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Testy Tuesday – Dollar 77 Edition

The Dollar fell from 77.515 at 3:15 yesterday to 76.835 at 7:30 this morning.

That, my friends, is the story of the markets.  A 0.9% drop in the Dollar overnight is a huge move, something that once upon a time would have made headlines as America's $100Tn worth of household wealth has $1,000,000,000,000 shaved off of it in some overnight catastrophe.  But there was no overnight catastrophe, just the horribly normal, shockingly ordinary destruction of the US Dollar, which has now become the plaything of International Market manipulators who boost it to pump the Asian markets up overnight and then crash it to goose the US markets in the morning.  It's MADNESS but we are loving it because, at least it's predictable madness.

In yesterday's post I reminded you about our $87.50 short on oil futures and we hit it again this morning and that's exactly what I said would happen in my 2:21 comment to Members when I predicted they would run oil back up into inventories.  We LOVE ranges – they are so much fun to play.  Gold is now 20% above our $1,150 line and at the top of that range ($920-$1,380) we've been watching since March of 2009 so I updated our "Spinning Straw Trades Into Gold" post with a whole new set of trade ideas to help protect our cash if the dollar keeps getting weaker and gold keeps heading higher.  

As I said to Members in yesterday's Morning Alert, it's all a huge sham but it's the only game in town so we just need to learn the silly rules and figure out how to win if we want to keep playing (although I am currently advocating mainly cash and playing just for fun as we test our upside).  We did go for an ABX trade in Member Chat on Friday, a play that was also made available to Stock World Weekly readers over the weekend (last chance to subscribe before we're out of Beta and the rates double!) and ABX is, of course, flying as gold broke through the $1,400 mark yesterday.  So we like gold as a small hedge against inflation eating into our sidelined cash but, on the whole, I'd rather short it – I just want to be clear about that.

We can't short gold with Benny and Timmy running the printing presses day and night so we're picking on oil off the $87.50 line in the futures.  There is no demand for oil, it's pure speculation and I don't think the World Bank is going to come out and tell people that we should start using oil for currency any time soon so it's safer to play oil to get real than gold.  At least with oil, we get an actual inventory report with demand numbers every week – copper, unfortunately, is based on a lot of guesswork and copper has shot up to $4.02 and also makes a compelling momentum short below the $4 line as that's another unrealistic number as we are back to 2008 highs despite the fact that, GLOBALLY, 10% less people have jobs than in 2008 and 75% less commercial and residential construction is going on.  So what is this copper being used for?  IT'S NOT – IT'S TOTAL BS SPECULATION!!!

This is a chart from Q2 and you can see the record stockpiles even then.  The stockpiles haven't gone down, of course but the price of copper has jumped another 33% in the past 3 months – completely disconnected from the fundamental supply and demand curve.  How long can this last?  Until the suckers run out of money of course!  

We learned our lesson in 2008 not to bet against the sheer stupidity of commodity speculators as oil went from $100 to $140 a barrel as if people could actually afford to pay $100 per tank for gas (not to mention the impact on food prices).  The market delivered a very harsh lesson that fall as consumer spending ground to a halt once the stimulus money ran out and, when people could no longer refinance their homes to pay for gas, the whole ball of wax came undone at record speeds.  Well, here we are just over 2 years later and I can say with virtual certainty that WE HAVE LEARNED NOTHING!  I mean really people – this isn't some academic discussion about tulips in Holland in 1637 – this just happened, TO US, 2 YEARS AGO.

Well, not "us" exactly as we were short oil at the time of the crash but US as a country and it really saddens me to see how we can simply repeat the same mistakes over and over again.  What we, at PSW, did learn is not to go too crazy shorting the madness.  Oil took 6 months to fall from $140 to $35 in 2008 and gold fell from $1,000 back to $700 in 7 months so there is no major need to get in right at the top.  What there is a need for is cash as we need to be flexible and ready to go with that downward flow once it gets going. 

Keep in mind that a weak Dollar does lift all ships so it's all about the dollar bounce.  If the dollar does fail the 76 line, which may happen if the G20 don't take action to stop it over the weekend, then we will be right there – betting with the idiot speculators but we'll be the ones nervously looking over our shoulders, waiting for the other shoe to drop.  Our new gold plays are step one towards making sure we don't miss out if the markets do pop our breakout levels but so far, they haven't and we will wait PATIENTLY for a proper test.  

Here's something you MUST read.  I keep getting attacked as a liberal and I am to a large extent but my issue in tax policy centers around the top 0.01%, the people AND corporations who make over $100M per year and pay less than 15% taxes.  If this group alone paid 35% like most people, then the bottom 99.99% could pay 30% less AND we would have a balanced budget AND we would be able to pay off our debt with the surplus as we're talking $2Tn in unpaid taxes here!  Barry Rhitholtz had a great chart showing how companies like Google, IBM, ORCL and MSFT use loopholes to pay 2.4% tax on foreign income (which is 1/2 of the S&Ps income):

In an unrelated matter, PSW will be moving it's publishing center to Ireland but our main office will be in the Netherlands and if you need me, I'll be on the beach at Ritz-Carlton, Grand Cayman, where my tax savings should pay for a year-round suite!  That's right, screwing the government over isn't just for the big boys so thanks to Barry for the how-to chart and thanks to voters for making sure these loopholes will never close – see ya suckers!  

Hopefully the Caymans will be a safe haven when it all hits the fan and the fan is already hitting something as the life-support system that the EU is using to support Greece, Ireland, Portugal and Spain is under pressure in the current credit squeeze and all 27 member states of the EU have now agreed that revisions need to be made to the Lisbon Treaty in an attempt to stop things over there from spinning out of control — Again…   At the same time, the World Bank (the guys who are pushing for the gold standard) now says Asia may need capital controls to control the bubbles that are forming in the region’s stock, currency and property markets thanks to US QE practices.  Real-estate prices are a concern in China, Australia and parts of Southeast Asia.  Japan, Thailand and Malaysia have seen their currencies surge more than 10 percent against the dollar this year, while some of the region’s stock markets have jumped more than 50 percent, Sri Mulyani said. Sri Lanka’s benchmark stock index is up more than 90 percent this year, while the measures for Thailand and Indonesia have exceeded 40 percent.   

According to the WSJ: "Global controversy mounted over the Federal Reserve's decision to pump billions of dollars into the U.S. economy, with President Barack Obama defending the move as China, Russia and the euro zone added to a chorus of criticism. Mr. Obama returned fire in the growing confrontation over trade and currencies Monday in a joint news conference with Indian Prime Minister Manmohan Singh, taking the unusual step of publicly backing the Fed's decision to buy $600 billion in U.S. Treasury bonds—a move that has come under withering international criticism for weakening the U.S. dollar."

It's a good week to watch and wait.  The bullish premise remains the devaluation of the dollar and, as far as bullish premises go – it's a very good one but there are plenty of negative overhangs and this is NOT the time to tie up your capital in stocks so cash remains king and we have many, many ways to go short (like selling PCLN Jan $450 calls for $16) once this rally exhausts itself.  

Keep being careful out there! 

 


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  1. NET $ +.07%
     
    F =1222.50


  2. PCLN out of the stable already. Possible Phil’s short caller 430 is still holding for a day. After CMG I think I will stay with more relaxed plays, toooo much for me


  3. Wow, PCLN is a bear-killer.  It is tearing me a new one.


  4. Phil / Fisher   Your link led me to this para from Fisher (Dallas Fed).  It has frightening implications for importer profitability next year.  It also suggests inflation will explode, so buy more ABX and maybe even TBT quite soon?
    I do find it of interest that one of my CEO contacts just came back from meeting with all 450 of his Chinese suppliers and reports that the Chinese government was “encouraging” those manufacturers to grant wage increases to their workers on the order of 15 to 20 percent, in large part to goose up domestic spending. Combining wage imperatives with recent commodity price increases, the manufacturers of low-tech Chinese products, from wicker to clothing to the lower end of entertainment devices, have started their bids for supplying the fall of 2011 needs of this particular large importer at dollar price levels 30 percent higher than current levels. Alternative production sites like Vietnam and India, according to this source, are only slightly underbidding these Chinese suppliers.
    To be sure, these are opening positions for negotiation. But they are alarming. They might portend a shift back to sourcing low-value-added goods in lower-cost venues like Mexico over time, but in the immediate future, this hints at a squeeze on margins for those sourcing from China, Vietnam and India. Other CEOs who source inputs in the Far East report the same phenomenon, which is vexing because none of them feel they have the pricing wherewithal to pass on cost increases of more than 2 percent or so in light of the weakness of consumption. The one thing they are certain of, however, is that retail goods inflation is highly unlikely to drift downward.

    Read more: http://www.businessinsider.com/dalls-fed-chief-fisher-debt-monetization-2010-11#ixzz14n6XRMse


  5. Phil:
    Still holding USO Nov $36 puts (buy at $.34, now $.23). Should I buy more time on this trade or is it a lost cause on a short in and out? Thank you.


  6. PHIL good morning,
    if you can please any thoughts about PCLN,  Q3 earnings,  their perspectives in Q4 and CALLS ( I guess some  of us sold them  yesterday )
    Thank You


  7.  Hey all,

    We have two new positions for the day with a Buy pick in First Solar (FSLR) and a Short Sale in Direxion Daily Energy Bull ETF (ERX). 

    Check out both these positions here!

    Good Investing!


  8. Good Morning.
     
    You read a lot of scary stuff these days as the market plows forward.  Could this be another whack job that doesn’t understand the intricacy of Bernanke’s plan?
     
    kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2010/11/5_Jim_Rickards_-_Fed_May_Go_Bankrupt.html


  9. CCJ up 2.61 to 38.40


  10. NET $ (.14)% , dx/y = (.13)%
     
    I am still surprised the Ambac story has gained no steam


  11. Interesting Oil is up 87.20 and CVX is down 1.30 to 83.53 however XOM up .82 to 70.71


  12. Trading PCLN…Out of long Dec 380s for  +70%.      No further entry planned over short term.   


  13. gel1 POT up 2.00 good for our short putters!!!


  14.  cap
    you doing anything with fcx this am?  Cu over $4
    I did sell the 110c @ 1.27 and covered @ $1.11
    thanks for that one
    —————-
    Cap 
    November 4th, 2010 at 3:45 pm | Permalink  
    ban … fcx … its vacillating wildly w/ the dollar and metals prices.  I think its a short; you might want to just sell the 110 calls.


  15. Good morning!

    PCLN Jan $450s can be sold for $16 and I like that naked sale after looking over earnings.  

    Like yesterday – everything looks like a good short to me but it is amazing how much effort is being put into propping up this market at the moment.  At least you won’t be able to say you weren’t given a good opportunity to cash out!  

    FCX Dec $100 puts at $2.75 are the way to play a top to copper.  

    Same old level watch and we’re still waiting for the Dow to show us some backbone along with the Nas, who we keep shorting but they keep trying to go higher:

    • Breakout Levels: Dow 11,500, S&P 1,220, Nasdaq 2,600, NYSE 7,750 and Russell 725
    • Up 10% (must hold)Dow 11,220,S&P 1,177, Nas 2,420, NYSE 7,500 and Russell 700
    • Up 7.5%Dow 10,965, S&P 1,146, Nas 2,365, NYSE 7,280 and Russell 672
    • Up 5%: Dow 10,710, S&P 1,123, Nas 2,310, NYSE 7,140 and Russell 666 

    Copper $4 is now a key watch level and oil is already coming down nicely from $87.50 and you can grab the USO Nov $37 puts for .41 as a nice speculative put on inventory tomorrow but it is, of course risky.  The dollar is right on the 77 line and dollar direction TRUMPS ALL!  

    We’ve fallen back into that patten of pre and post-market pumps while we sell-off all the rest of the day so it’s all about who gets tired first, the bulls or the bears.  If the bulls take out the Nas and the Dow – they win and we get longer (and make sure you see our new gold plays) but not until as we’re still in that toppy Beta 3 pattern (see yesterday’s chart) and that means that there is a lot more bang for the buck speculating short than long at the moment. 


  16. Phil / Alan Tonelson and mercantalism    Great article explaining why unilateral US action to force manufacturing back into the US at the expense of our foreign ‘friends’ is the only way to cut into our 25% unemployment.  I remain baffled as to why our Harvard geniuses running Gov’t policy don’t get this.  Geitner wouldn’t know he was being screwed even if he was in a Detroit jail cell!  Every patriotic American should read this article.  How come our academic economists don’t get this?  They still believe ‘globalization’ is working for America – guess they’re still employed.
    http://americaneconomicalert.org/view_art.asp?Prod_ID=3903&email=registered


  17. yodi / XOM — xom goes ex-dividend today. Got my callers called this morning on a dividend play.


  18. Phil- I got in on one of gel’s ratioed trades: CCJ. Net loss of $2180. How should I adjust this? Thank you.

    bought 2 Mar $25 calls for $3.25, now $13.20
    sold 6 Mar $30 calls for $1.25, now $8.65
    sold 2 Mar $30 puts for $2.50, now .65 cents


  19. Phil/Dean Foods – momentary over reaction reaction or just a stop on the way down to new lows?


  20. NET $ (.35)% fell off as market spiked
     
    It is mainly the Yuan and Franc forcing the dollar lower
    $/Franc = (.66)%
    $/Yuan = (.55)%


  21. rainman
    XOM thanks fortunatelly I am still with .85 in premium with my Jan11 65 caller


  22. Phil--would appreciate your help on the folowing PCLN positions
    short Nov 380 calls @ 10.50
    bought Jan 350 puts @ $21.75
    sold Jan 390 calls @ @ 23.15
    Tx


  23. Food For Thought – On stocks like PCLN, NFLX, etc I think buying PUTS is a better way to go then selling calls, with very tight stops. Keep in mind BIDU last year. At 400 (pre split) we were chatting about how it was overvalued. Now, its $1100 (again, pre split). If you had done a short call, you could be rolling, rolling, rolling for who knows how long. Who’s to say PCLN wont be 600? Hey, it could do $20 per share in 2013, and thats only a 30 multiple…..certainly more fairly valued then NFLX, WYNN, and a hundred other companies that have gone crazy…..Just my 2 cents. 


  24.  Phil
    Want to thank you for banging away at scaling into positions.
    I feel better, sleep better, trade more relaxed and don’t panic (so much)when positions move against me because options allow for escape hatches I knew nothing about before signing onto this site.


  25. Yodi / XOM — I never have a problem with getting called early 8-)


  26. Anyone feeling the froth today? I can’t find a good solid data point telling me we’re hitting a top yet though…


  27. NET $ (.73)% here, they are crushing it
     
    F = 1223.50
    oil  +.44, gold +17.30


  28. PCLN/Yodi – I love shorting the Jan $450s at the moment.  They simply do not support that valuation (or $400 for that matter).  

    Fisher/Tusca – It must be very frustrating to be a person of intelligence on the Fed board these days.  I imagine Fisher is like my wife, who comes home from PTA meetings wanting to murder the school board as the people in power just nod their heads and listen and then just keep doing the same stupid crap they’ve been doing no matter how outraged their constituents get.   Anyway, I wouldn’t go too crazy with ABX or TBT as the most likely thing that will happen is an EU or Asian crisis that sends people flying into the dollar which will drop our bonds back to 0% and push the dollar back to 80 and tank commodities, which will drag down the market causing even more panic.   The salary thing is a non-issue, 20% of $2 a day is .40 a day – trust me, the manufacturers can afford it.  If there are 100M workers that’s $40M a day or about $10Bn a year or less money than GM, AIG, FRE, FNM, etc. lost in a single quarter.   Again, people just don’t have a good sense of proportion with these things.  You can’t just leave China – China is the place to manufacture because they invested in the infrastructure to move the goods around the country – Mexico doesn’t have that.  Countries that invest in infrastructure reap long-term benefits that enrich their people and countries that don’t become US…

    USO/DClark – I just picked the $37 puts for a play into inventory so, with your position, I’d DD at .23 for a .28 avg and then get 1/2 out at .30 if possible to leave you in 1x again at net .26.

    PCLN/Lithu – They had very good earnings but there were some tax gains and also currency gains and they project earning less than 50% of that amount in Q4 so I don’t think the exuberance will last but they’ll probably do their best to squeeze the bears out before letting it drop.  Depending on what you are in, you can roll to April whatevers (the $450s are $30.50) and keep in mind you can match those with a sale of the $360 puts at $20 and that means you can roll the callers to the 2012 $500s down the road so it sucks to be stuck in the trade long-term but it’s really not a reason to panic.  

    Dollar jammed back below 77 and the market flies!  

    Whack job/Exec – Well the Fed never had any money in the first place so it’s hard to go BK.  They write checks and buy assets (TBills, Hotels, etc) from the government and the banks and, since they don’t owe anyone any money, they are under no pressure to recognize losses on their assets and, of course, they can double down at lower prices to trim any apparent loss percentage they are suffering.  That can go on for years so it’s not even worth speculating on the Fed "running out of money". 

    CCJ/Yodi – Still my favorite commodity.  

    CVX/Yodi – Nat gas plunged from $4.21 to $4.10 and CVX has much more gas than XOM.  

    We’re getting another whack at the $87.50 line in oil but give them a chance to go over.   Not worth playing if the dollar is under 77 and those charts should be right next to each other if you are playing oil futures (along with copper, of course).  

    There are still 315,000 contracts (315Mb) jammed into December and those expire on Monday the 22nd so, between now and then, about 300,000 of those contracts have to be rolled to Jan (253,000), Feb (93,000) or March (105,000) delivery.  March having 105K already is more than normal so they are going to have problems as anything more than 550Mb in the 3 front months usually causes a sell-off.  

    That’s why I like the Nov USO puts, the Friday of expiration is the 19th, the day before the NYMEX must clear out Dec contracts so it’s hard to imagine them keeping oil this high but, with the dollar down here, anything is possible so it’s all speculation if you are not in cash!  


  29. rainman
    Called away is OK when you have the stock but in the XOM case I hold the long caller against the short calller meaning you lend up with negative stock positions, which in case of XOM might be OK as the stock normally goes down after div experation.


  30. I like CCJ also….. A little concerned on the rapid runup in  price lately… any suggestions on how to play it at these levels? or is it better to wait for a pullback? thx


  31. ban …. nope; still short 110 and 115 calls and 80 and 72.50 puts.
     
    wouldn’t mind seeing fcx back off


  32. Good Morning, All.
    DF (Dean Foods) down 15%, earning missed expectation and CFO resigning.
    I already have buy/writes on DF.  Damn!  Should’ve bought back the short puts last week.
    What do you think of DF long term?  People gotta eat, right?


  33. My PCLN Nov short strangle 340/450 has been playing out well so far.  Locked the huge gain on the short 340 put and rolled to the Nov 400 Put to tighten the strangle a bit with a week and half to go to expiration.  Holding a small gain on the short 450 call, and hoping it will hold, but no problem if I have to roll out and up to Dec 470′s.


  34. Phil
    strategy question? i own a RIG 2012 45/60 Bull Call spread--the sock is up nicely to $69.68--i believe that long term it will go higher--does it make sense to buy sell the 2013 65 call for $17 and use that to buy back the 2012 calls for $16.00 or go out a bit farther and sell the 70 2013 calls for 15.25 --(this will be my first adjustment and am trying to understand what makes sense--is there a rule of thumb that you use as to when to buy back calls? my thought is to sell some calls now and wait for a pull-back to buy the 60 calls back? --but which ones
    do you know anything about CIM--has 18% dividend and managed by the fine folks of Annaly
    thanks


  35. rainman
    I am interested to know  how you handle your shorter term buy/writes. Depending on the stock going up together with the short caller often being ITM before experation, I look at the cost of rolling the caller to the next month in comparison to the increase in value to the stock. I like to see a profit in holding the stock and using some of the gain to pay for the extra cost in the roll.


  36. Big jump here the NET $ +.27%


  37. POT/Yodi – That’s another fun short one day.

    Mercantilism/Tusca – Yes, I don’t know what happened to good old-fashioned protectionism.  We got brainwashed out of that concept by all the companies that were just licking their chops to ship 50M jobs overseas.  Mission accomplished on that one!

    CCJ/Nicha – Ouch, that’s really ugly!  It was a super-bearish play once they popped $30 and you are WAY past the time you should have been fixing this by adding some calls.    I’d roll the 6 callers up to 12 June $38s at 4.10 and cover with 6 2012 $40s at $5 (cashing your $25s) and just hope for the best if you want to stick with it.  It’s a silly time to sell puts with CCJ so high and the VIX so low. 

    DF/Brook – Those kinds of companies can’t raise prices fast enough to control cost.  Let them get beat up and then they become a good buy again. 

    Here comes the dollar and there goes the market.  What a fun day this is! 


  38. Phil / UUP  Do you still like the Nov $22 calls for a $ bounce.  I don’t see anything positive happening in the US and QE2 is flowing into commods and overseas, so that just leaves Japan action or another Euro fringe blow up as the catalyst?


  39. NET $ (.09)%
    F = 1220.25
    oil +.20, gold


  40. cwan120
     
    DF looking at Phil’s remarks it looks to me the stock is at its low 8.75 52 week low 9.35 regret they do not pay div But a buy write with a Jan 11 9 straddle does not look to bade to me 1.50 covering you between 7.50 and 10.50


  41. NET (.12)% at 11:00


  42. Phil PCLN your remarks Sell Jan11 450c to hot for me yes they overpriced but it looks to me a lot like CMG. To jump 25$ in 73 days they sometimes do 10$ in one day.


  43. Yuan/Mike – China did some token tightening ahead of the G20 and that’s what pushed the dollar down this morning.  

    PCLN/Savi – You really want to roll the callers up into the rally.  The Jan $390s will probably be fine (now $49) but the Nov $380s have no premium left at $46 so you should probably roll them along to join the Jans.  If you want to get more aggressive, you can roll the whole thing to 2x the Dec $420s ($22) to take advantage of the premium erosion.  The puts were just foolish as you bought a ton of premium and got crushed.  Not much to do but pray for a big pullback.  

    Puts/Hanna – If you consistently sell calls with stops and scales, you will do better over time than constantly buying premium but too many people let their short calls get away from them and that’s the real issue so puts offer more definitive cost controls, which is better for beginners (but far less profitable).   Also, staying away from volatile stocks in the first place is a good idea!  

    Thanks Ban – case in point!  

    Froth/Rain – All froth up here I think but, as we saw in April – that can last a long, long time.  

    CCJ/Sun – At this point, wait.  People who are in it should consider lightening up but that goes for all commodities.  

    DF/Cwan – They are fine long-term, just a bad Q as input costs rose faster than they could pass it through.  

    Good management LV! 

    RIG/Datuu – I’d buy 1x the 2013 $70s for $14.50 and put a stop on your $45 calls at $25 ($1.50 trailing stop) so you are set up to take your profits off the table and flip bearish if they turn down or in position to roll the callers to 2x the 2012 $75 calls (now $8) if RIG breaks over $70.  That way, you let the movement of the stock determine your next course of action and you are playing the momentum.  

    CIM/Datuu – Is a pretty good company but you do realize that Chimera means "a foolish fantasy," right?  Kind of hard to trust people who pick that name for a public corporation but they do pay those dividends (about .18 per Q) so what’s not to like?  They are also kind enough to have options all over the place so I like buying them for $4.02 and selling the Dec $3.50 calls for .55 and the June $4 puts for .50 for net $2.97 and, of course, your hope is that you will roll the Dec calls out and up while you collect your dividends.  

    UUP/Tusca – Yes, Bernanke gave it his best shot and the buck didn’t break yet but it’s very dangerous ahead of the G20 this weekend.  I’d pair buying the Dec $22 calls (.49) with the sale of the Jan $22 puts (.33) so you are in at net .16 with no premium to the upside and no limit on the gain.  


  44.  Dont look now, but MOS is near $75, up almost 80% since July 1! Woo, thats some nice return!


  45. NET $ (.46)% big move lower
     
    Europe close coming


  46. wonder  what caused that spike in $


  47. NET $ (.68)%
     
    it is the Franc. $/Franc is the on moving, $/Franc (.51)%, $/Yuan = (.39)% at 11:17


  48. that is (.58)% not (.68)% typo


  49. Phil,
    Re: your response to Tusca, relates to one of my questions. I’m a little unclear on what will make the dollar break below 76. Is it the commitment of Fed to more money printing and bond-buying and the speculation that comes from that? It seems you were implying that Bernanke was attempting to break it with 1) the QE2 program  AND/OR  2) just the announcement of the QE2 program. Is that right?  Can you elaborate a bit, please?


  50. yodi / buy-write — I’m not sure I fully understand your strategy. It almost sounds like you are justifying the roll by mentally using the stock gain to pay for a roll. I don’t look at things in that mental kind of way. I generally look purely at the numbers and my expectations for the underlying but I generally assume I have no idea which way the underlying is going to move (direction agnostic). I also sell puts when I have a buy-write (buy-write-write?). Like Phil, I try to assign a fundamentally "cheap" value to a postion and enter there (doesn’t mean it’s going up!). If it gets cheaper without a fundamental change, I’m happy to get assigned on the puts and will sell additional puts and maybe buy my callers back. If the stock runs up, I’ll buy back my puts and look at rolling the callers. All my decisions are based on my current expectations, risk and reward but it’s the math that drives me. I also try trade based on where I think the underlying won’t go. If I’m wrong, I’m happy because it means that I’ll make max profit on my callers being called or have really cheap shares put to me by my putters. It’s all just risk/reward/expectation balance. If one of them goes out of wack, my first instinct is to get out and reenter (not sell half), for example with Dean Foods CFO resigning, if that was unexpeted and I held a bullish position, I’d get out until I could digest the details. Playing long options, I’ll do the "when in doubt, sell half" sort of thing. I don’t know if any of that made any sense, I’ve never tried to articulate what I do.


  51. rainman- thanks for your summary. That cleared up a few things in my mind.


  52. Phil
    Love your ideas on copper, but I could not get close to $2.75 on the dec $100 put. Would you chase here for ~$2.90 or so? Thank you.


  53. NET $ (.34)% as Europe is closing


  54. Phil--on the PCLN trade the purchase of the Jan 350 puts were funded by the sale of the Jan 390 calls  per your suggestion--so not as bad I assume?
    Tx


  55.  TBT rallying


  56. rainman
    Thanks for the buy/write. Yes I look at it in a similar way. Using the caller roll cost is obviously a consideration for me not to get called away if the present value of the stock exceeds the cost of the roll. So the caller is possible OTM and I can sell aswell a possible higher putter. These plays are obviously some of the safer ways in our endeavor to make money. I for instand entered the DF play as I think we all still going to eat and the stock is cheap but has a back bone. I try to fill the same with 9r staddle Jan11


  57. NET $ (.51)% at 11:40
    oil +.13
    F =1120.75


  58. congrats to whoever printed 1221.73 yesterday


  59. Good morning,

     

    IWM 71.62, 72.44, 72.97, 73.49, 74.06, 74.24 and 75.41

     

    A tad under the weather today, so I’m not trading anything not obvious, but I am buying puts with the new shorting rules taking effect !!


  60. Very good discussion on ETFs on CNBC.  Finally people are discussing this nonsense.  

    Speaking of scams – Did you guys read Damien’s interview with Matt Taibbi on his new book?  Good stuff.  

    Nice – oil broke $87!

    MOS/Hannah – Don’t remind me.  I just cannot believe that one. 

    Dollar spike/Z4 – I think it was this:

    Spreads on European credit-default swaps are getting still wider, Fitch reports – with Ireland at 24% ("an all-time high") and Portugal at 22%, suggesting "mounting concern over Ireland and Portugal’s fiscal stability." 

    76/Ac – That’s the magic support line on the dollar.  The Fed can’t get inflation going at the levels they need if the dollar stays over that line and so much of the current commodity pricing, which is driving the markets, is based on Dollar 72 baked in (5% lower) that it’s going to be a real problem if they don’t get it.  Mainly it would show the Fed to be ineffective and this all goes back to my ramblings about the velocity of money and how pouring more money into the top of a market that isn’t moving is not only pointless but dangerous as it creates distortions that slow the economy even further while making it more and more top-heavy.  

    FCX/DClark – As a rule of thumb, 5% is not terrible to chase but the way this market goes, you are always better off waiting because things change almost hourly.  Even now, FCX is back up.  Put it this way, if you only took trades that went .05 your way rather than .05 against you, you would save $10 per contract in all your trading.  That’s  a lot more than you pay in commissions so try to avoid chasing – there will always be another trade.  

    PCLN/Savi – No, not as bad but now it’s time to pay the piper as the puts didn’t work out and the play won’t be free until time expires on the calls.  Keep in mind that the $350 put premise is shot so getting $10 for them at this point would be a gift.  

    VNO breaking down.  If BXP confirms by failing $86.50 then something is up.  

    IWM/JRW – Did you see the CNBC bit on ETFs.  They are focusing on volume trading on IWM!!!  


  61. Phil, on CCJ, i have a bunch left of the 17.5/25 bull call spread. Due to the odd premium structure, this thing that ought to be closed at or near 7.50 a pair looks more like $6.
    they are jan 11s, so i could just wait for expiration. What do you think?


  62. I think the short selling rule got pushed back to FEB, but not 100%, I think they got an extension


  63. CMG I trust some of us are happy down 1.50 I think they running out of chili or some of you guys are stealing their paper napkins!!!!!


  64. Wow, TBT and UUP are both up. That is a nice surprise. I keep rolling up SLV puts — damn them!


  65. Phil, 
    I have been holding the UNG Jan 6/8 6 P which I entered to hope and get back the 7/9 7 P which I got creamed on a couple months ago. With the runup in evrything finally UNG has gotten a little bounce (still down significantly but off the worst).  Do you think its getting some legs now…Should I improve the position?
    Thanks. 


  66. Phil, 
    JRW mentioned the new rules for shorting taking effect (all I know is that they are stopping stocks on more of a 10% move down, but not options), can you elaborate a bit on it and suggest a way to take advantage of this. 
    Thanks 


  67. Phil / ETF’s   Did I catch this correctly?  90% of IWM is in the top 10 stocks, so the smallest caps are underbought?  And, they are concerned about it taking 4 weeks to……. if there is a short covering frenzy (can you explain this bit, I don’t follow?).


  68. At the open: Dow 0% to 11407. S&P +0.12% to 1225. Nasdaq +0.26% to 2587.
    Treasurys: 30-year +0.14%. 10-yr +0.06%. 5-yr -0.01%.
    Commodities: Crude +0.39% to $87.40. Gold +1.16% to $1419.50.
    Currencies: Euro +0.17% vs. dollar. Yen +0.73%. Pound +0.11%.

    10:00 AM On the hour: Dow -0.02%. 10-yr -0.02%. Euro +0.19% vs. dollar. Crude +0.23% to $87.26. Gold +1.2% to $1420.10. 

    11:00 AM On the hour: Dow -0.07%. 10-yr -0.02%. Euro -0.07% vs. dollar. Crude +0.33% to $87.35. Gold +1.2% to $1420.10.

    ICSC Retail Store Sales: +1.3% W/W, vs. +0.1% last week. +3.4% Y/Y, vs. +2% last week. The strong showing was helped by cold weather which drove demand for seasonal goods. Full month sales are expected to show a solid 3-4% gain Y/Y.

    Redbook Chain Store Sales: +2.6% Y/Y vs. +2.5% last week. While cold weather contributed to a surge in ICSC sales, Redbook says public focus on mid-term elections restrained shopping. 

    Sept. Wholesale Trade (.pdf): Inventories +1.5% vs. consensus +0.6%, +1.2% (revised from +0.8%) in Aug. Sales +0.4% vs. +0.5% prior. Inventory-to-sales ratio 1.18 vs. 1.17 prior.

    Consumer bankruptcies jumped 12% Y/Y in the first nine months of 2010 and are expected to hit 1.6M this year, American Bankruptcy Institute reports. Doug McIntyre says it underscores the interconnection between the financial health of consumers, their profligate borrowing, the drop in home prices, and their inability to pay debts – and says "bankruptcy numbers are not done marching higher." 

    I want MORE FREE MONEY!  Pimco’s Mohamed El-Erian tells DealBook that the Fed’s decision to buy up to $600B in government bonds does not go far enough. QE2 could reduce the risk of deflation and a double-dip recession, he says, but will fail to overcome an “unusual” period of low growth and stubbornly high unemployment that may linger for years.  

    Risk appetite is starting to recover, as hedge funds saw their collective assets climb to more than $1.6T last month, the highest level in more than two years. Not everyone is sharing in the rebound: a sample study suggests quant funds may have lost nearly half their assets since 2007 after failing to capture swings in the market.

    Spreads on European credit-default swaps are getting still wider, Fitch reports – with Ireland at 24% ("an all-time high") and Portugal at 22%, suggesting "mounting concern over Ireland and Portugal’s fiscal stability." 

    Now THAT’S Capitalism!  The largest private employer in Saginaw, Mich., will soon be the city government of Beijing, as a 104-year-old unit of General Motors will be sold to new owners from China. The $450M purchase received little attention this summer, but it is a landmark deal – the first time Chinese investors have bought a U.S. industrial operation of such scale and history. 

    Foreign leaders ought to be thanking the Fed for its weak-dollar policies instead of criticizing it, Marc Faber tells CNBC, since they have allowed emerging markets to grow. "U.S. monetary policies have been very good for Asia, specifically for China… [they] fostered industrial production growth, employment growth, wage increases, domestic consumption, increased demand for raw materials." 

    Fertilizer stocks are running higher following a bullish USDA report forecasting lower agriculture commodity yields. Soybean futures jump 5.5% to $13.45/bushel, highest in more than two years, while wheat rises 8.2% and corn adds 5.1%. MOS +3.9%, CF +3.6%, BG +3.4%, AGU +2.1%, IPI +1.7%, POT +1.1%

     

    Safe-haven buying is helping push gold to a new high, with futures +1.25% to $1,420.70. Some analysts think the metal could hit $1,500/oz. by the end of the year.  I think they mean month! 

    Arena Pharmaceuticals (ARNA) is +7.8% premarket after a Phase III clinical trial of its lorcaserin obesity drug showed statistically significant weight loss among patients with Type 2 diabetes. Still, that may not be enough to get the drug past the FDA, which has been incredibly tough on obesity drugs (I, II, III).

    Barclays (BCS): Q3 pretax profit -76% to £327M ($537M), while its I-bank posted a pretax loss of £182M vs. a profit of £369M the year before. Core Tier 1 ratio unchanged from H1 at 10%. Bad loan provisions -27% to £1.2B. Analysts were mixed on the results, but investors have pushed the stock +2.6% premarket.

    Hey, we missed this on CVX – Probably dinging the stock:  Chevron (CVX) agrees to buy Atlas Energy (ATLS) for $4.3B, or $43.35/share, marking a 37% premium to yesterday’s close. (PR)

    GE (GE +0.6%) plans to spend more than $2B in the next two years expanding in China. GE is counting on emerging nations for growth, and earlier this week said it expects 30% annual growth from its India business. 

     JA Solar Holdings (JASO): Q3 EPS of $0.47 beats by $0.13. Revenue of $541M (+180%) vs. $454M. (PR)


  69.  Phil -
    On the USO puts – where would you look to take profits – (using USO not the puts themselves)


  70. Effective for trading centers by November 10, 2010, the new rule stops "the execution or display of a short-sale order of a covered security" at a price "less than or equal to the current national best bid," if the price drops by at least 10% from the closing price on the listing market at the end of the previous day’s regular trading. A covered security includes any security listed on a national exchange or the National Market System. Investors can still employ derivatives (e.g., options, futures, warrants, swaps), the author explains, to get a short position’s economic equivalent. The new rule relies on bids, which the SEC believes most precisely reveal current prices. The ban could stay in effect for as long as the rest of the day and the next day. The new rule applies to any short sale effected with US jurisdictional means but only to the particular short-seller, while the old rule had market-wide application.

    The SEC will no longer be flying solo. Unlike the 1938 rule’s absolute ban, the principal enforcement mechanisms of the 2010 rule are policies and procedures to be written by trading centers: self-regulatory organizations (national securities exchanges and associations) that run trading facilities, other trading systems, exchange and OTC marketmakers, and brokers or dealers executing orders in-house as principals or agents. Trading centers must reasonably design policies and procedures to achieve the purpose, must re-examine them frequently, and must quickly fix ineffective ones. The SEC chose this approach, the author notes, in the belief that trading centers are comfortable with and already use it. Moreover, it provides flexibility to deal with orders whose prices fall within the restrictions. The SEC and the SROs plan to monitor the policies and procedures to see if they are reasonably designed to achieve their purpose. A trading center that makes violations possible might be liable under Regulation SHO and federal securities laws forbidding fraud and manipulation

    http://www.youtube.com/watch?v=cIqH11Fa3e0


  71. I just realized I am fairly bullish on the dollar
     
    All calls:
    10 Dec 23
    10 Jan 23
    25 Mar 24
     
    I read a lot in the MSM about how the dollar’s cooked, so this is a fairly contrarian position. Am I chasing pixie dust here?


  72. NET $ +.06% back on the plus side, dx/y =+.17%


  73. BAC giving up one of its best assets BlackRock (jmho) to hold toxic crap
     


  74. Thanks for the Tabbi link


  75. phamr — any opinion on ASTM now that it’s almost at 4?


  76.  Phil,  Can you explain why it is better to roll up short calls on PCLN now, as opposed to waiting for expiration?  I’m currently short the November $400 calls at $12.  It looks like I can roll to Jan $420′s if I wanted.  Does the roll get worse as we get closer to expiration?  Thx.


  77. Im going to take their bate and short copper here at 4.04. If it doesnt pull back to around 4 by close it should pull back a bit overnight. Phil/anyone – is there any economic reports coming out of Asia/Europe/Australia that could be bullish for commodities overnight?


  78. JR,
     
    I am curious why you are encouraged to buy Puts due to this rule change.  What is your logic?


  79. Copper/jromeha -
    I would think the numbers from China might do something
    China’s October trade surplus is expected to hit $25 billion, says TJ Marta, of Marta on the Markets. Barclays sees the U.S. September trade deficit ticking down to $46 billion.
    Chicago Bridge & Iron meets with analysts, as do Rent-A-CenterHalliburton,National SemiconductorCypress Semiconductor and Solutia.
    Macy’s, which just posted a better-than-expected gain of 2.5% in October same-store sales, reports results.
    Cisco Systems could provide a window into tech spending and the outlook for 2011 when it reports results.
    Citadel Broadcasting appears in bankruptcy court in Manhattan amid criticism by a shareholder over its payment of restricted stock to managers.
     
    Thursday 11
    President Obama meets Chinese President Hu Jintao on the sidelines of the G-20 summit in Seoul. Likely to be on the agenda: trade, the global economy, Iran and North Korea. He also confers with South Korea’s Lee.
    Walt Disney, a component of the Dow Jones Industrial Average, reports results. Also reporting: ViacomKohl’s and Nvidia.
    China releases a number of economic indicators. According to Marta, producer prices are seen rising 4.5%; CPI is forecast 4.0% higher; retail sales, up 18.8% year-over-year, and industrial production, up 13.5% year-over-year.
    Dresser-RandOwens CorningAmeriprise and Tempur-Pedic are among those meeting with analysts.
    Friday 12

    The final day of the G-20 summit. Brown Brothers Harriman sees a low probability that some sort of coordinated solution to the issue of currency strength will emerge. Marta notes that the meeting’s being hosted by a non-G8 member marks "a significant shift" in the global balance of power. He says a full agreement on implementing the Basel III banking rules is possible.

    Healthcare Services Group and Waste Connections split, 3-for-2.
    Saturday 13
    President Obama meets Japanese Prime Minister Naoto Kan at the meeting of the leaders of the Asia-Pacific Cooperation in Yokohama.


  80. NET $ falling hard here (1.20) here real quick
    see if the market bounces


  81.  Phil, I bought XEC at 79:20 and then sold the Nov 20 $80 calls for $2.09 a few days back.  XEC continues to move up.  Does it make sense to roll the call as the stock moves up or just wait for expiration?


  82. NET $ (1.18) at 12:33, those are the two lowest I have sen since (1.06)% at 3:30 am last night
    oil +.10, gold +20.00
    F =1217.75


  83. palotay – you are essentially selling nflx calls into the excitement while the implied volatility is srtill ape shit


  84. NET $ (1.26)% here, we have been inverse this generally, dx/y =+.25%
     
    if we break down while its falling, something may be up


  85. Cash =1219.53, F =1217.25, F low overnight was 1214.75 watch that are if we break down, see if tit holds, if not may have more lower
     
    yesterday broke overnight low by .25 then bounced


  86. Jomama, But isn’t that offset by having to buy back the calls, when the implied volatility is huge?


  87. PCLN/lvmoda….I like the way you played that.  I’m a fan of short strangles, though I don’t use them too often. 


  88.  mike -
    What are these figures you keep posting "NET $ (1.26)% " what’s that refer to


  89. Hey, Phil,
    In your morning post, you said "we’ll be the ones nervously looking over our shoulders, waiting for the other shoe to drop".
    How the hell do we look over our own shoulders?  Aren’t our heads already on our shoulders?  8)
    Or maybe because the market is at such a dizzy altitude that our heads are flying high in the clouds?
    Pharmboy, are you around?  How about an anime here!
    8)


  90. It is my best estimate of what the dollar is really doing NET against a basket:  Yen, Euro Franc and Yuan.  Last few weeks the dx/y has been misleading.
    just an observation I have had, take for what its worth


  91. Forbes jumps on the socialism bandwagon


  92. And wheeeeeeeeeeeee!  

    CCJ/Barf – Seems safe enough to wait but if CCJ breaks down then maybe pick a long with less delta to cover the callers and get those $17s off the table.  

    CMG/Yodi – I got 12 forks and 20 packets of hot sauce!  

    UNG/Amatta – Well they just got a normal rejection off $6 but without a hurricane, it’s really a 2012 play on the call side now.  If you get to .50, I’d consider cashing out and buying 1/2 the 2012 $6s (now $1.12) to buy more time and you can add to those if they go lower and no need to worry if they keep going up (and you can eventually sell calls).  

    SEC/Amatta – I don’t have a link but conceptually if a stock is halted at 10%, we will have time to take a look and kick the tires and either buy options (if something is so bad they will fall more than 10%) or maybe sell them (if we think it’s going to reverse).  Think how many times you see a big, stupid move in something and say – "Gee, I wish I had caught that."  Now they will catch it for us and halt trading.  This includes biotechs that get decisions and stocks that are getting bought out – think of that opportunity!

    IWM/Tusca – No, the IWM is fairly well distributed but yes, the smallest of the 2,000 are certainly under-bought.  As to the coverage.  He has data showing that there are 230M shares sold short on IWM, which seems nutty out of 203M total shares of the ETF but it’s interesting as XRT is 562% short and RTH is 157% short (as of June 30th), which may go a long way to explaining the massive squeeze we had since.  Of course, that was back at the time when I warned everyone to get off the bear bandwagon and go long – it’s 4 months later now and who knows what the current numbers are.  I think the 10 number you heard was that the IWM is one of the top 10 holders of 90% of the Russell components but that’s not exactly shocking as they are over 1/3 of all trading in the Russell too.  On the whole, this study from data on June 30th predicts one mother of a short squeeze coming and they pretty much nailed it – too bad it took them 4 months to write the report!  

    USO/Samz – I think we should get a dip to around $37 but watch that dollar, which is testing $77.50.  

    Thanks JRW!  

    Pixie dust/BDC – I don’t think so but be very happy to see 79.80 and run and you need to roll out if we break 76.50.

    BLK/Mike – Those guys are on quite the buying spree.  

    PCLN/Palotay – Because you may never be offered that kind of premium again.  This is that whole "ALWAYS sell into the initial excitement" thing.  Already the Nov $430s have dropped back to $7 while the Jan $450s are still $16.  Those $430s topped out at $11.20 this morning – people go crazy when a stock is popping!  Of course if PCLN drops with the whole market then the VIX goes up and that offsets some of the longer option price decay but you don’t play games when the VIX is 18 and you are trying to sell premium.  In the very least, keep an eye on your net roll and don’t let it get away from you.  

    Reports/Jrom – I’m not organized enough for a calendar yet.  Big G20 meeting on weekend may strengthen the dollar and that’s all copper needs but it’s a dangerous short – I like the FCX puts safer as it limits the risk there.  

    Wow, great list Samz – thanks!  


  93. Phil,
    Assuming we do get the pullback you are looking for, then do you still see us heading back up after consolidation with the implementation of QE2 and the risk-on trade/reflation scenario or what do you expect? Thanks. The previous explanation was very helpful.


  94. exec / puts

    Just another tool designed to keep this market propped up, so what better time for "them" to have a "flash crash" ?


  95. Samz – is that all happening overnight? I am looking to cover by end of day or tonight, not planning on holding longer than that.


  96. NET $ (1.25)% at 12:53, dx/y = +.26%

    oil (.03)%, gold +20.3


  97. VIX (.44)% could not go back positive at the lows of the day


  98. rainman--thanks for your post to yodi--its very helpful for me


  99. be interesting if thing was going to break and move opposite the NET $, but I would have to see, has been on too close lately
    again I am watching for a quick wosh down to the 1214.75 – 1214.00 on the futures and then a bounce, but may just bounce here
    10yr = +1.48%,  30yr = +1.33% before the auction


  100.  Jromeha -
    It’s not all happening overnight – that was the list for the week from Barron’s – section called "previews" 
    But the China numbers do come out overnight – not sure what time – but by about 10 pm EST – some of Asia is trading 


  101. NET $ (1.16)% here at 1:00, dx/y =+.24%


  102. NET $ (1.24)% at the auction
    C =1220.40, F =1218.00


  103. Lumber futures up 35% over last 3 months, composite "spot" price up 9% (http://www.nahb.org/generic.aspx).  Copper up 48% in 5 months(data.cnbc.com/quotes/HGc1).  XHB homebuilders up 20% over last 2.5 months…something smells fishy…


  104. JR/Flash,
     
    Good point. 
     
    BTW……that gap up on IWM looks tempting.  I couldn’t find another gap in the last year that didn’t close.  I’m tempted to buy a bit of TZA.


  105. ROFL!  SLW CEO says he has no problem buying silver (through acquisitions) at $4 per ounce and that’s all he needs to pay and then the sucker speculators buy it from him for $27 – what a racket!  The CEO was too mellow and the Fast Money girl had to ram the talking points into him.  Wow, now they come back from the break and she totally puts her talking points into his mouth (CEO says he’s getting interest from sophisticated investors thanks to QE2) – that is not at all what he said! 

    XEC/Manta – Well, right now they are just good protection, right?  You can roll them up to the Jan $85s better than even so I’d only get worried if that fails to be the case.  

    Good summary Jo! 

    Dollar right back to where it was yesterday after lunch

    Buying back calls/Palotay – You only do it on callers that have already lost almost all their premium (deep in the money ones). 

    10-year auction didn’t go all that great ($24Bn) at 2.63% with a low (2.8) bid to cover.  So less participation at higher prices.  

    Heads/Cwan – Hey it’s all good if you’re in cash, just an amusing show…

    Forbes/BDC – That’s the last you’ll see of that guy! 

    After/Ac – I think we are still in a weak recovery but we need jobs and nothing is happening to create them in anything like the numbers we need (300K per month minimum).  Between no jobs and an aging population, it’s like termites eating away at the foundation – you may think things are fine until one day it just all collapses.   Based on earnings and adjusting the dollar back, I do think 10,200-10,700 is a fair range for the Dow so it’s not like we’re a mile over but where we are now has too low of an assumption of risk and the risk is out there – once we get over the next hump, perhaps it will be safe to get a bit more aggressive on the next rally. 

    12:00 PM On the hour: Dow -0.31%. 10-yr -0.16%. Euro -0.35% vs. dollar. Crude -0.05% to $87.02. Gold +1.21% to $1420.20.

    01:00 PM On the hour: Dow -0.29%. 10-yr -0.25%. Euro -0.48% vs. dollar. Crude +0.06% to $87.11. Gold +1.37% to $1422.40.

    Life support for oil:  The EIA raises expectations for U.S. fuel consumption and production in its latest monthly outlook. The agency expects WTI crude to average $83/barrel in the winter, and gasoline prices to average $2.84/gallon – $0.19 higher than last winter. Natural gas inventories have matched the records of a year ago. Crude futures flat at $87.04; natgas +1% to $4.128.

    Three lunchtime reads:
    1) Why call them hedge funds if they don’t hedge?
    2) Three firms whose buyback ‘yields’ top 10%
    3) Mini flash crashes still spook markets
     


  106. ASTM/BDC – interesting take on using stem cells.  Don’t know enough about the technology, and the run up is very impressive.  No options, so I would scale in appropriately.


  107. TZA Dec $18 puts can be sold for $1 and that helps pay for the Nov $18/20 bull call spread at $1.15 for net .15 on the $2 spread that’s $1.73 in the money at the moment.  


  108. New low here NET $ (1.69)% at 1:22, dx/y = +.34%


  109. SRS rally!!!


  110. PHIL/Dollar Cartoon - Low budget cartoon makes it even more funny…http://www.thereformedbroker.com/wp-content/uploads/2009/10/dollar-stocks-1024×539.jpg


  111. oops, :) forgot the smiley face. what a moron.


  112.  TBT is going parabolic – guess the 10 year auction finally made people nervous???


  113. NET $ (1.42)% at 1:30, traders coming back from lunch next 10-15 min


  114. Yodi- hahaha yeah, I took a bunch of their napkins too! I brought my lunch over from 5 guys’ burgers and used all CMGs condiments :) .
    Phil – great call on the copper short! Made a quick 500 off that contract!


  115. Here comes the overnight Futures low area of 1214.75


  116. CMG … I have been telling customers to watch for rat droppings …
    :grin:


  117. NET % (1.03)% at 1:40, so well off that extreme of (1.69)%, 11:40 time was (.34)% maybe a target, not sure
    here is that break of the overnight F low of 1214.75


  118. just sitting here at the slight break of overnight futures lows
     
    we broke FRI and MON by .25-.50 and bounced, see what happens here


  119. NET $ (.97)% at 12:46, dx/y = +.29%


  120. Same CBOE Put/Call ratio pattern as yesterday, except the ratio is higher today.


  121. NET $ (1.06)% first move back lower since the 1:40 time


  122. Phil

    From a while back – as a disaster hedge I have the SDS Dec 31 Puts short, with SDS Mar11 27′s long and Mar 33′s short. What adjustment can I make here? Thanks!


  123. dropping again NET $ (1.44)% at 1:55, dx/y = +.43%


  124. NET $ (1.58)%, the low I observed was (1.69)% see if we take it out
    dx/y = +.48%


  125.  I think based on Phil’s comments in the last days, the way the market looks and how the dollar is fighting that $76 line, I think we might be a bit toppy. Anyway, with all this blatant manipulation and free money from the Fed you never know how long this craziness will continue. One point to make is that I have lots of short calls (either naked or some of them full covered at higher prices and longer term, etc) in order to get the PREMIUM. At this point to me, based on what I just said, it’s still all about the premium on the TOP side of the range, because the VIX is so low the premiums are really bad in many of the stocks. Unless I feel that we are really on the cusp of an uptrending market for a long time, my plays are constantly adjusted to move them from being in the money (specially the short calls) to out of the money, by rolling them and extending them on time. When I don’t have any more premium left at this point, EVEN THOUGH I might feel that we might have a pullback, I’d rather roll them now further out in time and get them back to pure premium, to the most possible extent. Sometimes I end up paying a bit of money so I can roll them, but I intend to make TIME to work to MY ADVANTAGE at all times.. I still don’t feel going long on many companies is the wise thing to do, which coincides with Phil’s current thinking. Having said that, I’m taking some temporary loses so I can adjust my positions up and get them back to premium.. 
    The only one where I can’t do that just yet is my dreaded CMG, but I need to be patient on that one and I’m trying to sell some short puts (1/2 of my full short calls position) so that I can manage some gains in order to roll later. Let’s see what happens but until I see some negative news coming out of the company, the analysts or the industry for CMG, I don’t see them pulling back much.


  126. if we hold (1.69)% again, we may bounce higher on the dollar for the day

    oil (.46)%

    above 77.76 on the dx/y and things could get interesting s ParSar trend reversal to positve their
     


  127. Phil, things are getting confusing for me. Trading in a low VIX environment is becoming challenging. Selling premium is definitely not as profitable and most of my favorites have run up so much that I don’t see a point in getting involved again. I made over 70% getting involved in GE, SLB, NE, F back in  September shorting Jan 2011 puts but closed all my positions (you know 1 bird in hand…) as they have all run up. I also got involved in VLO when it was around $17 (I am still in 2012 options – patience there), but it’s up almost 20% already since then. To me, the VIX should be called the Complacency Index, not the Fear Index! It’s at the lowest when the market are at the highest and at the highest when the market are at their lowest. Buying protection when the market has lost 20% makes so much sense!
    In any case, what kind of trades make sense in a low volatility environment? Selling calls in stocks like CMG and PCLN feel to me like jumping in front of a bus! I have to remember that the price of the stock is not what I think it is worth, but what other people are willing to pay for it. And apparently, enough people think that a 100 P/E is OK for these businesses. Irrational, but what is not right now.  I guess cash is good until there is more clarity! Thanks.


  128.  I’m however stuck with some SDS Jan $29 short puts.. those were part of a hedge we did back when the SP was about to break 1,040 down. It didn’t, and now they are way in the money with a big loss for me. I don’t know either to stop this or wait until January for the SP 500 to reflect a better reality.. anyway, I am not so sure that we might be able to see SP hitting 1,040 in a long time. Phil, what do you recommend I do with this position which is no longer protecting much at this point? I don’t want to incur such a big loss. Thx


  129. NET $ (1.67)% at 2:07
    C =1216.81, F =1214.25


  130. JRW/TNA - ran TZA from 19.39 to 20.04 (almost flushed @ 13:05!)…now in TNA @ 58.73 but I’m not seeing the typical "double-tap" retest of IWM 72.97 or strong conformation through the 8ema…thinking TNA might fail here, your thoughts?


  131. new NET $ low of (1.89)% just my observation


  132. Pharm – what do you think ARNA is worth right now? It is at 1.5 right now and you can sell the Dec 1.5 calls for .2-.25. How much lower do you see it falling? Seems like a pretty save way to make 6.5%-8.2% a month……


  133. SEC RULES, 
    I still don’t see how we can take advantage of the 10% rule. The OPTIONS themselves will be reflecting what other traders are thinking the stock will do, so it would already be baked in there, no?


  134. Pharm – Sorry, things are crazy today and evidently I cannot spell and am omitting alot. On the last sentence I meant a buy/write seems like a pretty safe way to make 6-8% a month off of ARNA (providing you think that they will not go much lower than $1.5..


  135. JRW - decending IWM "tops" trend line was not broken @ IWM 73.22 on my screen…could be another head fake before the next leg down…


  136.  Look at the LVLT daily chart about 1:30pm today….flash crash???? Around confirmation that they would replace AKAM as Netflix streamer.  Pretty scary!!


  137. Phil:
    On the FCX short, are you just looking for the price of copper to break back below $4 and then get out. In other words a quick 20% and out. Or is it worth holding on to for more? Thank you.


  138. goldman

    All they have to do is to get past IWM 73.27; AND it’s 2:30 !! 


  139. Phil, 
    On your UNG recommendation, so I leave the Put side alone and the 8 Callers… and roll to (buy 1/2) the 2012 6 Calls? 
    Thanks


  140.  Phil:   What would you recommend for the extra short/naked Nov 128′s?  roll to Jan 131 or further up or out?, sell some puts?  TIA
    10 GLD 120121C120 Long
    10 GLD 120121C145 Short
    5   GLD 101120c128 Short


  141. BXP failed!

    TZA/Exec – good call by they way!

    Low budget is right, Goldman.  

    TBT/Samz – Lack of direct bidders.  More and more Ben is the only customer at the window.  

    That’s $1 on the oil futures!  Anything after this is pure greed.  Best hope they just pump it back up in the morning so we can take another whack at it .  

    Copper/Jrom – finally!  Thanks for chipping in on CMG.  We WILL take those bastards down!!! 

    Holy cow, poor gold!  

    Rat droppings/Cap – Man, you always have to go too far.  Reminds me of that South Park where Cartman gets revenge against Scott Tenorman, I was laughing my ass off and the kids said what’s so funny and I couldn’t tell them… 

    SDS/Deano – Ouch on those!  Well, it’s worth $1 to roll the $27s down to the $24s but not worth $1 to buy back the callers.  As to the puts, they have no premium at $5.25 so you can roll them to the March $29 puts at $4.95 but no real hurry as long as it’s a more or less even roll.  Since the bull call is a free play, paid for by the short put – the most important thing in this trade is to make sure that put eventually expires worthless.  

    Good plan Rav but, if we do break higher, just make sure you do have a nice upside hedge to cover an inflationary move higher.  

    Dollar getting interesting over the 77.50 mark.  Yen at 81.50, Euro $1.38 and Pound $1.60.  If the Pound fails the line and the Yen makes 82, we could see 78 and that will force some fun short covering in the dollar.  

    SDS/Deano – Same deal, just look ahead and try to gain $2 for a 3-month roll.  If you gain $2 4 times a year that takes you to $21, then $13, then $5 – at some point you would think the S&P might pull back, right?  

    02:00 PM On the hour: Dow -0.47%. 10-yr -0.44%. Euro -0.7% vs. dollar. Crude -0.53% to $86.60. Gold -0.07% to $1402.20.

    The Treasury sells $24B in 10-year notes at 2.636% (.pdf), lower than expected. Bid-to-cover ratio of 2.8; indirect bidders take 56.6%. Direct bidders take 9.4%. Treasurys cut back on losses; the 30-year yield +0.07 to 4.19%; 10-year +0.04 to 2.59%; 5-year +0.06 to 1.18%; 2-year +0.02 to 0.415%. 

    Things have gone pretty well for silver longs since Bernanke spoke in Jackson Hole – now the metal’s gone "not parabolic, but asymptotic," up 5.6% to $29. Other metals: Gold +1.4%, copper +2.1%, platinum +1.8%, palladium +4.1%.

    It’s good to be the king:  Goldman Sachs (GS -0.4%) reaped more than $75M in trading revenue on 31 separate days in Q3 and tallied just two down days, totaling $3.77B in revenue – impressive, but not perfect. Bank of America (BAC -1.7%) and JPMorgan Chase (JPM -1.1%) racked up perfect trading records for the second time this year, making money every day last quarter.  That’s a $200M per day avg profit for GS!  

     


  142. JRW – great point on "2:30"…although I’ve noticed the sticks have started later in the day this last week, plus/minus a few minutes around 3:00.  If we fail the 50sma here, I’m out on TNA…right now we are riding the decending 50 down…


  143.  Phil, for the upside hedge in case we break higher, what is the line here? I don’t want to make the same mistake I did with the way down with SDS, where I entered the hedge right at 1,040 in case we break lower.. just to see we didn’t and now I’m stuck with short puts on SDS. When is the right time for the upside? I’m willing to wait a bit until we get the confirmation of this break indeed happening and confirmed.


  144. NET $ (1.91)% at 2:30 new low as oil closes
     


  145. goldman

    Either we break higher here, or I’m out as well (73.18); but it looks like IWM 73.70 or better at the close right now !!


  146. JRW – TNA is starting to break the top of the decending channel that started @ 10:10…need to break through 73.22 with some real conviction!


  147. sold too many TLT puts. short Nov 98 p at .7 and Nov 100 p at 1.3 (now 1.90 and 3.6) own half cover Dec102p  at 4. what do you recommend. Thanks


  148. JRW - Agreed…IWM 70.80 is current R1…don’t see us blowing past that easily….plus looking messy at 73.53, and the dollar isn’t getting weaker yet, but the VIX is in freefall as of the last few minutes…


  149. Ratings on U.S. Treasuries Cut in China:
      http://www.thestreet.com/story/10916594/1/ratings-on-us-treasuries-cut-in-china.html
    I hope this isn’t a double post.


  150. NET $ (1.74)% at 2:45
     
    C =1218.97, F =1216.75
     
    I have run, take care all



  151. Hey all,

    I have my new China Automotive Longterm Ratings Report available now. We are starting this one as Buy with FV estimate at $24 per share.

    Check out our thesis, valuation, risk assessment, management rating, and much more here!

    Good Investing!


  152.  cute little flash crash on LVLT
    1:31 = $1.05
    1:33=  $0.49
    1:40 = $1.10
    vol in 10min. = apprx 13m
    avg day vol. = 11m


  153. JRW – you said you’re in at 73.18, how much lower below that will you let it fall until you bail? Thx


  154. JRW - TNA broke my 50sma…in cash currently, not TZA as there is a good chance I got flushed.  Although I’m seeing some other large players getting into TZA around 19.82 to 19.85  .I’ve watched the triples so long now, it’s like the matrix as I see "11,000 guy", "10,000 guy", 21,145 guy", etc make their moves…although "10,000 share guys" if often my contrarian tell…LOL!  I’m like you, I change my order size constantly!


  155. Advantage/Amatta – Not to be egotistical but we do try to be a little smarter than "other traders."

    FCX/DClark – When in doubt, sell half!!!  This market has punished all bears regularly so best to take profits early and often on the short side.  My general feeling on short plays is, if they go against us, then I don’t mind riding them out but if we get a quick win – we like the cash…

    UNG/Amatta – Yes but be alert because, if they go over $7, you’ll want to add more longs to cover those $8 callers.  

    GLD/Red – I’m not a big fan of these overselling plays but there’s not much sense in moving them now if gold is topping out.  Franly, I’d take money and run on the Jan $120s ($18) and you can cover with 10 2012 $150s at $11 and just add 5 more if GLD breaks $140 and then you’ll be rolling the callers along for a while but the Jan $128s ($11.20) can roll to the March $132s ($10.30) for $1 and, if the $145s expire worthless, you’ll be free to do a 2x roll on that caller.

    Upside line/Rav – I’d use 1,220 on the S&P as the momentum line for an upside play.  The right time is any time you get a good spot (and 1,220 should be in line with 11,400 on the Dow and 7,750 on NYSE so lots to watch) to draw a line and play off it

    TLT/Drum – I recommend not doing the opposite of what we were doing (shorting TLT at $105).  Anyway, it’s just a matter of rolling them down (in strike) and out in time until you get a bounce.  If they don’t hold 96.50 though, you may want a little more cover!  Nov $98 puts are $2.05 and can be rolled to Jan $94, which is a pretty big move in TLT in normal circumstances and, don’t forget, you can always sell Jan $100 calls for $1.10 to provide some buffer.  

    Ratings/HHF – Good catch, thanks!  Well folks, we are officially no longer the World leaders as it seems that now Chinese credit agencies can push our market around.  Now we know how the rest of the World feels when they are terrorized by Moody’s et al….

    The Dagong Global Credit Rating Co. just dropped the U.S. to A+ from AA following the Federal Reserve announcement it will buy $600 billion in U.S. Treasuries, The Wall Street Journal reported Tuesday.

    "The credit crisis is far from over in the United States and the U.S. economy will be back in a long-term recession," the Dagong report states, according to the newspaper.
     
    While Moody’s Investors Service(MCO_) andThe McGraw Hill Cos(MHP_)’ Standard & Poor’s both give the U.S. a triple-A rating, they have begun raising concerns about rising debt levels.
     
    Still, it is not a stretch to imagine politics are also at play in the Dagong report. Chinese government officials have been sharply critical of the U.S. efforts to devalue the dollar, which hurt Chinese exports.

  156. jromeha/IWM 73.18 - that was not where JRW entered, it was were he is thinking about bailing.  He probably got in around 58.65-58.85 range.


  157. ravalos
     
    CMG, did you not check the messages some people swiping chili , folks and napkins, others find mice droppings in the restaurant, I had a cockroach between my taco, How long do you still think they holding out ????


  158. NFLX discovers gravity!


  159. Goldman – Yes, I understood that wasnt where he entered, but I was curious at what price below 73.18 he was going to bail at.


  160. Capt.

    goldman is correct; I’m out of TNA now! IWM 73.18 was my tell !!


  161. Phil/NFLX – would that be lunar gravity or Jupiter?


  162. Phil
    Only your PCLN is flighing high 35$ in one day how long do you think they will stay that way. I am to scared to do a paper trade on this one


  163. JRW - IWM back in channel.  And hats off to "11,000 share guy"…I should have followed him in as the VIX did  a reversal at the same moment…grrr


  164. We really flighing low now scaling in some DIA Nov 113p short at .95 to 1.00


  165. JRW – thanks for the clarification. I guess I just focused on the "but it looks like IWM 73.70 or better at the close right now !!" comment and didnt know how long you were waiting/how much lower you would let IWM fall before you bailed. Shouldve told you and Goldman that I went long /TF right at 730.5 shortly after your comment then you both couldve done the opposite and made some money!!!!


  166.  Phil:  thanks for the advice on my GLD play, but re: your comment " I’m not a big fan of these overselling plays " when I go back to the video to check it turns out that  was your recommendation.  I still love ya man  :)


  167. Phil / NFLX – it is sad, though, that we are claiming NFLX has discovered gravity when it is only up $1, instead of the $5 it was up for no reason this morning….(well, worse then that, it was up i guess because it was dumping AKAM and moving to other providers….which implies they have problems with their data, which is not very positive for the scalability of their model). Really, it should have gone down…Oh well.


  168. jromeha – careful going short also as "they" will fight tooth and nail at SP1214.77 (S2)…


  169.  NFLX if I had known they had discovered gravity I never would have shorted them :(


  170. jromeha – see the size of those "green hammers" on IWM just now…with the second doubling in size to red in defeat (the "Red Sledge"?  I’ve got all kind of goofy terms…=D


  171. Back in TNA at $58.10 average !!


  172. Wow, impressive break down but crappy volume for a turning point.
     
    redlog / gravity — :-)


  173. JRW -   I missed my first $57.88 target.  Nice entry!


  174. NFLX/Goldman – I’m going for Mars (0.6 Earth’s).  

    PCLN/Yodi – They can stay up for a while but next earnings should do them in.  

    GLD/Red – What did I pick?  Sometimes I can’t see what I was thinking at the time, like that PCLN play selling the naked calls to pay for the puts.  It makes sense but is riskier than usually like so I need to reconstruct my logic at the time….

    NFLX/Hanna – Hey, anything not up and up is gravity, right?

    Wheeeee!  Oil $86.10, selling after the close.  Copper $3.97, gold $1,392, Dollar 77.865 – so glad we waited on gold plays but good to have them ready.  

    Volume not a big deal at all at 109M at 3:33 so could still get a stick to save the close.  


  175. No tickee, no stickee !


  176. On the hour: Dow -0.33%. 10-yr -0.65%. Euro -0.69% vs. dollar. Crude -0.46% to $86.66. Gold -0.08% to $1402.10.

    Reality bites: The Ceridian-UCLA Pulse of Commerce Index, a measure of the flow of U.S. goods via over-the-road trucking, fell 0.6% in October for its third straight decline. The negative month-over-month trajectory for October, typically a peak month for America’s trucking industry, may foreshadow a disappointing holiday season, the report says.

    Speaking of companies that don’t pay taxes:  Ambac (ABKsues the U.S. to block seizure of $700M of tax refunds that it says could destroy its ability to reorganize in bankruptcy court (earlier). Ambac seeks a court order letting it keep the refunds, declaring it has no tax liability from 2003 to 2008. 

    While Congress is trying to end the belief that the government will always save too-big-to-fail financial institutions, the institutions are realizing that they may be able to win the same support by internationalizing their operations – in effect, too international to fail – Simon Johnson argues. 

    Andrew Ross Sorkin asks if the SEC has bungled its disclosure rules after recent disclosures from the likes of Microsoft (MSFT) and Google (GOOG) that may have given a few savvy investors an edge. Vaguely worded guidance allows companies to publish market-moving news directly on their own websites without requiring wider distribution. 


  177. lost the rut, can we get it back before close


  178. Well, that didn’t work out too well !! Out of TNA at $58.30 ave.


  179.  Yodi/CMG LOL!!


  180.  Wow, look how valuable our sideline cash is getting!  8-)


  181. SP 1207.75 is S3….and the VIX is on fire…


  182. hmm why no stick?
     
    today, i bet on it….


  183.  Yodi/CMG, wow, that boycott is actually working! :D


  184.  Phil,
    Are you liking FAS for tomorrow? It took a big dump today. Or do we wait for another day for a sympathy rally?


  185. Ravalos I am telling you we after them


  186. Stronger dollar plus CME margin change =  silver sell-off
    SLW off $5 from its high today
    http://www.zerohedge.com/article/pm-selloff-reason-cme-raise-margin-requirements-silver-5000-6500


  187. they are fighting hard to keep NFLX green


  188. Rode weekly SPY 121 Puts from 0.49 to 0.62 in the last 30 minutes.  Saw dollar strengthening and needed a quick play, remembered you played these last week for a quick hitter, so borrowed the idea, just changed the strike.


  189. Oil $85.70!  Wow!  

    Amazingly, Nat gas holding that $4.20 line. 

    Dollar touched 78, this is going to freak Asia out this evening as I’m pretty sure EVERYONE was on the other side of this bet. 

    XLF heading for $15.  

    FAS/Praiz – Nope, let them show us something at $15 but $14.50 is the real test.  

    LOL – it’s like the ride is stopping at Disney….


  190. Guess I bailed too early, but 26% in 17 minutes seemed pretty good….oh well….


  191.  I’ve been out of touch for awhile as life has thrown some challenges at me the last month that has greatly limited any time I can devote to trading.  My blogging at “the plot” has been sporadic, in part because I moved to mostly cash, since I didn’t have time to trade. 
     
    It is with great regret that I am going to go off the list at the end of the month.  I’m writing in part to say thank you to Phil and many of you’re here at PSW that have greatly enriched my knowledge on investing, economics and many other things over the past 6 months.  This is a great trading community and I have enjoyed being a part of it.  As my life has recently changed with added responsibilities for family and work, I find I cannot participate or even read everything and I can’t justify the expense if I can’t use the great information.   
     
    I also discovered one of my major flaws as an investor (and perhaps as a person) which is impatience and too much emotion in my investing.  I was finding myself jumping into short term trades and losing all the gains I made on solid long-term investments.  As my role at work has changed, I barely have time to look at the market over lunch, and reading about you pros raking in the bucks is a little demoralizing to midnight cowboys like me who squeeze in investing just before bedtime or over 6 AM coffee.  I found myself making better decisions shutting out the noise and using my time to read books to expand my knowledge about how things work (I’ve been absorbing Augen and “This Time It’s Different” and back posting by Phil.)   What I learned here the last six months has been invaluable, but made me too susceptible to wanting to day trade, and kept the market too much in my head.  I found myself sometimes overwhelmed trying to outsmart the market part-time.  Ironically, Phil’s pounding the table to stay long-term focused is a part of my change in direction.
     
    I do plan to keep my blog at “the plot” going in some form, though I think I tried to run it too much as a trading newsletter with trade alerts and analysis.  I think I will refocus on the psychology of investing, trading styles and the trials of a part-time retail trader trying to save his IRA.  I hope those of you who read it and comment will check in from time to time.  I’d hate to lose touch.
     
    I looked at my plan to invest through monthly covered calls for a year as a bit of a useful failure.  I realized that even though I have an 85% trade success rate, I wasn’t making very much money.  My best trades were capped and called out, and my losers “swamped the boat.”  I think money can be made this way, but you have to be cautious, very disciplined and spend loads of time analyzing things.  I found it an exhausting way to make money, and could probably make more per hour with my account size working at McDonalds instead of trading.  I enjoy investing, but it is not a good business to run it this way. 
     
    Now I am reinvigorated and putting a new plan together, using much of what I have learned here, and adapting it for IRAs, where the rules on naked puts greatly limit the profit from so many success PSW strategies.  This is getting to be a long note, so I will post details as I get more clarity.  In short, I am moving to a strategy based on collars and married puts as my base trades, with lots a little improvizations to pull income out of the trade to pay for the puts.  It allows me to be a long-term investor and not need to worry about what happens during the day.  So “the plot” will live on, but with innovations. 
     
     


  192.  Phil:  GLD  Back on Sept 1 GLD was around 120 when you suggested the spread with extra calls, perhaps instead of selling puts?  In any case I think you misread the dates of my positions.  If GLD keeps heading down like the last two hours those naked callers will look like genius:)

    10 GLD 120121C120 Long
    10 GLD 120121C145 Short
    5   GLD 101120c128 Short


  193. JRW - your 72.44 line held, got in @ 57.28 average, THANKS, did not have that level at all!  Out for $0.70…


  194. Boy that was fun! Can we do it again? Huh, huh? Can we, can we? It’s nice to finally have some orders firing off instead of being half asleep the entire day.


  195. Good job Hoss!  That’s the key, just learn to grab those when you need ‘em…

    Back to our original entry numbers on ABX, good time to hit that one as an upside play

    Take care RevTodd – Let Greg know any time you want to come back and he’ll make sure you keep the discount rate.  Part of the reason we stress paper trading is that it’s very important to learn what kind of trader you are.  You need to find the strategies that fit your temperament – that is key to long-term success.  Also, as you noted, long-term trading needs to be the backbone of a portfolio – short-term trading is for fun money, not retirement money!  

    GLD/Red – Well it’s friggin’ BRILLIANT if gold goes down but I did want you to get those $120 calls off the table earlier (did you see that comment?).

    LOL Rain – Yeah, about time we had a little bearish fun. 


  196. rut made it back by the hair of it’s chin


  197. rev, I wish you the best in your endeavors! It was nice getting to know you the little that I did and I hope our paths cross one day in the future.


  198. JRW - thanks for the input today…can’t tell you how much confidence it instills for someone still learning to day trade!  So where do I send your fee…=D


  199. rev,
    God bless your ministry. See you on the other side, brother.


  200. HERO – getting some respect this week.


  201.  revtodd:  If I had a productive skill and could do work that benefited others like you I would much prefer to do that.  Keep up the good fight and ultimately you’ll get your just rewards.  peace


  202. This is very interesting.  Now they have WSJ commentators quoting Sarah Palin on monetary policy BEFORE she even makes the speech (which is the only way to make is seem like she knows what she’s talking about).  Is this the first step towards shaping the Palin 2012 ticket?  Do the Republicans really want to throw another election???

     ABX with a fine recovery at the bell!  Gold, not so much, finishing at $1,391.  


  203. Rev – what you are doing is inspiring. Many blessings on you.


  204. Anybody know what is up with JAG? I initiated trades to do the spread and while I bought the shares and sold the puts they fell off a cliff (down 7%) never getting a chance to sell the calls… 


  205. David / CAAS — Thanks for the heads up on that one, I’m playing along short term: CAAS @ 15.84, sold Dec 15 calls for 1.60 and the puts for .95. That should turn out a 12.9% profit in 6 weeks if CAAS can hold 15, otherwise I’m in at $14.15


  206. revtodd,
    In a way I am surprised about your statement. Specially watching the way you anylized your buy/writes. rainman and myself just discussed this type of play today. I followed various of your plays and I must say either the stock exceeded my purchase price or I got called away, even if I was assigned I could only add to the profits. I found one or two tades just paid for the membership, just about the only site I can say I am happy to pay for, as besides the funny political hogwash, the info ist first class and unreplacible. Even that I have a resonable size of a portfolio, my plays are normally limited to 2, 3, 5, sometimes but seldom 10 per order. Yes I spend most of the trading day on the sceen, but if I have to go out I close down the computer and the plays do not run away. So in a way  am very sorry you are leaving us. But every person has some direction in life and I wish you well what ever you are doing. Good luck. 


  207. Phil - Bow down to your future wonk…Sarah Palin: Monetary Policy Wonk
     http://blogs.wsj.com/marketbeat/2010/11/09/sarah-palin-monetary-policy-wonk/


  208. RevTodd, Good luck and we thank you for all the hard work you put into this. 


  209. Wow, that was a SICK move with oil!!! Tried to buy at 85.56 but trading off the iPhone is slooooooooooow.:(


  210. jromeha / sick — that was just Phil buying back his shorts 8-)


  211. Best of luck Rev, we’ll miss you! You definitely added to the psw family!


  212. TBT is finanly behaving how I wouldn’t it too.
     
    Good stuff.


  213. All the best, RevTodd – and I will keep hanging out at the Plot.


  214. … wanted it too ….


  215. Revv, 
    I have experienced many of the things you post on your note. I am struggling as well with figuring out how to be a savvy long term investor and still wring out profits month to month from the market.
    In any case I wish you luck on your endeavor. What is the URL?


  216.  Small government NJ Gov. Christie:
    The Justice Department Inspector General released a report yesterday showing that a select number of U.S. Attorneys sought reimbursement above government lodging rates. At the top of the worst offenders list: New Jersey Gov. Chris Christie (R), who was U.S. Attorney from 2002 to 2008.


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    Freddie says they are broke
    http://www.mainstreet.com/article/moneyinvesting/news/freddie-mac-tells-fed-we-re-broke


  218. not sure what I did wrong there, I must have posted wrong is a Freddie story

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    ttp://www.mainstreet.com/article/moneyinvesting/news/freddie-mac-tells-fed-we-re-broke


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    UPDATE 2-China ratings agency downgrades U.S. after Fed move
    http://www.reuters.com/article/idINN0910242920101109?


  220.  Good luck Rev… 


  221. ok I will post no more, till I find out what is wrong, my apologies


  222.  Best advice from Nouriel Roubini!
    Spam is a better hedge against inflation than gold: you can eat it and it lasts 1000 years. Gold is, as Keynes aptly said, a barbarous relic


  223. More about gold….
    I’ve never really understood the obsession that end-of-the-worlders have with gold. Canned goods, sure. Guns and ammo, sure. But gold? If the country collapses and my bomb shelter is full of food and medicine and electric generators, do you think I’m going to trade any of that stuff to you in return for a few Krugerrands? What kind of idiot do you think I am? 


  224. And finally, some comments about the Germany and China hysteria about QE2:

    This is just crazy. Exporting countries like China and Germany have relied on the United States as the ultimate consumer nation for years. The whole world has. And everyone knows this is unsustainable. Schäuble calls it a "deep crisis" and he’s right.
    But they’re addicted to it every bit as much as we are, which is why they go nuts when we take (extremely modest) measures to weaken the dollar in an effort to get our trade balance just a bit more balanced. So they need to make up their minds. Do they think America can run trade deficits forever? Or do they think we need to get our trade house into some semblance of order? If it’s the latter, do they think we should start doing it now, or should it always be put off until "someday"? What exactly do they want?

    Trade deficits can’t last forever. Period. The only question is whether America’s trade deficit goes away slowly and steadily, or if it goes away all at once during some kind of global panic. The rest of the world, to judge by their hysteria over the Fed’s actions, is willing to risk the panic as long as it happens sometime in the future and mostly affects us. I’m not. 



  225. Good luck Revtodd …
     
    Palin – Monetary Policy Wonk …. hah.  She is simply vocalizing what we all know and oppose which is Fed’s bankster policies and QE-2.  Good to see Phil agrees w/ Palin !  Ha Ha.
    I suppose some of you will soon be chearleading QE2 just b/c Palin is now speaking out on it ?!
    Remember, we, here, were ahead of that curve anyway.
     
    Maybe Sarah reads this blog and can see NJ (and Phil) from her house !
     
    And in case you were wondering, I think it would be a disaster for Republicans if Palin were Prez candidate in 2012.  I don’t think it has any chance of happening.  Even I would not vote for her.  But I would not vote for O either (i won’t eat green eggs and ham, cap I am).
    Although she is performing a useful function in calling out wrongheaded policies in a way that most opposition politicians, particulary those in office, are afraid to do.


  226. Wow, you wouldnt vote for Palin!? Well at least you have SOME standards Cap! I hope she doesnt win the nomination either. Im counting on Romney winning the nomination so Gel can donate 1 grand to my kids college fund (when he loses to Obama of course!)  :)


  227. jrohema — clearly I have very low standards, given the views of some of the folks that I cavort with here ….
    :wink:


  228. hahaha. Cap, been meaning to ask you, what do you do? Fulltime trader? What did you do before trading? Just curious.


  229. Revtodd—wishing you all the best--tx very much for all the postings--will definitely keep in touch on your site


  230. jromeha, 
    If I may ask, where do you trade futures (I assume that is what you meant with buying gold) that has an iphone platform? 


  231.  Phil, 
    What is the play on ABX? 
    Thanks


  232. stjean, great points on gold

    RIMM is done for, they haven’t got the money to burn and if someone doesn’t take them out they are going to need to come up with funds..sell shares at a much lower price IMHO..
    AT&T has slashed the price of the new RIM BlackBerry Torch in half today, just two months after its launch. The price is now $99.99 directly from the carrier, with a two-year contract. Without contract the smartphone sells for $500


  233.  Revtodd
    Thank you -- Will miss the help you have given those of us already in retirement trying to stretch their IRA’s.
    I’m sure your work helping others will be rewarded many times over what you would have gained trying to scratch a few bucks from wall street’s den of thieves. 
    My wife has been in teaching and administration her whole career and although monetary rewards were limited she has led a much more joyful and satisfying life filled with the personal rewards of helping so many children establish a start in life.


  234. Amatta – I trade on Thinkorswim (TOS). By FAR the best trading site Ive ever been on (although I only used Scottrade and USAA  brokerage before TOS)


  235. Ok…. today was a travel day for me… so missed the action.  Will reply to the thoughts presented by stjeanluc regarding gold….. If you are trading  equity shares or option positions, you are doing so for the opportunity to close out those positions at a later date for a profit. The same goes for gold – you are speculating the price will move in one direction or another and you will profit from the directional move.
    Gold ( bullion) is no longer a commodity that has strictly commercial use – it has evolved into currency status. When the currencies of the world become worthless because of dilution, then sovereign governbments and prudent folks attempt to hold a substitute fiat currency that can not be replicated or diluted. Physical gold in its various forms is the currency of choice, as the supply is relatively static and is accepted by most as a symbol of value that can be exchanged for antthing of value. This why the price is excalating, as more and more folks do no longer have confidence of the fiat currencies retaining value.Gold, as priced in US Dollars will in the near future be trading at $2500. per troy ounce. Gold is the last currency that has sustainable value. Given the fundamentals that are in play today, that surely are a catalyst for an appreciation in value against a paper currency that is in dilution mode, why would anybody want to short Gold ?


  236. jromeha
     
    I know you are concerned about that bet we have, and the prospects of losing it… so I’ll help with a new currency recommendation -
     
    Sell the EUR / SGD with an entry near 1.78. Set your stop loss at 1.82, and take profit at 1.69. The play is on the weakening Euro because of surfacing debt problems, and of course, the ultra strong Singapore Dollar.


  237. Phil
     
    I recently read someplace where an analyst has predicted AMZN to have a 40% increase in revenue for the quarter which includes the Christmas season…. have you seen this, or do you think it could be realistic ?


  238. Thank you Gel :) , but stupid TOS doesnt support trading the SGD…. Would you recommend any other pairing with the Euro? Maybe another one of the exporting currencies? Aussie, New Zealand,Canadian, Malaysian, Norwegian, Thai, Turkish, or South African currencies against the Euro? And for the record Im not concerned :) although Im definitely one of the lower income earners on here, by the time the election rolls around I’ll be enjoying a nice 365 day vacation courtesy of your main man GWB to one of the world’s "hotspots" :) . Although the vacation might suck, the financial gain (tax free income, hazardous duty pay, family seperation, +money saved from food, phone bill, etc) should equal a 30K+ raise. SO, on the 1% chance that I lose that bet, I will have a decent amount saved to pay you with.


  239. How hackers can help us defeat Wall Street http://www.marketwatch.com/story/how-hackers-can-help-us-defeat-wall-street-2010-11-08
    Fortunately there is a new frontier for hackers. America needs help now. Hackers love a challenge. Examples: Hackers could expose secret agreements between Wall Street’s co-conspirators, back-room deals with politicians and bureaucrats, lobbying payments and illegal campaign contributions, especially from foreign governments, encrypted emails, side dealings with short-sellers on derivatives, quant trading algorithms, return on investment, fee and compensation schedules, marketing scams manipulating the public, and all unethical or criminal plans.


  240. Home values down for 17th straight quarter: report http://www.marketwatch.com/story/home-values-down-for-17th-straight-quarter-report-2010-11-10
    WASHINGTON (MarketWatch) — U.S. home values fell 4.3% in the third quarter of 2010 compared to the same period in 2009, marking the 17th consecutive quarterly decline, according to a report from the online real estate firm Zillow.com. The length and severity of the current downturn is unprecedented since the Great Depression, with home values 25% below their 2006 peak, the report said. The Zillow Home Value Index, down 1.2% from the second quarter, reached $179,900. Of single-family homeowners with mortgages, 23.2% were underwater, the highest since Zillow began tracking negative equity in 2009.


  241. @Why anyone would want to short gold:
    The only REAL money that can be made by savvy participants is thru a FLUCTUATING price point. 
    Query: Can you make more money, a lot more, for the same investment dollars by buying AAPL at 300 and holding it until it reaches 400 a year from now,  or can you likely quintuple your profits by trading on its ups and downs, 100 times, between now and November 2011?
    That should explain why anyone would want to short a stock, gold, silver or anything else.
    And as long manipulators have been around, that has been MO of the big money and all other traders.
    And if you don’t think the markets are manipulated then why are you on this board?  Phil Davis knows that this is the case and has made many of us a good deal of money for our subscription price.


  242. Good morning!

    Dollar was down to 77.5 again overnight, hit 78 again just after 6 and is now (6:20) going down fast to goosed the futures.  Japan was very happy to get the Yen down to 82 and it’s the Pound, not the Yen, that’s pushing the Dollar down this morning.  

    Nat gas is $4.22 again but copper hasn’t gotten $4 back yet ($3.98), gold is $1,398 and oil is 86.42 after running to 87 so a nice rejection there if you are short ahead of inventory.  

    JAG/Amatta – Just part of the general commodity sell-off I think.  Earnings are out but not very exciting.  I think these guys are very lucky gold is at $1,400 or things would not look so pretty for them.  

    Palin/Goldman – I know, I commented on that before.  Very disturbing!  Sarah says:

    We shouldn’t be playing around with inflation. It’s not for nothing Reagan called it “as violent as a mugger, as frightening as an armed robber, and as deadly as a hit man.” The Fed’s pump priming addiction has got our small businesses running scared, and our allies worried. The German finance minister called the Fed’s proposals “clueless.” When Germany, a country that knows a thing or two about the dangers of inflation, warns us to think again, maybe it’s time for Chairman Bernanke to cease and desist. We don’t want temporary, artificial economic growth bought at the expense of permanently higher inflation which will erode the value of our incomes and our savings. We want a stable dollar combined with real economic reform. It’s the only way we can get our economy back on the right track.

    Actually, she’s right.  Even more disturbing!!! 

    Oil/Jrom, Rain – That one came hard and fast, not much you can do about those but the non-greedy exit at $86 still stands for now. 

    FRE/Mike – No surprise there, they only live on borrowed money as it is.  Try using the embedding tool for links, just highlight the text you want the link to be on and then click the globe with a paperclip on it symbol and the rest is easy. 

    Roubini/StJ – I feel his pain.  This gold thing is just so silly.

    ABX/Amatta – The one from the newsletter (which was actually from Friday’s chat).  

    AMZN/Gel – Actually, I think 40% growth is roughly in-line with expectations.  There is some basis for them rising from $90 last fall to $155 this year and last Q4 they shot up to $145 so they could hit $200+ into some good numbers but then it will be time to short them again.  They are past the point where I like them long at $170 but I wouldn’t short them here. 

    Hackers/Goldman – That’s not a bad plan!   The home value thing is part of that continuing deterioration in the real economy.  


  243. I am short gold – expecting a rally in the dollar and for days like yesterday where everything went down, stocks, commodities and treasuries.

    Would not recommend it as a trade – probably a bad idea and a good way to lose a bunch of money.


  244. Phil,

    JAG, you still like the may play on them? I entered the stock part and sold the puts but never got the calls as it dropped like a rock yesterday.
    Thx


  245. Trading RIMM.   It’s on the move.  Here’s a fun play:    Buy 10 weekly $60 calls for about .50/  Buy 20 weekly $57.50 calls for about .28


  246. Sorry, should read weekly $57.50 PUTS.