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Saturday, September 24, 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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Another no volume day Dow vol 61M with a bit more than an hour to go
I am enjoying my long Oil position early this morning up $2.1 on CLQ2 🙂
Let s see if we can touch R1 today $80.50 … only Mr Stick could take us up there!

Hi Phil,
Something I don't understand with the APPL play — the Sept $575/600 bull call spread.
You say "we assume AAPL should be over $600 and will prove it in July" but then use the short July calls as the offset — "selling 3 of the July $600s for $6.65 ($1,995)."
Why sell calls that might get assigned? Wouldn't it be better to sell puts?
Thanks

And here's the proof!  "New Greek finance minister in hospital; Vassilios Rapanos undergoes tests after fainting." http://www.ft.com/intl/cms/s/0/bca574de-bc73-11e1-a836-00144feabdc0.html#axzz1yXtxFhMu   Or maybe he just got a look at the real budget numbers.

Pharm- Hey, look at DEPO. Screwed up my master plan to sell boatloads of puts as it fell.

Zero/Greece – I saw a comment earlier somewhere that I thought was funny – "Greek PM sees country's debt figure, eyes pop out….Greek FinMin faints."

DEPO – good little company….Diclofenac, blah blah…

EU and Asia were both down…we are up almost 1%.  What a bunch of BS.  VIX gives up almost all of yesterday.  Buying more Sept 120 and 125 Ps.

Pharm, thanks for the BMY trade.  I'm going to wait a little until a pullback or increased vol, but it's now on my watchlist!

$TRIN is rising above 1…which means that the selling has started…FWIW.

StJ – Wondering if you ever heard of Google Cloud Connect?  It allows you to use Excel to upload spreadsheets to Google Cloud.  I'm researching this for another project, but it could help you update prices of the spreadsheets.  For example if you use TOS or IB, both have a RTD into excel.  Then all you would have to do is update the trade price, and all other prices would update from the market.  

MoMo AAPL play summary:  In 20 contracts BCS for 14.98(ave.)/5.60    or 9.38.   This should yield 15.62 if AAPL is over 605 at July expiration.  I believe this is very likely.    

Geez Pharm, how many did you buy???  Look at that drop right after your post.

CELG – ok, how about the Jan14 $50/55 BCS and selling the 45 P for a net credit of 35c…. or just sell the 45 ps for 3.95 for (480) in margin in a regular account.  IF CELG gets to 45, we would be backing up the truck on them.

 

StJ – this is for SWW as well, so you need not read my section this week!  Have a nice weekend all!

ryk – not enough!  Trying to break that PP at 133.53 and not wanting to be long the weekend….I bet a selloff unless someone pushes the HFT button.

a funny one for  Friday 😉
 
http://www.ebaumsworld.com/video/watch/82604727/

MoMo/   STO  LNKD   June 29  105 puts   5 @ 2.00  

ROFL, jabo

Hi Fellows Greetings from Germany and enjoying football Germany 1 Greece 0 half time. Until next week have a nice weekend. Yodi

Thanks Burrben, I'll look into it. It's not too crazy as is for now though so manageable! But being to use TOS as a feed for my prices would help keep it updated in real-time!

MoMo    STO   FB   June  29  32      10    @  .55

Those are FB puts,  June 29     32s

TVIX down 14%, man is that ETN broken!

Bailing out on QQQ 63 weekly calls for 80c
Just leaving some for a fun gamble on Monday open

MoMo trades are done for the day.  AAPL longs overtook the AMZN short losses.  MoMo trades are set up to make about 2k or more over the next seven days.   We have enough margin left in the portfolio to roll LNKD and FB if we have to.   Monday looks up to me.    Thanks and I'll check in later tonight and this weekend.  

phil
very early to throw the game.1-1 already !

Tied 1-1 between Greece and Germany…. Merkel looked unhappy! Still 30 minutes to go.

And France-Spain tomorrow… capped by England-Italy on Sunday. They are keeping the economic superpowers for the weekend.

Holy cow… Dow volume 146 at the close or 85M in the last hour!
That is a serious vote of confidence that Europe will pull out something over the weekend or Monday before US open.
Have a great weekend everyone – I am off trout fishing.

VIX futures just jumped 7%, any negative news out there? 

Fishing sounds good. Off to the North Woods of MN for a week of Walleye and Musky fishing. Mostly cash with some SPY puts for insurance. 
Phil, your earlier call to exit was right on but for once, I was a few days ahead of you. I unloaded longs on the move up and trimmed shorts on the way down. Closed the week with a little extra gas money courtesy of Iflan/AAPL.
Will be watching from the sidelines next week but may take a few pokes if things look interesting. WIFI in the woods nowadays.
Have a good weekend all.

Have a good weekend all…. Leaving for Quebec tomorrow for a week! Always fun there.

STJ, have a great time in Quebec.  My inlaws are from up by Quebec City.  They are a lot of fun.  Lots of good food and good wine!

Stj:  Have fun.  I hope you can understand their French.  Forget trying to speak English to them.  Montreal is cool, even if they do make French sound like it's being run through a wood shredder.

Pstas/MN,
will be driving through your neck of the woods next week, vanc – NW ontario via yellowstone, badlands, then crossing back in at Int;l falls… enjoy the pan fried walleye fillets.

Quebec / Robert and Zero – I have been going there every year for the last 10 years (Mt St Anne next to Quebec City). And I love Montreal as well. In the cities, my continental French works well but once you are in the countryside, it's a different language. I really have to pay attention then to understand everything. It's actually funny that on TV5 (the international French channel) they have French subtitles for Canadian shows!

Interesting figures:

http://www.bespokeinvest.com/thinkbig/2012/6/22/impact-of-commodity-prices-on-the-consumer.html

After bottoming out in early 2009, commodities once again began an upward climb, but this time the increase was much more gradual in nature.  In the span of more than two years, the entire benefit (and then some) of lower commodity prices had been erased.   Since that peak back in early 2011, lower commodity prices have once again been providing a tailwind for the consumer.  In fact, as of yesterday's close, the average American was seeing a $2.17 daily windfall due to the change in commodity prices since the start of 2008.  Two dollars may not sound like much, but on an annualized basis it works out to about $795 per person per year, or $3,175 per year for a family of four.  With a median household income for families in the United States in 2010 of $61,544, this works out to more than 5% of the 'median' family's income.

That about sums it up:

http://www.businessinsider.com/corporate-profits-just-hit-an-all-time-high-wages-just-hit-an-all-time-low-2012-6

Corporate profit margins just hit an all-time high. Companies are making more per dollar of sales than they ever have before. (And some people are still saying that companies are suffering from "too much regulation" and "too many taxes." Maybe little companies are, but big ones certainly aren't).

Corporate profits as Percent of GDP

Wages as a percent of the economy are at an all-time low. This is both cause and effect. One reason companies are so profitable is that they're paying employees less than they ever have as a share of GDP. And that, in turn, is one reason the economy is so weak: Those "wages" are other companies' revenue.


Wages to GDP
 
More of that with 4 years of Romney!

Oh the irony is killing me.  From Barry Ritholtz: Inflation Ex-Deflation (this time, INCLUDING energy)
 
The Fed always uses the Core CPI (prices ex food and energy) to give a inflation number that in recent years has skewed it downward.  But now that food and energy prices are dropping it is skewing the core inflations numbers upward
 
In fact the core inflation numbers ex food and energy is at 2.7% on a 3-month annualized basis and way over the Fed's target.  Add in food and energy and the inflation number comes out to only 1.73%. 
 
So now that we are running hotter than the Fed's target number, should we be raising rates, or at least stop all easing policies for now?

Good post by Mark Dow, a behavorial macro-economist/hedgie, (in fact all his posts are great) on A Framework for thinking about Gold and Silver.  Many of the factors which contributed to the run-up in precious metals are reversing (fear/inflation/BRICs etc) and should modulate the price and growth. 
 
Phil's target of 1100-1400/oz. as a fair value sounds about right according to Mark.

BBBW / hedge fund attorneys

I have a wide range of contacts at U.S. law firms which specialize in hedge funds. But I want to find out if there are any PSW members in the U.S. who are hedge fund attorneys, or who work at firms with hedge fund practice groups, who could do the work at a steep discount to normal fees.

Thank you.

Ron Resnick
RonRes@hotmail.com

Vegas Update——Meeting dates Nov 11th and 12th 2012—–registration fee $200 p/p ( no refunds unless meeting is cancelled—if cancelled refunds will be minus any costs that lvmoda has incurred in setting up)—min participants 25 –maximum 50
Preliminary Agenda
Nov 10th—–meet for dinner (not included in registration fee)
Nov  11th—-meet at Cafe Moda (times to be confirmed) but approx 10am –to 6pm (lunch included)
Nov  12th—-meet at Cafe Moda approx 6am to 1pm (breakfast included)
please send $200 p/p to my pay pal acct (same as last year)–e-mail is— savi_ted@hotmail.com—-payments should be in by July 30th ( first paid first spot up to max of 50)
exception to no refund policy— jromeha who is in Kabul —-will reserve a spot for you—no payment needed now
Hope I have covered all the initial details –otherwise I am sure I will hear from the group

Phil—-could you please let lvmoda know if you need  any changes to the computer set up from last year
Pharm—do you think you can help with the scheduling of speakers for Sunday—I am only aware of you and ronresnick and of course Phil atm
we need to figure out how to handle dinner on Saturday once we get a firm count —-anyone willing to handle this—lvmoda will help with suggestions etc

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