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Thursday, December 1, 2022

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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

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zero / AAPL — I about covered my monitor with coffee when I read the phrase "Ballmer's inspired" ๐Ÿ˜ฎ

Buffett buys another newspaper, the Waco Tribune-Herald

http://www.omaha.com/article/20120622/NEWS/120629903

Phil I have an EDZ July $18/22 Bull Call Spread I am using as a hedge, bought for $1.15, offset by the $16 puts for $1.05 so net $.10.  With EDZ currently at $.62, I can roll the $18's to the Aug $16's for $1.40 and the $22 caller to the Aug $20 for $.90 in credit so investing $.50 to gain $2 in position and giving myself another month of coverage.  With the puts at about even, should I wait to roll them to the Aug puts for $.65 or wait until some premium burns off?  If I roll now the original hedge of net $.10 turns into a hedge with a $.05 credit.  TIA!

Phil: I bought 1200 share of SVU at $$7.73,now $4.81,sold 2 Jan. $5 P& C for $4.16 for net $3.61/$4.31.Call are at $.65.With all rumors of buyout,close out calls? Thanks

Whoa – AAPL overload today.  Between Phil's ideas and our man LF, I feel like I'm in a orchard!

CELG / Pharm:  Those Oct $50 putters already showing 30% profit from yesterday. I have not been in CELG for a while and wouldn't have seen that if you hadn't mentioned them early yesterday.  Nice job & thanks!

Shades of HMC and Asimo? Looks like F (Ford) is getting into the App business:
Logging into websites may soon get easier, thanks to Ford KeyFree

 
"Not content with just the automotive industry, Ford may be moving into the password storage business.

According to a promotional video created by French ad company Ogilvy Paris (spotted by Fast Co Design earlier today), Ford is working on a way for users to more easily log in to websites like Facebook and Twitter."

RevTodd – if you're going to play one day a week, Friday is certainly the one.  In addition to my PCLN trade above I made a bundle on the NFLX surge today.  Pharm and I (and likely others) are big proponents of Opex Crazy Plays – buying ITM spreads to play time decay and picking up OTM nickle and dime options to play surprise swings.  It can be a blast, but start small!

 Another note on Crazy Plays – don't start with Momos, the bid/ask is too wide, cut your teeth on options that trade tight with penny increments.  For example, I practiced on MSFT for awhile, that's a great one; a .10 option on that one just two hours ago is worth .40 now, that's why we call these plays crazy! 

Thanks Mr. Mocha, I will watch your posts.  I have a staff person going out on maternity and we have a party today, so I don't know if I will be done in time to play today.  

revtodd- please send us all an invitation when Phil enters the pulpit- it will be quite different than his seating himself at the poker table in Vegas. He practiced the other day in his interview with a collarless shirt- all he needed was the clerical collar- :which you may have to lend him- ๐Ÿ™‚

mrmocha/Opex Crazy Plays, is this a new kind of trade?  How come I didn't know :-(.  Do you have link for examples?  TIA.

Bob, several of us on this site were posting Opex Crazy Plays over the last few years, but I've not posted much about it this year, sorry.  My examples above of MSFT at .10 and the PCLN spread should give you a hint at how it works.  I'll try to post more on upcoming Fridays.  I spend a lot of time in meetings so for me it's a pleasant weekly diversion at the gaming table…

Jthom – I don't do the collar thing.  It frightens the New England Congregationalists.  I go for the pastoral navy blazer look, but keep the somber black robe on Sundays.  I could probably get Phil into very stylish alb.  Phil, I would always expect you to take a pro-wages point of view ๐Ÿ˜‰

mrmocha, Thanks a lot, looking forward for it.

Jthoma: Phil has been preaching to his choir all along, no practice needed!!

Rev:  Wages of sin?

AMZN $220 seems like a good pin today. Selling  $215/$220 spread for .26.  Just some pocket change to reinforce the pulpit prior to Phil.

ALL PRAISE

CELG/never – ur welcome.  The spread has widened on the morning pick, so I may have to adjust that one out in time.

ON that note, the Oct 65/July 65 CELG calendar is 1.81.  Good upside protection, and reduces the whipsaw action.  I am doing 10 for 1.81 or better.

PhiL ACI $5 p at $1.37 = net $3.63 . Book value = $14 /share . I nkow you like BTY,but is there a potential buy out of coal assets here

QUOTE OF THE WEEK
Women worry about what men forget;
Men worry about what women remember
  

Pharm, What months/strikes do you like for BMY?  Did some research after your post, and I like the story, but I'd like to defer to your experience for timing and price.  Thank you VM!

PCLN – closed the rest of the 660/665 spreads for 4.80, entry price 1.20, that was too fun!

Wages of Sin….Lord knows I need help

revtodd –  It took me more than 30 minutes to figure out you weren't talking about a options collar, you meant a real one.  Damn, my head is too caught up in this bidness!

Good job MrM…. Looking forward to more picks!

Jabo, please don't hate me for switching from PCLN short plays to long plays.  I feel so dirty over here on the 'dark side'.

StJ – too much work this year, but when I retire you and I can run a Crazy Plays Portfolio together 8) .

BMY/Burr – How about the 32 Jan 14 straddle for 7.40 paired with the stock.  When I originally noted them a long time ago, they were 18, then 23, then 26….now at 35, the prices are getting a bit rich, so protecting the capital is the way to go.  Otherwise, wait for a VIX spike and then do that one.

burrben – LOL!  Made my day.  Jthom suggested I loan Phil a collar, so I was responding to that.

CRM…what a farce.  Starting to roll into more puts and selling the June5 29 $125 puts for 1/2 cover. POS.

mrmocha I only hate hate ๐Ÿ˜‰
I hope everyone makes money at PSW…
I still think PCLN gets hurt with the weak Euro (Phil do you agree)?
I guess I shouldn't be surprised anymore by the mystical rise by PCLN and CMG that follows every drop post earnings…

revtodd – 11 year old minister.

CRIS over $5 finally.  Starting to sell more puts…they just might start to move this one up.  For a mrm crazy play, sell the Dec $5 puts and buy the calls for a nickle credit…. I will try a few.

MrM – My problem right now… Taking on too much between work and this place! Another 20 years and I'll have more time.

Speaking of farce: "Cairo (CNN) — Ahmed Shafik, the last prime minister under former Egyptian leader Hosni Mubarak, will be named the country's new president on Sunday, the semi-official Ahram Online news site reported Friday, citing several unnamed government sources."  There's no way he won; the Muslim Brotherhood won, and Egyptians all know it — many of the votes didn't come from "Islamists", but from people voting against control of the country by Mubarak's military.  Not good; the protests are not going to go away, and probably worse.

stj – you DO have a lot of work here!! You need an assistant.

AMZN  MoMo…..  The 10  July 230 puts sold for 11.50.   Reason……1. .Clear that both AAPL and AMZN are going to go up.   2.  Exit losing trades  quickly.  

MoMo:  AAPL/   BTO  5 more of the July 575s at 15.00

Iflan – you mean the July 580's, correct?

PLX recovering nicely.  Down still, but much better.  Those sold puts are looking good.

 

Take it up boyz…Volume is horrid, and they are going to drop this think like a rock next week for EOQ.  SPY P/C ratio is 2.0

Pharm – do u sell covers for GLUU? I have stock at $4.46, thinking about selling July 5's.

"PITA" being the Greek version of People for the Ethical Treatment of Animals?  Wow, that Greek crisis just gets worse and worse!

MoMo trade:    AAPL…..Sell to open 20 July 605 calls for 5.60.    This is now a bull call spread.

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