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Easy Money Monday – Robbing Peter to Pay Portugal

That was easy!  

Who'd have thought Europe's problems could be over just like that?  Certainly not us, as I was quite skeptical Friday Morning (see yesterday's Stock World Weekly for the Executive Summary of the Week's Events).  As I noted in Friday morning's post, we had ended the day on Thursday very bullish – too bullish I decided on Friday morning and I called for cashing out into the weekend at the end of the morning post.  In the morning Alert to Members, I repeated:  

When in doubt, sell half and, in this case, I want to get back to more cash by the day’s end in the White Christmas Portfolio as the WCP is too bullish and I’m just not in the mood to risk it so we’re not going to be too brave if the "rally" stops or even slows down.

The markets were very kind to us, heading higher all day long and giving us great exits.  Heading into the close, we got a bit more bearish and, aside from existing hedges like our EDZ spread (mentioned as our key hedge in last week's Stock World Weekly), we added DXD (ultra-short Dow) Jan $15 calls at $1.25 but we offset those with short FCX Feb $33 puts at $1.25 in our virtual White Christmas Portfolio, with 10 of those contracts on each side netting a free spread with unlimited upside (with the downside being owning FCX cheaply).  As I pointed out to Members, DXD was $18.50 just 3 weeks ago.  

At 3:26, just before the close, we added the SQQQ (ultra-short Nasdaq) Jan $16/19 bull call spread for $1.50, which I pointed out had a nice 100% potential upside all by itself but you could also, for example, offset it with things you REALLY want to own if they get cheap – like shorting a GOOG Jan $500 put ($1.20) or an AAPL Jan $320 put ($1.25) or a MSFT 2013 $20 put ($1.10) – the idea is to just thing of what stock you REALLY want to be jumping in and buying if the market throws a 20% off sale.  If there's nothing, then you should be thrilled with the 100% potential gain on the raw spread.  

But THAT wasn't the easy money (I'm not so egotistical that I would guarantee we open lower when it's only 7:30 as I write this).  In fact, I was at the Jet game with a bunch of Financial guys (thanks Rustle!) who were asking me what the markets would do tomorrow and I said at the time (early afternoon) that Monday was a wildcard but it was Tuesday we were playing bearish for.  

The EASY money came at 11:54 last night, after I got home and went over the news and, as I commented to Members: "Markets opened at 6 with the Dollar way up at 79.34. So far, we haven’t seen a big sell-off but I do like shorting the S&P futures (/ES) below the 1,250 line (now 1,250.50) or, of course, the RUT (/TF) below 740."  The Russell Futures already fell to 733 before turning around (weak bounce) at 4:30 am – up $700 per contract and the S&P fell back to 1,240 at the same time, up $250 per contract and, as we like to say – the Egg McMuffins are paid for!  

We're not ready to hit the panic button just yet – that likely comes tomorrow when Treasury has to hawk off $177 BILLION ($177,000,000,000 – a new record for a month, or $77Bn more than $100 Billion Dollars – muhahaha) in funny money over the next two weeks, beginning with this afternoon's (1pm) auction of $32Bn worth of 3-year notes, then $21Bn of 10-year notes on Tuesday (with an FOMC announcement at 2:15, where it's QE3 or bust anyway) and then $13Bn in 30-year paper on Wednesday.  

So, on the off chance we can't find enough suckers investors to purchase record amounts of low-interest paper this week – I thought it would be prudent to hedge for a possible catastrophe.  

Looking ahead, we have the longer-term catastrophe of OECD Nations needing to borrow $10.5 TRILLION $10,500,000,000,000 – (that's muhahaha TIMES 105 – REALLY) or 20% of the Global GDP next year – in order to keep the lights on.  Now, since the OECD nations are 80% of the Global GDP, they are probably not going to be able to borrow the ENTIRE GDP of the other nations and we've canceled our Moon and Mars programs – so no loans from there are likely.  That's OK though – because they will borrow the money from EACH OTHER!

That's right, the OECD nations will borrow roughly 25% of their combined GDPs from each other next year.  This is nothing new, of course – that's how we do things in the modern world.  Feel free to try this at home – if you owe, say 700% of your salary in debt (don't let this debt to GDP fool you – it's debt to tax revenues that should be examined!), like the United States, and your German Aunt is "only" 500% of her salary in debt – then she can lend you 100% of your salary to help you cover your shortfall next year and you can lever that money 10:1 and lend her a year's salary, no problem and then she can lever it up and lend it out to that French guy she's having an affair with and he can turn around and pay off his Italian Mistress, etc. – until everyone has a lot of money to spend and a little more debt.

After all, we're "only" expanding our debt by 14% next year and, if we borrow another $2Tn in 2013 – that will be added to $17Tn we owe and just 11.7% more added to the pile.  So you see, the bigger the pile of debt we have – the less of a difference each round of new debt makes – BRILLIANT!  

As I said to Members during weekend chat, my real concern in Lee Adler's article ("Unreported Bedlam in Treasuries Signal Massive Panic") this weekend isn't the fact that there are no real people who want to hold US paper at sub 3% interest (Duh!), but that WEAK WITHHOLDING TAX COLLECTIONS forced Uncle Sam to borrow $9Bn (11%) more than forecast last week and $13Bn (17%) more than forecast this week.  That's that "salary" I was talking about above.  Like the bottom 90%, the salary of poor old Uncle Sam is steadily dropping and, unfortunately for the bottom 90% – he's the rich Uncle that not only is supposed to lend them a hand when times are tough (and he didn't) but is also the Uncle that got rich because they LOANED him 12% of their annual salaries for the past FOREVER in the form of FICA payments, which he counted as income on his budget returns.  

Oh Uncle Sam – how could you?  Americans are now, as Economists like to say, Funded Under Current Kapital Equity Distribution – and, if you can't figure out why Kapital is spelled with a "K", then we know how it happened to you!  Now it's after 8:30 and I can say with quite a degree of confidence that we WILL, in fact, open lower as the Dollar is now at 79.97 so congratulations to all who heeded my cash call as we are now 1% richer in buying power than we were on Friday in our cash position.  

Speaking of being 1% richer:  News from the Wonderful World of the Top 1% (many of whom were in Sky Boxes with me yesterday) – it only takes 6 of them, if they are the Walton (Wal-Mart) family to equal the combined net worth of the bottom 30% of our citizens (93,000,000).  

That's right, the 6 Walton kids, who earned their money the old-fashioned way (inheritance), are now worth a combined $93,000,000,000 while the bottom 30% of the people in our country are worth less than $1,000 so EACH Walton has 15.5 MILLION times more money than the average person who works in their store (now THAT deserves a muhahaha!).  Kind of makes you wonder why they sell guns there but, then again, I very much doubt you ever see a Walton in a Wal-Mart store.  

The "average" top 1%'er (as if there's no difference between you and the Waltons) is 225 TIMES richer than the the "average" American, which means those "average" Americans are about 100 times richer than the bottom 30% but Conservatives think that THOSE PEOPLE need to pay more taxes because it's "so unfair."  Now, I am not saying we need to hunt down the Waltons to fix the economy, but I am going to point out that WMT earns $16Bn a year in net profits and their 2M employees could use another $1,000 a year A LOT MORE than the Waltons could use another 2% more money added to their wealth pile.  

Giving 2M WMT employees $1,000 more to spend doesn't seem like a lot but they will, in turn, go out and spend that in local economies (the ones WMT sucked jobs out of) which will, in turn, generate more jobs and more tax revenues etc for the Government while giving it to the Waltons will generate one more super-yacht or whatever.  That Waltons should learn the lesson of Henry Ford, who realized that paying his employees enough money to be able to afford a car would greatly increase his car sales which, in turn, made him richer than he would have been squeezing the life our of his workers.  Too bad  almost no one in America seems to remember how Capitalism actually works.  

Meanwhile, down and down the markets go – where she stops – we'll have to wait and see but Timmy's got a lot of notes to peddle this week and nothing sells TBills like a panic out of equities – funny how conveniently that works out (for the 4th consecutive month).  

Be careful out there!  

 


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  1. Looks like oil lines won’t work well this morning…

    R3 – 100.09
    R2 – 99.88
    R1 – 99.50
    PP – 99.29
    S1 – 98.91
    S2 – 98.70
    S3 – 98.32

    The problem comes from the quiet night session on Sunday night! 


  2. Pretty good post on Europe:

    http://www.theatlantic.com/international/archive/2011/12/debt-crisis-banking-crisis-constitutional-crisis/249801/

    Germany’s demands are bad finance, bad fiscal policy, and bad constitutional design. You don’t fix this mess by ruling out forceful action until closer integration has been achieved. You don’t repair Europe’s underlying political dysfunction by increasing the distance between government and governed. 


  3.  ETF Performance Chart:

    http://www.bespokeinvest.com/thinkbig/2011/12/11/key-etf-performance-matrix.html

    Treasuries are still OK for the year, but losing steam. World indices are not have a great year! The other 2 winners – Gold and Utilities. Nothing like a good dividend Phil!


  4. BTFD


  5. Phil, not sure if you caught 60 Minutes on Sunday, but they had that piece on Buffett and his son and it was pretty good. No inherited wealth in the Buffett family and Warren doesn’t believe in that. He specifically said that he doesn’t want to build a Buffett dynasty. Pretty refreshing I have to say.


  6.  Phil,
    does it make sense doing a calendar PUT spread on USO. Buy JUL 41 Puts @ 6.50 and sell next months PUTS.
    TIA
    rehat


  7. Phil/Post
    USA, German Aunt, French Guy and Italian Mistress…. your on a roll this morning…. LOL


  8. OH no, the EU is not fixed!  Yeah, who woulda guessed?  PP for today:


  9. For people interested in TA, here is a small article on fractals to find turning points:

    http://www.thereformedbroker.com/2011/12/11/using-fractals-to-spot-market-turning-points/ 



  10. That was a bad open… XLF already under 13. Not a good sign! 


  11.  Stj, what are the strikes for today’s FAS strangle?


  12.  


  13. FAS / MampcsA – I usually wait until after 10:00 AM to enter my trade to let the dust settle a bit! 


  14.  


  15. Phil / DX — Expect DX to fail 80?


  16.  


  17.  Barfinger: stock picking
    FWIW:  I hear you on picking the wrong horses.  Something I have learned, am learning, is I don’t buy stocks based on anyone’s recommendation, even Phil who I consider brilliant.  It has been my experience that unless I am already comfortable with a company, or am willing to learn alot more about them, (ie. Iflan and AAPL) and their business I should stay away.  Since a buy-write is hedged anyway on the upside I don’t see much reason to look outside the realm of Blue Chips, thus reducing, but not eliminating the chance of going to 0.  Why buy something that may double if I’m selling calls on it when the downside risk will likely chase me out of it.  Now what has proven of great value to me is the various tools and strategies I’m learning from Phil and applying to Blue Chips.


  18.  


  19. I think these figures about the 6 Waltons tend to be a bit misleading, because 43% of the US population is on food stamps and to qualify for food stamps you have to pass a test that you have less than $2000 in assets, including retirement accounts. Also because of underwater mortgages, car loans, and credit card debt, many people have negative net worth. I would not be suprised if 20% of USAians have negative net worth, so probably I alone am worth more than the bottom 20%.


  20. FAS Strangle Experiment – Now looking at a 55/68 strangle. I am giving more room on the downside now given the current trend.  


  21. Lincoln:
    I can’t agree more. I am learning that it simply isn’t worth the risk to trade in things that don’t have a great history of success.


  22. Food Stamps / Jmm – It’s a bit more than 15% on food stamps, not 43%. Too high to begin with though! 


  23. Lincoln/ Blue Chips
    I see your point about the risk of failing to hold the short put on a "BCS with a short put" trade with a volatile stock or etf, and meanwhile having a limited upside on the trade because of the short call.  What time frame are your trading the blue chips in.   Seems to me that they are a good match for the long term income portfolio where you’re looking to buy at a discount and sell calls on your eventual full portfolio.  Are you also trading the blue chips in the current month?


  24. Phil, for income would you buy 3000 more NLY selling the 2013 $15 p&c.


  25. Phil
    do you see any catalyst to move the Dec $13 XLF call? wait or take the 50% loss (.28 vs. .15)?


  26.  Euro on its way to test/breaking 132 – recent low – then 


  27.  looks like October low of 131.50


  28. Good morning and wheeeeeeee!  

    Unfortunately this is not a dip we can buy into as we need to see how supports work – either down 4% more from here (at the next 5% down lines on the Big Chart) or back over the lines we were holding last week.  Anything in between is a day-trader’s paradise but no place for making any real bets.  

    If the Dollar pops 80 (now 79.97) it is game over for the bulls until it calms down.  Also, they must take Cramer off CNBC at this point because he is spouting so much BS that I can’t even figure out what’s happening this morning.  Mr. Def-Con 3 is suddenly trying to tell people NOT to worry about Europe – I mean WTF??

    Is his only job to make sure his sheeple do the exact opposite of what is right from day to day?  And, since the feature the man constantly – is that the function of CNBC in general?  I pointed out last December (and all new Members should read this) that, from a business perspective, their model doesn’t make any sense.  Only if you look at CNBC as a propaganda network does their business begin to look realistic.  

    Anyway, moving on – so I have nothing to add trade-wise to our already bearish positions.  Don’t forget we expect this drop to last through the Fed Meeting tomorrow at least but, if no QE3, then I’m sure that 30-year auction on Wednesday will go very, very well but I don’t think the Plunge Protection Team is willing to let things snowball that far so I do intend to bottom-fish ahead of the Fed and lighten up on the short-term bear bets.  

    The CAC is down 2% and the DAX is down 2.5% but the FTSE is only down 1% while our indexes are all over the plays led down by the RUT (down 2.15%) and the Nas (down 1.8%) with the Dow holding up best so far, down just 1.25%.  This is NOT a bad sell-off with the Dollar at 80 (up 1%) and INTC cutting guidance while the volume (26M at 10 on the Dow) is too light for panic so we should hold 12,000 on the Dow (a bit below it now) unless we get actual bad news.  

    On the whole, we’re just erasing Friday’s ill-gotten gains and we did KNOW they were ill-gotten on Friday, while we were gaining them so really, this is just a big yawn and we’re re-set to last week’s lows and testing the BULLISH bottom of our consolidation channel.  

    I think we hold -1.5% today, fall another 1% tomorrow to sell the TBills and then get our Santa Clause Rally off the Fed announcing more QE at 2:30 but, then again, that’s what we thought last wek so how funny would it be if that’s exactly what happens.  Does that make me psychic or does it prove there is, in fact, a conspiracy to manipulate the markets?  We report – you decide…

     Monday’s economic calendar:
    1:00 PM Results of $32B, 3-Year Note Auction
    2:00 PM Treasury Budget 

    6:30 AM Overseas: Japan +1.4%. Hong Kong -0.1%. China -1.0%. India -2.1%. London -0.5%. Paris -0.9%. Frankfurt -1.3%.

    At the open: Dow -0.8% to 12087. S&P -0.95% to 1243. Nasdaq -1.03% to 2295.

    Treasurys: 30-year +0.67%. 10-yr +0.32%. 5-yr +0.12%.

    Commodities: Crude -1.28% to $98.14. Gold -2.62% to $1671.75.

    Currencies: Euro -1.01% vs. dollar. Yen +0.38%. Pound +0.35%.

    10:00 AM On the hour: Dow -1.24%. 10-yr +0.36%. Euro -1.07% vs. dollar. Crude -1.52% to $97.89. Gold -2.99% to $1665.55

    Market preview: Stocks move aggressively lower after Intelcuts Q4 guidance; S&P futures now -1.2%. Skepticsm about the eurozone’s fiscal union deal from Moody’sS&P and others already sent EU shares and U.S. futures lower, and yields on peripheraleurozone bonds higher. The dollar +1.1% vs. the euro, which, along with technical selling, causes gold to fall 2.5%.

    The rupee clocks another all-time low vs. the greenback afterIndian industrial production dives by 5.1% Y/Y in October, and 1.9% from the previous month. "Awful, just awful," says an economist, "(It) tells you that the slowdown has caught on much more than what one might have thought."

    This is "fixed"???  Italy sells €7B in 12-month bills, with the average yield dipping down to 5.952% from 6.087% prior. Bid-to-cover of 1.92 vs. 1.99 prior.

    The ECB purchases just €635M in sovereign debt in the week ended Dec. 9, vs. €3.7B the previous week. It brings total buys under the SMP to €207.6B.

    The overview:  Congrats to EU leaders for one thing: By making the U.K.’s withdrawal the news, they averted focus from the lame result of the summit. The new proposal "enshrines Hooverism" in EU law, writes Ambrose Evans-Pritchard. No fiscal union (eurobonds, transfers, shared budgets) or monetary assistance, just budgetary straitjackets for countries already in recession. 

    Rabble-rouser of the day:  Bundesbank board member Andreas Dombret raises objections to central banks lending to distressed states via the IMF, saying that the money can’t go into "some sort of special pot" just for the EU, and that Germany’s $45B share of the $200B ($266B) package would need some kind of indemnity from the Bundestag.

    Rabble-rouser of tomorrow:  French Socialist Francois Hollande – the man leading in the polls to become the next President – says he would seek to renegotiate Friday’s EU summit agreement. Sarkozy’s challenge from the left is that he has given in to the Germans by not fighting for easier money in return for austerity. From the right (up to 20% in the polls) comes calls to leave the eurozone.

    Trying to get out  ahead of what must surely be a coming downgrade if the ratings agencies want to retain any of (what’s left of) their credibility, Sarkozy says the loss of France’s AAA would be tough, but not insurmountable, reports Dow Jones. 

    Number Cruncher: Peripheral bond yields are soaring in the first trading session following the solving of the EU debt crisis. Italian 10 year BTPs  42 bps higher to 6.78%. Spain +32 bps to 6.07%. Already written off by anyone other than EU bureaucrats, but still of interest, Greek 2 years 310 bps higher to 151%. The FT‘s James Mackintosh reckons the rate prices in a hard default by March.

    Naysayer:  Moody’s isn’t buying the eurozone’s latest world-saving deal, saying it still expects to review its ratings on all EU sovereign credit in Q1 2012. "In substance," the agreement "offers few new measures, and does not change our view that risks to the cohesion of the euro area continue to rise."

    Chicken Little:  S&P Chief Economist Jean-Michel Six says the eurozone fiscal union deal was a significant step in resolving the "crisis of confidence," but more fiscal and monetary action is needed and time is running out. "There is probably yet another shock required before everyone in Europe reads from the same page," Six says.

    Where the sky is actually falling:  Latvia’s largest bank, Sweden’s Swedbank (SWDBY.PK), scrambles to contain a run after what the bank calls absurd "rumors." Depositers lined up at ATMs withdrawing more than $20M on Sunday. The bank said it is functioning normally and all customers have access to their funds.

    Doomsayer:  The EU could be in for some Lehman-style chaos due to the "complex web" of credit protection they have created: banks have sold €178B worth of CDS on GIIPS bonds to each other and tried to hedge this by buying €169B worth. At least 38 banks are involved, with Deutsche Bank (DB) on top, selling €37.4B and buying €34.5B.

    Clueless:  Under the Fed’s currency-swap plan, which it recently revived to fight the eurozone crisis, the bank may not know who the final borrowers are. The Fed lends money to other central banks and they then loan it to local banks. Last week, the ECB’s three-month dollar lending through swap lines surged to $50.7B.

    Friendless: Russian President Dmitry Medvedev’s page on Facebook serves as a high-tech tale of the tape in the nation. Nearly all of the 10K Russian Facebook users who commented on Medvedev’s status on the site fired up criticism, while only 3.7K users "liked" his postings about the merits of the ongoing demonstrations.

    Mikhail Prokhorov – perhaps best known in the States as the owner of the NJ Nets - announces a bid to run for Russian president in 2012. He says he’s "not scared" he’ll repeat Mikhail Khodorkovsky’sfate - another billionaire who challenged Putin and promptly found himself in a Siberian jail.

    Wage inflation: San Francisco becomes the first city in the U.S to raise its minimum wage to over $10/hour after hiking the rate to $10.24 for workers effective on Jan. 1. The increase marks a $2 premium over California’s minimum wage and nearly $3 over the federal government’s.

    California Governor Jerry Brown is expected to announce up to $2.5B in budget cuts following an estimated revenue shortfall of $3.7B, the WSJ reports. The savings could include a seven-day reduction of the school year, projected to save $1.5B.

    Goldman doesn’t see much suspense to Research In Motion’s (RIMM) FQ3 results, due out on Thursday, not after thewarning it delivered earlier this month. The firm, which is maintaining a Neutral and $18 PT on RIM, is instead focusing on issues such as RIM’s BlackBerry services ARPU, which could fall as carriers renegotiate contracts, and the impact of job cuts on its operating expenses.


  29. Way better than movies!  Activision’s (ATVI) claims Call of Duty: Modern Warfare 3achieved $1B in sales in its first 16 days. The company adds this total comes in a year when movie box office receipts are expected to fall 4%, and is thus indicative of gaming’s growing share of consumer entertainment spending. Fair enough, but long-term trends within gaming spending may not be entirely in Activision’s favor. (previously)

    Notebook contract manufacturers expect their Q1 shipments to fall 10%-15% Q/Q, according to DigiTimes, a drop that’s worse than normal seasonality. In addition, backing up Texas Instruments’ (TXN) mid-quarter update comments, PC component suppliers claim visibility is still low thanks to customers "focusing on monitoring their inventory and taking a cautious attitude about placing orders." (Black Friday sales)

    Stock futures take a new leg down as Intel (INTC) cuts Q4 guidance, expecting revenue of $13.4B-$14B against a previous estimate of $14.2B-$15.2B. The firm blames a reduction in inventories and microprocessor purchases across the PC supply chain due to hard disc drive supply shortages. Shares -3.4% premarket. (PR

    More on Intel’s (INTCguidance cut: Several analysts had warned about a potential inventory glut forming among Intel’s PC OEM customers, as the company failed to bring its output in-line with the industry’s diminished production capacity. However, given weak sales data, there may also be some demand-related concerns on investors’ minds. Also lower: AMD -2.4%NVDA -2.6%DELL -2%HPQ -2.5%. (earlier)

    "We don’t think (the Thai floods are) going to have an impact on PC market sales in the 4th quarter," said Intel (INTC -4.2%) on its Q3 conference call, following which, company insiders sold heavily. "Why does the skeptic in me want to think the warning is using the hard drive shortage as a convenient scapegoat," says Herb Greenberg. (more

    "The Intel (INTCguide down reflects component shortages, not demand weakness … So I am getting more aggressive and adding to SPY long rental," tweets Doug Kass. "Rental" – a term used by those who don’t expect what looks like an ugly open to hold throughout the day.

    Prior to Intel’s (INTC -4.2%) Q4 guidance cut, Goldman’s Heather Bellini had already issued a note cautioning Street estimates Microsoft (MSFT -1.4%) are too optimistic. Bellini, who’s twice slashed her estimates for Mister Softee over the last 2 months (III), forecasts the company will earn only $2.91/share in FY13 ($3.04/share consensus), and is maintaining a Neutral rating on its shares.



  30. Phil / lincoln / barf — Good discipline in my opinion. Phil, barf makes some interesting observations in the income portfolio thread (http://www.philstockworld.com/2011/12/10/income-portfolio-year-end-almost-review/#comment-1537191 -- link button not working for me this morning). He points out that you end up loading up on losers when a stock fails. I haven’t gone through the scenario of having a full position in the red and trying to dig it out but my spidy senses tell me that it would be better to sell ATM calls for HALF the position to TRY and get half the position called away (when in doubt..). That allows you to return to a strategy of hedging with both puts and calls rather than trying to just sell calls against the full allocation. The theory being that if you reduce allocated capital (but not risk) and being put to again should average you down and you also know that at least one side of your hedge is going to work. You still have the risk of a fast upward move not giving you good rolls but you have that risk with both the full and half positions.  I haven’t gone through the scenario so maybe I’m wrong. Comments?


  31. Big Data week:  

    Wednesday Dec 14

     

    Treasury Budget
    [Report][djStar]
    2:00 PM ET

     

    Retail Sales
    [Report][Star]
    8:30 AM ET

    Redbook
    [Bullet
    8:55 AM ET

     

     

    Weekly Bill Settlement

    Jobless Claims
    [Report][Star]
    8:30 AM ET

    Current Account
    [Bullet
    8:30 AM ET

    Money Supply
    [Bullet
    4:30 PM ET

     

    Quadruple Witching

     

    Equity Settlement
    12-15-11
    Equity Settlement
    12-16-11
    Equity Settlement
    12-19-11
    Equity Settlement
    12-20-11
    Equity Settlement
    12-21-11

  32. Have to agree with DK, got out of TZA at 10am a bit early it seems but better to lock in profits than hope for a meltdown thats unlikely since tom is Fed day and $ top heavy here.


  33. AAPL 50k     I’ve placed an order for a credit bull put spread Jan 390/385 for 2.30,  5 spreads, good till cancelled.    This order is  1/4 of a planned 20 spread holding into January.  It is purposely placed at ask, not bid, so that we get the higher price.  This will only occur if AAPL retracts further, so that the order may not fill (we don’t care if it does not fill). 


  34. Tom Toles 


  35.  Ben Sargent


  36.  2_can: blue chips
    I started with several artificial buy-writes last year, ie INTC, MSFT,T etc, with the Jan 13 leaps selling equal number of puts and calls a couple of months out.  Then since I’m comfortable that they won’t go bk, or zoom to the moon, like the momo’s I sell some additional puts and calls closer in always mindful to keep the scale balanced. I have many short puts and calls expiring in Jan so I’ll see how comfortable I am then.    I had kind of a baptism by fire on selling naked calls on NFLX and GMCR this year but following Phils advice I survived those stocks doubling against me so selling small amounts of naked calls on MSFT and T seems relatively tame.  ;)


  37. Buffetts/StJ – Well I would not say NO inherited wealth.  His dad bought him 400 acres of farmland and charged him rent until he was able to pay off the land but he did turn it into a big-time farming business that made him independently wealthy.  

    USO/Rehat – Too much crap out of IRAN to be comfortable with that trade and giving them 8 months to burn you.  

    Roll/Acobra – That  happens when I don’t get a chance to write much on the weekend – I had a lot of stuff bottled up…

    AA Money/StJ – See, we got too complacent.  Wish we kept those short $9 calls now.  Still comfortable with the target but this trade is dullsville!  

    FAS Money/StJ – Let’s take out the caller (now .70) and sell another Dec $58 puts for $2.  

    IWM Money/StJ – 1 TNA Dec $43 put can be sold for $2.30.  

    Dollar/Rain – The fact that it did not get rejected at 80 is very bearish.  If it holds over (and it should with the TBill auction tomorrow as a strong Dollar helps keep rates down) for the day, still bearish and below 78.80 before we can even say it’s improving.  

    Time to play the bounce with Dow testing 12,000 for the brave!  Dow futures (/YM) are 11,944 and over 11,950 is a good line to play with tight stops.  DIA $121 calls at .92 were double that on Friday so 10 of those in the WCP with the intention to DD (probably) if we test 50 points lower but then sell other calls and roll back if we fail to hold 11,950 on the regular Dow (11,900 in futures).  


  38. Don’t forget BOUNCE means 20% of the drop (180 on the Dow to 12,000) so 12,036 is our target and 40% at 12,072 would be a GIFT – as in a horse who’s mouth one should not look greedily into…  


  39. amzn for nflx rumor..if they did that amzn would be a short …doubt bezos would do it though…W. Europe Sovereign CDS Index up 3.9% to 381.17 bps…new record high…


  40. AA Money / Phil – We are very much on target, but I agree, this is almost on cruise control now! 


  41. Good points on Blue Chips Lincoln!  

    Misleading/JMM – It says combined net worth.  93M people pool their assets – the sum of the work of their entire lives and have less than 6 people, who inherited it from their Dad.  I would bet you that most of those 93M people put in longer work-weeks than the Waltons and a lot of those people in jobs that the Waltons wouldn’t enjoy at all.  There will always be poor people, there will always be sick people, there will always be hungry people and people suffering from disasters that none can avoid (unless praying harder counts) – is it our job as "evolved humans" to sum up acceptable losses or do whatever we can to eliminate the suffering from this World.  Don’t crucify me for suggesting that – they already tried it with the first guy and the question still stands…

    I will put it to each and every one of you that, certainly, you cannot help everybody but, just a certainly, you can all help somebody.  If 30M of US (top 10%) simply each helped just one of THEM (bottom 10%) – and we can do that with the merest flip of our checkbooks – then there would be 30M less of THEM…  


  42. FAS Money – Buying back the 68 calls (now 0.73) and selling another 58 Put ( now 1.83). 


  43. IWM Money – Selling one Dec TNA 43 Put (now 2.25) 


  44. Buffett / Phil – 400 acres is not billions…. and he has been working to pay it as opposed to say, the Waltons! 


  45.  


  46. stjeanluc: "The perfect amount to leave children is ‘enough money so that they would feel they could do anything, but not so much that they could do nothing.’" – Warren Buffett


  47.  


  48. New Zealand Telecom (NZT)  - anybody know this stock?  big stock price decline in Nov. but it has large dividend of around 10%.  They are spinning off fixed line unit Chorus and also will start selling the Iphone.  looks interesting. 


  49. Hungary turning fascist (again)? 

    Perhaps – http://www.raoulwallenberg.net/press/budapest-experiences-a-new-wave-of-hate/

    Glad it’s a country of only 10M people.


  50. NLY/Rpme – The hedges on NLY are awful due to the big dividends so the only hedge you really get is hitting them right on an options strike, like $15 or $17.50 or  catching them on sale to give you a better buffer.  So I would not play for more NLY right now but, as a new entry, I’d start by selling the 2014 $15 puts for $4.10 as that knocks the entry down to net $11.90 (26% off) and, if you don’t get assigned, you make $410 per contract, which is more than the $1.36 dividend anyway ($272 for 2 years) so why even bother taking a risk on the stock if your goal is to collect a dividend and protect yourself?  

    XLF/WCP, Crussell – Well, as I said on Friday, it would have been great to get out then.  Now .12, down from .28 with XLF at $12.76 I think little harm can be done waiting for the Fed tomorrow.  If they go down to .05, I’d DD ahead of the Fed as .05 doesn’t matter much but we dropped .35 in a day so we can certainly gain .70 in 2 different days and get back to our goal.  

    CAC much worse at down 3%, DAX down 2.1%, FTSE down 1.5% into their close.  Euro at $1.32 is getting a bit silly and the Dow is now right on 12,000 with Dow futures at 11,925 so the Futures players have less faith than the DIA players (119.96) with 95 days to close (/YMH2 is current contract) – probably not a good sign.  

    Dollar 80.125, Euro $1.3209, Pound $1.5608, 77.83 Yen to the Dollar and 1.235 Swiss Francs to the Euro.  

    Oil is $97.90, nat gas $3.25, gasoline $2.57 ($2.55 has been a good long), gold $1,668 (told you so!), silver $31.28, copper $3.45.  

    Don’t tell me you couldn’t get a good entry on the DIA longs – now we’ll see if you curse me out later!  

    FAS Dec $60/61 bull call spread at .55, 10 in the WCP. 


  51. CAC with Fitch DG Europe GDP…the risk has risen a DG coming to Fra.


  52. Helping – No one is “giving” anybody anything – at least not in aggregate sums that matter. That’s why 501c3 charities are tolerated by the ruling class: nice tax break and no threat. Surely WMT isn’t giving more money to ees to spend in the consumer economy – just like Henry Ford didn’t. Gotta teach people to fish (“organize”) – not hand them a tin of sardines.

    Help WMT folks form US unions, because its collective action or nothing. Unfortunately, the very bottom 30% that need a boost – and shop at WMT – will happily cross a picket line to shop there – or, worse, play scab. The same way enlightend liberals will walk past a picket line to shop at Whole Foods and related organic stores (and have – even in hipster Berkeley – paternalistic phonies.)

    I’m not suggesting “striking” is the only option. But it’s the truest test of labor market-share power. If you can’t effectively withhold your labor, you can’t win.


  53. angelcur/NFLX – is that rumor driving the silly run-up today?


  54.  Euro down a full 2 cents – just broke 1.32


  55.  anyone on IB have the symbol for the Dollar Index – I used to have it but my settings got erased


  56. NFLX / NF – This is this kind of rumors that makes NFLX almost unplayable. I was thinking of trying to work a strangle play for them (like for FAS) as the premiums are great and margin more reasonable than the 3x ETF, but these acquisition rumors make it almost impossible to win! 


  57. Good catch Samz – that $1.32 euro was a support line going back to October! 


  58. NF**/ i htink so but bezos isnt a bozo


  59. PHIL//are you keeping up with the far left/right in a frenzy over the apparent activation of massive FEMA camps?


  60. Phil – do I understand you correctly that this is the DD point on the DIA $121′s?  Fifty points down from 12,000…


  61. magical sloppy buyer is hearting  apple!


  62. Sold the Dow and NASDAQ100 on the run up from Friday as per your call re the too complex Euro Agreement,
    Not all that up to speed with the options trading however will be working on that aspect. Mostly I trade futures, CFDs and currencies.
    Belong here, I already know is right for me.
    Thanks so much.
    roro


  63. NFLX – Unplayable is right. For the first time, I opened what appeared to be a conservative w 77.5/85 bear call spread on them (rather than a very conservative bull put spread.) Not much return expected, but I didn’t see 77.50 by weeks end. Maybe I still don’t. But if the market turns up later this week, they probably at least hold this run up. Why do I even bother? The zaniness offsets the nice premiums.


  64. angel/Bezos – Correct. Be nice if he/they said something to knock it back down. But that’s just me.


  65.  Wow, Euro 1.3184, not a happy camper.


  66. Hi Phil would you DD Dia 121 call at this point, not understand sell other call from previous comment, is it DD Dia 121 call and sell a higher strike call against it. thx


  67. Barf/Rain – That’s a long discussion but it generally goes back to whether or not you believe a stock has value.  Are you trading random numbers generated by computers or percentage ownership shares of companies that have real value?  You are telling me, that if you have a pair of Levis you paid $50 for and they go on sale for $30 after XMas (40% off) that, rather than be happy to buy another pair at $30 and end up with 2 that averaged $40 (20% off), you would rather sell a $30 call on the jeans, which will cost you $20 if they put the prices back up when the sale ends.  I believe the Jeans are worth, in fact, at least $40 so, when they are at $30, there is no way I would promise to sell a pair to someone for $30 (selling a call) because I would rather own the jeans than sell the for $30.  Your "spidey sense" tells you that if they are $30, they must  be worth $30 or less and, I assume, if they are selling for $15 then maybe $10 and if $10 then maybe $5.  

    If you are randomly picking stocks and consider the price of the stocks you pick to be random values then sure, it makes statistical sense to cover at whatever price.  I simply don’t see them that way and choose to use price swings to our advantage and sometimes that works great and sometimes we get "stuck" with a loser, like owning a lot of RIMM or IMAX or HCBK at record lows (the Jeans at $20).  To me, that’s fantastic – I only want a portfolio full of stocks I bought at the lows – but that’s just me…

    Damn, they are going to test our resolve at 11,950!  

    LOL on those cartoons, StJ! 

    Buffett/StJ – I agree and, of course, there’s nothing wrong with getting a nice head start from your family – isn’t that why we work hard anyway – so our kids can prosper too?  I’m just saying it’s not like regular people get to pick a farm and have their Dad pay cash and act as landlord so they can spend their 20s working their own business, rather than establishing credit and saving for a downpayment, etc…  

    People tend to underestimate the value of a 10-year head-start in life, not to mention little things like no college loans to pay off (Ivy ones at that!), connected introductions, etc.   I’m sure Howard got time to see the World in a worry-free childhood and I’m sure the neighborhood had a good school and he had the best medical care – No one who comes from that kind of wealth can ever be truly self-made.  That doesn’t mean I don’t respect their accomplishments but it’s a myth the top 1% like to perpetuate – that they have it "just as rough" as the "failures" in the bottom 50%.  Very few can actually say that.  

    My parents (Mom and Step Dad) went bankrupt in the 70s and I paid for my own car and my own college (less scholarships – thank you Government!) and pretty much everything else except for my room since I was 13 but I NEVER think that I didn’t have a privileged life because my parents were well-educated and able to scrape by during that recession and recovered nicely in the 80s while I knew many, many people who were not so lucky.  One of my biggest breaks was that I went to a high-school that was very liberal about attendance and I was able to hold down a full-time job (and a part-time job) and save enough money for college during high school.  If not for that one factor, perhaps I would have ended up in Community College and working a trade somewhere (if I were "lucky").  

    Speaking of lucky, the DIA $121 calls are now .68 so we double down here to have 20 at net .80 and we’ll have to make a new decision if they fail to hold .50 but, otherwise, we can live with the $600 loss in the WCP. 

    90.265 on the Dollar as the Euro dumps below $1.32 at their close (now $1.317) is silly low but exactly what we expected ahead of the auctions.  


  68. US markets seeming relatively strong given the currency moves would have expected bigger drop -
    VIX only up 5%


  69.  Hi Phil,  Thanks for all the great information and fun chat.  I’d like to make a suggestion as a new member, working hard to learn the ropes and follow along in my virtual accounts with your suggestions.  I know it’s due to my newness,  but at times I’m not sure if you are making an observation about a trade position,  suggesting one that might be worth looking into a little further, or actually saying let’s do this one.  Would there be a way that you could clarify that for us newbies, maybe a title phrase or underlined word.  Also, while I understand that most of the members are quite advanced and know exactly what you mean when you throw something out, would it be possible for you as a way to help accelerate our learning curve, to show the specifics of the trade, for instance:  FAS Dec 60/61 bull call spread at .55, 10:  buy to open 10 contracts of FAS $60 at ___ and sell to open 10 contracts of FAS $61 at ___ for a net of .55.  Thanks very much.  


  70. NFLX – Oh. I see: Verizon takeover chatter. I don’t like it killing my w bear call spread, but I’ve always thought Verizon was a good suitor – if any. Gives them a low-end service – without overt cannibalization. And NFLX is eating a huge chunk of their bandwidth anyway.


  71. Bought some TNA at 42.64, playing for a move back to 12,000.  Now time to look at selling some IMAX puts.


  72. http://www.telegraph.co.uk/finance/financialcrisis/8949723/Merkels-Teutonic-summit-enshrines-Hooverism-in-EU-treaty-law.html
    ZERO/EURO..as you know i have been saying since E1.47 the Euro is dead..the main problem is growth…nothing euro officials were discussing would help that…NOTHING!  even if they did exactly what market wanted….huge ecb/imf intervention….does nothing to solve real problem…would have bought some time maybe…but same result


  73. Phil NETL Possible you can put some light on this play as I think you might have recommended it
    I hold 6x Jan13  50c pd .35 and sold 2x 45c for 4.69 now 4.85 stk is trading for 49.45 more than 4.5$ OTM
    should I not sell some more calls ?


  74. Phil:
    http://www.marketwatch.com/story/dont-get-mad-at-wall-street-get-even-2011-12-06?siteid=nwhwk
    The above article talks about a list of companies that the author feels will be dumped by big mutual funds for their year end window-dressing and he feels they will go up in the early part of next year.
    What do you feel about that argument? And how would you play it through options, if one does subscribe to this view?


  75. Anyone knows what are the requirements at TOS to do day trading?


  76.  samz3700, any luck with the USD index symbol on IB? I have been searching for that as well…


  77. Day trading with TDA  - You get 4 trades in a 5 day rolling window. After that you will need 25K min balance to continue day trades or wait for free ones to come out of the 5 day window. 


  78.  Angel:  Agree totally.  Austerity alone will just ending up breaking the Eurozone in pieces, because citizens will just become poorer and more unemployed.  The Germans are playing hardball, and the Peripherals are going to pick up their bats and go home. Idiocy.


  79.  Tarpoon – I thought it was dxy – I am going  to have to contact customer support later - 


  80. oburlacu:  25K is the minimum needed for day trading due to FINRA rules
    http://www.finra.org/investors/smartinvesting/advancedinvesting/daytrading/p005906


  81. that quote is perfect
    ck this out it sums up everyhting about the baks WOW!
    http://www.efinancialnews.com/story/2011-12-12/banks-sit-in-a-tangled-web


  82. oberlacu,
    The day trading restriction is around stocks and options. I don’t believe futures trading has day-trading restrictions – however there are other tradeoffs with trading futures.



  83.  VIX is not moving much today – another indication that this drop is not real panic?


  84. Sachs – i’m with Hendry on his opinion of Sachs: "champagne socialists"



  85. Cartoon / Phil – OK, one more for the road…

    Tony Auth 


  86. Blue Chips/ Lincoln.    Thanks!


  87. Phil
    I was wondering what you thought about HFC.  It seems like a good value now to me, although I really wonder about economy and/or earnings for fourth quarter and so maybe HFC goes down more from here.  How would you enter the trade for a long position?
    My guess….
    buy 500 shares HFC
    write 5 HFC June 16 calls strike $18.5 (This limits my upside but gives me a good range to still turn good profit if HFC falls (like I am guessing))
    sell 5 HFC June 16 puts strike $16.5 (I would not mind at all owning HFC for $16.5)


  88.  Micky D – "Dirty deeds done cheap."  I wouldn’t feed a Big Mac to my dog.  If I had a dog. Can’t bring myself to buy the stock, it’s like going long rat poison.


  89. Micky D / Zero – You might want to check your other holdings for rat poison… 


  90. Zero – Being long a lot of companies is like being long sweat shops… 


  91. Note AAPL’s resistance to downward pressure:    NAS – 1.8  %,  AAPL – 0.7 %     This leaves me confident in holding calls. 


  92.  Stj:  Sigh.  Diogenes would not have been a successful investor in these strange times.


  93. Good quote Kinki!  

    NZT/Terra – Well, does anyone else in New Zealand already sell it?  Generally, I like these guys as they have little competition and decent growth (around 2.5%) but quite a lot of debt and that could be a big issue if rates don’t normalize – or rather if they DO normalize at what rates should be in a rational world (up 50%, at least).  They crashed out to $4.50 in 2008-9 so $8 is not a thrilling price and the options are too thinly traded – in fact, NOT traded so I’d OFFER to sell June $7.50 puts for $1 and that’s great if you get it but, otherwise, I’d just stay away.  

    Facism/JC – Well, you have to start somewhere.  I remember when Genghis Khan’s Mongol hoard was just "a bunch of bad kids on horseback."  Anyway, aside from slaughtering 40M people, Wikipedia does credit Khan with: 

    Beyond his military accomplishments, Genghis Khan also advanced the Mongol Empire in other ways. He decreed the adoption of the Uyghur script as the Mongol Empire’s writing system. He also promoted religious tolerance in the Mongol Empire, and created a unified empire from the nomadic tribes of northeast Asia.

    So let’s not just knock the Facists until we give them a chance to enforce some changes and then, as the great Bush said – let history decide what kind of leaders they were. 

    Speaking of soon to be facist regimes:  Europe closed at the day’s lows with DAX down 3.36%, CAC down 2.6%, FTSE down 1.8% – UGLY!  

    Makes it much more likely we follow through tomorrow so less likely we want to ride out these bullish bets so we’ll be happy to get a little pop and get out if we have a chance today.  

    Labor/NF – True, which is why there has been a decades-long program to demonize labor in the US and to tear down their power base by gutting their jobs (and so the size of the remaining unions) through outsourcing.  Thank the Ronnie Horror Show for getting the ball rolling on that one by treating the Air Traffic Controllers like criminals and sent in the military to cross those picket lines and man the controls – but I’m sure you know that story…

    FEMA camps/Angel – Yeah, pretty sickening.  Hard to tell what’s real and what’s not.  Here’s a pretty balanced look from Lew Rockwell:

    Security, while not mentioned in the KBR release, is an issue addressed previously under guidance of the U.S. military. In an August 2009 report we highlighted that the Army is Hiring for Internment/Resettlement Specialists, in which we noted:

    It seems that the US Government is preparing for a high volume of military prisoners. We suspect these will not be foreign nationals, as we either kill them or detain them outside of the USA. So, one must conclude that these corrections, interment and resettlement specialists will be supervising US citizens. The military is calling them internment camps or resettlement camps. Back in World War II they were called by a different name.

    Additionally, we have learned over the last couple of years that FEMA has requisitioned manufacturers for 140 Million Packets of Food, Blankets, and Body Bags, while the U.S. military is Actively War Gaming ‘Large Scale Economic Breakdown’ and ‘Civil Unrest’ which includes training for over 20,000 US military personnel for contingencies that may include riots and/or mass detentions.

    I love that KBR gets this contract – too funny if not so tragic for the American people.  Here’s a good video of one camp.  

    MSB/Angel – Always a good initial sign. 

    Welcome Roro!  Don’t be shy, I only make fun of stupid questions….  8)  

    Observations, etc/Beaufleurs – If I indent a comment in white, it’s either because I’m saying something that I think is important for all Members to see (as opposed to me answering a specific question) or it’s a trade idea I think that any Member can benefit from.  If I SPECIFICALLY name one of our two active virtual portfolios, then it’s a trade idea I intend to track and follow through one.  If you want to accelerate your learning curve – go back 12 months and read all the posts and comments under the "Phil" tab above and track those trades over time.  I’m fairly certain that, after doing that with a thousand trades or so – you’ll be completely on top of things.  As it is, you are kind of like the scrub nurse who is new to the operating team and insists that we all need to do things the way they taught you in medical school – it’s just not going to happen – you need to get used to our system because the system is not going to change.   The idea of this site is to teach you to think for yourself, not to blindly follow every trade idea I throw out (which would be nuts anyway).  Concentrate on learning how and WHY we make trades and then what we trade will become very obvious to you.  

    NFLX/NF – Yes, because VZ isn’t big enough to contact movie studios and make deals for content distribution on their own.  Puh-lease!  

    IMAX/Rustle – Mission Impossible is next weekend but this weekend’s box office numbers in General were crap (down 17.9% from not exciting last year) with New Year’s Eve topping the box office at a pathetic $13.7M so perhaps be careful in case it’s a trend.  Expectations are super high for MI and IMAX may be bucking the trend but sentiment can get very negative on this sector if we get another bad week.  Don’t forget, the VIX is low so not the best time to sell puts anyway.  

    80.17, oil right on 98. 

    Euro/Angel – That’s a rough article. 

    NETL/Yodi – Certainly not that I remember.  In fact, what I actually said was:

    NETL/Yodi – They don’t make anything but designs that they ship out to Asia.  I hate that model as a business but I guess the stuff is good as BRCM wants them for big money.  Not much you can do about it, you sold the calls and sacrificed the upside.  You could ditch the stock at $48 roll the Sept $31 caller ($17.10) to the 2013 $45 caller at $5 and cover with the $50 calls at .50 in the hopes that they finish below $49.50 and make you a little more (you can do that with 3x since you collected $1.45 on the spread) but it’s a crap shoot. 

    That was a suggestion on how you can save a trade you were already in.  My suggestion was to take the $1.45 you collected and the $3 you made on the stock (and the $17.10 you owed – net $12.65) and roll it into 3 2013 $50/45 bear put spreads at $4.50 each (net $13.50) at which point you simply hope that the stock finish lower than the $49.50 offer and you make a little bit of money.  It was meant to be an even spread, not a ratio spread but it still works out if you can sell calls for $4.85 with the same logic to cover your open calls.  You are risking the net .15 from the what the caller is paying you and the .50 that you paid for the calls – if the deal goes bad or is seen as detrimental, you can make up to $4.30 (the net of the spread) but, as I said, it’s a crap shoot.  

    Rotation/Etrad – I know I answered that one extensively over the weekend.  

    TOS/Obur – I believe minimum $25K balance but not a penny less.  

    Hugh/Angel – This is year 3 for his China short.  I don’t disagree with the logic but timing is everything.  

    HFC/Russell – I don’t mess around with refiners that aren’t VLO.  HFC may be wonderful but VLO is steady, liquid and easy to predict because they are the biggest and best run.  Same logic for ABX as a gold miner (although I do poke a couple of juniors once in a while), FCX in copper, BTU in coal and CHK in nat gas – when there are very clear industry leaders that are MORE beaten down than the stock you think it a good value – I’d go with the leader.  The trade set-up you have for HFC is just fine but I’d rather have 5 VLO June $14/20 bull call spreads at $4 and sell the 18 puts for $2 so you’re in for net $20 but the break-even is $17.50 as you have the $14 calls.  That spread makes $2,000 if VLO holds $20 vs potentially owning 500 at net $20.  That price assumes VLO is below $14 and the calls expire worthless but then you can buy 500 more for $14 or less and own 1,000 at an average of $17 so that’s the real play to the downside.  Your spread maxes out at $1,000 but has a nice buffer BUT forces you into 1,000 shares below $18.50 with a break-even at $16.60 so you can own 1,000 shares of VLO at $17.50 after they drop 15% or 1,000 shares of HFC at $16.60 after they drop 15%. 

    MCD/ZZ – The chicken tenders are good and I like the new fruit shakes and, of course, the best fries.  Plus, it’s crack for kids – you seriously could not make more money backing drug dealers than playing McDonald’s…

    Sweat shops/StJ – AAPL springs to mind (don’t say leaps – or jumps!).  


  94. Geeze…..just logged on.  What’s the story today??? 
     
    I thought this was all fixed.


  95.  Iflan:  NetF**  was right when he said last week that "Apple is the new gold."  I’m loaded up on the March 400s and smiling every day.


  96. Long MCD short the US.

    EUR action not very encouraging but,  I would be surprised if they didn’t try and take back 1.324 in a hurry.


  97. StJ/Foodstamps
     
    Sorry, my bad. Should have said 43 million, not 43%, though now up to 45 million. Anyway my point remains that probably about 30% of Americans have a net worth of zero or less. It would be interesting to compare this to other nations to see if this is exceptional.
     
    Here in the Dominican Republic it is clear that many people do not have a great deal of capital, as evidenced by purchasing one spoonful of tomato paste at a time, or one band-aid, or 2 aspirins, and not being able to achieve economies of scale that are available in the US even to users of food stamps.
     
    Although there is some correlation between hard work and accumulation of wealth, most of the hard work is often done before birth and choice of parents, nationality, and native currency is crucial. Personally I favor communism, but people who know much more than I insist that although appealing in theory, it doesn’t work in practice, though I note that while many Cubans move to the US, escaping communism for economic opportunity, there are an equal number of Haitians escaping capitalism for exactly  the same reason.


  98. This market is a coin toss.


  99. Phil…DBC..Bot Jan 26c some time ago for 2.90, bot back 30c for 1.20 profit. Hold on or create new BCS as inflation has to show eventually. Thanks


  100. Oxen Group went long on DDM at 57.55…like it as a nice recovery play this afternoon.


  101. Phil / Jeans — I guess I don’t have the conviction to place a value on a company like you do and believe that the markets can remain "irrational" longer than I’m willing to spend trying to roll to a profit so I start assuming I’m wrong and look for the best way to adjust to minimize losses and increase gain potential. I believe the true value of something is what you can sell it for. If the market is selling Jeans for $30, then I think that’s what they are worth (today). Doesn’t matter if I paid $50 for them last week or how much they are next week. Maybe xmas trees would be a better example. I guess I’ll have to wait and see how you adjust the RIMM and HCBK trades in the income portfolio. RIMM is particularly interesting since I think it has the potential of going he way of PALM after losing its first to market advantage and then the tablet snafu.


  102. Diogenes/ Zero – I will soon pick up the habit of carrying a lamp in daylight as well, but with very little hope! 


  103. 0×0 / MCD — My feelings as well but it’s a fine line to walk with emotional investing.


  104. Jmm – I had a post a while back emphasizing luck as the biggest factor in one’s success and you only reinforce that point! Not sure about communism the way it is implemented in places like Cuba (milder) or N. Korea (definitely the more hard core version) but none match the original concept. But then again, Adam Smith would probably not recognize capitalism in what we practice today! Actually, he would probably be runoff the GOP today! as would Reagan for that matter…

    Adam Smith, the father of laissez-faire capitalism, wrote in The Wealth of Nations that markets can destabilize and even destroy communities. Government’s task, therefore, is “erecting and maintaining certain public works and certain public institutions, which can never be for the interest of any individual, or small number of individuals, to erect and maintain.”


  105. Pharm - note that ARIA had good news this morning and immediately dumped a dollar, so somebody really wants an $11 pin this week (which is max pain) no matter what the news…  I sold the $12 covers on Friday’s pop so I’m plenty happy, but if the VIX goes up this week, then I’ll be selling some more puts on Friday at higher VIX / lower price .


  106. IMAX/Phil
     
    Haven’t done anything yet, waiting to see if IMAX can get to low 19′s again or even 18′s.  Then will either buy stock or write puts depending on premium.


  107. 11:38 AM European shares close on the lows, answering Friday’s "why are risk markets rallying?" question by giving it all back and more. Stoxx 50 -3%, Germany -3.4%, France -2.4%, Italy -3.6%, Spain-3%, U.K. -1.7%. Euro -1.2% to $1.3216, and near a 2-month low.

    12:00 PM On the hour: Dow -1.93%. 10-yr +0.4%. Euro -1.53% vs. dollar. Crude -1.73% to $97.69. Gold -2.96% to $1666.05.

    1:00 PM On the hour: Dow -1.84%. 10-yr +0.34%. Euro -1.37% vs. dollar. Crude -1.3% to $98.11. Gold -2.84% to $1668.05

    2:00 PM On the hour: Dow -1.77%. 10-yr +0.28%. Euro -1.5% vs. dollar. Crude -1.33% to $98.08. Gold -2.82% to $1668.45

    Wow, a good auction – what a shocker!  1:03 PM The Treasury sells $32B in three-year notes at 0.352%(.pdf). Bid-to-cover ratio of 3.62, vs. a recent average of 3.29; indirect bidders take 39.1%, vs. a recent 40%. Direct bidders take 7%, vs. a recent 12.4%. 

    1:12 PM Treasurys trim gains a bit despite some solid (and likely Europe news-driven) demand at today’s three-year note auction: the 30-year yield -0.055 to 3.05%; 10-year -0.06 to 2.01%; five-year -0.035 to 0.85%

    1:22 PM French police says they’ve disarmed a letter bomb sent to the Greek embassy in Paris. Police said they were called to the embassy after smoke was seen escaping from the parcel stored in the building’s basement.

    At tomorrow’s policy meeting, the Fed will be discussing a new communications strategy at which it will be more explicit about the direction of interest rates. How much more explicit? Is there anyone who doesn’t know zero rates will continue for several more years? What if something changes requiring rates to be adjusted? What good would an explicit forecast have been then? 

    Erik Swarts writes that his charts suggest Treasury yields could fall even further, "eventually taking out the lows from the last cycle’s trough in the 1940s." Aside from the technical view, Swarts says the current phase of the debt crisis – the sovereign debt phase – is much larger than the initial phase in 2008, suggesting the reaction of Treasurys should be even bigger this time

    Commercial and industrial lending in Q3 rose at the highest rate since 2008, an average annual rate of nearly 10% vs. a 1.7% decline in the past four years, according to Fed data. Former Dallas Fed president Robert McTeer believes the resumption in lending means a projected Q4 pickup in GDP may be sustained next year even amid the European crisis.

    Pew estimates the cost of extending several tax and spending policies due to expire next month would amount to $152B in fiscal 2012, and $1.8T over the next 10 years. $90B of the FY12 total would be the result of extending a payroll tax holiday that’s being hotly debated in Congress. 

    Fitch!!!  Markets take a new leg down as Fitch speaks on the summit result. "A ‘comprehensive solution’ to the current crisis is not on offer … Hopes that the ECB would step up its actions … appear to have been misplaced … We still believe the ECB, … is the only truly credible ‘firewall’ against liquidity and solvency crises in Europe."

    In the wake of the Fitch statement, the euro touches its lowest point since early October, now at $1.3186. Any further fall will send the currency back to its level of last January, when it was on the rise as the Fed was in the midst of QE and the ECB was getting ready to tighten. FXE -1.4%

    Turkish Q3 GDP jumps 8.2%, smashing expectations for a 6.6% rise, and against a 8.8% increase in Q2. In response, central bank governor Erdem Basci calls inflation – running at 9.5% – the "number one problem" for the economy, but gives no indication he’s ready to tighten further.  TUR -4.3%.

    John Hussman doesn’t buy Sarkozy’s Friday claim that easier ECB lending will allow banks to funnel funds into sovereign paper. He calls such a move a disaster that would increase leverage ratios even more, and cause bank funding to dry up as all would now be junior to the ECB. "This is a solvency issue – a shortfall between money owed and the resources to credibly repay it. There is no … trick to get around it."

    One of Joe Fahmy’s five reasons a rally may be coming: He’s noticing "more and more trading setups" for strong fundamental companies to build sound technical bases and break out on strong volume. "We’re not quite 100% there yet [but] if they work out, that will be a very healthy sign." 

    John Hussman notes negative pre-announcements areexceeding positive ones by the largest amount since mid-2001. Investors relying on forward earnings when those expectations assume profit margins 50% higher than historical norms could be in for a rude awakening on any sort of economic weakness.

    Josh Brown’s "big lesson" of 2011 is that market timing has become "a fool’s game," and investors will increasingly seek dividend-paying stocks after boring but high-yielding utilities (up 14% YTD) and consumer defensives (up 11.3% YTD) have trounced the market. Buy-and-hold is still worthwhile, but "only if some kind of current income… is part of your return expectations."

    Gold suffers its worst selloff in 2 months, down 3.1% to $1,665/ounce as risk is very much off this morning. We forget, is gold supposed to rise or fall when financial markets turn south? On the industrial side, copper slides as well, -3.2% to $3.44/pound.

    Shares of Vulcan Materials (VMC +24.7%) soar following the announcement of  MLM’s hostile bid - hitting circuit breakers several times along the way. Martin Marietta Materials (MLM) trades5.8% higher.

    Companies that rely on trucks to ship products across the country are pushing for new legislation that would allow more states to join Maine and Vermont in permitting trucks with loads weighing as much as 97K pounds to rumble down their highways. The proposed Safe and Efficient Transportation Act would allow each state to decide how far it would go in allowing the 97K pound trucks – counterbalancing safety issues with economic need and fuel savings. - Not to mention lost jobs due to bigger trucks and more road repair that won’t be paid by the Corporate users but by the citizens of the towns they pass through.  

    Amazing how quickly people can turn on INTC:  Numerous analysts are defending Intel (INTC -4.7%) following today’s guidance cut, buying its assertion that the weakness is due to temporary inventory reductions caused by hard drive shortages. However, FBR’s Craig Berger is less sanguine, believing Intel’s results are undergoing a "mean reversion" after strongly outperforming the broader PC industry in recent quarters. (more)

    I like these guys:  Canadian insurer Sun Life (SLF +1.9%) bucks a weak tape after the company assuages investor fears by announcing plans to maintain its dividend. Separately, the company says it will stop selling variable-annuity and life insurance policies in the US.


  108. Pharm, The fair value of AFFY, please.


  109. Pharm - what do you think of selling long-dated puts on VRTX down here?  The JUL 25 Ps are $3 and it seems like owning them at $22 would be fine…


  110.  From FT:
     

     

    Fat-tail fears catch oil traders between $50 and $150 bets

    Investors and traders are buying large amounts of oil contracts that would profit from a price super-spike – and a collapse – in a rare and deep split of views




  111. Data provider Yipit downwardly revises its original estimate of Groupon’s (GRPN -6.1%) October gross billings because it accidentally double-counted some of the online daily deal company’s more complex deals involving multiple price points. Yipit now says gross billings rose just 1.5% to $147M, vs. previous 22% to $176M.

    More free publicity for Zynga (ZYNG) (previous): Zynga gets its IPO week off in fine fashion after the firm’s Words With Friendsgame is featured over the weekend on a Saturday Night Live slot poking fun (sketch) at Alec Baldwin’s misadventure playing the game. Downloads of the game have skyrocketed since the affair occurred last week and hit the twittersphere.

    Three lunchtime reads:

    1) Reasons to rally?

    2) MF Global: A romance with risk that brought on a panic

    3) How to lower risk and build a margin of safety

     

  112.  Phil / McD –  You do know that those chickens never touch the ground, have no muscle, aren’t real chickens, don’t you?  I only eat chickens where they run away from hawks and run after bugs.
     
    Facists:  The victors write the history books.


  113. Why 2012 should be good for IMAX:
     
    IMAX Release dates of possible big hits for them in first half of year:
     
    Beauty and The Beast 3D                         Jan 13th
    Underworld Awakening 3D                        Jan 20th
    Star Wars I: The Phantom Menace 3D     Feb 10th
    Titanic 3D                                                        Apr 6th
    The Avengers  3D                                        May 4th
    Men In Black III in 3D                                May 25th
    Amazing Spider-Man 3D                           July 3rd
    Ice Age: Continental Drift 3 D                July 13th


  114. oops forgot the new Batman movie on July 20th


  115. Phil
    Thanks, makes sense about HFC and VLO : )


  116. Good Afternoon
    Phil—-thanks for the input on the income port—- sold some GE puts today as a starting point
    I do like SLF--do you have trade for that , seems like a good candidate for the income port?


  117. EDZ Jan 18p – closed the short put that was part of the $18/23 hedge for a net $1.10 (sold $2.60 bought back 1.50) — probably get to do that at least one or two more times before the end of January. 
    However, if we continue down tomorrow I’ll close out the hedge, as now I am all in cash so my hedges have turned to directional bets.


  118. Calendar Put Spread SPY 121 Dec Quarterly buy, 121 Dec Monthly sell.  1.19 debit.  Buy back if it goes above $1.45 or below $1.


  119. Hey all,

    I have an article up about a reverse iron condor position in RIMM that you all might find interesting. We are entering this on Thursday prior to earnings. Most likely we will buy the 16/15 bear put spread and buy the 17.50/19 bull call spread. Make money if RIMM moves a lot…

    Check out the idea here:

    http://www.theoxengroup.com/blog3/?p=7614

    Good Investing!


  120. Cynicism/ZZ – I don’t know, seems to work for me.  

    Fixed/Exec – Yep, imagine where we’d be if they didn’t "fix" it.  

    DBC/490 – It’s a QE3 play and continues to be a nice inflation play.  They are still $1.40 at .90 in the money and you can sell the July $27s for $2 and roll to the July $23s for $4.70 so, depending on how you did on the old calls, you’re rolling out to a deeper spread with a bit more time.  

    DDM/David – Sounds good to me. 

    Jeans/Rain – Yes but you don’t have to sell things when they are on sale.  By that logic you should have dumped your home by now, simply because it got cheaper – as if it has no actual value to you for the long-term.  RIMM is a stock that we own for net $25ish that I can sell March $20 calls for $1 against.  3 sales like that a year is a 12% return on the $25 so that’s what RIMM is "worth" as a stock to us.  Our goal is to lower the basis to $17 and we can sell the same $20 calls without the fear of being called away (in fact, the $17.50 calls are $1.65 so 3 of those is 29% of $17 on 3 sales).  Yes, RIMM may go the way of PALM – who got bought by HPQ for $1.2Bn ($5.70) when they were selling 1M phones per Q and generating $350M in revenues at a loss.  RIMM does $5Bn a quarter and makes $700M but is being valued less than 7 times what Palm sold for, selling 13M phones last Q and another 500,000 tablets.  Anyway, most investors think like you do – that’s why we are able to buy stocks at these ridiculous prices.  

    History/ZZ – Not when they burn them.  Interesting thing about free-range chickens – I think they do taste better.  Whole Foods is big on telling you what a great life their chickens have before they murder them but damned if those aren’t delicious birds!  I like Argentine beef for the same reason, raised naturally in open fields without too many pesticides and other crap (I assume not none even though they say none as how can you avoid it?).  

    IMAX/Rustle – I’m not that excited because you have 3 re-releases (although I’ll certainly go see Phantom Menace).  No way would I pay $15 to see Beauty and the Beast, Underworld not my kind of thing, Titanic (retch!), Avengers I’ll see twice if it’s good, Men in Black yes, Spider Man twice if it’s bad – more if it’s good and Ice Age should be straight to DVD at this point.  HUGE gap in that schedule too so really it boils down to what they have in March and April to fill seats but I’d wait for Star Wars and Titanic to tank and assume those last 4 are summer blockbusters.  

    Oh 5 with Batman.

    You’re welcome Russell.  

    SLF/Savi – Since you asked.  They are at $19.26 with a 7.5% dividend ($1.38).  Very thin options is why I don’t usually discuss them but if you can get the stock and sell the May $17.50 calls for $2.70, it’s no big deal if they call you away and you can sell the $17.50 puts for another $1.70 so you get them back at net $15.20 if it drops.  That’s net $14.86/16.18 on the spread and makes the dividend close to 10% with decent coverage for a big dividend-payer.  

    EDZ/Canuck – Good plan. 

    Barry makes a good point about confusing correlation with causation:


  121. Phil,
    If we were to get a bounce today in the Dow, would the 20% bounce line be around 11990?


  122. Newt Gingrich is writing Obama’s campaign commercials…

    “I would just say that if Governor Romney would like to give back all the money he’s earned from bankrupting companies and laying off employees over his years at Bain that I would be glad to then listen to him. I’ll bet you $10, not $10,000, that he won’t take the offer.” - Newt Gingrich, in response to Romney’s criticism of Newt’s $1.6 million in "consulting fees" from Freddie Mac. 


  123. Phil: What do u think of KFT June $32/34 BCS at $1.60 paired w/ June $$33P at $1.25 for net $.25 on 42 spread for an initial entry.
    Also. PFE Jan.$15/$17.50  BCS at $1.90 paired w/Jan $17.50 P for net $.45 on $2.50 spread for a initial entry. Thank you.


  124. Don’t know if this has been posted before, but my son showed it to me yesterday. It is the Nativity Story as if it happened today and was communicated via Facebook – called a social network Christmas.
     
    http://www.youtube.com/watch?v=sghwe4TYY18


  125. Good morning, nothing new……………….

     

    IWM  71.87,  72.15,  72.56,  72.98,  73.24,  73.51,  74.12,  74.62,  74.80  and  75.06

    I have descending trend lines at IWM 72.96 and 72ish; the lower should hold.

    I expect a Santa Rally to begin later this week or early next; this from Bespoke:

    And supporting stats:

    And SPX support at 1220 – 1224:

    It will be after Christmas when things should get really interesting !!    Good hunting !!


  126. RIMM / David – For your info, I ran some test on Iron condors and earning over the last earning season (I worked with JC on that) and never published the results because I want to test it with another earning season. But I was selling condors, the same way you would sell a strangle hoping for a volatility crush. The difference is that you can have a wider profit span with a condor and you limit the margin requirement. It worked out well except on Netflix where it blew up and I had to roll it and broke even eventually. But I would usually get between 5-8% on margin every time. I also played that with expensive stocks that would offer many strikes to choose from and good premium at the delta levels I was looking for. Not sure you’ll get that with RIMM. Please keep us posted!


  127. mrm – ARIA – kinda like us, selling into the excitement.  Big blocks were moving earlier, but things seem to have slowed down.  I missed most of the action, as I have been in meetings and trying to get caught up.  Lazzard raised their target, and others reaffirmed, so the $11 area is a very important one for them.  Let’s see how they handle the next few months, as I think a sell off is coming and we will see if they can handle the pressure.

     

    VRTX – absolutely.  I think they will be swallowed…..


  128. JRW – I still don’t see the 1270 SPX area getting broken….I know the crystal ball is hard to predict, but if it is, 1300 should be the real line in the sand…..


  129. Go figure….CMG green.


  130. FAS Strangle Experiment – I closed the 68 Call side for a 37% win in case we get a stick. I’ll keep the put side open overnight as it’s still within the parameters and look for a tighter strangle tomorrow based on how we open. 


  131. IMAX/Phil
     
    They also in 3D have John Carter: Martian Manhunter which I would see but don’t know how big that will be, Dark Shadows in 3D and Jack The Giant Killer.  Think you’re underestimating Titanic and Beauty and the Beast.  Both will attract a new generation of kids who want to see it on a big screen in 3D and adults who want to see it again.  Lion King did much better than they anticipated when they rereleased it and Underworld does have a decent cult following and the trailer in 3D looked very good.  But then again, trailers are supposed to look good.


  132. JR/Santa
     
    I’m with you.  "They" needed to put some fear out there so they could get there cheap entries prior to the low volume BOT fest that they have in store for us the rest of the month.


  133. WCP moves:  

    GNW solid at $6.39

    SCO just have to hope for collaspe

    FAS $67 short calls just .70 which is BRILLIANT since we pulled the $66 calls at $3.40 off the .60 spread!  Since XLF can pop 10% and send FAS to $78, let’s buy those calls back and be done with that spread.  We do have the Jan $67/72 bull call spread that we left to cover them but let’s wait on the Fed before we give up on Financials as that spread is bonus profit anyway.  

    New FAS (Dec $60/61) is fine, of course.  

    TNA holding up so far and JPM is fine.  

    DXD Jan $15 calls are $1.50 but we need the balance so we keep them.  Offsetting FCX puts down but not out. 

    DIA $121 calls still .65 but we have 20 so that’s what I’m most nervous about but let’s see if we get a pop into the close. 


  134.  xlf jumps .5% on one trade…hahahaha…if that isn’t msb then we have the dumbest large fund traders in history.


  135. 80.30. 

    Bounce/Kallen – We’re down form 12,200 to 11,950 so 250 points and that makes 12,000 the 20% bounce.  

    KFT/Dflam – I like them but bad economy can push consumers to generics (although half the generics are their too).  The spread is fine but I just don’t see them as attractive, up 100% since 2009 in a market that’s just as scary as 2008.  PFE is also up 100% so not as attractive as it used to be.  The run-up in price has dropped their dividend to 4% but you won’t get it anyway with that spread.  I think for both, I’d just sell puts to see if you get a cheap entry first.  

    Cool chart JRW. 

    CMG/Pharm – Someone predicted $400 – was a new item not worthy of repeating!  

    IMAX/Rustle – As I said yesterday, it doesn’t pay to try to time the movies and if the market wasn’t shakey I’d be gung-ho bullish (we have no reason to sell them in the income portfolio as a long-term play) but, to commit new capital to them at the moment makes it questionable when cash is king.  

    Fear/Exec – Yes but you also don’t want the bears to get carried away so a little stick can beat the bravery out of them into the close.  


  136. JRW’s continuation/addition (from Tim @ Slope)….


  137. I think DMND doesn’t go bust and, in fact, clears up this accounting nonsense.  The June $36/44 bull call spread is $3 and you can sell the $20 puts for $2.50 for net .50 on the $8 spread.  

    Diamond Foods (DMND-24% premarket after saying it won’t file its 10-Q on time because its audit committee hasn’t completed a review of how the nut company accounts for payments it makes to walnut growers. Because DMND won’t meet the SEC deadline for its quarterly report, the company expects to be temporarily booted to a lower tier of Nasdaq. 

    The ongoing saga of Diamond Foods (DMND -21.5%) takes another twist after a SEC filing (13G) reveals Wellington upped its stake in the packaged foods firm to 13.6% with recent buys.


  138. IMAX/Phil
     
    Completely agree, which is why I am patiently awaiting and hoping they revisit more along the $18 range.  Just think they have much better possibilities than last year’s crop of movies with more theatres this year.  I currently have no position in the stock.  Sold last out with nice profit when it first hit 20 about a week and a half ago.


  139. Ahhhh, how do they do that every time? 


  140. 0X0/MCD
    Maybe Pharm can recommend a company for them to buyout to develop stuff like Lipitor Lite to be included in their Value meals. Hey, maybe PSW can broker the deal and make a killing (in keeping with your rat poison motif)!


  141. This premarket crap is really annoying.  VIX (someone noted above) is falling, but hitting the lower bb, so be careful not to hold on to longs too long. Tomorrow and Wednesday are the days.  I would go long the 10 yr if I could.  So, easing into TLT short term is wise…..someone just moved 1K Jan 118/124 calls…I am following.  $1.97


  142.  S&P 500 keeps pressing on the lowsbut  VIX remains non plussed…I  view this decline with suspicion….. price is the ultimate arbiter….I can’t help but think thismove is the market shaking out  weak longs; pushing shorts to get aggressive just before launch!


  143. Just put the drugs into the hamburger….then who cares….


  144.  Phil,
    Getting out of anything on this pop?


  145. Nailing it again Phil, my family loves you.  I love you too, not that there’s anything wrong with that!  Thanks for today’s trades, I didn’t have a clue what to do this morning.  Now, how about tomorrow?  


  146. DMND — got the spread for net zero….


  147. XLF/Angel – Just a bot jumping the gun I guess.  

    Pop/Kallen – Just the DIA $121 calls at .80 in the WCP, we don’t need to be more long so let’s ditch them even!  

    Thanks Bruce!  Tomorrow I think we get pre-market pump but I think down move into note sales and then, if we’re not saved by the Fed – we are probably DOOMED!  How’s that for a prediction?  

    Have to run to dentist but I’ll be back after dinner.  


  148. you meant pumping the gun!!


  149. Phil – you and Lloyd today with these dentist appointments…
    FWIW – remember you can trade the DIAs after the 4:00 bell (for 15 minutes if I remember correctly). Useful trick.


  150. Phil, why are we not down more considering the run up in the dollar?


  151.  raising mortgage fees to pay for payroll tax cut is so dumb is mind-numbing


  152. Portfolios are all up to date on the spreadsheet! 


  153. What happened to Jrom, we have not seen him in a while? Did he already check in at the Kabul Hilton? 


  154. Pharm any feeling about HSP with the change at the top trading a buck above 52 week low buy write?


  155. Thanks Kwan, I didn’t know about DIA’s after the bell. Any others?


  156. 2nifty, If I am not mistaken it is all options


  157. my options orders for today just expired


  158. Thanks Sage, guess I’ve really been asleep at the wheel, yikes!


  159. Closed the short Dow at 11,970 and the NAS100s at 2285. Back to cash. Maybe re-enter on that bounce up to 12,025 area or maybe not.
    Thanks for the welcome, Phil.  Nice glasses, and definitely like your neighborhood! I think I may be around for a while.



  160. Pharm- From the trades you have posted (the SPY put spread from last week plus the TLT spread from today) I am surmising your disdain for the Santa rally scenario- or at least for it to be short lived? Your calls on long bonds have been on this year so I am listening. Could you elaborate?


  161.  2Nifty,
    The only options I know I’ve traded up until 4:15 is SPY and DIA. Optiosn with real equities (as opposed to these ETFs) as underlying will not execute after 4:00.


  162. Anyone have any insight into STEM, they were fine until 2pm, and then dropped 18% in the final 2 hours???


  163. Kallenjr, perhaps but my SCO expired same time as my TZA today and that was 4:16pm, but perhaps to your point they are not single issue equities but ETFs


  164. Iflan—-I see that my Jan 390/385 put spread filled for a credit of 2.30—-anyone else?


  165. I remember DIA, SPY and QQQQ, but apparently XEO, OEX, SPX, NDX and RUT do as well.


  166. sagemm1,
    any of my open orders good for that ‘day’ that don’t execute expire at 4:16 as well regardless of underlying being SPY, DIA, or any other underlying. They are in my order queue, but they don’t get filled after 4:00 (except the SPY and DIA we mentioned)


  167. Savi…..your post 5:37.   Well what do you think of that.  My order did NOT fill.  Hmmmm………..


  168. iflan—-only 3 spreads filled—


  169. Your AAPL portfolio may be ahead of mine tomorrow!         :)


  170. Anyone / SLF : Dividend Risk
    Can someone explain to me how DivRisk works when entering a trade like the SLF one Savi and Phil were talking about?  From what I understand if I sell the calls ($2.70) and that premium received is higher than the Div payout ($1.38), I shouldn’t have to worry about the stock getting called away.  But I think I’m missing something……
     
    Do I have to keep alert to when the stock is paying div’s, and what the premium of the option is on the ex-date?  I’m confused about the actual mechanics of the div risk.
    Thanks!


  171. Iflan—-I doubt it but would be nice :-)


  172.  FAS Strangle 
    Stjeanluc, I would like to thank you for continuing to pursue this trade and keeping all of the spreadsheets up to date.  I think it’s one of the most interesting "side" discussions we have had here.  Since the paper trading has gone very well, I’m going to try some very small entries next week.  
     
    As a side note, I spoke to my ex-vol arb trader buddies, and they have been selling strangles on the weekly triple etf’s for a while now.  They try to time it when vol expands though, and vary the etf’s they use based upon what’s "rich" or "cheap" based upon realized and implied vol’s, and term structures.


  173.  stjeanluc
    Can you help me with the "spreadsheets all up to date".  Where do I find those??


  174. Regarding trading options until 4:15, I got this list from a NYSE Euronext site:
     
    (ETFs) DIA, EEM, EFA, IWM, IWN, IWO, MDY, QQQ, SPY, UNG, UUP, XHB, XLB, XLE, XLF, XLI, XLK, XLP, XLU, XLV, XLY, XME, XRT,
     
    (ETNs) AMJ, GAZ, INP, JJC, MLPN, OIL, RJA, RJI, VXX, VXZ


  175.  stjeanluc – I thought Jrom was heading off for an all expenses paid vacation to Baghdad for a year. But if he is in Kabul he can say hi to my son who is there until March training/advising Afghan trainers. Something he didn’t expect is that a lot of those guys can speak English. They try and hide that ability to see what out guys are saying about them but apparently you can tell pretty quickly if they are listening, especially when they laugh at a joke. My son is in the Canadian Army.  


  176. mjjwo9bSpreadsheets.


  177. Thanks kallenjr!


  178.  Iflan – I got a fill on one contract on the put spread as well.


  179.  Obama’s speech on inequality in Kansas with comments in the margins from Robert Reich -
    http://www.huffingtonpost.com/robert-reich/obama-inequality-speech_b_1133147.html?ref=email_share
    This is a fairly good read and summary of where Obama is going with the 2012 campaign, channeling his inner Teddy Roosevelt.  


  180. Strangle / Burrben – Thanks! I think it makes it more interesting to try different types of trades (and also more educational).

    Not hard to imagine that your friends are doing the same thing, the premiums are just incredible. And the truth is that you could play the same thing on the other ETF as well as they indicate. Look at the TNA put that we sold on IWM Money,  it was sold for $2.25 this morning and it finished the day at $1.65. On 10 contracts, it’s $600. Not bad for day’s work! I don’t have the time right now to do the type of analysis that they do though. But I did mention to Savi yesterday that I was thinking about adding some TA to the mix to enhance the returns. Maybe after the holidays. 

    In any case, start small and plan on rolling as we can’t be that lucky for 4 weeks!


  181. Thanks for posting the link Diamond! 


  182.  Diamond / StJeanLuc
    Thanks!!


  183. Kabul / Grenowoods – I hope your son stays safe! It has got to be hard for him and your family to have him spending the holidays there! We do forget that in our little cozy world… Thanks for sharing!

    I thought that Jrom was going to Afghanistan, not Iraq. We should hear from him someday I guess! 


  184.  Ok, its getting weird:
    http://espn.go.com/new-york/nba/story/_/id/7344425/nets-mikhail-prokhorov-run-russian-presidency
    Let’s see, should I trade for Dwight Howard or run against Vladamir Putin?  Should I get Medvedev on my ticket or see if JayZ could play a role in the new Russia?  I guess Bush ran the Astros for awhile, so who knows.


  185. And tonight’s cartoon…

    Walt Handelsman 


  186. Prokhorov / Rev – Not sure this guy will be able to stay in Russia too long unless he wants to end up in Siberia with Khodorkovsky. Apparently, Putin doesn’t like competition in the "free" election. At least not from people who have more money to buy votes than he does!  Oh well, so much for democracy there!


  187.  STJ
    From the bespoke intraday volatile stocks list you posted  FSLR NFLX PCX and X all have weeklies. I may add these to the experiment tomorrow.  I did a live trade on FAS last Thursday afternoon that expired nicely, however on my smaller account it used all my margin so I was stuck for the day.


  188. GBP – The Pound is Falling..but Paul McCartney about  30 years ago..


  189. Good morning! 

    DMND/Esco – Great, way to bid on contracts!  

    Lloyd/Kwan – We must use different dentists as I didn’t see him there…  As to the DIAs – you know you can trade futures all the time – once you get used to that, you never look at those after hours indexes again.  

    Speaking of after hours – that’s what I came on to  tell you – the Dollar just bottomed out at 80.15 and now heading up, which should execute the indexes.  No particular catalyst other than Shanghai taking yet another bath and now down at a critical breakdown point at 2,250 (although 2,500 was pretty critical).  They are now down 12.5% since mid-November and they don’t believe in Santa Clause anyway. 

    Of course, 12.5% is a normal overshoot on a 10% drop and if that holds, there’s still hope but you can’t be at all tolerant about losing that line.  This is now the lowest they’ve been (breaking the Fukushima floor) since breaking over this line in 2009 and the bottom was another 28.5% down.  Probably this is the worst single Global signal at the moment and it MUST be taken seriously because, if you had taken it seriously in 2008 – you could have saved yourself a World of hurt!  

    So RUT (/TF) just failed 730 and that’s the put of the moment – if oil (/CL) fails to hold $97.50 (now $97.74), that’s going to be a good short line as well.


  190. Down more/Rpme – We’re not down more because there is a strong, underlying expectation of QE3 in 14 hours that is supporting the market.  Things will turn pretty ugly if we don’t get it.  Notice all the negative news this morning and that couldn’t keep us down – that’s the normal shenanigans when the Banksters want to chase retailers away from their positions, which is why I wanted to go long in the afternoon (and we’re still pretty bullish in the WCP, playing for the Fed).  But, as noted above, China is failing and we did expect them to be NEXT so it’s pretty hard to get enthusiastic unless the Fed is going to come up with another $500Bn or more tomorrow to get us through the next Q.  

    Mortgage fees/Angel – Well everyone gets paid but no one is buying houses so it’s a fake tax anyway – they are just looking for an offset they can sell. 

    Jrom/StJ – Last I saw him, he was off to see the World.  

    Thanks Roro! 

    Big Chart – Still healthy consolidation right where we want it.  S&P holding their line (barely), RUT on their line, Nas holding, Dow tried to break over and failed, NYSE tried to break over and failed – not dead yet.  

    STEM/Rpme – GERN, who were the pioneers of stem-cell research, have announced they are discontinuing that part of their operation.  A lot of people are taking it as a signal that they’ve decided it’s a dead end but it’s possible that just their approach is a dead end or that they’ve decided to focus on something with more profit potential or they could be bowing to pressure from Conservatives, who have been trying to shut them down for years.  From IPSCell.com:

    Reportedly, Geron has decided to only focus on cancer research and for financial reasons has shut down its hESC trial for spinal cord injury.

    This is a very sad day for stem cell science.

    No more spinal cord injury patients will be treated in Geron’s former clinical trial.

    This leaves Advanced Cell Technology as the only biotech conducting active clinical trials on hESC-based products. One has to wonder and worry about financial pressure on them as well.

    Are stem cell-based clinical trials too expensive to make it all the way to the clinic?

    What happens to the relationship between Geron and CIRM, which was going to give Geron substantial financial support?

    SLF/Burr – If you sell a put with less premium than the dividend payout, it is in the caller’s interest to exercise the option on ex-dividend day so he gets the stock for the agreed-upon price (the strike) plus the dividend.  There’s no harm to you other than not getting the dividend as you get to keep the money for the calls you sold plus the caller deposits the strike cash in your account in exchange for your stock.  Usually the stock drops the next day so you just get in at a cheaper price, sell more calls and start again.  As long as you sell calls that have about as much premium as the quarterly dividend, you have nothing to lose by being called away and decent protection on a dip (which then causes the caller to have more premium and be less likely to cancel the contract and call you away).  

    80.22 – indexes holding up so far with RUT still 730, Dow 11,945, Nas 2,291 and S&P 1,229.5 so very easy to see when we cross bullish (if Dollar heads back below 80.20 at this point) but below 80.15 is a must for real progress to the upside.  Still pays to play down for now.   

    Great list Kallen – Could you put that in the Wiki?  

    Inner Teddy/Rev – About time! 

    Nap time for me…


  191. Phil……….Thanks for HU re Shanghai and the possibility of an ugly aftermath in the event of no QE.
    I think I will wait it out until 2:15 and then look to trade after the FED announcement.


  192. Obama speech / revtodd – Thanks, it was interesting to read with Reich’s comments. Republicans see their only shot is to tie the economy like an anvil to Obama and sink him with it. So he has to demonstrate in terms that people accept that he didn’t create the problem but is working on their side to fix it; and that there are powerful forces he’s fighting against and he needs their help to defeat them. So I like the approach of putting the current circumstance in a broad historical context, and making it an epic contest against greed and corruption which has tried to undermine the American dream for over a century. Linking himself with Teddy Roosevelt isn’t bad either. Fortunately, there’s no one around who can credibly say, "I served with Teddy Roosevelt, I knew Teddy Roosevelt, Teddy Roosevelt was a friend of mine. Mr. President, you’re no Teddy Roosevelt."


  193. pakdog – Good points.  I think Obama is on the right track here.  The right is going to come hard with all the socialist, job killing, anti- business rhetoric as their strategy.  Obama has to set the tone and explain what America is all about in a more compelling way, that will address the economic fears of independents.  He has to pin the Republicans to the upper class and get most of the middle class to see their interest with the Democrats.  He needs to consistently stick with a vision of what America is all about, and that a free market has to be a fair market, not a pirate ship.


  194. Phil/St Jean/Greenwoods- hello! Im presently in combat training at the joint base Maguire/Ft Dix/lakehurst in NJ. Not able to check this site too often when we are crawling through mud pretending we’re army all day. I’ll finish Friday, get a few days with my family, and then leave for Kabul 24 Dec.

    Greenwoods- what base is your son at in Kabul? ISAF hq? If so, I will be across the street at NKC (new Kabul compound).

    Phil- internment camp exercises- we have to prepare for everything, that is our job. Besides, otherwise all they’d be doing is forwarding funny YouTube clips to each other… Honeybadger don’t give a f$&k!!!! Hopefully y’all seen that one, too funny.I guess the powers that be got sick of the global warming scenarios where World War breaks out due to competition for natural resources….however, I think internment camps here are a rather silly idea considering the % of people whom have guns in this country…Body bags however…..anyways, today is the fun day… Im off to clear a town full of ‘insurgents’. We have paintball-like bullets in our m4/m16 clips that hurt like a beeeeoch!


  195.  jromeha – All I know is that he’s part of Operation Attention and he’s in Camp Alamo (great name) where he stays for the entire deployment for security reasons. The only time he leaves the camp is on a Rhino coming from and going back to the airport. At least that’s what I’m told. OPSEC plays a major role but it sounds like there’s some other "shit" going down right now. Pretty scary stuff but a Canadian soldier was killed by a suicide bomber while travelling on a Rhino in October. My son was on the same bus the week before. He’s 3PPCLI based in Edmonton. Canada’s multi-year combat mission out of Kandahar ended in July. Now we’re doing the training thing in Kabul (plus there’s a small group of 50 in a base in the west) until 2014.


  196.  jromeha – Take care of yourself out there.  My thoughts and prayers go out to you.  Thanks for checking in.


  197. LOL – Hey Jrom!  I knew where you were, of course (my memory isn’t that bad) – just didn’t know if it was OK to say. I guess I’ve done too much Government consulting and assume everything is a big secret…  


  198. One of the e-mails I got from a colleague on the Greek debt issue, quite hilarious!
    Subject: The Greek Bailout Explained
     
    It is a slow day in a little Greek Village . The rain is beating down and the streets are deserted. Times are tough, everybody is in debt, and everybody lives on credit. On this particular day a rich German tourist is driving through the village, stops at the local hotel and lays a €100 note on the desk, telling the hotel owner he wants to inspect the rooms upstairs in order to pick one to spend the night. The owner gives him some keys and, as soon as the visitor has walked upstairs, the hotelier grabs the €100 note and runs next door to pay his debt to the butcher. The butcher takes the €100 note and runs down the street to repay his debt to the pig farmer. The pig farmer takes the €100 note and heads off to pay his bill at the supplier of feed and fuel. The guy at the Farmers’ Co-op takes the €100 note and runs to pay his drinks bill at the taverna. The publican slips the money along to the local prostitute drinking at the bar, who has also been facing hard times and has had to offer him "services" on credit. The hooker then rushes to the hotel and pays off her room bill to the hotel owner with the €100 note. The hotel proprietor then places the €100 note back on the counter so the rich traveller will not suspect anything. At that moment the traveller comes down the stairs, picks up the €100 note, states that the rooms are not satisfactory, pockets the money, and leaves town. No one produced anything. No one earned anything. However, the whole village is now out of debt and looking to the future with a lot more optimism. And that, Ladies and Gentlemen, is how the bailout package works


  199. LOL checho!


  200.  Checho: That does really say it all – lol.