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Testy Tuesday – Navigating the Global Rumor Mill

What insanity!  

300 points up in the Dow yesterday (as predicted – thank you very much!) then a 200-point drop early this morning at the EU open (3am) then back to yesterday's close (up 200) and now (8am) kind of in between.    

Yesterday's big rumor was Italy, who had a terrible Bond Auction yesterday that went off at 4.15% vs 2.96% a month earlier (up 35% in 30 days), would be bailed out by China – who seem to be tired of waiting for the EU to get their own act together and seem willing to deploy their $3.2Tn in foreign exchange funds through CIC and SAFE (China's State Administrator of Foreign Exchange) to make, according to the Financial Times, "significant purchases of Italian Bonds and investments in strategic companies." 

That drove the markets higher yesterday afternoon even though the actual meeting was over 2 weeks ago and Italy just, in FACT, had a tragic bond auction just hours before this "news" popped the markets back up – MADNESS!  As I said to Members just before the close: 

This market is just ridiculous at this point – jumping up and down 100 points because China will or won’t buy $8Bn worth of bonds in a $60,000Bn global economy. People are just out of their minds…

This morning's market-dropping rumor was started in Uncle Rupert's Journal where an Op-Ed piece published this morning began with this shocker:  

'We can no longer borrow dollars. U.S. money-market funds are not lending to us anymore," a bank executive for BNP Paribas, who declines to be named, told me last week. "Since we don't have access to dollars anymore, we're creating a market in euros. This is a first. . . . We hope it will work, otherwise the downward spiral will be hell. We will no longer be trusted at all and no one will lend to us anymore."

Apparently, Rupert isn't done unwinding his Euro short position yet.  That's why he taps the Director of the Conservative French Institute for Economic and Fiscal Research, Nick Lecaussin – a man who Iconomie calls "France's Worst Enemy" to write about high-level but anonymous sources at BNP who tell him the Bank can't access Dollars anymore – a ridiculous statement that was immediately denied by the Bank but – TOO LATE – the Damage is done and Uncle Rupert made another $100M on his Euro shorts (coincidentally, I'm sure!).  The Bank (who lost $3Bn of market cap this morning) stated:  

BNP Paribas categorically denies the statements made by this anonymous source and confirms that it is fully able to obtain USD funding in the normal course of business, either directly or through swaps (see attached document (46 ko)).

BNP Paribas is surprised that the Wall Street Journal published this opinion containing both statements from an anonymous source, and a large number of unverified assertions and technical errors, without contacting the bank for verification.

Surprised?  I guess BNP is in trouble if they don't know how the game of Capitalism is being played these days!  As we discussed in yesterday's post, EVERYBODY is lying to us these days and it's creating market turmoil on a daily (and intra-day) basis.  Much like in 2008 – unscrupulous investors can make a fortune in a single day by floating a rumor like the one above and there is just as much money to be made on the way back up as the rumor is denied and the stock recovers.

This is the kind of market where my many years of media cynicism really pay off.  What we all need to be aware of when we hear a "market-moving" rumor is what venue is releasing the information (who owns them?), who is the person reporting (who owns them or what do they have to gain) as well as whether or not the rumor makes sense as well as whether or not the reaction makes sense.  As I pointed out to Members yesterday – whether or not China buys $8Bn out of 60,000Bn worth of global debt from Italy is really not something that should move the US Dow Jones Industrial Average (also owned by Uncle Rupert!) over 1% 20 minutes, is it?  

The game this fall is rumors and innuendo and that game can be played through earnings in October when facts will, for however brief a moment, once again rule the day.  For now, we need to do our best to cut through the BS and simply find good companies to invest in.  

It's not that complicated really – will BNPs credit issues stop someone from buying a McDonald's Shrimpburger in downtown Tokyo?  Will Greece leaving the EU stop 3Bn Asians from buying cell phones this decade?  Will Italy's credit woes get the World off fossil fuels any sooner?  No, there are certain Global fundamentals that will not change and when a ridiculous rumor-driven market drives good companies, especially blue-chip stalwarts like MCD, KO, AA, XOM, MMM, PFE, etc. down to bargain-basement prices – that's when we do BUYBUYBUY, no matter what idiot Cramer is saying.  


We are, at the moment, staying the course but we do need to make progress back over our Big Chart levels in order to maintain our bullish stance (which we flipped to yesterday morning).   We still expect a string of announcements from the G7 nations in the form of stimulus and bailouts to mark the second half of the month and it's just one week until the Fed Meeting where it will literally be QE3 or bust!  This week we have August PPI and Retail Sales tomorrow, followed by August CPI and the usual job losses on Thursday. We also have Empire Manufacturing, where anything better than negative will be an upside surprise as well as CPI, Industrial Production, Capacity Utilization and the Philly Fed (also with negative expectations) – all on Thursday morning!  Friday will seem anti-climatic with TIC Flows and Michigan Sentiment.   

Data trumps rumors and QE3 or whatever stimulus we get trumps everything else so we'll simply keep our eye on the Big Chart and hopefully we can hold those -5% lines on the Dow (11,011) and the Nasdaq (2,473) while waiting for the S&P to hit 1,173.  As for the NYSE – we'll be thrilled to see a 50-point gain to take the -10% line at 7,079 and the same goes for the Russell, which needs 697 and deserves it if the Dollar is strong as that's good for smaller companies so no reason for them to be lagging like they are.  

If the S&P breaks over 1,173, then the TNA Sept $40/43 bull call spread at $1.30 becomes an interesting play and that can be offset by the sale of the RUT Sept $610 puts at $1.22 for net .08 on the $3 spread.  The Russell is currently at 680 so it would take a 10% drop in the RUT by Friday for those puts to take a loss so that's the bet with a massive upside bonus.  We'll discuss other potential offsets in Member Chat but it's time to get to work. 

Be careful out there!  


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  1. Oil Lines
    R3 – 94.67
    R2 – 91.94
    R1 – 90.46
    PP – 87.73
    S1 – 86.25
    S2 – 83.52
    S3 – 82.04
    Yesterday’s high and low – 89.21 / 85
    Breakout lines – 96.02 / 73.97
    Big volatility back. First time in a while that all resistance lines are over $90.00. The trend is up now!

  2. Phil,
    BTW…nice call on the up move yesterday.  I listened and profited.

  3. Unfortunately, this is where the jobs are:
    DoD, WMT and MCD! That and some other Chinese companies… 

  4. France’s worst enemy= FRANCE!…thank gosh lafayette was around but they are the germans with good cooking…

  5. From StJ’s link above:

    SPY Chart from Shadow Trader:

    The orange circle on the chart above encompasses both the eight week long descending trendline and the value area point of control (VPOC) based on the "flag" area formed over the last six weeks of trade. It is within this orange circle where the SPY is most likely to slow, due to the high level of price acceptance designated by the VPOC, and possibly reverse in order to maintain the eight week downtrend.

    A move and close above both the VPOC and descending trendline on a daily timeframe would cause shorts to cover open positions which would in-turn provide fuel for a move higher.

    It is important to be aware of the levels presented on the chart above because the SPY has an average true range of 3.21 over the past 20 trading days. Based on this, it is possible for the SPY to reach the descending trendline as soon as today

    PP for today:

  6. Ortizism of the day:

    “There’s nobody to blame but everybody.”
    Pretty much true of our current situation!

  7. FAS Money Recap 
    Long Strangle –Jan 12 Puts (3.01 average now 3.27) and 15 Calls (2.75 average cost now 2.50). 
    Weekly – 1/2 September 13 Puts (1.03 now 0.94) and 1/2 October 13 Puts (2.30 now 2.30)
    Monthly – 1/2 September 13 Puts (1.03 now 0.94) and 1/2 October 13 Puts (2.30 now 2.30)
    Looks like we getting back on track with the puts! For now….  

  8. Employers/Pharm – I like those charts – new knowledge – similarly, land-holding stuff is interesting. Biggest land owner here in LA area is the Roman Catholic church, followed by Kaiser Permanente.

  9. @ Phil, whats your opinion on corn? Maybe a short opportunity? Never really traded corn, but tempting to short at these levels (i have read that there is plenty of supply in south america among other things)…. thanks

  10. SPY 118 C calendars can be bought back most likely by EOD, if not early tomorrow. I am going to risk the 117s until Thursday, and may add to it depending upon the direction.  This feels overdone (yes, feels!), so adding to it will only enhance our gains.

  11.  Phil,
    Good time to buy puts for Oil. its reaching 89.

  12. Good morning!

    Thanks Exec.  

    After all that nonsense in the Futures we’re opening flat but not GMCR, which is flying up to new highs on news that COST sold out of their machines so lining up for a good short entry around $115.  The Oct $120/110 bear puts spread is $5 and that’s a fun way to play and that can be offset by the sale of the Sept $115 calls, now $2.25 for about $3.  

    Oil (/CL) tapped $90 on the button and we got our $1 entry on the USO Oct $32 puts.  

    The Dollar is 77.59 and we NEED it below 77.50 to keep going otherwise we’re heading back down with oil my favorite near-term short.  Gold is $1,828 and the entry of more Chinese firms into futures trading makes that trade to just get out of for now.  

    2,200 has been a tough nut for the Nas to crack so let’s take the rest of the money and run on our QQQ calls in the $25KP (.80 now).

    If you need a downside hedge, the QID Oct $50/53 bull call spread at $1 with any of the normal offsets like VLO Oct $20 puts at .91 or TM Oct $65 puts at $1.90 or HPQ Oct $21 puts at $1 to make it "free" protection. 

    Tuesday’s economic calendar:
    7:30 NFIB Small Business Optimism Index
    7:45 ICSC Retail Store Sales
    8:30 Import/Export Prices
    8:55 Redbook Chain Store Sales
    9:00 Ceridian-UCLA Pulse of Commerce Index
    10:00 IBD/TIPP Economic Optimism
    1:00 PM Results of $21B, 10-Year Note Auction
    2:00 PM Treasury Budget

    At the open: Dow -0.01% to 11060. S&P +0.19% to 1164. Nasdaq +0.27% to 2198.
    Treasurys: 30-year -0.15%. 10-yr +0.02%. 5-yr +0.05%.
    Commodities: Crude +1.17% to $89.22. Gold +0.7% to $1823.25.
    Currencies: Euro -0.12% vs. dollar. Yen -0.48%. Pound +0.24%

    Market preview: S&P futures follow European bourses in reversing losses on a report that Papandreou will hold a conference call with Merkel and Sarkozy to discuss Greece’s economy. Buthopes fade that China is interested in Italian bonds. At home, small business optimism plunges, and the jobs bill is looking like a non-starter, but Europe likely will drive market action.

    Still not dead yet:  Redbook Chain Store Sales: +4.5% Y/Y vs. +4.9% last week. Strength during the Labor Day weekend was offset by softness at mid-week.

    Best Buy (BBY): Q2 EPS of $0.47 misses by $0.05. Revenue of $11.35B (flat Y/Y) beats by $170M. Sees FY12 revenue of $51-52.5B, EPS of $3.35-3.65. Shares +2.4% premarket. (PR)

    More on Best Buy’s Q2 report: Domestic segment comparable store sales growth seen in mobile computing (including tablets), appliances, eReaders – offset by lower sales in TV, gaming and physical media. Lack of new phone launches led to a 5% decline in mobile phone sales. Sees flat to a 3% decline in FY12 comparable store sales. Shares +2.7% premarket. 

    ICSC Retail Store Sales: +1.3% W/W, vs. -0.7% last week. +3.3% Y/Y, vs. +2.7% last week. ‘A burst of sales following Hurricane Irene gave retailers a 1.3 percent lift’, according to the report.

    August Import Prices: -0.4% vs. -0.8% expected, +0.3% prior. Ex-energy +0.2% vs. +0.2% prior. Exports +0.5% vs. flat expected, -0.4% prior.

    Reuters reports a French source as saying Germany’s Merkel and France’s Sarkozy will make a joint statement regarding Greece today. The FT’s Neil Hume with his take on what may be said. European shares have rallied strongly off early lows. Stoxx 50 flat after being off 2.5%.

    "The top priority is to avoid an uncontrolled insolvency, because that wouldn’t just hit Greece," German Chancellor Angela Merkel says in a rebuff to coalition members who have pushed to consider allowing a Greek default. She added: "Everything must be done to keep the euro area together politically, because we would very quickly face a domino effect." 

    In a corker of a speech, BoE member Adam Posen pounds the table for more stimulus from all of the G7 central banks. Accusing countries of "policy defeatism," Posen leaves nothing out of his prescribed policy mix – QE, pushing long rates down, setting up public banks to provide lending – and warns of "lasting damage" if strong action isn’t imminent.

    Stagflation continues to be the word in the U.K. withinflation rising to 4.5% in August from 4.4% previously. In a requiredexplanation letter, BoE Gov. King blames temporary factors such as a bump in sales taxes and a rise in global energy prices. London -0.2%.

    Italy sells €3.9B in 5 year notes at an average yield of 5.6% vs. 4.9% at July’s auction. Demand was weak, with a bid/cover ratio of 1.28 vs. 1.93 previously. The news sent Italian shares tumbling, but they have rebounded to +0.4% on the day.

     Italy confirms it has talked with Chinese officials about a strategic investment in Italy, but China has declined to comment – leading analysts to believe any talks are likely preliminary, and unlikely to lead to anything substantive. Italy’s debt-to-GDP ratio is second in the eurozone only to Greece’s. 

    Following review of Portugal’s fiscal reform progress, theIMF approves the release of the next tranche – €3.98B – of Portugal’s bailout loan. "The new government has signaled its strong commitment … and good progress has been achieved on policy implementation."

    The IEA cut its forecast for oil demand due to a lowered GDP outlook to 1M barrels per day this year and 1.4M barrels per day in 2012. The agency now sees a small surplus if "significant downside risks" to the economy push growth lower. Libya – the wildcard in the mix – is expected to produce 350K-450K daily barrels of oil, ramping up to 1.1M by the end of 2012. 

    Ceridian-UCLA Pulse of Commerce Index, which uses real-time diesel fuel consumption data, fell 1.4% in August following a 0.2% drop in July. "What we’re experiencing is the ‘new normal,’ where the U.S. economy will continue to stumble forward until a new growth engine is identified," UCLA’s Ed Leamer says.

    SodaStream (SODA) is up 5.1% premarket after Janneystarts coverage on the personal soda machine maker with a Buy and $60 PT. The firm likes SodaStream’s growth, retail expansion, and improving margins. The company received positive commentary last week from Oppenheimer and J.P. Morgan.

    MGM Resorts International (MGM) is upgraded to Buy at Brean Murray with a $15 price target, citing "upside and recent gaming data too compelling to ignore” in the wake of a one-third slump in its stock price since July. Las Vegas gaming trends "can surprise on the upside if the economic recovery continues," the report says. MGM +2.2% premarket.

    Much like its U.S. data, comScore’s analysis of the 5 largest EU markets shows Android (GOOG) rapidly gobbling market share: the firm estimates Android accounted for 22.3% of "EU5" smartphone users in July, up from just 6% a year earlier. NOK‘s Symbian saw its share fall by 16.1%, while AAPL and RIMM‘s shares grew 1.2% and 1.5%, respectively. 

    Apple’s (AAPL) hoard of cash (previous) will topple $136B by the end of 2012, according to Morgan Stanley’s Katy Huberty, a level that ranks higher than the GDP of all but 52 nations in the world.

  13. Everybody/StJ – Those bastards!  

    Corn/Asaenz – If we weren’t burning it for fuel, we’d have a massive surplus so I do like it as a short if it gets too crazy.  $799 was where it topped out in June before falling to $576 and now $745 but trending up so I’d wait for the retest and the obvious short. 

    Oil/Rehat – Very dangerous play at the moment because I think they are going to take down the Dollar (look at TBT!) and that should boost gold and oil for a bit.  I like the Oct $32 puts but with the full intention of rolling them higher and doubling down at lower prices – very likely into tomorrow’s inventory report.  

    RIMM looking good.  Congrats to all the faithful on that one.  IMAX was another conviction long and they are coming back too.  Maybe CSCO can take back $17.50 and give us a set!  

    Check out DB this morning – MADNESS!  

  14. Looking to build a stronger position in IMAX on another possible dip or buy writing some puts against them.  With the next Batman movie, The Hobbit and the reload of Spider-Man, IMAX should have a big year ahead of them.

  15. Hi Phil __ I have lot of Rimm short put from previous rolling current position October 34 short  put and March 30 short put.  Earning is on thursday, what do you rec do at this point, cover half with short call???

  16. If anyone took the DMND position we recommended on here yesterday, we took gains off the table at the 76.50 line for a 3%+ gain … that is equity.

  17. It might not end well…
    Love this sentence that he lifts from the G7 communique:

    Among the classic lines in that statement we read:

    We must all set out and implement ambitious and growth-friendly fiscal consolidation plans rooted within credible fiscal frameworks.

    The “growth-friendly” austerity is a lovely turn of phrase. Who invents this sort of stuff? 

  18. Quiz du Jour:
    who guesses what that chart is:
    it’s not that hard, is it?

  19. stjean – Wow, fiscal consolidation and growth friendly in the same sentence!  These people have cojones to put out such nonsense.  Echoes of the 1930s indeed.

  20. I feel safer already:
    Minority Report is already getting implemented. I wonder if Watson is on the case also! 

  21. Chart / Pentax – I would love it to be the FAS Money return chart…. but no such luck I believe although the drawdown are close! 

  22. OPK may be starting to break out.

  23. Dollar bounced off 77.50 – looks like we’re getting a bit weaker – be careful!  

  24. Pentaxon, i believe that is Gold. 

  25. Since this is the site about making money, Phil thought you would like this about saving money, half price Whole Foods:

  26. Phil / Merkel    Ilene’s clip is the most important note of the day.  It suggests that we are going to get an orderly restructuring (big write down and or extension of term and lowering of rates?) of Greek debt, which will avoid the domino effect and Euro break up.  Isn’t this a very powerful statement by Merkel?   The mkt understands that many banks will need recapitalizing and are pricing bank stocks accordingly.  I suspect that the German and French Gov’ts will agree to take big equity stakes in their banks (rather than Tarp).  But, won’t this be a big positive for the Euro and represent a kind of Euro stimulus of about $500B?
    But, then the ECB will have to be financed sufficiently to be able to buy other PIIGS bonds to prevent the jackals turning their attention to Spain, Italy etc.  ie there has to be a Euro borrowing rate for all of Europe.  Can this be achieved?
    "The top priority is to avoid an uncontrolled insolvency, because that wouldn’t just hit Greece," German Chancellor Angela Merkel says in a rebuff to coalition members who have pushed to consider allowing a Greek default. She added: "Everything must be done to keep the euro area together politically, because we would very quickly face a domino effect."

  27. Hey, we have an early winner already!
    Ain’t that amazing? In three years you had only 4 chances to buy on a draw-down more than 10% and there was only one short draw-down with 20% – though Gold was making an average 7.5% per month (!) for three years.
    Of course there was a sharp sell-off when the prime interest rates were increased to more than 20% afterwards, but I think we will have to look for another exit this time…

  28.  Phil, what’s the rolling plan on the USO puts? The roll to 33 puts is .28. Should we try to roll for .25? Just in case i’m not in front of the computer when the spike happens.

  29. Looking at RIMM makes me wonder if Hanna is still here?

  30. IMAX/Rustle – No 2014s yet but you can sell the 2013 $15 puts for $3.20, which is very nice or maybe take $6.20 for the $20 puts, which is riskier but compared to owning the stock it’s a buy at net $13.80 with the stock currently at $17.60 so I think a nice way to play them up long-term. 

    RIMM/Gucci – Very risky on earnings, could go either way.  Oct $34 puts at $5.50 and March $30 puts are $5 so maybe roll while the rolling’s good if you are worried.  If RIMM goes up, the delta on the March puts is .41 while the Oct puts is .65 so you give up .24 per $1 to the upside.  On the other hand, you could roll the Oct puts down to 2x the $30 puts ($3) to put l.50 more in your pocket on the logic that ANYTHING up, of course, gets you right off the hook while down 10% to $27 and you are in the same position as you were (but better off than if you left the $34 puts, which would run to $7 so your breakeven to the downside is about $33.25 before the roll is worse than sticking with).  While it does carry more margin, as long as RIMM doesn’t fall more than 10%, then you have the same roll to 1x (combining the 2x Oct puts) the March $30 puts most likely.  

    OPEN heading up too – must be MoMo day!  

    DMND/David – Very nice. 

    G7/StJ – That’s funny as I first read it as "We must root out ambitions and growth-friendly fiscal consolidation plans" – Freudian slip of interpretation…

    Chat quiz/Pentax – Greece going through their loans?  

    Predictive policing/StJ – Actually I think Batman invented that technique in the 60s.  

    Coupon/Rustle – I get those mailings – they have a lot of good stuff.  Check out that coupon, 269,021 purchased in one day so far – that’s $2.7M for WFM today but I don’t know how many new people it attracts.  Still, as a regular, I think it’s nice of them.  

    Greece/Tusca – You would think but I doubt the heyenas are going to let go of this bone without a fight.   In a fiat currency, all of this can be achieved because there’s really no limit to how much money the ECB can spend – the only question is how we value the Euro after they do it.  EU markets are loving it – up around 2% now.  

    Gold/Pentax – But now they are bringing the Chinese in.  That should give us a top unless they can stir up demand in Africa next. 

    USO/Mampcs – I’d wait for .50 or less on the $34 puts, not worth rolling and rolling.  If they don’t make it over $90 and cheapen the roll, then there’s no need for the roll as $90 becomes a bigger rejection zone. 

    QQQ Friday $53 puts at .45 with a stop if we hold 2,500 through the EU close (11:30) and then if we get back over it after it fails.  10 in the $25KP.  

  31. Phil/StJ/FAS money:
    About 2 weeks back I shared with you the performance of my FAS money strategy. The only difference between what I did and what u were recommending is – this was going to be a low-touch strategy that always fully covered by the end of the day.
    Here is the current performance
    [The red-line is a fit-line, which I hope will be the future trend :-)   ]
    After the early drawdown in Aug, it has managed to do reasonably well.  I believe the volatility in the equity curve can be reduced by adding another security to it. What other weekly ETF would u suggest adding? The criteria of adding another security are -
    1) presence of weekly calls 2) liquid (other leveraged ETFs are nowhere near FAS’s liquidity) 3) Reasonably uncorrelated.
    As of this past week, I have added EEM. However, if you can suggest something better, I’d very much appreciate it.

  32. Another amazing chart I think:
    The spread between the DAX and S&P500 has reached an unprecedented level. This is not just because of the German banks. Compared to other European indices (e.g. Eurostoxx50) these do not play such a big role in the DAX. The DAX is very (early) sensitive to the global economic cycle (lots of machinery, vehicles, chemicals,…). I don’t think that this gap can be persistent and I think it will close pretty soon (either way), just as it did in March 2008.
    Currently a +1:-3 DAX/ES future play would perfectly match this spread (=a long bet on the green line).

  33.  Phil – Question….I have the TZA Oct 35/45 bull call spread with a nice $2.00 gain on it, however, with the volatility lately who knows if TZA will hold 45.  What would you suggest to protect those profits, or should I let it run because it’s a hedge?

  34. GMCR behaving itself quite nicely!  THAT’s the kind of excitement we love to sell into (the silly kind). 

    FAS/Etrad – EEM not a bad idea but I’m not sure they are "uncorrelated" to the US financial sector.  XLE should be volatile enough to pay nice premiums but constant enough to keep you out of trouble.  There’s V, GE, SDS and BP – all with weeklies worth looking at.  

    DAX gap/Pentax – Oh that is not a pretty sight!  

    Europe done now – DAX up 1.8%, CAC up 1.3%, FTSE up 0.85% all finishing near day’s highs but what a day it was as they were all down more than they are now up heading into lunch.  Could bode well for our afternoon though

  35. As bad as reporting can be by The Enquirer oops I mean Wall Street Journal portraying rumors as fact that BNP Paribas couldn’t borrow US$  and never confirming with BNP Paribas themselves which flat out denied it, CNBC just referred to the article and never mentioned that BNP Paribas denied it stoking the coals even more.

  36. FAS Money / Etrad – We talked about another instrument last week with Phil. I was suggesting XLF and USO. EEM crossed my mind, but I have some bad memories of that ETF and how volatile it became. Phil was not crazy about USO but also suggested INTC and VLO as individual stocks. But then we have to play around earning and all so I don’t know. But suggestions are welcome.
    And BTW, weeklies are not necessary for a decent return I think. You could play the monthly options, but trade them more actively. 

    we can all be mortified by that…if a fucking joke that people go to bed hungry an dhomeless in a country that spoon feeds its banking elite

  38. I guess our rising and receding tides have been strong enough to lift all boats:
    Correlation is at an all time high…. 

  39. Phil & StJ:
    Thanks for the suggestions. Tonight I will look at all the choices you mentioned. Will keep u posted on the progress.

  40. This could have potential: 

  41.  Phil – how would one trade that DAX/ES gap? I can’t find the symbol on ToS. IB has the DAX futures, but it looks like I have to ask to trade them. What do you think of the trade?

  42. Phil, I find it incredible that you are still coming up with these clever ways to bet against GMCR, which has been one of the very few strong performers despite a bad market and near-perfect correlation between stocks. I can tell you that I began about a year ago shorting the 55 calls, and now, I have to admit that despite rolling three times and doubling down, this trade has simply got away from me and is doing serious damage. I would advise anyone considering a bet against GMCR to slap themselves silly before pressing the "trade" button.
    It may someday work out the way most of us think is "correct", but I have begun to fear one more positive earnings report (fake or not) from these guys. Betting against GMCR on fundamental grounds has been the worst series of trades, bar none, I have ever been involved with.

  43. TZA/Hoss – Nice one to have!  Note I picked TNA longs in the morning post so that tells you what I think of TZA holding $45.  Your Oct $35 calls are $13.50 out of $10 max so of course you want to take that off the table.  The Oct $45s are $8.50 so net $5 and I guess you paid $3.  I would flip to the Oct $35s to the Jan $40/50 bull call spread at $3.50 so you take $10 off the table and leave $3.50 on the $10 spread that’s $6.50 in the money to protect a possible payout to the Oct $45 callers.  If we have a major crash and TZA pops 20% by Oct expiration  (7% down on the RUT) then you will owe your caller $10 and you’ll have $10 of longs that are fully in the money and you’ll then have to decide how to roll out.  Of course, if the RUT fails to hold 666 again you can always be proactive and double up on the spread or buy more longs or whatever.   That trade may cause a margin issue as technically, in a non-pm account, you have naked calls.  If that’s an issue, you could just roll out to the Jan $56 calls at $10 and put $3.50 in your pocket (free spread) and see what happens but it’s the same deal as you’d want to add more longs if we fail 666.  

    CNBC/Rustle – And people think this stuff is not coordinated.  As if we are supposed to think they are all just merely incompetent and that COINCIDENTALLY they release these stories just as the EU is closing and the market is trying to break higher.  That’s the great part of this scam, by the time the fundamental traders sift through the BS to get to the truth – it’s too late as the technical damage is done and they form a top that freaks out the TA people.  

    I find it amazing that it was way back in Feb of last year when I wrote "Greece is the Word," saying:

    We can’t afford to have this government at a standstill – this government needs to be in meeting with other World governments and we need to act in concert, the way we did to save the banks.   But the banks have been saved and now there are no puppet-masters willing to pull the strings to draw our leaders back together on behalf of the people.

    That’s why it’s hard to get worked up about this stuff now – this is OLD news and it’s the same debt and the same crisis we had 18 months ago.  S&P 1,050 was the bottom then and again in June as we talked about Greece again and then the next Spring as the revolutions I predicted the year before began breaking out in the Middle East we had another nice dip, but that time to 1,250.  Now we’re at 1,150 and I don’t see why it shouldn’t hold – things are the same, not worse and this is about the right range for the markets with an UNSOLVED crisis.  If they "fix" it, we’re good for a 10% move up, at least.  

    Poverty/Angel – Don’t even get me started on that one!  That statistic is a joke anyway when you define poverty as INCOME (before taxes!) of $22,314 for a family of 4.  I would challenge the people who don’t think poverty is a major issue to try living on double that amount for a year and see how much fun it is.  

    As poverty has spiked, median household income declined by 2.3 percent to $49,445 between 2009 and 2010. The typical household now earns less than it did in 1997, when inflation is factored in, a troubling sign of economic stagnation.

    Good slide show on vanishing jobs.  Here’s why the Corporate PR people now control the media: 

    According to the Bureau of Labor Statistics, reporters and correspondents held about 61,600 jobs in 2008 and had a median salary of $34,850. Employment of these workers is expected to decrease 7.62 percent between 2008 and 2018.

    In 2008, mail sorters held 179,900 jobs and earned a median salary of $50,020. The projected change for these positions from 2008 to 2018 is a decrease of 30.32 percent

    Correlation/StJ – Isn’t that insane?  There’s another bunch of jobs that will vanish – allocation advisers…

    Trading view/StJ – I was going to say I like better but now they made Chartly all crap thumbnails too.  Still, clearly a better caliber of chats on Chartly to me.  

    DAX/Kurt – I think if you have to ask to trade them then you can get massively screwed on low-volume moves.  What’s wrong with good old EWG?  They are super-low at $17.86 and you can go long for a 20% pop with the Jan $18/20 bull call spread at .90 and play against a drop with the SPY Jan $119/118 bear put spread at .53 so, if you buy both, you make .47 if the S&P does not go up from here and you make $1.10 if the EWG rises 10%.  I would go with just the EWG and some sort of offset because I hate betting against myself like that – if you don’t know (or think you know) which way something is going to go – why even bother playing it?  

    GMCR/Barf – Just because a stock keeps going up doesn’t mean you can’t make money betting against it – it’s just a question of time-frames and notice this one was nice and short and that spread is already up 50% on the short calls and up 10% on the spread for net $4.25 off the $2.50 spread (up 70% on the day).  The trick with shorting the MoMos is sticking with them as you generally get them eventually but you have to take small victories and run because the next day they can burn you again.  Are you still in them?  The premiums are so insane at the moment they do make for fun betting. 

  44. gmcr and all the momo mutants..none of these will decline if we have a bottom of any significance in short the treasuries i think finally we are there..i ve been long for months as you know..i am now short (not like jimmy rogers or gross but really) any firther spiking of the ereasuries can be shorted with impunity..the internal cluster of the bond benchmark model i follow is at its best level since dec 2008..unfortunately price action from those extreme bullish readings have resulted in a 9% per annum loss..SO GOT GET EM BOND BEARS

  45. Phil  "QQQ Friday $53 puts at .45 with a stop if we hold 2,500 through the EU close (11:30) and then if we get back over it after it fails."  Not quite sure I understand the second part of the rec.  Thanks

  46. Oh, and I see nothing ridiculous in the notion of "growth-friendly austerity", if by that, one means that government restraint of spending (austerity) frees the private sector to employ capital in growth-producing ways. Sometimes, I think some of us need to be reminded that government is not supposed to be the creator of growth.

    now is this news?

  48. barfinger – Interesting.  If government spending was actually restraining the private sector, you might have a point.  Can you site data/studies which shows this effect in our current circumstances?  Also, government is supposed to help the economy when it’s in a funk.  I think you’d agree our economy is currently in a funk.  That’s basic Keynesian stuff which I guess no longer applies today, for some unexplained reason.

  49.  Barfinger: GMCR
    I hear ya brother I also am fully in short calls starting @$60.  But my concern is not on losing but rather not play the down move well.  Rememeber NFLX, OPEn SODA.  When a company feels the need to release that COST has sold out there product it just seems silly.  COST only carries products that sell out :)

  50. 12:00 PM On the hour: Dow +0.01%. 10-yr -0.21%. Euro +0.06%vs. dollar. Crude +1.15% to $89.2. Gold +0.6% to $1821.45.

    CoreLogic’s latest report shows 10.9M U.S. properties (22.5% of residential properties) are underwater at the end of Q2, vs. 22.7% for Q1. Toss in properties with less than 5% equity and more than one-quarter of U.S. mortgages have negative or near-negative equity. The usual suspects – NV, AZ, FL, MI, and CA – lead the way.

    European stocks brake a more than 10% slide in since Labor Day, closing solidly higher. Stoxx 50 +1.8%, Germany +1.4%, France +1.1%, Italy +1.7%, Spain +2.4%, U.K. +1%. French bank shares had a wild ride, with SocGen 15% higher after swinging 32% on the day. 

    Off 33% in less than 2 months and sitting at summer 2009 levels, when does Germany become a buy? The country has a dynamic economy, and the sinking euro will only help the nation’s export machine. The German ETF - EWG - is thankfully heavy with multinationals and light on financials.

     "How do you know a country is about to default?" asks Lorcan Kelly. "When the percentage change in yield is smaller than the percentage point change in yield." The yield on Greek 1 year paper rises 18 percentage points – but just 15% – to 135%.

    Impeccably running a sinking ship (Bill Mitchell)

    Greek Default Probability Is 98% as Papandreou Fails to Reassure Investors (Bloomberg)

    Testifying before the "super committee," CBO Director Elmendorf says the agency has lowered its economic outlook, expecting growth of just 1.5% this year and 2.5% in 2012 – against August estimates of 2.3% and 2.7% respectively. Unemployment – previously hoped to drop in 2012 – is expected to remain above 9%.

    Operation Twist may already be priced in to Treasurys, says Deutsche’s Alan Ruskin. "Should Operation Twist materialize it will go down as among the best flagged actions for any unorthodox policy change," he writes, as he forecasts Bernanke will not pull a rabbit out of his hat at the FOMC meeting with a surprise announcement.

    Bagehot’s Rule, Central Bank Incentives and Macroeconomic Resilience (Macroeconomic Resilience)

    Perry’s Ponzi-Talk Implies Social Security Fraud (Bloomberg)

    I like this guy!  "You can’t jump over a chasm in 2 steps," says Mario Blejer, the former head of Argentina’s central bank. "It’s totally ridiculous what is going on … Greece should default, and default big." Blejer took over in Argentina shortly after its 2001 default and has been an adviser to the BoE’s Mervyn King.

    Painful Medicine (IMF)

    An EU official says Treasury Sec. Geithner - planning to attend Friday’s EU finmin meeting – will likely urge Germany to give up its resistance to increasing the size of the bailout fund. He is also expected to "tap the Greek finmin on the shoulder," to remind him of Greece’s responsibility.

    The FDIC flexes its Dodd-Frank enhanced muscles with a set of proposed guidelines designed to protect the economy from the collapse of mega-sized banks. The rule – opposed by big banks – seeks to require the largest FDIC-insured banks to engage in extensive planning and reporting to limit potential damage to taxpayers from their own demise.

    Finra is stepping up its bid for more power, telling Congress today that it is well equipped “to serve as at least part of the solution” to replacing the SEC in overseeing the investment advisory industry. Critics are skeptical of giving Finra such authority, given its spotty record of policing Wall Street in the lead up to the financial crisis.

    Are ETFs Creating a Spike in Market Volatility? (Yahoo Finance)

    Fifth Third Bancorp (FITB +3%) shares are raised to Outperform at RBC Capital, noting that "FITB is attractively valued relative to peers, well positioned to grow, while being defensively positioned should the economic recovery stall." Nomura upgraded FITB a week ago. Regional banks (KRE +2%) are some of the S&P’s best early performers: CMA +5%FHN +4.2%.

    JPMorgan Chase (JPM +1.9%) jumps to the top of the Dow leader board after Stifel Nicolaus puts a Buy rating on the shares, saying the bank is undervalued after falling 25% since May. But JPMscales back its own outlook, saying market revenue will be down from Q2 and investment banking fees will total a less-than-expected $1B for the current quarter.

    Shares of U.S. Airways (LCC) are up 18% on high trading volume, as the prospect of "continued capacity discipline" carries weight with investors and provides a big lift to the entire sector. Also kicking in on the positive side for carriers is the potential for a littlemargin relief with an outlook for higher fares and lower fuel prices. Gainers: DAL +9%AMR +5.7%UAL +5.5%LUV +5.5%

    IDC is now forecasting 2011 PC shipment growth of just 2.8%, below even Gartner’s 3.8% forecast. However, like Gartner, IDC expects 10%+ growth in 2012, and also sees annual growth of ~11% from 2013-2015. These optimistic longer-term forecasts suggest PC industry firms could further disappoint the market if tablets continueeating into demand beyond 2011.

    Best Buy (BBY -7.2%) shares are tumbling now after reporting Q2 profit fell a greater-than-expected 30% and cutting its full-year forecast. Goldman Sachs warns the future does not look bright, as results suggesting ongoing pricing pressure and growing macro pressure cause the firm the review its estimates and target. Among rivals: RSH +1.4%SHLD +2.4%

    I don’t know but these don’t sound too recessionary: 

    Caterpillar (CATadds 2.5% in early trading as investors warm up to its 2% yield and sub-15 P/E ratio. Citi analyst Timothy Thein says Caterpillar will gain from a "boom in petroleum exploration and production," as more companies use their engines for onshore and offshore rigs.

    Engine manufacturer Cummins (CMI) is up 6.4% aftersetting 2015 targets of $30B in sales (reflecting an annual growth rate of 14%) and an EBIT margin of 18%. COO Tom Linebarger also notesat an investor meeting that the company is setting financial targets for 2011 exceeding what it originally planned to achieve in 2014.

    On a positive note – it does look like we’ll be able to get off this mudball and start again!  

    New ‘super-Earth’ that is 36 light-years away might hold water, astronomers say (Washington Post)

    Three lunchtime reads:
    1) How to be a profitable bull in a bear market
    2) It’s time to admit the euro has failed: How to profit
    3) Can speculative trading magnify financial market co-movement?

  51. Phil,
    This is odd behavior in the market today.  Feels like a fake push up as a prelude a sell off. 
    What’s your take?

  52. Greek default – only 98% chance?  HA-HA, Bloomberg, you sandbaggers… !
    Greek Default Probability Is 98% as Papandreou Fails to Reassure Investors (Bloomberg)

  53. According to the Duke University/CFO Magazine Global Business Outlook Survey for Q3, CFOs’ optimism level about the economy dropped 7.7 points to 49.4, the largest decline and lowest level in a year .  Almost 2/3 of CFOs said they have grown more pessimistic about the economy, while only 12% are more optimistic.  Nonetheless, CFOs don’t expect a double-dip recession, rather a much slower pace of growth

  54. A picture worth a thousand words – that is what this market is on!

  55. pharm – I knew you were in to that stuff!  ;-)

  56. Where is JR?

  57.  Phil/DAX – agreed, I don’t like the idea of a low volume spread that’s hard to get out of. How would you suggest playing EWG? Jan 12 18/20 BCS at $.95 offset with the sale of 15 puts at $.90? Or is there a better play to capture more upside potential? I don’t suppose it’ll go back up to $29.05 by January. 

  58.  fwiw i think we are bottoming..tha’s how i am playing it anyway

    Vast majority of global market cap has been bottoming, not breaking down.
    In global market recovery, all markets would participate

  59. Phil/USO
    I have the Oct 32 puts along with the Oct. 36/35 Bear put spread. At what point do you double down on the puts and do you roll the spread? Thanks

  60. Hi guys, got meetings all week so just popping in for a quick look around. Friday I loaded up for the downside because JRW and Pharm and Matt were dour and using words like "bloodbath" to describe this week, it’s not working out so far.  Is there still a negative stance on this board or have we flipped bullish?

  61. Someone want to correct the stick’s clock?

  62. Well, this is not surprising – austerity is painful:

  63. Rain/Stick,
    Call me nuts…..but I’m playing for the anti-stick today…they’ve baited everyone the last few days with nice closing sticks, so I’m thinking they’re going to serve up some pain today.

  64. mrm – I am still bearish, and holding my puts w/ covers.  The Calendar spreads are working to offset any negative bias.  I ask, what has changed?  The 10yr note auction had a bid to cover of 3, with a 2% yield.    We have quarter end, and WS cannot afford a bad Q, so they are propping this thing to squeeze the shorts.

  65. Oh, and the dollar is down 1%.  Go figure.

  66. the trick is we know its rigged..everyone on th eplanet is bearish..if you were the rigor and not the rigee which way would you lean

  67. exec / stick — could be, I’m eyeballinga breakdown of 68.97 on IWM for my bullish exit.

  68.  Pharm – any thoughts on the USO calendar spread? Any adjustments needed? Thanks… the SPY spread is looking great today, btw (I’m only in the 118 C). 

  69. OK, buying back the SPY 117 Calendars in here for about 1.78, a small, but nice gain.  118s holding and may, in essence, DD @ 1.78.

  70. kurtw: I have to correct Phil (somewhat) the DAX is sufficiently liquid, but only when traded on the EUREX. (I don’t know if there is another low liquid version of it somewhere)
    Unfortunately you can not trade it on TOS, however you can trade it on most other platforms (IB, CQG,…).
    The contract size is rather large (Index x 25 Euro). It is traded for 14h/ day ( 2:00-16:00 ET).

  71. mrmocha – Phil will tell you that things are better than on the board feel.  He’d certainly be right today!

  72. USO, holding. Will wait until Thurs/Fri for the next round.  Will do the Calls by EOD.

  73. out with 5.3%.

  74. We entered a new trade in our Earnings Alpha Portfolio in AutoZone (AZO) today. Went long the stock with 1/2 position and believe the stock has more legs into earnings. 12-month PT is $380.

  75. exec / anti — looks like IWM is setting up a nice downward trend but watch out for the bull pendant .

  76. Rain
    I see that bull flag. 
    I have a SL set but hoping the bull flag is just "them" messing with the traders.

  77. I don’t know, I’m seeing comfirmation of higher.

  78. OK, let’s ease into the USO calls.  OH resistance is at 35.4 or so, buy first Oct 35 calls, sell 1/2 amt of Sept 35 Cs (so if you buy 10 Oct, sell 5 Sept.) 

  79. Phil -

    Expect much more upside in XLF?

  80. 1175 is a bit of resistance on the spu..the fooler is it gets thru there..78 would be next resistance

  81. in bullish

  82. QQQ/Tyr – Doesn’t matter, dead trade as we held 2,500.  2nd part was, like futures, to keep a strict line to stop out at if we did get a lasting entry and you can see why now as we’re up 25 (1%) now that we broke higher. 

    Austerity/Barf – Governments have always been creators of jobs.  The very creation of government is the creation of Government jobs and then the government’s purpose is to pool the people’s money AND SPEND IT on jobs that are too big do be handled at the local level.  Whether it’s war or roads or rails or mail – THAT IS WHAT GOVERNMENT DOES.  Keynes argues that, since Governments DO, IN FACT, create jobs all the time, that they should perhaps lean on the side of creating more jobs when times are tough (and when businesses are not creating jobs) to pick up the slack in the economy.  

    Asia/Angel – Well the good news is they’ve now run out of new places to uncover the same crisis!  

    GMCR/Lincoln – I don’t see why you would be in $60 short calls, which I imagine must be at about $60, when you can roll the callers to 2x the 2013 $110 calls at $30.50 to push them into all premium and you don’t owe that $60 until GMCR makes $140.  That way, you can cover with short-term bullish bets if they go over target levels (and plow those profits into rolling the longs up).  The key is that you MUST take action when you lose 20% and 50% is an absolute on any kind of position.  If you aren’t willing to take a 50% loss off the table then you have no business letting it go past 20% in the first place!  

    Fake push/Exec – On the larger fundamental view, I think we’re priced too low at the moment.  I think what you’re seeing is the plentiful supply of fear magnifying each upside point of resistance.  Very tough market to call so, as I said yesterday, we need to have a hypothesis and set levels that test our hypothesis and stick with it until/unless it is PROVEN wrong – now is not a good time to go with "feelings".  

    Tim Leary would be pleased, Pharm! 

    EWG/Kurt – Didn’t I say?  Jan $18/20 for .90, selling something you want to own if the market goes lower like our VLO or HPQ puts.  I don’t see why be greedy when you can agree to buy, for example, 100 shares of GOOG at $450 in Oct for which you collect $500 for the short puts and, with that money, you can buy 10 of the EWG spreads for $900 and that puts you in for net .40 per contract and you make $1,600 if all goes well (or you own GOOG for $450).  As a less margin-intensive offset, you can agree to buy 2,000 shares of VLO for $20 in Jan (selling $20 puts for $1,90) and collect $3,800 and use that to buy 50 of the spreads for $4,500 so net $900 with a $10,000 upside.  There’s no point in being greedy when you can make such good money on a tiny move up.  

    Oil (/CL) coming back under the $90 line again, which is our shorting line in the futures.  

    They can’t get that pesky dollar to go lower – just under $77.50 but holding the line. 

    Rates/StJ – Well we’re "winning".  

    Bottoming/Angel – Well I certainly hope so or we are fooked!  

    USO/Jomp – Why would you spend $1 on the puts when you already have a .50 spread?  If you spend $1 on the spread you can roll the $36 puts up to the $38 puts ($1.30) and then you can make 53% on your money off the same bet.  The trick is NOT to make the second $1 bet in the first place because you already have a .50 bet that will double if USO goes down and, if USO goes up, THEN you can roll up more cheaply, probably for $1 or, if something changes and you no longer believe in the spread, then you can pull that loss with less than .50 gone, rather than $1.50.  Always opt for keeping yourself more flexible, not less.  

    Bearish/MrM – Ah so you are the reason we’re going up!  I’ve been pretty bullish since yesterday morning but certainly not chasing this 300+ run in the Dow – just watching to see what happens around our key levels. 

    Austerity/StJ – You would think you don’t have to paint a picture for people but worth 1,000 words, I guess:  

    Painful Medicine

    Again, this is exactly what the top 1% want as they confiscate properties and pay workers as little as possible.  Same game they’ve been running for 1,000 years.  

    DAX/Pentax – You are right, I was talking about local platforms in the US where it’s considered an exotic.  

    TLT coming down nicely despite auction.  I’d like to see them get below $110 after the 30-year tomorrow.  

    The Treasury sells $21B in reopened 10-year notes at 2.00% (.pdf) – a record low auction yield. Bid-to-cover ratio of 3.03, vs. a recent average of 3.13; indirect bidders take 48.5%, vs. previous 35.4%. Direct bidders take 11.1%.

    Treasurys add to losses on the longer end after the 10-year note auction comes in at a record low yield: the 30-year yield +0.07 to 3.33%; 10-year +0.05 to 2%; five-year +0.03 to 0.9%; two-year near flat at 0.21%.

  83. $25KP – Don’t forget our goal is to roll the USO Oct $32 puts up to the Oct $34 puts for .55 or less.  They are now $1.45 and the $32 puts are .89 so we should start to get them and yes, it would have been .10 cheaper to just buy them for $1.45 in the first place but we didn’t know for sure we’d get this opportunity up around $90 oil.  Once we have the roll, our goal would be to DD at about $1.05 for an average entry of $1.25 but I doubt oil will pop that high unless we get a huge draw tomorrow.  

    XLF/David – If we get QE3, yes.  If not, no. 

  84. out for a 1% loss

  85. Dollar headed up to Phil’s 77.50.

  86. Phil
    I did 20 of the SQQQ BCS @ 1.30 as a hedge. The short C"s are up $1100 
    Is it prudent to try to play these spreads by covering the short calls  then reshort them or others (assuming a pull back before close)  or leave this insurance policy in place?

  87. DXD Friday $20/21 bull call spread is .25, 4 of those offset by 1 JPM Oct $28 put at .95 risks .05 to make $4. 

    Dollar over 77.50 = Bad!

  88. If they are going to anti…..this is where it would be.

  89. LOL……did you see that BS with the dollar

  90. Like a dog trying to shred a toy by shaking it!

  91. Wow  what was that on the dollar

  92. SQQQ/Ban – The Oct $26/31 bull call spread?  You take a huge risk when you uncover but if you feel comfortable momentum trading them intra-day, that’s fine but don’t be greedy.  Consider that each time you improve your net by just .25 (out of $1.35), that’s huge!  Also keep in mind the same goes for a .15 loss the other way!  If you can stay disciplined enough to make .25 as many times as you lose .15, you can end up on top of the game but the key, like with the Futures, is to wait for a serious line of resistance to show itself and play off that – don’t force moves.  At the moment, you can assume the 25 lines on the Nas will be good spots to play but it looks like 2,525 is holding at the moment so you may have to wait for 2,550 to be tested unless we break below into the close.  Woops, scratch that!  I just realized that the bid/asks on SQQQ is ridiculous and your rip yourself apart going in and out of them.  If you want to gamble, just short the Qs on the resistance lines as they have penny spreads (the way we did into the EU close with a very quick abort and no loss).  

    Gravity pulling hard on oil.  

  93. Joe,
    What do you mean….that was your standard .12 drop in a millisecond.

  94. Loving the Euro at $1.37098.  FXE a little shy of the mark still at $136.50 might indicate upward move coming in the Dollar (as those who manipulate it are front-running).  

  95. Phil / gravity — I like that description. :)

  96. Phil/USO,
    My mistake – I sold the Oct 35 calls and bought the 36 calls. I guess that would be a bear call spread. I have these along with the Oct. 32 puts. What is your opinion? Thanks

  97. Hi, Pharmboy,
    Thanks for answering my questions yesterday regarding SPY calendars.
    You said that the risk is the shorts going DITM.  But in that case, aren’t your longs also DITM?  If they have the same strikes, the shorts should have less premiums left because they are closer to OPEX.  So, aren’t you still in green?
    I am sorry about all the questions, since I haven’t got enough experience with calendars.

  98. well they arent making it easy…th ebears are using alot of bullets right now..but aapl isrg ibm holding up near highs

  99. Phil USO bought the OCT 32 for 1.00 set it up to roll to 34 for .55 now .60 sold as well the Sep 35 call for .35 now up .49 again I trust to wait as 90 seams to be the top your thoughts the short call is against Oct long calls

  100. uh oh… the broken stick???

  101. There ya go exec :) That looks pretty anti to me!

  102.  Let me guess, we are getting a sudden drop because Greenspan is saying the Bush era tax cuts should be allowed to expire and tax loopholes should be closed.  

  103. What BS on CNBC – Bob says "It would take a lot to support the Italian debt" and the number HE puts up is $100Bn.  The US sold $21Bn in 10-year notes TODAY and we’ll sell at least that many 30-years tomorrow and we sold $30Bn worth of 5-year notes yesterday and Bob thinks it’s going to be hard for Italy to raise $100Bn this year?  You have to be a very uncritical listener to not be annoyed by these people…

    USO/Jomp – That’s a different trade entirely but the same concept.  That spread, in that case can be ignored as a separate bet that USO doesn’t make $35 (oil over $90 in Oct) and then you can just play the puts along with the $25KP but still, why have two trades on the same position?  

    USO/Yodi – I don’t understand where Sept suddenly came in.  They expire in 3 days and are EXTREMELY dangerous to play and you said call so I have no clue at all what you are doing there.  As to the Octobers, those were an easy .55 roll a while ago but now getting away.  If you put in spread orders to roll without doing the legs individually you will rarely get your price until it is well below what you are offering.  Your broker has no interest at all in filling your low-ball requests first.  Tomorrow is inventories so we may get another run up then for a cheaper roll. 

    Dollar snapped back to 77.64 and the reaction from the markets is severe!  Dow is red for the day if they don’t turn back up.  

    Dow volume 124M at 3:24, a bit light so stickable – maybe this is a shakeout – I don’t see why there would be a panic into the Dollar and gold isn’t moving at all.  

    Greenspan/Rev – Ah thanks, that explains the Dollar move at least.  

  104. Like to report on Flam AAPL 2k guaranty trade I see he is not on the board today
    Bought AAPL oct 400c for 10.45 now 9.47
    sold AAPL oct 405c for 8.65 now 7.70
    Just to cover the cost sold AAPL oct 310 p for 1.99 now 1.82
    total profit up to now 18.50

  105. Phil / Italy -- The fed has the ability to buy foreign debt as well as domestic. Do you think they will? QE3?

  106. Phil angel
    Not looking for any simpathy but I can tell you being single and living on $20,000 for 3 years is demoralizing, devistating and paying no income taxes doesn’t stop the $6,000 just in property tax so the Teton County Sheriff can treat me like scum. I am sucking of the government and they are not?

  107. Seems like there is a full-out attack on confidence this afternoon – check out this negativity: 

    12:29 PM "You can’t jump over a chasm in 2 steps," says Mario Blejer, the former head of Argentina’s central bank. "It’s totally ridiculous what is going on … Greece should default, and default big." Blejer took over in Argentina shortly after its 2001 default and has been an adviser to the BoE’s Mervyn King.

    12:48 PM "The euro’s attraction as an alternative (reserve) currency is likely to be reduced," says Morgan Stanleyslashing its target for the currency to $1.30 by year end and $1.25 for 2012. The ECB’s softer stance, the resignation of Jurgen Stark, and the German court’s ruling on the bailouts all add to what was already a deteriorating picture for the euro.

    01:10 PM CFOs are increasingly pessimistic about the strength of the economy, according to a new survey that found 65% of nearly 1,000 CFOs polled grew more pessimistic in the past quarter. But that doesn’t mean they see a recession ahead; hiring plans, capital spending and dividend growth continue to hold up well, the poll says.

    01:31 PM "It would be better to leave than endure 30 years of pain," says an Italian official, bringing home to Martin Wolf just how near the breakdown of EMU is. Wolf believes the ECB needs to ignore Germany and begin supporting governments "without limit." If the Germans don’t like it, they can take their ball and go home – but it will be their own economic funeral.

    02:19 PM PIMCO’s Mohamed El-Erian thinks Europe is "close to a full-blown banking crisis," and is hoping World Bank and IMF meetings in Washington next weekend need to serve as a catalyst for a broader intervention. El-Erian recently put Europe’s recession riskat 50%. - Don’t forget, Greenspan works for Pimpco now.  

    02:28 PM As Treasury yields tumble to record lows, there’s lots of talk the U.S. is following the economic trajectory of Japan. Butconsider this: After 990 trading days from its Oct. 2007 peak, the S&P has retraced 74.2% of that peak. On the 990th day from its peak, the Nikkei had retraced only 46.5% of its closing high from Dec. 1989.

    02:48 PM A U.S. district judge in Pennsylvania rules the insurance-purchase mandate in the President’s health care law is unconstitutional. It’s the latest in a series of mixed rulings for the statute, whose fate seems likely to be decided by the Supreme Court.

    02:56 PM One of this morning’s rumors looks like it’s panning out: Greek officials and the French President’s office have confirmed a conference call to take place at noon ET tomorrow between Papandreou, Sarkozy, and Germany’s Merkel. "To be honest, the latest bailout plan is not proceeding as expected," says a senior EU official.

    03:21 PM The Dutch Ministry of Finance considers Greek bankruptcy inevitable and is preparing for suchreports RTL Nieuws. At this point it is only hoped that the default occurs in a controlled manner that will prevent financial panic. Also quite direct is the CFO of Rabobank: "The only question is when."

    Even while they are making progress day by day the rhetoric is ratcheted higher and higher into panic mode.  Then the float the Greenspan rumor and goose the Dollar – hoping for a tipping point.  The fact that it isn’t coming should really worry the bears, who certainly do not seem prepared for the possibility of a move back up.  

  108. That’s balls from Greenspan to talk about letting the tax cuts he supported expire…. This guy is an economic war criminal! 

  109. And sectors trading ranges:
    Some have been hit hard…
    But not as hard as China:
    That’s a sick index! 

  110.  Pharm –  I’m still holding the 110 Put Calendar, and will probably buy back the Sept 16 puts if they hit .10 (now at .16).  Waiting for Thursday to sell the next round of weeklies.  Does that sound about right?
    PS – How about those Cyclones in triple overtime!?

  111. FAS Money (unoffficial move) – I just sold the SEP 13 calls for .50, seems like a fair risk/reward…

  112. Also selling SLW SEP 39 calls here.

  113. AAPL traders:    Uncovering the Oct 360s yesterday was dead-on.    I uncovered 40% you will recall.   Now I’m re-covering  them, but with the Oct 385s.   This creates 40% Oct 360 /385s and 60% 360/375s.      Stay with me.  We’re going to go to the bank again with this one between now and October expiration.

  114. Hi all! Its been a few months since I’ve been on board here. Been busy relocating from NYC to the west coast & traveling so I’ve left the markets alone up until this point. I had originally planned to take this month off and enjoy the beaches and relax, however I started the book ‘Atlas Shrugged’ the other day and had a massive capitalistic spark. What a boring Tuesday to get started but the ‘watch & learn’ track of the day gave me some time to catch up on older posts. Phil – again I appreciate all you do and look forward to the weeks ahead. Keep the trade ideas flowing.

  115. Cwan – Either direction, if they go DITM, then I wait for the next week to roll to the strike of = amount, or buy back for a small gain/loss.  That depends. 

    SPY Puts, you are somewhat correct revtodd.  I don’t buy anything back until it reaches a nickle.  I may roll if it really starts rocketing up (or down), but rarely do i do that.  I just wait patiently, as the market is in a channel.  Patience is the key.


    Hawkeyes suck.  QB is horrible.  As I noted to willex (I think), going to  Ames is more of a death sentence for the Hawks, than a gift.  This year was no exception!

  116. Phil
    Was wondering if CSTR has crossed your mind? They made a good run from here a few times in the past.

  117. So on the Calendars, I bought back the 117s for ~ 15c, sold more 118s for 1.78, and still have the 110 Ps that are down, but not out by any means.  Wait on the puts.

  118. Take a look at the trading volume in /DX, where is it?

  119. EDZ holding up well, that’s not a good sign for the bulls. 

    Italy/Rain – They should.  As I said over the weekend, the G7 should have simply put up $1Tn and given the PIIGS a 3-year holiday on all loan payments as long as they hit budget targets.  Greece is $400Bn in debt on a $330Bn GDP paying $23Bn in interest out of a $96Bn ANNUAL BUDGET.  That’s 24% of the budget in interest payments and that’s what all the rioting and shouting and all this panic is all about.  How easy is it to "fix" – just GIVE them $100Bn and cover their interest for 4 years and the whole thing is kicked to 2015.  That’s why this whole thing is such nonsense – Greece can’t take down the markets unless you blow it completely out of proportion and purposely do nothing at all to mitigate the damage.   This has to be the stupidest crisis ever fabricated.

    Greek Budget in Euros:

    Greece’s debt as of March 2010 (now about 285Bn Euros) – note only $112Bn was owed to Banks (TARP was $700Bn for perspective) and only banks that were stupid or greedy in March of 2010 still hold Greek debt today.  It’s the Sovereigns that eat the rest and, other than France – it’s a drop in the bucket:  

    BRICS/Joe – I’m not surprised, they must be sick of this BS too.  Brazil says "Hey, I’ve got $100Bn to lend – it’s no big deal — REALLY!"  

    $20K/Shadow – Time to get an apartment, I think!  

    Greenspan/StJ – This cartoon nicely sums up Greenspan’s career:

    I like those sector charts.  

    Most S&P 500 sector charts look pretty similar to the chart of the main index.  Industrials and Financials have clearly experienced the most pain during the recent downturn, while the only sector currently trading above its 50-day moving average is Utilities.  Subscribe to Bespoke Premium to view these sector trading range charts on a regular basis.

    Subscribe to Bespoke Premium to receive more in-depth research from Bespoke.

    Wow, 4 already.  This day flew by – very exciting!  

  120. Phil
    Know anyone that wants a nice home with over 3 acres 6 miles from the 2nd most power ski area? An Apt sounds good to me.

  121.  lflan, I missed your trade yesterday (and today) but I’m holding 5 Oct 375/380 against 3 sold Oct 305 puts and it is going great (from last week when you suggested a spread). Please keep posting your trades! I love ‘em! 

  122. lflantheman
    Is This your latest Bull call spread ? thanks
    This creates 40% Oct 360 /385s

  123. lflantheman, thank you for your insight on AAPL.  How do you "cover" the 360/375 and 360/385 BCS?  Thanks again.

  124. Welcome back Manimal!  

    CSTR/Shadow – We have always liked them but down around $25, $45 is hard to swallow even though they have good growth.  It’s just that so many very solid companies are trading at 2-year lows and these guys are up almost 100% in 2 years.  If they get back to $35, very interesting.  

    Dow finished at 190M so 1/3 of the volume in last half hour.  

    Ski area/Shadow – I would have when I was younger but now I can barely make it to Killington a couple of times a year.  

    At the close: Dow +0.36% to 11101. S&P +0.88% to 1172. Nasdaq +1.39% to 2222.
    Treasurys: 30-year -0.67%. 10-yr -0.15%. 5-yr flat.
    Commodities: Crude +1.96% to $89.92. Gold +1.28% to $1833.85.
    Currencies: Euro +0.1% vs. dollar. Yen -0.44%. Pound +0.45%.

    Market recap: After an epic 24 hours of Euro-rumors, stocks finished higher in choppy trading as French banks dismissed concerns over their access to funds. Volume was light, as trading continues to lack conviction. Treasurys fell after the U.S. sold 10-year notes at a record low yield. Advancers led decliners on the NYSE by three to one.

    Transportation stocks are steady gainers on the day with all 20 stocks listed in the Dow Jones Industrial Transportation Average moving higher. Not getting left out of the party are shipping stocks (SEA +2.2%), led by OSG +9.2%PRGN +4.2%FRO +3.6%and DRYS +2.8%.

    A BofA survey of financial pros finds near-unanimous agreement the market will force a major intervention to handle the EU debt crisis. The favorite solution is a EU TARP in which mandatory capital injections are made into the banks, followed by a restructuring of the debt of the PIIGS.

    One idea rattling around the Fed - stop paying interest on $1.6T in excess reserves lenders have on deposit – may not be very helpful. Are banks really going to start lending if they’re no longer getting 0.25% from the Fed? The unintended consequences – including negative rates and money market funds breaking the buck – may outweigh any theoretical benefits.

    GE creates jobs – In Europe!  GE‘s Jeffrey Immelt, who heads Pres. Obama’s advisory panel on creating U.S. jobs, is investing $118M expanding GE’s business in Germany, building a new innovation center in the country and hiring 450 people. Immelt has overseen big losses in GE’s U.S. workforce since his 2010 hiring as CEO, but he has added tens of thousands of new jobs overseas.

    Can you possibly need more evidence that the middle class has been destroyed?  As a weak economy dings sales of "premium" brands, Procter & Gamble (PG) is embarking on a strategy shift: the company is now offering more products targeted specifically at high-income or low-income consumers, rather than maintaining its traditional focus on the middle class. Citi refers to this phenomenon as the "Consumer Hourglass Theory." 

    Getting ready for those inevitable riots:  TASER International (TASR +1.1%) gets a jolt after itannounces an order for 200 TASER X26 electronic control devices and related accessories by an unnamed U.S. federal government agency.

    Those nickels and dimes really add up:  Airliners collected $1.38B from customers for fees in Q1, according to the U.S. Dept. of Transportation, breaking down to $784M in baggage fees paid (grumpily) by consumers and $598M in fees for making changes to reservations. The DOT has proposed tracking 16 additional fee categories to monitor the industry more carefully. 

    Philips Electronics NV (PHG +4.8%) continues to climb after raising its cost savings targets and confirming its 2013 forecasts in the face a weakening global economy. The company also reaffirms its intention to step up additional investments in R&D. 

    M&A making a comeback to rave reviews:   Transocean (RIG +3%) sets a bullish tone for energy stocks, as Argus Research says the planned $1.4B purchase of Aker Drilling will help its deepwater drilling business. RIG "is acquiring the fleet at a modest discount to fair value," Argus says. Also, Hess (HES +2.8%) shoots higher after CEO John Hess buys $10M worth of its shares.

    EMC CEO Joe Tucci told a German newspaper his company is looking to acquire security software firms. Independent security software vendors that might not be too big for EMC’s appetite include WBSNFIREVDSIIL, and KEYW.

    While Research In Motion’s (RIMM) smartphone position might be holding up well in Europe and Latin America, its North American freefall has been stunning: Bernstein estimates RIM’s NA shipment share has gone from 54% in Q1 ’09 to 12% in Q2 ’11. The firm expects more pain in 2012, as AAPL and high-end Android (GOOG) vendors move downmarket

    More on Cisco’s (CSCOanalyst day: The company iscutting its sales growth forecast for the next 3 years to 5-7%, below a prior long-term forecast of 12-17%. Cisco expects its addressable market to grow 7-8% during this time, with strong growth in wireless, virtuallization, and collaboration offset by switching and routing weakness. Shares are now up 2.4%

    While Cisco (CSCO +2.2%) has $45B in cash and investments on its balance sheet, good for a net cash position of $30B, only $4B of these assets are onshore. If its offshore assets were repatriated today, without a tax holiday, Cisco would be left with $15B in net cash. This $15B difference is equal to about $3/share in Cisco’s valuation.

    CHINA and IPhone 5 in the same paragraph = WINNING:   Barclays’ Ben Reitzes believes the iPhone 5 will begin selling in China as soon as early December, which in turn could make his calendar Q4 iPhone forecast too conservative. Reitzes also sees Apple’s (AAPL) tablet competitors taking a "more subdued" tone, bolstering his view that the iPad will continue dominating the market. (previously

  125. Thanks Iflan.  I went long on Apple as well and cashed in this afternoon.  

  126.  Boy for the left, which always seems to have fight back on their heels, this is how you frame an issue: WITH THE TRUTH.
    Also, skunky republicans CHEERING letting the uninsured die? It’s one thing to secretly think it, but another to outwardly CHEER it. Here’s the part of the political cycle I truly enjoy: watching the true colors of the people I despise surface unfiltered. No secret language or subliminal messaging here: If you’re poor --> JUST. FRICKIN. CROAK already!! That’s a pretty plain message.
    But on a lighter, and more fun-with-hypocrisy front: Remember the Terri Shiavo nonsense? Well, easy answer there: if you want to pull the plug, just let your insurance lapse and watch the "Freedom Party" come do it for you. Problem solved — Everyone wins!

  127.  Question, are we going to look back and say remember when mortgage rates were so high at 4%?
    Are we in for a  decade of Japanese style stagflation? The one where no one buys anything but gov’t paper at 0.01% yield?Stocks flat. Houses flat. GDP flat.

  128. Today’s levels.

  129. Bio/Debate- I love when people that didn’t even watch the debate chime in when the Media takes something out of context. Ignorance is bliss. At least I took the time to watch the debate (as I would a dem debate) Let me guess, you were busy watching reruns of 2.5 men???

  130. @bio/jakester/debate
    I watched the whole debate and their was no doubt they were cheering for people to die if they chose not opt for healthcare in a good riddance kind of way.  Ron Paul did not feel that way and none of the other candidates were cheering but the tea baggers in the audience sure were.

  131. Media bias blah blah blah. If you vote for republicans, you’re voting with people who cheered. And you know it. And the thinly veiled gay joke (trying to escape some humiliation through conveyance) is duly noted.

  132.  Phil
    When you sell a leaps put, and it goes against you or in the money, would you suggest selling shorter term naked calls – maybe partials – particularly if the stock is fairly stable? I am thinking of MO 2013 25′s – which are not ITM,but due to the high vix I am "down" 30%. Thanks,

  133. LFlan/AAPL
    For the novice,
    Did you sell the Oct 385 calls?
    If so, are you expecting AAPL to trade below $385 by Oct expiration?
    If so, why? Europe overhang? Run up into earnings, followed by fall into expiration?
    Why not buy the Oct calls straight up?, hold and sell AFTER the run up?
    Would appreciate your thoughts

  134. You know, it is kind of funny watching other people go at it….  8) 

    I watched the video in question but I’m in no mood so I’ll let Mother Jones Report, you decide.  

    Blitzer: Let me ask you this hypothetical question. A healthy, 30-year-old man has a good job, makes a good living, but decides, "You know what, I’m not going to spend $200 or $300 a month for health insurance because I’m healthy, I don’t need it." Something terrible happens, all of a sudden he needs it. Who’s going to pay if he goes into a coma, for example?

    Paul: In a society that you accept welfare-ism and socialism, he expects the government to take care of it.

    Blitzer: Well, what do you want?

    Paul: He should do whatever he wants to do, and assume responsibility for himself. My advice to him would be have a major medical policy. But not forced—

    Blitzer: But he doesn’t have that. And he needs intensive care for six months. Who pays?

    Paul: That’s what freedom is all about. Taking your own risks. This whole idea that you have to prepare to take care of everybody.

    Blitzer: But congressman, are you saying that society should just let him die?

    Crowd: [Yeah! Yeah! Laughs.]

    Here’s a longer version of the clip.  The problem with this kind of debate is Blitzer isn’t there to press the point.  Ron Paul cops out of the question saying "charity" should take care of the guy.  So Government taking money from people is bad but charity taking money from people is good.  



    Either way, to me, the point is you can’t just let people die and therefore sick people need to be taken care of and therefore it is ONLY LOGICAL that EVERYONE pays into a health care pool that takes care of those unlucky enough to need it.  The Government, through collective bargaining with 300M insured, should be able to negotiate decent prices – perhaps the same kind of prices that Cuba pays (1/10th) for the same drugs or that Canada pays (1/3) for the same equipment.  Breaking up the insured into relatively small pools run by insurance companies and charities obviously leads to an elitist health-care system and completely negates our ability to effectively bargain for rates which, last I heard, was part of the Capitalist process.  

    Ron Paul is supported by the Health Care industry, they charge the US over 2 times as much, on the average, for each and every medical procedure as the same companies charge for their goods and services everywhere else in the World.  I have never seen such an amazing thing as the same people who want to cut spending on relatively minor projects will FIGHT to make sure we spend an ADDITIONAL 7% of our GDP on health care compared to ANY other developed nation – WITH WORSE OUTCOMES!  

    They are screwing you and you LOVE IT!  Come on Conservatives, admit it, you love to get screwed by Big Corporations – this probably relates to why they bust so many Republicans at bondage clubs…

  135. Maya, BruceE, bobhu, yodi,kurt….Thanks for your interest in my favorite stock……….AAPL…..Yes, today I sold the Oct 385s, so now I’m fully covered again.  My basic strategy is to hold spreads on AAPL most of the time…….this is for safety.   In volatile times like these a spread is much safer than a straight up call, and the spread will give you very decent profits as the stock continues to rise .  Then, when I see AAPL pulling back to a level which I feel is unreasonable for the stock I buy back the covers, or a portion of them.   So I’m intermittently taking profits by selling then buying back the covers as the stock price fluctuates but I’m safely in spreads most of the time.   Today I sold the 385s because they had the most premium.  Now I’ll leave the spreads alone UNLESS AAPL pulls back again to, say, 375 or less, then I’ll buy some covers back (for  profit) , leaving some 360s bare, and watch the inevitable climb back up, at which point…….repeat, repeat.     That’s my current strategy, and it works for me because I eat, drink and sleep with this stock on my mind.   As you know, I often own options on only one stock …….AAPL……My strategy on AAPL  may change as expiration approaches or as market conditions change.  I’ll post if I alter viewpoint or strategy. 

  136. Phil/ Bio/ Rustle- There is no doubt they were not cheering to kill people. If you really believe that then you more twisted than these outlets that publish this crap.  Bondage clubs??? Was that a bondage club Weiner was in??? I didn"t realize. You are so completely convinced of your own slant I stopped taking you seriously a long time ago.  This is the reason I rarely even check in here anymore. You are what is called Sneetches (look it up). Doctor Suess so it’s on your level. This site could be popular if it wasn’t filled with so much hatred and liberal bias.

  137. Phil- Ron  Paul is a doctor = bought and paid for by the health care industry? What a bunch of crap. Prove it. You should stick to trading because your politics suck.

  138. LFlan
    Thanks for that explanation.
    Unfortunately, I have not had much luck selling AAPL calls.
    It has SEEMED to me that every time I sell these, the stock starts to run up, or I cannot quite time it right.
    I have had better luck selling longer term puts.
    So what happens to your long AND short calls if AAPL gets to $400 by Oct expiration? And how do you calculate that up front?

  139. Good plan BDC – next time there’s an incident like that, the family should just go outside to the demonstrators and say "We ran out of money but they said if you contribute $100,000 a month they may be able to keep her going for another few years."  That would probably be a lot more effective than tear gas at dispersing the crowd!  

    1% Mortgages/BDC – I don’t know, if I can buy a $300,000 house and pay $1,000 a month for 30 years – I don’t think I’d be all too upset about it….

    Big Chart looking much healthier.  Although not as strong as it was, we are still in a rising channel that would be confirmed by a higher high – even if it doesn’t last.  That means we need to pop those red line on the Dow, S&P and Nas and the pinks on NYSE and RUT.  Last up pattern took about 9 days (good for demark fans) and we’re only in day 2 so we’re going to have to be patient but 5 days from now is the Fed Meeting so it all times out well.  

    Debates/Jake – Are you seriously going to watch 10 more 90-minute debates?  That’s 15 hours of your life you’ll never get back!  For those of you who wish to be as committed at Jakester, this site let’s you watch every last one of them (6 already down and 9 of Jakester’s hours well spent, I’m sure).  

    Leaps/Deano – What you are saying is that, if a stock you think is underpriced gets cheaper, is that a good time to short it?  Well, is it?  If you sell a put and you don’t REALLY want to own the stock, then STOP OUT.  Don’t ride it to the point where you think betting against yourself is the only solution.  Now, with MO, I know I would love to own them for net $23 and the 2013 $25 puts are $3.25 with the stock at $26.18 so what do you care what your Broker says you are down if your goal was to buy MO for net $23?  

    The stock isn’t even below $25.  Now, if you are so dying to buy the stock that you are now willing to spend more than net $23 to make sure you own the stock and don’t just profit from the short puts, then you could sell the $25 calls for $2.84 and that puts you in a buy/write at net $21.34/23.17, assuming you were to buy it right now.  Since $23.17 (the put-to price) is lower than your planned $24 entry, you don’t NEED to buy the stock yet, you can plan to buy the stock before it gets to $28, which would then make your buy/write net $23.16/24.08.  

    See how that works?  So you just have to do the math and figure out what you can live with.  Clearly, with these numbers, there’s no crisis yet.  Also, if you are scaling in, note that the $20 puts are $1.40 so, essentially, you can roll your puts to 2x of those for net .70 (.35 each) and then you are looking at a 2x entry at net $18.50ish.  Again, not something you need to do but if you think owning 2x of MO at net $18.50 is a good thing, then why on earth would you worry that the short $25 puts are $3.20?  

    NEVER sell a short put against a stock you don’t REALLY want to own.  If you stick to that, you will have a much more relaxing time watching the puts go up and down in PRICE – not VALUE!  Also, keep in mind that the major flaw in selling short calls in stocks you are bullish on is that you DON’T, by definition, REALLY want to be short the stock (because that’s what selling naked calls is) and, if the stock has a good something and flies up 10-20% for whatever or, even worse, gets bought out – then you end up losing money on a stock that went the way you thought it would and you feel like a real idiot – not a nice feeling, but an accurate one when you bet against yourself.  

    No Jake, I was just talking about the club that RNC staffers take people to Club Voyeur in West Hollywood but that scandal, was quickly swept under the rug and they had to wait about 6 months to fire Steel.  It’s OK Jake, it’s a very expensive club – perfect image for the RNC and I’m sure you’re proud to see your contributions going into a leather g-string.  In fact, there’s a lot of interesting ways they spend your money or OVERspend as they spent $16M in that period and collected only $7.2M – kind of like what they do with the National Budget!  

    For Mr. Steel, that trip out West also included $9,099 at the Beverly Hills Hotel, $6,596 at the Four Seasons (right down the street) – probably on a dinner although they claim to have charged "food" at the club so the food at the Four Seasons must have really sucked….

  140. Ron Paul/Jake – You may be right, Health Care was only the 3rd largest contributor to Ron Paul in the last cycle with $571,000.  Apparently old folks loved him more ($1.1M) followed by Computer/Internet with $754,00.  He got a nice $124,000 from the Mitch Lau PAC, which gets it’s money from the medical industry.  But you already know this stuff, don’t you Jake – otherwise you’d have a fact once in a while instead of just your immediate knee-jerk denial of anything that doesn’t conform to your viewpoint.  

    And who is Ron Paul’s 2nd Biggest Pac contributor?  Why it’s Robert D Leppo of Chronix Biomedical, who sell Medical Devices and equipment in San Jose, CA.  They spent $45,373 to make sure Ron Paul was re-elected in Texas’s 14th district, in a campaign that raised $5M but only spent $2.7M.  When a candidate retires, all that unspent PAC money goes to him – isn’t that special?  

  141.  Phil – from the tone of your email it sounds like you thought I was panicked – not so, nor did I sell a short put in a stock that I didn’t want to own at the net. Just looking for some confirmation of selling on both sides – which you gave me in your second paragraph. I think MO is undervalued – as are several stocks I won like this – and I’m just looking to sell partials on both sides awaiting a recovery. Some sort of ratio with a plan to buy in on the way up, and keep maxing the premium was my thought process. 

  142. Phil/Club Voyeur- I have an office in Burbank (over the hill from west Hollywood) and familiar with thsi club. I can state for a fact this is nothing as you describe it. Voyeur is a trendy club that attracts celebrities . It’s is not the kind of place Steele would be hanging out his "steel"  ( as weiner was) but hey, misleading your audience is part of your gig, right?  Frankly,  I’m a businessman and I follow the policies of the company. If Steele is staying at the Beverly Hill’s hotel and eating expensive dinners then fault the bureaucrats (probably democratics) that implemented such a loose a policy permitting this type of behavior. BTW, If you think this is a scandal it would take about 10 seconds of googling to find similar Democrat violations, so don’t insult my (or your readers) intellegence with this crap..

  143. Oh, I see the confusion Jake – You thought I was talking about the NRC’s fundraisers (yes, there were many) at the Forty Deuce strip club in Vegas when I was talking about the RNC’s bondage club adventures in California.  So many scandals, so little time…

  144. Tone/Deano – Sometimes you ask a question that I think is important for a lot of people so I will answer in a more general way and restate rules that are important to follow.  As long as I got the answer in you were looking for, then I’m happy but it was a good general question that I didn’t want to go to waste so I expanded on the topic and highlighted it – it’s not some judgement being passed on you other than the fact that you happened to ask a good question. 

    LOL Jake – So fixated.  Now you want to debate on what kind of club Voyeur is?  Well, sadly I’m not familiar with the club but still I’m disinclined to take your word for it when several hundred reviews on Yelp disagree with you.  As to Weiner – how does that make you "win"?  I don’t get it, you have a group that runs on a holier-than-thou platform yet turns out some of the most depraved sexual behavior in politics since Caligula and you have now countered that by saying "Weiner" in each of your last two comments.  What’s the matter – did you forget about Lewinski already or does texting pictures trump blowing campaign contributions on lesbian bondage shows?  I’m sorry that I don’t visit the club as often as you do so I’m not really up on the scales.  

    Fortunately, in the interest of fairness, there is a site that compare the two but, as they so aptly put it:  

    Oh sure, Democrats have their sex scandals, but they’re not nearly as interesting. For one thing, most Democrats busted in sex scandals aren’t the same type of overbearing moral scolds as your average GOP politician. (The one recent exception was former New York Gov. Eliot Spitzer, whose work shutting down prostitution rings left him open to charges of bald hypocrisy when he was caught rendezvousing with a prostitute himself.)

    Additionally, Democratic sex scandals tend to be of the more vanilla nature: affairs with campaign workers and interns are pretty standard fare as far as modern political culture goes, as are visits to high-priced call girls.

    The GOP’s deviants, on the other hand, have brought a wealth of oddball debaucheries to the table, from failed bathroom-stall hookups to slimy messages sent to underage congressional pages to rumored S&M diaper fantasies. 

  145. Phil/Obama- Major contributors- Let’s see, oh it’s Oil and big banks. Hmmm……It’s good you can see the wrong on both sides of the fence…NOT!

  146. Phil/Voyeur- Sorry, can’t help fulfill your deviant sexual fantasies. I’m not part of the club scene in the LA area but If I was, there would be many others in front of that one.  If I read inside your large QUOTES your real issue is that you hold conservatives to a higher moral standard? That’s really the root oif this isn’t it? Is that your argument? It’s expected from the Dems but shocking when it’s a conservative? You should be very proud.

  147. I’m sorry Jake but forgot the link to the Yelp reviews on your "trendy club."   I have to just mention how funny it is that you are now reduced to sticking up for Club Voyeur to protect your party!  " Voyeur is a trendy club that attracts celebrities . It’s is not the kind of place Steele would be hanging out his "steel"  ( as weiner was) but hey, misleading your audience is part of your gig, right?"   Obviously telling people I’m misleading them is your new gig as you make this statement over and over yet, in this very same sentence you say Weiner was "hanging out his steel" or whatever it is you are saying yet, unless I am very much mistaken, that’s not at all true as the picture in question merely showed an outline in his underwear.  That doesn’t excuse it – I could give a crap about what the man does in his free time but whatever image you have burned in your head may, itself, be "misleading" – unless of course you can do one of your fabulous 10-second Google searches and prove that you are not just making crap up in your efforts to defend your boys.  
    ROFL – it’s still funny – Voyeur is a trendy club…   Wow – really?  Seriously that’s your story and you’re sticking to it?  

  148. Obama’s top contributors:  

    University of California$1,648,685Goldman Sachs$1,013,091Harvard University$864,654Microsoft Corp$852,167Google Inc$814,540JPMorgan Chase & Co$808,799Citigroup Inc$736,771Time Warner$624,618Sidley Austin LLP$600,298Stanford University$595,716National Amusements Inc$563,798Wilmerhale Llp$550,168Skadden, Arps et al$543,539Columbia University$541,002UBS AG$532,674IBM Corp$532,372General Electric$529,855US Government$517,908Morgan Stanley$512,232Latham & Watkins$503,295

    Obama’s top contributors by industry

    1Lawyers/Law Firms$43,154,6422Retired$42,892,9783Education$22,976,1264Misc Business$16,500,9995Securities & Investment$14,891,7356Health Professionals$11,746,6317Business Services$11,503,7718Democratic/Liberal$11,106,4879Real Estate$10,422,03110TV/Movies/Music$9,004,07211Civil Servants/Public Officials$8,807,39112Computers/Internet$8,521,00313Women’s Issues$6,906,66414Misc Finance$6,398,26715Printing & Publishing$5,968,03116Other$3,669,12317Hospitals/Nursing Homes$3,339,09918Commercial Banks$3,316,35119Non-Profit Institutions$2,974,89520Construction Services$2,915,255

    Come on Jakey, make up some BS that doesn’t take less than 30 seconds to prove you wrong.  

  149. maya1     6:45 pm question……….If a stock is above the price of the spread at expiration then the spread gets closed out automatically (at least at TOS) and you will get credited the exact amount of the spread.  For example:   The AAPL OCT 360/375 spread closed today at     33.00/22.71.   This means the spread is presently worth 33.00 minus 22.71 or 10.29.   Now if AAPL remains above 375 at expiration then the spread will be worth exactly 15.00.   And the spread difference at expiration will be exactly 15.00 even if AAPL is 450.00.   So the above spread stands to earn how much if you buy it today and AAPL is above 375 at Oct expiration?    15.00 minus  10.29   =   4.71     .     And 4.71 divided by 10.29 reveals this to be a 45% gain.      Now the other spread I hold is Oct 360/385  which closed out today at 33.00/16.70.    This spread is worth today 16.30.  This is a 25 point spread, so if AAPL is above 385 at Oct expiration, then it earns 8.70, a gain of 53%.   So that’s how it’s calculated.  And if you work with these types of spreads enough you soon do the calculations in your head.  Now with AAPL, you can lay out such a spread tomorrow and expect a 50% gain within 39 days if AAPL is above your top spread number.   Will AAPL be selling for more than 385 at October expiration?   Hmmm…… What do you think?   :)

  150. Twitter fund/Yshen – I’d like to see them put in more than a month before investing.  It is a good concept though.  

  151. From Zacks research, Earnings revisions are at their weakest since April 2009, with 56% being revised down.

  152. really i think it important to point out that Caligula really shouldn’t be thrown into the same ‘unit central’ as michael steele..after all unlike steele Caligula was raised in a powerful and complex society.. underscored by savage brutality….please allow him the exalted status both Fellini and Bob Guccione recognize in their seminal works on  venues of decadance that make the Club Voyeur look like ‘The Layback and Whackit Bar" in my hometown of Lewiston Auburn Maine…Caligula was the King of the fleshy pink penumbra..he knew how to throw a hot dog down a hallway!!…steele and his cronies mere hard ons…asshats… with  (someone else’s) a credit card…if you are going to cudgel the priviliged at least use a worthy rythmn stick….

  153. Sophomoric.

  154. Phil/Contributors- Doesn’t take more than ten seconds to prove you are misleading your readers to further your liberal agenda, BTW, Don’t I see no less than four banks and "no tax" GE in your response? Enough of this nonsense. I’m done.

  155. Jakester- get a clue you clown, even the dirtball that is Rick Perry said he was shocked at the audiences reaction. The tea badgers in this clip remind me of the crowd in the running man…. I’m just waiting for the crowd to start chanting ‘buzzsaw, buzzsaw’

  156. I just found out about "Attack Watch" – paid for by "Obama for America," it’s a web site for responding to Republican sound bites.

  157. Jakester-Wow Jake…Big Oil and Big Banks gave money to Obama. I’m shocked! I can’t wait untill he starts a war in an oil rich downtrodden country under false pretenses and pushes awards for no bid contracts to "rebuild" same country to those very same contributors (or doesn’t flinch when his VP does it). Then we would really be in trouble! By the way, do you really think that Democrats are responsible for the head of the RNC’s profligate ways? Seriously? "If Steel is staying at the Beverly Hills Hotel and eating expensive diners then fault the bureaucrats (probably democratics) that implemented such a loose policy permitting this type of behavior."
    Gee Phil, the fun never stops around here!

  158. Deano/naked calls
    I don’t know about the naked calls, but I don’t see why you can’t sell some call spreads for income in the shorter term while you are waiting for your short puts to come to maturity. If you do that, you are actually close to  implementing the option strategy of the Iron Condor in which you sell a put spread below and a call spread above the current price, where the maximum return is that on expiration the stock remains between the strike price of the short puts and the short calls.
    The danger is obviously that the stock suddenly comes to life and you find yourself in trouble with the call spread, although this will be partially offset on the put side. Of course with the call spread being short term, there is probably plenty of space to roll it forward if necessary. Perhaps one way to do this would be to use some kind of ratio spread. For a purely random example, if you are short 10 puts of stock x, you sell 5 OTM call spreads for $1 with a potential loss of $3, thus giving you a potential income of $500 if the spread expires worthless and a potential loss of $2500 if the stock goes batshit. This loss, could however, be mitigated by gains on the value of the short put, though only if you were prepared to liquidate the short put early. If the short put was sold when the VIX was high, and it is now low, you might not want to do this.
    I have certainly been toying with this idea in terms of having a portfolio with a large number of short puts, you could sell a limited number of OTM SPY call spreads (for example the October 122/125 spread for net $1)  to generate income in the interim, with the knowledge that if the call spreads go bad, the rest of the portfolio will be looking good.

  159. The civility quotient is falling fast here.

  160. It’s cyclical, Zero – remember a couple of weekends ago? I think it’s part of this little culture to have these swings; we’ll come back.

  161.  As I have said on here many times I am a conservative (but Phil’s economic arguments are really pushing me the other way!).  I enjoy hearing the opinions of others and seeing things from their perspective.  
    The current Republican candidates are scary.  It is sad that "my" party can not come up with an better candidates.  I am embarrassed by the things these people are saying.  It is very divisive and non-productive.  
    The bottom line is that I am an American.  I want my country to improve.  I think having philosophical differences is good and even healthy!  However, some of the comments these candidates are making, I am very worried about the future of my country.  I live in Illinois and we had one of the Representatives that did not show up to Obama’s jobs speech.  I called the office and I complained that I felt it was inappropriate, rude and un-professional!  You are a congressman, it is not about party lines, it is about helping this country!  Make no mistake, I am not a fan of Obama and I did not vote for him, but he is my president and I wish him the very best, for all of our sakes.  The sooner everyone figures this out, the sooner we can start to turn American around.
    Well, thats it for me.  Off to bed.  I can not wait to meet everyone in Vegas!

  162.  First the Catholic kids and now the boy scouts?
    Boy (no pun intended) the republican wet dream (pun intended) of keeping it in closet, as opposed to the liberal progressive agenda of getting therapy and moving on, is sure having it’s usual, disgusting and utterly predictiable consequences, ISN’T IT NOW?
    Weiner. MARK FOLEY. Weiner. MARK FOLEY. It’s like the marco polo game you can play in the pool. Is the docuhebag who texts actual woman of actual consenting age better or worse than the guy who texts underage boys. OH PLEASE, TELL ME REPUBLICANS, HOW DO YOU LIK ETHOSE UNDERAGE BOYS!!!!!!!!!!!!!!! God this is so easy like shooting fish in a barrel. 
    The only thing that pisses me off about Obama (sorry, conservatives, I’m not racist, so no, it’s not because he’s black), is that HE’S TOO DAMN ECONOMICALLY CONSERVATIVE. New Deal 2! Make the sequel!!!!!  Trains. Dams. Bridges. Jobs. GO!

  163. LFlan,
    Thank you for the explanation…see it now!
    Will AAPL be over $385 at Oct expiration?
    I have NO idea!
    Fundamentally, it should, and is there already but if the market tanks on European stuff…all bets are off, no?
    Would love to hear your thoughts.
    All the best!

  164. Jakester – You spout such nonsense.  It’s obvious you don’t really believe what you say.  Isn’t there somewhere else where you can get your conservatroll jollies???  There must be a lot of Libs to pick on in Burbank.  Go outside and get it out of your system man!  Or go up to the Bay Area and live in Berkeley.  They’d love you there!

  165. Slow down!
    THIS IS THE FIRST TIME I HAVE CHECKED IN LATE FOR A WHILE. What the hell is this shit? Twisted!

  166.  I was reading about the Single Integrated Operational Plan. If you conisder yourself an American and have no idea what I’m talking about, then YOU ARE NOT AN AMERICAN.
    If you haven’t visited the Hiroshima bomb museum, a couple of comments: A) you suck, travel more, or else, B) put it on your list. To feel sorry about a bunch of woman and children that were murdered in single instance of a fraction of 1 second, well that’s for you to do your own moral math. To realize the situation that exists today though, that such a weapon exists with your exact name imprinted on it: either floating in a sub, or an ICBM base, launch capable within 60 seconds, with it’s immeasurably stronger powers. Well that’s something else entirely. It empowers me really, to be honest. To realize how stupid and foolish you are with your abortion and your worthless Christian doctrine, the very thing that defines the idiocy of the ignorant and uneducated.
    Keep this in mind when you vote for *whoever is next*. Whether it’s the leathery and horrible Michlle Bachmann (or whatever her name si), or the Mormon guy, or that douchebag moron, what’s his name? Rick Perry (is that an ice cream flavor).
    Keep this in mind. Because if happens it will be YOUR FAULT.

  167. Twitter/market – those guys introduced that concept back in 2010. They weren’t giving out the code for their algorithm then either…
    zeroxzero – you’ve just gotta learn how to filter out the BS…
    shadowfax – I didn’t like living on ~25k for even a year when I started grad school in 2003 (not one bit!), let alone having to pay 6k in property taxes. Now I just have to pay off student loans, but at least I was lucky enough to find a job where I shouldn’t be paying that forever.

  168.  Well, I was about to say this is entertaining… but then I got to biodiesel’s comment and all of a sudden reality kicked in. Thanks for ruining the party, Chris! I haven’t been to Hiroshima, but I went to the Werner von Braun’s skunkworks at Peenemunde in Germany this summer and had similar feelings to yours. Hard to see all the ingenuity of the German spirit put to work on what would become the basis of our current ICBM fleet. It was even harder too to step inside (with my 7-year old son) a "cattle car" of the German railway that was used to transport Jews to concentration camps, and try to explain that particular part of my culture. Not to equate the two, but it pisses me off that we as Americans can wage war in the middle east and kill tens or hundreds of thousands of innocent people in this day and age and people like the current crop of Republicans can feel like that was a just cause. Ugh.  

  169. zero its true…but you will note that the stridency is least phil isnt boring some of his less ‘fast flying’ wing men however are one note ponies…so its much better as a ‘trading site’ because of phil’s hand holding but compared to zero hedge the repartee is flatulant…from the right and left..just my take there is just no escaping the barrage of political garbage…not the concerns that are expressed but the hyena like gang banging that goes on if one says something that upsets the delicate sensibilities of the partisans…both sides…there are about three people on the site who actually make solid contributions during the trading day it would be great if we could avoid the shitstorms but really this isnt the trading desk at millenium…or tudor jones..i like it because its like a fucked up family..  

  170. Dollar on the march again – 77.88, taking down the futures about 1%. 

    It doesn’t make the Nikkei happy so what’s the point?  Yen still pinning 77 – the Swiss should learn from those guys!  

    Euro $1.362 and dropping, Pound $1.575 and dropping.  Gold holding $1,840, oil back to $89 and falling, gasoline $2.72 on a hard drop as well.  Copper failed $4 at $3.94 now, silver still $41.  

    Caligula/Angel – He only reigned for 4 years, I don’t know where he found the time as a one-term Caesar.  

    BP/Jake – Seriously, is this how you present facts?  So Obama got more money from BP than other candidates did…. from BP.  How does that prove anything other than the fact that you will take any random bit of information to try to back up a point you made up?  What does that have to do with contributions by industry, by sector or total contributions?  Where does this put BP on the total list of Obama donors?  If you actually read your "evidence" it very clearly says that BP spent $15.9M lobbying and made $2.89M in donations with Obama getting a total of (drum roll please) $77,051.  That’s 0.4%.  Wow!  Not wow about BP of course but wow that you weren’t embarrassed to let yourself be associated with that insanely lame article as the only actual bit of evidence you have provided to back up any of your nonsense.  Seriously, is this how you draw your political conclusions?  It does explain a lot…

    Running man/Jrom – Classic!  Maybe we can do that game with the poor and uninsured.   

    Attack Watch/Elliot – It’s a good sight but I wish they would position it differently.  It should be more about exposing the BS without all the drama.  Still, it is amazing how much BS is slung in these campaigns.  

    Well said Danosu!  

    Well BDC, now you are stereotyping.  Not all Conservatives feel the the same way about all issues the same way not all Liberals do.  What’s sad is that there are so few moderates on either side and that it’s all become about "winning" when we have a political system that was designed to promote compromise so, essentially, no one is actually following the will of our Founding Fathers.  When did Democracy come to mean half the people get their way for 4 years and half the people suck it?  I do fault "regular" Conservatives/Republicans for allowing their party to be hijacked by extremists.  You don’t see the Democrats taken over by Communists because, believe it or not, we do know what "too liberal" is.  We hardly even have any proper Socialists but, compared to the current Republican field, Reagan is a Socialist.  What I’m sure is a silent majority of Republican Conservatives have allowed themselves to be identified with extremists for so long now that they end up getting pushed to the right trying to defend their party.  That has left this country with no middle ground and no middle class and those of us who do care about the country should want to fight to take back that middle – it’s what America used to be all about.  

    Hiroshima/Kurt – I made a point of walking around the whole city, trying to imagine the whole thing being leveled in an instant.  You look at all the people, the women, the children, the shopkeepers, the delivery men, the painters, the carpenters, taxi drivers – all going about their daily lives, trying to make a living and some guy 10,000 miles away pushes a button and kills them all.  Justified or not in the course of a war – what’s really sick is that we, as a planet, even allow for the possibility of that ever happening again.  But, then again you have a guy who almost became our President who joked about bombing Iran – when did we become that?  Palin’s all for it too, she’s only worried Obama would start another war and steal all her fun.  

  171. jackster is fercockt….
    Phil, you’re right!  Yiddish words and phrases can be a great way to express yourself…. :)

  172. Phil
    Looking at TOT again they finished the day at 44.55 there 5 year low is 35.05 on 10/27/2008
    Came up with 2 spread  Jan 42.50 / 47.5 for 1.30 selling jan puts for 1.30
    Selling 2   Jan 13 42.5 / 50 for 3.30  then selling 1 Jan 13 40.00 puts for 6.20 for net  .40 for 2 speds already 1.50 in the money.

  173. Shadow

    I’d have to agree.

    Makes mw wonder if this noise is worth the price of admission.

  174. Moonstruck –  Wow!  I missed quite a night here.  I was out looking at a brilliant full moon last night, and wondering what kind of crazy stuff would be happening at work.  (It always does during the full moon.)  Sorry to miss the sex club conversation since it is increasingly becoming an area of expertise.  I just helped with a murder investigation at a local club (that is actually called the T & A Club, at least they are clear about what they are.  No Hollywood crap about being exotic.)  I have had two clients who were "dancers."  These places always turn out badly for the women exploited by them.  
    Anyway, I don’t discuss politics on the full moon.  In case you are wondering, the full moon not only effects politics, emergency rooms, psychiatric wards and so on – it also effects the markets!

  175.  By the way, if you do read the article on moon phases, we should be at a temporary high right now after the full moon, so hedge accordingly.  It sounds like crazy astrological stuff like horoscopes, but it may be related to ancient patterns of hunting during the full moon.  We males may be hard wired to hunt more aggressively during full moons (when we can track our prey longer due to the extra light), therefore we still run up the stock market due to the extra hormones pumping through our systems.  Time for the let down now, especially from the bitter disappointment for those of us who did not spear our mammoth, or make a killing on CMG!  As I said, hedge accordingly!

  176. Good morning! 

    Wow, nice turn in the Futures. 3am trade is back on today with the Dollar peaking out at6 78 and now back to 77.50 for a 200-point swing in the Dow Futures, all up over half a point now with the RUT taking the leadership we’ve been looking for.  

    It’s all the same BS pumping tricks they usually use only this time we’re betting on them so it’s fun!  

    Oil bottomed out at $88.50 but recovered to $89.75 at the moment, gold is $1,838, silver $41.27, gasoline $2.74, copper $3.95 and nat gas totally flatlining on the $4 line.  

    Euro bottomed out at $1.36 (gee, who’d a thunk?) and zoomed up to $1.3725, Pound fell to $1.57 and now back to $1.58.  Dollar rose so sharply the Yen is at 76.80 and EUR/CHF is $1.2037.

    So all is right with the World at 7am despite this:

    Chinese Premier Wen Jiabao says no one should rely on China to bail out the world economy. "Countries must first put their own houses in order," Wen said today. Asian stocks dropped following his comments, but European markets and futures have shaken the news off. 

    Moody’s downgrades the credit rating of Credit Agricole to Aa2 from Aa1 and Societe Generale to Aa3 from Aa2, with negative outlook. The financial strength rating of Credit Agricole is lowered to C from C+, while the review of SocGen’s will be extended "to consider the implications of the potentially persistent fragility in the bank financing markets, given its continued reliance on wholesale funding."

    More from Moody’s: The agency maintains its Aa2 rating on BNP Paribas, concluding the bank’s "profitability and capital base currently provide an adequate cushion to support its Greek, Portuguese, and Irish exposures." The lender, however, does remain on review.

    Though the news was not unexpected, stocks tumble in the wake of the Moody’s downgrade of French banks. Hong Kong -1.7%, Japan -1.3%, Australia -1.7%. Index futures: France -2.3%, Germany -2%, S&P 500 -1.3%. The euro -0.6% to $1.3592. 

    Only 20% of Americans believe the country is on the right economic course, and just 9% are confident we won’t slide back into recession, a new poll finds. Most think it will take 6+ years for home prices to recover to pre-recession levels.

    "Greece should default, and default big," Mario Blejer, who managed Argentina’s central bank following the world’s biggest sovereign default, says. "This debt is unpayable," he says, and, "A small default is worse than a big default and also worse than no default."

    That’s right, all the bad news that sent investors running last week is now being happily ignored as the markets plow higher.  The big dollar dumping move is a new rumor that the Treasury will work with the Fed to manipulate the TBill auctions (Operation Twist), which means both the supply and demand for TBills will be controlled between Timmy and Benny.  Timmy is also off to Europe to teach them how to manipulate their economies as well so – MORE FREE MONEY FOR EVERYBODY!  

    An EU official says Treasury Sec. Geithner - planning to attend Friday’s EU finmin meeting – will likely urge Germany to give up its resistance to increasing the size of the bailout fund. He is also expected to "tap the Greek finmin on the shoulder," to remind him of Greece’s responsibility.

    Treasury Secretary Geithner will make an unexpected trip to Poland this week for a meeting with eurozone FMs as fears of a Greek default decimate Europe’s banks. Geithner’s trip marks the first time a U.S. Treasury secretary will attend a eurozone FM meeting.

    European Commission president Jose Manuel Barroso says the EC will soon present options for the introduction of euro-area bonds, but warns the move won’t put an end to the crisis. Barroso told the European Parliament that the region faces its most serious challenge in a generation – "a fight for the economic and political future of Europe."

    There’s still plenty of bad news out there so we remain skeptically bullish.  Don’t forget, our pattern has been 500-600 points on a bull run and then a pullback and RUT 700 has been a brick wall to get through so we’ll watch that carefully for a sign that the markets are really ready to head higher.  We bottomed out at 10,800 on Monday so 11,340 is our goal (5%) in the short-term on the Dow but we won’t get there without the RUT cooperating.  

    As long as we hold 3 of our -5% lines on the Big Chart, we’re on a bull run but I love that DXD play from yesterday’s chat as protection and we’ll take another look with whatever offsets make it free protection as we need to leg into protection as the market legs higher (rule of thumb is taking about 1/4 of the gains on the way up and hedging for the way back down).  

    Wednesday’s economic calendar:
    7:00 MBA Mortgage Applications
    8:30 Producer Price Index
    8:30 Retail Sales
    10:00 Business Inventories
    10:30 EIA Petroleum Inventories
    1:00 PM Results of $13B, 30-Year Note Auction 

  177. LOL 1020!

    TOT/Bert – If you like TOT long-term, when the VIX is near 40 you want to take advantage of it to sell as much premium as possible.  So, when you go long, you don’t want to pay much premium either.  The 2013 $32.50 calls are $12.60 and you can sell the $42.50s for $6.10 for net $6.50 and you can sell the $40 puts against those for $6.50 and you are in a $10 spread that’s 100% in the money for $0.  Since you own the $32.50 calls, even if you are assigned TOT below $42.50 (5% down), your break-even on the trade is $37.50 (15% down) but your worst case is still owing 1x at net $42.50 because the stock could fail $32.50 and then you get nothing for your calls against the assignment.  On the other hand, that means your worst case is you own 1x of TOT for net $42.50 with the stock lower than $32.50 and if you DD there, you’re back to net $37.50 or lower anyway so a fabulous play to scale into!  

    Full Moon/Rev – That’s right, I forgot about that.  One of the Members had a nice lunar tracking chart a while back.  Also, I had a burrito at CMG that did taste a bit like mammoth!  8-)

  178. Phil/TOT
    "The 2013 $32.50 puts are $12.60 and you can sell the $42.50s for $6.10 for net $6.50 and you can sell the $40 puts against those for $6.50 and you are in a $10 spread that’s 100% in the money for $0. "
    I believe that should read "2013 $32.50 calls"

  179. Thanks JMM – doing it with puts would be – BAD.