How would you like to make $10,000?
If the Russell can finish this option period (24 days) 2.5% higher, at 1,178 or higher, we can turn net $1,000 or less cash into $10,000 for you. After all, if the Fed is going to give away money – why shouldn't we get our share?
I'll preface this by saying that our Members are already long on Russell Futures at the 1,150 line, as we made that call in our live Member Chat Room (become a Member here) earlier this morning.
If the market is going to remain bullet-proof (and missile-proof too, it seems) then the RUT is now the lagging index and we can construct a play to take advantage of it breaking back up by making a play on TNA, the 3x Ultra-Long Russell ETF.
Very simply, if we buy the August $72.50 calls for $3.45 and we sell the Aug $76.50 calls for $1.70, we have a net cost of $1.75 on the $4 spread that's $4.64 out of the money (at goal) and that's 6.4% out of the money so, to be safe, we'll need a 2.5% gain on the Russell, from 1,150 to 1,178.75 to make the full $4. 25 contracts at $4 = $10,000 so we can work with that.
But what about the cost of the 25 contracts (at $1.70 x 2,500, that's $4,250)? Well, there's a couple of ways to offset that. One way is to sell 25 TNA Aug $65 puts for $1.70 to offset the cost. The danger there is, if the Russell goes down 2.5% (to 1,121) or lower, we'll be assigned 2,500 shares of TNA for $65 ($162,500) – that could be unpleasant.
Instead, we can commit to being long TNA at $45 in 2016 by selling just 5 2016 $45 puts for $8, and that raises $4,000 and commits us to owning "just" 500 shares of TNA at $45 per share ($22,500).
Now, if you don't want to be bullish on the Russell when TNA is down 37% (Russell 1,006), then why are you long on it at 1,150?
Another fun way to offset the cost of a speculative spread is by selling puts on a stock you REALLY want to own anyway. Today, in our Chat Room, we were discussing the merits of STNG, who are in the midst of a stock buyback at $9.74 per share (so far) but are still trading at $9.92.
That puts a bit of a floor on the stock for the near-term and they pay a nice 0.36 dividend (3.9%) so we can sell 40 Jan $10 puts for $1.25 ($5,000) and that pays for our TNA longs with $750 to spare and our worst case is owning 4,000 shares of STNG at $10 per share ($40,000) – right about where it is now.
Another stock we love to sell puts on is ISRG. That stock is at $388.72 but we can sell the 2016 $300 puts for $23.50 so selling just 2 of those raises $4,700 in cash and our obligation is to buy 200 shares of ISRG for $300 ($60,000), which is 23% below the current price.
CLF is another constant favorite for raising capital and the 2016 $13 puts can be sold for $3 so just 15 of those raises $4,500 and obligates us to own 1,500 shares of CLF for $19,500 – very efficient!
So, there's a few easy ways to make a bullish 1,000% return on cash in 24 days if the market goes higher – now we can get back to talking about what's wrong with the market!
As noted by Citt's Steve Englander: "Investors took note of a somewhat changes Yellen tone, but are treating the Fed as an outer-orbit risk rather than as an asteroid taking dead aim."
With a Fed meeting coming up next week, you would think investors would be a bit more "risk on" – not to mention a plane being shot out of the sky, war in Ukraine and Gaza (plus the usual nonsense in Aftica, Afghanistan and Iraq) and sanctions piling up against Russia, which affects their trading partners in the EU and Asai as well.
Money is flowing back to the Dolar as well as US Treasuries – so SOMEONE is nervous but it sure isn't US Equity Investors, who are hell-bent on trading stocks near their all-time highs coming into Q2 earnings. The Dollar shot up to 80.83 this morning and is likely to move a lot higher if the Euro fails to hold $1.3475, a level it hasn't been below since mid 2013, when it was 5% lower than that at the lows.
A 5% bump in the Dollar would be devastating for commodities and equities yet oil (/CLU4, Sept, is now our front-month) hit $103 this morning – where we're also shorting it in Member Chat (and tune in for our Live Trading Webinar at 1pm, EST).
After falling from $137.50 on FXE, we expect support at $133.50 and that's a $4 fall so 0.80 bounces but let's call it $1 and look for $134.50 to be a weak bounce today. Anything less than that and we are heading DOWN and that would not bode well for the bulls in the short run.
Meanwhile, over in Dubai, it may be time for round 2 (or is it 3?) of the property bubble as Credit Default Swaps jumped back to 166 basis points. Dubai has racked up $129Bn of debt transforming itself into a tourism hub and the Middle East base for banks such as HSBC and DB. “The crisis in Syria and Iraq and the spread of ISIL in neighboring countries is affecting sentiment towards the whole Middle East,” said Samer Mardini of SJS Markets, “Dubai feels that the most.”
At the same time, the yield curve on US Treasuries is hitting a crisis-level low. When short-term and long-term yields reach parity like this, there is no benefit in holding long-term paper and investors tend to leave that part of the market, pushing up long-term rates very quickly which may fix the yield curve, but has other, nasty economic impacts.
Banks have less incentives to lend long and fund capital or residential investment projects since banks can lend short and capture a higher rate. This reduces the pace of credit growth and the number of new projects financed by debt. Also, the risk-free rate is an asset class that competes with equities and other asset classes (housing, gold, etc.). The higher the short-term rate the less speculation in other asset classes which can lead to bubbles bursting.
Maybe the sky isn't falling, but there are certainly some cracks!
Geeze, it amazes me that people can be AAPL bears, that company is almost perfect!
MORL has got to be a crock of ****, right?
Nearly 20% dividend with a monthly payout and 0.35% expense. No way that is a legit product…
Imax, Shanghai Film to open 19 screens in China
HONG KONG (AP) — Imax and China's biggest state-owned film exhibitor are teaming up to open 19 giant screen cinemas in the world's No. 2 movie market.
Imax Corp. and Shanghai Film Corp. said Tuesday that a "significant number" of the theaters will open before the end of 2015.
No financial terms were disclosed. Shanghai Film already operates three Chinese Imax theatres.
Box office revenues in China surged 27 percent last year to $3.6 billion, making the country a crucial market for international film companies.
Government policies aimed at encouraging growth of Imax and 3-D movies are helping boost the format's popularity in China's tightly controlled film market.
"Transformers: Age of Extinction," the latest instalment of Michael Bay's blockbuster robot film franchise, earned nearly $10 million at Chinese Imax screens on its opening weekend, more than double the previous record, the company said.
The deal comes a year after Imax partnered with another Chinese company, Wanda Cinema, to open up to 120 of the Canadian company's theatres.
At the end of 2013, Imax had 173 cinemas in China and plans for 230 more by 2021, according to its latest annual report.
That puts China on track to become Imax's No. 1 market globally, overtaking the United States, where box office revenue growth is stagnating and the company has about 380 cinemas.
?Citi has downgraded Amazon (AMZN -0.7%) to Neutral ahead of Thursday’s Q2 report, and cut its target by $19 to $395.
Wow ! Talk about taking to the woodshed ! ! ! Cut their price target by a whole $19. You tellum Citi.
Phil – With regards to AAPL earnings report today, what were the things that you found most interesting?
Phil
Is there anything in IRBT's earnings report that makes you hesitate increasing position size at the current price. THX.
Does anyone know if Phil discussed the August XOM puts during the webinar today? I'll try to get to the replay once posted but just wondering if any or you would mind filling me in on any adjustments that were suggested.
Thanks!
XOM/jeffdoc – I believe his take was not to roll but to double down on the 100 puts since they cost 50% less now.
Thanks Ivan, appreciate that.
From Bloomberg, Jul 23, 2014, 5:32:45 AM
European stocks rose for a second
day as companies including Daimler AG reported better-than-expected earnings. U.S. stock-index futures were little changed,
while Asian shares climbed.
To read the entire article, go to http://bloom.bg/1tyoRIQ
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From Bloomberg, Jul 23, 2014, 4:52:11 AM
America’s appetite for German stocks
is cooling as Europe’s biggest economy shows signs of weakening
and its equities hover near record levels.
To read the entire article, go to http://bloom.bg/1mBGAt6
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From Bloomberg, Jul 23, 2014, 4:57:04 AM
U.K. supermarkets may be masking the
true scale of price discounting, complicating the task facing
policy makers as they debate how long to keep interest rates at
a record low.
To read the entire article, go to http://bloom.bg/1rrv2ij
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From Bloomberg, Jul 23, 2014, 5:50:33 AM
Daimler AG (DAI)’s plan to restore its
Mercedes-Benz brand to the top of the luxury-car market gained
traction in the second quarter as surging deliveries of the
flagship S-Class sedan propelled a jump in profitability.
To read the entire article, go to http://bloom.bg/WAMllv
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From Bloomberg, Jul 23, 2014, 3:34:25 AM
Investors are signaling confidence
that inflation in Hungary will stay subdued and the forint will
stabilize after the central bank’s surprise conclusion to
Europe’s longest interest-rate cutting cycle.
To read the entire article, go to http://bloom.bg/1rrChGZ
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From Bloomberg, Jul 23, 2014, 5:18:59 AM
ABB Ltd. (ABBN) earnings dropped for a
third consecutive quarter, missing analyst estimates, amid
mounting charges at the unit for offshore wind and solar
projects.
To read the entire article, go to http://bloom.bg/WAKuNC
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From Bloomberg, Jul 23, 2014, 2:21:42 AM
He spoke yesterday with Bloomberg’s Firat Kayakiran in London. (Source: Bloomberg)
Aluminum prices are set to increase
as producers refrain from adding capacity and demand rises, said
Norsk Hydro ASA (NHY)’s outgoing chief executive officer.
To read the entire article, go to http://bloom.bg/1rrGLNV
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From Bloomberg, Jul 23, 2014, 5:59:08 AM
CPI increased in June 0.3 percent after a 0.4 percent gain the prior month, matching the median forecast of 85 economists surveyed by Bloomberg, (Source: Bloomberg)
European stocks rose for a second
day as earnings from Daimler AG to Akzo Nobel NV beat estimates.
Emerging market shares advanced to an 18-month high as
Indonesia’s rupiah led gains among higher-yielding currencies.
To read the entire article, go to http://bloom.bg/1nkC7iT
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From Bloomberg, Jul 23, 2014, 12:00:01 AM
A U.S. council of regulators is poised to label MetLife Inc. (MET) a potential threat to the financial system, subjecting the insurer to oversight by the Federal Reserve, two people with knowledge of the matter said.
To read the entire article, go to http://bloom.bg/1njnQmC
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From Bloomberg, Jul 23, 2014, 5:25:09 AM
He speaks before the Committee on Economic and Monetary Affairs of the European Parliament in Strasbourg, France. (This is the first part of the question-and-answer portion of Draghi’s testimony and is courtesy of Europe by Satellite. Source: Bloomberg)
Before the Federal Reserve and fellow central banks go to work raising interest rates, they first need others to go to work.
To read the entire article, go to http://bloom.bg/1nlAem8
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From Bloomberg, Jul 23, 2014, 3:40:52 AM
The deutsche mark is dead. Long live
the deutsche mark.
To read the entire article, go to http://bloom.bg/1ue6tc9
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From Bloomberg, Jul 23, 2014, 4:57:34 AM
The Bank of England said some
members of its Monetary Policy Committee have started to argue
that the risk of a rate increase undermining the recovery has
fallen as growth becomes more entrenched.
To read the entire article, go to http://bloom.bg/1nTtPKW
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From Bloomberg, Jul 23, 2014, 1:30:00 AM
Melting Arctic ice is widening a path for ships to deliver European oil to Asia, stoking South Korea’s ambition to become a regional storage and trading hub.
To read the entire article, go to http://bloom.bg/1rHykgE
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From Bloomberg, Jul 22, 2014, 9:33:51 PM
Less than 24 hours after Xiaomi unveiled new products aimed at stealing away more Apple fans in China, the California consumer-electronics giant reported earnings that show it’s still strong in the world’s largest mobile market.
To read the entire article, go to http://bloom.bg/1nlfvPt
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Watch this video at http://bloom.bg/1rzdsKJ
Apple’s Gross Margins Guidance: Why Is It a Concern?
July 22: Estimize CEO and Founder Leigh Drogen, Raymond James and Associates Managing Director Tavis McCourt and Bloomberg’s Cory Johnson discuss Apple earnings and product sales.
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How Murdoch Will Win His Time Warner Takeover Bid
July 22 (Bloomberg) — Forbes Media Chairman and Editor-In-Chief Steve Forbes and Bloomberg’s Jeff McCracken discuss Rupert Murdoch’s tactics in previous takeover bids. They speak on “Street Smart.” (Source: Bloomberg)
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Apple IPhone Profitability Is `Excellent’: Munster
July 22 (Bloomberg) — Gene Munster, an analyst at Piper Jaffray Cos., and Alex Gauna, an analyst at JMP Securities, talk about Apple Inc.’s third-quarter earnings and outlook.
Apple said quarterly profit rose 12 percent to $7.75 billion, with a jump in iPhone and Mac sales helping to make up a drop in iPad demand. Munster and Gauna speak with Cory Johnson on Bloomberg Television’s “Bloomberg West.” (Source: Bloomberg)
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Future of Trucking: Big Rigs Become Robot Convoys
July 23 (Bloomberg) –- Peloton Technology has developed a vehicle-to-vehicle communication system that has the potential to transform the trucking industry. By tethering two trucks together using advanced sensing intercommunications, the Silicon Valley startup says they can improve safety while cutting costs for thousands of trucks on the road. Video by: Sadie Bass, Justin Beach. (Source: Bloomberg)
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From Bloomberg, Jul 23, 2014, 5:46:45 AM
European leaders warned against a rise in antisemitism in the region after some protests over Israeli military action gave way to racist slogans.
To read the entire article, go to http://bloom.bg/1nizLkt
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From Bloomberg, Jul 23, 2014, 12:35:06 AM
Samini talks with Trish Regan on Bloomberg Television’s “Street Smart.” (Source: Bloomberg)
Donald Sterling accused his wife and the National Basketball Association of fraud in a new lawsuit over the proposed $2 billion sale of the Los Angeles Clippers to former Microsoft Corp. (MSFT) Chief Executive Officer Steve Ballmer.
To read the entire article, go to http://bloom.bg/1mCk8A3
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From Bloomberg, Jul 23, 2014, 12:32:44 AM
In March 2013, Mario Longhi lobbed
an unexpected question into a roomful of 150 U.S. Steel Corp.
managers: Who here would buy the company’s stock, tomorrow?
To read the entire article, go to http://bloom.bg/1txdgd1
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From Bloomberg, Jul 22, 2014, 7:00:01 PM
For the past two decades, growth in
the global economy spelled higher revenues for the Organization
of Petroleum Exporting Countries. Not any more.
To read the entire article, go to http://bloom.bg/1mBCWiV
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From Bloomberg, Jul 23, 2014, 5:42:34 AM
Chinese banks will probably offer discounted mortgage rates to their clients in the second half of 2014 as demand in the country’s housing market weakens, according to a Bloomberg News survey.
To read the entire article, go to http://bloom.bg/1mBGMIW
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From Bloomberg, Jul 22, 2014, 5:00:00 PM
Companies going public in Hong Kong are getting the message that less is more.
To read the entire article, go to http://bloom.bg/1txbMPM
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From Bloomberg, Jul 23, 2014, 12:10:05 AM
China’s efforts to stimulate the
world’s second-largest economy are insufficient so far to
achieve the government’s growth target of about 7.5 percent,
according to a survey of analysts.
To read the entire article, go to http://bloom.bg/1rIW04a
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From Bloomberg, Jul 22, 2014, 5:36:35 PM
The cost of living in the U.S. rose at a slower pace in June and home sales climbed to an eight-month high, showing the economy is generating little price pressure as growth accelerates.
To read the entire article, go to http://bloom.bg/1ngJvvH
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From Bloomberg, Jul 22, 2014, 12:40:12 PM
Home sales, at least in the U.S., seem to be rising. Existing home sales in June increased to 5.04 million annualized. That number may be affected by the weather, as June sales most likely come from contracts signed after the depths of winter.
To read the entire article, go to http://bv.ms/WBobaV
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Pharm,
UBS just raised Puma Biotechnology (PBYI, $59.00) from $125.00 to $325.00!
Good morning!
This is why the bears need to just give up. Just above, on the CPI chart, the Bloomberg article says: "The cost of living in the U.S. rose at a slower pace in June and home sales climbed to an eight-month high, showing the economy is generating little price pressure as growth accelerates. "
But growth is NOT accelerating. We JUST had a GDP report that showed exactly the opposite, yet here we have a noted MSM publication simply ignoring that FACT.
How do people read these things and just accept them? How do authors write them? How do editors OK them? Not even the commenters seem to catch it – it's like the whole World just accepts the BS of the moment. This is what Orwell predicted it would be like in a future where the media became electronic and the past was instantly forgotten by a population that was unable to think for itself.
It took took them 30 more years than planned, but here we are!
Orwell also nailed it as to our present form of Government and the media:
Meanwhile, Fox is buying TWX (AOL, Turner Networks, CNN, HBO, Cinemax, Warner Brothers, Cartoon Network, DC Comics, People, Time, Fortune, Sports Illustrated) – and no one is freaking out.
If this deal goes through, how long do Bill Maher and John Oliver have left?
IRBT/Jph – They got hosed by a big drop in military orders this Q. Otherwise, looking very good. People selling are simply clueless.
AAPL popping a bit this morning now that people have digested the earnings.
MORL/JPH – The dividend payout is very uneven but it's been an impressively steady grower for the past year. Could go the other way fast if rates rise and the REITs drop but a great way to play REITs bullish.
IMAX/Diamond – That's 25% growth from China alone over 7 years – not bad.
AMZN/Albo – Glad to see C draws the line at 1,000/1 p/e ratios!
AAPL/Diamond – All as expected really. "Most interesting" was how dead IPod sales are – almost time to terminate that product. $1.6Bn in R&D for the Q is on pace for over $6Bn in R&D this year – that's $6,000,000,000 just on R&D, which is more money than all but 300 companies on the planet have in total sales! The thing about AAPL R&D is that, unlike MSFT R&D – they actually come up with something from time to time. AAPL is now spending as much on R&D as IBM – assuming they are not wasting their money – that's going to have very strong implications on future growth.
BNN just called and they want me on next week to explain how I knew AAPL was going to be the stock of the year back in Jan, when they were crashing. LOL – I love the fact that hardly anyone is a Fundamentalist anymore!
IRBT/DC – Not at all, military orders were down 50% and they still rocked it. That means military money is just a bonus for them at this time.
XOM/Jeff – Doubled down was the decision. Average .75 now.
Big Chart – All time highs on the S&P again. Meanwhile, NYSE only barely over Must Hold and RUT and Dow below.
Europe and Asia generally up, oil $102.50 – same old, same old…
Phil- seems like oil is reacting nervously to news out of mid east. Are you still shorting with it spiking to $102.60 this morning? I would think with nothing really changing and Gaza just being a replay of what happens there every few years, we should still be shorting under 102.50
Don't forget, inventories are 10:30, not a good short ahead of those, though still tempting. Big draw last week is unlikely to be matched.
PBYI. Biggest gap up evah?