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Thursday, March 30, 2023


Happy Martin Luther King Day!

It's Martin Luther King day so the markets are closed.

It's a good day to read his "I Have a Dream" speech – really is amazing when you think of the great social change in this nation that was set in motion by one man with a vision.  Here's a great video of the actual event.

It is a testament to the power and effectiveness of Dr. King's movement that, even to those of us who were alive at the time, it seems like it must have been another world where a man had to speak out against such injustice as if it wasn't obvious to the majority of people that segragation, whether by law or by practice, was an outrage.

Sadly, many of the lessons he taught us have already been forgotten, some great quotes:

  • Nonviolence is a powerful and just weapon. which cuts without wounding and ennobles the man who wields it. It is a sword that heals.
  • Nonviolence means avoiding not only external physical violence but also internal violence of spirit. You not only refuse to shoot a man, but you refuse to hate him.
  • It is not enough to say we must not wage war. It is necessary to love peace and sacrifice for it.
  • The hope of a secure and livable world lies with disciplined nonconformists who are dedicated to justice, peace and brotherhood.
  • Human progress is neither automatic nor inevitable… Every step toward the goal of justice requires sacrifice, suffering, and struggle; the tireless exertions and passionate concern of dedicated individuals.   
  • Never forget that everything Hitler did in Germany was legal.
  • We will remember not the words of our enemies, but the silence of our friends.
  • The past is prophetic in that it asserts loudly that wars are poor chisels for carving out peaceful tomorrows.
  • A nation or civilization that continues to produce soft-minded men purchases its own spiritual death on the installment plan.
  • A nation that continues year after year to spend more money on military defense than on programs of social uplift is approaching spiritual doom.
  • One of the greatest casualties of the war in Vietnam is the Great Society… shot down on the battlefield of Vietnam.
  • Our scientific power has outrun our spiritual power. We have guided missiles and misguided men.
  • Rarely do we find men who willingly engage in hard, solid thinking. There is an almost universal quest for easy answers and half-baked solutions. Nothing pains some people more than having to think.
  • Take the first step in faith. You don't have to see the whole staircase, just take the first step.
  • The ultimate measure of a man is not where he stands in moments of comfort and convenience, but where he stands at times of challenge and controversy.
  • The time is always right to do what is right.
  • Our lives begin to end the day we become silent about things that matter.
  • Darkness cannot drive out darkness; only light can do that. Hate cannot drive out hate; only love can do that.
  • If physical death is the price that I must pay to free my white brothers and sisters from a permanent death of the spirit, then nothing can be more redemptive.

Dr. King also had a sense of humor:

  • I want to be the white man's brother, not his brother-in-law. 
  • It may be true that the law cannot make a man love me, but it can keep him from lynching me, and I think that's pretty important.  

It is very important to remember that people do, in fact, have power.  Last year we had the "Arab Spring" where protests eventually toppled dictatorships.  Maybe this year will be Europe's turn – not so much political dictatorships as economic ones.  Have the 99% slinked away, never to borrow the wealthy again or are they merely hibernating for the Winter?  

Did Doctor King Imagine, almost 50 years ago, that the lines in 2012 would no longer be drawn between black and white but between rich and poor.  Who will speak for the downtrodden masses in the 21st Century – how does one represent the bottom 99% when the smallest bit of fame is likely to take the speaker out of their ranks?  

Fortunately, President Romney will put a stop to all this nonsense:  


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Thanks, I did know that synthethiclly they are the same.  But from what I understand you would want to look at credit spreads in a high vol environment, and debit spreads in a low vol environment.  I'd rather be long vega, than short vega with what we have going on in the world at this point.   At least that's what I gather from doing reading today…
Phil had another interesting take that I will have to sit down and walk through.  I don't have TOS anymore, and IB doesn't have as clean of a PnL/Risk graph as IB does.  

Request for graph
Can anyone plug this into TOS Risk Graph and post it?  I don't have TOS, and IB is a pain with these.  It's a modified iron condor…
Buy 2 RUT February 640 puts
Sell 10 RUT February 630 puts
Buy 8 RUT February 610 puts
Net credit of about $680
Buy 2 RUT February 820 calls
Sell 10 RUT February 830 calls
Buy 8 RUT February 850 calls
Net credit of about $700

Market Trends:
Martin Luther King, Jr. WeekCobra's Market View
Holiday WeeksCobra's Market View

This can not be repeated enuff:
"So, if I have $41,981 to buy 100 shares of AAPL and I expect it to go up 10% this year, I can buy the stock and perhaps hedge my investment (which would eat into my potential profits) and I would need AAPL to go up 13.5% in order to make $5,700 against $21,000 in margin tied up.  On the the other hand, if I sell 2 2014 $300 puts for $28.50, I collect $5,700 TODAY and tie up $6,000 in ordinary margin and my worst case is owning 200 shares of AAPL for net $54,300 so my "risk" is spending $12,319 more than I intended but, for that, I get 100 more shares of AAPL at net $123.19 a share.  If you don't REALLY want to buy 100 shares of AAPL for $123.19 then WHY THE HELL would you be buying 100 shares at $419.81?"

I with you on that Flip.  

Virtual portfolio weekend updates:


lflan, I didn't add any comments on your moves. 

Phil – I have listed all the trades and current position of the 25KP portfolio for your review.

I too want to make sure I understand Buying vs Selling spreads. For the TZA/Jerconn example you responded to, is this correct? If so, it seems different from numbers you stated or I am misunderstanding your response (all quotes per ToS):
TZA Close 1/13: $23.81
Buy TZA Jan 2013  $35 Put: Midpoint=$17.50, $11.19 ITM, Premium paid=$6.31
Sell TZA Jan 2013 $25 Put, Midpoint=$8.60, $1.19 ITM, Premium sold=$7.41
Buy TZA Jan 2013 $35/$25 Bear Put Spread, Midpoint=$9.03, Premium sold=$1.10

S&P did downgrade the EFSF fund to AA+ today following the France downgrade.

Phil and kallenjr, I too find that the TZA put spread doesn't compute.  Basically costs around $8 with max return around $10.

To Kallen's point above, I think you had the 30/25 TZA Bear Put up (mid 4.60 in TradeStation) rather than the 35/25 spread.

Phil/Why does AAPL not use prison labor?
There are currently at least thirty seven states that have sanctioned the outsourcing of prison labor by private corporations that base their businesses within our state prison system.
The list of companies participating in this kind of labor schemes comprise some of the United States leading corporations.
IBM, Boeing, Motorola, Microsoft, AT&T, Wireless, Texas Instrument, Dell, Compaq, Honeywell, Hewlett-Packard, Nortel, Lucent Technologies, 3Com, Intel, Northern Telecom, TWA, Nordstrom's, Revlon, Macy's, Pierre Cardin, Target Stores, among many others.
Each and every one of these businesses are thrilled about the financial success produced by prison labor.
I don't know why AAPL is not on the list, but my guess is that Chinese labor must be cheaper.

Oh my… Just watched Romney.  Looks like I'm pushing all my chips into the Ron Paul camp if for no other reason than I love watching people on FOX news trying to explain away his support.  He's the only one not owned by this Orwellian nightmare system.  Are we destine to become a "capitalist" totalitarian state?

This just out:
Finnish foreign minister raps euro pact plan
By Michael Stothard in Helsinki
Finland’s foreign minister says a proposed new European fiscal treaty for the is “unnecessary and harmful”, raising fears that one of the few triple A rated countries left in the bloc could try to block the new rules.
Erkki Tuomioja said in an interview with the Financial Times that Finland should not sign the proposed treaty enshrining a fiscal compact, and that “the majority of [the Finnish] parliament has the same view as I do”.
He said the treaty, which would requires members to reduce their structural deficits to below 0.5 per cent of gross domestic product, was “about Germany’s domestic policy needs” and “we should not be taking orders from anybody.

the only thing romney loves is money……….just another hypocrite like the rest.
Phil……….at least McGovern (the CIA analyst) spoke out publically against the war and the contrived WMD falsehood as the premise for it. the witch herself VOTED for IT………and, not that i have anything against people making money, but i keep asking myself how people like Hclintion have become sooooo wealthy from being in a lifetime of public service/politics unless the answer is selling influence…………..you have to wonder how talented these people are to be able to run a country and accumulate such vast fortunes in such short time spans.
what amazes me, and i really mean this, is that a flake like Romney can even get 1 vote. the interviews are painful to listen to. Romney says NOTHING which begs the question about the intelligence (or sheer stupidity) of the audience he is pitching.
i am off the soap box on my personal views about politicians……..
i guess we are onto earnings tomorrow so maybe we get some vol back in price. hope so. ….and the S&P other downgrade today……..
i did the paper route too. always worked when i was a kid, and always had money

GHASTLY// Newt as Torquemada!!!..althoughi think newt would be better at it..so in this dedevilling of candidates would make obama say Saladin?..maybe Abelard?
All i can say is what a bunch of lousy choices for America including the President..who couldnt run a hot dog stand (but he sure could sell em) i can't see Elder Mitt getting the nod..its a guaranteed loss to the GOP..i  had a single very revealing dealing with him he has been 'smitten by the bump of acquisition"..that intereaction at BCG  showed he wanted no one but himself to succeed and when you were in a room with him (and his hair) the room got smaller fast and he was very distracted. He had a chance to help a kid who had been admitted to 'his' B school.. that kid needed an unpaid internship as part of  fulfilling his admissions requirements..Mitt said no..later someone called me and said he couldnt stand the fact someone had been deferred without an undergraduate degree…he is named for a wonderful man who was a Mormon (of a different calling)..as was his father George..Mitt is a hollow man.

one other thing i want to relay here, especially since it is MLK……….when i was a boy and had my paper route i delivered to maybe 7 or 8 black families that lived in a segregated part of the town next to the the town dump.
the road was dirt and i walked it everyday except sundays. the people who lived there were direct descendants of slaves who had come north on the underground railway and escaped into canada, although i have to admit the treatment they got was pretty poor, and if you take into consideration when i was delivering papers  the shameful treatment lasted a pretty long time too.
these people had nothing, but every saturday when i did my collections they always paid their paper bill on time.
it is a real shame their history was not celebrated and their struggle was not understood by the local population.
later in life when i was in the investment business i was invited to the opening of an upscale department store in downtown Montreal. MLK had performed in Ogilvies Tudor Room at one time as part of a  group known as the Fiske Jubilee Singers…….there is a modest black and white photograph of the MLK with the Fiske singers that hangs outside the door of the Tudor Room still to this day.
it would be nice to see some politician of whatever strip step up and own moral responsibility while at the same time putting personal gain aside for the benefit of all………probably what it will take and angelcur is right as far as i can see.

roro are you in montreal?

i'll take a shot angelcur……….you can get me at rorotraderathotmaildotcom.
you are welcome anytime whenever for whatever reason………you don't need a reason………i had no idea you had posted as i was writing that piece about delivering papers.

angelcur……….the answer to your question is, yes.

"As a result, Obama has brought in more money from employees of banks, hedge funds and other financial service companies than all of the GOP candidates combined, according to a Washington Post analysis of contribution data." (One could argue that WP  now has conservative side, but that doesn't mean these facts are incorrect.)
And according to the same article Bain Capital employees gave Romney $34,000 and Obama $76,000. WTF?
My earlier point: The war is between Labor and Finance, and the problem I have with Democrats, (and I am not a Republican, nor conservative) is that they have their hands securely in the pockets of both! Until we frame the arguement correctly and take off partisan rose colored glasses, we will scream at each other until we are exhausted and the real issues will remain out of focus. I have been reading Phil since 2008. I can't claim a trading history as long as yours, but certainly an investing history that much and longer. I too gain a subtle edge from Phil's intelect and view.  I respect others perspectives, but if ideas cannot compete on their own merits, and must be defended by attacking the person behind the idea, I know for sure that there is a problem at the core of the arguement. I do enjoy your often subtle and entertaining comments.

Check out Zero Hedge's last article tonight. Didn't see it before I posted but a table of who contributed and how much is worth a thousand words.

SAN ANTONIO, January 17, 2012 – Valero Energy Corporation (NYSE: VLONews) today announced that the company expects to report earnings per share in the range of $0.00 to $0.10 for the fourth quarter of 2011.  Included in this estimate is an after-tax benefit of approximately $161 million, or $0.29 per share, from a year-end LIFO inventory decrement.
The fourth quarter 2011 results were negatively impacted by weak margins on refined products, particularly for gasoline and petrochemical feedstocks.  In addition, refining margins in the fourth quarter were negatively impacted by reduced discounts for heavy sour feedstocks and the narrowing of prices for West Texas Intermediate versus Brent crude oils, resulting in higher-priced crude oils flowing through the system.
Despite the lower results expected for the fourth quarter, Valero expects to report its highest annual earnings per share since 2008 with full-year 2011 income from continuing operations per share in the range of $3.59 to $3.69, including the LIFO inventory benefit

Let's say you buy a $40 call for $3 and sell a $45 call for $2 and then you paid net $1 for a $5 spread.  So, if you are wrong, you lose $1 and, if you are right, you win $4 so, if we assume being wrong and being right are random events – you can be wrong 4 out of 5 times and break even.  If you sell the $45 puts for $3 and buy the $40 puts for $2, you get a $1 credit and have made the exact same bet (that the stock will finish over $45).
For both the bull call spread and the bull put spread, the P/L graph is flat below 40, increases dollar per dollar between 40 and 45 (slope of 1) and is flat above 45. Hence if the market price of the call spread is $1, the market price of the put spread should be $4, not $1. In other words, the market should price the two spreads so that the P/L is the same for every possible outcome, rather than price the call spread the same as the put spread.

Futures are reaching last Thursday highs… Oil is $100 again and dollar a bit weak!

I think Phil was referring to buying the 40/45 call spread or selling the 40/45 call spread. I don't think he mentioned Puts. Or am I missing your point?

Futures up probably on this:
News Alert
from The Wall Street Journal

China's gross domestic product rose 8.9% from a year earlier in the fourth quarter of 2011, slower than the 9.1% expansion in the third quarter, China's National Bureau of Statistics said Tuesday.

The increase was bigger than the median 8.6% gain forecast by 12 economists in a Dow Jones Newswires survey.

/ES- upside resistance in the 1310 area; Support at 1286. Technical resistance should be strong as it is the intersection of two trendlines.

stjeanluc………..they are talking a trillion Euros for the Feb 29 LTRO and i guess the FED is still standing there with its  bazillion BAZOOKA
the trade last week was buy into the European mkt for a rally and then sell it when NY opened.
wonder what the playbook has in store this week, but with a bazillion from the FED backing a trillion of fun money from the ECB who the fuck knows?
maybe 1245 for the S&P by the time 0930 est tomorrow? party like its your birthday

Fun in the oil patch. Now Iran is threatening its neighbors.

Good article on oil. At least I thought so.  Looks like we may have more opportunities to short oil.

/ES- check that- intersection of the trendlines is more like 1304-5.

looks like it is 6400 for the DAX at 3AM

everything is wonderful, in Mitt's own way………there is a politcal slogan.
i know, i know,  i promised, but really, i will shut the f— up

i love milos..nick the old four seasons hotel the habs..the bar at the ritz..first time i saw gretzky was at the old forum…

just sold the AUD/CAD again at 1.0540 which puts cost at around 1.06 plus some so if it gets there (1.0650) i think i may sell it again.

it is a very cool city………the french culture is a gift.
i love the outdoor rinks for pickup hockey, but have slowed down on that score. the river views are gorgeous. ritz in boston on Arlington was a place a went to once in a while when i lived there but liked the Oak Room at the Copley on Dartmouth
live here for now, but always liked the red wings.
i think the ritz was redone

SPARKY/ Its a type of doctrinaire attitude of unwaveringly left or right..its sad..it keeps the asshats in congress employed and the implicit understanding they have is to agree to disagree which insures  the further life of this fossilized corrupt system  ..these roots need extirpating..and frankly i don't care if its a republican or a democrat that does it..an alien landing would be fine..we should all be embarassed that we dont' react to  the game as it plays out day in and day out and then have a national vomit day into the refllecitng pool..the stench wouldn't be any less palpable than the one wafting over the potomoc now..from sea to shing sea

Phil regarding the above Euro post – that chart is missing probabilities for each outcome 🙂

Romney will likely win because he may be the only thing Americans can agree on this year.  Obama has not provided leadership, only management. As a consequence, Romney's politics won't matter.  Ron Paul has no chance. Obama could win if he catches a break; too close to call for now..  

00//I don't think there is a chance that Romney could win..the US will never elect a Mormon President..watch the droves of Christian right wingers stay home if he's the nominee..scary to believe but listening to people in SC at my club talk about Joseph Smith and his talking 'lizard"..I interjected "that lizard was actually a salamander"..I got tthe following response form a Caolinian Yale grad..'OK then Mike A FANCY LIZARD"..forget it..my friends who are serious Dems want him so badly..they want nothing to do with GIngie..

RORO/ 5 Arlington was my home in Boston..loved it!

Phil as always thanks for your help.Stupid me, I  have lost a few k playing the EK patent story..any wild option plays to get any of my money back? I always buy PREMIUM ! LOL

Holy smokes, what happened to the BDI?
It's fallen off a cliff! Is this dollar related only or what?

the only thing I'll say about Ron Paul, who's one of the more likeable republicans (I like how he handles himself in the debates), is he is too old. An effective president will be in term 8 years to get his or her work done, so it's not how old you are now, but how old you;ll be in 8 years. You can't age discriminate when you're interviewing someone for a job, but that's not the case when you exercise your constitutional right and duty go in the booth, close the curtain and pull the lever.
So Ron Paul will turn 85 in his potential 8th year. Reagan was 77 in his, and Reagan was definitely checking out near the end at that. (and read the link, Reagan makes a funny joke in there).

i meant 1350 for the S&P, ….not feeling so hot…….not far off with he DAX call
i remember that weird time……Clinton voted for it. 29 Dem Senators voted against. ….the politics is so divisive
The Iraq Resolution or the Iraq War Resolution (formally the Authorization for Use of Military Force Against Iraq Resolution of 2002

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