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TGIF – Holding that 100% Line Would Be Nice

Fastest Double EVER! 

That's the verdict as the S&P 500 adds 666.79 points in 23 months, the fastest gain since the index was founded in 1957.  "The scale of this rally is just enormous," said New York money manager Barry Ritholtz. He calls it the most intense rally since the Depression. Even during the go-go 1990s, the S&P typically took around three years to double. For instance, it first cleared 1,000 on Feb. 28, 1998 — 35 months after its first move above 500 on March 24, 1995.  

Ritholtz says the average stock market bounce following a crash is 70% or so, and is stretched over a longer period.  But of course, in previous cases the Fed wasn't buying up half a year's worth of Treasury issuance and holding short-term interest rates near zero.

"This one is unique," said Ritholtz. "Obviously the Fed is the key difference. We have never seen them throw this much liquidity into the mix." Accordingly, most market observers are now tapping their feet waiting for the inevitable pullback. The average correction following a postcrash bounce is 25%, Ritholtz said.  According to Fortune:  "There are all sorts of reasons to expect the momentum to turn against stocks after their unprecedented gains. They range from rising bond yields and stretched stock valuations to political unrest in the Middle East and another iteration of the ongoing debt crisis in Europe."

Of course, as Fortune should know, IT JUST DOESN'T MATTER what's going on in the World as long as  B-B-B-Bennie and the Fed continue to prime the pumps at the IBanks and last week, the Fed set a new record as well by expanding their balance sheet to $2,492,000,000,000 after adding $23Bn of US Government Securities.  

Now I wouldn't want to force you to draw any conclusions that may link those two items. After all, Doctor Bernanke himself says that the Fed's actions have nothing to do with either inflation in the commodity pits or in the equity markets.  They are merely providing ample liquidity to their Member banks who, in turn, lever that liquidity 10:1 and spend it in the same wise fashion they always have – like the 10s of Billions of Dollars of "toxic" securities they have been splurging on again, once again hoping to make a quick buck (and get a big bonus) before the bottom drops out – again.  

Of course, watching the same mistakes get made by the same people who didn't get punished last time (see Matt Tiabbi's excellent "Why Isn't Wall Street in Jail?") means that we can make THE SAME investments that worked last time.  Like yesterday, I sent out an Alert to Members at 10:04 to add USO March $36 calls at .94 to our $25K Virtual Portfolio, which is a very aggressive virtual portfolio aimed at generating $100,000 by December 31st. 

Well, USO did what it pretty much always does when the Fed is giving away money (as discussed in yesterday's morning post), which is to say that it went up all day long and those March $36 calls jumped 26% on the day, finishing at $1.17.  We will be taking the money and running on that trade this morning as the March contracts settle next Tuesday and Monday is a holiday and there are still 110M open barrels on the NYMEX and Cushing, OK is packed to the gills already and the roll to April (contango) is $3, which is a lot.  That leads us to expect a lot of last minute dumping after the morning spike, so we may end up going short on USO today and we will certainly take a short position on the oil futures below the $90 line.  I'm sorry if that sounds "flip-floppy" but that's just the way to play this market! 

We had a great ride playing oil all the way down from $93, selling March $38 calls for $1.40 on the 28th, against $100 oil not happening.  Those dropped to .29 on Wednesday (up 79%) and, of course, we're long now so done with those. You can't fight the Fed when they are hell-bent on devaluing the Dollar at this kind of pace – all you can do is hold your nose and BUYBUYBUY but, as always, we stand very close the the exit doors to make sure we avoid the stampede on the way out.  As Barry said in that Fortune article: "The average stock market bounce following a crash is 70% or so, and is stretched over a longer period and the average correction following a postcrash bounce is 25%" or, more succinctly, as Marvin (the Martian) said: "Where's the kaboom? There was supposed to be an earth shattering kaboom!"   

Speaking of flip flopping – we also went long on AAPL on yesterday's little dip as people were panicked by a well-timed (for the bears) photo that was supposedly of a very frail Steve Jobs entering a cancer clinic.  We had many reasons to question the image, which did not show his face but did show some very cheap jeans and a sweater with buttons on it draped over a very frail-looking man with (from behind) Steve Jobs-looking glasses.  On that "evidence" AAPL fell from $365 on Wednesday morning to $351 in pre-market trading yesterday (where I also commented in the morning post that we had our doubts) and now it has been confirmed that Jobs attended last night's meeting with Obama and a dozen other tech leaders so, sorry bears but – He is not dead yet!


Mr. Jobs' very obvious signs of life don't stop the hyenas from using their media attack dogs to try to scare people out of Apple's stock. Take Jim Cramer's, for example, who headlined a real hatchet piece this morning with the very scary title of: "Dozens of Hedge Funds Sell Apple Shares."  This is, of course, totally misleading as the net of fund flows was 6.1 million shares added in the quarter vs 1.6M sold but let's not let the truth get in the way of a good headline, right Cramer?  

Of course takes the opportunity to allude to the fact that this is about the National Enquirer photos (aka Jim's research department) and they make sure to drop the symbols of 7 very popular stocks (C, GE, SIRI, LVS, MSFT, VZ & T) to make sure Yahoo and Google Finance pick up this article from this "trusted source" as well as tossing in the phrases "iPad 2" and "iPhone 5" – just to make sure their headline hits the fanboy sites as well and causes as much panic as possible.  Yet, amazingly, no arrests will be made!  

This is how the game is played, folks.  These hack publications are nothing but tools of the hedge funds who use rumor, innuendo and, of course, completely misleading extrapolations of thinly researched data to herd you in and out of stocks that they are looking to load up on or unload – depending on the plan of the day.  

We have long-term "safe" plays on AAPL with very wide margins of error in our hedges (down to $270) as we did anticipate the possibility of Jobs dying and we did take a speculative bullish position yesterday as a trade but, when I see such a blatant attack on AAPL being carried out by the hedge funds' hatchet men, I have to think now is a really good time to get more aggressive on AAPL, who do have the iPhone 5, the iPad 2 and a $99 or maybe $49 iPhone coming out shortly.  

Keep in mind AAPL had $65Bn in sales in 2010 and dropped $14Bn in cash to the bottom line with $25Bn worth of cash and short-term investments (another $25Bn in long-term investments) and a p/e of 20 while Cramer fave NFLX had $1.6Bn in sales (1/40th), $115M in profits (1/121st), $257M in cash and short-term investments (1/97th) and a p/e of 80 (4 times greater). Which one do you think should be the "BUYBUYBUY"?  

Today we will be ignoring a lot of bad news like:

Well, we're not totally ignoring it, we did take a put on the Dow as they tested 12,330 yesterday but we will be looking to buy those F'ing dips because the Fed is still out there – printing money – every day – they cannot be stopped by mortal man….

Have a great weekend, 

- Phil

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  1. Phil,
    I wish I had a buck for every article I read from some expert that claims we are going to get a substantial pullback.  Take a look at a 120 day daily chart.  There hasn’t even been a hint of a pullback.  How the hell are you supposed to buy the dips when the dips are so shallow that they don’t even you can hardly see them.
    We’ve said it over and over……this market is manipulated…..they want it to go up…..and there doesn’t appear to be any force that can change that reality.  I personally think that it will take something big to turn the tide…..and when that happens….it will drop like a rock.

  2. Good morning Phil — Any adjustment need for XLE march 72 put that was DD I think this week in the 25KP.  Thx

  3. exec-- the market has been going straight up since September without a pullback. Crushing if you are short anything other than the bear funds. Killing me.

  4. Exec – June, that is when POMO runs out.  Until then, enjoy the ride….PP below.


    Chart #2 from ShadowTrader

    Notice how the VIX has been making lower highs during the recent period of broader stock market appreciation.

    A close above yesterday’s high or even a sideways move today will keep the possibility for a spike into the descending trendline next Tuesday or Wednesday in play which of course would occur on a broader market pullback.

  5. Phil
    I am perplexed as to what to do with my TZA hedge.  If I do nothing I am afraid I will lose further on any new adjustments because of wider spreads after the split. If I roll to 2012, then I have limited my options for further moves and severely lengthened my commitment. I am wondering if it makes more sense to close out TZA and go with a more conservative hedge? Is there a better hedge for a rather conservative portfolio that is still 60% in cash? Thanks.
    P.S. I don’t think I was too heavy with TZA as I only had 500 BCS to protect 50K portfolio.

  6. As of 8:55am this morning, FAS was up 0.4% in premarket trading of just 12,200 shares.  That is a phenominally low number of shares traded for such a big move!  Where are the sellers??  I can’t believe there aren’t any longs out there wanting to take some off the table.  Pigs get slaughtered.. and one day we’re going to have a whole lot of pork to deal with!

  7. Good morning Phil or any one what holiday do we have Monday?? thks

  8. yodi--Presidents Day

  9. Jobs photos – I always like to see cui bono – this is interesting but may be outdated: "
    What the tabloid’s readers, in politics and out, may not know is that a key owner of the Enquirer is a prominent New York investment banker and one of Hillary Clinton’s key backers, Roger Altman. Altman was an official in the first Clinton administration, and his name is often mentioned as a possible Clinton Treasury Secretary.
    The investment boutique which Altman founded and chairs, Evercore Partners, bought a controlling stake in American Media, which publishes the Enquirer, in 1999, which it still holds with a partner. Evercore’s president, Austin Beutner, sits on American Media’s Board of Directors, according to Evercore’s website.

  10. Thks Savi so for that I take it the market is closed? Every one is complaining about him, he even had to rattle the bones of poor Jobs.

  11. PHIL
    Good morning,  USO 25kp,  MAR 36 C  up 40%.

  12. cnarbais – i understood (maybe falsely) that we were to sell the USO during initial excitement movements. I took 1.38.

  13. Wow, VIX down $1.  Nice premium crush.

  14. FEB expiration RUT,
    It seems the Feb month RUT has expired. Can anyone help me find the RUT index settlement value. I don’t see it on the CBOE website.

  15.  Damn, the solars are FLYING.. talk about bad timing. I’ve been following LDK for 3 years now and when I really saw the opportunity, I wanted to close my entire CMG position and open up to 100 contracts in LDK back when it was at $12.2, since I knew it was undervalued.. but I couldn’t close CMG because I wanted some volatility crush after earnings, so I didn’t make the move. Now CMG is moving around the $260 line and I’m earning premium as every day passes, but LDK shot up to almost $15 since Feb 10! (when CMG announced earnings) :(  

  16. Pharm
    Yet no drop in the prices on VIX option prices. Been trying to roll March 18′s to April 15′s since yesterday. The prices are higher than yesterday!

  17. Good morning!

    USO/$25KP – PLEASE don’t tell me I have to tell you that $1.45 is PLENTY to make off our .95 entry (52%).  We can set a stop at $1.40 and make it a .10 trailing stop if we head higher and, over $1.60, it can become a .15 trailing stop but we cash out by day’s end no matter what.  If it were a bigger position, I’d take 1/2 off now to make sure we get the nickel. 

    New play on USO is is the Feb (today) $36 puts at .03.  It is possible that we get a huge sell-off later and those suckers could leap up.  This is a craps roll play, you can buy 50 contracts for $150 and, of course, if that costs you more than $20 in commission it’s a waste too as it’s most likely dead money but there is a teeny, tiny chance that USO drops back to yesterday’s low at $35.50 or better as they clear out the NYMEX March contracts so the possibility of making $2,500 on $150 is why it’s a fun bet.  

    We do want to play those oil futures short below the $90 line on the same logic but very tight stops above.  This is the kind of play where you might lose 2-5 cents 5 times before it breaks down or it may never break down – certainly we’re not taking chances over the weekend.  

    1,333-1,345 is the range on the S&P between the 100% gain off the bottom and the Fibonacci level we looked at yesterday.  In THEORY, the index should be sluggish in that range and a break in either direction will be telling.  

    If oil does turn down, XLE will be a fun day trade on the Feb $77 puts, now .50 but only below the $90 line on oil. 

    The Dollar was spiked down ahead of the close from 78.3 to 77.8 and that’s where this morning open is coming from so let’s watch out for a comeback on the Dollar to presage a dip in the indexes – we’ll have to play that one by ear.  

    Don’t forget, it’s option expiration day – things can get crazy!  

  18. Patience young Skywalker….t’will happen. 

  19. Phil
    Was not trading yesterday.  the FAS trade is still a 45 cent spread but the prices are higher/lower can I take it as I could use the bullishness?

  20. Phil, I have an ABX Jan 2012 40/45 spread. I paid around 2.85 for it and lets say I could get 3.40 for it now. Is this the type of position you would recommend holding or would you piece out of it? I am inclined to hold it because it feels good to have something working ;) But seriously, this is your strategy and I am wondering how you would play it?

  21. Pharm:
    Well that didn’t last long! Now VIX up .11????

  22.  Phil, I got stuck with the USO Mar 34 Puts (BTO .54 now .25) original idea was to DD at .33. Would you DD now, kill it or just hold?

  23. Out even on my overnight FAZ.  Didn’t go as planned so I’m playing it safe.

  24.  Phil, 
    I have 4,000 HOV at 4.25 with the Feb 4 puts and 4.50 calls (sold for .10). Right there on the line, would you roll to March for .15 and or just let them grab the shares if we finish above?

  25. Phil, OIL at 87.20 on the futures, I don’t understand the 90 line, did you mean 87?

  26. implied volatility low on BP. any option trade that you like here?

  27. Phil,  I have been trying to reach Greg P. by email a couple of times over the last month and half and haven’t received a reply.   I just submitted an inquiry via the site too.   Could you please have him reply to me?

  28. Dips/Exec – I agree, very frustrating but we can make our 500%+ hedged plays along the way so we don’t miss much and the dips to buy are things like CSCO or SKX’s brief tumble yesterday – it’s individual dips we have to look for.  As I pointed out in the chart of the S&P 1,500 yesterday – of the 25 WORST performing stocks, the last two on the list only lost 15%.  That means there was not a single company out of 1,475 others that we would have not made money doing a buy/write on.  Not one.  There are PLENTY of crappy companies out there but only 25 out of 1,500 (1.66%) lost more than 14%.  Let’s do another year of that, I say!  

    XLE/$25KP, Jabob – Wow, those dropped like a rock!  Our basis on 10 is $1.15 so doubling down at .50 would be .825 average and the delta is .17 so we’d need a $2 drop to get even.   XLE is up $5 from last week so not too unreasonable to look for a pullback but the rioting in the Middle east is not going away so feels a bit like throwing good money after bad into the weekend.  The June $72 puts are $1.85 and that would be a $1.30 roll and we can sell March $74 puts for .87 and that would probably be a better use of our net .50 so that will be our decision AFTER the weekend.  If they keep going up, the roll will get cheaper anyway (because the June puts have a .30 delta to our .17) and, if they pull back – we might not need the roll.  

    TBT on the march again. 

    Good chart Pharm.  VIX failed 16.50 already.  I am still hoping for that spike (and pullback). 

    TZA/DC – Of course if you are worried just cash it out and wait.  Why be in a position that worries you?  Just leave a small amount in (adjustments don’t have to be all or none) to protect over the weekend and until the reverse split and then you can see how you want to deploy your cash.  

    Pork/Matt – On these volumes it is 90% bots trading with bots.  If they all get a buy signal, they all buy and there are no sellers.  The whole market is like watching a broken slot machine that just keeps paying out.  You can stand there and cluck your tongue at all the players who are taking advantage of it or you can put your money in the slot and pull the lever.  Sure it will run out of quarters at some point and sure the authorities might notice it’s broken but – it’s just a quarter – try it!

    Monday/Yodi – It’s President’s Day.  If this were Mexico we would honor the day by putting our leaders’ heads on pikes outside the White House.  8-)

    Enquirer/Snow – Yeah, the media is a funny thing.  It was Murdoch who came up with the idea of owning rag sheets specifically to attack anything he disagreed with.  Have a paper that no one takes seriously and you can get away with murder – or at least character assassination – on a daily basis.  

    USO/Cnarb, Morx – That’s OK, the idea is to set a trailing stop but $1.38 is very good money and not worth gambling away.  Our official stop was set just .07 over that and it could just have easily have turned the other way after you sold.  The more you take smart exits like that, the less you will regret the ones that go up further as you will have seen countless others fall away from your smart exit.   The rule of thumb is to set a stop at 20% of your gains.  That would have been at about $1.30, when USO was $1.38 and, as I noted above, we widen our stop a bit as we get higher but it’s right along that rule of thumb. 

    RUT/Red – Settlements are here.  Not sure what the deal is with when they fill. 

    AAPL is dragging the Nas down – if oil breaks it will be too much for the S&P to bear I think.  

    FAS/Willie – Of course, the prices don’t matter if you can get the net spread you wanted.  

    Copper looking rejected at $4.50 – that would be a big change.  Dollar still below 78 though so it’s all about which way it goes.  So far, at G20, Europeans look serious about fighting inflation while we look — well like us.   I mean, Benny and Timmy are representing us – what would you expect?  

  29. Bought the f-ing dip in FAS at 33.94.  Stop at 33.91.  Will try and hold until between today’s high(34.24) and Wednesday’s high (34.29).  If it gets there quick, will buy FAZ after selling.

  30. Phil-- I asked about ABX not XLE?

  31.  Phil: Rolling down
    Okay now I need to learn how to better handle a down move.  CSCO my Feb 22 callers are done, I’ve now got my (12) Jan 12 15 C′s and (6) Jan 13 15 C’s, ample Apr puts and my net is $19.50 ish.  So this is a situation I’ve not dealt with particularly well in the past.
    Should I stay naked, wait for a bounce? Roll down? That is typically what I do and then of then comes the bounce   Would love to know WWPD (what would Phil do)  TIA

  32. Phil ARUN holding stk @25.40 now 30.78 up 5$+ sold March call 25 c for 1.76 now 6.00. Question is it wise to roll caller say to Apr 30c  taking advantage of the dif. in premium and intrinsic value? Thks

  33. Phil / Oil acquisition targets      Which smaller US and Canadian oil companies (or drillers) are likely to be acquisition targets for domestic or international majors?  Could be one of safest investment plays out there?
    Also, wheat only up 7%, seems like a lot of catching up to do vs other commods, any focused investment plays on price upside for wheat?

  34.  Phil/Anyone
    Re the USO buy 50 Feb 36 p
     I use E-trade pro and the comm shows @ $45  -- .75/contract + $7.5 for the trade.
    You mention not to send over $20 comm. 
    Is  TOS comm. only $20 for that trade?

  35. Iflan- you around? Apple falling. Good time to go long?

  36. Busy busy options expiration day …. busy rolling a bunch of positions; while monitoring others that will expire.
    So far so good.  Some good CMG rolls.   Good NFLX rolls.
    I still have 11 to do !  Its a pain in the a$$, but it does generate some good cash.

  37.  Phil:
    just bought the $36 Puts USO for .03…..
    What exit price are you targeting?

  38.  Phil, What are your thoughts on expedia.  worlds largest travel site.  Took a pretty big hit after earnings related to the prospect of short term profitability being affected by infrastructure upgrade.  Longer term this will help them.  Margins compressed  by higher costs from airlines.  They have also been hit by a dispute with American airlines.  AMR has come to agreement with PCLN, so EXPE has to get this figured out.  They are down 30% from their fall highs.  Does it make sense to buy the 20/25 bcs for 2 buckjs and sell the 20 puts for 2.2.  You can just sell the puts for 2.2 and your entry is 17.8, which is below their 12 month low of 18.2.  

  39. Cap / rolling — Would be easier if we could get a nice spike in the VIX. Can you take care of that? Still working on 4.

  40. Who is the contact man at TOS for PSW . They overcharging me on assignments.

  41. USO trade – first IB charged me $26 commission for 100 contracts.

  42.  Jordan
    thanks – can’t believe E-trade charge that much more

  43. Guys ..Try the USO trade at Optionxpress…50 contracts  $75 comm.

  44. Phil what play do you like (long term) on APPL after this nonsense?

  45. Two words come to mind watching silver:  RUNNER RUNNER.  Or is it one word?  Well here is two words:  poor shorts.
    Since the market opened, the upper 15min BB is the SUPPORT.  Fun chart.

  46. ABX/Jabob – You still have $1.60 on $3.40 left to gain and we have no reason to think you won’t so let’s say we’re 65% confident that you’ll have a 50% gain.  The question is whether or not you have something better to do with your $3.40 for the next 12 months than probably make $1.60?  What’s key here is you have an expectation of making .15 per month so now you have a benchmark so you can set a stop at $3.25 (.15 trail) and just worry about whether you are on or off track each week.  

    USO/Amatta – I’d do the DD at .26, they were .48 yesterday and a DD will average you at .40 so not unrealistic to get back.  Volume on this run is very low and not to be taken too seriously but you can always buy some March $40 calls (.25) which have the same delta to lock them down over the weekend if you are worried.  

    FAZ/Matt – Taking money and running is the only way to be bearish. 

    HOV/Amatta – You have money, right?  I would let them expire and deal with the assignment (if any) next week.  Why pay the putters and callers even a nickel when the stock right at $4.50?   After that, I’d sell the Jan $5 puts and calls for $2 and stop messing around with monthly sales.  

    Oil futures/Amatta – Sorry, TOS has me in the next month.  $87.50 line is good for the current contract.  

    BP/Drum – They are not that cheap at $48 unless we assume $100 oil and I just don’t believe the global economy can take this for long.  As an inflation play, I could get behind the 2013 $50/65 bull call spread at $3.60, offset by the sale of the $40 puts at $4 for a .40 credit on the $15 spread.  Worst case is you own BP for net $39.60, which is almost 20% off and, of course, the put will be rollable and best case is you make $15 on about $8 in cash and margin.  

    Greg/Leon – He’s not in every day but usually get’s back to people.  I’ll let him know.  

    ABX/Jabob – OK, XLE was Gucci!  I got mixed up somehow.  ABX answered above.

    CSCO/Red – Please clarify your $19.50(ish) net.  Do you own the 2012 $15 calls and 2013 $15 calls or did you sell them?  I can’t get to a $19.50 basis here so I’m stumped but, on the whole, I’d be inclined to give CSCO time to recover as long as the indexes are over our levels.

    ARUN/Yodi – I wouldn’t pay $3 to give up $5 of protection so quickly.  What’s wrong with rolling to the Apr $28s at $4.10 and putting them in 50% Premium where you are buying $3 of headroom for $2?  If you are so gung-ho bullish on the stock that you don’t feel the need for protection below $30, then sell the Apr $28 puts for $1.25 too!  That way, you are just .75 out of pocket. 

    Oil and wheat/Tusca – How about you remind me of that over the weekend (sat am is best).   I’m interested in the idea but you asked two questions that are about 2 hours of research each to give a proper answer and, this being option expiration day – the timing could be better.  

    USO/Ban – It depends on your agreement in your account.  There are lots of brokers with flat fees like Option House, or Trade Monster that let you make trades with flat commissions.   If you have a lot of cash, you can also get any broker to agree to deals like that.  Then there’s broker accounts that charge you a flat percentage of your portfolio for unlimited trading – those are generally for HNW traders so it depends on your account size, frequency of trading etc.  If you trade a lot though, you should not be paying .75 AND $7.50 – the trade fee should be waived.  You can call your broker up and ASK them how you go about transferring your account over to, for example, Option House and, if your account isn’t tiny, they will ask why you are leaving (this works better than threatening to leave) and you tell them that the deal is better and then you send him the link and, surprisingly often, they will match it to keep you. 

    USO/Jasu – There is no exit, either they sell off or, like craps, the house takes your money away.  If they do turn down and go past .05, keep in mind you can sell 30 to get even.

    EXPE/Trad – Those travel guys are interesting inflation plays as they will get more revenues from higher rates.  I wouldn’t try to call the bottom here, better to see if they pop $22 and get in then.

    TOS/Yodi – Scott.  

    AAPL/Amatta – I like the same spreads we have been doing for weeks, selling long deep puts and buying bull call spreads.  You can sell the 2013 $250 puts for $19 and buy the 300/360 bull call spread for $29 and that’s net $10 on the $60 spread that’s currently $53 in the money and your worst case is owning AAPL at net $260.  How easy is that?  

  47. Dollar is dumping!!!  77.77 and falling fast.  

  48.  Phil
    I’m up nicely on SPWRA in at 12.5 with P’s & C’s sold, but now deeply buried on the callers. I was thinking about taking some off and rolling to the Jan $10 calls, and selling the 17.5 P’s & C’s – any other play you like better?

  49. Taking the $ and running in FAS.  Small stake in FAZ.  Can’t help myself!

  50. rainman, I wish I could help w/ the VIX.   I am too busy making the market go up everyday on no volume.

  51. Yodi
    The TOS guy is Scott, good memory but have no idea how.

  52. AAPL Feb $355 calls at .85 are fun.  

  53. Tusca, wheat is up a hell of a lot more than 7%. Not sure if you’re looking at a particular stock or what but wheat is up 70-100% since june.

  54. 11:09 AM The Fed buys $6.688B in Treasurys maturing 2013-2015, of $37.36B submitted by dealers. Since the Fed announced in August it would reinvest proceeds from maturing debt, total purchases come to over $425B. Bonds continue to trade lower: 30-year yield +0.03 to 4.71%; 10-year +0.04 to 3.62%; 2-year +0.03 to 0.79%.  

  55. Phil,
    I asked Greg a question a couple days ago also. Should I just submit it again later or what? Thanks

  56. Wow, look at CAT  $105

  57. Cramer was pumping CAT last night

  58. IB fees – it matters if your order adds liquidity or takes liquidity.  If you add liquidity (this is usually when you place an order outside the bid/ask spread, so it rests on the order book for a bit), then the exchange gives "rebate" to the broker if the order eventually executes, and then in IB’s case any rebates get offset against your commissions.  If with my order I had removed liquidity (e.g. I had hit someone’s ask price) then most likely I would have not had such a low net commission on the trade.

  59. Oil up $2.00 today

  60.  Phil
    Thanks will try one of those to compare. Acct value apprx. $500K  30-50 trades/mo

  61. Pharmboy
    God morning and thank you again for letting us have access to your 25kp spreadsheet.  The USO trade gain should read $215.00.

  62. Phil--In your AAPL put sale don’t you worry about how far out it goes? Or do you think this market has a lot farther to run before the real world returns? My fear is that a lot could happen in two years that could kill this bloated market. Maybe, I am being too pessimistic and should put my dunce cap back on and BTFD!!

  63. Hello TSRX…..oh my.

  64. morning to you to cnar…..thx.  Copy/Paste error.

  65. Pharmboy
    USO  (1.38 – 0.95)*500 = $215

  66.  PHIL/QID – I’m still in an earlier QID hedge you recommended a few months ago.  I’m in the April 10/14 Call spread, short the April $12 puts.  Net 0.49 on the spread.  I’m wondering if I should pay 0.50 to roll the long caller down to $9, and offset by rolling the $14 caller to $11.  So about .30 to gain $1 in position.  I’m obviously going to have to roll along the short $12 put, until it expires worthless.  

    Can you see a better way to adjust this position?  

  67. This market reminds me of an old record album that keeps skipping and replaying the same verse over and over and over again.

  68.  @ban2 – I paid $13.22 for 50 contracts on USO this morning through Interactive Brokers. I had an account at eTrade but moved all of it over to Interactive Brokers after eTrade only gave me level 1 option "permissions" (I could sell covered calls and that’s it), and told me I could either write in and ask nicely, or wait 90 days and ask again through the web. IB gave me everything I asked for with no issues, and the commissions are WAY less. Plus the Trader Workstation interface is really powerful (not that I have a lot to compare it to, but I like it). 

  69. Nice surge in FAS.  Figgers.  But they still haven’t taken out Wednesday’s high.  Meanwhile, FAZ didn’t break the days lows.  More shenanigans or only a matter of time?  I’m doubling down in FAZ on the notion that it’s more shenanigans.  Tight stop.

  70.  Jrohema — this link is for you, relating to your comments from late last night or this morning re: Madison WI / unions

  71.  Phil: CSCO claification
    Earlier I should have clarified that between the sales of puts and calls my long (12) Jan and (6) Jan 13 $15 calls have my basis around $19.50 as breakeven, was undecided about selling callers at $21 or $20 as the Feb $22 C’s  expire.  I’m reluctant to cover right after a 15% drop in the stock so you have more or less answered my question.

  72. Phil/CVX
    I bought CVX Jan 2013 $80 C at $14.20 (now $21.10),sold 2013 Jan. $85 C at $9.14 (now $15.50) and sold 2013 $75 P at $7.20 ( now $ 4.65 ) for a $2.14 credit on the $5 spread.With the 50 % increase in the C,should I roll the 2012 $85 C to 2013 or just let time do it’s thing. Thanks

  73. Phil, 
    On HOV, I figure if I am able to sell now 4 puts and 5 calls for March for .25 with this low volatility, perhaps I can do it every month for .30 or more, and if that is the case I would be getting $3 over the next 10 months, versus $2 with the January’s… a whopping 33% extra (or $4,000). And this is selling the $4 Puts not the $5. It seems to me well worth 15 minutes every month…your thoughts? Thanks 

  74.  Damn, that IWM just does not stop !

  75.  Obama in Silicon Valley.
    I think the only job he was looking out for is one for him after his term is over.
    "I want to be like the Goreacle … become a multi hundred million aire w/ free GOOG or AAPL options and some board seats.  Whaddya say guys?  Its a no-show job, just like the unions have "

  76. Phil, Shadowfax  thanks on TOS Scott the charging me 15$ per assignment any one getting a better deal. It is always better to close before tonight??

  77. Kurtww
    $13.22 compared to $75 in Optionxpress. How much do they charge for 10 contracts. Im ready to leave this guys. do you know if would be able to keep my 5 trading level status if I were to transfer to them. thank you

  78. Here comes that dip in oil finally.  Let’s see how long that lasts.

    Runner/Lapper – True, true. 

    SPWRA/Deano – Congrats!  That trade sounds good to me although you may as well pay $1 more to go out to 2013 on your calls if you intend to hold them long-term.  

    CAT/Cap – Yet another one I have to bite my tongue and ignore!  GMCR and SBUX are both up on news they will be going head to head – amazing stuff.  

    $500K/Ban – There is no reason they should deny you then although your volume is a bid low (don’t increase it to make them happy!). 

    AAPL/Jabob – 2 factors:  1) There WILL be 2014 and 2015 and 2016 contracts.  If I could play those, I would (like Buffett) but, either way, I don’t consider $270 the "last" roll possible just because it’s where the screen currently ends.  2) AAPL, as I mentioned earlier, sells $65Bn worth of stuff and makes $14Bn a year on top of $25Bn long and $25Bn short-term investments.  Let’s say they drop to $180 a share and the cap drops to $175Bn and profits drop in half and half their long-term investments are wiped out.  Then the p/e on $7Bn a year is 25 but the $37Bn in cash now drops their effective cap to $140Bn and we’re back to a 20 p/e again.  I’d be in AAPL at $270 and I can DD at $180 for a $225 average and then I can sell 2015 $230 puts and calls for about $75 (the 2013 $360 puts and calls are $125) and that would give me a 4x net on AAPL at $150/190.  If you don’t REALLY want to own 4x AAPL for $190 in 2015, then DON’T sell ANY 2013 $270 puts today but, otherwise, it’s a great trade for AAPL lovers.  Keep in mind, that’s the DOWNSIDE and, of course, one would think that somewhere between $355 and $180, it might have occurred to you to cover or take a downside hedge.    

    $1.38/Cnar – Wasn’t $1.40 the stop on the USOs?  From .94 that’s .46 x 500 = $230.  

    QID/Palotay – Well there’s a hedge that’s not working at all!  As QID can move up fast, I’d rather spend the money on time than position.  The Apr $10 calls are .50 and the July $10 calls are .97.  I’d go that way as it’s likely you’ll have to roll the puts along anyway and that’s where you’d probably want to spend .50 to roll them down $1 if it comes to that.  

    Over/Exec – And over and over and over and over…

  79. On USO, I held out for a .10 pullback and it didn’t happen until $1.55 pulled back to $1.45.  Is that the right way to play?  My logic was that a .45 gain at the open allowed for that kind of trailing stop.  Thanks for the play by the way.

  80. Cap – Why would jromeha or for that matter, anyone with a balanced view of reality, give a rats azz about anything the National Review has to say?…….

  81. great aapl explanation! Thanks!

  82. Phil, Are you ready to bail on the AAPL FEB 355 calls now at .35

  83.  Phil
    this is a Phil o sophical question.
    I have a short PCLN Feb 450 C sold above $20.
    I see from the option tables that max pain would be to close PCLN just below $450 and if that happened I could make another $300 bucks by waiting another 3hrs.
    Is there any thing to that max pain stuff or would you just close out and forget about that $300.
    This is where my Kantatakaprophititis affliction keeps showing it’s ugly head.

  84.  Oil coming down nicely!

  85. The Bernank  just released an instructional video

  86. 2 SMAs crossed and the EMA at 12:52  IWM 83.66 we could retrace to 83.33. The upward trend line needed 83.88 to continue up to 84.18, only the stick left today maybe. The telco guy has been here 4 times since yesterday changed everything and put a monitor with cconstant ping. This is what can be done if your line is flaky so never give up starting with home run of good wire computer to d-block.

  87. CSCO/Red – Ah, OK, that’s not really what a basis is.  You are saying, if I understand, that you would break even if CSCO hits $19.50 so we would call it a BASIS of $4.50 on average and that’s ahead of the game so good.  There’s a reason Rule #2 is "When in doubt, sell half."  In theory, it should answer your question very well, right?  You can sell 1/2 the May $19s for $1 and those can roll to 2x the Oct $22s (now .60) so unless you think getting out for net $22.50 is a problem, that’s a good consideration as you, FOR A FACT, collect net .50 per long now which is 10%+ for 3 months.  See how logical it is if you break it down? 

    CVX/Dflam – Good deal on those!  The bad thing about verticals like that is you do have to wait.  The differential between the deltas is just .07 so, for you to get a $2 gain, CVX has to go up another $28.  See, you need to be realistic about your expectations.  Either a $28 rise in the underlying equity or patience will get you the remaining premium.  You can roll the Jan $85s to the 2013 $90s for about $1 but the Jan $85s still have $3 of premium that will expire in 10 months while the 2013 $90s have $6 in premium that will expire in 22 months so really no point in rushing the roll is there?  

    Come on USO – DIE!!!   Note that this is likely to take the indexes with it if it breaks!  

    HOV/Amatta – Depends on the Fees and, of course, what do you do when HOV is at $4.75 or $4.25, etc.  Also, perhaps you can put the $2,000 up front to good use and — what about the fees?  How much do you pay to buy and sell .30 12 or 24 times a year?  How many times will you get burned over that time-frame and have to adjust?  How much of your valuable (I hope!) time are you spending watching this every month as a short-term position vs. moving it to a long-term portfolio and concentrating on more interesting opportunities?  

    Jobs/High – Thanks.  I am fairly certain he was not the guy in that picture (or maybe this one isn’t him?):

    Apple's Steve Jobs, bottom-right in black shirt, and Facebook's Mark Zuckerberg flank President Obama in Thursday photo.

    It does look like water in his glass, though.   Damn I would have loved to be at that table.  They should have let someone film it.

    Better to close/Yodi – Well then you need to balance out what it costs you for either but, as I said, if they pin $4.50 you don’t get assigned anyway and you can only be assigned one side or another.  You said 4,000 shares right, so that’s 40 contracts that would cost you .05 x 2 to cancel – that’s $400 dude, even if TOS is waiving the fees.  So you are worried about a $15 assignment?  

    OH YES!  Panic in the oil pits!!!  I love it when a plan comes together!!!  

  88. Phil
    25kp.  As per your rec. yesterday VIX rolling Mar 17 to C to (Mar 15-19 spread) I did this trade buying the 15-19 C spread for 2.20 and selling Mar 17 C for 2.20.  what i believe its the same than rolling down for 1.40 and selling the 19C for 1.40.  I dont see this trade in Pharmboy’s spreadsheet and Im wondering if its part of the official 25kp or not. Thank you

  89. I executed the Jan SSO 48/55 went to the midpoints of the Bid/Ask (4.20 at that moment) and it got filled immediately, I went to check back the prices and they moved the bid/ask on the short calls .25 immediately, so be careful when trading these leaps as they are very iliquid AND manipulated!. Now I have my work cut out for me starting behind on the trade. Not finding anything I would REALLY like to own to cover the 20 bought…. AAPL would be great at 250 but obviously undoable for the price. Any suggestions?  

  90. Phil Incredible call on oil.  I sold those three cent puts for $.14.  Darn near a 5 bagger.

  91. Howdy everyone,
    I went to get milk for my son this morning and the price went up 15%.  My dentist hiked the rate by 12%.  Wow, no inflation!  I’m pondering whether to reduce exposure to stock in my 401k account, which is always 100% in stocks.  A 10% drop there wouldn’t be nice.  May be sell half for now.

  92. Cap- keep dreaming, you mean when his TERMS are over!!! Ain’t no WAY your lame candidates will beat him…. Unless Trump ran, he might put up a good fight but I think he’s too liberal for your people to handle…
    Sigh…. Had my oil futures short at 91.07, .11 cents!!!!!!argh…..

  93.  Peter D/401k, and put it where? You can’t go back to cash in a 401k.. and the alternatives are very limited.. it’s either bonds or stocks.. if anything move it to super large caps?

  94. getting run over again on my ABX March 48 callers at 2.29. what do you think is the best roll on these?

  95. ravalos,
    Cash in 401k is what I’m thinking.  The P/L chart has been very good for a few quarters, so let’s take a breather there.

  96. Great call on the USO Phil! A nice 400% gain on those 36 Puts!!… Shame never got a fill on the DD for the 32 Puts as I would have been even now.
    Now on AAPL I think we have a dead horse…. As long as it is not a dead Jobs we’re ok though. 8-)

  97. Well think I’m seeing the answer to my question re max pain on expiring options

  98. Phil / USO -- nice call on the 90 level Phil!

  99. amatta- SSO, what was Phil’s play? I am at work and don’t have the details with me. Thanks.

  100.  Decision time. Sold 50 of the 36 USO puts for .1 (net was .3 on 100). Now it’s a free ride. But not sure it’s going to go any lower. Sell the remaining 50 or wait for a hail mary?

  101. Peter – funny, been in stable funds in my 401k since middle of January fearing a crash. But now I am thinking of going back into large cap funds.

  102. Hey, the drop wasn’t due to me re-balancing my 401k!  Just checked the Money Market return for the particular fund in my 401k is -0.21% for the 1 year return.  That’s because of their 0.58% fee.  The low rate is pulling our money and put them in the bank’s pocket.  How could the bank executives have bonus when the money market return is -0.21%?  It’s a great transfer of wealth from the mass to the elite for sure.  We can do better than 0.5% annual return by just selling 1 way out of the money iron condor.

  103. cnarbais 
    I have had commission prices all over the place, they have "smart" routing that sends the order to wherever they deem is best, and sometimes the commissions really vary by where they send it. Overall I have had the sense that the commissions are really good. 
    As far as level 5 trading status, I’m sure if you have it now they will give it to you. I have gotten everything I’ve asked for, which includes everything they offer in the US and a couple other countries I asked for just because. If you’re in doubt, just be generous answering how much experience you have (it’s not like they’ll check).

  104. I see the Bahrain forces are firing on the civilians….Yaaaaaaawwwwn…….no biggy……that should provide some good stimulus for the market.

  105. Phil……in light of the recent killings of in the middle east… any good bullet or coffin manufactures that we should be looking at?

  106. Hi, Peter D, long time…
    What’s your take for RUT March, 720/900 Strangle?  one contract per 100K?  Thanks.

  107. USO/Dennis – That’s exactly the right way to play.  The only thing I would add is that I don’t use hard stops but it’s a judgement call when a spike might stop you out or if you do have to bail that can cost you an extra nickel as often as not.

    2% dip in AAPL really hurting the Nas now.  Even NFLX is down!!! 

    AAPL/Red – You must not make those trades!  Holy cow, they went from .85 to $1.05 (up 23%) and pulled back very, very slowly past $1, .95, .90, .85, .75 – and you are telling me you still have them at .35?  That is so, so not the way to trade I can’t even begin to tell you how many things are wrong with that!  A day trade, especially one that is out of the money and expiring in 4 hours, is 20% and out – ALL THE TIME.  Even if you have fantastic momentum, like the morning shorts on USO, you at least get 1/2 out when the momentum stops and get the rest out at least even.  

    PCLN/Ban – Right on the money – nice job!  Yes, there is something to max pain on expiration day.  Before that, I don’t count on it much but if something looks very good for a pin.  It often does.  The real consideration though, is how screwed would you be if they pop $10 into the close, which they can do on a stick in 30 seconds?  If you can live with that – THEN you can be all brave but this is not some $20 stock where you risk a $2K assignment, this is a $45,000 per contract assignment if you are wrong.  

    Good video Kustomz – very relaxing!  Where do you get that bubble maker?

    Glad to hear you are making progress Shadow!  

    VIX/Cnarb – We didn’t make it official as I decided to hold out hope for the weekend but, as I said yesterday, that’s an aggressive way to play that is likely to cost us for being greedy. 

    AAPL/Amatta – What do you mean undoable?  

    USO/Button – That’s the way you have to play those.  Take a few chances and, once in a while, you get the jakcpot.  

    401K/Peter – Maybe at least you want to buy a hedge like EDZ to counteract a swift melt-down.  Breather is a good idea too. 

    Terms/Jrom – And don’t forget Hillary.  She gets her 8 next!  8-)

    ABX/Drum – I think they are good protection over the weekend.  If you are that bullish, sell some Apr $48 puts for .88 and that pays for you to roll the callers up to the Apr $50 calls if you have to.

    USO/Mampcs – That was probably it, better off to use tight stops (maxed out at .16) on at lest 1/2 each time so if you killed 1/2 at .10, then a move to .16 would stop out 1/4 at .14 and then, if you wanted to stick out the last 1/4, you could get out at .07 even and still have a pretty good blend.  

  108. Phil "better to close" I do not trade in 4000 shares or 40 contacts mostly between 2 and 5 contracts per play so say we have 3 contacts and 3 stocks to assign this cost 15$ against the cost of say 6x 1.00 or what ever I still like to go lower say 5.00 to close. I might have many positions but do not risk 40 contracts on any stock. The only once where I have up to 100 and 200 contracts is C, BAC and HOV you actually set them up just about a year ago.
    Question on AAPL Holding the in my plays some Apr 340 long c for 21.59 today trading at 22.87 would it be good to roll them down and further out on a dip like today.??? thks

  109.  kurtww @ 12:04
    thanks for feedback – looks like I need to move from here also – I like and am used to the etrade pro and hate to begin learning a new platform, but for such big difference in comm. it’s prob. worth it.

  110.  Peter D/401k, Mine has a 2.59% YTD (as of 12/31/10) with a 0.13% of expense ratio.. not bad..but I wonder if we are really in a bubble territory yet to actually move the funds.. maybe 1/2 partial move.

  111. phil/jobs/high
    That was Lary Ellison (with the beard) of Oracle across from Obama and Carol Bartsz of Yahoo in the red dress also. Must be a high tech conference

  112. will they stick it higher or reduce exposure into the long weekend?

  113. Done with the rebalancing.  Don’t worry, it’s only effective at the close of trading!
    RUT Mar 720/900 at $1.67 credit is very safe.  1 contract gives us $167, which is only 0.16% of $100k, so it’s not worth doing, unless you want to beat the money market return in my 401k.  The margin requirement at a -15% and +15% move is only $15k, while the current margin requirement is $2k, so there are plenty of fire power left.  If you want that much cushion, then sell the RUT Apr 720/900 for $8, decaying at $4 a month instead of $1.67 a month.  Sorry for the long answer as I wanted to explain the margin and the potential return for this trade.

  114. IMGN moving now too.  Well all, have a nice, long weekend. Off for the rest of the day.  TSRX, if you have the final 1/4, I would either move out, or put a 25c stop on it.  THAT was a nice move.

  115. If the dollar wasn’t down a full point today (now 77.65) I wonder how bad the hit on oil would have been today?  

    Bahrain/Exec – Sadly, you are right.  I don’t think they go for that coffin stuff like we do, I think they make a simple box and put people in the ground.  I am surprised that funeral homes are holding up in a bad economy – you would think people would stop spending $10-15K for a funeral but, nope, those $1,500 cremations are not popular at all.  

    Contracts/Yodi – Well I’m very relieved those are holding up then!  As to AAPL, they are very much under attack right now, I wouldn’t want to have a naked upside call at all with a delta like that.    Oh look – CNBC is doing more Apple bashing right now!  Always get the English guys when you want to sound authoritative!

    Conference/Dflam – Yes, almost makes me want to be President knowing I can have cool dinners like that. 

  116. Oh, I have my order in for 40c on those EGLE calls so we don’t miss it.

  117. Phil/Coffins,
    Good point…..bulldozers would probably be a better bet.  If these uprising keep escalating they’ll have to go the mass burial route…….we should seriously consider Caterpillar…….those D-10′s they make can handle an entire village in one push.

  118. Long weekend and indexes under aapl leadership going red with rut just ready to cross the line!

  119. You can make it at home with 2 sticks and some rope, its the soap mixture that’s important need detergent, distilled water and glycerin properly mixed otherwise….KABOOM!!

  120. Hello Phil, is it time to buy USO March 36 calls again?

  121. AAPL – Buying 4 May $310 puts at $7.50 ($3,000) and selling 5 March $330 puts for $4.55 ($2,275) is net $725 on the 4 long puts as we assume rumors will persist.  If something bad just happens, we assume the March puts are rollable and that leaves us on the hook for 1 naked put at $330.  

  122. All indexes red except for the $dji

  123. Peter D/Strangle….  Thanks a lot, have a nice weekend.

  124. Yodi: I have his info posted on my computer…
    Scott Sheridan at TOS    1-866-839-1100  #3249 
    Direct to Scott:    1-773-435-3249
    Good luck.

  125. Out of FAZ for nice little gain.  No 5 bagger though-

  126. Next move depends on how 83 holds or folds

  127. 82.78 strong support.

  128. Thanks Jbur

  129. Phil,
    Considering that the normal rule of thumb for stocks is 10 to 20x P.E and 2 to 3x sales. While AAPL is great on the PE side being 20x current and 14x forward, the sales multiple is a pricey 5x. Should this number which is almost never shown be a concern to investers?

  130. LOL Exec!  No wonder CAT is $105!

    USO/Alik – Nope, today is the end of certainty.  This was easy math based on the end of the NYMEX schedule but now they have (presumably) cleared the decks and that SHOULD put the bulls in control but I have/had a feeling that they already pulled out all the stops to keep oil as high as it’s been so I am not particularly bullish on oil now.  As always, we can be patient, gather more data and wait until a good opportunity presents itself. 

    Dow/High – I swear that’s because we shorted it yesterday at this point!  

    AAPL right on that $350 line.  5 March $355 calls at $8.65 ($4,325) can be covered with 3 Weekly $350 calls at $6.20 ($1,860) for a net $2,465 entry ($4.93) each, which is the price of the $365 calls so figure about $10 of leeway to $340 without worries.  .  

  131. Talk about a MoMo stock – the EuroDisney stock traded in Paris has gone over 105% in 2 weeks and no one knows why. It’s under investigation now as there are some strange volume patterns – yesterday, they traded  over 5 millions share (13% of the capital) while they usually trade 30,000 shares a session! That would qualify as strange… even by our new standards. 

  132. Phil yes these  plays C,BAC, HOV are doing very well thanks to your idea. But I generally perfer 100 eggs in 100 nests instead of 100 eggs in two or thee nests.

  133. yodi
    You got an egg farm in Mexico?

  134.  Phil: 1:59
    Hey Phil you’ve got me mixed up again with somebody else on an AAPL trade.  What am I your whipping boy?  I’m gong to start taking it personally when you have to lecture on bad trades and your first assumption it’s me :)

  135. No shadowfax just many stones on the land no good for anything.

  136. AAPL/High – I don’t think so as AAPL has proven long-term higher margins than "normal" companies – even going through reducing the IPod from $399 to $39.99 over the years.  I know when I used to sell computers, AAPL’s rule was 38% gross margin or they wouldn’t make the product.  It seems to have held up over the years and done very well for them.  You can’t compare that to companies like HPQ, DELL, AMZN or even WMT that are thrilled to hold 25%.  

    EuroDis/StJ – I would have bought that stock!  DIS was a big crash favorite of ours under $17.50, now $44.  Totally great company and would certainly work out the bugs over there over time.  

    100 nests is too many Yodi – even for a cuckoo bird!  

    LOL Red!  I don’t know, today is your day I guess…  That time it was Rehat, who is new (sorry) and I guess my fingers are used to hitting Red.  

  137. Phil
    Added that 20 period moving average to the 50 and 200 as you mentioned,it is a great direction indicator and the crosses seem very significant after 1 week of watching. Thanks for the advice! Computer is running perfect since 12:45.

  138. Phil / Lloyd     Strikes me there’s more money to be made now (or soon) by Goldman by buying hundreds of billions of puts and selling calls for July than in placing upside bets at a mkt high.  Low Vix makes and (theoretical) end to pomo makes this investment cheap now.  All it would take is a bunch of downgrades factoring in margin squeeze due to inflation and they can move the mkt down 20%.  What am I missing here, other than calling the timing?  Or, is he bound by a promise to his buddy Ben to prop the mkt until kingdom come?

  139. I was at Miami International last week and the LLL body scanners aren’t being used, I asked why and they said understaffed due to spending cuts. Anyone else travel recently, were body scanners in use?

  140. Man ‘o man.  That stuff in Bahrain is messed up.  How can we possibly be in cahoots with a govt that openly shoots its own people for demonstrating?  I don’t care what our interests are.. it’s not worth being associated with a regime like that.  The hypocracy of it all makes me sick.

  141.  Phil, playing it safe, is it wise to wait to see if any reports on Jobs ill health have merit and if they do, to just wait till AAPL has a panic sell off and load the boat on selling longer term puts in the mid 200′s which would pay a nice price from the higher volatility in the options and use that money to buy longer term calls?

  142. IWM failed that 83.34 tripple cross!

  143.  Wow selling into the initial excitement was in order with SPWRA… should have shorted against my long calls. 

  144. ….ain’t that America…

  145. …I’ll leave you all this one….Have a great weekend.

  146. Hey check out this cool thing.  Wordle lets you make a tag cloud of stuff so I did the Fed minutes:


  147. What do they charge at TOS for assignment? $6.95 flat for me at Schwab without regards to how many options…

  148. 83.25 becoming resistance instead of support, plus what pharm said very early, take the money and run time.

  149. Notice the Fed is not very concerned about Debt, are they?  

    Even better – here’s the top 150 words from todays chat

  150. Phil / TZA  - I have april ’11 14/20 bull call spread down 30% at the moment from Jan. 25th entry.  roll or stay put for while longer?  I also have EDZ July ’11 24/32 bull call spread down about 6% from jan. 28th.  10 contracts in both cases.   thanks!

  151. i think phil has too much free time :P

  152.  And the fed is not concerned about Inflation either…

  153.  Wow, they are really making an effort to pin CMG @ $260.. the max pain for February was $250 but $260 is not that far.. manipulated markets! 

  154.  Phil/Word Cloud, that’s cool! so from the Fed we can see INFLATION is a big one there.. as well as foreign, prices and remained LOL

  155. What the Bernank got for his money!
    The banks say we will hold up the DOW because it’s Friday and a three day. Good thing it’s not his money, Bernank needs a pink slip!

  156. Matt/hypocracy:
    Your not serious are you???  You don’t actually believe that our politicians really believe the BS they spew? 
    If it was up to them, they would machine gun down anybody that got in their way if they thought it wouldn’t compromise their reelection efforts.

  157.  nflx roaring back at the end of the day.  Wonder if Cramer has been pumping it today.

  158.  1020 — why are you such an ornery guy sometime ?  was I talking to you.
    I hate to call out a fellow Packer fan, but ….
    NFLX — someone spread a rumor of AAPL buying them for $310 … uh huh

  159. By the way – I LOVE it when we have quiet Options Expiration Days – it makes me feel like I’m really doing my job with so few panics and last minute issues – good job all!  

    SPRWA/Amatta – Yeah, that’s where ALWAYS comes in in Rule #1.  8)

    Suburbs/1020 – That’s a new one for me.  

    TOS/Amatta – I think it’s $15.

    TZA/Terra – Same as some other ultra we discussed this morning, you can take advantage of the chance to buy time.  It’s $1.55 to roll to the July $12s and I’d take out the callers at .20 for now and plan on selling something for .70 (Apr $15s at the moment) next week to offset .50 of the roll.  On EDZ, you already have time so I’d offer $1 to roll down to the $21s and see if you get it.  

    Free time/Abel – Only took a couple of minutes.  Greg sent me a link that someone sent him.  Very cool to have so many people contributing great content for our site.  

    Pinning/Rav – Oh yes, all over  the place.  I’m pretty sure AAPL was nothing but a pin job to get them to $350 so they started a rumor to make it happen.  Pay a photographer $10,000 to stage a photo of Jobs, have Cramer pump the rumor and PRESTO – 2.5% off!  

    Cloud/Rav – I should have cut out that long, boring section on foreign exchanges to get a better view but, unlike what Abel thinks – I don’t have that much free time!  

    Weekend/Shadow – You are right and next week we get Retail reports from a lot of guys.  

    NFLX pinning $235!  ISRG $340, CMG $260, GOOG $630, PCLN $450, WYNN $127.50, NYX $37.50, WMT $55.50, BA $73.. so many coincidences!

  160.  jromeha — Trump that’s funny.
    Trump for President
    Trump to buy the NY Mets … er the NY Trumps

  161.  Got all my rolls done !
    I think I had more than 20 of ‘em !    Damn …
    That did raise thousands of dollars however.

  162.  But it is work !

  163. And just like magic, ALL GREEN… with a minute left to go!

  164. Isn’t that just AMAZING? 

    Have a nice, long weekend everyone! 

    - Phil

  165. Phil: I like the theta decay on your AAPL put trade. Trade makes money over the next several weeks over a wide price range. I’ve done similar things with AAPL weekly callers against long AAPL monthlies – same idea, shorter time frame.

  166. WOW on the DOW….hope you all have a great extended weekend

  167. I’ll post the results for all the screens I have in progress this weekend, but the one I started 3 weeks ago is doing well. The top 10 stocks as ranked by Price-to-Sales are up over 2.3% for the week as opposed to 1.07% for the S&P500 and overall up 9.44% in 3 weeks as opposed to the S&P500 4.73%. The results from the other weeks I screened as as good or better.  

  168. What a sick stick, last 3 minutes.

  169. Well, that’s a wrap.  Cherry pie for everyone!

  170. Phil,
    Thanks to your advice to us appl phil’s, I decided to quit sitting passively on this BS news and cover my long calls with 125 Contracts of the AAPL Feb 18 C’s @ $3.50, just closed them @ $0.38 for a three hour $39,000 profit when otherwise I would have had a loosing day. You made my weekend. Have a good one!!

  171. Found the right way to spend OpEx Friday, caught 36 crappie today.

  172. Rolls/Cap – Yeah, it is annoying but nice to have a cash day once in a while.  

    Here’s some actual good news:

    Intel (INTC +0.5%) plans to build a $5B chip manufacturing plant in Chandler, Ariz., that will create 4,000 new jobs at the site. Construction on the factory, to be named "Fab 42," will begin later this year and be completed in 2013. Intel calls it "the most advanced high-volume semiconductor manufacturing facility in the world." (PR

    American Airlines (AMR) will re-hire 200 furloughed flight attendants – this after 365 re-hires last week, and 228 more that will get unlimited recall rights rather than falling off the list in the fall. The new group will return to work in a couple of phases this year. 

    Other stuff:

    Market recap: Stocks drifted higher, with the Dow rallying to new two-and-a-half year highs, in the absence of economic data and meaningful corporate announcements. Gains in the energy sector were offset by declines in materials and tech stocks. Silver powered to fresh 31-year highs, and gold put in five-week highs. Ag futures fell sharply. NYSE advancers slightly outnumbered decliners.

    The ECRI’s Weekly Leading Index stumbles after recent gains, slipping to 129.5 from 130.2. Annualized growth rose to 4.9% – highest since last May – from a revised 4.6%.

    "We have sold everything we can produce in silver and have demand for at least twice that volume," says the head of sales at the Royal Canadian Mint. Silver surges another 1.9% to $32.16/oz., even as news floats of an impending margin hike. Next stop: Hunt Brothers. SLV +1.0%

    G-20 finmins meet in Paris today and tomorrow, but consensus is unlikely, as Japan’s Noda says the G-20 is split down the middle over how to measure imbalances in the global economy and how to avert future financial crises.

    With economies on the mend and stocks rising, many investors seem content to see little progress from the G-20 meetings, and are eager to avoid any "heavy-handed attempt to subjugate domestic priorities for the sake of external balance." 

    Ben Bernanke defends his policies at the Paris G20 meeting, acknowledging some negative spillover effects from capital flows into emerging economies, but pointing at rigid and undervalued currencies being the critical issue, not QE. (transcript

    What Obama discussed with tech titans Jobs, Zuckerberg, Ellison, et al., at last night’s dinner: proposals for R&D investment, ways to get kids to study math and science. What he should have discussed: how tech companies should finally start doing something with their huge cash hoards. 

    A large outflow of hedge fund investors could "cause activity in some markets to freeze," according to a recently obtained report by the Financial Stability Oversight Council, while the failure of a large insurer could “result in dramatic and destabilizing actions.” (previously)

    Flows out of emerging market funds continue to surge, hitting $5.45B last week, the third highest amount in 3 years. The outflows are high enough that it has triggered a contrarian buy EM/sell DM trade signal from Citi’s analysts. EEM +0.3%. VWO +0.6%

    Cotton reverses course and locks limit down, but BAL -9.6% underperforms as many piled into the ETF yesterday, anticipating perhaps a string of limit up moves. Sean Corrigan notes the move in cotton since last summer is a 10-sigma move, i.e. a 1/10^22 chance of occurring.

    Why hasn’t food inflation punished the U.S. yet? Heavy discounting plays a role, but it could also be Americans’ love of processed foods, where marketing and packaging are a bigger pricing factor (chart). 

    Simple demand and supply have pushed coffee to a 14-year high as "people just can’t seem to drink enough," and weather’s kept stockpiles tight. Coffee ETN JO +1.4%; it’s up 13.8% YTD and up 90.6% Y/Y. Starbucks (SBUX +1%) still rising as the market digests its "very bold" single-serve market plans. Oh, and Green Mountain (GMCR +2.8%) is trading at 295 times cash flow, tops in the S&P 500. 

    Egypt confirms that Iran has asked permission to pass two warships through the Suez Canal on their way to Syria. International law precludes Egypt from stopping any vessel unless they are at war with the ship’s country, according to the Suez Canal transit authority.

    The flash crash panel pitches an overhaul of the HFT market, including charging high frequency traders fees for the disproportionate amount of orders they send into the marketplace. The merger frenzy among the world’s top exchanges could cast the flash crash debate in a global light. 

    More from the flash crash panel: The joint report from advisers to the SEC and CFTC calls for a limit-up/limit-down system to be applied to equities before halting trading on "all but the most inactively traded" stocks, ETFs and derivatives. The current circuit breaker has been "problematic" in cases where a fat finger caused an erroneous print. 

    The SEC is looking into whether some mutual funds overstated the value of thinly-traded and risky muni bonds. Given investor redemptions and a weak muni market, many funds have had to sell high-quality liquid assets, leaving portfolios heavily-weighted with junk-rated bonds.

    Allstate (ALL) sues Citigroup (C) and Deutsche Bank (DB), accusing the banks of misrepresenting risks on more than $385M in mortgage-backed securities it bought. Allstate has filed similar suits against JPMorgan Chase (JPM) and Bank of America’s Countrywide unit. 

    Elizabeth Warren names two former Wall Street bankers and a former Freddie Mac (FMCC.OB) official to senior posts at the Consumer Financial Protection Bureau, creating a face for the new regulator that may prove more friendly to the financial industry than critics had feared. 

    Illinois hopes to sell $3.7B of bonds to make this year’s contribution to its teetering pension fund, essentially paying a single year’s bill by adding to its already heavy debt load – "short-term thinking… not unlike Americans taking out home equity loans to pay for cars and vacations before the housing bust." 

    Municipal bond investors have two reasons for worry about public worker protests in Wisconsin, Joe Weisenthal writes: No one had Wisconsin on their list of problem states, and "it shows just how far the Democratic party will go to the mat for public employee unions, and how hard it might be to cut costs." 

    Wisdom from Warren Buffett (BRK.A): "The single most important decision in evaluating a business is pricing power… If you’ve got the power to raise prices without losing business to a competitor, you’ve got a very good business. And if you have to have a prayer session before raising the price by 10%, then you’ve got a terrible business." 

    Oil stocks have very recently diverged from the price of oil, suggesting stocks have started to outperform crude, but the ratio’s still low; do oil stocks have a lot further to run? Today: Crude +1.5% to $90.22. 

    Apple’s (AAPL) in the antitrust hotseat again, this time over the terms set for media companies who sell content for iPads. Sources say the FTC and DoJ are just beginning their inquiries, while the European Commission says it’s "carefully monitoring the situation." (Apple’s antitrust past)

    Steve Jobs (AAPL) has six weeks to live? The American Cancer Society cries foul. “Based on a photograph or even based of a videotape of someone giving a presentation on stage, it is impossible to make an estimation of someone’s life expectancy," the ACS chief medical officer says. 

    Another recall at Johnson & Johnson (JNJ +0.6%): JNJ pulls injectors filled with its Simponi arthritis treatment in the U.S. and Germany and withholds shipments, the company’s fourth recall in recent weeks. Recalls of 40 consumer products last year, led by over-the-counter children’s medicines and Tylenol pain pills, cut sales by $900M. 

    The smartphone ETF (FONE) begins trading today. The FirstTrust NASDAQ CEA Smartphone Index Fund will invest in stocks involved with the "handsets, hardware, software and mobile networks associated with the development, sale and usage of smartphones." 

    More merger mania: CNBC’s David Faber says ICE (ICE -2.1%) and CME Group (CME -0.1%) have explored ways to form partnerships to bid for the NYSE (NYX +1.4%). Faber also says CME has spoken with BM&F Bovespa; the Brazilian exchange operator denies it. WSJ reports that BATS Global Markets will acquire pan-European trading platform Chi-X Europe for as much as $360M. 

    Fidelity boosts its commission-free ETF total to 30, adding five new iShares funds to the free-trade program. It’s still got a ways to catch up to competitors like TDAmeritrade, which has 100 commission-free ETFs, but it’s been popular for Fidelity – attracting investor cash at three times the rate of funds outside the program. 

    Three lunchtime reads:
    1) Fed, lately a friend of stock market, may become a foe
    2) My crazy gold investment strategy – the Dow/gold ratio
    3) Banks’ plea to transfer mortgage risk likely to fail

  173. Theta/Chaps – It’s a good thing to look for when a liquid stock like AAPL gets some big short-term volatility that you think may subside as it jacks up the front-month premiums to make a good sale.  

    Screens/StJ – Very nice!  

    $39,000/High – That rocks!  I guess I don’t need to tell you to have a good weekend – congrats!  

  174. Phil,
    Any thoughts on a paired trade, using commodity ‘benefactors’ (DE,CAT, ADM, DBA, etc) on the long side and commodity ‘consumers’ (SLE, K, KSY, PEP,etc) on the short side?

  175. did you see the machine kick in at 1530 to the second;

    bang, the 40 stocks i am watching graphically on 8 different screens all shot up like the mops in fantasia

    i mean it’s incredible, 36 of the 40 were trending down at 1529 with a lot more red than green and then whamo, to the moon Alice

    Faber is right, this is all going to end badly

  176. my list of insanity securities is long and distinguished and 100% agree on DE;

    i am absolutely bullish on a global economy roaring into the sunset, but i fear this all consuming wave of market manipulations is flat out of control

    i am twice the value long that i am short but with my hand resting on the dump handle and near the exits as Phil wryly puts it;

    Philip Davis, David Fry, and Zeal LLC were pointing out the insanity in mid Feb 2009 that while the late 07 market was frothy, the panic selling was way way way overdone and it was the daily bleat of the msm’s flinging the crowd into the sea

    I swear when I read Phil every day the last few weeks I get the same feeling in the opposite direction.

    if you strip away the mickey mouse in US govt indust prod numbers (like including the value of inflated energy products in the form of utility revenues in the gross number), China so far outstrips the US and anyone else in REAL industrial production and their machine appears to be faltering and when they get a cold, hey, it’s not just going to be little one

    the gyrations since irrational exuberance kicked into overdrive post ’95 I believe significantly more pronounced…

  177. Very nice video on consumerism – should be fun to get the Conservative’s reactions!  

    A good companion to the more serious "Century of Self" series that is a must watch:

  178. Phil
    Looks like, for all the wrong reasons, the DOW is ready to surge, catch up with other indices toward that 100% level, but  I do not know how to profit from this.
    Is there a DOW strategy at the moment for those looking to trade in weeks/months time frames, not by the day’?

  179. Phil,
    Will you flesh out the trade of which Highlander spoke?  Being newish, I didn’t quite grasp it – I found the blog entries too terse.  I *did* grasp the $39,000 profit however.  I would like a $39,000 profit.  Please, teach me to fish.  Thank you in advance.

  180. How crazy is this market – look at TZA, they have to do a 3-1 reverse split after only 9 months! You have to go back a long way for the previous reset! I guess, we go short on TZA on day 1 after the split… If you had shorted the ATM Jan 11 Call on July 9 (day after the last split), you would have made 50% by Sept 8 and 90% by Nov. 8! Well as we know, past return are no guaranty of future performance….. 

  181. Screens / Phil – I am trying to keep up with the $25K portfolio ;-)
    I figure 9.44% in 3 weeks is like 163% a year (non-compounded). That should keep me ahead of food and gas inflation…. In any case, a good start, but I am not dreaming. This market is the perfect storm (in all sense of the term).

  182.  HIghlander … very nice … you must have some huge AAPL position !
    Money Show / Trader’e Expo in NYC next week.   Anyone attending ?  I  am …

  183. QID stock split !!!!

    Phil. I have April 10 Calls that have been killing me since January. Not sure how this stock split will affect things. What would you be thinking at this point?

  184. First it was 10 Jan $10 QID calls, then doubled down, then rolled to Feb, then add 10 more on a big up day, then rolled to April. Now I have 30 April $10 Calls.

    They have been kicking my ass for two month, I’ve been wanting to bail but I keep staying in the game. I’m ~5k into the trade, not sure if I can salvage it. Or if I should just take the loss.

    With the QiD nearing 9.50 I’m thinking of adding more capital… But I dont know how Long I should chase… This market is bound to fail.

  185. Phil.

    Thanks for your advice!

  186. Matt- Bahrain is the HQ of the U.S. Navy’s 5th Fleet, we cannot just cut them off.

  187.  Does anyone have any thoughts on WAG?  they are no longer cheap, but they really are executing and flu season is really revving up, especially here in AZ.   I am thinking about a 2013 35/45 Call Spread for about 5.25, financed by 2013 40 puts sold at 5.3 for a net even spread (probably).  I went to WAG today, and it was packed – people end up going in there and buy all kinds of garbage they really don’t need – they still do well in their photo dept. as well.  

  188. Phil/Suburbs  Arcade Fire is an Indie rock band from Montreal – Their Suburbs album won the Grammy for Album of the Year last weekend.
    The video sent a chill up my spine because it looked like the neighborhood and the friends that I grew up with in South San Jose, back in the seventies.
    I’m sure that I’ll not be the last to feel the chill….
    In the suburbs I
    I learned to drive
    And you told me we’d never survive
    Grab your mother’s keys we’re leavin’

    You always seemed so sure
    That one day we’d fight in
    In a suburban world
    your part of town gets minor
    So you’re standin’ on the opposite shore
    But by the time the first bombs fell
    We were already bored
    We were already, already bored

    Sometimes I can’t believe it
    I’m movin’ past the feeling
    Sometimes I can’t believe it
    I’m movin’ past the feeling again

    Kids wanna be so hard
    But in my dreams we’re still screamin’ and runnin’ through the yard
    And all of the walls that they built in the seventies finally fall
    And all of the houses they build in the seventies finally fall
    Meant nothin’ at all
    Meant nothin’ at all
    It meant nothin

    Sometimes I can’t believe it
    I’m movin’ past the feeling
    Sometimes I can’t believe it
    I’m movin’ past the feeling and into the night

    So can you understand?
    Why I want a daughter while I’m still young
    I wanna hold her hand
    And show her some beauty
    Before this damage is done

    But if it’s too much to ask, it’s too much to ask
    Then send me a son

    Under the overpass
    In the parking lot we’re still waiting
    It’s already passed
    So move your feet from hot pavement and into the grass
    Cause it’s already passed
    It’s already, already passed!

    Sometimes I can’t believe it
    I’m movin’ past the feeling
    Sometimes I can’t believe it
    I’m movin’ past the feeling again

    I’m movin’ past the feeling
    I’m movin’ past the feeling

    In my dreams we’re still screamin’
    We’re still screamin’
    We’re still screamin’

  189.  Phil or anybody else
    What happens when I hold a short put (like TZA or QID), that are going to reverse split next week – and then need to be assigned? Would it be done with cash settlement?

  190. Phil/Suburbs   I just read that a short film by Spike Jonze is called "Scenes from the Suburbs" will be released on DVD in May.  I’m looking forward to see that…..

  191. 1020   Love that band! Grammy well deserved.

  192. Just finished watching the Century video (pt 1), it would look good on PBS’s American Experience , oops
    that"s on the chopping block. 

  193. Great article from the times quantifies my premise that polls asking people about economic outlook are fundamentally flawed:  

    Here we can see that the "majority" (29%) feel Unemployment will fall and 50% think business conditions are better BECAUSE THAT’S WHAT THEY ARE TOLD but, a bigger "majority" (37%) think their own family is worse off and a huge ratio (23/10) think their income will fall (only 10% think raises are coming) while 53% think they are losing out to inflation and just 8% (not even all of the top 10%) think they will keep up. 

    This is a huge disconnect between what people say and what they think.  That’s why, when I see polls of "business outlook," I tend to give them a low weighting in my overall data outlook. 


  194. Somehow, the Economist thinks I’m an expert on the Middle East and wants me to participate in some policy discussion next week!  I need to tell them that I’m as uninformed as the next guy but I will want to listen in to the people who are leading the discussion as it’s Jane Kinninmont, who is not only their Chief Economist on the Middle East but also a poet (which makes for interesting articles by her) and Robert Powell of Berkeley – two people I’d pay to listen to anyway!  

    Paired trades/8800 – Not a bad plan but I HOPE we are getting to the top of the food cycle, not the bottom!  The food problem is getting so bad even the G20 has noticed.  Hunger and starvation aren’t the kinds of things that Governments get to "put off" for a very long time.  PEP is getting hit and K is possibly a good choice on margin pressure but not sure about SLE and what is KSY?  If CAT goes over $105, then that whole group is good to go.  DBA was a Secret Santa play and already over target for January!  Keep in mind that the problem with speculative food prices is that there is a real point at which people cannot afford to eat and the top 10% won’t make up for it in volume like they do in energy consumption.  X million tons of grain are sold every month to feed 7Bn people and if 1Bn of those people switch to boiling shoes in soup, you end up with a big oversupply of grain very fast.  This is what happened in the Great Depression – price hikes due to demand, speculation, overfarming, drought, more speculation, lack of demand, systemic collapse.  

    15:30/Chaser – That’s our stick!  It is amazing how this goes on day after day without real comment from the MSM.  I guess it’s OK as long as we go up.  If there was a stick down they would be conducting investigations…  I agree that this is sort of the opposite feel to when I was saying things were too cheap in 2009 and we started buying a bit early in Fed and the market has a blow-off bottom after that.  Maybe we still need a blow-off top.  I don’t think tops are as obvious as bottoms because, at bottoms, you can say that, absolutely, a stock is worth more than the price.

    Dow/Strether – Sure there is.  We can do DDM, just like SSO and we know the Dow has over 500 points to get to it’s 100% mark so I think something along those lines.  I’ll look it over on the weekend.  

    USO/Dsheara – Well he played with a LOT of money, obviously – short-selling the AAPL $350s as a momentum cover.  125 contracts sold at $3.50 was $43,750 collected and then bought back for .38 was $5,375 back.  What he did was a variation on my 2:37 spread trade idea but he already had the longs.  Notice how those March calls held up while the weeklies got crushed – High sold the ones that expired today – even better but the backspread I suggested at the time is the way you can take good advantage of a similar situation without too much crazy risk.

    TZA/StJ – Do you think these reverse splits are a sign of a top?  This is what happened at the bottom, they began to "fix" all the ultras.  I wonder if there is some hidden tremendous profit in doing these reverse spits for the holding company?  What’s most amazing about these ETFs is they are fictitious constructions of no real worth that pretty much do nothing but lose value and churn fees and then, when they become totally worthless, the holding company simply hits the reset button – screws all the current traders over and then gets a whole new batch of people to ride the cycle all over again.  What a friggin’ racket!  

    Trader’s Expo/Cap – What are dates?  I know someone invited me but I forgot all about it.  

    Obamacare/Cap – Save $1.4Tn over 10 years by NOT insuring 40M people ($350 a year per person) – that’s BRILLIANT!  And meanwhile the 260M people who are currently covered will all continue to pay their 20% annual increases, which will cost $500Bn more PER YEAR than we’re spending now – BRILLIANT!  Also Cap, the same report found that repealing the bill would ADD $210Bn to the deficit over the same period and also there are $732Bn in spending cuts in the bill (Medicare) that would be erased by repeal so the net savings, not counting the Trillions of damages to citizens who pay for health care, would be $604Bn over 10 years or 10% of the cost of continuing the war(s).

    This whole fight against health care is a reprehensible sham paid for by drug companies and others who profit from America having the highest per capita health care costs of any nation.  With our $2.5Tn annual health care spending that’s expanding at 20% a year, every year they can manipulate people into "stopping Obamacare" is worth another $500Bn to $1Tn for the industry.  They already know they got a multi-Trillion Dollar jackpot by derailing Hillary 20 years ago so they are pulling out all the stops on this one – now fighting the battle even after the battle was lost.  

    This is just the same old Republican head-in-the-sand BS that’s destroying this country.  What is your plan for this?


    We are only at the very beginning of a crisis that is going to accelerate rapidly over the next 10 years and won’t peak out for another 20, when you and I are over 65.  Even if the $8,000 per person average health-care costs "only" increase 10% a year between now and then will add up to $53,000 a year for health care alone.  Even keeping cost contained at 5% (1/3 of average) would still end you up with $21,000 a year when we retire so that’s $42,000 for you and your wife so don’t plan on too many big trips!  

    This isn’t a crisis you can pretend doesn’t exist like Global Warming – this is societal suicide!  

    Health care is an atrocity in this country and it really breaks my heart when people swallow the BS propaganda that is doled out by the Health Care lobby.  It isn’t like other countries haven’t tried socialized medicine – we’re about the only ones left who haven’t and we pay through the nose for that "privilege."  It amazes me to see people like you support the raping of the American people by Big Business – I can understand the paid lackeys you worship in Congress sucking up to the Health Care lobby and selling their souls to get reelected but what the hell do you think you get out of this?  



  195. QID/ITrade – I hope it was a hedge and not a bet!   Remind me later as TOS is down this morning (planned update) so I don’t have my charts. 

    Good point on Bahrain, Jrom!  I think CVS is a lot more reasonable than WAG but, also, remind me later when TOS is back up. 

    Arcade Fire/1020 – Unfortunately I’m getting old as I watched the Grammys with my kids and was surprised at how few people I know these days.  

    PBS/Doro – They don’t have the guts to air that kind of programming anymore.  Not to risk getting what little funding they have left cut off.  

  196. Phil/Aging Population
    The chart above illustrates in the simplest of terms what a mess we are in for.  Even the most naive politician should be able to take one look at the chart and figure out that things are going to get very ugly in the next few years.  Instead though…..they continue to play politics with SS and healthcare like the coming storm doesn’t exist. 
    I don’t see how this country is going to avoid bankrupcy which will most likely spark a revolution between the have’s and have nots.  I know you like to go on about the top 1% paying their fair share and all that……but let’s get real… the populating ages the burden of paying for the entitlements and other government spending will fall on the young…..and as they point out in the book America Alone…..wars and revolutions are not started buy the middle aged and old people, rather the young……take a look at the middle east……so at some point……the poor kids that have to work there asses off to pay for all this….are going to say enough.  Some believe the Tea Party phenomenom is the first phase of this movement…..time will tell. 
    Meanwhile our idiot politicians are to busy thinking about the next election cycle to address the real problems.
    How the hell can anyone get bullish in this environment???

  197. Isn’t it amazing that today, the market has become a great "tell" as to how things really are…..

  198. "as the populating ages the burden of paying for the entitlements and other government spending will fall on the young…"
    I for one will insist that those obligations be met. 
    Pardon my cynicism, but since I am fast approaching that point my view is that the statist mentality has wrought the consequences of its agenda.  So be it. The statists’ have promised and deliver you will.  You all and your children and their children better start figuring out how you are going to pay for it. 

  199. Exec – I agree to some extent.  Why do we have to have a battle between the have/have nots, when it’s our policy makers that are not making the tough choices. The young have it right if they think they need to start at the top.  (then Washington would reinstate the draft!?)  Flat taxes for all,  No tax on business, tax is paid when product or service is purchased. Cut Defense 20%  Close bases abroad – let that country defend themseves.  I mean, well can bring HELL on earth from a joystick in the middle of the Nevada Desert…..
    We need a healthy and Intelligent America to compete in this world.
    There is so much that can be done thru efficiencies for all Government programs, and many will have to go. tough choices.
    We have the answers.  What we do not have is Responsibility or Accountability in Government…..
    ….and little Character to be found….

  200. ….Oh, and Matt Taibbi has it right, Let’s put those Wall Street Crooks in Jail!!!
    THAT would make me Happy….. :)

  201. 1020/have/have nots
    Take a look at what our country has evolved into.  You ask why there has to be a battle between the have’s and have nots……it’s because that is what our political parties promote.  Class warefare is the perferred strategy to get reelected these days.
    What is interesing to me is how they have convinced many of the haves into thinking they are the have nots.  It’s laughable….you’ve got teachers and union members and other upper middle class people believing they are the have nots….you have politicians pitting every group against one another.  It’s ridiculous.
    What I see happening now is that the public workers have now surprassed the average private sector worker in salary and benifits, and the private sector has finally woken up and said…..wait a second…..we’re paying for this….you work for us….and they don’t like it. 
    What is likely to happen next… that it is going to become abundently clear that social security if broke and the benifits that everyone has been lead to believe they are going to retire on are not there.  Then they’re going to figure out that the public sector aren’t even part of social security and that there system is solvent……because most people are oblivious to this fact……and then the shit is going to hit the fan big time.

  202. Phil / Oil acquisition targets        Reminder as requested: Which smaller US and Canadian oil companies (or drillers) are likely to be acquisition targets for domestic or international majors? Could be one of safest investment plays out there?

  203.  I’m curious Phil….a few days ago you mentioned that there were places in the U.K that would you consider living if things got really ugly here in the States…what areas do you like? Also anywhere else in the world you would consider living?      And everybody else?  Where do you like?   Thx

  204. How/Exec – Well, as I keep pointing out but no one wants to hear, our GDP is $15Tn and we spend $3.5Tn including debt service.  Therefore, we COLLECT $4Tn a year in taxes on goods and services (a 25% VAT, for example) and pay down our debt over time.  It’s a radical concept known as a budget.   If we want to lower our VAT rate, then we need to elect people who will get serious about spending over time but there should be no question, ever, that we balance our books each year and pay off a portion of our debt on a 15-year schedule.  You can do that and either eliminate regular taxes or just push them up to the highest brackets (over $1M for people, over $10M for corporations) and you can eliminate SS payments or you can cut them down or you can keep them going until that system is back to surplus.  

    There, that took 5 minutes of adult decision-making.  Now on to Global Warming, stopping the war, energy independence and Universal health care…  

    This is why I get so angry – these are not unsolvable problems – these are problems that people are unwilling to solve.  

    Give ‘em Hell Pstas!  You make those kids pay.  It’s their own fault for being born and all, right?  

    Public/Private/Exec – Wow, do you really believe that?  There is no comparison in those statistics.  Our private sector jobs have devolved us into a nation of hamburger flippers so the "average" private worker now earns less than the average government worker but the average government worker who is required to be a college graduate, often with a post-graduate degree or special training (police, fire, education, medical) make far, far less than people with simiar qualifications in the private sector.  How about this one item – Barack Obama gets $1M a year to run a corporation with 20M employees, thousands of offices around the World $15Tn in revenues etc while Larry Ellison gets $85M bucks to run Oracle.  You know this country has totally messed up priorities when there’s barely a lobbyist in Washington that doesn’t make substantially more than the politicians they are lobbying.  

    But, of course, you don’t feel that way because those lobbyists work with their PR firms and PAC committees to make sure you don’t.  

    Oil companies/Tusca – OK, I will try to get back to that later.  

  205. UK/Sun – I like Jersey, which is really pretty much in France.  They have a strong Financial sector but are self-supporting with agriculture exports (lots of cattle and dairy and the most delicious potatoes).   They have a 20% flat income tax and a 3% sales tax with no VAT.  Guernsey is similar and a bit smaller.  Those are my two favorites at the moment.  I like them because the UK would defend them from foreign attacks (if things really went to hell) but they are too far away for UK people to bother with and the fact that they are British should keep French scavengers from bothering them.  In a normal depression (less catastrophic) they are both able to be self-sustaining with a small well-educated population mixed in with a lot of farmers.  Both have semi-independent small governments that could more quickly adapt to a changing global situation than the a larger nation.  

  206. Phil/How,
    I agree it can be fixed….and it will….however…I read an interesting article from some scholar who’s name escapes me…..that outlined a believable piece on how things in this country are never fixed until they totally break.  It has a lot to do with the fact that politicians are too spinless…..or more accurately unwilling to do anything (like raise taxes or fix SS) or address any volitile issue that might cost them their phony bolony jobs.  Hell….anyone that pays attention can see that it is true.  They talk in circles and run away from their beloved cameras at the mere suggestion that they address one of those issues.
    As far as the private/public sector head on collision that coming down the road. 
    It’s coming and it’s coming fast……you make a good point when comparing like jobs…..however… are singling out a few instances…..and even in those situation most people aren’t buying it because they see just how hard the public sector is expected to work.  It’s the ol 15 guys standing around watching one guy with the shovel routine……nobody’s really buying the fact that you’re comparing apples to apples.  In fact…in my neighborhood there’s a big tado over a police and fire chief that are being paid over 150K a year in a neighborhood that doesn’t have fires and hardly see’s crime…….not to mention there are 10 other police and fire chiefs in a 5 mile radius.  But that another discussion for another day.
    Have a good evening.

  207. 1020- flat taxes are not the answer. 10% out of a person who makes 25k a year affects that person a HELL of a lot more than 10% of someone who makes 250k….they should just eliminate ALL deductions, that would increase revenue!

    Exec- the only people who consider the teabaggers the start of this revolution are teabaggers themselves! If they gave a damn about the deficit they would cut spending AND increase taxes! I don’t have the numbers in front of me but I’m pretty sure 90% of the teabaggers voted for those BS tax cuts! That’s kicking the can down the road…
    Also, you’re unions and teachers comment made me laugh! You’re a funny guy. Seriously, I don’t even know why I respond to such ignorant comments but I can’t let you conservatives rule this board! I’m not saying that there aren’t loopholes that union members or teachers can take advantage of but I hardly consider them the haves!!! Teachers don’t recieve much monetary compensation, I believe most do it bc they want to make a difference ( I know it must be hard for a conservative to realize there are other motives besides money people consider when choosing a career path).
    And as a member of the Gov’t I get sick of the constant ragging on Gov’t workers by some members on this board. Sure some might be lazy(as you’ll find in any large corporation), but most are honest, hardworking people. What’s wrong with wanting a liveable wage? And although the disparity between the public and private sector is often mentioned, they are often comparing apples to oranges. When comparing wages across education levels there is little, if any disparity between the public and private sector. Most federal jobs require a college degree.

  208. Damn Phil, you stole my thunder!!!! lol. Had most of my message typed earlier but didn’t hit the submit button!

  209. Jrom,
    I’m not ragging on government workers or teachers……but look at the numbers and you will see that both fall into the middle to upper middle class.

  210. Exec, show me those stats!!! You’re a smart guy, go get some proof! My biggest pet peave with you conservatives is so many of you take talking points from bill o’dbag or glen beck (still can’t believe that dude is from my SMALL hometown of Mt Vernon, WA…sigh) who say ‘reports show’ or ‘statistics show yada yada yada’ but rarely name the report they are quoting. Then, conservatives like you (and many of my military buddies) use those same talking points as FACTS bc some jackass fox news commentator said so. Now, I’m sure most teachers and union members are middle class(IMO few are upper middle class) my point is there is nothing wrong with that! You don’t want to start paying public sector workers poorly, bad things happen… Look at Russia. I would rather have cops make 60k or more a year And are HONEST rather than ones who make peanuts but except bribes. I loved my year studying abroad in Russia and didn’t want to leave, however, coming back to the states gave me a renewed sense of gratitude for our Gov’t and the workers in it.

  211. jromeha – Flat taxes for all, on a scale and no deductions.  Sounds about right.
    Phil should just bag his day job to start a new party. The Party of Common Sense…..
    He’d have my vote….. :)

  212. Oil/Tusca –  Scott likes DVN as his top 5 riser.  They have been ramping up in price but still an attractive value if oil prices hold up.  I’m more comfortable with a set-up to buy them cheaper, selling 2013 $75 puts for $7.60, buying the $80/100 bull call spread for $11.20 for net $3.60 on the $20 spread that’s $8 in the money.  Margin looks like $15 plus the cash so not a bad way to play since it’s in the money.  Better off buying 2x of that spread than trying to do a buy/write.  If they get bought out, you collect early anyway.  

    ECA is not bad either with a mix of gas and oil.  At $30.97, they make a nice buy/write, selling the 2013 $30 puts and calls for $9 for a net $21.97/25.96 entry.

    NFX is along the same lines.  I’m liking the O&G guys because the low nat gas prices are dragging their oil valuations down while everyone else is running wild.  The Jan $50/65 bull call spread for $11 can be offset with the sale of the 2013 $60 puts at $8 for net $3 on a 100% in the money $15 spread and about $14 in margin plus the cash.  

    XEC is much more gassy than oil but a solid company and small enough to be acquired easily.  The 2013 $100/125 bull call spread is just $13 and you can sell the $90 puts for $10 with the stock at $114.62 so that’s net $3 for a spread that’s $14 in the money and about $18 in margin with a 20% discount if put to you so a very fair way to play. 

    UPL is also gassy and just missed their first Q in 8 so a good pickup assuming they hold the 200 dma at $45 (down 10% from pre earnings).  Thanks to the sharp dive, you can sell 2013 $40 puts for $4.50 and buy the Jan $35/50 bull call spread for $8.75 for net $4.25 on the $15 spread that’s $10 in the money with $8 in premium on the long puts.  

    By the way, the way to play any of these more aggressively without going too crazy is simply to partially cover the long calls or stock, which gives you additional upside 

    Fixes/Exec – The reason that things don’t get fixed until they break is because we have a country full of babies and leaders who coddle them so they end up growing into a nation of whiners who complain about everything but don’t have the spine to make the choices and do the work to make things better.  Mostly, and I know this sound "liberal" but it’s true, it’s because we are the victims of a 50-year marketing campaign that tells us that "government is not the answer" and is, in fact, the problem that stops the freedom-loving people of America from all becoming millionaires but it’s total BS.

    For one thing, the entire history of our country has been twisted because it wasn’t the British Government that was oppressing the colonists.  They were, in fact, protecting the colonists from the French in the seven-years war and had been encouraging colonists to settle out west to give them reasons to defend more and more territory.  That war cost England a fortune (supplying troops form overseas and the colonists had little interest in enlisting when it was more fun to grab land from the French) and they needed to maintain troops to defend the territories they had captured.  

    That led to a series of poor decisions.  There had always been a 2-4% income tax on the colonists, no one cared about that – it was less than they paid in England.  England had over-expanded Globally and were struggling to pay for wars all over the place to defend their MERCHANT fleets – which is what it’s always all about – defending the top 1%.  

    Poor decision number one came when England reversed their policy on land settlement as they tried to get the new territories properly under British control.  Don’t forget that England (and France) had stripped their own countries and were literally worried about "peak wood" and running out of food and land for their people so the "New World" was just that to them – it was a new World to move on to now that they’d trashed the old one, just like we exploit the 3rd World today and then get outraged when they begin to expect some form of economic equality.

    So anyway, England stopped the colonists from settling West and now the troops that had been defending the land they encouraged the colonists to grab was now turned back on the colonists (and by colonists here we mean wealthy land-owners and corporations who expected to have large holdings in the new territories) trying to grab land.  To fund this Army, which England saw as essential to maintaining order and stopping the new American Elite from taking over the West now that France was no longer a threat, they levied a tax on the colonists.

    England saw this as doing the average colonist good but England did not control the press and those that did vilified the action as British Soldiers (there were just 7,500 of them) occupying "American land" and keeping "Americans" from what was rightfully theirs.  In other words – the same idiotic crap that works today worked 250 years ago as the Corporate Media convinces relatively uneducated masses of people that the land they would never stand a chance in Hell of ever getting is being denied to them in order to push the agenda of the top 1% so they can grab the land and enslave the suckers who support them. 

    Kind of like the Democrats, England made the mistake of not taking the original Tea Party crowd very seriously as their actions made no sense to people who lived in a fairly well-educated Democracy 3,000 miles (2 MONTHS at the time) away.

    Since the colonists paid far less taxes than British citizens and since England had a lot of debts, the obvious conclusion was that the colonists should begin paying more of their fair share of taxes (and don’t forget the political pressure came from the British citizens, who didn’t want their taxes raised to pay for King George’s war to defend colonists on the other side of the World – which is pretty much asking more conservative citizens to bail out the risk-takers isn’t it?).

    Interestingly, the Sugar Act (1764) was a REDUCTION in the existing tax rate on tariffs (not just sugar) but what the Act did was enforce collection and that threw the cheaters (the rich) into a frenzy.  "How dare they expect us not to evade our taxes?!?"  

    The Stamp Act (1765) was also more of an enforcement action.  Everybody in England paid commodity taxes.  The Stamp Act made the big mistake of including legal documents and newspapers and that got the lawyers and the press completely against the crown, which pretty much doomed them right there.  35 of the 50 signers of the Declaration of Independence were lawyers.  

    Colonial Stamp duties were less than those in England and the revenue still wasn’t enough to pay for the 7,500 soldier (that’s still all this was about) that were there to protect the rights of colonists until an equitable system of land distribution could be established.  Keep in mind that this land represented what today would be Trillions of dollars to whoever could get their hands on it.  Now you begin to see the real motives behind the "revolution."

    To help balance the books, the British passed the Quartering Act (1767), which required colonists to provide British troops housing, provisions and transportation.  Do you think that this affected the average American laborer who went home after a hard day’s work to a small home?  Do you think this affected a family farmer who had two horses one cart a small house and a barn?  Nope, not at all.  This was a tax on the rich who had horses, land and houses to spare.  Outrageous!!!

    Still, the press got the colonists riled up and they boycotted British goods and by 1766 the Stamp and Sugar acts were repealed.  Since that was effective, the colonists (the rich ones) pressed for more and the rest of the tariffs were removed in 1770.  Maybe they had no representation but they also had no taxation!

    So, by 1770, ALL of the taxes had been rolled back EXCEPT the tea tax.  Even the Quartering Act was not renewed by Parliament in answer to American petitions.  Of course, the average colonist had no idea about any of this because they didn’t pay these taxes, the merchants did and they controlled the media and they weren’t saying anything because this wasn’t about taxes at all – it was about LAND!  And they couldn’t steal the land as long as British troops were watching it…

    Since there was no logical reason to start a war, one had to be constructed and the merchants had their opportunity when the Tea Act of 1773 exempted the British East India Company from the one remaining tariff.  This was actually done as a bail-out of the struggling business because colonists were not drinking Tea as the tax made coffee cheaper.  The tax break gave EIC a competitive advantage over the local merchants so, of course, Rent-A-Rebels attacked a cargo ship and the MSM painted this blatant act of Corporate terrorism as a patriotic declaration of War.  

    British Parliament then did what any self-respecting government would do when their ships are attacked.  They sent troops over, reinstated the Quartering Act and passed some other ill-thought-out rules very quickly that pretty much shut down Boston harbor, further enraging the merchants but the last straw was Parliament passing the Quebec Act, which firmed up the restrictions on settling western lands.  

    So, after provoking the British to reinstate the taxes and rules they had already peacefully removed, the Continental Congress was convened in September of 1774 and, just like we "investigated" whether Saddam had WMD’s – there was no friggin’ way these guys weren’t going to use this as an excuse to get rid of those pesky British soldiers that were stopping the top 1% from grabbing more land.  

    Obviously, Britain was not completely innocent.  They made a lot of bad decisions, just like Saddam made a lot of bad decisions when America was hell-bent on attacking him.  There were, of course, British citizens, British corporations, British Military – ie. British interests in the Colonies and they were screaming for protection so an idiot leader named George sent his Army into a quagmire to fight a long, expensive war that he couldn’t possibly win.

    Thank goodness we learn from history, right?  

    If this is not the story of America you have heard, please read up on these things from both American and non-American sources and then tell me why you think the story we hear over here is so different?

  213. LOL Jrom – GMTA! 

    Middle class/Exec – And where should government workers and teachers fall?  Should they be lower class?  Do you want "lower class" people educating your kids?  Do you want "lower class" people regulating businesses, making sure the drugs you take are safe, designing your bridges, defending your nation?  Really – is there not a second stage to the thinking here?  This is exactly what bothers me about Conservatives – they want a country that provides the best of everything for free but all the hyper-majority Republicans in the House can come up with is $67Bn worth of savings on a $3.5Tn budget.  

    IT’S A JOKE.  They are nothing more than a scam.  Not that the Democrats are any better.  They had two years to do what needed to be done and they did NOTHING!  NOTHING!!  NOTHING!!! I am so angry about that that words fail me but I do refuse to give up and declare all politicians evil as that is just pointless and will accomplish nothing except conceding our nation to the Corporations.  So, I continue to work with the Democrats, who I see as the lesser of two evils.

    Common Sense/1020 – Thanks for your vote.  Remember, it was Thomas Paine who said:

    Society in every state is a blessing, but government, even in its best state, is but a necessary evil; in its worst state an intolerable one; for when we suffer or are exposed to the same miseries by a government, which we might expect in a country without government, our calamity is heightened by reflecting that we furnish the means by which we suffer.

  214.  Tax Tools – TOS- anyone had any experience using this tool? No support available on the weekend- just starting out I see the drop menu for the from/to fields do not have  a 2010 date listed as a choice? 

  215.  Revisionist history lessons are such fun. The first read- instant reaction – jabberwocky! ( 
    The second read, this time with my "emergency tin foil hat" ( firmly in place – Eureka!. It all makes sense. Who knew, wizards behind the curtain pulling the levers all the way back then. 
    I can’t wait for the next chapter. 

  216.  Tax Tools – TOS- correction – support is available. 
    They advise that Tax Tools in not available from the desk top platform. You have to go to the web site and log in- open my account and choose Taxes. That brings you to the Gainskeeper program. It is a pop up so blocker has to be disabled. 

  217. pstas,
    Gainskeeper is a pain.  I told TOS that they made a mistake by dropping their easy to use Tax platform for TDAmeritrade’s Gainskeeper.  For example, if there are unresolvable items, there is no link for users to fix them, and TOS support can take days to respond (they haven’t yet).  There are errors that look like their back-end system errors, such as "could not withdraw" an order, "symbol found, but not having a valid date", that made it difficult to wrap up the tax as we don’t know whether to ignore the errors or not.

  218.  Peter- I have opened up the Gainskeeper and it is no picnic. So , any solutions? 

  219. pstas,
    It’s actually not bad that you can export them to .TXF file.  However, if you have traded SPX and RUT, those are treated differently in Section 1256 of the tax code.  It’s actually made it simpler.  Gain/loss in SPX and RUT are treated as 60% long term gain (great!) and 40% as short term gain, and the beauty of it is that there is only 1 line in your tax return, no matter how many transactions you have on SPX and RUT.  Those index transaction is marked with an asterisk (*) in Gainskeeper export.
    It gets more complicated with carried over from last year and carry over to next year.  TOS Tax Tool on the desktop is still available, so a trick is to export from Gainskeeper, import to TOS Tax Tool, and export to tax file (.TXF).  The tool separates out carried over, etc.  I tried and it worked last year, but haven’t tried it this year, and I don’t quite remember the step by step.  I’ll figure that out as I go before 4/15. 
    I haven’t give up hope that I can export straight from Gainskeeper and not doing the work around this year.  Will see what TOS says to my questions.  There is of course Trade Log software (approx $300 for unlimited trades) that many people here like.  Disclaimer:  I never meant these to be tax advice, just what I’ve done to cope with filing tax.

  220.  Peter- that is good to know about the treatment of SPX & Rut    - a bit of savings.
    According to the manual on Gainskeeper the data is exportable to a PDF; txt, xlf or txf format.

  221. Phil
    I have a issue on a Real Estate deal that I am involved with a national food chain.  The interested party is an LLC that has 400 locations around the US and they have cut a deal with the franchisor for a territory in SE Wisconsin.  Their plan is to open 35 new locations.  I have a corner on a busy intersection which is next to a large medical center and down the street on the next block is the largest employer in the county the county building.  also a 1/2 a mile away is the areas hospital.  A coffee chain across the street from me opened 2 years ago and is doing 1.5m a year which is supposedly the best in SE Wisc for that chains locations. 
    My problem is how would you deal with the threat of inflation?  tying rent increases to CPI seems useless, do you have any other ideas?

  222.  Phil, 
    AAPL, undoable in the sense that I would need to sell 7 AAPL ’12 250 Puts to get the fund the spread… couldn’t sleep too well with the prospect of Jobs dying and AAPL going down 100 points and having $175,000 put to liability. The margin for this on Schwab also is a killer.