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Thursday – World Bank Says Fighting Poverty is an Investment – Ryan’s Head Explodes

image"We don't see the focus on poverty as about charity, but rather about investment in future growth." 

World Bank President Jim Yong Kim outlined his vision of what the multilateral lender should do, focusing sharply on cases of significant poverty.  Dr. Kim said economic-growth expectations were being scaled back everywhere but that he was determined to prevent the substantial gains made by emerging economies over the past decade from being wiped out.  "Every country has to look at its public spending and see what works," he said.

The World Bank had their annual meeting in conjunction with the IMF in Tokyo this week and Dr. Young's message is no longer the opposite of Christine LaGaurd's, who has essentially come around to thinking that austerity is no longer the answer – pushing for debt write-downs for Greece, Portugal and Spain as well as backing Greece's request for two more years to meet its fiscal targets.  “We will spare no time, no effort to actually do as much as we can in order to help Greece,” Lagarde said. The fund’s purpose is “to make sure that Greece is back on its feet, that it can one day return to markets, that it doesn’t have the need for constant support.”  

Meanwhile, Spain was downgraded to one notch over junk (BBB-) with a negative credit watch by S&P last night but it was more of a "buy on the news" event this morning as it's certainly not a shocker that Spain's paper is worthless without the ESM backing.  Yields on 10-year Spanish bonds shot up 9bps to 5.89% but stopping short of 6% was considered a positive.  Spain is the poster child for the idiocy of using austerity to combat debt (ie. the Romney plan) as squeezing the economy by cutting Government spending has actually worsened the country's fiscal position, which has led to calls for greater austerity but these calls come from bankers and bondholders – who just want to get paid, no matter the long-term damage done to the borrowers.

“There is no chance that Spain will hit its targets,” said Megan Greene, director of European economics at Roubini Global Economics LLC, “The deficit targets are economic suicide.’  “Even as you cut, the gap between spending and revenue collection keeps getting larger,” said Jonathan Tepper, a partner at research firm Variant Perception. “We’re on a completely unsustainable trend,” said Dario Perkins, director of global economics at Lombard Street Research.  “The domestic economy has completely imploded.”

INDU WEEKLYOur own domestic economy is generally growing at a modest pace, according to the Fed's Beige Book, which was released yesterday.  In our Special Alert to Members reviewing the report, I noted that you could see the evidence of the slowdown in Manufacturing, which was giving us those weak PMI and regional Fed reports but those headlines masked a lot of underlying improvements compared to past reports.  

That led us to take a more bullish stance into close, including grabbing a lot of QQQ Oct $70 calls at .05 and flipping our DIA Oct $132 puts at .65 (up 53% from our Morning Alert to Members) to DIA Oct $135 calls at .38.  As we expected in the morning post, once the S&P failed 1,440 (about 11:15), the Dow had no support and quickly dropped 100 points from 13,430 to 13,340, where we took the money and ran. 

As you can see from Dave Fry's Dow chart, so far, so good as to holding our 50 dmas.  The Dow's is at 13,302 and, as I noted yesterday, our Big Chart is not showing any real technical damage yet and we fully expect at least a bounce this morning after everyone but the AAPLdaq held their lines and, since we're also bullish on AAPL, we didn't let that one spot of weakness change our mind.  

In more bad news for the GOP, the unemployment picture continues to improve with Initial Jobless Claims dropping almost 10% from last week to 339,000 – miles below the consensus estimate of 370,000.  That's the lowest level since early 2008.  If this trend continues, the October Unemployment Report, that will be released on Friday, Nov. 2nd, just 4 days before the election, could be even lower than the 7.8% posted last Friday.  

AAPL WEEKLYIn other positive economic news, US foreclosure activity dropped to a 5-year low of 180,400 filings in September – down 7% from August and down 13% year/year.  Most importantly, the declines are coming from non-judicial states, like California, where there are no pipeline issues backlogging the process so we're making real progress clearing our our housing inventory this year.  

U.S. equities get upgraded this morning to Overweight at Citigroup thanks to "the combination of strong EPS momentum and a very aggressive central bank." The S&P 500 will score a 12% gain by year's end, predicts Tobias Levkovich. The "most-favored" 20 global stocks includes these from the U.S.: AES, CSX, GS, GOOG, QCOM, SBUX, and GOOG is gapping up $10 into the open already.  

This will be interesting as only 30.6% of the people surveyed in the AAII Investor Sentiment Survey were bullish for the week ending October 10th – down 3.3% from last month with bears climbing to 38.8% up 5.6 points, up 17% from last month.  That's a lot of sideline money that may have to flip-flop if we get the bounce we're expecting!

So we're bullish but cautious and we REALLY do not want to see another test of yesterday's lows – once is enough in this case and, now that we've sold all our long bonds into the panic this week – it's time to let the bulls run again.  


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  1. Good Morning!


  2. Good morning everyone a pretty big rally from last night lows amazing!!



  3. Phil,
    I've been away and just catching up on posts – yesterday you said SVU is paying a dividend? I checked with dividend investor and last one was in June. When is the Xdate? Thanks


  4. Good Morning from Santiago Chile, trading this morning with the Andes in the background. Hopefully AAPL pays for this little excursion today.



  5. Phil/SVU – Nevermind, just saw it later in yesterdays chat


  6. http://www.philstockworld.com/2012/10/11/lara-logan-this-is-terrorism-and-our-way-of-life-is-under-attack/
    very interesting video.  Doesn't seem that we learn or accomplish anything in these wars we get involved in.


  7. Suggested reading for concerned citizens: by Chris Lasch
    "The culture of narcissism in an age of diminishing  expectations".


  8. Oil Lines for 10/11/2012R

    R3 – 95.78
    R2 – 94.72
    R1 – 93.14
    PP – 92.08
    S1 – 90.5
    S2 – 89.44
    S3 – 87.86

    Yesterday's high and low – 93.66 / 91.02
    Inventories are today at 11:00 AM.


  9. Do you think this billionaire is worried about an Obama win?…..
    http://finance.yahoo.com/blogs/the-exchange/thomas-peterffy-why-warning-us-socialism-225706100.html
     
    Addios, IB……


  10. New jobless claim at 339,000….

    Paging Jack Welch!


  11. Good Morning
    LOL stj


  12. Rumors of a takeover by Softbank from Japan seems to be helping Sprint (S) a lot this morning. Looks like a 20% gain!


  13. Good morning / Thanks Jrom



  14. AAPL
    Just a note of the Bull CS trade I've been scaling into on AAPL, since Phil posted some new longer term AAPL trades yesterday
    —- 
    The 2015 $400/550 bull call spread is $106 and pays $44 (41.5%) at $550
     – my favorite way to play – you can pick up 3 2015 $570/800 bull call spread for $100 ($300) and sell 2 Jan $730s for $30.50 ($61) and that's 20% on the first 4-month sale and you drop you longs' basis to $239 and that's your break-even at $650 with PLENTY of time to adjust.  



  15. I am guessing we still have a stop on the AAPL weekly 640 at $850!

    AAPL – Net $34.00
    AMZN – Net $11.18
    QQQ – Net $0.28



  16. Talk about a downgrade – Wedbush cuts CMG price target from $450 to $320…. Of course, they are trading at $283 now so a bit late.


  17. Good morning! 

    We're looking to get over the strong bounce lines from Friday's highs to yesterday's lows and anything less than that (holding it too) is going to put us more bearish.  

    Levels to watch will be Dow 13,462, S&P 1,438, Nas 3,074, NYSE 8,264 and RUT 830 – we should be gapping past all of those at the open and we don't want to see ANY of them fail.  

    The Dollar is down 0.5% from yesterday so we'd BETTER get a 0.5% gain in the indexes so, unless we're up about 1%, we need to be worried that it's a weak move up.

    Dollar currently 79.84, Euro $1.2938, Pound $1.6045 and 78.57 Yen to the Dollar so it looks like the BOJ is buying Euros today as they were at 78 at 4 this morning (Nikkei close).  The Nikkei likes it and is up 100 off the bottom in the futures (/NKD) but still way below neutral (8,850) at 8,625 so don't expect the BOJ to be satisfied at 78.55 Yen to the Dollar. 

    We have nat gas inventories at 10:30 and oil inventories at 11, which are expected to show a net 3Mb draw.  Anything less than that will not support $93 (now $92.50) and any kind of build should send us back to $90 on /CL

    AAPL popped to $645 but not tearing it up just yet and, fortunately for the $25KP, AMZN is coming back too and those gains more than make up for the small loss on our AAPL covers.  Until all our indexes are up over 1% – I'm not comfortable getting more bullish.  We have Consumer Comfort at 9:45 and Plosser (huge hawk) speaks at 12:30 and then the 30-year note auction at 1pm so could be a rocky day until the afternoon.  

    If the S&P fails to hold 1,440, we can use the Dow to get short again.   The $135 calls are not exciting at .42 so far but the $132 puts are back to .50 and we picked them up at .49 yesterday and got out at .65 so no reason not to do that again if the S&P can't hold the same line we used yesterday.  

    At the open: Dow +0.46% to 13407. S&P +0.66% to 1442. Nasdaq +0.77% to 3075.

    Treasurys: 30-year -0.54%. 10-yr -0.29%. 5-yr -0.12%.

    Commodities: Crude +1.39% to $92.52. Gold +0.22% to $1769.05.

    Currencies: Euro +0.53% vs. dollar. Yen +0.49%. Pound -0.28%.

    Market preview: U.S. stock futures riding high, possibly due to a number of factors, not least strong weekly jobless data - till next week's revision at least. S&P benchmark +0.5%. An upgrade of U.S. stocks by Citigroup may also be boosting sentiment as markets on both sides of the Atlantic brush off S&P's downgrade of Spain. Sprintjumps 17.3% on buyout speculation involving Japan's Softbank, with Clearwire soaring as well. Later: Fed's Plosser

    The Bloomberg Consumer Comfort Index slides to -38.5 from -36.9 last week. The last time the index began Q4 this low in a presidential election year (1992), the incumbent lost. Eight-six percent of respondents view the economy negatively, 21 percentage points more than the long-term average. "Almost no one" says the economy is in excellent shape, the first time that low since late 2011.

    The EU considers pushing back the start date for new Basel capital rules as banks say the Jan. 1 start date is "wholly unreasonable" given that final details of the measures are still unknown. Implementing tough capital rules as the Continent's lenders already faces massive deleveraging may not be the best policy.

    The Coast Guard notifies BP and Transocean (RIG) that a new sheen of oil near the Macondo site matches the oil from the 2010 spill; the sheen could be linked with oilfield debris left on the ocean floor at the time. The sheen doesn’t pose a threat to the shoreline, but the Coast Guard tells BP and RIG they may be held financially liable for the new oil. (earlier: potential settlement) 

    Grains soar as the USDA lowers its estimate of corn ending stocks to 619M bushels from 733M in September. The cut comes even as it raises its forecast of harvested acres to 360K. What happens, asks Arlan Suderman, if the USDA is forced to cut harvested acres in its next report? Yikes. Corn +4%, Beans +2.1%, Wheat +1.5%.

    Safeway (SWY): FQ3 EPS of $0.66 beats by $0.24. Revenue of $10.0B misses by $190M. Shares -0.9% premarket. (PR)

    More on Safeway (SWY): Identical-store sales running at a 1% clip on improved volumes. Operating profit slips 30 bp Y/Y to 2.47% as costs for the company's loyalty program hit. Reiterates 2012 EPS guidance at $1.90-$2.10 and free cash flow of $850M-$900M. Shares -0.9% premarket.

    Alaska Airlines (ALK) and Boeing (BA) confirm a report that the airline is ordering 50 737 jets in a deal that's worth $5B at list prices and is the largest booking in the carrier's history. The order comprises 37 fuel-efficient 737 MAX aircraft and 13 Next-Generation 737-900ER planes, and brings the total number of MAX bookings to 858. (PR)

    Boeing's (BA$5B order from Alaska Air adds to a five-year $2B contract from the U.S. military to continue providing logistics support for its C-17 transport aircraft. Boeing said yesterday that program has expanded to 246 aircraft from 42, and so helps to cut expenses through economies of scale.

    A week to forget? Shares of Toyota (TM) show some resiliency in the face of mounting challenges on various fronts. While arecall of 7.4M vehicles might be easily rode out, slumping sales in China and the troubling trend of Lexus sales in the U.S. don't have any quick fixes. Toyota's ADRs trade at $74.50, only about 4% lower than where they were a week ago.

    Tesla Motors (TSLAnabs a $10M grant from the state of California to help it move forward with development of the Model X EV crossover. For its part, Tesla kicked in $50M and will add 500 workers for the project. Production is slated for 2014. 

    Shares of Goodyear Tire (GT +1.7%) trade higher after a potential buyout of Cooper Tire & Rubber raises the profile of the sector. The stock has also some caught some interest as of late with its low earnings multiples looking better in the face of strength in the U.S. auto market.

    Clearwire (CLWR+29.2% following a report SoftBank (SFTBF.PK) is thinking of buying a majority stake in Sprint (S) – investors are clearly betting Sprint's 4G network partner will also turn into a takeover candidate. However, MetroPCS (PCS) is down 7.8%, as the Street assumes a Softbank deal will lower the odds of a Sprint counter-offer to the T-Mobile deal, and perhaps put the carrier in a worse competitive position. Leap Wireless (LEAP+3.4%.

    LinkedIn (LNKD +3.1%) catches a bid after ITG forecasts Q3 revenue will come in at $255M, soundly above a $244M consensus. The business social networking leader has delivered a string ofrevenue beats, and the Street seems to be pricing in another one.


  18. Hey Phil: wanted to get your thoughts on NLY. How about buying the stock at it's current price of $16.27 and then selling the Jan 2014 $15 Puts and Calls for a net entry of about $13.10? You get to collect the dividend (which may go down) while you wait.


  19. will we be rolling Oct long calls? OpEx next week.


  20. Wow, dead here.  Anyone like MOSAIC?  I was thinking about the March 55/60 Bull CS, selling something to offset. 


  21. http://finance.yahoo.com/blogs/breakout/traders-betting-ryan-takes-biden-apart-says-najarian-115231977.html
     
    I bet Joe feeds ryan his lunch, gives him a wedgie and sends him home, crying to mommy….. :)


  22. Chile/Aaron – Sounds nice!  Enjoy the trip. 

    SVU/Kinki – Thanks.  SWY a bit disappointing today and cost them 4%, SVU down 3% in sympathy.  

    Peterffy/1020 – I love guys like this.  He was educated by those Socialists (actually, Hungary was Communist until 1989 so his whole premise is a lie) for free and then left with his degree in computer sciences to make money in the US.  He's certainly a self-made Billionaire but the opportunity that was available to him in the 70s is no longer there in 2012.  He was an immigrant who didn't speak English, got paid top Dollar to come to the states, was able to parlay his money into building his own brokerage (good luck with that these days!).   The modern Republican party wouldn't even have let him enter the US!  

    AAPL/Burr – I like that one!  Too bad Jan $730s already dropped to $12.75.

    Disappointing move so far but at least S&P is holding 1,440.  

    CMG/StJ – Better late than never.  

    NLY/Japar – Those REITs are totally out of favor at the moment.  I do like them long-term but don't over-commit as they are one dividend cut away from single digits.  

    Long calls/Morx – Depends which ones but yes, it does need to be done.  

    Europe stronger than us, up 1.25%ish – good sign for us if they finish higher.  



  23. Phil/petriffy  He won't miss my money, but I feel better…..(He's on tv now) :)


  24. Phil: AMZN
    I am short  9 Nov 250 calls and have 3 Oct 260/250 bear put spreads.  What I typically do is to sell some puts against short calls.  In this case does it make sense to now take profit on the 260 puts and roll 2 of the short puts to Nov 240 and close out the remaining Oct 250 P? Or close out the spread and plan to sell puts as we get closer to earnings, Oct 25th, when premiums should be higher?  TIA


  25. phil,
    i have been trying to rehab a pcln trade.
    started with the long 595 puts…..last week i sold this weeks 620 then rolled to 610.
    i am trying to manage this trade and would like ur thoughts as to where i am today as i have tried to position it best i can.
    right now i am long 5 oct 595 puts
    short 2 610 weekly puts
    short 3 610 weekly calls
    and short 3 600 oct puts.
    i would appreciate your advice going into today/tomorrow……….tks


  26. PCLN down again?



  27. BTW, for those wanting not to trade as much, the easiest plays for me (which I still hold) was writing the 42 SCO calls where I received 2.45 premium and the UCO 28 puts where I received 1.25 premium.  And there has been more than a few times that you could've played it that way.  Think oil will stay in this range for awhile and will have a chance to make similar plays in November.


  28. so, now you're takin' to making fun of fat people?


  29. playing oil /cl after that?


  30. Such low expectations for Biden tonight.  He's a lawyer and he's been a Senator for 40 years – I think he's going to shred Ryan tonight.  He only debated Palin last time – not much of a test but here he is in the primary debates.  If that Biden shows up tonight, Ryan is in big trouble.  

    AMZN/Lincoln – Earnings are 10/22, after expiration and it looks like you're going to collect the full boat so why risk anything in Nov.  Wait and see what they do and then you can set up a new spread but you know AMZN can move $20+ up or down on earnings and your risk/reward isn't that great for making a November guess right now.  Bird in the hand and all that….

    PCLN just failed $600.  RUT taking off, S&P moving up, AMZN weak, AAPL weak – strange….

    PCLN/Mill – Well it seems like you're bullish on PCLN, not bearish as you're short 6 in the money puts against 5 long calls.  Somewhat mitigated by the short weekly calls I guess but not sure what your premise is but I guess it was bullish as you essentially have 3 Oct $600/595 bull put spreads where you need $600 to get $5 and then you have 2 $595/610 one week calendar spreads, where you need $610 to make money and your hedge is being short 3 Oct $600 puts, where under $600 you get paid.  As I'm sure you know, I'm no fan of PCLN and I certainly would have stopped out when they failed to hold $600 and all you can really do is roll your losses and try again, maybe cash the $595 puts (now $12) and just keep rolling the naked losses until you get lucky.

    Oil/Rustle – I'd say very range-bound $85-95 and, of course, we're trading $88.50 – $93 for entries.  

    Speaking of oil:

    EIA Petroleum Inventories: Crude +1.7M barrels vs. consensus of +1M. Gasoline -0.5M barrels vs. -0.1M. Distillates -3.2M barrels vs. -0.4M. Crude +1.61% at $92.72

    Down net 2M not enough to hold $93 so good short on /CL at $92.50 now but very tight stop over that line. 


  31. 25KP – The short weekly 640 calls are good for 50% right now and next week's 650 33%! That's $2,000 on the table right there.


  32. Roosevelt/Rustle – As you can see, back in those days you had a fairly educated electorate who knew better than to buy that "chicken in every pot" BS.  Since the Reps couldn't come up with a better platform, they decided to dumb down the voters instead and, 4 generations later – they've now got a whole population that hears the same promises but believe them…

    CNBC running another Romney commercial.  What ever happened to equal time regs? 

    $25KP – Very tempting to buy back the AAPL calls on that dip but now who wants to pay the premium, especially with one day to go on the weeklies?  I guess we should set a stop on 2 of the $640 calls, now $3.50, at $5 and the other 2 at $7 and, once one set triggers, we'll look ahead to set a stop-sell on Oct calls.   At the moment, I'm watching the $645 calls, now $8, for about $10.



  33. AAPL taking a turn for the worse it seems… Relentless now!


  34. Phil
    Any trade on JPM for earnings  ?
    Thanks


  35. Oh here's Peteriffy's commercial.  Very misleading.  He was born in Communist Hungary right after the Russians kicked their asses in WWII so of course they were poor!  Sadly, it's like I was saying – they count on the viewers to not know enough about history to question the "facts" as they are presented.    

    OK, now AAPL too good not to close out short calls in $25KP – let's get naked and buy back the Oct $650s for $5.65 and the weekly $640s for $3 and we MUST make some sales to cover later.


  36. Phil-- just did a BCS for tomm on AAPL 600/615 . Hoping to make 23 cents on that spread. Do u see any problem on this please.


  37. Amits
    Thanks for the TNA trade!


  38. morx/fat  Funny, I saw a wingnut with hairy legs….. :)


  39. Coffee poll/1020 – Good think they don't do a Big Gulp poll – I doubt that would go Obama's way….

    OK, we're finally getting rid of those annoying Europeans.  Closed at day's highs, up about 1.25% and even Spain up 1%.  Hopefully now they can do a little US buying before they go home.  

    JPM/QC – Too random here.  They were my top pick in the low $30s but now back at $42.50, they're not cheap and I can't imagine anything so great in tomorrow's report that they should pop $45 but the Chase section should be picking up with the housing rebound as well as the flight to cash and, of course, they took that big trading hit last time so easy comps so I wouldn't bet against them either.

    AAPL/Amit – Of course I have a problem risking $15 to make .23.  If you do that trade 60 times you have to never miss or you'll be a loser overall.   

    Damn, there goes 1,440 – be careful…


  40. S2 for AAPL is at $633. We'll see if that holds!


  41. Phil,
    relentless selling in AAPL? What is the scoop there No mention on CNBC about AAPL….Thanks


  42. yw rhc
    thanks Phil


  43. I think I read a headline saying Samsung can resume selling one of their products that had been banned after Apple won that initial verdict. 


  44. Phil: AAPL
    I haven't followed all these trades recently but is their a reason you don't also sell some puts when you are covering and selling premium to lower the net cost if you are long term bullish on AAPL, even though the original intent was a short term trade?  TIA


  45. AAPL
    Appeals Court rules that Samsung can resume selling Galaxy.


  46. Samsung can resume selling the Nexus.


  47. Regardless who wins the debate tonight, I am sure Biden will be turned loose, it will not be boring.


  48. Bob Woodward was speaking about if Watergate happened today and he said that he thought it would still be investigated and reported but because there are not only 2 different political parties but almost two different types of news for each party that it would've been spun into something other than what it was and never resulted in a resignation today.  He believes and quite correctly that whatever you believe there is a news channel or blog or magazine that will back that up and there will be an equal amount of same media on the other side.  So you can live your life views and beliefs always thinking that they are correct and not pay attention to facts.


  49. Interesting study:

    http://www.bespokeinvest.com/thinkbig/2012/10/11/the-jobless-claims-market.html

    The weekly Initial Jobless Claims reading has done a pretty good job mirroring the movement in the US stock market since the bull market began in 2009.  Below is a chart of the S&P 500 versus the inverse of the Initial Jobless Claims (seasonally adjusted) reading since March 2009.  With the inverse of the claims reading making a new bull market high this week, will the S&P 500 now follow?  

    Logically makes sense as more people having jobs does help the economy overall. Of course, we know that all these jobs numbers are manipulated. But the market is manipulated as well hence the correlation!


  50. Good analysis:

    http://blogs.reuters.com/jackshafer/2012/10/09/why-we-vote-for-liars/

    The pervasiveness of campaign lies tells us something we’d rather not acknowledge, at least not publicly: On many issues, voters prefer lies to the truth. That’s because the truth about the economy, the future of Social Security and Medicare, immigration, the war in Afghanistan, taxes, the budget, the deficit, and the national debt is too dismal to contemplate. As long as voters cast their votes for candidates who make them feel better, candidates will continue to lie. And to win.


  51. Pharm/ I bought back the VRTX calls 62.5 OCT at 90c  just naked long nov 62.5 nov now
    Should be a great trade…


  52. AAPL – Anyone else read the article on Seeking Alpha about the "iPad Mini" actually being a universal remote?  As someone who has already given up cable TV in favor of web based content,  I actually think this has some interesting possibilities…
    http://seekingalpha.com/article/917341-apple-s-positive-uncertainty-universal-remote-ipad?source=email_rt_article_readmore&ifp=0


  53. Lionel, I would hold these and add to the longs. 


  54. TLT – ticker shows up down 3c in my portfolio, but up 11c on TOS 'gadget' list.  Interesting….


  55. StJ – Here is another picture of the weekly claims. 
     
    https://twitter.com/MonetaAdvisors/status/256382962994671617/photo/1/large


  56. TLT is up, VIX is down….not good.  Looks like a 15c difference b'w the gadget side (quote) and my portfolio ticker quote…interesting……


  57. Aapl/phil
    phil, I've got +10 Jan 2014 400 Calls and -10 Apr 2013 550 Calls
    i believe now is the time to roll those 550's and get them above my longs.  ( been waiting for months for a aapl pull back.  Was planning a pull back to 550, but think this 625-ish is going to be about it )
    your rec please.  Would like to end up with an extra +5 calls so I can generate some income, all the while minimizing paying premium.  Like to buy DITM to avoid premium, but not much free cash left.  Will have to work with the $250k in the current long.  TIA


  58.  Maybe we'll all die on 12/21 and this will all be MOOT! 


  59. On cnbs – Is blankfein at this interview to keep simpson and bowles in line?……
     
    ….To me, him being there, just gives simpson and bowles less credibility……


  60. jacalynm/moot  I figured the Mayans just ran out of room on the stone….. ;)


  61. PHil – question on V puts – I have 5 Jan '13 $110 puts bought at $2.62, now worth .50 – was thinking of rolling up and forward to Nov 125 puts at .62 for only .12 – but  maybe it would be better to DD here?  Your advice?  Thanks!


  62. AMZN – so what is the pressure on this? rumor of the ipad mini?


  63. AMZM / Scott – Don't know about that because both AMZN and AAPL are weak!


  64. End of bond auction/ AApl call 645 oct for $6.6


  65. Apparently austerity is not a solution:

    http://www.motherjones.com/kevin-drum/2012/10/imf-report-says-austerity-great-way-tank-your-economy

    We find the coefficient on planned fiscal consolidation to be large, negative, and significant….Overall, depending on the forecast source and the specification, our estimation results for the unexpected output loss associated with a 1 percent of GDP fiscal consolidation are in the range of 0.4 to 1.2 percentage points.

    Paging Mitt and Paul!


  66. Now looking at S3 (628.97) for support for AAPL! 


  67. Is anyone in disbelief that the Apple Samsung ruling was over turned? I was not, is that why AAPL is $630?


  68. Mid-week update for the Strangles portfolio…

    So far, so good!


  69. Phil – i am in the AMZN Nov 240P for $12.25 basis. What could I sell to protect the current downtrend gains but still keep earnings in play. Should I roll out and sell Nov's Puts?


  70. Have to give Doug Kass props, he nailed Apple and all the reasons for shorting it at 700.  Those gems have been few and far between for him recently.


  71. On the earning side, we have 2 big financials tomorrow – JPM and WFC:

    JPM – The EPS estimate is at $1.21 and the whisper at $1.24. They usually move around 3% (either way) on earnings. The weekly 42 straddle gives you about 3% so no much room for a trade there!

    WFC - The EPS estimate is at $0.87 and the whisper at $0.88 for a penny beat. They usually move by about 3.5% on earnings and the weekly 35 straddle pays $1.08 so 3.08%. Not worth playing either!

    Currently JPM is a bit cheaper than WFC on a P/E (9.7 to 11.65) and PEG basis. They also have a better price/sales ratio. Neither of these are really over valued right now, but still a lot of skepticism about the financials will keep valuations low for a while.


  72. Very depressingly weak…

    AAPL/Jasu – No idea why but, like yesterday, not really much selling from an A/D perspective.

    You're welcome Amit.

    Samsung/Ink – I can't see how a little competition is going to cause AAPL selling.   They never got much of a pop when they won that decision anyway.  

    AAPL/Lincoln – Well, as you can see, AAPL is dangerously weak so we don't really need the added complication.  Ultimately, the short puts are covered so we're limiting losses but we shouldn't mess around selling puts in a stock we don't REALLY want to own 100+ of long-term when 100 shares of AAPL is too big for the portfolio. 

    Watergate/Rustle – I doubt it would bring down the President today.  

    LOL StJ – Good note on manipulation correlation….

    Universal Ipad – I'm sure that's a function it could be capable of. 

    AAPL/CCS – The April $550s are $109 so $659 means not much premium left.  You have the 2014 $400s ($245) and you can sell the $600 callers for $113 so that's an easy roll but if you want to go the other way, you can roll the caller to 10 2015 $700s at $107 and you can pick up 15 $600s for $147 ($220,500) and that drops $24,500 in your pocket and leaves you with 5 open calls to sell against.  As you are paying $70 in premium x 5, I'd sell 2 more $700s for $214 to knock of 2/3 of the premium and then you have a 15/12 bull spread and you can sell 5 front-month calls against that without too much risk.  

    12/21/Jacalyn – Good plan.  I know a lot of people who are playing it that way….

    V/Jercon – We've given up on them.  Even today they are up.  You can't stop US consumers and the Fed just made it a bad trade.  

    AMZN/Scott – A lot of Momos selling today, not sure why suddenly.  

    Austerity/StJ – Evidence is so clear, it's amazing how many people don't believe it. 

    $630 better hold on AAPL! 

    AMZN/Calch – I'd roll to the Jan $220 puts at $8 and sell the Oct $230 puts for 7.30 and then you're in the spread for about net $2.  If you feel more bearish than that, just sell a few less short puts.  

    WFC/StJ – I think it's more likely they disappoint than JPM.


  73. On the other hand, we also INFY to report tomorrow morning. They are expected to match the consensus at $0.74/share. On average, they move about 7% on earnings. There are no weekly options, but the Oct 47.50 straddle pays $4.02 which is 8.4% of the price. Not a lot of room to play either… But the last 3 earnings report, they met consensus but opened down between 10 and 14% the day after… 

    Once again, not overvalued at a P/E of 15.56 which is where it was at the last earning report as well.

    Possible play Phil!


  74. Evidence / Phil – The evidence is strong for global warming and evolution as well… Funny that only one side doesn't seem to believe the evidence no matter the topic!


  75. "Very depressingly weak….."  Uh, Phil, you're not alone, give the latest a listen: http://www.youtube.com/watch?v=rPFGWVKXxm0


  76. AMZN 25kp / Phil,
    —- AMZN/Calch – I'd roll to the Jan $220 puts at $8 and sell the Oct $230 puts for 7.30 and then you're in the spread for about net $2.  If you feel more bearish than that, just sell a few less short puts. 
    Is this your recommendation for the 25kp?


  77. And on a more serious [but less gloomy] note:  Should we be shorting WFC, BAC & C against mid-sized banks [which]?
     
    "The conventional wisdom among Wall Street bankers is that Barack Obama was tough on them and Mitt Romney, who emphasizes the harm of “excessive regulation”  would be easier on them.….Romney adviser Glenn Hubbard, the Columbia Business School dean and a contender to be Mr. Romney’s Treasury secretary, has made a similar point: 'The Dodd-Frank Act missed the mark on housing and too-big-to-fail financial institutions but raised financing costs for households and small and mid-size businesses,' he wrote in The Wall Street Journal in August….Other economists in the Romney camp – N. Gregory Mankiw of Harvard, John Taylorof Stanford and Kevin Hassett of the American Enterprise Institute –  have sounded the same note…..The suggestion: A  son of Dodd-Frank law that would set a strict cap on the size to which any bank could grow  — perhaps a ceiling, expressed as a percentage of GDP"  http://blogs.wsj.com/washwire/2012/10/11/political-perceptions-big-banks-beware/


  78. Any ideas for FAS money plays for JPM and WFC earnings tomorrow?


  79. Missing above: "Mr. Romney, however, sent up a flare in the recent debate: He called the Dodd-Frank financial-regulation law of which Mr. Obama is so proud : “the biggest kiss that’s being given to New York banks I have ever seen.”


  80. Sorry, got caught up in a CC with lawyers,  Didn't realize how long since last post. 

    AAPL should hold $630 and the Nas is now tied with yesterday's low and gapped up 25 points from here this morning so I'm pretty sure there are buyers at this level who aren't going to wait overnight to get burned again.  

    Half the Dow is green, half is red with very little movement in either direction.  We're actually right back where we were on the 13th (QE day) and that day we shot up from 13,330 to 13,570 – hitting 13,650 the next day.  So now we're retraced to where we were before QE was confirmed – just seems like it should be a floor. 

    INFY/StJ – I don't like to guess this early.   We have no sector comps and currency seems to be hitting some companies really hard and that could be a big issue for INFY.  If I had to guess – I'd guess lower but I'd rather not guess and the puts are really expensive.  I suppose, mathematically, that the Nov $50s at $1.40 covered with the Oct $47.50s at $2 is a nice .60 credit and, in theory, as long an INFY doesn't jump over $55, the short calls should be able to roll into a bull spread with that same credit so not much risk and anything down is a profit.  

    Evidence/StJ – It all goes back to this concept that there are no facts.  Science is considered someone's opinion by a pretty large segment of the population and people feel free to disagree – despite having no expertise whatsoever.  

    Oil/StJ – Not at all – huge trouble at the NYMEX.  Oil bottomed out at $91.50 so far, not a bad gain off the $92.50 entry but now into their 2:30 run back up.  Gasoline about to break back over $2.95 (/RB), where it's playable but ONLY over that line.  


  81. Phil—caught that run of /RB at the close of NYMEX—so you would go long above /RB 2.95?


  82. AMM/Sank – Not sure yet.  It's different because we already have a short sale to work out so I was going to wait for tomorrow and see where we are with that.  

    Shorting banks/ZZ – I don't see how the banks can go down with QInfinity – there's just no logic to it.  

    I'm feeling better about my logic.  On QE day, we were at these levels when it was still a possibility that there would be no QE – makes no sense to go below them when not only do we have QE3 but it's bigger and longer than anyone expected.  

    JPM/Cdel – As I said, too iffy to bet with no other banks reporting yet. 

    GMTA Savi!  Gotta be thrilled with a small move now, this close to the close. 


  83. I'm not too worried about AAPL in the $25KP because our Nov $660s are $15.60 and the Dec $650s are $26.80 and we can sell the next week $635s for $9.50 which have a delta of .45 and expire before earnings while the Dec $650s have a delta of .44 and a huge theta (time) advantage so that's our retreat if AAPL doesn't go up tomorrow and then we should pick up another $10 for the weekly $650s for earnings or the Nov $675s are $11 and that puts us in a $25 spread at about net $25 with a month advantage – not ideal but not tragic.  

    VIX is down again today ($15.62).

    CHK having a good day: 

    Chesapeake Energy (CHK +3.8%) reportedly is selling more than 28K net acres in the Granite Wash and Hogshooter Wash areas in western Oklahoma, an oil-and-gas play it recently called a "significant boost" to its long-term strategy. CEO Aubrey McClendon had called Hogshooter "one of the best oil wells drilled onshore in the Lower 48 in the past several decades."

    IMAX too – Another one of my picks from yesterday!  

    Shares of IMAX (IMAX +5.5%) run up a gain on heavy volume a day after Credit Suisse initiates the name with an Outperform rating and $28 price target. Increasingly tagged as a China play with the nation devouring the IMAX large-screen format, the company is starting to see its grand plans for expansion in Chinaaffect the broader film industry. The movie script for the remake ofRed Dawn was altered so that the protagonists were North Korean – instead of Chinese – with censorship boards in mind.

    Dow volume 55M at 2:45 – 70M is "normal".  

    DIA $132 puts at .60 and I'd take it as we got out with .65 yesterday but there's one less day now (out of 7) and 20% is not bad for a cover.  


  84. Option Pain/williex – the historical tab is working again today..
    http://www.option-calc.com/optioncalc/


  85. are those DIA puts your talking about the same ones from yesterday? – DIA $132 puts @ .60


  86. Geez… As a holder of FAS, I never thought I would root for the TBTF banks-
    WFC & JPM are 13.16% of holdings.


  87. AAPL/Phil
    What's likely to be the overnight cover for the naked calls?
    Thanks


  88. AAPL/Phil
    Still in a bind. Did what you advised with the Oct 670s — well almost. Sold half and put on 5 of the Jan 630/650 spread.
    But still holding 10 of the Oct's. Wondering if I should sell the next weeks 635 as you mentioned above and use some money to roll the 670 to Nov 690s and then try to get some money back by selling weeklies when I can.
    Keep getting myself in holes here and having difficulty managing all the rolls.
    Any advice appreciated. Don't yell.
    TIA


  89. MrClark3 – If you can get AAPL to make one, I'm all in! :-)


  90. Scottmi
     
    Thanks it was working over the weekend.  have you used it long in any way?  I was thinking it might work with selling weekly premium. 
     
    Of course AAPL is not a winner this week or month …..Probably


  91. Diamond- im all for that… i only use mac computers


  92. AAPL needs to close above $640 tomorrow to get back to a bullish trend – otherwise, on a path to $600. 

    DIA/MrC – Yes, but in the morning Alert we went back to the well on S&P below 1,440.  

    Yay Mr Stick!  

    AAPL/$25KP, Zip – I can't cover at $630, it's too low.  That's why I noted the escape plan above.  Not likely AAPL drops more than $10 overnight and more likely they gain $10 so rather just wait and see and, IF they go down, THEN we roll out to Dec and lick our wounds. 

    Spacebook/Mr C – Oh that is perfect!  Can't find anywhere to actually buy it though…  Might be a concept that never went anywhere.  I would have bought it today!  

    AAPL/Zip – I lost track of your position now.  What do you have at what basis?


  93. I started with 690s rolled down to 670s and my net was about 26 at that time. I had 20 of them.
    Now I have 10 670s and they're about $1.


  94. Feel like an idiot. Lost all of my gains from the past year and more.


  95. I did do some weekly sales against them but the gains were negligible compared to the losses.


  96. Black Monday: Monday, October 19, 1987
     
    The 3rd Monday in October …


  97. Live and learn Zipla….you'll be alright.  I'm sure we've all had incidents like that.


  98. COST having a bad day after making new high yesterday on earnings.  

    For some reason, X is up as is FCX and other basic material stocks – doesn't really match the flat market.  

    AAPL/Zip – Well you can't stay in Oct like that.  There's no saving the $670s – it's a question of whether or not you want to make a new bet but I'd save the money to work on your Jan spread.  The $630/650 spread is $10 and will double at $650 so that's fine but you can sell Oct $640s for $5 and spend that money to widen your spread by $10 to $620/$650 and if AAPL makes a big move up, THEN you can invest in some long calls or spreads to cover but if you can widen that spread $10 for $5 that's paid for by short calls a few times between now and Jan, you can do very well if AAPL holds up.  Hopefully the lesson is learned – don't buy premium, sell it! 

    Meanwhile, AAPL making me nervous now.  Nov $660s at $14.50 so not taking too much damage, although down $7 for the day on $20 drop in AAPL but, on the bright side, the roll to the Dec $650s is just $11 and that's the only damage we're worried about.  Also, Jan $630/670 bull call spread is $17 and same logic as above for Zip, we can flip to that spread and just try to sell a few weeklies to get some money back so a couple of good retreats still available and we're still waiting for the IPad Mini announcement to change the tone.  


  99. zipla – same here! I had the Oct 700's from the MoMo portfolio that I rolled down to the 690' and rolled again to Nov 670/690 spread. I too have lost everything I made this year. 


  100. 20.00 swing on aapl


  101. zip – AAPL's behavior is a puzzle.  I believe more in incompetence than conspiracy as a rule as the explanation for aberrant phenomena, but there is either "secret information" circulating about Apple that no one has bothered to disclose to me, or some kind of consensual collusion is manipulating the stock.  I don't believe this — I don't "believe" in general, I know something or I don't.  But I believe I'm confused.


  102. Phil/AAPL
    Boy, that close sucked.  Looks like we are headed towards 200 dma?


  103. That was a pathetic finish.  Will be interesting to see what Asia and Europe do with this. 

    Transports finished right on the 5,000 line.  

    Dow volume just 85M – very, very low.  


  104. Phil – The only reasons I've heard(not looking at technicals) for Apple's drop are supply chain issues with FoxConn and the Samsung ruling.  As you mentioned earlier, the Samsung thing is negligible and I am sure that they will work out the supply chain issues in no time.  Just my thoughts.


  105. Technical help requested: I tried to upload a 25mb file to my email the other day [Yahoo, in this case] and a pop-up said, "file too big, but one of our partners can help."  The "partner", YouSendIt, said they would be glad to download software that would permit me to send large files — on the conditions posted below, to which anyone's obvious response would be "Ya, right, like that might ever happen!"    Anyone know where I can purchase a service that does this without turning into a vicious info predator?
     
    "You grant YouSendIt and Attach Large Files access to:
    Obtain your Contacts data from Yahoo! Contacts.
    Scan and analyze email and instant message headers and contents, all email options such as vacation auto-response details, disposable and blocked email addresses, and folder names.
    Read access to your public and shared Profile information is being requested."


  106. AAPL has a head and shoulder on daily and tgt is 605.
     
    The 50% retrace move of this recent drop was 647 and we stopped right at 647.5 .
     
    I am also in ur shoes with regards to gains and have a loss on AAPL if we close below 625 tomorrow. But i think we are going to 605 :( to complete the head and shoulder pattern which sucks. I am hoping by the grace of God we get bailed out tomorrow .


  107. Well, I said the other day that the best thing AAPL could do is test $600 and clear out all the non-believers but it's no fun to watch when we already own it.  I agree Samsung is a non-issue.  The judge did not reverse the ruling or the fine, what he said is that AAPL failed to demonstrate that the sale of Samsug phones would impact their sales – because they have been and project to continue to sell out their full production run so it's anti-consumer to remove Samsung as an alternative.   

    This does not change the fact that Samsung will ultimately owe AAPL more money for all subsequent sales.  

    As to the supply chain – its really all speculation until the earnings report….  


  108. Zero- try wetransfer.com


  109. Thanks for your patience Phil.
    I just don't seem to be getting it. And I despair of rolling and doubling down as it seems like throwing good money after bad — recent examples being V and VXX.
    I get what you're saying about widening the spread. In fact selling the 10 Oct 670s — depending on tomorrow's price — might give me $1000 that I could put to widening it. I had even thought today about rolling the Jan 650s down to 640 today and using the money to roll the 630 to 625 or lower for an extra dollar.
    But, overall I'm pretty lost at the moment. I had been following the FAS money plays and was doing fine for a while. But I'm out now and just holding some long XLF which since it's in profit I'm thinking of selling so that I can simplify my life.
    I'm also in a 5 TZA Oct 14 call as a hedge which seems to be doing me no good at all — net in that is 2.74 and today we're 1.23. 
    Other losers that are beating me down are some short HPQ Jan 14 puts — 5 x 20s and 5 x 23s at net 5.67 and 4.98 respectively. OK I know there's a lot of time for these to recover but overall the position is pulling my overall portfolio down.
    Last but not least are 10 LLY Oct 41 puts which are going to expire worthless same as V and VXX, and 10 short BBY Jan 14 puts at net 4.08. (Again we may get the buyout and all will be well).
    So it's a sad picture overall. I had to get out of the AMZN play at a loss and the SQQQ too.
    Of course there is an obvious pattern to the losers LLY, AMZN, V and VXX in that they were all buying premium.
    But I hadn't intended buying premium with the damn AAPL Oct 690s — I was hoping to cover them if we got a little gap up but it never happened.
    In all of this I hope I don't come across as whining — although I am despondent about the situation and, more importantly, my learning curve. And this is not your fault, please don't think I'm bitching at you. I take responsibility; I cry in my own beer.
    The real pain in the ass is that I had been doing pretty well all year — was up a good 30 percent from my starting position this time last year and rarely came on the board needing to get bailed out as I felt I had a grip on it. But the past two months have left me bewildered and down more than 30 percent from that same starting position.
    I feel like I need the simplified Dummies version of the plays to get ahead. All advice, admonishments, ridicule — but hopefully also some clarity about how I should see myself back to succeeding — will be accepted.
    Thank you.


  110. AAPL Earnings – I am guessing that the earnings this quarter will not include many iPhone 5 sales because of the launch date sot it's possible that they could not be that great given the fact that many were delaying buying new phones knowing that new ones were just coming around. That's another possible explanation for the current weakness I guess. The last 2 October releases, AAPL opened down 5% after the report. Might be a product of their launch calendar. Last October, they reported $7.05/share but 3 months later in January they reported $13.87/share. 


  111. AAPL/Zero
    Thanks for your thoughts. I'm not a believer in much either — and never again in AAPL's typical and welcome frothiness coming up to earnings. It was always such a solid.
    Just think they need to dress the new CEO up in blue jeans and a polo neck, die his hair black, and get him to do cool powerpoints more.


  112. AAPL – The last three days there has been large MOC orders on the sell side of more than 300K shares. Someone wants out it seems.


  113. jabo
     
    your picture may have bad mojo.  when i opened it my anti virus popped with a malicious software blocked


  114. Zipla—you are not the only one in this frightful AAPL  mess—I am still learning the art of rolling etc—I missed some of Phil's adjustments and I am being spanked for it—I trade the futures ie /RB my favourite to try to re gain some of the losses in AAPL but have a long way to go
    STJ—due to some computer problems I lost the link to the PSW portfolios --could you be kind enough to send me the link--btw did Iflan buy AAPL Jan 620 for the Mo Mo portfolio or am I hallucinating --when it comes to AAPL I don't know what is real anymore  ;-(
    VEGAS— hope everyone got the alert from Pharm—if you are attending the dinner please do not forget to send the money by Oct 20th
    Thanks


  115. sorry williex… i hope not 


  116. Savi — Yeah. It's been a few weeks of being bruised, battered and bewildered after every day. I look forward to finding out more about futures trading in Las Vegas but, as things are going, and if they keep going this way, I may not have any money left to get into it.
    BTW will also be sending you a paypal for the dinner but, could you do me a favor and strike me from the poker. I thought that everyone would play but then I saw there were quiet a few not taking part so, since I hardly play at all, I'd be better off on the sidelines. 
    Thanks


  117. Hi Phil,
    AMZN : short 4x Oct 12 250P (sold for $0.85, today closed at about $5.85, net -$5), covered by Oct 20 245P ( bought on Sept 10 for $4.5, about $4 now, down $0.5).  
    Debating strike to use to roll Oct 20 245P, as 240P at $10 looks a little pricey.   Added problem is the roll of weekly 250P, which is a huge loss.  How do I roll out of this pickle?


  118. Aapl / Phil
    thanks for roll rec.  I like.  I just landed back in the states.  I think the terms are even a bit better.  Going to load up and see what the delta.   Just glad to have finally rolled out of a $100k loss.   Some shorts 420 callers really got away from me in Q1.  Was using the "hope" strategy instead of reality of the situation.  Thanks again.  


  119. On AAPL daily chart, there is rising trend line support from the low on May 18th that was touched (but not breached) on July 25th, 26th and 27th which is now very near the 100 day moving average (621.21), that was also not breached this past Tuesday, and has acted as strong support this year. Both the 100 dma and the aforementioned rising trend line should combine now as somewhat stronger support. If that fails, there is a 613-615 support zone before the 600 level is challenged.
     
    Overall, although the correction from the September 21st high has been swift and painful (for some), AAPL is still technically in an uptrend until it fails to establish a higher low. If it can establish a higher low, IMHO it will once again revisit the September 21st high.
     
    Just my $0.02 … as always, I could be wrong …


  120. AAPL – There is also the 150 dma at 609.92 that might act as support, although it has not been tested since late last year.


  121. Position sizing is crucial. Whenever someone enters a trade, foremost in their mind should be RISK EXPOSURE! It is not as important how much a trade might make, as it is how much can be lost if the trade is not correctly managed, because sooner or later something unexpected WILL happen!
     
    Phil always stresses that everyone should have an exit plan before they enter a trade, and update it if the trade begins to move against them. NEVER be afraid of taking a small loss because ALL large losses begin with small loses that were not taken. 


  122. I'm short AAPL now and will be through earnings and then I think the buy plays are in order. Just my 2 cents.


  123. Diamond – Words of Wisdom.  That's why the strategy of continuing to roll a bad position seems like a flawed strategy to me.  CUT YOUR LOSSES SHORT and walk away to live another day has always been good advice IMHO.


  124. AAPL / Diamond – There is a 50% retracement line around 615 or so. And looking back on the chart, you can see a confluence line between 615 and 620. That's the next line on our way to 600 I think. 

    But I agree with BDC, earnings will clarify the technical situation quite quickly! Like I said above, last October they dropped 5% after earnings, dropped another 10% after that, kissed the 200 DMA and went parabolic from there. The next quarter is usually a good one for them! 


  125. Here you go Savi:

    https://docs.google.com/spreadsheet/ccc?key=0Anwf9je9MizqdGQzN2NZUjNfdjhrbjFwWlc1eDYtWnc

    Yes, lflan is long the Jan 620 Calls. Painful now… Having a position (long or short) on earnings is going to be trying I think!


  126. Thanks STJ


  127. pstas:  Thanks for the tip on big files.  I've worked on the problem for the last hour, and solved more precisely the problem I have, which is not to scatter large files around randomly but to share certain ones with certain people.  I found out that my Dropbox account allows me to upload files to newly-created folders targeted at a certain person or persons [email addresses] which folders they can then access at will on one's Dropbox account, but, obviously, not others.  When you create the "friends or whomever" folder – I created one per person, since my list of people is short – , then you push a button which sends an invitation to their email, from which email account they can then open the folder  and access the contents.  Neat.  Thanks for the kick in the right direction.


  128. stjeanluc – Interestingly, The Market Message by John Murphy (stockcharts.com) which he posted at 12:47 PM ET, also addressed the AAPL support line drawn under its May – July lows. I did not read this until just a short time ago, but he also mentions the trendline drawn over the July peak is another support level. 
     
    I think that we can all agree there seems to be a lot of strong support between 622 (or so) all the way to 600. So, we may not be at the bottom yet, but it probably is not that far from here. Provided, of course, earnings and guidance does not totally suck! ;-)


  129. Music for a bad day …
     
    R.E.M. – Everybody Hurts  [Automatic for the People]


  130. Coca Cola Hellenic is leaving Greece moving to Switzerland. There is no way Switzerland is a better place than Greece to bottle soft drinks, unless there is a problem with the currency.


  131. Still 2 weeks from earnings Diamond… Lots can happen in between!


  132. …well with the currency, or the taxes, or the constant disruptive riots.


  133. stjeanluc – Yes, but only 6 trading days to OPEX! ;-)


  134. 50 DMA lines holding as expected technically!

    Except for poor NASDAQ. Live by the AAPL, die by the AAPL!


  135. AAPL/zipla – i know what you mean about crying in your beer… Just make sure they're not bitter tears.


  136. Will Ryan repeat this level of lying:

    http://www.youtube.com/watch?feature=player_embedded&v=9r6TA1PNG_M

    Obama sure screwed the pooch in the debate, but where the heck is the press? In a European country, he would have been taken to task for the level of lying by everybody. Here, we think he shows self-assurance.


  137. Just checking in after meetings all day.  Thanks, stjeanluc, for the virtual short strangle portfolio updates!  It's been very helpful.  As the current positions are almost out of premium again, it looks like we need to sell some more premium soon.


  138. Phil:
    Can the claim below affect AAPL shares to any great degree?

    "One piece in the puzzle, possibly: On Friday, after the market close, the Nasdaq OMX Group announced that it was replacing  First Solar  with Texas Instruments in its Nasdaq-100 Index, the top 100 companies on the Nasdaq. First Solar is a tiny energy company with a stock market value of just $1.7 billion and no longer meets the requirements for membership in the elite Nasdaq-100; Texas Instruments is worth nearly $37 billion. In a note to clients, Stifel Nicolaus managing director David Lutz says the swap in the index could have a ripple effect on the larger companies that will have to make room for the new addition. In other words, investment managers running funds based on the Nasdaq 100 Index will be more likely to sell Apple or Google (down nearly 3% Monday) to accommodate Texas Instruments."

    Read more: http://business.time.com/2012/04/17/when-investors-decide-its-time-to-take-profits-on-apple-everyone-in-the-market-feels-it/#ixzz292nx7Syl


  139. The kid is getting slapped around and futures like it.


  140. Hi Diamond,
     
    Yes I do try to be aware of taking small positions and often only work with half the orders in the 25K.
     
    This time, I was wrong. Screwed it. Had scaled into the 20 690s bit by bit and even sold batches of them and bought them back at a better price to get a better price overall. And I did go in with a plan. The plan was to cover. But until the past few days I didn't realize you could just as easily cover by selling a lower strike. My understanding was the sold strike on a bull call spread had to be higher. But, anyway, as I said, the big bright original plan was to buy and wait for a better price on the sold call for an overall lower price on the spread. And we know why that didn't happen.
     
    BTW I do remember I first covered with a lower call but Phil said I was in a bear call spread with the expectation that the stock would drop further. At that stage nobody seemed to think it would — not to 632 anyway. I was a little flummoxed by that so I pulled out of the sold calls, went naked, and as you put it, watched little losses become greater losses — although I was covering every night and selling weeklies for a small profit in the morning. Should of course have left them on all day and I'd probably not be hurting as bad.
     
    So, what can I say: I'm doing my best figuring this damn options trading thing out so I can get it right and not land in the crapper but, as the poem goes:
     
    But little Mouse, you are not alone,
    In proving foresight may be vain:
    The best laid schemes of mice and men
    Go often awry,
    And leave us nothing but grief and pain,
    For promised joy!
     
    I know the horse has bolted but I'm still grateful for the tip about closing the barn door. Even so I would be even happier if you could share some of your knowledge and skills about how you manage when you're in a pickle, how you decide on your sizing, and how you manage disaster exits.
     
    I did think I was doing it by the book, but it's clear I'm a damn slow learner. I will take any straightforward ground rules you can give me to heart and hopefully get it right before I die broke.
     
    Thanks


  141. Here is an interesting interview with Max Keiser and John Najarian of OptionMonster that might shed some light on what happened to AAPL recently, starts at 13.30 min
    http://www.youtube.com/watch?v=MqbI41dw0eg&feature=player_embedded#!


  142. scottmi
    In Britain you can actually order and get to drink a pint of bitter.
    That way, when you do the crying bit, it doesn't muck up the taste!


  143. jyoti
     
    Thanks for sharing. That was interesting.
    Would make you think there's no point in trading there are so many algorithmic odds stacked against you.


  144. Gotta love Smokin' Joe Biden….. And 90 minutes still not enough to explain the tax cut math for Ryan. I thought they wanted to simplify the tax code.


  145. zipla – I know where you are at emotionally and mentally, but try to remember: "This too shall pass."
     
    At this point, Phil is the best one to help lead you out of this situation as he understands option trading on an entirely different level. As the saying goes: "He's not from around here!"
     
    As for position sizing, etc., Optrader always recommends an excellent book:
    Trade Your Way to Financial Freedom by Van K. Tharp
     
    Lastly …
     
    "I am hurt, but I am not slain.
    I'll lay me down and bleed awhile,
    Then I'll rise and fight again."


  146. who won the debate?


  147. Wow, that was a way better debate than the Presidential one.  Biden did a great job but Ryan held his own for the most part.  Moderator was great – kept them both in line.

    I'm very disturbed by how many people seem to have put way too much money into the AAPL position.  As I have said many times, the $25KP is meant to be the aggressive 5 or 10% of a $250,000 to $500,000 portfolio, like the Income Portfolio, that is sensibly invested.  At the moment, the position is down about $15,000 and is certainly still recoverable but, if your portfolio is such that this is an amount that matters to you – then it's not a trade you should be making in the first place.  

    I'm going to "fix" the AAPL trade in the $25KPM and roll it back to a FAS Money-type of set-up, which is far more sensible for those with a smaller account although, as I just said, if all you have is $25,000 or $50,000 or $100,000 for that matter – then it beyond foolish to be trading 100-share option contracts of a $600 stock – that's $60,000 each contract you are leveraging – 10 contracts is $600,000 worth of AAPL stock so a 5% move against you will cost you $30,000.  Just say no to positions you can't afford – please! 

    So, going forward we will play AAPL in two ways, one is damage control for the current beaten-down position, looking to heal over time and the other, in the $25KPA, we will continue to play aggressively.  It will be good to compare the performance over time of the two approaches.  

    Positions/Zip – It sounds to me like you are running your entire portfolio aggressively.  That's very dangerous, as you can see.  I find it odd that your concern is to get out of FAS Money, which makes phenomenal amounts of money, to concentrate more on risky things.  FAS Money is all XLF because FAS is, at the moment, too dangerous to play.  When it's a good time to sell FAS premium, we'll do it but you now have an "urgency" to make your money back so you're not satisfied to wait PATIENTLY for the right opportunity – does that sound like a good plan?  If you have an Oct TZA position and it's two weeks to expiration and your position is out of the money – what do you expect will happen to it as expiration nears?   The hedges are insurance we expect to lose but note that we moved our hedges to Jan in the Income Portfolio weeks ago.  Also, last week those calls were .46, had you doubled down, your net would have been $1.60 and you'd be a lot less upset now, right?  But you didn't think it was worth spending $230 to DD but then when the position jumped from $230 to $750 ($1.50) yesterday, you still didn't want to take the money.  Now there's 6 trading days left – what is your plan?  

    Fail to plan, plan to fail is very apropos here….   Do you feel the need for TZA protection going forward?  The Jan $14/18 bull call spread is $1.15 so it costs you nothing to roll there and it's $1.20 in the money and, if TZA goes up $2.80 (about 20%), you make another $2.85 x 5 = $1,425 (not counting the $750 you already lost).  Now, the question is, will $1,425 do you any good if the Russell drops 7% to 770 and, do you believe that's likely to happen?  If the answer is no to EITHER of those questions, then what are you in the position for?  

    HPQ 2014 short puts are net about $16.25 with HPQ at $14.25.  You say it's pulling your portfolio down but if it were 2014 and they were expiring, they would be $2 each and you'd have a $2,000 loss and certainly you'll be able to roll them lower when the 2015s come out.  The rest is premium but it goes back to the issue of why make a trade like that if you don't REALLY want to own HPQ for net $16.25?  If you don't intend to stick out a position long-term, then get the Hell out when you lose 20% – that's a good rule of thumb.  Meanwhile, I'd point out that you could instead sell 10 IBM 2015 $145 puts for $9 if you don't like HPQ anymore or, how about selling 3 AAPL 2015 $350 puts for $29.20 – that's about the same but AAPL would have to fall another 45% before those go in the money.  Just because you started with HPQ, doesn't mean you have to ride it out to the bitter end.  

    With LLY, there's nothing you can do about them at this late stage and I'm not sure what the problem is with BBY but I imagine the same as HPQ depending on what strike.  With AAPL, as you say, your premise was blown but you stuck with the trade – that's never a good idea.   I'd try to get back to what was working – sell premium, sell premium and, when in doubt, sell more premium.  It's boring but it works and, as you can see from "going for it" boring can be nice.   If you were comfortable with FAS Money, I think you might want to try to get back to those basics – it's a nice little income producer but you have to be patient although, not very because in just over 3 months in the current set-up, we've made about $4,500 and we only have about $4,500 worth of longs covering so 100% in 3 months is not a bad track to recovery.  

    AAPL/CaFords – Volume has been very heavy on the way down from $700, about 20M per day with almost 30M on Tuesday, which was a big up day.  On the climb from $600 to $700 (Aug-Mid Sept), the average was closer to 13M so 45 days up and should take 22 days for all those folks to cash out, which means that group should be about done by now.

    AMZN/DrM – You let them get too close to each other and now earnings are the 22nd so you take a lot of risk selling that week.  As with Zip above – what's your premise?  You sold short $250 puts for .85 against a $4.50 position but you didn't stop out when you lost 20% or 40% or 60% or 80% —- all the way up to a 500% loss you refused to stop out so you must have had a plan, right?  Those puts were .43 on Monday and $2 on Tuesday and $5.60 on Wednesday and they opened this morning at $3 but you didn't stop out then either but at least you got out before they hit $8 this afternoon.  So now you have a $5 loss and you still have the Oct $245 puts that expire in 6 days and they are $4 so down another .50.  You could sell the $245 puts to some other sucker who doesn't realize earnings are not until the week after and use that month to put yourself in the Nov $235 puts ($8.10) or the Jan $225 puts ($8.55) and if the caller expires worthless, you can do a partial cover into earnings (assuming you are bearish) and use that additional revenue to roll to a higher strike (the Jan $235 puts would be +$3,50) or, if AMZN fails to hold $245 next week, then you can stop some out or just roll to a bear put spread with the Jan $205 puts at $4.30, for example so that's the Jan $225/205 bear put spread without spending any additional money.  You still have to be right, of course, but if your premise remains – it's a good way to play it.  

    You're welcome CCS.  I'm sure others would love to hear about your $100K turn around if you feel like giving details of how you rode it out.  

    Good support line Diamond, thanks.   Good point on risk exposure as well. 

    KO/Sparky – That is interesting.  Maybe the execs just don't want to live in Greece anymore.  

    Big Chart holding up in it's own way.  

    TXN/DC – It's possible.  If they are cap-weighting then they need a 30x allocation but still, it's tiny compared to AAPL and the rest of the Nas and, of course, if they are "forced" to get into TXN, then they are "forced" to keep their AAPL allocation as well.  

    Nice clip Jyoti, thanks.

    Who won/Jabob – I'd have to say Biden won but he didn't go for the kill shot so not getting killed was a net positive for Ryan/Romney although I don't think they converted any Democrats with that performance.  


  148. From Seeking Alpha Market Currents:
     
    The U.S. is heading towards fiscal disaster and no one in Washington is doing anything about it, warns a trio of experts. Erskine Bowles and Alan Simpson – authors the Simpson-Bowles reform plan – along with Goldman Sachs CEO Lloyd Blankfein are concerned that investors are putting way too much faith in Congress and the White House to work out a deal. Those people are just "whistling around the market" right now, and they're likely to get creamed, Simpson notes. "They really believe honestly that no Congress could be this stupid, and by God, they can.” 


  149. Whoever you wanted to win. Biden was rude, brash and convincing, Ryan was polite, subdued and persistent.  Unlike the first debate, no one's mind will be changed by their exchanges.


  150. Sorry ZZ and Phil, I have to disagree.  Biden made it through the entire debate without putting both feet in his mouth once! That's a major win for Obama.  Brokaw put it best, although he was trying to apply it to both veep candidates; it made you feel a little bit more comfortable with that whole heartbeat-from-the-presidency-thing.  That's going to have an effect.  My only advice to them would be for Biden to tone down his teeth and for Ryan to manscape that Eddie Munster thing; it's just not Presidential.


  151. October Volatility – Stock Trader's Almanac


  152. Thanks Phil for taking the time to give that detailed answer.
    Yes. FAS Money has nearly always been good to me. And no I won't sell the XLF and get out of it.
    As to trading the whole portfolio aggressively, perhaps I am, although I have some very slow burners in there as well like BTU and BA. The only really big gamble I took was on the AAPL trade — I thought it was a certainty and yes it was because I got greedy. I admit it. It's so often a certainty. And I had luck with it on most earnings even before I started reading your blog.
    When I comes to selling premium I know the basic idea but seem not to understand how to get the most out of it. Some of the best steady money I've made has been selling puts but when it comes to adjusting spreads and using weeklies to maximize premium sales I just don't seem to get it. Or if I do, don't trust myself to execute it properly. Perhaps it's something you can address during one of the sessions in Vegas.
    Looking forward to seeing what you do with the APPL recovery project.
    God it seemed so much easier to make a buck last year. After QE2, running into Christmas it looked like all the geese were laying Faberge eggs.
    Thanks again.


  153. Hi Phil,
    Thanks for your ideas about AMZN 250P/245P weekly / roll.  I have both positions open still, and 250P were sold just this week, to collect small premium.  In fact, I also had an order in to roll 245P to Nov 240P, but that one did not fill.  I am still  way behind on learning to roll position, so your advice is appreciated.  While I want to retain bear position on amzn, at what point, would it be prudent to enter a Jan 220/180 bull put spread for about $7-8 (I cannot do naked puts) to add to bear put spreads?
    Thanks in advance.


  154. Phil/AAPL – Good morning! Just wanted to see if I could get your opinion on a virtual trade. I'm also following the AAPL trade and am actually pretty comfortable with it. I have 10 Jan 650 calls which I paid $46 for. I have been selling weeklys so my basis is much lower, just yesterday I scalped $5 on six of the callers. Certainly from looking at the chart it looks like we are going to kiss $600. If I use that as my operating assumption would you stick with selling the weeklys? Would your tactics change if we went down and flirted with the 200 dma? Thanks Phil!


  155. Some comedy from the WSJ:
    "The European Union has been awarded the 2012 Nobel Peace Prize, a move that comes as the  27-member bloc works to contain the debt crisis in the euro zone. "


  156. Good morning!

    Fiscal cliff/Diamond – Yep, quite the boogie man.   Of course Congress and the President will not come to any kind of deal and will allow the United States of America to default on it's debt and other payment obligations and spin into bankruptcy, taking the entire Global Economy with it to make a political point.  That's the logical path of least resistance – happens all the time…  You know what, I'll bet if someone had a nuke – they'd use those too because people are just completely self-destructive and insane by nature – especially our elected leaders…

    Changing minds/ZZ – Saw an Intrade chart that showed Obama/Biden rocket back to 62% actually, but I still agree with WaPo, who called it "The Art of Not Losing" for both.  What I do think is that Biden has re-energized the Democratic base and now it is 100% up to Obama to put some top-spin on this sucker next week

    LOL Rdn – that is quite a look he has…

    Volatility/Diamond – Wow, that's pretty extreme.  I'm amazed at the way the VIX has been dropping off again, now 15.59.

    By the way, Dollar down at 79.66 masking a lot of market weakness as our futures are up very slightly but should be down if not supported by that weakness (was 79.9 at close).  Euro $1.297 up 1.4 from Weds am, Pound $1.604 is bullish over $1.60 but only if confirmed by Euro $1.30+ and 78.44 Yen to the Dollar means Yentervention continues on Euro so far but BOJ tends to switch horses so we can expect them to support 78.50 on the Dollar and fight hard to get the Yen over 78.50 into the weekend.  

    No problem Zip.  Let's just set some reasonable goals and try to get on track for next year – only takes that long to review positions from time to time.  It has been a very difficult year, you're still outperforming many fund managers..

    AMZN/DrM – I think you need to have a bit more of a sense of urgency as we get into the weekend regarding the Oct positions.  I don't like AMZN so I don't like a bull put spread on them.  I was advocating a bear put spread but only as a solution looking forward if the calendar spread had to be rolled when too successful (the front-month caller getting too much in the money) – otherwise the point was to give you more time on your long puts without spending more of your own money to move it. 

    AAPL/Aaron – I hope you didn't ride those down from $75 (now $32.50)!  It sounds like you are comfortable selling the weeklies and, while I'd be very careful on earnings, you need to consider taking a break and buying more time – like selling, for example, the Nov $655s for $16.20 to protect yourself through earnings.  If they miss, you can roll down to April whatevers for +$30 (net + $14 cash) and you know you can just start selling again.  If they flatline – you make $16.20 pretty quick and, if AAPL rockets up, the Jan $610 calls are $52 so + $20 and you have the Jan $610/Nov $655 spread with 2 months to roll the callers.  Violent stocks like AAPL are great to play selling the weeklies but you just need to remember that earnings are an exception and it's more important to protect the overall position (the money-maker) than to try to guess direction.  

    Peace Prize/Deano – Must be the way they quell those riots…

    Peace baby!  


  157. 7:17 – all things d says ipad mini launch is oct 23rd  - tos headline, stock up 3 a half hour after 


  158. Phil, it's incredible you have to apologize for all the work you do for those of us who can't.  Is this not a TRADING site?  When did the word Trading become synonymous with GUARANTEED profits.  Just tell folks to put on their BIG Girl or Boy panties and as you told me when we met, there will always be another trade tomorrow.   I for one read what's written and am RESPONSIBLE for mysel and my choice to trade or not.  I have no APPL trades yet because I can't get a handle on them yet.  When I do I will join.  THANK YOU for all you do for me, it is much appreciated!!!