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TGIF – Happy Crashiversary – Are You Prepared for the Next One?

25 years ago today, the market fell 22%.

You never know what's going to panic the markets – since then we've had many other sudden corrections like Black Friday just 2 years later and Black Wednesday in September 1992, we've had the collapse and 9/11 and whatever you call 2008 and recently we had Dubai and Greece leading to sudden crashes and the ubiquitous flash crash and whatever happened last August (Europe again).  

So stock markets are dangerous places to keep your money, on the whole.  That's why TZA (ultra-short Russell) is our primary hedge in the Income Portfolio  and, as I mentioned in last Wednesday's post, should the S&P fail to hold 1,440, then the Dow has little support all the way down to 13,295 as well.  Just this Tuesday, I reiterated a TZA spread Members could use for general portfolio coverage:

Ultra hedges/Bdon – You just can't beat TZA at $15.  The Jan $12/15 bull call spread is $1.50 so 100% upside if TZA simply doesn't go any lower.  If they do go lower, you can sell the April $11 puts, now .50 for $1 (the Apr $12 puts are .92) before your $1.50 is even out of the money and then you'd be in the Jan $12s at net .50 and worst case is you get assigned at net $11.50 in April but, of course, you can roll or simply accept the assignment and cover and then you have more long-term protection.

We like to buy our protection when the market is going up – it's cheaper that way!  TZA was at $14.75 at yesterday's close and the Jan spread was still about the same $1.50 but it's $2.75 in the money – all we need is for TZA to not go down (Russsell not to go up) and we make a tidy profit.  That's a good way to hedge because the only way that hedge loses money is if the market breaks higher.  

We're not turning bearish yet but, as we're seeing some pretty serious misses (GOOG and CMG yesterday, for example) and some pretty strong reactions to those misses – it is a good time to make sure people do remember the value of hedging.  If nothing else, it's a piece of mind that lets us ride out these dips without worry.  Also, of course, it's good to have wagers on both sides of the field.  In our $25,000 Portfolio, for example, we are playing AAPL bullish and AMZN bearish and yesterday they both went down.  We were able to sell a few APPL calls and AMZN puts to cover and now we're collecting premium on both ends while we wait for earnings.

The Dollar continues to push higher as the EU predictably inspires no additional confidence in their meeting (as we expected yesterday) and now Moody's is raising warning signals on the German Banking System, saying the country is over-banked, pushing down profits and making it less likely they'll have the reserves to deal with major losses.  Spain is still dithering about accepting a bailout, the anti-austerity party is winning in Greece, Hollande is on the ropes in France and Merkel's opposition is growing – not exactly confidence-inspiring and the Euro has dropped back to the $1.30 line this morning while the Pound fell right through $1.61, back to $1.603 – that's not good and a rising Dollar puts additional pressure on the markets.  

We bet the Dollar long by going short on oil at the $93 line – in both the Futures (/CL) and USO, using the next weekly $35.40 puts, which we picked up at .66 (now .78) in our virtual $25,000 Portfolios yesterday as we still expect one more big plunge as the last of the November contracts have to be cleared between now and Monday.  The Dollar is already over $79.50 this morning and, if we get a real market crash, we can see USO re-test $32.50, which would make those puts worth $3 each though we'll probably be thrilled to take a double off the table. 

SPY 5 MINUTEIt was a wild day in the markets yesterday as GOOG accidentally released earnings at 12:15 and boy – were they disappointing.  Fortunately, we had discussed Google's prospects extensively yesterday morning in Member Chat and my conclusion in the subject was:

Unless GOOG has a significant upside surprise (and their biggest all year was 11%), they are only expected to earn $10.65 vs. $9.72 last year and last year Oct earnings were the 11% surprise and it took them from $525 to $670 into Jan, when they missed by 10% and fell right back to $565.  

So, if you assume they are going to be 10% stronger than the earnings that took them to $670, then we can add $67 and we get $737 and GOOG has already priced this in with a run from $575 in July, where they posted $10.04 in-line earnings – all the way to $774 at the end of Sept and now back to $755.  So, barring any big positives, I don't think GOOG has much chance of going higher and the 200 dma is way down at $633 and the 50 dma is $720 so not much preventing a drop.  I wouldn't short them but it's just a very dangerous-looking play on either side.  

Unfortunately, the early release caught us by surprise and we hadn't even gotten around to discussing possible short plays on GOOG or the Nas but thank goodness we weren't long.  The only long trade idea I liked was the 2014 $700/800 bull call spread at $48.50, selling the Oct $775 calls for $10.20 as a spread and, of course, the $775 calls will expire worthless today but the spread is still $37.60 so not even a $1 loss on a 10% drop – that's why we love those kind of plays.  

GOOG WEEKLY Now, if you want to stick with GOOG (see Dave Fry's chart) on that spread, or even set up a new one, you can drop the $800 caller ($46) down to the $740 caller ($66) for $20 and sell the Nov $720 call for $8.50 so now you have $28.50 and you spend $18.90 to roll your $700 calls ($83.60) down to the $660 calls ($102.50) and that lowers your basis on the spread from $48.50 to $38.90 but now you are in the $660/740 bull call spread, which is $40 in the money and, each month, you can sell more calls and use some of the money to widen your spread and some to reduce your basis until you have a free spread that will be all profits at the close.  It's a little boring but VERY profitable!

We have been painfully sticking with AAPL as they have dropped 10% in a month and yesterday they dropped $12 more dollars to close at $632.64 after testing $630 again.  While GOOG's problems with ad revenues have nothing to do with AAPL's business model, we still felt it prudent to partially cover our long AAPL positions – just in case.  AAPL and AMZN both report next Thursday in what's sure to be another interesting day in the market.  

Meanwhile, MSFT disappointed and MCD missed this morning and GE was unimpressive AND guided down – while Q3 was probably a trough, it won't take much to get investors nervous.  As we expected, the more international exposure a company has, the poorer their performance but CMG had a very disappointing report and they are all US so it's possible we're over-estimating our local market as well.  

So caution is the word of the day and we'll have to keep ourselves well-hedged and wait another week for another few hundred earnings reports to get a better picture.  24 companies missed earnings estimates Wednesday (close to half) and 8 of them guided down, yesterday was much better with just 16 misses out of 50 but GOOG was one of them and another 8 guided down and this morning 10 out of 21 companies are reporting misses and 3 of them are guiding even lower – we expected a poor earnings season but is it even worse than expected?  

Let's be careful out there.

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  1. Phil, Lflan
    Looks like the Tech earnings are coming in disappointing. So, what is the probability that Apple disappoints too. Is this recent slide in AAPL indicative of what is to come or are these opex games being played on the sheeple(me). thanks

  2. Good Morning!

  3. Oil Lines

    R3 – 95.12
    R2 – 94.05
    R1 – 93.25
    PP – 92.18
    S1 – 91.38
    S2 – 90.31
    S3 – 89.51

    Yesterday's high and low – 92.99 / 91.12

  4. Phil,
    With 66 MM barrels left in Nov, Short /CL at 92.90? your thoughts appreciated Thanks

  5. Looking at earnings so far, it seems that a lot of companies are reporting weaker revenues overall. Financials seems to be the ones reporting stronger revenues while techs are weak. 

  6. Just reporting a chartists rendition of what's to come….

  7. I just ordered the Samsung chrome laptop for $249 thru
    If the rumors are true about a $99 7" tablet, these could become big issues for Apple.
    Sometimes it sucks to be King…..

  8. Did phil suggest next weeks USO put or calls

  9. Al-Ponzi – Awesome Pharm!    :)

  10. USO / Bertl – We have the puts in the 25KP!

  11. THX are they weeklies

  12. AAPL / Pharm – Earning is 5 trading days…. Consensus estimate is for $8.93 but the whisper is over $10. I am guessing that they beat, but the question is by how much.

  13. Next week's options Bertl.

  14. IWM downward trendline support is at my 81.30 line for the open

  15. Pharmboy,
    H&S Calculation of AAPL : Target  606.93.( 705.07-656=49.07, 49.07-656=606.93)

  16. Good Morning—back home
    Vegas—I have responded to all who sent me the $ for the dinner—-if you sent and did not receive a response please let me know—on Monday I will be giving the count to Nobu—atm 21

  17. CMG/Phil – any suggestions on handling the CMG trade from yesterday's chat?

  18. AAPL/StJ – that is in 5 days…that target could be reached by then.

  19. Hard and heavy selling so far.

  20. maybe today…..

  21. Neet
    I have APPL seeing $560 but hope I,m wrong.

  22. Ouch on CMG!

    AMZN – Net $13.63
    AAPL – Net $27.39 (both excluding opened trades)

  23. On the 25KP, I have removed all the options that expire today and have not shot of coming around except in a repeat of 1987! Should that happen (hopefully not), I'll adjust the prices!

  24. AAPL / Pharm – I have $616 as the next Fib line (50% retracement). That we could see…

  25. Good morning!  

    Gotta expect some bearish follow-through but GOOG back to $705 and nice if they hold it.  AAPL $630 better hold too…

    CMG is going down and down and our trade in the $25KP was to own 4 Nov $250 puts at $7.70 – they are now $12 and that's the end of the good news.  We sold 5 today $270 puts for $7.80 and those are now $23 ($11,500) so we have to roll those to 7 Jan $250 puts at $20 ($14,000) so we're in those for about a net $7 credit and hopefully they turn around and, if you have the margin for it, the correct play here is to take the Nov $270 puts off the table (selling into the excitement) at $12.  Between that $4,800 and the $3,900 we collected on the original sale, that's $8,700 collected and then we're just hoping to pare the short $14,000 below that level.  

    Meanwhile, GOOG is failing to hold $700 so that's bad and our indexes are down about 1%.  We sold the DIA $135 puts in the $25KP as well and those shot up to .80 but our Nov $133 puts are $1.50 so let's roll the $135 putters over to the next week $134 puts at .80 for an even roll.  If we can gain $1 a week, we have 2 more weeks left and we can net out a win, even if the Dow drops another few hundred.  Actually, I think 13,400 is going to hold so let's cash our Nov puts and leave the short naked puts as a bullish play.  

    Now for the good news – IBM has stopped falling and GOOG does look like it wants to stay at $700 and the volume is strong (86M on the Dow at 9:45) so this is a nice capitulation move and will be very bullish if it turns.  In fact, how about picking up 10 TNA today $59 calls for .90 in the $25KP with TNA at $59.71 – seems like a fair amount of premium on a bet the RUT continues to hold 828 but out if it doesn't.  

  26. 25KP – I missed the cover of the DIA puts. I'll adjust the spreadsheet with Phil's last trade. Sorry!

  27. phil,
    im short the jan14 55 gdx calls from a previous spread.
    the plan was to sell weekly puts to recove some of the prem.
    at present im short the oct 53's
    i want to roll to the next week and my question is this…….
    there is more pemium in the 51.5 than the 53 although it would cost me about .75 to roll down..
    since im in for the long haul week after week roll………i think i should stick with the 53 roll vs going down in strike…..

    would like ur thoughts not so much for the numbers (which are small) but for the theory., learning……………..tks as always

  28. DIA Puts / Phil,
    Completed the roll to next week's DIA $134 Puts. However, cashing in the Nov $133 Puts is going to require $50k of margin.

  29. 25KP CMG / Phil – To keep with the portfolios structure, in the 25KPA I will have the short CMG naked but in the 25KP I'll keep the cover with the long Nov Puts.

  30. CMG down 15% is a bit silly.  $242 is down 41% since July and while I hated CMG at $415 – they are now a $7.5Bn company (down from $13Bn) that makes $250M a year and is still growing at 15-20% for a forward p/e in the low 20s.  

    Chipotle Mexican Grill, Inc. (NYSE:CMG): According to Baird, it would use weakness in Chipotle to buy the share aggressively since it believes that Q3 results were missed because of a variance on new-store contributions, not fundamental issues. The firm stated that the company’s earnings report contains various positives such as healthy same store traffic, healthy balance sheet, and reassuring management commentary. Shares have an Outperform rating and price target of $460.

    Tech/Jasu – AAPL is a world unto it's own.  AAPL, in fact, is causing part of the tech slide as no one is buying laptops or even desk-tops (although Mac sales are fine) when they don't have a tablet yet.  Whether they buy an IPad or a clone, the point is they are not buying traditional equipment so all the old-line manufacturers are simply getting their asses kicked.  It's like saying all the horse and buggy manufacturers and suppliers are in a nose-dive so shouldn't we short Ford because they too provide transportation – apples and oranges.  

    Oil/Jasu – Yes, I noted that above and, amazingly, oil is at $93.24 (/CL) at the moment.   Too scary to short oil Futures over the weekend but those USO puts are cheap again and put a limit on potential losses.  

    AAPL/$25KP – I don't want to uncover but AAPL does feel bottomy here ($627) so let's take the $6K we collected on the call sale and spend $7.50 to roll down to the Nov $640 calls before it gets more expensive.  So that will add $1.50 to our net on AAPL and we're in for about $29 (not counting the $6 from the short calls) and the Nov $640s are $19.50.   

  31. Might need to leave the long DIA puts as cover in the 25KP as well. Sell them in the 25KPA which has no margin requirements.

  32. QQQ at .80. Time to DD?

  33. Anyone know what is pushing the Dollar up against the Yen?

  34. Good Morning!   Going long AMZN  .   Nov   atm calls.

  35. Dollar 79.58. 

    CMG/Diamond – That's interesting:

    This happens with expanding companies – they hit bumps in the road. CMG earned $2.27 a share, missing $2.30 (yep, it was a .03 miss and they're down 15%) but last year this Q they were earning $1.90 and they jumped UP from $300 to $347 and on to $442 in April, where we hated them.  It feels odd to even defend them now but I also loved them when they were part of MCD and I liked them when the spun out of MCD – it was just the $300-440 thing I didn't like because this is a $300 stock, not a $400 stock.  Now that they are trading at $245 – I like them.  That doesn't make me fickle, it just means I know what they're worth. 

    Revenues grew 18.4% year over year to $700.5 million in the reported quarter buoyed by new restaurant openings and higher comparable store sales (comps). However, revenues too missed the Zacks Consensus Estimate of $703 million.

    The restaurant operating margin expanded 70 bps to 27.4%, attributable to a 60-bps cut in labor, 30-bps drop in occupancy costs, 70-bps decrease in other operating costs and 40-bps slip in food, beverage and packaging costs (as a percentage of total revenue).

    Total operating margin expanded 210 bps to 17.4% in the quarter, benefiting from overall lower expenses. However, general and administrative expenses went up 60 bps year over year to 6.9% of revenue due to the investment toward the biennial conference in the third quarter, higher stock based compensation expense, and about $1 million in bad debt expense related to general contractor insolvencies.

    In the Income Portfolio, let's add 10 CMG 2014 $235/315 bull call spreads at $30 and we'll hold off on selling for now as they may get a quick pop back.  

  36. AAPL/Phil
    Since I adjusted down yesterday to the 10 Nov 635 and covered yesterday with 7 Oct 26 650 do I need to make some adjustment? Lighten up on the shorts later? Or sell the shorts and roll to Nov 630. Would prefer to be in sync with the 25KP but make that adjustment too early yesterday.

  37. Good morning Phil – in yesterday's post you referred to an ALU trade from Wed in which the break-even point was at 0.635. I looked through Wed's posts and could not find that trade. Would you mind recapitulating?  Did I miss the boat on this trade?

  38.  interesting that german cds has just absolutely crashed…meaning no german balance sheet destruction to "save" europe.

  39. Phil – what do you think of NOK? i was thinking of buying it at its current price of $2.73 and selling the Jan 2014 2.50 puts/calls for a net entry of 1.045.

  40. Phil
    What do you think of MSFT ?
    Any trades ?

  41. Financials/StJ – That's what happens when they get free money.  The Fed helps no one but the banks.  

    Dollar 79.67 – that's finally forcing oil to get realistic.  Unfortunately, that knocks down XOM and CVX and they are big Dow components but this too shall pass.  

    AAPL Chart/Pharm – Ouch!  

    Chrome Laptop/1020 – This one is $449.99, couldn't find the $249 but nice at 3lbs on 0.83" thick.  They say it boots in 7 seconds.   They say everything synchs through your Google account – that's nice. 



    • 1.3GHz Intel Celeron 867 Dual-Core
    • 4GB of DDR3 RAM
    • 16GB Solid State Drive
    • Integrated Intel HD Graphics
    • 12.1" Widescreen LED-Backlit Display
    • 1280 x 800 Native Resolution
    • 2x USB 2.0 Ports, 1x DisplayPort
    • 802.11a/b/g/n Wi-Fi
    • Integrated Webcam, Microphone & Speakers
    • Google Chrome OS





    CMG/Cdel – Don't forget, if those adjustments work out by Jan, we MAKE $8,700 on that "broken" play.  

    FAS Money – Let's sell 3 next weekly $118 calls for $1.80 ($540) – getting tired of not collecting money on that one and we do have 15 longs so it's good to lock in the gains we have.  

    99M on the Dow at 10:30.  

  42. appl testing 625 for 4th in 10 days….watching it even more closely than usual ….if it takes out $625 convincingly…could get ugly for whole market

  43. does anyone have the graphs for food stamp use and the participation rate now? tia

  44. also, does anyone have the nymex futures that Phil shows us?

  45. AAPL / Angel – The earnings better be good….

  46. MSFT is at bottom of 6 month channel.  looks interesting.  

  47. Wow, existing home sales go down the crapper….real estate goes up…..

  48. thanks Pharm… could you post a link, please?

  49. Phil/AAPL I sold this weeks 625 puts, now at 625.75. When would you roll to next week and what would be your strike if you did? I'm thinking 580 or 590?

  50. On any picture, you can right click it and copy link location…plug it into the browser…and good to go….

  51. Pharm-- you the man!!

  52. Pharm / IMUC - this one pulled back for a share offering, you following it at all?  Good for a toe in the water?

  53.  I was nicely short MSFT yesterday into earnings, but it seems curiously resistant to going down.  My response is rather the surprise of this fellow:

  54. Funny, all these job creators (Trump also comes to mind) always think that they achieve everything only with hard work:


    That’s not to say he set out to trade on his pedigree. Not long after graduating from Harvard Business School, he turned down offers from several prominent firms to join an obscure start-up called eGrad, whose meager resources gave it a kind of grunge aesthetic: secondhand furniture and heating so erratic he brought in blankets to keep warm. When Tagg wasn’t cold calling would-be corporate partners, he could sometimes be found packaging merchandise and mailing it. But making it on your own is never so clear-cut when you’re a Romney. Some of the biggest meetings he landed were with Staples, which his father had funded at Bain Capital, and General Motors, a company where his last name still carried weight.

    Tagg’s biography is littered with similar stories—short cuts he couldn’t have taken without his last name, obstacles that melted away before he was even aware of them. And yet, thanks to the Romney myth, he and his family believe that most of what he has achieved comes from old-fashioned industriousness, not older-fashioned status and wealth. [...]

    Romney recently said that “ninety-five percent of life is set up for you if you’re born in this country,” implying that his sons have had only marginally greater opportunities than those of his secretaries. It’s what allows him to believe that his family has earned every dollar they’ve accumulated, unlike the underachieving masses, who would rather accept government goodies than shape their own destinies.

    No wonder they cry when ask to contribute a bit more and have such a skewed view of the rest of us.

  55. SJT – You might find The Nation's recent investigation into how Romney profited from the auto bailout through buying dirt cheap bonds.  Is this why he doesn't want to release all his tax returns?

  56. GDX/Mill – I'm confused.  You are SHORT the Jan $55 calls?  Those are just $1.60 and $3.75 out of the money so they don't need too much protection.  You sold the Oct $53 puts and, because GDX went down, like you originally thought, you lost money and they are now $1.80 and have just .01 of premium at $51.21.  If you roll to the next week $53s, they are $2 so then you are selling .21 in premium and really, really screwed if GDX drops further.  If you are unwilling to spend money to sell more premium, then why not just roll out to the Nov $51.50 puts at $1.88.  That way, nothing out of your pocket and you make the $1.60 on the short calls if GDX goes down or you make $1.88 on the short puts if GDX goes up so, as long as neither side loses over 100% – you're in good shape and a 50% stop would make sure that doesn't happen.  

    DIA/Sank – If margin challenged, then you simply need to keep the puts but now the Nov $133 puts are $1.46 and, if you go with the bullish premise, you can roll down to the $131 puts and pocket .55 and then the spread is just $3 ($6,000 for 20).  

    CMG/$25KPM, StJ – Well, we don't want to have more premium than we're selling so let's move the Nov $250 puts ($11) to the Jan $235 puts at $11.50.  So we collected 5 x 7.80 = $3,900 and then we spent $23 to buy them back ($11,500) and then collected $14,000 on the new sale for a total credit of $6,900 on the 7 short Jan $250 puts and we bought the 4 Nov $250 puts for $7.70 ($3,080) and sell those for $11 ($4,400) and now we can roll to either 4 short Jan $235 puts at $11 ($4,400) or 7 short Jan $225 puts at $8 ($5,600), whichever works out better for margin.  It looks like a naked Jan $250 putter has $5K in margin and the $250/225 spreads have $2,500 so I leave the mix up to you but I'd stick with the 4 short Jan $235 puts and then you have 4 at $1,500 margin and 3 at $5K but the credit remains $3,820 and that's cash in pocket, which gives you $7,600 of margin anyway.  Also, the margin requirement should drop off about 20% for each $10 CMG rises.  

    ALU/Japar – That's from the Income Portfolio, last updated last Friday. 

    Germany/Angel – What are they at?  

    NOK/Japar – Fortunately, my horrible scarring from MOT has kept me away from NOK.  They simply can't find a way to fit in to the New World Order and MAYBE they'll turn it around but it's super-risky.  At least MOT was still making money – just less of it.  NOK lost $2Bn last year and is not projected to make any money this year (-.41 per share) or next (-.10) so you are buying at least a $2Bn loss for $10Bn when you buy them on the hopes things get better in 2014.  If your cousin came to you and asked for money to fund this venture – would you give it to him?  

    MSFT/QC – When they kick Ballmer to the curb, I will buy them but $29 is not cheap enough for these jokers.  

    And down we go again – hopefully it's just the Europeans throwing in the towel into the close and HOPEFULLY everyone has their RUT hedges – in fact, we're testing 828 now and those TNA calls are down to .60 so it looks like we need to stop those out in the $25KP. 

  57. Nation / Rev – It's on my iPad now for the weekend.

  58. ST JEAN // i certainly don't think any of us would have minded being born into wealth and privilege..i suppose ultimately its what you do with your good fortune..grow it or share it..i am no fan of romney but he has given a ton to his church and charity..i continue to believe he's the next president..last night was the stunner for me my brother in law an avowed leftist announced he wasn't voting..
     PHARM// AAPL they wont be very good…they wont include iphone 5…the guidance will be more in focus than usual..but anyone who starts whacking APPL because iphone sales are down is a dolt.

  59. no bounce! Ruck!
    Back to the drawing board.

  60. 25KP / Phil – I'll adjust the CGM and DIA positions in the 25KPM to reflect your advice. It will be interesting to see how we manage the 2 sets from now on.

  61. AAPL/Phil
    Maybe you missed this question earlier:
    "Since I adjusted down yesterday to the 10 Nov 635 and covered yesterday with 7 Oct 26 650 do I need to make some adjustment? Lighten up on the shorts later? Or sell the shorts and roll to Nov 630."
    Since I first asked it looks like there's no hurry about doing anything. But would like to be more in sync with 25Port plays.

  62. Kass/Nicha
    Doug Kass did in fact pound the table when Apple hit 700 and called for a short term correction in it immediately and laid out many reasons for it.  He actually did nail that one.

  63. GOOG back to $690, very ugly, AAPL $622, CMG $245 but V is still $141 – what the heck are people buying?  

    Dollar 79.69, oil $92.35.  

    1,440 getting tested again.  See, we're only back to Tuesday's open and everyone is freaking out again.  Here's Monday night's Big Chart.  And remember – Tuesday was a big up day from these levels: 

    So the Nas has sustained the only real damage since Tuesday morning and the Dollar was at 79.61 then – here's the morning levels (this is why I like to record them) at 6am:


    Dollar down to 79.61 so you know the Futures are up, but only a little so far.  Euro at the magic $1.30 line and Pound just under $1.61 with 78.83 Yen to the Dollar keeping the Nikkei happy enough to make it back to 8,700.    

    Oil $91.72, gold $1,740, silver $32.84 (nice buy for /SI at $32.85 line), copper $3.70, nat gas $3.50 and gasoline $2.8575.

    Amazing we tested and failed 13,600 again yesterday – that level is stock market Kryponite!  

  64. Suddenly $616 doesn't look so far away for AAPL!

  65. ES broke 1447 on decent volume, big spike @ 11:11, bulls would like to see a bounce here, bears will push for 1434 which is must hold.

  66. The RUT has crossed below its 50 DMA again… 

  67. stl AAPL only $4.56

  68. Pharmboy
    What do you think of BMRN at 42 the NOV calls are asking $4.00?
    Would this be a good place to enter with a buy / write?

  69. TNA/$25KP – OK, let's try that again with the $59 calls now at .40 – 20 of them this time.  

  70. Well this is funny (and somewhat sad), AONE is holding up my entire portfolio today.
    a 100% gainer helps with that … 8)

  71. UK FTSE -0.4%
    German DAX -1.0%
    French CAC -1.1%
    Spain IBEX -2.4%
    Italy MIB -2.0%

  72. IMUC – a long time ago, in a galaxy far, far away.  Toe, sure.  Toes, no.  Foot, might get whacked off……

  73. kass/rustle – agreed on Kass about the correction. But it seems he is still bad mouthing AAPL. And that is why Andy's challenge.

  74. BMRN/qc – we are in the Nov 42/45 BCS with the 32P sold.  You could roll the 32s to the 35s, but it looks like a double top on BMRN, so I would first sell some puts further out.   Biotechs are getting a shulacking today.

  75. 20-year, break-out or collapse. Chart looks ominous

  76. GOOG and AAPL are still bleeding. Daily ATR @1431, so does 50SMA.

  77. Phil—-please help!!!!!! on CMG
     as stated sold the 4 Nov 250 put at 12.20—--but instead of the short today 270 puts I have short next weeks 270 puts  at 8.50 (my mess up) how should I roll—-thank you

  78. DIA – touched a trendline, looks like finding a little support here.

  79. so close yet so far, I was contemplating a straddle versus just long call yesterday. So close… in hindsight the trade was so obvious …

  80. FU market!!!

  81. angel
    I have a catholic friend in utah and he tells me that the mormon chruch has a 10% tithing and the church sends a person down on pay day to check their pay checks to make sure they get the correct amount.  so romneys charity to the church is nothing special if you want to be a mormon.

  82. They just tested 1434 ES, if we dont bounce it may get fugly.

  83. Copper is down -4.6% since 9/14 despite US housing optimism and investor perceptions that global growth will rebound on central bank stimulus/actions.

  84. willieX-- maybe EVERYONE should give 10% to charity??? That would solve a lot of problems, right?

  85. I added this when I posted the big chart last night:

    The same pattern seems to be repeating – 3 or 4 big days up and then a correction. Tomorrow could be a down day and could be messy with OpEx. 

    The pattern is still alive!

  86. Food stamps – Another lagging indicator Obama gets blamed for when CLEARLY the increases came under Bush and he's made tremendous improvements since.  If anything, what he's guilty of is making more people eligible for longer periods – the fiend!  

    NYMEX Futures/Jabob – Here.  63,000 contracts still open.  Oil $91.95.  

    AAPL/StJ – Their forward p/e is getting below 12 ($53.27 for next year and probably too low) and that, of course, ignores their $120Bn of cash and investments (20% of their new, silly $582Bn market cap).  Also, usually when you talk about cash it's like XOM has $50Bn in cash and investments but they also have $80Bn in debt.  AAPL has $0 debt!  If LBO were still a thing, AAPL would be a likely target at these prices because you can fund the buyout with cash on hand.  

    AAPL has 6% of the Global PC market – the decline of laptop and PC sales hasn't affected them yet as they gain market share to make up for the overall decline (still 350M units projected for 2012).  One day, they'll focus back on PC sales and, once the get to 12%, then I'll be worried they can't grow more.  

    Dollar $79.70. 

    114M on the Dow at 11:45.  

    HOV $4.39, up 2%.  

    SVU up 3% at $2.20.

    HON making new highs at $63.50 – who kicked them out of the Dow?  

    Laptop/1020 – Thanks.  Only thing that worries me is low memory for storage but I guess you get used to not having it.  

    AAPL/Jomp – Now failing $620 and those short puts are $7.50.  The trick is to sell it when the premium is 75% gone (less than 25% of the remaining price is premium) – at that point, they don't have anything left to give you.  You can roll them even to the next week $585 puts (now $7.80) but there's no hurry unless that roll begins to turn against you.  So watch the roll but you don't have to execute until right before the close so you may as well give AAPL a chance to bounce back as long as that roll doesn't cost you anything. 

    Romney/StJ – Like many in the top 1%, simply delusional as to what the bottom 90% have to deal with.  

    GOOG $680 – Wow!  How low can they go?  

    SOX down 2.5% at 366 – it better stop here.  Nas down 1.75% and AAPL down 2.5% at $617 so we're SUPPOSED to get a bounce here back to $620 at least.  

    AAPL/Zip – I guess I did miss that.  Well, you're up $4 on your short calls so I'd cash that in for now and look to re-sell later.  Hopefully, you can sell the same calls for $10 (now $7.50) or better but, if not, you can sell the $640 calls (now $10.60) for no less than $10 (if they keep going down) and then you can used that $2 per long share to subsidize a roll down to the $625s (+$4.50) so you maintain the same spread but end up buying $10 in position for $2.50. 

  87. AAPL bouncing off the $616 line, but we have to cautious as they have tried to rally a couple of times and failed!

  88. hi PHIL
    thanks for the great stroke on USO/CL
    would like to know ur views on natural gas futures
    thank you

  89.  Willex:  I doubt very much that the Mormon church sends an officer to garnish Romney's "paycheck", every month" so it's hardly fair to suggest that his donations to charity are somehow compulsory rather than voluntary.

  90. Phil / Chromebook — This isn't an Apple device. They actually let you add storage: "The Chromebook has a headphone jack and SD card slot on its left side;"

  91. I heard that Reid's 'source' for the zero inome tax comments he came out with a couple months ago was a (republican) Nevada industrialist who is high up and tied in deep to the mormon church. The funny thing is the guy could care less how much taxes Rmoney pays, but you can be damn sure he cares how much Rmoney is tithing. Chances are good ol' Willard was stiffing the church a bit when his bigger checks were rolling in and the industrialist was none to pleased…

  92. $616/StJ – Mission accomplished.  $615.84 was low trade. 

    AONE/BDC – Quite the comeback.  

    Oh, and I'll have you guys know I made it to my meeting yesterday using AAPL maps!  ;)

    CMG/Savi – So you got out of the long puts, that's good.  You have the short next week $270 puts (5 I assume) and those are $25.  If you have the margin for it, you can roll them to 2x the Nov $250 puts at $11.50 (costs $2 per long) and those can be rolled down to the Jan $230 puts ($10.50) for another $1,000 if you have to but, if all goes well, you'd be done in Nov.  Considering how awful the market is today, the fact that CMG is holding $245 is a pretty good sign.

    Oil below $91.  

    I'm watching SPY at $144 – if that fails (and it is) then not much hope left.  

    Oil $90.50 – this is what we expected and it's dragging down the markets so hopefully a blow-off bottom here.  We KNOW oil will recover when the contracts flip – maybe even today depending on how many they are flusing now.  

    $25KP – USO Next week $34.50 puts are $1.18 and close enough to a double that we may as well cash them. 

  93. Let's use that USO money to buy 20 more TNA $59 calls at .15. in the $25KPs

  94. Phil,
    For a long term hold:
    buy MSFT+Sell 2015   $23Put+32Call For net 23.31.
    If put net 23.15, If called 33.28%……Your recommendation appreciated…

  95. Thanks Phil in the AAPL roll but I rolled before you posted as it was going down to 620 so I rolled to next weeks 580 from this weeks 625 for a credit of .75.
    I took 1/2 off the USO at 100% – great call on that

  96. AAPL/$25KP – Gotta buy back the 4 AAPL $640 callers for $10.20, that's up about $5 ($2,000) and of course we'll re-cover.  

  97. Charity
    The big problem is most given to the majors goes to deciders etc. The includes the morman church. What they giv away is more or less forced donations, check out their balance sheet, as big as meacorps. If someone is in need gust give that person your money, it feels way better knowing 100% goes to those who need it. The rest is a scam making heros out of blood suckers!

  98. SPX resting on 50 SMA (again).

  99. I did not make that many mistakes, some auto no help.

  100. Has anyone else found Office 2009 is impossable? I dumped it and put Office Professional 2003 on my laptop where I use it. Trade system needs the same but 1 computer or more money.

  101. Sorry I moved the conversation to hearsay.  All I can say is that I have cut back on my donations over the last 5 years when things became tight for me. 
    It would be nice to be able to give 10% or more with out jepardizing my situation.  Also what i give to the church i have always looked at as dues not charity.

  102. Doesn't look like any chance of recovery today. Follow through Monday?

  103. Willy
    Not hearsay!! To be in good standing in the Morman, LDS, church requires up to date 10% donation and that is on the gross not net. Actually it is more than 10% of a paycheck, that is why the "check the stub".

  104. Follow through / Shadow – It's a tough call as the Dow is close to hitting its 50 DMA now and last time we bounced hard. Technically, the NYSE is in the best shape. On the other hand, both the NASDAQ and RUT are already below that 50 DMA line so Monday could get ugly if the other indices don't bounce.

  105. Willex// He would be into organized fornicatory rites and i would still give him his due for giving probably 100 million away in his lifetime. Come to think of it he and O are currently the two biggest practitioners of organized fornicatory rights!

  106. I guess you can fight the Fed and possibly knock them out.

  107. Thanks Phil

  108. STJL
    I have TZA shares and trying to decide to hold or not. I feel mostly it will follow through next week if not Monday.
    Sorry all AAPL is going to disapoint without the I5 sales, about $9. That may be the killer so what day is that?

  109. Damn, my computer just crashed and I lost all sorts of brilliant comments!  

    Short story is this should be the blow-off bottom and hopefully we finish down less than 1% for the day on the indexes.  Although now it's not looking so good as we had a sad little bounce and we're going down some more. 

    Mail/Angel – That's when I crashed!  Actually, I don't see anything in my mail.

    10%/Jabob – Unfortunately, there are no charities that build roads and treat the water supply and stop banksters from running wild.  

    Dollar still going up – 79.71.  

    Nat gas/Hero – They are not likely to get over $4 and probably will range between $3 and $4 long-term.  A huge amount of capacity is off-line so the top is self-regulating and the fact that they've been willing to shut down production to support $3 indicates it's a good floor.  

    Chromebook/Rain – That's good but expensive.  A 64Gig drive costs as much as the laptop. 

    MSFT/Jasu – I'd say that GOOG chromebook and the AAPL OS collection are reason enough not to like MSFT long-term.  If they crash back to $24 (down 15%) then I'll like them but how is $28.50 a bargain when they were under $24 last fall?  

    AAPL/Jomp – Not sure what your position actually is then.

    Recovery/Shadow – I thought we would but that was a very sad little bounce.  Does not look like buyers are waiting to pounce and, in fact, TLT is back to 121.50 so a lot of people ran for cover over there.  

  110. Romney/charity
    Regardless whether it's required or not, I think it's still a great gesture to give 10% of your salary to charity.  Now with that in mind, it also matters what the charity or church does with the money.  The Mormon Church has used a ton of money a few years ago to air commercials in CALIFORNIA not Utah, to advise people not to vote for Prop 8 (gay marriage) and they also use their money for many political purposes too.  Mormons are very powerful for a minority and extremely well organized.

  111. Thanks Phil and Stjeanluk

  112. Downward trendline support is about 81.40 and we have hit 81.60 so maybe a bounce at the line or this week is red!

  113. 64 GB SD card / Phil – About $50 on Amazon!

  114. Shadow, whats your worst case on IWM?

  115. Phil / SD card  — You're shopping at the wrong places.  64G SD cards as low as $34

  116. Using GOOG tp bounce, how far we can go?

  117. Phil – Thanks for the USO money.  I didn't go into the TNA trade, but it paid for our plane tickets back to Austin, TX.   
    Oh and if you want to buy a cheap house in a depressing place with very cold winters and lots of senior citizens, buy in North East PA.  I sold my mom's 4br 2ba 3000sqft house for 65.  Crazy….  That's cheaper than most peoples cars in NJ.

  118. $25KP – Selling 20 TNA $57.50 calls for .50 with a stop at .65, selling 20 $58 calls for .25 with a stop at .35.  

  119. TNA/25KP – Phil, close some down? roll to next week? hold and pray?

  120. This is probably the last chance to turn around as we re-test the lows of 12:15 – if they break – we could leg lower. 

  121. Phil/AAPL, Now I am short next weeks 580 puts an short next weeks 650 calls

  122. TNA/Phil – ah. thank you. don't know if i'll get those fills though..  

  123. As a person who is ridonkulously short, Im praying for the latter!
    Pharm – AVEO – Doubling down yet? At what point do you just want to buy the stock and sell covered calls?

  124. Phil-- the next week TNA 59 callers are at 1,05 am i seeing this wrong how are we seeing 15 or 25 cents for next week. Sorry i am confused


  126. Phil, your heading for the day has turned out to be very accurate.

  127. Kustomz
    IWM 81.30 if that holds, that would be a huge breakdown, so 80.40 next good support. Weak until the 78s after. I have not needed to update those levels yet but 72.90 June 4! I could be set if we hit that and like Phil warned this AM, are you ready? Overdue!
    I will probably get stupid and miss a bunch of that locking in profit.

  128. Anyone follow COST?  What's the giant sucking sound all about?  I'll proabably put on a position if it makes it to the 200 DMA.

  129. Thanks Shadow, I wouldnt be surprised if we bounced here. EUR, AUD not very weak and $ not showing panic.

  130. VIX still rising.

  131. Tough times for the NASDAQ:

    Was riding high for a while!

  132. Kustomz
    I have been expecting a bounce but not yet, the lines almost always work and that confuence line is 81.30, this is too early for a stick and although The RUT has good volume I have no idea what is normal for anything else, Phil keeps the DOW numbers. JRW used to do SPY or was it SPX?
    Never take for granted something that may end, wish I paid more attention to S&P.

  133. FU VXX!!!

  134. Shadow/S&P,  /ES looks like 1416 may be next support if we take out 1426. Bulls need to take back 1434.

  135. Charity/Rustle – That's the flaw in the "charity" system – it's no different that just doing what you want with your money.  You choose the charity that will do what you want with the money instead of doing it yourself but we CHOOSE to live in a society and we ELECT leaders in that society to make choices that will benefit all of us and taxes are how we tithe.  There's only a semantic difference.  Also, don't forget, as a Church leader – Romney is one of the people deciding where the money will go anyway and, as much as he gives himself – it really just puts him in a position of power to leverage control over a much larger amount of money that he has a disproportionate say in disbursing.  Very consistent with his World-view actually…

    AAPL/$25KP – Our longs are $16.50 and we're in them for near $30.  The Jan $640s are $31.65 so we need to raise $20 to make a roll.  At the moment, the Nov $640s are $16 and I'm looking at selling 5 of those into earnings to pay for 1/2 the roll and then surely we can sell 10 somethings for $8 if AAPL heads lower and, if AAPL goes higher, we have 5 clean longs and 5 we'll have to roll but if AAPL goes over $700, then 5 of our longs are worth $60 ($30K) and even if we're a wash on the other 5, we're in good shape.  Anything lower than $700 should be easy enough to roll and a big dip to $550 would knock our Jan $640s down to $11 (the price of the $710s) and then we'd have to see what's left to sell but we can likely deal with it.  So that's what I'm watching now but, for now, I think we should sell 5 next week $625 calls for $15.70 as those should drop fast if AAPL doesn't go up on Monday and, if AAPL goes up on Monday, we'll just roll them to Nov anyway.  So let's say that we'll pull the trigger on that by the end of day or if AAPL fails to hold $615.  

    You're welcome Shadow. 

    SD cards/StJ, Rain – Oh, silly me, I was looking at BBY!  

    You're welcome Burr.  You didn't miss anything on TNA but hopefully a wash with our short sales.  I know what you mean about PA, I used to own a building in Bethlehem and I couldn't believe the price of homes over there.  Also bought a company in Stroudsburg once and had to go there a lot – that's another nice little place to live cheap but I'm too much of a city boy to go that far from NYC. 

    TNA/Scott – We turned it into a bear put spread and now we just have to hope we don't get a big stick into the close.  So in the last batch we bought 20 for .40 and 20 for .15 after losing .30 on 10 in the first try.  So we're in for $1,400 and we sold 20 $57.50s for .50 and 20 $58s for .25 and, if they expire worthless, that's $1,500 back but a really tough way to make $100 (all lost on trading costs too). 

    AAPL/Jomp – So it's a short strangle?  That's fine I guess but be careful with those calls into earnings.  

    TNA/Amit – Those were the TODAY calls, not next week.  

    German CDS/Angel – Wow, those are dropping fast!  You would think the Euro would look better. 

    Heading/RP – But no bounce.  

    COST/Rain – Does look tempting but this is some very relentless selling.  Asia will not be happy on Monday and then Europe had a comparatively mild sell-off today so Monday not likely to be good and, depending how bad that is – we're getting into panicky areas here.  

    VIX/Rain – Wow, $17.33.  It's been so long since it did anything I hadn't even looked.  

    Oil popping back over $91 with 15 mins to NYMEX close.  $3 top to bottom – very nice for the Futures players (and USO not too bad either).  I wish we could do that every month but by spring they usually have worked off the end of year backlogs.  

    Dow/Shadow – 138M at 2 is very good but average for expiration day and, of course, heavy early trading makes it harder to stick the close.  

  136. amitshenoy174
    TNA they this weeks play today only!!!

  137. I just stripped all vestiges of Google from my computer[s], installed non-profit Firefox, installed a new Kaspersky anti-virus suite to guard the door, and I'm actually cheerful for the first time all day, given the dreadful market.  Google began to auto-install all kinds of crap, one of which sends me messages even though I "uninstalled" it — when I try MSFT uninstall, it stares at me and says "I don't exist", literally.  Google's tracking just became ridiculous — anytime I searched anything even vaguely related to a product, it would chase me around various countries targeting me for local ads!!  Boy have those guys lost their way — nice job on the earnings announcement yesterday.  The Big Short, coming soon to your local search engine.

  138. Thanks Kustomz
    The futures even better I have /ES and /TF on the bottoms of each 3 minute chart, but I only know the RUT.

  139. 0×0 / search — so are you using Bing now?

  140. If anyone has had experience with Mozilla's "Thunderbird" email program, let me know, I need to dump Gmail, too.

  141. The 50 min SMA is stopping IWM as it crossed the 20, not a good sign at all!

  142. Rain:  I deleted Bing today in a frenzy of destruction, figure I'd shoot first, then ask you whether I should have!!

  143. jomptien – I am not the person to be telling you this as I have lost money in every conceivable way to trade, but the way you are trading is extremely risky for very very little payoff.  If I understand your trade, you are obligating yourself to buy $250,000 worth of AAPL in order to make $350-$400.  That is crazy.  It looks like an easy way to pick up change as your out of the money puts expire worthless.  It is, until you catch a day like today.  Please be careful.

  144. German CDS bets maybe Greece gets the boot.

  145. ZXZ
    I hear the best is Yahoo mail, I use hot mail, broke down this morning and I have been hacked 3 times. Never heard of Thunderbird but don't like Mozilla, like Google to many trackers.

  146. Thunderbird / Zero – I use it and like it. Plenty of extensions to make it do what you want. I had some issues on one upgrade though and so backup is a must (as it should be with things like mail anyway). 

  147. NASDAQ 3000 here we come!

  148. So uncle Ben, now what?    FU QEI !

  149. The 200 DMA for NASDAQ is at 2968! It's really almost up to AAPL earnings to save them now. 

  150. Thanks to all the guys in the NYMEX pit today.  You made a miserable day great.  Weeeeeeeeeee oil

  151. Some competition for Amazon:

    Many of us who live in North America and Europe consider Amazon synonymous with online retail — yet we forget that the company barely even registers in some parts of the world. That misconception is about to be cleared up now that one of China's largest online retailers, 360buy, is going global. A just-launched English version of the store is initially shipping China-made goods for free to 36 countries that include obvious candidates like Australia, Canada, the UK and the US as well as France, Germany and southeast Asia. You're unlikely to find a Kindle Fire HD equivalent in the selection, but the mix could still make Amazon nervous when the brand-agnostic can already find real bargains. Combined with long-term plans to set up local distribution points, 360buy's international expansion could get more of us comfortable with buying from China and heat up a retail race that some thought had already been won.

    That will probably will drive the stock higher though!

  152. Ugly, Ugly, UGLY!

    Oil right back down again.  Dollar 79.72.  

    Congrats on getting away from them ZZ.  I love Thunderbird, wouldn't use anything else.  

    Bad signs/Shadow – Good call.  

    Good point Albo. Just because a trade is logical, doesn't mean it should be made of the risk/reward is out of whack.

    3,000/StJ – Damn that line better hold! 

    New lows on oil, $90.40.  That seems to be the close – what a ride!  

  153. Talk about diverging trends:

    a1db13a7f5eb78a0d873a5aef61dcea8 Friday links:  matching time frames

  154. Guy on CNBC makes a good point re. calories on the menus of fast-food places.  I was in MCD the other day and I saw that the Agnus meal was 1,400 calories and decided it wasn't worth it.  Making people aware could end up killing these guys as the junk food is their big money-maker – even when they offer healthy alternatives.  Even my kids were at the Hard Rock last month and they decided not to order the nachos because they were 1,900 calories so making the public aware of this stuff could have a bigger, faster effect than was expected. 

    Diverging/StJ – Yeah but YUM has a p/e of 22 vs. even now 33 for CMG.  CMG is growing as fast as YUM but was priced to do double.  Plenty of room for more divergence there.  

    XLF down to $16.07, could have sold another couple of FAS…

  155. where is mr stick when we need him??
    FU Mr stick!!!!

  156. Before you jump on 360bay get ready for zingers from your friends at customs. I am getting smarter but took a $100 hit 2 months ago, took the bargin and then some. What is safe $100 and never ship UPS or Fed Ex they will get you every time. The smaller guys I deal with always ship Peoples Republic Air about 20 days always free of customs.

  157. The average move for AAPL after earnings is around 5.5% and that would be about $35 based on the current price taking us back to$650. I would imagine though that positive guidance could generate a much bigger upward move following this bad month! And bad earnings (or guidance) might not have as much impact given the fact that AAPL has already given up $90 over a month and its ratio are more than reasonable. I guess we'll see.

  158. If you are worried about Monday, the TZA next week $16/17 bull call spread is .22 so better than 300% return if TNA hits $17 (now $15.76 after gaining $1 today) and, if you want to cover, for example, $6,000, you can buy $2,000 worth (100 spreads) and just put a stop at $1,000 so you spend $1,000 to get over $6,000 worth of insurance as 100 spreads at $1 returns $10K.  $1.25 is 8% up from here, just a 3% drop in the RUT will do it.  Keep in mind this is insurance you will probably loose but it will make you very happy if it pays off.  Let's do 50 in the $25KPs – just in case.

    Also in the $25KPs, those AAPL covers triggered so we have 5 short next week $625s, now $15 covering our longs.  

  159. Calories / Phil – Bad for fast food places but good for our healthcare system. Given the choice, I'll pick the healthcare anytime!

    Regarding CMG and YUM – In addition to P/E, the P/S ratio is way better for YUM than CMG now. Same with PEG. YUM seems the more attractive of the 2 in the long run!

  160. When Google made the deal with he communist government in China to collaborate with them in censoring the internet in exchange for being able to do business there (vietnam too); that was when I lost all admiration for them.  The invasive tracking is just all part and parcel to that business mindset.

  161. TNA – looks like these are going to get hit with a stick..

  162. Virtual Short Strangle Portfolio – Sell 5 RUT Nov 730 puts for $1.75 credit or more, Buy 5 RUT Nov 700 puts for $0.875 debit.

  163. Phil/calories  We've had that out in Cali for a while and for me, I won't eat anything, other than a fresh order of fries, at MCD.
    It's a great idea and some of the same forces who fought that are now fighting to keep GMO's off our labels…..

  164. Phil
    I have two AAPL calls that I need to cover  before close. One is a Jan 650 and the other a Nov 630 position. What would you reccommend? thanks.

  165. Virtual Short Strangle Portfolio – Sell 3 GOOG Nov 560 puts for $0.95 credit and sell 3 GOOG Nov 760 calls for $0.9 credit

  166. IRA Portfolio update!

    Rolling all OCT positions to NOV at 3:55 today.  I will get all the prices from TOS and post the update some time over the weekend.  If there are no decent rolls we might be letting ourselves get called away on several positions.

  167. Such a fuss to know what you're eating – If not the label, how about the manufacturers website…for those who care?
    Yea, I know, I'm just a Pinko Communist Propaganist putting my wishes up against the poor, little food manufacturing conglomerates….. :)

  168. Is the calories count on all menus now?  I'll have to go checkout Fat Burger in Vegas!  :)   They added one along the east side of the strip and there is one downtown.

  169. Hello All – Any rough estimate on what the decay on the next week Aapl $625s might be over the weekend?  TIA

  170. Sell signal at 15:06 and now the SMAs are crossing again, only stick looking anti!

  171. When is AAPL earnings?

  172. That's a complicated calculation lnk! You need to take into account volatility changes and if we tank on Monday morning all bets are off. Theta is -1.17 so that's your guidelines for now but it's only a guideline.

  173. AAPL/Phil
    I missed the 625 trade for 5.70. Take what I can get or take a lower strike?

  174. AMZN/Asia – China's 360buy is just one among many strong players. There's been very strong online shopping in Korea for years and years, and with a variety of companies – you don't find the one-note tune here that you see in the States. I know a guy, name of Yi Won, who works as a middle manager for Hyundai Home Shopping – really busy outfit, but far from alone. Mr. Yi, by the way, is the crown prince of Korea – but waddya gonna do, gotta put food on the table.

  175. 10/25 4:35 PM Shadow!

  176. This is an early squeeze, you cant blame the bears for covering but it may bring further selling into the close if bulls arent determined.

  177. stjean/aapl  Something tells me you had that date and time mesmerized….. ;)

  178. Did someone on CNBC just say that this is the worst 4 week drop for Apple since 2011?

  179. 1020 — What that article fails to mention is that that poll only showed 40% against the proposition (12% undecided).   I sure hope it passes.  After researching GMO's in our food system, I've drastically changed my diet.  Most of europe has banned the stuff.

  180. I think i need a new t-shirt.

  181. rain – Though, I'm for an exemption on the yummy Fatburger…… ;)

  182. Thanks again STJ Wednesday? that puts a different light on the first 3 days.

  183. NO WAY at 82!

  184. The ES has been tough to dance with today…..

  185. 1020 / exemption — No exemption needed.  They're not trying to ban GMOs just get them labeled as such. 

  186. Well, if there's any words of wisdom threatening to emanate from our senior Members, this wouldn't be a bad time to cut loose!

  187. FU AAPL

  188. rain – Just kidding. The calories are enough to keep me from that bad boy…..

  189. Does anyone know when LULU report's earnings?

  190. zero – Nearly all the shouting is over. I'll just wait for November 6, to see how intelligent my neighbors and the American people really are…..

  191. Phil, i entered TZA Jan 12/15 spread yesterday at less than 1.50 now worth 1,70. don't have much long positions now. would you recommend taking some TZA profit off the table or adding a few long that are obviously underpriced? i intend to hold the spreads for longer as they seem like a good deal but if there are cheap longs to balance that would be nice too. thanks in advance and thank you for your advice on USO and TZA!!

  192. This is now a BOT war and the push is getting crushed. Nobody is really trading, The close should tell some truth, this feels a lot like the days before the 87 crash. If I sell it will be after hours and a partial.

  193. 1020
    Be prepared to be disappointed.  LOL

  194. Buying  6 month out  ATM AAPL calls.   People may stop eating Mickey D's but they won't give up their Apple products.  Apples are healthier anyway, eh?   

  195. Shadow:  Where is the OFF switch!!!!

  196. I can't believe AMZN is threatening those $235 puts! 

    Nas down 60 in a day – That's messed up!  

    Customs/Shadow – That's funny.  Are you responsible for customs if you order from China?  Some housewives are going to in for a shock if that happens. 

    AAPL/StJ – AAPL predicted $34Bn in revenue and $7.65 a share for Q3 and analysts expect $8.85 and $36.23Bn in sales.  Last Q they did $35Bn and $9.32 and they had guided $34Bn and $8.67 so it is possible that expectations are too high.  AAPL dipped from $600 to $567 on last Qs earnings but then almost immediately shot back to $600 and then to $674 in a relentlessly bullish August and topped out at $705 in Sept and now they are giving up 1/2 of the $135 gains or we can call its $530 to $700 so $595 splits the baby and that just so happens to be the 200 dma.  Gotta be mentally prepared for that test. 

    Fast food/StJ – I'm all for it.  It shouldn't be a good business to sell empty calories to people.  Why can't I go to a drive-in and get half an avocado with some tuna salad in it?  There are millions of things they could serve but the margins are better for crap so that's what they sell.  

    GOOG/2Can – Yes, unfortunately, they never really intended to "do no evil" but it's a great slogan.

    AAPL/Chakra – I'd just sell 1 next week $635 for $10.20 as  you can always roll that up to 2x the Nov $685s (now $4.80) and, if AAPL falls, then you can sell another call for $10+ and put a stop on the $635s.

    TNA close but no cigar for our stops.  TNA at $57.93 so real value of $57.50s is .43 and $58s are worthless.  Currently priced at .50 and .15 – right where we sold them.  

    Food/1020 – If its not right in front of people they're unlikely to check.  I see with my kids how effective it is to list calories on the menu.  Also, the new school lunch system is fantastic, girls are clearly in better shape this year because they're not having so much crap in school.  Come home hungry but more awake.  Also, and it's only been 45 days – because they have healthier choices, they have discovered healthier favorites.  It's so simple to improve people's health and shouldn't that be a thing the Government is responsible for?  

    Calories/Rain – MCD does it voluntarily as do some other national chains.  Next year it will be mandatory and it's already mandatory in NYC (that health facist Bloomberg again). 

    AAPL/Ink – Not a lot of decay due to earnings premium.

    AAPL/Shadow – Thursday after hours unless the pull a Google. 

    AAPL/Zip – You mean selling the next week $625s?  They are still $13.90 so yes, I'd take that.

    Yi/Snow – Wow, must be a lot of crown princes.  

    LULU/BDC – I don't see a date yet.   Took a big hit today.  

    TZA/Ethan – If it's a hedge, I'd let it do it's job.  That spread is $3.60 in the money now so why accept $1.70 for it?   I'd look to add some cheap longs – but not today…  

    I'm sure I don't need to mention that this is a nothing bounce, not a stick so far.

  197. Move here, only fast food is Subway, it will cost $15to20 to get to bad food, still a bargin compared to $150 in Vegas, I will hold judment on the big $$ health, it is tinsel town!

  198. There's an FOMC meeting next week?  Does anyone know if the minutes will be released before or after the Apple announcement?  TIA

  199. LULU / BDC – Tentatively earning date is 12/7! Not confirmed though.

  200.  nikkei up so much on bullshit rationale, could get hit especially hard on mon

  201. shadow/Vegas
    Shadow if you want, you can go to the Bellagio buffet, I think it's $30-35 and they do have sushi there.  It is definitely not Nobu but bring a pillowcase from the room and load up some of the dryer food (nothing with sauces) and you will be set for the week.

  202. williex – I'm big on local issues as well – lot's to consider….

  203. EDGA is holding IWM with a little ARCA help, looks to me like some MM are taken a beating in the process.

  204. The Big Chart is going to be ugly tonight! Maybe I'll wait until tomorrow morning to see if it looks better then…

  205. Phil – Yes, the twins had healthy choices from pre-school. Seems to have really helped our daughter. The son?  Well, let's say he's lucky mom and dad have patience….. ;)

  206. Yummy AAPL sauce!! 610 and there she goes.

  207. TNA – i played chicken with the bots.. and lost.

  208. Bulls held /ES 1426
    Have a great weekend folks.

  209. I was bearish in general on AAPL recently and even I think this is a bit overdone. I don't want to hold a call over the weekend but if the price stabilizes here next week (and especially after earnings crushed IV) it'll be go time on AAPL calls.

  210. Rustle
    Too late for that expensive dinner reservation, but if IWM crashes I am going even if I have to sleep in the car. I have not been anywhere other than family in 5 years. Back when I was sent there 2 times a month food was free.

  211. rustle / Vegas  — Or just go over to Hash House a Go Go and get a 2500 calorie breakfast that will stick with you all week for $12. ;)

  212. Sellers won!

  213. Have a good weekend everybody!

  214. FOMC/Ink – Not the minutes but the statement will be before.  AAPL is after-hours Thursday.  

    TNA finished at $57.91 so .41 for the $57.50s and the others are dead.  Small consolation overall.

    Selling after the bell and the Dow is finishing at 230M.  

    Nikkei/Angel – Total blew that one.  Was a very obvious short this morning at 9,000 (now 8,870).

    LOL StJ – Try printing it upside down, that will cheer you up…

    Have a good weekend folks! 

  215. Or go to the Heart Attack Grill for a burger that will stick all week!

    On April 13th 2012 Guinness World Records presented the Heart Attack Grill with an official certificate proclaiming… "Most calorific burger Heart Attack Grill in Las Vegas includes in its menu the 1.444kg (3lb 2.94oz) Quadruple Bypass Burger packing 9,982 calories. It's 6.91 calories per gram (195.95 calories per ounce) makes it the world's most calorific burger as verified by Guinness World Records"

  216. My feelings sumed up, on any $100> meal, from one of my favorite all-time scenes….. :)
    Have a good weekend everyone!

  217. Albo, Thanks,I know, it was working for a long time-not today. My plan is to buy back the callers before earnings and roll the short puts out in time. Hoping for decent earnings as long as they don't get whacked.

  218. stj — that's the one I was thinking of!  Fatburger just stuck in my mind.

  219. Bellagio/Rustle: That idea of the pillow and the buffett reminds me of cousin Eddie:

  220. rule # 2 sell half got $15.75 at 4:30. just got whipped by .01! Worth waiting .13 over the close price. FU ARCA!

  221. 1020 Jbur
    I have never had a $50 meal or a $12 hamberger.

  222. A $20 shot of Scotch, was tasty!

  223. Hey Shadow
    I have only had a $50 meal 8 or 10 times (when I was a traveling consultant on an expense account) and never a $12 burger.  The $50 meals were good but give  me an average bowl of gumbo or jambalaya in new orleans any time. 

  224. and by the way congrats!! shadow

  225. Shadow
    also had more than my share of top shelf scotch even have had a few bottles of the 150 yr old macallans.  stopped when scotch became trendy as the cost became utterly stupid.

  226. Scotch/williex – amen, brother on the utterly stupid prices. now i only get a bottle when go through duty free.

  227. Phil – WOW! What a rush!!! I was definitely selling premium into the excitement at the end today. :-)
    What I found interesting after-hours, is that apparently the Big Boys (block trades) were buying this sell-off: Money Flows -
    I also found interesting what was being bought on weakness: Microsoft (MSFT), Google (GOOG), GenElec (GE), JPMorgChas (JPM), BerkHathwy B (BRKB), (AMZN), Citigroup, WellsFargo (WFC), Apple (AAPL), Qualcomm (QCOM) …
    Have a GREAT weekend all!

  228. Thanks for all the comments that had me switch to Firefox and Thunderbird after Google jumped the shark with prying, tracking and commenting on my every move, geographically and commercially.  They're outta here!!!  Bought a domain and got off the commercial e-mail service bandwagon for the most part as well.    Apropos of which: after the Google horse burns up in the barn, CNBC explains why it had to happen.  But they might have a point, as to why Google could disappear — and their place be taken by Apple.  It's all about mobile devices, they claim.  FWIW --

  229. Farmland.  We all know the U.S. story of prime farmland prices rocketing.  I'm being offered a piece of a partnership in a place where it hasn't gone up, in fact people are leaving the land and there is attractive acreage available.  Could anyone sum up what is driving farmland prices?  "The price of food", obviously, but, is that a long-term trend, and, what kind of food [you can see I'm no farmer]?  I'm pretty sure that the principal use to which the land in question would be put is rice cultivation, in case that matters.

  230. It doesn't look any better this morning!

    We have a repeat of last week when we hit the 50 DMA on the Dow and SPX and bounced back. The NYSE is still by far the best average technically. NASDAQ and the RUT are already below their 50 DMA and the NASDAQ is within 6 points of our Must Hold line. On Monday we have more tech earnings with Texas Instruments (TXN), Western Digital (WDC) and Yahoo (YHOO). And many more the rest of the week, NFLX, JNPR, VMW, GLW, AKAM and of course AAPL on Thursday! The NASDAQ is only about 35 points away from its 200 DMA – crossing below would be sell sign for many managers.

  231. Maybe there is a future for Intel after all:

    Even if they don't lead in the mobile market yet, their R&D roadmap leads to chips that are much smaller, of lower consumption and more powerful. They definitely have the money and the people to catch up. We'll see…

  232. Looking at the Big Chart again, we can see that all the indices are now at confluence lines (I think that JRW used that term). 13,300 has been a resistance line and now support (we hope) for the Dow. Same for 1430 on the SPX and 3000 for the NASDAQ. And 820 looks pretty good on the RUT as well. A little more murky for the NYSE.

    Overall, this looks like a good spot for a bounce if it wasn't for the fact that we have all these earning reports next week!

  233. AAPL
    Phil -
    I believe from your plan detailed above you are planning to go into earnings long 10 Jan640Cs and short 5 Nov640Cs.
    Using TOS's TOOLS>WIDGET360 we can look at the IV for that position.  The IV for the Jan640C's is 35.5 and the IV for the Nov640's is 41.
    The historical volatility from is about 22.
    Using yesterday's option prices and TOS's Analyze tool we can set up that position and adjust the date to Oct26th and adjust the volatility of each position to the 22% HV.
    If we do that we see the volatility crush will crush us, causing our position the loose $26,475 instantly, leaving us with a breakeven of 693.
    I would appreciate other members duplicating this exercise this weekend and commenting also.

  234. AAPL – more data form (hope it formats correctly)

    Earning Date
    Pre-Earning Close
    Trending Before Earnings
    After Hours Movement
    Opening Price
    After One Session
    DAYS TO Expiration
    At Options Expiration

    26 Fib
    10 SMA

    July 24, 2012 AC

    April 24, 2012 AC

    Jan. 24, 2012 AC

    Oct. 18, 2011 AC

  235. AAPL – Oh well
    The data shows that for the last 4 earnings the stock moved about -6% to +9% the next day

  236. AAPL trade – how about this to take advantage of the vol crush, sell 1 Jan610C/Jan61P straddle for a credit of $87.15, margin required is $12,224.  The vol crush should make this profitable the next morning and the position has a BE of 523/697

  237. AAPL – here is the link to the optionslam data

  238. AAPL / Edro – I don't know that you get that much of a vol crush on options dated in January. If you go back 2 weeks for example, you can see that the IV for the ATM options in January was 33.52. Today, it's at 36.49. It might be a factor of earnings as much as the recent market movement. On the other hand, the IV on the ATM weekly option was 31.27 but on Friday it was 65. That's over a 30 point rise in IV. That's where the biggest crush will happen. The fact of the matter is that you can sell a 90 day straddle for about $90 and a 6 day straddle for $43 or 1/2 the price. At the same time, given the recent earning history of AAPL, I would be very careful playing the weeklies. The lowest strike is now 560 and on bad earnings, we could be there quickly! The average historical move for AAPL is around 5.5% – the last 4 earnings have been of course more volatile.

  239. StJ
    Good point, so using the TOS thinkBack tool I went to July 20th (earnings were July 24th) and checked the Oct600 strangle which had an IV of 30.01.  Then I went to July 25th, after earnings, and the strangle had an IV of 25.91.
    Recalculating my proposed Jan610 strangle using a 4% adjustment  the Jan610 strangle showed a max profit of $1234 on the 26th, BE at 551/660 with an 88% probability we would stay within the BE range.  Certainly not as good.
    Turns out the IV on the Trade page and the IV on the Analyze tab are calculated differently, the trade page calculates the IV of each option, the Analyze tab averages all of the options.

  240. AAPL -
    I recalculated the weekly using the IV drop from the July earnings weekly, -19%, and the max profit on the 26th is $3151, BE 548/670 with a 90% probability we stay within the BE range.

  241. Let's wait until Thursday Edro and see what happens. Phil and lflan might have some ideas then!

  242. AAPL – Using the IVs adjusted to the July values, Phil's Jan640/Nov640 shows a loss on the 26th of -$8965 at 610, BE at 647.  Of course he has lots of time to adjust.  He might do better going to cash and re-entering after earnings seeing he has to get to 647 to get even again.

  243. The Rev pointed out to an article in The Nation this week:

    I finally got around to read it and it does make you sick! These hedge fund guys (and Romney was part of the scheme mentioned in the article) don't have any love for their country. They are robbing us blind, sending our jobs to China and unloading their liabilities to the US taxpayers. And that's not even talking about all their tax avoidance schemes. Forget about the 47%, these guys don't care about the 99.9%. 

    Altogether, in direct and indirect payouts, the government padded these investors’ profits handsomely. The Treasury allowed GM to give Delphi at least $2.8 billion of funds from the Troubled Asset Relief Program (TARP) to keep Delphi in business. GM also forgave $2.5 billion in debt owed to it by Delphi, and $2 billion due from Singer and company upon Delphi’s exit from Chapter 11 bankruptcy. The money GM forgave was effectively owed to the Treasury, which had by then become the majority owner of GM as a result of the bailout. Then there was the big one: the government’s Pension Benefit Guaranty Corporation took over paying all of Delphi’s retiree pensions. The cost to the taxpayer: $5.6 billion. The bottom line: the hedge funds’ paydays were made possible by a generous donation of $12.9 billion from US taxpayers. [...]

    Obama hired Steven Rattner, himself a millionaire hedge fund manager, to head the task force that would negotiate with the troubled firms and their creditors to avoid the collapse of the entire industry. In Rattner’s memoir of the affair, Overhaul, he describes a closed-door meeting held in March 2009 to resolve Delphi’s fate. He writes that Delphi, now in the possession of its hedge fund creditors, told the Treasury and GM to hand over $350 million immediately, “because if you don’t, we’ll shut you down.” His explanation was corroborated by Delphi’s chief financial officer, John Sheehan, who said in a sworn deposition in July 2009 that the hedge fund debt holders backed up their threat with “an analysis of the cost to GM if Delphi were unwilling or unable to provide supply to GM,” forcing a “shutdown.”

    The entire article is worth a read… When we bailed out GM, we basically gave these guys almost $13B and they bitch about the bailout and complain that they unions made out like bandits. It makes for good political points. They are just vultures picking on the weakest preys! Next to them the IB look like choir boys. I just don't know how they sleep at night.

  244. Winston Think: The weekends are always great for reflecting on what might have been and what could be, if only one could improve one's skillset and capabilities. Phil's post on hedging is a classic as well as his reference to the original article(s). Last week's action in AAPL and the boards recent love affair with very short term trading reminded me of the stories of traders in London coffee shops at the time of the South Sea Bubble :) . But I love this board and it is a special community and I would not have it any other way. But I digress – weekend reflections are in order. 
    First I thought about my portfolio in general. There are too many positions, there are some companies where it looks like I have been rather successful in trading their options, others less so, and some real stinkers that I would prefer to forget about. But these positions probably hold the most in terms of lessons to be learnt. Could there be some advantage in analysing how I approached trading those stocks which produced three very different types of results? I decided to classify my positions into three categories, or three Tiers – based on profits generated year to date. Tier One companies are in the top third of profits generated, Tier Two in the middle third of profitability, and TIer Three …. well you get the idea, but the real name for Tier Three should be Tier Losers.
    Tier Two companies: FAZ, AMGN, HOV, EDZ, BRKB, TNA, SU, STO, FAS, XLF
    Tier Three companies: TBT, TZA, SVU, DXD, AMZN, INTC, QQQ, CAT, TCK, RIMM, COST, HPQ, ANR
    The ticker symbols underlined are disaster hedges. Ticker symbols in bold are there to remind me of my capacity for stupidity.
    The majority of positions started off as ABW – artificial buy writes (or short strangles with a ITM long call kicker). A few were naked puts (e.g. SHLD, CHK, BTU). When they were placed they always had minimum 12 months to expiration, the majority expire in January 2014.
    So, the first run assessment of the Tiers. For Tier One I had a laser like focus. I kept up-to-date on a daily basis on business news, how their fundamentals were evolving, how their industry and competitors were performing. Also how this translated into technical price action. For example, I have been managing an ITM naked put on JPM for the last 24 months. It is finally out of the money. But during that time I was able to sell monthly calls against the naked put to make substantial profits. I knew these stocks like my children (OK, that's an exaggeration but you get the idea). Every one of them was a stock highlighted on PSW for one reason or another. Phil's conviction on stocks like CHK, GE, CSCO and GLW was an additional aid to remaining with them. I was supremely confident that I could sell options against these positions and had worked out in advance exactly how I would roll them up or down given the necessity.
    Tier Two – the lessons are not so obvious. Many are hedges – simply the cost of insurance. The others were small positions based on 'recommendations' on the board. These positions will neither make or break me. Many Tier One positions started off as Tier Two companies.
    Tier Three: the more significant disaster hedges. as well as the clunkers that I should have sold when they were down 20%, but never did. They were trades made because the sentiment on the board seemed to be that they were 'sure things' – that definitely applies to those in bold. Even though I thought technicals showed the opposite (Phil's conviction on AMZN being unable to sustain its price and therefore surely subject to the laws of gravity is a case in point). But blaming somebody else is easy – there is a need for me to take responsibility (compare how I view Tier One companies).
    So for me, one learning is how do I nurture Tier Two companies into Tier One (using the same techniques that made similar positions extremely profitable), and how to make sure I jettison Tier Two companies before they descend into the abyss of Tier Three. That for sure requires more reflection. And any input from my colleagues on the board would be most welcome.
    And of course, reduce the number of positions.
    Sorry for the length, but it was rather cathartic to share this with the community.

  245. Heart Attack Grill/StJ – I can't believe they waste space on tomatoes…  

    The make the customers put on hospital gowns to eat – that's classic!  

    $100 meals/1020, Shadow, Willie – I guess that's my personal 1% detachment, it never occurs to me that $100 is too much for a meal.  Having lived in and around NYC for so long – there's so many places that cost that much it seems normal enough and then, when I travel – I tend to go to good places too.  Obviously, I'm talking date meals, not ordinary eating but I'd say "normal" with Tina and the kids is $20-30 pp eating out around here and the sushi place we like hits $200 with the tip for the 4 of us and we do that once a week.  Hell, in NYC there are places that charge $20 a drink and my favorite burger is the Kobe Burgers at Cheesecake Factory and Zinburger (a local place that also has great $5 shakes) and that's about $12 or $15.  I'd rather have one of those a month than a Big Mac once a week…  

    Buffets/Jbur – There's a $45, 24-hour buffet pass from Caesar's, which includes 7 other hotels in their chain and, if you time it right, you can probably use that for 2 days worth of eating (Brunch to early dinner the next day) so $22.50 a day not bad and the Caesar's buffet itself is pretty good.

    Weakness/Diamond – Those are all good companies, not surprised there's some early bargain-hunting.  I'm liking BRK.B if they get back to $85 but I do think it's a bit early to add longs – you never know how far we can fall so buying things on a 5% dip isn't really worth rushing the commitments.

    GOOG/ZZ – Interesting side effect of AAPL maps is I don't use GOOG anymore to find things because it's not connected to my map app.  Very sneaky by AAPL, which has a perfectly good search function built into the maps and I'm sure if I had Siri it would be even more of a no-brainer to use.  I don't know why AAPL just doesn't buy GRMN for $8Bn or maybe there's someone else who's good and cheaper but then they could add their stuff to existing systems and solve their mapping problem in one step (and pick up a company with good cash flow and a p/e of 13).  Anyway, the point was that GOOG may have some problems if the dominant mobile phone provider manages to steer people away from them. 

    CMG/Seer – 15% drop seems a bit excessive.  Forward p/e now down to 22 on those guys so won't take much for an upside surprise.  

    Farmland/ZZ – It isn't worth anything if it isn't farmed properly.  Very dangerous if you don't know that much about it as you have to consider long-term weather patterns, soil quality, access to and cost of water and stability of supply, cost of delivering goods to market, availability of local labor and global supply/demand for the goods you are able to produce on your land (it's not "anything you want" – you often are limited by the land quality and the environment).  Farmland has zoomed up in value the past few years and, if the place you're looking at hasn't – you have to assume there's a good reason for it.  To me, if you're going to be a rice farmer you may as well just buy rice futures – at least you can get out of them when they go down 20%.  

    Barron's Kinki – LOL, I put that up in the new post.  

    Big Chart – VERY UGLY downtrend in Nas and RUT – clearly a down channel and none of the other indices seem to disagree.  Obviously the Must Hold line must hold on the Nas next week or we are DOOMED!!!!    Dow still has a very long way to fall to 2.5% support and then the 200 dma is way down at 12,950 and the S&P no better with it's 200 down 60 points (5%) from where it is.  Most disturbing, look at the 200 dmas of the Dow and the NYSE – they're flattening out – that's really not good.  Great chart notes StJ.  

    INTC/StJ – I think they are smart enough to re-invent themselves but a rough transition in store.  

    AAPL/Edro – Well that plan is shot with AAPL at $610 anyway.  We have to see where we end up now.  Friday was much uglier than we thought it would be so we may have to move to a more defensive position.  No way to know until next week but we'll be quick to cover an additional move down because it's another $30 down (5%) to the 200 dma there but at least that's a line they haven't failed for years.

    At this point, AAPL has gone nowhere since Q1, when they had $39Bn in revenues and $11.6Bn in profits.  Last Q3, they had $28Bn in revenues and $6.6Bn in profits and it seems mathematically impossible for them to come in below $32Bn and $8Bn (up 20%) for this Q and, after Q3 last year, they fell to $361 and then climbed to $425 on Jan earnings and Jan earnings sent them to $641 – up almost 50% from pre-announcement of Q4.  If they do miss and crash back to $500ish – this could be the deal of the Century – the trick is to stay solvent enough to play it! 

    AAPL/Edro – It's an interesting play and earnings are after the Jan expiration but you may be stuck with it for a while if we got to $500 or $700+ and either is possible.  I like that optionslam chart and table.  Note in the straddle history that it's been a coin flip to go plus or minus 100% on earnings.  The don't price them like that because it's risk-free – that's about exactly how much risk you are taking. 

    Nation/StJ – I weep for America if that guy gets into office.  It will mean the bottom 90% have already lost and we're essentially Rome, just leaching away our years of glory until the inevitable fall.  

    Thinking/Winston – That is a lot of companies to worry about!  I would look carefully over the underperformers with an eye towards getting rid of half and putting that money into the underperformers you are keeping.  I see you kept some things long after we gave up like TBT, RIMM and ANR.  Also, you need to look at your winners as well and think about whether or not some may have topped out and run their course.  Under the new post, StJ updated the Income Portfolio and, with the exception of HPQ, SVU and BBY so far – all of our losers have become winners but, after 3 months, we only have 18 stocks and 1 hedge.  20 is about my limit and I can pretty much guarantee we won't go over 30 – it's just too much to look after.    CSCO, for example, is up nicely, as is BTU – we need to see if we have a better use for those slots than, in BTU's case, waiting another year to make $1,000 – especially if the market continues to look weak.  And, if we decide to dump BTU – JRCC should go too although, as was so in our original premise – the premium remaining on those $2.50 puts is completely ridiculous with the stock at $5.  Implied volatility there is over 100%!  

    OK – let's move comments to under the new post to avoid having to go back and forth.  

  246. Winston – On last thing on that.  What I'm saying is you have SVU and you have RIMM as underperformers.  Let's say you have $10,000 of each and you're down 50% on both.  Which is more likely to help you if you DD on it?  RIMM we decided was dead long ago and SVU we upped aggressively so let's say you walk away from RIMM and DD on SVU.  With SVU at $2.19, you can buy 5,000 shares an sell 50 2015 $2 puts and calls for $2 or more ($2.26 was last sales) and you're in for .20/1.10 on the new batch.  Even if your old batch is net $5 – that's still an averaging down to $3 and, if you sell 2015 $2 calls to cover the other half at $1, you knock another .50 off the total net and, of course, you can always roll it. 

    Don't make your decisions in a vacuum, look at the options and think about the next 4 years of owning the stocks if they drop another 50%.  Which ones make you feel more comfortable?  Even something like HOV – it's doing OK but are you hedging it out or looking for a home run?  At $4.38, you can sell the 2015 $5 calls for $1.05 and $3 puts for $1.50 and that's $2.55 in your pocket now, which is more than 50% of the current price.  You still own HOV and you make another .62 if called away at $5 but, even if they drop below $3 and you're assigned another round, that round only costs you net .45.  

    If you do this with ALL of your positions, you'll have a lot less damage from the losers and, while you may cap your winners somewhat – I bet on the whole you're better off and you can have a lot less daily angst with the trades – that in itself has a value.  

  247. Thoughts/Phi – thanks, great insights as always. One point, for most of the positions I do not own the stock. HOV is a rare exception. I followed your recommendation to buy the stock when it was at $3 and sell the $2 puts and the $3 calls (both Jan 2014). I finally ended up with 5,000 shares, 50 short $2 puts, 10 short $3 calls, and 40 short $4 calls. So a nice profit so far, which I will close out when there is limited upside. Rolling the current positions looks challenging.
    For most of the positions I am hedging them out – by selling short term calls – but as you cautioned recently, don't take full covers too soon otherwise you end up with a lot of work for little reward. CAT and COST are example of my deep ITM long term ABW which I covered with short calls and after announcement of QE3 I am still digging myself our of a slight hole, but confident I will roll them into profits over time.
    Don't take this the wrong way, but I dabbled with SVU (classic Tier Two) and I rolled a few times to keep myself above water, but I don't think the fundamentals/technicals make it worth the effort. There are more profitable fish in the sea. But the trade on paper looks pretty good – until bankruptcy looms. WFR was another classic that I never got excited about – the case was made multiple times on how to turn this dog into a winner – but unfortunately it decided not to play ball. 
    As someone once said, one of the greatest skills is knowing when to roll 'em and knowing when to fold 'em. I am still learning that one, but improving every month.

  248. Thanks for the "Farmland" comments, Phil.  The proposal is actually not an investment partnership, it's a more complicated situation — I'm trying to create a candidate for mayor [don't ask], and farmland has something to do with it, but the bottom line is I don't need to own any, and that's perfectly good advice in my situation.  I can structure something far better for all concerned.
    And as for Pharm's "Most Wanted Ponzi" list, it's all very well to joke about terrorism, but remember that it's for real and that the price of freedom is eternal vigilance:

  249. Does anyone have something(graphs) that shows that there has not been any wage inflation? Also, any graphs that show how costs have gone higher even without wage inflation?

  250. It often seems that discussions of whether the Eurozone might split up or not focus on the so-called "Peripherals" — Greece, Portugal, Spain and Italy.  I rather think that, if the Eurozone integration project founders, it will do so over a somewhat longer term by way of disagreement between France and Germany, because monetary integration is impossible without surrendering important control over fiscal policy and financial systems, which of course includes foreign, defense, and social policies.   They have, after all, had important disagreements in the past.

  251. And here's a more cheerful thought for those of up pounded by Friday's debacle.