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Fed Speak Friday – Volcker, Lacker and Ben Batting 1, 2, 3

INSERT DESCRIPTIONWhat a fun day for debate!

Former Fed Chair, Paul Volcker went way off-script in Chicago yesterday and "moved unsparingly from banks to regulators to business schools to the Fed to money-market funds during his luncheon speech.  He praised the new financial overhaul law, but said the system remained at risk because it is subject to future “judgments” of individual regulators, who he said would be relentlessly lobbied by banks and politicians to soften the rules."

This is a plea for structural changes in markets and market regulation,” he said at one point.  He also had some great quotes:

 Banking — Investment banks became “trading machines instead of investment banks [leading to] encroachment on the territory of commercial banks, and commercial banks encroached on the territory of others in a way that couldn’t easily be managed by the old supervisory system.”

Financial system — “The financial system is broken. We can use that term in late 2008, and I think it’s fair to still use the term unfortunately. We know that parts of it are absolutely broken, like the mortgage market which only happens to be the most important part of our capital markets [and has] become a subsidiary of the U.S. government.”

 Risk management — “Markets that are prone to excesses in one direction or another are not simply managed under the assumption that we can assume that everybody follows a normal distribution curve. Normal distribution curves — if I would submit to you — do not exist in financial markets. Its not that they are fat tails, they don’t exist. I keep hearing about fat tails, and Jesus, it’s only supposed to occur every 100 years, and it appears every 10 years.”

The recession — “It’s so difficult to get out of this recession because of the basic disequilibrium in the real economy.”

This afternoon, Richmond Fed President Jeffrey Lacker will speak in Kentucky (his hometown) on "Reflections on Economics, Policy and Financial Crisis!" and it always makes me nervous when Fed Presidents put exclamation marks on the word "crisis" so we'll be paying attention to that one.  After market hours, at 4:30, Uncle Ben comes to the plate with "Implications of the Financial Crisis for Economics," which sounds like a snoozer but that's three Fed guys in a row saying "crisis" in the same day – I don't like it!  

I was bearish yesterday morning but we bottomed out earlier than I thought and I sent out an Alert to Members at 10:01 saying: 

Of course DIA $105 puts are now up a huge 46% and the IWM $67 puts are $2.30, which is over 100% so shame on you if you don’t take that money and run – we can always find something else to trade later and you can put those profits into a sensible, long-term disaster hedge like the QID play from yesterday’s chat.   

It was housing that was our big worry and we got better-than-expected Existing Home Sales with 4.13M homes (annualized) changing hands and that, thanks to the magic of a downwardly-revised July number, was up 7.6% vs flat expected.  That is the fun thing about Government statistics – they tell you a better-than-expected 4.1M homes were sold in July and the market goes up, then we expect 4.1M homes to be sold in August (annualized) and that would not move the market but then, in August, the government revises July DOWN to 3.84M homes sold (which means our excitement over July was completely misplaced) and then reports 4.13M homes for August and calls that UP 7.6% – isn't that INCREDIBLE?!?

When I say "incredible" I mean, of course, lacking any and all sense of credibility.  Nonetheless, the market loved it and we shot up on the "good" news.   If we're lucky, August will also be revised down and the same completely inept measurements will show September to be "improving" to 4.1M again and we can rally off that number. 

Today it's all about Durable goods and expectations are set so low there that it will be hard to miss at this point so we can celebrate the mediocrity as only Americans can this morning.  We can expect a pop on Durable goods to take us back to yesterday's open ahead of the bell and then we'll see what sticks into the weekend.

8:30 Update – Confusion!  Durable Goods were DOWN 1.3%, which is 30% WORSE than expected and last month was UP 0.4% but, ex-Transports, we are UP 2% vs. down 3.8% last month so that's what they are focusing on in pre-markets and the futures are flying up about 1% already (8:45).  

What a great opportunity this will be to re-enter our directional shorts – very exciting stuff for us as we can sell options to suckers who think we're heading up and up and buy puts at ultra-low prices from bears who are getting squeezed out of positions.  As I mentioned yesterday, though - we are still long-term bullish, the adjustments we're discussing are just our directional short-term plays as we use those to ride the waves of the market while we PATIENTLY wait for our long-term positions to mature.  Our new trade ideas yesterday were a mix with short plays on PCLN (backspread), the Russell (a bullish TZA spread) and the Nasdaq (a bullish QID spread) and long plays on SKX, ADBE (see Wednesday's post as well), XLF and TASR.

Gold is touching the $1,300 mark this morning, giving the metal bulls ore-gasms with dreams of $1,500 dancing in their heads.  We're sticking with our GLL trade (now $34.60) but maybe no more if the Fed boys sound like they are about to ramp up the printing presses.  What I do know is that there is no way they are going to extend the tax cuts until after the election and if the Fed doesn't punch the button on easing – I'm not sure how long investors are going to be willing to wait for the next government give-away.


Speaking of Government bailouts for the rich as well as lies, damned lies and statistics – the Republicans revealed their "Pledge to America" but, strangely, none of them put their hands over their hearts and swore to anything…   We had a great political discussion in last night's chat so I won't rehash it here and Jon Stewart summed it up very nicely last night when he was comparing the text to the old "Contract With America" of 25 years ago and ended up laughing so hard he couldn't go on.  One of our Conservative Members said that it all boils down to whether we are better off than we were two years ago and my response was:

Better off – Well, two years ago the S&P was at 750 (and still not done going down) and people were lining up at banks to take out their money because they thought the entire economy was going to collapse and whole wall street firms were going bankrupt overnight with thousands of people losing their jobs on a daily basis (close to 1M jobs lost in a single month at the peak).  

During this crisis, we still couldn’t get the Republicans to pass legislation that was proposed by their own leadership because they thought that it was a good time to throw a temper tantrum and hold government hostage so, yes, I do think we are so much better off than we were two years ago that I can’t even imagine the workings of a mind that wants to go back to the insanity of Republican "leadership."

That's all I have to say on the matter until after hours but I do feel a weekend post on the subject forming!  Doug Kass agrees with me.  Not about politics but about bonds as he now says that shorting bonds will be "the trade of the decade."  I still think buying TASR for $4 will be the trade of the decade but shorting TLT at $105 was already the plan I've laid out in previous posts.  Japan is having no luck propping up the Dollar this week and the 3am trade came early this morning as the Yen bottomed out at 85.38 at 12:20 and shot up to 84.10 and looks to be heading even higher this morning (lower is higher as it's Yen to the dollar).  That is a HUGE one-day move for a currency but, then again, it happens all the time lately as they step up the manipulation – kind of the way we're used to up and down 100-point moves in the Dow these days.      

The Nikkei did not, of course, like the move and they fell 1% to close the week at 9,471, over 1,300 points below the Dow this morning and 200 points "too tight" based on our invisible Nikkei-Dow rubber band theory that says they should stay within 1,100 points of each other.  Europe was off to a cold start despite a rise in German Business Confidence but they cheered right up on our Durable Goods report and are now up about a point ahead of our open. 

We did the charts earlier this week and no one is in any danger so we'll be looking to just drift through the day and see what sticks but we'll certainly be hedging into the weekend and picking up those same directional plays we already made money on twice this week.  Will third time be a charm or do we break up and out next week on surprisingly good data – tune in and find out! 

Have a great weekend,

- Phil

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  1. Phil,
    I sold the NFLX calls at 165 when you called it a few days ago.  Should I roll them up to 170 now that it is going higher?  What is the best way to handle the run up on this stock?

  2. iflan / intuition — I’ve mentioned this book before "Blink: The Power of Thinking Without Thinking" by Malcolm Gladwell. A recommended read related to intuition. I think it should be recommeded reading for traders, especially day traders.

  3. JR,
    You’re a technical guy, have you ever listened to this guy?  He’s very thorough.

  4. There have been mixed reports that China has blocked export of rare metals to Japan, apparently in retaliation of the capture of a Chinese fisherman. According to some reports, China produces 93-95% of these compounds, which are used in many manufacturing products, such as hybrid cars. Now the reports seem to substantiate that exports have been blocked to some degree. In the US, Molycorp (MCP) produces 3,000 tons to China’s 120,000 tons. Note the rise in REE and MCP yesterday and in the premarket. Worth keeping these on the radar screen for future reference as this is not likely to be the last time we see this event and one imagines the US and others will be scrambling to find other sources to prevent future shortages (MCP, although very small was moving much higher).

  5. Rainman/Iflan – I’ve found that meditating and yoga daily helps as well. Some people don’t do it b/c they associate it with ‘eastern religion’ and what not but it does help with thinking clearly, ect…

  6.  Phil – love google chrome – loads much faster – goodbye to ms 
    Anyone figured out how to move your google bookmarks out of the folder on the left and onto the main bar – i imported them (google bookmarks) but they seem stuck on the right side

  7. Chrome – sorry ot – wow that is great – just go into bookmark manager – open as a seperate tab and you can move stuff around – i love this – what was I thinking sticking with IE – bookmarks strung across top in folders is awesome

  8. Phil, Your analysis of the health care system at the end of Thursday’s comments was excellent! I applaud you on that.

  9. Chrome- how does this compare to Firefox?

  10. Anyone else having problems with TOS? Fortunately I was LONG oil when it went out rather than short!

  11. pstas- I have been using firefox for a while now. Tested chrome yesterday and I think it is much faster than firefox.

  12. Rolled DIA mattress from Jan 11 106 to 108p for .82 

  13. Good morning!

    Gosh I hope you guys don’t need me to tell you to: ALWAYS sell into the initial excitement! 

    This is a fantastic opportunity to pick up hedges into the weekend and our old favorites, DIA $105 puts are back to .89 so we like them again as well as QID $13 calls at $1.67 for a weekend play to the downside.  Of course if we make 20% today for some reason, we take it, as making 20% a day is making 4,000% a year and, unless that’s normal for your portfolio – it’s best to take those 20% gains when you can!

    As I have said before – keep in mind these are bearish offsets to an otherwise bullsih portfolio.  I don’t want these trades to be taken out of context! 

    I said Monday that "our job for the week is to get past the housing data.  If we can hold our 4% lines through all that, then all we need is decent earnings to take us 5% over the 10,700, 1,123 lines.  We hit our target of finishing the week pretty much between 4% and 5% and now we can afford to test 2.5% as long as we don’t fail it."  Well, here we are, so we are in the funny position of being technically bullish but fundamentally skeptical:

    • Up 5%: Dow 10,710, S&P 1,123, Nas 2,310, NYSE 7,140 and Russell 666 
    • Up 4%: Dow 10,608, S&P 1,112, Nas 2,288, NYSE 7,072 and Russell 660
    • Up 2.5% (MUST hold): Dow 10,455, S&P 1,100, Nas 2,255, NYSE 7,000 and Russell 650

    The S&P was 1,145 on Tuesday, the Dow was 10,809 so let’s keep some perspective and especially watch the Russell, who are just testing 660 again at the open.  Russell failure has been a great indicator that things were overbought. 

    Coper is $3.62 and even nat gas is having a good time at $3.91 but well behind oil, which is back at $75.75.  Right around Tuesday’s highs is the best place to start trying some shorts and we can do a quick stop-out if we break over the lines and back on below it. 

    AAPL may flirt with $295 and, if it’s a real rally, they should get over $300.  We want to short BIDU at $100, probably selling the Nov $100 calls at $6.50-$7.

    I don’t have an upside play but I’ll have plenty if we hold these levels for next week.  I’ll update the September’s Dozen over the weekend and get to work on October’s list – just in case. 

    Have a great weekend,

    - Phil

  14. Starting a new hedge fund,  its the MTDB fund..Monkey and a Dart Board, Bongo guarantees returns of 1000+%

  15.  firefox – always gave me problems with certain sites – also I think they are probably toast with chrome on the market and google behind it – they just won’t be able to keep up with google – no tech expert so I could easily be wrong

  16. Chrome/firefox- one thing I really like about Firefox is the ability to open multiple tabs; close and then reopen all the same tabs automatically. Does Chrome do this also?

  17.  Phil -
    Feeling like a need a better hedge against the dollar decline than just tbt which we all know has been a killer -
    Any ideas on that front besides just following dave over at etf digest and getting some more international etfs going

  18. Phil;
    buy or hold on RIG, your opinion on reinstatement of dividend and if so how it may effect price per share.

  19. Chrome- also- some trading platforms don’t work well with some browsers. I switched to Firefox because the Scottrade Options 1st Sytem did not work well with IE. Anyone encounter such problems using TOS w/Chrome or others?

  20. when you mention TASR as a play that involves law enforcement, have you noticed that most departments are sticking with old crown vics and not buying whatever has replaced it. when they can and need to buy, where will they go? there was someone producing a specialized car.

  21. Lflan
    Thank you for sharing your thoughts on AAPL.
    I tend to agree with you.
    And as Rainman said… A decent read.
    Q: as a day trade, am thinking of selling the Aapl sept 290 puts expiring today(about$0.50), hoping AAPL holds 290, but it fell back yesterday
    What intuit you?

  22. Nice chart of blockbuster’s demise coinciding with netflix’s rise over the years.
    Also, Neflix signed NBC just after they rejected Apple’s dollar rental model yesterday.

  23. Good morning,


    IWM 64.14, 64.42, 64.94, 65.23, 65.57, 65.91, 66.40, 66.68, and 67.09

  24. Phil
    “sell into the initial excitement”
    Sell AAPL also this morning? or are you talking specifically about your hedges to short the market into initial excitement?
    Please clarify

  25. Good Morning!  Sold all my longs – I just feel this morning could be a nice parting gift…… :)

  26. exec / website

    No, but he sounds desperate, as well he should in TZA over night and a gap up this morning. Obviously he doesn’t visit our site  8-)

  27. Sold my long too. 

  28. NFLX/DD – Always have your eye on the roll.  Right now, NFLX is $166 and the $165 calls are $9.20 so almost all premium.  The roll is to the Nov $180s, now $9.10 so the only time we worry is if that roll relationship (flat) begins to move against us.  Otherwise, there is no need to do anything.  The Jan $195 calls are $9 so unless that time-frame is unacceptable (and, if it is, then selling naked calls is never a good idea) then unless your 3-month target for NFLX is now $200, there’s really nothing to worry about. 

    Blink/Rain – I like Gladwell but haven’t read Blink.  Thanks.

    COST making year highs.  PCLN on the march again.  MEE making progress (an old pick).  EXPE making new highs. 

    Chart guy/Exec – I like those videos.  I’m going to have Ilene contact him. 

    Yay, New Home Sales 288,000, up from record-low 276,000 so now we are building 15 homes per day per state.  That’s gotta employ like 100 people easy!  Still going to take us higher as it wasn’t negative but this should be it as we’re hitting 2.5% on SOX and Transports and AAPL is lagging the Nas and, of course, the weekend is going to be tough not to sell into!  Now we wait for Lacker at 1pm.

    Home Prices were down 1.2% to get that 4.3% rise in sales. 

    HOV at $3.90 – heading back over $4.

    China/Ocelli – I don’t think the metals thing was tied to the fisherman.  I think China just wants to make sure their home industry has firsd dibs on rare metals so they are stockpiling the good stuff. 

  29. JR,
    Are you shorting into this rally?

  30.  yup, also just sold all my longs that were unhedged…..valuations have just run up too fast for me in most places, and i’m afraid we may be setting up for an earning season disappointment if we have DOW 11k…..

  31. Phil/Chart Guy,
    He’s a really good tech guy but has a very bearish outlook.  That is a dangerous combination if your personality is to lean bearish.

  32. Wow, bought an oil contract at 75.39 and had a sell order at 75.67 that somehow didn’t register :) , just FINALLY got through to TOS and sold…First time I actually gained from one of those system errors!  

  33. Oh boy, this is such BS !  Un real; major pump job, solely pre market.

  34. Bookmarks/Samz – I have to play with it but all the functionality seems to be there. 

    Thanks Kururi!

    Oil/Jrom – Looks like they did you a favor as they are up and up now at 76.27.  My TOS is still working. 

    DIA $105 puts now .75, QID $13s at $1.52 – I think it’s a gift but volume is still low so possible we go higher and we do have window dressing through next Thursday

    Mattress/Yodi – Good call, rolling Naked Jan $106 puts to Naked Jan $108 puts for .82.  Can’t see  wanting to cover into the weekend but we will be eating it next week if this keeps up.

    MTB/Kustomz – That will likely work well if we pop our levels. 

    Chrome – I just shut off shockwave and sped up page performance on Yahoo considerably - that’s a cool thing to be able to do!  GOOG does seem to remember all the tabs but I haven’t experimented yet. 

    Dollar/Samz – I like shorting TLT at $105.  Weak dollar and high rates usually have a direct correlation and will again one day.  What we have now is a totally artificial market on rates with the Fed buying whatever tresuries the banks they feed money to don’t – a ridiculous system that won’t last although they did muzzle Ron Paul’s "Audit the Fed" nonsense by giving him a speech kind of like this.   I like TLT 2012 $100 puts at $9.20 and you can 1/2 sell Nov $100 puts for $1.20.  .30 a month doesn’t sound like much but it’s $4.50 between now and next Jan and, like the mattress play, it’s a manageable way to hedge

    RIG/42 – Well they are not ridiculously cheap anymore but they are still the best and still very cheap.  Since they still could get sued, I’d lean towards risking just a 1x assignment with the 2012 $55/70 bull call spread at $6.70, selling the $50 puts for $6.60 for net .10 on the $15 spread and your worst case is you own 1x for about 20% off at $50.10.  TOS shows net put margin of $5 so that plus $6.70 on the spread is $11.70 of cash and margin to make up to $15 in 15 months at $70 – that’s a nice spread! 

    Holy cow – up and up we go!  Dow is over Tuesday’s highs but S&P was 1,148.50 (2.5 below), Nas was 2,365 (tied), NYSE 7,299 (17 points) and RUT was 672 (12 to go).  We’re getting a huge push from the energy sector but AAPL is still weak (and nothing on the Nas matters but AAPL) despite SOX at 2.67% for the day so I still think we top out at Tuesday’s highs – we should see soon.

  35. I have never had issues with Scottrade (Elite) nor my favorite for fast and reliable stock trades. I use TOS for the few options I trade……

  36. One member recommended MAIL before div date 9/16 and made a nice profit on the sale of the stock . The day after div day repurchased the stock for 5.55. Today 6.03 again. Paying dive 15% twice yearly. Regret no options. Thanks to the member for the tip.

  37. yodi- I believe MAIL was gel’s recommendation.

  38. Phil:
    I executed the NFLX trade yesterday (NFLX price @ $163). Unfortunately (or maybe not) I did a bear CALL spread (Jan 165/175)! Besides telling me I am an idiot which I have already done 100 times, is there anything to worry about with this trade. On further review, I don’t think I am that bad off. Down $300 now, but if NFLX comes back say 5-10% I think I will be ok. What say you? Is there an adjustment that you think better of than just staying put. Can always roll to a calender or call spread if NFLX keeps going up. Thank you.

  39.  Phil,
    Passed a milestone today since joining 2 months ago. 25% of my account is in buy/writes, bull call spreads and disaster hedges. A majority of the trades were taken directly from your ideas or someone else`s contributions.  Some were daytrades that became spreads.
    That part of my account is up 30% as of today. I don`t worry about it, or mess with it much, did a few rolls etc.
    Rest of the account is there to day trade, cover the writes and take advantage of opportunities. 
    Thanks to everyone who contributes here, what a sweet way to trade, so many opportunities.

  40. Thanks nicha thanks gel

  41. ben1be — :-)

  42. JRW – guess we know where they were going to put all that bond money from yesterday…….just held it till pre-market this am and jammed it all in?

  43. JRW / No buy writes?    Is that because you still expect the mkt to tank at some point?

  44. TOS/Pstas – They are in their own thing, not your browser.  It’s a nice, thin client they use.

    Police/B1 – They are specially made but we don’t even have an auto industry anymore so I guess they’ll have to be calling Toyota.  as to TASR, they are my stock of the DECADE, not the year.  My theory is that there will soon (2-3 years) be lawsuits from people who are shot with a gun when a TASR COULD have been used and that will flip the concerns of the police from being sued with the stun guns to being sued without the stun guns.  Also, they will be making some more advances in conjunction with battery tech that gives them some wireless options that will increase range substantially.  As I often say – can you imagine in Star Trek if they are in a phaser fight and one guy suddenly whips out a 44 magnum and blows some guy’s head "clean off"?  It would seem totally barbaric, right?   That’s the future – you can’t expect game-changing technology not to creep in over time.  In the history of weapons, when has that ever happened?  Arrows were much cheaper than guns yet, not surprisingly, eventually every king spring for the steel, didn’t they? 

    NFLX/Ynub – NBC added USA and SiFi to the existing deal, not all new from what I could tell but it is good for Neflix and makes you wonder what NBC is doing with Hulu, which is the reason they won’t play ball with ITunes as that’s their direct competitor.  On the other hand, I only see 11 out of 30-something shows on Hulu that you can’t already get on Itunes anyway.  ABC (of course) and Fox are fully on-board with ITunes so the trick is who cracks CBS first.  The strange thing is Hulu is $10 per month for all 30 shows (4 episodes each) while ITunes charges $1 per episode so why NBC wouldn’t want that additional revenue is beyond me.  I think the Hulu model is good and will eventually challenge cable and it’s also why I don’t see NFLX growing into it’s value because a TV show is worth the .25 NBC is charging, not the $1 AAPL and NFLX want to charge.  

    Also bad for NFLX is RedBox, who are CSTR, who I used to bang the table on.  Around me, you can go to pretty much any 7-11 or grocerty store and they have the machines with about 500 movies to choose from for $1 and it’s in your hand in 30 seconds – makes NFLX seem annoying.  If they get TV seasons it will be all over. 

    Selling/Maya – You want to sell calls into run-ups but yes, you want to sell stocks or options you already own if you aren’t almost posive they have room to run, especially ahead of a weekend.  If I didn’t love AAPL so much I would certainly be working into a short here as they are simply due for a pullback after running straight up from $240 this month.  That’s a 20% run with no pullback so a $10 retrace $280 is very likely in their future but if they get to 30% ($312) then we expect a 20% retrace of $13, back to $290 so, in either event, shorting them here, at $293, has a positive risk/reward profile. 

    Good job 1020, Exec, Hanna!  I’m sure we’ll find something to trade next week….  8-)

    Bearish/Exec – That’s just what I like for the Favorites or Chart School though, I think it’s hugely important to have well-reasoned, diverse opinions. 

    BS/Cap – I think the markets are celebrating the Pledge to America! 

  45. 4B in POMO money

    ORCL looking to buy chip company, I think its NVDA they need 3D, more bang for the buck would be AMD but that acquisition would be much more complicated.

  46. Phil / David Tepper     He must be a subscriber as he’s parotted your stimulus is inevitable mantra.

  47. exec

    I’m in TNA waiting to bump but I don’t know that there will be an opportunity to short; we’ll have to see.


    Good point !!


    See my strategic chart from the other day; I don’t want to be trapped even though the buy-writes have a built in 20% hedge.

  48. This market is really testing my guts.. I have short 3x CMG Oct $170s ($5.2 credit, which at this point still has $4.2 in pure premium) and also short 3x NFLX Oct $170s ($4.6 credit, all still premium).. This is absolutely crazy.. there are a lot of other stocks that are still cheap but these 2 guys’ valuation is beyond me! I’m a bit convinced that they are not worth $170 each, but I am affraid that the pre-earnings run up will not allow them to expire worthless bu Oct’s expiration, and instead I would have to roll them out to November (and a bit higher).. Patience is KEY!

  49.  Phil,
    So would you consider selling an AAPL 310/320 Call spread if you thought of a 30% retrace at the $310 area?

  50. Phil, I have a Jan12 20/25 bull call spread on EXPE for a 3.09 debit, the spread is deep in the money, any move I can do to speed collection or just wait?, also have an March 11 17/18 calls 16 short put artificial buy-write in EBIX for net +0.35 which is also doing well but I can’t move the strikes because they are fully priced, any thoughts on it?- your insight will be fully appreciated, many thanks. Carlos 

  51. Picking up a little DXD (short) for some ‘walk around money’  :)

  52. WFR reaching for the star(s) :-)

  53. GLL popping suddenly, something is up, maybe the dollar finding a floor..

    NFLX/Dclark – Nothing wrong with the spread.   You own the $175 puts, right?  The real problem you have is you are playing a $165 stock and buying 100-block option contracts and worrying about $300 – that means you are playing over your head.  These are inherently risky trades, especially with mo-mo stocks and they will flucuate up and down on you.  Jan is so far away it’s not really worth worrying about now but the correct way to play a spread like that is to take advantage of NFLX’s move up and take a cheap roll to the $180 puts (+$3), just like the way we adjust the Mattress Plays. 

    Paying $3 for $5 is a good business model over time – not necessarily on this particular stock but if you consistently make these plays and consistently improve your positions by $5 for $3 at any opportunity, then your winners will put you up an extra 66% on your secondary allocations while your losers can only cost what you put in so if you stop your losers out with 50% lossess and your winners pay off in full PLUS a 66% bonus – you don’t even have to be right half the time to do well

    Up 30%/Ben – Congrats!  I know it seems like a boring way to trade but the results are far from boring, right?  Thanks for spreading the good word on buy/writes – I can only preach so much

    Tepper/Tusca – I think that’s just because it is inevitable. 

    Guts/Rav – Let me know if you capitulate.  That’s always a good time to go short.  Nothing against you but just when you see the early bears begin to throw in the towel, that’s often the right time to get involved.  It is crazy but keep in mind you can offset with some QQQQ calls rather than give up.  You can use any .50 line for an on/off switch and be happy to make .25 here and there to offset your short losses and, ultimately, pay for a roll. 

    AAPL/Newbie – If AAPL were not my favorite company I would absolutely love it.  I think $330 is their max price assuming great earnings and outlook but even that would be very hard to sustain without a nice pullback of $50 at some point so, as long as you are willing to roll, it’s a nice play. 

    EXPE/CMS – Yeah, those are frustrating when you didn’t sell the puts and they go in the money.  There’s not much you can do about a vertical.  They are what they are and tend not to change until you get within a few months.  That’s a great thing about them from a hedging standpoint but makes them very tedious when you feel you should have been rewarded.  You could roll the callers to 2x the Jan $30s ($2.50) and buy 1x 2012 $35s ($2.80) to cover.  You maintain a 20% higher delta but you crush them on theta (they expire a year before you, in 1/5th the time) so it’s the way to go if you are still bullish and, you can also set a stop on your $20s at $10 (about $29 on EXPE) to make sure you keep your gains or, if you are a little more bearish, you can cash out and go with 2x the $35s, fully covered with the Jan $30s and you have half your cash off the table and you can just add more calls if they break over $30. 

    EOG finally catching a break. 

    WFR/Rain – Another about timer. 

  54. Phil

    For the rangeish outlook:

  55.  Any thoughts about UNG? I sold some Oct $8 puts on which I’m currently behind. thanks.

  56. Phil/re NFLX & CMG: It’s not going to be that easy for me to capitulate.. :) I have plenty of patience, and most importantly, plenty of margin to breathe in.. I would only be toast if one of these two get acquired by some crazy desperate buyer at a significant premium, but I doubt that at this point given their extreme valuation.. although you never know!

  57. What I DID notice is how things quickly change from an investor’s sentiment point of view in regards to ISRG. That stock used to FLYYYY like the wind when we get crazy up days like today.. yet they are in a very CLEAR downtrend since their peak on 4/16.. and they can’t get past the resistance point of the 50 SMA @ $304.90.. impressive how this resistance is proving to be quite tough for them. I expected this stock to shot up along with the overall market pre-earnings at least, and I switched from a short strangle I had (Jan 2011 $180 put / $400 call), which I closed at a profit, to just short Jan $230 Put to keep the same margin at play and taking advantage of the run up. It’s impressive how the technicals come in play nowadays!! Every day I get more and more convinced any trading in between earnings is purely based on technicals..
    Also, I fully agree with rolling $5 (up or down) for $2 or $3.. at times I get so lucky and roll $5 for just $1.5! It’s nice how the leverage of the options as they move AGAINST you allow you to be pretty flexible and improve your position substantially with just a little bit.. the fact that an option lose less and less value as the stock moves in the opposite direction allows any CASINO HOUSE to have a SUPERB edge in the market.. LOVE IT! Thanks a lot Phil!!!

  58. JRW III
    Did you see the post on the
    What do you think for $25.00 ?

  59.  Phil – AAPL
    Follow up question, so if I sell the OCT 310/320 and look to roll you would suggest rolling up and out to the 320/330 in Nov, would you have concerns about their Oct 15th earning report?

  60.  ONTY getting bitch-slapped

  61. Europe closeed up 1.8% in France and Germany and up 0.88% in UK

    German business confidence unexpectedly rises to the highest level in more than three years, with Ifo’s business climate index climbing to 106.8 vs. 106.7 in August and expectations of 106.4. Looking ahead, businesses were slightly less optimistic than in August. 

    Also pushing Europe higher – guess who?  Ireland is “very unlikely” to face a Greek-style crisis, according to a Goldman Sachs analysis. “With Irish spreads already at all-time highs, we would argue that refinancing risks in the Irish debt market is aggressively priced-in already.”

    Spanish finance minister Elena Salgado presents the country’s budget today, under pressure to deliver cuts that will appease those seeking further austerity. Salgado has previously said Spain doesn’t need further budget cuts. “Markets are looking for the hair shirt from the periphery economies” as sovereign yields rise. 

    At the open: Dow +0.6% to 10726. S&P +0.61% to 1132. Nasdaq +1.24% to 2356.
    Treasurys: 30-year -0.47%. 10-yr -0.22%. 5-yr -0.08%.
    Commodities: Crude +0.44% to $75.51. Gold +0.27% to $1299.80.
    Currencies: Euro +1.04% vs. dollar. Yen +0.18%. Pound +0.64%.

    10:00 AM On the hour: Dow +1.4%. 10-yr -0.27%. Euro +1.12% vs. dollar. Crude +0.82% to $75.80. Gold +0.15% to $1298.30

    11:00 AM On the hour: Dow +1.67%. 10-yr -0.25%. Euro +1.22% vs. dollar. Crude +1.82% to $76.55. Gold +0.11% to $1297.70.

    12:00 PM On the hour: Dow +1.65%. 10-yr -0.26%. Euro +1.2% vs. dollar. Crude+1.44% to $76.26. Gold +0.06% to $1297.10. 

    Aug. Durable Goods: -1.3% vs. -1% expected, +0.4% prior. Ex-transport +2% vs. -3.8% prior.  Futures jump following durable goods orders. The headline number (-1.3%) missed expectations, but ex-transport orders were +2%, while July orders were revised up to +0.7% (from +0.4%), and ex-transport orders were revised to -2.8% from -3.8%. 

    Moo!  Q3 GDP growth estimates likely will be revised upward, T. Rowe Price chief economist Alan Levenson writes, with today’s durable goodsreport showing that the capital goods cycle is gaining traction.

    Er, or notThe ECRI’s Weekly Leading Index declines fractionally (122.2 from last week’s 122.6), but its annualized growth rises to -8.7%, highest since June 25 – all saying it’s "still premature" to predict a new recession, Managing Director Lakshman Achuthan says.

    Aug. New Home Sales: Unchanged at 288K from (revised from 276K) July vs. 295K expected. Months’ supply 8.6 vs. 9.1 prior. Median price $204,700. 

    Mortgage delinquencies declined in Q2 on a quarterly basis, bank regulators report, but home forfeitures jumped 14.2% – mainly through completed foreclosures. The total of homes lost is 67.5% higher Y/Y, while serious delinquencies are 16.1% higher.

    More bullish spin from people who are already heavily investedFed intervention in the financial markets virtually guarantees that most investment choices will go up, Appaloosa’s David Tepper tells CNBC. "Either the economy will get better by itself in three months [or] the Fed is going to come in with QE." In the meantime, he believes the S&P could drop to 1100 but not to 1000.

    Sources say the SEC is looking to replace the circuit-breaker system that briefly halts trading in a stock if its price rapidly rises or falls by a certain percentage with a "limit up/down" system that would allow trading to continue within the allowed range. The proposal would help in situations where a circuit breaker is triggered by an aberrant trade rather than a fundamental breakdown.

    Rumors of government intervention send the yen on another roller-coaster ride. Vice Finance Minister Fumihiko Igarashi told reporters he "hadn’t heard of any intervention" in the forex market. Recently, the yen was flat vs. the dollar. 

    Shorting bonds will be the "trade of the decade," Doug Kass says, predicting looming inflationary pressures will derail the massive bond rally. Kass notes that the implied inflation rate in 10-year TIPS jumped from 1.5% to 1.92% this week, "so we’re beginning to see inflationary pressures."

    Speaking of rumors – this is why the SOX are flying todayShares of ARM Holdings (ARMH) are +6.5% premarket after Oracle (ORCL) chief Larry Ellison told investors at yesterday’s annual meeting he’s looking to buy chip companies. AMD (AMD), seen by some as a more likely target due to its enterprise focus, is +4.5% early on.

    Netflix (NFLX) CEO Reed Hastings apologizes for putting his "Big American Foot" in his mouth for saying "self-absorbed" Americans wouldn’t notice that Canada was getting a $7.99/month streaming-only option not available in the U.S. Remember, though, that streaming currently offers only 20% of the movies available by DVD. 

    Announcements of recent layoffs at Bristol Myers Squibb (BMY) and Abbott Labs (ABT) show that "big pharma has begun to die the sort of death that the American car industry did," Doug McIntyre writes. Citing the rise of generic drugs that have sapped revenues from the big firms, he says the industry "is in a retreat that could last for years."

    Petrobras’ (PBR) record $70B share offering was oversubscribed, with buyers including sovereign wealth funds from the Middle East and Asia. The offer’s 2% discount was much smaller than investors expected, and suggests strong demand. Time will tell how buyers make out… PBR -1.1% premarket.

    Target (TGT +2%) becomes the biggest retailer to carry the iPad (AAPL) with plans to begin sales of six models Oct. 3. Separately, the company says half of its roughly 1,500 regular stores will have grocery sections by the end of 2011, which should add 1 to 2 percentage points to same-store sales.

    NBC Universal (GE) chief Jeff Zucker says he’s leaving the network after its 51% sale to Comcast (CMCSA) cl

  62. qc

    I did see that; but for $25.00, a K&N filter will buy you 6 H.P. and doesn’t weigh as much 8-)

  63. For those still long, TBT is starting to turn !!

  64. lost $2700 last week on the aapl run up with the $280 call.
    recovered $1500 by selling the same expiration( sept) puts.
    can anyone come up with a brilliant idea to recoup another $1200 today?
    I am curious as we have some seriously sharp minds on this site
    ( just trying to have some fun)

  65.  Remember the old days when gold used to move AGAINST the markets and not WITH the markets? 
    1300??? Holy crow!
    And what was that ‘fat tails and Jesus’ comment Volcker made. That makes no sense…

  66.  AAPL – buy the Apr11 300′s for 26 and sell the Nov’s for 12?

  67. Maya1 / $1200

    Get 48 old bricks and sell them for $25.00 each 8-)

  68. Phil ,JRW / Trapped      JRW quote, "See my strategic chart from the other day; I don’t want to be trapped even though the buy-writes have a built in 20% hedge"   To fear being ‘trapped’ don’t you have to have an extremely pessimistic view on the likelyhood of QE2 and eventual fiscal / structural stimulus?

  69. ONTY – well, that was nice.  Now we can get back in for a discount!


    Talk about bitch slapped….check the chart on AMAG.  Down again.  Kinda reminds me of, oh…STEC, SPWRA, DIA (@ 14K), etc etc etc.

  70.  Wow. Just to recap, NFLX 165 (+65% from late July), AMZN 160 (+50% from late July), PCLN 343 (+ 80% from early July)….Whew. Even AAPL is up more then 20% from late August. Now thats a rally!! Its almost like 1999 again….

  71. All that telecon/computer upgrades had to be for conferencing…..wonder what that’s gonna do for airlines?  Oh, the other thing about that, it ain’t our manufacturing….I believe that gear is put together somewhere else!

  72. Trading AAPL:  bobhu….here’s how I work 1/2 covers on aapl…… calls ATM or slightly ITM a couple of months out, say November 290s.    Sell 1/2 covers (weeklies) on Monday or Tuesday.     Sell the covers that have the most time value.  These are usually ATM options.   Now what happens……Stock falls back……….you repurchase the covers at a lower price, then wait for reversal.  I usually buy them back when I’ve made >50%.       Stock remains level.   The Novembers remain level but the covers quickly lose value, and can be repurchased late Friday, or left to expire worthless.  Stock ramps up.  You continue to make money because you are only 1/2 covered.  Late Friday you close out the covers.    I like to do this with the weeklies because they lose value so quickly.   
    gel 1   where will aapl be in one year?    $400
    rainmain.   I’ve read "Blink….great book.
    jromeha…..My son meditates a lot, but I’ve never gotten heavily into it.   I am into lucid dreaming, which is fascinating and fun.   All of these things seem somewhat related.
    Maya1       I hope you did sell those Sept 290 puts this morning for .50, as they are now worth about .10!

  73. Phil
    your thoughts on PBR now that the offering is over and was over subscribed?

  74. Phil,
    What is your take on WHR?  It looks like it is bottoming and turning up… maybe a little late?  I was thinking about selling Jan 80 put for around $9 if I can get it.  Do you have suggestion for this if you think this is a good stock that may go up?  Thanks.

  75. tuscadog
    I somewhat understand your situation, I day trade and the last 2 weeks sold all but 2 stocks. The issue is balance and that is why I went with both NFLX and ADBE trades. I like that one is short and one is long, perfect for rangish as is day trades. Also will sell half TQNT today under when in doubt sell half. Not ready to leave the country yet, things still can be fixed, maybe!

  76. hanna5:  And today they blow upwards based on a hedge fund manager openly and brazenly calling out on national television, the "Bernanke Put" and that the Fed is unequivocally devoted to inflating the market.   
    Scary.  Maybe the economy is recovering and we enter another massive bull market, but I can’t believe anybody feeling good about our medium and long-term prospect with this. 

  77. tuska / trapped

    Or maybe I just have commitment issues 8-)

  78. Any of you PSW Wizards willing to help mentor a newbie to get up to speed via some direct email question and answer?

  79. Pharmboy - I’ve got some ONTY, at what price should I DD?

  80. Great picture JRW!

    UNG/Oak – Oct is creeping up fast and hurricane season looks like a bust but there’s always next year and you can roll to the 2012 $7 puts even so, if that’s the plan, no hurry as long as the roll stays even. 

    Patience/Rav – Very much a virtue for short selling options. 

    ISRG/Rav – Absolutely trading between earnings is on technicals, that’s why I love to take advantage of non-news sell-offs as they are generally based on rumors or the overall market but have nothing to do with the stock.  Right now PCLN is kicking ass and all travel stocks are up but travelING is not up so PCLN is taking market share from someone or perhaps none of them are worth what they are fetching – once earnings come out – whether or not the Emperor has any clothes will become painfully apparent.   So glad you "get" the rolling – that’s what it’s all about – scaling in and taking advantage of opportunities. 

    Brick/QC – I think it’s a brick….  I’d rather have an emblem or something

    AAPL/Newbie – It depends where it works out.  Right now it’s about $1.80 and you can roll that anywhere.  The Jan $320/330 spread is $2.60 so you have a long way to go before that roll gets away from you and the Apr $340/360 spread is $1.80 but you shouldn’t even be in this kind of trade if you are worried about losing .90 (50%) or $1.80 because that can VERY easily happen as you are taking a risk of 5 for a reward of 1 – these are, as you may have noticed, not trades I like to make because I don’t expect to be right more than 1/2 the time and you have to be right over 80% of the time just to break even on this one.  The questiion you need to ask yourself is, over the course of 5 earnings reports, do you seriously believe AAPL will not once move more than 10% ($30).  If the answer is yes, then you can take the risk but if either the answer is no OR if a single poor outcome will cause you not to continue to try the other 4 times – then this trade is a TERRIBLE idea for you.

    Still no volume – just 77M at 12:44 with 90M "normal."

    AAPL/Maya – How about 100 $290 puts for .07?  That’s risking $70 and you might get it all back if they drop into the close. 

    ROFL JRW! 

    Trapped/Tusca – Yes, I am certainly not that pessimistic.

    1999/Hanna – If we follow through to 12,000, 1,200 then it sure will be. 

    PBR/Datuu – Well now they have a boatload of cheap money they may as well start investment banking.  I would be worried that they begin acquiring companies or assets for too much money so I’m not thrilled with them but it sure makes SLB and RIG more attractive.

    WHR/Nhuyn – I’m worried about steel prices hurting them as well as lack of demand, of course.  Still, off this DG report, they look good for a move up but I’d go artificial, just in case.   You can do the 2012 $60/85 bull cal spread at $13 and sell the $70 puts for $11.85 and that’s $1.15 on the $25 spread that’s $19 in the money and your worst case is it’s put to you at net $71.15 but the b/e is $65.58 because of the calls and that’s 17% off on a 1x assignment

    Bernanke put/Kinki – That’s why I wonder if it backfires tonight because Ben’s speech doesn’t sound like he’ll say a thing about QE so maybe setting up for disappointment. 

  81. Pharm--own ONTY stk around current price--would you do any spreads?

  82.  JR- Any premonitions on the close? Melt up to 666, or sell off in the PM to 660 or less?

  83.  Quick TOS question:
    In TOS charts… is there any way to chart 2 or more symbols simultaneously on one chart?
    Also, is is possible to divide one symbol by another (to get a ratio)?
    I can’t find the answers to this in the manual… 

  84. MrM – U in the runup yesterday?  I am going to sell the Oct10 $3P and if you have the stock, why not sell the Nov $4 C.

  85. Not acting like a sell off day.

  86. AAPL……Having difficulty at 293.   AAPL up 1.29%, the NAS 2.04%.    I like your play Phil on the 290 puts.   It could possibly come in.  

  87. lflantheman/Trading AAPL…Thanks a lot.

  88.  AMAG –  could be a rebound play or could be bound for 9?
    These bio’s are risky business

  89. Wouldn’t do spreads on ONTY yet.  I have to look at when data is coming out, but trials are supposed to resume (from the enceph scare from March) in the nest few months.

  90. Tx

  91. phil
    from your morning email levels
    the DIA 105 puts are $0.89
    buy or sell the puts? what expiration?
    the QID $13 calls at $1.67— buy? sell? what exp?
    Are above still doable?

  92. drcraig,

    I f I had to guess, I’d say higher, maybe 66.68; but I got out of TNA at 66.41 so what do I know 8-)

  93. 12:00 PM On the hour: Dow +1.65%. 10-yr -0.26%. Euro +1.2% vs. dollar. Crude +1.44% to $76.26. Gold +0.06% to $1297.10.

    01:00 PM On the hour: Dow +1.76%. 10-yr -0.24%. Euro +1.17% vs. dollar. Crude +1.64% to $76.41. Gold +0.12% to $1297.90.

    The Fed’s purchase of another $3.9B in debt (of $15.85B offered) brings the weekly total to nearly $12B – and it’s the lowest submitted-to-accepted ratio of the rollover program so farAre we scraping the bottom of the barrel already?

    Four months after the NY Fed released a much-dicussed morose report on the tri-party repo market – where banks raise short-term loans backed by collateral – Gillian Tett says the ensuing silence has been deafening. 

    Standard Chartered’s CEO Peter Sands says global bankers view the U.S. as an arena of "uncertainty" - not knowing what the impact of the November midterm Congressional elections will be, nor "how long the U.S. expansionary fiscal stance is going to be sustainable."

    Norway’s central bank sues Citigroup (C) and execs including current and past CEOs Vikram Pandit and Charles Prince, contending that nondisclosure of material information led to $835M in lossses on Citi shares and bonds. (complaint) - So C is "only" up 2% today – it is amazing how nothing affects individual stocks most of the time..

    Three lunchtime reads:
    1) Fed dissenter Hoenig wages lonely campaign against easy credit
    2) What’s the Fed signaling?
    3) Get ready for the end of the September rally 

  94. Phil
    You mentioned CSTR today and I have looked at some spreads, bull call spreads are interesting net 2.30 on $5 spreads, $1.65 on $3. What do you think? I can’t believe people give $.10 on the $1 to count change and the Redbox is backed up at our only grocery stroe every day. Thanks

  95.  PSTAS – there is a way to open multiple tabs in Chrome. I have a booked mark folder contain site I look at in the morning. When I right click on the folder I am given the option to Open all Tabs.
    SRFROG – TOS overlay. on the Chart entere first symbol 
    click studies
    mouse over Add Study
    mouse over Compare with
    select Custom Symbol
    enter 2nd Symbol
    then click Style
    click Settings
    go over to the Scale & Axis tab and check the Percentage View Box.

  96. Phil…Do you like QID for the weekend, or will we continue this fluffiness Monday?   Tx.

  97.  JR/exec – It looks like a melt up day to me. I was curious if others had a different perception. We’ll see what happens after lunch. I’m pissed because I set a stop that I didn’t realize triggered this morning around 65.89 just before the push higher. It wasn’t until 66.15 that I realized I wasn’t in. What a waste… I’d LOVE an opportunity to get short, but the risk/reward in either direction right now is not compelling. 

  98. Phil
    My idea is for next month after Tuesday.

  99.  thanks newbie!

  100. Phil,you didn`t comment anything on the EBIX trade I mentioned in my post, nothing to say or you skipped it accidentaly?

  101.  Russell is over 666. Are we bullish now?

  102. JRW
    Noticed IWM passed 66.68, does it hold or fold, what if the push goes to 67.09? Volume seems weak. Thanks

  103.  "what in the wide, wide world of sports is going on here" 
    markets up, AAPL limping along up .30c from it’s open is, S&P up 1 std,  Black Monday lurking going into earnings or hedge funds trying to make their quarterly look good?

  104. Maya1
    DIA 105p  I took it as a buy the Oct 105p now .72 in case the market will go down over the week end as it is up nearly 200 points

  105. I am drooling at the mouth but each time I reach for my order screen I slap my hand- PCLN,AMZN,NFLX,HOT,CRM,GOOG,ISRG,CMG- someone will get rich sometime on this list of shorts if they don’t go broke first!

  106. I’m thinking overall bearish into the weekend as well.

  107. FYI/EBIX
    it`s an artificial buy-write, March 011 17/18 bull call spread and short the 16 put for a net +0.35…just want to know if, given the fact that is fully in the money, there is anything  I can do to improve it ?  thanx again

  108. Phil, David R.  / SKX   Heads up for members, I’ve spent about a week researching SKX, talking to all of my industry contacts, even internationally, plus store visits and many calls to store managers across the country.  I’ve also talked with industry ‘experts’ who advise hedge funds (for big fees).  I’ve been adding aggressively as a result, 5k shares today up to total 31k shares for a long term hold, targeting $50 by end of 2011.  I’ll write a long piece over the weekend from my notes.  But, Shape-ups story is still strong and will continue growing next year.  The buyers think that the new Fall collection is great (lighter and more aesthetically pleasing). 
    The original Shape-up has become a basic / classic product which people keep returning to buy, so no aging or inventory provisioning issue at year end.  Management have figured out that below $99 is the magic price point.  The recent $10 to $20 discount has got volumes moving again. 
     International a year behind US, so still huge growth ahead there.  Major inroads developing in countries like UK and Germany.  Specific retailers like Famous Footwear made silly mistakes in doubling the Shape-ups inventory prior to BTS (back to school)  treating shape-ups as an athletic category, but Shape-ups has nothing to do with BTS, it’s for regular folks, like nurses and workers on their feet a lot. 
    Mums don’t buy for themselves during BTS, so the sales slow down was seasonal and expected.  Retail sell through has picked up again last two weeks to previous levels and is still the number one selling shoe in all family footwear outlets.  SKX have totally outflanked arrogant Nike developing this new category which is analoguous to what Reebok did to Nike womens cat with the Aerobic shoe in the 80s/90s. Nike is apparently sticking with the Freetech training shoe for women, but we know in the trade that this will never work in the broad walking mkt.  SKX are going to ‘own’ the ‘fitness walking’ category which is going to be a $1.5 billion mkt within 2 years.  No one else is committing the scale of A&P $ and PD effort to this opportunity like SKX. 
    The Reebok toner is uncomortable and laterally unstable, so the only material competitor is going to fade.  The copy cat brands will lose store presence due to disassorted sizes, slow sales, heavy dicounting and lack of A&P clout.  SKX will be the Nike of this category.
    Stellar growth to continue.  A big squeeze ahead for the 29% short interest when mgt elaborate on their plans for 2011.  I think Oct 29th is 3rd qtr conf call.
    But, members should do their own research.  Go to and call stores.  Ask the store managers what customers think about Shape-ups.  Buy a pair for yourself and wifey, try them out.  See the reviews an (the $billion web retailer of footwear).  The health benefit claims are being validated.
    No idea what will happen to stock price short term as first news catalyst only Oct 29th.  Analysts will probably wait until then before changing hold ratings.  But, industry experts I’ve talked to are now advising hedge funds that all is fine with SKX.

  109. Jthoma – say hello to broke!!

  110. AMZN popping $160!  So funny that the $150 Kindle drives AMZN to a p/e of $66 but the $499 IPad, which outsells it by a mile, only takes AAPL’s p/e to 22

    TOS/SrF – There’s a manual???  I don’t know the TOS answer but both of those things are easy and nicely don’e on StockCharts, which is free although I like the compare on Yahoo charts much better bacause of the way you can change the time-frames

    Shorts/Maya – Yes there were weekend plays alshough both not looking good now (October puts).  Still very nice as a bullish offset with DIA $105 puts now .71 and QID $13 calls at $1.42 – they are both buys but watch that RUT 666 as that’s a breakout for the rest if they can punch over.

    CSTR/Shadow – Yes, the change thing is crazy but I see people doing it every day.   It was Redbox that attracted me, though as that’s a no-brainer model (I think they should put them in airports).   I do not love them in the $40s the way I loved them in the $20s but they are worth about $50 so not so bad at $42.25.  You can do a nice artificial with the 2012 $30/45 bull call spread at $8 and sell the Nov $40 puts for $2.40 as it only takes 4 sales like that to pay for the spread

    QID/Iflan – I look at these trades as rollable.  Even if we go up next week through Thurs, I’ll still like being loaded up short into Friday and the weekend – just in case this was all BS.  If we go all the way back to 11,500, it’s time to cash out longs and go more aggressively short anyway. 

    EBIX/Cmsos – Totally missed it.  Keep that in mind next time, one of the reasons you get such good prices for taking long spreads is the lock-in factor.  Most traders don’t want to be locked in like that so we get paid well to take the burden despite the relative safety.  Meanwhile, the $17/18 spread should be sellable for $1 and that’s the most you can get anyway so why not just ask for it?  Once that’s done you can leave the naked put or maybe try to do an even roll to the Nov $20 puts – worst case is you roll ‘em back, right? 

    666/Praiz – Well I did mention above they hit 672 on Tues so we shouldn’t be too impressed with 666 and they are pausing here nicely.  Breaking levels means over and holding for 48 hours, not just a peek over the line…

    Whuck/Newbie – It’s window dressing as far as I can see.  Worst case ever, I think.

    Shorts/Jthom – I agree, my October Dozen is likely to be a list of short trades at this point. 

    SKX/Tusca – Good points and I 100% agree, one of the best buys in the market right now. 

  111. Good Morning
    Phil… Just had a chance to read last nights’ commentary – WOW… lots of "swiss cheese" arguments in need of rebuttal. I will be unable to to submit as I will be "AWOL" this weekend – travel commitments.

  112. 01:00 PM On the hour: Dow +1.76%. 10-yr -0.24%. Euro +1.17% vs. dollar. Crude +1.64% to $76.41. Gold +0.12% to $1297.90.

    02:00 PM On the hour: Dow +1.7%. 10-yr -0.3%. Euro +1.15% vs. dollar. Crude +1.57% to $76.36. Gold +0.1% to $1297.60.

    Richmond Fed President Jeffrey Lacker: The crisis happened in part due to "constructive ambiguity" – encouraging firms to act as if they weren’t backstopped, while actually standing ready to help – and that idea is no longer plausible. Specific decision rules are needed when deciding on bailouts, and Dodd-Frank reform only seems to get partway there, embodying "two contradictory approaches."

    The SEC may be looking at the elimination of stop-loss orders as one of several steps toward preventing another flash crash, a Themis Trading white paper speculates. Stop-loss orders were not the precise cause of the flash crash, Themis says, but they resulted in "enormous damage" to many unsuspecting traditional investors.

  113. Oh no Gel!  I will just have to go around all weekend with my wrong thoughts, I guess…  8-)

  114. Wow, look at us moving CSTR! 

  115. phil, gel
    you guys are funny!

  116. I do believe we have passed an inflection point with the Dollar. The markets are anticipating more QE by the Fed, and the markets are more than likely right. The debasement of the dollar’s value is contributing to the continuing rise in the price of gold, vis a vis the USD.  This recent strength in the price of gold is the "canary in the goldmine", as this is the signal the dollar has further to drop. With a falling dollar going forward, we should see some nice moves in TBT, as the " less informed" will eventually realize the worst place for money is the US treasury bond market.  Even the Mexican Peso is trouncing the USD today.

  117. Gel/
    Great play on EUR/CHF
    I am out now

  118. Phil / weekend
    Sorry about that… you can always read some missives from Krugman, JM Keynes, or even Robert Reich to fill in.

  119. Phil,
    What do you think about buying march 145 puts on fslr??

  120. shadow

    Well, if "they" are going to push it, this is the usual time of the day for it !!  (But I don’t think so)

  121. Good one from Zero Hedge: "Are Stocks Overvalued by $4Tn?"

    Folks — something has to give … yields on the 2-year T-note (thin line, right hand side on chart below) has a 75% POSITIVE correlation with the S&P 500 and just hit a cycle low. Either it’s a short or the equity market is … take your pick.

    Down goes AAPL, DOWN GOES AAPL – Wheee on those puts – .30 already (up 300%)!!!  That’s a free trade if you cash 1/4 now and a free double if you stop 1/2 at .28. 

  122. Phil….I bought those AAPL puts for .08 and just nailed a TRIPLE!     :)   :)    :)

  123. Phil – U forgot the most important line from the Zero H. article:  

    As a reminder, historically bonds are right… about 100% of the time.

  124. Phil was good, his $70.00 AAPL weekly trade(290 put), was $300.00 8 mins ago.

  125. Oh no, forgot my "Down goes Frazier" link - good thing it’s the weekend, I need a day off…

    Krugman/Gel – What are you trying to do, warp me beyond repair!  With you gone I’ll have to watch Covuto or something so I can better understand what’s really happening…

    FSLR/Harip – I think I’d rather see them hitting $160 first.   Looking at the way we’re holding up today, it seems like we have a major prop job coming into next week so I’m in no hurry to get short.  I do think disaster hedges are important because you never know but I think we may be good for another big move up next week. 

    Pushin’ it real good JRW! 

    Triple/Iflan – Excellent!  I love finishing a week off with those. 

    100%/Pharm – Yep, if people are willing to shove money under a mattress in these quantities, it does have to make you wonder what the hell stock buyers are thinking of. 

    AAPL now a great example of why you cash out 1/2 to lock in profits on those kinds of trades.  Greed kills! 

  126. Phil / Zero Hedge    Which one is right then, equities or bond mkt???

  127. Indeed it IS good to be King !!

  128. Phil/
    I have to admit you were right and this window dressing exercise before the end of the quarter seems to have been the only mover of this market this week.
    The most BS move was in European markets today moving up almost 2% on a weak positive? US data.  Even some large European banks are up 5% today.
    So the big question is when it will fall…

  129. Here is a nice play for the folks that like dividends… NGG ( National Grid  PLC ) – pays a nice 8.2% and this one is SAFE and has good prospects for price appreciation. The entered the short November  45 puts for a discount entry on the stock. Buy this one under $43.50- ( limit order ) or look for short puts ( options are thin though )

  130. Way better than being President !!

  131. Phil… I am but a mere protege of CAP… He is the word-meister, and will hopefully step up to the plate and exhibit his "home-run" capabilities.

  132. humvee
    Sorry, I go to bed early but I live 40 miles west of Jackson WY and 150 miles south of West Yellowstone. Jackson is only 15 miles south of Grand Teton Park, only 2 problems in Jackson Big Bucks and DUI task force, not the place to drink on Friday or Saturday night, The judge thinks 5 years blowing in a tube twice a day is resonable for first offense and they took my guns for 23 months for lies. Second thought West Yellowstone sounds safer. Don’t ever drive drunk in either park, felony mandatory 1 year in the graybar hotel, even Bill Gates couldn’t pay his way out of that. Hope it works out!

  133. Stock buyers, I thought it was us and the bots!

  134. JRW – LOL…. Now I know it was Lloyd that claims ownership to the pink Ferrari on the PSW web site yesterday!

  135. Buh-bye NFLX – thanks for playing our game! 

    Which/Tusca – Probably a meeting in the middle would make sense. 

    Lloyd/JRW – Ouch, it’s burning my eyes!!!! 

    When.Lionel – I’ll be looking for a flash crash anytime after Weds/Thurs.

    NGG/Gel – Good one!

    Cap/Gel – Oh no, two of you would be two too many. 

  136. Phil JRW
    Somehow I should have known CSTR would fly, it isn’t PSW. As I have said the spys are on me. Smae as when I posted the complete IWM day trade concept. Sorry everybody! How can we incrip everything?

  137. Phil – is it a good idea to buy DXD Oct calls (23 calls dont seem to have much premium, even 24 calls might be a good idea); or is it a better idea to wait till next week? I am sufficiently hedged over the weekend (am holding on to yesterdays QID play because I am long on techs mainly; and have covered my longs by selling calls) – I am now looking at bear plays to make money.

  138. shadowfax
    Oh my!….. how times have changed – when in college I stayed overnight at the Cody, WY Graybar Inn and Resort, because I was broke, ( also a little hungover ) , but the Sheriff took pity on me, and provided a place for me to sleep overnight – complimentary breakfast included.  Hospitality was more in vogue then !!!!

  139.  Phil what will be your mattress strategy going into the weekend?

  140.  Tusca—good piece on SKX! Thanks.

  141. Spy/Shadow – If most of what we do is buy stocks that are good values, what do we care who knows it?   There’s a reason bullish investors come on TV and talk up their book – once you are in, you should be happy to see others joining. 

    DXD/RN – They are very diectional bets and expire quickly.  OK if you didn’t like the QID or DIA plays but if you are already well-hedged, then just keep in mind it’s a gamble but, of course, I think a good one as it’s rare I do something like those QID calls, which are almost at delta 1. 

    Mattress/BGB – Jan $108 puts ($4.90) naked is the official stance.  I’d say about 60/40 bearish at the moment

  142. Hey all
    When I first checked CSTR it was $35 Wednesday, I have also checked out SNDK, just another spy test!

  143. Also check out TQNT up 4.5%!

  144. Phil
    Problem is I am not in yet, I don’t chase!

  145. 3:00 PM On the hour: Dow +1.83%. 10-yr -0.29%. Euro +1.16% vs. dollar. Crude +1.74% to $76.49. Gold +0.18% to $1298.60.

    Stocks have been moving up and down largely at the mercy of forces beyond a company’s control. That’s wreaking havoc for traditional stock pickers who have discovered that long-held investment strategies no longer work very well. "Stock picking is a dead art form," Jim Bianco says. "Macro themes dominate the market now more than ever."  Don’t tell this to David – it seems to work fine for him! 

    Being bearish isn’t just about forecasting gloom – you also have to find cheap insurance against losses, and that’s become pretty hard to locate.

    David Tepper’s earlier remarks that Fed intervention is sure to boost most investments may have helped goose the market, but he’s wrong, Prag Cap says. "We must see an increase in aggregate demand that leads to higher corporate revenues that leads to hiring that leads to real economic recovery. If you’re banking on QE to generate real end demand, you’re mistaken."

    The worst is over in housing and the ongoing "bottoming process" just needs more time to work itself out, Zillow’s Stan Humphries says. Further government tinkering would be wasteful, he says, yet ending control of Fannie (FNMA.OB) and Freddie (FMCC.OB) is unrealistic – and potentially risky. "Anything that is jarring to the housing market right now is not what we need."

    Greece signs a deal with Qatar’s sovereign wealth fund that could clear the way for investments of up to $5B in the indebted country, Greece’s state minister in charge of investment says. 

  146. PGH Phil – Is energy overextended?  Looking at a covered call for now, then roll into Ps.  Apr11 10s or 11s?

  147. Phil, lflantheman/Trading AAPL…Thanks a lot

  148. Phil, that chart you’ve shared from Zero Hedge’s article is DEEPLY, deeply disturbing. Whoever is wrong (bonds or stocks) the correction would be so painful, that it will have big repercussions in the minds of the investors.. I’m sure of it. What’s most scary is that bonds are historically 100% right.. could this be the very first time they are wrong? Is THIS time different? I think things will become clear as we start seeing the next earnings announcements.. but it’s mind-boggling.

  149. Pharm, i am thinking about buying some uso puts – but i am loaded with some dia puts.  I think on monday, everyone is gonna say – "now what?"  The only premise to continue buying  is the election.

  150. Is there any volume in this move?

  151. Jo – I have been playing SPY more than DIA, and the weeklies have been a saviour.  I think oil goes down some, but it is consumed, so over time, it has to go up (much like NG that I have been in since the beginning of the year). I also have been doing iron condors don the SPX, as the range motion is good for those (less margin intensive compared to Peter’s plays). 

  152. Trying to sell the SPX Oct 1180-1185 vertical for $1.50 (20% chance they are ITM).  This is the top half of a iron condor, that if we can get a nice move down, the other 1/2 can be sold.  Looking at the SPX P side of1100 or 1090s.

  153. lflantheman
    Re you AAPL weekly do you buy your long caller today or Monday ?

  154. BS/Cap – I think the markets are celebrating the Pledge to America!    Phil / LOL  — could very well be !  :grin:
    I hate days like this; I am almost always caught off guard and on the wrong side of it.
    But then again, AMZN 160 ??????   GMAFB !

  155. Phil / Hedge Funds   Doesn’t this run up put great pressure on these hedgies sitting on cash to buy until Sept 30th or look silly?  Does this make not make you suspect more of this bs bullishness next week?  I’m only 15% hedged on my big long positions, so nervous.

  156. tuscadog
    thanks for your work and insight into skx--i look forward to reading your report next week--

  157. Heggies are closing their doors, tusc.  They are losing more than most.


    Chrome needs to have an app for scrolling through to the next page.  That is one thing I like about Firefox.

  158. exec
    Only volume today was first 3 minutes!

  159. PGH/Pharm – I’m thinking $67.50-$77.50 is a fair range for oil at the moment.  You can just buy at $10.85 ans ell the Jan 10 calls for $1 and $11 puts for $1.20 for net $8.65/9.83 which is a buck off plus the dividend so not too bad and just roll the winner to a new split.

    Bonds/Rav – It is different in that we have an amazing confluence of events driving people into the dollar/Tbills despite the poor returns PLUS we have our own government/Fed pulling out all the stops to keep the rates as low as possible PLUS we have a lot of money out of the housing market and unwilling to move into the stock market PLUS we have about $2Tn of sidelined corporate cash.  That qualifies as "different."  Oh wait, I forgot to mention that, for their own reasons, both Japan and China are motivated to keep the dollar as strong as they possibly can and they do this by – buying TBills! 

    This situation is kind of like if my 8-year old girl wants to play in my football game and we huddle up and I tell all the guys to let her score a touchdown and she gets a hand-off (a caught pass is not going to happen) and she bobs and weaves and men stumble and fall and miss her or she gets free of their grasp all the way to the endzone and she feels great about herself.  All it takes is ONE of those 11 guys to decide he’s not going to let her score and the outcome gets radically different, doesn’t it?  That’s what betting on low rates is right now – you have a lot of players all creating a ridiculous, unrealistic situation that let’s the TBills "win" week after week but all it’s going to take is one guy to decide to make a tackle and those TBills will be on the way to the emergency room…

    Come on AAPL!  Just a $6 drop from here and we’re up 7,000%!  I’m really pissed because I didn’t realize NFLX had weeklies too!  Those $165 puts went from .75 to $3.50 already.  We have to remember these weeklies – next week the weekly puts could be intensely good performers.  

    Man, where were all these bulls when I was all by myself last month?  Now all CNBC has is bulls who say "I’m fully invested – I love stocks…" 

    Hedgies/Tusca – Those guys were buying when we were.  They’re not as dumb as you think (well, not the survivors).  They need a good Q and the Q ends on Thursday – they’ll want to be back in cash by then because they know what nonsense it is and this low volume is going to be like a gunfight at the OK corral as they all circle around each other waiting to see who hits the sell trigger first and then the fireworks will begin.  Most likely they do what they did this week which is blow us up on Monday, pull in the retailers and sell all week.  

  160. Gel / I;m trying to stay on Phil’s side by not eviscerating his nutty ideas …
    but then, from time to time, I gotta whack him upside the head.
    Its like listening to Howard Dean on TV tell everyone "You’re wrong" and then start spewing something silly.   Only so much one can take !

  161. Gel / I;m trying to stay on Phil’s side by not eviscerating his nutty ideas …
    but then, from time to time, I gotta whack him upside the head.
    Its like listening to Howard Dean on TV tell everyone "You’re wrong" and then start spewing something silly.   Only so much one can take !

  162.  No way bonds and gold are both wrong.

  163. Jo / ICE
    Did you get in on this one?… it is starting to look real "cool" as a long term investment. Nice moves upward lately. When volume picks up, it should really climb.

  164. Weeklies; Schwab & Etrade do not trade them.
    Fidelity does.

  165.  Phil if you think we’re going to get jacked up on monday, wouldn’t a more aggressive mattress cover make sense?

  166. ravalos/Chart,
    "Phil, that chart you’ve shared from Zero Hedge’s article is DEEPLY, deeply disturbing", which chart are you refering to?  I might missed it.  Thanks.

  167. Phil / Monday   Since you think Monday is up, should I drop my spec hedge in SH and repurchase Tuesday next week?

  168. Jo – Oil is lagging the commodity move… could see a move up relatively soon !

  169.  bobhu – here

  170. Jacked up/BGB – It depends on your balance.  If you don’t need protection then sure but if you do – there’s a more than 1/3 risk that we drop 200 points and it’s much worse to be too bullish than too bearish in your covers.  We’re up 10% for the month – that’s screaming for a pullback and selling puts now you get a TERRIBLE price at a low VIX so if the market does fly down and the VIX goes up, those puts will make your entire hedge useless.  If you are not making money today because of your hedge – then you are overhedged! 

    Chart/Bob – 2:23

    Monday/Tusca – If you are scaling into hedges then an up day Monday is a chance to roll and DD for the big show we expect later in the week.  If you are overhedged, then you might want to cut back but I’m betting that hedge funds are smart and in control and that bet has not always panned out the past couple of years.   I underestimated the stupidity of funds in the past – I won’t do so again…

  171. Cap… ya, I know what you are saying… I do not take seriously much of the "noise".anymore.

  172. My long VIX calls really suck at the moment… will wait for a nice correction in the market and will get out of this stuff forever. They are a hedge, but not a very good one.

  173. This is what drives me nuts about NJ and is another big cause of the housing crisis:

    click for ginormous chart

  174. Wow, that was it already?!?  Today went by fast!

    Have a good weekend everyone – I’ve got a few posts to do…

    - Phil

  175. TOday was a good trading day, so let’s celebrate:
    For Cap/Gel: Howard Dean Scream (As performed by Dave Chapelle)
    For Phil: Black Bush

  176. Took profit on CERS…. will look for a replacement for the funds.

  177. gel- thank you very much for the IDCC explanation. I have it on my radar. How would you begin a new position with this? Sell puts, b/c, buy stock? As always appreciate the advice. :)

  178. Phil – that’s one reason I left Westfield, NJ.  Taxes were crazy.  Here in CA, our taxes are the same we were paying 10yrs ago in NJ – and our house is 2X bigger!

  179.  I’m missing Matt today as I’ve only got one of my indicators (cap calling bs) to confirm the overbought status. Used to be Matt would be in such pain for 2-3 weeks that I’d know when to get out. As it is, well hedged & naked on the mattress. Looking for October black friday I think.

  180. Gel – CRIS, although, CERS has room to run some more.

  181. tusca- thank you for your work on SKX. Bought more today. :)

  182. Property taxes- now why would you be upset with high property taxes? Big income, big house, big tax bill. Where is the problem?

  183. Missed 1/4 of the move today; 3% on the day, 17% on the week.  Have a good weekend all !!

  184. JRW & Phil, thanks to you both, y’all rock! 
    Have a good weekend everyone…..Hoss

  185. nicha / IDCC
    I like to own the stock, as this one has "big time"upside genes in it’s DNA – With the huge amount of cash they have and the amount they generate quarterly, they have a very nice day coming in their future. I am also long the calls for leverage, and short puts for income.They will either declare a dividend, buy back some of their stock, make an acquisition or lastly be acquired – either way… WE WIN !…. The stockholders will be putting pressure on the board to "make their day" with one of these scenarios… so I am in this one, "just sitting in the weeds" waiting for the action to take place.

  186.  aapl/Iflan: Help me understand, please…..
    Step 1:
    AAPl buy (10) calls ATM or slightly ITM a couple of months out, say November 290s. 
     Step 2:
    Sell (5) 290s CAlls         1/2 covers (weeklies) on Monday or Tuesday.
     Sell the covers that have the most time value.  These are usually ATM options.
    Now what happens……
    Stock falls back……….you repurchase the covers at a lower price, then wait for reversal.  I usually buy them back when I’ve made >50%.      
    Stock remains level….. The Novembers remain level but the covers quickly lose value, and can be repurchased late Friday, or left to expire worthless. 
    Stock ramps up…  You continue to make money because you are only 1/2 covered.  Late Friday you close out the covers.    I like to do this with the weeklies because they lose value so quickly.

  187. Phil, What do you think about a VXX Jan11 15-22 bull spread for, selling the 15 puts for about  total debit of .75 for a $7 spread AS A DISASTER HEDGE protecting my Jan. bull plays. 

  188. newbie_trader
    I think lflantheman has gone home with a bag full of cash. I wanted to clarify some point in respect of time of his purchase.
    The principal as he explains it is very clear. say Buy 6 Jan11 long calls 290 (ITM) and sell now still 290 Sept weeklies ITM. ( 3 only!!!!)
    If the stock goes down below 290 the weekly will expire worthless on the end of the week. If the stock stays at 290 or slightly  above the premium,  the short caller loses value very quickly by Friday, but nothing much happens to the long Jan caller. If the stock goes up say to 300 the delta of the long caller goes up more than the delta of the weekly so you will lose money on the short weekly but you will gain more money on the long caller, so possible you roll the short caller to the next weekly and you still cash in on the roll. My question only was in timing I think you need to do the complete play at the same time not buy the long caller today and sell the weekly on Monday as the stock might have gone against you.

  189. pstas… my principal problem with high taxes is the money is TOTALLY WASTED for the most part.  I otherwise would be happy to pay what is asked,  if only these wonderful money managers and economists in the government had any clue whatsoever how to provide benefits with their expenditures.

  190. Gel – That is the most important point in any tax discussion!  Government is the worst possible entity to spend our money.  Set the rules and let the private sector do the work.

  191. Gel-property taxes-my statement was tongue-in-cheek with a bit of sarcasm thrown in for flavor. Our leftist fearless leaders are usually quite adamant regarding upper incomes types paying their more than fair share since they usually came to the gains by exploitive means – thus, my rhetorical point on property taxes. I studied this issue a bit some years back and found that typically local property taxes comprise 75% public education levies of which 80% are personnel costs. In this day and age, even in supposed good school districts, a significant % of students (15 – to 20 %) cannot pass a basic skill/knowledge test even with staff emphasis on the test itself. The "mantra" from the education complex (union leaders and administrators) is chronic underfunding cited as the culprit. So, the solution is more money/higher property taxes and/or general revenue funding / higher state/local income/sales/exise taxes. Those higher taxes must be producing correspondingly better results, right? So what is the problem?

  192. newbie_trader
    By the way this is a play you will not sell to your grandmother for save investment as the AAPL stock could go down by 50 points and even if you gain on your weekly you going to lose a lot on your long caller!!!!!

  193. YRCW on fire after hours.  They announced a tentative agreement with the Teamsters.

  194. Gel, Pastas,
    The arguement over funding being the issue is so lame.  In TN, we have no income tax and very reasonable property taxes and the county I live in is ranked in the top 50 counties in America for primary education.  That said, I don’t think there is a person in this country who would not be happy to pay more in taxes if they felt like the money was being spent wisely.  The abuse in government is rampant and has been going on for decades under a variety of administrations.  Education is a great example of how the private sector can be effective however.  We started a charter school in the mountains of North Carolina, where the public education was abysmal.  We took the same kids, gave them considerably more guidance by empowering the parents, used mostly state funding and the graduation rate improved  an incalculable amount as there was very few drop outs of the charter school and the number of kids going on the college tripled.  It was amazing to see what this little community could do when out from under the state beauracracy.

  195. Kururi, I try some weeks vxx trade. I Buy vxx and sell monthly calls. Yesterday I  sell 17 weekly calls for 0.7 before closing.  I was ready to cover if vix go up. Today vxx  lost 0,98 but calls expired. My positsion is -0,74 but I have collected more premium and next week sell calls again.

  196. yodi/newbie….That’s basically the way I do it.  And yes, the safest is to get into the long call and the 1/2 short weeklies at the same time.  What I generally do is just hold the long calls and go in and out of the weekly covers.  However, sometimes I get rid of the 1/2 covers and the longs at the same time.  What determines this is my 10% rule.  If my AAPL PORTFOLIO (not the specific AAPL holdings) goes up more than 10% in any one day, I cash out completely that day, as I did yesterday.   (Note that the AAPL holdings and the portfolio are not the same value because I’m never invested 100%.  I may have anywhere from 0 to 90% of the $ invested at any one time.  Right now it’s 0, as I think we’re a bit frothy.)   Cashing out when big profits come keeps me focused, thoughtful about the market, and separates me from the greed which can move in if you don’t guard against it.   10% in any portfolio in one day should force you to the sidelines in cash to think about the next day, what comes next, what you should do.            And I rarely short AAPL, except maybe for a daytrade scalp, like today. 
    Playing these weeklies has been fascinating.  I’m convinced there is some really significant money to be made there.   You saw what Phil’s quick in and out Sept 290 put trade did today.  But you have to be in front of the computer to make those trades work.  You have to be willing to make the trade, set a very tight stop, and get out when the profits come.   And with these weeklies they can come very quickly.  AAPL is perfect for trading this way.  Very high volume.  Very narrow spread.  Volatility.  A day trader’s dream. 
    So it’s been a good week.   An exciting week, and profitable.   I think next week will be more of the same.

  197. newbie….no, this type of trading is not for your grandmother.  :)

  198.  Iflan/yodi,
    thank you both for you insight. I think I will test this out on a sim to get the feel.  have a great weekend, see you next time

  199. Iflanteman,
    Thanks I think we got the point all have a nice week end

  200. Phil,
    You wrote:
    This is what drives me nuts about NJ and is another big cause of the housing crisis:
    Would it be more accurate to say that these %ages another result of the housing bubble?
    State and municipalities over-reaching into the inflated  and elusive home values to grab an ever bigger share to support their growing labor demands…public sector jobs bubble.

  201. yodi,
    do you have any favorite stock orstrategies you like to trade?

  202. tradinv / pstas
    Yes, the ineptitude is at catestrophic levels… we eventually will see a revolution, as the tax paying citizens are at the point of accepting no more of this stuff. There is a ‘ground swell" of anger here in California, over the horrible attitude of our governmental electorate, and their minions who are nothing more than parasites. These "employees of the taxpayer" believe they have a presumptive right to do whatever they think is proper for those that are their serbs. Geez, what an imbalance!.. this, like all imbalances do not last forever. My real estate taxes are over $100,000 on my residence. This money is paid to the County, and not one time stays in the community where I live ( No, I am not kidding ) There are no schools, fire department, police department, road maintenance – Absolutely NOTHING… al of these services are paid by private citizens or corporations. Later on in the year I’m going to pave the road in front of my house, as it is nothing but potholes, and I am worried about the damage to the sispension on my car. The 100 grand goes to neighborhoods in the County that are "disadvantaged"… Ok, fine but don’t insult me ,

  203. gel1,
    I think I would imigrate to another (freer) state…

  204. Deano; now that’s funny …. I think Matt’s head exploded today.  I just sat around cursing all day.
    Bio … that’s funny; thanks !
    Gov’t wasting tax money … I got more articles to post, about crooked pols and their cronies; the teachers unions; Waiting for Superman; and so forth.  Maybe this weekend.
    Pstas … NY post had a good article on that in the form of a review/article about the failure of the educations system by Kyle Smith; check it out … it describes EXACTLY what you posted.

  205. Tradinv- agreed:  the funding issue is a smoke screen. While there has been some mixed results on Charter, voucher and private education initiatives, on balance they have been a positive force and again, with some exceptions, the vested complex of union leaders/administrators along with their office holding enablers have resisted mightily. I have always found it fascinating that urban politicians (dems for the most part) are the enablers of this continuing fiasco yet many of their constituants (urban minorities) favor such change as measured in many polls.
    You are also right on point regarding receiving value for tax dollars. Unfortunately, neither political party as presently constituted "gets it".

  206. The public sector is continuing the over-reach…for our protection. This is going to get exponential in the 2011 IMO

  207. Review: “Waiting for ‘Superman’”
    By Kyle Smith | September 24, 2010

    Progressive filmmaker Davis Guggenheim’s expose of the teachers unions that are holding our children’s futures hostage is one of the best films of the year. My review of “Waiting for ‘Superman’” is up.

  208. Cap, I have long worried that the Dems will find a way to drive a wedge between people based on income. It is a longstanding theme (at least 80 years that I know about) and it experiences some success now and then. In fact, I believe it is today the ONLY issue that dems can use to their advantage. Once taxpayers understand that everybody ought to be on the side of sensible government that is somewhat fiscally responsible, Nancy Pelosi and her ilk can retire in comfort.
    The guys I know well, of various income levels, pretty much think the way traditional Americans have always thought. To a man, they trust none of the political class.

  209. California / gel – Gel, feel free to call me on this, but isn’t Prop 13  the reason your property taxes go wandering off into the state general fund?

  210. newbie_trader
    I do not know how long are you trading options. On this website many people have a strategy. Phil has set up a basic plateform for trading a 10k 100k and 1 million portfolio. I have always been interested in div paying stocks. The same you can spruce up with call and put selling. You can follow RevTodds plays of the month, which I like, you need to make your own pick which stock  you prefer. If I like to add more stocks to a div paying stock, I sell  putters at the same time. Obviously a day like today is not a good day to sell putters, when the VIX is low. Non div stocks, I often play like an artificial buy write, buying in many cases a leap call well in the money, selling shorter month call options against it.
    A new strategy I have started by selling future wheat and oil contracts. The same is in many ways different to stock options. Like in all trading you need to study the fundamentals as well as technicals. After studies I only enter contracts normally three to four month ahead but important with a delta not more than .20.
    More risky plays are: I enter three or four month ahead stanglers, like I am still holding AMZN Jan 11 160/105 c/p. Even that this stock reached 161 today, I still hold a 20.00 cusion.
    Obviously I play Phil’s DIA mattress play and try to come out with a small profit every month.
    Sometimes I enter some recommended day plays like buying the DIA Oct 105p. The market will take a breather and it will as well protect your portfolio against a downdraft.
    I can only recommend you start very small with one or two contracts per play so if it goes against you, you do not lose a lot. Like with the AAPL play only play by buying two callers and by selling one caller.
    Start with paper trading and see how it works out. Selling putters or stanglers cost margin, and it very much depends on your position if you can use margins 
    There are many more smarter guys on this board so never fail to ask. In many cases Phil has given me some eye opening answers.
    So good luck to you and save trading

  211. snow / Proposition 13
    Agreed… Prop 13 is still alive and well, but that is not my bitch. Taxes are still too high, and the whole system is corrupt.  Why should a guy be paying over 100K anually to the government to live in a house, when he owns the house and paid for it with after tax money, and does not receive any services for the taxes paid? . What in the hell could be more unfair, and to add insult to injury, the government officials are asking  for much more.  All of the proceeds go to neighborhoods that have chosen a lifestyle that is embellished with entitlements and welfare. ( by the way…. a large percentage of these residents are not even citizens and pay NO income tax or any other kind of tax. – Talk about a reason for a revolution.  Add to this riduculous imbalance. I have to insure my property to the hilt at a large expense to guard against the cockroaches that want to rob the place, and oh, by the way…. be careful about driving on the roads, as most are bad drivers and have NO insurance.  Many of their bretheren are sitting in state prisons at a cost of $65,000 per year each, and yes, I’m paying for that as well. – I am pissed at the government officials and politicians that have made all of this reality, and also looking at the conditions of life in Switzerland… at least they have some laws there that protect against this crazy irresponsible welfare, no responsibility mind set.  Many of you who might be reading this post might think I am a selfish, greedy SOB that deserves to get punished by the government for having financial success… OK, fine, but I have paid enough taxes in my lifetime to support hundreds of those that spent much of their lives sitting on their asses waiting for the government to provide them with their benefits, or "rights" as they have been brainwased to believe by the liberals who are looking for votes. I have  also created thousands of jobs that otherwise would not exist… so why should I continue to be asked for more… as far as I’m concerned – there ain’t no more from me… go do something to take care of yourself for a change.

  212. Totally unrelated to trading, but I just had a fantastic evening with a great guy and his parents.  My son (9)and daughter (11) are both competitive swimmers, so they got invited to listen to a talk by Ian Crocker and his parents.  I was allowed to come along. :)   As you probably know, Ian is an olympian who has won 3 medals, 2 of them gold, swimming the butterfly.   He and his parents gave a slide show highlighting his life and showing how he made his way to olympic history.  He then talked one-on-one with each of the children attending, let them touch and examine his olympic medals, and sat for a picture, which he autographed, with each child.  He and his parents are very modest and down-to-earth people and it was one of the most enjoyable 2 hours I’ve ever experienced.  And there was no charge.  Ian is from Portland, Maine and one of our swim instructors here in Bangor, Maine asked them to come, and they did.  His parents still live in Portland.  Ian lives in Texas.  Very special people, all three of them. 

  213. Tusca: Thanks a lot on SKX article, How would you buy it, buy/writes, so to do as Phil advises, or any other way? How lucky you made me feel that I joined this site.

  214. Yodi, Iflan: To both thanks a lot on your lessons on how to get in. I wil study them over the weekend, as my hear is bursting today with so much information. Can you please tell me what are weeklies and how do we trade them? Thanks to you both

  215. Phil: What a day full of information. I have enjoyed all your articles and learned a lot. Thanks again for this superb service. What re weeklies?

  216. Pharm: Thanks on the PGH question. I hold 3K for a long time and I think is about time I start making some money of them besides the dividend.

  217. Cap-Superman- excellent!!!!!!
    This is truly the crime of our century.

  218. arbolito/weeklies  Weeklies are options that expire every week, Friday.  I don’t think they are listed until Monday of the week they trade, so I can’t show you any now.  This weeks have expired, next weeks haven’t been listed. 
    They are quite volatile and  decay rapidly.  Some people think they are a lot of fun.

  219. lflan … that is way cool (Ian Crocker); raised well….

  220. Cap/pstas: Guggenheim was on Oprah the other day as were reps from some of the most successful schools including the superintendent from DC so all the stay-at-home moms are going to see this movie and this issue should catch fire.

  221. Yeah Gel, I could be wrong but I thought you mentioned you were from the Vancouver/Victoria BC area? Why not Washington? no state income tax. Maybe I’m partial bc I’m from there but it’d be close to home for you and you’d be living in paradise!!

  222. jromeha… It is a nice choice for sure. I am thinking of Zurich Switzerland, as I have spent much time there, and because I am also a Canadien citizen, there is no problem. with much of anything as far as the Swiss government is concerned. They really want nothing to do with Americans ( the Swiss government ), because of the hassle with the Swiss banks of late, by our government, putting pressure on the banks to break the Swiss bank secrecy laws. I have banked in Switzerland for years, and it is totally legal as long as you report it on your income tax return, and also report any income derived from banking there.. I love that area in Europe, and my wife is Italian. The culture is something we both would enjoy. I do like living in California, but the taxation issue ( confiscation ) is out of control, so I may very well make the change, and maybe sooner than later.

  223. JRW
    I need to book some flights into Santa Rosa airport from Monterey ( private ) . Have you used Pulse Aviation, as they I believe as based there? If so could you recommend them?

  224. lol, Gel, that was quite a rant!
    And on another note, lflan, I had a similar experience when my son played high school football. When he was a senior, a grad of his school who went pro, Ahman Green, came for the season-end football dinner. Real nice, modest guy, treated the kids great. So, the kids who were raised right and don’t let their egos run away with them are out there.

  225. gel
    When and how often do you need to fly MRY-STS
    I MAY be able to help…possibly

  226. rexx: thanks a lot on your response to weeklies? Can you tell me please where they list.

  227. arbolito
    Weeklies you find on the TOS trading platform if you open the trades put in the relevant stk in this case AAPL and look under Sept options and you find the weeklies. I trade with TOS = Thinkorswim others have other trading platforms. Should you not have a trading platform this is the first thing you need to realy trade. Most brokers like TOS have two platforms one for paper trading with a reset button, this is always the best to start with, before you lose any money.
    good luck

  228. maya1
    I am looking at three roundtrips for my wife  commencing in about two to three weeks.- probably two day layovers each trip. It is a four hour drive each way through San Francisco – very tedious. Thanks!

  229. Snow… sorry for the rant… I have to admit, I get a little too fired up occasionally on this issue – next time, I’ll take a cold shower.

  230. Normal



    /* Style Definitions */
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    mso-padding-alt:0in 5.4pt 0in 5.4pt;
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    For those of you who wondered what the Democrats have accomplished in the last 18 months, here’s what they say they accomplished and who they accomplished it for …
     “Everything Democrats have accomplished — from reforming a broken health care system to reining in the Wall Street banks that were out of control — has been because of you.”

    Get your free sticker today:
    Personally, I declined the sticker.

  231. gel / pulse

    They wanted $10.400 for a trip I get through Amex for $8,200, and the Amex jet was nicer !!

  232. Pharm- are you still staying out of OREX? Seems pretty cheap here and it should have at least a lil’ bump before the FDA decision… I was looking at buying ITM Jan calls and selling them after/if they pop but well before the review (or any stupid docs are released).

  233. Testing 1 2 3