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Flip Floppin’ Friday – Riding the Serpent for Fun and Profits

And the spitting cobra is back:

That's right, the newest chart sensation, the "spitting cobra" has re-formed on our Big Chart and it was quite an accurate sell signal on May 31st, as well as Sept 20th but we jumped the gun last Thursday, although we did catch a small ride down before the reversal.  

Reversal is just what we have, pre-market, as the major indexes attempt to reverse yesterday's losses BUT, interestingly, the Russell is still in the red, simply unable to take back that 1,100 mark.  

That's why TZA was our favorite short last Thursday and the spread we discussed in the morning post was the 40 Dec $20/24 bull call spread at .90 ($3,600), selling the 2016 AAPL $400 puts fro $41.20 ($4,120) for a net credit of $520.  

The Dec $20/24 bull call spreads are now $1.20 ($4,800) and the short AAPL 2016 $400 puts are now $39.40 ($3,940) for net $860 and a $1,380 profit already (265%).  How's that for a good hedge – the RUT is only down 10 points since we made it!  Come on folks, this is just the stuff we give away for free…

Meanwhile, speaking of AAPL, in our Member Chat room on Monday morning, we played a more complicated spread (this is the whole point of joining PSW, we teach you how to make these trades) with AAPL and my trade idea was a broken butterfly ahead of earnings based on the fundamental principle we teach at PSW, which is:  BE THE HOUSE, Not the Gambler and SELL risk premium to others.  Ahead of AAPL earnings, the risk premiums were through the roof and we took full advantage with:

Trade Details Cost Basis Expected Value Expected Profit/Loss
· Buy 5 AAPL 2013 01-NOV 510.00 PUT $4,875.00 $230.00 ($4,645.00)
· Sell 5 AAPL 2013 01-NOV 530.00 PUT ($9,550.00) $3,750.00 $5,800.00
· Sell 5 AAPL 2013 01-NOV 520.00 CALL ($9,750.00) $3,685.00 $6,065.00
· Buy 5 AAPL 2013 01-NOV 540.00 CALL $5,125.00 $250.00 ($4,875.00)

In theory, between $510 and $540 after earnings, we expected to make between $1,000 and $2,000 in a week on a trade that risked no more than $640 if we were wrong.  As usual, we like to set up positive risk/reward scenarios so that, even if we only get 1/3 our trades right, the balance is well in our favor.  AAPL came in dead center on our spread and, as of yesterday (contracts all expire today), the spread was already net $3,125 – almost at our maximum possible gain.  

This one was not officially added to our Butterfly Collection, that virtual portfolio has been returning a very dull 6% per month and uses more conservative strategies than this earnings play, which risked losing $600 but had a tremendous short-term upside.  In yesterday's post, we mentioned a few of our other earnings plays on EXPE, JDSU, SBUX and V and those plays had mixed results in yesterday's wild action:

  • EXPE 2015 $44.48/34.48 bear put spread at $3.50, selling Jan $49.48 puts for $3.90 for a net 0.40 credit, now $1.80 - up 525%
  • EXPE 2016 $45/60 bull call spread at $6.50, selling 2016 $45 puts for $9 for net $2.50 credit, now 0.65 (up $3.15) - up 126%
  • JDSU June $13 puts sold for $1.12, now $1.54 - down 37%
  • SBUX Jan $80 puts at $3.65, now $2.74 - down 25%
  • V March $210/220 bull call spread at $3.50, selling Nov $205 calls sold for $4.10 for net .60 credit, now $2.02 - up 436%

See what I mean?  Because we have extremely positive risk/reward ratios on each trade idea, we don't have to win all 5 to make excellent returns.  Also, since we REALLY want to own JDSU at net $11.88 and JDSU is actually still at $13.09, that trade has plenty of time to come back for us (or give us JDSU at another 10% off) and SBUX we rolled to an even more aggressively short position as we feel their upcomming possible $1Bn+ settlement with Kraft is going to catch many of their new shareholders by surprise.  

Actually, the SBUX trade was going well for us until GS came out with a conviction buy on them during the day with a $92 price target.  The rating had all the positives for a long-term hold but neglected to mention what impact a $1Bn+ settlement may have on their earnings (roughly $2Bn per year at the moment).  That's why we've been shorting SBUX and that's while we'll keep shorting SBUX until the settlement.

Meanwhile, KRFT is planing on taking SBUX's $1Bn and teaming up with MCD to begin selling branded coffee in grocery stores (Kraft already supplies MCD with McCafe Coffee), K-cups, etc. This is also not mentioned in GS's rosey report on SBUX and that's possibly because GS and their top clients have a ton of SBUX to unload ahead of the court decision and what better way to herd in the suckers than to release a note on earnings day that's essentially vague and mentions 2019 and $92 for a target with SBUX already at $80.  Fortunately for GS, most investors don't read more than the headline and BUYBUYBUY at $80+, even though $12 growth over the next 6 years really isn't likely to be the returns they are churning over.

Oh, and did I mention that coffee is currently trading at an all-time low?  Imagine what a return to normal pricing would do to SBUX's bottom line? Just last year, the price of coffee was 70% higher than it is now and the year before it was 150% higher.  A lot of the earnings growth of SBUX is the impoverishment of their suppliers.  Who knows, maybe the suppliers will drop the price of coffee to free to give SBUX another year of savings and maybe the year after that, suppliers will pay SBUX to take their coffee to keep the trend going.  It could happen – just ask GS…

/KCZ4 is the Dec 2014 Coffee Futures and I like playing those bullish along with our SBUX bearish position.  They are currently trading at $117.90 (much higher than the current spot price of $105) and they pay (or cost) $18.75 per nickel, per contract and the margin requirement on each contract is $2,750.  A small bounce to $125 in the front-month contract (currently KCZ3, they don't do monthlies) should net about $7,500 per contract and a stop below $100 should cost about $1,875 per contract so, just like our option trades, we look for that positive risk/reward scenario.

Come join us a week from Sunday (Nov 10th) for our 2-Day Las Vegas Seminar, where we'll discuss options and futures trading as well as the overall economy and even what stocks we like for 2014.  We're also going to play poker and have sushi – a good time for the whole family!  Hope you can join us.

Have a great weekend, 

- Phil


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  1. Oil Lines

    R3 – 97.92
    R2 – 97.47
    R1 – 96.92
    PP – 96.47
    S1 – 95.92
    S2 – 95.47
    S3 – 94.92

    Yesterday's high and low – 97.03 / 96.03

    We have been making lower lows this week it seems!

  2. Android on a roll now:

    Android tops 81 percent of smartphone market share, Windows Phone cracks 4 percent

    That's a lot of phones. AAPL losing market shares but selling more phones – the smartphone market is still expanding it seems.

    Android tops 81 percent of smartphone market share, Windows Phone cracks 4 percent

  3. Bill Gross – commie!

    In the United States, the share of total pre-tax income accruing to the top 1% has more than doubled from 10% in the 1970s to 20% today….Congratulations. Smoke that cigar, enjoy that Chateau Lafite 1989. But (mostly you guys) acknowledge your good fortune at having been born in the ‘40s, ‘50s or ‘60s, entering the male-dominated workforce 25 years later, and having had the privilege of riding a credit wave and a credit boom for the past three decades. You did not, as President Obama averred, “build that,” you did not create that wave. You rode it.

    And now it’s time to kick out and share some of your good fortune by paying higher taxes or reforming them to favor economic growth and labor, as opposed to corporate profits and individual gazillions….If you’re in the privileged 1%, you should be paddling right alongside and willing to support higher taxes on carried interest, and certainly capital gains readjusted to existing marginal income tax rates. Stanley Druckenmiller and Warren Buffett have recently advocated similar proposals. The era of taxing “capital” at lower rates than “labor” should now end.

  4. It looks like we either need more growth or a lower market:

    US stock market cap to GDP (Exhibit 2), one of Warren Buffett’s favoured valuation metrics, is currently 1.12x, clearly high by the standards of the last 60 years. The measure is at the very least a reminder that growth in 2014, rather than liquidity, is essential to prevent an overshoot of the equity market.

    I vote for more growth!

  5. We are all like Japan now it seems:

    Unfortunately, just as Japan approaches escape velocity from the deflationary vortex, Europe is showing signs of what could be long-term economic trouble for the world economy. (The 27-nation European Union is the world’s largest economic bloc.)  The latest update on price levels in the euro zone today showed headline consumer prices rising a piddling 0.7% in October, from the same month in 2012. That was much lower than economists had expected. Core inflation—which strips out the noisy and volatile prices of products like food and energy—rose just 0.8% compared to last year. That’s a record low.

    The bottom line? Europe is playing a serious game of footsie with deflation, just as Japanese prices have finally stopped falling. Year-on-year price changes actually increased 0.7% for Japan in September. This chart shows the deflation baton being handed off to Europe.

  6. Phil/DXJ, This seems to be an interesting ETF as it is short the Yen and long Japanese stocks. Volume good also. What is ytour take on this? Thanks

  7. And the insane chart of the day:

    Good job with imposing austerity on our infrastructure. I predict many reports on collapsing bridges over the next 10 years. Idiots!

  8. stj, It's too bad people don't understand this stuff. Much easier to watch Fox and told what is what.

  9. 'Heavyweights square up in lawsuit over former Nortel patents'

    boy, would ilove to be the lawyer on this one.

  10. Good Morning!

  11. Phil/Pot   I have spoken with members of a San Diego County Co-op and they say their best strains are coming from non smoking, white collar pharmaceutical types who grow for fun….


    ….Juan Valdez sells dirt…. :)

  12. Zalicus Inc. (Nasdaq Capital Market: ZLCS), a biopharmaceutical company that discovers and develops novel treatments for patients suffering from pain, today announced positive results of a Phase 1b clinical study with Z944, a novel oral T-type calcium channel modulator in development for the treatment of pain. The Phase 1b study is an experimental clinical model utilizing Laser-Evoked-Potentials (LEP) to provide both objective and subjective assessments of the activity of Z944 in induced pain states. Based on these results, Zalicus is planning to advance a modified-release formulation of Z944 into Phase 2 clinical development in an appropriate pain indication in 2014. In addition, a second United States patent for Z944 (U.S. Patent number 8,569,344) covering methods of treating pain was issued on October 29, 2013, providing additional patent protection for Z944 in the United States until at least 2029.

    “This is the first T-type calcium channel modulator to demonstrate clinical translation in pain, and these results are indicative of Z944’s potential activity in modulating pain signaling. We look forward to further evaluating a modified release formulation of Z944 in a relevant clinical pain syndrome in 2014,” commented Mark H.N. Corrigan, MD, President and CEO of Zalicus.

  13. Good morning!

    Here's how NYC celebrates Halloween.  Well, we also do it like this….

    Oil FAILING at $95.50 – so much for Israel attacking Syria…

    It will be surprising if this doesn't take the oil majors down and then they take down the S&P (now 1,775 on /ES).  No good shorts at the moment but watching RUT (/TF) 1,100 with great interest to see if they can get back over it.  If not, then I'd just short whatever index goes highest (Nas at the moment, 3,383 on /NQ). 

    Bullard giving us an early boost with doveish talk:  

    Oil is telling us the real story of the economy.  Dollar up to 80.70 despite Bullard's note but it's a super-slow day and nothing matters until next week.

    At the open
    • Dow +0.37% to 1602. S&P +0.25% to 1760. Nasdaq +0.36% to 3933.
    • Treasurys: 30-year -0.26%. 10-yr -0.16%. 5-yr -0.05%.
    • Commodities: Crude -0.88% to $95.53. Gold -0.72% to $1314.2.
    • Currencies: Euro -0.59% vs. dollar. Yen +0.07%. Pound +0.49%.

    Nikkei dropped all the way to 14,155 overnight, now crossing back over 14,300 so /NKD is the long I'd play with the Dollar going up and the markets up this morning but only as a momentum trade over that line.  

    Gasoline $2.55 is an interesting long (/RB) but only if oil holds $95.25 and the Dollar stays under $80.70.

  14. nice 2Kround trip on /TF — good morning 

  15. Here's a few useful charts to start out day:














  16. Timely cover on ABX and GDX yesterday. These guys really can't get any traction whatsoever!

  17. Phil,

    Should we stop out of USO that we did yesterday?

  18. EUR/USD hitting its 50dma

  19. anyone else playing the white pony ?    /TF   crazy ride ===

  20. Wow, we're drowning in a rainstorm here.  

    Android/StJ – Well, it is FREE.  iOS only comes with an iPhone so, unless AAPL can grow sales faster than the 25% they're currently going at, they are going to lose market share but, as I keep saying, it's not the market they want (people with money).  In the recent iOS7 upgrade, I noticed it was all adjustments to their wallet payments – they are going to roll into mobile payments in a big way and Android simply can't because the open platform would be hacked to shreds if people start using it for payments.  That's your next $10Bn for AAPL, mobile payments.

    That's where that "fanaticism" that others make fun of will pay off for AAPL as their fan base will be thrilled to make payments by waving their iPhones at things.  Wealthy people who are eager, early adapters will give AAPL a massive advantage at point of sale.  If they are really smart, they'll put out Android-compatible apps (assuming they can secure it) so they can capture the broader market as well.  

    By the way, speaking of Apps, I don't know if it's on android but download an App called "Scan" for $1.99 and then wave your phone at anything with a bar-code or one of those other things:

    iPhone Screenshot 1

    This is a mind-blowingly useful App that immediately tells you if the thing you are looking at can be bought cheaper somewhere else (and lets you order it right off the phone if it is).  If you combine this with an AMZN prime account – you become one of those dreaded "showrooming" people the retailers dread!  

    Bill Gross/StJ – He had a revelation and came over to the dark side!  One of us, one of us, gooble gobble, one of us

    That infrastructure chart is G-D ridiculous!  If you live in an apartment building and that's what's happening with their infrastructure spending – you'd plan on moving before it all hits the fan, right?  I'm telling you guys – as StJ says, better have an escape plan for this train-wreck in progress.

    DXJ/Jomp – Well, they Nikkei is up 75% since last year and the Yen is down 22% over the same period so yes, it would have been a great ETF a year ago, when it was at $30, but now it's $48 (up 60%) so what is it you expect?  Can the Yen go down another 20% without bouncing?  Will the Nikkei rise another 75% without pulling back (it's already back from a near double)?  Just too late to jump on board for me.  

    RUT touched 1,100 (/TF) and was smacked down hard.  That means we can take a poke at shorting the Dow (/YM) below the 15,550 line (now 15,563).  Oil testing $95, super-nasty if they fail that.  Dollar 80.94 is being ignored by the Dow so far.  

  21. ABX – Phil or anyone/ What happens to the puts in ABX if they sell the additional shares?  I sold Jan 2014 $19 puts which are still positive… just sell now?

  22. wombat

    I am not allowed to go in and out, but I dream of days like this when I could. I have IWM puts that when we finally drop will sell. Be super careful if playing the ups as they are news pushes. I believe today will be solid down.

  23. ABX/Phil,

    Adding to ariverAs question: Based on the changed circumstances, what is your outlook for ABX?  Do you still think they are a good long-term hold?

  24. Linn Energy, LinnCo pop higher as SEC has no further comment on filing

    Linn Energy (LINE +10.8%) and LinnCo (LNCO +10.9%) could be in the clear from the probe of their accounting activities, after the companies file an amended S-4 which says the SEC's Division of Corporation Finance has advised that it has no further comments on Amendment No. 6 to the Joint Registration Statement.

    Hedgeye's Kevin Kaiser laments: "One of most expensive E&Ps in US. With zero organic growth and highly aggressive accounting. Who cares I guess."

  25. phil.

    it looks like a lot of volatility i.e. price of options/prem  has come out of tsla.esp higher call strikes….

    is that indicative of anything……….that it has rolled over on the 50/20………?

  26. Phil/Freaks

    …Cannot beleive you pulled that one out, awesome. smoked a fat doobie and saw that in the theater in my college days…hilarious!

  27. Phil — Scanning — there is an excellent iPhone app called Red Laser that read bar codes for any product, and also the CR codes (in your photo), and gives all kinds of internet prices.  Great for browsing in a bookstore and storing info on all those books you want to read later, and, er, buy as ebooks on your iPad.

  28. wombat

    Concerning the RUT, I have a downward channel with a projection of IWM 108.57 by Europe close and then a possible bounce to the upper channel. 108.57 is a strong confluence line and I plan selling some at that point.

  29. Phil

    We had that rain yesterday (Michigan). So tomorrow you can expect very windy conditions.  My stab at weather forecasting!

  30. Android / Phil – Android has had mobile payment for a while using NFC that AAPL would not support and this next version of Android makes it even better:

    Android 4.4 KitKat now utilizes something called “Host Card Emulation” technology. With the HCE, your device basically emulates a ISO/IEC 7816 smart card, which basically allows it to work the same as a device that has a secure element. It’s a bit more complicated than that, but that’s the gist anyhow.

    What makes HCE even more exciting is that ANY app can utilize it. This means that developers can now build apps that easily allow for NFC payments, card access, transit passes and more – without the secure element needed.

    Up until now NFC payments have been a cool idea, but a very limited one. Part of the problem is carriers have flat out refused to support Google Wallet, claiming that the secure element poses a potential security risk. The truth is that these carriers likely just want to promote their own payment standards.

    With HCE, it doesn’t seem to matter what carriers what or think. Any Android 4.4 KitKat device with NFC should now easily work with Google Wallet and other mobile payment services, on any mobile carrier.

    Without the secure element controversy, mobile carriers will find it hard to shut this down. In fact, with the new payment system being a part of Android 4.4′s core, it may prove to near impossible to remove it without incurring Google’s wrath.

  31. And there are many apps like that Scan apps out there… Some free as well.

  32. dclark

    Reporting weather is easier, I have a solid 6" of snow with knee high drifts. Chancy, it is coming your way.

  33. Nortel/Wombat – Too bad these things take years to play out.

    Pot/1020 – LOL, I'll let you be the expert on that one!  When I was young, Columbia was a feature.  

    ZLCS/Pharm – Very thin trading but someone got paid $2.55 for selling the April $5 puts – that seems very worth a shot for a net $2.45 entry.  

    /TF/Wombat – Congrats, you are really getting the hang of that thing.  

    STP – Hmm, should we have quit while we were slightly ahead?  I guess now we know how bearish we are, about $6,000 per 75 dow points.  

    In the STP, let's DD on those next week $34s at .55 for 40 at .70 and, of course we look to get 1/2 back out at .70.  If USO is not up on Monday, we roll to Nov most likely as we need some kind of upside hedge in the STP. 

    ABX/Arivera – If they SELL the shares, the stock just dilutes, I don't think it will affect the options other than the stock may drop (already has).  I like selling stock to pay off debts – it's free money for the company.  They are selling 188M shares for $18.35 and they plan on using the $3.45Bn to pay off $2.6Bn in debt and give them $850M in working capital.   This is ABX just doing what they always do as they prepare to buy more gold assets while the price is low and their competitors (who can't raise cash like this) are suffering.  If you are a long-term investor, that's great.  Short-term, we may see $15 again.   They did this in 2009 as well, selling 108M shares for $4Bn ($36.95).   While that sounds terrible now – the stock flew up to $53 by the end of 2010 but the MSM is pushing the "and now it's down by half" aspect of the story to scare the sheeple out of the stock for their Bankster Masters.  

    ABX is a LONG-TERM inflation play.  While they do have a ton of debt (about $16Bn), they also have 400M ounces of gold ($540Bn) and roughly a $900 extraction cost $360Bn, which leaves them with $180Bn worth of profits to pull out of the ground over the years.  In their recent earnings, here's the summary:

    • Strong operating results and cash flow; improved 2013 guidance

      • gold production of 1.85 million ounces at all-in sustaining costs (AISC) of $916 per ounce
      • copper production of 139 million pounds at C3 fully allocated costs of $2.15 per pound
      • narrowed the range and lowered top end of operating cost guidance for gold; improved copper guidance on Lumwana turnaround
      • adjusted net earnings of $0.58 billion ($0.58 per share) and adjusted operating cash flow of $1.30 billion
    • Targeting annual cost savings of $500 million from a flatter operating model and other initiatives

    So, I say this every time ABX can be netted below $15 and I'll say it again – this is a great long-term investment and a great hedge against inflation.  You can sell the 2016 $15 puts for $2.70 for a net $11.30 entry and leave it at that (37% below the current price) or you can add the 2016 $13/20 bull call spread at $3.15 and that's net .45 on the $7 spread that's $5 in the money to start.  

    Let's do 40 of those in the Income Portfolio and our worst case is owning 4,000 shares at net $13.45 ($53,800) and we already have 15 short 2015 $25 puts, now $8.20 ($12,300) that we sold for $3.30 and we'll roll those along to 20 of the 2016 $20 puts at $5.60 ($11,200) for net $1,100 and that's fine as our 15 long 2015 $13 calls are up $2 ($3,000) so far.  

    Dow Futures were good for a quick 25 but stopped out now.  

  34. phil

    i think its from an old inc port trade but i am long a nuan jan 15….18-25 bcs x 10 and short the 18 puts x10

    i was thinking of improving by buying back the 25;s ……rolling the 18 call to 16 and sell a couple of puts to offset……………..your thoughts/strikes……………..tks

  35. LINE – Pstas,  thx for the post.  Hadn't noticed the big jump.  Sold a partial cover of Jan 32 calls.

  36. RUT 1,093!  Should be bouncy here.  Dollar 80.80.

    ABX/Wappler – See above.  

    LINE/Pstas – That one's a stay away for me.  

    TSLA/Mill – It's just indicative of the constant rise that forced the premiums so high is abating (for the moment).  The implied volatility of a stock takes into account the move it's made recently.  As TSLA went up and up, the IV went up.  Once it even flat-lines, the premiums begin to decay.  Doesn't mean much more than that – it's a measure of their recent action. 

    Freaks/Sage – That movie traumatized me when I was a little kid and saw it on Chiller Theater or something.  There are some things kids should NOT watch…

    Red Laser/Esco – I'll be curious to see if it's as good as Scan.  I'm amazed by how it picks up any obscure thing I put in front of it.

    Gold, meanwhile, barely bounced off $1,305.  

    Weather/DC – Thanks for the update.  As long as I can fly to Vegas on Sunday, I don't care…

    HCE/StJ – Worth keeping an eye on.  Yet V and MA seem not to be worried at all.

    Free/StJ – I think my Scan app has paid for itself about 20x already in savings, so no complaints. 

    NUAN/Mill – I can't imagine why, I haven't liked NUAN for ages and Icahn's pump job caused us to go short on them a while ago.  I guess if you are stuck with them, I don't think $15.50 is where you should bail but I wouldn't put too much money into them.  I'd assume this is the bottom and take out the short calls (.65) and that leaves you with the essentially net free $18 calls and the short $18 puts that are $2.50 under water.  That's a 1x play so I wouldn't add more puts but, if you want to spend money, then I'd spend $2.20 to roll down $5 to the $13 calls ($4.20) and IF they fail to hold $15, THEN you can sell the $15 calls (now $3.20) and roll to the 2016 $10 calls (now $7.10) and see how that spread plays out.

  37. Phil/Vegas

    We leave for Vegas on Thursday. Can't wait to get out of here!

    …and get to this!

  38. Got a re-entry on the Dow shorts (/YM) at 15,550 while oil is failing $95 – that's a good combo!  

  39. I'll be well-tanned and rested by the time you get there DC!

  40. Phil

    TZA's calls are starting to heat up.

    …and stay away from the topless pool! :)

  41. Hi Phil, I ended up short the shares of CZR after being assigned the short call options at $12.50 (part of the 4 legged play). Now I am short the CZR rights issue by default following the recent corporate action. What is the exit plan on the rights issue? Thanks, Dec

  42. IWM has broken support and dropped below trend line support. Glad I only sold some puts as planned. Next stop is about 107.8.

  43. TZAs up nicely, but the VIX is down – somewhat comical,

  44. Credit cards / Phil – I don't know that V and MA will be worried by the Android setup. They might even come up with their own apps using that software.

  45. phil, in the STP, should the vix puts be rolled out?

  46. That 107.8 is a reflection point next support is 108.5 but the bottom could be 107.2, A 50% retrace.

  47. /TF is a nasty mistress

  48. Here is an interesting take on the cost of Tesla's new battery agreement with Panasonic.  Looks like their 25% gross margin target could be impacted if true.

  49. wombat 1085 /TF!!!!!

  50. Caught a 50-point drop on /YM.  Thanks, Phil!   I also just went into /RB at $2.55.  Do you still like that one?  

  51. lotter batteries

    The increases are likely to be higher because China has the rare earths.

  52. TCS off to the races.  Just too much cash in this market looking for a home.

  53. Thanks, Phil

  54. Lots of TSLA positive news but the price is not reflecting. AAPL below $520 is another surprise.

  55. LINE – I was lucky enough to buy the stock at $13.60 in Nov 2008.  Since then I have collected $13.04 in dividends.  Stayed with the stock since Leon Cooperman owns 6.6 million shares.  I've had good luck with his picks.  Incidentally he also owns 56 million shares of CIM. (Don't know why the italics clicked on.  Must have hit that key by mistake.)

  56. StJ / VXX

    I am following your VXX ideas after the split.  I have recently twice sold the VXX Dec 13, 13 puts as the market looked toppy. I am wondering what you think of combining the two.

    If VXX goes to 50 after the split then buy say 2016 25 puts and sell monthly or bi-monthly 13 puts against it.

  57. shadow – thanks
    already on it – this has been quite a ride this morning. its all i've done : >

    how are you feelin ?

  58. Topless/DC – Somehow, having daughters takes all the fun out of ogling young girls…  

    CZR/DM – We cannot get a straight answer from anyone on those rights.  It's not normal as it's not reflected in the option pricing and the rights are not transferable so how can you be short them?  At the moment, we're leaning towards thinking the rights will simply disappear once they are used by the actual owners but never take anything for granted – check with your broker and, if you find something out – please let us know as we have gotten many mixed messages. 

    1,086 is the low for the RUT (/TF) so far.   

    IWM/Shadow – Volume is still very low so be careful if they pop back over 1,090 on the Futures.  

    VIX/Deano – What volatility?  I don't see any volatility…

    CCs/StJ – Anything like that can dilute the brand.  AAPL has 15x more cash than both of them combined ($11Bn), they could set up a merchant backbone and take them on directly.  The only thing V and MA have going for them is they don't earn enough ($5Bn combined) to hold AAPL's interest although they pull 20x p/es, which would make AAPL a Trillion-Dollar company! 

    VIX/StP, Lunar – We'll see if we get a big drop next week and, if not, then rolling or killing.

    TSLA/Lotter – It's speculation on top of speculation.  "IF true" is a massive understatement.  TSLA is the buyer, it's not likely they'd quadruple their order with a worse deal.  More likely economies of scale and better production control are a benefit to both companies.  

    /RB/Imho – Congrats on Dow.  Yes on /RB – but tight stops at $2.55 and watch out for the Dollar over 80.85, which would be a sign to be super-cautious (as would oil failing $94.75).

    TSLA/Shadow – If you do the math on their deal with Panasonic, they simply can't possibly make enough cars to come close to justifying $160 until the end of the decade.  

    LINE/Albo – Well that's the way to do it.  Nice tree you planted.  

  59. from WSJ:

    Nasdaq Halts Trading at Nasdaq Options Market

    Nasdaq OMX Group halted trading Friday morning at one of its three options markets.

    The exchange operator said in a notice to traders it halted trading on its Nasdaq Options Market, known as NOM, at 10:56 a.m. EDT. The halt came after an earlier alert that Nasdaq was investigating some issues at that exchange. Nasdaq OMX’s other two options exchanges were operating normally, according to a spokesman.

  60. Topless/DC – Somehow, having daughters takes all the fun out of ogling young girls…

    oh god this made me laugh – i have two daughters

  61. Albo- LINE- similar history for me, I stopped selling calls on LINE as I was more often than not getting my dividend stolen. 

  62. VXX / britkid99 – I thought about that as well but I don't know that you get much from these put sales especially if VXX is over 50. And I was also using in my IRA account so selling a lower put strike might use up a lot more margin. We'll have to look at them when they reset VXX and see what's cooking then.

  63. Phil: daughters

    I have three. I know! I know! :)

  64. Phil

     With the drop in AIG is it worth a trade?



  65. womb:

    My last is almost out of the house and then I can start ogling again!

  66. I only wrote on LINE once.  Stopped doing it til today, cause the premium was low and I loved the dividends.  Thought I'd try it on the big pop today.  Only partial however.

  67. TLT going down hard and fast.   Money coming out of bonds, rates going up and the market going down – this might be BAD.  

  68. OK, Which one of you traded 1417 contracts of  DLR April 40 puts? – even after Phil told you to stay away.

  69. shadow

    I hope I am out of here before any snow comes my way. Way too early for that!

  70. wombat

    Feeling very optimistic, still in shock over yesterday's approval for $13,000 in drug assistance. I did call the surgeon after that. Today is a refreshing profitable but I am selling the rest soon if we don't drop some more soon. Could be daily bottom. They are stopping short of goals, close to, I may change my correction factor this weekend.

  71. Shadow // TF

    $3.2K – I'm out – thanks man.

  72. wombat I have sold 60% now up over 2K but it is not one day.

  73. phil/STJ, is it too early to think about an earnings play on TSLA.  it seems TSLA could go either way on earnings.  how about a Nov2/Jan calender straddle, to take advantage of the IV crush?

  74. wombat

    I am all cash now for me this is a couple weeks but dam good about 35% return at times a loss.

  75. Phil/Uso~/cl falls below $95. Any thoughts on yesterday’s nov2 USO 34s?

  76. Phil

    Thanks for everything.

    Now would you go for something else over the weekend? IWM is ahead of the rest.

  77. Phil – You are so right about tree planting.  Unfortunately, I have also planted more than my share of weeds over the years. ;-)

  78. WOW! I think I actually sold the last at the bottom when I saw /TF @ 1085. I am changing my lines by an unknown correction factor. Been slightly off for the month. It's beer30.

  79. Daughters.  It's a worry, that's for sure.  Two and counting. Good thing there's a [not much] older brother to help out.

  80. NFLX 420??


    maybe 4/20 Pharm??


    FU NFLX!!!!


    FU BAIRD!!!!

  81. Phil   Thanks for EXPE trade,made 25%,my membership for a year,in 1 day.In and out!THKS

  82. Any comment on the REITs today?

  83. shadow

    I was hoping for $22 on TZA, but I bailed on my Nov 20 calls at $21.5. Only so much this market will pull back when there's a giant bed of money under it that keeps growing.

  84. CZR/Phil,

    I am also short the rights.  According to the corporate action guys at TDAmeritrade I will be short CGP shares if the rights are exercised (today is the last day before these right expire, by the way). Since there is a lot of paperwork involved, it can take up to 15 days for this to be reflected in the account.  So anybody who is short the rights now should know by Nov 15 whether they are short CGP or not.  Once (and if) it start trading on Nov 18, people would also know what their P&L looks like on the new CGP short position – before that, there is simply no way of knowing.

    This whole thing still sounds completely insane (why no adjustment of the options if there is a risk of loss from the rights?), but I have decided to wait until I am actually short the shares before I take the next step.  Also according the TDA I will get $8.64 in premium for being short the shares, but somehow that doesn't make sense, either.  Wasn't CZR supposed to collect this?

    Very, very messy – let's see how the story unfolds…

  85. dclark

    Very good for a bunch of us. IWM is down 2.5% and it would surprise me if we return to the top early next week This was a RUT only correction and oil that is another story.

  86. zero/reits

    They seem paralyzed by the FED. They have stopped talking about tapering, but I think many are losing their faith that the FED can control everything that might happen including interest rates rising on their own.

    sitting on a few depressed NLY shares!

  87. shadow

    The chart on DIA got me to bite on a few Dec puts. Still expect the VIX to kick up going into DEC with another round of debt limit tomfoolery on the way.

  88. Nasdaq/Deano – Those guys are spinning out of control.  I posted a while ago that the reason they don't actually FIX their system is because then they couldn't sell priority access to co-locators, which is now a significant source of their revenues.  I think they are playing with fire though and, one day, this whole thing will blow up in their faces.

    Laughing/Wombat – Well, you can see why Chinese men prefer sons…

    3 daughters/DC – Wow!  I salute you.  Reminds me of a line from Fiddler on the Roof: "Bless me with five daughters, a life of poverty, that's all right."

    AIG/QC – That's not a drop!  $53 to $48 is 10% but they're up from $30 last year so up $23 and down $5 is a 20% retrace of the run.  Get another $5 out of them, and THEN you might have a good entry.  

    Ogling/DC – 7 years from now, I hope I have the energy!  

    DLR/Stock – That's a big play. 

    Optimistic/Shadow – Thats great. 

    Upside wheeeee! on gasoline, crossing over $2.56 and looking good with 2 hours to NYMEX close.  Remember, every penny they jack it up is $5M at the pump per day so, on a Friday, pushing gas up .05 makes our local oil cartel $75M extra over the weekend!   That's why it's such a good trade, they're not going to deprive themselves of all that cash just to screw you out of $1,000 on your contract!  

    TSLA/Lunar – We are straight-up positioned for them to drop 10% on earnings.  Hopefully we're not wrong.  If you want a hedged entry, I'd lean bearish (but keep in mind how badly this stock can burn you) and go for:

    Selling TSLA Nov $10 calls for $11.70 and buying March $170/200 bull call spreads for $9 for a $2.70 credit and, if TSLA misses, you keep the credit plus whatever is left on the spread and, if they beat and head higher – then it's time for the Rawhide Strategy.

    USO/STP, Invest – Sure, we doubled down on them to average .70 on 40 and now we'll see if we can get 1/2 out at .70 and ride the rest into Wednesday's inventory.

    You're welcome Shadow.  How about not push it, get to cash, have a nice, relaxing weekend and we make a fresh start on Monday with better information?  

    Weeds/Albo – The nice thing about weeds is you don't need to take care of them.  8) 

    EXPE/490 – Congrats.  Good job taking money and running.  

    REITS/ZZ – No particular comment other than what Roubini said:

    …All of this excess liquidity is flowing to the financial sector rather than the real economy. Near-zero policy rates encourage “carry trades” – debt-financed investment in higher-yielding risky assets such as longer-term government and private bonds, equities, commodities and currencies of countries with high interest rates. The result has been frothy financial markets that could eventually turn bubbly.

    Why the Rich Should be Taxed More – by Bill Gross.

    CZR/Wappler – That's right, it makes no sense for you to get  $8.64 since $8.64 could ONLY be transferred from the owner of record to CZR, at which point they get the stock, which means the delivery is fulfilled and you have not borrowed the new CGP, nor have you prevented the right from being exercised.  The OCC guys I spoke to said it makes no sense but, unfortunately, TDA gets to make the call and it's going to be very hard to argue with them if they decide to screw people. 

    Shooting at LAX. 

  89. dc:  Phil seems to think we've entered "renter's world,", in which buying a house is either out of reach or seen [given the real estate meltdown of the last half decade] as no longer the store of family wealth it once represented.  But the housing stock is down relative to population [yes, still expanding in the U.S.], so someone has to build/buy the damned things.  Spanish banks are buying up apartments by the thousands right now, e.g.   Rates?  Well, rates are low, historically, despite this year's spike, which is coming down.  So the speculative froth may be long gone, but not every family can move in with their mother-in-law, so I remained mystified.  Maybe I should go long Coleman, don't they make tents?

  90. For the calendar players who are still following Today is rolling or sell next weeks callers.

    Special attention on CVX which did not do so well. Still well in credit we hold back on selling next weeks caller as I trust the stock will recuperate so no good selling any callers today.

  91. zero

    ahhhh.  Tent living…..the best! :)

  92. Housing/ZZ – Keep in mind this is a topic I know a bit about, having owned a real estate data company from 1998 to 2004.  There are roughly 110M homes in the US and 310M people, so 3 people per home but that doesn't count apartments so closer to 2.2 people per home.  Should just 10% of the young or old people (220M of them) decide to move in with their parents or children, thats 22M and, keep in mind, those are SINGLE homeowners so pretty much a 22M decline in home occupancy.

    Since, AT THE PEAK, we only built 2M homes a year and 1.5M is "normal" – it would take 10 years at ZERO before we even adjusted to just slightly lower demand.  

    This is not even counting the fact that, in fact, the average occupancy of homes is probably closer to 3 but then there are vacation homes, another luxury that can be given up (flooding the market with open homes) and has no need to be replaced.  So let's say just 5% of all homes were 2nd homes or investments – that's still 5M homes to be dumped – 2.5 years of building!  

    THEN we factor in whether or not people have the money for deposits, taxes, mortgages and all the other bills that come with a home and we find that more and more people are making the very rational decision NOT to own homes at these prices.  We needed another 20% correction in home prices to clear out the inventory but, instead, we got a 20% bump so no inventory was cleared and it's going to be a very long time before home come back in a significant way.  And the longer they stay down, the more you poison the well as another generation grows up believing homes are not a good investment.

    This map shows when homes were built in the US.  That's another problem with your home-building thesis – most of this country lives in homes that are less than 40 years old.  That means we aren't even into a replacement cycle on the old homes (and people in the Northeast don't treat their "classic" homes as tear-downs). 

    JOBS, jobs are where the new homes come from.  People with money who feel good about starting a family and putting down roots.  See Japan over the last 20 years to see what happens when you lose that in a country.  How are the REITs doing over there?  And that's with 20 years of zero interest loans….

    Some of the REITs that have apartments are doing well but it's like sloshing water around in a bucket and calling one side higher than the other.  Once things settle down, neither side will be as high as you'd hoped. 

    Tents/ZZ, DC – Tents are where the real action is – check out the view in beautiful Sacramento:

  93. zero

    Like all things, the housing market will return. There won't be much growth, but at some point, people will fill the open inventory and population growth will drive new construction. Of course, if we can't create new jobs that my delay the process or present a real paradigm shift.

    Do you remember being a renter? I do.  There's enough things with that thought alone that will drive a certain number people to always want their own place. And how long before rents become ridiculously unaffordable?

    Do reits necessarily need more houses to succeed?

    Coming to Las Vegas?

  94. Took $2.57 and ran on /RB.  Thanks Phil!

  95. zero

    I wrote that before I read Phil's (a real expert). Just sell all your REITS! :)

  96. /YM rode down to 15492 – thanks Phil

  97. Phil

    Wait I will till next week, for starter making no sense it could pop up. I have a goal to get over the house call restriction less than $5,000 so I can day trade again. It may sound strange but I never lost net that way, this holding doesn't work with a small amount. Actual investing is not in my cards yet. Second goal is make enough to pay medical bills by April, the end of my 0% loan. I'm paying off the co-pays for 2 people and we both have significant improvements. Actually most think spinal surgery rarely works, I am involved with 6 on 2 people, all good.

  98. Thanks, Phil & DC.  I do believe that the better part of wisdom is knowing what you don't know, and U.S. housing fits that category.  A very good UK fund manager is going long U.S. housing — their fund is up 27% this year on quite conservative investments – so I've been pressing the issue a bit on PSW, and greatly appreciate your comments. Plus I am constrained to buy/build a house in the U.S. for next year, already bought a lot [in January, it's up in value] so I'll stop there with my "long U.S. housing" exposure.  No, I can't make Vegas, I'm 2,500 miles away and preternatually occupied right now.  Next year, since I'm moving to the U.S. after a 14 year expatriate detour.

  99. 139588 600 GOP Grave Dance cartoons

    139583 600 Congress Goes to Work cartoons

    139565 600 Lest We Forget cartoons

  100. zeroxzero

    There is one part of real estate that is mostly safe. Commercial in the off areas, smaller towns etc. where their has been no appreciation and closing businesses can't go much farther. Buying land is always safe long turn since, it is a limited resource. Congrats on that move.

  101. phil……..tks for your thoughts on nuan……….

  102. I'm 58 and I live and work at a remote oil plant (look up the SAGD process – it's a cool, cheap way to extract oil from the oil sands and there are plants being expanded and built everywhere in the area) most of the time. It's hard not ogle the few young females around here. Occasionally I think about the fact that they are younger than my three sons. Only occasionally though – LOL.

  103. zeroxzero

    Actual building is all around a looser, not work the cost for an extremely long time. Buy a fixer upper on the cheap.

  104. Housing – although I've been watching Korea's birth-rate sink, to the fear and trembling of the government. The primary reason is the cost of educating a child – not so much the public schools but all the after-school academies and tutoring shops, especially for learning English. These are staggering, and people are simply deciding enough is enough and voting, so to speak, with their reproductive systems. However, as I travel out of Seoul, down to Chunju in north Cholla Province or to Yeoju about an hour outside Seoul, I see apartment blocks going up in all of the small cities like Ichon and Yeoju, and even Kimpo which is practically a part of Seoul. Most Koreans live in apartments with various rental/lease arrangements, some of which seem odd to Americans, and probably less than 30% live in detached houses, much less than that in the big cities. So how come the builders are still putting up apartment blocks? Where are the people coming from to fill those buildings? I must be missing something.

  105. worth not work

  106. One major dip buyer, $1.1 million block of IWM. FWIW

  107. Now the chasers coming in, been a while since this happened.

  108. snow/Korean housing

    It's simply explained as the increase in number of single-person household. Because people don't want to get married due to various reasons, there are more unmarried 30 something 40 something year olds. And unlike what they did in the past (living with Husband's side family), more people separate from their parents and have their own house. So the demand for large-size apartment homes have significantly reduced last 10 years and people prefer modest-size apartment homes. 

    Adult population's marriage rate is not as bad as Japan, though.  People simply prefer to live by themselves without their parents, married or not. And old parents don't want adult kids' family problem in their old age unlike 20-40 years ago.

    I had the same idea 10 years and my Dad always said the country would be full of ghost buildings. But alas, no, they are building even more and more.  Personally, I think North Koreans will absorb lower end market one day once they get united.  But that's just my personal opinion.

  109. shadow:  I'm only building because I want to live in it.  My own builder told me that the day it's finished, it won't be worth a penny more than I spent.  But I'm leading the bird, and the community as a whole will appreciate — not because U.S. real estate as a whole will go up, but because I've tracked internal U.S. demographics and the coasts are losing out to the center.  As long as I don't lose money if I need to sell sooner than I expect, I'm good. 

  110. Very nice Imho, good exit. 

    REITS/DC, ZZ – There's nothing wrong with REITs as a LONG-TERM investment.  I like AGNC and NLY and I'll like BXP and VNO if they get cheaper.  I like them because they buy when the market sucks and then they wait a decade for the market to come back and that suits me just fine for my investment horizons (I've got a good 20 years to retirement) so what do I care of NLY is is at $15 or $11 in 2013?  In 2000, they were at $8, in 2002, they were $20, in 2005, they were $11, in 2008 $20, in 2008 (later) back to $13…  

    Meanwhile, they paid out about $2 a year in dividends so 25% of the original $8 x 13 years is 325% of the money back with 20 more years to go (not including beneficial option sales, of course).  That's why I find these discussions a bit silly – you don't buy REITs or Trusts as short-term plays, you accumulate them over time and, if you are really smart, you DRIP back 1/2 your dividends into more stock whenever they are below your original entry point to knock down your basis and increase your holdings.  

    Don't play REITs like day trades or momentum stocks – they are playing for the long haul, not trying to maximize their share price every Q.  You can sell NLY 2016 $10 puts for $1.95 right now with the stock at $11.74, that's a nice return right there (25% against your net $8.05 entry and no less than 50% on margin) or you can buy the stock and sell the $10 calls for $2 as well and then you own the stock for net $7.79/8.90 and that makes the $1.40 dividend 18% while you wait to see if you get called away with an additional 28% gain at $10, which is 15% LOWER than the current price. 

    Day trading/Shadow – Haven't you been doing better NOT day-trading?  Think about it…

    Housing/ZZ – Too bad you weren't here two years ago when I was trying to buy that block of condos in Vegas.  Nice double already on those units.  The whole key to real estate is money and patience.  Have cash around when someone else is in trouble and dumping and then wait for the situation to turn back around.  

    You're welcome Mill.

    Sons/Greno – So not the same!  I'm telling you, having daughters just kills the mood.  Even when I'm at a party and some young girl is dressed too provocatively, the first thing I think is "where are her parents?"  Fortunately, both of my daughters are prudes for some reason (neither Tina or I are) so not much stress at 11 and 13 (so far).  In fact, I had to argue with Maddie over getting a dress that didn't cover her up to the neck because she didn't want to show ANY cleavage or leg.  

    Apartments/Snow – Perhaps people are giving up those 30% houses and getting apartments?  That's the sloshing effect we have here at the moment.  

    And what Sihyang said!  Thanks for input Sihyang.

    Chasers/Shadow – Surprising if we don't get that on a Friday.  All that money out of bonds has to go somewhere. 

    Building/ZZ – If you're going to get use out of it, it's a totally different equation.  

  111. sihyang:  Korea united?  What do you think in respect to that?

  112. Active fund manager's success – NOT OWNING APPLE INC!

  113. I don't think much of it macro-wise. I only can imagine what local effects can be which wouldn't be interesting to members here.

  114. Phil / houses:  I'm building because I couldn't find a house to buy that I liked — and I'm not fussy.  But, somehow, house design in the U.S. and, to a large extent, abroad, has evolved [devolved] into a curious animal.  A Spanish architect mentioned at a party some years ago that "your average house is 40% living room, and it's used as a hallway, and 15% is dining room, and it's not used at all." 


    I spent some years thinking about that [I live in one of those, a rental].  When I tried to buy a U.S. house, same thing.  Living room a hallway/Grand Central Station distributive hub — in fact, virtually every room is a hallway, because, somehow, U.S. builders have eliminated hallways — every room has a few holes in it through which you pass to get to the next room.  Hallways used to be beautiful — now you just bump from room to room through openings in their walls.  And master bedrooms are the same as smaler bedrooms — just much bigger, with the same sized bed in the middle.  Very odd.  So I had to build — too old school, I guess.

  115. That makes sense, Sihyang, thanks, about the singles, although I still doubt it'll last long. Good to have another Korean on board, although I'm Korean by marriage and long exposure (old Korea Peace Corps volunteer, written into my wife's family register by my mother-in-law).

  116. Snow:  I thought you were a "real" Korean whose handle was "wons" backwards.  As in, more than one won. :)

  117. Phil--do you have an opinion on FEYE?

  118. Heh! What's real, zero? I speak the language, have a large extended family, and, being the oldest male in my generation, get called on to preside over certain ceremonies. That said, it's fun freaking out ethnic Koreans by telling them I (of European descent) am Korean.

  119. Phil Day Trading

    Because I think not enough margin and small lots cost too much to enter and exit. Rolling a small amount and your never going to win with costs. I would be lying to say I have made anything with options, I recall about 4 that worked out a TBT, TZA, MON, and that medical device DCDN? I only lost small amounts trading TNA and TZA stock. I never did half of what JRW claimed but made money a few percent conservatively 4 out of 5 days. I was happy with $100 per day and that was a key part of the formula, sometimes I did early trades and more times late in day. $400 a week was OK with me, sometimes I did nothing, and a few days it was thousands.

    Option gains are limited to IWM and USO when I bought the premium, after that selling that whatever banking call and a $40,000 loss a few years back I just couldn't cover if assigned. That was your trade and I posted that when you wanted to point it out, nobody else admitted getting burned, not even you. That took 40% of my money in one bad sale. You play a big fish game assuming people have unlimited margin, at least a million so you only invest a small percent. I do know it works if you have the means.

  120. Well that was a shitty close for /rb. Sigh… Worst 6 months in my portfolio's life. 

  121. jro / ouch

    phil / /CL getting crushed – long 94.45 into close ?

  122. jro—same here --got crushed today on /RB   ;-(

  123. Message from IB

    To NASDAQOM traders:

    Fri Nov 1 14:17:56 2013 EST

    Due to NASDAQOM options technical issues, they will remain halted until the market close today. All NASDAQOM option orders have been canceled as of 10:36:57AM EDT. 

  124. Oil $94.50 and falling! 

    Design/ZZ – Well, if you want the real old-school stuff, there is no other way.  My house has no halls and my office is what would be the dining room if we dined.  We EAT in the kitchen, which flows out to the living room and the closest thing we have to a hall is the choice of which of the two downstairs bedrooms to go to at the end of our foyer.   Of course, for me, this is boxy as I used to live in a 3,000 foot open loft with 25-foot ceilings in Jersey City.  Before I bought that place, 4 guys lived there and they had full court basketball set-up across the main floor.  I left the main floor pretty empty except for my giant TV flanked by massive speakers and a couple of floppy chairs.  We had fantastic parties…  When Tina and I were getting ready to have kids, she walked around my beloved loft clucking her tongue and saying "we can't have children here, it's too open".  I said we'd just wall off a box in one of the corners and stick the kid in that but the led to her walling me off and, so, I became a suburban homeowner!  

    Shooting/QC – That puts us all in the mood for our Vegas trip!  

    Wons/ZZ, Snow – I thought it was just nicely poetic…

    FEYE/Jabob – I'm not qualified to judge whether or not a company like this is any good.  In pre-profit mode, like they are, you have to have a handle on their 3-year business outlook and they only just came out so no history but a huge valuation already.  I think they were asking $20 and got $37 and have drifted as high as $45 but no one really has a clue what they are worth (certainly their underwriters undershot by a mile).  Their stuff sounds cool and, if it were cheap, I'd like to take a crack but they are far from cheap so I'd rather wait a year and see how they do. 

    Trades/Shadow – The point I am trying to make is you keep getting burned going for big money but do well when you are happy to make quick $100 gains.  Why keep shifting back to going for big money?  

    /RB/Jrom, Savi – I don't get it, it went from $2.55 to $2.57 before falling.  How did you lose?  

    Oil/Wombat – Other than USO in the STP, we're not playing oil bullish, are we?  

    51M on the Dow at 3:08, a bit more than yesterday but not much.  

  125. I was long 2.58 from yesterday's play. 

  126. If you haven't noticed, the US Dollar has had a nice rally this week.  As shown below, the Dollar remains in a long-term downtrend, but it has just broken back above its 50-day moving average after a big run-up over the last four days.  The last time the Dollar got back above its 50-day, it didn't last long, but this is something to keep an eye on in the coming days.


  127. no – i just thought since its been hammered, they would try to pump it into close.

  128. Phil — Shooting — I'm taking Virgin to Vegas from LAX, so leaving from the same Terminal 3…

  129. zeroxzero

    Your builder is lying to you. I built a lot and I made money building for myself over and over playing the tax exclusion game. For others it was wages and they never got their money back even for years, even in boom times. The house I live in the only things I subbed out were excavation and the foundation because I was too busy. Most times I did the foundation also. Building houses is actually extremely simple, watch once and copy. In my opinion the workers are worth very little but demand a lot. If they don't fly fast you loose your ass and the owner buys that. I could show you how to self contract with some sweat labor and save 25%. Then you could sell and not loose.

    Now the really bad news. I put this house up for about half of what it would sell for. Sounds good but that isn't enough to buy the building materials, they have tripled, forget the land, or labor. So I am stuck for now if I don't want to go way down in class. I put all my money in getting fixed  about 30 surgeries so I can sell and build my own one more time. Pain under control and I will do it. The ratio of material to contract is staggering. I would say but my head would be bit off by someone.

  130. GLD – jan14 120 P for 2.10 or so.

  131. POT – Jan14 33 Calls for 79c.  :)

  132. thanks Phil!


    Have a great weekend everyone!

  133. Middle class disappearing – bad news for the long run!

  134. left to go do something came back and it had turned down—I know I know should have just stayed glued to my chair—you think I would know that by now

  135. /RB/Jrom – That's why we don't play overnight.  We had several test of $2.60 between the afternoon and 5am but then back to $2.58 at 8am was and absolute stop out then $2.57, $2.56, $2.55, back to $2.57 and then $2.56 and then the big drop.  The whole key to the Futures is taking those small losses and waiting for the next move in your direction.  

    Dollar/Aaron – A strong Dollar would be a nightmare for the markets.  The Fed didn't ease and now there are rumors that Europe will – not a good combo:

    Virgin/Esco – Well at least you know security will be on their toes…

    You're welcome Jabob.  

    Middle class/StJ – Very, very sad. 

    Glue/Savi – Well it's only a few pennies, can come back next week.  Shows how pathetic demand must be, though.

  136. 20 XOM Jan $87.50 puts at $1.58 in the STP.  XOM a bit high anyway and, if oil collapses over the weekend and we lose our $2,800, this $3,160 worth of puts have a good chance of getting a lot of it back. 

  137. Phil

    The little money was day trading. todays profit is going for broke. I bout small amounts of way out of the money puts and started early, prices went down bought more and finally a 2.5 % drop. To me this is close to buy lottery tickets. I can't sell options! If you follow the rules and sometimes get out in 60 seconds, you loose very little. It is exactly your teaching of futures. There is no difference, in and out cost me $13.98 options add .75 per contract and I tried over and over, only way to get better prices is second rate brokers or lots of money to open the account. Etrade lowered the cost when I did a lot of trading and believe it or not their execution is lightning fast, not screwing up in over 3 years now. My rep even calls at least once a month. Who at TOS gets that service? Sounds like no one.

  138. Hey apple lovers:


    If I buy an Ipad air do I need the largest 128 gig? Never owned a tablet not sure if this is to save to a built in drive? or is this like RAM any help would be appreciated. TIA

  139. If you need a little pick-me-up check out this patriot.  Very inspiring.



  140. Pharm – can you give me a quick opinion/comment on EXEL? Thx

  141. XOM – googlie eyes…that chart looks bullish….dragonfly doji, after the gravestone one yesterday.  Hitting the 200d MA….I would not short it.

  142. Deano – small position is ok…..large position is not…

  143. sagemm1

    Depends on what you want to do. Read only and some IT less is fine. Want to save a music library and a few HD movies that is not enough.

  144. Pharm – OK –  can you give me a comment or two on what they do & likelihood of success? Will they be around in two years is the key question. Thx

  145. Thanks, Shadow, I'll be vigilant.  Fortunately, I bought the lot at the bottom of the market, so I have some room in the final cost.  But I did think the architect's statement odd about building something whose total costs would not be exceeded by its market value when finished.

  146. Pharm

    I wonder what you thought of this and if there could be any trade in some  of the companies

    Chinese.    Pharmaceutical California


    Positioning California to attract a growing share of China’s massive foreign investment pool and bolstering California-China trade, Governor Edmund G. Brown Jr., the Bay Area Council and the Governor’s Office of Business and Economic Development (GO-Biz) opened the California-China Office of Trade and Investment today.

    It is the state’s first foreign trade office in a decade.

    The California-China Office of Trade and Investment will serve as a hub for California companies interested in entering or expanding in China – the world’s second largest economy – and Chinese companies seeking investment opportunities in California – the world’s ninth largest economy by GDP.

    The privately-funded office will be staffed and operated by the Bay Area Council, which has deep roots in China. The Council organized the trade and investment mission’s delegation of approximately 90 business, economic development, investment and policy leaders.

    On the heels of the $1.5 billion China-California investment partnership announced Wednesday, four more deals were announced today by the California-China Office of Trade and Investment.

    Beijing-based pharmaceutical company JOINN Scientific is investing $50 million to establish a pharmaceutical production plant in cooperation with Staidson Pharmaceuticals, to be located at the former Bayer manufacturing facility in Richmond.
    Emeryville-based New Logic Research Inc. and Sacramento-based McWong International have secured a $20 million contract with Inner Mongolia-based ChinaCoal Mengda New Energy Chemical Company and China National Coal Group for a zero-liquid-waste discharge project.
     Hongye International of Wuhai, China is investing $100 million of private equity investment into the Arcadia, California-based firm Singpoli Capital to develop green energy, biochemistry, media, high-technology and real estate construction projects in California.
    Scripps Institution of Oceanography/UC San Diego signed an agreement with Ningbo University that includes: $50-$100 million of Chinese funding for a Scripps research center for development of renewable marine resources and technologies at Ningbo University.

  147. there goes XOM….


    EXEL/deano – well, they have cabozantinib approved for a type of thyroid cancer, but the big trials are out in time. I don't see when the next read out is, as many of the trials are early on.  this is their ONLY asset for now…so they will live and die with it.  I see them needing money in the short run, as they are moving 40-50M/q.  So that gives them about 6mo to 9 mo of cash left.  I would wait until after an offering to get in, or buy small now, sell the run up, b'c I don't see any data coming out and then sell a put….or sell a put now and wait.

  148. JRW – Shadow/ FWIW (not much…)

    My recollection of JRW trading was that at the time, there was a lot of volatility in the market.  I was day trading heavily TNA/TZA, AGQ/ZSL and UCO/SCO. I'm also with etrade and use to have 4X margin (lost it thanks to PSW!) and that was the catalyst for some daringly stupid but profitable trading… YET it stopped working at some point just because the volatility dried up.  I use to see 3% daily swings regularly and haven't seen that in a while (except the past few days…)  At least in options, I sell puts when things fall (Just made 50% on JCP $6 puts when they went near $6, sold SLW puts today after yesterday's fall) and it has worked well.  Thing is,

  149. Pharm/zlcs

    Was there report what you expected? Would you do a small entry here or what Phil suggested earlier selling the April $5 puts? THX.

  150. Trading Chinese companies…no way.  Selling to China, yes.  I just don't know enough about how they report income…or its accuracy….so I won't go near it. 

    ZLCS – no, there is another one for Z160, that is what we are playing and I expect it to also be positive.

  151. zeroxzero

    The home trap in the US is way beyond loan sharks, another thing I did was draw my own plans because architects are like artists with funky ideas. I paid them for plans that I couldn't get permitted. Whatever anyone says remember this: minimum in Colorado or similar places, 3 bedrooms, 2 baths, laundry on main floor, and lots of closets/storage.  Everyone gets sick of stairs sooner or later or like me unable to do them.

  152. Pharm – thanks very much!

  153. Ahh, the crock run up today…why am I not surprised.


    Also, buying ZLCS is fine, or buy calls out in time.  Selling puts now is too dangerous.  Know what you can lose, not what U dont.

  154. Etrade/Shadow – That does sound good. I know they've been working on their options platform. 

    IPad/Sage – I know my 64GB is full because of my songs and just a few movies and TV shows I like to have for the plane.  That is your whole hard drive.  I absolutely want the 128 but, if not for using my IPad for music, I woudn't need it (but I use the IPad because my phone doesn't fit the music because it's full of pictures and videos).  Actually, do they have 256GB?  8)  

    XOM/Pharm – But if oil goes down (which is what we're worried about) how would XOM go higher?  

    CROX finding a floor – I know someone was interested.  They're buying about 20% of their own stock back so it seems to me it's worth a toss selling the 2015 $12 puts for $2 and that's a nice ROI without getting fancy.  I'd say use that as a start to DD if they go lower (doubtful) or to pay for a bullish spread AFTER they get back over 50 dma ($13.50).

    Dow volume crossing 60M and Dow rising into close, all green but RUT.

  155. Thanks shadow have over 9000 songs on Ipod would assume at a minimum transfer all onto Air probably not movies though, I do not like looking at small screens.

  156. XOM – LOL Phil….I don't know, just reading the tea leaves, and oil is down….XOM is higher.  Market goes up, XOM goes up….

  157. SODA/Phil – time to look again before holiday buying?

  158. Damn bullish, wouldn't you say?  Irrational exuberance dies hard when driven by the prospect of easy money.

  159. XOM/Pharm – I think XOM is up because a Bot is buying the Dow, not because of anything good going on there.   Also, they are pretty balanced so lower oil prices good for refining and chemical divisions but I don't think it lasts if oil breaks $95.   CVX certainly not faring as well.  

    SODA/Scott – The only direction I like to play SODA is down.  When they hit $60 let me know and we can short them again.  

    Nice green finish – good for /NKD, at least.  Dow up 0.5%, RUT down 0.3% – interesting times.

    Have a great weekend everyone.  I'll be around tomorrow then off to Vegas for a few West Coast meetings ahead of the conference.  

    See you there, 

    - Phil

  160. arivera

    I will loose my 4x with 1 day trade! They warn you now it is rule#14 or 41.

    Yes it was more volatile when JRW was charging. I excepted small gains over and over. I did do many things different when things changed like take the morning dips, play the afternoon recoveries and some days not play at all. JRW was temperamental and got PO'd at me for mot following him. I built a powerhouse machine to watch his moves and I know he used PSW to his gains. My main thing was get out before he did, the hell with the last dime when he sold he moved the market and burnt you. Now it is only the BOTS. Sorry you lost but you could not follow him, it was clear you had to pre-empt him.

  161. Have a great weekend all!

  162. Spitting Cobra pattern May:  

    Current pattern:  

    What happened after May 20th:

    As you can see, we got another one like that in Aug as well.  It's really just the way a rally exhausts itself.  Are earnings great?   Are we getting more stimulus?  Are the data points up?  Not really….  That just leads me to think there's no reason this time will be different.  

  163. Didn't get on to post it last night, but some things from Halloween can live on… Here's a creepy country song for y'all. Enjoy! ;-)

  164. Note we're final at 1,761 – still inside yesterday's red candle.  Nothing bullish about that and very, very similar to what we've seen before.  

  165. Shadow – I was day trading before I got to PSW so I did not really follow JRW or his methods.

    My point was that the volatility was greater and more profitable and the short term options trading can be profitable.Anyway, good luck.

    Phil's spitting cobra should bring some volatility to the market!

  166. I hope I didn't open up a can of worms. But if I say a little I may as well tell more. I got a lot of information out of JRW at first and then he totally closed up on ways, his notes are a joke other than to me they remind me of how I figured all of it out. Then I built a machine many times more powerful than his, I also found that that etrade had better powers than swaby that he used. I could have posted that he was using members at the beginning but he got me started. I still keep most of everything to myself. I refuse to tell most of how I do anything because there is spying here. I tested many times and posting ended everything I found as a "trick that worked". Another secret is don't trust anything more than today, maybe a week. I actually watch and compute many more things than JRW did. I even told him a few things that later he posted as his but I couldn't hurt him, he was hurting everyone, and He thought of the concept so I felt I owed him.

    I still wonder about his ending. Some think he lost it all but I think he got in trouble, either the dual citizenship or his trading which he had an inside a swab. I was investigated for a long time but in the end I had no power or inside anything. He got sick?

    So now it is similar to Phil's future trading except I use more sophisticated pivot points and trend lines.

    I will tell you all that I do it differently but always cross Phil's 5% rule lines but a bunch more and the numbers are ridiculously close so I use a correction factor that changes with HFT bots.

    Lately I have tried to assist with trades involving the RUT and the only other thing I am onto is oil and I add some to what Phil misses because he is doing at least 30 things. I am an analyst and very technical but I have found I am not a Jack of All Trades, I am a master of one at a time. If I play oil that is it and it is new, or I play IWM. I watch QQQ but it is another story that would be too much to compute all the lies.

  167. Quote of the day:

    Morgan Housel, “Most financial advice tries to make people better investors. I’ve come to the conclusion that it’s more helpful to focus on how to become a less-bad investor.”  (Motley Fool)

  168. stj

    GREAT QUOTE! I would add give up what you are not good at, Just because it doesn't hurt as much after stopping hitting your hand with a hammer doesn't imply it doesn't still hurt.

  169. stjeanluc   


    may I ask you why you're buying puts instead of selling calls. does your broker allow to sell credit call spread in retirement acct?

  170. That's surprising:

    Quick, name the ultimate rich person automotive toy. Porsche Cayenne Turbo? Bentley Continental GT? Lamborghini Aventador? Pfft, those dinosaur-fueled monstrosities are old news! It's all Tesla Motors, all the time for America's elites now.P

    Research released by Edmunds indicates the Model S is now the best selling car in eight of America's 25 wealthiest zip codes as ranked by Forbes. At the top of that list is Atherton, California, a Silicon Valley town near Tesla's Palo Alto headquarters where the average home costs $6.65 million.

  171. VXX / ed3524 – I gues you could sell a credit call spread as well. For example, on 12/3/2012 when I opened the position, the 35/25 bear call spread was around $3.35. It's $0.58 today so a very good return in a margin account. In an IRA the margin would be the difference between the strikes – the credit. In this case that would produce a return of about 37% while I got 45% with the puts. 

    So, in a margin account, it's a viable strategy. In an IRA the puts are better. We can check out trades when they reset and the Jan 16 come out and see what works best. 

  172. TSLA dominates in 2 places in 1 state. Are they making enough cars to expand that? Can they make enough cars to expand that? That is the $162.40 question for investors.

  173. VXX / ed3524 – And I would not sell naked calls because a big spike could really make it a nasty situation even if only on paper!

  174. It seems to make so much sense…

    As Lawrence H. Summers, the former Treasury secretary under Bill Clinton and architect of President Obama’s initial economic program, pointed out in congressional testimony last May, the sequestration’s $64 billion in cuts this year might reduce federal debt by 0.39 percent of G.D.P. But if the G.D.P. shrinks by 0.6 percent, as estimated by the Congressional Budget Office, it will make the debt burden heavier, not lighter.

    Here’s how Simon Wren-Lewis, a professor of economics at Oxford University put it: arguing that the tiny amount of economic growth Britain has recently achieved after a years-long downturn proved austerity to be the right policy is tantamount to saying that global warming skeptics had “won the climate change argument because of recent heavy snow.”

    The United States does face a fiscal challenge. The C.B.O. predicts that along the current policy path, public debt will start rising as a share of G.D.P. toward the end of the decade and exceed 100 percent of the size of the economy in about 25 years.

    There is time to fix that, gradually, especially as long as interest rates remain low.

    But if current tax and spending policies remain in place, the civilian government’s entire discretionary budget — which pays for things like worker training, research at the National Institutes of Health, border security and much more — will shrink by 2023 to just 2.6 percent of G.D.P., the equivalent of about $420 billion in today’s economy. That’s less than at any point in decades.

    This is the money that helps pay for child care and education; that maintains our roads and bridges; funds the National Parks. Its decline deserves the American political system’s undivided attention. Fat chance.

    Which is probably why they'll cut taxes and cut spending instead. Idiots!

  175. Guys – Have a great time in Vegas !

  176. …..and learn a lot.

  177. ABX – Although I hate the drop the last 2 days, they have not broken their uptrend measured a fib pull of the lows to Aug. highs.  If they break 17.30, then I'll cover.  They are just trading in a range now from 17.50 to 21.00.  Patience if, like me, are in this for the long term at a current paper loss.  Sell calls and sell Puts to lower your cost basis as it tests the lower/upper parts of the channel.

  178. stjeanluc /VXX

    thank you very much 

  179. Thanks, jfawcett:  I've become convinced that ABX is truly cheap, and represents a rocketing long waiting to happen.  I don't think the catalyst is susceptible to prediction, because I hypothesize that, in its purest form, the catalyst for gold is "fear." 


    That makes it hard to pick an event or time frame for the trade, but gives you a high probability that the undifferentiated fear driver will make an appearance within a reasonable time frame — if even for a few hours — if you can maintain a position at a reasonable cost.  The global distribution of news media and the velocity of the dataflow provides a target-rich environment for fear mongering.

  180. jfawcett/ABX

    I hear you, but did you see the volume on the drop?! There were a whole lot of folks running for the exits on this one.

  181. Phil – October sales numbers for Tesla and other Plug In vehicles are out.  But please remember these are North America numbers and dont include Rest of World (where Tesla had a lot of sales in Oct.)

  182. zero/ABX

    My memory goes back to May of this year when I was convinced ABX was a great buy and caught the sell-off to below 14. It took me until mid-October to work off that loss. Not sure much has changed for ABX since then other than the closing of Pascua-Lama and the recent dilution. Perhaps the closing and dilution will be positive events for them, but I am willing to wait for the downward trend to change.

    The "fear" factor just isn't that strong (yet). Today's market was a great example of that!  I love them long term, but I think, with patience, better prices are around the corner.

  183. albo

    He's being very disingenuous in his explanations. Many people consider/perceive what he's saying as an outright lie. What's wrong with just saying you made a mistake?  In my opinion, he has a real problem with admitting fault or responsibility and that makes it very difficult to trust his intentions. Healthcare needs to be fixed, but does it need to be fixed like this?

    My policy (which is the one I wanted and covered what I wanted) for my business was replaced because the company that underwrote it refused to offer it any more. My new policy (2013 policy that closely matches what I had) IS more expensive and DOES have higher deductibles and out-of-pocket expenses.

    My insurance salesman, who is worth his weight in gold, has looked at the exchanges and says, at this point, it is best for us to stay where we are with the new policy. He has also recommended that we make our current policy "unaffordable" so our employees have the opportunity to gain full access to the exchanges and governmental subsidies. In order to do this, I will have to raise the costs for each "single" participant to double what they currently pay.

    This is a unique problem for any small business that tries to do the right thing. On the one hand, they can offer an "affordable" health plan to their employees, but keep them from being eligible for any available subsidies if they decide to go through the exchanges and find their own plan. A plan that may be considerably less expensive or even free with the subsidies.  Alternatively, they can make their current plan "unaffordable". This would provide employees full access to the exchanges and any possible subsidies, but require employees to pay a much larger portion of the current plan's costs.

    On the positive side, while I was evaluating our options to secure a new health insurance plan, I did notice the availability of some private exchanges. AON Hewitt is one such company. I don't know that much about them, but the concept sounds interesting (see below). What happens if these private exchanges work better than the Governmental one's?  I guess it all depends on your definition of the problem. But if the ACA does nothing else other than drive private solutions that weren't forthcoming before, then this could be a good thing. But something tells me that my liberal friends have a much larger agenda in mind.

  184. ABX – In a IRA.  Not retiring for 9 more years.  I am pretty sure I can own ABX for zero.  Sooner than later ABX will survive.  I see no reason to give the market paper losses.  There is always a way to work a loser to a winner.  Nothing is free.

  185. ABX – Overlay /GC over ABX.  Pretty good correlation.  /GC is also testing (again) a 50% fib line pull back.  1300 looks like support.

  186. Here’s How Much Berkshire Hathaway Made On Financial Weapons Of Mass Destruction In Q3

  187. Google is becoming every Apple fanatic’s dream company | PandoDaily

  188. Bespoke Investment Group – Think BIG – The Smaller They Are, the Harder They Fall?

  189. Why Letting Everyone Keep Their Health-Care Plan Is a Terrible Idea

  190. CHART OF THE DAY: 12 Economies’ Stock Markets Versus GDP

  191. Guest Post: Don’t Worry – The Government Says That The Inflation You See Is Just Your Imagination | Zero Hedge

  192. The World’s First Supersonic Business Jet Will Reach The Market In 2021

  193. Regulators contact more banks over currency market manipulation

  194. Google’s mystery barges revealed as luxury showrooms with party deck: report

  195. Chart of the day, sovereign precariousness edition | Felix Salmon

  196. True facts about the cuttlefish [video] – Holy Kaw!

  197. 12 Million People Turn To Predatory Payday Loans Every Year

  198. A little more Korea….as the article mentions, Park and Putin already huddled during the G20, and likely as a result, he's coming for a visit. What I find interesting is the transport link Park is proposing…if it's not pie-in-the-sky, I would think there's some serious potential for regional development, including Russia and South Korea's new friend, Mongolia – and of course North Korea.|home|newslist1

  199. When Buffett Was Crazy and We Were Scared – MoneyBeat – WSJ

  200. One Chart That Shows Why You Should Be Getting Nervous | Slope of Hope

  201. Spain-Based Fagor, Europe’s Fifth Largest Appliance Maker, On Verge Of Bankruptcy

  202. Japan’s Most Hated Outfit, TEPCO, Reports Fat Profit (From Taxpayer Bailout Money) | Zero Hedge

  203. Lawler on Homebuilders: Home Orders Off Significantly Last Quarter

  204. The Entire Fiat Money System is Bankrupt: Demise of the Global US Fiat Dollar Reserve Currency | Global Research

  205. Wit Happens – The Daily Show with Jon Stewart – 10/31/13 – Video Clip | Comedy Central

  206. ‘Short’ the VIX? Talk About Risky! – Focus on Funds –

  207. Birth and death around the world in real-time [video] – Holy Kaw!

  208. Here’s Everything You Need To Know About The Growing Investigation Into Rigging The Global Currency Market

  209. CHART OF THE DAY: The ‘Forward-ISM’ Is Sending A Troubling Signal

  210. How the 1 percent always wins: Liberal washing is the right’s new favorite tactic

  211. Holding the lines….

  212. Tons of data next week – PMI, rate decision, unemployment rates, industrial production, GDP! 

  213. Hi Ladies and Gentlemen, Will be with you in thought on Monday, While flying over the big pond to the headless city of Cancun. I must say I had a wonderful time in Germany and can't wait to return there next year again.Today gave the finishing touches to my RV to be ready to weather the winter here. The weather has changed here and we running about 5 degree C, but can not complain we had a lovely Autum here in Germany..I will miss you all in LV but can not stand for 2 1/2 hour in line to enter the beloved USA, to much I passFrankfurt emigration and Custom in 10 minutes!!!

    See you all on the web next week so God will.


  214. Silk Road Express – here's a more detailed article on the transportation network South Korea is proposing:

  215. Snow

     This idea has been around a while this is from June 2013


    Revival of the Silk Road': Kazakhs launch China-Europe rail route

  216. dclark/agenda  It's called Medicare for All.  Done.

  217. Seems to me that the adage "be fearful when others are greedy" applies to this market. How can I profit fr this fear?

  218. BA: Jan 15 spread  - closing early, selling covers.

    There was a question whether closing a Jan 15 95/105 BCS now made sense. A couple of weeks ago I did not think so, but now I am not so sure. The original ABW was the above spread financed by the sale of Jan 15 87.5 put. The net cost was around $2.15. Currently, the BCS can be closed out for $8.50 – leaving $1.50 on the table (but you would have to wait until Jan 15 to call it your own). So in terms of finding ways to make $1.50 on BA a tad earlier, how about the sale of the Dec 14 $140 calls for $1.13 (BA is currently trading at $133). I am long on BA with other positions so I would be happy to roll this if needed. Seems a good trade off between time, bird in the hand, and alternative means of capturing some premium. Of course, no need to get your money on BA – there must be plenty of similar opportunities especially after this recent bout of euphoria.

    Now is a good time to review BCS, to see how to balance gains and time. 

  219. GLUU- for those following :

    Note : this is a very speculative and volatile play on mobile gaming. Options are thin. I am in the stock and short some puts and partially covered with June calls. 

  220. Savi – Agenda for LV?

  221. EUR/USD- Whee! 

  222. Phil  early morning question before departure.

    BA I hold a May 14 120 caller position sold for 8.78 now trading for 16.30 with about 3$ in premium. The caller is obviously covered some what by 2x Jan15 BCS but it disturbs me to see BA already trading at 133 and I like to roll the May14 caller to May 145 In the above case I am paying 3.30 on premium by closing the May14 caller but receiving the some what the same amount by selling the May 14 145 caller 12$ ahead of the 133 BA stock price. I know one should not pay for premium but in the above I pay sero

    for bettering my position to 145. What do you think? TIA

  223. Greetings from Vegas!

    Just got settled in so I'd better sleep first.  

    Yodi, on BA, not sure what the spread is but, to some extent, don't you want to protect potential profits?

    A lot can happen between now and May….

  224. Phil Greetings from Frankfurt Airport Hope you all have a nice time in LA

    In respect to BA I do have various BCS all Jan15 90/110 100/125 all in good standing I keep them for the long whole. I just noticed Winston idea on BA and feel I would not leave the odd 1.50 on the table and expose myself to another Dec caller even that the same is 140. They gone from 100 to 133 in no time. I only wanted to set the May 14 120 caller 20$ higher to 145 without taking money out of my pocket.

  225. Good morning!

    Still on East Coast time.

    Futures up a bit but not commodities, indicating its a rally based on expectations of ECB easing still.

    Asia mixed and Europe not too excited.  I'm waiting for my laptop to.load a windows update so I can find more details but, overall, doesn't look too exciting.  

  226. Testing fixed time.

  227. LOL, that's funny, now these comments are appearing before my 7:09 comment as that was really 6:09.  Oh well, all will be forgotten by 7:10.

  228. BA/Yodi – So you are waiting on the last $3 of your $20 spread ($90/110) and, to do that, you want to spend $3 to roll up the short calls?  This is why you don't value the protection, you are not protecting enough potential profits.  If you don't see any possible way that BA can fall below your net $128.78 by May, then why not take your $17 from the 2015 $90/110 spread and put it into the $110/140 bull call spread ($17.50)?  That would give you $11.50 of upside on those and you would be well-protected by the short $120s and, if BA goes higher, then the $100/125 bull call spread (now $18) would be well in the money for the full $25 gain and you can add 2016 $120/140 bull call spreads at $10 to set up for the next 100%.

    While BA has gone up fast, it's only up from $90 in April to $100 in June to $110 in Sept to $120 in Oct to $133 in Oct.  If every time they add $10, your response is to take another $20 spread for $10 – then you certainly wouldn't be upset to see them get to $200 in another 6 months.

    BA/Winston – You have $13.50 in the hand and you can only make $1.50 over the next 15 months.  We know we can do better than 10% in 15 months with cash but you also have to factor in how safe(ish) that 10% ROI is and treat it more like a dividend that's coming to you.  So it depends how aggressive you want to play it but yes, that cow's been milked already.  I'd point out that the $87.50 short puts are just $2.34 so you could cash out the $13.50 and pay the $2.34 and then sell the 2016 $100 puts for $7.60 and those will pay about $3.80 (price of the 2015 $100 puts now) if BA holds $130 for the year, that's as much as you could make holding the old combo open but you free up your cash in exchange for only a tiny bit more margin.  And, as you say, with cash there could be better opportunities than to keep playing BA close to 100% over last year's entry.

    OK, any other questions can be re-asked in the morning post but I need to get started on that.  But first, some news:

    Fed's Fisher concerned credit spreads have narrowed too muchFederal Reserve Bank of Dallas President Richard Fisher on Monday said he was concerned that corporate credit spreads have narrowed too much. ?

    The Fed is locked in a QE prison of its own makingUS policymakers are caught in a trap – a seemingly inescapable dilemma that stems directly from the massive scale of QE.

    Analysis: Rewards shift to stock pickers in U.S. market rally Reuters

    Junk Loans Approach $1 Trillion as Standards Dip: Credit Markets. Loans to junk related companies in the U.S. are on pace to exceed $1 trillion this year, a level not seen before the financial crisis, as concern rises that lenders are lowering their standards. The almost $873 billion of leveraged loans made in 2013 to borrowers ranging from hotel chain Hilton Worldwide Holdings Inc. to coal producer Peabody Energy Corp. is more than the $642.3 billion obtained in all of last year and up from the post-crisis low of $161.5 billion in 2009, according to Bloomberg. At the current rate, the record of $899.1 billion in 2007 may be eclipsed as soon as this week.

    Investors Return to IPOs in ForceInvestors are stampeding into initial public offerings at the fastest clip since the financial crisis, fueling a frenzy in the shares of newly listed companies that echoes the technology-stock craze of the late 1990s?


    For signs of bubble, look no further than LBOs. Market watchers who have been out hunting for bubbles may want to look at debt rather than equity. A number of measures that focus on leverage, particularly in the area of corporate takeovers, show that kind of risk-taking back at levels just before the financial system imploded and sent the economy into its worst slump since the Great Depression.Leveraged buyouts—LBOs—for both big and midsize companies are approaching debt levels last experienced in 2007, according to the latest figures from Thomson Reuters. ?

    Show Me The Lack Of Money: Global Corporate Cash Flow Slides To 2009 Levels.

    Michael Woodford Warns "By Blinking [On Taper], [The Fed] Has Made A Negative Reaction More Likely".


    A "Frothy", "Overbullish", "Overbought", "Overmargined" Market With "Not Enough Bears" – In Charts.

    Here's The Evidence That The Tech Sector Is In A Massive Bubble. (graph)


    ECB easing talk lifts shares, pressures euro


    Increased prospects of a European Central Bank interest rate cut this year sent the euro to a six-week low on Monday and boosted the region's share markets, which extended gains on robust manufacturing data. A plunge in the currency bloc's inflation to well below the ECB's target level and pressure on money market rates hardened expectations last week for a shift in ECB policy and look se…

    Euro at Six-Week Low on ECB; Aussie Climbs as Spending Surges. The euro fell to its lowest level in more than six weeks before European Central Bank Executive Board member Joerg Asmussen speaks in the run-up to a policy meeting amid signs further stimulus may be needed in the region. The euro fell 0.1 percent to $1.3480 as of 12:43 p.m. in Singapore, and last week dropped 2.3 percent, the largest decrease since the five days ended July 6, 2012. It fell as low as $1.3442 today, the least since Sept. 18. 

    Europe is a currency saint but an egregious demand sinnerThis year’s burst of euro strength has brought crisis closer and baked a lot of future damage into the 17-nation bloc.


    Euro zone factory PMI points to broad-based economic recovery Reuters
    French factory activity shrinks faster in October: PMI Reuters

    Asian Stocks Fall After Fisher Speech on Fed PolicyAsian stocks fell after Federal Reserve Bank of Dallas President Richard Fisher said the U.S. central bank should end its record stimulus as soon as possible. South Korean financial companies including Woori Finance Holdings Co., Shinhan Financial Group Co., Mirae Asset Securities Co. and Hana Financial Group Inc. dropped more than 1.6 percent. Coca-Cola Amatil Ltd. (CCL), Australia’s largest listed drinks company, slumped 4.9 percent after forecasting 2013 earnings will decline. China Resources Enterprise Ltd., a brewer and retailer with businesses in Hong Kong and mainland China, gained 1.5 percent. The MSCI Asia Pacific excluding Japan Index fell 0.2 percent to 478.49 as of 11:47 a.m. in Hong Kong, after rising as much as 0.2 percent.

    Fed Gives Banks New Dire Scenarios for 2014 Stress TestsLenders including JPMorgan Chase & Co. (JPM) and Citigroup Inc. (C) will have to show they can survive the demise of a trading partner or a plunge in value of high-risk business loans in the 2014 version of U.S. stress tests. The scenarios for the annual tests, outlined by the Federal Reserve in a statement yesterday, reflect some of the most pressing threats seen by regulators as they gauge the ability of the U.S. financial system to withstand economic shocks. Bankers will have to show what would happen to the value of leveraged loans they hold, the impact of another housing bust and how they’d fare if a firm that owes them substantial sums collapses.