxes, not even 10% of sales, which is why the VAT becomes appealing as it takes away to opportunity for corporations to write off the majority of their earnings… 


  403. We report, you decide/Phil – I have a hard time of classifying belief systems as right or wrong because the criteria I use cannot be proven as the one true way.  People believe,  in my humble opinion, some really strange stuff.  My point earlier was that those who reside further to the left or right in the spectrum of political beliefs are less likely to concede a point because their philosophies are so incompatible thus the perception that neither side will agree to compromise because they are too militant.  It is for this reason that the majority of American politics is conducted in the center and can be largely inept for extended periods of time unless pushed to one side or the other by external events.  Bush 43 and 9/11 for example.  I find it very difficult to imagine if there was no 9/11 that events in that presidency would have hashed out the way they did.  I think that the primary reason America has not been pushed further in the opposite direction has to do with the fact that the economic collapse has been stalled.  I also think that you are correct in the lambasting of the MSM.  The wealthy and the corporations have created a huge imbalance in society and they are fighting to convince the general public otherwise.  A really good example of this can be found in the documentary "What’s the matter with Kansas" (http://www.imdb.com/video/wab/vi832242457/).  I believe that the next wave of economic disaster will come from municipalities and then states.  Sooner or late a local municipality is going to be forced to go bankrupt.  California will be forced to do something drastic.  I find hope in a few places where the MSM cannot dictate the script.  Wikileaks is the model of change for the future.  I see change as a really slow burn that is not reflected in the MSM.  


  404.  Jordan, 
    Thanks a lot, I would appreciate that as I use Schwab and they don’t offer anything nearly as sophisticated. I might take a look at switching but it is such a pain with open positions, etc…
    Here is the link to the spreadsheet. 
    Thank you very much! 


  405.  Phil,
    What is the time frame for the GENZ play?
    Thanks


  406. Further thought on conspiracies:  
    The orchestra conductor doesn’t make a sound.
    Some would do well to read, "The Shadow Elite", a terrific treatise on why conspiracies as such need not exist to accomplish what conspirators do achieve. And far more. 


  407.  JRW, 
    Thanks. Is that on the 1 minute IWM? Its a rather large one at 12:12 and a small one at 12:40 right? So it doesn’t matter if after completing the top part of the symbol it drops? Because that is what seems happened on the first one (at 12:16 it dipped a bit). The rise after that was for only .14…   On the second one however (I don’t know if this has to do with not falling after the completion of the symbol) it ran up .25 before turning down for a bit and then making the huge runup… but how did you know to stay in through the spike down from `1:00 PM to 1:06 which gave up the .25 gain after the Sig Rune?
    Thanks a lot, sorry for the multiple questions…
    Have a nice Sunday…


  408. Health care:  we move left and europe moves right.  we move to centralize care, they to decentralize it.
    http://www.nytimes.com/2010/07/25/world/europe/25britain.html?em&exprod=myyahoohttp:
     
    What is shows, I’m not sure, except that no one has a solution to provide expensive health care for citizens when its beyond its means.


  409. Phil,
    You wrote..
    "This is the nonsense that is being played with Global Warming as well and it’s the same kind of logic that has Evolution downgraded to a "theory" and being given equal time with "intelligent design" as if even our education is now negotiable." 
     
    I don’t think the real problem has been the downgrade of little "e" (evolution) to a theory but the faithless assumption that the theory is in fact a law and that an entire system of viewing human life as little more than tissue. The natural "evolution" from this belief system (it is a belief system, a religion) is now leading to the moral decadence and low regard for human rights being played out all over the globe. The very .01%ers abuse of those below is a direct result of the internalization and embracing the idea of survival of the fittest, elities born to rule and  evolutionary forces at work writ large. Let’s be fair here this belief system has some merit (species do adapt over time) but very little real science to back it up (men came from apes). This theory/system is at odds with creation/design; always has been, always will be. They are mutually excusive for the most part. Both ideas have consequences.
    I have often thought that if the Democratic Party would jettison their general embracing of every historical moral perversion (gay marriage, abortion and other historical evidences of a declining nation), they may be able to put to work some of the social and political ideas that you so often espouse.  I agree with many of your thoughts, appreciate your observations and enjoy your insight.  It amazes me that you do this from some internal compass of right and wrong and yet disparage the "religious" on you site; especially the "conservative" participants as if their ideas are totally without merit. Your ideas of right and wrong, justice and injustice, imply or at the very least assume upon the existance of a standard.  I for one do not believe this standard evolved, but was given. Soli Deo Gloria…
     
    Respectfully,
    Barry


  410. Bps – ‘Moral perversion’? Really? THe biggest problem with social conservatives is they are quick to point out the percieved wrongs of others but do not look at the ‘log in their own eye’ (I think that is how it goes, I did go to a Christian high school).  THey are ‘pro-life’, yet support the death penalty.  How does gay marriage or abortion affect you or other conservatives? It doesn’t! I remember Cali’s anti-gay initiative (last year?) and seeing an interview  on TVof one Christian guy who gave his life savings (when he had 2 young daughters) of 40-50K to support the anti-gay initiative (Im sure his daughters will understand why their dad did this when they are preparing for college and have to get massive loans) .I know this example is extreme but I really that the key to democrats success is not to stop embracing progressive policies, but to become better organized. Republicans are very good at standing together, something the dems need to learn. Bush’s policies were terrible, yet many democrats broke with their party and voted for his bills.  Look at Obama, how many republican senators/congressmen have voted for ANY of his bills? They needed to bribe some of their own (Ben Nelson) just to get certain bills passed! When the dems start playing hardball like the Republicans do is when we will see real change…… That is until they are voted out of office in the upcoming election :( .
    V/r,
    Elias


  411. Jordan, 
    Oops, sorry the link didn’t show up. Let me repost it here in case you come back in. I really appreciate it if you could run it on TOS…spreadsheets.google.com/ccc
    Thanks, 


  412. jromeha,
    Certainly I would hope you can discern the diffrence between opposing the right to destroy babies in the womb and legitimate taking of the life of a criminal who has committed a crime worthy of death.  This is not so hard to resolve in any mind, just get the crime close to your home and family and it is easy to see.
     
    As to how gay marriage and abortion affect me or other conservatives? Only indirectly and fortunately the decay is relatively slow. Indirectly in the sense that when calamity comes to a nation as the result of foolish practice all will tend to suffer.  I would say that history is self evident as to the long term consequences of destroying your progeny and failure (or in the case of gay marriage) inability to reproduce. We now face a crisis of an aging population and 50 – 60 million babies (future citizens) were deprived of life and liberty without due process of law; I would call that a travesty of justice.
     
    As far as the man who supported the anti-gay agenda with his life savings? So what? It was his life savings wasn’t it?
    Many have given more for less; some even their lives for the truth’s sake. We all support/resist based on our views of ultimate reality. Perhaps his daughters will honor his committment to his values.  What are you willing to give your all for?
     
    And you are mistaken that I would defend the Republicans, especially former president Bush. Just beause I believe that certain things are wrong i now support all the things the republicans espouse?  As for calling the above mentioned atrocites Progressive policies; I could not disagree more, if they are anything those are Regressive\Barbaric and cannot yield the fruit of a peaceful and prosperous nation.
     
    I certainly hope many are voted out in both the camps, but we have given too much authority to our federal government. With that power mostly what you get are those who seek power as opposed to service and the next bunch is not likely to be fundamentally any better than the population at large. I think it was George Washington who said not to give any more power to a government than you would entrust to the least of your citizens and remember Pogo said, "We have seen the enemy, and he is us".
     
    Righteousness exalts a nation…
    Barry


  413. I think the most important aspect of this last argument is the fact that so many Republican voters who vote based on moral issues help elect officials that write and pass laws that are contrary to their interest.  The big wigs in the GOP use moral issues to drive votes and in return they push for policies that are conservative.  They use media to script a narrative that will distract the public into petty arguments with no answer.  There is no way to appease either side which is fine with those writing the script.  (Homosexuality, however, is a lost cause for the right.  Young people are far more tolerant of homosexuality than their parents, even in widely conservative places like the deep south.  That fight was lost the second MTV introduced a gay character on the Real World.  Abortion, on the other hand, can be argued in perpetuity.)  Besides, morality in corporate and political dealings are so vague that these issues cease to matter much.  How many large corporations either sell, distribute or produce porn?  More than people would choose to admit and the people involved, either directly or indirectly vary from Mitt Romney to General Motors.  Moral issues tend to lose their clarity when lots of money is at stake.  The bottom line is that people with real, deep set beliefs have been snookered into supporting policies that make the rich richer and the issues more convoluted than before.  


  414. ok, i’m still not long TBT and today’s my day, Phil…..  what is a good entry?  how about the 34-36 call spread for August and sellig the 36 puts to bring in a little credit? sor ay other ideao it costs about 90 cents or so, a double above 36 in 3 weeks?
    or any better play on it?