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Fixed Markets Friday – Greece All Better – Next!

The Greek debt crisis is over!

Again.  Well, for now.  Despite the "voluntary" participation of 85% of the debt-holders, collective action clauses (CAC) will be triggered to force other bondholders and a similar action in Argentina led to 10 years of lawsuits – so we have that to look forward to.  "The rule of law has been treated with contempt," said Marc Ostwald from Monument Securities. "This will lead to litigation for the next ten years. It has become a massive impediment for long-term investors, and people will now be very wary about Spain and Portugal." 

“Even if we band aid this Greek situation right now, they’re going to default down the road or write down 100 percent of the debt,” said Scott Wren, senior equity strategist at Wells Fargo Advisors. 

Now the European Commission has sent a team of experts to Spain to check its budget deficit data, according to Spanish website Expansion, and they will be greeted by a National Strike, scheduled for March 29th, to protest the austerity measures the EU is trying to enforce.  Greek bonds are already passing the 20% mark again so this "fix" has lasted all of a few hours and already we're seeing rates creep up in Italy, Spain and Portugal (Ireland can't even borrow money – at any price) and part of the reason is they just blatantly screwed over the last batch of bondholders and Credit Default Swaps have now been revealed as completely useless tools to protect bond investments – and part of the reason is Uncle Sam needs to borrow a record $227Bn to pay the bills for February alone:

While the above chart may look like a catastrophe to a casual observer, especially considering February is the shortest month of the year – others may be cheered by the thought that the US will never actually have to pay this money back, as Greece has now shown us all that the path to default is celebrated by global markets climbing to record highs.  So, if Greece's $450Bn default can get us to Dow 13,000 – imagine what the US's $16Tn default will do – I can't wait!  

We are waiting for the jobs report this morning but according to the Gallup poll, there aren't any.  Gallup sees 9.1% unemployment in February, up from 8.6% in January, which is the largest monthly increase in more than a year.  Gallup does not do "seasonal adjustments," so they won't match the "official" numbers, which is a good thing as Gallup shows that 19.1% of our population is underemployed – employed part-time and not counted by our Government as unemployed but not in those jobs by choice – it is simply all the work they can find.  

8:30 Update:  The Official Unemployment figure shows just 8.3% unemployment, with 227,000 jobs added in February and average hourly earnings up 0.1%, just 8.3% below the increase in the price of gas during the month!  Before you go celebrating this number, keep in mind that hiring more people for more money creates a demand for Dollars, the same Dollars the Treasury needs to cover February's $227Bn deficit or $100,000 of excess spending per job created!  

We're already thrilled as oil popped over our $107 shorting target (see yesterday's post) and has already fallen back to $106.50 for a gain of $500 per contract (so far) and gold dropped off our $1,700 line to $1,688, which may not seem like much but it's $32.20 per dollar per contract for $398.40 per contract there (so far).

As planned yesterday, we pressed our short bets into the "rally" and even shorted AAPL (again) by selling the March $535 calls for $8.10 and buying the March $550/535 bear put spread for $9.60 for net $1.50 on the $15 spread.  That spread will be cheaper this morning as it went the wrong way on us but, if the market does fail – it's going to be just as rewarding as our Wednesday bet was.  

TLT should also provide a good entry this morning and I like selling the March $114 puts for .50 and buying the March $115/116 bull call spread for .55 for net .05 on the $1 spread that makes 1,900% next Friday if TLT finishes over $116 – that's a fun way to go bullish on TBills and, as they say, you don't fight the Fed!  

I also like shorting CMG at $400 and the March $390 puts can be bought for $2 and they can be paid for by selling the April $435 calls for $2.80 so you make 40% if CMG simply fails to make it to $435 in 40 days and perhaps a Hell of a lot more if the are harshly rejected at $400 next week.  We need to find a new favorite short as GMCR finally tanked and FSLR already died so we need a new focus short and I'm liking CMG, which I intend to do a proper write up on at some point.  In Member Chat last night, I was reminded of my May 10th 2011 note to Members regarding GMCR:  

GMCR/Scott – I doubt SBUX would care about their bad accounting as long as what they do is clean (although, to some extent, it’s nice to trust your business partner). What I saw about GMCR this weekend was the new machines they sell are more money ($149 and $179) and one of the "features" is that they have a filter cup and you can put in your own coffee, tea or cocoa without buying the K-cups. This seems kind of insane but it indicates they are getting pushback, as I expected, on the K-cup pricing and they are trying to cover their tracks by front-loading machine sales revenues to keep the books looking good. No way would I ever go long on them and I still think, long-term, the shorts will pay off but when is the big question. They are like FSLR – there’s no real future in them but they are a great tool for the market manipulators to herd the sheeple in and out of constantly generating fees and spread revenues over and over again – who wants to give up on that?

Good point Lol – SBUX must have known about the issues. All they are doing is branding their coffee in K-Cups and selling the machines – not like they are in partnership with GMCR.  

It took a while but SBUX put the knife in GMCR last night and has now become their biggest competitor, killing GMCR and sending them down 20% overnight while SBUX moves on to record highs, stealing a little of that Momo magic for themselves.  

My last trade idea of the day for Members was a very aggressive short in the Nasdaq, using the SQQQ March $12 calls at .55 and offsetting the cost by selling the April $12 puts at .70 to create a net .15 credit spread into the close.  We had previously taken a fun play on QQQ, buying the TODAY $64 puts for .07 as the Nasdaq spiked up into the close so, if the Nas tumbles today, we are going to be very happy campers.  

So we had very bearish expectations yesterday as we felt that Greece could not be fixed enough and the US could never hire enough workers to fill the gaping hole in our economy that the indexes are attempting to ignore and soar over.  Like Evil Knievel, Homer Simpson and other famous would-be chasm jumpers – the attempt looks very, very good – until it falls short, and then we all discover how far down gravity can take you

Hey, maybe the markets will stay up and maybe the S&P will hold 1,360 and maybe we'll try to get bullish over the weekend – but not today…

Have a nice weekend, 

- Phil

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  1. Oil Lines

    R3 – 108.82
    R2 – 108.01
    R1 – 107.46
    PP – 106.65
    S1 – 106.10
    S2 – 105.29
    S3 – 104.74

    The lines have tightened greatly today…

  2. Ok, HuffingtonPost is really addictive… 
    One Out Of Every Ten Wall Street Employees Is A Psychopath

  3. "The rule of law has been treated with contempt…"
    The rule of law has limited application to sovereign governments and to legislators. The United States was a signatory to the UN Convention Against Torture and had previously put Japanese officers on trial after World War II for crimes that included waterboarding which was regarded as torture. However the Bush Department of Justice decided that waterboarding is not toruture, even though the whole world thought the law was established. Apparently the Obama regime has concurred. If they did not, they would be bound by the convention to put the alleged torturers on trial.
    Only last night CNN was running on and on about the retiring governor of Mississippi, Haley Barbour,  having pardoned several prisoners who were working as trustees at the Governor's mansion when he lived there. According to CNN, which presented an admittedly one-sided account, the Mississippi law that specifies how pardons may be issued specifically states that certain processes must be followed during the course of issuing pardons, processes which were ignored or by-passed. However the Mississippi Supreme Court has ruled that the pardons were legal and that they stand.
    The rule of law is what the executive branch and/or the Supreme Courts of various legislatures and nations say it is, even if everyone always thought it was something else. See Nineteen Eighty-Four for further clarification. If a person or entity does not agree, they either have to obey the law or overthrow the said government or court at the ballot box or by other violent means. Theoretically even the American Declaration of Independence is reversible, though this is somewhat unlikely due to subsequent developments in the territories covered by the Declaration.

  4. PP for today.  Prognostication for the market….up.

  5. TLT/ Phil – i hold a 115/116 BCS on TLT that expires today. What your advise? Wait or roll? I see USD getting stronger so i still have a chance

  6. One Out Of Every Ten Wall Street Employees Is A Psychopath
    This is probably sort of true, but having worked with psychiatrists, courts, prisons, etc. for over 30 years, I would say that psychiatric diagnoses are only valid in context. A diagnosis of "psychopathy" (although the term is obsolete in the current official  manual for diagnosis, so has no legal standing) is not much use for a court defense as it will not get you a lesser sentence, though you might be able to claim that you grew up bad, because your parents made you that way. It is just a layman's way of saying a person has no conscience. But so what? Most people only do right because they fear being punished, and do bad things if they think no one will notice. You might just as well say that one in ten of professional soccer players are psychopaths, (though this might be an underestimate). In any competitive field,  the winners will probably be the most competitive, not the most sporting. BTW, it is interesting that although professional soccer players often commit acts of physical aggression on other players, or even team mates in training, kicking, elbowing,  or tripping a referee is almost unheard of.

  7. Dollar has gained back ALL of yesterday's losses.  Market up!?  All is well.

  8. “I Love Ya, Man” – Where have ye gone, IFlan? Who shook you up this week? Lol. I follow your AAPL trades in smaller batches (I’m not so comfortable with pure directional plays – but you’ve got the touch…) I found myself improperly in uncovered April 500s before this weeks event. Improperly because I don’t like to have to pay minute to minute attention. But during the mini-drops during and just after Cook spoke, I heeded your call to buy on dips. And after the dust settled, I just sat tight to get out even or at my preset gain goal. Why? Because despite the naysayers – here or elsewhere – IMHO that lowkey press event demonstrated that Cook et al are rock-solid comfortable with where they are – no “substantive” flash required. All the numbers reported and even the modest I3 improvements (and the announce-to-available timeline with its affect-on-stock price history) – to me at least – and the markets I guess – suggested, well, to be crass: 530 is in the rear view mirror. While I’m trading AAPL in a slightly different way than you, much is based on your premises – don’t balk, my brother!

  9. Good morning, still nothing new


    IWM    78.34,  78.66,  79.10,  79.29,  79.56,  79.82,  80.17,  80.46,  81.06,  81.41,  81.69,  82.00  and  82.41

  10. Pharm/Dollar

    I was thinking the same thing. 
    This market really is convoluted.  It's pretty much evolved to the following:

    1. Bad News = Market Rally
    2. Really Bad News = Bigger Rally
    3. Good News = Market Rally
    4. Better Than Expected News = Market Rally
    5. Not as Bad as Expected News = Market Rally
    6. Dollar Drop = Market Rally
    7. Dollar Gain = Market Rally
    8. The Bernak Speech = Market Rally
    9. Kucinich gets Fired = Market Rally
    10. Good Jobs Report  = Market Rally
    11. Bad Jobs Report = Market Rally
    12. Good Bond Auction = Market Rally
    13. Bad Bond Auction = Market Rally
    14. Nancy Pelosi has decent Bowel Movement = Market Rally
    15. Romney lies in a Political Speech = Market Rally
    16. Syria wipes out a neighborhood = Market Rally

    I could go on…..but what's the point.  BTFD's.

  11. Is anyone getting weird sounds while on this site.  Sounds like a cartoon in the background?

  12. No comment lflan!

  13. No option expires today!

  14. No option expiration either.

  15. exec/weird sounds, same here, it's the hulu video at end of Phil's post.

  16. AAPL port:   Sold to close 5 of the March 17 555 puts for 12.15 and bought to close 5 of the march 530 puts for 2.20, thus reducing my DSP on the account to 1/2 what it was.   Stop laughing stj    !!!!

  17. AAPL/Iflan – I promise to revert to my basic member fox hole after this post. In as much as I play AAPL around your thoughts, iflan, beyond very conservative bull put spreads, I prefer, 30% return DITM bull call spreads over 80% and the like. For example, but not looking at numbers now, even tho it looks like your 500/550 will cash, I might have set up a 470-520 (for my comfort level) – what say ye or any of ye?

  18. Phil – You had a comment yesterday about the TSL calls that we DD and to take out 1/2 at $1.34. But we bought them for $1.34 (not the average cost – I list the price we trade at). I am guessing we are keeping them as we rolled a $0.75 loss from the 7 calls making the average cost more like $2.00.

  19. Oil – not so excited about oil at 107 with the dollar up too..

  20. NF**X  I absolutely agree.  You must always set up your trades so that YOU are completely comfortable with them, not anyone else.  Phil presses this home all the time.   That's why I don't advocate following exactly any of the trades posted on our board unless  you have reviewed them and deem that you are yourself quite comfortable with the trade.

  21. Phil,
    Thanks, I sold 1/2 the GMCR puts bought yesterday for a nice profit. Was hard to sleep last night after seeing the huge drop AH, and I was having crazed lotto type fantasies.

  22. Pharm,
    DEPO reported better than expected earnings & revenues.  Dropped like a rock.  Good time to DD?

  23. I revised the calculation for the BCS and I am now using the cost basis in relation to the current value of the BCS to calculate the profit percentage. I was previously using the potential value of the BCS but that didn't take into account the cost. But that means that some targets are not attainable. For example, a double of the 85/89 FAS BCS would be over $5 but it's a $4.00 spread. There is no ideal way to display this, but the new way is more accurate. I am of course open to suggestions!

    Phil – I added the P&L calculation.

  24. stjeanluc Or Phil FAS what next? Closed my 85/89 Bull call for max profit Some what not on the record of 25K Any recommendation after 10AM weekly or Monthly thanks

  25. Good morning!  

    Wheee on oil, all the way down to $106.06 that time.  Now back at $107.50 for yet another re-load opportunity but shorting oil into the weekend is always a dangerous game so not likely to be as much fun as yesterday was.  

    Dollar looking mighty at 79.95 and why not – everyone needs them.  You need them to buy oil, you need them to buy gold, you need them to employ 227,000 additional workers and the Treasury needs 227,000,000,000 of them next month to fill this month's deficit.  That's a lot of demand for Dollars!  

    Poor Euro got whacked down to $1.312 and the Pound is $1.5712 as the BOJ finally switches sides.  The Yen is loving that, back over 82 at 82.26 and I would bet they fight hard to defend that 82 line so don't expect the Dollar to give up much ground today.  Pretty disappointing that oil hasn't gone lower – we'll have to wait and see. 

    Don't forget next week is Treasury Auctions on Monday, Tuesday and Wednesday and the Fed decision on Tuesday afternoon and, through it all, they want a strong Dollar.  That should be good for TLT (see trade idea in above post) and bad for oil ($106.83), gold ($1,681), silver ($33.27), copper ($3.80), natural gas ($2.28 – can it really go lower?) and even gasoline ($3.30) so I'd want to fade a pump into the weekend anyway.  

    The FTSE is down 1% and France and Germany are up about 0.2% and we're up just a little at the open.  Oil just crossed $107 again but, as I said, I'm not as enthusiastic today as I was yesterday unless the Dollar gets over 80 (doubtful) but still we can play that $107 line or $107.50 with very tight stops (/CL).  

    In our $25KP, we added more April $40 puts and now is a good time to roll them to the April $41 puts for .45 (no more).  

    So all hail Obama the Job Creator and let's see what happens today!  


    At the open: Dow +0.25% to 12940. S&P +0.24% to 1369. Nasdaq +0.15% to 2975.

    Treasurys: 30-year -0.21%. 10-yr -0.11%. 5-yr -0.04%.

    Commodities: Crude +0.11% to $106.69. Gold -0.9% to $1683.45.

    Currencies: Euro -1.06% vs. dollar. Yen +0.86%. Pound +0.69%.

    Market preview: Stocks look set to open modestly higher (S&P futures +0.2%) after U.S. payrolls increased more than expected, and relief that Greece secured enough debt-swap commitments to restructure its debt. The news was tempered by theU.S. trade deficit, which widened to its highest level in more than three years. Treasury prices tumble; the dollar rises sharplyLater: wholesale trade.

    Feb. Nonfarm Payrolls: +227K vs. consensus of +215K, +284K (revised from 243K) in Jan. Unemployment 8.3% vs 8.3% expected. Average workweek unchanged at 34.5 hours, inline. Average hourly earnings +0.1%.

    More on the Nonfarm Payroll report: The labor force participation rate rose to 63.9% (63.7% previous). The employment/population ratio rose to 58.6% (58.5%). Big gains in professional and business services (82K) and temporary help (45K). Construction and government employment were flat. December employment revised higher to 223K (203K).

    The dollar is moving sharply higher against most major currencies following the jobs report. It's the opposite of recent market action where, perversely, strong U.S. economic news saw the greenback drop as money moved into "risk" assets, of which the euro, the pound, and the aussie are now thought of. The euro -1.1%, pound-0.7%, aussie -0.4%, yen -1.1%UUP +0.8% premarket.

    Jan. Trade Balance: -$52.6B vs. -$49B expected and -$50.4B (revised) prior. Exports $180.8B. Imports $233.4B.

    "There will be plenty of optimism in the corridors of power around the eurozone today," as Greece has defaulted – something policymakers have spent 2 years trying to avoid – without roiling the markets. A look inside the numbers finds Greece lowered its debt load by €105.4B, but new debt of €93.7B was issued (€58.7B to Greece, €35B to the EFSF) to do it! A "pyrrhic" victory indeed.

     "Greece is a completely unique case," says German finmin Schaeuble following a teleconference with other EU ministers, and the country will enforce CACs without exception. The deal frees up €35.5B in immediate assistance, with the ministers set to approve the rest of the package next week. The eurozone, he says, is prepared for any ISDA decision on CDS.

    Welcoming the news of the Greek debt swap, Eurogroup President Juncker says the conditions are in place to being disbursing funds for the 2nd bailout. (statement)

     "A page in the financial crisis is turning," says French President Sarkozy of the Greek deal. "Today the problem is solved." Politicians will be politicians, but markets have a way of making people wish they had kept their mouths shut.

    More FREE RUPEES!  India's central bank unexpectedly cuts its cash reserve ratio by 75 bps to 4.75%, saying the move will inject 480B rupees into the banking system. The announcement came after markets were closed in the nation.

    India's 75 basis point CCR cut - sharper than the expected 50 bps and coming several days ahead of a central bank policy meeting - raises expectations the bank could cut its benchmark rate next week. A slowing economy and falling inflation have rate cuts on the agenda, but few had expected them to start in March. EPI +2.2%.

    Boeing (BAstretches out its lead over Airbus (EADSY.PK) in large plane orders (YTD) after its European rival only lands six for the month of February. After only two months, Boeing has booked more than 50% of the gross order Airbus expects for all of 2012.

  26. Dollar lines are:

    S3 – 80.17
    S2 – 79.93 (we are here)
    S1 – 79.58
    PP – 79.34
    S1 – 78.98
    S2 – 78.74
    S3 – 78.39

  27. Is anyone shorting Oil here at 107.50?  

  28. Debt – here is a quote from Bruce Krasting from his article relating to the CBO and DC cooking the books "If the $2.65T of debt identified by the CBO[loan guarantees] is added to the FNM/FRM debt ($6T), the Trust Fund IOU's ($4.6T) and the debt held by the public($10.4T), it comes to $24T.  That would put the true debt to GDP at 160%." 

  29. What the hell is going on with oil!?!?!? Dollar up huge and they have to Roll their contracts soon, how are these pieces of sh!t keeping oil so high!?!?

  30. New here.Re : TLT. I have a basic understanding of selling puts/bull call sreads however I can't figure out the math behind the premise that if TLT finishes over $116 it makes 1900 %. Can someone clarify. Much appriciated

  31. Burrben     We are short with everything we have.  

  32. Volume at 10:10 just 16M on Dow.  

    1 in 10/Burr – Underestimating, I think.  Depends on definition, of course.  

    Viva la Revolution JMM!  

    TLT/Dpast – Today?  I'd take out the $116s for .07 and hope for the best.  Very strange that Dollar is crossing 80 and TLT is down, hopefully it reverses and, if not, you can roll to next week for .60 but don't let that get away from you.  Once you roll, the next week $116s are .60 so not much harm in the transaction with several chances to catch a pop.  

    I'm a little concerned they're only pumping up the Dollar so they can tank it later for a big stick.  

  33. Dollar at 80… That was a tough nut to crack last month!

  34. edgewater / 1900% — Profit/Cost = .95/.05 = 19 = 1900%

  35. I just made $4000 the easy way.
    I have an AMX $20/$22.50  bull call spread and noticed that both legs of the spread were listed at the same price in my account. On checking I found that the bid/offer spread for the $20s was $3/$6.60, a bit ungererous, so I submitted a bid to buy one contract for $4.60, and went back to review my holdings page and found I was $4,000 better off.

  36. Question for those smarter than myself – If Australia's exports are down along with China, Japan, and the EU, how is it that our trade balance is as bad as it is?  Shouldn't it have been better? 

  37. Feel's to me like they want 108 on Oil today…   Just sayin..

  38. Restickulous!

  39. Volatility Study / Peter D – If you could explain what you mean by "peak" volatility I could see what I can do. 

    Phil had an interesting suggestion this morning and I will try to implement something over the weekend – track stocks that are outside their volatility envelope using prices going back to my previous spreadsheet. On the weeklies it would be interesting to do that every day but maybe weekly on the monthly options. I'll see how involved that is.

  40. Convoluted/Exec – Good guidelines.  

    Sounds/Exec – Auto play was on the video, I fixed that. 

    Wow, they are jamming oil to the moon, Silver flying too.  Oil coming up to $108 despite Dollar 79.97.  Someone is playing major games.  Still no trading with Dow at 22M, perfect environment for manipulating indexes.  Gold back to $1,700 – let's see if that sticks but over $1,700 on gold is a good reason not to short oil.  

  41. Phil / jamming — Think they'll plunge the $ to get the majors over resistance?

  42. FAS Money – The way this market is jumping, cash is tempting but let's see how the weekend goes. 

    IWM Money – Same 

    $5KP – A loss?  Damn.  DMND up today, TSL just sucking, TLT I'm not really worried and the Dow is not looking so strong so nothing to change here.  OK to keep TSL then, I thought that was our average cost so we'll make a note that we're looking to get 1/2 out at $2.  

    $25KP – Why did we cash out those GMCRs???  Nothing to change right now, maybe later.  

    Meanwhile, there's $108 on oil.  Dare they go for $108.50?  Gotta start shorting here (/CL) and take the losses, even though it is the weekend as this is simply ridiculous. . 


  43. Thanks for getting totals back StJ!  It's a really useful spreadsheet now.  

    FAS/Yodi – You closed that at $4?  That's great.  Well if StJ books that officially, I'd want to put in the April $94/99 bull call spread at $2.35 as we're still protecting the short $88 calls from burying us. Since we owe $6 there, it makes sense to add a hedge that pays us $3.65 if FAS keeps going up and, if we go down, then we make our $2.35 back off whatever the $88s lose – sort of a balancing act played out over time…

    Nice move back to $107.80 already so, like yesterday, 1/2 out here and your new basis on the other half is $108.20 and you set a stop at $108.05 and you can't lose off this cross.  

  44. 25KP / Phil – Man, it hurts to see these GMCR puts at close to $12 when we sold them for $2.60… But who could have predicted it? 

  45. Phil
    What's your opinion of Doug Cass?
    He bought Mar SPY puts right after the jobs report and just doubled down
    hope I don't get in trouble for posting his stuff
    Mar 9, 2012 | 10:18 AM EST

    Stock quotes in this article:
    I am buying SPDR S&P 500 ETF Trust (SPY) month-end $137 puts at $1.85 now.

    Position: Short SPY common; long SPY puts
    Mar 9, 2012 | 8:39 AM EST

    • The good news has already been discounted in equities.

    Nonfarm payrolls were in line, very close to the whisper of up 230,000.
    My strategy, stated simply, is that the good news has already been discounted in equities, and I am adopting a sell-on-the-news tactical approach as I short more SPDR S&P 500

  46. FAS / Yodi – I see the 85/89 spread at around $3.50 now. When did you sell it for $4.00?

  47. GMCR/stjeanluc
    This man could've predicted it,
    Raj Rajaratnam

  48. Anyone interested in a Fisker Karma?
    Consumer Report's bought one and it BROKE DOWN in the first couple miles!
    <blockquote>Our Fisker Karma cost us $107,850. It is super sleek, high-tech—and now it’s broken.

    We have owned our car for just a few days; it has less than 200 miles on its odometer. While doing speedometer calibration runs on our test track (a procedure we do for every test car before putting it in service by driving the car at a constant 65 mph between two measured points), the dashboard flashed a message and sounded a “bing“ showing a major fault. Our technician got the car off the track and put it into Park to go through the owner’s manual to interpret the warning. At that point, the transmission went into Neutral and wouldn’t engage any gear through its electronic shifter except Park and Neutral.

    We let the car sit for about an hour and restarted it. We could now engage Drive and the same error message disappeared. After moving it only a few feet the error message reappeared and when we tried to engage Reverse the transmission went straight to Park and again no motion gear could be engaged. After calling the dealer, which is about 100 miles away, they promptly sent a flatbed tow truck to haul away the disabled Fisker.

    We buy about 80 cars a year and this is the first time in memory that we have had a car that is undriveable before it has finished our check-in process.

    Building an all-new car company from the ground up is a monumental challenge, especially for a car with innovative drivetrain technology like the Karma. Designing, engineering, certification, manufacturing, and distributing an all-new car pose giant hurtles for a start-up company.

    We encountered other problems with a Karma press car that visited the track for a few hours, and we have heard of problems at press events. In addition, we see that some owners are experiencing a variety of issues, as evidenced by forums such as</blockquote>

  49. Do you think the ISDA decision will impact the market? Or everything is priced in?

  50. stjeanluc
    FAS I got 3.65 as on my calculation max profit , I know 4 on paper but you know the bird story why wait an other week.
    Phil's play looks good if we still go further up however I feel market is very slow 20 to 80 pt movement meaning every body is carefull standing by. Normally I like to sell a put to ease the pain but it is very questionable at prensent .

  51. st jean if i could undo ten trades in my life time i would have 5x the liquidity i have..those are the one's we learn from and still never forget;  trading pain morphs toward the myth of perfectability almost always…i bot gmcr in the teens 7500 shares sold it right after the split..there's one i would like to have back and thats NOT even in the top ten lol!

  52. FU EDZ TZA FAZ!!!!

  53. rustle……  This man DID predict it, and cashed in on it.  What did HE know that we didn't?    :)

  54. Trades / angel – I agree and I don't look back on the missed opportunities as there are more in front anyway! That was one of the first rules I learned in trading – don't dwell on missed opportunities. It's one of the toughest rule to follow though!

  55. GMCR / Rustle – Well we were all bearish on them but yesterday was a bit violent! In any case, we made our money so that's a good thing now matter what. Like Phil says, anything over 20% profit is a happy accident and we made 75% on the second set of puts!

  56. Debt/Ink – Well, if you're going to look at it that way, of course it sucks.  I think I prefer the Government delusion so I can sleep at night.  

    Oil/Jrom – They have 8 more trading days on this contract and only 189Mb left to dump, that's not a lot of pressure:  


    Click for
    Current Session Prior Day Opt's
    Open High Low Last Time Set Chg Vol Set Op Int
    Apr'12 106.87 108.06 106.13 107.88 10:44
    Mar 09


    1.30 143789 106.58 189298 Call Put
    May'12 107.36 108.50 106.62 108.32 10:44
    Mar 09


    1.26 43364 107.06 206042 Call Put
    Jun'12 107.81 108.95 107.14 108.95 10:44
    Mar 09


    1.39 32479 107.56 161806 Call Put
    Jul'12 107.90 109.32 107.57 109.32 10:44
    Mar 09


    1.36 16307 107.96 95652 Call Put

    The funniest thing about this is:  


    Dec'15 94.52 94.62 94.31 94.50 10:26
    Mar 09


    0.20 511 94.30 28096 Call Put

    That's trading TODAY along with the others!   If you buy a Dec 2015 contract for $94,500 and short a July 2012 contract at $109,320 you have a very good chance of making some money but the rolling costs are what makes it questionable (for those of us not able to move the market at will, that is).  

    Welcome Edgewater!  TLT was off the cash .05 on the spread and the $1 payoff, which is up 19x.  

    Nice channel on oil between $108 and $107.80 like yesterday, only $1 higher so figure same bot and we had a nice .75 drop from 11:30 to 1:30 so let's see what happens when the EU closes.  

    $4,000/JMM – Very nice!  Good job paying attention.  

    Trade balance/Ink – Mostly it's oil that kills us.  

    You said it Rain!  

    Plunging the Dollar/Rain – That's just something I'm worried about but Pound and Euro are super-weak so the non-conspiratorial view is more jobs = less Fed, per the formula they gave us (and inflation is over their target too) and, as I said above, many demands on Dollars driving them higher so, if the EU and the BOE finally realize that we are NOT going to be joining them in the money printing frenzy – well then their currencies are not worth where they are, Greece fixed or no.  

    GMCR/StJ – Unfortunately, I did predict they'd fill that gap but we were down $15K at some point and we could not afford to gamble away a winner.  Just unfortunate timing – had we been up $15,000 or even $5,000, I would have been happy to let those run as we already took 1/2 off the table up 50%.   As it was, I was hoping they would bounce back to $65 and give us a reentry on Greece is fixed news.  Oh well…  

    Doug Kass/Ban – Those are 3/31 puts, not a bad idea but not doing so well at the moment.  He's got the same line of reasoning I do so perhaps I'll have to go find him and have a few beers later as the markets are not buying our premise so far…  

    Fisker/ITrade – Makes you appreciate how good TSLA is.  It's not like anyone can get those things right.   To some extent, I give all these guys a pass as they've had 100 years to work the kinks out of internal combustion engines but I would not, at this stage, want to rely on an all electric.  TM has it right with hybrids – just get the mileage up to 35 on a real-size car and that's a very good start for now.  

    Gold now shortable below 1,710 for the brave (/YG).  

  57. FAS / Yodi – Thanks, that makes sense. I would tend to agree on cashing in using this morning excitement.

    25KP / Phil - Would it make sense to roll that 85/89 BCS to the one you proposed earlier (94/99) given the fact that the best we can get for the current one is about 3.60 now? We are at 90% of potential profit.

  58. ISDA/Dpast – Apparently not, or no one seems to think so.  I think next week you'll see bond prices flying in Europe and then we start to have a whole new round of crises as all their lovely math goes out the window.  No country is really paying people enough to gamble on bonds.  They are saying, flat out, that 120% debt to GDP is not sustainable but Japan is at 220%, Ireland about 180%, Portugal, Spain and Italy around 120%, US 110% – So Greece, offering 20% bond rates turns out that that in no way came close to compensating investors for the risk they were taking and now we think they are going to turn around and lend these countries Trillions of Dollars for 10 years at 3%?  MADNESS!!!  

    FAS/Yodi – Well, in the $25KP, we already sold the short calls.  That's what we're protecting with the bullish spread.  We were also lucky to sell a $75 put ages ago and that one should expire worthless.  

    At least oil is well-behaved at the lines.  Very slowly crept over $108 so plenty of time to get out and wait for the next line – PATIENTLY! 

  59. To follow up on the volatility study I did last week for stocks that have weekly options, this weekend I will update the list with prices at the close of today and see how many stayed within the predicted prices. This should make for an interesting study for strangle sellers!

    I'll do the same thing for monthlies after expiration as well. I am guessing that 12 months from now we should have some good data.

  60. Phil FAS yes I am still holding the Mar 78put thinking it will go worthless

  61. What is up with oil dollar above 80 and oil over 108

  62. This is kind of surreal with oil up $2 while the Dollar is up 1%.  

    GMCR/Pharm – That was a good trade.  Kind of like our CMG short – maybe we get lucky there?  

    FAS/$25KP, StJ – Yes, I'm all for making that that roll. 

    Actually, with oil, that was the same spike just over the line we got yesterday at 11:30 so I am not deterred from re-shorting under $108.  

  63. $25KP / Phil – OK, I'll book the roll from the FAS Mar 85/89 BCS to an Apr 94/99 BCS in the spreadsheet. 

  64. The six world powers that have agreed to resume negotiations with Iran over its disputed nuclear program issued a blunt request on Thursday that the Iranians allow international inspectors unfettered access, most notably to Parchin, a large restricted military complex that the inspectors suspect may house a testing chamber for explosives used in atomic weapons triggers. – New York Times
    The Pentagon is preparing an array of military options for striking Iran if hard-hitting diplomatic and economic sanctions fail to persuade Tehran to drop its nuclear ambitions, Defense Secretary Leon Panetta told National Journal in an interview on Thursday. – National Journal
    The U.S. military is planning for the possibility of strikes against Iran and Syria using a mix of conventional and cyber weapons as tensions in the region continue to rise, according to senior Pentagon officials. – Defense News

  65. Phil / Electric — We've had over 100 years with the electric too but not in the numbers of internal combustion engines. Tesla also has design flaws and the cars can be brciked by letting the battery go dead. I still think CNG cars before reliable electrics since they use that time tested internal combustion engine and the oil and car companies are more likely to be on board.

  66. if market thought economy was gaining traction we would see a +20 bps move up in one day…if ake keeps weakening hedgies might freak out this afternoon.

  67. Phil SWKS a buy write with teeth. bought stock in Nov 11 at 19.00 stock went down to 14 in Dec so I diceide not to lose on the deal I sold the Aug12 17 caller for 2.40 So if called I at least would not lose on the stock. Well today that stock trades for 26.79 and the caller Aug 17 is up to 10.30 yes still some premium but sadly to say let the stock go. What you think? Thks

  68. So are they just loading up on oil before they get their guy to blow up a refinery or pipeline??…Phil any pictures of their guy heading out wearing a GS fleece with THT in hand?

  69. FAS bought 94/99 Apr for 2.35 holding back on selling putter

  70. Thats …TNT in hand

  71. I guess something to pay attention to in future earnings:

    These estimates are always to be taken with a grain of salt but, if UBM TechInsights is to be believed, Apple is cutting into its precious profit margins to keep the price of the iPad flat. According to the research firm, the total cost of components in the 16GB 4G model is around $310 — not including assembly and shipping. With a final price of $629, Cupertino is pulling in about a 51 percent profit, a sizable drop from the estimated 56 percent profit margin on the similarly specced iPad 2 at launch. A large chunk of that increased cost of production is made up by the new retina display, which is estimated to cost around $70, and the LTE chipset, which UBM priced at $21. In contrast, current pricing on the panel in the iPad 2 and its 3G radio rest at around $50 and $10, respectively. We're sure Tim Cook isn't losing any sleep though, there are plenty of other ways to make up that lost dough — like selling more iPads.

    The lawsuit about the ebooks should not have a big impact on the bottom line for AAPL as these sales are a drop in the bucket. It's more a PR problem! But that could impact the stock price as well, but I doubt in a durable fashion.

  72. mrmocha
    AAPL fall guy that is my rule here in MX and government, never run around with a fat gold chain around your neck

  73. Looks like they missed the oil pipeline but hit a nat gas pipe instead! :)

  74. JRW – The Military plans for the possibility of everything. I think Phil even posted awhile back on the planning for mass internment camps in the US due to protests, etc. I can tell you from my time here Kabul that we are making preparations to REMOVE $45BN of equipment from this country, not shift it to the west to potentially attack Iran.  I dont think we call in an air strike for at leats 12 mos b/c we are not positioned right. We'll see though…I guess they will continue to use it to hold up oil prices…   

  75. HOV recovered well 2.92

  76. Morning Phil
    I bought some TZA yesturday at $19.60 and today its 18.5 should i just sell and take a loss. i was banking on a top, but i dont want to loose a lot in this either. i know that not how we do business here you have taught us better :) its just a lazy trade :)
    so what you think ?

  77. 25KP / Phil – Looking at the XRT position, something strikes me as funny with prices of options looking at rolls. Given the fact the XRT has risen $8.00 (or 15%) in the last 10 weeks, how come we can only roll even (small credit) our 55 calls only up about $4 to the 59 by Jan 13. That doesn't show great confidence in the current run!

  78. Looks like AMZN did take a hit off the TXN report but BKS not affected at $13.46.  Makes for an interesting short here with the April $13 puts that can be bought for .90 and offset with the short April $14 calls at .82 for net .08 on the puts.  

    FAS/Yodi – I don't see XLF falling too far.  I'm thinking $14.50 next week.  

    Iran/JRW – So same old BS?  

    CNG/Rain – I think that would be nice too.  Let's do SOMETHING in this country besides sit on our hands until the pumps run dry!  My solution for electric cars is simple, standardize the batteries on the cars and make it so they slide out at service stations and then you just pull up to a service station and they switch your dead batteries for charged ones and you zoom along on your way.  The "refueling" charge will pay for the rotation of the batteries over their life-cycles and they can be better maintained, serviced and ultimately disposed of by turning their care over to professionals and, of course, it allows us to go all electric or nat gas and electric without completely disrupting our gas station infrastructure.  

    $106.75 is what I'm hoping for on oil, based on yesterday's 11:30 to 1:30 dip.  As long as Dollar is over 80, I'm pretty confident we can get there.  

    Weakening/Angel – Well this is just 34M on the Dow coming up on noon.  Clearly no one is buying this "rally" and that's with Greece all fixed.  If not now, when?  

    SWKS/Yodi – You have the stock $19 and sold the Aug $17 calls for $2.40 and now the stock is $26.78.  You were wise to cover but if you next time set 25% stops on 1/4 and 50% stops on 1/4 and 75% stops on 1/4 and 100% stops on the last Q at which point you can re-cover with higher strikes, I think you'll have a lot more fun with these.  As it is, you stand to lose the stock at $17, where you'd like to still own it, right?  So what possible harm could there be in selling the 2014 $18 puts for $3?  Then you can cash the stock ($26.74) and you have your $3 from the short puts ($29.74) and you can buy 2x the 2014 $20/30 bull call spreads at $4 so you STILL have $21.74 in your pocket and now you can roll the caller to 2x the Aug $24s (now $5) for about even and now you are $4 in the money to your callers with another 16 months to roll them (and again, you can stop 1/4 at $6 and 1/4 at $7 and 1/4 at $8..) so you stand to make another $8 on top of the $21.40 in your pocket if SWKS finishes between $24 and $30, even if you don't get lucky on your callers in between.  

    Rent-A-Rebel/Sage – I think that may be the reason we get this 11:30 sell-off.  I think they expect an event at the EU close to spike oil and, when they don't get it, they sell off and then roll us back up expecting an event at our close. 

    Meanwhile, $107.50!  

    AAPL/Mr. M – That's what I was thinking.  

  79. @Iflantheman
    Can't remember for certain, but I think it was you who made mention of a Petsmart bcs prior to earnings announcement. about ten days ago.
    If so, thank you very much, if finally paid off.

  80. Rent a rebel…as fdar as I know Dick Fuld is still unemp[loyed perhaps he can light the match

  81. TZA/Micro – The fact that you ask that question indicates you are not scaling in and that's a bad thing.  Never assume you are right on a trade.  This one is down 5.6% and you are already worried?  Then why on earth are you playing with an ultra-etf in the first place?  It's clearly a coin flip whether the RUT goes up or down 2% and moves your triple-ETF bet up or down 6% and the rules of your game is down 6% and you take the loss but up 6% I bet you don't take the gain so it's not even a 50/50 bet since you won't be satisfied unless you either get incredibly lucky or incredibly broke.   So I think if you intended to be short on the RUT, then be short on the RUT.  As to the trade, I would have sold the April $16 puts for .50 and bought the March $18/19 bull call spread for .45 so a net .05 credit on the $1 spread and, if TZA drops $2 (a 4% rise in the RUT), then that would make the $16 puts about $1.40 (current price of the $18s) and I would roll those down to 3x the $14 puts (probably .50) so my entire bet would be that TZA doesn't fall $4.50 (24%) by April expiration, which would be an 8% move up in the RUT to 885 and, of course, if you even THINK the RUT can go to 885 – what the hell are you doing buying TZA in the first place?  

    XRT/StJ – I don't see how anyone can be confident at this level.  There is just no way to support $60.70 so they are a great current short but who knows how long this game will continue – so we just roll along until the music stops.  

  82. Phil / batteries — I agree with standard swappable batteries. Unfortunately, there are too many competing battery techs and companies out there for it to happen any time soon. It is also questionable whether the economics of battery power have the advantage vs hydrocarbons when looking at the big picture (at 30,000 feet). Very much paralleling the ethanol vs hydrocarbon argument. I think CNG will get to 10% of the S curve with the current adoption rate by government and business well before battery tech will get its 10% through retail adoption and tech competition.  Especially with Obama finally recognizing nat gas as a viable alternative to gas and not just another hydrocarbon to be banished.

  83. Phil / dry — Oh, and if the pumps DO run dry, you can bet CNG will be the cure over batteries since it becomes a bootstrap problem at that point.

  84. Oil might be done at $107.50 for now, just below it at $107.45 and would be really dumb to give up these gains. 

  85. WTF CMG??? 
    Is that Mofo ever going to go down?

  86. I will take me scolding like a man from you Phil i know better then that :)

  87. Pharm – DCTH is one i have on my Pharmboy watch list. Is it going down forever?

  88. SCO/Phil – i'll be lookign for the 1:30 dip… i have some SCO April 32 puts at net $2.98. with gold up, dollar high etc, would you be more inclined to cover with selling April 33 puts (or March even?)  or just closing out before weekend on whatever dip may get today…?

  89. Phil,
    On TZA, how do you like a longer term play selling the July 16 puts for $1.82 to buy the April 18/21 BCS paying $2.07 which leaves a $0.25 debit against a $3 spread?
    Thanks in advance

  90. DD on DEPO.  Not yet. Maybe selling puts a few months out.

    DCTH -  I have no idea with them.  I would continue to watch.  I am out of them.

  91. the all knowing euro (AKE) is LOVED my the Magical Sloppy Buyer!

  92. 11:00 AM On the hour: Dow +0.4%. 10-yr -0.19%. Euro -1.21% vs. dollar. Crude +1.19% to $107.84. Gold +0.82% to $1712.65.

    11:46 AM European shares close mixed following the results of theGreek PSI. Stoxx 50 +0.2%, Germany +0.7%, France +0.3%, Italy-1.3%, Spain -0.2%, U.K. +0.5%. The euro falls sharply vs. the dollar,-1.3% to $1.3105

    12:00 PM On the hour: Dow +0.36%. 10-yr -0.19%. Euro -1.22% vs. dollar. Crude +1.05% to $107.69. Gold +0.58% to $1708.55.

    1:00 PM On the hour: Dow +0.31%. 10-yr -0.19%. Euro -1.19% vs. dollar. Crude +0.74% to $107.36. Gold +0.79% to $1712.15.

    Jan. Wholesale Trade (.pdf): Inventories +0.4% to $475.5B vs. consensus of +0.6%, +1.1% (revised from +1%) in December. Sales -0.1% to $413.1B. Inventory-to-sales ratio unchanged at 1.15 from prior Month.

    sobering spin on the jobs report is to gauge how far the economy still has to go. Using the Labor Department's numbers, after the recession wiped out 8.8M jobs in about two years, the economy has only generated back about 3.45M in the following two. At a pace of 227K per month, it will still take a couple more years to get back to pre-financial crisis employment levels

    Goldman Sachs cuts it Q1 growth forecast to 1.8% following the higher-than-expected trade deficit. It was Monday when Goldman raised its estimate to 2.0% after the ISM services report and last week when the firm cut to 1.9% following the ISM manufacturing report. We need to stop calling these forecasts, they're tracking numbers.

    A few bulls switched over to the bearish side, according to the AAII sentiment survey for the week ended March 7. The percentage of bulls decreased by 2.1% to 42.4%, matched by an increase in the bears to 29%. Bullish sentiment remains well below the frothy 50%+ levels seen in early February. 

    "The sanctity of (bondholder) contracts is certainly lessened," says Bill Gross of the Greek PSI deal, "Bondholders have this to look forward to going into the future." Hasn't the Bond King heard of Greece's "uniqueness?" Gross "overwhelmingly" believes CDS will be triggered (Pimco sits on the ISDA Determinations Committee).

    Fitch cuts its rating on Greek debt to "restricted default" following the PSI news. The move is more or less meaningless as the bonds will no longer exist. When the new bonds are issued, they will receive a rating (likely low speculative grade) based on the agency's assessment going forward.

    The ISDA says a decision on CDS can be made once Greece formally activates the collective action clauses, and will consider this done once the news is published in the official Greek gazette. The Determinations Committee still expects to render its decision today.

     "I would not short Italy at all," says IMF chief Lagarde, heartened enough by developments there and the rest of Europe to give investing advice. One is reminded of then ECB President Trichet's July 2011 tip that speculating on a Greek default would be asure-fire loser. (h/t Bond Vigilantes)

    Harrisburg, PA will skip a March 15 $5.27M interest payment, reports Bloomberg. The city has been barred from a bankruptcy filing and a state-appointed receiver has been trying to come up with a plan for Pennsylvania's capital to get out from under its massive debt load.

    Gold futures reverse course to move up 0.6% to $1,708.10/oz after sitting in negative territory most of the day. Metals analyst says that sentiment is shaky amongst traders with no clear definition of where the floor for prices stands.

    The bid comes out of gold and silver following the NFP report, with traders apparently believing continuing solid employment numbers lessens the chances for additional QE. Gold is at 1,681/oz., silver at $33.29. GLD -1%SLV -1.2%.

    GE CEO Immelt says increased dividends will be a top priority for the company's free cash, expected to rise to $30B over the coming years. As economic instability becomes the norm, "I have learned nothing is certain except for the need to have strong risk management, a lot of cash, the willingness to invest." (annual letter)

    Emirate Air, the world’s largest operator of Airbus (EADSY.PK) A380s, is seeking compensation from Airbus due to lost revenue as cracks in the wings have grounded the planes. Qantas and Korean Air also have grounded much of their fleets. Boeing (BA), whose 787 Dreamliner developed trouble in the tails of the planes, eventually can expect similar treatment. (earlier)

    YRC Worldwide (YRCW +5.1%) is trading higher today, after earlier agreeing to sell its interest in Shanghai Jiayu Logistics to its 35% joint venture partner, as the struggling trucking company continues to sharpen its focus on the North American less-than-truckload business.

    Clever!  In another sign of Facebook's (FB) ever-increasing web reach, music video site Vevo, estimated by comScore to be the 2nd-most-popular video site in the U.S., is now requiring users to log in to their Vevo accounts via Facebook. It was recently rumored that Vevo would abandon YouTube for Facebook, though its deal with the online video kingpin doesn't expire until next year.

    Not so clever:  Consumers love Pandora (P +3.3%), but it's just not a good business, Steve Birenberg writes. Active users and time spent per listener per day are exploding, yet every song listened to on Pandora carries a real cost which is increasing every year. Also, there's no infrastructure in place to sell local advertising needed to gain market share vs. old radio.

  93. Oxen Group put clients in long on $SAM this Monday for swing trade. We are now adding the position as well to our short-term trading portfolio looking for $105 to hit next week for a solid 3% gain. We have the stock Buy rated with 2012 target at $120. Like it on recent weakness.

  94. The 16GB 4G version of the 
    new iPad will have acomponent cost of $310, or 49% of the device's $629 price tag, estimates UBM TechInsights. That makes it more costly to build than a comparable iPad 2 (AAPL), whose components account for 44% of its cost. The new iPad's high-res display, estimated to cost $20.50 more than the iPad 2's display, stands to affect margins for both Wi-Fi and 4G models, as do higher assembly costs.  - And labor costs are climbing too!  

    "One of my favorite generational shorts is Apple (AAPL)," said bond guru Jeff Gundlach last night at a CFA dinner, as reported by CNBC's Jane Wells. "The rainmaker is gone, and I don't see people lining up all night for iPad 482."

    Three lunchtime reads:

    1) Winning the war in Europe

    2) Measuring China's real estate bubble

    3) Yardeni: Stocks and quantitative easing

  95. phil,
    Strategy ques: What's your rationale with Mar TLT bcs for using the 115/116 @.45  spread vs the 115/117@.71( payoff: .55 vs 1.29)?

  96. I hear you on CMG. Hold out for July though, this one could go on for awhile (making the short even more valuable, of course).
    I think 420-430 maybe is the place to go heavy.

  97. stjeanluc/volatility study,
    The short options sellers get killed when volatility spikes.  For instance, when VIX is at 48 last year (or 80+ in 2008), what would be the expected move in the underlying?  Can we derive the expected move from the "peak volatility" at that time?  We can use the results for two purpose, one is to estimate how far OTM for opening new short positions, and one is to calculate the theoretical loss if we sold the short before the volatility spike.  It may not be the exact science, but is good to have.  Having the average volatility is great, but we need to figure out the highest volatility, at which point as the put option's price would be very high, squeezing the available margin.  Thank you in advance!

  98. Guys if you spare a dime, can you load up some TLT. I need it to be above 116 by EOD.  Give a brother a hand, it has been a very very bad week (two months)…

  99. GLL/Phil – do you have any feel for next week bond sales on gold? will there be an effort to cram back down again? or no one cares, so learn to love it long?

  100. Volatility / Peter – The best I could do would be to run a study looking at the current month price move and calculating a ratio with the 5/10/50 or 100 month volatility average. The higher the ratio, the higher the "current" volatility would be. And at the same time, calculate the strikes based on the "real time" volatility. Not sure if that makes sense.

    I'll see what I can do. If not too complicated, I could run the scan every night after hours and make a list of the volatile stocks. But no promise!

  101. Batteries/Rain – I think if they fund the development properly, they can drastically improve battery tech.  Lithium-Air looks very promising as are other carbon-nanotube approaches.  Obviously I'd want to favor whatever uses the least-rare, least-toxic approach but if they break out of the mindset that the consumer has to care for the batteries and have access to only standard voltage, it would open up a lot more possibilities.  This is why you NEED Government involvement – solutions are limited to the view that people will only charge their cars in their garage at night – that causes researchers to abandon many potentially fruitful solutions because they don't fit the perceived infrastructure.  The Government needs to say they are willing to change the infrastructure if we accomplish certain goals.   And this is not to say I don't think the same effort should be put to CNG but even that will end one day – the sun, on the other hand, should give us another 5Bn years of energy before we hit "peak sun".   

    CMG/Jabob – There's someone on the other side wondering why they can't close the deal on $400.  

    Scolding/Micro – Not really a scolding but when you ask a question that makes for a good example to others, that's what you get…

    SCO/Scott – Unfortunately, we didn't get as good as we hoped and now we're coming into the NYMEX close in an hour with the weekend ahead.  I'd just get out on this next dip and hope for a nice pop in oil on Monday so you can re-enter.  

    TZA/IZega – I like it as a hedge but not a trade as we have no evidence, technically, that our indexes are weak at the moment.  

    Man, how fast did CNBC cut off Obama.  For 8 years I had to endure every single word Bush uttered – even when he was on his ranch they followed him around with cameras and played whatever dumb crap he said over and over again.   Poor Obama gets about 3 sentences out and they cut away to something else….

    Great article Angel:  


    First, any semblance of fairness has been discarded. Anyone who lent money to Greece was a dumbass who ought to lose money. And in most bankruptcies, that’s precisely what happens. If you don’t happen to be a secured creditor – that is, if you don’t have collateral, like property or financial securities – you just have to take your share of the loss. That’s what bankruptcy is. It is the basis for capitalism. 


    But not in Greece. In Greece, official creditors haven’t taken any hit at all. They’re fine. The entire burden of adjustment is falling on private lenders. In effect, Greece has changed the rules retrospectively. Bond investors thought they were lending under one set of conditions, but – hey presto! – they weren’t. It turns out that official bodies made loans while the private sector picked up the losses. You can call that what you like. Me, I call it fraud.



    Second, this whole rescue is bogus anyway. A report compiled for the troika of the EU, the IMF and the ECB argued that economic conditions in Greece are so dire, so little likely to improve, that the real level of debt is likely to be 160 per cent in 2020, not the 120 per cent officially projected.


    Since 120 per cent would only take Greece to the desperate position Italy was in before Christmas, that would hardly have been a rescue anyway. Since 160 per cent is the beyond-desperate position that Greece was in when the whole sovereign debt problem unfolded, that wouldn’t be a rescue at all. 


    The only long-term effect of the rescue will be to burden the Greek economy with so much debt that recovery will be all but impossible. The Greek economy is contracting, not growing. And that’s no way to get out of debt.


    Third, loads of private investors were worried about their Greek exposures, so they bought insurance on it. In the financial markets, that insurance goes by the forget-you-even-asked name of Credit Default Swaps, or CDSs. Those things are simple in essence. If you lend £1,000 on an insured loan, and the creditor only repays £300, then your insurer should pay out £700. Simple, huh?

  102. Volatility / Peter – I could also calculate how far the current price is outside the predicted volatility and try to extrapolate a "real time" volatility and recalculate new strikes. Either way, there might be something we can do.

  103. JR/Iran

    Interestingly, the article mentions China.  I thought China and Russia (who was not mentioned) were the main obstacles that were preventing any serious sanctions.  Actually, it's been the opinion of many that Russia and China's  reluctance to draw a hard line on Iran which has bolstered Iran's obstinance. 
    I'll believe it when I see it.

  104. flipspiceland/ PETM   Yes, that did pay off nicely.  That company has a beautiful chart, doesn't it?   It would be a good addition to anyone's long-term portfolio.  

  105. Greece / Phil – Well, there is some irony in the fact that in this case the loans made by "official" bodies are kept whole while loans made by private parties are bearing the brunt of the losses. Seems to me like some kind of payback for 2008 when government had to bailout private investors for foolish investments!

    Not saying that I condone the way it has been done, but still, there is some sweetness to be tasted now. And all these big private lenders were not crying fraud when we changed the rules to help THEM! They wanted no part of capitalism then…  Only when there are profits to be shared.

  106. Here is a list of the IPO from the last 6 months and how they have fared:

    There might be some obvious shorts there… 

  107. Phil,
    Has has the market decoupled from the dollar?

  108. TLT/8800 – I don't believe that was the price I saw pre-market when I looked at it.  The .45 trade is just a little more conservative.  I think $115.50 is worst case but of course you can go for it for the extra .26, very worth it if you have faith.  Of course, statistically, I'd say if you are going to spend net $35 to try to make $165 instead of $5 to make $95 (net cash ignoring margin), it could be argued that you are better off buying 2x of the $115/116 spreads for net .10 to make $190 at a strike ($116) where the other trade would make just $65.  Even if you are just looking at the spreads with no offsets – 10 of the $115/117 bull call spreads at .71 would be $710 with a $1,290 potential at $117 while the same $710 can buy you 16 of the $115/116 bull call spreads which make $880 at $116 vs $290 on the other spread so you need to get to $116.60 before you make as much money as the more conservative play.   Like anything else, when you catch a great move – you're a genius BUT, the other 99.9% of the time – you are the sucker who paid more premium than he had to out of greed for profits you don't even have.    

    AAPL in serious pin action.  Like a laser on that $545 line.  

    TLT/Dpast – What happened to rolling?  

    GLL/Scott – I worry about the weekend with gold but I think we see a Dollar over 80 next week and that should not be good for gold.  

    Greece/StJ – I have no pity for anyone who bought Greek debt.  I told everyone who asked me not to buy it just like I told them not to buy GM debt or AIG debt.  Debt yeilds are really not something you should be chasing, they are generally not priced by idiots like stocks are.  When you are being offered 20% on a loan, it's because there's an extremely high chance that you will not be getting your money back.  If you want to enforce real fiscal discipline on nations, including this one, just stop lending them money!   Instead we play all sorts of games to pretend we are solvent.  Thank goodness most companies aren't able to do that or we'd all be screwed.  

    $107.25 – that was a gift!  

    IPOs/StJ – Well, on the whole, a good bet – if you can actually get the IPO price, of course.  I'd rather see their mid-point on day one – that's more realistic.  

  109. Greece/Bonds – With what has happened with Greece, who in their right mind would want to own bonds at this point?  I think I read something about Harrisburg, Penn. skipping a payment. 

  110. Biggest scam in history is a good article a very true …about being a huge scam
    My question is was that also an eye test as the words kept getting smaller and smaller…yep 20/20 it is!

  111. Dpast/TLT,
    sorry, loading up on next weeks…

  112. Decoupled/Exec – I don't know if ignoring for a day constitutes decoupling.  Check out the month chart of the Dow and UUP – nothing like decoupling going on there.  

    Bonds/Ink – That's what I've been saying.  The blowback on this will dominate the Summer.  

    Eye test/Sage – I don't know why that happens when I copy an article multiple times.  Not much font control in this box and I'm no HTML pro.  

    Oil bounced right off $107 and that's the kind of move you want to flip long on if you are a flip-flopper (not that there's anything wrong with that).   Then you just play it up to the next Quarter, keeping in mind it's all bonus money when you do that. 

    Dollar 80.07, Euro $1.3104, Pound $1.5666, 82.49 Yen to the Buck and EUR/CHF ——  1.2054!  

  113. Phil,
    Thks for the TLT risk/reward tutorial

  114. Phil I do not fully agree with you. If they would not have abolished the gold standard all would be fine.
    I am happy to loan out my money at a 100% interest, as long as it is secured by gold. I am always happy if I do get my monet back as well as when I do not get my monet back. Sorry no gold in Greece coffins.
    When you are being offered 20% on a loan, it's because there's an extremely high chance that you will not be getting your money back.

  115. What happened to the TNA and TZA players today?

  116. Total U.S. fuel demand fell an average 78,000 barrels a day to 18.2 million last week, an Energy Department report on March 7 showed. Consumption was down 7.6 percent from the same week a year earlier.

  117. Phil what do I do with a Bull play without horns SLB since Feb11 I hold the Jan 13 85/95 bull  19.79/14/92 now turned in to a sheep 5.47/ 2.68

  118.  isda says credit event has occurred.

  119. So NOW they say Greece has suffered a Credit Event…

  120. my prediciton is this is where they kill the cds forever….no one gets their money on this one

  121. Biotechs have not participating in the run up….so it is my belief (and I am wrong more than right) that either money is not moving into biotechs…..or banks are a better bet?  I put my money on drugs. 

  122. Guys what are the odds that TLT will hold 115 through the close? It looked to be heading for a pin there about 20 mins ago, but I'm not so sure now. Im afraid 116 is out of the question though

  123. shysters…..

  124. THANKS ISDA!! GO TLT!!! Thats what i was hoping for Phil ;-) Go go go 116 in 20mins!!

  125. Pharm DEPO looks a bit sick today possible took Slentrol

  126. LOL yodi……yes, I have been waiting for revenues to come out, and I am not as impressed.  They should be higher.  Will have to give them a bit of time, but it might be time to lighten the load on them.  

  127. I am telling all, if you like biotech, and animals, I have drugs to get out of companies to move into the animal health business.  PFE is selling theirs to Bayer (maybe), Petsmart and Petco are all doing well.  We pay for our animals….and the drugs work.  One could be very good for race horses that suffer from hay fever….yes, they do!  That is BIG business, as it is non steriodal.

  128. Any vets on the board?  or vet sales people?

  129. the jobs dude not sounding very confident

  130. HSP….ok, now selling the Aug $35 strangle on them, buying the stock.  1/4 entry.

  131. well i wonder if they are oging to give us the swoon we antiipcated yesterday..who wants to be long over THIS week end!

  132. angel—why is being long  THIS weekend any different than the others???

  133. Too much support in the market, if it does sell off it'll happen in the last 10 min.

  134. its THIS week end i guess jabs?

  135. angel…me.  HSP, SGEN….with TZA, USO puts and SPY, SPX puts.

  136. You're welcome 8800. 

    Debt/Yodi – Seems like six of one and half dozen of another – just depends on what you call being defaulted on.  You are talking secured vs. unsecured – not even similar, is it?  

    Demand/Angel – Don't worry, what they lack in volume, they more than make up in price.  

    SLB/Yodi – Well if you stop/change at a 50% loss on the spread, there is little problem, your oginal spread was about $5 and now you have a $5.40 $85 call so you can spend $6 to roll the call down to the Jan $72.50s, buying $12.50 of position for $6 or you can roll back to the 2014 $80 calls for about $6.50 buying $5 of position plus a year (and another sale of premium to cover down the road) or, if you don't like SLB enough to put $6 more into the trade, then you should be happy to take $2.80 and walk away.

    Credit event – Duh! 

    TLT/Barf – I'd be very surprised if they failed $115.  Makes no sense they aren't up on a strong Dollar. 

    TLT/Dpast – You are welcome.  Now you need to pay me back $115M for all these shares I've been buying for you!  8)  

    Animal drugs/Pharm – I'm all for it but let's get our fund going first.  Also, it's one thing to accidentally cause Fido to have a spastic colon but quite another when it's a $5M race horse so I'd be careful playing in that arena. 

    Immelt/Angel – Well he could have been more cheery. 

    Wow, I just did a spit-take on my monitor.  Dow volume just 34M at 3:41!  This is like saying the Jenga game is going well when no one has touched it for the whole day….

  137. Pharmboy,
    Are you trying to sell the idea of animal drugs to PSW, Inc (aka Berkshire-like business start-up)?  Do those drugs require long FDA approval cycles?
    May be something we should think seriously.

  138. Phil DOW vol..66m..not sure what your looking at but it isnt 34m

  139. Phil – if the drug did not kill dogs at 500mg/kg (10 kg dog), I am not the least worried about a nominal dose in a race horse.


    cwan – Development times in animals are much shorter than humans FWIW.  This company in KC just received more $$ from VCs.

  140. $25KP:  TZA 5 March $18 calls, now $1.15, let's spend .95 to roll to April $18 calls and DD at $2.10.  

  141. It might make sense to close out call side positions, there may be a fall after the close and take part away before settlement. Transaction costs mught be worth it.

  142. Dow/Kustomz – That's why I thought that was crazy.  Must be stuck or something.  Odd because other things are working normally on ETrade but that certainly seems wrong.  Not that 66M is much better…  

    RUT is quite the outlier now.  

  143. Well this ends a nicely manipulated week for me! Looking forward to more manipulation next week!

    I'll post the updated levels later.

    Have a good weekend all… I have my to-do list already!

  144. Pharm looking at the volume and thinking about the vid you posted of the old geezer calling for a 1k point drop every month for the next ? months..

    Catnip, buy a few tons of high grade kitty weed becoming Scarface of the animal kingdom while opening a chain of drug rehab locations for cats. Winning!

  145. Nice week end to all

  146. OMG. TLT might make 116 after all!

  147. Well that was a very strange way to end the week.  

    Have a great weekend everyone!  

    - Phil

  148. I'm shorting CMG when it crosses 400. At least taking a little nibble.

  149. TLT 115.97!! Doesnt get closer than that. I had cashed at 115.80
    Phil thanks for pushing TLT. I made 160$ ! Yes 160$. But i need every penny

  150. ROFL Kustomz!  

  151. AAPL 545 exactly--those guys are good…

  152. TLT,
    feeling very good about quadrupling down on TLT $115's (next week), Phil's scaling lessons are paying off.

  153. Kust…..Granville from KC.  My home.

  154.  have no fear market…SUPER AAPL is here!

  155. stjeanluc
    not to add more job but at your comfort,is it possible to study the suitable ETF  to strangle EUR/CHF ,if this thing stays still? 
    Thanks for all your priceless efforts

  156. ETF / Spiro – Let me see what I can find.

  157. Quadrupling/Canuck – Funny, I must have missed that lesson…  

    At the close: Dow +0.16% to 12929. S&P +0.42% to 1372. Nasdaq +0.54% to 2986.

    Treasurys: 30-year -0.14%. 10-yr -0.11%. 5-yr -0.07%.

    Commodities: Crude +0.88% to $107.52. Gold +0.93% to $1714.45.

    Currencies: Euro -1.21% vs. dollar. Yen +1.09%. Pound +0.96%.


    Market recap: Stocks ended off earlier highs after the ISDA's expected ruling that Greece's debt restructuring is a "credit event," but another strong monthly jobs report bolstered the view of an economy on the mend. It was the fourth straight positive week for the S&P and Nasdaq. The dollar surged vs. both the euro and yen. NYSE gainers led losers better than two to one.

    Ten-year Treasury yields at 2% suggest an economic slowdown, while narrowing corporate spreads point to a healthy expansion, notes Sober Look. It's Treasury yields looking more suspect given the rise in inflation expectations, meaning it's a matter of time before the 10-year begins a move towards 3%. TLT -0.3%.

    "The most beautiful deleveraging," says Ray Dalio, describing the action in the U.S. economy. Europe? "Ugly." American policymakers have gotten things right by mixing debt restructuring with injections of cash to keep demand growing, he says, and the ECB's recent move to money-printing leaves him more optimistic about the EU.

    The ISDA has, in fact, determined a "credit event has occurred with respect to Greece," and schedules an auction date of March 19 for the defaulted bonds to set the CDS payout price. (earlier

    Markets show little reaction to what had been a pretty well-tipped event – the ISDA Determinations Committee deciding a credit event has occurred with respect to Greece. Shares remain modestly higher though continuing to leak oil from morning highs, the S&P 500+0.4%. The euro remains sharply lower, -1.3% at $1.3106.

    A pretty fair investment for anyone who stuck with the trade – at 2008's start, it cost just $22K annually to insure against default on $10M of Greek debt. The same protection today costs $7.6M. The total notional value of CDS outstanding is about $70B, but the net amount is pegged at just $3.2B. For comparison, the net amount for Lehman in 2008 was $5.2B. 

    And so it begins (and here's why that "net" CDS number is BS – it's not all the same banks:  Austria's KA Finanz – the so-called bad bank of a lender nationalized in 2008 – likely will need a capital injection of €1B after the payouts on CDS it wrote on Greece were activated. The Austrian finmin admitted as much last weekend, saying €600M in provisions had already been built up, with €400M still at risk.

    Prepare for the attack of the Romneys:  Go west, Goldman: Lured by low taxes and a work force that provides a lot of bang for the buck, Goldman Sachs (GS) is hiring like crazy in the Salt Lake City area. The region is now on pace to become the company's fourth-largest global operation behind only NYC, New Jersey, and London. 

    Apple (AAPL) will be investing $304M in an Austin campus to bolster its local sales, customer support, and accounting operations. It's estimated the project will create 3,600 new jobs over the next decade. In recent months, Apple, which expects to spend $8Bon capex in 2012, has also announced plans for an Oregon data center and an Israeli R&D facility

    Microsoft's (MSFT -0.1%Windows 8 preview didn't include an official launch date, and a Mizuho analyst says his checks find that the first Windows 8 based hardware might not arrive on the scene until the end of the September - too late for back-to-school selling season, which “will allow Apple to further consolidate its position in the tablet market."


    Barry's succinct summation of week’s events:


    1)Greek debt deal finally done, yeah!, CAC use likely guarantees CDS payment, it better, waiting on ISDA
    2)Feb Payrolls at 227k, 17k better than expected and two prior months revised up by 61k. Participation rate ticks up
    3)Gasoline prices fall a hair after 39 straight days of gains
    4)ISM services index rises to 1 year high at 57.3
    5)Chinese Feb CPI up 3.2% vs est of 3.4% and the slowest pace since June ’10
    6)China cuts GDP growth forecast to more sustainable, non inflationary, less bubblicious level of 7.5% that leans more on consumption
    7)India cuts bank reserve requirements to ease bank liquidity squeeze
    8)Brazil cuts rates by 75 bps


    1)Average hourly earnings in payroll report rise just .1% m/o/m and 1.9% y/o/y, below expectations and still below the rate of inflation, 2)Initial Jobless Claims at 362k, 10k more than expected after 3 weeks below 360k
    3)Jan Trade Deficit $3.6b higher than expected, will trim Q1 GDP estimates by up to .3 of a % pt
    4)Prices paid in ISM services index rises to highest since Mar ’11
    5)Fed discussing another way to price fix long term interest rates?
    6)China bank loans, retail sales, IP and PMI services all weaker than expected
    7)China cuts 2012 GDP growth rate target to 7.5% after 7 years of 8.0%, less growth, ripple effects everywhere
    8)Canada and Australia report unexpected drop in jobs in Feb
    9)Brazil’s economy grows just 2.7% in 2011
    10)LTRO sell on the news, European bank stock index down 3.5% on the week, Spanish CDS trades at 7 week high, Portugal CDS trades at 5 week high.

  158. Thats it Pharm, going to save it this time.

    Pharm, what area of animal health are you looking into?

    Great weekend folks


  159. Granville/Pharm – I have a lot of respect for the guy and love OBV but he does sound a little like this:

  160. As earnings season draws to a close, the blended earnings growth rate is a respectable 6.1%, but growth falls to a mere 1.2% when stripping Apple and AIG out of the equationResults aren't expected to improve for a while: Analysts predict earnings will decline by 0.4% in the current quarter, followed by at least two quarters of single-digit gains.

  161. Phil,
    my first double down was way to early, so I doubled the double, but I am sure you know that

  162. Kust – animal health = branded drugs.   People will pay a premium for things athat are safe and work.  Look at Rimadyl, a COX inhibitor for dogs.  It is 'safer' than ibuprofen or aspirin, but it still kills too many dogs. 

    In 2006, the market for dog arthritis pain medications tops $130 million a year and is growing about 13% a year, consulting firm Wood Mackenzie says.

    It is actually much larger than that.  Since there is no cap on charging a premium for animals, one can go with what the market will accept.  There are many drugs sitting on the shelves of pharma that could be monitized for animal health.  New feed, branded drugs, etc.  It is very good business and high margins.

  163. This is the MONTHLY SPY for 10 yrs……I really hope that doji signals something is in the works….down.  Look at the volume and other indicators.  MOM and OBV are divergent, RSI and MACD could be starting to roll.

  164. Pharm. I think OTC is the best way to start. Cheapest way to build a brand. You just need to create a product and find a buyer with a large network of clients. How close are you to actually getting this off the ground? Whats the ballpark funding needed with what you have in mind?

  165. Phill,
    What do you think about the China trade deficit miss?

  166. Animal drugs profitable.
    Certainly the mark up is terrific. I bought a multidose bottle of Ivermectin (antiworms medication) at the local feed store for $30 as I had two chihuahuas to dose monthly. (As they don't need quite as much as a horse, the stuff has to be diluted with juice and measured with an insulin syringe, so don't do this if you don't know what you are doing.) Anyway the $30 bottle would have provided hundreds of doses for the chihuahuas, and yet you would have paid $10 for a single dose packaged in a meat flavored tablet.

  167. Kust – the drugs are there, rotting on a IP vine, as the company (my old one – sheesh) has not done anything with them for several years.  I have offered cash for out licensing and a percentage of the new company, but they will not separate out the drugs for the hope of a buyer for human health.  To make a long story short, we need a bit of animal data in dogs/horses/etc (we know the mechanisms work in mice and rats – oh, and humans), and then we need tox data.  Once the tox data are finished (2-3yrs max), filing and then on the market.  We are looking at 4 yrs and about 20M tops.  This is for 2 drugs.  The more drugs that come in, the more it will cost.

    While i understand OTC is attractive, the overall market is being saturated as there are enough sales organizations out there.  I am looking for revenue streams, and eventually selling the drugs to someone else for either a percentage of revenue – kick out dividend, or buyout.  I prefer the former.

  168. Playing the Percentages / Swinging for the Fences
    Easy to get the feeling that the northward direction could easily change south at any time. But methinks there are forces at play that will not reveal their hands until the deadly deed is done. AAPL is a name in question. Going to the moon, or not up for the job as a $500+ stock. Who knows? It may not be necessary to:
    AAPL Jan 13 BCS 400/450 costs $38.58 and can be financed by a sale of the AAPL Jan 13 445 Put ($23.50) for a net $15.08 on the $50 spread that is $145 in the money, and the $445 put can be rolled until the end of time. You could also take out some insurance through a SQQQ BCS – but there is time to think about that later. And as Phil says, they have to take it away from you. If AAPL does start tumbling, and starts to touch the $445 level, it would be a pretty good red flag that IT IS the time to go short. 
    There are not many forests where the trees mature so fast.

  169. Apple
    The time to get out of Apple Long positions is NOW, in my humble opinion.
    Better to skip the next "up" 50 dollars than to get the next "down" 50 or 100 dollars drained away.
    Be Happy! Live Happy! Take the profits.
    Now is the time.  March 10-2012

  170. Newbie/AAPL
    What rationale are you using for that statement?
    AAPL is one of the ‘cheaper’ stocks out there right now.
    However, IF and ONLY IF their earnings visibility changes, you could argue that the next $50 is down. But that is true for any stock/company.
    Have you seen or heard anything recently that makes you believe the next leg is $50 down? Between the disbelief in the success of the iPad and the Steve Jobs illness, the stock was underpriced for the past 12-18 months…it has now caught up, it seems…