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Thursday Thump – Yucky Euro and the Oil Slick

$WTIC WEEKLYGood golly what a mess!  

I hate to say I told you so but…  Oh wait, no, I’m actually loving this…  I TOLD YOU SO!  Look at July 2008 and look at June 2011.  Now, look at July 2008 and look at June 2011.  Now, look at where oil USUALLY trades.  Is it over $100 or under $80?  You don’t want to go back further because then the case could be made for under $60.

Wages have not gone up (adjusted for inflation, since 1973), home prices have not gone up (since 1985), stocks have not gone up (since 2006) – just oil and gold and silver and other stuff that greedy rich bastards like to hoard in hopes of making themselves even richer – even though it comes at the expense of EVERYONE ELSE IN THE WORLD.  

One of the protesters in Greece had a sign that said Prime Minister George Papandreou was "Goldman Sach’s employee of the month" – now THAT’s a good insult!  At least it indicates that the Greek people UNDERSTAND how they are being screwed over while it’s the Americans who are bending over and taking it from the Banksters without complaint.  

I’m not going to get into it again but WHO pays that extra $30 a barrel for oil?  The bottom 99.9%, that’s who.  Sure The Donald also pays $4 a gallon when he gasses up the limo and he also pays double to heat his gigantic homes but a full tank in the limo is $120 while the prix fixe at Masa is $450 per person for Donald’s lunch so I doubt he’s as worried as you are about a tank of gas.  The American people are having $1.5Bn PER DAY extracted from their wallets at $4 per gallon, which is $547Bn a year and Globally that’s $2Tn spent on gasoline alone.  All that money is/was disposable income that is being directed AWAY from other parts of the economy. 

Add in the heating oil, natural gas, oil products (rubber etc.) and all the pass-through energy costs from manufactures and we’re up to about $5Tn, nearly 10% of the global economy going up in flames to enrich perhaps 1,000 oil men (and some of those men fund terrorism with their profits) and the speculators who shove the prices higher.  THEY ARE DESTROYING THE WORLD!  And it shouldn’t be the people who rally against these bastards – it should be the other businesses, whose customers are being robbed of their disposable income before they can even drive to the store.

Sure Exxon, for example, spends $30M a year lobbying to make sure this game continues to be played their way and they should – because XOM sold $400Bn of that $5Tn last year, so what’s $30M to make sure oil stays as high as possible for as long as possible?  WMT took in $104Bn in revenues and it could have been $120Bn if their customers didn’t leave it at the gas station on the way to the store – why don’t they wake up, get together with other consumer companies and hire their own lobbyists to help end commodity speculation and put a stop to this National disgrace?  Just a thought (and one I encourage you to pass along by sharing this article with others)…

Now, getting back to my own evil speculator mode – we hit oil futures for a nice $1 worth of gains in this morning’s Member Chat and, at $10 per penny per contract – that’s pays for our gas money AND lunch at Masa so we’re all set for the day.  As I have mentioned, I really hate going long on oil as we become part of the problem but at least we concentrated our firepower on breaking the backs of the speculators last week and, guess what – IT WORKED!  

Just like any bully, it really just takes a few of the other kids to stand up to them and they run away crying.  We began picking off oil at $103 on June 1st and on June 2nd I detailed our results and we kept at it since then, relentlessly calling the bluff of the speculators whenever they pretended they actually wanted to buy a barrel of oil for over $100.  

Oil bottomed out at $94 yesterday but may go lower still if Europe keeps spiraling downward (back to $94.50 at 8:25 and we are no longer playing for the bounce other than some fun USO calls we took yesterday).  That’s a 900 penny drop at $10 per penny per contract and we started out with 376,000 contracts on the NYMEX when I called the short play so that’s $3,384,000,000 made on the NYMEX by shorts in just 15 days – that’s nice!  

Do you want to know something funny about this? When a hedge fund manager makes $3.4Bn betting on the market or speculating on commodities – he becomes a national hero but when a humble blogger tells thousands of other people how to make $3.4Bn, it pretty much passes unnoticed.  I’m not complaining (much) as I enjoy what I do and our Members are pretty happy with the results but it shows you how screwed up our values are when we reward the greedy behavior and ignore the altruistic tendencies.   

8:30 Update:  414,000 Americans lost their jobs last week.  That’s "normal" these days and does not bode too well for the next Non-Farm Payroll Report but bad news is GOOD for the market as it keeps the Fed on the table so I popped into Member Chat just now and called for long futures plays on oil (yes, I am a shameful slut) at $94.50 and on the Russell at 775.  I am also expecting a softening by the EU (mainly the Germans) on the Greek situation as threatening Greece is clearly not working so now it’s time to be the good cop and JUST GIVE THEM THE FREAKIN’ MONEY!  

I know that’s not "fiscally responsible" and I know they’ll "never learn their lesson that way" and it may even encourage bad behavior from the other kids but, at this point – they are burning down the EU House so Germany has to decide if they are willing to let the whole thing burn to the ground in order to punish one bad kid or if they want to pull $100 (Billion, that is) out of their wallet and buy themselves a little peace – until the next time, of course.  

We went more bullish yesterday – taking disaster hedges, of course but we went back to the well on our 12 DIA short put ideas, which held up so well during the downturn yesterday that it improved my overall outlook.  As I said to Members yesterday, when I reposted them with adjusted prices near the close:  "PLEASE compare these with our original entries. Virtually NO CHANGE despite the sell-off. This strengthens my belief that these are good picks and have gone down far enough. I think the most any of these lost was $150 (the VZ puts). That’s why this is a great way to pair a hedge!"


It’s all going to be up to the EU today and tomorrow.  Greece’s Finance Minister, George Papaconstantinou, resigned last night and they are still looking for someone to take responsibility for the VERY UNPOPULAR austerity program in his place.  "Papandreou’s goal with this reshuffle is to defuse tensions within the party and the anger among the population," a senior party official said. "He is under a lot pressure to replace Papaconstantinou, but he also has problems finding a replacement. It’s a job that few know how to do and even fewer want."  

Underscoring that difficulty, earlier Thursday Socialist party deputy George Floridis—a former public order minister and a mooted candidate for the job of finance minister—resigned his seat in parliament, citing objections to the reform program.  As a precondition for receiving the next tranche of its existing loan—or any further aid package—Greece must pass a promised five-year, €28 billiion austerity plan by the end of this month. If it doesn’t, Greece may run out of money by mid-July, possibly precipitating a new crisis in the euro zone.

In May last year, Greece narrowly avoided default with the help of a €110 billion bailout from its fellow euro-zone partners and the International Monetary Fund, and is now seeking at least another €60 billion in aid to cover its borrowing needs for the next two years but it’s not like this will all explode tomorrow – we still have 4 weeks!  So, just maybe, the markets are overreacting a bit at the moment.



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  1. Oil Lines
    R3 – 104.89
    R2 – 102.42
    R1 – 98.95
    PP – 96.48
    S1 – 93.01
    S2 – 90.54 (also a Fib line)
    S3 – 87.07
    Scary volatility after yesterday…
    There is also a rising 200 dma at 92.66 now and on the upside, I have a Fib line at 95.69 which held at 4:30 AM this morning. There is another Fib line at 99.32 and that also happens to be the 15 dma. And finally, the 50 dma is at 103.73.  

  2. Good morning!

    RUT futures a good bullish play over the 775 line (774.80 at the moment) – tight stops of course.  

    Oil good again over the $94.50 mark as jobs were so bad they’re good!  

  3. Phil
    SQQQ   I have 10 contracts  23/24 Jun BCS, was assigned  -300 shares @ 24 overnight. Whats the best way to handle this since looks like SQQQ could still be headed up?    

  4. And also because it could be important, here are currency lines:
    R3 – 77.71
    R2 – 76.92
    R1 – 76.45 (we are there)
    PP – 75.66
    S1 – 75.18
    S2 – 74.39
    S3 – 73.92
    There are Fib lines at 76.17 and 77.20 on the upside. Also, the 200 dma is at 77.63 and it is still going down! The 15 and 50 dma are now rising (slightly). And we are also on the upper edge of a 1 standard deviation regression channel drawn from the last high in January on the upside yesterday.
    R3 – 1.4594
    R2 – 1.4491
    R1 – 1.4324
    PP – 1.4221
    S1 – 1.4054 (we are there)
    S2 – 1.3951
    S3 – 1.3784
    We are now well below the 15 and 50 dma. The 200 dma (rising) is at 1.3802. We are at the bottom of a 1 standard deviation regression channel drawn from the lows in January.
    R3 – 1.6530
    R2 – 1.6444
    R1 – 1.6319
    PP – 1.6233
    S1 – 1.6108
    S2 – 1.6022
    S3 – 1.5897 

  5. I stand by my post a couple days ago about hating Joe Kernen.  Not getting too political, I’m an independent, I think both parties destroyed this nation and most politicians are bought and we are run by big banks and other major industries.  Reminds me of the movie "Rollerball".  But it seems like Republicans are little kids and their attitude is Mommy can never do wrong, while Democrats will say ok, I agree, my guy’s not so great.  That being said Kernen is in the mommy camp and talking about it would be a great thing to breach the debt ceiling and it wouldn’t have a bad effect.  Basically screw those who need their social security checks.  And he was going on and on.  I had to contain myself from doing an Elvis with the television.

  6. Good morning, Wisconsin


    Solar info.


    PP for today.

  7. Phil / Think like Obama,Ben and Timmy    I suspect they are on the phone with Merkel and Trichet emphasizing that they have no choice but to throw more good money onto the Greek bonfire, because it’s still much cheaper than the meltdown alternative to the global financial system.  They’re probably telling Merkel to go easy on the austerity demands since the Greeks themselves still have the power to collapse the ponzi with a political impasse in Athens.  A dangerous moment, but what’s another $100B after we’ve already wasted trillions?  Cheap price to pay to extend the ponzi for two more years.  Sunday night meeting of Euro leaders will be key (if Greek Premier gets his vote through Parliament?), but I suspect the decision is already being made today by phone.  Market implications of this thesis?

  8. Phil, you write better than Matt Tiabbi.  I thoroughly enjoy your morning posts almost (almost) as much as I enjoy your picks.  Thank you for making investing so enjoyable. 

  9. Phil / Economic Calendar — Phil, where do you get your economic calendar from?
    Thursday’s economic calendar:
    8:30 Housing Starts
    8:30 Initial Jobless Claims
    8:30 Current Account
    10:00 Philly Fed Business Outlook
    10:30 EIA Natural Gas Inventory
    4:30 PM Money Supply
    4:30 PM Fed Balance Sheet

  10. Phil / Philly Fed     I don’t expect the Philly #’s to be any better than the terrible Empire #’s given current sentiment and the jobs #’s.  Short trade ahead of the announcement? or is it priced in?

  11. tchay/RUT discussion from last night
    I’ll probably do several posts to try and answer your questions. First, on allocation, number of contracts, VIX sensitivity.
    My approach would be to allocate a certain % of my total portfolio margin to the RUT trade – say, 10%. Then I’ll commit a certain% of that margin to taking positions. As mentioned last night, I prefer to keep something like 60% of my total RUT margin in reserve. With a less volatile index like SPX, I’d be more inclined to go 50/50.
    So a VIX spike would increase my margin usage automatically and use up some of my buffer. You can either live with the increased margin usage (due to large buffer) ,rebalance towards delta neutral wtihin the month to reduce margin usage, or, in a real emergency, bail out of that month and roll out your strangles to the next month to reduce margin and wait for the storm to pass.
    If you roll for even money, eventually you will reap the original premium you sold. For example, say you sold $10K of strangle premium and a VIX spike increases your commitment to $20K, so you’re down $10K on paper. Then you roll for even money so that your strikes are comfortably OTM. Your commitment is still $20K, but it has to decay to zero eventually if you keep the money between your strikes. This is similar in my mind to what Phil says about not freaking out when you sell a LEAP put on a stock you really want to own and the premium doubles after you sell the put.
    More later.

  12. FYI:

  13. @Felipe
    Thee who buys gold and likes it at 1,250, do you include yourself among the greedy, rich bastards? Or if one doesn’t hoard gold then they are exempt?
    I maybe greedy, I may be a bastard but I am not a hoarder, and I am not making money on anyone who is poor (poor people don’t want much, so they have no gold to sell me).
    I’m just goin’ where my aquiline nose leads me hopefully to greater profits in palladium, Gold, and silver.
    And I resent resembling that remark.

  14. phil, is today still good to dd FAS Jun17 24C? Thanks

  15. Broadening descending wedge in SPX. 1240-3 target by tomorrow.

  16. Felipe, I"M a hoarder! And as you noted, Also, as far as I know, I haven’t robbed any poor people to allocate some of my assets to a prudent stash of precious metals.
    I also don’t know what rich is anymore… I’m pretty sure there are a lot of millionaires on this board who sure don’t think of themselves as rich. Rich is when you only have to trade for amusement.

  17. i ahve no idea how that just happend but my apolgies

  18. Good morning!  

    Angel sent me a nice chart pointing out that the volume spike in the S&P E-Mini Futures looks a lot like a blow-off bottom, even if the headline volume seems low.  I mentioned earlier that a 4-day bottom doesn’t need to have the same daily volume as a 2-day bottom so we are not giving up hope yet but it all hinges on getting the Dollar back below 75.25 today and somehow "fixing" Greece.  

    What we REALLY don’t want to do is fail that 11,895 line on the Dow and the S&P has to hold 1,268 and the RUT CANNOT fail 775 – getting the Nas and the NYSE back to the 2.5% lines would just be a bonus compared to that.  If we can just hold the lines today, we’ll be in position to have a crazy rally tomorrow into expirations but THEN I’ll be a lot more demanding about what constitutes a proper rally.  

    Oil popped back to $95 and we’re happy enough to take another .50 in the futures, right?  I cannot emphasize enough that you can make .25 10 times in the futures before you’ll ever get a $1 move so take profits, take profits and TAKE PROFITS!  

    Same with the RUT, which already pulled back from 777.50 so now we can reload them over 775 again.  We’re waiting on the Philly Fed but the early action indicated that traders are terrified of it and that means it’s going to be very hard for it to disappoint so we could get a little boost at 10.    Overall, I’m bullish until we get disappointed but let’s stay on our toes.  

    Fun upside play is IWM JUNE (tomorrow) $77/78 bull call spread at .67 with IWM at $78.06 so we’re playing for the RUT to hold 775 for a 50% gain in one day.  You can offset that with the sale of the 77 puts for .29 to be more bullish and then you are in for net .38 with a 200% upside in one day.  

    On a sadder not, the USO June $38 calls are .21 and we’re in for net .47 but let’s see what happens at 10 before giving up.  In fact, let’s spend $210 to buy 10 more in the $25KP and then we’re down to net .38 on 30 contracts, a little more realistic of a goal.  

    At the open: Dow -0.05% to 11891. S&P +0.01% to 1266. Nasdaq +0.03% to 2632.
    Treasurys: 30-year +0.27%. 10-yr +0.18%. 5-yr +0.07%.
    Commodities: Crude +0.3% to $95.09. Gold +0.1% to $1527.80.
    Currencies: Euro -0.38% vs. dollar. Yen +0.09%. Pound -0.53%.

    Market preview: Stock futures reverse losses after weekly jobless claims and May housing starts pleasantly surprise. S&P benchmark flat. However, the Greek tragedy (IIIIIIIVV) continues to rattle world markets. Yields on 2-year and 10-year Treasurys hit their lowest levels of the year. Southern Union is surging after news of its $7.9B acquisition by Energy Transfer. Later: Philly Fed outlook.

    Notable earnings after Thursday’s close: RIMM

    Initial Jobless Claims: -16K to 414K vs. 420K consensus. Continuing claims -21K to 3.68M.

    May Housing Starts: +3.5% to 560K vs. 547K expected and 541K (revised from 523K) last month. Permits +8.7% to 612K vs. 563K (revised from 551K) last month. 

    Q1 Current Account-$119.3B vs. -$126B expected and -$113.3B in Q4.

    Banks repossessed 66,879 homes in May, down 4% from April and 29% from a year earlier, data from real estate firm RealtyTrac shows. The number of foreclosure filings decreased 2% from April to 214,927. The drop in activity is due to processing delays and weak buying demand.

    Eurozone inflation falls for the 1st time in 9 months, the May rate slowing to 2.7% from 2.8% previously. The news is not likely to alter ECB plans to hike rates another 25 basis points in July. Full report (pdf).

    The Reserve Bank of India hikes interest rates by 25 bps to 7.5% to counter domestic inflation that "persists at uncomfortable levels." The move was largely expected, though some economists believed the central bank might pause given evidence of slowing growth in manufacturing and investments.

    U.K. May retail sales come in soft, dropping 1.4% vs. expectations for a decline of 0.6%. Growth Y/Y is just 0.2%. Cable gaps down nearly 50 pips on the news, now -0.5% at $1.6090. - Who the Hell has these expectations???

    weak auction of €2.8B of Spanish 10 year paper sends that country’s bond yields soaring to 5.65%, the highest level since the crisis began. Funding is there, but price is the issue, and "Spain is clearly headed in the wrong direction," says a strategist. Spanish shares are recovering from sharp early losses, -0.5%.

    Greek bond yields continue to shoot higher, the 2 year note at one point climbing more than 200 bp to above 30% before falling back to 29.12%. The 10 year closes in on 18%. Irish and Portuguese sovereign yields hit record highs as well.

    Greek unemployment rises to 15.9% in Q1 vs. 14.2% at the end of last year. A metaphor for a failed economy: the world is set to enter Q3 and the Hellenic Statistical Authority is just now releasing data for Q1. 

    The announcement of a Greek cabinet reshuffle has been delayed as members of the ruling Socialist party hold an emergency meeting to quell a party revolt over the proposed austerity measures.

    The ECB’s Lorenzo Bini Smaghi reiterates his bank’s stance that it could no longer accept Greek paper as collateral in the event of any sort of default. This position means a Greek bank collapse in the event of a sovereign default, as the country’s lenders are dependent on the ECB for funding.

    ECB’s Wellink says the EU’s bailout fund would have to double to €1.5T ($2.1T) if lawmakers want private sector investors to participate in a second-round bailout for Greece. The move would create a ‘safety net’ and take into account contagion risks for Portugal and Ireland.

    "There is a certain misreading of intentions," Olli Rehn tells Bloomberg, "we will not let the euro area face any kind of catastrophe." Duly noted. Markets have consistently underestimated the will and the power of EU leaders to push the denouement of this crisis into the future.

    "Iceland’s luck was that it did not qualify for a bailout," says Asgeir Jonsson, describing a country that – contrary to Ireland - refused to put the debt of its banks on the backs of citizens. A quick collapse ensued, but now the country is back borrowing on international markets (at 3%), returned to growth, and with a solid banking system.

    Barely noticed yesterday was Irish finmin Noonan’s call for senior bondholders in Allied Irish Banks (AIB) to take their share of losses. The announcement was made ahead of a meeting with Tim Geithner – a champion of the "no bond losses ever" policy. "Noonan must be kidding," says a U.K. economist. 

    Boeing (BA) shares its rosy sector outlook, saying it expects a $4T market for new aircraft over the next 20 years as the "world market has recovered and is now expanding at a significant rate," with ‘robust’ growth in China and other emerging markets rebalancing world demand. (PR

    Big bets against housing made John Paulson a legend in 2007, but the collapse of Sino-Forest (SNOFF.PK) and a big position in financial stocks is taking its toll this year. His flagship fund lost 13% in just the first few days of June, now down 20% YTD.

  19. i was copying a convo to a file and thought i had cleasred it before cutting and pasting to th eblog..v v sorry all…

  20. angelcur – can I remove that post?

  21.  chaps thanks
    so is it mean that you sell same amount of contracts every month? or as Peter you play small until VIX spikes up where he increase position size?
    second question: after one month you roll you shorts to next month or you hold them longer?
    and one more:
    how and when you adjust (roll):  is it specific Delta # or you just roll when you fill unconfortable? and how you pay for roll? do you sell all you long spreads or just part of them for first roll? Do you move oposite shorts closer to pay for it?

  22. @gmarts
    There is a big difference between rich and affluent too.  As rich is someone who has saved many millions and doesn’t have to work, then there are those who we think might be rich in the media who live a high lifestyle but are spending all their income and typically are the ones you see claiming bankruptcy, that would be affluent.

  23. yes pharm please do i am v v sorry

  24. well its not bad reading tho..for a voyeur

  25. Uncovering my shorts…..another leg down coming….


  27. Dollar 76.13 – Nicely done Boyz!  

    SQQQ/Dave – So you have the $23 calls ($6.25) and you’re short 1,000 shares, right?  Of course cash the calls and then just put a stop on the stock at like $29.50 ($5.50 loss so net .75) and you make whatever less than that they work out at.  Obviously, if the Nas fails to hold 2,200 you should probably give up (and you still get a full win on the other 7). 

    Rollerball/Rustle – Man was I pissed at that re-make.  Perfect time to update the commentary on the Corporate Society that the first movie was all about and they blew all that off to make it a terrible, terrible, pointless remake.  

    Philly Fed down 7.7 – is that bad enough to be good?  It certainly is TERRIBLE!  July of 2009 was the last time it was this low.  Now we’ll see if this bad news was already baked into yesterday’s sell-off.  Economorons were expecting +5 so a 150% miss on this one…

    Tomorrow’s data is Michigan Sentiment and Leading Indicators. 

  28. Pharm, Re; uncovering your shorts… Just make sure you don’t end up in front of a press conference with your pained looking wife standing next to you.

  29. ALTH is flying!

  30. Markets seem pretty accepting of the Philly data, so far at least

  31. Don’t make me twitter you gmarts! 

  32. While we’re looking ahead – here’s next week’s data:  

    Date ET Release For Actual Forecast Consensus Prior Revised From
    Jun 21 10:00 Existing Home Sales May   NA NA 5.05M  
    Jun 22 07:00 MBA Mortgage Index 06/17   NA NA +13%  
    Jun 22 10:00 FHFA Housing Price Index Apr   NA NA 0.3%  
    Jun 22 10:30 Crude Inventories 06/18   NA NA -3.406M  
    Jun 22 14:15 FOMC Rate Decision Jun   NA NA NA  
    Jun 23 08:30 Initial Claims 06/18   NA NA NA  
    Jun 23 08:30 Continuing Claims 06/11   NA NA NA  
    Jun 23 10:00 New Home Sales May   NA NA 323K  
    Jun 24 08:30 GDP – Third Estimate Q1   NA NA 1.8%  
    Jun 24 08:30 GDP Deflator – Third Estimate Q1   NA NA 1.9%  
    Jun 24 08:30 Durable Orders May   NA NA -3.6%  
    Jun 24 08:30 Durable Orders -ex Transportation May   NA NA -1.5%  

    Mo Money/Tusca – As I said yesterday, we lost $1Tn in one day when we didn’t pass TARP the first time.  We still ended up passing TARP, only by the time we did it the market was down $5Tn and we lost 10% of our GDP that year and the Government lost about $1Tn in tax revenues so how does it even make sense NOT to do whatever we can to avoid a crisis like that.  The only people who don’t get this are the idiots in the Corporate Media and their pet politicians – unfortunately, they have the pulpit.  

    Thanks Chaser!  Matt’s one of my favorite writers. 

    They finally found a photo bad enough to make Wiener resign.  

    Data/Rain – That’s from Seeking Alpha Market Currents, where most of my news blocks come from. 

    OK, little knee-jerk sell-off is done and now the Dollar is heading back down and we can resume our bounce. 

  33. tchay/RUT
    I will play politican: "it all depends." :)
    I don’t focus on number of contracts, I focus on margin usage. And how I adjust depends on what people are paying for options and my market opinion. Let me give an example.
    In April, with RUT at 850 and all the QE money, people were paying lots of money for calls and not compensating you for short put risk, IMO. So I was comfortable rolling to higher strike callers for even money. I just didn’f feel the RUT was going to get to 950. This meant using up reserve margin and going delta negative on the trade – meaning taking a bearish position on RUT.
    When somebody would pay what I considered decent premium for puts during this market run-up, then I would either flip short calls to short puts, or roll up calls 1x, which is cash negative, and pay for it by selling puts to be cash even after the adjustment. Either of these put-selling strategies gets you back closer to delta neutral.
    When the market corrected, I cashed out the calls I had been adjusting for several months, and my margin usage went back down towards my target.
    More later.

  34. Sold DE Jan $80 puts @ 8.10

  35. AAPL – can sell July 320 puts for 7.40 – big support there.

  36. AAPL – Also had nice bounce off 200 sma

  37. OIL chart FWIW.  I am staying short.

  38. NFLX: Someone pulled the plug today on NFLX-down %2 +. Nice.

  39.  Phil/USO TBT
    What do you suggest we do with the June 38 calls?  Rolls now?  Also, is it time to roll my June 34 TBT put shorts now or wait til tomorrow.  I sold it at .57 and was thinking of rolling to July 32

  40. Oil / Pharm – The scary part about oil now is that /DX goes from 76.40 to 76.15 and yet, no move in oil. As I pointed out yesterday in my COT chart, it looks like they are running out of buyers. Big money is leaving that trade for now… 

  41.  Looks like they might pin NFLX to 250 after all! Whole lot of excitement for what will amount to a pretty flat trade. Hopefully I can still make a little off it, though. 

  42. From bespoke (chart at link): The percentage of stocks in the S&P 500 that are trading above their 50-day moving averages dropped to 15% after yesterday’s decline. While the index itself is still above its March lows, this 50-day reading is now well below its March levels. As shown below, this is just the second time during the current bull market (since March 2009) that the reading has dropped below 20%. The other time it dropped below 20% was last year around this time when we were also worrying about problems in Greece.

  43. tchay/RUT adjustments
    If I have the time, I adjust the shorts frequently to take profits, and I must make the time to roll to stay comfortably OTM. The shorts are two months out and far OTM, so their prices will vary a lot on a % basis. Let’s say I sell a call for $2.00. If it falls by more than 50% (to less than $1.00), I’d be inclined to take the profit, and perhaps sell another call at a lower strike for $2.00. There’s a good chance that original call will be back to $2.00 at some point, and I can sell it again. So, if I’m working the trade, I’m taking profits and repositioning.
    If the call I sell for $2.00 goes up to $4.50, I start feeling uncomfortable and will want to adjust, because the call is getting closer to ATM. Then, depending on market prices, I’ll adjust using the options outlined earlier. Now there’s a higher strike call selling for $2.00, so that’s one option, etc.
    When there’s about a week left in the current month, I’ll start rolling my shorts out to the following month. So, for instance, I’ve just finished rolling July shorts to August. So, I’m always in the trade and rolling forward.

  44. Kernan/ Rustle
    BTW Kernan is pushing a book recently "written" by his daughter… contradictiog "attitudes" of teachers in her classroom about the "good of capitalism" and what "really caused" the economic crisis……  this points to his on ai non bias ???

  45. Kurtww, last month they pinned NFLX at $245 into OPEX.

  46. Good call on Philly Fed Tusca but, as you can see, was priced in. 

    Nice primer Chaps, thanks!  

    Gold/Flips – I actually do my best not to hold positions that encourage hoarding when possible but, more importantly, I will speak out against speculation, even though I am a speculator.  The people at the bottom are never going to be able to affect systemic change so it is up to us to push for reform.  I am very confident that I can make just as much money if they turn this into a fair game (like it used to be back in the old days) and I think it would be better for my country, which is far more important to me.  Anyway, what you or I do does not amount to a hill of beans compared to what JPM, GS, et al pull off and they ARE purposely manipulating the markets and they are purposely causing millions to suffer in order to skim a little off the top – that’s just evil…  


    FAS/$25KP, Ethan – Oooh, tough call at the moment.  I’m expecting to get back to $15 tomorrow but it would suck if we fail.  Since the $23 puts are .99 and the $24 puts are .50, I think I’d be more inclined to sell 1/2 the $23s for .85ish IF we start falling because that would easily pay for us to roll down to the July $23s but, for now, watching and waiting is good.  

    Hoarding/Gmarts – See above.  We’re all playing the game that’s available but that doesn’t mean we can’t work to change the game, does it?  There’s nothing wrong with investing in a miner who sells gold to people who want gold but when you invest in gold (or oil) in such a way that you create a false demand for it and that causes the price real consumers pay to be inflated as they (who use, perhaps) 30 barrels a year of oil, have to compete against your 30,000 barrel order at the NYMEX, of course you are directly "robbing" those people who are forced to pay more for something you don’t even want in order to compete with you in a game they don’t even want to play.  

    It’s a destructive misallocation of resources that causes all sorts of distortions in the global economy.  In a proper market model, a shortage of gold drives the price to a level at which people will no longer demand more of it and miners would top out in earnings and investors would move on to alternatives to gold (other conducting or decorative metals) and those companies would prosper and pick up the supply slack and we would get some reasonable equilibrium that would benefit society with more supply and more choices.  Instead, speculators drive the price of gold and oil  well past what people WANT to pay in ordinary demand but, since there is an underlying necessity demand, those who MUST buy gold and oil are forced to pay irrational prices that would never exist if there were no speculators.  

    No problem Angel – because it had so many links, it was in moderation anyway and I just threw it out – hopefully without having the system think you are a spammer….  

    Woo-hoo on the RUT futures – 785!  Also nice for the IWM spread.  

    Speaking of speculators – they dumped 50,000 contracts yesterday at the NYMEX.  Another 90,000 (ish) to get rid of by next Tuesday should be doable without too much damage:  

    Click for chart
    Session   Pr.Day   Options
    Open High Low Last Time Sett Chg Vol   Sett OpInt  
    Jul 11 95.29 95.75 94.29 94.70 Jun 16, 10:30
    -0.11 101581   94.81 131293   Call Put 
    Aug 11 95.74 96.20 94.75 95.14 Jun 16, 10:30
    -0.12 54163   95.26 267615   Call Put 
    Sep 11 96.20 96.69 95.15 95.56 Jun 16, 10:30
    -0.15 15034   95.71 155587   Call Put 
    Oct 11 96.61 96.91 95.64 96.04 Jun 16, 10:30
    -0.07 9192   96.11 62290   Call Put 

    10:00 AM On the hour: Dow +0.09%. 10-yr +0.27%. Euro -0.29% vs. dollar. Crude +0.02% to $94.83. Gold -0.03% to $1525.80.

    June Philly Fed Business Outlook: -7.7 vs. 7 expected and 3.9 prior. New orders -7.6 vs. 5.4 prior. Shipments 4.0 vs. 6.5 prior. Unfilled orders -16.3 vs. -7.8 prior. Prices paid 26.8 vs. 48.3 prior.

     EIA Natural Gas Inventory: +69 bcf vs. consensus of +70 bcf. Futures sink, -1.3% to $4.50.

    Here’s one way to create some job openings:  The Obama administration is intensifying a crackdown on employers of illegal immigrants, notifying another 1,000 companies the government plans to inspect their hiring records. Wednesday’s surge in "silent raids" brought to 2,338 the number of companies audited by ICE in the current fiscal year, topping last year’s record of 2,196.

     "The firewall that markets thought existed between Greece, Portugal and Ireland and … Spain and Italy is in danger of being an illusion," writes Michael Riddell following a weak bond auction. He notes Spain’s borrowing costs are well above its nominal growth rate, which implies a continually rising debt/GDP ratio.

    The Spanish high court rules a tax investigation of Emilio Botin, chairman of Banco Santander (STD), and his family can go forward. A leak of data showing family deposits into a Swiss bank led to the inquiry.

    The U.S. economy is flirting with its "stall speed" but hasn’t quite breached it so far, FT‘s Gavyn Davies writes. Since the reasons for the slowdown include temporary factors such as the Japanese earthquake, economic growth likely will remain just above stall speed for the rest of 2011, he says, "but there is not that much room for error."

    FBR Capital advises switching out of Intel (INTC +0.2%) into Advanced Micro Devices (AMD +0.1%), dropping Intel to Market Perform and boosting AMD to Outperform. The switch follows checks that suggest AMD “should gain both desktop and notebook processor market share” in the second half, while noting this is only a “tactical” play as Intel shares remain "very inexpensive."

    Kroger’s (KR +4.6%upbeat Q1 report, in which it raised its 2011 forecast for same-store sales and earnings growth, boosts sharesof other supermarket chains that have endured a recent selloff: Safeway (SWY +1.8%), Winn-Dixie (WINN +3.2%), Supervalu (SVU +1.5%), Whole Foods (WFM +1.2%).

    Winnebago (WGO -17%) collapses following a disastrous Q3 report. YoY profit was down 80% on what CEO Bob Olson called "softened" demand, saying the company "remained concerned the current recovery appears to be slowing."

  47. Phil on LNKD we holding the bear put Aug 85/90 and JUN 92.5 c short now .07 . question shall we sell an other round of AUG calls on 80 now 2.63 thks

  48. AAPL, +25% on July 320 short puts earlier

  49.  Hi Phil, any instructions on the USO $38 June calls that are now at $0.11

  50. Phil / JAG   I’m down about 20% on this and Edelson thinks gold is headed down short term.  Just take the loss?

  51. Phil, I guess I see the gold trade a little differently. For me, my gold holdings (physical metals not equities) are basically savings, with a currency hedge built in. The long term prospects for the USD don’t leave me very confident. Also, the physical holding of the asset leaves me a bit more comfortable against the prospect of a black swan (Weimar,Zimbabwe) type scenario. I don’t see this as likely, but more like a disaster hedge.
    I do my speculating in the paper markets.

  52. FXE- Pharm- what is your current thinking here? More pain ahead. I have July puts now fully covered with June 141′s waiting for that premium to burn off or roll down to July.

  53. 76.08 on the Dollar and not helping very much.  Not helping oil at all, still under $95 but a good futures play over that line.  

    LOL Gmarts!  You should be a political adviser.

    DE/Rain – I like that one.  

    AAPL/Jomp – That’s a good one because you can always roll it way lower too.  

    Oil/Pharm – Yes, it could go either way but EIA just upped demand forecast by 1% (700Kbd) for 2nd half so you would think that would give it a little support.  I think this is more an issue of July futures winding down at the moment.  Brent is going up.  If oil isn’t back to $96 by 2:35 (NYMEX close) today then I think they are in big trouble and we can go for some more July puts for the ride down to $85.  

    NFLX/Okno – NOW they are at the right price for tomorrow’s close.  Congrats to all who kept the faith through that BS pump-job they had at the end of last month! 

    TBT/Kyw – Yeah, that sucked right.  They hit $34 and died again.  You have June $38 calls?  Those are dead and I would not buy TBT calls, they are too unreliable.  I would roll June $34 puts (now $1.67, which you REALLY should have stopped out on the trip up from .48 over the past few days) to the July $33 puts at $1.43 and you can sell one extra to make up for the .24 you are short on the roll or sell more to make up for the call losses.  It is ALWAYS better to sell premium than to buy it but, next time – use stops!  

    Side note on TBT – They are in a range between $32 and $34 since mid-May.  That means you buy (or sell puts) near $32 (like now) and you sell (or buy back puts) near $34 (like Tuesday and yesterday morning).  As Hank Paulson reminded us: "Don’t let the perfect be the enemy of the good" – you did not scale into your position so when TBT was at $1.64 on Monday, you were looking at a big loss (had you doubled down at $32, you would have averaged $1.10 collected).  Then, when TBT rose to $34 on Tuesday, the short puts dropped to .48, which was was not only a 70% recovery from the previous day with just 2 days left but it was actually a 20% PROFIT off your .57 sale (and would have been a 60% profit off a DD if you had scaled in).  NO position is going to be a winner for you if you do not manage it properly other than through dumb luck and, if that’s what you rely on for trading – you may as well just go to Vegas and play the tables – at least they’ll give you free drinks!  

    Speaking of oil – forgot to mention – notice there are STILL 600,000 contracts in the front 4 months.  That indicates very few contracts were actually cancelled, they have simply kicked that can down the road as well at a cost of at least .50 per contract (chicken feed, really).  

    Dollar back to 76.25 but now Greek PM is speaking so maybe fixed again!  Let’s see what happens while he’s speaking live (no idea what he’s saying but EU markets close in 20 minutes so it better be good).  

  54. Good chart Rain, thanks:  

    I would have to interpret that chart as pretty bullish.  Unless earnings are TERRIBLE, then we are seriously oversold.  Also, it means that if the market drops another 10%, we’ll be ridiculously oversold so all the more reason to sell puts that are 10% out of the money and all the more reason to take buy/writes that give you a 20% hedge.  

    11:00 AM On the hour: Dow +0.53%. 10-yr +0.21%. Euro -0.27% vs. dollar. Crude -0.14% to $94.68. Gold +0.16% to $1528.70.

    Nothing new in his speech:  Speaking at a meeting of PASOK members, Greek PM Papandreou rallies the troops, repeating yesterday’s message of the need to move forward with structural reforms and austerity measures. Having rallied sharply since NYC got out of bed, the euro is falling again at $1.4134. FXE -0.3%.

    The new inflation numbers were "shrugged off" by mortgage-market participants, as Freddie Mac reports an almost unchanged 30-year fixed rate of 4.5%. Average 15-year rates settled to 3.67%, and the one-year Treasury-indexed ARM is still under 3%.

  55. Bit of unclarity – something I’m not quite understanding and need to in order to help my swing trading of index EFTs – looks to me like /dx and /cl are moving in lockstep, opposite directions. Is this correct, is it normal, why is it, will it go away at some point?

  56.  chaps
    thanks, very informative, I’m asking because doing vertualy the same just would like to hear how others handle same kind of strategy,
    I just sell options little bit more expensive ($3-3.5) and to automate the process of rolling I use Delta (like incometrader doing it)

  57. tchay/RUT put verticals and VIX hedges:
    As mentioned, I keep the put verticals in the front month. That’s so they’ll converge to something profitable if there’s a major sell-off, versus what would happen with a two-month vertical. I try to stay disciplined and maintain one put vertical for every short put commitment. As mentioned, I usually pay about $.12 for $1.00 put vertical spread.
    Verticals are nice because, even when the market is moving up, they tend to retain most of their value until roughly a week before expiration. I’m willing to lose all my put vertical insurance money. But there are salvage plays as mentioned last night. When I roll my shorts, I roll my verticals as well, generally.
    So, in summary, you might construct a hypothetical trade under TOS with shorts two months out and put verticals in the front month. Then look at the P/L graph for the front month. That’s your target; that’s what you’re working. Even though your shorts are two months out, you’re looking to harvest premium on them over the front month. My experience is that put verticals in the front month significantly reduces the volatility of the trade.
    VIX hedges: I’ve looked for VIX hedges. I traded the VIX for awhile, but Phil gives a good warning on VIX trading. There’s just something weird about trading options on the VIX, IMO. So my current candidate (for both delta and vega hedging) are the six-month SPX put diagonals I discussed yesterday, which are really just a variation of Phil’s mattress play.
    My premise is that if you actively manage them, you can probably get your insurance for free (i.e, get out of the diagonal even), if the market goes up. If that’s true, then your net cost is the margin employed. That’s not much of a cost, IMO.

  58. tchay/your strategy:
    Yes, I agree. I read over your strategy and concluded that at the heart of it, you’re hunting in the same game.

  59.  Phil, Thanks for your help on TBT.  As for the June 38 calls, I was referring to USO from yesterday.  Any instructions on what to do on it now?

  60. Disaster hedge -  FAZ Jan 50/55 call spread and short a Jan 30 FAZ put, net debit on trade $0.66 if I have my numbers correct.  Comments?

  61. The US best export economy is just humming along: 

    Maybe the rest of the economy is in the doldrums, but the LA Timesreports that sales of U.S. military gear are on a record pace this year:

    India signed a deal Wednesday for the purchase of 10 Boeing C-17 military cargo jets….The largest-ever U.S. foreign arms deal was announced last October, when Saudi Arabia ordered $60 billion in military hardware in a multiyear pact. The Saudis’ laundry list of weaponry included Raytheon Co.’s 2,000-pound bunker-busting bombs, Boeing’s F-15 fighter jets and Sikorsky Aircraft Corp.’s Black Hawk helicopters.
    More deals are in the works. Australia wants two dozen Navy Seahawk helicopters valued at $1.6 billion. Saudi Arabia is eager to get $330 million in thermal-imaging and night-vision equipment. And Britain is looking to purchase $137 million in upgrades for its U.S.-made ship-mounted guns. Orders are also in from Morocco, Iraq and the United Arab Emirates.

    Who says Obama isn’t doing anything to boost the economy? And keep in mind, these are export dollars, so they’re helping our trade deficit. Good job, military-industrial complex!

  62.  LNKD/Yodi – No.  Why add risk now?  I don’t know what it is with you guys never being satisfied.  The spread is at $3.50 and looks good to make $5 and the caller is worthless at .07 for an almost 100% gain on the net $1.55 entry from 5/31.  100% in 2 weeks and another 100% very likely to be gained and you want to risk selling calls $10 lower than we did last time?  Why?  We short things that are obvious and, HOPEFULLY, a little more than half the time we get it right and get a nice win like this one.  This trade is OVER, we take the 100% gain (stop at 75%, maybe make 200% if all goes well) and we can certainly afford to wait a month to find another grossly overbought stock to short because we only have to do this once a month to make 1,200% a year.  Isn’t that enough???  

    Why did Babe Ruth walk 2,200 times in 8,800 at bats?  That’s letting 8,800 pitches go right by him.  Because he had the DISCIPLINE to WAIT for a good pitch!  When he did swing at pitches, he got a hit 34% of the time, which is one of the best percentages of any player in history.  What made him the most valuable player of all-time was that, of the 2,800 times he did hit the ball, 714 times he hit a home run (100% gain), 136 times he hit a triple (75% gain), 506 times he hit a double (50% gain) and 1,444 times he got singles (25% gain).  When he got out, it was a 33% loss for the team that inning.  That took his team to 10 world series in 17 years – learn to do that with your portfolio and you’ll be an immortal too.  

    Nice AAPL call Jomp!  

    USO/Izega – Hoping for a 2:30 miracle otherwise we hope the .10 holds up and we’ll take a $600 loss tomorrow.  

    JAG/Tusca – I don’t know what you have.  I like them long-term but I’ve been saying for ages that gold topped out and we should wait for $1,250 to look at miners again.  If you have the actual stock at $4.50, they bottomed out at $4.11 so figure $4 should hold and you can cash out and just sell the Dec $5 puts for $1.15 (net $3.85 re-entry) or you can be more aggressive and add the $5/6 bull call spread for .30 so you don’t miss a run up or you can keep the stock (with, I assume a $5.40 entry), sell the puts and sell the $4 calls for $1 to drop your net to $3.25/4.13 with a 20% profit if called away at $4 (but of course you can roll the calls out and up probably).  

    Gold/Gmarts – Gold’s different than oil because people don’t really NEED it other than the fact that so much self-esteem is tied into owning gold and getting gold as wedding and other gifts due to a lifetime (several lifetimes) of programming (ooooh, shiny!).  I think at $300-$500 it’s a sensible asset to hold as it does have value in electronics and, of course, as a reasonable decorative metal but at $1,500 – it’s you and a bunch of other speculators playing chicken with their holdings.  If the global economy collapses and money is no longer valuable then I will be a lot happier with a Barrett M-82 and 1,000 round of ammo (.50 caliber) than few one-ounce gold coins – or even a few pounds of it!  

    Very nice explanation of algo logic, thanks StJ:  

    So why, asks Scott Hunsader, is the market reacting — sometimes violently — a full two seconds before the release?

    His theory is that the algos are being programmed to take advantage of the so-called ‘quiet’ before the data- release storm.

    The period is ideal because it provides the algos with a unique opportunity to move a market subtly yet very much predictably — at the same time as sparking a series of trading chain reactions, which can be easily navigated and front-run pre-anticipated in a variety of related options, ETFs and equities. Safe in the knowledge, we might add, that a sizeable order flow is coming right around the corner, but which is now just sitting on the sidelines.

    As Scott Hunsader explains, normally the bid/ask spread in most of these active stocks and ETFs is as tight as a penny wide. However, when these strategies are in use the spreads tend to increase very rapidly indeed, often becoming locked (where the bid price equals the ask price) or crossed (where the bid price exceeds the ask price).

    DX/Snow – Oil is priced in Dollars and you are looking at short-term movements so, at any given moment, the underlying fundamentals don’t change other than the net price of oil when PRICED in Dollars.  They will de-couple when oil fundamentals chance more than the dollar relationship but then they will go right back into synch as oil’s "global value" finds the right spot and then you are back to price swings in your local currency.  

  63. What markets thought there was a firewall shielding Spain, Portugal, Ireland and Italy from Greece?  The whole point of the moniker "PIIGS" was to demonstrate that there is no shield.
    They just make this stuff up?

  64. Phil, re: Barret etc… We have that stuff too. :-)

  65.  Canuck Bob – Just my .02 you could look at doing at 47/52 spread rather than a 50/55. Numbers come out about the same and it will give your spread a better chance.

  66. DPO- I am adding here – no options but pays a nice 9%+;

  67.  chaps
    do you use diagonal hedge for your long stock portfolio? what is % of your short strange (margin) of your total portfolio?

  68. Thanks Phil – thought it was something like that, but wasn’t sure. That’s helpful. So short term, since the market is dancing to the dollar, our friends who are playing with prices are also causing the market indices to bob around, again short-term. Interesting.

  69. Phil, what is the 2:30  "miracle"? How do you see oil / USO moving short term?

  70. 785 in RUT futures proving very hard to cross.  Dow futures are over and holding 11,900 at the moment, S&P 1,266 and Nas 2,208.  On the indexes, we need 8,000 back on the NYSE and 12,000 on Dow to get a little more comfortable but so far, so good in recovery land.  

    USO/Kyw – Prayer is the current strategy.   We knew it was high-risk going in.  We spent now $1,140 on 30 calls and it may be a total loss if oil turns down but it’s so unusual that oil drops day after day like this it was a worthy risk.  Unfortunately, it’s possible that it’s our calls that are keeping oil down – there are 6,600 open June $38 calls so plenty of incentive not to pay them off but, on the other hand, there are 13,600 open $38 puts so hopefully those guys get screwed – although, tomorrow, we could both get screwed with a flatline at $38.  As I said, I hold out hope for a 2:35 pump job.  

    FAZ/Canuck – I like it.  40% down on FAZ is 13% up on the RUT so keep that in mind if the RUT kicks up but great risk/reward profile for a long-term hedge, especially if you take Willsons idea and go a bit lower.   

    LOL StJ – At least we are still good at that.  

    PIIGs/Flips – I agree but it’s important to know what the punditocracy is saying to the less-critical masses.  

    Smart Gmarts!  

    Good job Willsons, you totally get it.

    11:21 AM The mini-rally in bonds continues amid the Fed’s purchase of $4.862B in Treasurys maturing 2015-2016, of $15.196B offered by dealers – over $3B into last month’s issue of five-year notes. The 30-year yield -0.02 to 4.17%; 10-year -0.04 to 2.93%; five-year -0.03 to 1.51%; two-year inches down to 0.37%.

    12:00 PM On the hour: Dow +0.58%. 10-yr +0.24%. Euro -0.18% vs. dollar. Crude +0.08% to $94.89. Gold +0.26% to $1530.20.

    Fixed!  The euro pops back up near the day’s high as the IMF hits the tape saying it sees a "positive outcome" on Greece at the next eurogroup meetingFXE -0.1%.

    Backing away from finmin Noonan’s statement about imposing losses on senior bank bondholders, Irish Deputy PM Gilmore says the country will not act without the approval of the ECB. Since the ECB doesn’t approve, you have your answer.


    Disaster losses of about $600M in May – chiefly from tornadoes in more than a dozen states – have already marked Q2 (with $2B in losses) as Allstate’s (ALL +0.9%most expensive since 2005′s Hurricane Katrina hit New Orleans. Many insurers have raised rates and deductibles as Midwest weather’s grown more severe, and Allstate’s been the most vocal among them.

    Beware Contagion From Greeks Baring Rifts (WSJ)

    Gambler or Investor? The Truth About Why We Trade (WSJ)

    8 reasons you stink at trading stocks (Market Watch)

    The Misunderstood Home-Mortgage Interest Deduction (Economix)


  71. I’m pretty sure the fundamentals don’t support $95 oil.  I’m reloading yesterday’s trade buying August $35s for $1.11 until Phil blows a whistle.

  72. FAZ/Canuck – Oops, I meant financials of course.  Was watching the RUT futures at the time.  

  73. Some of those 38 puts are me. I’m hoping that your hope for them to get screwed is a false hope :) . Although I think I’ll just take the 10% gain on those and flee from oil for now.

  74. I was wondering….

  75. Hi Phil --would you buy back Dia short put today or wait till tomorrow, they are Dia june 119 short put cober for long Dia July 119 long put, thx

  76. $25KP – Let’s buy 15 USO Oct $40 calls for $1.85 ($2,775) and sell 20 July $38 calls for $1.06 ($2,120) for net $655 with lots of time to roll if oil does head up (the Aug $40s are $1 so not likely to give us trouble).  

  77. @Felipe
    When you put up a trade as above in the USO $40s, does that only apply to the $25KP portfolio?

  78.  Why is Marathon Oil [MRO] attracting shorts?  Is gasoline headed down?

  79. New York City Mayor Bloomberg calls for major immigration reform, proposes green cards for graduates with advanced degrees in fields deemed "essential", a new type of visa for entrepreneurs with investor ready to fund job creating ideas, and more temp and perm visas for highly skilled workers.
    Reward innovation? Try to keep graduates in this country instead of pushing them back to to their home countries? Naaaa…

  80. I got a robo email from X home state senator (D-FL) about GOP plans to put SS $ into stock mkt. I can see it now if it ever happens: "We need lower taxes for corporations to boost your retirement."

  81. tchay/diagonals on long stocks:
    I’m starting to do that, like with short put commitments in 2013. So I’m experimenting with buying a long SPX strike that’s pretty for OTM, since my longs are self-hedged down to a certain level. Then construct a diagonal. With an 18-mo diagonal, the putter’s I have so far are two months out and I’ll probably roll two months at a time, I guess.
    I’ve been trying to get a feel for how much position you can gain on your putter if you roll them out and down for even money when the delta on the diagonal is no longer negative. For shorter-duration diagonals (6 mos) where the putter is front-month, my estimate is about $30 a month. So, if I have a long Dec 1140 put with a short July 1170 put – a relentless market drop would allow me to roll roughly 6 months x $30 a month, resulting in a Dec put vertical with a $150 spread. I did a study on the longer (18 mos)  diagonals as well, but I can’t remember the results. But basically, I like diagonals on SPX so far.
    Short strangles: I’d guess it ranges from about 25% of my margin up to maybe 40%. Less lately, because I felt the whole QE2 thing is such BS. Been trying learn how to sit on my hands. :)

  82. They now have a pic of Anthony Weiner in drag in the Daily News.j  It just gets better for him every day.  What was this guy smoking??

  83. LNKD/Phil/Yodi,
    I think Yodi just following Phil’s suggestion on LNKD trade on 5/31 as following…
    "LNKD Aug $90/85 bear put spread at $3.40, selling June $95 calls for $1.85 is net $1.55 on the $5 spread that’s $3 in the money and you can hopefully sell another $1.55 call in July for a free ride."

  84. @ Phil, any RIMM options worth the risk for todays (after close) earnings? seems like all the negative news are already bake-in the price….thanks.

  85. Phil
    Do you think we head down after July 4--given POMO ending and earnings not so great?

  86. Chaps and Tchay, i have been working a similar hedge as well.  On the long side i use Dec 13 (the farthest out in time, gives largest vega affect) 1000 right now 1/4 covered with July 1260s.  I expect i will have to roll the 1260s to 1/2x (1215 atm) soon now.  As a lot of my trades involve selling premium ( negative vega/vix) i was looking for not just a delta hedge but something to smooth the impact of vega on my portfolio.  I was hopefull to have the vega hedge "pay for" the repositioning of the shorts on this last market drop and it worked well.  On the SPX hedge, i am hopefull that it would pay for itself overtime, and it wouldn’t take much for it to be a profitable trade on its own.  Thoughts?

  87. Phil,
    As an initial entry to TASR what do you think of the Dec $2.50/5.00 BCS @ $1.50, selling the $5 Puts for $1.00. Net $0.50 on $2.50 spread that is $1.78 in the money. If assigned, I have a good chance of a net entry lower than simply selling the $5 Puts for a dollar.

  88. VIX is creeping higher..  guess not buying this bounce.. ???

  89. Pharmboy, BSDM is making me happy that I did a DD on Tuesday, go baby go!

  90. FXE/pstas – I will uncover and buy more shorts when 1.42 or so is reached.


    USO/zero – could not agree more.  Oil is going down more.

  91. BSDM/mrm – Damn UR a good….I was too early!  Charts say it all don’t they.

  92. robert:
    I think Phil generally recommends gearing the duration of your hedges to the duration of what your hedging. That makes sense to me. I’m not hedging anything so far out, so I wouldn’t use Dec 13s.
    As a vega hedge, I think Phil commented yesterday that 2013 is so far out, that it’s probably not a great vega hedge (I’d have to reread his post more carefully. This is just from memory.) That also makes sense to me. The more time you add, the more you’re just piling unknowns on top of unknowns, so the price action is less predictable. It’s true in theory that the farther out you go, the more vega sensitivity you have, but theory is limited. The theory is based on a math model that makes, by necessity, unrealistic assumptions about risk compared to the real world.
    In contrast, people can make better judgements about where the market might be six months out. Having fooled around with index options for awhile, my experience is that the market will generally bid up SPX puts significantly more on a % basis six months out when there’s a sell-off, versus front-month puts. Again, that makes sense to me. Six months is a period people can get their minds around and they can envision the compounding effect of multiple sell-offs over six months. That’s why I’ve started focusing on six months for vega hedges.
    My longer dated diagonals (18 months) would be for price protection. In other words, if my longer commitments are hedged down 20% on their own, I’m interested in a hedge that protects me below 20% 18 months out.

  93.  Phil, 
    Still holding out for the CCJ short July 28 Puts roll?

  94. CROX is kicking ass!  There’s another CSCO-type deal where everyone told me how wrong I was for sticking with them on the way to the bottom ($1!).  

    Speaking of which, SKX is at $14 with a $700M market cap and $476M in sales and $11M in profit.  You have to look at guys like this as an M&A deal for NKE, who have $19Bn in sales and make $2Bn but command a p/e of 19 so buying out SKX (not that they will but it’s a benchmark) would be immediately accretive to NKE earnings, dropping probably $50M to the bottom line (assuming cost savings and little synergy) and bumping sales 2.5% on a $38Bn company so we apply the 19 p/e of NKE ($950M) and the 2.5% sales to the $38Bn cap ($950M) and we get the fair price for SKX as an acquisition.  So, at $14.15, you have to like either the naked short Jan $14 calls at $2.15 (net $11.85) or pairing that with the purchase of the stock and the sale of the $14 calls for $2.25 for a net $9.75/11.88 entry with a very nice 43.5% profit if called away in Jan at $14 or higher.  So let’s say 2,000 shares ($19,500) as a buy/write (selling 20 puts and calls) in the Income Portfolio.  

    Miracle/B1 – That’s the NYMEX close so we hope for a stick into that.  

    Fundamentals/ZZ – They didn’t support it in 2008 either but that didn’t stop it from hitting $140.  Just be careful in either direction.   

    Dollar bounced off 76 (now 76.13) and is knocking everything back down.  This is kind of ridiculous, may as well sell everything and just bet the Dollar!  

    $38 puts/DDay – I would certainly take that and run on the dip rather than risk overnight on the last day. 

    DIA/Income Portfolio, Gucci – I take it you mean the Income Portfolio trade where we ended up short 50 June $119 puts at net $1.22, now .46 but .56 out of the money so I’m not too keen about spending $4,600 that we could collect tomorrow – make that that we WILL collect tomorrow as far as the premium goes.  As we are covered by 50 March $110 puts and have 9 months to roll – I think it’s worthwhile to take a chance and hope they expire worthless but I reserve the right to change my mind if the close sucks.  ;) 

    USO/Flips – Well I like the trade in general but I wanted specifically to use it in the $25KP.  Most trade ideas I don’t track as it just takes up way too much time and I have no idea whether someone decides to use it or not until/unless they ask about it later.  The idea of the virtual portfolios is to track selected trade ideas and discuss the logic over time so people can learn to trade their own portfolios better.  Hopefully everyone understands that the $25KP is very aggressive and the Income Portfolio is much more conservative. 

    MRO/ZZ – That’s the thought.  When oil stays low for about 5 days, gasoline usually begins to capitulate.  At the moment, it’s still holding $2.95 and, of course, another Holiday Weekend is right around the corner, which is why I don’t think oil is going that far down until after July 4th when, hopefully, we get the same kind of sell-off we just had after Memorial Day.  

    Immigration/Kwan – Now that guy should be President!  

    Robo Mail/Jomp – Is it too long to post?  I’d love to see it.  This is like that plan to put all the remaining SS into the market.  That would have been fun when the market crashed.  

    Wiener/Rustle – At this point it’s mind-boggling he didn’t resign right away.  He had to know all this crap would come out if he let it ride.  Talk about poor judgement…  

    Push ‘em back, push ‘em back – wayyyyyyy back!:

    (Reuters) - Germany wants the deadline for for a second Greek rescue package to be pushed back to September, reflecting the problems Europe is having hammering out the details, EU and banking sources said on Thursday.

    One EU source told Reuters that German Chancellor Angela Merkel and Finance Minister Wolfgang Schaeuble favoured a delay.

    "The argument goes: We don’t know what to do, let’s buy more time," the source said, adding that Berlin had its customary backing from the likes of the Netherlands, Finland and Slovakia.

    Thanks Angel!  

    LNKD/Bob, Yodi – Ah, I did say that but the assumption was they wouldn’t have dropped $10 already.  It’s very, very different selling a $95 call on a stock that never broke $100 vs. selling a $80 call on a stock that was at $95 a month ago, right?  

    RIMM/Asaenz – I think the $35 puts are overpriced and you can sell 5 of them for $1.50 ($750) and buy 4 Aug $32.50 puts for $1.78 ($712).  

    July 4th/Streth – That’s my theory but I also expected a pump job into the end of June.  So far, no pump.  

    TASR/RJ – My stock of the Decade is not having a good first two years!  Actually, on that spread, you net in at $4 because you are paying net $3 for the stock (buying the $2.50 puts for net .50) and then you WILL get assigned the $5 puts under $5 for an average entry of 2x at $4.  Since your net gain is capped at $2, you may as well just sell 2x the puts unless there’s a great margin difference.   

    VIX 22 – that’s not good!  

    01:00 PM On the hour: Dow +0.54%. 10-yr +0.28%. Euro -0.13% vs. dollar. Crude -0.01% to $94.80. Gold +0.13% to $1528.20.

    Knocking the Markets down at the moment:  Goldman offers some color on the weak Philly Fed print, noting the broadening weakness goes beyond supply-chain disruptions (Japan). Only 6 months ago touting the strength in the economy, is Goldman now angling for more fiscal stimulus and QE3? 

    Recent data from the BIS suggests U.S. banks have $41B inexposure to Greece, mostly in the form of CDS contracts sold to European banks who own Greek paper. By comparison, French banks (under downgrade threat), part of an economy 1/6 the size of the U.S., have $65B in exposure. 

    "Black Swan fund" Universa isn’t the only one who’s seeing a market crash based on the "Q ratio" – market value divided by the replacement value of its companies. And that ratio is currently about 49% above mean, as high as it tends to get.

     Responding to Papandreou’s earlier "stay the course" comments, Greek opposition leader Samaras says the only consensus the PM wants is with the troika, not from others within the government. Any clear look at the figures will convince anyone the troika plan cannot work.

    Pandora (P -7.8%) continues a slide begun immediately following yesterday’s post-IPO pop, now back to its $16 offering price. Gravity at work in recent IPOs suggests rumors of an internet bubble are greatly exaggerated. 

    Wireless spectrum in the U.S. is so limited – and Americans’ appetite for bulky media like video so voracious – that wireless broadbandwon’t be truly able to handle it "for a long time to come," says Motorola Mobility’s (MMI +2.3%) Sanjay Jha. Peak speeds of 4G networks rival wireline, but the standard broadband provided to homes by cable companies should continue to dominate. 

    Three lunchtime reads:
    1) Don’t buy the dips – sell the rallies
    2) Pimco research: QE2′s end and asset classes
    3) Fed on the sidelines 

  95. Pharm, regrettably I’m still only ‘good’ less than half the time, my life’s goal is to be good at 60% of my trades, that’s how you build a retirement!

  96. UUP/$25KP – this seemed to be a bit of a laggard wtih dollar move up. is UUP a useful posiiton? is dollar only going to get stronger now (between now and Jan)?

  97.  Can I get a "wheee!"?

  98. Phil, heres the post:
    If you are unable to see the message below, click here to view.


    How would you feel about turning over to your guaranteed Social Security savings to Wall Street?
    You probably wouldn’t feel too good about it. Not too many Americans do.
    That’s why Republicans have tried to keep their latest plan to privatize Social Security quiet — and that’s why our public petition to oppose the Republican plan has been gaining so much steam.
    We’re joining together to bring some unwanted attention to the Social Security privatization plan Republicans have quietly introduced in the House, but we need support from Americans like you to make sure it doesn’t go anywhere.
    Sign our public petition opposing House Republicans’ Social Security privatization plan now.
    We should work within the current structures of vital programs like Social Security and Medicare to ensure both remain intact for those who pay into them during their working years, not turning them over to profit-above-all-else interests. Let’s join together to make sure this happens.
    Thanks for staying engaged,

    Bill Nelson

  99. Watch out!
    Have no idea where the trojains came from but took 2 hours to remove, a LINK?

  100. Building permits and housing starts rise modestly
    Philly Fed region also contracts.
    But Business Barometer suggests stronger activity.
    Jobless claims improve slowly.
    Consumer comfort strengthens, but expectations worsen.
    Current account gap widens.

  101. DEPO having a bad day

  102. Did I miss a post About DEPO down .60 today with no news that I can find

  103. @ Phil, didn´t quite get what we should do with the USO $38 calls, now at .09 …. should we sell them today to get at least some money back? o ride them to hell and wait until tomorrow? thanks…

  104. Argh!  There goes .85 on the FAS Next Weekly $23 puts.  We’ll have to keep an eye on XLF $14.75 to see if it holds but markets look horribly lame.    

    Duration/Chaps – That’s right but, of course, you can assume you will roll back your short-term loss into a slightly longer hedge if you have to so you can avoid constantly wasting money on short-term hedges (and, if the market reverses, then you make money on the short position and no longer need the hedge to offset the loss).  

    Speaking of hedges, I was discussing this one with a fund manager yesterday as we were speculating on a good gold hedge if the EU collapses.  On the premise that that happens and gold goes to $2,000+, the Jan $170/200 bull call spread is $2 on the $30 spread and you can sell Aug $160 calls for .90, which have a .17 delta, with a stop at $1.35, which would be a move in gold back around $1,560, at which point you can sell Aug $170s for at least the .45 you lose and then, if you lose another .45, gold is at about $1,600 and those longs are starting to look very good for the extra .90!  

    CCJ/Amatta – From the Income Portfolio?  Well they sure aren’t coming back soon so probably we will go with the roll to Jan $25 puts but we still have a month don’t we?  

    Good/Mr. M – Actually, if you are "good" 4 out of 10 but never lose more than 20%, all you have to do is have a single 100% gain one out of 8 wins along with 20% on the other 3 and 7 wins cancel 7 of 12 losses and the other 5 even out with the one double and that means any gain over 20% in each of the 7 wins (out of 20) is your profit.  If you think of your trades that way, it will help you value those 25% and 30% gains a little more…

    A key to that strategy is, of course, never entering any trade you don’t feel has a better than 50% chance of doubling and then be thrilled when it makes 25% as one win buys you 2 more chances at a double (because you cancel out your next loss in advance and then (if you lose) you are still up 5% as you start your next trade.  

    Oil just trading dead into the close – pathetic.  Dollar back to 76.20 but indexes are weaker than that as the Dollar was 76.40 last time they were this low.  RUT futures back at 775 but I don’t even feel like playing them long now.  

  105. As you can probably tell folks, I am laying low these days on the biotech info. Play what we have, nothing new unless something really excites me (no pun intended gmarts).  IMGN is waing up.  CRIS is a great DD point or entry for new.  IMGN is finding a bottom in the 11 range and is perky.  DEPO, PLX and SGEN are consolidating.

  106. Anyone Talking about a drop HRBN droped 56% in 4 hours! I can not find any good reason anyone knows ?

  107. Yodi / HRBN  Citron hit piece, go to their web site.

  108. Hey all
    Looking like the IWM supports are failing, whish I hadn’t missed the 1 PM slide, next support 77.41.

  109. yodi / HRBN — Citron is on them:

  110. jomptien / SS — "guaranteed Social Security savings"?  Whuck?

  111.  Phil, Mystery Gold Hedge???

  112. Money flow into IWM is vertually ZERO!

  113. Go VIX, Go!

  114. Looks like I needed an I.

  115. Gold / rdn4evr – I am guessing GLD… 

  116. So much for $320 on AAPL looking safe! 

    Thanks Jomp, I didn’t know about that one.  I know Karl Denninger would have an issue with the use of the term "guaranteed" in connection with SS – he advocates simply not paying it and saying "tough luck" – problem solved.  That’s the other scam about taxes in this country, the government collects $2.2Tn and spends $3.6Tn so we have a $1.4Tn deficit but $1Tn of what they collect is SS and Medicare.  So, in reality, they are spending $2.4Tn more than they collect from actual taxes – the other Trillion is supposed to go in a "lock box".  

    Finally, an oil stick!  Let’s see if they can really accomplish something this time.  

    At this point, we would be trilled to get 1/2 out of the US June $38 calls at .20 in the $25KP

    Oh no, already smacked down at $95 oil ($37.50 on USO).  

    Mystery/Rdn – ???

    VIX 23.93 – someone is buying some puts I assume. 

  117.  AAPL just blew 200sma. Is this a blowoff bottom or a real decline? Can’t tell with the low summer volume.

  118. How is volume today?

  119. Hello Boyz!  … and the occasional girl.
    Sorry Phil but,
    Good call on Philly Fed Tusca but, as you can see, was priced in. 
    I think Pharm got ya today.  Way to go boy!  I’m right there with you.  This beatch is headed down. 
    I’ve done a lot of soul searching since taking a break and I’ve realized that I am (was) exactly the trader these programs are built around.  The kind of trader that is easily swayed.  Although I’m a big bear on this bs market.. I’m also a contrarian.  And it’s my contrarian nature that always gets me.  Of 10 trades in a day, I’ll have 7 small winners and 3 bigger losers.  The losers occur when I’m looking for a bounce or a rejection and it doesn’t materialize. I get sucked in by their ploys.  Of which.. there are many!  For intance, just now when TNA broke below the flash crash at 10am it was very orderly.  But as soon as I go further short, the bid shoots up over 30 cents in a matter of seconds.  It’s all about panic and fear.  This market is built on deception.  If it ever behaved, in a timely manner, how it should, ‘they’ would go bankrupt.  So ‘they’ can never let that happen.  In fact, they probably make most of their money forcing the market to go exactly the opposite of what it SHOULD be doing.  It confounds all but the saviest and/or most resolute investors.  I am trying hard to add myself to the latter category.  I severely overtrade.. always thinking I can outwhit them.  All the while being played the fool.  Shame on me and better luck to us all.

  120. Wow, I wrote about DEPO an hour ago and hit send comment.  Now I see the consolidation is down.  They were upgraded yesterday, so I say someone wants in.  7.90 is the pop low from Januaury, so that line will be defended otherwise it falls to 7.15 or so.  I am DD here.

  121. matt
    I made money but twice I got cought in market trades that the bid exceeded the ask. This seems to only happen in the AM. Your friend also trying to not get sucked in. The Shadow doesn’t really know!

  122. GMCR – 5 July $80 calls can be sold for $4.25 ($2,125) and covered with 3 Sept $85 calls at $5.90 ($1,770) for a net $355 credit.   You need to add 1 long call at $82.50 and another at $85 but then the roll should be easy.  

    $37.50 hanging tough on USO

    A surprisingly strong housing report plus a timely upgrade from UBS lift Home Depot (HD +2.1%), a Dow component, and Lowe’s (LOW+2.9%). UBS likes the companies’ execution, achievable goals, ability for margin expansion and allocation of capital. Also, Lowe’s is on pace to repurchase half its outstanding stock, and Home Depot 30%, over the next five years.

    Monday’s VIX July $24/25 spread is up 150% already!  See you don’t "need" $25 for it to work:   Although up a bit today, the VIX remains subdued despite all the concerns over the economy, Greece, et. al. Jim Bianco sees a market "unwilling to acknowledge anything unusual might be underway," and he’snot sure that’s a good thing. "If the present complacence is incorrect, the subsequent adjustment will be harder and more violent than it would have been otherwise." 

    Now here’s a good idea!  Bill Ackman’s is considering an IPO of his hedge fund, Pershing Square Capital Management. The move would allow him to secure billions in less fickle capital with which to make investments.

  123. OK, FXE topped at 141.30, close enough.  Down now with a doji.  I am buying more FXE Ps, 140s.

  124. FAS will be the first to test lows of yesterday and the 10th.  We’ll see if they are going to fake a bounce today or just go for it to the downside..  the other should follow.

  125. Matt – 1240 on the SPX.  FAS will move through it.  

  126. Looks to me that they throwing in the kitchen sink today!!!

  127.   Phil – "On the premise that that happens and gold goes to $2,000+, the Jan $170/200 bull call spread is $2 on the $30 spread and you can sell Aug $160 calls for .90, which have a .17 delta"  This sounds great, but what symbol are you referencing?

  128.  Anyone else grab that nice break on iwm at 78.77 around 12:58?
    I have tried to stop day trading per that WSJ article on gambling but that was too nice a set up on JRW’s system or even just look at the morning trend line.

  129. If 77.41 fails the next levels are 76.59 and 75.30, I am just watching to save today’s gains.

  130.  PCLN going down. 

  131. That burrito just tooted!

  132. GLD rdn, GLD….

  133. @shadow, do you hold any iwm puts or tza calls at the moment? thanks

  134. People, the high VIX is a gift today, a week ago I was selling BRK/B SEP 75 puts at this exact level for 3.20, today I’m selling the same puts for 3.70…

  135.  Euro Hedge  / Phil – Why not use FXE instead of GLD for a European crash hedge. You can buy the Jan 2012 125/130 Bear Put Vertical for $0.92 and sell the Jan 2012 155 Call for 1.03. That’s a free $4000 vertical if the Euro goes back to its lows and little risk at 155 given the circumstances. And the 2013 160 Calls are at $2 now so the 155 rolls probably to 170 or so at which point Europe is screwed as they are twice as expensive as the US.

  136. I stand corrected!  RUT did the testing first with a grade of  FAIL!!!!!!!!!!!!!!!!!!!

  137. Phil, do you have any suggested adjustments for this AAPL trade from Monday June 6th:
    "AAPL July $340 puts a nice sale at $10 because of this data from conference: …"

    "I still like selling the AAPL July $340 puts, now $10.50. "
    "AAPL/Lapper – Yes, full disclosure – we sold those $340 puts yesterday and I was hoping this shameless advertising would turn the corner for them.  Or possibly, it was a nicely done collection of data on AAPL and hopefully, those who don’t know why we went long on the drop will see that the projected 15Bn app sales alone in 2011 should be good for $21Bn in revenues and AAPL "only" had $65Bn in revenues all of last year so the people who sold them yesterday were probably idiots and the cheaper they get, the more we want them."

  138. AAPL – The next "safe" line is 315…. 

  139. Caution-  TNA broke the low, NOT RUT.  Not yet at least.  Still could be a trap but I doubt it.

  140. Oh no….if this goes….

  141. I’m no expert, but the market seems to be reacting oddly.  Petrobras down to almost a 52 week low, oil almost holding $95 with Euro getting trashed, I’m more confused than usual, which is saying a lot.

  142. .SPX aproaching March’s low close (1256). .DJI still has 300 points to go. IWM already below. Love the smell of fear during OpEx. Tomorrow and Monday should prove interesting.

  143. Zero / reacting oddly — Capitulation!

  144. asaenz
    I am totally cash and just wishing the would a could a!

  145.  Move down today is not as large as earlier in week but vix is finally starting to move -
    I am short calls on spy and they are actually increasing in value bc of the vix.

  146. Now to screw up the rest of us maybe a stick save, go BOTS go!

  147. .SPX and .RUT had a textbook bounces off 200 DMA (bot activated I presume), They both still sit below their 200 EMA’s though.

  148. rehatPCLN, you just noiced that?  PCLN has been droped over $100 since begining of May.

  149. I don’t want to lead the PSW to death but today was all about IWM 78.67 and 77.88. What to do is up to you!

  150. Fish oil, smish oil.  Those fish are rotten.  Just could not find the heart to short something so over bought.  Well, MDVN yes.

  151. Phil:
    Does it make any sense to sell this weeks $23 FAS. Easy roll to next weeks $24′s or watch it expire worthless?

  152. Phil / Brent Oil    I don’t follow the oil mkts normally, but isn’t Brent a better short than WTI ($20 higher price) given the mess Europe is in and the likelyhood of Euro depreciation.  Affordability will become an even more difficult challenge with the current austerity nonsense.  Is there a leveraged short etf with liqidity to take a punt shorting Brent? 

  153. dclark41
    I watch XLE and my take is down they go.

  154. I would love to panic but only 100M shares have been traded on the Dow as of 12:45 – no one is actually selling, just an absence of buyers.  

    Gold/Rdn, StJ – Oh yes, that was GLD!  

    IWM $77/78 bull call spread from this morning fell to .50 so the play would be to kill them for .40 (if they go that low), which is either a .27 loss or, if the $77 puts were sold for .29, now .55, they are still out of the money so waiting with an eye to rolling to the next week $74 puts, now .51 tomorrow.  Even with the .27 loss on the bull call spread, if the puts expire worthless it’s a winner.  That’s the good thing about bull call spreads – they are very forgiving when a trade moves against you.  

    Howdy Matt!  Hope you are enjoying the carnage.  Just keep SELLING premium, not buying it and trying to outguess the moves.  In the very least, you get the clock on your side and that’s a big edge.  

    Speaking of being a contrarian – GOOG is below $500.  2013 $310 puts can be sold for $10.50 ($30 ordinary margin) and the 2013 $450/500 bull call spread is $26 so net $16 on the $50 spread with 212% upside if GOOG holds $500 for 18 months.  

    CNBC banging the fear drum is an excellent contrarian indicator as well.  

    Berkshire/Mr M – Good call!  

    FXE/StJ – Simply because I don’t follow it or want to put my head in FOREX all day.  Also, GLD can go up for several reasons while FXE pretty much has one and can totally screw you if Greece is "fixed" but that same fix would also knock the Dollar down and be a positive for Gold.  

    AAPL/JVest – Also a stopping issue.  Those puts were $7.50 on the 9th (up 25%) back to $14 on the 10th (very scary) and back to $7 on the 14th.  If you are not scaling in then you must use stops on directional trades like this.  Anyway, at least I know, since you didn’t want a 25% or 30% profit that you REALLY, REALLY want to own AAPL at net $330 so anything lower than that is a huge bonus and, that being the case, the now $19 $340 puts can be rolled to 2x the Aug $305 puts at $10.20.  Those can, in turn, be rolled out to the Jan $265 puts (now $11) providing you don’t wait until they move 100% against you but if you don’t REALLY want to own 2x AAPL at net $260, then you can just do a 1x roll to cover what you lost and hope to get out even.  

    That felt nice and bottomy.

  155. Phil mentions this but a reminder that the high VIX distorts the short puts and people get panicked out of positions – just see if it is on track or not.

  156. @ Pharm, ARRY is hitting 52 week low today, buying opportunity maybe? thanks

  157. FAS/DC – That is very tempting down here as $23.40 was the day’s high.  HOWEVER, I think we are way too low and tomorrow is a crazy expiration day and we already made money for the week so I will say pass on the $25KP but I’d call it a good bet on the whole and I’m just going with my gut.  

    Brent/Tusca – You can play them in the futures but there are legitimate reasons Brent is more money.  Europe (not counting Russia) doesn’t produce as much oil as we do and they don’t have Canada and Mexico producing for them like we do.  OPEC oil goes to Europe, Japan, China and here and with all the unrest in the region, they are tighter on supply than we are.  Also, I would never play Brent because it moves as much as our oil does but you’d never know why unless you redirect all your news feeds to EU trading sites.  

    Good reminder Jomp! 

  158. Uh Oh! Don’t look now, but AAPL may be losing the 200, and has broken 324-325 support line which goes back about 6 months. Happy I unloaded  my June 320/325 bull puts last week. Still have the Jan13 250 short puts..

  159. FAS Jun23w’s are back to 90c Phil.  Gonna wait or 1/2 cover.  Just a reminder……

  160. Phil / bottom — I’ve felt some nice bottoms in my time, but that bottom was lacking a bit of volume 8)

  161. Phil
    Felt like a bottom to me I just don’t want to screw up a good day. The lines are holding and a stick, what does that mean?

  162. Forgot the linky.

  163. Phil:
    Really tough call, I will wait. Max pain at $25. Who knows. Maybe they will try to pin it there tomorrow.

  164. AAPL/Jbur – Attitude needs to be "oh boy, I might actually be able to buy AAPL for net $250 a share!"  

    FAS/Pharm – Yes, I am agonizing over those but COF is buying ING for about $9Bn and SUG is getting bought for $8Bn by ETE and TEX just raised their bid on whoever they are buying so it’s looking like a Merger Monday coming early and those announcements are NOT coincidental all of a sudden on a Thursday afternoon – this is coordinated by "THEM" to reverse the drop.  

  165. Phil: Thanks for the reminder

  166. Phil
    ….and thank you for that last bit of info on FAS. That makes holding make even more sense.

  167. A buy program and a sell signal,WTF!

  168. TNA now up nearly $3 in less then 50 minutes after breaking the low held since December 8th.  Yeah, that’s a foundation we can build upon.  NOT!

  169. Phil / Brent    Thanks.  Then that $20 price diff is a huge advantage for US chemical co exporters.  Any plays on this.

  170. Wrong, Phil. I know you’re busy but I have to call you out when you belittle me based on wrong data. The AAPL July $340 puts have not dropped below $10 since you called them at 1:30pm eastern time on June 6th. You must be looking at the wrong chart. I have them up right now in TOS:    .AAPL110716P340
    "AAPL/JVest – Also a stopping issue.  Those puts were $7.50 on the 9th (up 25%) back to $14 on the 10th (very scary) and back to $7 on the 14th.  If you are not scaling in then you must use stops on directional trades like this.  Anyway, at least I know, since you didn’t want a 25% or 30% profit that you REALLY, REALLY want to own AAPL at net $330"

  171. asaenz - well, ARRY has hit 1.72 twice in the last five years, if you really want it cheap just put in a huge buy order at 1.75 and wait to see if you get lucky, that’s what I’ve done.

  172. matt
    We must believe!

  173. Pandora should have stayed in their box – $13.60 now.  Someone paid $23.50 yesterday!  

    Big Bottoms/Rain – That would be this version.  

    Meaning/Shadow – See above comment.  I think they shoved it down to dump the weak hands but then got a little worried when we failed 774 on the RUT and all of a sudden 3 firms announce buyout news (always good for lifting a sector) in 3 different sectors at the same time – just a coincidence, I’m sure…  

    Dollar was smacked back down to just below the 76 line then but how the Hell do they plan to keep it down with Europe still and open wound?  

    03:00 PM On the hour: Dow +0.18%. 10-yr +0.37%. Euro -0.25% vs. dollar. Crude -0.08% to $94.73. Gold +0.07% to $1527.30.

    The European Banking Authority has ordered banks to use "more conservative" assumptions when stress-testing the value of their sovereign debt holdings. The move is likely to lead to increased loss provisioning as banks mark down the value of the paper to jibe with reality.

    Internet IPOs coming to market over the past three months are off by an average of roughly 20%, signaling the " 2.0" bubblemay have been popped before it ever got started. Without the injection of a QE3 steriod, it’s going to be hard to reflate. Hear that Groupon?

    The Senate overwhelmingly votes to end a subsidy and tariff meant to protect domestic ethanol production. There’s a catch though: the legislation is tacked onto an economic development bill that is not expected to pass. 

    Nice AAPL reverser!  Consumer interest in tablets is “staggering,” and sales will grow at a compounded annual rate of 66% through 2015, Sanford Bernstein writes. Apple (AAPL), of course, will dominate tablets “for the foreseeable future," while Texas Instruments (TXN) is well-positioned with chips based on ARM Holdings (ARMH) designs; Intel (INTC) is "likely to miss the boat." 

    James Altucher’s eight reasons most people stink at trading stocks, and what to do instead: Copy someone like Warren Buffett who really knows what he’s doing… or has been flat lucky. These days, Buffett is into stocks like these: MAGSKSNYXOMUPSCOSTWMT,WPOWFC

    Sentiment on Research In Motion (RIMM -1.3%) is "overdone on the downside" ahead of today’s earnings report, and value investors likely will step in “in the short term,” so Avian Securities raises its rating on the shares. Strength in overseas markets will be boosted by new BlackBerrys this year, possibly creating the kind of lift in sentiment RIMM saw last year when PlayBook brought buzz.

  174. ARRY – I am not ready to DD more on them or make them a new entry.  Just have to see where the fall stops. 

  175. pharmboy:
    Where are you DD on DEPO?

  176. Phil THANKS!

  177. Another sell signal, beware longs this is total fake.

  178. Yes/No, 78.26, I am out on a limb!

  179. Chemicals/Tusca – DD and XOM are the best. 

    AAPL/JVest – I guess I pulled the strike below.  The $340s only fell to $11.75 from $18 so I can see why you didn’t want to stop out at $12 or $14 or $16 or $18 or $20 or $22…  So it wasn’t a stopping issue (it was a scaling and stopping issue).  At least they are back to $18.75 now so the roll still works but then it’s still got 4 weeks to go so a little early to give up.  

    Fake/Shadow – Of course it’s fake but a fake rally is what we expected.  

    Dollar right on that 76 line.  Dow volume 141M.  

  180. Beat me up, &8.27!

  181. 78,27

  182. DEPO/dclark – I DD on them at 7.85, right after I wrote it above.

  183. Pandora / Phil – Just like LinkedIn, they can’t explain a revenue source to justify their valuation. Have no fear though, they will still have a higher market cap than you dear CSCO soon ;-)  

  184. Phil / PIIGS      All intelligent quantitative analysis shows that some form of debt restructuring is needed for at least Greece and Ireland. Germany and France will be forced to lead a recapitalization of the ECB to fund the restructuring and protect / save their banks and avoid contagion. Timmy will help via IMF. Probably a trillion.
    This will be like our own massive Tarp and QE, so, once announced, won’t this inject significant liquidity into the European mkt and boost risk assets while devaluing the Euro? I guess that will be good for Euro and global mkts and bad for US mkts?

  185. Very awkward session.  Not happy.  I would like to just sympathize with M1966, but unfortunately must empathize instead.

  186. Shadow, there was big volume in TNA today.   A reversal could be in the making.  But merger news only buys a day or two of bounce.  I don’t know how they can sustain this passed Monday.  I’m fully covered after giving up half my gains for the day.  I’m positive we’ll see lower from here.. but my crystal ball doesn’t say when!  TNA closed .7% up after being down 5% intraday.  These guys are amazing.

  187. zeroxzero, LOL.  I’ll take it either way.  Thanks!

  188. Re: Jan AAPL 250 puts, my 5 were down $1000 briefly today. in the past my response would have been ARGH! PANIC! COVER! Instead I calmly sold 5 more and now I’m only down $292 on that position today. 

  189. matt1966
    You arte not the only one, I am wondering if the market will go up. If it does we could both make lots of $$$$ but I am afraid and totally cash.

  190. Let’s be clear on scaling in the above AAPL chart.  If short AAPL $340 puts at $10 and you REALLY want to own it for net $330, then you can ride out whatever move it makes if you choose.  If you are more like trading it, then you need to have a stopping discipline that takes a 20% loss and quits.  First of all, if you take a 20% loss at $12, you are down $2.  Then if it keeps going up to $18 and you think $18 is ridiculous, you can re-enter at $18 and now you have shorted at net $16 and you are down 2/16ths, which is 12.5% and you have a stop about $19 (where you would be down 20% again).  

    If, on the other hand, you are scaling in, then you can sit through the first 20% loss (because if you DD, then you have a 10% loss) all the way to 40% ($14) at which point a DD would take you to 2x at net $12 with the stock at $14 (down 14%).  Of course, you don’t DD EXACTLY at $14, you DD when you think the damned thing is done moving against you but, at the point it crosses $14, you need to make a serious commitment to DD at whatever price.  So, in the above example, AAPL topped out at $18 and if you had DD’d there, that would be 2x at avg $14 with the option at $18 (down 28%).  At that point (and you need to have thought this through before hand) you are committed to another DD at about $20, which would be 4x at $17 and down right about 20%.  

    At that point, you would have a very full position (assuming a 1,2,4 scale is your allocation) and you are down right around 20% and you need to pull the plug if it’s still going the wrong way.  In this case, we never got to $20 so it was 2x at $14 and once we get back to $14 or less, we get back to 1x, now with the higher basis.  Then you can go back through the cycle, take a profit or just stop out even.

    Of course, once you are in for 4x at net $17 and the stock goes over $20, you don’t have to take the loss, you can just roll the loss ($3-5) to 4x at a much better strike so you can just try to win the loss back (or you can be creative and roll a 4x $5 loss to a 2x $10 put).

  191. All AM positions at best = ZERO!

  192. matt…this is the premise….there is more room to run, down.

  193. Halted trading on RIMM….hummmm

  194. @ Pharm, do you have any shorts on oil and/or indexes? bought a few tza calls on the stick today, just dont know how they can keep the dollar down with all this european mess….

  195. My entire portfolio is short right now except biotechs.  SPY, USO, CMG, OPEN, EDZ, SLV and GLD.  Oh, I do have 1/2  position in FAS calls and just bought CSCO 2013 12.5c (round 1).

  196. RIMM – Waiting for earnings…. 

  197. FXE short as well.

  198. P/StJ – I’m still waiting for NFLX to explain themselves!  

    EU/Tusca – I have no idea.  Too many moving parts to that supposition.  Euro is weak to the Dollar BECAUSE people believe the Union will collapse and the currency will dissolve, NOT because the US is more fiscally sound.  Look at Japan – the country is in a 20-year funk and has now turned radioactive yet their currency still kicks our asses.  I don’t think you realize how badly Ben and Tim (and Paulson and Snow) have damaged the Dollar.  It’s a funny thing because people in this country don’t want to be taxed to pay off our debts so instead the Government prints money it doesn’t have and ALL of our assets (as opposed to just new income) are devalued by 20% over 5 years – that’s $20Tn that was taken from everyone in America to preserve tax cuts for the wealthy and, of course, Big Business.  That’s why the Dollar is a joke of a currency – the only thing we have going for us is we don’t, so far, have anything as immediate a Greece going on.  

    AAPL/Kurt – Great job but don’t forget why you covered.  As above on scaling, you want to get those extra 5 off the table as fast as possible to maintain your flexibility.  

    RIMM/Pharm – That’s normal for them, they have to clear earnings through Canadian exchanges as well. 

  199. TEST

  200. Pharm, do you recommend an option play on CRIS or just the stk?

  201. Pharm
    what do you think of ?

  202.  Phil/USO  For the June 38 calls, besides hoping for some sort of bounce tomorrow, do you have any additional thoughts?

  203. Wow Pharm, that’s pretty bold!  But where I want to be.  I was scaling in nicely but today’s mega stick is a gut check.  Just need to look at it as an opportunity for a better entry.

  204. RIMM – Guidance, not good!
    For Q2, the company is guiding for revenue in the range of $4.2 to $4.8 bln. EPS is seen in the range of $0.75 to $1.05 per share. The Street is at $5.4 bln in revenue and EPS of $1.40 per share.
    For the full FY 2012, the company expects EPS in the range of $5.25 to $6.00 per share. Analysts are targeting EPS of $6.29 per share. 

  205. FU RIMM

  206. Matt – I covered a ton of things today on that bounce for expiration tomorrow if we get a pop up.  But otherwise, I started shorting last November……LOL.


    No, jumped back in right before June 3…JRWs date.


    Poor RIMM…if that is guidance, then CSCO is really screwed.

  207. RIMM AH – Below $30! 

  208. RIMM down $5

  209. RIMM guidance – exactly why I am short.  Holy crapola, look at ‘er go.  SPX 90+ earnings is crap.  This thing is gonna roll.

  210. Pharm,  related to:
    "My entire portfolio is short right now except biotechs.  SPY, USO, CMG, OPEN, EDZ, SLV and GLD.  Oh, I do have 1/2  position in FAS calls and just bought CSCO 2013 12.5c (round 1)."
    Am I correct that you are long EDZ?  Are you short GLD?

  211. Mind you, tomorrow RIMM will be trading at a forward P/E of 5 or so. They are already below 6 now. On paper, this looks cheap. This also looks like the typical value trap – not saying it is, looks like it. We need to see another quarter before jumping in. The problem is that they don’t forecast growth returning until 2012. I guess it might be a nice pickup after everyone jumps on the downgrade bandwagon. On the bright side, they sold more of the Playbook than they projected! 
    They still make more money than LinkedIn and Pandora (combined!)… You could probably add OPEN as well!

  212. Today’s Levels

  213. RIMM is on a very similar path to PALM.  I currently have a blackberry and will be getting rid of it for an IPhone.  For a long time, I had it for business and their email system constantly pushes through email.  So it’s great.  But when you’re whole premise is your email system and the phone sucks to comparables, their tablet sucks compared to the IPAD and the IPhone and Droid’s email systems are getting better, you’re screwed.  I can see companies moving towards the IPhone especially if many employees use the IPAD at work.  Think RIMM has to do something quick or they are Palm.

  214. leon – yes, short gold, BCS on EDZ, sorry. 

  215. AAPL/ Phil, thanks for the explanation. I don’t mind getting grilled on proper rolling & scaling strategies — definitely need to work on that — just wanted to make sure I was getting the right lesson. (I would’ve happily taken 25% profit if it had come.)
    Sometime later this year we’ll probably all be wishing we bought a bunch of AAPL today at $321…

  216. All: Regarding HRBN.. hasn’t Phil warned us all about these Chinese rip-offs? Chinese fraud on Wall Street, Chinese hacking military defense contractor databases, Chinese hacking congressional databases, Chinese military espionage.. what the hell is next?

  217. Jbur, next is you learning to speak Mandarin.

  218. HYG – holy moly.  That is supposed to be good for the market?

  219. Hi Everyone—all who are interested in meeting in Vegas please let me know--the weekend of Oct 8,9th 2011—once we have a number we will look into hotel rates etc and let you know all details before finalizing

  220. we need to have a good showing for it to work

  221. Savi – I am in. I suggest you call the hotels first and figure out how much they charge for a conference room with mike, speakers and projector etc. Alternatively, a member here – lvmoda – suggested that we use his restaurant which has a banquet room, I think, where we can hold meetings. His place is off the strip but if it works out, we would be there all day anyway. 
    deano and another member worked quite a bit on this last time but the hotel logistic issues and people cancelling at the last minute made it a flop.

  222. For those interested,  October 7 & 8  is Yom Kippur ( a religious holiday) and may not work  for some  PSW members.

  223. RIMM – To put things in perspective, there is some market research done to predict market share in the future (in this case 2015) and they predict RIMM with a 13.7% market share in the smartphone business:
    They also predict the market to grow to 450 millions handsets as opposed to 303 millions today. Even losing 1% market shares would still mean increased revenues for RIMM. Now 2015 is still 4 years away, but in my opinion, RIMM has some excellent technology (I use Android though for my phone and an iPad but I was not "raised" on Blackberry) that is worth something to someone. Their latest OS – QNX is very good and has some great potential – good multitasking, scales well, etc…. They might have a bad transition period from the current OS to QNX on the phones but if they can round up enough developers (big if) to offer a nice range of apps, they might have a chance.  That said, I would not jump in now. Patience…

  224. what a brutal action on fx.  just trendless chop.  pissed away 17 pips already, and that’s on 1/2 lots.  looks like NY time trading on a slow day.  going to bed until 2, now it really died.

  225. stockbern--did not realize that --yes, it may not work for some members--any input on other dates?

  226.  take away today: dont like the way so many key stocks aren’t bouncing at 200-day…option expiration impact hard to gauge

  227. JNK is down big also.  Some of this is ex-dividend, but really?  Do these funds own Greek, or PIIGS debt?

  228.  Savi/Vegas — I am in!  I worked on this last time, and in addition to what Nicha said, they will also ask you what you want to do about food and drinks, for the conference room.

  229. Greenspannnnnn!!!  Son of a bitch, we were recovering and then that jackass opened his mouth:

    June 16 (Bloomberg) — Alan Greenspan, former Federal Reserve chairman, said a default by Greece is "almost certain" and could help drive the U.S. economy into recession.

    "The problem you have is that it’s extremely unlikely the political system will work" in a way that solves Greece’s crisis, Greenspan, 85, said in an interview today with Charlie Rose in New York. "The chances of Greece not defaulting are very small."

    Keep in mind that Greenspan works for Pimpco, who are buying up EU bonds at record highs ahead of Greece, who is right now in a cabinet meeting to try to work out a deal to get a bailout and end this mess.  This is just blatant market manipulation that cost the Dow futures 100 points.  

    On the whole, it’s another chance to go long on the futures.  The new oil contracts (/CL) fell $1 to $94.60 and they are a buy here with a stop at $94.45.  Gasoline (/RB) is $2.93 and playable over that line, Silver (/SI) is worth a toss at $35.25 with a tight stop as it seems to be like if Greece falls apart, silver and gold go up and if Greece does not fall apart, the Dollar goes down and silver goes up.  Russell (/TF) futures are 777 and a buy over that line and Dow futures (/YM) are 11,880 and a buy over 11,875.  

    Watch the Dollar (/DX) – if it goes over 76.20 (now 76.18) we are screwed but I think this is an over-reaction and a great opportunity.  


  230. USO/Kyw – Well, it was looking good until Greenspan opened his mouth, now I think we’re screwed.  Oil was up to $95.81 at 7:30-9 and Greenspan’s news broke about 9 and now it’s $94.73, still better than yesterday but not enough to give us a big pop.  It may all reverse again depending on word out of Greece.  Europe doesn’t even open for another hour so all this drama was in very thin trading. 

    Asia is off half a point after a flat open, Greenspan hit them right at the open so they never stood a chance.  I don’t play Nikkei futures because they are too crazy but /NKD is interesting at 9,330 – THAT seems oversold!  

    RIMM really sucked but see Alert from Income Portfolio for selling into the excitement strategy.  At this point, if they earn $5 a share (below low end of lowered guidance), they have a p/e of 6 – if they accidentally do something right and the p/e just goes back to 8, they are back to $40 very fast.    

    There are approximately 25M Blackberry subscribers and telcos and cable companies are routinely purchased for $500-1,000 per subscriber, which would give RIMM a $12-25Bn market cap.  This drop brings them down to $15Bn so really getting to the low end of any reasonable valuation range.  

    The company is doing a 5% stock buyback ($1Bn, using 1/2 their cash or less on the drop) and keep this in mind:

    For the quarter ended May 28, Research In Motion  said net income came in at $695 million, or $1.33 per share, compared to net income of $769 million, or $1.38 per share, for the same period the previous year.  Revenue grew by 16% to $4.9 billion.

     OH NO!  What a catastrophe – RUN AWAYYYYY!  

    Silly markets…  Like I said earlier this week, modern "investors" have no stomach for a single bad quarter and this particular quarter for RIMM was full of R&D and marketing expenses as they push out revamped product – is this what we punish corporations for?  

    The company said it shipped 13.2 million smartphone units and 500,000 units of its new Playbook tablet. Analysts had been expecting smartphone shipments of 13.3 million and Playbook shipments of 436,000.

    Balsillie did take pains on the call to say the job cuts were not part of a restructuring effort, but rather a “streamlining” of the organization that has grown rapidly over the last few years through rapid sales growth and acquisitions.

    “We just have been so busy growing and launching products, I think this is the right time for to us go back and step back and just make the system more efficient,” he said.

    On the call, both Balsillie and co-CEO Mike Lazaridis said the company was near the end of a major transition as it gets new handsets certified by wireless carriers and prepares its new operating system for launch.

    Lazaridis, who made a rare appearance on the call, also defended the company’s decision to develop the BlackBerry 7 operating system at the same time it is developing QNX for its smartphones.

    “It would have been unrealistic to build a whole new tablet platform and port BlackBerry to that platform at the same time,” he said. “To take that path would have left RIM with a product void for most of 2012, which was unacceptable.”

    AAPL/Jvest – I have faith in them, they usually get slapped down into earnings.

    HRBN/Jbur – I’m glad someone was paying attention! 

    HYG/Pharm – That’s a crazy move

    VEGAS – Yom Kippur is a problem for me!  Sorry, I had no idea it was that weekend.  It just turns out to be Friday night and Saturday, not a good time.  What we can do, however, is schedule the thing for Sunday, meet up Saturday night for dinner (when I can eat) and if we plan on staying Sunday evening we can do some live Futures trading, which is probably something people would be interested in (starts at 3pm in vegas).  Very important we have web access wherever we are by the way.  

    If it’s that weekend, I would head out Thursday, work from Vegas Friday, fasting day Friday night and Saturday but then very happy to have a dinner with people (any food at that point!) Sat Night and then Sunday we can get some work done.  

  231.  Vegas/Phil — Great idea on the Sunday futures trading, but because of the Monday holiday, maybe no futures at 3PM on Sunday?  I mean, except for the foreign exchanges.

  232. Phil, nice timing on those future trades just now… market reversed right when you posted. Ha ha, and now I just saw your alert on Stocktwits.  "PSW does Twitter?"

  233. Stocktwits:  BTW, I think every trader should have the Stocktwits streamer in a corner of their desktop. I find it a very timely source of info, with various sources / traders posting the economic data almost real time. In addition, lots of humour and some great links to articles and blogs around the web. 

  234. Greece names Evangelos Venizelos as Finance Minister.  I would have gone with someone with more vowels but maybe this guy is qualified…  Most likely just the fact that they found a guy to take the job is a plus. 

    Futures/Esco – Nope, markets are open Monday – just a kinda Holiday.  

    Twitter/Never – I am trying to do more Tweets but it’s so not my style (140 characters – give me a break!).  Mostly it’s Ilene and Greg putting up links to articles.   As far as reading it, it’s pretty much a total crap-fest as far as I can tell although using Flipboard on the IPad makes it a lot more interesting (works on Facebook too).  

    Speaking of StockTwits – it is miles better than Twitter but, for some reason, I have 6,000 Twitter followers and only 76 on StockTwits, which is kind of embarrassing so PLEASE everyone sign up to follow me on StockTwits and make at least 100 of your friends do that too so I can get a respectable number – Thanks!


  235. Wow, oil just collapsed!  $94 on the Aug contracts.   That’s why stops are so serious in the Futures.  

    EU has very little confidence at this point, Brent is down $1.50 now and we’re into panic selling – below our 11,865 on the Dow futures (/YM) is a good short as they can drop 100 fast!  

  236. $93 on oil (/CL) is certainly a buy! 

  237. Vegas Trip  -   Once the dates are set, if so inclined we can use my restaurant as a meeting place during the day.  It doesn’t open until 4pm, so it’s available all day  – just need to lock in the dates so that another banquet doesn’t book those dates.   My suggestion on hotels is that everyone should make their own arrangements and pay their own bills.   The room market here is hyper-competitive and there really isn’t an advantage to booking as a group (of course, they won’t tell you that).  Rooms at the Venetian/Palazzo are available at $129, although October is high season but I suspect Las Vegas will still be seen as the nations’ worst economy and will be struggling to fill rooms.

  238. @Felipe
    er…..uuh….maybe you could do something about your Avatar on Stocktwits? 

  239. Other than oil (back to $93.44 already so stop at $93.35, reenter over $93.50), that wasn’t so bad.   Dollar popped to 76.25 but markets didn’t take too much damage yet.  Europe is down a full point at lows of day at about 10 am over there. 

  240.  Wow, this is crazy – just slammed back down to $93 again despite dollar back to 76.20.  Oh well, gotta keep buying this range ($93-$93.45) until it breaks.   

  241. Back on the upswing!  Now we can hit our bullish entries again but watch 76.20 on the Dollar now – that’s a good signal to dump out and wait to see if we get back below 72.20 (bullish) or over 72.25 (bearish).  

  242. Do you mean 76.20-76.25??

  243. Long CLQ11 at 92.86.  Can’t open Jul contracts on OX for some reason.  What a crazy move on oil…doesn’t really look like the dollar is driving the dump, not sure what is causing it.

  244. Fukushima – Much Worse than you think says al jazeera. i dunno, journalism or propaganda?

  245. Vegas/LV – Sounds good.  If it’s that weekend I assume it would just be Sunday.  That would mean people could stay wherever but then we have to book something for Sat Night and I would vote for having a poker tournament that night – I’m sure a casino could arrange that or maybe your place?  

    Avatar/Flip – I like my muppet guy.  

    Dollar/Flips – Yes, I’ll fix that, thanks.  

    Wow, oil is amazingly weak.  $92.85 at the moment with the Dollar at 76.14.  Futures trading very annoying at the moment, you have to keep taking .10 profits and then it pulls back and then you reenter and then it pulls back – too annoying…

    Dump/Lv – Well that expiration date is looming and I really do think we screwed up the NYMEX by encouraging people to short oil at $103, $101.60 and $100.60 on consecutive days.  If some of those people are holding contracts to expiration (which was the plan I described in that post) then the NYMEX guys who are used to rolling out of their contracts can’t find buyers. 

    Keep in mind the mechanics of a naked short.  We offer to sell a barrels at $103, the guy who made an offer to sell at $103 assumes it will go up (or at least pretends to assume so) but what he absolutely does not want, is to take delivery of 1,000 barrels of oil per contract next month.  So the real demand maximum is perhaps Cushing’s capacity of 40Mb and everything else has to roll or cancel but to roll, they still have to find a buyer and if we caused 60,000 contracts to be held short – then there’s at least 20,000 contracts (20M barrels) worth of oil that buyers (who promised to give us $103 for a barrel) can’t find other buyers for because their assumption, when they offered to buy oil for $103, was that we would turn around and buy the contract back for $109.99 because that’s the game.  

    Well we didn’t buy at $102.99 or $102.95 or $102 or $101 or $100 or $95 and now they are freaking out because they are obligated to accept delivery of (as of yesterday) 135M barrels of oil at a facility with a 45Mb capacity.  They MUST sell 90Mb and this contract expires on Tuesday so there aren’t many suckers left, especially with the price dying.  So they drop the price and drop the price and drop the price but our guys are not playing by the rules and they’re sitting on those $103 contracts.  I can’t believe it took me so long to realize how to screw these guys but I guess I never really thought about how many people read my stuff until those TV people told me I had 250,000 readers across various sites.  That was what led me to kill Seeking Alpha – because it’s too much and I couldn’t talk about trades in the morning post but the outlet is still there when we do want to use it – so I did for the oil trade.  

    Speaking of oil, just jumped over $93.25, stopped out there and now back to $93 with the Dollar at just 76.12.  Maybe I’m old but I remember a time when a nickel move in a day was a big deal….

    Fuku/Scott – Who can even tell anymore.  Our whole lives they’ve been telling us a melt-down would be very, very bad and Chernobyl certainly was very bad but somehow Japan has a magical reactor that can go into triple meltdown but causes minimal damage?  I think the propaganda may be what we’re getting from Japan and the Corporate (Koch) Media, who certainly don’t want to tell you that nuclear power isn’t a good thing.  Of course, on the other hand, Al Jazeera’s sponsors would love to see a global "No Nukes" rally as it boosts demand for fossil fuels.  Gundersen though, is not the property of Al Jazeera, he’s the main critic of what’s going on in Japan but a very credible guy.  The truth may be out there but good luck finding it in a World where newspapers and magazines can’t make a profit and cut back their staff to the point where they don’t even have foreign desks anymore.  

    Meanwhile, a nuclear waste advisor to the Japanese government reported that about 966 square kilometres near the power station – an area roughly 17 times the size of Manhattan – is now likely uninhabitable.

    In the US, physician Janette Sherman MD and epidemiologist Joseph Mangano published an essay shedding light on a 35 per cent spike in infant mortality in northwest cities that occurred after the Fukushima meltdown, and may well be the result of fallout from the stricken nuclear plant.

    The eight cities included in the report are San Jose, Berkeley, San Francisco, Sacramento, Santa Cruz, Portland, Seattle, and Boise, and the time frame of the report included the ten weeks immediately following the disaster.

    According to Gundersen, the exposed reactors and fuel cores are continuing to release microns of caesium, strontium, and plutonium isotopes. These are referred to as "hot particles".

    "We are discovering hot particles everywhere in Japan, even in Tokyo," he said. "Scientists are finding these everywhere. Over the last 90 days these hot particles have continued to fall and are being deposited in high concentrations. A lot of people are picking these up in car engine air filters."

    "These get stuck in your lungs or GI tract, and they are a constant irritant," he explained, "One cigarette doesn’t get you, but over time they do. These [hot particles] can cause cancer, but you can’t measure them with a Geiger counter. Clearly people in Fukushima prefecture have breathed in a large amount of these particles. Clearly the upper West Coast of the US has people being affected. That area got hit pretty heavy in April."

    Hmm, maybe Vegas isn’t such a good idea – depends which way the wind blows…  8) 

  246. 76.02 on the Dollar – Now we should get some action – especially if we can punch below 76!

  247. We’re still glowing here in Vegas from all those atomic tests 90 miles away.  No wonder people lose their mind and their wallets here!   Actually the Atomic Museum is a fun thing to do here.

  248. Mission accomplished in futures, $93.62 on oil (stop $93.50, .25 trail), gas still cheap at $2.9189, silver $35.16 after visiting $35, RUT 780, Dow 11,914 so stops can be set and breakfast can be taken…  Later!  

  249. wow 100 pip ramp!  and all it did is 6 points on ES.  Not what it used to be.  Benny woke up early this morning.

  250. Goldman, JP Morgan Have Now Become A Commodity Cartel As They Slowly Recreate De Beers’ Diamond Monopoly
    "Today, the WSJ continues this investigation into a practice that is not insular to JPM but also includes Goldman Sachs and "other owners of large metals warehouses" which can simplistically be characterized as a De Beers-like attempt to artificially keep prices high for commodities such as aluminum, courtesy of warehousing massive excess supply, artificially low market distribution of the final product, while collecting exorbitant rents in the process."

  251. Apologies Phil, just now saw the article on your site . . .

  252. Ron Paul’s Fort Knox Fever

    He demands the Treasury prove there’s real gold in the vaults

  253.  Interesting article on Groupon’s business model:

  254. ES/Lapper – Gotta be more patient than that.  Look at the Dollar now, 75.64!  Oil back to $94, Dow near 12,000 (whooot on our short puts!!!).  

    Article/Kramer – Don’t apologize, that’s exactly the kind of thing I do like to see!  

    Groupon/Dr C – Haven’t they collapsed yet?  On no, of course not, they haven’t IPO’s yet….  8)

  255. Vegas – one day trip is too little especially for us east coaster’.