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TGI Fed(s) – Promises, Promises

 

You made me promises promises


You knew you'd never keep


Promises promises


Why do I believe


All of your promises


You knew you'd never keep – Naked Eyes

Wow – what a party!  

The former Vice-Chairman of Goldman Sachs (Draghi) says everything is fixed and the global markets go flying – what's not to trust?  Would anyone form GS ever lie to us?  Would GS be involved in manipulating the Global Markets – of course not!  

Now that I've fulfilled my obligation to get my mother back unharmed – let's get real.  Draghi said the violent spike in bond yields in recent days was hampering "the functioning of the monetary policy transmission channels" – the EXACT expression used to justify each of the ECB's previous market interventions.  

Yields on Spanish two-year debt plunged 72 basis points to 5.47% in barely an hour, with comparable moves on Italian debt – easing the pressure before a string of debt auctions in Rome over coming days. The MIB index of stocks in Milan surged by 5.6%. Madrid's IBEX rose 6%, the biggest jump in two years, led by an explosive rise in bank shares.  Mr Draghi's comments came as Spain claimed backing from France and Germany for activation of the eurozone's rescue fund (EFSF) to buy Spanish bonds, though this would require calling the Bundestag's finance committee back from holiday for a vote. Action by the EFSF would provide "political cover" for the ECB to join the fray in a two-pronged attack.  "We're firing on all cylinders: that is what has ignited the markets," said Hans Redeker, currency chief at Morgan Stanley.

Joint statements from Madrid, Paris and Berlin said market turbulence "does not reflect the fundamentals of the Spanish economy, or the sustainability of its public debt".  According to Ambrose Pritchard, "the wording seems scripted to clear the way for intervention."  Of course, now it's time to put up or shut up as the Fed meets next week and the ECB has their pre-holiday meeting next week as well so it's going to be action by next Friday or none until September.  Marc Ostwald from Monument Securities said Mr Draghi's words were "cheerleading bluster", while Gary Jenkins from Swordfish called them "a bluff to get through the summer".  

As far as bluffs go, it's a good one.  And why not, if this were a poker table, Draghi has the second biggest stack of chips at the table, next to Bernanke and then there's the BOJ, the BOE and the PBOC – and you – and Draghi just put the bears all in on the ante – he doesn't even need to bet yet!  

Needless to say, the bears quickly folded yesterday and the Global Markets took off, bringing us right back to the highs we had when we had that ridiculous rally at the end of June – that was also based on promises of more QE from our Central Banksters.  The fact that we then fell right back to the lows of July in the first 10 days of the month doesn't seem to worry traders (not "investors" at all!), who went into such a buying frenzy that EVEN JIM CRAMER thought it was overdone.  

"Mario Draghi may have given us the perfect opportunity to cash in on some gains," said Cramer.   "Every asset that investors had just given up on was suddenly roaring. But move fast, Cramer warns, because this kind of optimism never lasts. Germany’s “iron chancellor,” Angela Merkel, will always be there to “pull the rug from underneath.”"  While I find it very disturbing to have to agree with Cramer – he's making perfect sense here.  

To that end, we added a bullish spread on the Russell to take advantage of possible ACTUAL stimulus over the weekend or next week.  We're using a very aggressive bull call spread on TNA and tempering it with the sale of short puts in stocks we would like to buy anyway – my trade idea from Member Chat was:  

With the S&P over 1,360, it's time to go bullish on the RUT (playing it to catch up).  I think the Futures can be played over the 775 line (now 773.30 on /TF) but the fun play on stimulus is the TNA Aug $49/54 bull call spread at $2.20, selling something you want to own in a downturn like CHK Sept $17 puts for $1.28 for net .92 on the $5 spread.  

  • SBUX might make some good put sales today – we'll have to see.  
  • DMND is back down where we like to sell puts, the Sept $15 puts can be sold for $1.35.  
  • MCD came down nicely, Jan $85 puts can be sold for $3.05 or 2014 $80 puts can be sold for $6.  Also odd on MCD, who were around $100 until March – is the March 2013 $92.50 calls at $2.75 – that's not a bad risk for a call position, especially if you pair it with the long put sale.  

Setting ourselves up for a potential 400% winner if the markets do move higher (and we simply stop out of the spread if the S&P fails it's Must Hold line at 1,360), which then provides an upside hedge for the bearish bets we intend to make and press into any rally that isn't backed by at least $500Bn in actual cash from the Central Banksters.    

8:30 Update: GDP came in at 1.5% vs. 1.2% expected and down from 2% last Q.  We expected more of a slowdown but prices up 2% gave us a nice APPARENT boost (same goods and services produced but at 2% higher prices is a $320Bn pop to GDP, which is the entire GDP of all but the top 30 Nations on Earth!).  Q4 2011 has been revised UP to 4.1% from 3% so we are slowing drastically but it doesn't seem as bad because, instead of being down 2.6% from 3% to 0.4% – the magic of the revision has us starting from a 1.1% higher base so we "soft land" at 1.5% – isn't math fun?

Of course, with an established 1.1% margin of error between revisions, it's very possible that our actual GDP is 0.4%.  Residential fixed investments (durables) were weak and Federal, State and Local Government spending were once again negatives as even our Government begins to run out of money.  As we expected, inventories increased substantially and added 0.32% to the GDP as the calculation is based on the assumption that everything in a warehouse eventually gets sold at the full price.  This is the kind of thinking that leads to nasty downward revisions in GDP later on! 

Today, however, the futures are loving it, as well as more positive noises about potential stimulus from the G20 so hopefully another nice rally this morning to add some shorts into but, as I said to our Members yesterday – you have to have a good mix of upside plays as well since this market can move 5% in either direction very quickly. 

So be careful out there and have a great weekend. 

- Phil


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  1. Oil Lines

    R3 – 93.05
    R2 – 91.76
    R1 – 90.65
    PP – 89.36
    S1 – 88.25
    S2 – 86.96
    S3 – 85.85


  2. Good Morning—--
    Phil—-agreeing with Cramer!!!—I might have to leave earth   :-)


  3. Morning musical interlude:  


  4. Phil—-do you like USG?—-I was thinking of selling some long dated puts as an offset to the TNA spread above as I have a relatively sizable position in CHK



  5. Phil: thx for the who


  6. Happy Friday!


  7. Lincoln—-what


  8. Savi, we clearly woke up in a parallel universe this morning of Phil agrees with Cramer. Maybe we should try getting out of the other side of the bed. 


  9. Savi: go back to phils musical interlude, start your day with a smile


  10. Happy Friday! More iced coffee and another Who video. Great way to start the weekend!!


  11. Loved the musical interlude. So how the heck did Townsend manage to walk and leap through that dancing crowd with his guitar cord intact?  


  12. TLT – never got the roll to 129, anybody??


  13. TLT / Edro – Didn't happen yesterday. The closest was $1.20 or so.


  14. FLAN/ EXPE:  WOW! Thank You!


  15. Star- Thanks for strategy- Walking away.


  16. Phil – Yesterday I assumed you meant next week's 88 FAS Calls as the prices matched. You said $2.00 but that was good only at the open. They dropped right after that.


  17. AMZN – Just got the roll from Oct 185s to Oct 200s for 1.80


  18. AMZN /   P/E 269…right right… thats a big leap of faith for future earnings.  Well i bough back the 240$ Calls so at least i made some pocket change


  19. DMND: I have a Sept 16/21 BCS that is getting close to the 50% shut it down rule.  Can i get some advice on how to roll this out?
    Thanks


  20. The TLT roll to 129 for $1.00 was never there yesterday but the 126 are up 20% this morning. Is it worth risking over the weekend?


  21. Good morning!  

    Well GDP was better than we thought (doesn't matter why) and that means our bearish premise has a big hole in it.  AMZN also held up against expectations and the Nas didn't collapse with AAPL.  None of this makes a lot of sens, of course but, when the markets don't make sense – we have to switch off our brains and obey those technicals.  

    1,360 is the be all and end all of technicals.  As long as the S&P is over the Must Hold line – we can't really be bearish on the broad market.  We also can't be too bullish if the S&P is the ONLY index over the Must Hold line but the RUT and the NYSE aren't too far away so we'll keep our eye on the -2.5% lines of 780 and 7,800 as our 2nd and 3rd confirmations to stay bullish – along with 1,360.  

    Even as I write "stay bullish" I feel silly as I'm not bullish at all but this is why we have to learn to switch off those brains – they can be your worst enemy in these BS rallys. 

    Sorry about AMZN, I certainly didn't expect this kind of reaction (now $232) to earnings that were almost exactly what we expected.   Hope does spring eternal on that stock but I'm not going to capitulate (this is why we only shorted 5 in the $25KPA and none in the $25KPM) as the plan was to roll up with the silly spike and try again into next earnings.  But, for now – run they will…

    AAPL STILL is not coming back – that's a big flashing warning sign so we will be pressing our bear bets but not cashing in our bull bets to stop ourselves from over-committing into next week, where they might actually drop $500Bn worth of stimulus on us.  Note the aggressive bullish hedge on TNA from this morning – as long as the S&P is over 1,360 – that's good insurance.  

    Off a pop like this on a Friday open with Asia already closed and Europe closing soon – it's not likely we'll get any solid announcements today from Europe – as they would only benefit the US markets.  So that means it's a good situation to take a bearish poke at the Dow as it test's 12,900 in the Futures (/YM) and 12,950 on the index – just in case some fund comes to their senses and takes the money and runs into the weekend!

    DIA Aug $127 calls are $1.08 – 20 of those in the $25KPA and 10 in the $25KPM with a stop at .95 – we're just playing to see if we get a sell-off, that's all.  


  22. Phil/AMZN,
    How about a roll to Oct 195 for 1.10?
    Thanks



  23. PHil – looks like you mean DIA 127 puts, not calls…


  24. PCLN wow – anyone selling calls on this pop?


  25. I'm assuming DIA should be puts? We already have 20 Aug 126s, are we leaving those alone and adding 127s?


  26. Wow, saved by the bell (well EXPE) for the PCLN puts. They will need to be rolled, but could have been a lot worse…


  27. Phil
    On a day like today where with so much time to go the FAS 76s are trading below half their original value, do you take them back and wait for the next breakdown to sell again, or just be patient and happy that all is on track? BTW it's been great fun so far


  28. Phil:
    So what's the impetus for this BS rally #1042? Gold not reacting well if the stimulus talk is real. And they can't really think that we are back with that GDP number even though it beat the lame expectations?????


  29. Stjeanluc.    Looks like you missed the momo trade I posted yesterday afternoon, a paired AMZN/EXPE earnings trade


  30. Cmon Ford for gods sake..rally like the rest of them..


  31. Newt--nice work! 


  32. T making new highs, WMT too at $74+.  

    VIX at 17.11 – nothing to worry about, obviously.  This time TLT agrees with them, down to $129.89.  

    SVU harshly rejected at $2, back to $1.90 – not a channel we want to form.  

    Oil $89.59 (not a good day to short), gold $1,622, silver diving back to $27.36 (down .50) copper $3.41, nat gas $3.03 (back to lows) and gasoline $2.84 but not a good Friday to go long either.  

    Dollar 82.70, Euro $1.2325, Pound $1.572, 78.41 Yen to the Dollar indicates BOJ buying Euros again (and the Nikkei is loving it at 8,610) and EUR/CHF $1.2009 so the Swiss are certainly fine with the Euro coming back up.  

    FAS Money – No changes and on target except I really thought we were selling the THIS weekly $88s so I'm a lot more nervous about the next weeklys, which I would not have sold as there may be huge actual stimulus next week.   But, with 15 naked longs backing us – I think we'll be OK.  

    $25KPM – Easy come, easy go there.  F F is my new battle-cry but Sept is a long way off and we may get stimulus.  SVU may get bought, JRCC is simply a good play, TLT should drop like a rock if things stay fixed, SQQQ died hard so let's buy back the Sept $60s for .30 and then next week we can re-position the $50s and, don't forget – it's a free trade anyway if ABX and BTU finish over their strikes.  DIA isn't worth the roll – let's just see how that one plays out.

    • TLT/StJ – Sad that didn't fill – was a perfect roll.  No the moment is gone, we got the drop we expected and now we're back in position with the $126 puts but those $129 puts were between $2.30 and $2.45 all morning and until 3pm yesterday before rocketing up to $3.20 this morning (+.75) while the $126 puts were between $1.25 and $1.35 that whole time and hit $1.85 this morning (+.50) so – had someone asked me in the 5 hours that roll could have been made yesterday if it was worth an extra .05 or .10 to gain $2 in position and .10 in delta – I think I might have said yes…

    $25KPA – Same adjusts as $25KPM plus EDZ may no longer be a desirable hold, CHK I love (as usual),

    • AMZN Oct is a good thing as we have ages to make good but maybe they get a downgrade so let's roll the $185 puts (now $2) up to the $205 puts (now $4.35) for $2.30, which gives us a basis of $6.15 on the $4.35 puts but we're not ready to dd yet – hopefully (and I know that sounds funny as we lose money on the initial 5 contracts) AMZN goes to a very silly high and we can roll them again before we DD. 
    • AAPL now lagging the market by a lot – seems very odd.  Let's roll down to the $585 calls ($5.55) for $4.40 and see how the day goes – if we get a big pop in AAPL, I might want to sell some next week calls to help pay for the roll.  

    DIA – OOPS – I meant the Aug $127 puts above at $1.08 (now $1.05) not calls.  Hard to mix up though as the calls are $3.15.  


  33. Momo / Lflan – I did miss that trade lflan! I'll update the portfolio now!


  34. /YM at 12,900 for you Futures players!  Nas (/NQ) just under 2,600 at 2,597 so that break up would be a good indicator to give up the shorts as would 780 on the RUT (/TF now 778.5 and, of course, we're done with the longs from this morning!).  

    Dollar testing 82.50 makes me thing a bounce should be in store around here.  


  35. SQQQ – the Sept 60 call is 1.40, not .30 now.


  36. well if you told me to short aapl and go long AMZN I would have called you crazy, but here we are…the market is very good at humbling us professionals…and the pundits are saying buy more AMZN now??? I just do not understand, oh well next trade:)


  37. Update MoMo portfolio:

    Great call on EXPE lflan… but join the club on AMZN!


  38. FAS Money / Phil – This week's 88 were around $0.60 then… 


  39. I think Romney is starting to unravel.  First he criticized London's security and questioned how prepared they were, London got pissed, Mitt quickly backtracked.  Then he came out and said that the firearms used in Aurora were illegally obtained and they weren't and there was no report that they were.  He just making up anything right now with the assumption that no one in the world is going to check on it.


  40. Phil: AMZN short calls
    I am in 1X Aug 335 C sold short and am ready to either roll to 2X the AUG 240's or keep the 235's and add  1X the 240's., which makes more sense from a premium sold perspective?  I love AMZN services and have 2 kindles but am perfectly willing to work this longer term with another DD to higher prices and rolling to later months as needed.  TIA


  41. Phil: s/b Aug 235's



  42. phil – "(/TF now 778.5 and, of course, we're done with the longs from this morning!).  "
    I bought the TNA Aug BCS 49/54 based on your  call. Not sure what you mean by the above statement. Should I hold TNA or get out.
    TIA
    gandhjo


  43. scottmi / Cramer is buying WY as well


  44. Just what the world needed – more unrest:

    http://www.wired.com/wiredscience/2012/07/drought-food-prices-unrest/

    Twice in the last five years, rising food prices triggered global waves of social unrest. With drought baking U.S. crops, another round of soaring, society-straining price spikes may happen in coming months.

    But let's not worry about climate change….


  45. With a chart about possible scenarii in food prices:


  46. StJean — SQQQ — It looks like you have the Aug 50/60 prices on your chart, not the Sept. prices…I'm showing $2.95/1.30…


  47. Cramer/Savi – Yes, it really makes me question my own thinking when it's in line with his…

    GT popping 10% this morning.  

    USG/Savi – It's a nice housing recovery play but the fact that they fell to $5.75 last fall keeps me from being bullish at $16, which is pretty much where they were last July before diving 50%.  

    Who/Lincoln – When I got my first DVD alarm clock, Slip Kid was my wake-up song for many years.  

    Weekend/Amalfi – Aren't you supposed to call me?  

    Townshend/Mike – Heroin does wonders for your concentration…  

    Rolls – You guys are never going to get rolls if the only way you fill them is to get both legs as a spread.  Remind me this needs to be a demonstration topic in November on our open market session on Monday.  You will learn by losing but all you are doing is identifying the intra-day channel and timing it – it's no harder than when we identify a longer-term channel except you are just playing for .05 or .10 moves to get your fills.  As I have said many times – I make an individual offer on both sides that is LOWER than my base and, whichever side fills first – then I just work on the other side.  If you identify the channel correctly – the times you make .10 or .20 better entries will usually exceed the amount of times you get burned for .10 or .20.

    For instance.  TLT is falling now so the logical thing to do is FIRST buy the $129 puts ($3.35) and THEN look to get out of the $126 puts (now $1.91) for $2.35 if possible but you put a stop on them (mental) at $1.80 – like a momentum play, so your worst case is you did the roll for $1.55 – if you get lucky, we get a nice break below $119 and you sell the current puts for a much better price.  Of course, I would not do that NOW because we BROKE the channel we were in but I sure as hell would have done it when we were testing our LONG-STANDING top at $132 yesterday.  That should be obvious!  

    Now we can assume $129 is the bottom of the channel and SELL the $126 puts for $1.90 – which is a fine and dandy profit if we don't get a bounce but, if we do get a bounce, then our plan is to watch the bounce (20% of a $3 drop is .60, 40% is $1.20) to see where the momentum stops and we re-establish the $129 puts there – hopefully for $2.90 or less .  See – you can play it either way if you just pay attention to the channel!  

    Our watch indexes are just over their lines at the moment but Dow still under at 12,985 and Dollar right on 82.50 so very exciting!  Volume on Dow is so-so at 32M at 10:30.


  48. SQQQ / Esco – Correct, thanks!


  49. INteresting from Andy Zaky – AAPL now trading lower for sixth day in a row, almost never happens.  And AAPL now trading below its lower B-band…meaning, prepare for catapult…



  50. TLT – I didn't pay enough attention to the channel. Bought the Sept $126 puts at $1.26 three days ago and sold for $1.83 when the dollar seemed to bounce at $82.50.  The dollar is still bouncing while TLT is heading down to $129.  i took a tidy 45% profit not wanting to be greedy, but I've left another 10% on the table.
    Was my mistake solely in missing the channel?  Where do you see the top of the channel if I wanted to get in at a later time?


  51. Once again EXPE proves it's way better than PCLN but, once again, PCLN follows EXPE higher as if they are the same.  

    AMZN/Edro – Great instincts on the roll.

    DMND/Newt – I like them for $19 in Sept so I'd take out the $21 calls for .50 if it fills and wait and see for next week.  If they go lower, you can sell the $17s ($1.20) and use that money to roll down to the $14s ($2.90) for about a dime out of pocket and you've dropped your spread $2 for net .60 more.  

    AMZN/Pat – Right idea, not ambitious enough.  What if this pop is totally wrong?  We think it is, maybe some clever analyst will too and send them flying back down?  Worth taking a chance if you have conviction on a position.  

    CAKE making new highs – that's a pretty bullish sign, people seem to be moving upscale a bit in their dining choices.  

    DIA/Jerconn – Thanks.

    PCLN/Ging – I think stay out of the way until next week.  If we get stimulus – all bears are screwed.  

    DIA/$25KP, Real – Yes, the idea is to have a "temporary" DD on the DIA puts, hoping to make a quick score that essentially lowers the basis of the ones we already have or, if we get stopped out, adding a dime to our basis cost on the DIA shorts we already have.  

    TLT – As I was saying before, we expected a bounce off $129 and we did not get it so the premise is blown and, if we were fishing for a better price and had an unfilled leg – now we would be forced to capitulate and fill it since we don't turn a bull spread into a naked risk.  

    Dollar still holding 82.50 so all is not lost for bears but not looking so hot either….

    Euro zooming to $1.2367, Pound just rejected at $1.575 though.  Yen is flying – now 78.56, .57, .58…  Somebody hit the buy Euro, sell Yen button.  


  52. Hi  jerconn
    what do you mean for  "prepare for catapult…" ? 
    TIA


  53. Phil / AMZN   Phil couldn't fill the Oct 205 roll @ 4.35 , selling for 4.80 now. What do you think?


  54. MoMo/StJ, Lflan – What a great break with PCLN.  I'd be happy to get out alive!  

    That's it for the DIA puts – stopped at .95!  Next move would be to put money into improving existing puts but let's see where this ends – if they crank up AAPL – they sky's the limit.   

    FAS/Crussell – At the moment, I'm happy to be on track.  I am not bearish on the Financials into next week (the sale of the next week $88s was a mistake, I only had faith that this week they would stay below) so I would not pay $1 for puts I don't believe will trigger.  If I thought we would pull back on Monday – then yes, I'd want to work it.  


  55. Phil / I'll be in touch tomorrow


  56. Loving the momos i'm playing.
    Ok guys, want your opinion on the following: OPEN, GMCR and SODA.


  57. smala/AAPL – meaning it's dropped so low (relative to its performance) that it's ready to catapult higher.  Oversold, under its lower Bollinger Band, six days in a row down – all point to a leap higher, as Phil was implying also…(buy 585 calls)


  58. German FinMin and Geithner to hold press conference on Monday. 


  59. Phil: AMZN short calls
    think i submitted this just as you posted earlier

    I am in 1X Aug 235 C sold short and am ready to either roll to 2X the AUG 240's or keep the 235's and add  1X the 240's., which makes more sense from a premium sold perspective?  I love AMZN services and have 2 kindles but am perfectly willing to work this longer term with another DD to higher prices and rolling to later months as needed.  TIA


  60. Impetus/DC – MORE FREE MONEY!!!  What else do you need?

    AAPL TODAY $580 calls at .30 are a fun trade.  

    FAS/StJ – Oh I know, it was the wrong week but the point is I would not have sold the next weeks just because I read it wrong – I would have ditched the trade – and that seems to be a shame that we didn't but now we get to roll, which is always fun.  

    Mitt/Rustle – I think he's working off-script over there and he really sucks off-script.  

    AMZN/Lincoln – Yeah, I'm not a big fan of selling short calls on Momos.  I assume you mean $235 and why would you get out when they are still 100% premium?  I do like adding 1x the $240s with a tight stop on the $235 caller BUT the same analyst who may downgrade AMZN on Monday and drop them $20 may upgrade them on Monday and pop them $20 so maybe you want to wait before pressing a bet with unlimited downside.  

    TNA at $51.50 already, $49/54 bull spread at $2.35 so no big move yet but nice to be $2 more in the money for just .15 more in price – spreads are so silly sometimes.  

    TNA/Gandhjo – I was talking about the early morning Futures play, not the spread.   We picked up a $500 winner on the Futures and that more than pays for 2 spreads so a very good deal when playing both.  The TNA spread is for possible QE action next week.  

    Food riots/StJ – Good time to remind people of my favorite economic cartoon:  

    DIA – Now I do want to spend .50 to roll up to the Aug $128 puts ($1.25) in both $25KPs.


  61. DIA/Phil – hmm. out at .95 has the puts right at (and still under) charty trendline resistance. I'm seeing a few other stocks all pushed up to resistance lines..  suspiciously.  All waiting for QE? Hold to sell AFTER it comes or is a pop up too risky? it if doesn't come, or if people remember everything isn't fixed or any different except data is worse then… 
    what an exciting morning. ;-)


  62. DMND/ Phil: Thank you.


  63. Gold is acting really droopy for a free money stimulus fueled rally.


  64. Anybody watching AAPL?  It's moving…from $572 to $578 so far…target ~$590


  65. What's the difference between the 'Price' and the 'Act Price' when you're using a stop limit? 


  66. MoMo trade:   I sold the 5  EXPE Sept 45 calls just now for 12.05, a triple.  Now Phil, and stjeanluc, think like I'm thinking for a moment, about PCLN.  The reason I made the EXPE play was that I thought it would pop on earnings.  And of course that would push PCLN higher, and it did.  So I didn't panic yesterday and buy back the short PCLN puts at 40+, and I hope no one else did either.  We have to close the PCLN trade today, as it's Friday.  But what do you figure PCLN will do between now and August 7, when they report?  Go down?  I doubt it.  I think they go up higher right into earnings.  So we buy back the puts today, and then what…..I haven't decided yet, but I think PCLN needs to be played here to go higher, not lower.


  67. mrm – where are you on VVUS Aug 18 puts? Holding, converting to a spread?


  68.   imf just said collateral at ecb vulnerable to downgrades, margin calls


  69. Now, regarding AMZN.   What the hell is wrong with these people (buyers) ?   Or am I the one that is crazy.  I told you in a post 2 days ago that this thing might go up with earnings, then I reversed my own judgement and bought some puts the next day.  At least I was doubtful enough about the play to pair it with a more confident long call on EXPE.  So now we hold a couple of Sept 215 puts in the MoMo.  Should we hang onto these?   Or just dump and move on? 


  70. Phil do we get out of the TLT positions now with $400 profit or not yet.


  71. Phil do we get out of the TLT positions now with $400 profit or not yet. in the 25kP


  72. PCLN / lflan – I think that it's too scary to roll to Aug as they report in between so the play should be for next week. DD on the current position to buy $20 is not really an option as it uses too much margin given our portfolio's premise. If we stick to PCLN (and we don't have to – plenty of fish in the water), that would leave selling next week's 665 about even by EOD. That's plenty bullish. You could roll down lower and sell calls to pay for that, but I would not be crazy about selling calls against them now!


  73. AMZN — I've learned a long time ago not to bet against Bezos.


  74. jerconn - you made my day!  I'm too busy for crazy plays today but when I got to work and checked PSW before a meeting the most recent posting here was yours with 'AAPL' and 'catapult' in the same sentence, so I bot some calls and went to the meeting.  When I came out my calls had tripled so I sold; I'm done trading for the day and I owe you a beer, bud!


  75. ROFL 1020 – The last panel was great "brought to you by Shelly Adelson."  This one is good too.  

    HILSENRATH!!!!  OMG are they freakin' kidding?   And the headline has nothing to do with the content!   WTF???

    On the table/Rperi – No such thing.  You didn't waste your time hoping for 10% more and moved on to find the next 45% opportunity with your cash!  In this case – $132 was my predicted top and, if you look at how it behaved early in the week – it pretty much confirmed it was having big trouble there.  Also, notice $129 is holding, just wasn't a firm hold and you can see the support there too going back to the middle of the month. 

    Speaking of channel tops – oil at $90 again but kind of dangerous on a Friday.  

    Hopefully Dow 13,000 is too tough to crack today.   

    AMZN/Jyoti – .50 more is a lot to pay.  I'd wait because, as I said above, we could get really burned on Monday and THEN you'll get a much cheaper fill.  If it goes our way – you'll do fine.  

    Thanks Amalfi. 

    Beaten down MoMos/Lolo – I think GMCR has been completely discredited but, in a brainless rally, the other two might do well.  

    AMZN/Lincoln – Well same response unless I'm really confused.  

    Holding/Scott – It's good to use your discretion.  I agree with your assessment, I'd rather risk losing another dime and waiting because my .95 target was fairly arbitrary to the price I THOUGHT it would be at when we topped out.  Still, can't spend all day calling audibles so, for those who don't feel comfortable making the decisions, I keep it simple in and out with stops.  Expectations are now so high for bailout action next week that I think we may be topping ahead of the news – and you know how that ends…

    Now they are saying $300Bn coming from Geithner and German FM on Tuesday night – that's 30 S&P points!  

    You're welcome Newt!   Nasdaq hearing is scheduled for July 26th.  

    Gold/Kinki – I think gold is priced more on fear of EU collapse than inflation so it goes down when Europe calms down.  Same with the Euro – they can do all the QE they want but the Euro isn't priced this low (from $1.40) over easy money – it's a fear of a total collapse of the currency.   

    AAPL/Jercon – I'm watching with the $580 calls, already 1/2 out at $1 for a free ride!  $585 would be a nice way to end the week…  Stop at .75 though – no reason to blow a nice little gain.  

    Act price/Amalfi – I have no idea.  Maybe they mean last.  

    PCLN/Lflan – I agree, based on EXPE, they may now go back to $700 in anticipation of good things coming but I wouldn't bet them up – I'll just be there to short them if they pop again.  You're talking about playing expectations but I'm looking at the reality of it, which is they just popped from $620 based on someone else's earnings and NOTHING, that they themselves have done – that's just silly. 

    IMF/Angel – WTF?  How can they be so off script with everyone else?  

    AMZN/Lflan – Sept may be cutting it close but last year they popped on earnings and all the way until August ($227 high) and then crashed back to $177, which is a 20% drop in a month.  Then they climbed back to $246 in Oct but were at $166 before XMas and I see no reason to think that channel is broken yet.  

    TLT/Micro – Tempting but no because I think we can do much better.  


  76. Strip Clubs in Tampa Are Ready to Cash In on G.O.P. Convention
    http://www.nytimes.com/2012/07/27/us/strip-clubs-in-tampa-are-ready-to-cash-in-on-gop-convention.html

    i guess conservatives like to have fun too :)


  77. nicha / vvus – I'm not in Pharm's play, sorry, I got out of his crazy spreads before the announcement.  I bot the AUG 25 puts after they announced, sold half yesterday and am riding the other half.  Looking at VVUS today with another bearish engulfing candle, you probably don't need to rush to cover.


  78. MRM – it was a quid pro quo – thanks for the QQQ's from yesterday, I'm still holding on to half of them, expecting to get out as AAPL tops out, hopefully!


  79. stjeanluc/PCLN….we can absolutely not roll to August, but we can and probably should roll to next week.   And no, calls should not be sold on this stock right now.  So we'll see what EOD brings.  I agree with Phil….the best new play on PCLN could be post earnings, when it might be short-able after a pop. 


  80. AMZN..MoMo trade .  I sold the Sept 215 puts for 4.40.   I don't think holding puts on AMZN is the best play right now.   I'm thinking more in terms of selling naked calls, but I'm not sure yet.  But I'm out of the puts in the MoMo, as I think they will just lose more money. 


  81. PCLN - don't get too excited about going long on this one yet, it hasn't broken above its downtrend line from April.  Today's jolt is just the normal silliness they do to get it around 666 on key days, for some odd reason…


  82. Phil: more pop
    "same analyst who may downgrade AMZN on Monday and drop them $20 may upgrade them on Monday and pop them $20"
    oh, I hope so… 


  83. MoMo trade…I just bought back the this weekly 675 puts for 11.00, so the trade was a wash (for now).  I've not decided what to do next with PCLN (if anything), but the MoMo port only contains the AAPL Jan 600/650 bull call spreads now. 


  84. There is very strong resistance at IWM 79 today, the top exclude some crazy stick.
    In AprilI I said AAPL was fair priced at $54? 3 or 6. By the same numbers it is now fair value at $521. After it hits somewhere near that it should go up expecting super earnings again even though the trend is clearly down. FWIW except market crashes before the election.


  85. Didn't think a 1.5% GDP print would get us Dow 13k again but here we are.


  86. TZA set up coming.  Waiting for second white confirmation candle……1/4 position


  87. PCLN / lflan – Maybe your original 675 target could be reached today! Just unreal….


  88. THAT MAKING ITS WAY AROUND TWITTER


  89. stjeanluc….I've considered that as a possibility, but I got out even anyway.  I'm not a TOTAL cowboy!   :)    Just for fun I bought one (1)  today 670 call (not for momo, just for me) for a buck, just so I can say I was still in the right end of the trade if it gets there.   :) again. 


  90. Ah the beauty of the second candle! Protects against false moves…


  91. Seriously, on PCLN,…..IF we get a pullback, we should sell some next weekly puts.  If we don't, well…………


  92. I'll be back late afternoon.   Good trading! 


  93. Looks like the world's economies were fixed and the drought ended while I was at the gym…when can we short this nonsense? this bear is hibernating in ca$h.


  94. stardawg
    When did you see it? We passed 78.73 and the next line I have is 79.29 with trend and fibs at 79.00 waiting for direction 100% cash.


  95. Phil / I'm holding a 60% gain on TLT Aug 128 puts.  I don't want to be greedy, but I also don't want to be foolish either. If the Banksters come up with a real deal stimulus this weekend, the upside on the 128's is guaranteed.  If we get a disappointment from them, what do you see happening to TLT on Monday morning?  I know the rule about selling half if in doubt.  I just don't see the downside clearly.


  96. Phil, 
    what's the advice on the Amzn Oct. 185  Ps?


  97. Phil:  A bit confused by your Hilsenrath / Headline disconnect comment.  The headline suggests that the Fed has key price indices below 2%, and states that business investment is at adequate levels [8%+], with contracting defense spending that takes pressue off the indices.  The conclusion is that the Fed can stimulate/print money/whatever else without blowing it's inflation targets by much.  You yourself wrote about inflation hypersensitivity being a new phenomenon, that was not viewed as being invidious per se in the past.    Please explain where you're going with this.


  98. Nobody told VIX this is a rally day.  I'm just watching most of this craziness from the sidelines.  Trying really hard not to pull the trigger on an AMZN put diagonal.


  99. I shorted UNG the other day.  If the uptrend truly is broken for now, contango should start to play against UNG, shouldn't it?


  100. lflantheman 
    Do you think this is a good time to get in aapl Jan 600/650 call spread
    at16.85?
    Thanks


  101. /ES headed for 1376…we were there 7 days ago and 1321 just 3 days ago. If the big banks aren't making money trading these wild swings… then who is?


  102. I cannot remember a time in my trading career when bullish market moves seemed so disconnected from reality, at least since the tech bubble. AMZN is the final straw for me.  How can this stock go up on a bad earnings report and a bad forecast?  For that matter, how can the market be rising so easily, on rumors, in the face of such an overwhelmingly high wall of worry?  I'm going to hunker down in cash and enjoy the beach, until some semblance of an appreciation of reality appears, somewhere. Y'all enjoy, and I am definitely watching and learning in the meantime.


  103. The Big Chart trend would suggest maybe another up day on Monday with Asia and Europe boosted by today's rally but down days after that as we reached the upper limit of the channel. But who knows what happens over the weekend!


  104. Strip clubs/Micro – Reps very big on that stuff.  Dems more likely to be in hotels with women.  

    AMZN up and up.  

    Very good market action considering Dollar did bounce off 82.50 (now 82.58)

    AAPL topping out right at $580 – not worth gambling afternoon on $580 calls at $1.05 so done . 

    AAPL/Angel – Interesting as usually they bombard it negative BEFORE earnings, not after.  

    2nd candle/Star – Very true!  I usually look for 2 10s. 

    When/Rebel – I was just listening to Bloomberg Radio and word is massive CB action next week.  If not – HUGE disappointment.  

    TLT/2Can – Aug I would take and run – timing's too tight with next week too random. 

    AMZN/Rms – Rolled up to Aug $205 puts (see above) 

    Hilsenrath/ZZ – I guess you can count the first sentence as him making his point.  Gee, if that's all it takes, I'll start having my morning posts done by 6:35!  The Fed actually has no specific inflation target, though 2% is assumed and I'd be more concerned about the fed not wanting to "overheat" the economy than inflation numbers.  The hawks argument on the Fed has always been that they are simply not giving adequate time for existing stimulus to work through economy and the danger of putting more in now is that you can drastically overload the system as QE1 and 2 kick in late. 

    VIX/Rkyro – Yes, very flat considering another big up day.  

    UNG/Rkyro – You would think but going against logic this month.  Surplus has trimmed a lot though due to drastic production cuts (still building but not as much in a typical summer).  

    Beach/Mike2 – Very wise move!  

    Monday/StJ – We have good momentum now and expectations of action are for Tues/Weds so no reason to slow down on Monday:  


  105. WTF?


  106. stjeanluk
    My viewpoint is almost exactly yours. The one difference is I see Monday as going nowhere, flat open, up or down .5% and close about at the start or close today. Again as stated and more likly now a stick close doesn't count. Anti stick close will really throw everything off.


  107. From ZH – Draghi said to hold talks with Weidmann on new ECB measures.  Draghi's proposal said to include bond buys, rate cute, new LTRO


  108. Draghi in favor for ESM banking license


  109. WTF is right, rainman!


  110. good thing AMZN blew out their numbers…oh wait


  111. Hard drop on the TLT…..!


  112. ALso from ZH – "An ECB spokeswoman said in an emailed statement that it is usual practice and nothing special".


  113. what a spike!


  114. WTF? I F$CKING HATE THIS MARKET!


  115. Wow – who let the dogs out that time?  There goes 13,000 and 790 in the Futures – crazy!  

    Dow volume at 1:30 just 64M – never have so few bought so little and done so much….  

    KO with a p/e of 21 at $80.  So what's this "growth" stock going to do?  MCD quite the bargain at $89 with a p/e of $16.66 – as we know, 666 on a stock is a sign that Lloyd has blessed them!  

    TLT $128 now – incredible drop for 2 days in the multi-Trillion bond market – that's going to chase money into equities.


  116. How about PCLN – over 675 after all and going for 680. Up almost 8% today. Just unreal….


  117. PCLN= CRAZY


  118. Pretty painful to miss this. But at least flat is better than short – account will be ready to go on Monday. Have a good weekend everyone.


  119. TLT / Phil – we have 60% on hand now with the 126 puts…. What's rule #1 again!


  120. Gold woke up quick!


  121. Wow, Draghi MAY be talking to the Germans – that's been confirmed!

    PCLN with a $50 pop and not even earnings day for them.  At this rate, they could be at $1,500 by earnings…

    13,100 and climbing.  And to think we thought 13,000 would be resistance.  

    Steve Leasman says Budesbank won't confirm or deny meeting – see it's official!  


  122. F goes green!!  oh and FU F


  123. stjean:
    I think we need those TLT to offset what is happening to the DIA puts!


  124. TLT/$25KP, StJ – Well now we have to take the money and run!  


  125. OUT OF BONDS INTO STOCKS 


  126. From the WSJ today…
    "However, Germany's Bundesbank reiterated its opposition both to any further government bond purchases by the ECB and to allowing the bloc's rescue funds access to ECB financing.
    "The Bundesbank hasn't changed its opinion" on such purchases, a spokesman for the central bank told Dow Jones Newswires Friday."


  127. BOA MODELING IS PEGGING 110% OF QE3 PRICED IN 


  128. ANFD YOU KNOW HOW CLAIRVOYANT THEIR QUANTS ARE


  129. TLT/ Phil: Thank you!


  130. Son of a bitch with AAPL.  I like to say you shouldn't regret taking a profit but SON OF A BITCH!  

    AAPL Aug $585s at $9 already.  I wish that hadn't happened as it's rough in the $25KPA not to take that and run since it's up $3.50 since we did the roll (63%) and it does cover our losses and it is $2,000 profit so – damn – I guess we have to take it and run.   


  131. wow Phil—thx for TLT and AAPL—I missed it the other day but got in today


  132. so they fool markets again with more smoke and mirrors…if real economies keep sliding then it wont matter
    they are talking bond buys, more ltro and a rate cut….hahahahah….YEEFUCKINGHAW!


  133. http://www.reuters.com/article/2012/07/27/us-eurozone-spain-idUSBRE86Q0JS20120727  Unnamed EU official states that, until the ESM is set up in September, there will be no Spanish bailout by Germany.  Six long weeks for Spain, which is mostly on vacation [well, over 25% of the working population are on "unpaid" vacations].  A long time for Euro currency owners to sustain "hope" as their strategy.  Draghi's blowing smoke, sez I.


  134. Might need a breather:

    http://www.bespokeinvest.com/thinkbig/2012/7/27/dow-30-trading-range-screen.html

    HPQ, CSCO and AA still lagging though….


  135. Maybe Frau Merkie should go on vacation more often! glad i'm just an observer…madness.


  136. Reminiscent of 2000 and 2001 with the tech stocks except this time it is the whole market- maybe the most irrational market I have ever seen in my 35 years of watching closely!


  137. Offset/DC – This is how you work a balanced portfolio – now we take the TLT and AAPL profits and plow them into improving our DIA puts and then we buy something else bullish that is covered by the DIA puts and, if we go up again, we buy more DIA puts with those profits until we have $25,000 worth of DIA puts and then the market crashes and we make a fortune (ideally).  

    110%/Angel – Yep, that seems about right.  

    You're welcome Newt, Savi – congrats!  

    Overbought/StJ – Not critical yet.  UTX interesting.  HPQ funny.  CSCO still looks good.  

    I knew I should have gone gung-ho bullish when Cramer said to sell!  

    Bubble/Jthom – Oh this is nothing yet.  Call me when YHOO is back at $300 and then we'll talk.  

    Deficit only $1.2Tn!  Isn't that fantastic?  


  138. This is rediculous !
     
    Short DIA, SQQQ, TZA for Aug…


  139. TLT : Phil is that a sell ?? or sarcasm :) i coudn't tell


  140. Phil,

    Dang It – the stupid EDZ hedge went awry.  Any suggestions?
    It was the 14/18 BCS financed with the 15 Putters (all Aug).


  141. WSJ – "Many ECB members surprised by Draghi's comments suggesting new bond buys" also "Draghi wants to discuss buying govt bonds simutaneously with eu-sone rescue fund"


  142. Phil:
    Guess in my portfolio I am currently a little short of bullish positions without TLT and AAPL.
    I did scalp AAPL $585 calls for a nice 50% gain and 75% on TLT. Not a bad days work. But now what to buy?
    I want to be balanced.


  143. Wow, that Euro rally is sure showing some staying stamina  -  [irony, Phil :) ]


  144. DC – EDZ looks cheap


  145. Ah, Peter- almost all the RUT premium has been crushed. Selling some SPX Sept calls here-1450's


  146. Inkarri 19
    I agree, but too much headline risk at the moment for me to get back in to EDZ.


  147. Buying CCJ January bull spread.  BoA upgrades CCJ today, falls 3%.


  148. LIKE A RATE CUT HELPS AT CURRENT LEVELS….JUST WEAKENS THE EURO WHICH MARKET HATES..FIRST LTRO WAS A DISASTER AS SPAIN /ITALY LOADED UP WITH TOXIC DEBT…AND BOND BUYS ONLY VERY SHORT TERM BAND AID!! BUYBUYBUY
     
    I REALLY BELIEVE THE ECB WANTS A WEAKER EURO THE MARKET JUST HASN'T FIGURED IT OUT YET


  149. Phil: I have the Aug 18/20 Bull Call for $1.06, Aug 18 puts sold for 0.41. I am thinking of rolling my 18 calls to the 16's for an additional $1.10. TIA.


  150. You mean restickulous, right ITrade?  

    TLT/Micro – Up almost 100% is a sell!  No sarcasm when we're cashing in our winnings.  

    EDZ/Haschade – I take it the bull call spread was free (assuming the $15s expire worthless).  I'd roll the $14s (.92) to the Sept $15s ($1.25) and let the $18s burn over the weekend.  We assume EDZ will go lower and you can roll down cheaper and then pull the short calls and wait for a bounce to sell.  As to the short $15 puts ($1.60) the Sept $14 puts are $1.50 so no worries yet and they still have .50 in premium to burn so why pay it when it's still possible it all unravels again next week?

    What to buy/DC – SVU still under $2, WFR $1.80, DMND $16.50, CSCO $15.65, BAC $7.31…

    Irony/ZZ – Hmmm, is it?  

    SBUX – We forgot to buy them!   Let's sell 10 Jan $45 puts for $3.05 in the Income Portfolio.  

    CCJ/ZZ – A constant favorite.  


  151. If the EURO falls, then the USD should increase and that should send us down relatively..


  152. Do I get this correct, "We are going up on confirmation of a rumor!" Yes?


  153. Shadow- not exactly, we are going up because we are going up.


  154. Looking at the Dow chart, they’re going to have to come up with more ammo to push it up further:


  155. pastas
    Then we have to be bullish when it is going up because we have to be right when looking back. That goes along with never look ahead becaus you may not like what you see and we have been warned!


  156. I just sold my single (that's one) PCLN 670 weekly call bought at 1.00 for 6.60!   I should have bought a hundred of them.  Now I'm telling you, PCLN is not going to stop here.  It's going up more next week!  I've still got 90 minutes to nail down the right trade.  And EXPE….we took profits on that one at the peak….  And AMZN continues to ramp up. Glad I closed the puts.   And AAPL?  Gee willikers.   What a day!


  157. Irony / Phil: Well, you were really wearing the clever trousers with that one!  Very funny.


  158. we did not cross trendline support on either dip


  159. stjean: That is one bullish looking chart


  160. Rate cut/Angel – When they start paying 0.25% for me to borrow money – it will help.  I don't think the weak Euro is the goal because the Euro is weak over break-up possibility – let's say .20 is that and .05 is QE.  So they can easily jam QE up to .10 if it cuts the fear in half and still make progress on the Euro/Dollar trade and I imagine $1.30 is the most they are hoping for anyway at this stage.  

    Mystery stock/JBur – I'm going to go with VIX and say yes to rolling to the $16s but why not take out 1/4 to 1/3 of the $20s too – just in case you get lucky?  

    Rumors/Shadow – Well it was the best-selling album of all time.  Powerful stuff…

    More ammo/StJ – No problem.  Draghi's driver will tell Der Spiegel this weekend that he heard him on the phone discussing "the big one" coming next week and then Bernnake's barber will tell the WSJ that he's having his hair cut on Tuesday because he wants to look nice for some big announcement and Merkel will remain on her month-long vacation so she can't be reached for comment which means everyone can assume she'll say yes right up to the moment she comes back and says no.  

    TNA almost as goal on day one.  $49s at $5.55 – tempting to cash them out here but too scary to leave naked short $54s.  

    I love that bit, ZZ.  


  161.  "(Reuters) – European policymakers are working on "last chance" options to bring Greece's debts down and keep it in the euro zone, with the ECB and national central banks looking at taking significant losses on the value of their bond holdings."  Ah, that bodes well for a Spanish bailout  [Warning; irony]    http://www.reuters.com/article/2012/07/27/us-eurozone-greece-debt-ecb-idUSBRE86Q0LC20120727  


  162. The market always has a familiar smell at the end of the month.


  163. stjeanluc…would you have dreamed earlier this week that the PCLN put sale would have come in 100% profitable, had we held it until this moment?   I find it amazing that another company's earnings has such a shoving effect on this company.  BTW, PCLN is listed as 99% held by institutions.  Can this possibly be correct? 


  164. I love it when a trade really comes together.  After 4 DD's and a roll, I cashed out 16 times my initial position in TLT today for a 140% gain.  Thank you Phil for the lessons in scaling in, and paying for position.


  165. La Vanguardia headline, Economía | 27/07/2012 – 17:35h [2:35 EDT]  (Barcelona's leading newspaper)  "El FMI empeora su previsión de caída del PIB español para este año y 2013. El Fondo dice que la economía española se contraerá un 1,7% en 2012 y un 1,2% en 2013.    ["The IMF worsens its projections for Spanish GDP for 2012/2013, expecting a 1.7% contraction in 2012 and 1/2% in 2013."]  Not too cool.


  166. qcmike…AAPL….It's not the best thing to play right now.  I look for more pullback in near term.   I'm looking at other more interesting plays. 


  167. PCLN / lflan – If you had told me on Wednesday that we'd make our target I would have asked you for the stuff you were smoking! I would not be surprised that they are 99% owned by institutions. At that price, few retail investors can own 100's of share!


  168. Spain / Zero – Here you go with your negative waves… Just drink the Kool-Aid and be happy for now! Good news is good news and bad news is even better news.


  169. stjeanluc…..et al….a good trading point….when you are selling puts I think you should always plan to make your roll on Friday afternoons, if you have to.   It's only then that you really know what you need to do.  But even then, this is a highly unusual move.  Have said that stj, tell me PCLN won't be over 700 by next friday. 


  170. Screen shot 2012-07-27 at 12.16.40 PM

    Apparently it's a family tradition with animals!


  171. PCLN / lflan – 690 has been a tough nut to crack these last 3 months… It's actually a strong S/R line going back to March. I dunno!


  172. considering the bazooka of money the market seems to think central banks are going to throw at them…gold trades TERRIBLY
    CONSIDERING THE BAZOOKA OF MONEY THE MARKET SEEMS TO THINK THE CENTRAL BANKS ARE GOING TO THROW AT THEM…GOLD TRADES TERRIBLE


  173. LOL  STJ


  174. Phil: LOL and sorry about that… It was the TZA Aug 18/20 Bull Call, rolling to the 16's Still a good roll? Thanks


  175. Phil AAPL did hit 585 crazy high came in at $662! I still see $520ish first.


  176. angelcur/gold
    For that matter oil didn't really play along testerday or today either I expected oil to be up at least $5.00  and  its having a hard time staying above 90.00


  177. MoMo trade:  Buy 3 LNKD Sept 100 calls at 11.00


  178. $585 on AAPL! 

    99%/Lflan – Doubtful but maybe that explains how it can get yanked around like this – just a trading toy for the big boys.  While very impressive looking at (what?) $682, the whole company is only worth $33Bn – about what AAPL trades in two hours.  

    TLT/2Can – Congrats and you are very welcome!   That's the whole key, make little profits here and there, take little losses when you have to and, once in a while, you catch a big one.  

    Spain/ZZ – It doesn't count if it's in Spanish.   Seems like it was a good excuse to spike the market even higher…

    ROFL StJ! 

    TZA/Jbur – Well that's very different.  Aug $18s are $1 and you don't want to buy position without getting time.  I'd go Sept $17s ($2.10) and split the difference.  Figure very easy to get the Dollar back when you are ready for another sale and TZA is at $17.88 so you are dropping .88 into the money for $1.10 – a very good deal.  

    TZA being so cheap here, I do like the Sept $15/20 bull spread at $2 and that pays 150% if the RUT simply fails to hold 780 and it's still about $2.50 in the money if the RUT doesn't go over 800 so there's no real reason to even offset it and, if the RUT goes much higher – then you can sell the Sept $15 puts (now .45) for about $1.50 and then use that to roll you calls further down and lock in bullish profits.  


  179. BTW, I'll update the Income and Peter portfolio after the close today!


  180. Different Scot here :) but just a reminder:
    "PCLN/Scott – Remind me next time they hit $670, that's a good spot to short them again. "
    They are nearly $683 now, unbelievable…
    Almost bang on R1 Fib PP: http://stockcharts.com/h-sc/ui?s=PCLN&p=D&b=5&g=0&id=p51615702414


  181. Good presentation on behavioral investing:

    Britholtz Final Agora 2012


  182. From Barry:  

     

    Below are some examples of politicians promising to do “whatever it takes”:

    David Cameron July 2012

    Nicholas Sarkozy Sep 2011

    Gordon Brown Sep 2008

    George Osbourne May 2012

    Alistair Darling Oct 2008

    Angela Merkel Oct 2011

    Barack Obama Jan 2012

    And Bernanke said the Fed will do “everything possible” to save the world in Feb 2009. This type of phrase is nothing more than rhetoric. If they really knew what needed to be done, they would just do it instead of promising to do it.


  183. Barry's succinct summation of week’s events:

    Positives:

    1) ECB gets off its arse and swings hammer of the printing press.
    2) Italian consumer confidence bounces slightly off lowest level since at least ’96.
    3) China’s July HSBC flash mfr’g index rises to 6 month high but at 49.5 is below 50 for a 9th straight month.
    4) With record low mortgage rates, refi apps rise to the most since Apr ’09.
    5) Jobless Claims fall to 353k, 27k less than expected but throw it out with seasonal distortions from historical auto plant shutdowns that aren’t shutting down this summer.
    6) UoM final July confidence ticks up a touch from preliminary but finishes at lowest of the yr.
    7) KC region mfr’g PMI up 2 pts to +5.

    Negatives:

    1) US Q2 GDP up just 1.5%, slowest in a yr with no improvement seen in Q3.
    2) June Pending Home Sales unexpectedly falls 1.4% vs est of up .3%. NAR cites lack of inventory and not demand but it’s not like job and income growth has suddenly picked up.
    3) June New Home Sales total 350k, down 32k and 22k less than expected.
    4) Notwithstanding record low mortgage rates, purchase apps fall 3.2%.
    5) Ex the volatile headline #, June Durable goods weak.
    6) Richmond mfr’g falls to -17 from -3.
    7) German IFO business confidence falls to lowest since Mar ’10.
    8) UK GDP in Q2 falls .7% q/o/q, down for 3rd straight quarter.
    9) Euro zone mfr’g and services composite index holds at 46.4 but below 50 for 6th straight month.
    10) French business confidence drops to lowest since Feb ’10.
    11) Italian business confidence near 3 yr lows.
    12) In addition to Valencia, 6 other Spanish regions asking for help.


  184. EURO METALS OIL ALL LOOKING PEEKED


  185. Savi – you should have received an email from me on Monday, resent today.  Hope to hear from you regarding Vegas…


  186. PCLN - hilarious!!!!! After AMZN earnings were a disaster and the stock went up like crazy people are like "hey, we don't need good earnings anymore!" PUMP PUMP PUMP.
     
    Sold a weekly PCLN 650 call today for 24.50 and it's at 34.50 near the close. ARG! That's a 1000 bucks!


  187. Hey Phil – I ignored your call to sell those AAPL $580s for $1 so not sure whether to thank you or not (just kidding) for my $5 winner.  Actually I want to thank you from the bottom of my heart, that was an uncanny call.  


  188. bolt—-for some reason it went into my junk mail—I will send a reply this week end


  189. Who in their right mind would think AMZN could be up 8+% today…deeply troubled by how out of touch I am with this market. Its like watching a low budget horror flick where the monster just wont die!
    Good weekend to all.


  190. Thanks Scott but now we'll have to wait for next week as stimulus can pop them much higher (and make a better short). 

    Very odd lack of commodity participation in this rally.   

    PCLN/BDC – I still have more confidence in AMZN falling – eventually.  

    AAPL/Chaser – Wow, congrats on that and you're welcome (I guess).  ;) 

    Dow 112M at 3:55 – bit of selling into the close.  


  191. Here's my MoMo trade on PCLN:   Bought to open 10  August 3 (next week)  bull call spreads  685/690  for 13.35/10.85 or 2.50.   


  192. PCLN/Phil (&Scot) – over $670. Hey, i blinked!   Thanks Scot!


  193. Crazy Plays - I need to publish my meeting schedule for you guys, every time I have a day full of meetings the momos go ballistic, wow did I miss some fun.  Finished the day with one Crazy Play – next week PCLN bear put spreads 680/670 for $3, it's touching its downtrend line.


  194. Sorry for the late post on this trade.  I moved to another area and found myself on a slow slow computer.  Anyway, the PCLN trade is very small for this momo portfolio.  It either doubles or loses us little.  Let me know if any Q's on the portfolio stjeanluc.  Have a great weekend everyone!


  195. Phil: Thanks much for help on adjusting the TZA trade!  The longer I am here on the site (2 1/2 years now), reading your suggestions to everyone, the easier this is getting. It seems that there is an ebb and flow to all of this, and if you can catch onto that, then the battle is half won.


  196. What a way to finish the week!  

    Have a nice weekend everyone – I'll be around (trying to separate fact from fiction in this crazy market).  

    - Phil


  197. Have a good weekend everyone!


  198. Happy w/e all!


  199. lflan / PCLN - Whoops, reading the day's posts I see that I did the anti-play of your PCLN trade. Oh well, the way that thing bounces, we'll probably both make money if we time our sells!


  200. Right mind/Kustomz – There's no "right mind" to this stuff.  I guess if you know for an absolute fact there will be $500Bn coming next week, then a 50-point bump in the S&P makes sense but we had 20 yesterday and 25 today so what's left to do next week?  

    Schedule/MrM – Yes, good idea. 

    Ebb and flow/Jbur – Yep, very much like learning to surf – lots of falling but, eventually, you can see those waves coming from miles away and catch them with confidence. 


  201. oooooo….  It's Mr. Mocha vs. LFlantheman!!!
     
    We should make markets on which spread will win!  
    Wow, I just returned to my PC to see this market blow up.  Wow, even with the losses on the shorts I had, my port is up today.  Yeah!


  202. ZH – Treasury officials says no announcements expected after meeting between Timmay and Draghi/Schauble.


  203. Or play the weekly strangle and they could both be right…


  204. Pretty good week for stranglers…. 


  205. "The house the guitars were kept in."  Mostly flatlined.  Maybe up 25% since 2002, i.e., 10 years.  Less in real terms, I should think. 


  206. Mitt Romney being compared to Sarah Palin over in England. The British have such a great sense of humor. If we could only get him to pick her as his VP….Saturday Night Live skits for a generation.


  207. Good recovery in the put sold but with the last couple of days, the hedges are dragging us down.


  208. Romney / Rpme – The scary thing is that this guy has been running for president for the last 8 years basically and he still seems to be so unprepared when he is unscripted. For all the fun they make about Obama and the teleprompters, Romney probably need teleprompters, flash cards and some in-ear help.


  209. Was trying to get more into cash this week, but my ebb and flow were out of balance.  Even with some really nice gains on CMG, DECK, etc, I managed to end the week down slightly.  The damage was strictly mental, but man, how frustrating!  Reading everything over, I see where I went wrong.
    So, FU, Rkyroma!  
    Thanks for letting me vent.  Off to hit the heavy bag for an hour, then back to work with a good attitude.


  210. How long do you think they will let me use TOS if I don't fund my account at TDA?


  211. What bullsh*t.  4:49 PM posting in Financial Times already has senior eurozone officials cautioning against market hopes that the ECB was preparing to restart its long-dormant bond-buying programme as soon as next week, when the ECB’s governing council meets in Frankfurt. Such believers "were likely to be disappointed."   And Wolfgang repeated his pray type mantra that preconditions exist for any ECB action, i.e. committments in writing for more austerity measures by Spain, Greece and Italy.  It;s the same old, same old – we just added 200 points to make our coming fall that much steeper.


  212. Thank you, stjeanluc, for the portfolio update.  Whee, the short strangles portfolio got pass the $10k profit mark.  I just got back in town and missed all the downs and ups this week!  Looking at the charts, that was some serious fun.  Well, not fun if you got caught in the short squeeze.  Have a good weekend!


  213. I love the short side. But there is the great challenge that you are fighting The Establishment. They wield an awful lot of power. I found that out as a Civil Rights activist in the 60's. You can have the truth on your side, sometimes it doesn't mean a thing –  maybe for a long time. "You listenin' to me, boy?!". Some lessons you learn the hard way. It's not a game to them.


  214. This shows just how systemic the corruption is:
     
    http://finance.yahoo.com/blogs/daily-ticker/tarp-even-worse-think-abysmal-failure-barofsky-says-161743679.html
     
    All paths lead to Goldman Sachs.


  215. You're welcome JBur.  

    Good balance Burr.   I'm still of the mindset to pump up those short plays into the still-inevitable drop.   I just can't find anything to change my mind other than being gun-shy over stimulus.  

    That Schauble is going to be busy – he's supposed to be meeting Draghi too!  I hope they don't DSK him when he's traveling so much…

    Stangles did amazing considering the ridiculous rally – very nice Peter!  

    Income Portfolio/StJ – Spreadsheets are a little misleading for this kind of investing.  The "losses" on RIG are not relevant, for example as we intend to be called away at $40 with a $8,600 profit.  With RIG at $47.35, we're showing a net of $34,620 – undervaluing the combo (which is 20% in the money) by $5,380.  On the nice side of it – the math is inevitable and, eventually, we grind out that $5,380 over the next 18 months so it's almost like a $300 monthly dividend just waiting to get called away.  

    • SVU was a big hit we took and certainly the riskiest play there.  
    • CSCO we should  be adding to. 
    • GT looking good. – $4,360 to be won there.  
    • X probably fine – $5,630
    • HPQ iffy 
    • F – iffy 
    • JRCC fine – $3,560 coming there. 
    • ABX fine – $4,800
    • TZA offers about $6,000 of potential upside, cost $2,400 for the insurance. 
    • ALU – probably good.  
    • SQQQ offers about $16,000 of potential protection, cost $4,400 for the insurance – we're over-insured for the Amount of short-term bullish positions we have.  
    • BTU fine for $3,840
    • SBUX fine for $3,000 

    So that's about $30,000 worth of 2014 calls we feel confident about, which is a bit less than $2,000 a month coming in as the premium washes out BUT we have $6,800 in short positions over the next two months, which wipes out the potential gains (not counting the ones we aren't sure about, of course) so we need to either pare down our insurance next week or make about $4,000 of aggressive Aug/Sept short puts that will take advantage of the protection of the TZAs and SQQQs.  

    Olympics starting early – that's going to mess up the DVR crowd. 

    Venting/Rkyroma – Always good to review but no one could have expected up 5% in two days to end the week.  Even, or near-even, is great when you misjudge the market as you live to fight another day, when things make more sense.  

    TOS/Bird – I never heard anyone say they got kicked from Paper Money. 

    Steeper fall/Den – I sure hope so or I missed this rally for nothing.  

    Corruption/Bird – Well there's a signal it's time to go watch the Olympics – too heavy for a Friday night!  


  216. Income / Phil – I was thinking that either TZA or SQQQ have to go. It seemed to me that the TZA spreads did the job earlier this week so the SQQQ 10K seems too much especially since most the other positions are already self-hedged.


  217. Holy schmoly…what a complete and utter squeeze!  Rolling up my puts and GLTA.  I have to agree with Biderman here….

    Despite Mario Draghi’s reassurance that the ECB will do everything in its power to save the euro zone, Europe is not going to do anything meaningful and central bank action will not save the equity markets – on the contrary, they’ll “implode”, Charles Biderman, Chief Executive and Founder of TrimTabs Investment Research, told CNBC.


  218. Birdman, TOS – I don't think they'll kick you out of Papertrading but unless you fund the minimum, say $2,000, you'll be on a 20 minute delay.


  219. StarDawg / Mr. Mocha / Birdman
     
    Just got done reading last nights dialogue, and I wanted to thank you all for sharing.  My town lost power for the last 48+ hours, so I just got a chance to read it.  Thanks again!


  220. Bird / short side: I've struggled to find a trading "style" that works, and I've [finally, going on two years] reached some preliminary conclusions, which I offer for the very little they are worth.  
     
    Phil tenet #1: Trading is not investing.  Phil also has an approach to investing, but trading is about having a premise, which should include a time frame, adjusting the position while the premise holds, bailing out if it's blown,  taking profits or minimizing losses, and finding a fresh horse.   
     
    Phil tenet "2:  "Balance". Markets don't go straight up or straight down for more than a small percentage of the time. Convincing yourself that you know which way the overall market will go is the quickest way to going broke, which I have proven to myself enough times to be considered clinically insane.  Shorting the weak and going long the stronger plays works [understanding that nothing works every day.]  Take some profits on the winners, double down or bail out on the losers, depending on your premise [blown, not blown]. You can change your balance ratio, depending on your outlook or the last direction of oscillation, but overloading one side of the boat is a good way to flip over and drown.
     
    Environment:  This is a bit more abstract, but I believe it matters.  At any given point in time, markets reflect a particular overall dynamic.  The current market, for example, is largely being driven by government action or inaction.  Monetary policy, fiscal policy, tax incentives, industry bailouts, yield curve manipulation, and incessant jawboning by policy makers and politicians in the U.S., the EU, Japan, China, Switzerland et. al. dominate short term trends.  The underlying global economic fundamentals worldwide are terrible, but governments are committed to supporting markets while having a limited ability to do so in a sustained manner.
     
     In practice, this means the market lurches between hope and fear with tedious regularity, and this requires traders to pay closer attention to political rhythms than to the microeconomics of the various industries.  At other times in history, the opposite has been true.  In short, horses for courses —  you have to decide where you think a given market can go given its current dynamic.  Straight up is very unlikely right now.  Straight down, equally unlikely, although that could change in a hurry, so you have to watch closely.  But then no one ever said that successful trading was easy.  My two cents, or possibly one cent.


  221. Style/zero – Thank you!


  222. Style/zero
    Great words.  Really made me think about mine. 


  223. Style/zero – thanks for that. Now I have to think what my style is and stick to it. I am a little haphazard now in my trading. 


  224. style/00 -well done! this is why I enjoy PSW. Great input from everyone.


  225. A magnificent opening to the Olympics last night. The Brits know how to put on a good show!
     
    I wonder if Draghi will allow these next 16 days to be peaceful ones for PM Cameron……


  226. Nowhere man – Mitt the Twit. As seen in the English tabloids…… :)
     
    http://www.youtube.com/watch?v=AH5fflZV3HE



  227. Income portfolio/Phil:  Maybe a 50/50 combo of Sept GLW $12 and DMND $15 puts to cover the SQQQ hedge? 



  228. Nice short term picture of the S&P500.  If that upward channel holds the market might be short term Overbought:
     
    http://content.screencast.com/users/ukarlewitz/folders/Jing/media/166d1ecd-9eae-4de0-b3ed-9ffc477c15cc/00000090.png


  229. I still can't access Stock World Weekly. Never was able to last week and you emailed it to me. I'm really interested in reading it as I have a growing sense that next week might be an inflection point. Please help if you can. Thanks!


  230. Phil / SWW – The issue emailed out tonight (9:50p Pacific Standard) was July 15th's SWW.


  231. Current issue arrived this morning.


  232. Hi Phil,
    I have several long term positions in AA (400 share purchased at $16! and x12 Jan 7.5C purchased at $1.91).  After various premium sales, I have realized loss of about $700 and unrealized losses of about $3500 ($3k on 400 shares and rest on options). With current position(s), I need AA to be at $11.5 to get to out about even.  If I add 50x Jan 7.5/9 BCS at $4.2k, this trade can allow me to close all AA positions by Jan, if AA remains over $9.  Additional $cash committment to AA options BCS at this point would be a stretch for my portfolio and limit my ability to react if trade does not work.  Therefore, I am highly unlikely to enact Jan 7.5/9 BCS trade or any such single, large position to recover from current loss.
    I have many such positions in my portfolio, with deep losses.  
    I guess my retirement investment premise has always been that markets will work over long term.  However, now I am looking at 10-15 years to retirement and reminded of famous PSW cartoon "I haven't saved a dime and I retire tomorrow.  (Phil,) here is your chance to become an investment (trading) legend!" 
    Appreciate the discussion related to investment style here and would like to hear Phil's (and everyone's) comments about to repair portfolio or attitude, in context of this position and in general.


  233. Phil: balancing
    My portfolio is now almost exclusively made up of sold premium.  sold puts on stocks I would like to own,  sold calls on stocks I feel are "toppy" and am willing to ride til they fail to keep going up.  Since I am currently weighted much more on the side of the sold calls I also have sold calls on TLT as an offset in case the market moves much higher.  My thinking is there is an upper limit to TLT,  the calls are easily rollable and should be profitable if stocks move up.   Over the last five years it looks like TLT and SPY are mirror images but I'm wondering if in fact there is a scenario where both go up?  TIA


  234. drmtv10,  my take is to scrape the position.  Look out to jan2014, since it is an IRA account you can't sell naked puts but you can still sell a 3-8 bull put spread for around 1250 @ 10 (I don't know who you trade with but you'll still hve to margin a little, but it should be a reasonable small amount).  Match it with a 5-8 bull call @ about 1999.  Then I Would buy a hand full jan14 10's and sell front month 10's against it to collect cash.  


  235. Joel / drmtv / Naked Puts – In IRA accounts held by TDAmeritrade I am holding short puts on HPQ, F, X, JRCC, and ABX per the income port plays.  If I am not mistaken, you must have the funds available to purchase if they are Put to you.  When I make the trades, I know what is available (in case Put to you) just in case so margin is used (I think????).


  236. jfawcett, you can't sell the put naked, but you can still do the bull put spread in an IRA, where it becomes covered and subject to standard margin 20%, you will sacrafice the lower put premium  but give your self more room to operate.  


  237. Lincoln: I am but a wretch saved by God. I discovered the virtue of selling premium a decade ago, joined this site to see if there was something I was missing, and there were several things. However, you are very close to the ultimate understanding. Do not concern yourself with direction. If you sell premium on both sides, you will most of the time cash regular checks, just like if you worked for it. Think about it. You don't really have to understand the market, you don't really have to understand the macro factors, and Lord God above, you dont need to pick stocks.
     
    Sell premium, my son, and you shall be rewarded.
     
    Otherwise, I am not religious.
     
    I have strangled (betting both sides) of TLT for a year now. I have no clue what the upper limit of TLT is. I remember Phil saying 124 was the upper limit, short like crazy. Well, it was true at the moment, and it isn't now. I sell puts if TLT backs off, and I sell calls into whatever panic drives things on the given day.


  238. Do we have a mechanism for email to members without a public request?


  239. Pharm: how long does it take before you become an official perma-bear? Not that there's anything wrong with that…
     
    Keep in mind there's early, and there's wrong.


  240. Barfinger – strangling TLT.  I may have seen the light.  I was looking at strangling TLT after reading your post.  It looks like an interesting trade.  How much premium do you try to generate each month?


  241. revtodd: I take whatever I can get at the stike I feel comfortable with. It is not about optimizing profit for the period, it is about being paid and avoiding trouble. Currently I am short Aug 133 calls, and 126 puts. Whatever it produces (and I got an average of $.90 a side) it doesn't matter. Get a position that you can roll if it goes wrong, take what they give you.


  242. Hi Joel,
    I do like the suggestion and BE for the new position is 8 for Jan 2014.  To make 4k, I would need to tie up 4k on BCS (20 contracts 5/8) and 8k on 20 contracts 8/3 put credit spread (assuming no margin IRA). So, net $cash is 12k, which drops to 6k with margin (roughly). This compares reasonably to my current cash outlay of about 5k on current positions.  I would prefer to do this in an account where I do not have margin for naked puts but I can play around with that with multiple accounts.  
    I would probably do something like that but wondering.. why not try 7.5/9 BCS to Jan 2013 first, and if it does not work, roll it forward to 2014?  (I already have some Jan 9P sold that are showing even and may add some 2014 8P on a market drop).
    I am not very good at "rolls" but like the idea of rolling forward, selling premium.  I have tried to read PSW to learn this better – anyone have a good link or reference for this?  Anyways, I would probably skip this part of the position for now.
     Thanks for the suggestion.  


  243. Thanks Barfinger, I think I will add this to my tactics.  Do you do the mostly do the monthlies?  Ever do the weeklies?


  244. I love selling premium, but one thing that Nassim Taleb believes has always nagged at me. He says that you can sit there collecting small amounts for a very long time and then get blown up with a single Black Swan. Black Swans are, by definition, highly unusual, rare and unexpected events. But they can happen, especially in this day of HFT. I'm always worried that a 3,000 point drop in 10 seconds could undo months, maybe years, of collecting premium. 


  245. drmtv10, nothing wrong with the 7.5/9 jan 13.  The difference is if you sell the 2014 5/8 you have more protection to the down side with the 1.71 in your pocket, paired with the short 8 put giving another 1.35 in your pocket.  You get a $3 credit and only need 8 to hold  and the whole thing is covered.  At this point,  you won't have to worry about rolling for awhile and you have a good defined spot at $5 resell 2015 or 16 puts.   If it runs away to the up side you just slap on a 9/12 BCS.


  246. Futures down about 0.35% at the moment (9pm). 

    There is a surprising lack of news out of Europe.  I would think plans would be firmed up or something but nothing so far.  Nikkei dropping a quick 50 on no news.  

    Big chart looking almost as spectacular as it did at the end of June – still needs follow through tomorrow and especially to close the month on these highs.  See SWW for my week ahead commentary.  

    GLW, DMND/Kinki – I don't want to load up with risky choices since we already have a couple of positions that are in question.  Might be time to add a few good dividend payers. 

    Queen/1020 – LOL, that's just what I was telling my kids when she came out.  I was explaining that England used to control about half the planet – picture is perfect:  

    I think the whole James Bond thing was cute but holy cow did the media make a big deal out of a little thing.  It was cool of her to do that as they generally don't allow anything fun and even getting to see inside Buckingham Palace like that is a big deal.  I wonder what will happen when she's gone.  No one wants Charles to be King but at least he can pull off "royalness" – there's no way William will command that sort of respect – especially if he becomes King by stepping over his Dad. 

    Overbought/Kinki – Gee, ya think?  Actually, I was surprised that we don't have a stronger signal than this: 

    NYSI

    NYMO

    VIX


  247. Apple is no basically a cell phone company:

    http://www.engadget.com/2012/07/29/visualized-the-idevice-influence-on-apples-bottom-line/

    Visualized the iDevice influence over Apple's bottom line

    Well, an iPad as well…. Computers are now less than 15% of their business. Some transformation!



  248. SWW/Bird, all – Yes, they can't seem to get that mailing right.  I find the link on our main page works fine though.  

    Schaeuble/Pharm – Here's more on it: 

    German finmin Wolfgang Schaeuble rejects speculation that Spain is about to request that the eurozone's bailout fund buy its bonds. While the country's high interest rates are "painful," it is "not the end of the world if you have to pay a few percent more at a few bond auctions," Schaeuble told the Welt am Sonntag newspaper. 

    AA/DrMtv – Wow, they haven't been at $16 for a year.  50x is kind of drastic, don't you think?  That's 5,000 shares to replace your 400.  Bottom line is, if you close here you are down $4,200, which is more than 400 x $8 (the difference between $16 and the current price) so I guess if there was a wrong move to make a long the way down, you must have executed it!  Your 400 shares are worth $3,400 with AA at $8.50 and you say you don't want to commit more cash but you're talking about taking the same $3,400 you have in the stock and increasing your leverage by a factor of 10 where, if AA finises at $7.50 or lower, you are wiped out rather than "just" losing another $400.  

    As you say, it's 10-15 years, why are you so desperate to double down by January.  There is no free lunch in the markets – you are getting paid 100% upside because your risk is 100% to the downside and we're still concerned, despite the recent rally, that this whole thing is going to come off the rails this summer anyway and then where will you be with all the huge leverage?  I could have been an investing legend if you heeded my calls for cash, Cash, CASH and weren't in a position where you were maxed out and down at the same time but now you need to think seriously about a 10-year plan, not a 6-month plan. 

    With AA, assuming you want to stick with them, why not just sell the 2014 $8 puts and calls for $3.10 against the 400 shares you have.  That gives you back $1,240 in 18 months.  Do 6 sales like that in 10 years and you collect another $7,200 on your $3,400 without betting the farm.  Worst case is you net into 800 shares of AA at $8.20 (($11.50 – 3.10 + 8)/2) but, of course, the 2014 puts are rollable to 2016 $5s or $6s but the net on the next 400 shares is $4.90 and if you aren't willing to buy 400 more shares of AA at $4.90 – why the hell would you be even considering a trade that requires them to hit $9?   

    Repairing a portfolio isn't about repairing each and every bad position you own – it's about evaluating each position and cutting the losers and focusing on the trades that to offer a good risk/reward profile.  If you lost 30% – that's tragic – but if you make 20% a year for the next 5 years, it will be a blip in the grand scheme of things – why not play for that rather than trying to get 30% back in 6 months and risking only having 30% left if things go wrong again?  

    TLT/Lincoln – Well certain types of stimulus can give TLT a boost that could last a few months and that would be along with the S&P but, over the long term, I don't see how an effective negative rate of return can be sustainable – especially if the rest of the market isn't falling apart.  

    Puts/Joel, Jfaw – You can, in most IRAs, sell naked puts – it's just an issue of how much margin they want.  If they want 100% margin, it may  be impractical to sell the naked put but hopefully you have enough sidelined cash where that isn't a big issue anyway.  

    Amen Bafinger!   Yes we did capitulate on TLT to $132 but $124 is still about the right price top for non-panic.   No on Emails, I wouldn't feel right about giving out people's Emails and most people have (or could have in 10 seconds) Email accounts they use just for semi-public traffic.

    As to selling premium – that's what we do in the FAS Money Portfolio every week.  It was our top performer last year and likely will be this year as well as we put very little money in play and collect huge premiums on a regular basis.  I like to run it because it's a hyperspeed version of what you can do with every long-term position – simply sell as much premium as you can be comfortable with on both sides of the trade and then roll the losing side (there can be only one) and re-establish on the other side.  Wash, rinse, repeat for 10 years and you have a nice little return – why be greedy when this path is so easy?  

    Black swans/Bird – That's why I like buy/writes on blue chip stocks for long-term portfolios.  To the upside, you can only get called away with a profit and to the downside, you can only end up buying more of the stock for a very steep discount.  As long as you don't over-extend yourself relative to your actual buying power – what do you care if the market dives and things get cheap or if the market flys up and you are "forced" to go to cash at a nice profit?  Black swans are a negative for people who bet in one direction to the extent that a big move against them can wipe them out – that's foolish betting in any circumstances and that's not at all what selling premium is about.  

    AAPL/StJ – That's a bit scary. 

    Guidance does suck – amazing how people can place such big bullish bets in this environment. 


  249. Black Swans/Phil – Thank you for the thoughtful input. Puts much of the nagging feeling to rest. One key seems to be sizing and make sure you always have enough margin available. As you say,there's no free lunch in the markets. At least not anymore – way back you could work little inefficiencies, such as warrant hedging ("Beat the Dealer" author Thorpe picked up on those. I once built a small hedge fund around it – but I digress.)


  250. Perma bear.. Come on. I am a realist.  Bonds do not tell a lie, and last time SPY was up here TLT was 116.  Please tell me who is not telling the truth.  We are Japan…and that country still has not hit an all time high after how much stimulus?


  251. AAPL / Phil – It's actually really scary because 10 years ago, Nokia were really hip, then Motorola came up with the Razr and everybody had to have one. Then Blackberry were the latest fad and now it's the iPhone. But 5 years from now, who knows…. And when 50% of their business is that iPhone, they better come up with a good one each time!


  252. St. Jean:  Apple better be working on the iRise Reincarnation Platform [DNA-based], because they're going to need Steve back to keep that amazing string going.


  253. Does anybody know a good website to rent a car for a couple weeks? I am coming in from overseas in Sept.


  254. Phil / CLNE – Were $24, now $14,  Jan 14 $12 Short Puts at 3.10 (8.90 entry).  Do you like the NAT Gas fleet provider long term?


  255. CLNE/Jfaw – Nat gas will fall again once the heat wave ends.  Only massive electric usage and very low prices ($3 is still very low) are keeping inventories from overflowing capacity at the moment.  Plenty of time to invest in nat gas once we have a fleet of nat gas cars but investing in a fleet to move around a product for which there is not demand yet is really putting the cart before the horse.  

    Euro down 1% off Friday's highs at $1.2267, Pound $1.57, Yen 78.21 and Dollar 82.85 (up from 82.50) so it would be a perfect set-up for going short if we weren't so freaked out about possible stimulus action so it's mostly watch and wait today but let's go over that long-put list as we may have some nice re-entries.  


  256. jomptien
    I've had good sucess with Car Rental 8


  257. jomptien – carrentals.com  :)