Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!

Friday’s Fantastic Finish – What Next?


We hit our 13,600 line on the Dow yesterday and this is the point where, last September, when I called the Dow a canary in a coal mine for being the only index not to break it's Must Hold level on the big chart – the same Big Chart we've used all year with the same levels predicted since the Big Crash.  We're only living the 5% Rule here – we're a long way from breaking it.  

Note how the Big Chart from September 24th of last year looks the same as the current chart (see yesterday's post), right down to the same Striking Cobra pattern that's all the rage now with the TA crowd.  We had just had massive QE announced in Europe and Japan and the Fed was extending our own QE but I gave my analysis of the Dow components and concluded they were out of gas and we were likely to be topping.

This was the topic of discussion in yesterday's Member Chat along with my famous Tugboat Theory of Market Movement, which is keeping us in our mid-range TZA hedges – even as the Russell cracks new highs.


INDU WEEKLY My conclusion at yesterday's close was:

I can't believe the Dow's at 13,600 and AAPL is at $505.  Remember when they were talking about putting AAPL in the Dow?  That was at $700 and the $200 drop at 8 points per Dollar (Dow is not cap-weighted) would have cost around 1,600 points!  As it is though, 13,361 was the tippy top in October but we closed about 13,320 and that was our only day above (with a cliff dive after).  So a day above tomorrow, into the long weekend, would be a huge victory but, first, we have to close above today. AAPL was about $666 at the time and the Nas was 3,196 at it's high so very strong if you ignore AAPL's 6% drag on the index.

So, we're much stronger internally on the Nas now than we were then and, hopefully, that means we don't have an air pocket underneath us.  The way we made these gains (the hard way) vs. the series of one-day pumps each week (mostly pre-market) that took us up last time is also way different but, still, until we're over our levels for a couple of days – this is where we need to be most cautious of a reversal. 

RUT WEEKLY In that September post, my pick was also TZA ($13.88 at the time) and it shot up almost 50%, to $19.15 on that 7.5% drop in the index – which made it a pretty perfect hedge.  Now the Russell (chart by Dave Fry) is over the Big Chart's 10% line at 890 and TZA is down to $11.57 and that's not bad with 900 looming as significant upside resistance as Dave notes – if the RUT does continue higher from here – it will be time for both of us to redraw our charts and THAT would be the bullish sign we didn't get back in September.  

It would be great if we simply break out and go higher here but look what a perfect "M" pattern we can make if we drop back to 12,000 (12%) from here.  Aesthetics are important too, you know.  This is a very serious inflection point we're running into and we'll need an upside catalyst next week with earnings coming up from (among many):  VZ, JNJ, IBM, TXN, GOOG, MCD, UTX, AAPL, MMM, UNP, MSFT, T, SBUX, COP, PG, HON, OXY and HAL – if those can't push the Dow up and over – nothing else is likely too and we're back to making that "M".  

According to Bespoke, VZ, MCD, ABT, SBUX and HON have the unfortunate habit of missing earnings roughly 50% of the time, with VZ, IBM,PX, BMY, T, COP and PG all historically shakey on revenues.  Those are the dice we're rolling next week and we're shoving them all into 4 days as the US markets take MLK Day off on Monday.  That's another reason we're adding the SQQQ spread into the weekend – long weekends are always dicey.  In general though – we remain bullish until proven otherwise by the loss of our levels.  So, in part, our gains act as our hedge for now.  

China's GDP was good last night and Japan has vowed to keep printing Yen until it's down another 10% and that's boosting the Dollar back over 80 today and keeping he lid on the Futures so far (8:45).  According to Seeking Alpha,  the "Great Rotation" is getting legs as $11.3B has gone into global stock mutual funds in the last 2 weeks – the largest 2-week inflow since April 2000 (how'd that one work out?). The theory (open for discussion) is mutual fund flows reflect "Mom and Pop" activity, while ETF flows – money left in the last week – are more dominated by the institutional and trading set.  We'll have to see how this plays out but I'm not as worried about "air pockets" under this rally as I was in September and news like this is very encouraging. 

Today is expiration day, so not to be taken seriously and we'll see how things stand after the long, Holiday Weekend.  

Have a good one, 

- Phil

Do you know someone who would benefit from this information? We can send your friend a strictly confidential, one-time email telling them about this information. Your privacy and your friend's privacy is your business... no spam! Click here and tell a friend!

Comments (reverse order)

    You must be logged in to make a comment.
    You can sign up for a membership or log in

    Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

    Click here to see some testimonials from our members!

  1. StJeanLuc / Income Port
    I was wondering if in the Notes area, you could list the Div % of the stocks in the income port?  If we are long the stocks it's nice to know, and if short the puts, it would help with dividend risk.  
    I don't mind getting the rates, if you could add the field?  

  2. Good Morning!

  3. Go figure! Another supply problem, or more appropriately a supply story. Where are the facts from these two unamed people with knowledge of Sharp's production plans? They go further making  own conclusion based on these outstanding facts from two unamed sources who are the "go to" people when you need a story about Sharp's production plans by saying:
    "Reuters reported that it was unclear how much of the slowdown was due to seasonal changes in demand or consumers choosing the smaller iPad mini introduced last year. The Nikkei newswire reported Jan. 14 that orders for iPhone 5 parts had been cut by about half following lower-than-expected sales, underscoring concerns about the smartphone market and sending Apple shares to an 11-month low."
    And that validates all the other supply stories from the past week! It's a two for one story. And AAPL goes below 500 and everyone's happy.

  4. Oil at 95.90.  Almost another chance to reload at 96.  Made some nice cashflow this morn shorting off 96

  5. Phil HPQ Reading through your comments this morning again I must say this is an excellent way to handle this type of situation, should be studied especially by newbies! Thanks.

    Today Jeff Currie, Goldman Sachs chief commodity strategist put forth some comments regarding the Oil market.  Jeff Currie from Frankfurt said he wouldn’t be surprised “if we woke up in summer and [Brent] oil cost $150 [per barrel]".


    But then the authors from EconMatters do a good job of rebuking this guys claim. I guess GS is long oil and wants to get out before summer.

  7. It would be great for these uber rich CEO's to come up with their own plans….for once….
    FU john mackey!….

  8. ….To be Clear…It's not that these CEO's have issue with the healthcare mandate, it's the fact that the terms "socialist" and "fascist" when it's clear healthcare is a societal issue for all…..
    Quit Bitching and get Involved!

  9. jabo/felon  “The sad reality is there are people around this country who are building up enormous arsenals of weapons because they think the end is coming "
    You'd think these folks could learn from "Mayan" folklore…..

  10. Phil:
    Do you like GE here? The GE 2015 BW selling the 20 calls and 22 puts. 30% discount if put to you or ~25% return plus the dividend.

  11. 1020- when the zombie appocalypse happens you'll be knocking on my door wanting the protection I can provide with my newly purchased M4!

  12. jrom: with an aimpoint m4 2moa and BUIS

  13. Attempting to sell the CLDX Feb $7 puts again for 30c.  They did not go yesterday.

  14. jromeha – I'll be fine. My 13 y.o. daughter speaks zombizee…… ;)

  15. Sorry, late start this morning… Updating the portfolios now!

  16. Obviously need to roll the FAS calls. That little dip is helping now!

  17. ITB WEEKLY Good morning! 

    Funny that the cartoon mentions PCLN and they are shooting back to $675 today.  Apple who?  Still, I used to hate PCLN (the comparison to market cap of airlines was an argument I had made when they were toppy in the $700s) but they've grown into their value a lot since early last year and I wouldn't be gung-ho to short them this year – especially if Europe turns around – which was killing them after the Olympics.  

    Dollar 80.05 now and that's up 0.5% so anything less than a 0.5% drop in the markets is a good thing and, usually, it's a 2x effect so we have to be pretty forgiving.  News, as I noted this morning in yesterday's chat, was mixed and, of course, it's expiration day so not much is expected overall.  

    Oil back at $96 but a tough short into the 3-day weekend (in Futures) but fine to play /CL off the $96 line with tight stops above during the day, of course..  I'm happy with the USO puts though as it's not a driving weekend for most – just a bonus day off for those who get it (we do). 

    AAPL/DC – It's the same story, just phrased differently now.  People are such idiots that, unfortunately, this kind of nonsense works.  That's why it's good to flush the retailers out of stocks before a rally – they fall for this kind of crap every time so better to dump them before we head higher.  

    IYT WEEKLY BA back to $75 – professional traders trying to find some balance there.  

    SOX at 410 and over 400 is great, Transports (Dow flavor) are 5,660 and we were happy with 5,000 and the Dow is over 13,600 and hopefully will hold it today so nothing to complain about so far – think how key that 100 line on IYT was – and we blew through it yesterday.  These are the early signs of a proper breakout.  

    You're welcome Yodi.

    Currie/DC – This is why I want a TV show.  I'd get a team together and wire his house with a fake news-feed and, when he wakes up in the morning, we'd say oil was at $150 per barrel and record his shocked expression and his frantic phone calls and how he'll run around like a headless chicken freaking out, saying WTF?  THAT would be good television!  The real counterpoint to GS's call is that they've been calling for $200 oil since 2006 and $150 is actually a retreat for them and just as ridiculous and unaffordable as $200 was.  

    $150 oil would cost the 90Mbd World $4.5Bn a day or $1.6Tn a year.  That's 10% of the US GDP spent on something that will give no incremental benefits.  The US is 25% of the global economy so it's a 2.5% drain on the global economy and it's all discretionary spending so roughly a 25% pullback in discretionary spending with $1.6Tn worth of business drained away from other companies which would, of course, lead to a massive Recession which would, in turn, tank the price of oil.  So it's a ridiculous statement for GS to make – nothing but an attempt to manipulate the price of oil into the upcoming rollover next week (Tuesday, I think) so their traders don't get burned with 58M barrels worth of contracts still open at the NYMEX and 307Mb of barrels they don't want already stuffed into March deliveries and a rough rollover coming in June, which already has 146M barrels jammed into it (50M is normal) as traders were desperate to recover losses from the end of last year so they went for the start of this summer's driving season.  


    Click for
    Current Session Prior Day Opt's
    Open High Low Last Time Set Chg Vol Set Op Int
    Feb'13 95.19 95.67 95.11 95.43 09:52
    Jan 18


    -0.06 15834 95.49 58563 Call Put
    Mar'13 95.65 96.12 95.54 95.87 09:52
    Jan 18


    -0.07 33766 95.94 307276 Call Put
    Apr'13 95.99 96.48 95.92 96.24 09:52
    Jan 18


    -0.07 3903 96.31 101793 Call Put
    May'13 96.27 96.72 96.26 96.50 09:52
    Jan 18


    -0.08 2215 96.58 67049 Call Put
    Jun'13 96.48 96.91 96.37 96.62 09:52
    Jan 18


    -0.13 5754 96.75 146488 Call Put
    Jul'13 96.47 96.90 96.44 96.65 09:52
    Jan 18


    -0.12 1036 96.77 67580 Call Put
    Aug'13 96.51 96.59 96.46 96.59 09:52
    Jan 18


    -0.04 1241 96.63 34196 Call Put

    These charts speak for themselves:

    Notice how we are being deluged with bullish notes on oil this week – that's a sign of desperation by friends of NYMEX traders – who are finding no forward interest in barrels (note flat pricing on the strip – indicating no one really believes supplies will be short – and Dec 2015 is $88.59 on last trade (this morning) to give you a long-term idea of what's happening.  

  18. RIO rallying today!

  19. Phil AMZN
    Most of my short puts are worthless today. Due to your negative outlook on the stock I have been hesitant to enter any new ventures on this one. How about setting something up like a Jul13 bull put spread say 230/210 for a credit of 3.80 PM margin 840.00. I am sure you have a better idea. TIA

  20. Sorry AMZN I set them always up X 2 options explaining the margin

  21. Phil AONEQ We set up a play 6 Nov 12 still have 10 short Jan14 1$ puts being today 1.15 against me the Jan13 1.5/2.5 Vertical is worthless today. Any Idea? TIA

  22. Hopefully I got it right now!

  23. Income Portfolio / Burrben – I'll add a field for dividend and also earnings date.

  24. Phil -
    Any plays on INTC or just wait for it to bottom out

  25. Phil You are well atuned to the BBY play. With all my short puts and a 200 stock bought at 24.56 now 14.63 I am actually showing a total credit of 58 $ today Having now calls I am asking is it wise to sell some calls or is it better not to cap a possible buy out TIA

  26. Oil 95.46.  The 96 line keeps on giving…..

  27. Health care/1020 – Got another link?  I don't have MSM and hate to give out more passwords.  

    Supremacist/Jabob – All I know is that that is one bitchin' Superman shirt.  Clearly the man knows how to shop is all…

    GE/DC – I always like GE, I think we just did a trade on them around $20 and up 10% already at $22 but you can still sell the 2015 $18 puts for $1.60 and that's netting in at $16.40, which is a lovely 25% discount off the current price and, if you want to be more aggressive than that, you could pick up the $20/25 bull call spread for $2.20 for a net .60 entry on the $5 spread and work that off by selling 1/2 the March $22s at .50 and you can work your way towards a free position.  GE is good for call selling as it's big enough that it's not likely to fly up on you and the 2014 $25s are .50 so that's your roll target and you'd be 100% in the money at that point with a $5 edge on the caller (and you can always buy more long positions, so little worry there).  I don't know why GE isn't in our Income Portfolio – let's go with 30 of those spreads (15 short March calls) and we'll be happy to add to it if GE goes lower.  

    FAS Money – $130 caller down nicely from yesterday (now $5.70 with almost no premium).  This is why we wait.  Now we can roll them along to the Feb $135 calls at $6 for about even as I'm pretty sure we're toppy here so why spend money.  I am not, unfortunately, comfortable selling puts but I think it's a great time to cash our XLF $13 calls at $4.25 and buy 20 2015 $15/19 bull call spreads at net $2.  Warning – these will look awful when XLF goes up on us because the net delta on the spread is about .30 so 20 x .30 is $6 per $1 move in XLF but that's a $3 move in FAS and the Feb $135s have a delta of .54 so it's 3 contracts times 3 (for the ultra) time .54 is about $4.86 so it's a pretty bearish change of stance on XLF as we wait for the next round of financials (mid-sized) to reports.  

    In general – the above reflects my general feelings that we need to be more careful up here until we see another week or two of earnings and our indices make it over their previous highs.  

  28. stjeanluc…close enought!  :)

  29. Phil/Bitchin'  Superman?!  I thought it stood for small….
    MSN – I'm not sure what you mean. Does the link not work?…..

  30. AAPL!
    It's been a little over an hour since the last mention….. ;)

  31. Opt – What do you think of V for puts? thx

  32. Test – supper slow day – not posts in 30 minutes

  33. Phil – can you clarify you XLF/FAS adjustment.  "a $1 move in XLF is a $3 move in FAS ".
    A $1 move in XLF is about 5% and that translates to 15% in FAS – which is $20~ in FAS … ?
    Is my understanding wrong ?

  34. AAPL I had a 518/520 PT for today,  dissapointed and below my bullish trendline most of the morning. We'd need quite the reversal.

  35. UK FTSE +0.5%
    German DAX -0.3%
    French CAC -0.1%
    Spain IBEX -0.5%
    Italy MIB -0.2%

  36. On a slow day, some good tips for every day life…..

  37. Virtual MoMo trade:   BTO 1 GOOG Jan 25  (weekly) 700 PUT for 19.60

  38. GTHP….adding to the position.  77c or better.  DO NOT pay ask.

  39. A good 4 days for RRD in our Income Portfolio. Might have picked a bottom there!

  40. Seems common sense to me:


    …a new study…found that the more money (in total and as a share of total college costs) that parents provide for higher education, the lower the grades their children earn.

    The findings — particularly grouped with other work by the researcher who made them — suggest that the students least likely to excel are those who receive essentially blank checks for college expenses.

    I am making my kids take loans… My oldest one finished with a great GPA and I am now paying the loans. The deal was that the loans were on her if she didn't finish! A little motivation doesn't hurt.

    • $25KPM – I still like RIO so we'll wait for the weekend.  Crazy up and down move between yesterday's low and today.  .


    Rio Tinto's Albanese Scorecard: $49 Billion in Acquisitions, $34 Billion in Writedowns

    • AA Money, $25KP – Those SQQQ's won't save us from an ugly event but they'll help pay to retreat to July in in the $25KPA and down to $400 in AAPL Money – if it comes to that.  

    Keep in mind the Dollar is now 80.24 so we're holding up nicely considering.  

    AMZN/Yodi – You know I don't like bull put spreads because you are the sucker paying more premium.  If you want to be bullish on AMZN you can collect $800 up front against about $23 in margin (net $15 margin) by selling the 2015 $145 puts and those are almost 50% out of the money – that's a price I would like AMZN at.  If you like selling puts, why not just buy the 2015 $260/220 bear put spread for $21 and sell the Feb $260 puts for $7 and then you'r net $14 with 22 more months to sell (or roll if AMZN goes down) and then it's a nice cushion for more aggressive put selling than risking $6.20 to make $380 on 6-month spreads.  Keep in mind it's still pretty bullish – which I'm not, but at least you have a buffer in case AMZN dives on you. 

    AONEQ/Yodi – I thought we took the money and ran when we got the bounce from .05 to .15 in October?  That's the last time I remember giving them a thought.  I don't see any November comments on them but, regardless, they are essentially BK and investors are only hoping to recoup something on an asset sale.  This company is so BK that someone paid $1.24 for the 2014 $1 puts – they have to go to -.24 to break even on that trade.  So this is a loss – there's nothing to be done about it.  Maybe a miracle will occur but, more likely, you'll be assigned 1,000 shares for $1,000 as very expensive wallpaper.  

    INTC/Samz – We talked about them in Vegas and I said give them 2 years to turn around.  That was at $21ish and they fell to $19.23 (we had no interest in shorting) and I was surprised they zoomed back up to $23 into earnings but now my Vegas premise is in black and white on this earnings report so, again, not a buy at $21 unless you don't mind scaling in if they hit $19 again or even $17 in a big market crash.  Obviously, $17 isn't tragic and, if you think you're going to miss something, the 2015 $18 puts can be sold for $2.20, which TOS says is very margin-efficient against net $1.80 so 100% return on margin and it's better than the dividend (.90/yr) so no reason at all to buy the stock when you can do that.  

    BBY/Yodi – Now that one has hope.  If you feel over-exposed, why not just cut back a bit?  It's a coin-flip on earnings (end of Feb) whether there's a deal or not and no deal and bad earnings will be the end of these guys.  I still like them – they just paid a .17 dividend on 12/17 (4.6%) and you know I don't mind loading up on coupon-clippers when they are paying 5%+ but who knows what they'll say on the 28th?  In the Income Portfolio, we have the short 2015 $13 puts at $4 and the long $13 calls at $2.70 and now it's $3.50 for the calls and $3.40 for the puts so that's our gamble with a net $11.70 ownership.  If your structure is worse than that – why stay in it when you're 25% worse off than we are and we're worried about our position?  

    $95.50 is a good non-greedy exit off our $96 shorts on /CL if oil goes back over the line.  Don't forget the usual pump into the 2:35 NYMEX close.  Over the weekend, I'd rather stick with the USO Feb $35 puts (now $1) as it's easier to recover from a big move against you.  We still may get a nice move below $95.50 but I'd sure take at least 1/2 off and keep tight stops on the rest over the line.  Better to re-enter after they break below $95.50 than watch the gains melt away if the Dollar drops back and oil rallies.  

    MSN/1020 – They make you sign up.  That's why I never use them, I try not to make people sign up to too many things to read news items.  

    V/CaFords – Logically, I love the idea of shorting MA and V for the very issues COF is having but, at this point, it's like sitting down for the 10th time to play chess against a guy who finds a way to beat you every time – it's not even fun anymore…  If the market is weak next week then MA and V have a long way to fall so just remind me and we'll certainly want to find a nice put.  I think MA is weaker than V and the MA April $450 puts, now $4.80 were $3.83 last week but $13.25 after Christmas so that's a nice risk/reward playing for them to fall back to $480 (down 6.7%).

    Slow/Samz – Works for me on a Friday.  It's been a busy week.  

    Clarity/Partha – No, you are right, I should have taken the cost into account.  So the $1 move in XLF moves our total long spread by $6 but, with FAS, the $135 stock will move up 15% to $155 so $5,100 lost on 3 short calls while the 20 XLFs would gain 2,000 x .30, or just $600.  That was what I was thinking before I made the math error.  So, as I said, these will look awful if XLF flies up but the whole point was I don't think that's likely to happen at all but of course we'll have to stop out if I'm wrong.  

    Meanwhile, FAZ is way down at $13.25 and is getting interesting as a hedge.  The July $12/16 bull call spread is $1.20 and you can sell XLF 2015 $14 puts for $1.10 for some very cheap insurance because any drop over the next 6 months that even hints at trouble on the XLFs would put the spread in the money and you get $4 off the net price of the XLFs – way down at $11.  If XLF goes up, you can cash or roll the insurance at net .60 and, of course, you would be well on the way to having the puts expire worthless.  

    By the way, if you wouldn't love to load up the truck and buy XLF at $11 – why on earth would you be long on financials in the first place at $17?  

    AAPL/Kustomz – Not looking good today. 

    Europe looking sad as well. 

    I like those Life Hacks, Pharm. That egg yolk thing is fantastic:

    life hacks how to make your life easier gifs (2)

    RRD/StJ – Getting through earnings without incident is helpful.  

  41. Must be a slow day with Pharmboy doing his best impersonation of Heloise….. ;)

  42. Phil – Dial up MSN
    Then go to Money towards the bottom of page – CEO: Obamacare 'fascist'
    Could be a New Jersey thing…… ;)

  43. stjeanluc……When I started my college education I checked into my room at the dormitory and started placing job applications the same day.  I found a job washing dishes in the dorm cafeteria.  That was my first job of many that I used to work my way through college.  I got no money from family members (they had none anyway) or anyone else.  Last week my 19 y.o. daughter calls to remind me to send the second semester check to NYU, the second most expensive college in the nation.  I write the check, and wonder whether she will  actually learn to work someday.   Maybe I'm teaching her the wrong things about life……….

  44. Thank you Phil for you comments as you see I am weeding my garden today (8

  45. College/lflan – you are providing her an enormous boost, and there is nothing wrong about that.

  46. Searching for sugar man.  A great film I saw on the plane yesterday.  It's about Rodriguez, a great poet and musician in the 70's whose music never caught on in the US but did elsewhere in a big way.  Needless to say if you're a Dylan or Jim Croce fan an excellent soundtrack as well.

  47. Phil any interest or opinion on COF?

  48. hemas03 – This was a great 60 Minutes story on Rodriguez….

  49. SODA/lflan – turning or just expiration day oppression?

  50. Another inspirational story on Justice Sonia Sotomayor….

  51. VIX!!!!!

  52. 1020,
    Thanks, I'll check it out.

  53. VOLC/pharm – any reason for VOLC weakness this week?

  54. College / lflan – Both my kids worked through college as well. I think that knowing that you have a secure backup behind you is enough of a boost to get started. I was not handed anything when I started either and it's good for our kids to realize the value of money early enough. My oldest one lives and works in Manhattan now and she already created a budget for herself, is planning to put money in the 401K plan at her office as soon as she eligible. I had to help her when she moved in because obviously it's not cheap there and she doesn't make a ton of money yet. But she is careful because of what she learned over the past 4 years.

    …and why not, after all he invented the internet !

  56. PSW Atlantic City Conference April 27-29.  The date has been set and conference room booked.   It will be at the Harrah’s Resort.  It will follow a similar schedule as the Las Vegas conference with dinner and poker with Phil on Sat. night, all day conference on Sunday and live trading on Monday.  I have a block of rooms at the Harrah’s Waterfront Tower at $279 for Sat. and $65 for Sun which you can book on your own.  What I need from interested members is payment up front.  We will have a breakfast spread and lunch both days.   We will a have a reverse auction process in terms of the conference fee:  the first ten to sign up pay $400.  The next five pay $300 and the first ten get $150 back.  The next five pay $300 and the first fifteen get $50 back.   So on the first twenty participants, the cost to first ten is $200, next five is $250 and last five is $300.  We have a big conference room (at no extra charge) so certainly have room for more beyond that and could then probably have enough to pay for the dinner on Sat.  Phil does not have a lot of free time as we know so this is a special opportunity for us to learn from him in person during a live trading day.  I have not been to the Las Vegas conference but have heard many positive reports about it.  Six members had expressed interest a few weeks ago when the conference was first announced so it’s only fair to hold them a spot in the first ten until I hear back from them.  Craig is planning to hold an IRA discussion.  My paypal is:  Thanks and I hope we get a good turnout!!

  57. Not from The Onion:

    Reporters quickly noted that a session for GOP lawmakers called "Discussion on Successful Communication with Minorities and Women" will actually take place in the "Burwell Plantation" room at the resort where the retreat is being held. It turns out, according to NBC News , the room "is named after the Burwell Family, a wealthy family that owned many slaves in 18th century Southern Virginia."

    Nice touch…

  58. stjeanluc – love the irony…
    Maybe they'll have a special showing of Quentin Tarantino's new film, Django

  59. Irony / 1020 – I wonder if one of the waiters there will have a camera phone to capture all these "47%" comments that will certainly be flying in that room!

  60. Next week's key earnings:

    We already have a play on GOOG. I am guessing that Tuesday we could add a ISRG play as well. They are very volatile and premium is always crazy. As for AAPL, we have plenty riding on that as well but given the current volatility, there might be a quick trade there as well.

  61. stjeanluc – Nothing clandestine needed, we already know how they feel about those people….

  62. Out of all these earnings, I would be looking at FCX, IBM, SBUX and a couple of others for a potential long terms entry with calendars.

    BTW, I had mentioned a QCOM play, buying the Jan 15 50 calls and selling the Jan 13 65 calls and that's working well as QCOM is trading at $64.65 now so the short calls will expire worthless. Earnings are on 1/26. It's tempting to sell next week's 65 calls while waiting but I am worried that AAPL earnings could impact QCOM next week so I'll wait until after earning to sell another set of calls (probably Apr).

  63. VOLC – not sure what is hitting them right now, but they are getting attractive.  I think I said in Nov, $22 is a good place to start a position.  At this rate, may get there sooner rather than later.

  64. College/StJ – I'm still leaning towards offering to give them $200,000 to start a business instead.  They can read a book during lunch if they feel they're missing out on an education. 

    MSN/1020 – Still needs and account but Obamacare Fascist was picked up all over so I just Google that and read it for free – that's how I get articles for you guys that don't need passwords.  Meanwhile, I can't believe Mackey said that as his customers are likely ovewherlmingly in favor of Obamacare.  

    A little buying interest coming in now. 

    College/Lflan – That's a tough call.  I'm trying to get my kids to get jobs now but, of course, they don't see the need at 10 and 12 but I'm putting my foot down on my eldest this summer.  I was a paper boy at 10, had 2 routes at 11, became a busboy at 12, waiter at 13 and sold stereos at 16 (after one summer at Bambergers (now Macy's) and manged that store at 18 AND still worked a catering hall on weekends and then I delivered pizza in college and sold Bose stereos door to door and in the summers I was the Maitre Di at a Yacht club and that's how I paid for my college, cars, etc.  I didn't need to work that hard but I discovered early that it was nice to have a lot of money and working more got me more money.  While I really enjoyed college and got good grades with a business degree – I really never felt I learned anything I couldn't have gotten from just reading a book on the subject.  I had a few great teachers but these days you can sit down and watch a TED conference or on-line classes and what I learned working in the real world in exports out of college made me realize how little of use I had learned in my International Business major and was way better than a college education.  So why would I DEPRIVE my daughters of a proper education by letting them waste their time in college?  At the very least, they need to work – that's for sure but, seriously, if they aren't going for a professional degree – it's almost pointless.  

    Weeding/Yodi – Good time for it. 

    Rodriguez/Hemas – Cool the way his career revived after a 20-year break.  There was a documentary about him earlier called "Dead Men Don't Tour" but I don't see it on YouTube.  

    COF/Kustomz – Same issue as MA & V – they seem to have gotten a bit ahead of themselves and are ignoring recessionary risks ahead of possible debt slowdown.  Nothing really to short them over (not now, too late) but I have no interest in getting long as they spend A LOT 

    SODA/Scott, Lflan – I would get out.  I am telling you – fondue pots!!!  

    Oil back to $96 – that was pretty predictable.  

    Payroll taxes/ZZ – Has anyone actually heard real people complain much about this?  It's not even an issue people are discussing in my town.  

    VIX/Jabob – Crashing.  TLT still $120 though so not confirming zero panic reflected in the VIX.  

    4 words/1020 – Too many from that guy if you ask me.  

    Gore/Albo – I know it's hard for you to accept but the guy is brilliant.  He gets on all the right boards and knows how to set up his paydays.  If he were a Republican, you'd be worshiping his brilliant business acumen.   Also, rather than regurgitating Conservative rhetoric on Gore, how about check a fact?  Al Gore never claimed he invented the internet but don't let the truth get in the way of a good bit of barbed hatred, right?  

    PSW Atlantic City – Thanks Terra.  OK folks – it's put up or shut up as he needs $4K or there's no conference and, based on our prior experience with conference sign-ups, this is a good way to lock in the conference and make sure the room is there first.  In Vegas – it's more casual because LVModa generously lets us use his space, food and AV Equipment – which makes it both cheap and low-pressure but this is a real hotel space and they MUST HAVE DEPOSITS.  So, if you want to have an AC conference – NOW IS THE TIME TO COMMIT.  

  65. Phil/password  Sorry Phil – I have no account and have ever had an issue accessing MSN from any device…..

  66. Gore – AND he won the popular vote in 2000. Did that mean he would hang around D.C. and the Media and talk sh*t about others cough..cheney..cough cough… NO!  He hiked himself up from the bootstraps and has made MILLIONS!!!
    That'll show em….

  67. Iflan / washing dishes in college cafeteria: That was a cooler job than scrapping the dishes in the college cafeteria so you could wash them — removing the bun stuffed, with mashed potatoes and cigarette butt topping, into the water glass, a favorite undergrad trick.  But the Union insisted we be paid union wages — ah, those were the days!

  68. PS – Barry's conference in NYC is one day, 6 hours and costs $800 – so even $400 for 2 days is an incredibly reasonable price.  

    LOL StJ – How can they be that insensitive?   That earnings chart is very useful.  I want to see how we survive the weekend before getting into earnings bets.  GOOG, IBM, VZ, FCX, NSC, DD, TRV, TXN and JNJ on Tuesday should give us a pretty good picture.  Nice QCOM trade.  

    VOLC'/Pharm – They gave preliminary guidance that was a bit short last week and have been selling off all of this one ahead of earnings on 2/28.  

    Capital spending by hospitals has been affected by the weak economy. This has affected PCI volumes in the U.S., Europe and Japan resulting in slower growth of the IVUS disposable business in the recent past. Moreover, unfavorable currency movement continues to be a major headwind for the company. 

    I'm worried about that currency issue with a lot of the international players with the Yen so ridiculously weak and Europe so depressed that it doesn't matter if their currency is strong because no one is spending it.  

    MSN/1020 – I have no idea why then but no biggie.  Good point on Gore – he's gone out and had a great life and made mega-millions while Cheney has become the troll underneath a Washington bridge.  

  69. If the Dow confirms a move up, we can be off to the races next week but let's watch those Dow components closely.  

    Dollar still 80.09 and markets holding up well.  VIX is dead at 12.55 – no one buying puts into the holiday weekend.  TLT not holding $120 so money not going into bonds and Dow volume 159M at 2:13 – wild, funny stuff.  

  70. Just a FYI for future PSW conventions.
    Take a look at Tunica MS.  I used to make gambling trips down there and the people are super friendly ( southern hospitality) the room rates are dirt cheap (Last time I was there it was $25 a night) and I have never paid for a meal.  after sitting at the poker tables for a couple of hours.   The dice have the best odds I have ever seen like 20 to 1 or better.  with 5 dollar minimums.  so it is 5 on the line and 100 behind.  You do need a car as you fly into memphis and the town is a half hour away and the casinos are spread out along 10 miles of river.   Also Beale streeet in Memphis is only 30 minutes away for non gambling entertainent. 

  71. Some perspective on the yen move:

    But most importantly, the yen had a strong rally starting with the financial crisis and continuing until the fall of last year.  Overall, this rally represents an increase relative to the dollar of ~60%.  This rally also belies several standard thought process that would indicate a massive debt/GDP ratio (Japan's is now over 200%) and incredibly easy monetary policy would lead to a large drop in the yen's value.  Instead, Japan's political stability has led investor's to view the island as a safe haven in a time of extreme danger.

  72. Here's what killed the VIX and goosed the markets:

    WHITE HOUSE: 'We're Encouraged' Republicans Are Going To Vote On A Debt-Ceiling Increase Next Week


    The White House issued a statement Friday afternoon indicating that Obama would be receptive to a clean debt-ceiling hike:

    "The President has made clear that Congress has only two options: pay the bills they have racked up, or fail to do so and put our nation into default. We are encouraged that there are signs that Congressional Republicans may back off their insistence on holding our economy hostage to extract drastic cuts in Medicare, education and programs middle class families depend on. Congress must pay its bills and pass a clean debt limit increase without further delay. And as he has said, the President remains committed to further reducing the deficit in a balanced way."

  73. AAPL April $500 Calls / Phil,
    Your thoughts going into next week, please. Persist as is or roll or cover….?

  74. Al Gore -Easy, Phil  & 1020.  Only kidding ! !   "barbed hatred." ?
    C'mon, lighten up.

  75. A house aide on the GOP side (rank and file) explains three things that could happen now that the GOP has offered a 3-month hike on the debt ceiling.


    Some of the scenarios are not pretty:

    1. Dems decide to make their stand here and refuse to pass anything that is short term or tied to the requirement for the Senate to pass a budget.  If this happens, things get ugly fast.  You get the same war all over again and Republicans will likely feel more righteous about their resistance given the Dems unwillingness to take on what (the GOP sees as) very moderate reforms.  

    2.  Dems agree to pass a budget and the three month extension kick the debt ceiling to around June.  That means the hard line anti-spending guys can make their stand on both the CR in March and all the FY14 appropriations bills between now and June.  That should function as a great pressure release valve for leadership to force through what will likely be a less-than-palatable long-term debt ceiling extension.  

    3. We get a short term, but without the budget reform or the Senate never actually passes a budget.  CR becomes extra contentious, approps bills turn into the same type of go around as HR 1 and then the debt ceiling arrives with a unified, very angry right wing of the party. Back to  things getting ugly, only worse.

  76. IRA Portfolio update!


    Its options expiration time and we are going to need to roll some of our positions.


    BUY 10 ACI JAN 8 CALL @ $0.01

    SELL 10 ACI APR 9 CALL @$0.67 (we might finally make some money on this bastard)


    RIG – We are going to get called away at $46.  But our cost basis is $34.46 so wipeeee!


    CLF – I want to increase our position in CLF so we are going to start by selling a put

    BUY 1 JAN 33 CALL @ $4.15

    SELL 1 APR 35 CALL @ $4.00

    SELL 1 APR 35 PUT @ $2.44

    BUY 1 APR 20 PUT @ $0.08



    BUY 4 JAN 11 CALL @$1.02

    SELL 4 MAY 11 CALL @$1.36


    WDC – The put spread we sold will expire worthless

    MSFT – the put spreads we sold will expire worthless

    FCX – Our put spread is almost worthless so lets buy it back the short leg

    Buy 1 FCX FEB 30 PUT @ $0.10


    The portfolio is up to $104,055 net liquidating value however we now only have about 15k in buying power deployed.  I can't in good concience deploy money here while the market is at all time highs.  So I know it sounds terrible but heres hoping some kid of reality sets in and we have a little mini crash.  I am thinking we might get some decent volatility around the debt ceiling crap again.  So that is when I am looking at putting some more money to work.  P.S.  I double checked the post and everything looks fine to me, but If I wrote something that doesnt make sense there is a good chance it was typo, so bring it up and I will be happy to clarify.

  77. QCOM / Phil – I fully expect them to be above $70 in 2015 with the current mobile explosion. They are in Android, iOS and Windows 8 phones so pretty agnostic on the platform. The Jan 15 50 Calls are about $18 and I expect to sell about $10 against that in the next 24 months so net of $58 on QCOM (a 10% cushion) or a cost of $8 for calls I expect to be around $20 in 24 months (150% return – slightly ahead of inflation by then surely). Not bad when you expect the stock to be up only about 10% over that period. And that's a trade that lets you sell premium in an IRA and using LEAPS gives you some "fake" margin. The BCS paid by a put sale is more efficient in a margin account, but not in an IRA. And nothing wrong with closing that trade early if ahead of schedule on good earnings.

  78. Phil / college / education deprivation:  A tough call only you and your daughters can make.  College liberal arts programs don't teach you a trade — expensive investment, low/zero return on investment, if the return is derived from a salary. Agreed.  They were originally designed for the very few — the few that were assumed to inherit money/leadership positions and needed to be broadly educated rather than specialized.  There are under fifty colleges, I would estimate, that have the possibilty of producing a positive ROI, even in an intellectual sense.  I was a philosophy major — "would you like fries with that?" — but at a very good school, had excellent professors, was taught to think, but paid the price of trade school [law] afterwards to avoid flipping burgers.   If your daughters will have access to capital, that changes the equation.   

  79. Excellent report on the needs for infrastructure funding in the US:

    Big file but worth a look. 


    Overall, if the investment gap is not addressed throughout the nation’s infrastructure sectors, by 2020, the economy is expected to lose almost $1 trillion in business sales, resulting in a loss of 3.5 million jobs. Moreover, if current trends are not reversed, the cumulative cost to the U.S. economy from 2012–2020 will be more than $3.1 trillion in GDP and $1.1 trillion in total trade.

    And we only need to add $1.1T of additional spending over the next 8 years. And that would add $3.1T of GDP. 300% return in 8 years seems like a good investment.

  80. This is just my opinion on the value of college and is only based on my experience.  My investment in college turned out to be pretty good but not for the reasons I thought it would be. I went to school to study computer science and feel like my college did an ok job of training me for that field.  But much more important than my education was the connections and friends I made while in college. Those old college drinking buddies of mine turned into the first people to offer me a job when I got out of graduate school.  Had it not been for the relationships I developed in school I feel confident in saying my job search would have been much more difficult.  Its the old saying "Its not what you know but who you know that matters"  It has been my experience that being great at what you do is sometimes not good enough,  you often need to know someone to get that first interview in which you can show how great you are.  In my case I met that person in college. 

  81. AAPL/Sank – Hopefully it's pinned for expiration and will take off next week.  If not, we'll roll ahead of earnings.

    Gore/Albo – Maybe not you in particular but very sick of Gore bashers.  Other than just now (and as a comparison) you don't see Dems obsessing over Cheney but Al Gore seems to drive Conservatives insane (as does Bill Clinton or Kennedy (any of them) or Hillary or…  OK, let's face it, Conservatives are insane to start with and finding a person to fixate on is just a symptom of the overall problem.  

    Actually it's true, Republicans do have different brains:

    The studies looked at things like differences between groups’ perception of eye movement, and aversion to threatening noises.  Researchers also noted that Democrats had larger anterior cingulate cortexes, which are associated with tolerance to uncertainty, while Republicans had larger right amygdalas, which are associated with sensitivity to fear.

    Although Markoff concluded the studies combine to mean that the different groups communicate in different ways, psychiatrist Greg Appelbaum said the studies point toward conservatives’ tendency to avoid something called self-harm, while liberals avoid collective group harm.

    Tunica/Willie – Sounds nice but will be hard enough getting 20 people to AC for first conference there (about what we had at first Vegas, now 40 and hopefully more next year).  

    Yen/StJ – They are gunning for that 1.00 line now and they did it in the 90s so no reason to think they can't make it again.  That's why SNE went nuts this week and TM at new highs (and I remember when we were worried about them in the mid-$60s…). 

    IRA/Craig – Very nice.  

    QCOM/StJ – Oh I love them, just always hard for me to like entries 50% over our last one.  Hopefully, they miss earnings and at least give us an entry at $60. 

    RIMM flirting with $16.  Too bad we lost our nerve on that one. 

    College/ZZ – I could just move to England and save most of the tuitions (assuming they pass the placement exams with their low-quality US educations).  Max tuition there is $5,000 a year and limited increase to rate of inflation.  Ireland even cheaper at about $1,500 a year.  France is free and my cousin teaches at Sorbonne but she and my Uncle taught at Oxford and can pull strings in the UK so very tempting vs paying up for US schools.  Plus my girls can get rid of their Jersey accents hopefully.  In any case – to some extent, college is a good experience, if nothing else.  It's not at all the same to just share an apartment in a college town as you just aren't "one of them" if not actually attending school and, of course, the kind of kids who don't go to college in most places are not the kind of kids I want my girls hanging out with – so that's the main dilemma.  

    Jeff Darcy - The Cleveland Plain Dealer - Second Amendment - English - guns,nra,militia,regulated,violence,obama,obama-guns


    Infrastructure/StJ – Sadly, no change from when I wrote about this in 2010.  Sad and sickening.  

    Meeting people/Craig – Well that's the whole point of the Ivys.  All those rich people pulling each other up by their bootstraps so they can tell the bottom 99% how they had to work their way up from the bottom.  

  82. WDC/stj – earnings next wednesday. trading at top of channel and ~2% of all time high. see an earnings play here?

  83. StJean / Yodi / QCom
    Yodi had a very nice QCOM play a day or so back.
    Look at QCOM
    Jan14 play
    3x 55/65 vertical @ 6.10
    3x 57.5p @ 4.00
    cost 630.00
    return if not changed jan14 2355.00
    Margin PM 490.00
    Return 5.47% p. month
    downside protected 57.32
    For an extra you can sell Feb13 67.5c @ .79 extra 1.2% reducing you outlay of 630.00 by 158.00

  84. Looking for DELL LBO to be put to bed this weekend, either way.  I expect Michael Dell and Southeastern Asset Management to be part of the group, if there is a deal.  Puts Michael Dell and Mason Hawkins at Southeastern in the interesting position of now trying to convince shareholders that $13-$15 is a fair price after arguing for the past year how under-priced the stock was.

  85. WDC/Scott – Not really as there's certainly no reason to short them at this valuation.  While I understand why you see a "channel" that they are on top of, the fact is that they are priced the same as they were 20 years ago and 5 years ago while earnings and revenues are significantly higher now.  They have an $11Bn market cap, $3.5Bn in cash and about $2Bn in debt after buying back $750M of their own stock in the last 2 Qs (maybe more this Q) and they still dropped $329M to the bottom line on last earnings, which is why they popped from $32 to $36 on that report and now $45.  We liked STX and WDC when they were beaten-down and not as much up here but no way would I short them based on a chart.  

    DELL/Albo – If that deal goes through, whole sector should get priced up a bit.  

  86. Here's something the House Republicans are doing that you wish was from the Onion but isn't:  


    Coming off of the hottest year in U.S. historyand 333 months of higher-than-average global temperatures, Rep. Lamar Smith’s (R-TX) first move as the new chair of the House Science and Technology Committee includesa hearing on climate science, according to Dallas News.

    For Smith, who criticized “the idea of human-made global warming,” the hearing will be an opportunity to give a platform to the committee’s climate zombies:

    I believe climate change is due to a combination of factors, including natural cycles, sun spots, and human activity. But scientists still don’t know for certain how much each of these factors contributes to the overall climate change that the Earth is experiencing. It is the role of the Science Committee to create a forum for discussion so Congress and the American people can hear from experts and draw reasoned conclusions. During this process, we should focus on the facts rather than on a partisan agenda.

    Smith has blasted the media as “lap dogs” for not devoting enough airtime to climate deniers and implored networks to not “hide the facts.” Unsurprisingly, he has taken $500,000 from oil and gas over his political career and $10,000 from Koch industries last year.

    GOP members of the committee “keep science at farthest arm’s length” with its long list ofclimate deniers. “All that stuff I was taught about evolution and embryology and Big Bang theory, all that is lies straight from the pit of hell,” House Science Subcommittee Chair Paul Broun (R-GA) said. But the list also includes former Chair Ralph Hall (R-TX), Vice Chairman Dana Rohrabacher (R-CA), and subcommittee chairs Cynthia Lummis (R-WY) and Larry Bucshon (R-IN).

    If climate-denying Republicans want the facts and not “a partisan agenda,” they can just read the new draft National Climate Assessment, which dives into the consequences of a hotter, drier, disaster-prone climate.

  87. You can't make this shit up….sorry for the language, but this is absolutely preposterous….


    Have a great weekend all…..I will work on something for us all to read…

  88. A quiz for weekend participants in Williamsburg, Virginia - Provided by Mr. Pink Floyd  (slightly altered by me :) )
    So you think you can tell
    Heaven from Hell?
    Blue skies from pain?

    Can you tell a green field
    From a cold steel rail?
    A smile from a veil?
    Do you think you can tell?

    Did they get you to trade
    Your heroes for ghosts?

    Hot ashes for trees?
    Hot air for a cool breeze?

    Cold comfort for change?
    Did you exchange
    A walk on part in the war
    For a lead role in a cage?
    Running over the same old ground
    What have we found?
    The same old fears……

  89. Burrben
    You in deed are on the ball QCOM still playable mine is 30 up today!!!

  90. Have a restful weekend everyone!

  91. PSW Atlantic City Conference update – I've got 4 members signed up and paid for so off to a good start on our first sign-up day.   Feel free to email me at my address listed in earlier post with any questions.  Have a great weekend everyone.   

  92. LIFE….was that not on my list….AH high was 64.5….can it make it back there over the course of the coming weeks?  Sell some puts on them OTM when VIX returns.

  93. Someone explain to me the action in FAS vs XLF in the last 15 minutes.  Why did the FAS shoot up?

  94. Hey, $500 on AAPL, who could have predicted that? 15,000,000 shares and it pins to the number, market manipulation, nah, does not exist.

  95. College – Price is so inflated.  I don't see how any kid can work their way though college like I-sort-of-managed to. I think that the increasing gap between haves/have nots stems from this. College costs 10 times what it did when I started and minimum wage is up 50% since then.
    How can any middle class kid who can't "borrow from their parents" (Romney's solution) something like $100,000 get through a good college without getting a good sales job or running some scam?
    But the rude credential-ism of this country makes you a jerk if you don't get the kids to at least try it.  Solid engineering and business degrees from any good school will pay for themselves in 5 years.  As for liberal arts – well -  Sociology or French Literature won't unless its from a really good school and the kid goes into management consulting or wall street or gets a solid professional degree in dentistry or business or law.

    By all means, though, put them to work.  They can at least learn how much better it is to have a cushy desk job than scraping gunk off of counters or out of engines even if they aren't putting a dent into the bill.

    I do think price will begin to come down as reputable, partially online courses are developed for at least the first couple years.

  96. Phil – do you like TLT long? If so, what trade do you like? Thanks

  97. PSW Atlantic City Conference room reservation info for Harrah's Waterfront Tower – With regard to reserving rooms, the number which attendees should call is 1-888-516-2215.  you should reference Phil's Stock World and a group code which will be forthcoming.  We should be in the hotel's system by Tuesday.  Thanks.  

  98. cant believe how low aapl volume was today and it stayed in a 3 dollar range after the 502 pop at the open

  99. Good article and useful comments below from Herb Greenberg on BA Dreamliner issues. 

    For those who prefer visual reminders:  

    Good video clip and notes on how NRA ad pissed off the crew at Morning Joe

    LOL Pharm (but then sad/tragic).  

    Wish You Were Here video (in case you are now in the mood).   Pulse is one of the best live albums ever made, by the way.   

    FAS/Jordan – Congress note above.  If there's a deal, we can go off to the races.  Fear is for the bears at the moment, not the bulls.  VIX friggin' 12.29 – that's amazing.  I'll bet there are people here who have played the market 7 years or less and have never seen a VIX at this level.  The VIX has barely been below 20 since 2007.  

    Well, strong finish and that's that until Tuesday.    Dow hits 260M at the close and all of it bullish with a 13,649 finish. 

    No holiday for me – I have to finish that damned Income Portfolio but should be up nicely again by taking little action – as it's supposed to be. 

    Have a great weekend everyone. 

    - Phil

  100. How can you hold a fine line like that in a company with a market cap of 470B!!

    Great weekend folks.

  101. YM BioSciences (YMI) says its buyout by a wholly owned subsidiary of Gilead Sciences (GILD +0.8%) has been endorsed by proxy advisory firms Institutional Investor Services and Glass, Lewis & Co. ISI says the all-cash deal offers a satisfactory premium, while Glass Lewis also notes that the YMI board of directors conducted a reasonable review of strategic alternatives available to the company prior to entering into the proposed agreement.

  102. TLT/Crussell – Too tough to call as rates should start moving up as the US borrows another $1Tn this year (and housing comes back and there's a demand for money) but Fed still in the game so nothing obvious to play at the moment. 

  103. If you have a spare hour, and are interested in seeing the world in a different way, you might want to watch the documentary "I AM" this weekend.  Gives a great perspective of the world that we live in.

  104. Burrben
    Sorry, some of the language I didn't grock // I'm a beginner
    When you say 'vertical' – you mean a  ( Bull call / bear put ?? ) how does one know ?
    Small 'p' indicates Puts ? Sold ?
    "return if not changed' means simply is you don't change the position, expiration, strike, etc ?
    "Margin PM" is margin req for a "Portfolio Margin" ? 
    Look at QCOM
    Jan14 play
    3x 55/65 vertical @ 6.10
    3x 57.5p @ 4.00
    cost 630.00
    return if not changed jan14 2355.00
    Margin PM 490.00
    Return 5.47% p. month
    downside protected 57.32
    For an extra you can sell Feb13 67.5c @ .79 extra 1.2% reducing you outlay of 630.00 by 158.00

  105. QCOM / Burrben – Yodi's setup is a good one but not IRA friendly and I wanted something that could work in both types of accounts. 

  106. Climate deniers / Phil – Interestingly enough, the Pentagon is spending tons of money to investigate scenarii of climate catastrophe which makes sense since conflicts will probably erupt over land and resources (like water) eventually. Are these jackasses in Congress going to stop them from doing that as well. Idiots!

    And also, can CNBC now stop talking about the big payday that Al Gore is getting! Did they complain that much when the Koch brothers or the Walton kids inherited billions simply because of their last names. Sure, Al Gore was helped along the way because of his father's name. But 12 years ago he was worth "only" $2 millions and now he has $300 millions because of his good business sense. Once again, like with Obama, instead of admiring people who had a successful life because they studied and worked hard, they make fun or denigrate them. But if you are born rich and become a bit richer, then it's success! Idiots once again.

  107. Phil:  [To be answered whenever] — Of which stocks would your 10-20 stock U.S. infrastructure rebuilding intiative portfolio be comprised?  Such a program is so obvious, so wonderfully pork-barrelly, and so essential that it's hard to believe — impossible, for me – that Congress on one side of the aisle or the other, for their own partisan reasons, won't suddenly propose it, while the other side of the aisle will fall all over itself agreeing with them — no one in Congress is ever against spending money if they can get some for their district. 
    I would guess it could also be used as a sop against cuts in the military budget, which, now that the U.S. is an net oil exporter, we no longer need on nearly the previous scale [whether we ever did or not I'll leave to historians or whoever bothers to care]. Could I possibly be wrong on this?  It seems like a massive no-brainer.

  108. According to StockTwits [???] "Net money inflow today on $AAPL was $550 million on opening block trades. Biggest single day inflow in 10 months."

  109. Infrastructure / Zero – If you read the report I linked to, they actually mention that one of the issues is that the infrastructure money is allocated on a political basis rather than a need basis which obviously makes it inefficient. But I guess it's the only way to get money at all for these projects!

  110. AAPL / Zero – If you look at the On Balance Volume indicator on a daily AAPL chart, it has actually dipped below zero over the last 2 days and we have been making lower lows and lower highs. That also reflects the chart. Right now it seems that people are just selling the pops…

    On Balance Volume (OBV) measures buying and selling pressure as a cumulative indicator that adds volume on up days and subtracts volume on down days. OBV was developed by Joe Granville and introduced in his 1963 book, Granville's New Key to Stock Market Profits. It was one of the first indicators to measure positive and negative volume flow. Chartists can look for divergences between OBV and price to predict price movements or use OBV to confirm price trends.

  111. Second Amendment / gun banners
    The "assault weapons" ban did not make Americans safer:

  112. Now I'm wondering about all that sushi from fish flown in from Japan now:

  113. Oh boy:  

    Kansas House Speaker Mike O’Neal is under fire after asking Republican House members to pray for President Barack Obama’s death. O’Neal made the request via an email he forwarded to GOP colleagues in the House. In an email sent in December, O’Neal asked his fellow Republicans to pray Psalm 109, which contains the following lines:

    Let his days be few; and let another take his office.

    Let his children be fatherless, and his wife a widow.


  114. O'Neal / Phil – These guys are just out of control and the scary thing is that no one in the leadership of the GOP denounces any of these attacks. Look at the birthers and other crazies – did Boehner, Cantor, McConnell ever denounce them. No! And they wonder why they lose elections.

    This O'Neal guy should be arrested for treason!

  115. Pretty terrible environment for options premium selling.  Things must really be very fantastic:
    VIX at Multi-year Lows; Probability of Stability at These Lows at Multi-year Highs

    The bottom line is, without expressing opinion, the facts of the option market reflect that the VIX itself is at multi- year lows and the probability that the VIX moves away from these levels is at its lowest level in multiple years. Taken a step further, the forward looking option market reflects that the risk of a change in VIX is even lower.

    It’s not my place to question the “market” but ask yourself this: “Does the S&P 500 have less risk now than it has at any point in the last two-years and even if so, is the probability of that low risk maintaining its current level higher than it has been at any point in the last two years?”

  116. The VIX is not the be all and end all indicator but, there is a bit of correlation with the S&P that can't be ignored.  I'd say, on the whole, that it's a better indicator of a pending drop when it's going up than a pending rally when it's going down.  What really happens is, during a sustained rally – the reward for buying puts fades (as it is for our TZA's etc) and people just get sick of throwing money away on hedges.  So they stop, and they go all in bullish – and then they get caught with their pants down in a crash.  

    Watching preview for I Am now Burr – looks good.   

    Gore/StJ – It's just too f'ing funny to hear Conservatives bash Gore for doing essentially the same thing they were lauding Mitt Romney for doing (except Gore made much more money than Romney and didn't have to fire anyone to do it – he actually did help create jobs):


    Yet until recently Gore, while certainly well off, was not enormously wealthy. When he ran for president 13 years ago, Gore's financial disclosure forms show that his most valuable assets were an Arlington, Va., home, whose value was listed between $250,000 and $500,000, and stock holdings worth between $500,000 and $1 million. He also derived income from mineral leases. His total assets on leaving office were between $780,000 and $1.9 million — hardly chicken feed, but nowhere near enough to be a financial mover and shaker.



    While the 2000 electoral loss marked the end of Gore's political career, it proved to be the start of a remarkably lucrative rise as a businessman. Most visibly associated with environmental issues that culminated with sharing the 2007 Nobel Peace Prize, Gore was also busy building his future in the private sector. In 2001, he became vice chairman of financial services holding company Metropolitan West Financial. He co-founded Generation Investment Management, a U.K.-based investment management firm, in 2004. As of last fall, it had $3.6 billion in funds.


    More important, in 2003 Gore joined the board of directors at Apple (AAPL). The position came with $50,000 a year in fees and an accumulated tens of millions in Apple stock. Since 2001 Gore has also been a senior advisor to Google (GOOG), where he received significant pre-public stock options. 


    And then there was the co-founding of Current Media in 2002. Six years later, when the company registered to go public (never completing the planned IPO), it listed Gore's annual compensation for 2007 at $1.05 million. That was the same year that Gore became a partner at storied Silicon Valley venture capital firm Kleiner Perkins Caufield & Byers. Gore's growing celebrity, especially since the 2006 release of the film "An Inconvenient Truth" (the proceeds of which he reportedly donated to charity), has made for a lucrative sideline business on the lecture circuit. He collects as much as $175,000 per speech.


    By 2008, Gore was already able to invest $35 million in hedge funds and private partnerships. After the sale of Current, Forbes "conservatively estimates" that Gore is worth at least $300 million, or more than Mitt Romney.

    AAPL/ZZ – Yahoo has them finishing at $500.00 on options expiration day.  Amazingly, no one will go to jail and there won't even be an investigation.  Just the normal noises in here…

    Infrastructure allocations/StJ – Yes, it's hard to get a harrumph sometimes.  

    Weapons Ban/Opes – Great article.  Too bad it's based on false data:

    I guess we'll wait until we're into double digits to confirm the trend.  After all, what's 7 mass shootings a year between friends as long as we can fend off invaders (how many incidents of that in the past 100 years?).  Obviously it's ALL guns that need to be banned – but the NRA's massive propaganda machine is doing a great job spinning this to be about assault weapons and mentally ill people when the real problem is pretty obvious without the noise:  

    Sushi/LV – Let's hope those aren't the fish we were eating.   Anyway, it was so good that I think I would only be able to cut back to every other week if I lived there – unless it was actually glowing – then once a month…

    Treason/StJ – Well I'm not sure you can kill anyone with prayer (and what the f*ck kind of God are you praying to anyway?) so hard to get a conviction there.  It was Ghandi who said:  

    I like your Christ, I do not like your Christians. Your Christians are so unlike your Christ.

  117. For bull markets to be real they must be "felt." by that i mean "traders can hardly wait to get to work"…LITERALLY. My granted cursory view of the charts says to me "the bulls can't wait to get to work." Weak opens followed by "a bear slaughter" then the market drifts higher? This strikes me as the bears' hands being forced to either a: cover their short position b: be bullish and just start buying too or c: both. i'm sure on the long side they have basically an infinite variety of "bull trading strategies" that they can employ…the human mind is surprisingly capable in this regard.

    The answer to the question "where's the volume" then can be easily answered: "if you've been waiting around for it you're already too late." In short "if the bulls can create volume spikes too" then the bears are REALLY going to have to go back to the drawing boards. Money flows are now turning DECIDEDLY positive…"where too from here"?

    I would argue a multitude of options…but one "no longer far out there" possibility is just a plain and simple "speculative blow off" where the market surges say…40%…in a very short period of time (think of 1998)…"catching everyone off guard." that would include the Fed i might add…

  118. Good one from Gandhi Phil… I heard that Pinochet never missed a Sunday mass.

  119. A couple more weeks like this one and we'll need new lines! I imagine that if AAPL has some decent earnings that could be the momentum for some more bullishness.

  120. Phil,
    You asked me to remind you about Real Estate equity investments that you would be interested in. I know HOV just popped again after dumping at 6$ and bouncing back. CIM is starting to climb a bit up to 2.94 now. 
    My original question was to ask to see if you any companies in mind that actually hold the brick and mortar real estate such as warehouse or office buildings or possibly residential as well. So as to benefit from a surge in real estate prices. 
    I would like to stay away from any companies holding mortgages because that is just another fixed income play and with only a flat to rising interest rate environment over the next few years I think those long term debts will lose value (even though I think the underlying property will gain in value). Am I right in this hypothesis? 

  121. Congress will raise the debt limit.  That should make for an interesting Monday.  Yes, Phil, I saw the exactly-$500 Apple pin on Friday.  It's kind of like the Mafia leaving dead flowers on your doorstep. 
    As for banning all guns, given that nearly 20,000 of the 30,000+ gun deaths in 2010 were suicides, you're going to have to bring back "Dr. Death" to administer happy time morphine overdoses, because there's no way I'm going to drink Drano or throw myself off a cliff when checking out becomes the decent thing to do.  Oh, yeah, the "one shot" rifle you mentioned — long reach to the trigger --would it be legal to saw off the barrel first?

  122. Womb
    Allow me to help you out with the QCOM as I set it up.
    Vertical = bull call as TOS if you trade in TOS calls bull call or put Vertical as one position is above the other same month.
    c and p are short for call and put we do as well make sometime a differencial call is a long call (buy) and caller is a short call (sell)  We general are option sellers on this site but to cover yourself instead of buying the stock you need to buy a long call in respect of margin costs.
    return to be expected if  the stock price as is today does not change it does not mean you are changing the strike price!
    PM is correctly portfolio margin given by TOS I do not have the normal margin in my platform but you can look it up if you set up the play under papertrading
    and just for good measure here is an other garden play on BTU
    BTU has fallen over two years from over 70$ to 20$ now trading at a steady level at 25 +
    Buy 4 x Jan15  20/27c vertical (call bull spread) @ 3.45
    sell 4 x Jan15 20p @ 3.22
    and for not falling asleep on this one you can sell 2 X Feb13 27c @ .60 (this play you can do on a monthly basis for extra pocket money.
    PM margin TOS 302.00
    cost is about 0
    Max profit potential at 27$  2660.00 over two years
    interest per month 5.

  123. Dam pressed the wrong button again
    continue on BTU
    interest per month 5.02%
    lower limit protection 20.35
    you have any further question you are wellcome.
    As I am not in a position the play this in an IRA  I could not help on this one

  124. For more active traders Phil suggested yesterday a play on AMZN
    I have combined his suggestion to receive some more credit and not increasing margins to much. I play this one with 2 x options
    buy 2 x vertical Jan15 +260/-220p (bear put spread) debit 17.03 per vertical (-3409.20)
    sell 2 x Jan15 145p @ 8.65 (+1728.40)
    sell 2 x Feb13 260p @ 5.90 (+1178.40)
    cash outlay 502.50 in total for two plays
    Margin TOS PM 771.00
    Now this is a monthly option play where you sell putters closer to the actual price of the stock. Some month you might have to roll some, you hope they run worthless.
    The Jan15 combined option play is good for a range between 300 and down to 145 where the short putter will start going against you but the bear put spread will hold extreemly well!
    Once the stock will go over 300$ the bears pread will lose its shine  during July and Sept 2014 and we would have to look for adjustment even that you are making monthly returns on the short putters. The short putter sales should not call for any further margin as I see it. I will enter the play and we will see how it develops.

  125. Tech for the recovery? Juniper (JNPR) was beat up last week on a poor report by Intel, however they have a strong business, balance sheet, and cash flow. You can sell the January ‘14 $18 put and buy the $18/$22 call spread for net .68 on the $4 spread that’s $3.49 in the money on day one. Half the Feb 22 calls calls can be sold as well for .72, and one more sale like that makes is free.

  126. VIX/Phil: Nobody expects the Spanish Inquisition!
    Ever since 2009, it seems like the market rallies into the New Year and the VIX settles down into multi-year lows with forward options predicting prolonged stability then… BAM! 3 guys in red robes burst into the room and shake things up.

  127. Lflan :  I am 26 year old young newbie (and a big fan of yours) taking my lessons from here to make myself a better trader everyday.  I was going through many of yours and Phil's posts over last several months. I was curious how do you train your mind in amidst the uncertain outcome of every single trade you make and handle the account drawdowns.  

  128. PHil – here's an interesting article on the kind of mobile phone transaction chip you thought may be a game changer…apparently the bogie is in preventing fraud…

  129. The Income Portfolio is now up to date at this link:

    Look for the Income Portfolio June 2012 tab.

    We have so many open positions now that I can't take a single screenshot of the entire portfolio and I work with a 30" screen! Here is what we have opened this week and the current P&L:

    I have added a dividend yield column and an earning date column that I will fill out later today. I have entered some notes based on Phil's comments. We are now using almost $480K of margin.

    I will also update the Strangle portfolio later. It's becoming a full time job!

  130. Jerconn/nfc technology. NXPI is a semiconductor company that seems to be an innovator in nfc chips. I have a little in my IRA and they've had a little pop recently.

  131. Yodi
    Thanks so much. I just got TOS loaded up and to be honest, totally overwhelmed. This will take some time : >
    Thanks for the explanation of th splay. I'm going to TDA on Wednesday for a TOS workshop, perhaps the mechanics will become a bit clearer.

  132. TOS / Wombat – They also have tons of educational material online. It's really a great platform and they keep on making it better.

  133. womb
    You welcome and you will have fun with TOS

  134. Phil / dplatt : Real estate exposure
    What do you think of BGCP? it's  a wholesale brokerage firm, diversifying into commercial real estate with its recent acquisitions of Newmark Knight Frank (US commercial real estate brokerage & advisory), Grubb & Ellis.
    BGCP closed at 3.74 , had a high of 8 in 2012; annual div was cut from 0.68 to 0.48  in the 3rd qtr; not much in the way of options.  
    Phil – nice interview on BNN.  I agree that BNN viewers will find a tutorial on your trading strategy helpful

  135. Yodi
    StJ  // Language
    Awesome – thanks. Can i get you correct me on the language on the site. I htinkit's really important I understand the 'short-hand' you guys use. One mistake and that might be very bad. As a very sober friend in Vegas advised me once, 
    "Don't chase the chip cart – that would be bad."
    Please correct wheere i have misunderstood.
    this one with 2 x options  ( simply means you're 2 contracts across the trade )
    buy 2 x vertical Jan15 +260/-220p (bear put spread) debit 17.03 per vertical (-3409.20) now this really works for me becasue you use the plus and the minus, and a 'p' after the date. Therefore I can conclude that you are selling high and buying low, and they are puts – hence a bear put spread. correct ?
    How are you to tell if people arent using any of those indicators whether its a bull/bear/put/call/spread ?

    sell 2 x Jan15 145p @ 8.65 (+1728.40) got it
    sell 2 x Feb13 260p @ 5.90 (+1178.40) got it – would you place these both at once or roll them into each other ?

    Thanks guys – slowly but surely, step by step ( anyone remember that cartoon / ? )

  136. Six Degrees - Something of a side note here:  A friend passed around this Sandy Hook video. It left me wondering.. I'm 2 degrees away from Kevin Bacon. At the moment, I don't know if anyone I know knows anyone who is a part of Sandy Hook (though i'm making some calls). I figure this board has a number of folks on the east coast, and certainly in the demographic of a CT private school. In the spirit of ascertaining confirmation of truth, is there anyone here who has a direct or personally verifiable connection to the events at Sandy Hook? Do YOU know anyone who attended that school (about 400 familes), or knows anyone in Newtown, CT, or anyone in the various interviews, and can corroborate any version of what happened? I mean this in all seriousness. What do you KNOW about this? Is there anyone here with a connection? Thank you.

  137. Scott – We knew one of the 6 yr old girls who's life was tragically cut short at Sandy Hook.

  138. wombat – Here is a link from a seminar last Friday. John Person discussing trading techniques on Think or Swim.  (This is from a class that was in progress. Things get started at about the 5 minute mark)!

  139. Moving on to Monday post.  

    Good thoughts Ari.  

    Big Chart – So cool to see things begin to line up like this – very strong-looking and end of Debt Ceiling nonsense gives us no excuse for not punching up to 3,150 on the Nas (unless AAPL and GOOG screw up).  

    Real estate/Dplatt – I'll write that up in the Monday comments.  

    Suicides/ZZ – So you think 20,000 suicides by guns are a reason to leave guns out there?  That's some pretty fancy twisting of logic!  

    JNPR/Deano – Not sure what beat up means when they are up from $20.50 to $21.50.  I don't find JNPR as safe as CSCO or as interesting as ALU but they're fine for a long-term play but I'd want a bigger discount for my troubles so I'd sell the 2015 $17 puts for $2.55 against the $20/27 bull call spread at $2.70 for net .15 on the $7 spread that's $1.50 in the money to start, which means if you sell just 1/3 the Feb $22 calls for .72, you're collecting .24 per long and that's just $1.80 net margin on the puts and $2.70 on the spread for $4.50 cash and ordinary margin and you're paying yourself a 5% monthly dividend by just selling a 1/3 cover.  Who says you can't make money with a low VIX?  

    BAM!/Kinki – I know, at this point it's tempting to hedge with VIX longs.  The July $17/20 bull call spread is $1.15 and you can sell the (for example) JRCC 2014 $2.50 puts for $1.05 for net .10 on the $3 spread.  Obviously, the July $17 calls (now $3.60) can be rolled out well before they fall below $10 and, if the VIX goes worthless in July, a coal stock like JRCC should be doing well.  

    Training/Outlier – A lot of it is getting those 10,000 hours of experience, which helps you realize that losing is part of the game and being a successful trader isn't about not losing but about knowing how to adjust your losses and control them.  Great baseball hitters bat .300 – which means they fail to get on base 7 out of 10 times they try.  Yet a .300 average is enough to get you into the hall of fame.  

    If you keep your losses at 20% and your wins are 20%+ then you can win 3 and lose 3 and you are even.  But, if you get one double in 10 tries, it cancels out 5 losses – IF YOU CONTROL THEM – and a 40% win cancels 2 losses and a 60% win cancels 3 so you can hit .300 with a 20% a 40% and a 100% and you'll be 20% ahead overall on 10 trades that you missed 7 out of 10 of.  

    My goal is to get 6 out of 10 right and, from that point – the math will take care of itself.  The key is moving on from our losers though and getting back to trying for something else we may win at.  

    Chips/Jerconn – This is not going to be good for the CC companies unless they insert themselves quickly.  

    Income Portfolio/StJ – Thanks, I finally got it all updated.  

    BGCP/Bai – I don't know anything about them.  They are pretty small but look interesting – especially if they can keep that dividend up (still 12%).  Now the stock has adjusted itself to the dividend cut, essentially, it's a good deal if you like them long-term. 

    Step by step/Wombat – Actually I think Abbot and Costello originated that one although maybe it was the 3 Stooges – not sure who stole what from who.  

    Sandy Hook/Scott – I don't know anyone personally but it's not something people are really jumping to talk about yet – a bit close to the bone for now.  9/11, on the other hand, was different, probably because of the number of victims and also the dispersal of the victims' families geographically, as they all went from here (literally here, my neighborhood and so many others) to go to work in the towers.  With Sandy Hook – it's a local school in a town with 27,000 people and 26 died (1/1,000) so, statistically, it's nothing at all like your connection to Kevin Bacon which, I'm sure, still doesn't give you any major insights into his private life, does it?  

    Actually, if you want to know something freaky, my business partner, LLoyd Glick, had a son Jeremy and he was one of the people who rushed the cockpit on flight 93, which crashed in the 9/11 attacks (he can be heard on the voice recorder).  His sister's husband, Doug is our programmer for Stock World Weekly.  So now you know how close you are to that one.  

    If Tina hadn't been pregnant with Jackie (or, more to the point, if we needed the money more and she worked while she was pregnant) – she would have been arriving by train at the WTC just when the first plane hit the building as she worked in building 5, which also collapsed. 

  140. womb,
    I am reading you last question late Sunday afternoon So sorry for not answering before.
    I have tried to give as much detailed information as possible as they normally much shorter. I often set my trade in 2 3 4 or 5 contracts. The standard is one just gives one trade and you may execute as many trades as you like. However in a combination trade like the one you quoted, you always need to sell always more than one option contract if you wish to sell a short month option  against the long far out combination without paying further margin and making more money on the original trade.
    If you have problems to understand the bear and bull spreads I can only highly recomment to look this up via google as it is very well explaint with samples and all.
    Here again for everyone who does not follow ask  I am glade to help. Otherwise as I can see you answered your own questions correctly.

  141. Love this guy:
    Billionaire Warren Buffett Still Lives In Home He Purchased For $31,500