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Friday Already? What Next?

QQQQ WEEKLYWhat a wild week! 

The Dow is up 400 points since Monday and we are just 150 points away from our November 4th high.  Once we get over 11,500, we have no reason at all to be bearish from a technical standpoint and fundamentals are out the window so what else should we be looking at?  We ended up too bearish on our $10K-$50K Virtual Portfolio as we hit our double-down targets on a couple of index shorts so I am CLEARLY in the bear camp this morning as we're still playing this as a double-top, rather than a breakout but what if we do break out?  As David Fry said this morning:

Any worries from Europe, China tightening, higher Jobless Claims are mere inconveniences when the light is a bright green.  Let’s face it; this is what the Fed stated they wanted with their POMO activities—higher prices overall with higher stock prices emphasized. The Fed prints money and buys bonds from the Primary Dealers and (wink wink) they know what they’re supposed to do with it. Bears just better get out of the way. 

Looking at David's Nasdaq chart, we can see that we are back at 2007 highs.  I find this truly amazing as it seems to me things aren't quite as good in America as we THOUGHT they were in 2007, before we found out that Financial earnings were a scam and before our homes lost 1/3 of their value and when our neighbors used to all have jobs but CNBC is telling us over and over and over and over again how great things are so it must be true because they are on TV and TV doesn't lie to us.  


So there's our ridiculous rally premise and we're "very excited" to go bullish if we break over the 2007 market highs.  XLF has been a real laggard so we like taking advantage of a run in the banks with trade ideas like the FAS April $20/25 bull call spread at $2.70, selling the April $21 puts for $2.55, which is net .15 on the $5 spread that's already $4.25 in the money.  So, if FAS makes a .75 gain between now and April expiration and holds it, this trade makes a 3,233% profit.  That's pretty good right?  

See, that's why we don't fear the upside.  If the Fed insists on printing money, we sure know how to grab our share!  The risk on that trade is FAS falls 20% and you are obligated to own it at net $21.15 and FAS hasn't been much below $20 since mid-2009 - so it's a nice trade on continuing upside – don't say I didn't give you anything for Christmas!  

Want another one?  Our Members are already in FAS, UYG and XLF combos from when they were cheaper and we're also in DBA but DBC is a fun way to play commodity inflation as well and DBC is still nearly half of where it was in 2008 so if Goldman Sachs get's their Christmas wish of $100 oil, we can be off to the races on DBC as well.  

You can make a simple bullish play on DBC by buying the April $27 calls for $1, those should double if DBC goes up 10% (now $26) near-term.  If you don't mind being a long-term commodity player, you can buy the 2012 $26-30 bull call spread for $1.40 and sell the $22 puts for $1.10 and you are in the $4 spread for .30 with a nice 1,233% upside if DBC hits $30.  Keep in mind it was $45 last time the markets were this irrationally exuberant so we're not asking for much, just 1,200% to see us through to next Christmas!

This is why we have kept our cash on the side, we can turn that cash into BIG MONEY on a breakout and we only need to commit, for example, 1% to each of these two trades and, if they both work out, the whole virtual portfolio gains 44.66% so that's a nice way to start 2011, don't you think?

Our last Member Virtual Portfolio was a fairly conservative one called "Defending Your Virtual Portfolio With Dividends" from October 23rd.  We're done with those as it's going to be time to get much more aggressive if we're breaking out (and we wanted to be in cash in case we don't), so feel free to browse as it has a lot of good notes on sensible long-term investing strategies using options and, as a bonus, several of those stocks have come back down a bit and are still playable (BMY, for example, just tested our $22.50 target and looks good!).  

8:30 Update – ROFL!  It looks like we won't be needing those bullish plays just yet as Non-Farm Payrolls are a very disappointing 39,000 (160,000 expected).   This is great for us of course, as I mentioned above, we were forced to get very bearish yesterday following our rules and CNBC was scaring us but, surprisingly, it turns out they are complete idiots who give terrible financial advice and resemble a proper news station about the way I resemble Brad Pitt (see yesterday's post for more on that subject – on CNBC, not my Brad Pitt envy..).  

We're not surprised, I told you the jobs numbers were not real last Thursday and we expected a reconciliation in the more reliable NFP report and we're positioned 100% bearish in our $10K-$50K Virtual Portfolio (which now is looking a lot more like we'll get our $50K!) – we're mostly relieved to see that fundamentals can still be useful in this market but it is SO HARD to wade through this non-stop media BS that even I was worried and making preparations to go long (see above).  Of course we learned in the Boy Scouts to "be prepared" and that's what those 1,000% trades are for – they are a way we can dip our toes in the water without committing much cash at the early stage of a rally, just like our bearish bets (had they failed) would have formed a backstop for a larger commitment of upside capital.  

In fact. we WILL be taking a modified version of that FAS play now, to protect our BEARISH profits.  I regretted not being more aggressive on the XLF yesterday and now we should get a nice dip that will give us a good re-entry so stay tuned in Member Chat and we'll find something that could pop for us!  Sorry if I sound excited but I am – I'm always happy when Fundamentals triumph and I'm very happy when the market obeys our trading range – it makes it so much easier to make our calls…. 

Now, you'll have to excuse me as there's going to be a lot of work to do today.  What's striking me at the moment is that the Dollar has been jammed down to 79.6 from 81 yesterday, which is down 1.7% in 24 hours, a pretty big move for a currency that is over 60% of all the money in the World, don't you think?  That's stopping the markets from collapsing and sending gold over $1,400 (I already gave you a long play on gold last week – don't be greedy!).  This is a truly insane way of propping up the markets into next week's uncertainty with Ireland voting to accept or reject the EU loan package on Tuesday as a rejection there can send the Dollar over 82 and that can knock the markets down 5% at this point.  

As I mentioned to Members in the Morning Alert today, Ireland's Parliament votes on the EU aid package and the defeat of Cowen's supporter in last Thursday's election has left his party, who are likely to be thrown out of office right after Tuesday's vote, relying on two independents to pass the aid package.  Keep in mind that Ireland is being forced to accept these loans to save Europe – Europe is not saving Ireland but they need Ireland to save Europe – and US!  

Have a nice weekend – next week is going to be fun!  

- Phil


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  1. Phil
    I am wired that we have been too focused on macro issues when many companies in the s and p are doing well so yes I am capitulating and might I add wheeeeeee

  2. Phil
    Is ABX OK at today’s price? Any adjustment?
    Looking at the
    So, I was going to save this for the weekend post but I do like ABX at $49.66 as a hedge and you can do so many things with them like entering by selling the Apr $45 puts for $2.30 and, since who doesn’t want to own ABX for net $45, you can spend that $2.30 on 1/2x the 2013 $50/65

  3. Worried.

  4. NET $ +.29%, dx/y = (.31)%
    F = 1214.75
    overnight futresL  high = 1227.25, low = 1213.50
    10yr = (2.83)%,  30yr = (.89)
    prior to jobs number:
    the NET $ was at +.88
    the biggest move so far was the spike on the Swiss Franc, the $$$/Franc fell to (1.17)% from flat
    and the Yen/$ spike up to +1.47% from +23%

  5. A complete 50% retracement of yesterday’s huge gains for FAS in just 50 minutes this morning.  This market is insane.

  6.  DXY is down to 79.55, so the dollar is quite a bit weaker today.  Will be interesting to see if the market recovers from the weak jobs report later in the day based on dollar easing.   Why is the market so surprised that we have a crap economy…I guess Wall Street is really that out of touch with mainstream america!

  7. Phil,
    I’ve been chewing on your FAS Bull Call Spread.  What formula did you use to calculate the 3233% profit.

  8. Matt,
    You playing a bounce of the pullback this morning?

  9. Stand back boys, I’m going large today.  Gotta lot of ground to make up for the last 2 days and I’m going to break the rules by swinging for the fence.  Don’t try this at home-

  10. exec, I’m playing for eod day at flat or down from here. 

  11. Oh my God!  CNBC guys are trying to say that, in the grand scheme of things, 10,000 jobs here or there are not a big deal.  What a friggin’ joke!  Why don’t they say that when the numbers go their way?  And it wasn’t 10,000 jobs, it was a 110,000 jobs miss and, of course, we need 150,000 jobs a month just to keep up with population growth so anything less than that is a net job loss anyway.  

    So good morning to you!  

    I was going to be happy to sell into the dip today but they’ve already stopped the dip by dumping the dollar hard and fast.  There is some logic to dumping the dollar as higher unemployment gives the Fed an excuse to print even more money but did we now forget about Europe’s issues?  Also, dumping the dollar has the unintended consequence of raising the Yen and Japanese exporters don’t like that one bit so we could end up with an Asia crash on Monday led by Japan if the dollar is back below 80 – isn’t global finance fun?!?

    What I hear from the MSM punditry and the administration and the Fed and the ECB, etc, is DESPERATION!  I think they have thrown everything they have at the economy and they are pretty much freaking out if this isn’t enough to help.  I am still loving cash and I’m still bearish but the determination of, well, EVERYONE to take this market higher at all costs has got to keep us cautious so we do want to take a very small stab at the XLF play, which pays a nice 3,000% to the upside:

    FAS April $20/25 bull call spread at $2.70, selling the April $21 puts for $2.55, which is net .15 on the $5 spread that’s already $4.25 in the money.   

    We should get a much better entry as XLF tests $15 and, if they break $15, we can wait for $14.50 to be tested or $15 to recover.  So if you sell 10 FAS April $21 puts for $2,550, you are obligated to buy 1,000 shares of FAS at $21 ($21,000).  Of course you can roll them to a longer, lower strike or you can take the purchase and turn it into a buy/write, selling perhaps the 2013 $20 puts and calls for $15, which would drop your basis to $6/13.  Just an example but to illustrate why you shouldn’t have too much fear of the downside on this trade.  

    That $2,550 collected plus $150 more buys you 10 $5 spreads that are already $4,250 in the money.  They have to take this money away from you – that’s a good way to initiate a trade!!!  

    Moving on.  We caught a huge break on CMG in the 1050P as they are down another $7 to $243 and the $230 puts are $3.  Our goal was $2 so a stop at $2.50 (.50 trailing stop) is prudent here as we NEED that $750 to make up for some of our short plays that still aren’t performing.  

    That will let us let NFLX ride as I think they have a long way to fall and those are Jan puts anyway.

    No change in levels and my favorite upside play is the FAS (XLF can be played as a straight stock at $15.05 with a stop at $15) and, other than that, cash and patience into the weekend:

    • Breakout LevelsDow 11,500, S&P 1,220, Nasdaq 2,600, NYSE 7,750 and Russell 725
    • Watch Levels: Dow 11,220, S&P 1,185, Nas 2,500, NYSE 7,550 and Rusell 715 
    • Up 10% (must hold)Dow 11,220S&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 

    Remember, we’re only holding up because the dollar is down (now 79.50) and it is madness to assume the EU will be all fixed next week so I’m more likely to add bear bets than bull ones today – be careful!  

  12.  Phil
    WIth the $ jammed down so much in the past 3 days – do you still like the UUP plays?
    Also, I have TZA Jan $21 and $20 sold puts – can you comment on where to roll them to?

  13. NET $ +1.44%, dx/y = (.96)%
    10yr = (2.48)%,  30yr = (.68)%
    C = 1218.02, F =1218.50
    oil (.30),  gold +12.40
    VIX (2.48)%

  14.  CMG should have more downness today IMO

  15. It’s almost comical how they control this market with the dollar.

  16. Interesting that FCX and ABX are at new highs, GG is not. So as a lagger, it should follow or the others need to fall…hard.

  17. Also on the gold front, China has a bunch of new gold ETFs, so that also explains why they need to buy so much?  

  18. another masterful job of manipulation

  19. Well if things follow the standard format, they should be crashing the dollar within the next half hour to push us over the levels.

  20.  Matt, this one is for you….go BIGor go home.

  21. Wheeee is right Samz but it’s a quick dip so far.

    ABX/QC – If you can get the net, sure.  One thing we can count on is everyone printing more money, that fast turnaround in the EU indicated the entire planet has gone nuts and the only rational country is China – AND THEY ARE BUYING GOLD!  I think gold is very stupid but ABX makes money selling it so why not play them (although my boys at HMY are up 10% this week already!).  

    CMG, NFLX/Mike – About time someone besides me said something!

    Speaking of CMG – Done at $2.50 – should have taken $3 and ran (double).  At least NFLX is behaving rationally.  

    Insane in the membrane Matt!  

    Out of touch/LV – I was in NYC last night with some actors and teachers and I asked them what they thought of the economy and they think it’s terrible.  The actors are working for less and working less often and the teachers are resigned to not just their current wages being cut but they fully believe that NYC will be clawing back existing pensions and those that are retired believe they will be forced to leave NY if that happens.  The middle class is still being squeezed in a vice that gets tighter every month and it just seems to me like a damn that is going to burst at some point. 

    UUP/Yshen – Yes I do.  I do not, however, understand how the dollar can be pushed down like this.  As I mentioned yesterday, a 1% drop in the dollar = a $1Tn loss in dollar-denominated assets which is 2% of the Global GDP disappearing in 5 minutes.  Now we’re down 2% so we’ve lost the entire planet’s GDP growth in 2 days.  Does that make sense?  How can a $4Tn FOREX market be manipulated – it scares me to think someone has that kind of power but clearly strings are being pulled with the agenda of keeping the US markets at this top.  How long can it last?  I don’t know but I still don’t think much longer.  

    Meanwhile, some guy on CNBC says "Every girl in America is wearing Ughs, my grandmother has Ughs" and DECK takes off like a rocket.  Is it really possible that there are that many idiots with money that will just pile into a stock 10 seconds after some analyst on CNBC makes a pick?  Notice the buying leading up to it so someone knew he was going to say this and now they triggered a run off his statement – this is just blatant market manipulation!  DECK should be halted and an investigation should be held but it won’t so I say sell these morons the $80 calls for $4, they deserve to choke on them! 

  22. NET $ +1.68%,  dx/y (1.02)%
    C =1218.22, F =1218.00
    extremely tight movement

  23.  Up we go!

  24. Phil:
    If I want more time and less margin tied up on NFLX short (Sold 5 DEC $195 calls @$6.3) does it make sense to roll to (3 Jan $195 calls sold at $14.25). The deltas are pretty much the same and I don’t mind holding the trade to January as long as it doesn’t cost me so much in margin. I am not anxious just debating the move. The downside is that I will be in the trade longer on the positive side I feel more comfortable that NFLX will be nowhere near $195 in January than I do with those prospects by DEC 18. Your opinion appreciated.

  25.  Phil, what’s the plan for the DIA 110 puts in the 1050K? DD or roll (to Jan?) eventually if we don’t get the drop by Tue. Also, any upside plays for the 1050K today for balance?

  26. Phil/ Ugg:  That’s how the system works.  Of course you have the simple front runners but HFT can make boatloads penny by penny.  So if they can get even just a little push from a manipulator with a mouthpiece they can make more not only in additional volume but because they know there will be at least SOME people going long that they can sell to and eventually break into capitulation.  Anyone who has a hard and fast stop rule like JRW, and who shouldn’t?, can be taken advantage of.  This market shears day traders. 
    SO WHERE ARE THE INVESTIGATIONS SEC?????????????????????????????????????????

  27.  Phil: short calls
    I’ll reiterate what others have said re: selling calls short vs actually shorting or buying puts, "way more relaxing"  Now these up moves in the crazy stocks are just amusing to me instead of causing angst.  Hopefully if I have to keep rolling up and out I won’t see teenage girls entering a CMG in their UGGs in July:)

  28. Phil/ DECK, I took this opportunity to DD on the JAN 70 puts at 1.75

  29. If I wasn’t watching the market at all and someone told me that we when up .2% on unemployment and missed by 110,000 jobs and knowing we were being pumped up to begin with from these great unemployment claims, I would think we would be down 150-200.  I would never believe for a second that we would be flat on news like that or possibly even up.  I wonder how much we’d be up today if we showed a negative GDP or found out that Ireland is being auctioned off in parts.  Ridiculous!

  30. Covering PODD here with the $15 Decs for 40c.  This is a long term investment, so just making change and if they get called, then they can have them.  That would be a nice 25% in a few weeks.

  31. Rustle,
    Remember……it’s only ridiculous if you’re a bear.

  32. Thanks Pharm!
    Praizada, the spin is sickening.  It could very well be raised in the future but what about all the times it’s been lowered?  Do they really think the DOL has an agenda to sabbotage the economy?
    Someone giving the $ some love.. 

  33. very weird, I think the NET is breaking down, given that oil and gold are following the dx/y so strongly
    NET +1.98%,  dx/y = (1.07)%
    C =1218.54, F =1218.25 (watch and see if the cash crosses lower and lead us down)
    Never know, jmho, but if the NET $ is right we may be in for a heck of a sell off , yet commodities say its wrong

  34. please make no decision on my NET $ calculation, just something I am watching and there is no history to it, to prove its validity at all

  35. Phil
    Do you have a straight play for FAS? TOS charges me $1400 per put in margin.

  36. CMG/Cap – You may be right on that but we couldn’t risk the Dec puts.  

    VIX 18!  Because the market certainly isn’t volatile…  8-)

    Go even larger!  

    Cool, hit DECK on the nose!  

    Jobs/Praiz – Why was there no feature quoting me when I questioned last weeks ridiculously positive numbers?  Also, note the guy is saying "how can retail be down? – Retail hiring is down because retail sales are down – that’s the next line of BS that will be uncovered….

    NFLX/DClark – As long as the margins are similar it’s a very sensible roll.  Either way, your goal is to make $6.  Keep in mind though that as NFLX goes down, the relative premium on the Jans will increase and they will lose money more slowly.

    DIA/Mamp – That will depend on what actually happens on Tuesday.  We have 3 weeks left so plenty of options but I think this non-drop is based entirely on a BS move down in the dollar that can’t be sustained and I’m frankly tempted to go bigger on the put side but, as I said above, we are fighting global powers here and, while I have faith that, ultimately, the fundamentals will prevail – timing is always a tricky issue (as Keynes reminds us).  

    Ugh/Matt – Well, as I say, we don’t care if it’s rigged as long as we know how it’s rigged.  That was just free money selling $4s to those idiots – it’s like betting the guy playing 3-card Monty won’t find the red queen!  

    Selling/Red – I agree but a lot of people have trouble with position sizing and management so I’ve been reluctant to call too many in this chop but, as you can see above – it’s now getting a little easier as the manipulators get more desperate and obvious.  

    DECK/Novice – Nice keep in mind that a move like that is most effective when you cash out 1/2 at $2.25 and reduce your remaining basis to $1.25 with a stop at $1.75 so you lock in a .50 gain!  

    Ridiculous/Rustle – Well, they can keep anything up for a day but what are they going to tell us next week?  Ireland is fixed?  We already had a 400-point rally on that one….  

    Only if you’re a bear/Exec – Actually, if you are bull and you don’t realize it’s ridiculous and take your profits, then you may quickly find out what it means to become a steer.  

    Gold now very silly at $1,407.  GLD $137 puts at .20 expire in 5 hours but I like them.  

  37. Phil
    Do we let TM PUTS ride? Thanks

  38. Whomever mentioned CBST the other day, they are getting into the sweet spot.  I think it is prudent to wait until some consolidation as they could fall more, but the stock is at a big support level.  with a 1.2B market cap and a P/E of 12, and in the anti infective area, they are ripe for takeover.  Watching the Jan12 17.5/22.5 bull call spread coupled with the sale of the 17.5 Ps for about 50c on the $5 spread that is 60% ITM.

  39. PHIL  and anyone
    since market manipulation is a frequent topic in chat i was wondering how GS et al. manipulates foreign markets? do they have forex traders b&s currencies. (yes the pun is intended ) or do they have trading desks in all major foreign markets? or do they just rely on the bots in this market and foreign traders just react to us?

  40.  XLF broke below 15.

  41.  Phil / TZA
    Can you comment on rolling TZA short puts?
    (I have TZA Jan $21 and $20 sold puts)

  42. Phil:
    Thank you. I am going to wait another week to determine direction of NFLX trade. Now I know I have a possible roll if necessary. How close do I need to get to expiration before I begin to see theta really work in my favor?

  43. Oil of 88.00 or 88.15
    Is working real well if we get another spike

  44. Pharm- we gotta roll NUVA.

  45. VNO heading downhill with BXP – those are still great leading indicators and XRT is falling too so watch yourselves bulls!  

    FAS/Chakra – That does seem a bit much but you can play XLF instead by selling the June $13 puts for .57, which I hope is $1.30 in net margin and use that to buy the Feb $15 calls at .67 so .10 on and you get all the gains over $15.

    TM/Chackra – Yes as the weak dollar should hurt them on Monday.  

    GS/Z4 – They have everything everywhere and it’s not just GS, it’s what I call the "Gang of 12", which is loosely people like GS, MS, JPM, CS, BCS, DB, GE etc., who have both money and political influence to move the global markets.  Don’t forget that, aside from their own money, GS borrows many Billions from the Fed for free (I heard is was like $400Bn in and out last year but not sure of number) and get’s to shove the market around with their money plus GS puts out notes to HNW clients as well as the Funds they work with (20% of all hedge funds are run by GS alumni) so they can say "Oil $100" like they did yesterday morning, and just sit back and watch $50Bn pour into energy futures.  

    Deficit Commission proposal didn’t get enough votes to move to a vote on the floor of the House and Senate.  That should support gold for a while.  

  46. Phil,
    I bought AIB @ $0.90 and sold May $1.00 calls for $0.30. Do you think there is too much risk considering the vote next week even though I have a pretty good cushion? I would think a no vote would already be priced in, but who knows for sure?

  47. I love f-ing with the bots!  Word to the wise, if you ever place an order (I’ve only proven this for stocks) and it’s only partially filled do not modify the order.  They are teasing you to chase them down (or up).  In my experience, if I stand pat with my original order it has always been filled completely after an initial fill.  Just another tactic they use to squeeze you for pennies.

  48. Someone just paid me $0.30 for AAPL Weekly(today) 320 Calls. That’s $300.00(less commission).  I can have a nice dinner with my wife this weekend.   :-)

  49. IWM is resisting the dollar plunge.

  50. Good Morning,
    Are you hanging to the DIA and USO puts and for how long you think?  Thanks.

  51. bobhu- that’s $30 unless you sold 10 calls.

    so its bad and a no show, or did I just miss it?

  53. :)

  54. TZA/Yshen –  Well they still have $1 in premium, which is a lot so I wouldn’t be too anxious to roll them although you can roll down to 2x the $18 puts ($1.85) about even and then those are all premium and they’d be the same roll back to 1x the July $17s ($3.70) either way, right?   If you need to cut margin, the Jan $14 puts are just .23!  

    NFLX/DClark – Usually you collect about as much as you are going to within 2 weeks of expiration.  That last two weeks is very, very slow to give up the remaining premium.  

    Aw, CMG fell to $240!  Oh well, we needed the cash..

    AIB/RJ – It may be a long road ahead but I think they recover long-term. 

    Bots/Matt – Good point, I see that too.  One day remind me to tell you about messing around with them with block orders.  

    AAPL/Bob – That’s a really good thing to do, especially if you have the stock or long calls anyway.  

    Dollar 79.39! 

    DIA,USO/Cars – Didn’t you get the morning mail?  Wait until Tues is the plan.

  55. LOL…….they’re going to keep killing it until they get their pop.

  56. Dick Burner is the chief economist at MS?  That guy might give Hugh Johnson a run for his money!  

  57.  Good day for me … thanks to CMG.   Closed what had become a too big short CMG stock position.  
    Got off some short Dec 260 calls in CMG early today for 2.20 … would be happy to re-establish short stock there.
    Day-traded some more shares short on the early push higher as I expected roughly down $10, not down $3.
    Still have some other short call and put positions.
    Rolled out my worst position to March for a $2.40 credit and $5 improvement in position.
    All in all, nice … that was a tough one !

  58. nicha, yes, I did sold 10 contracts.

  59.  Phil, by t he way it’s 2 weeks to expiry on DIA/QID in the 1050K.

  60.  Matt … good observation about the bots.   Happens often as nobody else may really be trading.
    But it doesn’t always work.  Don’t chase; unless you really want the position.  If you really want it, a few pennies won’t matter.

  61. Phil,
    Damn, the only play I didn;t have from the 1050 was CMG as I had already trouble of my own there until today…so I am 
    Are we doing anything with the other positions I DD on DIA and DD on USO…

  62. Good Morning!
    Complaints to the SEC:
    matt / bots — Yeah, that’s exactly what I was calling "Bot Tag" the other day. I agree, they tag you and want you to chase. Standing still, I’ve found a partial fill usually leads to a full fill. Another interesting thing to do is to put your order in outside the bid/ask. Sometimes they’ll move to fill you!
    Amazing clubbings on the dollar. It might be interesting to consolidate some volume stats on the currency trading. I’m not a currency trader though…

  63. Good morning everyone:
    Dec. 3, 2010, 10:46 a.m. EST
    Deficit panel rejects sweeping reform plan

  64. Hey all,

    I have a post up for today for you all. As promised, I will have a couple posts each week. Check it out here:

    Good Investing!

  65. Phil,
    I have a newbie question.
    Yesterday you wrote this: DIA/Exec – Riding it out.  If we don’t get a drop by Tues we roll or get out. 
    I’ve never "rolled" an option,  I have 20 Dec $110P @ .52.  What is the procedure for rolling?

  66. Just nibbled on my first CMG shorts after a break of the 240 level and volume exceeding the 10 day already for the day.

  67. CSCO- Phil- what are your thoughts on buying some LEAPS down here and watching/waiting- low VIX, etc; then selling front month calls or turning it into a long term spread?

  68. NET $ +1.79%,  dx/y = (1.15)%
    C =1218.23, F =1218.00
    10yr = (1.43)%,  30yr = +.07%
    VIX (6.29)%
    oil +.12,  gold +11.75

  69.  Phil – thoughts on SWM?

  70. Cap, nice recovery-
    Rainman, thanks, they are at least making it ez to file a complaint.  Who knows after that-
    To me, the million dollar question is, after the Fed make QE2 official, who drove up the dollar?  Was it other countries determined to sabatoge the Fed’s plans?  Or was it the Gang of 12?  If it was the gang, the dollar could have a lot further to go.  If it was other nations, have they grown tired of fighting the Fed already?  Looking at the chart and the timing.. I would have to say it was the Gang.  Why would other nations attempt to drive up the dollar?  Why not just stabilize it?  To me, it was simply the Gang taking the other side of what a logical person would think would be an easy trade.

  71. At the open: Dow -0.26% to 11333. S&P -0.25% to 1218. Nasdaq -0.42% to 2569.
    Treasurys: 30-year +0.63%. 10-yr +0.64%. 5-yr +0.49%.
    Commodities: Crude -0.33% to $87.71. Gold +0.76% to $1399.80.
    Currencies: Euro +1.1% vs. dollar. Yen +1.49%. Pound +0.66%.

    10:00 AM On the hour: Dow -0.04%. 10-yr +0.38%. Euro +1.08% vs. dollar. Crude +0.17% to $88.15. Gold +1.06% to $1404.00.

    11:00 AM On the hour: Dow -0.03%. 10-yr +0.4%. Euro +1.33% vs. dollar. Crude +0.31% to $88.27. Gold +1.32% to $1407.70. 

    11:04 AM The jobs report was weak and factory orders dipped, but there’s now another $6.81B of reserves in the banking system, as the Fed buys that much in Treasurys of $21.668B offered by dealers in today’s POMO.

    Nov. ISM Non-Manufacturing Index: 55 in-line with expected and 54.3 prior (>50 denotes expansion). Prices index fell to 63.2 from 68.3. Employment rose to 52.7 from 50.9. New orders rose to 57.7 from 56.7.

    Oct. Factory Orders: -0.9% ($420.1B) vs. consensus of -1.1%. Factory orders had increased 3% (revised from 2.1) in Sept. Ex-transport, -0.2%. Shipments +0.3% vs. 0.7% prior. Inventories +0.9%. 

    Nov. Nonfarm Payrolls: +39K vs. +144K expected, +172K in Oct. (revised from +151K). Unemployment 9.8% vs. 9.6% expected, 9.6% prior.  Private-sector employers added only 50K jobs in November (falling short of ADP’s estimate of 93K), a pullback from October’s strong 160K. So-called U-6 total unemployed remained steady at 17%, even though "discouraged workers" rose to a recession high of 10.6% (from 10.4% last month). (Nonfarm Payrolls)

    From the "Bad news is good news" department:  Following today’s lousy payroll data, traders now expect the Fed to delay raising interest rates until March 2012. Prior to the report, fed-fund futures had fully priced in a rate rise by Dec. 2011.  Stocks look to a weak open, but the market could react to the jobs report in unexpected ways as the session advances. A disappointing jobs number could be interpreted as a positive, as it suggests the full QE2 will be applied. The market usually ends modestly up or down on the day of an employment report, even when the number is surprisingly bad.  

    Stubbornly high unemployment, stalled aggregate income, and stagnant hourly earnings – taken together, gains in November sales came at the expense of household savings. Overall, the latest jobs report does not bode well for strong consumption growth through the holiday season.

    President Obama’s $3.8T deficit-reduction plan, which Max Baucus says "paints a big red target on rural America," looks ready to fail. Proponents warn that status-quo could lead to a dollar implosion that would force Congress to "take actions that are far more serious and far more painful than anything in this proposal." 

    The deficit panel’s broad reform plan fails to get the 14 votes required to send it to Congress, though a majority of the 18-member commission supported it. 

    A series of tax relief measures is saving companies bailed out by the government such as GM, Citigroup (C) and AIG billions of dollars at a time when concerns have changed from saving the economy to closing budget deficits. "The agencies are literally throwing gratuities at banks and other companies," analyst Christopher Whalen says.

    Who got how much of the TARP and Frannie bailouts, and who has paid it back, and how much. Track it here.

    The Obama administration’s new lending fund aimed at helping small businesses may not be enough to overcome banks’ reluctance to make loans. Community bankers cite an "unprecedented" level of toughness from regulators, rendering them unwilling to underwrite loans they would normally make since they "could cost [the bank] dearly" in setting aside extra capital. 

    The ECRI’s Weekly Leading Index slips a bit, to 125.4 from 126, but annualized growth hits a 26-week high: to -2.4%, from last week’s -3.3%. Co-founder Lakshman Achuthan has been urging observers to rule out a double-dip recession scenario. 

    Risk premiums fall further in the euro-periphery as the ECB continues to purchase its bonds. The spread between the Portuguese 10-year and the German 10-year has fallen to 313 basis points from its lifetime high of 480 basis points just a few days ago. European stocks are largely unchanged after powerful rallies the last two sessions.  As the ECB reportedly buys big chunks of Irish and Portuguese debt, borrowing costs for these countries – and Italy and Spain – are falling, which should help calm Europe’s jittery bond markets. But it’s not clear that they can keep improving without the ECB’s sustained help. It feels like one big set of “ifs” has merely been replaced with another.

    Touting recent fiscal reforms, the Greek Finance Ministry proclaims shock over S&P’s decision to place that country’s debt on negative credit watch. For now, ECB purchases of PIIGS debt is the market mover as spreads on the euro periphery continue to narrow.

    Continued strong export growth leads the Bundesbank to upgrade its expectations for the German economy and forecast the lowest joblessness since reunification. German stocks have outperformed the rest of the continent this year, up nearly 20%, versus a drop in a broader European index (FEZ).  

    China’s top leaders decide the country is ready to switch to a prudent monetary policy from a moderately loose one, reports the Xinhua news agency. The decision, which had been discussed for weeks, allows for a new assortment of monetary policy tools, and may prompt as many as five rate hikes by the end of next year.

    In an effort to slow its economy, Brazil raises bank reserve and cash deposit requirements. Like China, Brazil would like to restrain its economy without resorting to interest rate increases that lead to more capital inflows which must then be offset by printing domestic currency.  I like that Brazil now has to be the globally responsible guys!

    Surprised?  A federal appeals court revives 24 lawsuits against a group of underwriters (including JPM and MS) accused of conflicts of interest in IPOs. Plaintiffs say the underwriters coordinated their activities with company insiders to gain from post-IPO stock price increases. 

    EU antitrust officials raid AstraZeneca (AZN -0.6%) as part of a probe into whether drugmakers colluded to slow the sale of generics. In a report last year, the EU noted companies are using a variety of techniques to delay the introduction of generics "for as long as possible." Today’s raid seems to indicate it’s serious about pursuing the issue.

    Google (GOOG) has reportedly signed a deal to buy one of the largest office buildings in Manhattan for more than $1.8B, and has put down a ‘substantial deposit’ on the 15-story building. This would be the largest real estate deal this year, and is expected to close by the end of the month. 

    Uh oh!  U.S. market operators are looking for at least a three-month extension for the 10% circuit breakers installed in the wake of the May 6 Flash Crash; the current program (covering 1,000 stocks and 344 ETFs) expires next Friday.


  72.  CMG $235 !  Dang; should have stayed short !!

  73. Phil/CMG, I missed the CMG trade. Would you still get in?

  74.  DRYS up over 12% today.    News of an $500M equity private placement….you would think that would take the stock lower on dilution…go figure!   Big price move over the last month.

  75.  Cap, well I still have my 9x Dec $200s short.. still a long way to go for me.. nice that you were able to close that position successfully. I really need CMG to cross $220 in order to do something ..

  76. Good morning,


    IWM    71.62, 71.98, 72.50, 72.72, 73.43, 73.91, 74.48, 74.78, 75.01 and 75.56

  77.  How ironic that Obama stacks the deficit reduction commission with 14 of the 18 appointees; and he can’t get the votes !
    That’s what happens when you appoint a radical union leader like Andy Stern to commissions as political payback for union support.

  78. CMG is on a technical trade. Since breaking 240 the 15min average volume has been is increasing. Look out below if it breaks 223. Maybe even today!

  79.  For the 1st time since 8/24, CMG broke the support 20-day SMA..that’s meaningful.. next lines could be $220 or even the 50 SMA at $209.60

  80.  Ravalos … CMG …. looks to me like you could roll that position to the same 9X Mar 210′s for a $2 credit.
    Doesn’t solve your problem, but it helps.
    Or to June 220′s.  Or to Jan. 12 250′s for a $3 credit.

  81. NET $ +2.19%,  dx/y (1.24)%
    highest spike on the NET up I have seen today, for what that is worth (probably not much)

  82.  rainman … I don’t see $223 on that downgrade.   I will guess at a close somewhere between 235-240 today.
    Just a guess.  20 day MA is about 238.

  83. CMG down 15! 

  84.  Cap, I eyed Jan 12 $250.. but then I will have a very long long wait on this one plus I won’t be able to reduce the size.. but you’re right, I really don’t see CMG coming below $220 simply on this downgrade, although quite sensible due to the arguments from a very respectable analyst.. I also think CMG will beat estimates in Q4, so I have to fight against that.

  85.  Keep in mind that particular analyst has a high case of 293 and a low case of 218.  And he didn’t cut it to sell.  Just to market perform.
    Who knows, there could be more downgrades.   Another way to manage your risk is to roll 1/2 out to Jan ’12 and hold on to 1/2 with no changes and wait and see.
    Yes 2012 is a long wait, but that is a big improvement in your position, and hopefully during the wait you will get opportunities to hedge or adjust your position along the way.

  86.  Oh man, I know the guys who own 111 8th Ave and are selling the building to Google for $2 B …. Holy Cow !!
    That was the RE Deal of the decade, there buying that property from the Sylvan Lawrence estate and making that meat packing district.

  87.  Cap/CMG, I agree.. I wouldn’t mind rolling to Jan 2012 if I can do it to the $270s. Then I would be fine waiting it out.. I also have short puts ($230 Jan 11 expiration) because I have to play both sides in order to hedge a bit.. only this time I’m rolling on time instead of letting them get away. On the downside, I really don’t expect a super big fall unless the fundamentals indicate so, and we will only know that until the next earnings announcement.

  88.  NFLX at $189!

  89.  What’s this, CMG / NFLX meltdown. 
    Oh no, I’m so unprepared!  :)  8)  :)

  90. He guys stop messing with CMG to much mice droppings in the restaurant I bet ravalos is smiling today finally he.

  91. Phil:
    Less than 4 hrs. to go; GLD hanging tough near top 137.32.
    When do you think we should bail out of the DEC3 GLD 137Ps?
    CMG was a GREAT call.

  92. Cap / CMG — well, breaking 235 brought the volume back up so you might be right. Looks like a battle right there. We’ll see who runs out of bullets first.  Interstingly, level 2 isn’t showing that many odd lots but there are some. Buy the F*in’ Dip! 8)

  93. Cap / Debt Reduction
    Well said !

  94. Phil/Anybody,
    Is BIDU a good candidate here for a short? It seems it has bounced 6 times on the 110 line over the last month… perhaps the 115 calls?

  95. Hi Phil KKD selling any naked callers at this stage ?

  96. I’m trying to swallow this like I tired to swallow the powder/water mix before my colonoscopy…….it will have more meaning when you get a little older.  Did I miss read Trichet’s quotes, unllimited injections (as needed) for the first quarter of 2011…and its not QE?  If we actually break out of 2007 highs and Trichet becomes EuroBernenke, does the Euro STOXX 50 have a chance of mimicking the US Indexes to the old highs?  Euro STOXX 50 (SXJE…..) was 4500 in 2008 currently call it 2800.

  97. Phil:
    What do think about SDS DEC 26 calls at .45

  98. RUT goes from lagging to leading.  What a crock.

  99. matt / stops

    I do NOT use hard stops!!

    I think we should retrace, that’s why I have all those Jan puts, but it’s not up to me, it’s up to Lloyd and Jamie. Further, to an extent, momentum begets momentum, and when the trend remains up in the face of bad news, once the good news really kicks into gear, the stage is set for an explosive rally. That’s exactly what we’re setup for right now !! So I’ll just play my game, watch my 8EMA on the 3 minute and get to cash before 4:00 every day, thank you very much 8-)

  100. CMG $235!  Damn!  They were just waiting for us to let go of those puts….  Hopefully NFLX will follow.   Good job on them Cap!  

    2 Weeks/Mamps – Well then we definitely need to get out by Tuesday!

    1050P/Amatta – No changes.  Europe may fail over the weekend.  If they don’t, we can get bullish Tuesday morning.

    Brazil/Mike – Yep, similar issue in above news items.  

    Rolling/Exec – That’s just shorthand for selling the puts you have and buying some other puts.  Rather than saying "sell the DIA $110 puts for .55 and then buy the Jan $110 puts for $1.40" we say "roll the Dec $110 puts to the Jan $110 puts for .85".  TOS, OXPS, IB and other brokers actually have a "roll" function so you can put the trade in at the net price which allows you to offer, for example .75 and often enough you get a good deal as the market fluctuates. 

    CSCO/Pstas – I like them long-term.  We sold puts to initiate positions already.  I still like selling the 2012 $20 puts for $3 and you can buy the $17.50 calls for $3.40, which is just $1 of premium and then wait for a move up to sell some calls

    Europe closed flat, by the way. 

    SWM/Hunter – I have never looked at them before.  I’d stay away from tobacco though as sin taxes are all the rage and may knock down consumption in a bad economy.  Actually I’d stay away from anything that requires mass consumption that consumers can live without.  

    Dollar/Matt – Well, from the gang of 12s perspective.  If they can get free money from the Fed, then buy up commodities, then drive up the price of commodities (GS boosted oil and gold forecast yesterday and news came out about China buying gold), then drive down the dollar to boost commodities further while they dump them – they could make an absolute fortune.  Thank goodness our Banksters would never do such a thing or the market could fall prey to manipulation!  

    CMG/Novice – No but I am not a chaser by nature so I tend not to want to run after any train that’s already left the station.  

    Speaking of trains – thank goodness we’re still on the NFLX to Hell express – down to $188!  

    Why is CNBC showing me a giant meatball sandwich?  Who runs this stupid network?!? 

    DRYS/LV – No because the equity placement allows them to service existing debt.  DRYS is worth much more than this and are only down on refinancing uncertainty.  

    CMG/Rav – You still need to set stops.  You got a 9 x $20 break in the last 48 hours and you don’t throw that away because it’s not good enough to get you 100% even!  Be sensible.  

    DECK $82 – So much for loving the $80 short calls, now $4.30.  I still believe in them and this is a good example of why selling calls on a big run is nice as they gained very little even though DECK has gone way against us.  If we had a stop at .40 (for example), then your risk is 1:10 as we risked .40 to make $4 – you can do that 10 times and you only have to be right once!  

    Apointees/Cap – So you really don’t know that he appointed an even amount of Republicans and Democrats or you just pretend not to know so you can make a fake point?  

    CMG/Rain, Rav – I think they stop it at 10%. 

    CMG/Cap – I think investors were just shocked that any analyst thought they weren’t going to $500.  They need a guy to come on TV and say "Everyone loves Chipolte, my Grandmother eats there!" 

    111 8th/Cap – Hey, I want to go to the party he’s bound to have!  Maybe we can light a fire using Google’s money! 

    CMG/Yodi – Yep, I have a whole draw full of their plastic utensils!  

    GLD/Reza – They are hanging tough at .20 so I’d say if the dollar beats 70.50 on this run then they can be held a little longer but, otherwise, better off living to fight another day.  

    BIDU/Amatta – I love them as a short but I don’t think selling calls is very safe.  Let’s look at them after the weekend.  

    KKD/Yodi – Too crazy, stay away.  

    Trichet/Living – He’s only following a program that’s already in place.  They key is whether they vote for a new facility and that’s doubtful unless Germany has a change of heart and why would they when things are booming for them and they don’t have to fund it?

    SDS/Arnie – If you aren’t too short it’s a fun weekend hold.  

  101. And what Stockman said……

  102. Phil CF aug 09 I landed with this stk for 115.00 it went down badly I started selling p & c against it The last one I am holding is Jan 11 90c  sold for 9.94 now up 37.37 and Feb p 105 short for 4.33 now down to 2.96. Even that I do not have much confidence in the stock I do not like to give it away under 115.00. I am not sure when this stk will nose dive again as it is going up to fast. Do you see any good changes I shall make. Thanks

  103. CNBC about to bash NFLX!  Cramer’s crowd still trapped in it. 

  104. Phil,
    Any thoughts n Kroger (KR)?

  105. Phil the DIA mattress play now naked 114p jan do we wait for a further drop to sell some dec 111 or even  putters??

  106. dang I had volume off
    talking about Netflix on CNBC

  107. JRW, did I say ‘hard stops’?  I meant ‘hard rule’ with using stops.  Sorry for the implication!

  108. Phil, what’s our goal on the nflx puts?  Are we being greedy/not greedy?

  109.  Phil/CMG, you’re right, I need to be sensible.. I put in an order to roll my 9x short Dec $200s out to 9x Jan 2012 $260s for 0.25 in credit.. it’s now -$1.25 so I would need a $2 further drop in the stock price to fill this guy in! I am willing to wait it out for a year considering that I would be back again to pure premium + the fact that $260 is a price for perfection.. 

  110. Phil
    I have $250,000 of GLD call options in an IRA. They are 1012 100′s. I would like to make some money selling options, over the next year, against these long calls.  I guess I would have to do it in a different non-IRA account.  Do you have a strategy in mind for this scenario ?

  111. Phil… that is 2012 100′s

  112. Out of CMG for 10% in 1 hr. Volume dropped off and MA moving up. Gotta get ready for a weekend get away so no time to babysit. 
    Where’s the top on oil??? USO just broke 38!
    BTW: Phil, still can’t post from Android. It doesn’t like the edit control. I’m sure it’s not a priority but it might be nice to recognize mobile browsers.

  113. Matt,

    I feel the same way you do, but sometimes ya just have to go with the flow !!





  114. NET $  = +1.62%,  dx/y = (1.14)%
    C =1218.92, F =1218.25

  115. Phil- sorry to bother but can you please point me to the link to $1 trillion defense budget. I am having a huge argument with some people at the lunch table. The Internet numbers vary from $650 to $750 billion.

  116. phil --any thoughts on the uso puts --they just hit 60

  117. Washington, D.C.- Dean Baker, Co-Director of the Center for Economic and Policy Research (CEPR) released the following statement on the final vote of the President’s deficit commission:

    "With the failure of the President Obama’s fiscal commission to issue a report and the release of November’s abysmal jobs data, maybe the country can now get away from its game-playing with imaginary budget numbers for 2035 and focus again on the economic disaster that confronts us.

    "This commission was a silly distraction that was intended to appease powerful interest groups. The country has a large deficit today because the collapse of the housing bubble wrecked the economy. This is simple and obvious to everyone familiar with the dynamics of the budget and the economy. If the unemployment rate were at its pre-recession level of 4.5 percent, we would have, at most, a modest deficit.

    "Furthermore, the story of out of control government spending is entirely an invention of people with an agenda to pursue. In 1980, non-interest spending was 19.8 percent of GDP. The Congressional Budget Office projects that it will rise to 21.1 percent of GDP in 2020 under President Obama’s budget. An increase in spending of 1.3 percentage points of GDP over 40 years hardly qualifies as out of control.

    "Much of any additional revenue needed can be obtained by a tax on Wall Street financial speculation. Remarkably, the commission’s co-director’s apparently never considered this obvious source of revenue.

    "The long-term horror stories of exploding deficits are entirely the result of a broken health care system, which is again an indisputable fact. Currently, per person health care costs in the United States are more than twice the average as in the countries with longer life expectancies than the United States. The projections show per person costs in the United States rising to three and four times the average in other countries.

    "If health care costs follow this trajectory then it will have a devastating impact on the economy. It will also have a devastating impact on the budget since we pay for more than half of our health care through the public sector.

    Honest people would talk about this as a problem of the health care system and discuss ways to fix health care. The commission’s co-directors instead tried to hide this health care cost problem as a budget problem.

    "The country does not have time for this sort of nonsense. In the longer term we have to focus on ways to fix on health care system. More immediately we need to get the economy moving again and get people back to work. With the end of this commission, maybe Congress, the President, and the media can again focus on the country’s real problems." 

  118.  Nicha – I believe that $650-750 Billion is the defense budget, but then we are paying another couple hundred billion on special defense appropriations for the wars in Iraq and Afghanistan.  

  119. gel1
    i know of an ira account that will let you sell options and basically do anything else that you want inside it--it takes a little work to set up --you need and llc and will cost about $2,500 but then you can do whatever you want--if you are interested send me your email and i will forward the info

  120. Group -
    According to my TDAmeritrade TOS program, Selling 10 FAS April 21 Puts "costs" me $14,000 in option buying power.  This is much more Option BP "cost" than anything else  I have traded (such as TZA, SDS) for selling puts.  NOTE: This is part of an April 20/25 Bull Call Spread – the call spread has zero Option BP "cost".  Does anyone know why the big hit?

  121. NET $  = +1.92%, dx/y = (1.22)%
    C = 1219.16, F =1218.75

  122. Pete/FAS --
    On TOS, with PM, I’m at about $8,100 in margin, for selling the 10 April 21 puts.

  123. Need PCLN  to follow CMG & NFLX

  124. datuu / IRA
    Thanks for the info… I have closed out all but one IRA account ( this is the only remaining ). I have it loaded up with metals and commodity leaps, as I am positioning the account as a hedge against inflation. The Dollar is heading south, and this account should go up accordingly. I might even add some TBT as well, because the inflation will force the bond rates to rise. These are "gamble" plays, but the way I see it, if I were to close out the account, about half would go to tax anyway. It is a crazy way to look at things, but reality prevails.

  125. pete:  I don’t think that Ameritrade has "portfolio margin" like TOS does.  That same trade on TOS would be $5800 in margin.  I have accounts in both and am hoping that when ameritrade completes its acquisiton of TOS in February that PM will be available, if not I’m moving my ameritrade account.

  126.  Did Creamer really said this yesterday???

  127. Any thoughts on buying XRT puts at this point.

  128.  Ravalos …. make the move and roll …. perfect opportunity

  129. Tina asked me what’s going on with the markets and I said "Blown jobs" and she said "Not now, I have to go pick up the kids. 8-)

    CF/Yodi –  I’d sell the stock ($126) and buy 2013 $130s, that have a .60 delta for $30 and 2012 $145 calls for $16.50 and you can then roll the caller up to 2x Jan $120s at $12 so you spend $3 to put the caller in $2 ($6 x 2) of premium and you have tons of time to roll to the upside plus you have the short puts.  The 2x delta on the Jan $120s is 1.32 while yours is about 1.00 so you have a nice downside advantage and time is on your side.  

    That guy on CNBC eviscerated NFLX.   Too bad they made it sound like sour grapes because he was dead on.  It’s like I’ve been saying – their business model does not make sense.  

    KR/BPS – I way underestimated the ability of consumers to cut back on food but, long-term, I think they are good to be in.  They are back to where we liked them back in October.    SVU is even cheaper and you can buy 2x the 2013 $5/7.50 bull call spread at $1.35 and sell 1x the $7.50 puts for $1.70 and that’s net .50 on the $2.50 spread and your worst case is you own SVU for $8.50, which is where they are now but you give yourself $4 of upside at $7.50 and, because of the 2x $5 calls, your break-even is actually $6, which is about 30% below the current price.  So if you commit to buy 5 at $8.50 ($4,250), you can make $4,000 at $7.50 – that’s a nice way to play a stock! 

    Dollar smacked down to 79.35! 

    Mattress/Yodi – Have to go with my gut and say stay naked over the weekend.  This is all just too silly…

    NFLX goal/RDN – Well we are being a little greedy and if I had 10, I’d sell 5 but I think we’re good for a ride to $170.  Check out the video linked in the above comment.  

  130. JR,
    I was thinking the same thing regarding the market.  I just heard an interview on fox where the commentator was beating a drum for the last 10 minutes about how deplorable these unemployment numbers are.  The were throwing every imaginable negative buzz word out there…….including but not limited to Double Dip Recession, Failed Policies, Hyper Inflation, Global Meltdown……Christ……I was laughing to myself as I listened thinking they must have bought the same Puts we did because  it was blatantly obvious that she was trying to talk down the market.
    Then I get back to my computer and IWM is setting new highs for the day.  It’s futile.  The Fed and whoever is pulling the dollar string had complete control of this market and it sure does seem that they have every intention of giving a Merry Christmas to the bulls.  If there’s not some terrible news over the weekend.  This markets probably going to expand on this rally Monday.

  131. Wow, oil $89 – that’s amazing.  

    Only .25 to roll Jan $35 puts to Jan $36 puts is worth doing in the 1050P.

  132.  Cap, it’s there, but it doesn’t fill! even though the mark reached $0.50 in credit (I have it for $0.25) but didn’t fill.. damn it.

  133. exec / puts

    At least I’m making $$ on TNA 8-)

  134. JR,
    BTW……Did you notice the spike down to 74.68 on IWM at 11:54 before they ran it up.  What’s that all about?  Cleaning out the stops?

  135. Phil / Fundamentals vs manipulation   We both think the Irish should tell the European banks to g f t, but remember the vote is by corrupted politicians next  Tuesday.  Our economy is a train wreck until we introduce trade restrictions to bring home jobs, but that ain’t happening.  Meanwhile Ben has said he’ll print whatever he needs to in order to pump the mkt up.  Surely it’s dangerous to bet against their strenght and determination.  Do you really think the Irish will of for default?  Can we really afford not to bet on a xmas rally- which Ben, Timmy and Lloyd are determined to deliver.

  136. Obama’s travel department is screwed up…. he should be here in Washington working with Congress to get the tax issues resolved before year end, otherwise taxes will go up, along with a spike in unemployment. – not good for the economy or markets.

  137. Gel- the USD/HUF is well past your stop, did you lower it at all in anticipation of a dollar bounce going into Ireland’s vote or have you moved on?

  138.  Hey, remember earlier in the week I said the NFLX Weekly puts at 200 could be interesting at about $2 ?
    Well, I didn’t buy them, but they are worth about $12.50 now !

  139. NET $  = +1.72%,  dx/y =  (1.15)%
    C =1219.26, F =1218.50
    10yr = (.37)%,  30yr = +.70%
    oil  +.60, gold  +16.90
    VIX (6.60)%

  140. Oil @ 89?
    Lord Blankfein sayeth, so let it be done.  $100 in 22 days.

  141.  CMG still dropping !  232

  142. "To pin, or not to pin", that appears to be the question GOOG is asking, as the 570 and 580 pinners do battle…

  143. @Cap
    So, what do like today at $2, that you ARE NOT going to buy?

  144.  Rav — I think you should try to roll to the 250′s for a $4 -4.20 credit.

  145.  Flip … I wish I knew !

  146. Pharm, what are your thoughts on teva – how much of their profits are at risk with this potential infringement? I will try to do some research this wknd

  147. CMG/Rav – That’s not really what I meant.  I know it feels like you are taking a loss but you put, let’s say, a $5 trailing stop on the stock and cash out if they run back up, then reload with the sale of some new calls (with more premium) as they run back up.   Frankly, I’d take the Dec $200 callers off the table here for $34 and sell the Jan $230s for $16 as those are 100% premium and then you are down to dealing with just $18 more dollars over the next 12 months if the Jans expire worthless (and, if they don’t, you are still better off).  

    GLD/Gel – I don’t see the point in keeping such deep calls.  You can cash out with no tax issue for $40 and you can capture additional upside with the 2013 $140/180 bull call spread at $10.50.  You won’t miss anything by having a cap – if GLD crosses $150, just take some of your $29.50 on the side and buy some more.  The net delta there is about .20 so you can easily protect with a small hedge against drops any time you lose confidence but, meanwhile, you have $190,000 in cash to play with and still $180K of possible upside on the spread.  

    Android/Cap – I’ll let the boyz know.  

    $1Tn/Nicha – This is a good one that explains the numbers. Even Wikipedia shows:  "When the budget was signed into law on October 28, 2009, the final size of the Department of Defense’s budget was $680 billion, $16 billion more than President Obama had requested.[3] An additional $37 billion supplemental bill to support the wars in Iraq and Afghanistan was expected to pass in the spring of 2010, but has been delayed by the House of Representatives after passing the Senate.[4][5] Defense-related expenditures outside of the Department of Defense constitute between $319 billion and $654 billion in additional spending, bringing the total for defense spending to between $1.01 and $1.35 trillion in fiscal year 2010.[6]"

    The issue has been that the wars, prior to this year, have been run "off budget" as if they were some petty cash expense that no one needed to account for.  The gigantic increase in Obama’s budget has been the honest recognition of the cost of the wars.  


    USO/Datuu – Good call, that’s the way to play them, you lose 20% and you come to a decision point.  As we’re scaling in and were in for just $850 of a $2,500 allocation, .60 represents a $250 loss (10%) so we have to decide what to do.  My decision was spend .25 ($250) to roll higher and then, if those puts fall to .60, perhaps we would then spend another $600 to DD but, for now, I like having 10 Jan $36 puts at net $1.10 that are down from $1.65 on Tuesday. 

  148. exec / 11:54


  149.  Cap, I agree.. the Jan 2012 $260s open interest is just 9! Whereas the $250 is 465.. I will do change.. the mark is $4.75 but my order is in for $4.50 and still doesn’t fill.. damn it.

  150. Phil, I’ve a FNSR-related question for you.

    Do you think there’s any chance that FNSR might run into a short squeeze Monday/Tuesday following Thursday’ 16+% jump?

    14.50% of the shares were short back in mid-November (although that was much reduced from the October number).
    Due to my own occasional unfortunate encounters with margin calls (most of mine don’t require immediate action), I know that with my brokerage the margin call often undergoes review for fulfillment 3 trading days later.  Is this policy similar across all trading facilities?
    Anyway, think there’s any chance?

  151. "DECK should be halted and an investigation should be held but it won’t so I say sell these morons the $80 calls for $4, they deserve to choke on them! "
    I am with you Phil but the problem is that the people choking are the herd, not the manipulators (who are also probably selling calls).

  152. Hello Phil, what’s your opinion about OSK?

  153.  Phil/CMG, the problem with that play is that I feel CMG won’t recede too much given its latest earnings.. I’m sure they will run this guy up again a bit before earnings due to the expectations.. I doubt Jan $230 would expire worthless. 

  154. Phil Thanks for the CF
    Let me get this streight I hold 200stk sold 2 jan 11 90 calls and 2  jan 11 105p.
    You say sell 200 stk OK
    buy 2 2013  jan13 130 c ,  buy 2 jan 12 145c  roll 2 Jan11 90c to jan 11 120c and sell two extra 120 jan 11 callers for 11.70. is this right???
    Putters are understood thanks

  155. jromeha
    I was stopped out of this trade at 208… another ‘middle of the night" auto trade – keeping my stop in place. I am surprised, but will make some anti- Euro trades next week in order to recover my losses on the HUF. The Forint almost always follows the Euro in lock step. and additionally the economic winds in Hungary are more severe than the Eurozone… so this play was well thought out… the markets however reacted in an unusual way, which we all can appreciate and accordingly trade with stops.  I had 100 lots riding on this one…. so will need restitution soon…. hopefully next week

  156.  Rav — I bet a roll for $4 fills .   Maybe 4.20.    Don’t be greedy … you want the roll….. take a $4 credit and be happy.

  157.  You are right though…. 4.50 should be doable.   33/37.50  should be an easy fill.     Try 4.30 see what happens.

  158.  Cap/CMG, the mark reaches $5 and still doesn’t fill at $4.50.. 

  159.  Ravalos; you don’t have to roll them together either, you can take the 200′s off now; and then enter an order for the 250s or 260s.

  160. Escohen / Humvee
    Thanks for the information on put margins. 

  161. Out of TNA at $64.50 for $1.60 or 2 1/2%

  162. Fascinating to watch these new computer bots. Draw a line across the tops on GOOG starting at 1pm and not how they touch the line and drop, touch the line and drop over and over.  It’s the "Stair step down to the pin price" bot in action.

  163. Phil / GLD
    Thanks!… I will enter your spread… but will retain some of my ITM calls and sell OTM calls monthly in order to double down on the income objective.

  164. NET $ +1.76%,  dx/y = (1.12)%
    C =1219.55, F =1219.00
    have to run, have a good weekend all

  165. GLD/Gel – By the way, here’s a stupid hedge fund trick you can use with all that cash.  Since you have the bull call spread and you make $29.50 on a big move up, you can work off your $10.50 by selling (this month’s example) naked Jan $146 calls for $1.10.  GLD is at $137 and you have an upside buffer with the hedge and all you need to do is buy to cover if GLD goes over $141 with calls that have very little premium, like the $126s at $12 (.65 premium).  You sold $1.10 in premium so you can’t lose to the upside and the caller would be more like $2 by the time you buy in so good downside protection and you might even accidentally make money as a momentum play on the way up (and, of course, you can roll the caller).  You can sell the naked calls in your regular account and buy the covers in the IRA so you take your losses buying back the caller (if any) on ordinary income and the gains go to the IRA.  

    IRA/Datuu – I would imagine a lot of people would be interested in that!  Can you shoot that over to us?  (admin at philstockword dot com)

    FAS/Pete – I think they’ve changed the rules for the ultras.  No big deal if you have plenty of cash/margin on the side, it doesn’t change the risk profile.  You can sell the UYG March $50 puts for $2.65 instead, it’s the same direction but just $5 in net margin.  

    Here’s an interesting change of pace.  For some reason,. margins are way lower on SQQQ and you can sell the March $44 CALLS for $2 and that’s just $3.30 in net margin and you can buy the $35/30 bear put spread for $3 and that’s net $1 on the $5 spread.  This a a bullish play on the Nasdaq and SQQQ was in the $40s in September and $67 in Aug but if you stop the $44s at $3, then you only risk a loss of $4 at worst – keep in mind this is a bullish COVER – I am still not bullish.  

    Swaps/Mike – One of the many rule changes that are being ignored by the market.  Commodity rules go into effect soon and we’ll see if oil holds $89 then. 

    PCLN/A647 – Let me know when you are ready to capitulate as we’re looking for another entry!  8-)

    Cramer/Yshen – Sickening isn’t it?  

    XRT/Arnie – I’m still in favor of the shorts.  Big effect on retail with early Chanukah (and Happy Chanukah to all by the way!).  That makes a big difference, especially when you consider how many of those Wall Street guys are Jewish and tossing those big bonuses around.  

    Monday/Exec – lt’s all about Ireland on Tuesday.  There’s nothing the Fed can do to stop Europe from melting down but that’s a dip we’ll probably want to buy into.  

    Ireland/Tusca – If the people were voting there would be no way this would pass but it’s a small country and they gave them a lot of lead time and the people are VERY PISSED.  You may have a politician in your pocket but when it comes to helping you or protecting his job – you will lose!  Right now the governing party is polling 4th, behind the nationalists.  That’s like telling the Republicans they are about to get less votes than the Green Party – you will be amazed at how quickly they cover their asses. 

    Obama/Gel – Actually he needs to be as far from Washington as possible when 2M people wake up on Monday and ask what happened to their unemployment benefits.  

    LOL Flips!  

  166. FCX 2012 $115/95 bear put spread at $10, selling $130 calls for $9.20 is .80 on the $20 spread that’s $7 in the money with FCX back near 2008 hight ($125 was top).  Good trade if you don’t mind rolling for better puts on a move up.  

  167. Phil… brilliant stuff on GLD… I never thought of that !
    Obama / Unemployment benefits…. any "horse trader" would jump on that one  – trade additional unemployment benefits for tax relief legislation and EVERYBODY is happy…. might help his re-election, if he is "hopeful" after the haircut he experienced in November.

  168. Anticipating a good Holiday Season for on line realtors and upscale products (TIF and others ) , I sold some puts on NILE ( Blue Nile ) for a short term play..

  169. Damn.. Cramer is "hawking" gold – he can’t always be wrong ( I hope )

    Australian Dollars Weighs on Retailers
    Here’s a report on effects of Stronger Aussie dollar on retail down under.

  171. Phil / Ireland      So you think the Irish will vote for default (or vastly improved terms in  lieu of default), so should we buy UUP now today?
    You didn’t express a view on the second part of my question: Our economy is a train wreck until we introduce trade restrictions to bring home jobs, but that ain’t happening.  Meanwhile Ben has said he’ll print whatever he needs to inflate mkts.  Can we really afford not to bet on a xmas rally- which Ben, Timmy and Lloyd are determined to deliver

  172. NUVA – I like the spread from yesterday.


    TEVA – generic Lovenox is not even on the market yet, but it is filed with the FDA  They are trying to block it from getting there.  I think NVS/Momenta lose as it is a SNY drug.  NVS is trying to stall them b’c they are trying to catch up it think.  I need to look more into the info.

  173. JRW, please tell me you just saw one of those sig ruenes (sp) to the downside!  Or does this market go down anymore outside of premarket and the first hour of trading..

  174.  Phil / Chanukah
    Happy Chanukah to you as well!
    Great Song :)

  175. FNSR/Rein – You know that’s another Cramer pump job, right?  To some extent this is the short squeeze, that’s what he’s doing, he’s picking stock after stock that has breakable technicals and popping them for his hedge fund buddies.  I’ll bet that guy has $100M hidden offshore by now.  Anyway, $24 is a double off the Aug lows so they should find a decent amount of sellers here and that will burn off the pressure.  You have to be patient to short this one and they do have really good comps from last year so I don’t think I’d be bothering with them in either direction here.  Margin thing is normal from my experience – always good to develop a relationship with your account rep because they tend to be a lot nicer about things if they know you are a professional and understand the account risks and how to deal with them.  

    Speak of the Devil – Cramer saying BUYBUYBUY! 

    Herd/Jordan – I know but screw them at this point.  I’m starting to think that’s the problem with the markets, not enough culling of the herd!  

    OSK/Alik – I like them a lot and it’s nice that they held $30 off this pullback.  They have some pretty wild premiums and you can offer to get in at net $22 by selling the 2012 $25 puts for $3 and then you can buy the 2013 $25/35 bull call spread for $4.20 so that’s $1.20 on the $10 spread that’s $6.40 in the money to start and worst case is you own them at net $26.40.  

    CMG/Rav – Then why the hell would you not be buying back the $200 calls right now and just staying away?  You can’t short a stock you’re bullish on – how can you possibly have the conviction to ride out moves against you?  

    CF/Yodi – Yep, that’s about the side of it.  The idea is to sell more premium while still having good downside protection to what you have.  

    UUP/Tusca – I think it’s worth the risk into the vote.  As I said above, we will probably have to "buy the f’ing dip" if we get a good one but we’re just so hugely extended right now and screaming for a dump back to 11,000/1,177.  If we hold that, THEN it will be fun to play up again.  

  176. Phil   What about shorting the Canadian Oil Trusts like PWE.  This stock has not really climbed much off its 33 high in 09.  Since we are in the USO Jan 135 puts in 1050p would shoring this stock with some puts make sense?  They are on a slide at the moment and if oil drops and the dollar gets stronger then it should put further downward pressure on this stock.  Interested in hearing your view.

  177. Matt/Go Down
    The way I see it, once the volume dries up and the Bots take over the market just creeps up and up and up…….from the looks of it, they took over at 11:54 today.  Why would any long sell into this?

  178. Sorry I rolled to the 135 USOs

  179. I meant 136 damn it.

  180. matt

    I’m not short yet, but as I often say at times like this, it’s either up, or down from here 8-)

  181. It’s looking like 12 green daily candles in a row for IWM.

  182. Matt,
    Will you please buy IWM long so that it breaks the trend!!!!  :)

  183.  Phil/CMG, my conviction is based on valuation, nothing else. It doesn’t mean I’m betting against the business. Just like NFLX has a good business to rent out movies and TV shows, we just don’t believe they should be priced stratospherically.. ISRG even though continues to grow extremely healthy, its price has come down a bit more to reflect a more proper valuation.. and they are still a monopoly! CMG is not a monopoly, their business is good but it’s a restaurant and the price should not be $260 or so. That’s my conviction, and I’m willing to ride it out until the price reflects a more proper valuation. In addition, the intention of selling calls/puts is to get premium.. as such, with my Dec $200s I’m not getting any premium anymore. This sell-off has presented a good opportunity for me to roll them out in time and higher in price with the intention of not losing money, but also to go back to earn premium over time. After thinking carefully, I rolled my short 9x Dec $200s to Jun $220s..they are 65% PREMIUM, and I’m still with the conviction that the price should come a bit down.. that’s my risk, and I’m sticking to it. However now I intend to also sell puts month after month, so that I can somehow hedge a crazy move up because the market remains irrational longer than one can remain solvent.. I don’t think this strategy is wrong, do you? If the shares edge lower, then I can either reduce my size .. if they ride up, well I just wait for opportunities like today’s to roll again and get them back into some premium.. after all they can’t go to infinitum, can they? What do you think?

  184. Good summary of the insanity from the NYTimes, this statement pretty much sums up the nonsense:  

    from March 2008 to May 2009, the Fed extended a cumulative total of nearly $9 trillion in short-term loans to 18 financial institutions under a credit program.

    That’s where our Gang of 12 gets their money – it’s 10% OF ALL THE MONEY IN THE WORLD just handed to them! 

  185. Unbelievable really.  At least for FAS, you’d have to go back to July 23rd to find a day like today.

  186. Phil poor rav. is in love with CMG I am just happy if this sucker stays between 195 and 240 until Jun no complain just get my money back and take a grand or two

  187.  jromeha
    Further to the currency opportunities next week regarding the EUR…. we need to watch what happens in Ireland early next week, when they vote on their budget for 2011…. the budget plan may fail to pass ( the bailout depends on it ). If it does not pass, they the EUR will head south – this may destroy the Euro rally. Should this take place, I’ll probably go short the Polish Zioty, as it follows the Euro, but on "meth", and the moves are hyped in comparison. ( moves faster ) like a meth-head chasing a bus.

  188. What is going on with the divergence between the RUT and SPX.

  189. exec, haha.. they were squeezing a new low in FAZ trying to shake the bush so I thought I’d throw them some meat to see if would call off the dogs.  It did… but only for about 5 mins!

  190. With power plants changing to coal….those boys are all over the top, literally.  Need to get ready to short.  For us oldies…remember the good ol’ PCX days…ahhh, those were the days my friend...

  191. You know Cramer and boys are successfully doing their job when you have a 2 day rally like we’ve had and no profit taking on Friday.

  192. Phil- totally agree… That’s one thing tht Bush always did was misuse/abuse what the appropriations bills were originally intended for. I’ve stated it many times in debates with the ‘cants on this board. Obama has done the honest thing by making an effort to get this war on the books.

    That compromise is weak and makes me sick. He should play for keeps and call the Republicans bluffs. Who will the people blame next election, those who tried to pass middle class tax cuts and wanted to extend unemployment benefits or those who wouldn’t play ball and let 2M people lose their lifelines right before Xmas bc the top % needed tax cuts? I mean, when I heard compromise I’m thinking they would be raising the min from 250k to 500k, not extend everything in order to get jobless benefits extended. The dems consistent lack of a spine is almost as pathetic as the ‘cants consistenly BAD policies! Anyways ya’ll have a good weekend – even you ‘cants out there!

  193. FNSR (and Phil) — While it’s certainly possible (probable even) that today’s action is Cramer-induced, so far as I know yesterday’s was all about the last quarter as I don’t believe Cramer had mentioned them.
    Frankly, as FNSR is one of my longer-term picks, I’m not thrilled with a 16+% one-day bounce as it makes me nervous.  But from a fundamental perspective (assuming such a thing even matters in the current market), I’ve scenarios that support FNSR at much higher levels 12 to 18 months out.

    Simply annualizing the last quarter’s $0.44 earnings (4x$0.44 -> $1.76) with a trailing PE ratio of 20 would give them $35+.  But for at least the last 7 quarters, they’ve out-paced their market in revenue growth (taking share from their competitors) *and* they’ve raised their gross margins and operating margins substantially while taking a market leadership position in the higher-revenue, higher-margin, less commoditized sectors of the optical components arena.
    So I frankly see them continuing to grow their earnings by (somewhat conservatively) 10% to 15% quarter over quarter for the next year (let’s say $0.44 + $0.48 + $0.53 + 0.59 -> $2.04).  With a 20 PE, that get’s them to $40 a year out.  By the by, "analysts" have FNSR with EPS of $1.83 to for fiscal year 2012 (ends April 2012).  They are, IMO, *way* off.
    But I’m hoping that seeing as how they’re growing revenues as much as 60% annually, that perhaps by next year they’ll actually suffer some PE expansion.  And a 30 trailing PE a year from now gives them more like $50 to $60.
    Obviously I could be wrong about everything, the entire market / world could explode (again!), and I’m not sure that they can sustain their current growth beyond 18 months from now.  But FNSR, at the moment, seems quite undervalued and is seemingly executing quite nicely.  Which is way I started buying it well-before the last meltdown, why I bought it through the meltdown (when it became ridiculously cheap), and why I’m struggling now to get it’s percentage of my portfolio back below AAPL’s. ;-)
    Oh, and my optimistic target numbers are ridiculous. ;-)
    Frankly, I’d really been hoping that FNSR would stay down until the January expiration and that we’d get some LEAPs to play with.
    FNSR was a lucky epiphany for me in that my last startup company (2006-2009) was working in the fiber optic / smart grid / national broadband space.  And very nearly every single optical networking equipment vendor that we dealt with was using FNSR optical components in their equipment.  FNSR has only grown its market penetration since then. ;-)
    Or, in short, I don’t think it’s all Cramer and, at the moment, I don’t recommend being short of FNSR other than short-term.

  194.  I have checked further into my call on NILE ( Blue Nile ) . Their black Friday sales were up 13% from last  year. Cyber Monday sales topped $1 bil which is a 16% increase. This is BIG, and over the next weeks ahead, it should be nice for those that like the stock. The short interest in the stock is a staggering 41%…. hmm …. When the earnings are reported, I’m betting on a massive short-cover rally….. As JRW says "we shall see ". Yodi— could this be a CMG inverse play ? 

  195. Gel – sales/revenues were up all over, but tell me that the net margin was better.  I bet not!  If KR can’t make margins on their own brands….these retailers are gonna be in deep dooo dooo.

  196. gel1 I trust he did not burn his fingers enough

  197. Thx for the info Gel, are you contemplating getting back in the USD/HUF trade at all? I haven’t closed it out yet.

  198. Don’t know why CNBC keep bashing NFLX(now they saying that NFLX will lose 3/4 of it’s value next year), happy with that because I have shorted calls, just feel strange. 

  199. Hi Phil — just ck in the index today — Please explain fundamental behind RUT index breaking out— what  drive this — is small cap or business folk is doing very well ???? I have ben rolling my short call on rut for the last several mos-- I hate to convert to short put and get a whip saw the other way next week — should I continue to roll further out mos and up untill it crash—THX

  200. This market just doesn’t want to go lower (other than NFLX and CMG). Unreal. Why is the RUS so much stronger?

  201. Phil/DECK – still hold onto the Jan 70 puts?  should have put a stop on this.  down 40%.  ouch. 

  202. yodi
    December 3rd, 2010 at 12:13 pm | Permalink  
    Hi Phil KKD selling any naked callers at this stage

  203. Pharmboy:
    what’s going on with the decline in BMY ? buy,sell ,hold?

  204. Dang it, I spent so much time writing that last FNSR thing that I neglected to continue lightening / rolling forward my current exposure to FNSR heading into the weekend.  Just in case Europe / Ireland / et al screw everything up Monday and Tuesday. ;-)


  205. Sorry Phil wrong stk ignore

  206. Wish I had any margin left to buy puts as the vix breaks 18.

  207. PWE/DD – Well since we’re shorting oil and that’s not working I wouldn’t want to double down on a trust.  Also, the option prices on the trusts are usually poor for selling but if they run up huge on +$100 oil, then they make a nice short.  

    Volume/Exec – Good point and volume is very lame 97M on the Dow at 3:15.  I don’t know why people ignore this – very clearly we went down on reasonable volume for the entire month of November and now we are up on low volume for 3 days and everyone acts like this changes everything – it changes nothing.  You can’t have 20 days of selling reversed by 3 days of buying – it’s not even possible – it means (even assuming similar volume) that just 1/7th of the stocks being bought reprices the rest but good luck finding buyers for the other 6/7ths at these prices.  

    Actually, I just noticed, this is the same way we started November, with 3 idiotic days of buying followed by a month of selling (except on the RUT).  

    CMG/Rav – I would just be concerned about giving callers more time when it can be avoided as inflation is your biggest enemy and valuation won’t mean a thing if the dollar begins to melt down.  The longer you give them, the more chance that our currency really unwinds and you get pushed into an intractable position. 

    RUT/Samz – Somehow they have been able to take control of the RUT, very possibly through the ultras and they now use it to drive the markets.  It makes no sense at all that the small businesses that, according to this week’s BBook, can’t get loans, aren’t hiring, have margin pressure and are not looking to expand, are leading the rally.  

    There goes XLF and FAS!   Dow goes green, UNP making new highs, SLB making new highs, oil $89.50 despite the NYMEX being closed and Cramer is pumping NFLX in TV!  What a world!  

  208. Phil:
    Would you hold XLF (DEC $15 calls buy 10 at .35 and (DD) 10 more at .16 / 20 total)? Small profit for now. Thanks.

  209. Cap/Pharm - HK has broken out of the channel it was in for a year and is holding up, so I think it’s game-on again for us!

  210. BMY – just rotation.  I would wait for some consolidation or start by selling Ps for an entry.

  211. Hi, Phil – Noticed your comment "Rolling/Exec – That’s just shorthand for selling the puts you have and buying some other puts. Rather than saying ‘sell the DIA $110 puts for .55 and then buy the Jan $110 puts for $1.40′ we say ‘roll the Dec $110 puts to the Jan $110 puts for .85.’"
    Was that a hypothetical example you gave to Exec or an actual call to roll the DIA $110 puts in the 1050p? Because us basic members aren’t in on some of the conversation that goes on inbetween posts, I want to make sure I’m not missing an adjustment to the 1050p there.
    Have a great weekend everyone.

  212. XRT Jan Puts volums (V) as of a few min. ago :


    -XRT110122P47. Quote for -XRT110122P47.

    -XRT110122C48. Quote for -XRT110122C48.
    -XRT110122P48. Quote for -XRT110122P48.

  213. I guess, messed up the cut&paste; you get the idea though :)

  214. You can’t have 20 days of selling reversed by 3 days of buying…

    Well, someone is buying Phil….and it ain’t helping the shorts.

  215.  jromeha – USD / HUF
    The strategy is the same for the HUF, as it is for PLN… I will most likely play both at the same time… and will post my trades.  If you are still in the HUF, then your reprieve will maybe come next week. – Lets hope !

  216. Boy oh boy…….they pulled the string on the dollar to get their stick.

  217. So, Phil……GLD? "Gold now very silly at $1,407.  GLD $137 puts at .20 expire in 5 hours but I like them.  "

  218. FNSR/Rein – Oh I have nothing against them, I just wouldn’t enter them off this move in either direction.  I would take profits off the table if I was long though.  You can cash the stock and sell the June $21 puts for $2 and buy the $23/30 bull call spread for $2.50 and your worst case is you own them again for $21.50 and and you have $6.50 of upside (30% of the stock price) off a trade that’s already $1.15 in the money.

    NFLX – Oh that was confusing, Cramer was now down on NFLX?  I can’t even keep track anymore…

    RUT/Gucci – See above, there’s no logical reason for it.  I’d wait for Tuesday as we can be right back to 715 by Wednesday if Ireland turns down the EU although the way things are going – maybe that’s going to be yet another "great" reason to rally the markets…  8-)

    Speaking of rallies – better later than never on FAS/XLF!  

    DECK/Terra – I’m for holding all through Tues.  They are not really down until DECK passes $74 on expiration day are they? 

    KKD/Yodi – Er, no, still.  

    BMY/Dflam – We need Pharm but I think accumulate although, as with everything, TUESDAY!  

    Ah, and what Pharm said!  

    XLF/DClark – I’d hold it as a hedge against bearish positions but I would NOT let it ride over the weekend otherwise. 

  219. A little new to options.  Did I just do what I thought I did?  Sold Dec DIA 116 puts $3.00 and bought 115 puts $1.99.  It seems to me that I am plus $0.01 below 115, some type of win between 115 and 116, and $1.01 above 116. All minus commissions of course.  Please feel free to comment.

  220. Stuck the landing!  Even the Russian judge gave em a 10.  

  221. This is the most assine market I’ve seen in a long time.  If the f-ing Fed wants to make us all feel so rich why do they let their henchmen make it so volatile?  I’m a long way from feeling rich after the last 3 ridiculous days.
    I think what might really be behind this is the Gang can finally rest ez because their boy the Bernank has said he will put the Fed on the line for any blowup in Europe that will eventually happen.  Outside of terrorism, there really aren’t any risks for them to worry about.

  222. Hello Phil,;
    if im trying to introduce friends to your site and get them interested, is it ok to send them some of your articles ?
    what about some of the old portfolios ?
    what about the articles about how to but stocks fro %20 discouns and so on.

  223. Now how are the MSM dumbasses going to spin this one without basically saying FREE FED MONEY for the believers.

  224. Phil:
    XLF out at .37 for a small gain. Thanks

  225.  Pharm / NILE
    Margins are an issue… however the vast expansion in revenue will make up for a lot of .discount activity. My interest is in anticipating a short squeeze (41% interest ) in February after earnings are reported on the 10th…. could send the stock up a lot

  226. Rolling/Dave – Hypothetical.  If I think a trade idea is generally beneficial… 

    …  I indent the box like this.  

    XRT/Reza – I’m starting to think the markets are so thinly traded that our portfolios are attracting a lot of Bot action.  We have to be a little more patient in that case.  

    Buying/Pharm – Remind me to dig out my car lot example over the weekend, it’s a good way of explaining how volume affects the markets.  

    Here’s my song of the day for NFLX.  

    GLD/Snow – Well I certainly hope you don’t still have them!  Nothing you can do about it now…

    Spread/Arganx – That’s great, you are net +$1.01 and the most the $116 putter can collect from you is $1.  Now, the flaw there is you need the Dow over 11,500 to make more than a penny and, of course, the commissions.  If you can get those trades that include the commissions – do them any time.  

    Lol Ottoman!  

    Terrorism/Matt – I’m sure that would somehow be good for the market too.   8-)

    Intros/Micro – Articles yes, those are public after 2 days so unless they say Members only or are from the education section, that’s fine.  Not the portfolios, also for Members only. 

    Well that was super fun!  

    Have a great weekend everyone.  

    - Phil

  227.  snow    LOL – "Silly Walks" is a keeper for some good laughs

  228. ok got it. when i include an article can i include the member chats or no ?

  229. Hi Phil : Bought XOM in July at $60.52 (after closing out puts) and sold 2012  $70 leaps for $4.22 . Stock now at & $71.19 and leap at $6.65.Don’t want to sell puts since it’s an IRA and requires 100 % cash set aside.Delta is .58  Should I roll to $75 leap at $4.25 ? thank you.

  230. Good note from Andrew:   Dollar Bull Throws in the Towel Following Employment Report

    UUP - PowerShares DB US Dollar Bullish Fund – A sea change in attitude toward the dollar following today’s weaker-than-expected employment report inspired one options player to cut and run from a large bullish position in the US Dollar Bullish Fund this morning. Shares of the UUP, an exchange-traded fund that tracks the performance of the dollar index, are down 1.00% to arrive at 22.93 just before 11:30 am. It looks like the trader originally purchased a massive position in March 2011 24 strike calls to gain exposure to a rising dollar, or alternatively to defend against dollar appreciation, ahead of the Fed’s decision to roll out a second round of quantitative easing. The investor appears to have purchased 105,500 calls at the March 2011 24 strike back on October 27, 2010, at a premium of $0.34 apiece. Since the calls were purchased, the fund rose approximately 3.8% from 22.65 up to this week’s high of 23.52. In hindsight, the trader would have been better advised to act ahead of Friday’s employment data release as he did when he initially purchased the calls ahead of the Fed announcement. Premium on the March 2011 24 strike calls stood at an average of $0.48 each on Tuesday when the UUP touched its intraweek high of 23.52. The plunge in the value of the dollar today combined with the adverse effects of eroding time value on the contracts pushed premium on the calls down significantly. The investor received just $0.24 per call option on the sale of all 105,500 contracts today. Net losses on the closing sale amount to $0.10 each. We do not know whether the options were tied to an underlying position or if the initial long call position was intended as a hedge against a strengthening dollar. These are important factors that would likely change the interpretation of the activity observed on the UUP this morning.

  231. Economies of scale may not make up for the margin…..from Rosie

    No doubt the retail sales data in the US have certainly surprised to the upside.  But iwas all due to the paper wealth create from  the bounce back in equity values bolstering th high-end consumption, and the low-end spectrum being underpinned by Uncle Sam’s generosity as a record near 20% of personal income is now being delivered from the govt transfer payments.

    The bottom line is that we will turn into secular bulls the moment we see that the U.S. economy can expand organically without the sustenance of a public sector oxygen tank. We need to see that the private sector can stand on its own two feet. We actually thought we were going to get that opportunity when Ben Bernanke announced months ago that the Fed was planning its exit strategy.

    Alas, no such luck here as QE1 morphed into QE2. We had also thought that a tax cut, which always had a December 31, 2010 expiry date, would disappear. But again, there is simply too much concern over how this will impact the economy despite the fact that revenues are falling so short of expenditures that the deficit continues to flirt near 10% of GDP. In fact, the government debt/GDP ratio in the U.S.A. has already pierced levels that touched off credit downgrades in Canada back in the early 1990s. When Fannie and Freddie’s balance sheet is tacked on, the U.S.A. looks worse than the Euroland periphery. Now what fair-value P/E multiple does that deserve?

    Word on the street is PFE is gonna announce a big, big layoff….>10K.

  232. Chats/Micro – As long as they are 7 days old.  

    XOM/DFlam – I wouldn’t because it’s based on $90 oil that is very unlikely to be sustained so why spend $2.40 to give up protection you very likely need.  Eventually, you can roll the caller to 2013s that pay you if you are patient.  

    Margins/Pharm – Another thing no analysts are talking about. 

  233.  Ravalos, that will work provided CMG doesn’t keep going up like WFMI or BIDU.  I think the June 220 roll is ok, hopefully the damn thing has topped out at 260 and you’ll be fine.  If it goest to 300 or higher, that will suck, but otherwise your strategy should eventually work out.

  234. WTF happened to the dollar the last 30 minutes going into close? Any news or just the typical BS?Dx was at like (.9) and ended at (1.15).

  235. More food for thought:

    The massive selloff in government bond markets, even in countries like Belgium and Italy (let alone Portugal and Spain), is a clear sign that the bond vigilantes are now targeting the supposedly stronger governments in the eurozone. These bond vigilantes are also speculating that the national purse will be needed to keep their banks afloat and the relentless widening in CDS spreads is an added suggestion from the markets that these governments may not have the resources to fully repay their creditors once they have moved to support their banking systems.

    What is notable that does not get a lot of press is that both the M3 money supply and private sector credit has contracted in the euro area in each of the past two months. The austerity packages needed to bring intractable deficits down will fuel the deflationary pressures, which will only further destabilize the financial system and add damage to the economy. While Germany is viewed as a darling in the region, its trade and banking exposures to the euroland periphery is huge. Judging by the market action, the contagion through to Belgium, Italy (never mind Portugal and Spain) is increasingly apparent. This is very much like how the problems in Thailand ultimately spread to Singapore and South Korea back in the 1998 Asian crisis. The question ultimately will be how the banking systems in the rest of the world will be affected.


    There was also a near eight-point drop in production (ISM) in November, to 55.0, the lowest level since June 2009. New orders saw a 2.3 point retrenchment to 56.0, significantly below the 60-plus readings in the first half of the year. The inventories index was one of the only components that rose in November, up nearly three points to 56.7. If it hadn’t been for the boost in inventories, ISM would have slipped further, to 56.0. Also, exports, which were the big story in October, fell to 57.0 from 60.5 — an indication that global growth may have slowed and with the European situation worsening, we could see further declines in the months ahead.

    Are we not back to the high on the SPX when the dollar was 5% lower?

  236. The symbol of demise for Western civilization, the adult onesie.  Humanity has dug its hole a little deeper!

  237.  I just noticed this when I went to take a look at some of my long term holdings. I’ve had LGDI as an investment for a couple of years. They hold large phosphate deposits in Australia. It looks like it might finally take off.
    Legend website:

  238.  Mocha / HK  …. yes, bout time !   Still long stock w/ covered calls sold against.

  239.  Phil / Hey Hey Goodbye … I nominate CMG to share that song w/ NFLX today !

  240. FNSR – Dang it Phil, your version of taking money off the table was way cooler than the one I actually executed today!
    I’ve really got to learn to be more fond of selling puts for positions I’d like to acquire.  All these years later and three+ pronged options trades still make my head hurt. ;-)
    That having been said, I did protect profits by swapping half of my actual stock for much less valuable out of the money calls (bad, bad, bad) while protecting the other half with would have best been described as a short-term ratio’d-bull-credit-put-spread.  One can only hope I got the spreads and ratios correct. ;-)

    Though I will miss seeing that 1800% return in my holdings list from the FNSR $22.5 options I finally got completely out of today.  That was pleasant.  ;-)
    I suppose that a major strike to FNSR from an options perspective is that the options can be awfully thin for this stock.  There were several strikes today where I was 90+% of the volume on the day.  Which ain’t necessarily horrible this time of the month, but can be a nightmare if you find yourself trying to unwind positions on expiration day itself. ;-)

  241. i was trying to become a day trader…got my ass kicked by selling NFLX 185 puts this morning for 0.27
    Two miunutes before close, they spiked to 0.45 and my 0.25 stop order of course got filled right at 0.45: a quick loss of $360 !!!!
    Did someone on this site say markets are rigged.
    Just took away all my marbles from the game..

  242. XRT/Phil – I hear ya; pointing out t 10873 XRT Jan47Ps changed hands which on a slow (low vol.) day like this, to me is unheard of!
    Fedex Ground to hike rates by net 4.9% in 2011
    How’s that for inflation?

  243. CMG,
    There is a lot of excitement on this board today on CMG.  I just checked my double short CMG spreads and they have recovered all the paper loss and are solidly in the profit column.  It was March 310 and 320 short calls and March 200/195 long put vertical.  VIX had dropped 3 days on the row, making the CMG calls lose value quicker than usual.  The trading plan calls for the buy back of the short calls soon so that the long put vertical is a free play.  CMG never reached 270 for a doubling down (sell more calls).

  244. PHIL / GOLD and QE – Bernanke is going to announce more QE on 60 minutes on Sunday according to zero hedge story linked below.  And he hasn’t even spent the planned $600 billion yet!  Looks like quite a few people knew about this before the close.  I hate this friggin’ rigged market.  Time to buy more gold and foreign currencies…  

  245. I was slightly annoyed, though somewhat amused, that The Bernank and the FED we’re going forward with QE2 set at $600B, but even the thought of going over that is beyond reproach. Seriously, more QE??? WTF!?!?!?!
    Silver is at 30, gold at 1400+ — I thought people were on the fringe predicting things to double from here, but now I am starting to see it. Gold 2500-3000 is very realistic and we are heading for very dangerous territory in this country. Somebody needs to stop these people, it is getting ridiculous now.

  246. terrapin
    Bernanke is a fool… and an embarrasement to the investment community. Why would he appear on 60 minutes in the first place and additionally telegraph his thoughts to folks that know nothing about money and banking. I’m in shock!
    Yes Gold, Silver and CEW look better each day. !

  247. I’m a moron for having SLV puts.
    Probably time to get on board this train more than I have. Long plays (especially financials) with key hedges in place for meltdowns (of course), but generally, very long is the way to go the next several months.  
    The Bernank(rupt) – insanity. The insane part is what happens once the shit hits the fan and they try to put a lid on it. That’s when the fun really begins (and TBT finally becomes a good pick). It’s like a smelly fart – there AINT NO PUTTING IT BACK IN THE "BOTTLE." I don’t know when we are going to face it but when we do it is going to be sick sick sick.

  248. biodieselchris
    You have it all figured out –  you are fortunate as you are early, and so many are still clueless ( most ).  LOL – funny bot appropriate analogy !

  249. Feel like a total moron for not embracing the QE2.

  250. Most people do not change much in their beliefs over their adult life – Bernanke is no different.  He is the "alpha dog" when it comes to QE, and wrote his PHD thesis with an emphasis on this theory, as a resolution to economic stagnation. This activity is destructive to the Dollar, and is the path for "hyperinflation". We as investors should accept this eventual outcome as a "probable" event.  I like long term trends that are identifiable, and we are in the midst of one right now. Phil, I know, has a concern for this ( I believe he is recommending some gold positions at the moment – ABX, HMY ) so I am not alone. I closed out some of my precious metals plays last week, but the news out of our government keeps on coming that dilution of the dollar is ongoing, and steps are needed for all investors to take advantage – or at least hedge the circumstances that are on the horizon. I am back into the "gold bug" disguise.

  251. gel – As usual pls post your trades. Many thanks.

  252. gel1, I’m not for more QE.. but I don’t have anything against the Bernank for going on 60 Minutes.  Who cares what the intelligence of the viewer is?  If they are interested, they should here what he has to say- 
    Terrapin, I share your frustration but I don’t think the fact that some people knew he is going to be on a TV show before some others knew is considered insider information-  However, it would have been very profitable information to have today and I’m sure, since the interview was taped Tuesday, others have been profiting from it since then.  How does that grab ya!
    Samz, It’s not as ez as simply embracing the QE2.  I was an early adopter.  I went long minutes after it became official that QE2 was actually going to happen on the 6th of Nov.  I sold later in the day.  Bought again the next day and took a loss.  Since then I’ve been thrashing about.  Maybe the whole European debt crisis, which seems to appear periodically out of nowhere, was a clever ruse to take the market down to flush out the weak hands?  If so, it’s clear the ‘Gang’ isn’t about to hand out money for the Fed without a fight.  Time to check one’s emotions at the door.

  253. GLD / Phil & Gel1:
    Can either of you explain Phil’s 2:26pm comment regarding Gel1′s GLD position?  I understand most of it.  The part I don’t understand is:
    "GLD is at $137 and you have an upside buffer with the hedge and all you need to do is buy to cover if GLD goes over $141 with calls that have very little premium, like the $126s at $12 (.65 premium).  You sold $1.10 in premium so you can’t lose to the upside…"
    My questions: (1) What is this $141?  Is it some sort of a resistance level?  If GLD breaks $141, then we assume that it’ll go higher?
    (2) Let’s suppose that GLD went above $141, and you bought the $126 calls to cover your $146 short calls.  And sure enough, immediately after you bought the $126 calls, the market turns around and goes down?  And then what?  Do you use $141 as an on/off switch and sell the $126 calls?
    Sorry about the long post.  I am interested because I see this as an interesting strategy that’s applicable to similar situations.

  254. cwan
    Phil’s spread on GLD, as an alternative to holding 250K in options that are almost $40. ITM makes a lot of sense, particularily on a stock that I am bullish on long term. By 2013, I believe we could see spot gold at $2500.
    I to am not totally clear on the calculations as regards $141, other than my the calls purchased in the spread are at the $140 strike, and the calls sold outside the spread are $1.10. I do not otherwuse understand the relevance of $141.. I believe Phil’s arbatrage between taking losses in the regular account and moving the profit over to the IRA is clever when structuring the hedge in the big picture.The protection is the same, but taxation treatment is factored for long term gain.- Very interesting !. I too hope Phil will run through the calculations for clarification.

  255. matt
    My comments were intended to criticize Bernanke for leaking the content of his presentation to 60 Minutes ( a taped interview ) for later release, that sugested he would consider a further expansion of QE. This leak hit the currency markets and tanked the Dollar. I do not like this activity in any form ( about the same as manipulated markets and data ). I personally lost over 50K last night, as the currency markets reacted to this leak. The Chairman of the Federal Reserve, above anybody else, should know better – this oversight is reprehensible and negligent. The issue is not about QE, but it is about stupidity, on behalf of BB. This guy is not smart enough to exercise care in his wordage when taping a show for subsequent release. One of the producers leaked his statements. I lived in DC for 6 years, and one thing that resonated with me during my time there, and that is I was in continual amazement over the stupidity of our government – not much has changed, I guess..

  256.  Phil / Rolling
    Can you explain how and when to roll sold options? Is it better to wait until most of the premium is gone, even when a sold option goes in the money?

    Does Bernanke knows something we don’t?

  258.  Phil:  Gels GLD play from friday
    Back in Sept I was working on somewhat similar play w  long 10 GLD 2012 120 C and short the 2012 145′s, selling some near term puts as we go along to knock off some premium and you also suggested selling 5 near term calls at 125.  I didn’t quite get the best way to manage these naked calls and as GLD has moved up to 137 ish I’ve rolled the 125′s to Jan 130′s.  I have been waiting for opportunity to buy back or roll up and out further but I’m not clear what my path with the naked callers should be if I don’t get a meaningful pullback.  What should I be looking ahead to?   Cheers

  259. Exec – thanks for the recommendation for Rue Domaine! That was the best meal I’ve had since moving to Dayton 18 months ago. I will definitely be going to that place many more times before I move to Boston in late April.

  260. datuu:
    I just read your post from yesterday to Gel1 where you said:  "i know of an ira account that will let you sell options and basically do anything else that you want inside it". Could be a perfect vehicle for my new LLC. Mind sending me the link/paste info to  Much appreciated and have a great weekend.

  261. All I want for Xmas is for the Dems to grow some stones!
    This is an outrage! Sorry, but if you make over a million $ a year you dont NEED a continuation of Bush’s tax cuts. Seriously, all you who complain about Obama and his socialist ways need to lay off the crackpipe. He is only different in rhetoric, no noticeable differences in policy. The watered down health care bill is the only ‘change’ we have gotten….

  262.  The Bernank on 60 Minutes … how bold of him to submit to the biggest softball interview he could find … its pathetic.

    I phone 4 $149 at Radio Shack 16gb w/ activation.

  264. Few workers with neglected
    401(k) retirement accounts would risk taking out second mortgages to invest in stocks, gambling that the investment gains would be enough to build bigger nest eggs and repay the loans.
     But that is just what Illinois, which has been failing to make the required annual payments to its pension funds for years, is doing. It borrowed $10 billion in 2003 and used the money to invest in its pension funds. The recession sent their investment returns below their target, but the state must repay the bonds, with interest. The solution? Illinois sold an additional $3.5 billion worth of pension bonds this year and is planning to borrow $3.7 billion more for its pension funds.

    Arizona, hobbled by the bursting housing bubble, turned to a real estate deal for relief, essentially selling off several state buildings — including the tower where the governor has her office — for a $735 million upfront payment. But leasing back the buildings over the next 20 years will ultimately cost taxpayers an extra $400 million in interest.