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Thursday Fix – Victory In Our Time!

You ask, What is our aim? I can answer with one word: Victory—victory at all costs, victory in spite of all terror, victory however long and hard the road may be; for without victory there is no survival. – Winston Churchill 

I do HAVE to say "I told you so!"  

When I was interviewed on Monday and they asked why I’m bullish, I replied that "stimulus trumps everything" and that’s what we’ve been playing for, especially in our new White Christmas Portfolio, which will be off to a rockin’ start with the aggressive upside trades that I not only mentioned in yesterday’s post - which made easy fills yesterday morning, as the markets shook out the last of the weak hands on yet another rumor-driven dip.  

We got our daily double on the AGQ calls, as expected and SSO fell all the way to $44.20 (150% profit on that trade if they finish Friday above $45) while FAS dropped $13.35 and that spread will be good for a 2,100% gain if FAS can get back to and hold $14 – which should be a snap thanks to our friends at the EU.  

In the morning Alert to Members, I put up this cute little Gif to illustrate the day’s action and it was a real roller-coaster day but we stayed generally bullish, taking quick profits off our morning bear plays on DIA and USO.  We added a bullish trade ideas for AMZN (complex spread), TNA (short Nov $40 puts at $3.60) but that was it for the day because my comment to Members at 11:01 was: "Dollar rejected at 76.80 – still hope for the bulls!"  

Well, those bulls were us and we already had our bets in place from last week, when things were cheaper so there was nothing to do but watch as the markets took off like a rocket from that point forward.  Heck, we were so bullish we even sold NFLX puts (Nov $67.50 puts for $3) as a bullish offset to a DXD hedge (which we’ll pull the bottom of today).   On Monday we had picked up bullish trades on AAPL and GLW and I mentioned EWG in Friday’s post (those should be looking good this morning!) as well as our plays to go long in the Russell Futures at 700 and Oil Futures at $87 – trade ideas that are now up $46,000 per contact on the Russell and $6,000 per contract on oil – not bad for a few day’s work…

Friday’s morning Alert to Members had 4 bullish trade ideas.  We still have to finish the month, but I’m feeling very good about the first 3:  

  • TNA ($42 at trade) Nov $40/44 bull call spread at $2.20, selling MOS Nov $55 puts for $2 is net .20 on the $4 spread.
  • FAS ($13.40 at trade) Nov $11/13 bull call spread at $1.10, selling the $11 puts for .80 is net .30 on the $2 spread.  
  • DIA ($116.50 at trade) Nov $114/120 bull call spread at $2.95, selling $112 puts for $2 is net .95 on the $6 spread.  
  • YRCW is still 0.055 per share and I still like them long-term (and I never like penny stocks).  

We were taking these aggressive trades because we had cashed out the bulk of our virtual portfolios ahead of the EU uncertainty.  That leaves us with lots of margin to play with (good for put selling) and allows us to make small commitments that give us a big bang, so we don’t miss much on the rally.  Putting just $1,000 of cash to work on each (out of a $100,000 portfolio) gives us a chance to pick up $20,000 on the TNA spread, $6,666 on the FAS spread and $6,315 on the DIA spread – that’s $33,181 from $3,000 committed – being in mainly cash certainly doesn’t mean you can’t make a little money now, does it?  

Our other trade ideas from Friday’s post (all of which should be doing very nicely) were

  • ABX ($44.70 at trade) 2013 $35/45 bull call spread at $5.50 offset with the sale of the $35 puts at $3.65 for net $1.85 on the $10 spread. 
  • ABX ($44.70 at trade) short Jan $42 puts at $2.40 for a net $39.60 entry. 
  • CHK at $27.50, selling 2014 $25 puts and calls for $14.75 for net $12.75 with a 96% profit if called away at $25 and a net $18.88 entry if another round of the stock is put to you at $25 (a 31.6% discount off the current price).  
  • FXE ($138.25 at trade) March $138/142 bull call spread at $1.90, offset with short $120 puts at $1.30 for net .60 on the $4 spread. 
  • SQQQ Dec $21/28 bull call spread at $1 with various $1 bullish offsets for "free" protection.  
  • XLF ($13.05 at trade) Jan $10/13 bull call spread at $2.30, selling $13 puts for $1 for net $1.30 on the $3 spread.  

Notice I added the price of the stock or ETF at the time of the trade and I’m doing that because we get endless questions about whether we ever just pick stocks, rather than options and the answer to that is:  EVERY TIME we pick a bullish option position, of course we are also bullish on the stock.   Most of the stocks I picked on Friday are up 5% in less than a week and I guess if I were a boring old stock picker I’d be crowing about it but WE CAN DO SO MUCH BETTER!  

This is what we teach people at PSW – Why should you spend $40,000 for 100 shares of AAPL with the hopes that they will climb to $460 (up 15%) by Jan 2013 when you can (and ANYONE can do this) SELL 1 Jan 2013 $300 put for $22.50 (collect $22,500) and buy the 2013 $350/400 bull call spread for $27.50 ($27,500) so for net $5,000 (not $40,000) out of your pocket you control the same 100 shares of AAPL and all they have to do is hold $400 and you make a $4,500 profit and even if AAPL drops all the way to $300 – you only lose $5,000, vs $10,000 if you bought the straight stock

THAT’s why we play options – you don’t have to leverage your risk, you can HEDGE your risk so you can ride out these ridiculously choppy markets and put LESS cash at risk while taking full advantage of positive moves.  Options trading gets a bad rap because people misuse it to leverage risk but that same leverage allows you to REDUCE your exposure (as in the AAPL example) to VASTLY improve your chance of success in a position.  

Getting back to today’s markets:  GDP came in at the expected 2.5%.  A lot of people thought we’d jump from 1.3% in Q2 to 3% in Q3 without any stimulus but those people are IDIOTS and they can feel free to be disappointed and sell if they want to – the World needs counterparties!  Government spending was still very low and there was no inventory build (and we discussed shipping data in detail in last night’s Member Chat), so lot’s of room for improvement and, by the way, did I mention the $1.7 TRILLION DOLLAR STIMULUS?   That’s just from the EU – wait until China, Japan and the US do something too – we’re talking 3% of the Global GDP already and I’ll bet they crank it up past 5.  A few Trillion here and a few Trillion there and soon you’re talking real money….

We will be keeping an eye on our Big Chart levels but today will be dominated by the Euro squeeze as the bears get their asses handed to them, despite being told – over and over and over again – that there was a fix coming and that it was coming today.  As I mentioned in various posts last week – follow the Conservative Media in this country at your own peril – they are so used to lying to their viewers that they can’t even separate fact from fiction when it matters (see Friday’s post for a great example of how Murdoch’s Journal goes particularly out of it’s way to misinform it’s readers – also it was the Journal who were spinning all the shipping news negative yesterday!).   

The Dollar is already flying down towards the 75 line in pre-market trading and look out above for the indexes if the Dollar fails to hold that mark.  As we expected, this is doing nothing for gold as we’re moving into a risk-off trade environment but I will caution that we still fear Yentervention from the BOJ (aimed at propping up the Dollar) as well as this weekend bringing a renewed focus on the US and our many, many economic issues as well as China.  

Just the EU stimulus alone will not be enough but, for now – it’s sure going to be a big help!   

 

 


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  1.  "You did it! You did it! You said that you would do it,
    And indeed you did. I thought that you would rue it;
    I doubted you’d do it. But now I must admit it
    That succeed you did. You should get a medal
    Or be even made a knight."

     
    [My Fair Lady]


  2. Oil Lines

    R3 – 97.80
    R2 – 95.86
    R1 – 93.88
    PP – 91.94
    S1 – 89.96
    S2 – 88.02
    S3 – 86.04

    Yesterday’s high and low – 93.92 / 90

    Breakout lines – 100.26 / 79.73 


  3. phil,
    where can i see the trades on your WCP


  4. PHil, does Rule #1 (sell into initial excitement) apply to spreads like our FAS 13/14 spread from yesterday?  I assume it does…also I still have the Nov $34 USO puts (got in at .90) – hold onto them or get out?  I assume better to get out of the way, looks like oil is barreling up…


  5. AA Money / Phil – I guess it’s going to get a little more exciting this morning with AA at 10.82 pre-market! 


  6. Phil/USO,
    I still hold Nov 34 puts – I needed the downside protection. Should I cover here or wait for a better entry? Thanks


  7.  Phil: 
    How do you determine whether this announcement means off to the races or sell into the excitement.?  with /TF already up 3.5%
     
    TIA


  8. Anyone have a copy of Phil’s "when to buy back a short put" rule of thumb? I know i saved it but can’t figure out where. Was it when your up over 50% with less than 30 days?
    thanks


  9. Morex, I think it’s up more than 50% with More than 30 days.


  10.  morx: buyback with phil permission
     
    " I think the tighter your time-frame, the tighter your stops is a good rule of thumb.  We generally say that we set tight stops on short puts (or short calls) that have gained over 50% with more than two weeks to expire and 70% with 2 weeks left and 85% in the final week (assuming, of course, you do believe they expire worthless).  If you are trading weeklies, I guess you can translate that to how many days are left.  In all cases, once you go past a 50% gain – you can often do better flipping to another position that pays you 100% to switch and can also give you another 50% ahead of schedule – the more good opportunities you have to switch to a fresh horse, the more you should want to.  "


  11. PP for today (not that they matter….):


  12. I believe today to be a good setup for some bullish daytrading in AAPL.   My plan:   I will scale in at 1/2 November 410 calls at open, the second 1/2  depending upon movement.    Trailing stop will be placed ( I’ll post the numbers).   This will be a trade of 50 to 100 contracts, perhaps more depending on what I see.   Exit will up to the trailing stop.   Want to play?


  13. Phil/Choices  I appreciate your comments from early this morning – your compassion has no bounds.
     
    You’re a good man Phil.  Thank You  :)


  14. stjeanluc
    AA will be a fat loss on the caller side


  15. Lflan… i’m IN for apple plays


  16. I think for today, cautious optimism has won over pessimistic dogma.
     
    How else can you be when raising kids?…..


  17.  Phil: your earlier editorial re work and luck
    You have two attributes lacking in most 1%’ers and that is humility and empathy!


  18. BCS up 17.5% in premarket. I like that.


  19. AAPL     1/2 in at 9.70


  20. AA Money Recap

    Long strangle:

    Jan 13 12.5 calls – $1.27 now $1.47
    Jan 13  7.5 puts – $1.04 now $0.77

    Short weeklies:

    Weekly 10 calls – $0.41 now $1.08
    Weekly 10 puts – $0.23 now $0.02

     


  21. AAPL    Another 1/4 at 9.00


  22. Write up coming on EXEL.  Since we are in rally mode, and they had positive data, I want to start a position on them.  Buy stock, sell the Dec $8/7 C/P strangle $1.20 or better.


  23. thanks jomp & lincoln


  24. SSO BCS Trade in WCP
    Fyi, I got in at 0.45 and sold today for 0.90, for a 100% gain.  I’m a didn’t have time today / tomorrow to scale out.


  25. There seems to be a little bit of selling in the excitement right now! 


  26. Good morning!  

    Congrats to all the bulls but let’s get serious now as we’re up 1,500 points in October and the month isn’t even over yet.  

    Profits are not profits until you take them off the table and we’re certainly going to get some serious resistance at Dow 12,170 (already over!), S&P 1,297 (2% to go), Nas 2,733 (half a point), NYSE 7,866 (120 away) and RUT 774 (3% to go) so it’s not likely to happen today or even tomorrow and that means we put up a toppy-looking pattern into the weekend.  

    There’s certainly no reason we shouldn’t be able to plow back to our July highs now (+10% lines) but let’s keep in mind that if you are going to let those huge gains ride on TNA, SSO, etc – in order to get even bigger gains – then it is PRUDENT to take a percentage of those gains (20-25%) and buy some hedges along the way.  

    It’s still earnings season and we’re getting out of the large-caps and moving into the small caps.  This will be put up or shut up time for the RUT and the SOX and, with a 15% move under our belts in a month, a 3% pullback (20% of the gains) back to yesterday’s close is not just a possibility, but a probability.  

    So NOW is the time to hedge and I like the following:  

    • SQQQ Dec $20/25 bull call spread at .80.  $4,000 buys 50 and pays $20,000 if the Nas falls apart and you can stop out at $2,000 so risk 2% to cover 20% of a $100,000 bullish set of gains.  
    • TZA Nov $30/34 bull call spread at $1, selling $26 puts for .90 is net .10 on the $4 spread.   The logic here is that if the RUT breaks over 774, you can roll the puts and kill the longs with better than .50 for a hopefully even exit or you can just roll the short puts because, eventually, you WILL want some protection. 
    • USO Nov $34 puts at .77 – I like them again, they topped out at $1.25 yesterday, that’s up 66% from here!  

    That’s it for now, we HOPE the markets just keep going up but let’s set sensible stops on our gains and make sure we have some downside hedges because the bears are circling the wagons this morning and will throw whatever they have left in an attempt to stop or reverse this rally.  

    Done with directional longs, of course, including the Futures and my favorite play of the morning is the DIA Nov $119 puts at $1.85 with a stop at $1.55 so let’s risk losing $300 and put 10 of these in the WCP (White Christmas Portfolio) to protect our unrealized gains.  

    Dollar not failing 75 is a bad sign, Euro not making $1.42 is also a bad sign but of course there’s going to be some profit taking as people who were bullish (like us) do a little "selling on the news".  


  27. Iflan/AAPL – I might play. Perhaps I’m late to ur party tho? Whaddya think about a 400/405 BPS expiring tomorrow?


  28. WCP – Thanks, PD. A little discipline on my inkling to pull the FAS profit yesterday afternoon meant I stuck with .80 limit on net credit. I went back and forth – a little lower. Then thought, no, I’m only pulling today at .80 – which never got it and so, the rest is history aka 100% off the table today. Same with SSO.

    I also know we’re not day trading GNW, but both the BCS and short P have mighty fine profits today – what say ye? Or are you still not lookin’ at that play until next year?


  29. AMZN – As you’ll recall, I was in a 1:3 AAPL 195/210 BPS pre-earnings. I decided to wait until today to (a) see if I got a bump (obviously we did) and (b) take a peek at new weeklies to see if I could begin earning back the cost of rolling the 210s a bit at a time. (Net loss of about $5 per contract if I buy back this morn.)

    I’m open to smarter ideas re same.


  30. NF….I like the 405/410 better, but it’s a bit of a bet that the markets stay up.   Seems they will.  Fair amount of "good news" out there today, which should support the markets through Friday.  


  31. Phil
     
    I own 1000 SDRL @ 29.30 net
    I sold the Jan 35 calls for .60
     
    I know right now it is a nice profit but I was accumulating for the dividend.  I don’t really want to five them up.
    my questions is: 
    am I being foolish not giving them up?
    if i am not being foolish what would you do? 


  32. To All / Order Management
     
    I was hoping you can check my thinking on the USO trade.  I bought 10 at 0.75.  Since I will be away from the computer for bits of the day today. I did the following
    Entered a STOP order (not stop limit) with a stop price of 0.35 to limit losses
    Entered a LIMIT order with a price of $1.25 to capture gains
     
    Is there a better way to do this?  


  33. stjeanluc
    any chance I can ask some questions about the AA trade?    I am paper trading it but I would like to hear the theories behind the trade and the adjustments depending on the situations that may come up. 
     
    I understand the theory behind the trade but not to clear about the realities.


  34. Dr. Faessel and Phil are in total agreement again, take some profits on your longs:
     
    The McClellan Oscillator is now overbought at plus 205.
     
    A $1.4 T rescue fund and a 50% Greek writedown of bonds looks to prevent the shorts from bombing the Italian, Spanish, Belgian and French bonds & banks. (Temporarily anyway!) The EuroLand spending model is about as idiotic and hideous as ours is. The US Government spends $1.40 for every $1.00 it takes in…  There just ain’t no spending cutback! Fugetaboutit !!!
     
    So, it’s going to be a big day. S&P futures are up 30 points. Short covering alone will continue to boost the market up to the 200 day moving average resistance at 1274. For sure, the Euro rescue package dramatically changes the shorter term investor and consumer sentiment. The big pop will send the McClellan Oscillator into hyper OVERBOUGHTNESS and set up a back-and-fill pullback tomorrow anyway. The technical structure looks solid as the cup-and-handle set up fires "price" into the six-month consolidation that was the top developed after last year’s Santa Claus rally. The next few months should be interesting.
     
    Price resistance / “overhead supply at the former support now resistance at1250 to1260 and Monday’s top tick resistance of S&P 500 (SPX) 1256 will be breached at the open. The 200-day moving average resistance is at 1274.
     
    The 50- moving average "now" support and former resistance is at (SPX) 1181.
    Short term price support in the S&P 500 (SPX) is at 1221 then at 1216. Last Thursday’s low tick of the cycle was at 1197and 1192.
    The August 8th lows were 1101.
    The “clean-out” lows were put in on October 4th were at (SPX) 1074.
    The (SPX) closed yesterday at 1242.


  35. AAPL trade from today.    Trade down 10% at the moment but no trailing stop for the following reasons:  1.  "Good news" in general, pushing the markets up.  Wouldn’t be surprised if we get a stick today.  2. Could hold the trade if necessary……almost 4 weeks to expiration.     So if AAPL surges, we get a day trade.  If not, we hold the position. 


  36. AAPL:   Last 1/4 at 8.05


  37. Does anyone have any of JRW’s price levels above 74.49
    I’m monitoring when I can, but have run out of levels above that.


  38. AMZN/AAPL – Oops. That was all AMZN. Freudian slip changing symbol to AAPL early in post.


  39. Phil, fantastic calls, thanks.
    For someone not day trading, and looking at a 1-2 week horizon, do you take a bit of TNA off the table and then wait to reach at least the must hold line of 774 on the RUS, or do you take a sell the news approach and take everything out of TNA until things clarify?
    Thanks!


  40. S2 for the dollar is at 75.39 on my charts and it looks like they are trying to hold that! Conversly, I have R2 on the euro at 1.4113. That looks like it’s holding as well for now. 


  41. JRW had a line at 75.33.  I looked back quickly at the August lines, and that was the only additional one I could find.


  42. Thanks JMM – One of my favorite musicals.  

    WCP/Srinirap – In each day’s comments you can do a CTRL-F search for WCP, I make sure I put that in every time I’m talking about or initiating one of those trades.  Probably this weekend, I will start a virtual tracking portfolio for it but it’s been a crazy week and I haven’t even finished last weekend’s update on the September’s dozen.  There’s certainly no need to follow every trade as it’s a quick in and out set using the same hit and run trading style we worked in the $25KP.  The best thing you can do is go back and review the $25KP posts back from the beginning of the year to get an idea of the kinds of trades we make and why we make them.  Those are all under our Portfolio Tab at the top of this page.  

    Rule #1/Jerconn – With something like the FAS spread, which is very tight, you can, of course, ride it out if you think it will hold up through tomorrow or you can ask to get out at .90-95 and be happy or you can be a gambler (you know I am) and pull the $13 calls at $2.65 and put a stop on the $14 calls (now $1.65) at $1.80 so you risk only making .85 but maybe, if FAS pulls back (and there’s still .10 of premium in that price) you make more than $1 on your  $1 spread.  Of course this assumes you have a feel for calling the top but selling into that morning pop to the $14 line on XLF was an easy call and that also happened to be the $16 line on FAS.  So, for the WCP, we will just take the $1 and run.  

    AA Money/StJ – As I’m sure you know by now, we do not react to one-day moves that are not related specifically to something that happened to the company.  At the moment, the Nov $11 puts and calls are .95 so an even roll at worst and we lose 2 weeks of sales (but we still have the money in our pockets).  This is the downside to playing the "quieter" stocks – with the ultra ETFs, we could still find a good roll to next week.  Depending on how today turns out, I wouldn’t mind rolling the $10 calls to the next week $11 calls for +.10 and selling the Nov $11 puts for .50 so we get another .60 in our pocket to buffer a move.  

    USO/Jomp – So you were one of the greedy people I talked to yesterday?  Well, as I said above, I like them again at .75 so I wouldn’t do anything but wait and see what happens over the weekend.  Considering the way the Dollar collapsed, this is not a big gain for oil.  

    Determination/Lincoln – I’m always assigning weightings for various factors in my head.  The fact that the Euro did not pop $1.42 could be a sign of Yentervention or it could be a sign that more people than we thought were already bullish into the EFSF news.  Gold is flat but not down so there’s still fear in the markets (or maybe just also holding up on Dollar weakness) and of course, we certainly can’t be disappointed on an up 2.5% day so we’ll just have to wait and see which way things break but, on the whole, I think we’re good for a retest of the top of our range but we won’t be breaking over it without the BOC, BOJ and the Fed chipping in about $1Tn each (another 5% of Global GDP).

    Thanks Lincoln – good to have someone on top of the archives.   I hope you guys are dropping these in the Wiki!  

    AAPL/lflan – I would take the SNE challenge seriously and not go too crazy with them.  In the very least, there will be a price war this Winter in smart phones and tablets.  I prefer conservative AAPL plays, like the one in the post above so you don’t have to get an ulcer watching the daily moves.  

    You’re welcome 1020!  

    If you want others to be happy, practice compassion. If you want to be happy, practice compassion. – Dalai Lama

    Fat loss/Yodi – LOL.  Didn’t we collect .64 and now the calls are what, .95?  May all of our losses be that "fat".  

    Thanks Lincoln – I think I have the empathy thing down but humility is something you have to work at…  8)  

    BCS/JMM – Can’t complain about that one.  

    SSO/WCP, Burr – Yes, selling for .90 is the correct play.  I hope I don’t have to spell this out on every 100% gain when there’s even the thinnest possibility that it can be lost!

    Watch that dollar now at 75.50 – over that and we may take a little dip lower.   


  43. Phil fat loss you right but the day is not yet over The Euro deal is a flash in the pan!


  44. Phil,
    Sell into excitement?  What a concept!!
    Out of the FAS and SSO weeklies for +50% gains;
    Bought back my short puts from Monday on MT (+100%), GNW(+100%), GLW(+250%) – thanks again!
    Didn’t sell my USO Nov 34′s yesterday (greedy??) but DD today.


  45. AMZN/Phil – And, yes, just so u don’t yell at me, Im looking to your AMZN play idea from post-earnings. Was looking for repair help on my 195/210 BPS overplay tho if ur cool with that and have time.


  46. Woo hoo. TASR just hit $5


  47. GNW/WCP, NF – I think we can do better on them.  Time is on our side, of course and we don’t need the money for anything else.  

    Speaking of WCP – So we are out of both bullish spreads and we have the GNW trade and the DIA puts and the DECK spread for this evening.  Did I miss anything?  That’s 2 bears and a well-hedged bull – that’s how we tilt our balance and adjust a small portfolio from 3 bulls and 1 bear to 2 bears and a bull with 2 cash outs and one addition – just like surfing, we make little adjustments as the market wave swells underneath… 

    SDRL/Willie – They are at the top of their channel but they are a good little company and well-priced so if it’s a long-term hold, then now worries.  They pay a huge dividend (9%) so you get crappy option prices on them but, if you love them long time – why not just roll the caller out to the 2014 $30s at $6 and sell the 2014 $25 puts for $5 and that drops your basis to about $19/22 and, if you don’t want to own 2,000 at $22 – why the hell do you own 1,000 at $34?  By the way, in dividend stocks like this it’s very easy to get called away, just roll the caller ($1.60) to the 2013 $29.80 caller at $6 and that drops your net to 24.90 with a $4.90 profit if called away, which becomes very likely at the Dec ex-dividend date – it’s a little less than if you wait out the Jans but less risk, of course and you can still sell those puts for either a re-buy at a cheaper price or a free $5 for doing nothing.  

    USO/Burr – I think it’s reasonable as you don’t want to leave a .50 gain on the table but I would perhaps sell 5 at $1.25 and then put a .25 trailing stop on the rest (assuming you can in your system), rather than just sell as oil has a long way to fall if they get going.  

    Dollar did not make 75.50 – could be good for the Bulls into EU close at 11:30.  

    Oil doing a triangle squeezy thing – watch for which way it breaks.  XOM not getting much traction from their earnings indicates bearish sentiment on oil prices.  


  48. GNW – I’m going to buy close 1/2 the SPs with 40% gain – let the rest ride. Free up some margin cash for additional WCP plays.


  49. GNW/Phil – Oop. Missed the post. Don’t think you’ll object to the partial SP close tho. Thanks.


  50. Earnings performances so far:

    http://www.bespokeinvest.com/thinkbig/2011/10/26/best-and-worst-performing-sp-500-stocks-on-earnings.html 

    Looks like Netflix is in the lead for worst performance so far!


  51. Phil,
     
    What kind of play would you suggest for going long silver right here on a 60 day time frame.  I was looking at AGQ options but they have a huge amount of premium.  Thanks


  52. Some people are still bearish:

    http://ftalphaville.ft.com/blog/2011/10/27/714326/edwards-going-bust-and-ecb-qe/

    The truth is that we’ll need a lot of inflation to paper over the free money flowing these days! 


  53. I have just updated my world-currency chart to see where we are (with intraday values for today).
    "Dollar corrected" the latest move wasn’t that impressive. We’ll see what will happen when the dollar gains again:
    http://www.pentaxon.com/psw/spy_vs_worldcurrency.png
    Here’s a close up to better show the daily points:
    http://www.pentaxon.com/psw/spy_vs_worldcurrency2010.png


  54. Phil—did we have a fas dec 13/14 bcs at net .60 dr—-I seem to have that trade— are we waiting on that one
    Thanks


  55.  That looks accurate:

    http://www.ritholtz.com/blog/wp-content/uploads/2011/10/Merkel.png

    Of course she could be talking about something else!


  56. StJ – I am doing the AA Money trade in paper, and I am not sure WHEN the adjustment on this trade is.  Do we act now on Phils recommendation or wait till tomorrow or a pull back on AA.
     
    TIA, scot.


  57. AA Money / Scotbraze – For now, let’s wait to see how today plays out. We’ll update this afternoon. 


  58.  DECK – What the heck is a DECK spread?  Is that the multi-pronged hedge from early post?   Sorry – learning.


  59. @ Phil, this past few days rally feels a lot like that we had back in late june-early july, also driven by the greek bailout, which gained too much too fast, and then quickly turned the other direction….don’t we need a healthy pull-back? i have my hedges so i am not worried, but it sure feels the same, do you see any negative catalyst in the near future that might cause the same, or are we almost good to go until x-mas? thanks


  60. EXEL – the Dec strangle is falling in price, let’s move it to the Feb12s for $2.  again, 1/4 entry.


  61. Also missed the DECK spread!!!


  62. DEck spread Buy 4x Jan 12 c 115 and sell Nov 5x 105 c


  63. DECK – in addition, 800 CREDIT…..now 765.


  64. Phil on that silver long play what do you think about buying the AGQ Nov 67.5 / 70 Bull call spread for $1.30 and selling the Nov $50 put for $1.30?
     
    Thanks again


  65. AA/Willie – The "theory" is that we have 65 weeks to sell premium and we can, in theory, sell about .60 a week so even assuming we only collect .30 in premium on 20 of those weeks (and the rest washes out like our .30 loss this week) then we pocket $6 against against $2.50 in longs.  I like trades where you only have to be right about 20% of the time to make a profit – even Cramer is right 20% of the time (I think).  

    1,274/Rustle – Good call by Faessel so far but if we pop that on the 2nd attempt, I’d be watching our 5% line at 1,297.  

    TNA/Tarpoon – You are welcome!  As I said above, I’d rather take profits early and often.  That’s exactly right, we want to see how we do at the next cross or, very easy to reload if we turn down and test 735 and use that for the new stop.  

    For you new guys:  

    • Rule #1 is: ALWAYS sell into the initial excitement.  That means when you own something and you get a good pop – SELL.  When you don’t own something and you get a big drop – SELL puts to buy it.  ALWAYS be SELLING premium whenever you can.    
    • Rule #2 is:  When in doubt, sell half.  In other words, you know Rule #1 says ALWAYS and hopefully the concept of ALWAYS is not lost on you but, if you STRONGLY believe that you can do better – then wait but, in the very least, put a very tight stop on 1/2 to lock in your gains.    
    • Rule #3 is our last rule and that rule is:  If you ignored Rule #1 and Rule #2, why are you even bothering to look for Rule #3 you stupid, greedy bastard?  

    I hope that helps to make things clear

    75.30.  

    Taking profits/Canuck – Nice job!  I wouldn’t DD on USO ahead of the weekend, might end up being better to roll on Monday.  My attitude is that I’ll know more if I wait so I need a pretty good reason to take action this early in a trade (other than taking profits, of course, because we KNOW we like those). 

    AMZN/NF – I’m confused, what are your positions?  

    TASR/Daveo – Woo-hoo it is!  

    For newbies:  TASR is my "Stock of the Decade" on the premise of A) Crowd control and B) That there will be a lawsuit in which a police department is found liable for NOT using a Taser.  That will be the turning point.  An example I like to use is that you can imagine an episode of Star Trek, where they are all stunning people with phasers (Kirk and his band of Galactic jack-booters just love stunning anyone who looks at them funny) and then one guy whips out an old 44 magnum and blows a guy’s head off.  What would the reaction be?  Once you have this kind of technology, it WILL replace the old way of doing things over time – just like now it is unlikely that a modern swat guy will pant a crossbow bolt in someone’s eye or that the police will whip out old-style maces to bash a few skulls in.  TASR just needs time but it will become the standard for global police.  

    This is a pretty good entry point for them as you can buy the stock for $5 and sell the June $5  puts and calls for $1.40 for net $3.60/4.30 with a solid 38% profit if called away at $5 and a 2x entry back around the September lows if not.  

    GNW/WCP, NF – If you need the margin, absolutely take some off the table with such a nice, quick gain.  A lot of that gain is coming from the lower VIX – another way that selling premium works to your advantage when the VIX is high.  

    Good list StJ – thanks:  


  66. AMZN Repair – Again, missed applicable post by a few minutes.  I was just gonna say (and will say it here):  I’m going to man-up and take some of what I’ve learned re AMZN and plays and try to craft my own near-term repair, post it and then see what Phil or others think.  Rather than just punting for an answer.  More later.


  67. Felix still has questions on the euro deal:

    http://blogs.reuters.com/felix-salmon/2011/10/27/europes-half-baked-deal/

    We know that there will be more… On the other hand, it looks like a good deal for US banks that hold most of the CDS on the Greek debt as the latest deal mentions that this is not a Greek default! Maybe I’ll ask for a 50% haircut on my mortgage and say that it’s not bankruptcy. See how that works.

    And the 50% haircut is not for everybody – not for the ECB or the Troika. But Greek pension funds will take a haircut which no doubt will play well in the streets of Athens.


  68.  iflan/AAPL – If I can net a buck today, I think I’m gonna do the 395/400 BPS into tomorrow.


  69. 1274/Phil
     
    Waiting to end of day unless we break down earlier which I doubt, but think some DIA puts going into tomorrow might be a good idea with the McClellan so high and will look to buy back some longs I took nice profits on today.


  70. AGQ/Button –  Whenever you find the premium distasteful – look to sell it.  I don’t really believe silver or gold will be going up into the year’s end but, if you want to play AGQ up, then the Jan $60/75 bull call spread is $6 with AGQ at $68 so you not only have no premium but a $2.42 discount to the current price.   I would not offset it because AGQ is so violent but if, for example, they drop back to $48, where they were at the beginning of the month, then you can sell the March $35 puts (now $3) for about $9 (the price of the March $55 puts) and then you have a net $32 entry, worst case and, if that doesn’t appeal to you – why they Hell would you be considering going long at $68?  

    Bearishness/StJ – There are people losing Billions today, they are bound to get desperate and float all sorts of BS to try to save themselves.  DB says they don’t even need to recapitalize and I’m sure they are not the only ones – so much of what drove these stocks down was nothing but BS that didn’t stand up once the fact of the EFSF was put in place. 

    World chart/Pentax – That’s why this view is so important – it keeps things in a much better perspective.  On the whole, we’re barely off our crash lows with miles still to go before we’ve really recovered.  

    FAS/Savi – In the WCP, we took $1 off the table this morning.  It looks like $2.68 and $1.73 at the moment and I would take no less than .95 but, the way it fluctuates with that spread, you should get $1.  One trick is to ask for $2.75 for the $13s and offer to buy back the $14s for $1.70 and whichever fills first lets you know what you need from the other.  If you are lucky – they both fill and you’re done.  Notice this morning my plan was to take the $13s off the table at $2.65 and then buy back the $14 puts as momentum – they ended up bottoming at $1.40 so even $1.55 was a .10 bonus on the spread.  

    LOL StJ – That’s a funny series, even without the innuendo, tracking the growth of the "little bailout package" over time:

    Someone should caption this with the names of various other World Leaders (obviously, Clinton takes the September spot).

    AA/Scott – StJ is in charge, I only advise on these trades.  

    Healthy pullback/Asaenz – What do you think that 20% drop from July was?  I think we’re good to go now (assuming more, coordinated stimulus) – there’s certainly nothing bearish that appeals to me at the moment other than possible Yentervention and the normal disaster stuff that we should always have hedges for.  

    AGQ/Button – I like mine better and you’re in luck as gold popped $1,725.  

    50%/StJ – Better than nothing and nothing is what they were worth.  

    1,274/Rustle – 2nd test likely after lunch.  I’m not making any plans until I see what happens.

    75.15. 


  71. did anyone catch cnbc  around 1015?
     simon hobbs just explained so my 7 and 8 year olds could understand why this "solution" is so dumb…im still playing this like it last for a bit longer and then turns down before most expect…then gives way to v stronf year end rally..we nearly got to my 1200 target th eother day this action is not sustainable as phil says! don’t get doctrinaire!


  72. AA Money / Phil
    The roll to Nov $11 c/p is 0.93 vs the next week $11 c/p which is 0.55 – however considering we can do the weeklies 2 times plus expiration week – is that a better roll?
    (I’m to learn the how this works…) 


  73. Phil—-I did see the trade on fas this morning—- but for some reason I have the dec 13/14 at net dr .60 — not the Oct—-wait on them ?
    Thanks for TNA trade — out with a nice profit


  74. Phil (or anyone with the answer) – Selling a single contract of AAPL $300 puts to help pay for a BCS requires $30K to secure them or as long as the trade is open, yes?   I only have about $150K in my trading account, so at that rate, I soon run out of ammo.  Am I missing something, or do we need to have a boatload of cash and/or margin to do many of the trades discussed here? 


  75.  Stopped out on DIA


  76.  VXX/Phil – What should we do with the VXX play?  I sold what was left of the weekly spread, but I’m still short the Nov $35 Puts.  I’ve been trained to be very scared of VXX because of decay, etc.  Should I get out of this put at a big loss?  Or ride it out and hope the vix doesn’t keep going down.  I know it is still all premium, but that can change on a dime.


  77. Caption / Phil – I think that Sarkozy is October 2009! 


  78. Out of my DIA 122 calls, waiting to go into puts.


  79. I was 30% of today’s volume on it, lol.


  80. In DIA 120 puts


  81. boltdude….that’s correct.   any time you sell a naked put you have to put up margin.  And we don’t talk about it a lot, but that margin, which now must remain out of use, must be figured into your earnings calculation.  Example:   You sell a Nov  put for $300 and are required to margin $30,000, then if it expires worthless in 4 weeks you’ve made not 100%, but rather 1%, because your money was out of use during the investment..   But if you sell a put to pay for a bcs, then that has to be figured into the profit/loss as well.   But yes, a lot of the trades here require margin. 


  82. TBT is at $22, should we jump back in?  ;-)


  83. iflan/AAPL 395/400 BPS – Damn.  I forgot and made this trade in a small port and don’t want to get smacked as a day trader (ET has weird account defaults in their mobile app – doesn’t always match the port from which you started the txn – gotta pay attention at the confirm screen.)  But can grab a 40% gain now.  Whaddya think?


  84. DIA 119 PUts got stopped out at 1.55 . Sometimes I feel like they do it specifically for me. Reload?


  85. NF……I’m not familiar with ET.  I use mostly TDA and TOS.   But generally all that’ meant by being labelled a daytrader is that you have to keep a certain level of equity in your account.  At TDA you don’t get smacked until you’ve done I think 4 day trades in 5 days.  But yes, if you can grab that 40% without them shutting you down, then go for it!  


  86. NF…..I didn’t mention it but there are some tricks you can use to "beat" the rules so to speak if you have a small account.  Say, for instance, you are up 40% in a day and don’t want to or can’t get out of the trade without penalty, then sometimes you can do another trade to offset the first, or protect your profits.  If it’s a straight up call or put,. then you can sell covers to protect some of your profits.  If it’s a bull put spread, then you could buy a put for little money to protect you from a retracement which might lose you your 40%.   Then tomorrow you get out of the bull put spread AND the put.  You just have to be smarter than the rule makers.   :)


  87. Lot’s of folks seem to be mystified by NFLX and that’s strange to me. The market collectively decided, en masse, that their projected growth was overvalued and the P/E fell to a healthy and respectable 20, which corresponds to a stock price of 80 and there’s not much more too it than that, honestly. Of course, the question of timing is always interesting, why did the stock have to go 300, as opposed to 150 or 200, or 250, before this realization, but therein lies the rub.
     
    But alas, let’s look at some other favorites and see what their price would be if they had a P/E of 20:
    CMG: 128
    AMZN: 46
    PCLN: 286
    LNKD: 4
     
    And for an interesting reverse perspective:
    AAPL …. 555


  88. boltdude – if you have $150k you should qualify for portfolio margin, that makes the margin hit way more palatable. For example, in ToS it’s showing the buying power effect of selling a Jan 12 300 put on AAPL as -$3800. That’s a lot better than $30k, at least. To qualify with ToS you have to answer some questions to show you’re not a complete newb. 


  89. @biodiesel
     
    Nice post, if only stocks really traded like that.  You almost make me want to buy long term puts on LNKD at 50.


  90. Phil or anyone.   This week’s end looks bullish, and BIDU reports I believe tonight.  Which way will they move, do you think?  


  91. LLOYD!!!!>>> just read somewhere that tomorrow is 666 days from the S&P bear market bottom at 666.
     
    cue the eerie organ music…
     

     


  92. Good morning,

    The last resistance I have is IWM 76.17 and 76.69;  this move has changed many of the confluence levels !!

    But, as they say in Europe, "this is what we MUST do" !!


  93.  Phil,
     
    Does closing out the FAS weekly 13/14 BCS mean you also should buy back the Nov $11 Puts that went with the spread?


  94. JRW…..and a van, no less!    :)


  95. Gold 1745.


  96.  Kurt – I’ve seen ToS mentioned a lot here; is that thinkorswim.com?  Is that the broker most of you use?  If so, what are the main reasons?


  97. Kurt / PM – I thought you needed $250k to qualify for PM.   Maybe things have changed.


  98. Just an FYI for the "retail’ we have been fed….last night someone posted Mish’s info on retail spending…then comes this…from Dave:

    The consumer spending pickup was largely financed by a decline in the personal savings rate

    Health care and utilities drove consumer spending last quarter — a case of the “essentials” beating the “discretionary”


  99. Who was the geezer that said 14K on the Dow?  He may be right.  WS needs our money to get out of their positions.


  100. Hobbs/Angel – It is what it is.  Can has been kicked down the road again, if nothing else.  

    AA/Yshen – Depends on tomorrow.  Generally, when we are behind, we make the more conservative plays and, always, we try not to take money out of our pockets to make an adjustment.  Time is free (we have 65 weeks in the bank), money is not. 

    FAS?/Savi – December?  I’d just cash it in unless you have an offset as it’s kind of a slow way to make money.  

    AAPL/Bolt – If you have the kind of account where it requires $30K then it’s not a great trade (but still better than buying the stock).  With a small account, it’s just not a trade you should be doing, right?  In a TOS ordinary margin account, that trade costs $3K in margin but, even if you aren’t using the margin – there is the very real possibility that you can be assigned 100 shares of AAPL for $30,000 – if a $30,000 allocation of AAPL is not appropriate for your portfolio – then it’s simply not a stock you should be trading short puts on at all. 

    VXX/Palotay – I think 25 is very low on the VIX and at 20 I would certainly look to go bullish so what is your path on VXX?  The net of the trade was .20 and the Nov $43 calls are $1.38 and the $35 puts are $1.91 but VXX is at $37 and the Jan $28 puts are $1.35 so the thing to do would be just sell the calls and leave the naked $45 callers to ride ($1.05) and see what happens because you can’t lose them both, can you?  So all you have to do is let them expire and roll the loser and don’t let that roll cost you more than the $1.38 you took off the table.  

    TBT/StJ – NO THANK YOU! 

    DIA/Oncmed – Well the Dollar bounced off $75.15 but we cashed out those winners so we don’t need the downside play in the WCP so no reason to chase it.  Actually, I like an oil short here for the WCP: 

    SCO Nov $45/48 bull call spread at $1.10, selling 42 puts for $1.60 is a net .50 credit on the $3 spread so just 5 can make $1,750 and that would be very nice in the WCP.   SCO moved $2.50 today to $45 on a $3 move in oil so figure we’re betting oil doesn’t go over $97 in the next 22 days to make $2.50 and anything below $93 will be a nice bonus.

    Good rule suggestion lflan! 

    P/E/BDC – Ah the conundrum of Fundamental Investing.  

    BIDU/lflan – I think we discussed the other day.  Too tricky to call but rising Chinese wages give them a good chance.  

    666/Angel – I’ll have to light candles on my desktop!  

    Hey JRW – Is that DSK’s van?  

    FAS/WCP, Kevin – Not worth buying them for .15 as they pretty safe looking unless you really need the margin.   At .05, I’d rather free up the margin but not until.  

    RUT right on that 5% line at 764 – hard to imagine they pop that today but Dollar very weak at 75.1 and if they break through then the Dow is "only" up 2.5% and things could get very interesting.  


  101. 108M on the Dow at 1:25 is incredibly light volume for a massive move like this.  This is like when you inflate one of those carnival balloons really, really fast with the water gun….  


  102. ARRY made it back to 2.50.  IF you are up, sell a call, if you are even, either dump 1/2 or sell a call.  Either way, congrats.  Now they need to get to $3 to make me happy.


  103.  bloomy saying state spending on medicaid will soar 29% this year even with cuts….wow


  104. I’ve purchased a few Nov 4 140/145 BIDU bull call spreads.  $2.35 with a chance to double.  Just a few, for fun. 


  105. TBT – Thank you Phil….oh, and


  106. angel / Medicaid – When you have more people in poverty and the cost of health insurance increasing, you will have medicaid costs increase.  The states can "trim" their medicare coverage only so much.  They have a variety of federal mandates which they must pay for (pregnant mothers in poverty, for example) that can’t be included as part of their cuts. 


  107. iflan/AAPL – Thanks.  Not gonna get hit based on 5-trades, etc. – but I really like the offset trick.


  108. i kow jc i was in health care for 20 years..its sad..and unfortunately get worse


  109. Rolling positions — I am still uncomfortable with knowing when and how to roll positions.  I looked through the education area, but didn’t find anything in-depth on the subject.  Could someone point to a good tutorial on rules and considerations for rolling positions?


  110.  So much for AA not moving 10% on one day…
    But then FAS is up 15% today


  111. WPRT -  Buy stock / sell Jan 2013 – 35 call and  25 put strangle? It has a very wide Bid – Ask spread.


  112. Hi, Phil,
    I am new to the group and missed the most interesting part of the rally. What should I do now?
    Thanks


  113. AMZN – Okay.  I overplayed the AMZN 210 short put this week – thought I had me an easy $2 – NOT (after earnings hammering.)  I had hedged a bit with the 195 Ps for this week (at 1:3 ratio) – got pinched for a modest equity call morning after earnings and ended up buying back 1/3 of short Ps – at a horrible price of course.  Long story short, I created the hole and now, after dumping the long Ps and waiting to see how cheap the 210s might get pre-expiration, I’m sitting on 210s.  If I buy back as part of new trade, roll, etc., it’s fair to say I’ve lost about $8 per remaining contract (factoring in all other debits and credits.)
     
    More in a minute.  Thanks. 


  114.  Phil: from GS this week [no, I'm not a client, I get it bootlegged] --
     
    "We take off our short recommendation on our capex basket (Bloomberg ticker GSSTCAPX) but remain focused on our BRICs basket (Bloomberg ticker GSSTBRIC) relative to our Domestic basket (Bloomberg ticker GSSTDOME) as we expect economic growth in the BRICs economies to remain resilient and a weakening  of domestic European economic activity
    amplified by the current pressures on the banking system.


  115. boltdude….best way to learn rolling is from Phil.  If you give him a specific example he can get you on track.   Only one of many things he’s expert at.  That’s why we’re here!


  116. iflan/AAPL 395/400 BPS – thanks.  just closed that out.  Didn’t run ur play – but thanks for (a) getting me to look back at AAPL for late-week premium and (b) the good feedback and guidance.


  117. "Is that DSK’s van"…LMAO


  118. DAX up 5% today – although they were extremely undervalued there compared to our market.  Think we are headed there?


  119. Pharm – when did EXEL’s info come out? I had Oct 6$ calls and those bastards pinned it on 6$ and it shot up from 6 – 7.45 the Monday after October options expired…


  120. Makes me wonder if someone extremely wealthy and powerful got out of bed this morning and decided "I am going to kill the shorts today".


  121. There’s a lady who’s sure all that glitters is gold, And she’s buying a stairway to heaven


  122. AAPL daytrade update:   So we’re about even on this thing right now.  Cost basis  9.10 per option.    Here are the choices.   1.   Bail out   2.  Just hold the straightup calls for profits this afternoon. (  or hold into tomorrow. )    3.   Sell some weekly 410 covers to reduce the cost basis   (they are 1.25)  4.  Convert to a November bull call spread by selling Nov 415s or 420s.    (they are 6.80 and 4.80)      For now I’m putting a stop at 8.90, as the market may reverse in the late afternoon.   We will revisit in an hour if still in the trade.


  123. EXEL – a few days ago.


  124. AMZN – First, as in poker, I am a firm believer in not having to make a big pot to "get back" a big loss – I’m happy to do small pot wins as I make my way back.   Second, as I’ve learned here, I don’t even need to play the same "game" (stock) to make up for a loss.  I do like AMZN in any case – so not looking for a vengeance trade.
     
    From Phil, you catz and my limited understanding (I’ve been in and out of AMZN for 5+ years – and a customer from Day One – I didn’t dig into earnings report, but pay attention to many diff surface reports) – I’m only laying this out in this single case to "check" whether I’m "thinkin’ right" as I propose my AMZN trade.  My timeline for same is likely front-month – and I’m a fraction bullish to neutral over that period.  Frankly, that may be overly aggressive for a front-month trade.
     
    From Phil, my biggest near-term concern is downgrade.  His rap re R&D is right on – so maybe they got unduly rocked, but the fat PE and downgrade may well rock them again in the near-term.  (Well – arguing with myself already:  maybe I don’t need a near-term trade at all – but I like to take profit off the table in 1-3 week cycles…)   One new concern I have (again, raised by Phil indirectly – as part of his continuing attack on my beloved NFLX – not really) is the content costs associated with giving Prime Members free access on the Fire.  Really?   Heading into a 4th qtr where they predict from a 250M loss up to a 250M profit?  I’m a Prime Member – I crush them on free shipping included in that fee.  While they may have a huge cash box versus NFLX, they are cash poor heading into next year ala new DCs – and now basically giving away all the content they are paying for.  
     
    Sorry for the book.   Based on all that, I’m leaning toward a Nov 225/190 bear call spread.


  125. Anyone still in GS from Yesterday?  U could be retired by now….


  126. Hi Pharm I was thinking straight to the moon ahead of JW schedule :)


  127.  Pharmboy, 
    GS – I bought the 110′s yesterday for 1.73 and sold them this afternoon for 7.78. Unfortunately, I only had 2 contracts.
    I used the profits to pick up 3 of the 120′s. We’ll see where they go.


  128. Hi Phil:  Options newbie here. Trying to learn your concepts of selling premium…
    Sold BTU $40 2013 puts at $7.20.  BTU at  $45.3   Is this ok or should I be considering something more than 18% gain? 
    ps. Would not mind BTU at $33 …


  129. TLT — fails 110!


  130.  Phil,
    I have sold JAN 12 puts on: KO, MSFT, WM, PG, JNJ,  GOOG, COP, V, and VLO which are above the strike ranging from 19% to 73%. I would not be able to accept assignment in the unlikely event that all were put to me. You had suggested a DIA hedge as a way of insuring against such a possibility some time ago, but I was never able to execute it due to TOS problems. Would that still make sense? In such an instance, do you seek to insure against the projected amount of the premiums required to buy back the puts if the market drops roughly 20%? If so, is there a way to calculate the projected premium?
     
    I also have other sold JAN 12 puts that are less than 20% above strike. Would now be a good time to take advantage of the recent run up to make preemptive rolls to lower strikes in anticipation of a pullback?


  131. pharm one of the best tune EVER!


  132. AMZN – F- me!  After all that, is AMZN actually gonna clear 210 tomorrow?  I hate waiting overnight when I already feel like I’ve been gifted with $206-plus today.


  133. AA Money / Yshenhar – Indeed, not boring anymore. Looks like the rolls will cost money no matter what we do now. Rolling to November will probably cost at least $0.40 out of pocket. Next week is getting too expensive at around $0.80 as I am not confident we can make up the $0.40 in 2 weeks. It’s one of these days! We had plenty of those with FAS Money! And way too early to double down IMHO.


  134. Re short puts, you might want to see Lincoln’s post from around 9AM this morning.


  135. AAPL  trade    ….    out   @ slightly over 1  % loss.   We will try another day.    


  136. MNTA just doing what it is supposed to do…..Very nice.  Oh, so is PLX.  Just DD on DEPO as well @ 4.80 and sold the Dec $5 Call against 1/2.  Baby steps, like N**F says.


  137. q3 growth confirms no recession
    Real GDP grew at a 2.5% annual rate in Q3, the most in a year, but slightly below consensus for a 2.7% gain  The advance reading shows real GDP recovered its pre-recession peak, nine quarters after the recession officially ended, the longest such recovery period in the post-WWII era.  Although growth remains below what’s normal at this stage of the expansion, it was a marked improvement over the average 0.9% rate in 1H  Q3 growth confirms the economy did not enter a recession, and we can expect a similar or better performance through yearend. 



  138. Phil……….Need help on adjusting SDS hedge. Bot Jan 12 24c @ 4.20, Sld Jan 32c @ 2.25,and Sld Jan 20p @ .95.Any way to play this 50 week low?


  139.  AMZN – Final note:  I am short (from Phil reco yest) the AMZN Jan 14 150 Ps – in a diff portfolio.


  140. Oh, and this one….


  141. Phil / Dummy DIA puts
    So I’ve been ignoring this bad trade for a while.  Figured I’d ask for help.
    I have the DIA Mar12 100 Put.  Cost Basis $7.  Trading at $2. 
     
    I’d like to say I was keeping that as a hedge, but really I just let the trade get away from me.  Since we are bullish, should I sell a lower put, maybe a mar12 90 and turn it into a bull put spread (if that’s what it does?)


  142. Rolling/Boltdude – Phil talks alot about this. generally when something is at a 20% loss you decide to kill it or look for a roll.. or depending on your view of the world and markets, double down.   if you are working with a covered call, the time to roll is when the time value is all (or just about) used up if ITM (in the money) or ATM (at the money). Then ‘do it again’ – roll that puppy out to the next month if you don’t want to just let it go.


  143. so the atlanta mayor kicked the OWS protesters out because they shunned dem operatives is that disgusting or what..he’s on cnn..he loved them til they wouldn’t politicize the occupation!
    nyt saying turkey sheltering militia fighting assad


  144.  boltdude – Yes, ToS is thinkorswim. They have been the recommended broker around here for a while, though they had some real issues a month or two ago when they completed their switchover to being under TD Ameritrade. I had some bad fills and wacky bid/ask spreads that threw p&l calculations out the window, but things seem to have returned to normal. The biggest thing I like about them is their software. It’s really powerful (especially compared to IB, Interactive Brokers), but it depends on what you want to do with it. I’m just getting into using their analyze tools to really look at the technical details of trades (not just delta and theta, but looking at vega and gamma and trying to figure out beforehand how a trade will do when the market fluctuates). If you’re just looking to do trades without too much analysis, you’re probably fine with IB, and they have cheaper commissions. I’m not familiar with the other brokers out there, but maybe someone else can chime in. 
    jc (and boltdude) – re: portfolio margin, ToS will give it to you as long as you stay above $100k. It’s probably dangerous to fully take advantage of it if you’re anywhere close to that number because the leverage could get you under it in a hurry, and then you’re automatically downgraded and will have to liquidate asap. But $100k is their number, or it was over the summer when I got it. I’m pretty sure IB is the same, and they just let me say I wanted it. 


  145.  Jabo:  The Red Army is behind "Occupy Wall Street"?  That is just hilarious — Fox really outdid itself to find that guy.  The average member of the Red Army couldn’t find New York on a map through the vodka haze, and the generals are too busy smuggling contraband on military vehicles to bother trying.


  146. Thanks, Scott.
    So, I strangled IWM going into yesterday’s Euro summit.  Long the 72 calls and 73 puts, both expiring tomorrow.
    WWPD (What Would Phil Do)?


  147. Red Army   1951    Senator Joe McCarthy     Deja vu all over again?  


  148. Out of AGQ calls from 10-24  entered at  2.30 out at 7.10, + 210% I know, being a greedy bastard , but it payed for once. Thanks for the trade Phil.
     
    Still long AGQ shares


  149. Phil/  WMT,
    I have been selling 52.5 calls and 50 puts on WMT for the last six months and enjoying the theta decay. It has been on a tear recently just flying up from 50 up 14% to 57+. I currently have 25 NOV 52.5 (@$2.94) and 10 NOV 55 Calls (@$2.39) and also sold some 55 Puts (@$0.52).
    The Chart looks that it may be topping out but I am afraid that WMT may be moving up from 50 to 60 as a price range as it has been stuck in the 50s for quite some time. 
    What is your fundamental hat tell you. Should I bail on the short calls or roll them over to Dec or Jan?
    Thanks


  150. red army..there isn’t even a red army any effing more!!..vladimir thinks of its as cyan..i love the fact that the protesters want no politics involved..they have no robespierre..(phil go for it!!)..we need a madame lafarge tho..anybody in th group into crochet? (i hope to heck i spelled that right)


  151. angelcur/OWS – Labor will bail soon too.


  152. netflexf**er…tell me why labor would bail?


  153. AA Money / Phil – Here is the situation now: 

    Weekly 10 calls – $0.41 now $1.39

    Weekly 10 puts – $0.23 now $0.01

    The 11 p/c for next week are $0.64. The November ones are at $1.00. A roll to November will cost us about $0.40 or so. Next week is out as too expensive. Do we wait for tomorrow to roll hoping that we get some profit taking which will deflate this week’s calls faster than the November ones?


  154. What a joke of a day. Anybody trade currencies here? Debating whether to short the Aussie $ futures here… Up over 3%!? Has to pull back .2% or so before close or when it opens tonight….


  155. Ah, I see you updated your rule #3 from when I first joined PSW
    Rule #3 is:  If you didn’t listen to Rule #1 or Rule #2 then don’t ask me how to save your sorry ass later!
    It’s good to know the rules

     


  156. X – selling the Dec 18 Puts for .54 gives an easy 22% in just 50 days on $236 margin requirement.


  157. i trade them and i wouldnt short the aussie..i was short both euro and aus..but with qeurope in the works..its a bad play …and  if the chinese even intimate the foot coming off the brakes that sucker is up 300-500..thats just my take..


  158. Might want to be careful now:

    http://www.bespokeinvest.com/thinkbig/2011/10/27/94.html

    This is the highest reading seen since we began tracking this indicator at the start of 2006

    That’s scary… We might have overdone this one a bit! 


  159. And to further the caution:

    http://www.bespokeinvest.com/thinkbig/2011/10/27/green-everywhere-except-for-treasuries.html

    These are some lofty numbers in most cases… except for treasuries! 


  160. And finally, some earnings stats:

    http://www.bespokeinvest.com/thinkbig/2011/10/27/sector-earnings-season-stats.html

    Looks like a lot of beats… Utilities seem like a lock! 


  161. Here’s the Red Army for you! http://www.youtube.com/watch?v=8WD0WVL-HjE
    wouldn’t that sound good at OWS?


  162. angelcur/OWS – I’m a union guy. But Labor in lock step with Dems on this. Last week when Trumka (AFL-CIO) and McEntee (AFSCME) appeared and endorsed and offered support,they totally ignored protesters desire NOT to be used as pol pawns for Obama. In the press they said: “Of course we’re going to recruit these folks to the Fall election work…” There are union members out there – but there’s isn’t a snowballs chance in hell that Labor will stay publicly associated with something that may spiral out of control, may involve lots of civil disobedience and isn’t clearly part of the program to re-elect Obama. At best, this is hedging for them. Gotten keep up appearances with part of member base – and take a flyer on it being a real “movement.” I said two weeks ago here that Michael Moore signaled the coming of the end. Not because I don’t like him – tho I think he insults working people from the GM movie on – but because only lefty union leaders dig him – and there are few of those. And working people don’t care what he or other “celebs” say on these topics. His “symbolic” entrance followed by no clear victory – small or otherwise – to be had and the need to get focused on “real politiks” – lol – means Labor is done.


  163.  Anyone wanna guess what the market does tomorrow?


  164. N that is an excellent take and helps me alot..somehow the occupiers have become threatening to someone because they are getting rubber bulleted..they are getting flash grenaded..and thrown out of cities..which i am flummoxed about..the timing seems suspicious seems coordinated..but goes to my point there really aren’t parties in the 60′s sense of the word anymore just amalgams of self interest that coalesce around the status quo through bickering..as an aside romney has now backed off his rant against labor… much to the delight of the intellectual eltie of the gop like bachmann and ebenezer paul…meanwhile we are letting labor friendly russia into the wto!!


  165. Holy Smokes, i can’t believe they broke +50 on the SPX.  is that a record? 


  166. I just heard a comment to the effect that one problem with the EU plan is that Italy and Spain are lending money to save themselves, which, at the very least, will add up to some very low growth in the EU going forward.


  167. Wow, we’re moving up in waves now.  Amazing. 

    Medicaid/Angel – And college costs were up 8% this year and averaging $17,000 a year with room, board, tuition means a guy with 2 kids needs $136,000 without grad school and he has to save $12,000 a year just to keep up with the inflation on the $136,000 – yeah, a really fair deal for all working Americans, isn’t it?  Combine that with inflating health care and then people wonder why people aren’t saving enough for their own retirement…

    Oil failing 75 – big fireworks time!  

    Rolling/Bolt – There are some things you just need to practice over time.  If you want a rule of thumb, if you intend to roll a position, you should do so when it’s no less than 50% premium an no more than 75% premium.  

    10%/Yshen – Not exactly a normal day though. 

    WPRT/Oscarz – Seems like a nice little company and that’s a good range but I’d sell the $30 calls because I always prefer to be conservative.

    Welcome Smartun!  You know, oddly enough, ever day – we find something else to trade.  I would suggest you do what your welcome letter asked you to do, which is go back and read a month’s worth of posts and comments so you can get up to speed and you’ll also benefit from seeing what we traded the last time the S&P was at 1,250 and people thought they missed everything…  

    AMZN/NF – They’re at $206 and recovering.  I’d wait and see where they end up (you have just the short $210 puts at net 0, right?).  Otherwise, you can always roll.  Again, if you REALLY wanted to own AMZN, you’d be thrilled to get a net $210 entry so I’m guessing your enthusiasm for them was less than sincere?  

    GS/ZZ – Thanks but hard to trust them. 

    5%/Pharm – Looks like we are zooming back to the July highs, as if this whole EU thing never happened and our own debt issues never happened, etc.  All is well until the next time they are not.   

    Meanwhile, our $30Tn stock market gains 5% in on day ($1.5Tn), which is the size of the entire EFSF poured into US markets alone.  If that does not seem realistic to you – remain a bit skeptical but I wouldn’t go betting against this thing.  

    Today/Russell – I’m sorry but I have no pity at all on people who were short today.  How many times could the legitimate news sources (ie. not the MSM) have told you that there WAS going to be a deal on the EFSF last niight?  Why would two of the Worlds top leaders promise something last week that wasn’t going to happen this week – would they want to look like idiots?  It would have been easy NOT to say anything or to be more vague but they said "There WILL be a done deal on Wednesday" – I’ve been writing for weeks how easy this would be to fix and we discussed how small Greece was in the grand scheme of things and how the EU had MASSIVE firepower in reserve and how it was in Germany’s best interest to maintain the EU etc. – I’m sorry but at some point you can’t go blaming "some guy" for something that was essentially inevitable.  As I said on Friday, however – you can go blaming some guy (Murdoch) for lying to you and misleading you and manipulating you if you were foolish enough to believe the crap spewed by the Conservative media.  

    AMZN/NF – Your premise for shorting AMZN contains the idea that they are in worse shape than NFLX for content?  I don’t think so.  AMZN has $100M a day coming in and that number is increasing by 40% a year.  NFLX has $7M a day coming in and it’s declining at the moment – do you see the subtle difference?  AMZN can write off content costs as a bookkeeping error and, of course, they probably get much better deals because they actually sell DVDs, which I’m sure the studios like to support as opposed to NFLX, which they consider a parasite, leeching off their IP.  You make assumptions like AMZN doesn’t know how to price things or do the math to make sure a deal is beneficial to them and I don’t understand that – they’ve been around since 1994 and have had success after success along the way with a strong founder still running the show – things like that matter.  

    GS/Pharm – And we didn’t even need Gupta to tell us anything!  

    BTU/Arivera – You have a net $32.80 entry on BTU, if you get called away at $40 it sounds like a 22% gain to me so as long as you are comfortable with the downside of owning BTU for net $32.80 – what’s the problem.  I often tell people to play with a compound interest calculator and just figure out what making 22% or even 18% or even 10% a year, steadily for 20 years will do for you.  

    This is something we talked about at the Vegas Conference – if you have $50,000 and you can make just 10% a year for 20 years – that’s $336,375.  If you add $5,000 a year to that money while you work ($100,000) that total jumps up to $651,387.  Of course if you have $500,000, that number becomes $6.5M and if $6.5M isn’t enough for you to retire on – then maybe NOW is a good time to start cutting back on the old lifestyle!  If you are 40 and you think you can work until 70, just $100,000 at 10%, adding $6,000 a year ($500 a month) for 30 years is $18,535,062.  At 12% it’s $31M and at 18% it’s $148M.  

    So, given what we know about wealth in America – you can probably see that it’s not realistic to expect to make 18% a year, is it?  Otherwise, all of our parents would have private islands.  The key to success is just going for that safe, consistent 10% a year and, if you happen to do a little better – that’s very nice but don’t risk 10% in the hand chasing 20% in the bush – it’s not worth it!  

    TLT/Esco – That’s bad, the Fed is already losing control on rates.  There was a bad 7-year auction today too!  

    Short puts/Kevin – You should NEVER sell puts on things you are not ready, willing AND able to keep as long-term positions if put to you.  Nothing can protect you from waking up tomorrow to find out that a nuclear device went off in Miami or London or whatever.  If you can afford the assignment and you end up paying $60 for KO when it drops to $20 – that’s fine because, a few years later, they’ll probably be back to $60 but if that drop just ends up giving you a margin call and wiping out your account – then you will take many years longer to recover than KO will!  As far as calculating protection, just knock 20% off the price of each stock and the difference between that and your net assignment is your losses.  Then you want to hedge some of those losses (usually half).  I don’t understand the way you phrase things because if you sold puts then everything should be fantastic and you can either lighten up (take profits) or just wait it out if you are confident.  Rolling to lower strike would be you taking money out of your pocket to pay to roll the putter to a cheaper position – essentially bailing out the guy who bought your puts.  While this is nice of you – I can’t see why you’d want to. 

    AMZN/NF – What you need to do is spend a week or two where you can only look at daily charts.  You have extreme reactions to every twitch of the market – it’s not a healthy way to trade.  

    AA Money/StJ – We’ll just add the 2013 $15 calls (.88 now) and roll the $10 caller ($1.42) to 2x the Nov $11 calls.  The 2 $11 calls have a delta of .66 (1.32) and the 2 long calls add up to .88 so we still do well if they pull back and, if they keep going up, we add more longs and do a 1.5x roll to the $12s.  Meanwhile, selling those $11 puts at .50 would have been nice.  

    No Recession/Angel – As I kept saying, you can’t trust 90% of the data that comes in.  Everybody was "ECRI has never been wrong in the history of the Universe" and "Mish says we’re all going to die" and "My cousin trades bonds and he says.."   Once you realize that people are clueless – you can really see through a lot of crap information as it floats past you….

    Red Army/Jabob – Oh that one is true, I was at that meeting.  8)  That guy, Klein, also wrote "The Manchurian President: Barack Obama’s Ties to Communists, Socialists and Other Anti-American Extremists" so this is kind of a working theme for him.  This jackass was also busted for tampering with Obama’s Wiki page -trying to insert false information to make him look bad.  All in all, a typical Fox guy.     

    SDS/490 – I wouldn’t sweat the Jan puts yet as they are all premium and can be rolled down to 2013 $15s ($1.70) so at some price I would think you would actually WANT the hedge.  As top the other, it was net $1.95 on that spread and you blew past 50% without a stop, which is horribly bad but the $24s are still .85 and you can sell the $20s for $1.50 and roll down to the $18s at $2.25 for better than even (but you’d still have the naked $32 callers too (now .40) and then you get paid $2 back if the S&P pulls back a bit and, if not – I sure hope you have some longs that are making money.  

    Oh look – it’s Cramer.  And he totally forgot that he told people not to buy last week.  

    DIA/Burr – You can do that.  Once you get past 50% losses, things get very hard to adjust.  Maybe keep that in mind for next time.  I’d sell the Dec $110 puts for $1.05 and roll up to the March $108 puts ($2.85) and see how that goes.  That way, you still have some downside protection and you improve your position.  Roll up $8 in Jan again and you’re at $116 and then you should be able to flip to a March $124/120 bear put so, if you have bullish positions to protect, it’s a good way to go to get the most out of some dead insurance.  

    Strangle/Bolt – I would take the call money off the table on such a massive gain.  What were you expecting to make that you’re not satisfied with this?  

    You’re welcome Gmarts.  Yes, greed can be good sometimes….

    WMT/Rehat – Why mess around?  You made money, it’s locked in, you will either get called away or you can make a nice roll at the end of the month.  The $52.50s are about $5 and so are the June $55s ($4.50) and that’s as much as you should expect from WMT (10% a year).  Give it until next week and make sure this rally sticks and then you can decide how to re-arrange.  Don’t forget, you can always dump 1/4 of the stock at $58 and buy 10 2013 $52.50/60 bull call spreads for $4.30 ($32 upside at $60) and then you can roll the callers to 2x, 4x and 8x before getting into trouble.  

    AA Money/StJ – Better off waiting.  As I said, I favor a 2x roll on the calls at this point.  

    Currencies/Jrom – Once Asia gets a hold of this, we could see a massive Euro squeeze or we could have an overnight Yentervention so I would stay miles away from currency trading at the moment.  

    Interesting StJ:  

    On the whole, I’d bet we revert to the mean at some point…

    Tomorrow/ZZ – Barring some major event, this is not momentum that will reverse by tomorrow.  Probably another 2.5% up.  

    Record/Robert – Actually we had 2 bigger up days in early August.  That’s how insane these markets are (and the first 50-point up day (8/8) was followed bya a 50-point down day and then another 50-point up day.   See – already we all forgot about it….


  168. stjeanluc
    AA
    Possible tomorrow every one is selling again. Today it is a down market in reverse. The new putter has very little value. I will hold mine and see what give tomorrow.


  169. Phil
    Does Japan really have to intervene with Dollar/Yen so low?  Maybe next couple of days?  Also thanks for SCCO advice. 


  170.  Phil – just to be clear regarding my 72c/73p IWM strangle, I was only expecting a big move one way or the other, so am very satisfied.  I just wasn’t sure if I should sell outright, or lock in profit by rolling to higher strikes, and was wondering if you would go to cash or continue playing this one.  You answered my question!


  171. Phil, re: the 2.5% follow through you mentioned tomorrow, do you suggest buying in before the close, or waiting for the open tomorrow morning? Thanks.


  172. AMZN/Phil – I know youre busy and that you’ll react poorly to this post (meaning, I guess the macro empathy doesn’t always translate well to the micro,) but I didn’t suggest shorting AMZN – if at all – was based on the NFLX issue – mainly, it would be based, in the near term, on an unfair downgrade. I really do appreciate the great trades ideas and the education, but please don’t tell me I have extreme reactions to anything (I’m not even sure what ur referencing) when any time NFLX gets mentioned you go off on a tear. I know Bezos et al know what they are doing. – I raised an issue related to cash flow on the heels of the market saying f-you to their report.


  173.  Problems/ZZ – Holes in the EU plan are the LEAST of the remaining Global Economic issues.  As I said, expect the focus to shift back to the US and China next week. 

    By the way, bad math in the AAPL trade in the main post.  1 contract spread is net $500 to make $5,000 if AAPL holds $400 (plus whatever margin on the short puts).  

    Yentervention/Russell – Yes, in fact, that makes me want to add another short:  

    DIA Nov $119 puts at $1.52 – 5 for the WCP overnight and we’ll either DD or roll if the Dow heads higher for a weekend protection.  


  174.  sure not everyday we get a $4 spike in oil…a $25 spike in gold… and a 350 point spike in the Dow….
     


  175. Wow, thanks for the reminder Phil.


  176.  Hi Phil,
    Looks like I have a few Nov 14 DIA puts hanging around which are 60% in the red. Is selling weekly DIA 14 puts a good way to try to recoup the loss?


  177. phew, jumped the gun on dia puts today but up .15 on them going into tomorrow.


  178. France’s President Nicolas Sarkozy announced Thursday
    night that the government has revised downward its forecast for GDP
    growth next year to 1% from the previous projection of 1.75%.

    Sounds low enough to beat :-)
     


  179.  lol, sure rub it in rustle


  180. DECK  beats!


  181. @dmoroz
    finished down .06 for day on those but made alot on the calls.  Should’ve listened to my original premise and also Phil to wait near EOD before making moves on my calls to get out of and puts to get in.


  182. Low enough /  Kustomz – The GDP numbers or Sarkozy…


  183. 10% Up – well that sure as —- beats losing 10% in a day! bigger balance, more cash, more margine and loaded up lots of downside cover through the day too. Stimulus kicks but!


  184. IWM/Bolt – You took a play and you have a huge profit on one side so you just TAKE THE MONEY AND RUN (another theme at PSW).  On the put side, you can wait it out or walk away but why would you begin messing around with rolling and crap when you have a clear winner locked in?  Not taking winners off the table is the number one reason most day traders (and casino players) lose money.  

    2.5%/Tarpoon – I am too worried about Yentervention and the Dollar is back over 75 so too many things can go wrong to chase this rally.  As you see above, the DIA puts got attractive to me.  You will rarely see me chase – if we miss a move, I’d rather just wait – PATIENTLY – to see how the indexes handle the next level and then decide how to play.  In this case, we’re at our +5% levels already so let’s make the market prove they can handle it first.  

    AMZN/NF – I was referring to your panic and then jubulation on the short $210 puts (and now worried again?) and then you are up and down and all around on the AAPL spread so I apologize but I get a bit dizzy trying to follow where you are at any given moment.  I was only trying to warn you that shorting AMZN is not a very good idea the same way I warned you that being long on NFLX was a terrible idea but I will give up (as I gave up with NFLX) and just leave it at the fact that the World needs counterparties and whatever you decide to do I will do my best not to argue about if you don’t want to hear it. 

    DIA/Dmoroz – Sure, as long as you use the money to improve your longer puts and not to put yourself into a dangerously bullish position. 

    Wow, what a day that was.  Let’s see if we can do it again tomorrow but how low can the Dollar go?  

    DECK with good numbers but we sold the $105s for $6.60 so we’re fine with $110.  


  185. AMZN/Phil – Apology accepted. Hee hee. Look, Phil, I don’t mind getting schooled – in fact being told what to do – especially by you on trading matters. I just don’t need the over generalizations – and who gives a rat’s ass about being up and down on AMZN – it’s been a fun week with them. I was long NFLX – and filled with regret for same – before I got back here and you helped me find my way out. Very good of you to give up. Maybe you caught me on a bad day – who knows. I’ll give you this much: as for willing counter-parties, you certainly have a handle on knee jerk defensiveness. Arguing is good. Lambasting is garbage. It’s your ball tho.


  186. DIA/Phil – Thanks for the day DIA play – really. And I just discovered, while being a little bummed I didn’t get the order in pre-close, that DIA options get processed in extended hours time? Cool!


  187.  Looks like Euro starting to sell off a bit, it wouldn’t take much of a move to send my rather overlarge USO short in the right direction.


  188. BRK/B- rolled up my 13-Jan leaps today. It has been a very nice run since late Sept. Up almost 50% so I am taking some money off the table. Have also done very well with front month long calls. I anticipate a pullback of sorts from here along with the general market after today’s run. My bet is new support for BRK/B in the $77 range (200DMA) and will look to lay on some covers if it trades into the mid-80′s. My longer term value target is mid-90′s.

     


  189.  Rolling/Phil – you posted above, "If you want a rule of thumb, if you intend to roll a position, you should do so when it’s no less than 50% premium an no more than 75% premium."
    Does the following example illustrate your rule, or am I misunderstanding?
    If ABC stock is at $110, and I have front-month $100 calls, I should consider rolling when they are between $15 and $17.50.


  190. From Michael Moore (saved it for after hours):
     
    Life Among the 1% …a letter from Michael Moore

    October 27th, 2011

    Friends,

    Twenty-two years ago this coming Tuesday, I stood with a group of factory workers, students and the unemployed in the middle of the downtown of my birthplace, Flint, Michigan, to announce that the Hollywood studio, Warner Bros., had purchased the world rights to distribute my first movie, ‘Roger & Me.’ A reporter asked me, "How much did you sell it for?"

    "Three million dollars!" I proudly exclaimed. A cheer went up from the union guys surrounding me. It was absolutely unheard of for one of us in the working class of Flint (or anywhere) to receive such a sum of money unless one of us had either robbed a bank or, by luck, won the Michigan lottery.

    On that sunny November day in 1989, it was like I had won the lottery — and the people I had lived and struggled with in Michigan were thrilled with my success. It was like, one of us had made it, one of us finally had good fortune smile upon us.
    The day was filled with high-fives and "Way-ta-go Mike!"s.
    When you are from the working class you root for each other, and when one of you does well, the others are beaming with pride — not just for that one person’s success, but for the fact that the team had somehow won, beating the system that was brutal and unforgiving and which ran a game that was rigged against us.

    We knew the rules, and those rules said that we factory town rats do not get to make movies or be on TV talk shows or have our voice heard on any national stage. We were to shut up, keep our heads down, and get back to work. If by some miracle one of us escaped and commandeered a mass audience and some loot to boot — well, holy mother of God, watch out! A bully pulpit and enough cash to raise a ruckus — that was an incendiary combination, and it only spelled trouble for those at the top.

    Until that point I had been barely getting by on unemployment, collecting $98 a week. Welfare. The dole. My car had died back in April so I had gone seven months with no vehicle. Friends would take me out to dinner, always coming up with an excuse to celebrate or commemorate something and then picking up the check so I would not have to feel the shame of not being able to afford it.

    And now, all of a sudden, I had three million bucks! What would I do with it? There were men in suits making many suggestions to me, and I could see how those without a strong moral sense of social responsibility could be easily lead down the "ME" path and quickly forget about the "WE."

    So I made some easy decisions back in 1989:

    1. I would first pay all my taxes. I told the guy who did my 1040 not to declare any deductions other than the mortgage and to pay the full federal, state and city tax rate. I proudly contributed nearly 1 million dollars for the privilege of being a citizen of this great country.

    2. Of the remaining $2 million, I decided to divide it up the way I once heard the folksinger/activist Harry Chapin tell me how he lived: "One for me, one for the other guy." So I took half the money — $1 million — and established a foundation to give it all away.

    3. The remaining million went like this: I paid off all my debts, paid off the debts of some friends and family members, bought my parents a new refrigerator, set up college funds for our nieces and nephews, helped rebuild a black church that had been burned down in Flint, gave out a thousand turkeys at Thanksgiving, bought filmmaking equipment to send to the Vietnamese (my own personal reparations for a country we had ravaged), annually bought 10,000 toys to give to Toys for Tots at Christmas, got myself a new American-made Honda, and took out a mortgage on an apartment above a Baby Gap in New York City.

    4. What remained went into a simple, low-interest savings account. I made the decision that I would never buy a share of stock (I didn’t understand the casino known as the New York Stock Exchange and I did not believe in investing in a system I did not agree with).

    5. Finally, I believed the concept of making money off your money had created a greedy, lazy class who didn’t produce any product, just misery and fear among the populace. They invented ways to buy out companies and then shut them down.

    They dreamed up schemes to play with people’s pension funds as if it were their own money. They demanded companies keep posting record profits (which was accomplished by firing thousands and eliminating health benefits for those who remained). I made the decision that if I was going to earn a living, it would be done from my own sweat and ideas and creativity. I would produce something tangible, something others could own or be entertained by or learn from. My work would create employment for others, good employment with middle class wages and full health benefits.

    I went on to make more movies, produce TV series and write books. I never started a project with the thought, "I wonder how much money I can make at this?" And by never letting money be the motivating force for anything, I simply did exactly what I wanted to do. That attitude kept the work honest and unflinching — and that, in turn I believe, resulted in millions of people buying tickets to these films, tuning in to my TV shows, and buying my books.

    Which is exactly what has driven the Right crazy when it comes to me. How did someone from the left get such a wide mainstream audience?! This just isn’t supposed to happen (Noam Chomsky, sadly, will not be booked on The View today, and Howard Zinn, shockingly, didn’t make the New York Times bestseller list until after he died).

    That’s how the media machine is rigged — you are not supposed to hear from those who would completely change the system to something much better. Only wimpy liberals who urge caution and compromise and mild reforms get to have their say on the op-ed pages or Sunday morning chat shows.

    Somehow, I found a crack through the wall and made it through. I feel very blessed that I have this life — and I take none of it for granted. I believe in the lessons I was taught back in Catholic school — that if you end up doing well, you have an even greater responsibility to those who don’t fare the same. "The last shall be first and the first shall be last." Kinda commie, I know, but the idea was that the human family was supposed to divide up the earth’s riches in a fair manner so that all of God’s children would have a life with less suffering.

    I do very well — and for a documentary filmmaker, I do extremely well. That, too, drives conservatives bonkers. "You’re rich because of capitalism!" they scream at me. Um, no. Didn’t you take Econ 101?

    Capitalism is a system, a pyramid scheme of sorts, that exploits the vast majority so that the few at the top can enrich themselves more. I make my money the old school, honest way by making things. Some years I earn a boatload of cash. Other years, like last year, I don’t have a job (no movie, no book) and so I make a lot less. "How can you claim to be for the poor when you are the opposite of poor?!"
    It’s like asking: "You’ve never had sex with another man — how can you be for gay marriage?!" I guess the same way that an all-male Congress voted to give women the vote, or scores of white people marched with Martin Luther Ling, Jr. (I can hear these righties yelling back through history: "Hey! You’re not black! You’re not being lynched! Why are you with the blacks?!").

    It is precisely this disconnect that prevents Republicans from understanding why anyone would give of their time or money to help out those less fortunate. It is simply something their brain cannot process. "Kanye West makes millions! What’s he doing at Occupy Wall Street?!" Exactly — he’s down there demanding that his taxes be raised.

    That, to a right-winger, is the definition of insanity. To everyone else, we are grateful that people like him stand up, even if and especially because it is against his own personal financial interest. It is specifically what that Bible those conservatives wave around demands of those who are well off.

    Back on that November day in 1989 when I sold my first film, a good friend of mine said this to me: "They have made a huge mistake giving someone like you a big check. This will make you a very dangerous man. And it proves that old saying right: ‘The capitalist will sell you the rope to hang himself with if he thinks he can make a buck off it.’"

    Yours,

    Michael Moore

    MMFlint@MichaelMoore.com


  191.   Hi Phil,

    How would you use SQQQ for protection / hedge from here?  I picked up some Dec 20 C (x25) for $1.5 into close today and and am long Nov 21C (x5).  I will be looking to sell some calls to both minimize cost of the insurance and build a hedge, but the magnitude of the move today is very much a surprise, so I am not sure how to figure out strikes for calls to sell.  
    If move seems to have leg, I would consider turning this position into calender / credit spread.  If move reverses, I would like to sell higher strike calls.  I am open to writing puts to lower cost of insurance but do have margin limitations.
    Thanks in advance for your guidance.
     


  192.  Hi Phil,
    Just saw that you have addressed SQQQ trade idea in your early morning post today.  Please let me know if you would change anything based on today’s move, other wise, please feel free to ignore my question.  Thanks.


  193.  Hi Phil,
    Just so I am prepared for the unexpected and can act quickly, what should we do to adjust the DECK trade if we see the name continue to rally at the open?


  194. Moore – I take it he means he’ll only trade options?


  195. Phil / WPRT.  Thanks for the suggestion on the call side. I get too greedy with stocks till fear sets in:-) When I  I plaid Blackjack my bet sizing was always under 1/5  Kelly with strict money management rules which experts (math-heads) would criticize  as  voodoo, negating the psychological impact of giving the winnings back…


  196.  BIDU/IFLAN – Nice call on this one!  


  197. lflantheman-
    Thanks for the BIDU idea. It made a nice bonus play for day.


  198. ALL VEGAS ATTENDEES—-please let me know if you did not get the $59 refund —and if you did not how to send it to you —-I want to close the books ASAP
    Thanks



  199. Moore – As long as I’m lobbing hand grenades today, I just have to comment on my re-read of the Moore letter. I’m a hard core union organizer and worker-side lawyer by trade. I have never met a working stiff that doesnt or wouldn’t think Moore’s positions in the letter are idiotic. You have to be a 1%-er to even think those thoughts. The phony man-or-the people rap is classic limo-liberalism. Stripped of the gunk, workers hear: “Pay more, earn less and work harder? You’re an idiot.” It’s the classic liberal conceit. Real working aspire to enter the leisure class – they don’t romanticize the working life.


  200. Phil/ TBT and TLT
    IF you thought the 10 year rate would be @ 2.60% in several months, how would you suggest playing TBT and/or TLT?
    Thanks
    Clarence


  201. Savi – received.  Thx.


  202. I do truly appreciate the amazing range of political discussion that Phil encourages here. Nothing like it. Not just blowing smoke. To have it combined with the trading skill he and other core folks bring? I’m happy to pay for the privilege. Even w a little testiness. I’m Italian to boot. We argue to breathe.


  203. rustle – thanks for the Moore email.


  204.  Looks like we are pace to have one of the best month in a while…

    http://www.bespokeinvest.com/thinkbig/2011/10/27/sp-500-best-months-ever.html


  205. Moore/Rustle
    Thanks for the "read" from Moore.  If those are the honest facts of his beginnings to date….. then my hat is off to him… Of course, his very name conjures up only ridicule and snark comments from those on the Right and those who attempt to delve into his motivations etc….. I have grown up in the rural midwest among union labor both in the trades and those working at Deere and from my experiences, I don’t believe Moore’s comments are off base.  My grandfather was instrumental in fighting for just labor laws in the 30′s and many lawyers in the law firm represented the common labor working man.  However, as years have passed "modern organizers of labor and many attorney’s" have become nothing but wh*res to the highest bidder……… one of the reason’s I don’t miss the practice of law…… Just my experience and opinion.    


  206. Savi-recvd my check, thanks


  207. Great post on the Moore letter Rustle… I don’t always agree with him on everything – I think he goes too far sometimes I guess for shock value but he seems like a nice guy which is more than we can say for let’s say … Rush Limbaugh! 


  208. Where did the 275% increase in income for top 1% come from:

    http://motherjones.com/kevin-drum/2011/10/price-plutocracy-0

    Funny how the numbers add up nicely! 


  209.  rustle123: Moore
    thx for posting. Reminds me that my 5 yr plan is to learn some of the skills Phil teaches so that once my investment portfolio is righted and generating the income I need once again that I’ll have time to work on some other meaningful projects.  For now this is all consuming but I am feeling confident the time will come when I can manage my time with more more variety.
    ps would love to see your thoughts on your next SCO idea


  210.  These guys just live in a fantasy world where hard work is the secret to success (nothing to do with your color, education and the dumb luck of being born with rich parents), upward mobility is a given and tax cuts pay for themselves:

    http://nymag.com/daily/intel/2011/10/the_ideological_fantasies_of_i.html

    Ryan likewise insists that the debate over rich investors who pay lower tax rates than the middle class is contrived:

    Obama quotes Reagan as saying that bus drivers shouldn’t pay a higher effective tax rate than millionaires. Well, that’s a no-brainer. Nobody disagrees with that.

    Nobody disagrees with that? How about Paul Ryan? His tax plan from 2010 would exempt all investment income from taxes, meaning that large segments of the rich would pay nothing at all. The average federal tax rate on households earning more than a million dollars a year, under Ryan’s plan, would be well under 13 percent, compared with a 19.5 percent average federal tax rate for households earning $50,000 to $75,000 a year.

    How about hard work as a basis for success. Apparently there are other factors (to be ignored for sure):

    One result is that rich kids perform far better in school than poor kids. But that is not the only result. Poor kids who beat the odds and get high test scores are less likely to complete college than rich kids with middling or even low test scores. Poor kids who beat those odds and graduate from college are still less likely to grow up to be rich than rich kids who did not graduate from college. I’m not sure if there’s a perfect solution, but pretty sure Ryan’s plan to slash Pell Grants is not going to help.

    I just don’t know how they can keep the middle-class voting for them! One thing they do though is to keep making their base get outraged that rich people pay too many taxes by making them dream of the day when they’ll be millionaire and have to pay these outrageous taxes. Unfortunately, we can’t all be in the top 1% or it would be called the top 100%. And as usual with these guys:

    Don’t confuse Paul Ryan with the facts. If studies run up against Ryan’s ideology, then the studies must give way.

    Oh well…


  211. CSTR – The spanking CSTR got today got me thinking about any favor AMZN might curry w studios because they sell DVDs – therefore leading to better streaming content deals. It would be interesting to see a comparison between the number of DVDs they sell-thru each month versus the number NFLX or Blockbuster (or CSTR) “buy” each week to service their respective bases. I’d guess rental-firm buys dwarf AMZN or WMT sales.


  212. CSTR / NF – Quite a spanking indeed… There might be a bad taste in the mouth of people when these guys talk about raising rates. That was the first nail in Netflix coffin. It might not apply to CSTR, but in this casino, it doesn’t matter! 


  213. NF**X - yes, DIAs trade an extra 15 mins after the normal market close. This can make for some interesting situations at times.


  214. It looks like HP is not spinning off their PC division after all.


  215. Moore – well i applaud his generous gifts with his first 3 million. whatta guy, eh!?  if it’s true..no reason to doubt.. except for the lying twisting agenda-catering "documentaries" he wen’t on to produce later. Hey, he made good. And what he wants is to be loved. Also interesting how when Moore comes up, almost inveitably so does a mention or comparison to Rush.. ;-)  As for me, i can’t stand Moore, and i simply ignore Rush (who doesn’t try to make me love him for his good and generous deeds--and i am sure he can cite a litany of them as well.)


  216. Wen’t – wen’t? how did that happen!?  .. went…   


  217. @Savi
     
    Got refund, thanks, and thanks for helping make the entire Vegas outing possible.  Great job.


  218. USO  -oil dropping nicely. Will be SWEET if see a gap down in USO tomorrow morning!


  219. @scottmo
    Oil – 50c down, now 30c up
    It’s not big move at all.
    it’s very usual for oil to move in range $2-$2.5 wide during night hours.
    and it’s so manipulated that it’s generally impossible to guess at this time of the day where it’s going to open in the morning.


  220.  Jan12 VXX 34 puts running!
     
    I love puts on this garbage with uber-decays. I doubt they even make it to 2013. That makes the Jan13 – 10 puts a free ride.


  221. New post is here.


  222. USO/lol – yes.. it turned up.. i was just indulging in some hopeful* optimism (*not a valid investment strategy)  ;-)


  223. Phil:  I’m not terribly adept at hedging and I’d like your opinion on these two hedges that I established late Thursday.  I created Nov TZA 28/32 and 29/33 bull call spreads for .87 and .77 cents respectively, offset by Nov 24 puts for .76.  Any tips on how to manage them and on what to expect would be appreciated.  Thanks.


  224. Oil – Down 70c @ 01:53 ET — Reuters 60 C Down @ 1:47
     
    I am a greedy bastard ; did not unload USO on the 26th and DD today! I like SCO better for today – I hope it works out scottmi. lol.


  225.  USO — the Euro is going to have drop to give oil a push over the edge, and that ain’t happening at the moment, much to my dismay.  
    I’m still optimistic.  With the only live fire conflict in the Middle East being Syria, those rebels Phil talks about are going to have to blow off their entire stock of RPGs at passing tankers to spike oil any further. And with Tropical Storm Rina crapping out over the Yucatan, I would think that the only thing holding USO at its present level is a weak dollar, knocked down by potentially unwarranted optimism about the future value of the Euro.  
     
    FT puts the case this way:  October 27, 2011 8:47 pm
     

    "The rally, of course, reflects the fact that investors were braced for bad news. For it to be sustained, the eurozone deal will need not only to stick, but to be the answer."
     
    "Unfortunately, it came with more questions. How will the leverage of the bail-out fund work? What will China get in return if it contributes? (Begging for help from poor emerging markets smacks of desperation.) Is the €106bn ($150bn) recapitalisation requirement for banks enough? (Analysts pencilled in higher numbers.) Will the “voluntary” bank haircuts on Greek bonds be agreed? Can Greece magic up a successful privatisation programme even larger than previously promised?
     
    "The absence of detail helps to explain why peripheral bonds did not see a recovery on the scale of equity markets."
     
    "True, Greek, Portuguese, Irish, Spanish and Italian debt all gained, with yields falling. But, Ireland aside, spreads over German debt remain within spitting distance of their highs across the periphery."
     
    "Perhaps European leaders have finally done enough, and peripheral spreads will fall once the bail-out details are clarified. Perhaps."
     
    "Just as likely is that further political wrangling is on the agenda, and the situation will deteriorate in due course. If this view is right, the summit reaction will look just like previous summits: after the relief rally, equities gave back all their gains and more in the next four weeks."
     
    So — the real message may be that, rather hoping for a Euro selloff to pump up my USO short position, I should perhaps focus on how to protect the lovely U.S. equity profits that flowed my way today if today’s Euro-optimism takes yet another post-summit dive. Yo, Phil, what was our hedge du jour again?


  226. Good morning!  

    Not much going on so far – would be great for the bulls if we hold a 20% pullback or higher.  

    Dollar flatlining at 75 all night, gold calming down a bit ($1,740), oil too ($92.75) with silver still way up at $35.50, copper $3.66, Nat Gas $3.79 and gasoline $2.69.  

    Euro flatlining below $1.42, Pound proudly over $1.61, 75.85 Yen to the Dollar and the Swiss are still the best at manipulating a currency with EUR/CHF back at 1.224.

    Asia was in a good mood with Shanghai and Hang Seng and Nikkei all up about 1.5% and BSE up 3%.  Europe, however, has gone flat.

    BIDUs profit doubled!  Should have had more faith in the effect of those Chinese wage increases…  CHL is still my favorite (only) China stock unless you count YUM (you can FRY a chicken?  No way!).  YUM isn’t cheap anymore but CHL is like investing in AT&T in the 50s – decades of growth ahead. 

    Before the VIX fairy goes away, you can set up to collect the $1.83 dividend by buying the stock for $49.44 and selling the 2013 $47.50 puts and calls for $11.50 for net $37.94/42.72, which makes the dividend 4.8% while you wait to see if you get called away for another 25% in 15 months.  

    Chinese stocks are undervalued and U.S. investors should heavily increase their exposure to benefit from the country’s long-term growth, Burton Malkiel advises. A typical institution now holds just 1.7% exposure to China, he says; it "should be at least 9% to better match China’s contribution to global GDP. And that’s conservative. It really should be 12%."

    Friday’s economic calendar:
    8:30 Personal Income and Outlays
    8:30 Employment Cost Index
    9:55 Reuters/UofM Consumer Sentiment

    Notable earnings before Friday’s open: ACIAGPAIV,AONBIIBBWACEGCICMCCOLCPNCVHCVX

    DDTE,GTIPGITTLEALYBMRKNEMNINWLPEGSWCTEN,VSEAWHRWY

    Bear market in reverse. The S&P 500, at 1,284, is now 20% higher than its low on October 4.

    "This is our reality. The global government put has come to dominate every twist and turn in the markets. There is no buy and hold… There is only one big roller coaster of volatility based on the decisions of clueless politicians who… fail to understand the impact of their policies… Welcome to the global government put. Fight it at your own peril."

    As long as the situation in Europe appears contained, at least for the time being, this market has some legs, says market strategist Joseph Tanious. Valuations are compelling, and if you look at the forward indicators, a lot of the headwinds that have been holding stocks back – are clearing. His recommendation: rotate out of defensive and high-dividend stocks and into cyclicals. (video

    Triggering CDS on Greek debt would be manageable argues Citi’s Willem Buiter, but imposing haircuts without having the insurance pay would be catastrophic. "(This) would impair the value of CDS as an asset class," he says. If CDS are no longer legitimate, holders of the underlying asset might have no choice but to sell – "contagion par excellence."

    Felix Salmon presents a flow chart of the EU rescue used for explanation during last night’s summit. The key, says Salmon, is the sequencing, with everything seemingly contingent on Greek debt getting a haircut first. The IIF may have agreed in principle last night, but that’s a lot different from getting each bank to tender its holdings for new debt valued at 50% less.

    "Why is it acceptable to write down Greek debt, when the Irish pay private bankers’ debts," asks Sinn Fein MP Gerry Adams.Under pressure to win Ireland some relief for its debt, PM Enda Kenny – having ruled out haircuts – is left seeking lower interest rates and maturity extensions. (earlier)

    Mix Europe’s pullback from the abyss with pent-up capital pouring into the beaten-down materials sector, and you get huge spikes in economically sensitive companies. Alcoa (AA +9%adds $1B in market cap today, as investors pounce on shares that had shed 34% YTD. Other big winners: DOW +8% despite a disappointing Q3 reportFCX +8.7%DD +5.5%.

    Is QE3 on or off? RDQ Economics can’t quite grasp how the Fed can launch it after the strong GDP report, despite all the Fed-head hinting about more liquidity. The take: "The doves at the Fed cannot look at this report and find any grounds to expand quantitative easing at next week’s FOMC meeting." Cullen Roche weighs in via atweet, saying his best guess is that QE3 still hits in 2012. 

    See, right on schedule:  A deal is done in Europe, but what about the debt in the U.S.? Americans need to save more, Stephen Roach says, but Fed "repression" is penalizing consumers by keeping interest rates near zero, threatening long-term savings and the economy. "Right now we’re borrowing surplus savings from abroad because we don’t save a nickel at home, and we have to wean ourselves from that."

    And this, of course:  Though Meredith Whitney has taken a lot of heat for herpredictions of a muni bond crash that failed to materialize, many still believe the asset class carries a lot of risk, given the challenges faced by local governments, and Europe’s ongoing issues. Bears attribute this year’s solid performance to low supply, rather than improving fundamentals.

    And then this:  A crisis could soon emerge for the ~400 community banks that still owe the Treasury Department nearly $2B combined in bailouts, according to the TARP Special Inspector General. "A common misconception is that most of the 707 TARP banks have paid back TARP, when really only the largest banks have exited TARP," the watchdog says.

    CA governor Jerry Brown is set to propose raising the retirement age for newly hired state workers to 67 as well as offering them less generous benefits – including the replacement of defined-benefit pensions with a "hybrid" system. His proposal also includes eliminating retirement service credits which bumped pensions by adding time to workers employment records.

    Well, that was fast… now stocks are overbought, heretofore bullish Birinyi says: "Our Sector Timing Model indicates that the market has reached its ‘absolute sell price’ (the most overbought level in the past 12 months). Six of the 10 sectors are also at their ‘absolute sell price’ and three sectors are within 2% of that level."

    Gluskin Sheff’s David Rosenberg pours cold water on thelatest GDP numbers, telling clients that consumers dug into personal savings to cover expenses, and most of this money paid for essential health care and utilities. “Outside of those areas, consumer spending was fairly stagnant and GDP growth an unimpressive 1.5%." - And, outside of those extra runs, the Cardinals lost last night’s game!  

    Next stop Portugal? "(It) appears to have entered a Grecian vortex," says Simon Ward, as the M1 money supply spirals down at an annualized pace of 21%. The just-completed EU deal falls apart if things spread beyond Greece, writes Ambrose Evans-Pritchard. Monetary contraction, onerous debt, and fiscal austerity are a lethal mix; at some point, the ECB – even without German permission – must act.

    Another alarming sign of financial distress for MF Global (MF): the firm has reportedly drawn down and exhausted all its revolving credit lines over the past few days, according to aBloomberg report, after stating as early as last Tuesday that it still had around $1.3B remaining. Shares -5% AH. 

    In normal times, what happened at MF Global (MF) would have been forgotten and we would’ve moved on the next quarter, says Dick Bove. But these are hysterical times, where anything that happens to a financial company gets magnified way out of proportion to reality. So now, what we have to worry about is a run on a company that’s actually solvent. (video

     

    Shares of both Chipotle (CMG) and Panera (PNRA) trade just off their 52-week highs, as well as sharing at least one other common trait…loyal (almost cult-like) customers. The winning recipe for both chains is close attention to a high quality menu and a leveraging of social media and reward programs to inspire continued loyalty. YTD: CMG +61.5%PNRA +33.9%.

    After mortgage REIT American Capital (AGNC -3.7%) reported lower-than-expected Q3 earnings due to margin compression driven by higher prepayment expectations, Evercore and Sandler O’Neill drop 2011 EPS estimates. But most REITs are rising despite plans to bolster federal refi programs for underwater homeowners. ETFs: REM +2.1%MORT +1.7%


  227. Shares of both Chipotle (CMG) and Panera (PNRA) trade just off their 52-week highs, as well as sharing at least one other common trait…loyal (almost cult-like) customers. The winning recipe for both chains is close attention to a high quality menu and a leveraging of social media and reward programs to inspire continued loyalty. YTD: CMG +61.5%PNRA +33.9%.

    After mortgage REIT American Capital (AGNC -3.7%) reported lower-than-expected Q3 earnings due to margin compression driven by higher prepayment expectations, Evercore and Sandler O’Neill drop 2011 EPS estimates. But most REITs are rising despite plans to bolster federal refi programs for underwater homeowners. ETFs: REM +2.1%MORT +1.7%

    Advanced Micro Devices (AMD): Q3 EPS of $0.15 beats by $0.05. Revenue of $1.69B (+4% Y/Y) beats by $40M. Company expects Q4 revenue to be up 1%-5% Q/Q, compared with consensus for 1% increase. Shares +6.7% AH. (.pdf)

    Baidu.com (BIDU): Q3 EPS of $0.86 beats by $0.03. Revenue of $655M (+85% Y/Y) beats by $36M. Shares +10.1% AH. (PR

    More on Baidu’s Q3: Advertising customers hit 304K, +12% Y/Y and +2% Q/Q. Revenue per customer +65% Y/Y and +19% Q/Q. Traffic acquisition costs (i.e. payments to partner sites) were 8% of revenue, down from 8.9% in year-ago period. Company expects Q4 revenue of $691M-$711M, well above $647M consensus. BIDU +9%AH. (PR

    Deckers Outdoor (DECK): Q3 EPS of $1.59 beats by $0.24. Revenue of $414M (+49% Y/Y) beats by $27M. Shares +1.6%AH. (PR

    Shares of Coinstar (CSTR) turn lower in AH trading – after a brief spike higher – stung in part by an announcement in the company’s Q3 report that it’s raising prices on standard def DVD rentals to $1.20 from $1.00. Also weighing on shares is late word that a 60-day delay on DVD rentals is being bandied around by Hollywood movie studios, aimed at helping boost their DVD sales and online purchases. Shares now down 11.1%.

    Hewlett-Packard (HPQ) says it’s keeping its PC divisionafter all, because it would cost more to spin it off. Turns out that the operation is more tightly integrated into functional divisions like IT and the supply chain than realized.

    More on H-P’s (HPQdecision to keep the PC business: It’sall about costs that would be involved in surgically extracting the Personal Systems Group, not to mention some scale economies that give H-P leverage with suppliers like Intel (INTC) and AMD, among others, when it comes to the server business. HPQ now +0.4% AH.

    Las Vegas Sands (LVS): Q3 EPS of $0.55 beats by $0.01. Revenue of $2.41B (+26% Y/Y) beats by $70M. Shares +5.7% AH. 

    More on Las Vegas Sands (LVS): Q3 profit jumped 26% on strong revenue growth in Asia, particularly at the casino operator’s Singapore and Macau properties. Margins were also helped by efforts to reduce the company’s debt load through the redemption of its preferred A shares, a move that will save more than $76M per year in dividend payments. Shares +3.5% AH.

    MetLife (MET): Q3 EPS of $1.11 beats by $0.01. Revenue of $20.5B (+66% Y/Y) beats by $4B. Premiums, fees and other revenues up 9%; variable annuity sales up 84% to $8.6B. Shares+1.4% AH. (PR

    Warren Buffett isn’t the only rich guy who wants higher taxes on the rich. A new survey finds 68% of millionaires support raising taxes on those with $1M or more in income. The result surprises Spectrem Group’s George Walper: "I thought that among this group there would be a feeling of ‘why doesn’t he keep his nose out of it’… The reality is maybe it has to be done." 

    Three lunchtime reads:
    1) European crisis postponed; investors face momentous decision
    2) Our financial smarts erode quickly after age 60
    3) Can small businesses make america prosperous? 



  228. Rolling/Bolt – Yes, when the intrinsic value (how much in the money you are) gets to about 50-75% of the options price, that is when you want to roll.  Of course it depends on what you think the movement will be between now and expiration – we don’t just mindllessly roll things (or do anything) just because of some simplistic rule.   Guidlines like that (like taking stops at 20%) are more to trigger decision points, where you seriously re-evaluate your position and decide to take an action but, NO ACTION is a valid plan of action as long as you have a firm plan in place for what your next step will be if the stock goes up, down or sideways.  

    So yesterday, for example, just because the short DECK $105 calls we sold for $6.10 are now $5 in the money and maybe have $3 of intrinsic – we don’t automatically roll them because there are 21 days to expiration and we still think it’s the top of the range so there may be a pullback and we have adequate coverage with our long Jan calls so our DECISION at this juncture is to watch and wait.  If DECK holds $110, we will add a long call, if DECK breaks $115, we will add another long call and THEN we will roll the callers and if DECK drops – we will be happy, happy people as it was a credit spread.  That’s the kind of plan you should have for EVERY position – what you will do next if it moves up, down or sideways.  

    Great Michael Moore post Rustle but I’ll bet some blockhead criticizes him anyway, despite the fact that people have been nominated for sainthood with less credentials.  

    SQQQ/DrMtv – Well, first of all I would not want to be the sucker paying 100% premium for protection in the first place.  I don’t even know what people are thinking when they do this.  You buy a Dec $20 call for $1.50 so you need $21.50 to break even on your protection.  At $18.16 that’s a 20% gain in SQQQ so the Nas has to drop 7% of you lose $1.50 so, essentially, if you have $100,000 in positions and buy $5,000 worth of calls, you will now be down $10,000 instead of just  $5,000 if the Nasdaq pulls back 5%.  This is a strange and unusual use of the work "protection" that I am not familiar with.  It’s like using a condom that might work but, if not, you get twins.  

    My logic in protection is that the SQQQ Dec $15 calls are $4.72 and the SQQQ Dec $19 calls are $2.10 so that’s net $1.60 on the $4 spread that’s currently $3.16 in the money.  We can offset $3,200 (20 spreads) by selling, for example 20 T Jan $29 puts for $1 or whatever it is you REALLY want to buy on a pullback.  That drops you to net $1,200 on $8,000 worth of protection that is already $6,000 in the money so the only way you LOSE the $1,200 is if SQQQ DROPS 20% and that would mean the Nasdaq is UP 7% and that means you MAKE $7,000 on your longs (and, of course, it would then be very unlikely the T puts would trigger).   If the Nasdaq even twitches down or flatlines or even just doesn’t go up a lot – you make a profit on the bull call spread and you are STILL not likely to trigger the T puts unless the market goes sharply lower, at which point we can always add more puts because you would already have $8,000 in the bag from these.   See the difference?  

    Ignore/DrM – Too late, I was in the mood to pontificate on what constitutes good protection.  

    DECK/Trader – Great question – see above.  

    Sizing/Oscarz – That’s good, it’s a similar concept with options trading.  Managing your position sizes is a very important skill.

    Fed/Asaenz – If Congress doesn’t do something, the Fed almost certainly will.  

    Wow, check out the Big Chart – How impressive is that to have all 5 indexes right on our levels?  This is why I think TA is a joke (even though I guess you could argue that this is TA) – These are lines based on a formula (our 5% Rule) we’ve been using since the crash of 2009 (we needed consolidation at a bottom before we could establish the base).  We don’t move the lines around every day or draw silly crosses or try to identify patterns other than the ranges we move into after each phase of consolidation.  Oddly enough, it’s the 50 and 200 dmas that eventually meet up at our lines, not vice versa. 

    Moore/NF – Oh come on, really???  What’s your take on Mother Theresa?  Was the bitch just out for the glory?  MLK was just trying to get laid?  Ghandi was just cheap?  While you "never met a working stiff who didn’t think Moore was an idiot" (none of whom actually knew him, of course) – Moore was a working stiff whose Dad was an assembly-line worker and whose uncle was a UAW founder (LaVerne Moore).  Moore worked at a plant after college, dabbled in journalism and scraped together the money for Roger and Me (a brilliant film) because he just thought it was a very important story (the destruction of Michigan via outsourcing and union busting) that the MSM wouldn’t tell.  That was 1989.  In 1997 he directed "The Big One" which criticized the growing trend in America of Corporations boosting their profits by downsizing and outsourcing their workforces and cutting benefits.  His point was that it was short-sighted of corporations because, eventually, the system would collapse when the people didn’t have money to buy their stuff anymore.  If people paid attention to this guy instead of acting like good little storm troopers and attacking him because the party tells you to – this country would be a lot better off. 

    2.6%/Clarence – What’s that, up about 10%.  Well that’s TLT down to $100.  We don’t play TBT anymore, it’s just too much of a pain in the ass.  You can play the TLT Jan $114/109 bear put spread for $3 and sell the $113 calls for $2.50 and that’s net .50 on the $5 spread for a nice 10x payoff on a small drop in TLT.  

    Thanks NF, I’m glad you appreciate the testiness.  

    Great chart StJ!  

     

    Woops, time to go to work!  


  229. I’m actually hoping it continues raining today so I don’t have to make my 8.30am tee time.  I WANT TO TRADE….
     
    Although that’s probably the time I should step away since I’m letting emotion (excitement) possibly cloud my judgement.  


  230. Moore – I’ll leave Mother T to Christopher Hitchens. It’s esrly, so I hope it was pre-coffee fog in my eyes that made it look like Moore’s name was in the same paragraph as MLK and Ben Kingsley. Is this guy your just-discovered long-lost brotha by a different mutha? I don’t know if working stiffs think St. Michael is an idiot – I know they’d think his positions in the letter are idiotic – and I’ve met more of them than he. Don’t forget his letter defines all of us here as freeloaders and carpet baggers for trading stocks. Gotta go – my butler is bugging me for my breakfast order.


  231. OSW – Driving my in-laws downtown last night, I took K Street in and also ended up going past McPherson Square. Perfect backdrop – foreshadowing, perhaps – for this NYT piece – meet some of the 1%-ers: http://www.nytimes.com/2011/10/28/us/politics/obama-bundlers-have-ties-to-lobbying.html?_r=1&hp


  232. What’s your take on Mother Theresa?  Was the bitch just out for the glory?
     
    Well, Christopher Hitchens thought she was Hell’s angel. Here is a quote from his Slate article:
     
    MT was not a friend of the poor. She was a friend of poverty. She said that suffering was a gift from God. She spent her life opposing the only known cure for poverty, which is the empowerment of women and the emancipation of them from a livestock version of compulsory reproduction. And she was a friend to the worst of the rich, taking misappropriated money from the atrocious Duvalier family in Haiti (whose rule she praised in return) and from Charles Keating of the Lincoln Savings and Loan. Where did that money, and all the other donations, go? The primitive hospice in Calcutta was as run down when she died as it always had been—she preferred California clinics when she got sick herself—and her order always refused to publish any audit. But we have her own claim that she opened 500 convents in more than a hundred countries, all bearing the name of her own order. Excuse me, but this is modesty and humility?
     
     
    http://www.slate.com/articles/news_and_politics/fighting_words/2003/10/mommie_dearest.html


  233. George Orwell on Ghandi (well worth reading the whole essay).
     
    Saints should always be judged guilty until they are proved innocent, but
    the tests that have to be applied to them are not, of course, the same in
    all cases. In Gandhi’s case the questions on feels inclined to ask are:
    to what extent was Gandhi moved by vanity--by the consciousness of
    himself as a humble, naked old man, sitting on a praying mat and shaking
    empires by sheer spiritual power--and to what extent did he compromise
    his own principles by entering politics, which of their nature are
    inseparable from coercion and fraud? To give a definite answer one would
    have to study Gandhi’s acts and writings in immense detail, for his whole
    life was a sort of pilgrimage in which every act was significant.

     
     
    http://www.george-orwell.org/Reflections_of_Ghandi/0.html


  234. Phil/CHL
     
    Thanks for that one. Looks like I need to make space in the IRA for some CHL.


  235. jmm/Hitchens – Thanks for finding and posting the concise CH piece. I don’t always agree with Hitchens – who is now near death – but I adore his writing. What a prolific and smart guy. When he got his cancer diagnosis, some rejoiced and sent notes telling him he got what he deserved – others said they’d pray for him. To the latter group he said: “Don’t.” True to his convictions no matter.


  236. jmm/Orwell – I’m not as well read as I’d like to be, but interesting that Hitchens is a huge Orwell admirer.


  237. NF**X/Orwell
     
    Most of his essays are available free online and well worth reading. More interesting to me than Animal Farm and 1984. Being about the same age as Hitchens, I must say that I am also a great admirer of Orwell who died the year before I was born. I got hold of a penguin paperback copy of his essays when I was 14 and read them over and over again. Of course my comprehension was limited at that age, but I still liked them and tried to model my writing style on his.


  238. NF**X/Orwell/Hitchens
     
    I can 100% guarantee you that Hitchens is very familiar with that Orwell line about saints always being judged guilty until proved innocent.


  239. jmm1951/Hitch and Orwell – Have you picked up CH’s memoir?  (I havent finished it – actually got side-tracked by the new collection of essays.)  I need to go back and read me some Orwell  - I hate to read online (and obviously I’m not a gentle touch while multi-tasking and trying to post around my warped sense of humor) – so can you reco a good collection of Orwell essays I can buy at, ahem, AMZN?  Or on my Kindle?  Thx.


  240. NF**X
     
    This seems to be the best one available for Kindle, though there is a much better collection of almost 2000 pages available in the Everyman edition but only in book form.
     
    This one seems to contain the very famous essay called "Shooting an Elephant" which is about his days as a young policeman in colonial Burma, but I don’t think it includes "A Hanging" which is also a very important essay in which he describes witnessing a hanging in Burma. However it does contain most of the popular anthology essays. If " A Hanging" is not in the book, it is worth reading online. It is only a few pages.
     
    http://www.online-literature.com/orwell/888/
    Orwell also fought as a volunteer in the trenches in the Spanish Civil War, where he was shot through the throat by a sniper bullet. This collection does contain some Spanish Civil War stuff, which is also very interesting.
     
    Kindle edition.
    http://www.amazon.com/Facing-Unpleasant-Facts-Narrative-Complete/dp/0151013616


  241. jmm/Orwell – Thanks.