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Monday Mortgage Fraud – Does It Matter?

Did you see 60 Minutes last night?  

This craziness is part of the "Fraudclosure" scandal that has been well documented by Barry Ritholtz over at The Big Picture so I’m not going to spend too much time on it other than to look at the overall trend.  37,000 people went to an event in Los Angeles for people who are in foreclosure and wanted to know their rights, 12,000 people came to a similar event in Miami, law firms are beginning to take cases on contingency in exchange for liens on the homes, which can become very valuable if the law firm successfully shoos the bank away from the Mortgage.  

LA and Miami are big cities so let’s say that, nationwide, only 200,000 of the 4M homeowners facing foreclosure are able to challenge their loans and let’s say only 50% are successful.  That’s still 100,000 mortgages that may be written off and, at $200,000 per average mortgage, that’s $20Bn worth of bank write-offs to work through the system.  But, if the 4M people who don’t think this applies to them begin to see their neighbors ripping up mortgage documents – how long will it remain something only 5% of the affected people do?  Just taking the banks to court over every loan can cause nightmares.  

Understand that what 60-Minutes is looking at is beyond "robo-signing," where an actual bank official’s name is signed by a computer without proper review.  In those case, even if flaws are in the documents, it’s hard to argue the banks don’t have legal possession of the property.  This is very different, this is fraud.  Not only is the bank using fictitious names but they are blatantly using multiple people who represent themselves as the same person AND the notarizations are fraudulent.  It’s very easy to imagine many outraged judges voiding the entire transaction (which the banks charged the homeowners to complete) or even entertaining lawsuits by consumers that will go far beyond just walking away from mortgages.  

Keep in mind this a whole new body of case-law so each lawsuit provides additional ammunition to be used against the banks as each attorney pokes at the many, many holes that have been created in the chain of title in the past decade.  Last week, LaSalle Bank lost a case in which their right to foreclose was denied for simply failing to provide proof of assignment.  If we use that as a benchmark, approximately 25% of the 75 Million mortgages in this country ($3.75 TRILLION) are "unforclosable."  

average days in foreclosureOne of the dirty little secrets driving our economy in the past year is the fact that there are currently 7M people living in homes in the United States who are not paying their mortgage.  There is not one single state in this country where the average number of days delinquent in a foreclosure proceeding is less than 365 days and states like NY and Florida are OVER 600 days past due on the average home in foreclosure process.  The Mortgage Fraud issue has distorted these numbers very much to the downside as banks are not filing foreclosures on delinquent homes – the real numbers are incredibly worse.  

In California, for example, "only" 188,097 homes are in foreclosure at this time.  However, an additional 499,802 homes are more than 90 days delinquent.  Even if the average mortgage payment were "just" $2,000 – that’s $1,000,000,000 PER MONTH not being collected by the banks but, on the bright side, that’s $1Bn PER MONTH that Californians can use to buy IPads or subscribe to NFLX or buy gold, stocks or oil futures.

Everyone is a winner in this game – by not foreclosing, the banks avoid writing off $100Bn worth of bad loans (and this is JUST California so you can multiply by 10 to get US figures) and the consumers are getting $12Bn a year in FREE MONEY and, of course, the Federal Reserve is papering over the whole thing by dumping 120Bn worth of MORE FREE MONEY on the banks.

In fact, the only people not winning are the suckers paying their mortgages as they have less free money to chase the inflationary prices that the people who live rent-free are able to stock up on.  Another fun way the Government is giving out money is through "reverse mortgages," where seniors sign over the equity in their homes in exchange for no more mortgage payments or, sometimes, the bank even pays them. 

There’s nothing wrong with reverse mortgages (unless you are a kid watching your parents spend your inheritance) but consider another few hundred thousand people who are benefiting from the Fed’s FREE MONEY to take the ultimate home equity loan (100%).  This is why the cruise lines are doing so well – suddenly Grandma has an extra $1,500 a month to spend!  

This is just another way our government is plunging further and further into debt in order to "extend and pretend" for the banks.  Reverse mortgages are made possible by ultra-low interest loans from the Fed to the banks coupled with possibly tragically misguided expectations that home prices will rebound and, on that basis, the banks are effectively paying 4% interest on the home equity lines.  I hesitate to mention it because it’s certainly not for everyone but NRMLA has good information and a good calculator to check out how it works.  

Unfortunately, every time we see home prices go down instead of up each month, it reminds us what a house of cards all these loans and, ultimately, bank earnings estimates (1/3 of all corporate earnings) is based on.  Short-term, since mark to market is still a quaint practice that USED to happen in the bad old days, we can just keep going and ignore all this but the danger accumulates like radioactive water in a Japanese reactor and, ONE DAY, someone is going to have to take a drink… 

Meanwhile, the market continues to party like it’s 1999 and the Dow futures have already jumped 50 points off the lows last night on no actual news.  Why shouldn’t they be enthusiastic?  As I said, we’re handing out $10Bn a month to people who don’t pay their mortgages and offsetting the discomfort felt by the banks by handing them $120Bn a month to play with and we have over 6M people who have been on unemployment for over a year as well as 45M people on food stamps and that’s about $9Bn (at $200 per month) that goes to pay the inflationary weight of food prices.  

No wonder manufacturers have gone with the idea of selling less food for more money lately.  We’re not expanding the markets but we are providing less product for more cash and that beefs up profits while keeping sales flat and even up.  Essentially, we are living in a fraud-based economy but it doesn’t seem to be bothering anyone so I guess we shouldn’t let it bother us.  Just because we know things will end very badly – it doesn’t mean we can’t enjoy the ride!  

I was on a plane this weekend and a passenger walked out before the flight began and said "I’m not paying $400 to be treated like this!"  We all burst into applause but then the other 199 of us passengers who were in the hot, smelly plane with one working bathroom and seats that were jammed so close together we could barely clap without poking the person next to us – all shut up and endured the flight to Florida that used to cost $250 with more legroom, working bathrooms, movies, free drinks and lunch just 2 years ago.  

Oil topped out at $108.80 in overnight trading and I reminded those few Members that were up around midnight to short it at $108.50 (Members make sure you read last nigh’s comments, we covered several major issues and there were trade idea for FXE and DUG).  We’re finally heading into our favorite week to short, when the NYMEX rollovers begin to loom large (still over 2 weeks away) and there is finally some real pressure on the price.  Don’t worry though – Goldman Sachs is on top of this oil issue and has doubled Lloyd Blanfein’s pay to make sure he can tank up the limo on the way to the office!  This is despite the fact that GS earnings were down 38% and the stock flat-lined.

Actual performance "just doesn’t matter" in this modern economy – just perception…

[Fraudclosure Chart by William Banzai7]


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  1. Good morning!  PP for today, and CELG post should be up soon!


  2.  Pharm,  What are your current thoughts on Dendreon?  Thanks!


  3. Phil / Oil = Nigerian elections are next thing press and speculators are focused on to drive oil higher.  I rolled those USO puts to May $42.  Do you plan to sell weekly puts this week? 


  4. Morning,
    As promised I have updated the webchart of my little "prophecy indicator" and added a short comment to it:
    http://www.pentaxon.com/psw/viyindicator.html
    The next days could get interesting. (further decline?)


  5. Regarding oil prices, Barchart has a nice Commitment of Traders chart that shows Managed Money and Retail rushing into the oil futures while producers and swap dealers get away…
    http://lemoyne-mappingthemarket.blogspot.com/2011/04/why-is-oil-going-higher.html
    This has driven prices higher over the last few months! Doesn’t look like fundamental pricing, just speculation! 


  6.  GM – I am Linda Green 


  7. Phil--went and checked and re checked the trades on FAS--total loss stands at $1200--very serendipitous trades


  8. Pharm--missed the previous DEPO trade--would you sell some puts today on DEPO—down 5% on CEO resigning?
    Tx


  9. Phil I,m in USO april 41′s average price 1.40.  I have 25 contracts.  Bought 10 then rolled and  dd and picked up another 5 at .65.
    So I have 25 contracts at 1.40.  Opps down over $3600.  Learned some good lessons but what do I do now.  Do you still think there is any chance oil will move down.  What would you do?
    Thanks


  10. Phil /  Gold Silver short      My short via ZSL is not working out.  Irish finance Minister seems to have been bullied by the Germans to accept lower interest rate protection instead of bondholder haircut, so the dollar remains the weakest degenerate.  Should I book my losses on gold silver shorts or hang in?  The ZLS ultra is painful when I’m wrong.


  11. Tusca – Looks like ZSL like many of these ultra shorts on commodities has only been good for selling calls against! The trend since 2009 is unreal. They had to reset it twice in that time period. That can’t be a good sign. In that commodity frenzy I would stay away. 


  12. CELG post is up.



  13. Pharmboy – Check your link!


  14. Oops, my mistake! ;-)


  15. DNDN – I think I wrote something on them Friday.

    DEPO – yes, Savi.  Septs.


  16. VVUS up nicely on their data for Qnexa.  Now, let’s see if they can give the FDA something to sink their teeth into.


  17.  Pharm, Thanks I’ll find it!


  18. HI Phil-- CMG back spread — april short put 240 ( .75), short call 270 (8.5), long june 290 call ( 12.12)-- should I adjust today or wait this week — if adjust — should I rolled short april call to may like 280 or may be 290 and at the same time buy more call june 290 right?  thx


  19. trad – It was Thursday to Jomama

    DNDN – the gov’t is going to cover, buy my question remains, how much is built into the stock price, and can they produce the goods/revenues to be viable?  Until they answer those, I am not a buyer.


  20. Tx Pharm


  21. NWBO – Put an order in to take 1/2 off if you DD.  Should be even on the trade now.


  22. Good morning!

    Aside from the plays on DUG and FXE from last night’s chat, make sure you check out Stock World Weekly, where we have long-term trades to take advantage of cheap prices on INTC, MSFT and CSCO as well as Pharm’s trade ideas for CRIS and IMGN.

    It’s a $27Bn POMO week, all in the first 4 days with no POMO on Friday.  The current schedule has just one day left (4/11) after this week with up to $8.5Bn distributed on Monday and that means Tuesday is another miss as they don’t release the next schedule until 2pm on Tuesday so shorting into uncertainty on Thursday will be an attractive plan.  

    Meanwhile, it’s still 1,333 or bust for the S&P and we are kissy-kissy on that line as well as Nasdaq 2,800 and Russell 850 – which is another pair to watch.  The Dow is right on 12,400 and the NYSE is at 8,500 – both worth noting as well as it’s interesting when so many psychological levels line up at once.  Usually it’s a sign of manipulation, especially when you hit the resistance after pre-market pumping but the volumes are so low we may as well be in pre-market conditions all day long. 

    Still, no change in my overall view that last week was BS and we should find a proper level at least 2.5% below where we are now so that’s S&P 1.300 – back to our Major Breakout Levels.  If those hold up – THEN I will be duly impressed and we’ll have to come up with another round of Inflation Hedges and Breakout Defense trades (some of the old ones are still good).

    Before we go there, they have to SHOW US THE LEVELS – especially the money shot of S&P 1,333!  

    Below 12,400 we can certainly  play the DIA $125 puts at $1.80, that’s just .80 in premium with a .71 delta so they should do very well on a dip.  

    Other than that, it’s a watch and wait day.  I will be very amazed if they hold everything up but I’m already surprised we opened green so who knows.  


  23. Good morning,

     

    IWM    82.82,  83.06,  83.46,  83.70,  84.04,  84.28,  84.42,  84.74,  85.12    (and $7.5 Bil of POMO)


  24. Phil, 
    FAS-- You asked me to remind you of the options to roll today (as I was unable to roll the long april 32′s). Here is my position:
    I have 80 long 32′s (in for the same net as the posted trades before the roll to the April 31′s).
    40 short this week’s 31′s (sold for .99) and 40 short this week’s  30′s (net .04 after rolling previous week’s for a net cost of .45 as per your recommendation).
    Thanks


  25. Pharmboy:
    Considering another round on DEPO of the Sept. 7.5/10 BCS. I can’t seem to find anything negative about the ceo’s departure. A lot of rumors about other insiders wanting to sell the company? Nothing reliable. Would you do the spread or take a shot at foregoing the spread and just doing a long call along with selling some puts? Have you heard anything more specific about Pelzel’s resignation? Thank you.


  26. Some quick links to my blog
    1. Results from my Combination Screen – keeps on going! Up 11.50% over the last 9 weeks while the S&P is up only 3.7%. The post also has this week’s screen list.
    http://lemoyne-mappingthemarket.blogspot.com/2011/04/combination-screen-412011-results.html
    2. Valuation spreadsheet – I have updated my valuation spreadsheet. It now includes all the optionable stocks in the US markets. I have also sorted it by Industry and Sectors for better analysis. In addition, I am starting a new portfolio using the information in the spreadsheet.
    http://lemoyne-mappingthemarket.blogspot.com/2011/04/valuation-spreadsheet-432011.html 
    3. And finally, I have updated the charts of the major indices using the volume weighted averages. Let’s put it this way, last week’s move on the DIA in particular was not very impressive. Not much volume to support the bog move. IWM was much more convincing in comparison.
    http://lemoyne-mappingthemarket.blogspot.com/2011/04/is-this-move-for-real-part-2.html


  27. JR,
     
    Lot’s of POMO money……U long?


  28. DEPO/dclark – I think selling the company is a good shot for them.  With a ~$500M cap, I can see them going for $20-23/share.  Their technology is transferable to many drugs, so….not unreasonable.  CEO departure was for personal reasons is all I see. 


  29.  FAS $25KP – I want to sell 40 (full cover)  WEEKLY $31 calls for .65 and spend .60 to roll all 80 April $31 calls back to the May $32 calls.  No change on the weekly $30 calls, now $1.35 but they are now an almost even roll to the April $31s (the ones we are selling) so that’s our plan if things keep going up but, hopefully, we catch a nice sell-off here.  


  30. More on copper
    http://ftalphaville.ft.com/blog/2011/04/04/535511/some-circumstantial-copper-evidence/
    This is unreal, this guys are just importing copper to back loans. This can’t end well for copper or the loans…. 


  31. Phil:
    I’m sorry, but how do we get to your "Stock World Weekly"? Thank you.


  32. On EGLE did I miss a roll or are we just the suckers waiting for the premium to run completely out? 


  33. Why is AAPL selling off for the past week?? 


  34.  And that cannot end well either:
    http://ftalphaville.ft.com/blog/2011/04/04/535101/michael-pettis-on-chinas-useless-banks/
    It’s funny how China seems to be repeating some of the mistakes that industrialized countries made 50 or 100 years ago in our growth cycle. What’s even more amazing is that industrialized countries keep on repeating mistakes they made only 10 years ago!


  35. CHK/Phil – in your DUG/CHK setup described this morning, you say CHK can be rolled to Jan $25s.. when would one roll this? if moves to 20% loss?


  36. exec,

    No position yet, I’m watching for a good short entry; if  we don’t get a buy program by 11:00


  37. amatta:
    Some were successful rolling those to the May $4. Some were not. I got the May $4 to fill at the price I wanted, but never got the April’s to fill for .10. Pretty much screwed on that. If I am lucky I may get another chance, otherwise, not worth the trade to move for less than .05. I just leave the trade on and hope it fills.


  38.  amatta/aapl
    why selling?
    1. hedge fund manipulation?
    2. japanese supply chain concerns?
    3. Recent weekend data showing android popularity gain?
    4. Rumors? though I don’t  seem to be able to find anything…..if anyone has some concrete info relevant to the past week stock movement, please share


  39. Good times for refiners – crack spread are still very high and show no sign of weakening:
    http://www.bloomberg.com/apps/quote?ticker=CRK321M1:IND 


  40. Phil, is it time to adjust my PFE position or am I already too late?  I currently am long pfe from 16.10 and short the jan 12 15 calls from 2.96.  Should I look to roll the calls into the jan 13 17.5 calls and puts for 0?


  41. OK line up with the FAS questions. Me first.
    Since i cannot do weeklies, i am half covrd with Apr 31s now. Should i full cover with them or go with a may for the 2nd half?
    thanks


  42. Phil,
    April $32 calls about at same price as weeklies $31. Would it be a bit more conservative (probably not your favorite word :-) ) to sell April $32s?


  43. Phil:
    Do you ever use technicals? It seems like FAS is trending up. MACD and RSI have upward bias and On Bal. Vol. going up. It also looks like the 10 day MA is going to cross the 30. I am not an expert, but it looks like the trend is up for FAS. Do you see something in the immediate future that will break this upward trend?


  44. Same ol song and dance with the dollar.


  45. dclark41: Go to the PSW "Home Page" to find it.


  46. Phil – i have the TZA May 40/Apr 42 bcs hedge. i am thinking to roll the short side to may 41s. Good or not?


  47.  Wow. FAS is a super popular topic :)  

    AAPL – i dont think there is any particular reason for the sentiment. But, the stock was heavy last week, staying flat when the market rallied. Probably an absence of near term catalysts and some profit taking. Perhaps just some consolidation, maybe at the worst case a retest of 330 or even its 100 or 200 DMA (its below its 5 and 20 DMA ; 200 DMA is about 305 or so). 


  48. Phil,  Good morning.  i have TZA disaster hedge.  April 44/ 46 bull call spread ($3.30 now .17, $2.73 now .105) with 38 short put ($1.48 now 4.20) for a total credit of $.91 on entry.   My plan is to roll the short puts and open up a new bull call spread to continue disaster protection.  My question is when is the best time to roll the short puts.  I figured we might continue to melt up.  Is there a point (delta maybe?)  when it is most efficient to roll or is it best to wait until expiration and get all time value out of the 38 short puts.  There is not much time value left in the short puts.  What type of roll would you be looking for?  The 38 can roll to the May 36 roughly even or would you go July 33 for even roll (moving putter to all time value with a bit of pad)?  Thanks for the guidance.


  49. Good morning
    Did anyone got the FAS roll for $ 0.60?


  50. thanks dclark… yes in Pham’s sheet its still showing April 4′s


  51. Nigeria/Terra – It’s always something, that’s not a factor top me and I’d like to see how the day plays out first.  

    IRM making new highs – That was a slow starter off September’s Dozen. Too bad we weren’t more aggressive with NDAQ off that list!  A lot of those trades are terminating their April cycle so we need to circle back on them this month and do some updates.  

    Anyone who does not have time to day trade should read the original September Dozen post as well as the more recent one and follow through on those trades and earnings.  You can make excellent returns with spreads like these that require virtually no attention (this goes back to last night’s hedge fund discussion) unless the market move VIOLENTLY down on you – otherwise, time is on your side and you just wait for your rollovers to either collect your cash or set up your profits for the next 6 months.  If you don’t have time at work – schedule a day off the Wednesday before expirations every 6 months and time your trades to expire then – you should be able to comfortably run through a dozen trade adjustments every 6 months like that.  

    Prophesy/Pentax – Thanks.  Here’s small version:

    Very nice chart on speculation StJ – did you make that?  

    LOL Cap!  Great way to start the week.  

    Serendipity/Savi – Yep, it’s a crazy-assed ETF, isn’t it?  

    BIDU $140!  I’d be impressed that they are up 18% in 3 months but they look lame compared to GMCR’s 61% rise.  

    USO/Lori – Yes, I think we correct to $105 but that’s not going to do it for you.  I’d spend the $1.15 now to roll out to the May $42 puts and then plan on selling April puts for at least .60 (hopefully the $40s on a dip) to offset but if we break over $108.50 again (before you get a good cover), you’ll have to turn it into a bullish cover by selling a higher call for about $1.  Once you get behind, you have to get more defensive.  

    ZSL/Tusca – I’d make sure they can hold $38 for an entire day firs but then giving up makes sense.  The dollar is still on the 76 line but not below and I wouldn’t walk until they kept the dollar below 76 for an entire day but the rise in silver has been relentless and that is killing the ultras.  If you have the ZSL stock, you could sell the May $21 calls for $2.65 for a net $23.65 exit.  We could go lower than $18.35 I guess but I would think it’s worth the risk to pick up $1.40 more than the current price. 

    As a new trade on ZSL I like the May $20/24 bull call spread at $2.15, selling SLW May $39 puts for $1.05 for net $1.10 on the $4 spread that’s $2.25 in the money.  Obviously, if SLW falls 10%, it’s pretty much a certainty you collect $2.95 in profit and, even if you end up buying SLW for net $37.95 (15% off), the additional $2.95 profit drops it to net $34, which is a 23.5% discount on SLW in your "worst case" or a clean $2.95 profit in your best case so a nice way to play the range on silver.  

    CELG/Pharm – IBM may be the next biotech powerhouse.  

    HFT/StJ – That’s craziness, now people are hacking the stock market! 

    CMG/Gucci – We’re on track on that one.  The $270s are $8 with the stock at $272 – no sense in paying that premium.  My attitude is if you get such a great expiration (right on the money at $270) then it’s probably time to take the money and run on that play (waiting for the premium to run out of the caller of course).   

    LULU $90!

    FAS/Amatta – From that position (and I have no idea what "the same net" is and I don’t have time to look back and figure out what the number was if you can’t be bothered to tell me), I would roll out to the May $32s for $1.07 and that puts you in pretty much the same place we are in the $25KP, right?  Then you’ll be in position to roll the $30 puts to the April $31s (now $1.10) and then 4 more weeklies to sell.  


  52. Speculation / Phil – You can get these CoT charts at Barchart.com. I picked up the one on oil because the manipulation is so obvious! But they have the same charts for most commodities. 


  53.  Maya, 
    Thanks for your input, I thought the supply chain issue had been dispelled by AAPL (furthermore other stocks with same issues are not selling off). Android being more popular I did read that but I don’t think that was something unexpected…
    It is just a BS market if you ask me, solid companies like AAPL are being sold off (INTC another one) while the insane MoMo’s keep the party going.


  54. Thank you Jbur.


  55. Phil, 
    FAS, sorry I am showing a basis for the April 32′s if $1.22… and the shorts as posted (.99 for the .30s and .04 for the .31′s)


  56.  Amatta,
    No sweat!
    Just following and taking what the market is giving me…
    bought back some calls that I had sold two weeks ago.
    Was unable to sell puts on the spike down, as I had already sold enough.
    One article on SA over the wend opined AAPL may go down to test 325 (TA)….Actually would be good if it did that before earnings later this month…
    Phil still likes the 2013 $250 puts.
    Lflan seems to have vanished..
    I am following this site on an hourly internet access prepaid basis from a village in India!
    Don’t ask me why!? 


  57. Thanks StJ!  

    GMCR $55 – it’s MoMo heaven today!  If they can’t break out the indexes at least they can break out the front-runners.  

    Stock World Weekly/DC - http://ilene.typepad.com/files/newsletter27k-1.pdf - You should get it Sunday Morning in the PSW Report – first item to click on at 8:30 am.  

    EGLE/Amata – We are May $4 suckers so waiting 6 more weeks as it has said at the bottom of the $25KP post since March 26th but I enjoy answering questions you can look up yourself in 10 seconds so much that I’m happy to do it here as well as provide the link in case you can’t be bothered to go all the way to the portfolio tab to look.  At this point, however, you may as well roll to the June $4s if you can get them for .15.  

    AAPL/Amatta – Most big tech is off – Da Boyz are saving all their cash to push the MoMos to make things look exciting.  

    And what Maya said.  

    TZOO $73.69!  - See, exciting…

    CHK/Scott – Not on a 20% loss.  We would have to believe that there was a serious danger of the stock being put to us rather than just a market dip.  The May $32 puts are $1.05 and CHK is at $33.29 and the delta on the puts is .35 so you will lose 20% on a .50 move down in CHK to $32.79.  Is that really a reason to panic and commit to a much longer hold on the puts.  As with anything, you’d better REALLY, REALLY WANT to own CHK for net $24 (our rolling target) but, if so, then you really don’t have to do a thing as long as CHK is higher than $30.95 and, even then, as long as the roll to the Jan $25 puts is about even – you still don’t have any urgency to roll.  Right now the Jan $25 puts are $1.23 and their delta is .17 so that’s a net delta differential of .18 so it would take roughly a $2 drop in CHK before the roll even goes much below even but, even then you have a huge time (theta) advantage between the puts you want to roll to and the current puts.  

    TBT once again playing dead.  May $36 puts can be sold for .90.  Also Sept $33/39 bull call spread at $3.05 is a good pair for that put sale.  


  58. Phil USO still holding the long 40 May p solo pd 1.19 now .69 April weekly short expired worthless what would be the next move? Thanks


  59. Pharmboy,
    OPK seems to be becalmed. Your current sage counsel, please.
    Thanks


  60. Phil I’m conserned I have too much money in th USO short to roll up at this point.  That would be another $2800 plus
    the original $4545 in a $30,000 portfolio at TOS.  Plus I have 8 May 49 short puts at 1.08 and 5 uup 21 calls at .92.
    Just started trading last week, guess I was too short.  Have about 160K in cash in Fidelity.  Thinking about doing the  INTL, CSCO, and MSFT trade in Fidelity but don’t think they will let me do puts.  What do you think?


  61. The “fraudclosure” issue is truly terrifying. Why would gold not be guaranteed $2000 levels with those numbers? If the Euro were to take a serious dive, why would there be a flight to the dollar?
    Anything but, one would think.


  62. OPK is right on track.  This is a LT hold….

    IBM/GE in bitoech space….let me know how it works out.  Big pharma has their own troubles, and JNJ can’t keep track of the companies inside of its umbrella – IBM thinks they can recreate the wheel…..(unless they hire me of course!).  I will take $5 stocks!  Thx.



  63. Phil,
    My renewal occurred automatically at basic membership over the weekend. I wanted to upgrade to premium membership without paying for the basic and premium. I sent a second email to the admin, but have not heard anything back. First email was sent about 6 weeks ago and never heard anything.  How do I do this?
    Mike


  64. Fort he 25Kp – did anyone get the EGLE roll?  I did not.  If so, I will adjust as appropriate.  FAS – not sure what the final tally was for last week, as I know there was confusion about which to sell, buy back, roll, etc.  I am going through the strings and will do what Phil had up for clarity sake.  I am in a bit of a different play now, as I rolled up and out to the 29s, a week or so ago, and then have been selling against those.


  65. Phil – Do you still like the DIA puts from this morning or did this trade give and go already? They had a high of $1.96 but are back down again to $1.80.  I only ask as DJI is knocking on 12400.


  66.  Maya
    From an internet café in rural India?….Wow! that is devotion to the site.


  67. PFE/JMM – Yes, I think that’s a good adjustment.  We’re sure comfortable that PFE will hold $17.50 and you will effectively bump up your call away price $2.50 in exchange for a year, which is 19% plus the 6% dividend – not a bad way to go longer!  

    FAS/Morx – I’d just do more Apri $31s.  They are all premium at $1.05 and that pays for you to drop all your longs at least one strike in position before rolling into a vertical (if you have to).  

    Conservatism/Vic – As above, it’s all about selling as much premium as possible.  You can collect .60 for a week selling the weekly $31s or you can collect .60 for 2 weeks selling the April $32s.  If you are renting out an investment property is it "conservative" to charge the same for 2 months as you are able to charge for one month or just silly?  Also, you are giving FAS 2 weeks to burn you rather than one.  If FAS goes up to $32.50 and the puts are $1.50 at the end of the week and then you can sell the April $33s for .50 – how much have you collected?  $1.15 and the April $33s would still be .50 out of the money and your calls would be .50 in the money and $1 in the money before you actually have to pay your caller another penny.  Would you spend .35 right now to move your May $32 caller $1 in the money?  If so – then case closed.  

    FAS/DC – Well I wouldn’t be sticking with them if I didn’t think the general trend was up but it’s subject to pullbacks and our goal is to get lucky and get a nice pullback and then a recovery before we re-cover.  It may not happen for a while but we keep taking set-ups that open up the possibility and we only have to be lucky once – our callers have to be lucky every time.  

    TZA/Morx – Narrowing the spread?  I’m not clear what your entries were so I have no idea whether it makes sense or not.  

    TZA/Robert – The timing is more an issue of when you have burned the premiums down to below 25% and it probably doesn’t make sense to keep the current combo.   The April $38 puts can be rolled to July $33 puts about even so that’s the way to go there but you let all the value drain out of your longs and that’s the mistake.  Generally you want to make a move while you still have 50% left.  Still, no real(ized) loss as it was a net credit play so it’s really just a matter of establishing a new bull call spread like the July $35/40 bull call spread at $1.30 and that becomes the cost of another 3 months of insurance.  If you kill that with .60 left and roll to another $1.30ish spread, that’s going to be cheaper when it comes time to move to September.  Note you are picking up another $3 in spread width, 3 more month of protection and $9 worth of strike in this move and that covered you for what – about a 5% run in the RUT?  As long as your longs did well, that’s pretty good insurance.  

    Barcharts/StJ – Thanks!

    Almost a re-load on oil future shorts (/QM) at $108.50.  We bottomed out at $107.60 for a nice .90 run and the stop, when you go that low, should be $107.75.  Once you cross the first .25 line, the best thing to do is set the stop at the next .25 line whenever you go more than .05 below it (or above if you are betting the other way).  

    FAS/Amatta – So you are down .60 on the calls and you sold the weekly $30s for .99, now $1.31 (.21 premium) and the weekly $31s for net .04 (very good to keep track that way as it keeps your head in the game), now .62 and pretty much all premium.  The move at this point would be spending $1.10 to roll out to the May $32 calls at $1.72 and that’s it for now.  You are not buying position but you are buying 5 more weeks of selling premium for $1.  What you then want to watch is the roll from the weekly $31s to the April $32s, currently even and the roll from the weekly $30s to the April $31s, currently costing you .23 but that’s the premium still carried by the weekly calls so, hopefully, that roll will come closer to even or better this week.  That’s the plan.  If you get lucky and you can do a pretty much even roll up $1 in strike 2 out of the 5 remaining weeks after this one, your callers will be at $33 and $34 against your $32 callers and hopefully that will get you even.  

    LOL Maya – That’s very cool but do take some time to enjoy your trip.  

    USO/Yodi – Right now we’re waiting to see if we get a sell-off.  We have time enough to give it until Weds inventories to see what happens.  You can do the roll up to the $41s for .30, we’re going to do it eventually but I’m not into spending money today.  

    Stuff/Lori – If you have $160K idle then don’t worry about spending money to make money on USO (as above to Yodi).  The key is to make sure you are only "borrowing" money from cash and that you WILL sell an offsetting short position to cover the cost.  As to the bullish trades, selling puts is a big part of the trade so make sure you like the math without.   Perhaps consider brokers where you can sell puts.  That is one of the worst rules ever made against average investors. How ridiculous is it that you are allowed to buy 1,000 shares of INTC for $19.50 but you are not allowed to sell 10 Jan $19 puts for $1.80 for a net $17.20 entry?  One takes $19,500 out of your account right away and gives you stock and the other puts $1,800 in your pocket and the worst-case is you own 1,000 shares of INTC at $19,000 (net less the $1,800).  That’s about 10% a year and you CANNOT underperform INTC over that period – it’s just not possible.  Anyone who’s a long-term player and doesn’t take advantage of short puts as entires is just flushing money down the toilet and the rules that trading companies like Fidelity have against selling naked puts indicate that they clearly have no interest in the welfare of their clients.

    Gold/ZZ – Because a collapse of the banks will make dollars more scarce, not less.  Gold collapsed with banking in 2008 for very good reasons.  In fact, it would by hysterical (to me) if the banks did collapse because all those Trillions of Dollars that Treasury and the Fed have been pumping into them would vanish in a puff of smoke and we would have all of the new debt and none of the liquidity because these bastards haven’t been lending it out (except back to Treasury).  In the collapse of 2008m the dollar went from 71.31 in July (Bush stimulus killed it) to 88.46 in November so that’s 24% in 4 months.  If you look back at a weekly chart – you’ll see the key resistance/support line was 76.50 and we rocketed over that level in a massive squeeze.  Of course, currency speculators never learn and here we are back at 76.50 and back at record short interest in the dollar and back at record high commodity prices and back with EU banking and national debt issues being ignored and back with a slowdown in China being ignored (and we added Japan now to the ignore list) but we still have intelligent guys like you telling me "this time it’s different."  Well maybe it is – but I’m not going to bet on it!  

    Optical Microprocessor How It WorksIBM/Pharm – Don’t write that off too easily.  I’ve been waiting for this for years.  Nanobots will clean your teeth, your arteries and your colon in the not too distant futures.  They can be trained to attack germs and cancers and we’re about 5 more years away from a 1,000-fold increase in processing power when they roll out optical chip sets (and quantum computing comes after that with another 1,000 improvement).  IBM is the best R&D company we have left and they are not confining themselves to tech anymore – not when big Pharma has dropped the research ball and left the field wide open for them.  

    Don’t forget Watson’s primary application is going to be medical diagnostics – they are going to use that to gather a world full of data on diseases and the most effective treatments and that will let them create more efficient treatments.  I won’t be surprised to see IBM pick up a biotech development firm at some point.  

    Upgrade/Ross – Greg’s off today but I’m sure he’ll get back to you.  Can’t say about 6 weeks old one but I’ll make sure he sees this one.  

    Libya/Lapper- Good stuff.  


  68. I had the EGLE roll for an average of 7 cents.  


  69. We are riding an ascending trend line that was resistance until Friday, (now support)

    It appears that the target is 1344 on SPX, so if we get close today, maybe tomorrow we get the pullback !!

    And a better view from PUG……………………

    .


  70.  Maya,
    Any where near Calcutta? I have not been back in 35 years. Where abouts in the US do you reside? Keep in touch….


  71. Pharm, check out VHC!


  72. Pharm – would you sell puts on VVUS?  do u like EXEL?  how about ABT (article in Barrons)?  Thx.


  73. Now that is a chart!  5 – 25 in no time.  Oh well, not my area.  Maybe CRIS will do something like that!


  74. Die FSLR!!


  75. CLNE is also breaking out…..


  76.  Phil, 
    FAS When you say keep an eye on the roll from the weekly 31′s to next week 32′s do you mean try to do it for better than even--what would be the target?  Are you expecting FAS finishes higher than 31 this week? Cause otherwise wouln’t collecting that $1 starting this week put me in a much better position to sell then next week’s 32′s? 
    Keeping an eye for an even roll on the 30′s is very clear… 
    Thanks


  77. Phil,
    In applying your short put vehicle entry to VOD (28.97), what would be an optimal choice?
    Selling May 30 @ 1.50, Jul 30s @2.50, etc. 27.50 is of course a better entry than 28.50 assuming VOD doesn’t  take off B4 Jul.
    Thanks


  78. Terr – VVUS – don’t like them, dangerous to do anything with. EXEL – have to look at them.  ABT – write up here. A bit late to get in on them as we played them off the $45 line, but a conservative play is fine at 1/4 entry.


  79. EGLE/Pharm – I’ll square up to whatever you decide.  

    DIA/Manimal – As long as we are below the 12,400 line then it’s just a momentum trade to the downside (like our futures trades).  

    S&P/JRW – I want to see that gap fill at 1,319 and a perfect time to do that will be when it crosses the rising bottom channel on Friday.  If that holds, we could have a very nice expiration week rally.  

    09:30 AM At the open: Dow +0.05% to 12383. S&P +0.09% to 1334. Nasdaq +0.23% to 2796.
    Treasurys: 30-year +0.1%. 10-yr +0.21%. 5-yr +0.22%.
    Commodities: Crude -0.02% to $107.92. Gold +0.64% to $1438.10.
    Currencies: Euro +0.04% vs. dollar. Yen +0.24%. Pound +0.33%.

    10:00 AM On the hour: Dow +0.06%. 10-yr +0.25%. Euro -0.02% vs. dollar. Crude -0.03% to $107.91. Gold +0.48% to $1435.80.

    10:59 AM On the hour: Dow +0.06%. 10-yr +0.28%. Euro +0.01% vs. dollar. Crude +0.14% to $108.09. Gold +0.52% to $1436.40. 

    11:10 AM Treasurys are holding gains today after a Fed buyback of $8.03B in bonds maturing 2016-2018, of $27.916B offered by dealers. The 30-year Tsy yield -0.01 to 4.47%; 10-year -0.03 to 3.42%; five-year -0.05 to 2.195%; two-year -0.03 to 0.77%.

    12:00 PM On the hour: Dow +0.18%. 10-yr +0.29%. Euro -0.08% vs. dollar. Crude +0.2% to $108.16. Gold +0.34% to $1433.80. 

    March Employment Trends Index: +8.1% Y/Y to 100.9 vs. 100.3 in Feb. (revised). "In the last six months, employment excluding construction and state and local government has been growing faster than almost any other six-month period in the past decade, [but] we do not expect a turnaround in those sectors, which are still lagging," The Conference Board says.

    Jobs looked good and there’s some top-line growth, but nothing in a stack of charts (including GDP, manufacturing, personal income/outlays, housing) that looks to Warren Mosler like anything more than that is happening out there.

    Today’s Fed sermon:  With each passing quarter, the recovery gets more established, Atlanta Fed’s Dennis Lockhart says – but after the Great Moderation and Great Recession we’re undergoing a "Great Rebalancing" in three areas: consumption and savings, fiscal balancing, and regulatory matters. In discussion, he predicted a continued moderate inflation despite an eventual reversal of a "savings glut" from emerging markets. 

    China might be slowing more than people realize, Michael Pettis says. In Q4 the PBoC said it believed the global economic recovery would continue and that stabilizing prices was its top priority. But at a conference this week, the PBoC questioned the stability of the global recovery, and shifted its focus to "managing liquidity efficiently."

    The full impact of the U.K.’s austerity measures will be felt this week as tax hikes and benefit cuts kick in. A key change: switching benefit indexing to the CPI from the RPI because the CPI usually comes in 100 basis points less … when the game isn’t going well, just change the rules. 

    NHK reports the Japanese government withheld data showing high levels of radioactivity would be found more than 30km from the Fukushima plant, well outside the evacuation zone. The exposure to people outdoors for 1 day would be 100X greater than the acceptable annual exposure for 1 year. 

    Jim Bianco produces a chart describing the balance sheet of the BOJ over the past decade. Noting the explosion in assets since the earthquake, Barry Ritholtz says the Japanese have created the equivalent of QEII in just a few days. Equity and commodity markets worldwide have noticed. 

    What Inflation?  Eurozone producer price inflation rises to a 2 year of high of 6.6% in February. For the month, the rise was 0.8%, slightly below projections of 0.9%. As might be expected, perky crude oil is the main culprit. The euro is up slightly at $1.4222. 

    A private survey shows headline Australian inflation surgingeven as the core rate slows to the lowest in a decade. With core being the policy driver, TD Securities lowers its projection of RBA rate hikes from 100 to 50 basis points. The aussie hits another new record before pulling back to unchanged at $1.0376. Aussie shares +0.6%.

    French home prices re-percolated in 2010, up 9% overall, and double that in Paris. However, a Bank of France warning to slow lending and higher mortgage rates in anticipation of ECB rate hikes look to be pulling away the punch bowl. Somewhere, it’s written that’s what central banks are supposed to do. 

    Expecting a pickup in inflation and bullish on the economy, more Canadian firms expect to pass along rising costs to their customers, according to a BoC survey. While the report would seem to point towards a quickening pace of rate hikes, STIR futures are higher and the loonie is experiencing a rare down day.FXC -0.4%

     Believing the ECB is about to make a policy mistake by hiking rates, Credit Suisse recommends getting underweight EU equities. Yes, higher rates will make life more difficult for the periphery, but inflation in the core states is breaking out. What’s a central banker to do?

    Expecting inflation to run hotter than forecast, BBVA Bancomer, the largest holder of Mexican sovereign paper, is buying inflation-indexed notes. Mexico is the only Latin American country that hasn’t jacked rates in the last year, thus boosting both growth and inflation prospects.

     Either rate hikes or a stronger currency or both seem certain after South Korean inflation comes in at 4.7%, the fastest pace in 2 1/2 years. Shares fall slightly, but remain just a hair underneath all-time highs. YTD: EWY +7.4%SKOR +13.3%.

     "It’s not just food and energy inflation any more," asserts Deutsche Bank, noting that the problem is starting to affect core inflation. Annualized inflation is a full percentage point ahead of Q4 2010, and expectations are catching up to the new reality. Still, there’s no evidence yet of rising wages, usually considered a prerequisite for full-on inflation.

     Analysts expect S&P 500 firms to post a 12% Y/Y increase in Q1 earnings, and surveys of CEO sentiment have reached new highs. Yet consumer confidence has tanked, in large part due to stagnant wages as living costs climb. These are heady times for companies, on the backs of workers who are feeling pain, Kelly Evans writes. 

    Silver hits a new 30-plus year high, rising to $38.47/oz. The metal looked to be giving up recent gains in the wake of hawkish Fed comments, until Bill Dudley’s stay the course comments on Friday lit a fire under the price. Premarket: SLV +1.9%AGQ +3.5%.

    Josh Brown wonders if the coming IPO of commodities giant Glencore won’t signal the top in the commodity boom in the same way that the IPO of Blackstone (BX) nearly marked the peak of the private equity/LBO "orgy." Glencore will sell a $10B sliver of itself around the end of April. 

    Republican Congressman Ron Paul plans to hold a hearing in May on the Fed’s emergency loans from its discount window to non-U.S. banks. The "staggering amount" lent to these banks "provided no benefit to American taxpayers, the American economy, or even directly to American banks," Paul says. 

    A Senate subcommittee report about the subprime implosion is expected to release emails and other documents that could expose Wall St. firms to more litigation. CDOs, Goldman Sachs (GS), Morgan Stanley (MS) and Deutsche Bank (DB) are expected to feature prominently, sources say. (


  80. Phil, I have TZA Apr. 16(before split) short puts from old hedge play with big lose(total about 50K), thinking about take assignment and sell them for loss then sell Jan 12 $30 or $35 puts.  In the mean time, sell monthly TZA calls for offset the loss.  What is your take on this?  Thanks a lot.


  81. Phil,
    Sorry, I am loosing it.
    OK, talking real estate, you renting FAS 31 for a week i’m renting 32 for 2 weeks for the same money, but yours 31 is 2 bedroom and mine 32 is only one bedroom, or mine is out for 20 more miles. Isn’t it true?
    31 calls almost in the money, so if by the end of the week FAS is at 32.50 and April 32 calls at 1.5 then weeklies 31 would probably be at 1.7 and then you would have to sell next 33 weeklies for .80, how much would you make?
    As I said i’m loosing it and i must have absolutely clear understanding of the strategy
    Thanks


  82. Pharm / CLNE — all alt nat gas as a fuel related stocks breaking out after Obama’s speech. WPRT and FSYS look about the same.


  83. Hi Phil :I’m back from vacation.I actually missed reading your daily comments.
    In my IRA account  I bought PFE at $15.26,now $20.26 and sold Sept. $19 C at $.82 ,now $1.88.What do u think of me rolling to Jan. $20 C at $1.65 ? thanks


  84.  Phil, Amatta, jasu
    I am in Kashmir… renting internet time from the hotel…
    But what a culture shock…..the videos I  took with the iphone of traffic, roads, people, animals, all sharing same pot hole filled space they call a road…
    The mountains and snow are beautiful, though.
    The country needs serious infrastructure.
    And Jasu, I live in Southern California..


  85. Pharm / ARIA – any news?  nice rally after 2 month consolidation. 


  86. Phil / GT — thoughts on Goodyear?


  87.  Big move in HEAT, up over 15%.  Anyone know why, besides being incredibly oversold?


  88. ARIA – nothing that I can see, except maybe ‘they’ finally discovered it (from us?)!


  89.  GMCR another 1 % up.  When will this stock die :-)


  90. LOL, that COOL stock I picked for my kid’s project is now up 55% since I picked it! 


  91. Do you have any opinion about ROVI?


  92. Pharmboy, I have PARD with big loss, what is your recommendation that I switch it with a very high risk/reward stock/option?  Thanks. 


  93. bobhu – NWBO or GTHP


  94. Phil – Hate to keep asking, I am in the Apr 30 longs with an order in to roll to may 31′s but i hear you saying drop to…? You mean like the 29s?  From reading advice to others i was under the impression we were rolling up and out. Should i continue with the roll to May?
    "FAS/Morx – I’d just do more Apri $31s.  They are all premium at $1.05 and that pays for you to drop all your longs at least one strike in position before rolling into a vertical (if you have to). "


  95. FAS/morx – I think it says above to roll UR April 31s to the May $32s for 60c.  The cover is full, with 1/2 weekly 30s and 31s April. 


  96. MoMo’s — I’ve been thinking I’d buy a long call on each of the MoMo’s. The way they never cease to amaze, I’d think any losers would be paid for by the winner’s. Not exactly a complete gamble since clearly the trend is your friend (until it’s not).


  97. JR,
     
    Did you ever go short?



  98. FAS/Amatta – The idea is to keep it as long as possible as long as it’s not getting away from you (meaning getting more expensive).  I am not expecting FAS to finish higher or at least to go much lower and give us a nice exit (see S&P target above).  

    VOD/8800 – The idea is to balance your fears (how low can it go) with your upside expectations.  So far VOD is holding the 50 DMA at $28.75 and the 200 dma is rising at $26 and we have no reason to think $26 will fail as we’re in a pretty solid, uptrending channel since 2008 and, if we do get a big spike down like there was last May, we would consider it a gift and a great chance to DD.  That means selling the July $29 puts for $1.90 is reasonable as that nets $27.10 and the July $29s roll evenish down to the Jan $27.50 puts and the 2013 $22.50 puts so now we’re down to net $20.60 in 20 months, which is about a 30% discount to current price ($28.90) so maybe it’s not even aggressive enough but we do expect a pullback in the market and we don’t really want to wait 2 years to get paid so going into the short July $29 puts at $1.90 and planning to DD to the Oct $25 puts (now .95) if things go the wrong way is a great start as long as you really, Really, REALLY want to ultimately own VOD at net $20.60. 

    TZA/Bob – I would sell the Jan $25 puts ($3.90) and be thrilled with that.  It’s not a bad roll as it’s near even and just $6 more of strike so shouldn’t change margin requirement much.  Keep in mind you can sell May $30 puts while you wait, a 1/2 sale for $1 isn’t too much risk and it pays for the roll.  After that, if you can pick up .50 every other month on a 1/2 sell, that’s $4 more coming to you over the year to help get you even.  

    Nas not looking pretty at all now. 

    Bad neighborhood/Vic – Yes but the beauty is you can command the same rents.  I’m really  not in the mood to run the math on every what if scenario – the point is that if you can spend $1 to roll back a month and that buys you 4 sales in which you can collect .50 of premium and you are fairly confident that you can roll the callers up $1 in strike if it moves against you – it’s almost a no brainer but it won’t be for you until you practice enough that you BELIEVE in the system.  Only time, practice and experience will make this work for you.  And that goes for all the people who ask what if this and what if that over and over and over again – these trades take time and perseverance to work out – something most traders seem to have no inclination to invest.  

    I missed you too DFlam – welcome back!  On PFE, I don’t think much of you spending .23 to give up protection.  A lot can happen between now and Sept and those calls are still .50 of premium.  You can offer an even roll and I would find that more interesting.  If you are that gung-ho bullishly convinced PFE cannot die, why not sell the Sept $20 puts for $1.18.  You already have a $19 caller you owe $1.95 to so this is collecting $1.18 that pays for you to roll that caller down the line if they head higher and now you will have collected a combined $3.13 from the caller and putter and that’s now better than a $1 roll-up and you’ve sold $1.18 more of pure premium and you are better off on anything over $19.23 and, if below that, you just sell more calls and roll the putter.  

    Infrastructure/Maya – Don’t worry, California will look just like that after a couple of years of austerity budgets.  

    GT/Rain – I’ve always liked them but they aren’t very cheap right now.  I would hope they sell off on news of supply issues that halt vehicle sales next month and then it will be a great time to jump in as a contrarian.  They are a very attractive buy/write even at this price with the $12.50 puts and calls at $7.10 but I do believe you can do better if you wait.  If the S&P breaks over our mark or they break $15.50, you may not want to miss out because $15 is kind of a sweet spot but as long as $6.50 doesn’t get away from you on the sale, it’s still a great buy/write.  

    HEAT/Palotay – Just the normal Chinese ADR nonsense.  When they were going down I said it looked like a flush and now they seem to have cleared out all the suckers and now they are ready to be exciting again to load up the next round of would-be millionaires to take them for a ride.  

    ROVI/Lol – Frankly, I’m not even sure what those guys do.  I guess they are an overall web service provider but I’ve never dealt with them or heard much about them.  Why did they pop up on your radar?  

    PARD/Bob – Very thinly traded options, you can kiss the spread goodbye the second you buy in.  

    Drop/Morx – If you are in April $30 you can afford to roll to May $31s but what I was saying is the sale of 1/2 x at $1 pays you .50 per long, which is enough to pay for you to roll down (IF YOU WANT TO) so there’s no reason not to do it (although maybe now there is as FAS dropped .50 and the prices aren’t as good).  


  99. exec / short

    12:47 and 1:32 !!


  100. Pharm -
    FAS/morx – I think it says above to roll UR April 31s to the May $32s for 60c.  The cover is full, with 1/2 weekly 30s and 31s April. 
    The problem is that i am in the Apr 30s so a roll to the 32s would be pretty expensive. I don’t know how i got behind but I was going to roll one then breathe. I have 3/4 cover with the Apr  31s, but can’t do weeklies.
    I appreciate your assistance.


  101. Phil, thanks for the advice.  A few follow up questions.  Is that 50% value left kind of like rolling the mattress play longs up for .50 (no correlation) ie the best time to roll up?  Do you like the wider spreads like you outline below ($5 verses the $2 width) or do you get a better bang for your buck with the wider spreads?  Thanks again.
    TZA/Robert – The timing is more an issue of when you have burned the premiums down to below 25% and it probably doesn’t make sense to keep the current combo.   The April $38 puts can be rolled to July $33 puts about even so that’s the way to go there but you let all the value drain out of your longs and that’s the mistake.  Generally you want to make a move while you still have 50% left.  Still, no real(ized) loss as it was a net credit play so it’s really just a matter of establishing a new bull call spread like the July $35/40 bull call spread at $1.30 and that becomes the cost of another 3 months of insurance.  If you kill that with .60 left and roll to another $1.30ish spread, that’s going to be cheaper when it comes time to move to September.  Note you are picking up another $3 in spread width, 3 more month of protection and $9 worth of strike in this move and that covered you for what – about a 5% run in the RUT?  As long as your longs did well, that’s pretty good insurance.  


  102. Phil / GT — Thanks. Things seem so expensive everywhere that I didn’t even think about the supply disruption but I agree they could take a hit on that . They report the 27th so worth the wait for that at least and if margin squeeze starts taking the markets down, I’d expect all ships to sink. A higher VIX would certainly be nice!


  103. Hello Phram, what is your opinion on IMGN versus SGEN – which one has a better chance of getting an approval?


  104. morx – if you own the April 30s for 1.60, the roll to the May 32s is even (and your delta is less with the Mays, thus the impending sell off will hurt less).  Since you cannot sell weeklies, Phil is going to have to help you there.  In looking at FAS, selling the Apr 31s for $1 (3/4 at least of ALL premium) which can easily be rolled up to May 34s for the same price.  IF we get the sell off this week, then those Aprils should be less than 20c, which case you would buy back and wait for the next run, then get out.  Selling the weeklies has been a blessing, but it is hard to make up with out them.


  105. Hello Phil, am I right to assume that you comments on IBM mean that you regard it as a good long-term investment, and would recommend selling  puts? Thanks.


  106. alik – Both but, IMGN is cheaper and WORKS!


  107.  Paul Ryan is a tool.  What he proposes is a joke.  Corporations are not paying close to 25% now in taxes and to lower tax revenue for individuals to a max of 25% will eliminate the middle class altogether. 

    "Taxes
    Ryan’s plan would cut corporate taxes to a top rate of 25 percent, down from 35 percent now, according to an industry source. It is also likely to lower personal tax rates to a top rate of 25 percent, which Ryan endorsed in an earlier proposal.
    A top 25 percent rate for both individuals and companies is the goal of Representative Dave Camp, the Republican who chairs the tax-writing Ways and Means Committee. Ryan has said he will defer to Camp on major tax issues.
    Ryan said both plans would "broaden the base" by reducing exemptions that riddle both the corporate and personal tax codes, but he has declined to provide details."


  108. Too bad CPI doesn’t have options – it could be the best short strangle play ever!  

    50%/Robert – It’s not the same as a mattress play, where we roll up $1 whenever we can to improve our leverage (and keep us in position to sell short puts).   In this case, you are setting a budget for your insurance premiums and think about what you are doing.  You pay $1.20 at RUT 850 to insure against a drop between now and July, then another .60 in July, .60 in Sept and .60 in Jan so $2 to protect against any 5% pullback in the RUT.  Meanwhile, let’s say you were buying $10K worth of insurance for $2,600 in month one and, ultimately $4,000 if all of your rolls expire with a loss.   If you were insuring $60K worth of buy/writes that pay 20% if the RUT flatlines or goes up for a year, then you make $12K and the $4K is your cost of insurance.  

    QQQ WEEKLY $56 calls at $1.25 have just .15 premium and are a fun way to play a possible stick (Dow volume just 65M at 2:20) with a stop if the Qs can’t hold .57 (.10 loss).  


  109. ooh-my. Could we substitute the words "roll down" for something specific? Are we talking abt Apr 29s? then i could just let it expire (over 31I hope) and go back to sleeping at night  :)
    (I did sell the extra calls at 1.05 before the drop)


  110. roberthjrfl / 50% — Once you’re past 50% of the potential, the risk/reward starts to work against you. When you achieve 50% you are now even on risk — risking $1 to make $1. You should at least be keeping a close eye on the position at that point. If you achieve 75% of the potential you are now risking $3 to make $1. Doesn’t sound as appealing does it? I look at all my positions at 50% and then gauge what I want to do with them based on time to expiration, the trend of the underlying, and the trend of the markets. Right now I’m more apt to repurchase at 50% with the VIX being so low  and the markets hitting resistance.


  111. MDVN – for a gamble play, and I am not sure when the Horizon trial data are due out (they say 1H11), I am following someone else on the lead.  Buying May 15s, selling April 15s for 25c debit.  RISKY, RISKY Risky….but I think they miss.  Just not sure when.


  112. Pharm – you are right! (of course) I plugged that trade in this morning and came up with around 1.50. I must have puut in some garbage. Still curious abt the roll down.


  113. Morx – whaddya have exactly….knowing that you cannot sell weeklies.


  114. VIX and TLT bounced off R1…


  115. ROVI – Software company. they are former Macrovision.
    Went through lot of acquisitions in last two years and shoot from around $10 to $70 during two years. Pulled back after last earnings due to lower guidance to $50-$55.
    Apparently switched focus from copy-protection to entertainment technology (TV listings and catalogs distribution, buying TV Guide, with lot of patents). Recently bought Sonic (Roxio) with thier DivX player, apparently trying to get into technology space of Netflix-like services.
    Sell IPG applications for cable providers – about 70-80 million devices. (usually get royalties – which is relatively steady revenue stream.)
    Sell metadata for music, games, movies, books, etc to online distributors and media portals
     

     


  116. i see the 1.50+ was my roll of XLE Apr 79s to May 80s. A whole nother issue.
    Re FAS, I have 40 Apr 30s for 1.47 paired with 30 Apr 31s at .91c.


  117. Pharm  – i’ll be out in the hammock when you get it figured out. Would you like my etrade password? then you wouldn’t have to disturb me. :)
    Really, thanks for your interest.


  118. GT/Rain – They pay great as they are but my brother is AutoNation and he says they are expecting serious supply issues so, with a situation like this, I would just hope that GT misses or guides down and then you KNOW you want them and you get to be greedy when others are fearful.  If not – then just re-evaluate at whatever new price.  

    Cramer jumping on my IBM thoughts.  Whoever reads this for him an feeds Cramer my ideas really sucks!  

    Wow, oil with a nice pop back to $108.55 into the NYMEX close.  I love how they do nothing all day but suddenly it’s a frenzy. 

    IBM/Alik – Yes, they are like AAPL – a bit expensive but if someone wants to pay me $6 not to buy them for $120 in 2013 – I’ll take it (selling the 2013 $120 puts for $6 with $12 in net margin) and accept the worst case of owning IBM for net $114.  If IBM gets a good sell-off, I’d be much more aggressive but I do think the market is due for a pullback and IBM is a bit high in the channel, despite what Cramer says about them.  

    Ryan/Rustle – Actually I would be behind a 25% flat tax (no exemptions) on all earnings but it’s still hard to get Corporations to be honest so I favor a VAT, where ALL revenues are taxed.  That eliminates this BS where GM can sell $300Bn worth of cars in America and then say not only did they not make any money but they need a bailout.  If we hit sales with a 20% VAT, then they would have paid $60Bn in taxes and we have room to play!  Same with GE and their $150Bn in sales – that will be $30Bn, thank you very much.  CEO does $15Bn in US sales, that’s $3Bn in taxes, not the $1.6Bn they did pay on $6Bn worth of profits (26%, which is still pretty good for a big corp).    The savings on accountants and lawyers alone would be a huge stimulus for the economy…    It’s a very simple concept, if you are selling something in the US, you will pay 20% of that price in taxes – no ifs ands or buts.  It is up to the corporation to price their product accordingly.  Logically, our $16Tn GDP should generate $3.2Tn in revenues for the government, that’s $1Tn a year more than we collect now.  Even if that cost you 20% more for everything you buy – it’s still less overall as you pay no income tax.   The only people that can possibly bother are people and corporations who pay less than 20% taxes.  


  119. OK – roll UR April 30s to May 32s, even.  Let’s see the close for the rest.


  120. Ryan/Rustle
     
    Problem is corporations are absolutely going to find a loophole whether it’s booking profits to offshore companies or a million other ways they can do it and the average billionaire pays 15% in taxes and they will find a loophole also.


  121. Taxes / Rustle123 – For the GOP, it is always a good plan that raises taxes on the middle class to give it to the rich… See an analysis of Ryan’s proposal and how it shifts the burden quite nicely. Why people don’t revolt is beyond me.
    http://ctj.org/pdf/ryanplan2010.pdf


  122. Hey Phil, any thoughts on JPM? The ex-div date is this week, i believe its the 6th. Maybe a little run-up till then? Thanks…


  123. Has anyone noticed that we’re not acting like a Monday, with $8 Bil of POMO !!

    Support at IWM 84.54, 84.40, and 84.24. order flow is green, dollar is dropping, yet………………..


  124. Phil,
    In your answer to the hedge fund question, you mentioned "conservative return strategies".  I sort of thought, the buy/writes are fairly conservative. But, you seem to referring to something even more conservative – CASH?, individual bonds?
    Can you please provide a couple examples of "conservative return strategies" in the context you used that phrase earlier.


  125. Roll down/Morx – I don’t know specific.  It depends what happens and what the prices are etc.  The point is there are options available and step one is collecting the revenue (you did that, which is good) and step two is waiting patiently and observing until we have enough new information to take a new action.  

    Good point Rain!

    ROVI/Lol – Thanks for that and now I know why I don’t follow them.  One of the things Warren Buffett likes to say is "Never invest in a company you don’t understand."  ROVI is like a Rubik’s cube, maybe they are clever or maybe they are making a total mess of themselves trying to find direction – only time will tell.  

    FAS/Morx – Seriously you didn’t think rolling down was clear but you say "paired with".  Is that short?  Is that a vertical?  If it’s a vertical that’s it, you’re done and should probably be thrilled to cash 10 at $1.62 to leave a 30/30 $1 spread that you paid net .56 for.  If you want to stretch it out, as I said, the $31s are all premium so you can just roll out to the May $31s at $2.13 for .50 and then you are ready so sell 4 more rounds of calls for .50 premiums but, if you can get out ahead – why not do that?  We’re going to be thrilled to get out even.  

    Paul plan/StJ – ROFL!!! I have no pity whatsoever on the idiots in the bottom 90% who voted for these bastards.  I just wish that there was a way that each party could tax their own constituents.  Time to split this nation again I guess….  
     

    So we go $182.9Bn further in debt, help not one single person who earns less than $88,000 and no one really unless they earn $127,000 or more but even those suckers get just 1/100th the benefit of the people who earn an average of 4 times more than they do.  Oh ain’t that America…  


  126. GG – Aroon cross-over on 4/1.  Shorting a small lot here in May 49s for $2.


  127. Tax on revenue.
    I have small business with 10% profit margin.
    with 20% tax in revenue – I’m bankrupt.
    Anyone with profit margin less then 20% – is out of business.
    Every small business that has losses is hit in addition by this tax (and unless has cash reserves – is dead)


  128. Boy……Bots are doing a good job of holding the RUT together. 


  129. 0404-tech


  130. They are buying their Ps JR as well as Treasuries!  VIX is UP!


  131. Phil
     
    C
    What adjustment is needed if any on the reverse split?
    Most of my positions are Jan 2012, some stock in IRA
    Thanks


  132. Out of TZA, IF THERE IS GOING TO BE A PUSH TODAY, IT’S NOW !!


  133. From Blumberg
    I love it
    Americans out of work more than six months have barely benefited from the longest decline in the country’s unemployment rate since 1994


  134.  Phil
    Would you be a buyer of IWM puts here? We seem very overbought/manipulated up.
    Thanks
    Strether


  135.  @stjeanluc
     
    That’s why I said you would eliminate the middle class.


  136. Phil, i was just surprised to hear roll down when the other posts i have been seeing have been rolling up & out. It sounds like it may be a great idea. i will crunch some numbers and make an educated decision.
    thanks again


  137. strether

    I can’t speak for Phil, but YES !!!!!!!!!!!!!!!!!!!!!!!!!…………………..( near EOD)


  138. here comes the stick again…i think.. even CMG is about to turn green


  139. You called it JR


  140. KIRK – btw, some funny pricing made this a good day to close out a July 12.5/15 BCS early at above payout. It’s nice getting paid extra, and early!


  141. There she is…TLT started to fade off that bounce from R1….that’s the way to do it, uh huh uh huh…


  142. Rustle – That has been the plan for the last 20 years but no one takes it seriously because they wave bibles and guns in front of people while stealing their wallets! 


  143. Aroon / Pharm – Just curious, but what period do you use? 


  144. StJ – std 25.


  145. GMCR – strong like loco bull.


  146. Phil (and Pharm) – I have 60 FAS April 32′s at .99 and I just discovered that I can sell the weekly’s (I wasn’t seeing them in the chain so I thought I couldn’t sell them) – should I roll out to the May 32′s or something else?  And should I cover with the weekly $31′s?  What’s the best way to play this?  thanks for your tremendous patience on all this…


  147. One must ALWAYS REMEMBER to fear the Stick !!


  148. JPM/Asaenz – It’s just a quarter on a $46 stock – I don’t think the dividend is going to drive purchase decisions.  I was loving JPM in the $30s, not so much here.  If they test $40 they will be exciting again.  

    Monday/JRW – I think POMO is running out of gas.  These are big dumps and not having the same effect.  Next month may be the last month too and people aren’t going to wait for the day before to head for the exits.   They can’t get the dollar below 76 even when giving away 8 Billion of them every day so what will happen when and if they stop printing more money?  

    Conservative/Judy – Well that depends on what your investment cut-out is.  If you are 40 years old and earning $250K and have $1M to invest then you can afford to be aggressive with maybe 400K of bonds, annuities or collared stocks (where there is virtually no chance of losing) and another $400K in buy/writes and short puts that you intend to own and $200K in short-term high-risk because you can always make it back.  If you are 60 and about to retire and that $1M is pretty much it – then risking 20% of it is not smart at all and probably $600K should be super-conservative and $300K hedged stock and no more than $100K risk (even that is dangerous).  If you are actually retired, then it’s out of the question.  It also depends on your lifestyle etc and how comfortable the money leaves you.  This one guy was telling my Mom she had to sell her house asap to cut down on expenses or she may run out of money by the time she is 95 (25 years).   There are so many layers to how you allocate assets, it’s not something I can say there’s a rule to but do sit down with some financial advisers and let them show you really conservative schedules (usually a tax-free 5-6%) and then you can compare that to collars on dividend stocks or, at the next level of risk, buy/writes, covered calls or short put sales. 

    GMCR, OPEN, TZOO, CEPH all making year highs into the close.  

    20%/Lol – No you would just have to charge more, as would everyone but prices will still find what the market will bear.  Don’t forget this is how 80% of the World works – just not us…  The same GE that pays no taxes here pays $20Bn worth of VAT in the EU.  We are just the nation of suckers being held hostage by people like Ryan Paul and his Corporate masters.   Also, consider the fact that idiots who sell their goods and services at a loss will no longer be able to compete with you.  

    Cool here comes the stick!  


  149. 81M shares on the dow with 20 minutes left. No wonder there’s no chutzpah.


  150. jerconn – cover with 31s…..yes, all premium, and you can use that money and roll out to May 32s.


  151. BIG volume coming in on BMRN.  I am a glutton.  May 25s……1.60.  Just a few….


  152. Lapper- great post! Initially I was for the intervention in Libya but after having coffee at SBX (they LOVE our starbucks) with a few Saudi, Egyptian, and Turkish military officers I quickly changed my opinion. They all viewed our intervention as EXACTLY what the former CIA official said, “yet another instance of America killing Muslims for oil”. I was shocked. They were respectful and all made a point to state they view the American people and American Gov’t as separate entities.. But if these military officers whom are living, and studying/working here feel that way… I can only imagine what the less educated arab, who hasn’t had the opportunity to live here feels about our country and what we are doing over there…


  153. C/QC – No adjustment really, I think it will be bullish and add premium.  

    Great timing on TZA JRW!  

    IWM/Streth – I wouldn’t want to pay premium for more than a day trade off rejecting 850.  I do like our hedged TZA disaster plays but I wouldn’t want to try to guess WHEN they fail.  

    Roll down/Morx – You can roll down when you get paid to do so, it’s a way of banking what you collect from the callers.  So if you are in the May $31s and sell 1/2 the April $31s for $1, you can roll all your calls to the May $30s for .50 – the roll is free and keeps you with a better delta – that’s a good way to play. 

    GMCR $66 – Forbes did a write-up on the SBUX deal and a whole new round of idiots are pouring in.   There is no new information, same crap as last week and the week before but every time it is treated like NEWS!  

    FAS/Jerconn – From the now .60 April $32s, I would spend $1.07 to roll to the May $32s and sell the weekly $31s to some other sucker for .60 or better (now .53).  That pays you enough money to roll down to the May $31 calls but you don’t really want to do that yet as it just ups your premium which will decay this week.  

    And what Pharm said!  

    No Chutzpah/Rain – That explains the lame schtick.


  154. .10 is fine on the Qs, we weren’t looking for an overnight.  Added to .15 on the DIA shorts and it’s a nice day!  


  155. As usual, a flat day is a good day for the short option sellers.  VIX went up a little, meaning instead of getting 3 days of Theta decay for Sat, Sun and Mon, we only got 1 to 1.5 days of decay.  May be some earning premium is starting to rise also.  Well, we can wait another day to get our Theta!


  156.  So much coincidence again, Dow closing at 12400.03, S&P at 1132.84, Russell at 849.22, could you really get much closer to the levels.


  157. Phil / ZSL and DGZ shorts     Well silver held $38 easily, so I folded and took my losses.  Gold and silver will probably collapse now!


  158. Pharmboy / CLDX
    have May4s callers against my shares, do you recommend to roll them to Nov,5s??????????
    you think they still have potential to go even higher?


  159.  Peter- while you are at it, can you order up a couple more of these followed by a big drop/pop in the VIX for May sales? 
    :)


  160. Last second sticklet filled IWM puts. Nice.
    Thanks for the gold exegesis, Phil.  Logic would tell me that a bank credit collapse would have investors stampeding into gold to escape the inevitable "rescue" packages of the U.S. govt.  But I have also long wondered about the fall of gold from Feb. to Oct. 2008 from $1k to $800k.   It helps to be an economic historian, as you are, in the absence of which "you are doomed to repeat it."


  161. BIDU with a 3% day – gotta have it!  

    What they feel/Jrom – I would think executing the UN guys in Afghanistan this weekend made that clear.   You think they hate us now, wait until The Donald is President.  

    Earnings premium/Peter – Good point, that’s starting to come into play.  

    Coincidence/Rustle – Isn’t that just the strangest thing?   8-)

    Silver/Tusca – Oh that sucks.  I guess we hope it goes up now so you feel better about the decision?  

    Doom/ZZ – Yes, it’s like writing a history novel trying to piece together what really happened in the markets to cause certain conditions.  That’s why I began keeping a blog in the first place – to remind myself what I was thinking when conditions were similar.  Now it’s so valuable I couldn’t live without it, I love going back and reading all the posts and comments surrounding key events – it’s like having a time machine to revisit historical events.  

    01:00 PM On the hour: Dow +0.13%. 10-yr +0.33%. Euro -0.09% vs. dollar. Crude +0.36% to $108.33. Gold +0.42% to $1434.90. 

    02:00 PM On the hour: Dow +0.01%. 10-yr +0.39%. Euro -0.23% vs. dollar. Crude +0.13% to $108.08. Gold +0.36% to $1434.00. 

    03:00 PM On the hour: Dow +0.03%. 10-yr +0.21%. Euro -0.13% vs. dollar. Crude +0.51% to $108.49. Gold +0.34% to $1433.70.

    4:00 PM At the close: Dow +0.19% to 12400. S&P +0.03% to 1333. Nasdaq -0.01% to 2789.
    Treasurys: 30-year +0.08%. 10-yr +0.24%. 5-yr +0.25%.
    Commodities: Crude +0.34% to $108.31. Gold +0.15% to $1435.10.
    Currencies: Euro -0.13% vs. dollar. Yen +0.07%. Pound +0.09%.

    Market recap: Stocks hovered near the neutral line in listless trading, hampered by weakness in tech stocks. Middle East instability sent crude oil to a 30-month high. Treasurys held on to gains, and focus will swing to Bernanke remarks tonight that could buoy stocks. Advancing issues slightly outnumbered decliners on the NYSE. 

    The U.S. will reach its legal debt ceiling no later than May 16 unless Congress acts sooner, and the emergency measures by the Treasury Department may provide extra borrowing room to last only until about July 8, Geithner says in a letter to Congress

    WTI crude is having a subdued day, but Brent, which many consider the true benchmark product is up solidly, hitting another post-GFC high. What happened to all that OPEC spare capacity? Brent ETF:BNO +1.0%. WTI ETF: USO +0.02%.

    Corn futures touch an all-time high, the nearby contract at $7.64/bushel. Last week’s USDA report showed a large increase in acreage devoted to corn planting, but also showed lower inventories as current pricing is not yet rationing demand. CORN +2.8%JJG +2.1%.

    The UN opens another front in the war against despots, firing missiles into a pro-Gbagbo military camp in the Ivory Coast. Reuters reports France as authorizing its army to participate in efforts to protect civilians there. Cocoa futures fall. NIB -1.0%.

     "Clearly, monetary policy must go beyond price stability, and look to financial stability," says IMF Chief Dominique Strauss-Kahn, perhaps realizing CPI readings in the 2% range often mask excess money showing up and creating imbalances in other parts of the system. 

    No wonder Matt was busy today:  On the step-up-place-your-bets watch, someone’s loaded up on SPY April 130 puts, laying down a $12M bet that stocks will lay down early this month. Bullish for QE3, or just mere hedging? 

    A surge in market volatility following the Japan earthquake and a jump in oil prices may not be enough to keep investment banking and trading revenue from falling for a fourth straight quarter. Analysts arelowering Q1 earnings estimates at big banks, saying trading revenue won’t rebound as much as they had expected from a weak Q4, fueling speculation about a prolonged decline. 

    The SEC is probing foreign companies with questionable accounting practices that have used backdoor methods to access U.S. capital markets, SEC commissioner Luis Aguilar says. At issue are moves by private foreign firms, many of them Chinese, to merge with U.S. shell public companies; red flags were raised after some hired unknown auditing firms. 

    A dozen companies say that hackers may have stolen millions of consumer email addresses because of a security breach at an ad company, including banks COFBCSUSBC and JPM, and retailers BBY,TIVOWAG and KR, plus DIS. The companies are warning customers to expect fraudulent emails that try to coax account login information from them. 

    Netflix (NFLX +0.8%) shorts had a late-February celebration, as the stock gave up some 20% of value, but that party looks over - for now – as shares just as quickly have regained that loss and tripped today along 52-week highs. 

    More than 60% of semiconductor stocks (SOXX -0.9%) move lower, led by OmniVision Technologies (OVTI -7.4%), which tumbles after news that Sony may replace it as its supplier of semiconductor imaging components to the iPhone (AAPL). Analyst defenders of OVTI, believing that the reports "have grossly misinterpreted this news," fail to stop the bleeding. 

    A pharma fight for emerging-market revenues has firms like GlaxoSmithKline (GSK), Pfizer (PFE) and Sanofi-Aventis (SNYbattling to retain key sales personnel in countries including China and India. Glaxo says it loses about 20% of its sales force in those countries each year to better offers from rivals. 

    S&P reiterates its Buy rating on General Dynamics (GD -5.3%) as the stock sinks following the crash of one of the company’s Gulfstream jets in a test flight that kills all four people on board. The crash should delay FAA certification of the Gulfstream G650, but the event should prove only "a temporary setback for Gulfstream and GD," S&P writes.

    Toyota (TM -1.0%) says it’s inevitable North American factories will have to be shut down due to parts shortages from Japan. The company expects 25K workers to be affected, but expects no layoffs, even as there is little idea how long the closures will last.


  162. I thought this should make it go lower not higher?
     

    Related Quotes

    Sym.
     
    Price
    Chg.

    PCLN
    Trade
    News
    518.59
    4.74

    Priceline.com Cut To Sell From Hold By S&P Equity Research >PCLN
     


  163. AONE – down to new all time low on friday, still kicking around there. Jan 2013 $5/10 BCS is just $.40, Jan 2013 $5 Put selling for $1.15. 1 put and $5 will buy 3 BCSs, $171 margin per TOS. Will pay 76% on margin if the stock doesn’t go up even 1 penny from today’s $6.01. Max payout of 774% on margin if stock over $10 by jan 2013 (and just a silly % return on your $5!). Worst case, you buy 100 shares AONE for total cost basis of $505 (per 1x setup).  I think i just talked myself into this for tomorrow.


  164. Phil, thank you for your advice on TZA, after review all trades, I found the loss was much big than I thought. I didn’t want wast too much time on trading hours so I post it now.  These are the detail of my TZA trades.
     
    Bought 100 contracts TZA $23/$30 Bull call spread for $2.5, sold 100 contracts TZA Jan 11, $23 Puts for $2.86.
    Sold TZA $23 Calls for $0.45, $30 Calls expired worthless. 
    Bought TZA $23 100 contracts puts back for $7.42, sold 2X(200 contracts) Apr. 2011 16 puts for $2.59.
    TZA reverse spilt 3 to 1.
    Sold 50 contracts Apr. 2011 $45 Calls for $1.06(will be worthless).
     
    So far, total cost is debit $9797.02 and my cost on TZA will be $48 on assignment($16*3) and TZA is $34.36, that is another $90K loss($48-$34.36 * 6666).  How can I get those loss back? 
    I am thinking to get $ 1 to $2 on TZA per month. This is my thinking, after got assignment for $48.00 sell it, book the lost.  then sell May $47.00 puts(about same price for Apr. $48′s put so I get $1.00 per month) and May $44.00 Calls for about $1.00.  I can get about $2.00 each month, I can get the loss back over time by that. 
    The reason I want to do it every month is because if we get a 10% correction on the market I can get back all the loss.
    Are those trades make sense to you?
    Sorry for the long post and thank you in advance.


  165. AONE – pending due diligence of course.. ;-)


  166. FAS showing a lot of strength AH.  Maybe a big free money day tomorrow?


  167. matt1966
    //FAS showing a lot of strength AH.
    As well as QQQ


  168. Posting parts of my valuation spreadsheet one industry at a time. I want to make sure that valuation can be compared fairly. First in line aerospace.
    http://lemoyne-mappingthemarket.blogspot.com/2011/04/valuation-aerospace-industry.html
    Based on the criteria that I used to select companies for my combination screen (up another 0.6% today), some of these companies appear cheap! For the expensive ones, I think that the valuation that is calculated could make a entry point where a value investor might be tempted. Selling puts at these calculated valuation might make sense. Just a thought.
    Once again, these are calculated automatically based on my original, I don’t revise any number so some can diverge completely since I am at the mercy of data provided and estimates. 


  169. Lists – MIT Technology Review’s 2011 list of Most Innovative Companies


  170. Natl Semi bought out for an 80% premium.  We should be looking for M&A takeout candidates.  Corporate America is sitting on so much cash.   


  171. Revenue tax – do I get you correct?
    If I’m business that buy cotton for 10 dollars, make thread and sell for $15.
    Are you going to tax me $3?


  172.  One has to wonder after reading this whether "Von Nott Haus" [very funny, Phil] has some nexus to PSW.

    Feds seek $7M in privately made ‘Liberty Dollars’
    Feds seek $7M in ‘Liberty Dollars’ that were invented by man to compete with US dollar 
    Tom Breen, Associated Press, On Monday April 4, 2011, 3:31 pm EDT
    RALEIGH, N.C. (AP) — Federal prosecutors on Monday tried to take a hoard of silver "Liberty Dollars" worth about $7 million that authorities say was invented by an Indiana man to compete with U.S. currency.
    Bernard von NotHaus, 67, was convicted last month in federal court in Statesville on conspiracy and counterfeiting charges for making and selling the currency, which he promoted as inflation-proof competition for the U.S. dollar.
    "Attempts to undermine the legitimate currency of this country are simply a unique form of domestic terrorism," U.S. Attorney Anne Tompkins said in a statement after von NotHaus was convicted. [Bernanke take note - zz]
    The concerns raised by von NotHaus and his group are finding resonance among some state lawmakers, too. About a dozen states have legislation that would allow them to produce their own currency backed by gold or silver in the event of hyperinflation striking the U.S. dollar. North and South Carolina are among those states.
    "He’s playing on a core idea of the radical right, that evil bankers in the Federal Reserve are ripping you off by controlling the money supply," said Mark Potok, spokesman for the group
    Von NotHaus is currently free on bond. If the conviction against him is upheld, he faces up to 25 years in prison and a fine of $750,000. A sentencing date has not been set yet.


  173.  Bobhu / TZA – Sorry, that is a serious loss. If i may be presumptuous and offer some advice ;  

    Many traders have lost tons of money by trying to get back a loss on the stock they lost money on. The money you have lost is gone. You will be assigned TZA at the stated price. Think about the investment you are making now as a new investment. Is a buy-write on TZA the best place to put your money now? If not, sell the TZA. Move the money to something else! Dont mistake a hedge with an investment that is supposed to make money!!! If you lost that much money on your hedge, you are either hedging a 9 million dollar portfolio, or you put too much money into the hedge….

    Also, keep in mind :  Selling puts (in the 100s, or 200s) on a regular stock is fine; it gives you a lower entry. But, a triple leveraged ETF is not a regular stock! There is no such thing as "cheap" ; You cannot keep rolling forever, because of the decay. Also, with inflation it is entirely reasonable for the Russell to be at 1000 in a year to 15 months ; IWM up that much would crush TZA.

    Just find a stock that you like NOW, and use the money for that purpose. Even if the market drops 5% tomorrow, what matters is that within the next 2 years, it will likely be more profitable then holding on to TZA over the same period.
    That being said, i dont know what will happen in the next week to 2 months. The market could drop or rise. But please have a trading plan and pre-determined outs for each trade you enter.
    Good luck!


  174.  Bobhu – i just want to be clear. I would agree on selling the TZA and booking the loss. Selling the May 47 puts and the may 44 calls is reasonable, except that I am afraid the market if it breaks out can move strongly up, and if it breaks down, could move strongly down. A strong move either way could expose you to a difficult roll with the puts and calls, unless you can double and double again. Do you have a plan for strong up or down moves with your call and put sales?


  175. PCLN/Jabob – Well, it did stop them from hitting $520 (today).  

    TZA/Bob – 100 contracts is MASSIVE – what on earth were you protecting?  If you sold the Jan $23 puts for $2.86 and they reverse split 1:3 then you sold the Jan $69 puts for $8.58, right?  Anyway, let’s focus on the loss of $90K.  Did you not make money on the bull side?  This is supposed to be insurance IN CASE the market falls.  That means there should be something to insure.  We won’t even get into the idea of stopping out with a 20, 40, 50, or even 60% loss being a good idea….  You seem to have a lot of cash and I guess you still want to short the RUT, right?  How about the RUT June $850/780 bear put spread at $21 – 20 of those is net $42,000 with a $140,000 payoff at 780.  You can hedge the upside with TNA July $78/85 bull call spread at $4 so about $20,000 there (50 contracts) pays $35,000 if the RUT moves up which means you have $27,000 at risk on the bear side to make as much as net $78,000 (assuming a total loss of the TNAs) if the Russell falls.  It may not happen this time and then you would need to decide if you want to reload through the end of the year, preferably before you are down more than $20,000  overall.  

    And what Hannah said! 

    Other than that, if you do take the assignment on TZA, the bottom line is you own them at $34.86 and you are down around $12.  Why mess around when you can just sell the Jan $35s for $8.50 and, if TZA drops further and you think it will come back (although you’ve thought that before, of course), then you can sell the Jan $25 puts for $6ish (now $3.50) and there’s all your money back if they get back over $35 by Jan.  If not, you have lowered your basis by $14 and you are on a rolling adventure until you do find a combination that expires worthless.  

    I like that list Scott, will have to take time on weekend with it.  

    NSM/Terra – That should work the SOX back near their highs (445).  

    Revenue/Lol – It’s a Value Added Tax so you would pay 20% of the $5 you add.  The cotton guy pays $2 for $10 unless he bought it from someone else.  

    Liberty dollars/ZZ – It does sound like things are going to Hell, doesn’t it?  If states are passing legislation to print their own paper – who are we to have faith in the Federal Government when clearly our local Governors do not?   Good note on Ben! 


  176. TZA/Hanna -  thinking about Russell up to 1000 with IWM and TZA crushed.. scary! sounds way too possible. thanks for highlighting this.


  177. AAPL rebalance:
    from The Wall Street Journal

    In a move likely to ripple across the stock market, Nasdaq OMX plans to announce a rare rebalancing of its Nasdaq-100 index, which will reduce the big weighting of Apple, which currently makes up more than 20% of the index.

    http://online.wsj.com/article/SB10001424052748704587004576243231566493842.html?mod=djemalertMARKET


  178. INTC in 25KP
    INTC earnings on Apr19
    Apr expiration on Apr16
    We can roll to the June20C for about 0.40, if we short the Apr20C the roll is about 0.25 and we can roll to the May and June shorts if the stock heads up.  If we short the May20C the roll to the June20C is even.
    We are loosing big time on this and we only have $0.15 left on our April20Cs.
    What do you think?


  179. TZA/Hanna – thanks again. examined my TZA position (34 contracts total, various exp) with that refreshed perspective and found that (on the next little surge up) i just need to close out one position (july $12 short puts) and that converts what did have a loss curve going all the way down to flatlining below $8 with a loss of $2.356, to a an overall curve that instead turns back up and max total loss of just $639. Now that is a more affordable hedge! 


  180.   Phil: 1% redux
    Phil, you’re ‘how old are you" lead-in to my comment was so curious I felt compelled to respond to your righteousness. 

    Firstly, thank you for finally decocting the subset of Americans whom you principally consider to be overly rich, and not particularly patriotic down to the .01%. And I’m sure you take no comfort in the fact that there are far more of the overseas .01% with plans to decamp to the U.S. than the other way around, but I can assure you that it’s true.
    Despite your opprobrium, would not label even this group as being totally without merit, since they include our favorite technology titans [Jobs, Gates, Ellison et.at.]. But I now understand that it’s quite a small group of Americans, 1/1000 of them, which has somehow earned your displeasure.  Although it seems to me that they were more the lucky beneficiaries of government-created windfalls — MBS, inflation —  than the shadowy creators of them.  Surely you now that Paulson make his initial billions shorting securities that the U.S. government blessed as saleable to widows and orphans?
    You then skip to "U.S. corporations," in order to bulk up the number of economic tormentors that afflict your "99%". This shifts the ground of your argument tremendously.  Corporations are not citizens. That’s easy to see.  What exactly they are, or have become, is rather harder.
    The ones you care about — the big ones — have evolved as the offspring of global markets.  They are "global" citizens, to the extent they are citizens at all — which they are not. They are legal entities enfranchised under the laws [or lack thereof] of all the jurisdictions in which they conduct their business.  They are indefatigably political, in pursuing their interests within each nation state, and hence not particularly patriotic to any. They are owned by citizens — not just American citizens, but a great variety of foreign nationals.  They don’t pay taxes, really, they just filter the money they make to a subset of "interest groups", principally governments and shareholders but not exclusively so — large multinationals have lots of "stakeholders."  They select their venues of operation primarily to avoid the type of regulation that governments impose to balance profits with the social welfare of their citizens.
    I distinguish between these two groups — the .01% of American rich and Corporations — because you don’t seem to, and I think it reflects a lack of clarity in respect of "who" or "what" the tormentors of these "99%" of Americans really are.
    While "good" and "bad" people undoubtedly exist, as cultures may define them, I simply cannot find any explanatory value in positing a global economic dynamic in which "people with little conscience" — including the management of multinational corporations — have brought about recession and economic hardship for the many through their heartless manipulation of the political economy of human civilization in pursuit of filthy lucre.  
    It explains nothing because that is what they are supposed to be doing. The pursuit of self-interest, with the occasional eleemosynary gesture, is the basic building block of capitalism.  Is it capitalism itself to which you object?  I somehow assumed you were capitalist.  It is national government that is supposed to set up, and enforce, the rules and the shape of the table within which self-interested actors vie with each other for their respective profit.
    Hence railing against the rich and the devil’s-spawn multinationals is quite beside the point. I think there is a structural problem with American democracy.  Government, and its laws and regulations, are intended to restrain or prevent exactly the type of excesses that you so eloquently describe.which you describe.  It has utterly failed to do so.  The mortgage crisis was a failure of banking laws and their enforcement.  The mortgage bond meltdown was entirely a failure of regulatory supervision.  U.S. financial and banking regulation failed utterly.  Phil, when the badly-built dam breaks, nobody blames the water — it’s a given.
    What is that problem?  If I had to take a guess — and for the purpose of disputing your "evil actor" theory of U.S. economic dissolution, I suppose I must — I would say that the dam began to crack when corporations — and I think you’re right about this — became "citizens" able to participate in the American political process directly, with deductible corporation contributions, PACs, and the whole anti-democratic superstructure of Corporate America.
    You simply cannot entrust a powerful political voice to large, transnational business enterprises, whose only raison d’etre is profit maximization, to be "good corporate citizens" of a particular country.  They are not; they cannot. And, as has become abundantly clear, they will not be — ever.  They need to be cleansed from the American political process, with all their excessive influence over perenially weak-kneed politicians in need of campaign finance.  Let their shareholders vote in favor of their interests — in the country of those shareholder’s citizenship.  Nothing wrong with a citizen voting his wallet, within a country in which a democratic majority of human citizens elects, and influences, its leaders.  
    And as for your 1%/.01%, let them vote their interests too, like anyone else.  The U.S. Constitution still mandates one person, one vote, as I recall.  That should even the odds in favor of the rest of us 99%. 


  181. AAPL rebalance also documented here:
    http://www.reuters.com/article/2011/04/05/us-nasdaq-apple-idUSTRE73415720110405
     
    No wonder they’ve been a little weak the past few days. (Not that the good folks at Nasdaq OMX would share insider information before a public announcement….)


  182. Phil/liberty dollars
    I am curious where the states will get the capital to purchase the gold and silver. Even if they print their own money they have to have a way to accumulate the metals they plan to use for backing and they can’t seem to be able to pay their bills let alone build a precious metal hoard.