3.7 C
New York
Tuesday, November 29, 2022

Subscribe

TGIF – Hail to the Cash!

SPY DAILYWheeeeee – that was fun!

A bit more violent than we expected but now you can see why we went to cash on Wednesday.  We even took a bullish bet on the Qs at the end of the day as we were hoping for a bounce this morning and we had really cleaned up with DIA July $124 puts from the morning Alert to Members, which came in at .95 and ran all the way to $1.85 but we took the money and ran at $1.40 for a nice 47% gain on the day

We also picked up AAPL weekly $570 puts for .50 and those made a quick 40% as well, closing at .70 at the day's end.  

In the afternoon, we took our winnings and played the QQQ next weekly $63s for .75 and they dropped a dime to .65 but we're playing with house money and a stop at .50 on the hopes there will be a rumor of stimulus that spikes the market back up.  

We were too scared to play the Financials bullish with the Moody's downgrade looming but we will be restarting our FAS Money Portfolio today in the hopes that this will be a bottom for the Financials (about $14 on XLF) that we can begin to makes some bets on.  Fas Money was, by far, our most profitable portfolio in the first half of the year, cashing in Wednesday with a virtual $12,175 profit with almost no cash in play (but using margin to sell FAS puts and calls on a regular basis).  

There are still rumors that MS will suffer heavy margin calls.  I say rumors because The Street reports $6.8Bn as a fact but, since Cramer is behind it, I don't believe a word they say.  

Moody's lowered its long-term senior unsecured debt rating for Morgan Stanley to Baa1 from A2, with a negative outlook, while cutting its short-term rating for the firm to P-2 from P-1 but this move was a long time coming and MS stock has already plunged from $21.13 in March to $12.26 in early June and that's very close to the $10 line they hit in 2009 – which they tripled off by June.  

We don't trust MS enough to bet on them directly but, if they DON'T blow up, XLF should do quite well and, even if they do fall apart, we think XLF has enough strong players to weather the storm.   Our previous favorite, JPM, seems to be doing just fun and, with an A2 rating – is still the star of the group!  If you want to be aggressive, MS can be played to hold $12.50 by selling the 2014 $13 puts for $3.15 and buying the $10/15 bull call spread for $2.50 for a net .65 credit on the $5 spread that's $4 in the money to start.  

Your worst case is you own MS at net $12.35 and Think or Swim tells me that you hold aside just $1.80 of net margin on this trade and that margin requirement will reduce if MS takes off and, if it doesn't, then your premise is blown and you should probably get out.  If all goes well, this trade will return $5.65 against the .65 credit an over 8x return on cash and a 3x return on margin if MS is at $15 come the Jan 2014 expirations.  

See how much fun we can have with our cash!   There are tons of great opportunities out there – so no hurry, we're not rushing into these trades because, with 800% returns, we don't mind missing the first 200% if they "fix" Europe next week because THEN we will feel nice and confident playing for that next 600% of upside.  Still, deploying a little bit of cash on a greed play is fun, right?

Speaking of fun plays.  Some of our Members had trouble filling LQMT on Tuesday and BNN rushed me off the air before I could mention them as my fun trade of the month.  Today they are back to .30 and we still like them.  AAPL just extended their licensing deal with the company for 2 more years and we're just looking for another rumor that LQMT's alloys will be used in the IPhone 5 to spike them up again (we caught a ride from .15 to .55 in April) but it's a craps roll kind of bet, so we're thrilled to take a dime and run when it comes.  

We'll be going back to the well on our Twice in a Lifetime List (Members Only) as we begin to re-establish some of our long positions but only tentatively ahead of the weekend.  We HOPE (not a valid investing strategy) that the EU gets it together and drops another Trillion on the PIGGS – that should be enough to take us to the end of the year at S&P 1,350 or higher but, until we get the ACTUAL stimulus – Cash remains KING!  

Have a great weekend, 

– Phil

237 COMMENTS

Subscribe
Notify of
237 Comments
Inline Feedbacks
View all comments

CCS thanks but no comparison study on mine??

Thank you stjeanluc for the spreadsheet update. 
I'm excited about the possibility for this portfolio.  If there is a big crash (10%), we should be able to grab a bundle of premium as we have lots of margin available.  If there is a gigantic crash (20% in a month), people will be glued to PSW for adjustments!  In other market conditions, we just go slow with collecting small premium every month.

TOS:  $1/contract no ticket fees,  & $5/stock order was an offer when I told them IB was offering $0.7/contract.  They looked at my account and agreed to this new rate.

stjeanluc,
The SPX Jul 1125 Put virtual pricing was $0.8 and July 1170 Put was $1.95.  Actual execution may be different.

We might be getting somewhere with solar eventually:

http://www.engadget.com/2012/06/22/all-carbon-solar-cell-draws-power-from-near-infrared-light/

What's this orange-like patch, you ask? It's a layer of carbon nanotubes on silicon, and it might just be instrumental to getting a lot more power out of solar cells than we're used to. Current solar power largely ignores near-infrared light and wastes about 40 percent of the potential energy it could harness. A mix ofcarbon nanotubes and buckyballs developed by MIT, however, can catch that near-infrared light without degrading like earlier composites. The all-carbon formula doesn't need to be thickly spread to do its work, and it simply lets visible light through — it could layer on top of a traditional solar cell to catch many more of the sun's rays. Most of the challenge, as we often see for solar cells, is just a matter of improving the energy conversion rate. Provided the researchers can keep refining the project, we could be looking at a big leap in solar power efficiency with very little extra footprint.

Thanks Peter – I do enter Mark prices usually as I can't guess what everybody is getting. That close enough for PSW work!

MoMo   BTO 5 more  of the AAPL 580s  at 14.20

Today should be interesting at the Euro 2012 – it's the 1/4 final between Greece and Germany. More than soccer pride is riding on this game!

iTrade/TOS commission,
How much volume do you have to get $1 commission?  TIA.

My PCLN spread from 10:16 is a quick double so if you're in it get out or put tight stops.

Euro / StJ – Hell yeah!! We are going to give those germans a run for their money (sic).  I hope you are supporting the underdogs today 🙂 (although to be fair i dont have high hopes). Go PIGS!!! 

wappler / volume — The threat of moving your money to someone with cheaper commissions can be just as good of  bargaining chip as volume.  Especially if you can point to publicly stated cheaper comission.  Just sayin'.

Markets not moving much tlt getting hammered as is vix??

Phil/faith  Thanks, I appreciate the reminders. Random acts of kindness is my favorite thing to do….. 🙂

is the dollar the manipulation du jour?

LOL Dpas… their money indeed! 

stj/  here is Monty Python's classic version of Greece v Germany  http://www.youtube.com/watch?v=ur5fGSBsfq8

mrmocha…I didn't play the PCLN spread but thanks for the heads up.

mrmocha/PCLN, great call.

….on another note, we have a "scumbag" alert here in San Diego….
 
http://www.utsandiego.com/news/2012/jun/20/billionaire-koch-brothers-plan-secret-convention-h/
 
….I can already smell the stench of an oil spill….

Wappler, I have a 25K account (probably in the bottom 5% on this website) and pay a flat .85 per option commission on TOS. Everytime they and/or their system screws up I called and got .25 cents knocked off my futures bill or 5-20 cents knocked off my options bill. In the 3 years I have been with TOS Ive got my options down from 1.50 to .85 and futures down from $5+ to $3.5. 

LOL Rexx….

wappler – They told me it 2500 contracts / month was the benchmark for $1 commissions.

rainman/volume,
Good idea, I'll give it a try!

Went long UCO earlier at 24, I expect some BS to jack up oil to 80 or a little over.  Also RSI very weak.

jromeha, rkyoma,
Thanks for the info, very helpful!

BBBY putting in a second low of the day.  seems like done going down.  might see a run to the declining 5 dy ma.

stjeanluc…..typo on the last MoMo trade…..I got those last 5 AAPL July 580 calls for 14.05  (not 14.20)

Is it me, or has AAPL behaving somewhat atypically, relative to the rest of the market, over the last month?  Nothing seems to move it much — neither bullish nor bearish sentiment seems to have much of an effect.  Am I missing something?

OK, thanks lflan! I'll update the portfolios later today!

Speaking of MoMo, that 650/700 PCLN weekly strangle is looking very good today. The volatility prediction worked out well.

Friday, June 22, 11:45 AM Yum Brands' (YUM +2.1%) Taco Bell continues to draw positive reviews for its new Cantine Bell menu. With words such as fresh, light, and crisp getting bandied around, the new initiative from the chain stands a chance to impact sales at Chipotle (CMG +0.8%) – which up to now has had a field day redefining the fast-food gourmet Mexican niche. Yum Brands plans to spend $20M in TV and digital marketing to spread the word that there's a new player in the game with its July 5 Cantina Bell launch just around the corner.

zero….AAPL doing about what I expect.   It might go to 570 (might, or might not) before zooooom!   
stjeanluc….yes, the weekly strangle for PCLN was right on wasn't it.  

EFA yielding 4.77%, monster option volume.

Iflan / StJ – Any short weekly strangles you can propose for next week? Cheers!

PCLN / lflan – Based on current volatility and last price, I would expect PCLN between 635 and 685 next week but I would be leery to enter a trade today based on the current environment!

zero/EFA, looks like a h&s formation though

That sounds like a good investment plan:

http://tpmmuckraker.talkingpointsmemo.com/2012/06/feds_charge_florida_man_in_astrology-based_ponzi_s.php

The primary principle underlying Persaud’s trading strategy was that the gravitational pull between the moon and Earth affects mass human behavior, which in tum affects the stock markets. For example, Persaud believed that when the moon is positioned so there is a greater gravitational pull on humans, they feel down and are therefore more inclined to sell securities in the markets.

Apparently the guy had a ponzi scheme based on that strategy. What could go wrong!

Non Sequitur: Gambling

lol, diamond.

Itrade or anyone:  IB rates
I've been trying to figure total costs of trades and I see their commision rate is lowest but not sure I follow the other fee per trade. And I am wary of the PM calculations they do.  Any thoughts on switching from Fidelity?  I currently pay fidelity $6.95 ticket plus .695 per contract so trading less than 17 contracts costs more than a buck, but larger quantities brings my costs down below that.  The execution is always excellent and the margin rules very clear and fair.  TIA

I don't really get why the TBTF's are up on the downgrades. What, the downgrades weren't as bad as they were expecting?!!

Thanks, Jomptien:  I've learned [with lots of blood and failure] to wait for the fat pitch, as PSW counsels.  EFA ain't it.
 
And thank you, Phil, for the AAPL dissertation, very persuasive.  It's behavior just seems anomalous, going from the hottest of stocks in 1Q to a dullard & laggard, as if Ballmer's inspired products were about to eat its lunch.

MoMo….order placed to sell the  10 AMZN puts bought this morning, for 14.00.   I'm going swimming.       Later.

Jbur – That's correct.  According to CNBC ( sorry, but at least I can listen to it while I'm driving around.. ), The Market was expecting 3 notch downgrade on MS, and only got 2.  Thus, it's up slightly.  

Stay Connected

159,636FansLike
407,692FollowersFollow
2,130SubscribersSubscribe

Latest Articles

237
0
Would love your thoughts, please comment.x
()
x