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Thrilling Thursday – Deal or No Deal?

138593 600 US held hostage cartoonsRepublicans are coming to the White House!  

European markets are treating this like it's a good thing, with thier markets popping 1.5% this morning.  

Our own Futures are up about 1% and, fortunately, we already made some bullish adjustments as I had interpreted yesterday's Fed Minutes as bullish in Our Member Chat (also tweeted out in the afternoon), which led us to cash out some of our bearish winners (TSLA, NFLX).  

We did, however, keep our oil shorts as it looks to me like $101.50 will break after that horrific inventory report that netted a 10 MILLION BARREL BUILD!  As you can see from this Bespoke Chart, a build like this is almost unprecedented, representing 1.5 days of imports at our currently, ridiculously low rate of imports.  

The failure of the NYMEX Trading Cartel to be able to cut off enough of our supply of crude to offset the profound drop in demand is making it very hard to maintain the charade of the artificial shortage of oil.  Like a house of cards – as that narrative begins to crumble – so will the price of oil:

Although they are making good progress, there are still 222,000 FAKE orders for 222,000,000 barrels of oil that, as very obviously illustrated by yesterday's build, no one ACTUALLY wants to have delivered in November.  So  the traders must roll those contracts to December – so they can pretend there is demand there but, there's a problem – December is already stuffed with 322M barrels worth of FAKE orders.  

At the moment, only contracts for January and February of next year are fetching over $100 as this glut of oil shows no signs of abating (and gets worse with every electric car sold and every solar panel installed) and, if you can wait to have your 42-gallon drums of oil delivered until December of 2015, $87.47 is the going rate and, if you believe people will still be using oil at all in 2020 – $79.96 seems like a reasonable price and 779,000 barrels are on order already.  Surely if you believe oil will go over $102 again in 2013 - you must like the idea of betting it's over $80 7 years from now, right?  Not if it's a complete scam and the people trading oil know it!  

Click for
Chart
Current Session Prior Day Opt's
Open High Low Last Time Set Chg Vol Set Op Int
Nov'13 101.46 102.27 101.39 101.89 08:11
Oct 10

 


-
0.28 27377 101.61 222305 Call Put
Dec'13 101.25 102.08 101.25 101.73 08:11
Oct 10

 


-
0.30 10188 101.43 322958 Call Put
Jan'14 100.83 101.65 100.83 101.24 08:11
Oct 10

 


-
0.27 3294 100.97 134946 Call Put
Feb'14 100.32 100.96 100.32 100.65 08:11
Oct 10

 


-
0.33 2043 100.32 63459 Call Put
Mar'14 99.60 100.11 99.60 100.10 08:11
Oct 10

 


-
0.49 1341 99.61 92030 Call Put
Dec'14 93.28 93.86 93.28 93.67 08:11
Oct 10

 


-
0.35 2123 93.32 245025 Call Put
Dec'15 87.41 87.88 87.41 87.80 08:14
Oct 10

 


-
0.33 147 87.47 119434 Call Put
Dec'20

-

-

-
79.98 * 08:08
Oct 10

 


-

-

-
79.96 779 Call Put

Of course, this is no different than what I was pointing out last Thursday, when there were 300,767 open orders when I wrote the morning post and called for shorting the lot of them at $104.  Yesterday, not even a week later, we hit $101.50 for a $751,917,500 gain on those short contracts – not bad for a week's work.  

This Thursday I'm telling you we are playing short below the $101.50 line (tight stops above) with a target of $98.50 on the remaining 222,305 contracts for a potential, additional $666,915,000 gain.  We'll check back next Thursday and see how it goes.  We also maintain our short positions on oil using USO and SCO the virtual Short-Term Portfolio we track for our Members.  

UUP WEEKLYTempting though it was to cash in great gains yesterday as we tested $101.50, we couldn't ignore that massive build in inventories as indicating a potentially nice breakdown from here – and, keep in mind, last year, at this time, oil was $90 a barrel in early October and $84.05 on Halloween ($31 on USO)!  

At the same time, any commodity bull has to be concerned about the Dollar and it's failure to fail at 80 (21.50 on UUP).  Notice what a minor (4%) move up in the Dollar last fall did to the price of oil!  Gold also fell about $100 at the time, but that was from $1,798 to $1,675 – not the same thing at all when we're starting at $1,300 so we're still generally bullish on gold from here – although a rising Dollar may give us a better entry still.  

As to our indexes, we have taken quite a tumble and we'll see if we get weak or strong bounces and, more importantly, whether or not we hold them.  Very simply, our 5% Rule™ looks for a 20% retrace of the drop, especialy after a 5% move in the index.  5% off 15,700 on the Dow, for example, was 14,915 so we already blew that by 112 points, which makes the proper 5% line a 160-point move up from 14,900 (we do a lot of rounding) so 15,060 is the LEAST we expect to see from the Dow before we are impressed.  Since the Dow actually tested 14,800, we have a 900-point drop and then a 180-point retrace to 14,980 but close enough to 15,000 that that becomes the line we'll be watching very closely this morning.  Anything less than that, and we'd be more prone to re-short than go long. 

Come and join our Member Chat, where we'll go over the rest of our market watch levels

 


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  1. Oil Lines

    R3 – 105.80
    R2 – 104.77
    R1 – 103.22
    PP – 102.20
    S1 – 100.65
    S2 – 99.63
    S3 – 98.08

    Yesterday's high and low – 103.75 / 101.18


  2. Phil – There appears to be really heavy volume in DEC and very little build in the JAN or FEBs. Is there a tax issue for corporate traders that creates an aversion to extend beyond the current calendar year?


  3. They better get their act together soon or we could see some much higher volatility – look at what happened with the VIX in the last 2 "crisis" and today:

    http://vixandmore.blogspot.com/2013/10/a-history-of-vix-during-recent-debt.html

    On the other hand, good for selling premium!


  4. What I have been saying for a year now:

    http://blogs.cfainstitute.org/insideinvesting/2013/10/08/the-worst-investment-in-the-world/

    Finally, let’s get down to the details. Why is this such a bad investment?

    The VXX is marketed as a short-term investment, but it’s still interesting to note that the total inflows have been $6 billion since its inception in 2009, and the market cap is now $1.15 billion. The difference has been eroded away. I myself have traded the VXX, with very poor results. To write this post, I was inspired to a great degree by Vance Harwood at Six Figure Investing, and I think he summarizes the VXX in the best possible way: “The VXX is a dangerous, chimeric creature; it’s structured like a bond, trades like a stock, follows VIX futures, and decays like an option. Handle with care.”

    Buy long term puts!


  5. Brazilian Middle Class Collapse - It can't be a surprise to any foreigner that's lived in Brazil that the credit card fueled boom of Brazil is blowing up. The article on Zero Hedge mentions credit cards that charge 80%/year…most Brazilians would be ecstatic to get a credit card that charges less than 100%. The two credit cards I was able to get through my job have MONTHLY interest rates of 12% and 16%. This in a country where the minimum wage works out to less than $5000/year and, other than groceries, everything else costs nearly 2x what it does in the US. 


  6. Another myth killed by Barry:

    http://www.ritholtz.com/blog/2013/10/obamacare-part-time-employment/

    Ahhh, a classic bit of misdirection — an assumption built into a question. The first step in answering that is to verify the reality of that assumption: Has Obamacare actually caused an increase in part-time employment?

    As you can see in the black line below, the number of part time workers spiked because of the Great Recession. It peaked and began to slowly reverse before the ACA was even passed. No, there does not appear to be an increase caused by Obamacare.

    max chart

    More like by the Bush recession!


  7. And this is what passes as information in the conservative media:

    http://www.anncoulter.com/columns/2013-10-09.html#read_more

    -- No doctors who went to an American medical school will be accepting Obamacare. 

    -- Obamacare is turning America into a part-time nation. According to a recent report by economist John Lott, 97 percent of all jobs added to the economy so far this year have been part-time jobs. Ninety-seven percent! 

    No wonder we can get an agreement. It has to be based on facts, not fiction!


  8. Good Morning!


  9. Here is a good chart for you Phil:

    http://blogs.marketwatch.com/thetell/2013/10/09/world-likely-to-have-11-trillionaires-within-two-generations-credit-suisse/

    In the past year, aggregate global household wealth increased by 4.9% to reach $241 trillion, a sign that even as the tepid economic recovery plays out, households are still accumulating wealth.  And that number is poised to grow over the next five years by 40%, reaching $334 trillion, according to Credit Suisse’s annual Global Wealth Report, out Wednesday.

    It’s pretty disconcerting to see over two-thirds of the world’s adults have wealth of less than $10,000, while the wealthiest 0.7% hold 41% of the world’s wealth.


  10. Too bad about the AMZN calls – good for a double this morning!


  11. Phil / VZ  - getting attractive here – u agree?  4.6% yield.  FIOS has 5 million users now growing revs at 15% annual rate.  old phone service subscribers down to 9 million.  FIOS passes more than 18 million homes so its growth can more than offset loss of old phone service biz.  


  12. BBY – what the..?



  13. AMZN was a triple if if if if if if if if….. never should yourself!


  14. Hello TEVA!  Good morning all.

    Someone asked about the location of the biotech portfolio.  Well, I am updating it now.  Been a little lax on doing that under the circumstances.  But will have it done soon.


  15. This is one mother of a squeeze.


  16. VZ/terrapin – very attractive down here.  The 2016s are out and you can sell the $47 calls and puts for $12.87 to lower the net to $33.60/$40.30.  Makes the dividend more like 6% for the next 2 1/4 years.  Thanks for pointing it out.


  17. stj – I have to admit I didn't even know who Ann Coulter was, but to see that she has written 9 NYT Bestsellers blows my mind.  Another complete twist of the truth is that “Health plans valued at $27,500 or more for a family of four will be taxed at a rate of 40 percent.”

    This is the top of the line so-called “Cadillac Plan”, that doesn’t even take effect until 2018. And who the heck would even think about voluntarily paying $2,300 a month in health care unless they are super-wealthy, so in reality it just doesn't affect most people (maybe .001%).  I don't know about anyone else, but I would feel completely ignorant to find out I was buying into any of this crap.


  18. Good Morning

    Phil—what do you think of going long /NKD—if so what line would you use—-thx


  19. SPY DAILYGood morning!  

    Oil tipped down to $101.16 (/CL) while I was finishing the post but now back to $101.71 and that's game off until/unless we fail at $102 or we cross back under $101.50.  As to our USO/SCO plays – I like them too much to cash them at the moment.  

    We have that same big pop that Europe had and they are now up about 2% so we'll see who runs out of gas first but there's nothing impressive about the Dow under 15,000 and, even that is just a weak bounce – so let's not go all kooky until the Orange Congressman sings and it's all clear to get back in the water.  

    INDU WEEKLYFollowing through on our bounce lines, we're looking for (and those actual 5% lines are significant too):  

    • Dow 15,700 – 5% = 14,915.  14,800 (consolidation) = 900 so 20% is 14,980 (weak) and 15,270 (strong) 
    • S&P 1,730 – 5% = 1,644.  We hit that (briefly) so 20% of 86 is 17 so 1,661 (weak) and 1,680 (strong)
    • Nasdaq 3,800 – 5% = 3,610 (didn't hit).  Call it 200 (see, lots of rounding) and that makes 3,650 (weak) right where the Nas bounced (no coincidence) and 3,690 strong and we hit that (almost) yesterday – so we should have been more bullish based on that!  
    • NYSE 9,900 less 5% is 9,400 and that's 100-point legs to 9,500 (weak and hit yesterday) and 9,600 (there now).  
    • RUT 1,080 (ignoring spike) less 5% is 1,026 and we never came close.  Call it 1,025 and call it 75 on the drop that never filled and we have 15-point bounces of 1,040 (yesterday's close) and 1,055 (already passed).  

    QQQ WEEKLYSo, with our Indexes at 14,987 (weak), 1,678 (just under strong), 3,743 (over strong), 9,618 (at strong) and 1,060 (over strong), we'll be watching the S&P and the NYSE very closely to give us an indicator of how real things are.  Keep in mind we need to HOLD strong bounces into the weekend but if any of our weak bounce lines fail – I'd be more inclined to bet the whole thing falls apart and that this relief rally is just a blip along the way down. 

    Unfortunately, an active meeting at the White House of such magnitude makes it very hard to call – so we'll just have to watch and wait for a while. 

    Oil is coming back to that $102 line and it's 10:15 so best to wait for the 10:30 nat gas report, which oil bulls are hanging their hat on to show SOME kind of demand SOMEWHERE.  It's very silly and pool season is over and it hasn't been cold yet – so they are likely to be disappointed.  

    Still shorting at $102 (/CL) and again at $102.50 if they pop it but I don't think they pop it.  


  20. Let's consider that only 18 Republicans are meeting with the President.  He had wanted to have them all at a meeting but they refused.  Obviously, they can't guarantee a deal immediately so it's not that likely we have a deal today, only a promise to vote.  The markets are acting like we have a deal already. 

    Boehner speaks at 11am and volume on the Dow is only 22M, not much for the first hour of a real move back into the markets.  Clearly the big boys don't feel like they are missing anything by waiting.

    The RUT futures (/TF) are struggling at 1,060  and AAPL is struggling with $490 and the Nas Futures (very different from the index) are at 3,183 with the Nas at 3,734 but that 3,200 line is going to be very rough to cross back over and figure that's 3,750 on the Nas – so we'll keep a close eye on that as well.  


  21. TASR coming back nicely now.  

    Nat gas inventories came in about 5% lower build than expected so here's $102 on oil but nothing to get excited about.  This should be their big push before dropping back.  Dollar 80.62 doesn't help oil bulls. 


  22. rperi – "I have to admit I didn't even know who Ann Coulter was"

     

    Just another fictional writer from the far-right…. You've been warned… ;)


  23. Oil?/Eric – Yes, Dec is a rough roll as it has tax implications.  That's why contracts are getting jammed up there at the moment.  By December, you can assume the contracts that are still there are going to roll as usual but, between now and mid-November, they can get really stacked up.   Best rule of thumb is that over 550,000 barrels in the front 3 months is a problem for oil trades.  600,000 is major pressure and 700,000 is almost a guarantee that a sell-off is needed to relieve the pressure.  Currently, we still have about 675,000 – which is huge.  The other key number is the front-month (222,000) and how many days they have to roll all but the last 20K to the next 3 months.  With the last day of this contract on the 22nd, there are 9 trading days to roll 200,000 barrels.  Figure 25,000 a day is "normal" for rolling so they are not in any imminent danger so far.  

    And, speak of the devil – we have a pop to $102.50 so no play here until they settle down.  That's annoying for USO/SCO in the STP but we're in those for the long haul.  On the Futures (/CL) the $102.50 line is too dangerous at the moment and we need to just wait and see how high they can push it.  


  24. Are we going for it at $102.50?


  25. VIX/StJ – No one seems too worried so far.  TLT also dead at 104.50

    I think Europe is pushing oil up as Brent is back over $110.  So 11:30 may give us our big break (EU close).  Meanwhile, they are having trouble at $102.50 so brave traders can use that line as a tight stop for shorts (/CL).  


  26. I would like to see Ann Coulter and Rachel Maddow fight it out.  Hopefully, they would both be crushed !


  27. Ow, pain!  $102.80.  That's down .10 twice on the way up.  Is it still worth trying to short oil? 


  28. albo/catfight   There is one difference between the two….

     

    …one references bovine scatology… the other, facts…..


  29. VXX/StJ – That's hysterical.  80% of the money that goes in disappears!  Funny how the author realizes the folly of trading it but it doesn't occur to him to BE THE HOUSE instead!  I guess what we try to teach is contrary to basic human nature.  

    By the way, it occurs to me that the VIX March $23/30 bull call spread is just $1 and you can sell Oct $18s for .75 that expire in 5 days (different expiration cycle).  If you keep a stop at $1.50 on the short calls, there will be plenty of chances to make the money back selling more calls over the next few months.  

    Credit cards/Brill – Who in their right mind would use such a thing?  You may as well walk around with a loan shark and ask him to buy you stuff.  

    I'm worried about TSLA, it's only following the market up.  

    NFLX, on the other hand, is up 5% and fantastic for our STP play, which we flipped bullish on yesterday.  

    Myth/StJ – People didn't actually believe that, did they?  I hadn't mentioned it because it seemed to ridiculous of a GOP claim to be worth discussing.  

    Ann Coulter, on the other hand, never worth discussing – but funny!  

    Wealth Pyramid/StJ – Wow, that's a good chart, thanks.  

    AMZN – no regrets.  We were aggressive with TSLA and NFLX – AMZN was playing for bonus money.  

    VZ/Terra – I'd wait for earnings (17th) and hope they miss.  If they don't miss, you can catch the move over the $47 line (both dmas) and go long with confidence.  Keep in mind they grant big concessions to new sign-ups and AAPL also takes a big bite as they pay AAPL up front for new phone sales (even to renew existing subscribers). So, when they report a Q with a lot of short-term pain – as this one may be – that's the time to get on board.  

    BBY/Scott – Bounced hard off the 50 dma! 

    BBY/Scott – They lost me on valuation at this point but they've done everything I suggested they do ages ago (de-emphasizing audio and video, more sales people (who can transact on the floor), store within stores, high-end (high margin) accessories, less software, high end rooms..) and it's working great so I sure wouldn't bet against them.  

    STP – I'll go over this later but 5 TSLA $180 short puts need to be bought back at $25.80.  That's net $18.70 with the $205 puts we sold yesterday and it isn't worth risking.  We can always fiddle with the 5 remaining shares later.  


  30. VXX / Phil – You actually don't need to be the house when you already know the results of the play. Your long term puts will come in no matter what when (not if) they reset. This has to be the trade of the century. I hope they keep VXX until I retire!


  31. $103.25 – Oil is out of control!  No betting up here, of course, have to wait for madness to pass.  

    Boehner speaking.  Brave play is shorting the RUT (/TF) at 1,060.  

    TZA tomorrow $23 calls have no premium at $.55 so let's risk $1,100 (hopefully only $550 if we stop out) in the STP and get 20 of those.  


  32. Not "NO" premium but very little (.20) compared to the $1.20 TZA moved this morning.  


  33. stjeanluc

    which strike is best for VXX long term puts? and I assume you mean the 2015.


  34. Coulter/Rperi – You need to read one of her books, it will blow your mind!  The amazing thing about her is that she has no facts and gets torn to shreds by liberals EVERY TIME, yet it doesn't stop her from being re-quoted and asked on talk shows as if she has some credibility.  

    /NKD/Savi – Too crazy at the moment.  I do watch them all the time to see if they form a channel but they did an air turn at 13,800, which was about halfway down and they popped right back to 14,400 (half again) so I think maybe they are forming a triangle squeezy thingy and there will be a huge pop one way or the other off the 14,000 line but it could very much go either way, which means the Futures are far too dangerous in case you get on the wrong side. 

    LOL 1020.  

    Oil/Bruce – Didn't we get burned last Thursday too?  Bad day to play, I guess but a good day to play when we're PATIENT! 

    PCLN/Jabob – Value?  Hmmm… 

    Worth it/Bruce – As long as you keep the stops at a dime or less – then the goal is to catch a nice .50 move down.  I think that's worth it as we risk .10 5 times is a $2.50 move up before a .50 move down won't erase the whole thing.  Anything better than that is a bonus.  

    Temporary extension is all we seem to be getting – AT BEST.  I don't think Obama is accepting their BS from the tone here:

    Sounds like they are offering some nonsense that's not going to be acceptable. 


  35. Human nature / Phil – I think that it's correct. Most people do not know how to evaluate risk properly. I was talking to some friends and had trouble having them understand that owning 1000 shares of GE at $23 is just as risky (actually more) than selling 10 Jan 15 15 puts. Of course, the biggest problem is that put sellers don't always evaluate the risk properly and over leverage themselves. These 23K of stocks could be enough margin for 20 or 30 short puts but then you increase your risk dramatically.

    Which goes to my original point – most people don't know how to evaluate risk!


  36. Phil—what does your value hmmm…. mean?


  37. Thank you Phil—-when you mention those triangle squeezy thingys I get very nervous ;-0


  38. Boy – I hope this does not drag out through November…..


  39. Cat fight

    Coulter, Hannity, Limbaugh, Beck, etc (even The Donald) are entertainers-  they're not serious political commentators, let alone journalists. And they get paid very well for catering to that segment that resents  everyone else who made it past the 6th grade.


  40. So I wonder if they go with their demands on cuts in exchange for a Thanksgiving day brawl


  41. STJ – Agreed on risk.


  42. Phil

    If oil crosses under 102.50 is it back in play?


  43. Phil

    If you have a b/c spread and puts sold same stock, is it a good idea to sell front month (same stock) calls against the b/c spread?

    I noticed that you did that at the web cast.

    Thanks


  44. VXX / Crlyles – Too late to play the 2015 now as VXX is already too low. As I told Savi the other day, you need to wait for VXX to reset now which they will as soon as they drop below 10. My guess is that it will be in the next 6 months or so (before if we get a good run up). Then I will buy the 2016 20 puts which will be around $6 or so if they reset to the same level and wait for them to hit $10 to cash in 15 months later. Not a homerun, but 60% in 15 months usually beats inflation.


  45. LV UPdate—we have met our min room req at Bally's and Caesars—-if you still need rooms please call and book at the best available rate but let me know so that PSW can credit for the bookings

    Also need to hear from members on dinner @ Rao's on 11/9 at 7pm—-poker @ Caesars after dinner on 11/9—-and dinner at Nobu on 11/10—-please e-mail by 10/15 otherwise I will assume you are not interested—-thank you


  46. Pharm

     

    Agenus Inc. AGEN

     

    Is there a trade on the

    Malaria Vaccine with GlaxoSmithKline (GSK),

    http://seekingalpha.com/article/1737762-agenus-and-glaxo-sizing-up-the-potential-for-the-rts-s-malaria-vaccine?source=yahoo

    I cannot see who owns what

     

    Thanks


  47. I guess changing the rules also works when you are not winning:

    http://talkingpointsmemo.com/dc/the-house-gop-s-little-rule-change-that-guaranteed-a-shutdown

    In other words, if the House and Senate are gridlocked as they were on the eve of the shutdown, any motion from any member to end that gridlock should be allowed to proceed. Like, for example, a motion to vote on the Senate bill. That's how House Democrats read it.

    But the House Rules Committee voted the night of Sept. 30 to change that rule for this specific bill. They added language dictating that any motion "may be offered only by the majority Leader or his designee."

    So unless House Majority Leader Eric Cantor (R-VA) wanted the Senate spending bill to come to the floor, it wasn't going to happen. And it didn't.

    "I've never seen this rule used. I'm not even sure they were certain we would have found it," a House Democratic aide told TPM. "This was an overabundance of caution on their part. 'We've got to find every single crack in the dam that water can get through and plug it.'"

    Congressional historians agreed that it was highly unusual for the House to reserve such power solely for the leadership.

    "I've never heard of anything like that before," Norm Ornstein, resident scholar at the American Enterprise Institute, told TPM.


  48. Phil:  What is your take on adding to the existing STP SLW & USO positions?


  49. The great Ann Coulter in action or, as Belzer calls her "fascist party doll". 

    Hope springs eternal so far.  Plenty of Conservative investors just saw their heroes marching off to give the President what for and they like it!  

    1,060 on the RUT broke the wrong way.  I think at 1,065 on the index, we'll have to give up on the TZA calls.  

    VXX/StJ – Truly the gift that keeps on giving.  

    Risk/StJ – Or understand math!  

    Hmmm/Jabob – Just interesting to see them in that category.  I've been telling you for a very long time they're not a MoMo because there is a real, growing business there.  I don't know if this tiny little pullback makes them a value but it's an interesting change-up.  So – hmmmm…

    You're welcome Savi (both times).  

    Oil/Crl – We're steadying out at $103 so that's now in play (/CL) but keep in mind that it's VERY EASY to lose $100 per contract stopping out at $103.10.  As I noted above, however, worth the risk with $1,500 to gain back at $101.50. 


  50. Trade: IBM Dec 13, Bull Call Spread 185/190 at $2.10. Stock is at 183.86 +$2.54.


  51. should we close out our TZA calls expiring tomorrow


  52. ISCO finally making a move!


  53. Short calls/QC - We do that sometimes but you can get burned, like we did on TSLA this year.  It's very rare that something like that happens but it killed the Income Portfolio's profits all by itself.  I'm generally in favor of it and you just need to do half sales or even 1/4 sales and, of course, set stops – which was our fatal flaw with TSLA.  Of course, we stuck with it and are now doing well on the pullback but it's taken 6 months to work out.  

    NFLX up 6% now.  

    Vegas/Savi – Great news.  I'm looking forward to the conference.  Only a month away now!  Thanks for putting it together.  

    And there goes $103.10 on oil (/CL) – looks hopeless until we hear that there's no deal in DC.  

    House rules/StJ – Truly sickening abuse of the system.   

    Adding to oil shorts/Rookie – Yes if oil goes up to $104+ but here ($103) is too wishy/washy.  It's only $1.50 off the bottom – nothing to really freak out about either way.  If you notice on the chart above, ONLY making $103 would be a weaker bounce than the bounce to $104 and that's a good sign that they're still trending down.  

    IBM/IHS – I like IBM long-term but we're not out of the woods yet on the budget deal so be careful.  

    TZA/STP, Rookie – The $23 calls are down .20 to .35 so that's down $400 but I'd like to give Congress a chance to blow it so I'm inclined to hold on for now.  


  54. Keep in mind, on the TZAs.  In 2008, when the GOP went to the White House and walked out without a deal, the markets dropped 5% overnight and 10% that week.  That wasn't even a shut-down, just a failure to agree on a bailout.  So the potential gain on the TZA makes it worth risking the loss in the STP. 


  55. Biotechs – Phooey. 

    AGEN – I love vaccines.  I just don't like this delivery system as much.  Their technology for delivery is interesting, but I am not sure of how well it elicits a immune response.  The 'virus' needs to incorporate the right way for it to be 'seen' and I need to look more at it.  GSK likes it, so a small stab at them is not bothersome at all. 


  56. Phil,

    FYI,  yesterday's  posted link for the Webinar didn't work on iPad ios7. I then went to Options Monster and tried to download from there and got the message that it couldn't be downloaded by Safari. 


  57. Phil

    I know you'll probably discuss this in Vegas, but I can't make it.  When you establish a line you'd like to short on oil, do you put in a limit order one tick below the line or even more?  Or do you watch real time to see what's going on before you put in the order?


  58. DIA 155 Dec calls for 1.37.  For the rally.


  59. STP Update: 

    • SCO – Should have taken the money and ran.  We will next time we're at $101.50 if it doesn't break below. 
    • GLD – Enthusiasm for oil not helping gold, this is a dead call anyway.  
    • POT – Still having trouble at $32.  
    • AAPL – Looking good there. 
    • WYNN – $5 pop today is a real pain in the ass but we're going to be rolling either way.  
    • TSLA – Just adjusted (see above) and $171.82 is great for us.  
    • CMG – Back to making highs but still, $434.38 is not the net $444.50 the caller need to break even in 8 days.  
    • FB – Lurching up and down but right where we want them.  
    • GSVC – Waiting on Twitter. 
    • SLW – These are worth pressing. SLW at $22.79 so no point in buying more premium but we can roll our Nov $24 calls (.92) to Dec $23 calls ($1.83) for .91 and sell the Dec $26 calls for .81 so net .10 on the roll plus the original $1.67 puts us in the $3 spread for $1.77 with a $1 lower strike and an extra month to get some upside action.  
    • SBUX – What a crazy couple of days!  We were back on track for two days and now back off, unfortunately.  
    • HMY – No progress
    • NFLX – I'm very pleased with this as we took $55 x 10 off the table ($55,000) selling our Nov $340 puts and now we have the short Nov $300 puts that are already up $3 ($3,000) with $22,000 left to collect if NFLX stays over $300.  If not, we're pretty well covered down to $260 with our spread.  
    • USO – Same as SCO, next time we'll take it.
    • TZA – Nov Spread stands.  New calls we're waiting for word from Washington. 
    • YUM – We were supposed to cash those calls and it leaves us with just the short 2015 $62.50 puts in the new LTP.  

  60. VEGAS baby…..sad I cant make it….but I will be there in spirit, and will have a trade for the occasion.  Maybe 2…. D'oh!


  61. Nas futures (/NQ) right on that 3,200 line – big test here.  RUT Futures at 1,065.  S&P Futures at 1,680 – synchronicity. Dow at 14,971 – not too far from 15,000.  

    Dow volume 43M at 12:40 – not too slow but compared to the amount of people who sold on the way down – this recovery is on very thin ice!  


  62. Phil

    I've read some negative things on SLW. Do you think it's a strong company and good long term play or are you just going for a short term play?


  63. SLW/Crl – It's not a "strong" or weak company, they are essentially silver traders and the company performance generally follows the price of silver.  You can compare things on Yahoo charts – notice how closely SLW follows SLV but with much better long-term performance.  In any case – it's a commodity play – not something we generally stick with for too long but I like the support here ($22 on silver) but not enough to risk futures contracts, which we prefer at $19:


  64. USO Nov Long Put (37.5) filled at 1.11.  Let's break back down.


  65. TSLA // Greatest vehicle made in the last three decades

    ( but I'm selling at $200 ) ; >


  66. White House not satisfied with GOP debt ceiling offer


  67. wombat

    Not liked is the best news all day, I dread this repeating itself.


  68. It never ceases to amaze me how the market tends to move significantly 10 days before options expirations, right when we are looking at rolling options.


  69. Saw my first Tesla on the streets of Dallas. Sleek looking.


  70. Did you ever notice how many SA authors write about AAPL and TSLA – as if it's an official cross-specialty.  Just another ratings whore is all he is….

    Siddharth Dalal is a software engineer at The University of Virginia and runs several websites, including a financial blog at Personal Finance Simplified (http://www.parchayi.com/) and The Internet Book Database (http://www.ibookdb.net/). 

    He is very interested in personal finance and investing, especially investing in India.

    I guess, according to Seeking Alpha – that makes him qualified to analyze TSLA (or AAPL). And this logic drives me nuts:

    if we do assume that 75% of the cars in the third and fourth quarter are in North America, the Model S will beat both the Leaf and the Volt and be the best selling EV in America. 

    OK, so TSLA might beat two TINY little divisions of two MAJOR auto companies.  Chevy is a DIVISION (meaning PART) of GM and Volt is the smallest of Chevy cars and GMs ENTIRE value is $47Bn (Nissan is $43Bn) while TSLA, at $173, has a market cap of $21Bn.  This FACT completely escapes these people, who get so caught up in whether they sold 24,000 cars or 28,000 cars that they don't realize that each car would have to sell for $1,000,000 in order for the price to sales ratio to be 1:1.   GM's price to sales ratio is 0.31 (sales 3x more than price) F is 0.46 (sales are 2x price), Nissan 0.34…

    Unfortunately, TSLA does not sell their cars for $1M each, their sales are projected to be, OPTIMISTICALLY, $2.1Bn which, conveniently, is exactly 10x sales or 20-30x more than the value of a normal auto company.  How long can that keep up?  If TSLA does end up selling GM's $150Bn a year, will they be priced at $3Tn instead of GM's $47Bn?  

    Obviously that would be insane – therefore the price now is insane – only we can have distortions like this in small companies but, as they get bigger – the supply of idiots runs out and you don't have enough people to support the stock anymore.  

    Finally we're getting some pullback.  Unfortunately, the meeting won't end before the markets close so we'll have to cash out the weekly TZAs (now .32) on a pullback but I find the weekend play attractive and the next week (regular Oct) $23s are .75 so let's get 10 of those for the STP and we'll see how today's finish to decide if we can afford more.  


  71. Pharm/ Isco~ it has a good run recently. Shall we take some profits off the table or you think it has more potentials in future? Thx


  72. ISCO – I am only up a few cents.  If you were in at 15c, then sure, but I am holding on for a move to $1


  73. Thanks, Pharm. Please inform us if you decide to adjust it in future as you knew it much better than most of us.


  74. Branded drugs are in for a real hurt, esp when the newer drugs are not 'much' better than generics….From Fierce Pharma

    A few weeks ago, Novo Nordisk ($NVO) said it had lost Express Scripts' business on two of its top drugs, Victoza and NovoLog. Well, that was just part of the action at the pharmacy benefits manager. More than 40 other drugs, including some of Big Pharma's newest growth prospects, got the same treatment. And ironically, drugmakers may have their own marketing techniques to blame.

    The PBM's National Preferred Formulary for 2014 includes a list of 44 treatments and supplies that won't be covered. Patients will be required to choose alternatives, which are helpfully listed alongside the newly excluded products. Among the excluded drugs are Pfizer's ($PFE) newly approved rheumatoid arthritis drug Xeljanz, Johnson & Johnson's ($JNJ) recently launched psoriasis treatment Stelara, and GlaxoSmithKline's ($GSK) newly minted respiratory drug Breo Ellipta.

    This is the first time that Express Scripts' ($ESRX) preferred formulary designates certain drugs as "not covered," spokesman David Whitrap said in an emailed statement. But the move is part of a larger trend among payers of all stripes, which are increasingly reluctant to pay for treatments that are new and more expensive, but not considered to be clinical breakthroughs. Express Scripts rival CVS Caremark ($CVS) blocked 34 treatments last year for cost reasons, but most of them weren't big sellers; at the time, CVS said it planned to expand the list.

    "If you look across our industry, there is broad and growing acknowledgment … that not all drugs need to be covered," Whitrap said. "Drug choices in some classes are larger than ever, with many products costing more with no additional health benefit."

    Ironically, one of the pharma industry's favorite marketing tactics--the co-pay card--played into Express Scripts' decision. As drugmakers have rolled out expensive new products, they've offered assistance to patients who can't afford the higher co-pays insurers use to steer members to generic drugs and other less costly alternatives. Thwarted in their cost-control efforts, payers have been protesting those co-pay assistance programs, blaming them for unnecessary healthcare spending. Some healthcare insurers even banded together to sue drugmakers over co-pay assistance.

    And now, Express Scripts has hit back. In addition to newer drugs like Xeljanz, the excluded category includes older, commonly used treatments such as Bayer's multiple sclerosis drug Betaseron and Merck's ($MRK) hepatitis C treatment Pegintron. "Nearly all of the drugs being given not covered status have co-payment cards that unnecessarily drive up the cost of care," Whitrap explained.

    The new formulary will apply to an estimated 30 million to 40 million members; Express Scripts estimates that the new drug exclusions will affect fewer than 2% of them. At 2% of the low end, that's still some 600,000 patients, which could be a painful hit to some drugmakers. Novo's loss of Express Scripts' business, for instance, is expected to cut into 2014 earnings by anywhere from 1.8% to 3%. Analysts estimated that the PBM accounted for 15-20% of Victoza's sales.

    Government gatekeepers in other countries routinely weigh cost and effectiveness when deciding whether to pay for drugs. Indeed, several have tightened up their standards in a bid to save money, including Germany, which instituted a strict pricing policy based on a new drug's benefits in comparison with existing treatments. Australia recently announced that it would be tracking patients using Bristol-Myers Squibb's ($BMY) new melanoma treatment Yervoy to gauge whether real-world results make it worth the $100,000-plus sticker price.

    Such hasn't been the case in the U.S., at least not in a broad, systemic way. But obviously, change is afoot. Memorial Sloan-Kettering Cancer Center made headlines last year for writing Sanofi's new colon cancer drug Zaltrap out of its treatment protocols, based on doctors' judgment that it was too expensive for the benefits it delivered to patients. Soon after, Sanofi announced rebates that would cut Zaltrap's cost in half.


  75. Phil/USO~ I’m wondering shall I add more positions of Nov 37.5p since oil is running up today? The


  76. Phil – What is your view of TLT? It's sitting above the 50 dma currently. A Nov BCS 104/106 is currently $1.06, but a small pull back to around $1 might be interesting. Your thoughts… Thanks, Eric


  77. wow – so the panel on the MSNBC are actually talking like smart people. They're saying a 3% bump is unjustified and the market is pricing to perfection a debt ceiling deal, when nothing has really progressed. The GOP is still refusing to open the gov – and thats a non-negotiable for O
    I think the VIX is gonna go nuts – but I'm gun shy on the VIX cause I simply don't understand it completely and have consistently made the right directional calls and lost cash.


  78. Pharm – with yesterday's ARIA shock still fresh in my mind, I'm wondering about our SGEN sold puts, how would you quantify the risk of selling puts on SGEN as contrasted with other bios?

    On a different note, yesterday's late day surge in GILD caused my put sale to not fill; that would have been a nice entry!  Thanks for your advice anyway…


  79.  short-covering…im surprised this much up without a concrete deal and still govt shutdown even on debt limit extension..I ve been at an appointment..wow


  80. Phil // SPY
    watching Santelli squawking about the 90% gain on the indexes – "big fat can" kickin down the road.
    Nov13 $162 Puts ( $2 ) - any thoughts on mods ?


  81. VIX / Wombat – It's actually one of these instruments where you can be right and lose money! If you want to bet on volatility, you might be better off using the VIX futures which you can trade on TOS. I has a post about that a while back:

    VIX Options Are NOT Based on the VIX Value

    So after all that, there is yet another layer of confusion. Being that you can't actually buy the VIX itself, traders might buy calls when they think the VIX is going to rise and puts when they feel it might fall… But guess what…

    THE VIX OPTIONS ARE NOT EVEN TIED TO THE "SPOT" VIX PRICE!

    Yes, you are reading that right. The VIX options derive their value from the VIX futures, which may be much higher or lower than where the VIX is actually trading.


  82. ARIA vs SGEN/mrm – well, they are different beasts.  Both have marketed products, one is an injection, one is a pill.  One is a technology on a drug that much is known (Adcetris – SGEN), one is a drug that is novel for its target (Iclusig – ARIA).  But selling puts on any company, let alone a biotech is a risk …. as you well know.  I like ARIA, and I do believe this gets resolved and they recover.  To $20? IDK, but in my mind $15 is not a bad place to be for them.  If sales even miss  by 1/2, that is $1B for them/yr.  The rest of ARIA's pipeline is thin, so all the valuation is on Iclusig.  SGEN, their valuation is on royalty streams from the technology as well as a few other shots on goal.  So, I have tended to be more aggressive and comfortable with SGEN, hence my not being that way with ARIA when it went to $20. 

    I do not sell a ton of puts in any biotech, as it is not worth the risk, and buying the BCS is a known paper gain or loss.  IF my puts are profitable, I may remove a few on the runs up (buy them back).  I don't go hog wild folks, these are biotechs, and doing 50 contracts is WAY TOO much.  the most I have are 10 in most of my holdings.  CRIS, PLX and SGEN being the exceptions.

    Hope that helps/answers your question.


  83. Pharm/Phlax~ what do you think of the long term perspective of this mutual fund? It has been nice to me in my 401k. I just hope the new Obamacare wouldn’t affect it. You can see the major holdings of it in Google Finance. The choices of investment in my company’s 401K are fixed. This is the only health care fund that is available. Thanks!


  84. ESRX/Pharm – That's very interesting.  Also good news as we're finally taking baby steps to get costs under control.  

    USO/Invest – It's back to where we entered our new STP trades last week with 5 more weeks to trade – I wouldn't add more than intended but we're in the $38s, not the $37.50s.  Maybe, if you want to spend money, it's better spent rolling up $1.  

    TLT/Eric – Too much BS to make a call.  I agree with your idea as $105 is the low end of the range but, if we do fail to make a deal, who knows what will happen in the bond market?  

    Gun-shy/Wombat – Don't play things you don't understand.  That's a Buffett rule.  

    Surprise/Angel – It's still a relatively low-volume move.  I can't imagine what people think is going to happen just because we make a budget deal.  That just puts us back to where we were when the market looked toppy anyway.

    Out of 9 companies that reported yesterday, 4 (COST, FAST, HELE and RT) missed with DRWI in-line and FDO, PRG, RPM and VOXX all hitting their numbers but FDO got hammered with lower guidance, PGR fell too on lower profit (but beating low expectations) and really only VOXX had standout numbers.  

    We'll hear from INFY, JPM. VAC and WFC on Friday and SWY and MU tonight but, so far, earnings season is NOT GOOD.  

    SPY/Wombat – I prefer the Nov $165 puts, now $2.15 because, if the S&P drops 40 points (2.5%), you go in the money and the gains pick up very quickly (the delta on the $169 puts is .60, so, after $4, you make about 33% for every 10 points the S&P drops.  If it's a hedge that's protecting something, that's the way to go.  


  85. Invest…I am still very bullish on biotechs for the next year or two.  Innovative science is where biotechs will fill the gap, and big pharma is going to be buying them up to fill their coffers as they have the cash to do it…..there is no other way to look at it.  As for the holdings, I like most of the companies…..


  86. Thanks Phil&Pharm for answering my questions.


  87. thanks Phiil – I just agree with you that this bounce is based on vapor. hedging with SPY and TZA.

    no intention to play VIX – thanks StJ, but too bizarre for me.

    TSLA // 

    He's claiming only 1 in 150,000 of his might catch fire. 1 out of the first 15,000 already has. That off by more than a margin of error. It's off by an order of magnitude.

    Elon is saying not one of the next 135,000 of his cars will catch fire.

    Anyone willing to take that bet?


  88. Pharm

    Do you think and etf like xbi is a good way to trade the bioteches?

    Thanks


  89. qc – I like the individual companies.


  90. LOL, my boys in DC are already doing a 17-seat countdown to regaining control of the House!  They're polling to unseat incumbents in these states:

    Democrats have a lead over Republican incumbents in 17 districts.

    Let the games begin!  

    This is another reason I'm skeptical.  Although no one wants the US to default, the Dems certainly aren't looking to bail out the Reps at this point – if the Reps want to have a hissy fit tonight and storm out of the meeting, no one is going to stop them.  The second Boehner walks out of that room without a deal, he loses – no matter what he says.  Even worse, if he walks out with a deal but can't sell it – the GOP implodes on the spot. 

    The only thing the Dems (and the market bulls) have going for them is that the Dems are really worried about the snowballing economic damage.  

    White House not satisfied with GOP debt ceiling offer
    • More is needed to break the budget/debt ceiling impasse, says the White House, responding to the GOP plan for a 6-week debt ceiling increase in exchange for negotiations with the President.

     

    Consumer comfort index slips just a bit
    • The Bloomberg Consumer Comfort Index barely slips to -29.7 from -29.4 last week, but beneath the headline number lurks trouble as the national economy subindex retreats to -60.2. It's a sharp retreat from the early August level of -45.1.
    • Nevertheless, the headline print is on track to end the year with its best annual average (currently -30.9) of any of the last five years.

    Brazil's central bank again hikes rates
    • It's the 5th consecutive rate hike for the central bank, which raised the benchmark Selic 50 basis points to 9.5%. No changes were made to the accompanying statement, implying #6 is coming at November's meeting.
    • Economist consensus has rates at 9.75% by year's end, and many foresee double-digits in 2014. The most recent CPI data has annualized inflation at 5.86% – lower than a couple of months ago – but still well above the 4.5% marking the top end of the target level.
    • The Bovespa is lagging most major markets today, +0.5%.
    • EWZ +1.6%, BRF +1.9%.

    Mortgage rates tick slightly higher, Freddie Mac says

    • The average rate for the 30-year fixed-rate mortgage ticked up to 4.23% in the past week from 4.22%, according to Freddie Mac's latest survey.
    • The 15-year fixed averaged 3.31%, up from 3.29%; one year ago, the 30-year rate averaged 3.39% while the 15-year averaged 2.70%.
    • "Mortgage rates were little changed amid the federal debt impasse in Washington, D.C. and a light week of economic data releases," Freddie chief economist Frank Nothaft says.
    Retail sales: Underneath the hood not too much to like
    • The government shutdown might have put a stop to the release of many economic reports, but at MasterCard the data crunching continues to go on.
    • A new report from MasterCard Advisors finds September retail sales were up 3% Y/Y – a deceleration from the pace seen early in the summer.
    • Though apparel and department stores (DDSJCPKSSM) showed weakness, Internet sales (AMZNEBAYBBYTGT) were up at a double-digit clip.
    • Sales in the hardware and furniture & furnishings (LZBETHHVTRH,BSETLEG) sectors were affected by fears over the impending government shutdown.
    • MasterCard PR

    Chevron hit by weak refining margins, but peers march higher

    • Chevron (CVX -0.4%) is lower after warning "significantly lower" earnings from its refining division would send Q3 EPS down Q/Q.
    • J.P. Morgan believes investors were anticipating relatively soft downstream results given the currently weak refining margin environment; perhaps that's why refiners are holding up very well today: VLO +4.4%, TSO +3.7%, PSX +2.3%, ALJ +6.7%, MPC +4.5%, WNR +3.7%,HFC +4.2%, CVI +4.6%.
    • Citigroup worries about CVX's upstream business too; it was expecting a much larger increase in Q3 production which would put CVX on track to meet its full year guidance of 2,650M boe/day.
    Why Morgan Stanley thinks Total is a better bet than Exxon
    • In a Total-Exxon showdown, Morgan Stanley says Total (TOT +1.4%) is starting to benefit from high investments, translating into stronger growth in operating cash flows than most other big oil companies, and enjoys a strong outlook for operating cash flow combined with plans to reduce capex after this year.
    • In contrast, Stanley says Exxon Mobil’s (XOM -0.1%) operating cash flow suffers from an upstream portfolio with relatively few startups and weak ramp-ups; with such a weak growth outlook, XOM could decide to add additional projects or go for a large acquisition, creating capex risks.
    • Meanwhile, Chevron (CVX -0.6%) is one of the firm's top picks, with higher production growth and improving returns in the next five years driving share outperformance.

    Which Side Of Goldman Sachs Is Right About Gold?

    Early Tesla backer takes some profits
    • FMR cuts its stake in Tesla Motors (TSLA +1.9%) to 9.61% from 15%
    • The investment firm got in near the ground floor, accumulating its sizable position in the EV automaker back in 2011.
    • SEC Form 13G

    Whole Foods Market to sell private-label K-Cups

    • Whole Foods Market (WFM +3.1%) says it plans to start selling private label coffee pods that will fit Keurig machines.
    • A 12-pack of the grocery store chain's Everday Value K-Cups brand will sell for $8.99, according to a Whole Foods spokesperson.
    • The development could be a negative for Green Mountain Coffee Roasters (GMCR -3.9%) which depends on the consumables side of its business model.

    Chanos still short H-P, continues to like Apple/Samsung

    • H-P's (HPQ -1.9%) market-pleasing analyst day guidance (III) hasn't made Jim Chanos less bearish about the IT giant. "They're talking about margins improving. I'm just hard-pressed to see how margins are going to improve in any of their businesses given the secular headwinds that are going on."
    • Chanos, who has been short H-P for more than a year – his bet did well in 2012, but hasn't done so in 2013 - declares the company's PC, printing, and enterprise ops to all be "under assault." "Turning around tech companies – IBM in the early '90s notwithstanding – is a very difficult undertaking."
    • Likewise, Chanos remains long Apple (AAPL +0.8%) and Samsung (SSNLF.PK,SSNGY.OB), viewing them as mobile offsets for his PC shorts. "[Samsung] is outright, outright very, very cheap …  unlike a lot of guys like Hewlett and others who go out and acquire their R&D … Samsung actually does it homegrown. As does Apple basically."
    • Chanos also discloses he's now long cloud HR/ERP software vendor Workday (WDAY+3.9%), using it as a hedge for an unnamed cloud software short he calls "an accounting nightmare."
    Multiple reports point to bigger iPhone; will there be more than one?
    • Brian White, who has been busy meeting with Asian supply chain contacts: "A bigger iPhone (AAPL +1%) is in the works, and our contact expects a launch in the 2Q:14/3Q:14 time frame." White's remarks follow a Monday note from Peter Misek (also toured Asia) indicating a 4.8" iPhone will launch next year.
    • DisplaySearch is taking things a step further, writing supply chain research leads it to think Apple could launch a both 4.7" and 5.7" iPhones next year, as well as a 12.9" iPad and 12" retina MacBook Air. The firm also thinks 55" and 65" Apple TVs with 4K resolutions could be pipeline – many rumors about Apple TV launches have proven false over the last two years.
    • The WSJ has reported Apple is evaluating 4.8"-6" iPhones, and has ordered display prototypes for 4"+ iPhones and a ~13" iPad. Reuters has reported Apple is thinking of launching 4.7" and 5.7" iPhones.
    Report: Best Buy out with aggressive iPhone offer
    • Best Buy (BBY) is about to launch a trade-in promotion whereby customers can swap an old smartphone for a $100 gift card that can be used toward the purchase of a new iPhone, according to a screenshot posted by TechnoBuffalo.
    • Is there a flaw in the promotion? 9to5Mac wonders why an iPhone owner can't grab a cheap Virgin smartphone for around $50 then trade it in for the credit on the new iPhone 5c while keeping the old iPhone in the process.
    • Best Buy has been coy in the past about margins on its iPhone offers.

  91. Here sticky stick


  92. IF one missed the trade yesterday on ARIA…the stock paired with the Jan24 $6/5 C/P STO is a nice mellow way to trade.  Just a few.  Just a few.


  93. OR the Jan14 $5/6 BCS selling the $4 puts for 2c net credit.  Even better.


  94. Whoops – WTF was that?  Oh well, so much for our TZA calls.   The weeklies are .20 so we take that $400 back in the STP and we can buy 10 more next week (Oct) $23s, now.65 ($650) because the premise hasn't changed – just the starting point.  


  95. market's on HGH or something.  this is just silly.  Two Dreamliners turned back due to technical problems and BA is up $4.00!


  96. Finally got the pullback off $103.50 and now just below $103.  I know what you'll say but I have to ask, what do you think of holding oil short overnight?  


  97. wombat/MSNBC  I avoid the 1pm-4pm pst. time frame to avoid the "extremists" on MSNBC.  :)

     

    My favorite is The Last Word with Lawrence O'Donnell 7pm pst.  Good TV with attitude!

    http://en.wikipedia.org/wiki/Lawrence_O'Donnell


  98. In TOS, they lost the link when buying like symbols.  Now I have to move them into the portfolio every time I buy or sell like symbols.  Anyone know how to correct this?


  99. AMZN $306.64 – damn!  

    Dow at 62M at 3:20 – about the same as yesterday – nowhere near long enough to make a trend.  

    BA/Rperi – Yep, that one's a head scratcher.  

    Oil/Bruce – Oh come on, do you really think I'm going to say year.  You can stay in it (with the usual line stops) for as long as you can stay awake but no longer!  If you want to play overnight – those USO/SCO positions in the STP are back where we entered them – much safer(ish).

    I was prepared to buy into this market move but this spike into the close makes the whole thing seem like a prop job.  


  100. TEVA….selling 1/2.  Get out of the rest at your own risk.


  101. Phil – In the NLY play you mentioned on the webinar, don't you think the odds are very high that the $10 call that you'd write, would be called on the next ex- dividend date if the stock moves up close to $12 ?  What adjustment would you make in that case ?


  102. Wow !  Hard to believe that BBY, which was left for dead, has tripled this year.  Whatever happened to the talk that they were just a showroom for AMZN ?


  103.  im going to add back the hedges i took off this morning into close…seems like a lot of optimism being priced in…. hopefully we get the usual block jam in final 10 minutes
     normally we get block jam up in final 10 minutes no matter what happened all day, yesterday not normal


  104. PLX hit 52 week low, looks like a DD day…


  105. NLY/Albo – NLY popped since I mentioned them, now $11.65, but the 2015 $10 call is $1.95 (I would not take less) and the dividend is .35 so, if someone calls you away, you essentially get the dividend and all you need to do is buy the stock again, sell another call with at least a .30 dividend and then you have your .30 PLUS $1.65 of downside protection.  The 2016 $10 call is $2, that's .35 of premium if it makes you feel better.  Don't get hung up on the amounts, the purpose of the shorts is to PROTECT YOU, not to make you a profit – that's what the Dividends are for.  

    BBY/Albo – That talk was ridiculous and I remember discussing it in Vegas last year.  I tried to explain that you can never replace the ability to actually touch something (desire) and take it home with you (satisfaction).  If people preferred to delay gratification – the World would look a LOT more different than just not having any more electronics stores.  

    Hedges/Angel – This move seems way overdone.  2nd biggest move of the year for most of the indexes, based on the absence of pain and nothing more.  


  106. PLX…just sell puts mrm…. YIKES!


  107. Good timing on Peter's part to sell the put spreads in the Strangle portfolio!


  108. here is the reason why oil spiked higher today. looks like manipulated oil market

    http://www.cnbc.com/id/101103376


  109. Oil/Rookie – That is just ridiculous!  

    Fine with us though – all the higher to drop from.  Set up for a $5 fall now. 

    75M just ahead of the bell on the Dow, which is up right at 300 for the day at 15,103.  Why not stop at 297 and 15,000?  Nope, needed to show 300 – much more impressive.  

    Well, I gotta run – should be very interesting after hours.


  110. oh what i would give to have Boner come out the room crying.


  111. wombat

    shoot me a note millcreek29@yahoo.com


  112. Anybody,

    Phil said don't hold oil futures overnight.  Do the stops not work overnight?  I'm new to the futures.


  113. Phil – I understand all that, but If NLY gets called, it's most likely going to be just before the stock goes ex-divd.  In that case you don't get the divd.  My preference would be to sell the $12 call for $1.05-$1.10.  Less downside protection, but less likelihood of it getting called away.  Am I wrong ?



  114. "PROBLEMS"


  115. crlyes:  I don't play futures, just options, but my sense is that oil never falls 30% overnight because someone discovers a giant oil well, but going up 30%, well, sir, any day of the week on the basis of war, terrorist attack, fire, flood, earthquake, revolutionary movements, or any of dozens of excuses that will simply force you to cover.  I'm happy to buy puts, where I can only lose 100% of a [smallish] position, but never put yourself short with unlimited risk, and never believe stops will save you on a flash crash.


  116. P.S., Angel's example is an excellent demonstration of the above.


  117. I could be wrong, but this looks like a strong bounce. On the broader indices like S&P and NYSE, the volume was actually inline with recent weeks.


  118. StJ // Did you mean 'strong' bounce. If not, I'm very curious.


  119. Good catch Wombat – what's a string bounce? Corrected.


  120. damn – i was hoping it was some 'quantum pattern' i've never heard of ; >


  121. is anyone else looking at the SPY after hours ? – check it out. 


  122. Pharm/TOS~ I think you could email your question to Support@thinkorswim.com. They have a v. good support team. They should solve your questions.


  123. Bounce must involve string theory..


  124. 100 days to Jan 14 expirations, easy to calculate how much per day in premium you should be receiving now.


  125. I guess we could be off to the races!

    http://stocktwits.com/message/16413176


  126. Good charts about healthcare costs in the world:

    http://www.huffingtonpost.com/2013/10/03/health-care-costs-_n_3998425.html

    Sickening!

    And others! It seems that we alone subsidize the pharma industry.


  127. And another good chart:

    I guess if you take into account dividend rates, treasury rates and P/E we are not yet at irrational exuberance levels!


  128. cryles,

    Another problem with overnight is its much thinner trading its quite possibly just you and the bots.

    If you put on hard stops they will trigger them. You have to sit there the whole time.

    tom


  129. No deal so far…

    Wow, that Big Chart looks positively freaky!  

    Futures down about 0.3% but that's nothing after those gains. 

    Overnight Oil – Yes, thinly traded means any news that pops oil $1 against you can come and go in seconds.  If you don't have much experience with Futures, stay miles away from the overnights!  You literally cannot even go to the bathroom while you have open positions.  


  130. In chart school they show the current S&P pattern as a bear trap.  How often does that pattern turn out to be prophetic?


  131. From Bloomberg, Oct 10, 2013, 6:34:32 PM

    House Republicans and President Barack Obama had a “constructive conversation” about the debt limit and the partial government shutdown, and discussions between the two sides are continuing, said House Majority Leader Eric Cantor.

    To read the entire article, go to http://bloom.bg/19mNKgd
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  132. Poll: Americans Name ‘Dysfunctional Government’ As The Top Problem Facing The Country
    http://thinkprogress.org/justice/2013/10/10/2762371/poll-americans-name-dysfunctional-government-as-the-top-problem-facing-the-country/


  133. House G.O.P. Discusses Short-Term Fix on Debt Limit
    http://www.nytimes.com/2013/10/11/us/politics/debt-limit-debate.html


  134. Facebook Removing Option To Be Unsearchable By Name, Highlighting Lack Of Universal Privacy Controls
    http://techcrunch.com/2013/10/10/facebook-search-privacy/


  135. Phil – So Dave is hiding his charts now, so one has to be a subscriber??



  136. I live in what would be termed a Third World Caribbean country [if it were an "emerging market" I would have heard about it].  Drugs are manufactured locally, are of good quality, and cost no more than 10% of U.S. drug prices — I have taken them, and given them to my children, for years with no qualms, as do scores of famlies that attend the American school here and hark from 25 different countries.  Hospitals turn no one away — for a small flat fee, you are taken care of, period.  It would be unimaginable to the population that it could be otherwise.  There are 3-4 hour waits to see a doctor, but everyone arrives early and, since money is worth more than time here, people bring their knitting and no one complains.  My wife had a three-day stay in a U.S. hospital last year for a kidney infection, treated with antibiotics, for over $6,000; minimum wage earners in the U.S. net @ $15,000 for an entire year's work.  It's very sad, really. 


  137. Phil:  what do you think of todays action?  The 40? retrace for all index were achieved and the volume matched the past 10 day vol.  Does that mean we flip bullish here?


  138. One of the reasons the GOP is looking for a deal – these are not good numbers:

    http://firstread.nbcnews.com/_news/2013/10/10/20903624-nbcwsj-poll-shutdown-debate-damages-gop?lite

    By a 22-point margin (53 percent to 31 percent), the public blames the Republican Party more for the shutdown than President Barack Obama – a wider margin of blame for the GOP than the party received during the poll during the last shutdown in 1995-96.

    Just 24 percent of respondents have a favorable opinion about the GOP, and only 21 percent have a favorable view of the Tea Party, which are both at all-time lows in the history of poll.

    And one year until next fall’s midterm elections, American voters prefer a Democratic-controlled Congress to a Republican-controlled one by eight percentage points (47 percent to 39 percent), up from the Democrats’ three-point advantage last month (46 percent to 43 percent).


  139. prescriptions // StJ
    I just made a very interesting discovery over the weekend. I have been using Walgreens for my scripts, and then someone mentioned checking out Costco. I did an apples to apples comparison and Costco was on average 70% cheaper. Unreal.


  140. STJ – I get the point.

    Enuff said. :-)

    I think you're preaching to the choir,  except for a few of us renegades.


  141. But it's so much fun albo….


  142. Fun. STJ. Please don't kick me when I'm down. But remember :John F. Kennedy held a dinner in the white House for a group of the brightest minds in the nation at that time. He made this statement: "This is perhaps the assembly of the most intelligence ever to gather at one time in the White House with the exception of when Thomas Jefferson dined alone."

    …and remember he said:

    "The democracy will cease to exist when you take away from those who are willing to work and give to those who would not."
    -- Thomas Jefferson

    …and :

     

    ."My reading of history convinces me that most bad government results from too much government."
    -- Thomas Jefferson

     

    TOUCHE MY FRIEND ! ! !


  143. To quote Don Rickles :  We kid because we love !


  144. I don't see anything new coming out of today's meetings.


  145. Albo:

    Count me in. But I love my liberal friends at this site.

    See we can get along!


  146. Amen dclark41.  But did you ever feel like you were alone on a deserted ship, and the liberal ships were attacking. 8-) ?


  147. Albo/dc:  I was a conservative Republican for years, as they were supposed to represent the traditional virtues — hard work, self-reliance, scorn for suckling at the public teat, strong defense, etc.  I still believe those are virtues. 

     

    But over the last 20 years the middle class has collapsed into the lower middle class due to the outsourcing of jobs to EM countries — which seemed to make sense at the time, and did in fact elevate lots of global poor people to a more tolerable life experience .  Unfortunately, this resulted in a sharp drops in average income, and was exacerbated by the increasing sophistication of computer-driven processes, which further lowered the average worker's income.  The result has been an unprecendented a concentration of wealth by those fortunate enough to be capital owners beyond their home equity — i.e., fortunate enough be stockholders of the large corporations whose profits soared.  I am one of them.

     

    As I see it, I am speaking [and voting] against my short-term interests here — since my stance will lead to Democrats raising my taxes.  But longer term, I believe that America must primarily be viewed as a civil society, bound by rules, not an economy first and foremost.  I have lived half of my life in very unequal socieites, and, over the longer term, they don't do well.  The rich scrabble to keep what they have, and usually export their wealth overseas, and the poor have no stake in the system, don't work much, and, under certain circumstances, will take to the streets and start burning things.  The internet and cell phone has vastly improved the mechanisms for doing so.  Hence, I think it is very much in my/our enlightened self-interest to take a longer view and redress the tremendous increase in U.S. income inequality for the sake of future generations, of which my children will inevitably be a part.  Not a sermon, just my thoughts.


  148. Nice thoughts zero….


  149. Lawrence O'Donnell on Sen. ted cruz and Sen. mike lee of Utah.

    http://www.nbcnews.com/id/45755883/#53249937

     

    Sen. lee is not a very smart guy – Idiot!….  :)


  150. Thomas J. /albo:

    Big T.J. fan here, especially the Jeffersonian Bible, so when I saw those two quotes they seemed strange to me. 

    Running a search reveals that though they are attributed to Jefferson, there is no source for the quotes:

    http://www.monticello.org/site/jefferson/democracy-will-cease-to-exist-quotation

    http://www.monticello.org/site/jefferson/bad-government-results-too-much-government-quotation

     

    Anyway I prefer:

    "Democracy is the worst form of government, except for all those other forms that have been tried from time to time."

    - Winston Churchill.


  151. albo

    All the time, but it gives me good perspective on how the "other" side thinks. This group is very intelligent, however, misguided I think their politics are. I only wish I had the time, or the gift of prose to match wits with them. I want to respond to zero, but I am running out of time. Perhaps over the weekend. I'm sure he can't wait! :)


  152. Thanks, 1020.  

    dc41:  I would be very interested.   I can always be convinced by a well-supported argument.


  153. Here is the South Park tesla clip for anyone interested

    http://www.youtube.com/watch?v=YZRTK0aZPyQ


  154. [image]Good morning!

    Well, oil back to $101.72 already, despite the Dollar falling to 80.35.  We're still looking for a good break below $101.50, of course.  

    Asia was up about 1.5% but they were chasing us as they didn't start the rally yesterday so we ignore that.

    Asian Stocks Rise as Bond Risk Falls; Won to Copper Gain 

    China Export Gains Understated on Fake-Data Distortions: Economy. China is poised to post its first slowdown in export growth in three months, a result that may understate the strength of demand after fake reports inflated figures in the year-earlier period.

    Europe is up only a little bit and that's not a good sign as they were 1% behind us yesterday.  

    • Royal Mail Shares Soar

      Shares in U.K. postal service Royal Mail soared on their first day of trading, rising nearly 40% above the government's original offer price. The rise will likely fuel criticism the U.K. government undervalued the company. 51 min ago

    • German CPI unchanged
    • German CPI flat on month in September, as expected and unchanged from August.
    • On year, inflation +1.4% (as expected) vs +1.5% previously.
    • Harmonized CPI flat on month, as expected and unchanged from August.
    • On year, HCPI unchanged at +1.6% (as expected).
    • A year-on-year fall in energy prices dampened overall inflation, although food prices rose 4.7%.
    • Wholesale price index +0.7% on month vs -0.6% in August.
    • On year, WPI -2.2% vs -1.7%.
    • EUR-USD +0.1% to $1.3534. (PR)

    Shutdown talks are "making progress" and that's likely to be the story into the weekend unless someone changes the rhetoric.  We won't want to be too bearish but I like a skeptical hedge like our TZAs into next week.  Meanwhile, let's keep in mind things are not fixed and we are now closing the 2nd week of Q4 with the Government shut down – the economic damage is being done:

    • Deal or no deal? GOP back to drawing board on debt plan after Obama meetingRepublican lawmakers scrambled back to the drawing board late Thursday to modify their plan for a short-term increase in the debt ceiling, after President Obama apparently pushed back on the proposal during a high-stakes White House meeting. The meeting broke up with no deal announced, despite optimism earlier in the day that the two sides might agree. Senate Democratic Leader Harry Reid also cast doubt on House Speaker John Boehner's plan. The day ended like it began, with Americans still unsure when the partial government shutdown will end, and the financial markets still uncertain as to whether the country might miss next week's deadline to raise the debt ceiling.
    • Poll: GOP Blamed More for Shutdown

      Americans have come to hold a harshly negative view of the GOP during the government shutdown, a new poll found.

    The Possible Outcomes Of The Shutdown Theater.


  155. NLY/Albo – Yes, but if you get called with a .35 profit and the dividend is .35, what's the difference?  Anyway, it's a matter of preference.  I prefer to have more downside protection.  If you prefer to have more risk – that's fine – just be aware that you are taking it.  To me, if the only reason you are taking on list is because you fear an assignment that pays you .35 instead of getting your .35 dividend – well, that just seems like a bad reason to take $1 more downside risk.  

    Tweet/Angel – Oh come on!  It wasn't a little spike, it was a whole day BS run-up.  That's just the excuse they are using for jacking up the prices yesterday – despite the fact that there was no possible logical reason for it.  The real problem is that people believe that nonsense.  

    Good point on oil/ZZ – Of course, this overnight we did get a big fall…  

    Big Chart/StJ – Super-strong bounce at this point.  Dow is messed up so we can't use them to be bearish and that forces us to be technically bullish.  Of course, that's why we never sold any long-term longs, we just hedged them and it's better to get back to even on the hedge but never to have panicked out of our bigger positions on the dips.  

    GS/Rookie – That's going to be a fun case.  

    String bounce/Wombat, StJ – Well, since string theory allows for the observed particle to arise from different quantum states – I guess a string bounce is appropriate for a market flip-flop that turns us from bearish to bullish (a quantum event) in a single session.  Of course, you never know what the market will be like going forward until you open the box.

    Bear Trap/Crl – Often enough to make people think it's a thing so I'd say at least half the time but clearly this is all about the debt deal being done when, in fact, it's not done.  If it is done, then it justifies this pop but will it justify a full-blown rally?  How can a chart pattern tell you what the Government will do over the next 2 weeks?  It's just Voodoo, sometimes it works, sometimes it doesn't because the thing you are predicting a coin flip so you will feel vindicated about half the time but it has nothing to do with the pattern – it's the FACT of the event we're waiting on that will determine the move.  

    Dave/Pharm – I see them.  Maybe they just weren't up.

    SPY DAILY

    If Dave stopped doing these, I'd be tempted to start.  Pretty easy money in charting!  This is one chart I do care about.  Looks like we worked off oversold in one day.  

    NYMO

    Sad/ZZ – Much worse than sad, it's economically crippling for the bottom 80% because we all get sick (or our parents do) eventually and people have babies (at $5-10,000 per), etc and that wipes out all the hopes and dreams of even the most careful savers.  You have to realize that there's a purpose to this – by keeping the working population poor, they don't have time to complain about their lot in life, they don't have time to start their own businesses and compete with the top 10% – they are, essentially, wage slaves.   The average person in your 3rd World Country is probably a lot more free than the average American, who would quickly find themselves in court should they choose to do something other than show up for work the next day because they are so in debt that they can never stop and then, as soon as they begin to save, they are brainwashed into buying homes for $250,000 that cause them to end up making $450,000 worth of payments to the bank and suddenly they are 50 years old and they wonder why they were never able to save any money after putting 2 kids through $100,000 worth of college each.   Throw in a couple of medical bills and any family not making $1M (AFTER taxes) between 25 and 55 won't have a pot to piss in when they retire other than, if they are lucky, some home equity.  

    Flip/Rookie – Well, we never got too bearish, did we.  Not much to flip, most of our longer plays were bullish and we flipped bullish on NFLX in our STP, which changed the mix but we're still bearish on oil and, of course, it's just one day and the looming Government issues are still unresolved so I'd say we can't be MORE bearish but I'm certainly not feeling bullish yet.  

    GOP/StJ – All the more reason for the Dems to let them twist in the wind for as long as possible.  The Dems won't actively stop anything, but they're not likely to actually help things move along either.  "Mr, President, take the deal" is the weekend GOP talking point – if this doesn't fly for them, they are in deep doo-doo.  

    COST/Wombat – Do you mean co-pay or straight buys?  

    Lots of dead cows in South Dakota (early blizzard) and no Government means no emergency aid means higher beef prices and lower corn prices (less consumption) for those of you who play ags.  Overall, looks like we lost 1% of the US herd.  

    Jefferson/Albo – Yes, he believed in limited Government but the main function of Government he did believe in was to restrain bankers from taking over the country.  At the time, Bankers were Big Business – there weren't a lot of industries before the Industrial Revolution – Jefferson would probably be a terrorist today, bombing Corporate Offices and leading the Occupy movement – he would be thoroughly disgusted with this Corporate Kleptocracy we have allowed to grow like a cancer on our nation.  

    I hope we shall crush in its birth the aristocracy of our monied corporations which dare already to challenge our government to a trial by strength, and bid defiance to the laws of our country. Thomas Jefferson 

    Educate and inform the whole mass of the people… They are the only sure reliance for the preservation of our liberty. - Thomas Jefferson

    Experience demands that man is the only animal which devours his own kind, for I can apply no milder term to the general prey of the rich on the poor. - Thomas Jefferson 

    The care of human life and happiness, and not their destruction, is the first and only object of good government. - Thomas Jefferson 

    The man who reads nothing at all is better educated than the man who reads nothing but newspapers. - Thomas Jefferson 

    It is always better to have no ideas than false ones; to believe nothing, than to believe what is wrong. - Thomas Jefferson 

    It is more dangerous that even a guilty person should be punished without the forms of law than that he should escape. - Thomas Jefferson 

    War is an instrument entirely inefficient toward redressing wrong; and multiplies, instead of indemnifying losses. - Thomas Jefferson 

    It is our duty still to endeavor to avoid war; but if it shall actually take place, no matter by whom brought on, we must defend ourselves. If our house be on fire, without inquiring whether it was fired from within or without, we must try to extinguish it. - Thomas Jefferson 

    Fix reason firmly in her seat, and call to her tribunal every fact, every opinion. Question with boldness even the existence of a God; because, if there be one, he must more approve of the homage of reason, than that of blindfolded fear. - Thomas Jefferson 

    We may consider each generation as a distinct nation, with a right, by the will of its majority, to bind themselves, but none to bind the succeeding generation, more than the inhabitants of another country. - Thomas Jefferson 

    So I am thrilled to see you quoting Jefferson, Albo.  Perhaps you can read further and be lead down his path to the Liberal Democratic Party he envisioned!  If only the people who run around quoting Jefferson actually took the time to read what he actually wrote….


  156. Very well said, ZZ – want to come home and run for Congress?  

    Good clip 1020.


  157. Phil:  What is your take on yesterday's action.  All the indexes turned green and stayed above the 40% retracement.  Does that mean we turn bullish or stay cautious.  Most of the trades (since I joined recently) have been to the bearish side (TZA, SLW, etc).  Do we adjust or watch for few more days and see where it takes us?  Thanks.


  158. Phil:  Sorry, ignore my recent post.  Didn't see your response. Thanks


  159. Crl I am not sure you will still read my comments specially on your oil overnight. I only can second Phil's remarks you can not even go to the bathroom when playing futures. I do not know how much money you are willing to lose. But even if you have 5 million to burn, do your self a great favor and open up a paper money acc with TOS. There you will see how fast you get down to sero. I know I as well have been there before wanting to jump in with two feet and make big money, but trust me it just does not work that way. Sure go ahead and ask any questions you may like and a fellow like Phil will be able to tell you, based on your questions, when you in deed can play with real money. This is no criticism only some friendly advise, from a fellow who has been there. This side, of which I have been a members for some good years now, I still learn every day something, be it from Phil or other members. Just learn to be patience and than all will fall in to place.


  160. Rookie – please remember, that probably 80% of the daily chatter pertains to maybe 10% of your portfolio. The primary value creation occurs with the income portfolio, which gets maybe 5 to 10% of the daily chatter. These are the positions that are established and occasionally monitored… longs left to slowly appreciate and short premiums to decay…. Phil has a more eloquent way of explaining this…