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Which Way Wednesday – Popping or Topping?

So close – and yet so far.  

All but the Dow have fully recovered from the January drop and the Nasdaq is making up for it by going 50 points over the previous 4,250 high (1.2%).  Is it a clear indication of a breakout or a silly spike higher with heavyweights like NFLX, TSLA, GOOG and PCLN acting like 1999-style dot com stocks?

TSLA is priced at 100 times FORWARD earnings, NFLX about the same,  PCLN (26) and GOOG (23) are relative bargains by comparison and AAPL (our trade of the year), with a market cap of $465Bn against $40Bn of earnings would seem like a great deal, by comparison (even if you ignore their $180Bn in cash), yet they have, so far, been sitting out the market rally at $520.  

This is just what it was like in 1998 and 1999, when people who owned "sensible" stocks like IBM, GE, AT&T, McDonalds, Ford, etc. were punsihed while Webvan (the old Amazon), Microstrategy (survivor), WorldCom (the old MCI), Inktomi (the old Oracle), Lycos (the old Google), (the old nothing), (the old NFLX), etc were valued at 100x earnings and more (the average p/e for the Nasdaq in 1999 was 78 times earnings).  

Internet bubble

A contrarian investor would have done very well for themselves in the 2000-2003 collapse, but only if they survived the run-up!  That's why I called for CASH!!! last week, not shorting, other than a few 500% hedges that are to be pulled with small losses if the indexes do manage to get over their previous highs (3 of 5, and it has to hold for 2 full days) of Dow 16,588, S&P 1,850, Nasdaq 4,250, NYSE 1,0406 and Russell 1,182.  

.SPX WEEKLYIf they can do that, we can get more bullish but, if they can't – why should we?  Sometimes, the only winning move is not to play and this is a very good time not to be playing.  

I THINK the market is not strong enough to get over this hump at this time.   I THINK these high-flying momentum stocks are being used to mask a broader exit of the indexes by the Banksters, who cover their tracks with a string of upgrades to excite the Retail Investors while they privately urge their High Net-Worth clients to "diversify" out of equities (after they have dumped their own holding, of course).  

That was the game in 1999, as poster-boy Yahoo, got almost daily upgrades from analysts who were happy to explain to investors how they needed to understand the new economy and what a game-changer Yahoo (and, by extension, their whole "space") was and how, while the valuations may seem "stretched" at the moment, it would seem like a relative bargain in retrospect.    

Keep in mind that the p/e of Yahoo averaged "just" 78.4, outside of the 1999 spike yet they are only now, 10 years later, back to their 2004 highs.  With $1.4Bn in income and a $38Bn market cap (p/e 27), YHOO is now a relative bargain stock compared to TSLA, who have also run up 10x in two years and have a $30Bn market cap on MAYBE $250M in earnings (if all goes well) for 2014.  That's a FORWARD p/e of 120 and YHOO topped out at 253x earnings, so maybe TSLA has room to grow – but that's PRICE, never VALUE. 

SPY 5 MINUTEIf you are short-term investor – don't worry about value – it's not that important.  Yesterday, in our Member Chat Room, we went long on oil and short on oil and long on oil and short on oil and long on oil and short on oil and were hitting about $500 per contract on each swing – value has NOTHING to do with those kinds of trades.  

I spoke about VALUE in yesterday's Live Webcast (replay available here) and this morning I found a nice article that summarizes the discussion we were having.   

ITMN went up 170% yesterday.  There's a reason for that, they had positive Phase-3 data for Ascend (lung disease treatment), which had previously been rejected by the FDA and took them down 95% from the 2011 highs of $50.  So the 170% gain is "back on track" and reflect a possible reality (the drug being approved, massive sales) and a situation that has absolutely changed for the company – FOR A FACT. 

As you can see from the long-term charts, the stock makes crazy swings but, as VALUE investors, my comment to our Members way back in May of 2010 was an excellent strategy:

ITMN –  I like playing them when they are down under $20 (hedged to under $10, I think it was) but once they pop they become ridiculously dangerous, as you see.  You can just sell a dozen Oct $12.50 puts on the assumption that they are once again worth about the $15 they were trading at and at least they are 1/2 premium and realistically rollable.   Should be less margin too.

At the time (5/5/10), the stock had just tumbled off it's highs and we took advantage to BE THE HOUSE – by selling Oct 2010 $12.50 puts for $4.50 with the stock at $10, which gave us a net $8 entry and $4.50 of upside if ITMN bounce back over $12.50.  Since our worst-case was having a long-term position on ITMN at net $8 (where we could sell more options for income) – we liked the VALUE of the trade – even though the chart, at the time, looked like a hopeless disaster.  Value investing strategies are only effective if you are willing to ride out the dips (preferably using our scaling strategies) and sell into pops – LIKE THIS ONE!  

We have many stocks that we've had to say goodbye to, like IRBT (our Stock of the Century) and TASR (our Stock of the Decade) as their PRICE raced ahead of our VALUE (so no new entries and we take some off the table).  If they have a mishap at some point, and get cheap again, we will be ready to BUYBUYBUY more with conviction.  Meanwhile, we can find plenty of other bargains with our CASH!!!


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  1. May I ask where the current portfolios are?  Is it still the google docs managed by StJeanLuc or is it the poweroption spreadsheet managed by Phil?   

    If it's PowerOpt, Phil could you post a screenshot of what's current?

  2. CERS / Pharm,

    Pharm – My CERS shares got called away last Friday when they closed at $7.51 on my $7.50 call. I had a basis of $2.36 on that one. – THANK YOU!  My question is after the earnings report last night they have fallen back to the top of the breakout range near $7.00.  They also have significantly lowered 2014 earnings outlook. Would you have any interest in re-entering?  How do you feel about the long term prospects?

  3. Looks like another spanking for the momo shorts..


  4. PLUG – Up big.

  5. Phil when you recommend a BCS (and a corresponding short put) can you explain how you decide on the actual prices? For example, do you start with the greeks or do you start with an approach to minimize margin?  Hoped for some guidelines to get me on track to look on my own




    The winning streak goes on at Tesla Motors • 8:35 AM

    Tesla Motors (TSLA) is still riding high after a glowing Morgan Stanley report and a stellar rating for the Model S in the latest Consumer Reports annual survey. Shares are testing all-time highs again in early trading.

    Still to come for Tesla is the announcement of the EV automaker's gigafactory which may involve Panasonic. Stay tuned.

    TSLA +4.2% premarket to $258.50.

  7. phil,

    tks for your thoughts…

    just to be sure when you say bcs in your note….

    If you were going to stick with this set-up, I'd buy back the short Jan $150 puts for $8,000 and sell 15 of the 2016 $180 puts for $48,750.  That would help margin and give you 22 x $37.50 = $82,500 (the 2016 bull spreads) + $48,750 = $131,250 of upside against $246,900 in short calls.  Since there are 42 short calls, that's $58 of upside protection but only in the sense that you would be no worse off than you currently are if TSLA is at $308 in Jan 2016 (and that doesn't account for possible pain in-between if they spike higher).  

    are you referring to the 250-310 jan 16 bcs i.e. going from 20 to 22

  8. Oil Lines

    R3 – 103.90
    R2 – 103.20
    R1 – 102.42
    PP – 101.72
    S1 – 100.94
    S2 – 100.24
    S3 – 99.46

    Yesterday's high and low – 102.5 / 101.02

  9. Kevin O'Leary is an idiot – CNBC is bad, but he made it worse this morning. It's funny when these guys talk about not having a minimum wage because we should let the market decide. But when it comes to CEO pay, let's not take any chances and pack the boards with cronies. Can't let the shareholders have a "real" voice. And what do they know anyway. It's not like they own the place… Supposedly, all these jobs that would return here if we didn't have a minimum wage. And whose taxes would be used to shore up the welfare state that would be overwhelmed then. Oh right, we get rid of that as well. But then, who is going to buy iPhones on a $2.50/hour salary. Details I guess!

    And when Hank Paulson goes on his knees to beg Nancy Pelosi to bail out his good buddies on Wall Street (and the entire economy as well) in 2008 – how about we let the market decide then…. 

  10. Felix bludgeons Bill Gross:

    Sometimes, the CEO isn’t really the CEO. When El-Erian was at Harvard, he “was having a heart attack” thanks to the irrational demands of Larry Summers, and ended up quitting to go somewhere a bit more grown-up. I can see how he would have had no desire to replay that movie a second time. And if El-Erian can’t manage Gross, then no one can manage Gross.

    As a result, the only way to save Pimco is for Gross to leave the firm entirely. If he must, he can take his Total Return Fund with him. Pimco’s investors care about good governance ahead of anything else, and Pimco is clearly suffering under the very opposite of good governance right now. Gross is singlehandedly responsible for most of what Pimco is today, and he can leave, at this point, with his head held high. But his natural tenure at Pimco has come to an end. It’s time for Bill Gross to take his leave of the company he built, and for him to watch it thrive under more professional, less idiosyncratic, management.

  11. My quote for today:

    When he was asked what people would learn from the whole financial crisis, Jeremy [Grantham] said, “In the short term a lot, in the medium term a little, in the long term, nothing at all. That would be historical precedent.”

  12. Good Morning!

  13. STJ – Good quote from Jeremy Grantham.  So true.

  14. Anyone notice how more and more stories from media are video clips? Seems this is a dumbing down of our society and allows more spin drives me crazy.

  15. SUNE

    Got to love this stock!  Have been riding it since it was in the dumps as WFR/ MEMC Electronics.

  16. Grantham / Albo – I like him… His comments are very often insightful. 

  17. I guess we could use a little bit more inflation, especially wage inflation. That would probably mean fewer mortgage delinquencies and more growth. 2 birds killed with one stone!

  18. Good Morning

  19. dclark41 – Well done on SUNE.

  20. Good morning!  

  21. Good idea:

    Taking to heart MMT, Keynes, Bernanke, Yellen merges Keynes’ idea of burying money in jars with Helicopter Ben’s idea of dropping money from the sky.  The Fed announces that the United States is going to create its own cryptocurrency, which can be exchanged for US dollars at any US regulated depository institution.  No or minimal fees can be charged by the banks for this exchange.  They will be created just like Bitcoin, decentralized and according to a mining algorithm.  American citizens can mine them, create businesses to do so, and put people to work.  Unlike Bitcoin, the supply of DollarCoin will not be finite, capped at 21 million.  Instead, DollarCoin will be targeted to grow at an inflation rate consistent with an NGDPLT of 20 trillion US dollars.  Liquidity is restored.  No QE is necessary.  CNBC starts cheerfully referring to DollarCoin as YellenCoin.

  22. Phil,

    Dollar rising, Yen getting stronger, Euro becoming weaker, One of them is lying, Nikkei going lower???

  23. Current positions/Burr – Sure, today would be a good day to go over the portfolios.  

    Futures Indexes rejected at 16,250 (/YM), 1,855 (/ES), 3,700 (/NQ) and 1,180 (/TF).  I'm still expecting a drop-off from here so the usual shorting the laggard strategy is a good one.  Watch the Dollar, now 80.37, which is up 0.25% since early this morning. 

    Oil (/CL) $102.50 is hard to get over.  I have not seen API numbers – they must have tightened up on their releases.  It's snowing in NJ so /NG still a nice play but just tested $4.50 so I'd wait for over $4.60 with tight stops below that line.  Obviously, a lot more fun to play if the Dollar is heading lower.  

  24. Albo

    TY, but it was Phil that was banging the table on this one when it was somewhere near $2.00. 

  25. Trains/Phil – nice photo – would've liked to see Korea included to really drive the point home. Korea is in the process of replacing its slow, out-of-date trains that can hit only 330kmh with new models that top out at 440kmh. It costs me about 40 bucks for a 400km ride on those trains, from Seoul to Kwangju.

  26. I remember.  Great call by Phil, but you stuck with it.  I sold mine at $13.

  27. Have a look:….0…1ac.1.36.img..0.10.723.Jg6znQOvrco

  28. ~

  29. Snow – that's cool.  I visited Seoul a few years ago.  Did not get the chance to ride on the train but loved the subway – the cars are huge with luggage racks above the seats and of course wireless service.  I did see the main train station in Seoul - it was very clean and modern.  Incheon is an amazing airport.  I'm sure they will have no issues getting ready for the 2018 winter olympics.  u still live there?

  30. STO GS@161.87, 10% trailing stop

    "Feb. 25: Goldman Sachs (GS) has been one of the weakest stock in the financial sector, which as a whole has been lagging the market. The bank showed relative weakness again today with almost a 2% loss. Goldman Sachs has been forming a bear flag pattern that could lead to lower prices with a break and close below $163. The next pivot to watch after that would be the pivot low of $159.77, and if that area doesn't hold, Goldman Sachs could retest the next major level of $153 from October 2013."

  31. Terrapin – we split time between Altadena in southern California and Yeoju, a town that my wife's family is from (since about 1100 AD), about an hour and a half southeast of Seoul. The family has an orchard, maybe 30-40 acres with pears, apples, and blueberries.

  32. Phil//  Adding to existing AAPL 2016 500/650 bcs – is this a good time or should we wait for it to drop further?  Thanks.

  33. CCJ – Up.  Nice call, Phil.

  34. I'm pricing this out at 0.80mid right now.  Still a huge upside with it being 11.86 ITM.

    From Deano:

    2016  62.5-72.5 BCS can be bought, selling the 62.5 puts for ~.30 debit, and with GILD at $84, the spread is $11.50 in the money. How can I not?

  35. CLF coming back down to pre-earnings prices. Would be nice if they could get back down to $18.50 for another entry point… Right now that knife is still falling.

  36. From Doug Kass:

    Tesla Discloses SEC Letter

    Feb 26, 2014 | 9:32 AM EST

    Stock quotes in this article:


    The SEC has questioned certain statements and requests an explanation of some items associated with Tesla's filings.

    After the market closed yesterday, Tesla Motors (TSLA) made public this early-December letter that it received from the SEC that questions certain statements and requests an explanation of some of the items associated with its 2012 10-K and its third-quarter 2013 10-Q filings.

    As to why the letter was just released, I suppose these letters are confidential until the company complies/replies or makes an additional SEC filing (when it must reveal it).

    Sometimes it means trouble ahead; other times it is meaningless.

    Stay tuned.

  37. Phil/XCO

    Do you still like them after their earnings miss?

  38. TSLA pushing on $260.  

    CNBC guy just said it's a "Chauncy Gardner Market" – my Being There reference from yesterday.  It would be nice if they actually credited me for these things!  

    Bull call spread/JMD – Well, there's no margin on just a bull call spread – it's whatever cash you use.  All I really care about is my target for the timeframe and THEN I look to the most advantageous risk-reward profile along the options strips.  I do tend to prefer $10 or $20 or $30 spreads – mostly because it's easier for me to quickly see if they are fully valued or not, as it is a pain in the neck to have to think hard about every set-up you look at!   As a rule of thumb, I try to pay the least reasonable premium for the call I buy vs. selling the most reasonable premium (based on my target) for the short call I sell but I also look at the net delta and contemplate how much pain there will be on a 20% swing in the stock.  If I think the pain is manageable (always assume a trade goes against you). then I might like it enough to make it an official call.  

    TSLA/Mill – Yes, just taking that useless $6,000 and adding 2 more of the sensible spreads you already have was the idea I had – though I liked the idea of stopping the madness and going to a more neutral position much better!  

    O'Leary/StJ – He likes playing the cartoon villain for the cameras.  He was an anthropology major in college and lucked out by joining up with two college pals (in Canada) in a TV venture, who bought him out for $25,000.  He then started a software company (SoftKey) with that money and ended up flipping it to Mattel at the height of the .com boom.  That's how he made his fortune.  He's been a successful investor since then but if he doesn't understand how much luck and timing had to do with his success, then he's truly delusional.  

    Gross/StJ – There are so many investment gurus like Gross, who only actually have one strategy and, while it works, they are "geniuses" but, when it stops working, they just keep right on doing the same thing.   Rarely do they have the wits to change.   

    LOL StJ – great Grantham quote.  

    Video clips/Sage – I think, in another 2 decades, they will just flash a picture at you for a story.  No words at all – just an image to set a mood.  

    Oh, sorry, I was looking at the indexes….  wink

    SUNE/DC – Another one that flew up and hasn't given us any good re-entries lately.  Better than TSLA for those who stuck it out in the sub-$2 days!  As we were discussing in Member Chat early this morning (previous post), rather than TRADING all the time – sometimes it's nice to just pick up a cheap stock and hold it:

    Fundamentals/AC – I stand by my top 8 (so far) list of the last couple of days.  If we can get some good consolidation without one of those silly reversals, then I’ll be going over the Watch List too for the weekend.  I’m into taking situational advantage of things like SPWRA and WFR, who are both down over the Euro panic (half their contracts are written in Euros) as well as affected by low oil prices (like that will last forever).  These are 10-year trades though and we’re scaling in over the first 5 so it’s ridiculous for people to watch anything they do each day like it matters

    WFR/1020 – Yes, there are now dozens of well-funded companies that install solar panels on the roof for free and you sign a 20-year contract to buy electricity from them (but at a flat, current price).  It's a good deal for people who can't afford to lay out $50-$100,000 and wait for state rebates that take the costs down to $25,000-$50,000 and then have to wait another 10 years to recoup the investment anyway.  This is similar to the suggestion I had for the US Government to do and they already have one of the resellers working in Home Depot so I think we'll see a big uptick in this sort of thing by the year's end.  

    WFR/Kurt – See above.  I still like them but it's a long-term thing, this is a terrible part of the cycle for Solar.  I don't see why waste .16, which is 5% of the stock, to buy back Jan $5s – You should be thrilled if you get called away at $5 and, if not, then happy to get .16 more.   

    WFR down to $2.96 and you can sell the 2014 $3 puts and calls for $1.85 for a net $1.11/2.06 entry and you can sell 1/2 June $3 calls for .24.  Pick up .10 per share 6 times this year and your net is down to .51/1.76!  

    Submitted on 2012/05/13 at 9:37 am

    FTR/Bolt – I like them because it's hard to see how they aren't worth more than $3.5Bn, even in a liquidation.  Same goes for CHK, HOV, SVU and WFR with their low values – those are a few, off the top of my head, that are good for long-term position building.  There's no saying when they will turn around but it's kind of like getting a really good deal at an auction – you may not need the thing now but you figure you can always resell it for more one day, when it's back in vogue…

    SNE/Jrom – SNE has a $14Bn market cap but is LOSING $3Bn a year – that's not too encouraging.  SVU and WFR are also losing money but WFR is restructuring and simply at the wrong point in the cycle while SVU is downsizing to cut costs for the long haul.  SNE is a major conglomerate that, very much unlike DIS, is MISfiring on all cylinders.  They went from $77Bn in sales in 2010 to $87Bn in sales in 2011 and losses went from $400M to $3Bn, making them the classic story of: "Sure we lose money on every sale – but we make up for it with VOLUME!"  As near as I can tell, 2012 is worse, not better than 2011 and this is not a company that can quickly be turned around – aside from the size, the culture stops them from shifting course quickly so I'd stay away. 

    Someone asked yesterday why we don't do more IRA picks but we do them WHENEVER THERE'S A GOOD DEAL – there aren't good deals all the time but, if you are going to INVEST in long-term positions for an IRA, then you have to PATIENTLY WAIT for a bargain to come around.  Recently I like SHLD, CLF, ABX, SLW, BTU… and, two years from now, I'll be reprinting this comment to show why people should learn to relax and do a little more INVESTING and a little less TRADING.    Unfortunately, what people actually learn is:

    “In the short term a lot, in the medium term a little, in the long term, nothing at all. That would be historical precedent.” – Grantham

    Much better than expected new home sales snaps the indexes right back up.  Sure it seems unrealistic that Sales jumped over 50% in month but, what the Hell…

    Actually, I'm seeing conflicting numbers.  That was from Seeking Alpha, who we don't trust anyway.  The right number seems to be 468,000, which is still a big jump.  Of course, don't forget a 68,000 bump means there were 5,666 actual homes sold in Jan and then they multiply it by 6 months to show the annualized gain.  Could be a lot of reasons – maybe someone will blame the weather….

  39. Delusional / Phil – Isn't the problem of a lot of these top 0.1% guys. As the old saying goes, they were born on 3rd base and thought they hit a triple… 

  40. Rustle—seems like Kass is desperate..

    He was a TSLA short pounding the table 50+ points ago.

    Come to think of it--Kass 'seems' really bright but his winning streak has been absent for a long time, right? Kind of like Hussman and Rosenberg.

  41. He put out an email pounding the table to short and said he did at 218-224 the day before yesterday.  But still, facts are facts.  Note this came out after close yesterday so not having an effect on price.

  42. QUIK – Catching some bids today.  Still long.  Still overweighted.

    rj-jarboe – XCO was originally my idea; not to buy the stock, but to sell the Jan 16 $3 puts for .50-.55.  Don't think it a quarter to quarter story.  They've said they expect to consolidate this year and grow next year.  Puts still look good IMHO.

  43. market strong like bull today

  44. Speaking of things I like, AAPL getting pounded again, $518!  

    Indicators/StJ – Amazing how low "core inflation" is.  

    Nikkei/Jasu – I like cash….

    Trains/Snow – The infrastructure in this country is heading to 3rd World standards.  We can't take another decade of neglect.  

    GS/Burr – Very brave in this crazy chop but they did fail the 200 dma ($162.26) so it's good if they stay below.  

    AAPL/LTP, Rookie – Nope, adding is for a real drop, $450 ish, not $500 (where we entered).  And we wouldn't add, we would spend $25 to roll the $500s down to the $450s and leave a wider spread.  If AAPL fell further, we'd spend another $25 to roll to the $400s and then we'd make up that money by rolling the short $650s to the short $550s and that would put us in the $150 spread at a $100 lower strike for $25 more and we'd only need AAPL $550 to collect our full amount.  

    CCJ/Albo – Thanks.  That was another IRA-appropriate idea.  

    CLF/StJ – That's the thrill of owning them – it's always something..

    X is starting to look attractive.  I certainly like them at a $20 entry. 

    TSLA/Rustle – Could be nothing, especially with their very complex GAAP and non-GAAP statements. I imagine many angry bears have written the SEC demanding an investigation so they have to look like they care.  

    XCO/RJ – I liked them well-hedged at $5.13, selling 2016 $5 puts and calls for $2.80 to net $2.33/3.66 and that hasn't changed much.  It is a speculative long-term trade but a good one to hedge energy prices.  

    Delusional/StJ – True

    Oil out and a big net draw in gasoline (because we ship it out of the country) is taking them back over $2.80 (/RB), where they can be played long.  Oil itself should make a run for $103, but probably makes a good short on that line (/CL).  Nat gas can't get out of it's own way ($4.52) - back to  being it's usual NO PLAY.  

    EIA Petroleum Inventories:

    • Crude +0.1M barrels.
    • Gasoline -2.8M barrels.
    • Distillates +0.3M barrels.

  45. Dollar tapped 80.50 but rejected there.  Nikkei happy about that, looking at 15,000, above which is does make a good long (with tight stops on /NKD).  

  46. Look at TGT – up 5% today following their earnings report. Looks like the hacking crap is behind them now! 

  47. X / Phil – Didn't someone upgrade them and STLD yesterday? STLD not looking bad either for an entry – sitting on their 200 DMA. 

  48. Great call on oil rejection, Phil.  I'm in for the ride down.  

  49. AGQ – looks like my silver play was a bit early, a better entry now for those of you that didn't play.  Nasty day for /SI.

  50. considering the $ seems the market is holding up well except TSLA, who knew a letter from the SEC could be so great!!

  51. MT – someone got busy on the Jan2015 $15 puts this morning.

  52. TSLA/Jabob, Rustle – No word on it in Yahoo Finance:

    Elon Musk's net worth is up over $12Bn this week – even Icahn is jealous of that kind of move!  So, let's see, he hires a PR firm for $1M a month to keep pumping the crap out of this and they hire 20 people who make $10,000 a month to make sure the social media and the press are constantly buzzing about TSLA and they spread some cash around on promotional events and advertisements….  a pretty good investment!  

    Sorry to bother you guys with facts but:

    On the recent earnings call, Tesla said that sales are going to be approximately two-thirds international going forward, so that implies 12,000 cars in the U.S. in 2014. How does that compare to plug-in car sales by the other automakers?

    GM: In the U.S. alone, GM sold 23,000 plug-in cars in each of 2012 and 2013. Most of these were Chevrolet Volt. Most recently, the Chevrolet Spark and Cadillac ELR have been added, but sales of those are not yet material.

    Ford: In the U.S. alone, Ford sold 15,000 plug-in cars in 2013, up from 3,000 in 2012. These are the Fusion, C-Max and Focus models.

    Nissan: In the U.S. alone, Nissan sold 23,000 plug-in cars in 2013, up from 10,000 in 2012. This is the Leaf.

    Toyota (TM_): In the U.S. alone, Toyota sold 13,000 plug-in cars in each of 2012 and 2013. These are the Prius Plug-In and the RAV4 EV.

    In contrast, Tesla sold an estimated 18,000 cars in the U.S. in 2013, up from 3,000 in 2012.

    Using the metrics above, very broadly speaking Tesla is selling about as many cars in the U.S. as each of GM, Ford, Nissan and Toyota. The growth rate in 2013 was much ahead of GM and Toyota, somewhat higher than Nissan and barely ahead of Ford.

    Speaking of IRAs – How about F at $15.30?  To me, the additional $11.70 margin for selling the 2016 $13 puts for $1.30 is a decent investment anyway (better than dividends) but, if you don't want to pair that with the stock and the short $15 calls for $2 to net $12/12.50 with a .50 dividend (4%), then you can JUST (to avoid margin) buy the 2016 $13/17 bull call spread for $1.75 and that has 71% of upside – without even selling a short put.  

    If you can't be satisfied with getting 71% upside in your IRA – then you shouldn't have an IRA!  

  53. Phil – As we've discussed, following gurus as they enter new positions can frequently, but not always, prove to be profitable.  And the data you get is usually 45 days old.

    But, I was browsing thru GURU FOCUS looking for ideas, and was struck by the number of gurus that I follow who initiated positions in BIDU in the 4th quarter.  Guys such as Daniel Loeb, Paul Tudor Jones, David Tepper, Jim Simons, etc.  All these were new positions.

    I'd appreciate it if you'd structure a BCS for BIDU.  Thanks.

  54. Also, your thoughts on the stock.  Looks cheap compared to GOOG, etc.

    BTW, they report after close today.

  55. FU TSLA!!!!

    FU PCLN!!!

    FU NFLX!!!!


    Can't these mofos ever go down even for a day???

  56. Phil,

    I think you're logic and fundamental approach with respect to TSLA and Mr. Musk is missing the human element. Right or wrong, I believe a significant portion of the investing public is begining to see Elon Musk as the re-embodiment of Steve Jobs and look toward him as a bussines messiah that will lead our nation to the financial promised land. Further, I think many people are seeing Tesla automobiles as the leading edge of a massively disruptive technology which will forever change the automotive world and dramatically enchance the "green" movement with all it's implications.

    I'm reminded of 1997-2001 when the general belief was that the internet would change everything, which of course it has,but not necessarily with the promised wealth for all that accompanied the hype. If my view is even partially correct, we could be looking at a multi-year jaw dropping experience. Yesterday, I closed all my TSLA positions, took my $40k loss and plan to watch this unfold from the sidelines.

    As a point of interest, I also closed all my SCTY positions since to some extent the same concerns apply.

  57. Phil,

    Despite your past reservations about selling puts on GOOG, after listening to Eric Schmidt hold forth impressively last night on Bloomberg, I wanted to ask your current thgts on selling some initial puts (say 25% position in Jan 900s which are fetching 12). Given the lofty levels of the mkt, I realize that higher put prices may be had in the near future (or not) but there would always be the option of rolling down and out and, at the moment, GOOG seems like a great LT value @ 888.

    Thanks in advance for your thgts.

  58. clanson2 … I did the same with TSLA/SCTY – after the huge drop and retrace, when I realized I was just getting chopped up either way … and it was best to watch it unfold and play small defined risk with this pair of names than to do anything large or naked risk.  I also found that the emotional toll of 'managing' these positions created enough turmoil that I didnt trade other more profitable positions properly

  59. Phil-Albo/XCO


  60. cslanson/TSLA

    Sounds like a whole lot of wishing and hoping if you ask me. I am not sure the Steven Jobs of the past was nearly as famous as the Steven Jobs today. Has Elon Musk already reached SJ levels?  These are the kind  of thoughts that are congruent with a frothy market.

  61. dclark41

    I agree with your "frothy market" comment but I was there for the five (5) years from 1997 to 2001 and watched dumbfounded at that half decade 'frothy market". History has a habit of repeating itself.

  62. TSLA / Phil

     A lot of buzz is being added in the networks about the potential 0f the new patent of Tesla where they affirm that car will be able to support over 400 miles without recharge, basically in a combination of 2 set of batts, one with the usual lithium units and other set in the same car  based in metal- air technology, which as far as  I know are only in labs….each set has different ranges and ways of operation, but the mix can create the 400 miles range.

    Some are saying this batteries development is a breakthrough that will affect many different areas of life.  this is just because as you, I can´t support any analysis using only electric cars.

    I have been for decades a frustrated investor in Valence and AXPW and know a bit about batteries (from investor side) and it doesn´t look so easy.

    Anyway the hype is out of control from my point of view so a bubble explosion will perhaps arise some interesting long term opportunities.

  63. Might need to add SNDK in the Momo's list – there is just no quitting in that stock either.

  64. SWKS – New yrly high.

  65. SNDK, WDC, STX – first two are making or at highs, the third is recovering after finding its regular support at 30MA on weekly charts.

  66. cslanson

    It is hard to watch.

  67. dclark--it is 1999 again.

    Even if PCLN is great--up 15-50 points almost every day?

    TSLA--up 600+++% 

    NFLX--330--450++ in no time..

    WYNN 238+++

    FB, Whatsap, etc…

    Being a "value" investor as opposed to a momentum guy has been painful and stupid.

    Hope that changes soon.

  68. goog what is there weighted % in the index

  69. I've now heard talk that some people are going to start valuing TSLA as a pure technology company rather than a car company with the new announcements and think they could be 700-100 in 3-5 years.  This way you can't compare it to GM or F.  They would be a technology company that just happens to produce cars and get a p/e of FB.

  70. meant 700-1000

  71. selling a second tranche of PLUG (position down to half). Let's see if they can go another 10X … 8)

    Phil – you asked me to check in on KNDI – bot Dec 30th, was flat/down for awhile, now up 31% (like everything else)

  72. Value and momentum / Jabo – Here is a good article on that topic:

    Bank of England’s Andrew Haldane (hat tip Felix Salmon) with some rather jaw dropping analysis showing that a momentum investment strategy consisting simply of buying when the previous month was positive and shorting when negative, significantly outperforms a simple value investing strategy based on the dividend discount model.

    This was not a fair comparison because a value investor would not hold only one month so the author compared with Buy and Hold:

    So momentum wins, but if you remove the Great Depression:

    Now value wins in the Buy and Hold scenario.

    BUT…. when one data mines the historical data (always a fun thing to do) and only shorts the market following monthly returns down more than 1.85% (prevents whipsawing I guess), the momentum strategy is a huge winner turning $1 from 1871 into more than $7,000,000 dollars today and significantly outperforming a buy and hold investment both pre and post 1940.

    Sounds like a good strategy to me!

  73. Phil, pwright72, Shadow, palotay

    Thanks for the IRA picks and strategies

  74. Well, if you can't beat 'em, join 'em, I'm scaling back my momo shorts and getting on the bandwagon, a sure sign of the top.  Buying FB MAR 72.50/77.50 BCS for $1.30.

  75. Musk/Phil

    How do you get Elon Musk's worth up over 12B this week?  I think he owns about 29mm shares of TSLA which would now have gone up about 1.45B and his worth in the company roughly 7.5B.

  76. Jabob

    Hard to argue with numbers like that!

    FU 1999!

  77. Rustle123 -Don't know about Musk's net worth.  But don't forget SCTY.

     Musk currently owns 20,724,991 shares of SCTY, which gives him a 28.34% stake in the company

  78. So is it time to double down on TZA? or bail:)

  79. Sorry, wasn't done with F.   In an IRA, if you pair the bull call spread $1.75 with the short $13 puts ($1.30), then you net into the $4 spread for .45 and $13 of margin (since you used the cash to sell the puts).   The point is, however, that, at $17, you make $3.55 against that $13.45 (27%) and the BIGGER POINT is that you don't lose money (Buffett's Rule #1) unless F drops below $13.40  and, even if F flatlines at $15, you STILL make $1.55 (11.5%).  

    So there's nothing wrong with selling puts in an IRA, the strategy is still sound, your return on margin is simply less but you benefit greatly from not paying taxes on your gains.  You COULD break the trade up and take the bull call spread (with $2.25 of upside) in the IRA and sell the short puts (with $1.30 of upside) in an ordinary account, where the margin would be just net $1.30.  That way, you make the same $3.55 but 2/3 of it is tax-free (deferred).  

    Gold tumbling $18 (1.3%).  Tapped $1,320.  

    Oil back to $102.46 already for a small wheee!  

    Strong like bull/Sage – Reminds me of this Daily Show clip on Russia

    TSLA/Jabob – I like Santos, he's a smart guy.  

    Apparently, Morgan Stanley believes that Tesla is the OEM that's better placed to dominate self-driving cars. This might seem realistic on the surface, since Tesla projects an image of the future, of a car more intertwined with technology than anything else out there. As such, it seems realistic that Tesla might have the upper hand regarding the technology-intensive task of building self-driving cars. But does it really?

    It doesn't. There is already massive research into self-driving cars. Google (GOOG) has their now-famous self-driving cars in the road. BMW has shown a self-driving car that is even able to drift around a circuit. Volvo has shown self-driving cars on a convoy among real traffic. As for Tesla, Tesla is at the absolute zero.

    I mean the absolute zero. Tesla's Model S doesn't even have adaptive cruise control. It has no lane-departure alerts. Or automatic braking. All of these technologies are in road-going cars today. And have been for nearly a decade! These are the first commercial steps of self-driving cars, and yet Tesla has none of it. Yet Morgan Stanley goes around saying that Tesla is the better-placed company to dominate autonomous cars?

    Again, sorry to bring logic or facts into a discussion regarding TSLA.  LOOK AT THE CHART — WOW, they must make great batteries….

    TGT/StJ – The hacking didn't drive people away.  Good news for them.  Fantastic call by Jfaw:

    TGT / Phil – Been waiting for these guys to be near a buy zone.  Sitting on support going back to 2011, They could go lower.  Planting trees with this one.  Looking at the 2016 options, I saw this.  Anything better?   Buy/Write?  Straight Short Put?

    Sell the 45 strike Put for 3.15.  Buy the 55/62.5 BCS for 2.95 for a 0.20 credit. 

    STLD/StJ – I like X better but only because I don't have a good handle on how STLD is set up by comparison.  I like MT better than both of them, hopefully they'll hold $15 and give us a good entry.  

    And what Scott said. 

    Congrats Bruce – and now maybe a round trip as they just tagged $103 again (/CL) for another short. 

    AGQ/MrM – That's one to get your heart pumping.  Good call. 

    SEC/Sage – Hopefully they'll send a letter to AAPL.  cheeky

    CHL/Burr – I was surprised they were holding up with /NG plunging.  

    CHK up 3%, ECA up 2.25%, CVX up 2% – with Nat gas down 10% on the day.   Do Fundamentals matter?  ROFL!!!  cheeky

    The company said the decrease was mainly due to a planned reduction in well connections during Q4, as well as severe weather that impacted production in October and December.

    BIDU/Albo – I'm sure those guys were buying at $140, not $175.  I liked them last year under $100 for the first time in ages but over $150 is too beaucoup for my tastes.   As you noted, 45 days late can matter a lot.  You can play with something like 3 2016 $140/210 bull call spread at $30 ($9,000), sell 3 $130 puts for $16.50 ($4,950) and that nets you in for $4,050 and then you can try to sell 1 $5 call each month (March $180s are $6.20 for $620) to help pay for the spread.  Since you are in for net $13.50 (not counting the short calls), you have 3x $56.50 ($169.50) of upside protection on the short call and, if you can pull off just 7 $6 sales, you essentially have 3 free $7,000 spreads.  

    Wow, for being bearish we're finding a lot of bull trades today!  

    80.53 on the Dollar – not hurting the indexes so far, especially the RUT, now 1,183.20!  

    VIX under 14 – what, us worry?  

    XCO recovering already.  

    Musk/Csl – Maybe so but that didn't keep AAPL's stock constantly going up under the original Steve Jobs.   Is that really how you would justify investing in TSLA – because Elon Musk is the new messiah?  I'm glad you cashed out.  I will be very, VERY surprised if you can't get back in 30% cheaper sometime within the next two years but when exactly is impossible to say.  

    GOOG/8800 – The problem is they are up so damned much.  Sure, they would be a great buy at $900 but that's $300 below where they are now so the question isn't whether or not it's good to sell the $900 puts but whether you will do so with the REAL intent of buying the stock for $900.   The 2016 $900 puts can be sold for $38 and that nets you in for $864 and the margin is $8,800 to collect $3,800 so it's not very efficient and, if GOOG drops $250 (20%) to $1,000, we can assume the short puts jump to the price of the $1,150 puts ($115) and you'd be down $7,700 per contract (200%) and your margin would be about what the margin of the $1,150 puts is if you had sold them for just $38 ($24,000).  

    Still, none of that is a big problem if you REALLY wanted to own 100 shares of GOOG at net $862 ($86,200) and, if you are playing it properly, you should be THRILLED to see GOOG come down to your price and you begin to plan turning your $862 assignment into a 2018 buy/write where you sell the 2018 $1,000 calls and $800 puts for maybe $200 and then you are in for net $664/732 on 2x and you still make 50% at $1,000.

    If, however, you didn't REALLY want to own GOOG for $864 and you take a loss on the way down – you are out $7,000 per contract ($70 per share) with nothing to show for it.  So the short puts are a FANTASTIC tool for INVESTORS but a very dangerous toy for traders! 

    And that is what seems to confuse people – hope that helps to clarify!  

    You're welcome RJ.  

    Very wise Partha – plenty of good things to trade with cash.  

    TSLA/Albo – As I said, a team of 20 PR people working round the clock to keep buzz at maximum.  What is this patent?  What stage is it in?  It doesn't cost much to file a patent but it can take Billions of Dollars of R&D and many years of time to get from a patent to a profitable product – just ask Nikola Tesla, who died bankrupt.  He had lots of patents.  

    Up every day/Jabob – A NFLX Jan $450/550 bull call spread is $37 and has 170% of upside if NFLX goes up 10%.  PCLN $1,350/1,500 bull call spreads are 1/2 in the money at net $66 with 127% of upside if PCLN goes up less than 10%.  You can buy 5 of each of those for $51,500 and sell 5 AAPL 2016 $450 puts for $46.50 ($23,250) and then you have $150,000 worth of bullish Momo spreads for net $28,250.  That's how you can offset short Momo positions (assuming you REALLY like AAPL) because you know the spreads won't even lose too much on a minor correction (5-15%) but you'd be a winner on short-term shorts.  If you don't have balance – you can get totally screwed but balance is not that expensive – you should consider it a cost of the trade every time you enter!  

    GOOG/Purple – What index?  The Nasdaq?  I think they are roughly 6% but maybe more now that they've gone up so much.   This chart is from April 2011, when GOOG was $500 and AAPL was $300 – very hard to say how the mix changes over time.  

    TSLA/Rustle – That's because if you value it as a car company you look ridiculous.  That's amazing, I wonder if Ford can get a scam like that going.  HMC certainly should, they actually do make robots.   I've gotta take something public – I can't wait to get in on this scam – whatever's hot, we'll send out a press release saying we plan to be the leader in that space!  

    KNDI/BDC – Great call on 12/30.  

    Momentum/StJ – OK, let's give it 50 years and see how it goes.  surprise

    You're welcome Kevin.  All you have to do is remind me and I'm happy to discuss IRA stuff as well.  

    Joining 'em/MrM – You can always add one a day and, if it keeps going for 10 days, you can pull the first one and add another….  

    Musk/Rustle – That's what the article (linked) said.  I'm not counting his money, even if he "only" gained $700M, I was just pointing out how easily a guy with that much interest in a stock can manipulate sentiment to keep it going.  Everyone gets away with it so the whole market is turning into a Billionaire's pump and dump playground.  What can go wrong?  

    Phones/Rookie – PLEASE, we are trying to maintain a fact-free environment here!  wink

    SCTY/Albo – Well there's $180M just today for Elon!  Must be nice….

  80. @albo

    He still wouldn't have went up that much.  Maybe article meant his entire net worth went up 1.2B at time it was written and editor forgot period.  Even with SCTY he should still be under 10B but growing quickly.

  81. Phil,

    Thx for reviewing the GOOG option dynamics and margin inefficiencies and putting the risk in perspective. Little like buying a sports franchise that's 11/0; the price would be less if you wait until after they lose a game or two, but if they don't you wouldn't own them or would have to pay a higher price. Will  likely wait to sell an initial put position to see if the mkt confirms a breakout. Thanks.

  82. Rustle123 – What's a billion or so here or there ?   His purchase of $100 million of TSLA on the secondary at $92.24 is looking pretty good. 8-)

  83. how could it be lower?


    Netflix to start filming superhero series this summer • 1:05 PM

    Netflix (NFLX -0.3%) will start filming and production work on its Marvel superhero series this summer.

    The company will set up shop in New York State as it works on the 60 live-action episodes in the series.

    The series marks further collaboration between Netflix and Disney.

    What to watch: Analysts think a successful debut of the show aimed at younger children and teenagers could boost subscriber tallies for the streaming service and create revenue opportunities.

  84. Phil – Again late to the party.  I think your example showing Amtrak vs. the world's trains is highly unfair.  The Amtrak loco is shown with the original Phase III paint when they are now sporting to Phase V paint!  (Tongue is in cheek.)

    I agree with your views on US rail.  What we call hi-speed today is a joke at 110mph.  The original passenger diesels built in the late 30's to early 60's were geared for 115mph, the speed of the steam engines they replaced. In their heyday, the Burlington (Zephyrs), Milwaukee (Hiawatha's), and Northwestern (600's) were highly competitive between Chicago and St. Paul/Minneapolis and hit 110-115 on various stretches. The 600's got their name because they would travel 600 miles in 600 minutes – that includes stop times. 

  85. I will not write FU for the rest of the month if somehow a miracle happens and PCLN and TSLA end in the red (NFLX too)..

  86. Musk/Albo

    I still think he's more PT Barnum than Steve Jobs. But he has made some really bright decisions.  Let's remember that according to the loan he had with GS, Musk had to buy those shares to maintain a certain percentage of the company.  I wonder how soon we will see 300 on TSLA.  I have mostly short puts on it, so manipulate away.

  87. MtGox and it's spectacular collapse shows what happens when a ground-breaking technology runs into amateur hour. Gox had a special place in people's hearts because it was first, and for a long stretch of time the largest, bitcoin exchange. Faux legitimacy piled on in a repetitive news-cycle fashion that always quoted the exchange to indicate the market price for their are article because they read about it in a previous article. However, for a long time it was well known something was "wrong." For example, running up to the collapse, MtGox would be quoting BTC prices 150-200 USD per coin higher than other exchanges. This reflected the ease of which you could deposit fiat and trade but the difficulty in withdrawing fiat currencies (a BTC would therefore by "worth more" in Gox because if you sell it you cannot withdraw the fiat as easily as other exchanges, such as coinbase, so as an example if you sell in coinbase for 750 you can have the cash in 2 days but gox could take 2-12 weeks and even then only Euro and Yen transfers have been working since June 2013, so the price is 900). 

    It is interesting to note how the market responded in some unique ways. Given the absence of government intervention the market has to get creative to solve problems. Despite MtGox being completely toast you can still buy "Goxcoins" (BTC coins stuck in Gox) for some fractional BTC price. Right now it is trading at ca. 0.10-0.11. The actual exchange is here. I attribute this value to the fact that an internal MtGox memo leaked they have about $32M in assets versus $175M in liabilities, which is 18% coverage. Because MtGox is also a bank (and Japanese banking laws a quite stringent), their cash and capital assets will be subject to Japanese banking laws. So my thought is the investors are stipulating they will receive, eventually, ~18% for a coin they are buying for 0.10, so 80% gain in let's say a 6 month timeframe? Obviously lot's of risk but an 80% return even in 1 year beats junk bonds all to hell.

    So where are those coins? Now this is interesting. This heist is essentially 2x Ocean Eleven's haul in of $160M (remember back when that was a lot of money??; now that's how much Elon grabs in the first 45 minutes of trading). All BTC transactions are recorded in the public ledger by design (this is how bitcoin works). Even though the addresses are anonymous they never can stay so forever if you are trying to move money to cash. As Andy Garcia said, "Run and Hide." I predict this whole thing will shake out of multiple years like some kind of movie script that not even Hollywood would've bought in to as plausible. Certainly, this is bitcoin's first major financial disaster. Either way, grab the popcorn.

    Price: always hard to predict of course but the last couple of major events, that were presumably uber-damaging on the surface, are worth noting: Silk Road got busted (thankfully) on Oct 2, the price of BTC was under 100 for a lot of that day. ON Nov 2 it moved about 200 and wouldn't stop until it hit 1000+ in Dec. China cracked down on yuan/BTC transfers in Dec and that sent BTC as low as 500 (momentarily lower). Checking the chart now, MtGox dying sent BTC to 400-430 range momentarily, though it is now at 580. 

  88. Wisconsin Back in the Black - Do I still have to hate Scott Walker?

  89. Rustle, you are a braver man than I am.  Too volatile for me to play either way.  Don't know whether or not to wish you good look on TSLA with quite a few of our members hurting on the other side.  I just hope it moves quickly in both directions so all are happy.

  90. Musk / Rustle – I don't know about PT Barnum. His SpaceX venture is doing pretty well and it is rocket science after all. No matter what happens with TSLA, the guy can't just be dismissed as an entertainer. But let's see in 10 years. Too early to judge.

  91. phil,

    first appreciate your thoughts/ input this morning….you know the best laid plans etc….with the open up 10 and higher i was in a margin/net liq situation so had to piece meal my way out…….

    i was able to take some losses….and reduce my delta by 1/2 (now -1300) after it was said and done…so i was not able to roll ….so when you get a minute would appreciate your thoughts relative to my remaining positions…and any addtl suggestions.  as i want to tune /simplify…have a little working room now……tks

    sht 4x jun 210 calls………held off selling all with the price jacked up…

    sht 10x jun 255 calls…

    long 10x jun 230 calls….

    sht jan 15 20x 180's

    long jan 16 20x 180-250 bcs…

    sht 10x  jan 16  180 put…was thinking of adding 5 more per your thought this am…but held off w/ it up again……

  92. Butterfly Portfolio is nice and boring:  

    We killed TWTR and that leftover leg of TSLA is dead money so it's time to add another one – but not now.  

    $25,000 Portfolio too tough in this choppy market:

    Income Portfolio falls victim to Musk!  

    Short Puts:  AAPL we wanted to buy a bull call spread if they came back down.  Let's add 3 of the 2016 $450/650 bull call spreads at $71.50 ($21,450), which nets us in at $9,300 ($31 each) on $60,000 worth of AAPL upside at $650 and we're starting out $70 in the money.  BBY, CAKE, EBAY, HOV and POT are all good.  

    Bull Call spreads:  DBA we love but look how the short calls are killing us relative to the long calls we own.  That's a very misleading thing when you look at how your positions are doing.  With DBA at $27 and our long calls at $24, we don't give a damn what the short $28 calls SAY they are worth – we KNOW we're worth $4 more than they are – no matter how high DBA goes.  SHLD is about even, still a good entry for a spread that $10 in the money.

    Covered Combos (Buy/Writes):  We picked up our dividends and all is well.

    Custom Spreads (mostly artificial buy/writes):  

    • ABX – Fine and dandy. 
    • BRCM – On track
    • CLF – Back to our entry point and better priced than we started at for a new entry. 
    • FAS – Fine and dandy. 
    • LULU – On track
    • RIG – Slow but on track.  
    • SCTY – We were doing much better before this week.  Still, it's fine as we only sold 5 short March $85 calls for $4.40 and SCTY is at $87.30 and we have 9 months to roll. 
    • SLW – 100% in the money already. 
    • TSLA – Short March $200 calls are a bit of a problem and we're only covered to $260 but let's give it the week, at least.  We can sell some puts, we can add more long spreads, we can 2x the 3 short March $200s (now $44) to 6 short June $280s ($22.70) better than even so not too worried yet – but very annoyed!  

  93. on the jun 210 that should be buying all…………..

  94. Musk/StJean

    But remember, Musk didn't invent the technology of TSLA, he bought it along with the name of the company and forced the guy who did create it out of the company.  He didn't invent or come up with the technology for Solar City.  He even plagiarized his idea of the hyperloop from a professor at MIT.  He is a good businessman but it's not like he's Zuckerberg who actually wrote all the code.  Elon just knew what to buy and how to sell and how to promote.

  95. Phil/ LTP: dont forget the long term portfolio :)

  96. LQMT/Phil

    Do you recommend a new position in LQMT. If so, what would it be? Thank You.

  97. Phil / BA: Does this make sense to you ? would BA and other look so healthy without the tax handouts / walfare ?

  98. TASR got tasered?

  99. This battery hype is close to crystal ball visionary breakthroughs. When all is said and done the backup at this point is disposable. Even Duracell and Eveready have been at it for decades. The GE ceramic idea may be of use as rechargeable but these technologies are designed for stationary use and TSLA isn't talking ceramic/zinc. Phil is right this is planned release of sound bites that financial guys have no clue and in typical American fashion never ask for proof, technical, or time lines. Metal air batteries are dense and lighter than more common types but they are disposed after use. The aluminum disposable that extends to 1,000 miles, adding water, carry bottles of distilled water that takes energy to produce with you, consumes the metal. Al this can be done in Musk's future battery change centers. When gas costs $50 a gallon maybe it will be competitive if the ridiculous idea doesn't cost 10 times as much. Really all this is not even close to gas/diesel efficiency. Of course all that is needed is $2.50 per hour minimum wage to do it all at the lowest price. Who will buy the $100 to 150,000 family car is the biggest question? Second is where will all the waste go? The guy knows how to manipulate idiots.

  100. Musk / Rustle – No different than Steve Jobs in many aspects – but in a different environment. And there is nothing wrong with that I guess. Like I said, let's see in 10 years what he actually does with his businesses.

  101. Nice sell off in last few minutes

  102. Musk and Steve Jobs could not be more different. Steve actually knew something about technology and was paid $1 per year to do it, because he had too much money. Musk is just another billionaire and super surprise knows how to make lots of money and not ever work for it.

  103. Virtual Short Strangle Portfolio updates -

    All positions have expired OTM.  That was very lucky as the last 4 weeks have seen large moves. For March, let's sell:

    - 10 RUT Mar 1070 puts for $1.9 credit, 10 Mar 1245 calls for $1.1 credit

    - 10 SPX Mar 1680 puts for $1.775 credit, 10 Mar 1930 calls for $0.875 credit


    Note that we are not trying to time the market, nor be aggressive with the positions.

  104. which way Wednesday indeed.

  105. That bond auction rallied TLT and the 30 year.  the indices have been sinking like a rock since.  there is still a lot of fear at these nosebleed levels

  106. Futures are 16,213, 1,848, 3,690 and 1,185 with the Dollar at 80.52, oil $102.76 and gold at $1,329.  

    TZA/Griffin – If it's a hedge, then we haven't seen 2 days over the lines yet (see main post) but, if you cashed out your bull plays and it's just a downside bet – it's not looking good!  

    Your welcome 8800.  Keep in mind though, that a sports franchise that IS 11/0 has proven its value.  Still you would have to check the farm system (if any) and the age of the players on the roster and their contracts but, more or less, you are getting a high-performing franchise like AAPL or MCD or DIS.  If earnings are winnings, TLSA is 1/10 since they've gone public and that's only using non-GAAP accounting (ie.  we lost the game but two long foul balls looked fair to us so we're giving ourselves 2 extra runs and a win for that game!).  What TSLA is selling you on is the POTENTIAL to be a winner, one day, down the road.  They are going to trade for this and develop that and hire this coach and build a new stadium and THEN they will get to their first playoff game after a 4-quarter winning streak.  Meanwhile, they are asking you to pay 100x the actual earnings (wins) for their team, based on the potential they tell you is there in the Future.  It could happen – Let's Go Mets!  

    MLB sale prices versus Forbes valuations

    NFLX/Jabob – I'm going to watch that.  I still love superhero stuff. 

    LOL Grant.  My apologies to Amtrak.  I did take the Acela to Washington a few months ago and I liked it a lot but it was $150 to go 288 miles in 3 hours – hardly a bullet train and not worth it if the kids were with me.   OK, enough train talk, starting to remind me of this.  

    Rest of the month/Jabob – That's all day tomorrow AND Friday – are you sure you can make it?  

    Very nice write-up BDC, would be a good post. 

    Walker/Scott – Of course not.   There's a proposal in my town to shut down the post office, stop trash collecting, shut down the public schools and close our parks (we have a lot) and we can save 30% on our property taxes.  A lot of kids go to private school anyway, so why pay for the public one?  That's what we need, a nation of Walkers to stop the Government from doing all that Government stuff.  

    TSLA/Mill – Well now that you capitulated, of course they are pulling back a bit.  I think you're balanced enough to watch and wait (unless you still have margin issues).  Once again I prefer just going for the 2016 spread to make up losses but, as you know, I do still think TSLA will see $200 before $300.  

    LTP/Micro – After I catch up on this.  

    Woops, look at the Nas plunge!  Dow 0.6% now in a huge move down.  Others will follow, RUT triggered short (/TF) at 1,180 and Dow (/YM at 16,200) and /ES at 1,840 just this second.   If any get back over – stop out!  

  107. SPY - Alert from Fidelity: "For a third time this week, the index has failed to hold and build on the 1850 area. On a 5-day chart this is beginning to look like a bearish compound head and shoulders top. And the neckline of that pattern is at 1845. That suggests downside potential to 1823 may be possible if the pattern remains intact. Pulling back to a day-based time frame on a 6-month basis, the pattern looks like a double top with a marginal new high for the second peak. A move and close above 1845 would render the head and shoulders pattern inactive."

  108. Phil,

    Ahem. Our initial exchange (and the sports franchise analogy) was regarding buying GOOG, definitely not TSLA. 'course if TSLA would step up and buy AAPL – show 'em how effective, dynamic CEOs promote/market in the big leagues – I might be interested. Your point is taken nonetheless. Thanks.

  109. LQMT/Hextra – Sidelined on that one for now (.31).  If they get back to .20, I like them but no particular news to make me want to pay more.  

    BA/Micro – It's not BA in particular, a lot of corporations get hand-outs like that.   BA has $86Bn in sales and 164,000 employees, AA has $23Bn in sales and 60,000 employees so who's getting a bigger subsidy?  Also, how the Hell is GE not on that list?  Anyway, the whole thing is despicable but it's not actionable until/unless there is a major push to re-write those regs (good luck).  

    TASR/Scott – Wow, they spiked to $22 on earnings release and now down 4% at $18.35.  I don't see any actual news driving this – quarter seemed good, guidance good.  Someone just messing around pre-market, I think and now they are taking profits.  

    All good points on TSLA, Shadow but facts won't sway people.  

    TLT/Button – You're right, up to 108 now.  VIX even woke up – 14.47.

  110. GOOG/8800 – Sorry, been talking TSLA all day.  GOOG a more proven winner, of course, but same concept to value it.  

  111. Phil – Good clip choice.  I saw that episode.  I am am a cross between Sheldon and the train nerd.  Actually, I am much worse.  Half the train stuff they said was wrong. 

    I rode a dinner train with my wife once near Seattle.  On the return trip I left my wife to ride in the engine, while she ate my desert alone.  She got even with me on another trip.  She won a raffle to ride in the cab of a rare BL-2 diesel.  My friends loved the shocked look on my face when she got up and left me!

  112. I wrote last week that one mistake was to try to use rational thinking to value instruments that behave irrationally like TSLA, NFLX and others.

    It seems that another mistake is to let your emotion sway your trading. I don't particularly like Elon Musk (although I don't really dislike him – there are worse and more useless billionaires) but investing on the basis of my feeling for the guy if I had any would have not worked well for the past $200 or so. I hate shopping at Target and yet I am long the company because I believe it will make me money. I don't care that much for gold miners and their way of doing business but I am long as well because it will make me money. I don't care about coal mining either, but long BTU and so on… Just trying to remove my emotions from the investing process.

  113. TASR – I just filled the following, Short 2016 $15 puts for $2.90, long the 2016 13/20 BCS for $3.20, for 0.30 net on the 7 dollar spread, which is $5 in the money.  1x position, with money allocated to doubling down two more times if/when they get cheaper.

  114. Phil TSLA and Musk will pay someday. This really stinks of euphoria and when liquidity dries up how does he get his money? When he is praying for $26 that 10 cents on the dollar today. The car, FB, and all this isn't even technology, it may use some to function. It is high priced Bull Shit and many will get burned.

  115. TSLA's moves are so violent that the Interactive Brokers margin calculator has blown a gasket.  I can't roll or close any of my TSLA positions, I just get a red alert dialog saying that margin could not be calculated.

  116. Virtual Short Strangle/Peter

    Starting to trade your portfolio. Which Mar 14 are you referring to - 8, 15, 22 or 29? Thank You.

  117. palotay //
    you suckered me back in TASR again ( I've always done well with them ) and I think they could weather pretty big drop. 

    if you like running multiple spreads
    Jan15 $15-26 Bull is $3.50 and $4 ITM, then you have plenty of room to roll out if needed

    mill // look at it this way, TSLA looks like its going to give back all of its gains today. Refreshing, isn't ?

  118. Short-Term Portfolio Review – WYNN position is killing us but we have until March and no rush to fix it just yet.  We'll see if there's anything we'd like to change:

    • TZA – We have too many of them, we need to consolidate.  Let's close the March $23 calls at .10 – they are too far out of the money.  The April spread is actually fine and, for the July spread, we may as well buy back the short $25 calls (now .65) and we'll leave it alone for the moment.  
    • WYNN – Those Jan $180 puts are strangely holding their value (down 30%).  I'm not inclined to close them out but I'd love to get out even ($9.75) if we get a chance, as we also have our combo.  Had we properly sold the short puts (being the house) to cover our other combo, we'd be much happier.  Spilled milk now.   We are covered to $240 with our existing spread and WYNN is $235 on the button after being rejected at $240 so it's watch and wait for the moment.  
    • CI – On Track 
    • SCO – Off track but not badly so.  We'll have to see how oil opens next week.  
    • SLW – On track 
    • GMCR – That's a Jan spread and nothing worth adjusting. 
    • FAS – On track.
    • TWTR – Let's buy back the short March $65 calls (.60) and see if TWTR can catch up with its Momo buddies.  If they fail to hold $55, we should kill the bull call spread.  
    • WYNN – As noted above, need to watch and wait to see if this run-up sticks.  If so, we cover more and roll.  

    Long-Term Portfolio – Up a disappointing 1.7% so far.  Still, I don't want to commit more in an uncertain market.  If we do break higher, I'm happy to do more shopping.  The good news is, most of these positions can still be entered.  

    Short Puts:  All good, FCX and HOV are our only negatives but both are well over target and not cheap enough to add more.  

    • DBA – That spread is on track.  
    • GLL – 115% in the money but we're showing very little profit ($400 out of a potential $1,500)
    • AAPL – We just added that spread to the PSW Income Portfolio, so I like it.  Unfortunately, it's not cheap enough for us to double down yet.  
    • ABX – 100% in the money
    • BRCM – On track
    • BTU – Weak but not bad. 
    • CLF – Big pullback but we still like them.  
    • LGF – On track
    • LULU – On track
    • MSFT – On track
    • RIG – Slow start, nice entry point as a new trade.  
    • SHLD – Also a good new entry.  
    • SLW – 100% in the money already
    • SPY – 100% in the money – all the market has to do is hold 1,800 this year and this trade makes 300%!  
    • T – On track but a good new entry.  

    Nice and boring.  We'll just have to see how this market top resolves itself before deciding on new positions.  

  119. from Doug Kass (pretty funn)

    Tesla Stats

    Feb 26, 2014 | 2:34 PM EST

    Stock quotes in this article:

    TSLA, TM, GM, F, HMC

    Tesla produces 0.5% of the typical volume of the big six and 37% of the market cap, so it's 72x as expensive.

    I know that the Tesla (TSLA) narrative has changed with the giga factory, but a friend sent me the following info via email just now.

    Below are the current automaker market caps per vehicle sold (in round numbers) based on 2013 production (in most cases, it approximates the cost of an average automobile manufactured by the OEM:

    Toyota (TM) = $18,000
    General Motors (GM) = $6,500
    Volkswagen = $12,750
    Ford (F) = $10,900
    Nissan = $15,250
    Honda (HMC) = $15,850
    Tesla = $1,410,250

    Tesla produces 0.5% of the typical volume of the big six and 37% of the market cap, so it's 72x as expensive.

    Rather a lot of future growth seems to be the consensus.

    As a baseline, let's assume that the company hits typical rates of industry net margins and valuation levels.

    The current price then equates to (for example) hitting its 55% volume growth estimate this year then a further 20%-plus-per-year volume growth for 60 more years, and no change in stock price till 2075.

    As I watched Tesla roar and soar this morning (at the peak up $18 a share) and the haters emerge, it is interesting to note that the stock appears to be headed toward unchanged on the day.

    Position: Long GM and F; short TSLA

  120. Hextra8 – It's March monthly.  When we don't specify the Weeklies, then it's a monthly options.

  121. Looks like they won't be happy until AAPL hits 510.

  122. Phil: My IRA at Schwab will not let me trade BCS because it will not allow an IRA to be a margin account.

    If you know of a house that allows an IRA to have a margin account please let me know.


  123. IRA/IHS – Fidelity allows me to do spreads, puts, straddles etc with my IRA. it's all "cash covered" but still works and cuts down "margin" if you do a put spread for example. I have said before here that I prefer the cash covered requirement for my IRA as it has prevented me from overtrading. Of course, I prefer TOS and they have assured me I can do all the same when I move my IRA to them from Fidelity, and get the same low cost of trades (much lower) i have with my TOS trading account than Fidelity gouges me with.

  124. What Scottmi said about Fidelity IRA's, goes for E*Trade too.

  125. Schab purchased Optionsxpress. I have an IRA at OPEX and can trade spreads.

  126. IHS – At Schwab, you have to open an OptionExpress account to trade spread transactions. The regular Schwab account allows cash covered put sales and outright option purchases.

  127. Nope, they are not letting these things go down so far.  Nice little gains on the shorts (50 on /YM, 10 on /ES, 10 on /TF, 30 on /NQ) below the lines but not worth trying again.  Back to watching and waiting to see how we finish.  

    Trains/Grant – Yes, you seem to qualify.  I love trains, but riding them.  Not to into the trains themselves.  

    Emotions/StJ – Yes, I try not to let my love/hate of various CEOs sway me but it is valid to know if Musk can back up his BS.  

    TASR/Paloty – A very nice stock to set and forget.  Good choice of spread (2016 $13/20 bull call spread at $3.20, selling $15 puts for $2.90) – that's a good entry for anyone who isn't in our stock of the decade.   Let's add 10 to the Income Portfolio.  

    Musk/Shadow – He can borrow against his stock or cash bits out.  After all, how much money can a person need?  If he owns 1/3 of TSLA, that's $10Bn and then about $3Bn worth of SCTY – if he can manage to scrape by on $10M a month, it wouldn't even be noticeable selling.  And, of course, people that rich are in it more for fame and glory than making money (although some people use it to keep score).   Delorean was running his company into the ground but he partied his ass off until the last minute. I remember CNBC had a Billionaire hedge fund manager (not Madoff) on and they were worshipping him and asking him for pearls of wisdom and a week later he was in handcuffs as it turned out it was all BS.

    TSLA/MrM – Wow, that's annoying.  Do they dynamically calculate margin requirements?  

    TSLA/Rustle – Yeah but if they ramp up production and sell 10 times more cars by the end of the decade, they'll only be 25x more expensive than other car companies – so there!  

    IRA/IHS – Sure, TOS has better rules (unless TDA changed them), check with them or Fidelity, when I used them, they were liberal.  Tasty Trade often discusses IRA option strategies.  You may want to find a message board there and ask people who they use that's flexible.  

    And what everyone else said!  

  128. Here a tech q for u guys. In my IRA I have lots of covered calls. I'd like to set a trailing stop on the common at 10%. BUT I can't sell out the common or I'd be naked short a call, which isn't allowed in a IRA. I don't want to sell the option, since it will be making $$ as the stock goes down + I nvr want to sell a option at the market.  Using a trailing stop limit on a option is tough as the spreads differ.  


  129. Full Petroleum Report is out.  Looks like we're exporting more and more, 1.936Mb/day last week – there's your draw in gasoline with 11M barrels to spare!   At the same time, we're importing 400,000 barrels a week less than last year, another -2.8Mb/week.  Notice they are not producing more gas than last year.  In fact, 1.4Mb/week less and we're exporting 14Mb/week on top of that!  Even so, regular gasoline is down 10% – still my premise that people simply do not have money to spend.  Higher oil/gas will break this economy pretty quickly.  

  130. Musk Phil

    But when the stock is worth $1 billion because everyone else sold can he get that? Same with his other adventures. I concede he will likely never be poor but when the real story comes out he may wear orange.

  131. EZCH, my sleeper stock of the year, catching some late session bids. ;-)

  132. EZCH/albo – did they hire Musk?

  133. Holy Moly ! ! !

    Don't know what's going on, but I like it !

  134. IRA/Burr – Can you cover with a long, out of the money call.  In other words, if you have IBM ($184) and you sold the March $185s ($5.35) and IBM just failed $185 and you want to bail on the stock and leave the short call, can you cover it with the 2016 $260 call at $1.60?  The delt on that is .09 so you're not likely to lose much and the margin should be $75, a lot less than the $185 you just took off the table.  

    Musk/Shadow – He can (with some restrictions) sell his stock along with everyone else.  Of course, if he makes big sales, people may panic and that would bang his value.  I really don't think Musk is doing anything wrong other than doing everything he can to promote his company.  They do make cars and they do work and people do like to drive them – that's a real, honest to goodness business.  The fact that he uses the system to manipulate the stock is simply a gamer doing his job.  He's only 43, these aren't old-style CEOs, the morality has left the boardroom a long time ago.  It's a game and he plays to win – and he's good at it.  

    Well, that was a bit disappointing.  The Futures are red except the RUT but the indexes seem to be showing all green.  Still flat overall except for the RUT and no new highs.  Try again tomorrow but this time – with YELLEN!!! (10am)

  135. Phil 

    Yeah, but I can't cover without hands-on action.  The trailing stops allow my positions to run, but protect against downside loss.  Since I'm not here all the time I want the protection.  BUT I can't be naked a call.  IB / TOS won't let you sell out a stock position if there is a covered call against it naked.

  136. Form 8-K for TESLA MOTORS INC


    Other Events, Financial Statements and Exhibits


    Item 8.01 Other Events

    On February 26, 2014, Tesla Motors, Inc. (the "Company") issued a press release announcing an underwritten registered public offering of $1.6 billion aggregate principal amount of convertible senior notes, comprised of $800.0 million aggregate principal amount of convertible senior notes due 2019 and $800.0 million aggregate principal amount of convertible senior notes due 2021. In addition, the Company intends to grant the underwriters 30-day options to purchase up to an additional $120.0 million in aggregate principal amount of convertible senior notes due 2019 and up to an additional $120.0 million in aggregate principal amount of convertible senior notes due 2021.

  137. good timing— I wonder if Morgan Stanley is the underwriter??

  138. Even a 1.6bb convert can't knock TSLA down.

    Musk is a wizard.

    FU TSLA!!!!!

  139. Old style CEO's / Phil – You mean like Icahn, Pickens, Blankfein, Dimon, Welsh… Lots of morality on their boardrooms! Morality has been gone from the boardroom for a long, long time!

  140. Can we declare tomorrow as a TSLA-free day?

  141. Phil—any opinion about the plant and offering? Why should this knock the stock higher? 

  142. Tesla said it intends to enter into hedge transactions for the convertible notes, as well as warrant transactions, which are designed to prevent dilution of the common stock "at the time of pricing of the notes due 2019 and 120% over the common stock price at the time of pricing of the notes due 2021."

  143. BIDU – Up 13 points in the after market.

  144. Russell not lagging anymore!

  145. Have been checking around on EZCH.  Can't find any news, but Call volume today was huge !

    March 27 calls, which had open interest of 115 contracts, traded 5185 contracts today.

    April 30 calls, which had open interest of 185 contracts, traded 5097 contracts today.

  146. Interesting CNBC report showing strong correlation between lobbying in DC and stock performance.  Notice that they try not to mention how much better this works in Republican administrations.  

    They are also having much angst over people spraying graffiti in Atherton saying "F the 1%".   Of course the FBI were called in – as usual for graffiti.  One of the CNBC guys said they need to make sure this doesn't turn into another occupy-style uprising.  Yeah, those must be crushed!   

    TSLA announces they will borrow $1.6Bn and get another $10 pop after hours.  

    Hot Tesla sets huge note offering, factory plans

    • Tesla (TSLA) has turned positive in AH trading after providing details (.pdf) about its gigafactory.
    • Tesla predicts the gigafactory will produce enough batteries to supply 500K vehicles by 2020, and that its output will exceed that of total 2013 global battery production. The company also expects the facility will drive down its per-kWH battery costs by over 30% within a year of volume production.
    • Facility construction is set for 2014-2015, equipment installation for 2016, and initial production for 2017. The gigafactory is expected to employ 6.5K workers, and require up to 10M sq. feet of space.
    • Tesla and its partners will collectively invest $4B-$5B in the gigafactory through 2020. Tesla will directly invest $2B.
    • Previous: Tesla announces $1.6B convertible debt offering

    Even JCP is going up now:

    • J.C. Penney (JCP) reports same-store sales rose 2% in Q4 with online sales showing some strength.
    • J.C. Penney Company Inc. (JCP): Q4 EPS of -$0.68 beats by $0.17.
    • Revenue of $3.78B (-2.6% Y/Y) misses by $70M.
    • Press Release
    • The company saw a 460 bp Y/Y jump in gross margin rate during the quarter even with clearance markdowns a factor late in the quarter.
    • The forecast from the retailer for 2014 is comp sales growth in the mid single digits and "significant" margin expansion.
    • JCP +4.8% AH

    BIDU kicks ass, another timely call by Albo.  Looks like 10% is the standard move now for good earnings.  

    • Baidu, Inc. (BIDU): Q4 EPS of $1.39 beats by $0.02.
    • Revenue of RMB9.52B (+50.4% Y/Y) beats by RMB290M.
    • Press Release
    • Baidu (BIDU) expects Q1 revenue of RMB9.24B-RMB9.52B ($1.526B-$1.573B), above a consensus of RMB8.67B ($1.43B).
    • Q4 results beat estimates thanks to a 9.4% Q/Q and 34.8% Y/Y increase in revenue per online ad customer to $3,452, and in spite of a 2.8% Q/Q drop in active online ad customers to 451K. On a Y/Y basis, the latter figure rose 11.1%.
    • Traffic acquisition costs rose to 12.3% of revenue from 11.7% in Q3 and 9.6% a year ago, as hao123 directory site promotions and a mix shift towards contextual (ad network) ads continues taking a toll.
    • SG&A spend soared 34.6% Q/Q and 135% Y/Y to $307.7M thanks to mobile product promotions. R&D spend rose 15.9% Q/Q and 80.1% Y/Y to $208.8M.
    • Bandwidth costs rose to 5.9% of revenue from 5.3% a year ago, and context costs doubled their revenue share to 3.8%.
    • Mobile accounted for over 20% of Q4 revenue.
    • CC at 8PM ET. Q4 resultsPR.

  147. Albo- many thanks for the EZCH idea.  Yesterday I bought a few Jan15 25/28 bcs, selling the Jan15 18 puts and can hopefully will be able close this trade out many months in advance.

    TSLA – after Feb expiry last week, I left my sold Jan15 265 calls uncovered and will soon be making an adjustment while the implied volatility is still high.  I do not plan to roll out in time, but I will make enough cash available to be able to double down in order to roll out in strike price, two times from here before I consider closing out the trade.  Looking at the Jan15 265's, I have about $4400 per contract in premium that I would like to expire worthless.  In the coming days, I will split this naked call out into a Jan15 strangle, maybe the 190/340, which will still allow me to capture about $4400 in premium if they expire worthless.  This will be the first move as it will not impact margin negatively and it gives me some breathing room.  I know this stock will likely give me trouble again with one of the strikes, and if this happens at the 340 for example, I will then double down (total of 2 x calls sold) but roll up in price while still allowing me to sell the same amount of premium left in the 340's.  On the other end I can then roll the 1 x 190 put up in price to capture more premium in case I need to roll up again and/or I can sell another 1 x put (to bring the total to 2 x strangles sold) to give me more room to maneuver on the call side.  Hopefully it will not go beyond this adjustment, but if needed, I can repeat this process and will max out at 4 x strangles and will only adjust within the 4 x position, or just throw in the towel.

    Of course there are other strategies I may employ such as buying calls or puts or spreads to capture momentum, but above is the meat of my strategy for this position that has went against me.  Hopefully this helps someone who may be in the same position.  Feel free to comment.

  148. TSLA – 6500 workers in that giga-factory! That would be nice.

  149. gs2013 – Great !   Glad you did; awesome timing on your part.

  150. IRA/Burr – Well, those are the rules, I suppose.  That's what I don't like about them.  You save on the taxes but you trade in handcuffs.  I'm still not clear on why you can't use a long – out of money cover, the margin on it wouldn't kick in until you sell your stock.  Or perhaps, just use more general hedges if you are worried about a downturn.  

    By the way, TSLA filed their official earnings for the Q today and it shows a loss of 0.62/share and, funny thing, there's 12% more shares this year than last year outstanding too, so the loss is diluted by the additional shares!  It's also educational to read their disclaimer.  While these have to be harsh, they do highlight things to watch out for as they try to execute their plan:

    We have only recently increased our Model S delivery rates in the United States to match our current and anticipated Model S production capacity. We have limited experience in the high volume delivery of our Model S vehicles. We have gradually ramped production of Model S and we intend to continue to increase the production rate significantly over the next several quarters. Furthermore, we have only recently commenced deliveries in Europe and have not delivered Model S vehicles outside of North America and Europe in volume; thus we may face difficulties meeting our delivery and growth plans in Asia and other right hand drive markets later this year, which may impact our ability to achieve our worldwide delivery goals. If we are unable to increase the production rate and increase our weekly delivery rate to match our production rate of Model S, ramp up deliveries in Europe and Asia and sustain a high level of weekly Model S deliveries throughout the year, this could result in negative publicity, damage our brand and have a material adverse effect on our business, prospects, financial condition and operating results.

    Our ability to sustain and grow volume production and deliveries for Model S is subject to certain risks and uncertainties, including:



    that our suppliers will be able and willing to deliver components on a timely basis and in the necessary quantities, quality and at acceptable prices to produce Model S in volume and reach our financial targets;



    that we will be able to complete any necessary adjustments to the vehicle design or manufacturing processes of Model S in a timely manner that meets our production plan and allows for high quality vehicles;



    that we will be able to commence and execute the launch and ramp of Model S in Asia pursuant to our current timeline;



    that we will be able to adequately respond in a timely manner to any problems that may arise with our vehicles;



    that we will be able to schedule and complete deliveries at our planned higher volume production levels;



    that the equipment or tooling which we have purchased or which we select will be able to accurately manufacture the vehicle within specified design tolerances, and will not suffer from unexpected breakdowns or damage which could negatively affect the rate needed to produce vehicles in volume;



    that we will be able to comply with environmental, workplace safety, customs and similar regulations required to operate our manufacturing facilities;



    that we will be able to maintain and improve quality controls as we transition to a higher level of in-house manufacturing process; and



    that the information technology systems that we are currently expanding and improving upon will be effective to manage high volume production.

    Finally, detailed long-term testing of quality, reliability and durability testing of Model S, are ongoing and any negative results from such testing could cause production or delivery delays, cost increases or lower quality of our Model S vehicles.

    We are dependent on our suppliers, the vast majority of which are single source suppliers, and the inability of these suppliers to continue to deliver, or their refusal to deliver, necessary components of our vehicles in a timely manner at prices, quality levels, and volumes acceptable to us would have a material adverse effect on our financial condition and operating results.

    This supply chain exposes us to multiple potential sources of delivery failure or component shortages for Model S, as well as for our powertrain component sales activities. For example, earthquakes similar to the one that occurred in Japan in March 2011 could negatively impact our supply chain. We have in the past experienced source disruptions in our supply chains, including those relating to our slower-than-anticipated ramp in our Model S production goals for 2012. We may experience additional delays in the future with respect to Model S and any other future vehicle we may produce. In addition, because we have written agreements in place with the majority, but not all of, our suppliers, this may create uncertainty regarding certain suppliers’ obligations to us, including but not limited to, those regarding warranty and product liability.

    …Furthermore, historically, automobile customers have come to expect new and improved vehicle models to be introduced frequently. In order to meet these expectations, we may in the future be required to introduce on a regular basis new vehicle models as well as enhanced versions of existing vehicle models. As technologies change in the future for automobiles in general and performance electric vehicles specifically, we will be expected to upgrade or adapt our vehicles and introduce new models in order to continue to provide vehicles with the latest technology and meet customer expectations. To date, we have limited experience simultaneously designing, testing, manufacturing, upgrading, adapting and selling our electric vehicles.

    Meanwhile, the stock is kissing up to $260 again.  

    Morality/StJ – Good point.  

    TSLA-free/Griffin – Maybe on Mars (for now)

    Offering/Jabob – It shouldn't send the stock higher.  TSLA is raising $1.6Bn to build a $4Bn factory and it says it has partners but, even if they do (and I heard Panasonic was in for $1Bn), where does TSLA get the money to cover the usual 20% cost overruns.  Starting a project now to complete in 2020 without presuming there will be inflation is a little crazy.  But still, just like most things, that's tomorrow's problem and it's BRILLIANT to announce you have to build a factory to provide batteries for 500,000 cars a year when you're currently producing 25,000 because – if you are building a great big battery factory, you must REALLY be serious about selling 500,000 cars and, if you say the batteries will be 30% cheaper – you must be right because, after all, you are a car company and you know what you want to pay for batteries.  Wash, rinse and repeat until you actually believe it…

    Imagine if AAPL builds a chip factory to make 300M chips for IPads in 2020, even though they only sold 15M last year.  Now imagine it's for an IPad that costs twice as much as competitors' tablets.  Of course, it did win the tablet of the year award and rich people did buy some so why wouldn't they be able to sell 20x more in 6 years?  AAPL would get laughed off the planet – Musk gets a halo – amazing!  

    EZCH – I don't see anything.  

    Good plan GS, a well-measured response.  

    Giga-factory/StJ – At least Musk is actually creating good jobs, gotta love that.  

  151. EZCH good call albo! I missed that one….

  152. Thanks, BDC.  Don't know where it goes from here near term, and I sold some late today following Phil's rule to sell some into the excitement, but think it goes higher eventually.

  153. PHIL/TSLA – I hate to pile on with another TSLA question, but I want to run my plan by you, and get your thoughts.  My current TSLA position is as follows:


    +10 March 170/205 call spread (figured I might as well wait to get the last $1.50 out of this spread before I close it)

    +10 April 210/245 call spread (Waiting for full value)

    -10 June 170 Puts (Waiting to expire worthless)

    +10 January 80/145 call Calls (I figure I may as well wait for the last $4-5 on this spread, but I will probably close this soon, as it is pointless to have so much money at risk for just a few more points).

    -30 January $180 calls 

    +20 January 200/260 call Spread

    -20 2016 $180 puts

    +10 250/320 Call Spread

    -5 2016 $300 Call


    I'm currently down about $170,000 (Which is a TON for me), but that improves to just down $60,000 at the end of the year due to premium burn if TSLA stops going up (FAT CHANCE). I'm completely even if TSLA is at $220 or lower at the end of the year.  The problem is my delta is still way too high, and I'm getting beaten up badly as TSLA continues to go up.  I need to get more neutral.


    I think my next step is going to be to close out the -30 January $180 calls, and transition into the 2015 $200(Put)/$250(Call) strangle for close to the same money.  This raises my break even on the upside all the way up to $310 at the end of the year, and break even on the downside to $198 or so (which I can reduce further by slowly scaling out of the puts and long spreads on the way back down).  It also reduces my delta considerably.  

    Would you agree with this plan?



  154. From Bloomberg, Feb 26, 2014, 10:02:37 AM

    When Hostess Brands Inc. went bankrupt in 2012, it triggered anxiety among employees at Ottenberg’s Bakery, a family-owned enterprise in Maryland. The companies shared a pension plan, and if Hostess couldn’t pay its retirees, Ottenberg’s would have to pick up the tab.

    To read the entire article, go to
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  155. From Bloomberg, Feb 26, 2014, 3:57:15 PM

    The top Republican tax-writer in Congress proposed restructuring the U.S. tax code to eliminate dozens of breaks to pay for reductions in the corporate and individual rates.

    To read the entire article, go to
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  156. From Bloomberg, Feb 26, 2014, 1:34:22 PM

    Manhattan U.S. Attorney Preet Bharara and the Federal Bureau of Investigation are probing possible criminal violations tied to the shutdown of Bitcoin exchange Mt. Gox, two people familiar with the matter said.

    To read the entire article, go to
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  157. From Bloomberg, Feb 26, 2014, 2:03:26 PM

    Israel’s technology scene has recently spawned several global sensations, and the Chinese are getting in on the action.

    To read the entire article, go to
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  158. From Bloomberg, Feb 26, 2014, 12:36:19 PM

    Investors are returning to the U.S stock market after the worst selloff in seven months, adding almost 52 times more money to exchange-traded funds that own equities than bonds.

    To read the entire article, go to
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  159. From Bloomberg, Feb 25, 2014, 6:01:00 PM

    The bunker deep in the Swiss Alps an hour’s drive south of Zurich was designed to withstand nuclear blasts and protect soldiers from a foreign invasion that never came. Today, it’s used to guard digital data.

    To read the entire article, go to
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  160. From Bloomberg, Feb 26, 2014, 4:47:37 PM

    JPMorgan Chase & Co. (JPM) and Goldman Sachs Group Inc. (GS) were among 18 financial firms that agreed to stop participating in some surveys of analyst sentiment while New York investigates early access to the information.

    To read the entire article, go to
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  161. From Bloomberg, Feb 26, 2014, 8:11:08 AM

    Dave Camp, the Republican House Ways and Means Committee chairman, is filling in the blanks in his plan to revamp the U.S. tax code and leaning on the financial industry to help pay for lower tax rates.

    To read the entire article, go to
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  162. From Bloomberg, Feb 26, 2014, 3:03:38 PM

    Victims of R. Allen Stanford’s $7
    billion Ponzi scheme can sue outside companies and law firms
    alleged to have played a role in the fraud, the U.S. Supreme
    ruled, dealing a setback to the securities industry.

    To read the entire article, go to
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  163. "Investors are returning to the U.S stock market after the worst selloff in seven months, adding almost 52 times more money to exchange-traded funds that own equities than bonds."

    Meanwhile, Don Hays of Hays Advisory, issued a buy signal on bonds this week.  He much prefers equities, but thinks now is a good time to get into the bond market.

    Go figure.

  164. Phil: TSLA/NFLX  Well, my Put spreads in these are as follows: TSLA Jan 15 180 short, 210 long puts at a maximum  loss of $10,157; NFLX Jan 15 380 short, 420 long puts at a maximum loss of $11,175.

    My inclination is to set stops of $5000 for TSLA and $5,500 for NFLX and exit early if the close drops to these levels.

    I would value your opinion.


  165. From Bloomberg, Feb 26, 2014, 5:42:23 PM

    Venezuela’s opposition ruled out
    attending a “peace conference” called by President Nicolas
    Maduro in Caracas for today following two weeks of protests that
    have killed 14 people.

    To read the entire article, go to
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  166. From Bloomberg, Feb 26, 2014, 3:00:46 PM

    NATO and the Obama administration
    made a plea for keeping post-revolutionary Ukraine in one piece
    as tensions mounted in the Crimea and the Kremlin ordered a test
    of combat readiness of nearby Russian military units.

    To read the entire article, go to
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  167. From Bloomberg, Feb 26, 2014, 5:46:04 PM

    Cattle and hog futures were poised
    to extend rallies as ranchers struggle to boost the U.S. cow
    herd from a 63-year low, while a virus that kills piglets
    spread, spurring concerns that meat supplies will ebb.

    To read the entire article, go to
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  168. From Bloomberg, Feb 26, 2014, 10:13:07 AM

    Five years after the credit crisis,
    equity markets are showing zero tolerance for bears.

    To read the entire article, go to
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  169. From Bloomberg, Feb 26, 2014, 1:30:00 PM

    Reserve Bank of India Governor
    Raghuram Rajan said the central bank aims to bring down
    inflation “over time rather than abruptly” in its effort to
    curb price pressures and generate sustainable growth.

    To read the entire article, go to
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  170. From Bloomberg, Feb 26, 2014, 1:51:58 AM

    Hong Kong’s economy is set to expand at the fastest pace in three years, even as the winding back of U.S. monetary stimulus adds to the risk of volatility in capital flows, the government said.

    To read the entire article, go to
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  171. From Bloomberg, Feb 26, 2014, 1:01:46 PM

    As Brazil central bank President
    Alexandre Tombini wraps up a two-day policy meeting in Brasilia
    today, there’s one thing his three-year tenure has proven is
    almost certain: he will not leave interest rates unchanged.

    To read the entire article, go to
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  172. From Bloomberg, Feb 26, 2014, 10:30:00 AM

    Economists at the International Monetary Fund, the global lender criticized for its fiscal austerity prescriptions, defended policies aimed at reducing income inequality in a study that showed they strengthen growth.

    To read the entire article, go to
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  173. From Bloomberg, Feb 26, 2014, 8:34:50 AM

    Ireland, home to one of the world’s biggest banking implosions, is now the scene of a skirmish between lenders and regulators that offers a warning to the European Central Bank as it conducts its own probe into the region’s balance sheets.

    To read the entire article, go to
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  174. From Bloomberg, Feb 26, 2014, 5:56:33 PM

    While almost no one was looking, Congress has embarked upon the most sweeping overhaul of the U.S. criminal justice system in three decades. What’s more, Republicans are working with Democrats, and in general agreement with the White House.

    To read the entire article, go to
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  175. From Bloomberg, Feb 26, 2014, 4:25:17 PM

    Adidas has announced it will withdraw a line of World Cup T-shirts that offended many with its stereotypical depictions of host country Brazil as a hotbed of sex, which begs the question: Who thought this was a good idea in the first place?

    To read the entire article, go to
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  176. From Bloomberg, Feb 26, 2014, 2:43:41 PM

    If you own a bond and interest rates go up, your bond will lose value. That’s just a fact.1 But the consequences of that fact, if you’re a bank, are all over the place. If you own that bond in your trading portfolio, you have what is colloquially called a trading loss: You owned a thing, it went down in price, you have lost money. Not in a strict literal sense — you have not turned the bond back into money, so your losses are “on paper” — but in every relevant accounting and capital and so forth sense.2 So your net income goes down (or becomes a net loss), and your regulatory capital goes down, by the amount of value that your bond has lost.

    To read the entire article, go to
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  177. House  #1  
    A 20 room  mansion (not including 8  bathrooms)  heated by natural gas. Add on a pool (and a pool house) and a separate  guest house, all heated by gas. In one month this residence consumes  more energy than the average American household does in a year. The  average bill for electricity and natural gas runs over $2400 per month.  In natural gas alone, this property consumes more than 20 times the national average for an American home. This house is not situated in a Northern or Midwestern 'snow belt' area. It's in the South.

    House  #2  
    Designed by  an architecture professor at a leading national university. This house  incorporates every 'green' feature current home construction can provide. The house is 4,000 square feet (4 bedrooms) and is nestled on a  high prairie in the American southwest. A central closet in the house holds geothermal heat-pumps dddrawinggroundwater through pipes sunk 300 feet into the ground. 

    The water (usually 67 degrees F) heats the house in the winter and cools it in the  summer. The system uses no fossil fuels such as oil or natural gas and  it consumes one-quarter electricity required for a conventional  heating/cooling system. Rainwater from the roof is collected and funneled into a 25,000 gallon underground cistern. Wastewater from showers, sinks and toilets goes into underground purifying tanks and then into the cistern. The collected water then irrigates the land surrounding the house. Surrounding flowers and shrubs native to the area  enable the property to blend into the surrounding rural landscape.  

    HOUSE #1 is  outside of Nashville,  Tennessee; it is the abode of the 'environmentalist' Al Gore.


    HOUSE #2 is  on a ranch near Crawford, Texas; 
    it is the residence of the former President of the  United  States, George W. Bush.

    An  'inconvenient truth.' 


    I sure hope  this gets passed to everyone! 
    And, yes …  I DID check Snopes prior to forwarding it.


  178. Albo – Funny comparison, but I don't think this really excuses GWB's attack on environmental protections and resistance to taking steps to reduce global warming.  

  179. palotay – You may be right.  And this is not a new story.  Just throwing it out there for discussion.  Apparently Gore's defense was that it's not fair to compare his house to other, because it's much larger.  DUH.  OK.

  180. Guess that means, "It's okay for me to have a larger carbon footprint than you guys, after all, i'm more important."

  181. Wow, Jabo, I'm not one to cry over MoMos, but I've been thinking that this most recent TSLA thing stinks to high heaven; and that article certainly doesn't change my mind.  Note particularly the list of other companies that MS intends to seek compensation from for IB services; explains the huge ramp in Car (Avis) for them simply losing a little less money than usual.

  182. albo, that's from a pretty old email.  I think back in 2007.  Both have moved to new residences.  From what I understand Bush's new house does use many eco friendly technologies.  

  183. Excel file posted here for managed FCF portfolio:

    Closed out 1/2 of the FIVE calls and complete LNKD position, HFC position, DO call, and USO put position. 

  184. CERS/button – sorry, been crazy days at work.   I still like them, but it is going to come down to reimbursement.  With the 'wars' winding down, I can see the need for new blood not being as high, so they may not be high revenues for a while.  They still need US approval…..their final 'module' was submitted in December.  I do not know if it was a device application or a drug application.  So, anywhere from 3 to 12 mo on the approval. 

    I would sell a few puts and buy bull call spreads.

  185. There is a lot of activity in the May and Aug Options.  I would buy the Aug 7.5/10 BCS and sell the May $5s for net 30c.  Let's pick up some of those tomorrow.

  186. Bitcoin 2014 "state of the union" powerpoint. (very pro-bitcoin bent). Enjoy!

  187. Honda – I did not know they made jets..

  188. Good morning!

    MS & TSLA – Like we couldn't see that coming!  Yet no arrests will be made…

    This bears watching:

    Ms. Wang said Chinese exporters have been big buyers of derivatives because they allowed them to hedge against the rising yuan. Such yuan increases make exporters' goods more expensive to sell overseas and make exporters' revenues, which come in foreign currencies, smaller. In many cases, Ms. Wang said, the businesses are losing money in their operations but make a profit because of the hedges, which generate a monthly income.


    Greg Matwejev, director of foreign-exchange hedge-fund sales at brokerage firm Newedge Group SA in Hong Kong, said most hedge funds in the region were betting on a stronger yuan. "It was like free money," he said. But the fast move downward forced them to sell quickly. "There is still a lot more pain before this trade shows signs of stabilizing," he said. "Very few funds are contrarian on this trade, and all are seeing red at the moment."

    He said that if the yuan falls further, investors will be forced to sell their yuan and buy U.S. dollars, adding that, if the currency moves beyond Tuesday's trading level near 6.12, it "will set off more panic U.S. dollar buying."

    Embedded image permalink

  189. Good evening, Phil. You're so energetic. Thanks for the update.

  190. Palotay-  just an idea which doesn't consider how much more margin you can dedicate this, but why not close out everything, and start over with 30 Jan15 200/310 strangle (about 5600 each). This puts you at even next Jan between 200 and 310,  and you'll get back at least 50% of loss if between about 175 and 335 (check my math), and you'll be no worse in Jan than you are today between 145 and 365, and this does not consider any potential adjustments.  Check my math but I think that's about right.  

  191. From Bloomberg, Nov 14, 2013, 7:21:00 PM

    The patchwork of tiny rice paddies that have decorated the terraced hillsides and alluvial plains of Japan for centuries is under threat as the government presses aging farmers to consolidate holdings or switch crops.

    To read the entire article, go to
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  192. From Bloomberg, Feb 27, 2014, 12:01:02 AM

    Berkshire Hathaway Inc. (BRK/A) will
    probably post record full-year profit showing how Chairman
    Warren Buffett’s five decades of acquisitions positioned his
    company to benefit from a rebounding U.S. economy.

    To read the entire article, go to
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  193. From Bloomberg, Feb 26, 2014, 9:43:14 AM

    Bank of America Corp. (BAC), the lender
    that turned to Warren Buffett in 2011 for a capital injection,
    reached a deal with the billionaire’s company to change terms so
    the investment is treated more favorably by regulators.

    To read the entire article, go to
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  194. From Bloomberg, Feb 26, 2014, 6:39:09 PM

    Chinese President Xi Jinping said
    pollution was Beijing’s biggest challenge as thick smog
    blanketing northern China cleared after seven straight days at
    hazardous levels.

    To read the entire article, go to
    Sent from the Bloomberg iPad application. Download the free application at

  195. From Bloomberg, Feb 27, 2014, 12:01:00 AM

    Tesla Motors Inc. (TSLA)’s plan to build
    what co-founder Elon Musk bills as the world’s largest battery
    factory could not only shake up the power industry but trigger a
    bidding war between states eager for the 6,500 jobs the $5
    billion investment could create.

    To read the entire article, go to
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  196. From Bloomberg, Feb 27, 2014, 12:28:26 AM

    Jamie Dimon was talking about the
    business climate, not the polar vortex that gripped much of the
    U.S. this winter, when he mentioned “weather” in a discussion
    about a slump in trading revenue at JPMorgan Chase & Co. (JPM)

    To read the entire article, go to
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  197. From Bloomberg, Feb 26, 2014, 9:25:50 PM

    Ko Jae Pil advised investors in an
    upscale area of Seoul to jettison bond funds last year as the
    Federal Reserve prepared to taper its unprecedented stimulus.

    To read the entire article, go to
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  198. From Bloomberg, Feb 27, 2014, 3:00:55 AM

    Spain’s economy expanded 0.2 percent
    in the fourth quarter, less than initially estimated, as public
    spending contracted.

    To read the entire article, go to
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  199. From Bloomberg, Feb 27, 2014, 1:59:48 AM

    The Swiss economy grew less than
    expected in the fourth quarter as exports of goods including
    chemical and pharmaceutical products declined.

    To read the entire article, go to
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  200. From Bloomberg, Feb 26, 2014, 7:34:52 PM

    Brazil’s central bank halved the
    pace of key rate increases, signaling the end of its tightening
    cycle is near, as policy makers struggle to tame inflation
    without further jeopardizing growth.

    To read the entire article, go to
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  201. From Bloomberg, Feb 26, 2014, 10:23:10 PM

    Hedge funds are losing confidence in
    Bank of Japan Governor Haruhiko Kuroda’s ability to keep
    depreciating the yen to boost growth and banish deflation as
    they wait for a second round of monetary easing to materialize.

    To read the entire article, go to
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  202. From Bloomberg, Feb 26, 2014, 2:04:31 PM

    Federal Reserve Bank of Boston
    President Eric Rosengren said the Fed should be patient in
    removing accommodation because of persistent damage to the U.S.
    labor market.

    To read the entire article, go to
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  203. Phil,

    Yesterday I got a reasonably good entry on Ford at a roughly 22% discount thanks to your instructing.  I am learning, albeit slowly.  Overall I am very suspicious of this market though.

  204. PSW – Price/Value; The value of PSW on a regular basis exceeds by far the price of the annual subscription. The edition of February 26 'Which Way Wednesday – Popping or Topping?', – priceless for the serious investor.

  205. Markets down about 0.25% now on disappointing economic news in Europe and huge loss ($15Bn) from RBS, who are half as big as JPM and JPM makes $18Bn in a good year so RBS's loss is 2 good year's worth of earnings and RBS hasn't had a good year since 2007!  

    • RBS's (RBS) net losses deepened to £9B from £6.06B a year earlier, hurt by the setting aside of £3.8B for compensating clients for the mis-selling of products, and £4.8B of other impairments and provisions.
    • The bank's operating loss after items widened to £8.2B from £5.28B in 2012, missing consensus of £6.7B.
    • Revenue dipped 12% to £19.44B.
    • RBS intends to slash £5B ($8.34B) of costs during the next five years and cut jobs as part of a restructuring in which it will refocus on its U.K. activities and merge seven units into three.
    • The bank has also lowered its cost-to-income target to 55% by 2017 from 65% currently, which will necessitate cutting £50B of risk-weighted assets from its international banking and securities unit by 2020.
    • RBS reduced its 2013 bonuses to £576M from £679M (15%), although given the bank's massive losses, the payouts are already causing controversy. (PR) - BONUSES?!??  ROFL!  Are they freakin' kidding???
    • More positively, RBS is poised to raise £1.1B from the sale of its remaining 28.2% stake insurer Direct Line.
    • Shares are -3.9% in London.

    TSLA/Palotay – Not a problem when you make a nice, organized position summary!  The thing about the March and Jan spread that are in the money is that they can no longer HELP you if TSLA goes higher.  They are supposed to be upside protection and, with just $1.50 and $5 left – they aren't anymore – they can then only hurt you to the downside, which defeats their purpose.  So I'd cash those for $33,000 and $60,000.  I agree with leaving the $9 short june puts unless you have a margin issue, in which case the 2016 $180 puts have about the same margin but put $25,000 more in your pocket to offset the longs.  

    Either way, you have 30 short puts and 30 long spreads covering 35 short calls but, unfortunately, 30 of them are the Jan $180s, now $87 but more like $97 at the open.  To lower margin and regain some sanity, I'd just split the Jan $180s to the short $250 calls ($50.50) and the short $195 puts ($25).  That will cost you about $35,000 but you are taking $99,000 off the table on the other two bull spreads and that leaves you with:

    • 10 short June $170 puts (you could leave them with stops at $15 as you won't need so many)
    • 30 short Jan $195 puts (stops on 10 if TSLA fails $250) 
    • 20 short 2016 $180 puts (stops on 5 if TSLA fails $250) 
    • 30 short Jan $250 calls 
    • 20 Jan $200/260 bull call spreads
    • 5 short 2016 $300 calls
    • 10 2016? $250/320 bull call spreads

    So, if TSLA moves below $250, you are left with 35 short puts and 30 short calls covered with 20 of the Jan $200/260 bull call spreads.  Technically, the 2016 $250/320 bull spread is covering the short $300 calls – it's almost like a different trade but you might want to roll the 5 short 2016 $300s ($50) to the 2015 $250s ($50.50) to clean things up – as well as to give yourself more time advantage between the hedges and the short calls.  

    Then you'd have 35 short Jan $250 calls covered with the two bull call spreads and 60 short puts if TSLA goes higher or 35 short puts if TSLA goes lower.  If TSLA does push higher, you need to add 20 more $250/320 spreads and you'll look to roll the 35 short calls to 50 at a higher strike but you'll still have the offsetting 60 short puts if that happens.  

    Keep in mind OR you could just take your $170,000 loss and sell 25 of the 2016 $350 calls for $40 and the $170 puts for $30 ($175,000) and now you can't lose both sides and TOS says margin is just $64,000 and you get your whole $170,000 back (plus a $5,000 tip!) if TSLA finishes between $170 and $350 in 2016.  With $70 per contract in your pocket, you are no worse off than you are now between $100 and $420.  THAT is how you get "more neutral"!  

    This is how you BE THE HOUSE folks – let other people speculate that TSLA will move up or down $150 (40%) from where it is now…  Keep in mind this is the kind of spread you can roll to AFTER you are totally screwed by a MoMo – that's what I do like about playing them, the outrageous premiums can be turned to your advantage and, if TSLA is at $400 in 2016 – you can just split the 30 short $350s into 30 short 2018 $500 calls and short $250 puts (probably even wider).  You only have to get lucky once…

    Bonds/Albo – I still maintain that anyone who ties up their money in USD for 10 years at 3% is INSANE!!!  

    TSLA/IHS – See above.  TSLA is pretty much unplayable unless you have serious conviction to gamble short (or long, if so inclined).  The manipulation by MS into this offering is despicable – but it works.  And look at how many Banksters are in with MS on the deal – also smart by Musk to align all their interests in maximizing his stock price.   Do you think any analyst will come out with a negative note on them?  Certainly not from GS, MS, JPM or DB and not from anyone WHO MIGHT WANT TO WORK FOR THEM ONE DAY, nor will any Government Official who may want a lobbying job or a board seat on a company underwritten by one of the them ever investigate the matter.  It's the perfect economic crime – it only hurts the shorts and no one likes shorters anyway…

    NFLX/IHS – Your logic is good but there's not much logic in the way these stocks are trading.  

    Lobbying/Pstas – It's like a cancer – very hard to get rid of.   Doesn't mean you shouldn't try.  

    Houses/Albo – Yes, that's a 2007 article about Al Gore's big house, I think it's already been circulated dozens of times to every human being on the planet by GOP sympathizers.  Of course, those were 2007 nat gas prices, around $15 vs $4.47 now, brought on by George Bush's idiotic energy policies and ridiculous wars.  While Al Gore was spending $2,400 a month (winter, I'm sure) to heat his home, GW was in the White House spending $1.4 BILLION a month of OUR money to fill the Strategic Petroleum Reserve up with oil at $120-140 per gallon, handing out fat supply contracts to all his pals in the oil industry to keep prices jacked up for US consumers.  Between that and his 1MB/day war effort – oil went from an average of $22 per barrel under Clinton to and Average of $102 under Bush and natural gas went from under $1 to over $10.  

    I sure hope this gets passed around to everyone, so we can remember what a complete and total nightmare it is when you put a Republican in the White House.  

    And, since you think snopes has the goods, why not cite the full article on Gore?  

    Some important points not covered in the report, however, was whether equating the Gores' home to the average American home was really a relevant comparison. A spokesperson for the Gore family responded by noting some mitigating factors, such as the fact that the Gores' Nashville residence isn't an "average" house; it's about four times larger than the average new American home built in 2006, and it essentially functions as both a residence and a business office since both Al and Tipper work out of their home.  The Tennessean also noted that the Gores had been paying a $432 per month premium on their monthly electricity bills in order to obtain some of their electricity from "green" sources (i.e., solar or other renewable energy sources). Other factors (such as the climate in the area where the home is located and its size) make the Gore home's energy usage comparable to that of other homes in the same area.

    When the environment begins to collapse from Global Warming and your grandchildren have to ration water and their food gets more and more artificial, because the real stuff is too expensive and when parts of the planet become uninhabitable – I hope you will proudly point to your attacks on Gore and support of people like Bush and say "yes, kids, Grandpa helped make all this happen."  And I know you'll sneer at this now as liberal clap-trap and that's OK.  You'll think about it again, one day, when it matters.  It will be far too late to change you – but maybe, just maybe, it will then make you a little less inclined to stop others from caring.  

    Futures getting worse and worse.  Down 0.4% now.  Was a perfect entry on our lines again (Dow 16,200, RUT 1,180).  Dollar at 80.54, oil $102.50, gold $1,330.  

    FCF/Bdon – Very nice.  

    Bitcoin/BDC – Good powerpoint.  What do you think of TUCND?  Seems like a fun play and just got killed off the bad Bitcoin news (now $1.75 from $5+). 

    Honda/Scott – They are not out yet (as far as I know).  It's a partnership with Piper and they are supposed to be very nice and fuel-efficient.  It kind of freaks me out that the plane is essentially controlled by tablets, though.  Somehow, I feel better toggling a switch so I know something is done.  I guess I'm just old…  frown

    You're welcome Invest.  Usually, I wake up early, check my IPad and go back to sleep but this morning was too exciting-looking to go back to bed.  Got a nice little dip as a reward and now we'll see what Yellen can do for us today.  This is her 2nd-day delayed testimony.  Her first day was Tuesday, Feb 11th and the S&P popped from 1,800 to 1,820 that day and we finished the week at 1,840.  The Dow went from 15,800 to 16,000 that Tuesday and 16,150 at the week's end.  Nas 4,150 to 4,200 that day and 4,250 to end the week, NYSE 10,050 to 10,200 and 10,300 at the week's end and RUT 1,120 to 1,130 and 1,150 at the end of the week.   Those are the indexes, of course, not the Futures.  

    We'll see what effect she has today as we're actually lower than her week's end on the S&P pre-market (1,833) and the Dow is back to 16,150, NYSE 10,300 but the Nas is a mile over and the RUT is still 1,070 (so far).

    Good strangle, GS but a little tight.  Of course, that can be made up for by just rolling the loser to a wider 2016 but, by logic, if TSLA is in that range, that means it calmed down and that means you won't get paid as much for the 2016 shorts you roll to.  So, while the volatility is this intense, I'm for selling a lot of premium.  

    Nice job Sibe and very right to be suspicious.  I am still sickened by that TSLA/MS BS.  This is why people are spray-painting "F the 1%" on walls in California – this is blatant stuff.  They used to be more subtle, now "Mr. Wonderful" is on CNBC saying US workers should compete evenly with Chinese workers for 50-cent a day jobs.  Maybe we should invest in guillotines…

  206. Thanks Winston!  

  207. Tesla – My home's monthly (30 day) electricity usage is well under 30kWh.  Now, a fully charged Tesla stores 69kWh (up to 85kWh on max charge).  The cars optimally consume ~300Wh and can go 200 miles or more on a charge (impressive).  So to drive 200 miles, a Tesla uses 2-3 times as much energy as my home uses in a month.  I read yesterday that TESLA anticipates having 500,000 sales by 2020.  That would be an additional load on the power grid of as much as 42.5 million kWh  that could come every 3-4 hrs (assuming 65mph for 200-250 miles).  My point is I do not believe we have the infrastructure necessary to support the kind of power draw that the will result if the TESLA promoters dreams come true.  There is a tremendous amount of energy packed into a cup of gasoline or diesel.  It can't simply be replaced by electricity in this world as currently (no pun intended) configured.

  208. Correction – Home usage is under 30kWh/ day (900/month), so the car consumes 2-3 times what my home consumes in a day with each charge.

  209. Good point on electric consumption, Sibe but you shouldn't drink cups of gas or diesel – that's crazy!  angel

    Anyway, that's another hidden charge for TSLA down the road because, the more cars they build, the more charging stations they will need and the more cars and stations, the more free fill-ups they have to give and, even if they are paying just .15 per kWh for electricity (national average more like .25), that's still costing them about $10 per car.   So let's say they put 500,000 cars on the road by 2020 (they predict a lot more) and those cars use a super-charger just once a month each – that's $60M a year they are spending just to keep that promise!  

    If they are wildly successful and put 2M cars on the road at some point (about what a major car company sells in a year), now it's $240M a year – nothing to sneeze at, even if you are making $5Bn (25x TSLAs 2014 projections).   

    Futures coming off the lows, Dow can be played on the bull side above 16,100 with tight stops, just looking for 16,150 and certainly out at 16,200, where I'd look for the next laggard to the upside (if not rejected).  

  210. CERS/Pharm,

    Thanks Pharm.  

  211. Phil – I'm over matched !  Touche.

  212. You are entitled to your own opinion but not your own facts, Albo.  cool

  213. brent's dying, but /cl still holding up.  spread now about $6.  maybe some of those us gas exports are starting to cut into overseas refiners?  But, who knows

  214. Kw/H / Sibe;

    I read that many solar farms and wind mills are not installed because there is not evacuation capacity in the grids, as mentioned yesterday with trains, there is a lot of infrastructure that is not able to to support a technological change.

    Actually there is nothing that contains as much energy per weight as diesel I see a much logic approach converting trucks fleets into compressed natural gas and liberate the diesel for efficient cars as you can actually find in most car companies that are able to deliver  up to 40 MPG, actually VW  and BMW are starting new powerful 3 pistons engines with 100H.P, the new Mini is offered with this engine.