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Meaningless Monday Market Movement

Why do we work 5 days?  

Market trading on a Monday is like going to a kids softball game when only 4 or 5 kids show up for each team yet they insist on playing anyway and the parents sit on a metal bench for 2 hours watching kids chase balls around.  There's a human tendency to follow a plan – even if the plan already looks like a disaster.  This just happened to my daughter's game on Saturday and I KNOW everyone would have rather gone out for pizza instead but it was on the schedule and would count in the league standings so we went through the motions – but no one, not even the kids, considered it a real game.  

The markets are like that on Monday.  Half the traders are still in the Hamptons and the ones that show up aren't into it and volume is usually 2/3 or less than that of a regular day and even the news isn't awake yet and very little data is scheduled (how often do you promise to have a report ready Monday morning?).  Still, we go through the motions but I'm not going to pretend it matters – let's just try to enjoy a nice sunny day.

Europe is happy this morning as the Greeks have agreed to yet another round of Draconian austerity measures.  Well, everyone but Italy is happy, because they are next on the EU chopping block.  Though thousands of protesters rallied outside Parliament yesterday, the Greek lawmakers bowed to Germany's demands (over IMF objections) and slashed $6.2Bn (3% of GDP) worth of spending, mostly coming from pension cuts while, at the same time, increasing the amount workers must contribute into the dwindling pensions.  

I have long warned that Greece is simply a petri dish in which the powers that be test just how much crap the people will take before they revolt – so far, it's an amazing amount of crap!  What has "worked" for Greece (ie. allowed them to pay usurous creditors 20% interest on bonds) is now being pushed on Italy who, like Greece tried to do, are pushing back by electing a union leader to represent them at the EU.  Most likely, he will fail as miserably as Greece's labor Government did ahead of their downfall.  

In a strong rebuke to their Conservative Government as well as the EU, the UK gave parlimentary seats to Brexit proponents - indicating the referendum may be closer to passing than the Coporate Media (Rupert, et al) would have us believe.  And, to really make the Conservatives' heads spin, London elected a Muslim mayor!  

So certainly not nothing going on over the weekend and not much data this week but we do have notes to sell so expect a bit of gloom and doom from our 6 scheduled Fed speakers (to scare people into bonds) and Charlie Evans was already no help at 5:10 am in London, though it was just a panel discussion unrelated to Fed policy.  Still, no news is bad news these days as market sentiment is downshifting and, as noted in our Option Opportunities Portfolio Review this weekend – we are heavily hedged and expecting a short-term correction.  

We had yet another chance to short our levels this morning (same as last week) as we tested 2,060 on the S&P Futures (/ES), Nasdaq (/NQ) 4,350 and Russell (/TF) 1,120 and now we're looking to see if 17,600 holds on the Dow (/YM), which is the Must Hold line on our Big Chart.  Our most recent options hedge, from our 4/26 post, was on the Nasdaq Ultra-Short (SQQQ), on the evening of AAPL's earnings, where I said:

If it all goes to Hell this evening, it will be Apple (AAPL)'s fault so it makes sense for us to add an Ultra-Short Nasdaq ETF(SQQQ) hedge that will pay us $15,000 in the STP, to offset some of the losses on the longs we haven't sold yet.  Given that our immediate concern is a poor report from AAPL (and if there is one, we'll be buying that dip!) we can take a short-term cover in our STP for earnings season:

  • Buy 40 June SQQQ $17 calls for $2 ($8,000) 
  • Sell 40 June SQQQ $21 calls for 0.85 ($3,400) 
  • Sell 5 AAPL 2018 $85 puts for $7 ($3,500) 

Consider how this hedge works.  If AAPL has bad earnings, the stock drops but probably not 20% (now $105) and the short puts would be safe while the Nasdaq falls with AAPL (it's over 10% of the Nasdaq) and SQQQ (now $18.45) will shoot higher and we should be $4 in the money, collecting $16,000 on our spread.

We will be obligated to buy 500 shares of AAPL at $85 ($42,500) but we want to do that anyway (now $52,500 at $105).  Less the net $14,900 we collect on the hedge, our net entry on AAPL would be $27,600 or $55.20 per share.  If owning Apple at 50% less than it's trading today does not appeal to you – this isn't a hedge to make!  

All did not go to Hell but, as we feared, AAPL did drag down the Nasdaq and that boosted SQQQ to $20.22 as of Friday's close as it languishes around $93, down from $105 but well over our $85 mark and those puts are now $10.60 ($5,300), for a loss of $1,800 (but we REALLY want to own AAPL for $85, so it's a non-issue) while the spread is now $2.45 ($9,800) for a net of $4,500 (up 309% so far)  if we close it today but we're sticking with the hedge, which has a potential $14,900 upside.  

Retail Sales are a big deal on Friday along with Thursday's Consumer Comfort and Friday's Consumer Sentiment but it's still all about earnings this week in the last big week of reporting.  After this, things calm down and we'll look for some fun bets as the stragglers roll in (since we now have plenty of sector benchmarks and can make more educated guesses).  

On our Big Chart – We're bouncing off the 50-day moving averages on all but the Nasdaq, which blew it already thanks to the Apple miss and we're keeping a close eye on the Russell's 200 dma at 1,123 – if we can get over that, it will be a bullish indicator but I'm not counting on it during an auction week – people don't buy 10-year notes for 1.7% unless they are very scared of putting their money in the market!  


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  1. Good Morning!

  2. Good morning TSN had a good QTR

  3. Good morning.  Looks like we cld get a chance to get filled on the put side of the GOGO trade.

  4. Colony Capital and Two NorthStar Entities in Talks to Combine

    Font size: A | A | A


    6:36 PM ET 5/6/16 | Dow Jones

    By Josh Beckerman 

    Colony Capital Inc. and NorthStar Realty Finance Corp. are pursuing a tri-party, all-stock combination that would unite the companies with the asset-management business NorthStar spun off in 2014. 

    Shares of NorthStar Asset Management were up 7% at $12.90 in after-hours trading Friday. 

    The companies entered exclusive talks after Colony and NorthStar Realty proposed a combination. A statement from the three companies said they believe a deal "would create a world-class diversified real estate and investment management equity REIT" that could produce "substantial revenue and expense synergies." 

    Los Angeles-based Colony Capital is known for real-estate investments. It also has made private-equity investments including Station Casinos and Miramax Films. 

    Privately held Colony Capital LLC formed real-estate finance business Colony Financial Inc., which went public in 2009. Colony Capital and Colony Financial merged in 2015, forming Nasdaq-listed Colony Capital Inc. 

    New York-based NorthStar Asset Management said in January that it would explore strategic alternatives. Activist investor Land and Buildings Investment Management said the "grand experiment" of the 2014 spin-off wasn't successful, and said NorthStar Asset Management should consider options including a recombination or a sale to a third party. 

    After the activist firm's Jan. 29 announcement that it would submit six board nominees, NorthStar said it was disappointed by the "potentially disruptive" effort. 

    Write to Josh Beckerman at 

    > Dow Jones Newswires

  5. SJB  Long SJB @27.21. Half position.  Stop is 26.20 – 4%.

  6. Yes Han – I am waiting for 3.8 on GOGO puts.

    Got out of /CL with a small loss, and playing /NQ from 4345 to 4400.

  7. Tugboats/Phil – which indexes have more weight? Is s&p going to pull NYSE and RUT up or will they pull S&P down…? 

  8. Good morning! 

    Nice drop and bounce testing those 50 dmas:  17,544, 2,045, 4,415, 10,185 and 1,103 so we'll keep a close eye on those this week – any failures = BAD (Nas already miles below).  Don't believe any of the action, of course – it's Monday.  

    GOGO/Hanj – The few times I regret not waiting PATIENTLY to get my fills compared to EVERY OTHER TIME I get a good fill at the price I want is not even a contest.  If I don't get good prices, I don't make a trade – it's a simply change anyone can make to their habits that can improve performance 5% or more.  

    NRF/Jabob – That's NSAM, not our NRF. 

    Oil below $44 and Brent has really closed the gap at $44.35 vs $43.91 – probably indicates /CL is still about 0.50 overpriced.  So funny now that the weekend fakery is over (and you wonder why I don't take this BS seriously):

    Tugboats/Scott – I go by market cap and reliability:  S&P, NYSE, Russell, Nasdaq, Dow.  NYSE is actually bigger than the NYSE but the S&P hasn't got too many silly companies in it that can skew results from time to time.  The Dow is just outright stupid.  

  9. go LABU!!!

  10. LL hitting by point / support point again…

  11. In his latest must read presentation, Citigroup’s Matt King continues to expose – and be very concerned by – the increasing helplessness (and …

  12. The number 1 spot? Not Florida. Or Arizona.<p>Florida and Arizona might be retirement hotspots due to their temperate climates, but when it comes to quality of life for senior citizens, they’re not all they’re cracked up to be. In fact, you might want to start thinking about the Upper Midwest.<p>A new …

  13. There’s no doubt finance is a prestigious industry. It’s highly paid, populated by graduates from elite universities, and perceived as being dominated by overachievers.<p>But this exclusive image is at odds with the ambivalence that many bankers feel about working in a world with long hours, brutal …

  14. The Making of an Ignoramus

    Truly, Donald Trump knows nothing. He is more ignorant about policy than you can possibly imagine, even when you take into account the fact that he is more ignorant than you can possibly imagine. But his ignorance isn’t as unique as it may seem: In many ways, he’s just doing a clumsy job of …

  15. <b>New York (CNN) —</b> Marty Cooper, who built the first handheld cell phone, says his invention has a glaring flaw: You have to keep charging its battery.<p>”Keeping your phone charger around is a real annoyance,” Cooper told CNNMoney in an interview. “And I think it’s going to be an increasing …

  16. Lending Club CEO Renaud Laplanche is stepping down from his position with the company after an internal review.<p>In pre-market trade on Monday following the news shares of the company were down as much as 28%.<p>In a statement Monday morning, Lending Club said, Laplanche would step down after, “an …

  17. <i>”After comprehensive judgment, our economic recovery cannot be U-shaped, cannot be V-shaped, but will be L-shaped,”</i> warns an ‘authoritative’ person …

  18. Buyer is German conglomerate JAB Holding Company.<p>Krispy Kreme Doughnuts has agreed to a $1.35 billion takeover offer by German conglomerate JAB Holding Company, a sweet 25% premium to the company’s closing stock price on Friday.<p>JAB is agreeing to buy Krispy Kreme for $21 per share in cash. The deal …

  19. Batman – I was just about to post about LL.  Stock down 20% in the past two weeks.  Earnings tomorrow before the open.  Any brave souls can sell the May $12.50 puts for .70. 

  20. Actually, someone just sold one contract for .91.

  21. We’ve all been told a lot of things that may or may not be true over the course of our lives: don’t swim for an hour after eating, drink water upside …

  22. Thinkstock/Sergey_P<p>If you pick up any principles of economics textbook, there will typically be a discussion of taxes and <b>tax incidence</b>. Tax incidence …

  23. Why did the oil price fall 70 per cent during the two years from the spring of 2014? And why, after falling from $115 a barrel to $30, has it now …

  24. Monday is Europe Day, the European Union’s annual celebration of peace and unity on the Continent. This being the European Union, do not expect any fireworks or carousing in the streets of Brussels, although the bloc’s employees have the day off, and several public events are planned.<p>The holiday …

  25. Phil,

    I wanted to get your thoughts on taking a bullish position in IBB secondary to the aging demographics. Kind of prefer IBB to Labu due to price history and decay issues. IBB has retraced 50% (100 to 400, now 250ish), whereas LABU has dropped form 226 to 26.

    Thinking of selling puts, just not sure of risk/reward of 1/17 225s (14.40), 250s (23) or 1/18 225s (25.40) 250s (36). To me, advantage of 1/17 is having more options to roll out to plus higher inc per mth.  

    Thanks in advance

  26. Every Friday night on ABC’s hit business reality show <i>Shark Tank,</i> entrepreneurs pitch a panel of celebrity investors, known as sharks, and offer a percentage of their businesses in exchange for capital to start, grow or save their businesses. “The entrepreneurs must convince the sharks to invest the …

  27. <b>Protesters have gathered outside parliament in Greece ahead of a vote on further austerity measures in return for more international bailout …

  28. Falling Dollar a Risky Premise for Rally in Other Assets

    The powerful rallies that have lifted stocks, crude oil and emerging markets for the past three months have one important thing in common—the falling dollar—and investors are growing anxious that it could prove to be the weak link.<p>While the dollar is down 4.5% this year and near a one-year low …

  29. It’s not a normal – or low risk – trading practice to amass a securities position that’s nearly five times the total economic output of Cambodia… or 1.5 times the market capitalization of the major global bank you’re working for. It’s even less normal if the bank you’re working for has no clue …

  30. GOGO who's the naughty boy who took 3.50 on the GOGO puts?  hmmmm? kidding – sort of. 

  31. AAPL/Phil  After the earnings fall, I bought back some short calls in my spreads and left the longs naked to see if it would rebound.  So I am currently holding 6 Jan 17 $90 calls (in for $20, now $10) and 2 Jan 17 $80 calls (in for $29, now $16.50) and 4 Jan 18 $115 calls (in for $11.00, now $5.80).  So I am showing a paper loss of about $11,000. The calls I sold showed a gain of about $7,250.  I have some short puts that I am fine keeping.  I'd like to keep about the same exposure to AAPL but am resigned to waiting for a while and probably should cover my longs.  How would you suggest rolling/covering these positions?  Thanks in advance.

  32. Should I be surprised that GOGO made it all the way down to 9.18 and the put short still did not fill?

  33. tangled/GOGO  No, bc those puts are waaaaay out.

  34. FYI Phil—-just saw the article u posted written by Kim Iskyan—-did u know he was a PSW member about 4 years ago—ran into him in Sri Lanka of all places

  35. MU – how low will it go…?

  36. Albo – I actually pulled the trigger on 1K shares at 11.75 ( I already have some 2018 10 Puts at 6.76 from an earlier trade) my thoughts are that it has been taken down pretty hard and i think 11 is the hard floor.  After earning tomorrow i'd be happy to by 500 more if it spikes below 11.75,,, if it goes up, i'll look to sell some short term calls not his in the 14 to 15 range.

  37. Phil,

    I'm looking to add another Butterfly trade (currently have MSFT, PG, WMT). I was looking at Target but was wondering if/how would you leg into this given that:   1) Earnings is 5/18;  2) Ex-Div 5/16  (2.84% dividend);  3) TGT looks to be into the bottom of its recent channel.  

    Also – should one ever consider diversification within a portfolio primarily comprised primarily of Butterfly trades — i.e. is it advisable to have 2 retailers TGT + WMT?   Thanks as always!

    (Note: originally posted Saturday – I apologize if I've missed a reply)

  38. Phil/IRA   So Phil, most of the trades I have seen since becoming a member are not IRA friendly – no short calls allwoed or strangles, straddles etc.  So, do you do options strategies that ARE ok in an IRA.  And no, I am not going to seek another broker – the one I have gives me excellent executions as well as other advantages. thanks

  39. Batman – Short 2018 $10 puts at $6.76 was an awesome sale !  Never knew they got there.  I'm going to wait til tomorrow and take another look then.

  40. Wild ride this morning:  2,050 still holding(ish), so far:

    And 17,600 – funny how well our lines work:

    25 lines are significant on the Nasdaq:

    10 lines are significant on the RUT:

    DAX rejected at 10,000 = BAD:

    Remember EuroStoxx 3,000 last week?  This chart does not:

    There it is (was):

    Ah what a silly market, constantly begging for free money and throws a tantrum when it doesn't get it.  

    As we expected, the BOJ did not save the World and /NKD dropped from 17,600 to 16,400 – too bad we didn't have the balls to play that one!  I'm kind of liking /NKD long here (16,400) for the bounce as the Dollar is bottoming at 93.50 and the Yen is topping at 92.50, which is already over the 2.5% line:

    The same can be said for Dow (/YM) 17,800, S&P (/ES 2,070), Nasdaq (/NQ) 4,400 and Russell (/TF) 1,140 – we can play these lines bullish (long the laggards) with tight stops below and 3 of 5 must be over to play the slower 2 and out if any 3 of 5 are under – simple rules.

    Watch EuroStoxx 3,000 as well – if that fails (I'm fairly sure we bounce first), then the markets all fail with it.

    Tugboats is the best analogy – all these markets are somewhat connected.

    LABU/Jabob – These ultras be crazy!  

    LL/Batman – Falling knife at the moment but tempting.  I see no news, just people bailing ahead of earnings I think.

    And what Albo said.  

    IBB/8800 – I'd go LABU at the moment, look how exciting it is.  If you are talking long-term, then yes, IBB is probably better – we haven't played LABU long enough to check the decay.  The problem is that IBB is at $260 and it make for heavy margin commitments.  Perhaps you might want to consider a short play on LABD, which is LABUs bearish twin.   It just fell 10% to $48 but, like all 3x ETFs, you have a great chance of it grinding down to zero over time.  

    You can sell 1 Dec $65 call for $15 ($1,500) and use that to buy 3 $45 ($14.50)/$35 ($8.50) bear put spreads for $6 ($1,800) which is net $300 on the $3,000 spread.  That's a fun way to play.  The problem with a put sale on IBB is that Hillary getting elected and appointing a drug price czar or something like that could really spook the sector and stick you with a lot of IBB and you only collect $1,400 or $2,300 anyway – I'd rather sell the short bearish ultra calls and roll out of a spike since the decay is so firmly on your side. 

    AAPL/Jet – I'd go with what we have in the OOP:

    For one thing, consolidating is a good idea when you have a messy position.  This one is currently net $4,615 and pays up to $30,000 if all goes well (and those prices suck – you can do better).  In addition to the simple $5,000 return if AAPL just holds $90, you buy yourself a year AND you are selling short calls along the way and we collected $1,000 for the first 75 days so figure you get at least 5 more shots to collect $1,000 is another $5,000 in your pocket while you wait (per set).  

    GOGO/Tangled – Thinly traded, you just have to be patient (and keep in mind, it will be just as hard to exit). 

    Kimisk/Savi – Sure, I taught him everything he knows!  cheeky  I'm always amazed to run into people in strange places.  Tina's Mom died years back and we flew into Portland Maine and picked a random hotel and I'm waiting for the elevator and I hear my cousin from England talking to someone.   We hadn't seen each other in years and suddenly we're both in Maine.  Of course, to some extent, it's because we (Top 1%'ers) all stay in the same best hotels and eat in the same best restaurants so we "bump into each other" a lot more often than people who work 9-5 and mow the lawn on weekends but it's still so cool!

    MU/Scott – Semis not the place to be at the moment.  

    Buttefly/Gbase – Well, you have 3 consumerish stocks so I'd be careful adding another.  Sorry if I missed that over the weekend.  I'd consider TXN or VLO to spread out a bit as the next add.

    IRA/Hanj – It depends who you have the IRA with.  Usually short puts are fine but full margin.   This is why I'm not a fan of having too much money in those things – trading with your hands tied behind your back is not worth the tax break.  In any spread we do with short puts – there's a bull call spread and if that's not allowed – I'm not sure I can help you but surely you can sell covered calls, right?  

  41. Phil/IRA – uhmmmmm, yeah, yeah, I sell covered calls…….Uhm yeah./

  42. VMC/Phil – going strong. leading indicator for XHB or HOV?

  43. GOGO – the long calls filled easily.  Would have been cheaper to fill today.  As a rule is it better/safer for the position to wait until the short legs fill before filling the longs?

  44. PHIL/IRA part deux   How far out do you go on covered calls? 2018s?  For example,,,,, lets say it was AAPL?  Yes, I already took some off the table, but going out to 2018 on AAPL for say, 130 calls for 3.05 credit no thanks.  However, the calls at 2017 jan 110 for 2.72 look better – 15% return if called based on todays price - thoughts?

  45. not entering GOGO because it is thinly traded.  BHI is that way too.  I would have liked to go in and out of BHI over the last year and averaged up/down but the bid/call spreads are awful.  over time, for day-trading type trades, i have moved towards options that have significant volume and the underlying stock is > $50, otherwise the trading fees become significant when you are rolling or selling options every quarter.

    the LTP trades are a different matter of course since they are buy and forget for at least a year or two

  46. Covered calls/Hanj – So, in an IRA, if you take the AAPL spread above, you can opt not to sell the puts and then you have the $30,000 bull call spread for $10,500, so "just" a tax-free 200% gain at 30% is not so terrible, right?  Also, you could sell 2 less 2018 $115 calls, sacrificing $1,250 now but then you can sell those quarterly short calls (covered by your 2 extra 2018 $85s) for the $1,000 monthly income.  The downside to that is you will need to buy more 2018s if you have do do a DD roll but, other than that, it's a very similar spread that you can work down to net $5,000 with regular call sales within your IRA restrictions.  

    VMC/Scott – More like road building than home building.  Go long MAFIA.  Still, nice to see a little pickup in Government spending – it's been quite the drag on GDP. 

    Legs/Tangled – I play the legs like individual momentum trades each day so, when the stock is going up, I try to fill the short calls (selling into the excitement) and, when it's going down, I buy the long calls and sell puts. On these long-term plays, it's not like my target is changing day to day – just the price of the options.

    Rumors that BID is getting a large investment:  

    Mystery investor may offer to buy piece of Sotheby's

    Sotheby's disclosed on Monday that an outside investor has expressed interest in buying at least 10 percent of the company.

    I agree with that – it's a down cycle in art and a great time to buy them.  It's like a hedge against inflation – it's bullish on the global economy over the long-term, etc. 

    IRA/Hanj – I like to go as long as possible and buy as little premium as I can while selling as much as I can stand.  As noted above, you are too aggressive in targeting – I prefer to buy the $85 calls (first calls where I can't roll $5 lower for $2.50 or less) and then, at $17.20, I've paid net $102.20, which is $9 in premium so I'm damned well going to collect about $9 and the $105 calls are $8.50 so that works out to net $9.70 on the $20 spread or you can get more aggressive by spending $3 to sell the $115 calls ($5.75) or buying the $80 calls instead ($20.10) but, since you can't sell naked short calls, you don't need a wider spread – just a high-percentage 100% gainer.  Unless you KNOW there is an event sooner that you will want to cash out for – it's usually better to just take the long-term spread because, if AAPL pops $20 to $105 – you will not see those prices again.  

    BHI/Lunar – Yes, that's why we don't touch ours, too annoying with those wide spreads.  Maybe better now that the sale is off the table.  

  47. In recent months unexpected calls have emerged from unexpected sources questioning whether capitalism is even working any more in a world in which …

  48. On Monday, Sotheby’s announced a loss of $25.9 million for the first quarter of 2016, compared to income of $5.2 million the year before. The publicly held auction house said a first-quarter loss is unremarkable, having posted one for 22 out of the last 25 years.<p>Still, Sotheby’s could have used …

  49. In earthquake prediction, geologists work in probability distributions rather than absolute terms. Consensus is growing, however, of the likelihood of a large and devastating earthquake to strike California. Why are scientists beginning to worry? The San Andreas Fault hasn’t produced a big …

  50. Phil,

    I am not that worried about Nov and Hilary appointing an Rx czar but point taken; to me the demographics of increased demand for meds outweigh the effects of lower unit revenue.  Yep, the idea of owning a bunch of a IBB, $250 stk, does give me pause. Thx for the LABD bear put sprd suggestion – makes the decay an asset. What keeps you in these small towns?


  51. Tiger Cub fund may be inflating the value of its holding by 56%.<p>Hedge funder Christopher Hansen’s Valiant Capital Management has gotten a big boost from its lineage. Hansen is an alumni of a hedge fund of someone who was once worked for Tiger Fund Management’s Julian Robertson—earning Valiant the …

  52. RIO DE JANEIRO — The new speaker of Brazil’s lower house of Congress on Monday annulled the vote to impeach President Dilma Rousseff, creating even greater tumult amid the power struggle gripping Latin America’s largest country.<p>Waldir Maranhão, the obscure lawmaker who took the helm of the Chamber …

  53. <i>By Abheek Bhattacharya at the Wall Street Journal</i><p>To the extent that China’s industrial recovery explains why iron ore and steel prices have jumped …

  54. It starts out like any one of a number of anti-aging treatments: rub some goo on your face, wait for it to dry.<p>But this isn’t a skin cream or wrinkle serum, it’s an invisible polymer “second skin” that dries to tighten wrinkles and reduce skin sagging.<p>“You put it on as an ointment, and it becomes a …

  55. Phil one of the news stories you posted today was about a company called Energous (WATT) which is working on a technology to use sound waves to charge electronic devices. Seems like a great idea but do you know anything about this company? Would it be one of those throw a few bucks and forget about it companies (see LQMT) or are they not there yet? Seems like there are some revenues already and that they may be on the verge of something big if you believe the story. 

  56. The lure and dangers of chasing dividend stocks

    The defining style of 21st century investment might be considered Scrooge-like: counting dividends, cheering companies which keep the coins rolling …

  57. Freeport sells key copper mine for $2.7bn to China Molybdenum

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  58. Following Donald Trump’s Thursday comments that rising interest rates would be disastrous for the economy, saying that “we’re paying a very low …

  59. For gold bulls, it looks like the good times of five years ago all over again, at least in one respect. Money managers boosted their net long …

  60. Phil/AAPl  -thanks!  On another note, IF price does not hold 92ish, 82 comes pretty quick.

  61. Modern homo sapiens have been around for about 200,000 years.<p>For about 2,500 years, we’ve had philosophers, sages, and deep thinkers to help us guide (and understand!) our behaviors.<p>Here’s a highlight reel of the finest in ancient wisdom. Some names you’ll recognize and some might be entirely fresh.<p>…

  62. Phil – STX hit another low today.  The 2018 $18 puts at $5.55 look enticing, IMO.  Stock is yielding 13.3%, which is ludicrous for a tech stock.  Think they'll probably cut the dividend, but I believe the stock will go up. not down. on that news.

  63. Albo/STX  Why try to catch a falling knife until you see a reversal on the daily.  I waited on SJB to see the reversal both on the daily and the weekly chart confirmed.  Doesn't guarantee we wont go lower but at least I have confidence in knowing that the buyers "won" the day so to speak on the daily and weekly timeframes.  And I actually wouldn't expect a divvie cut on STX – they can cut expenses first before that becomes an issue.  

    By my metrics, STX is nearer a reversal (standard deviation channels -effective about 72% of the time nokidding) but could punch lower on exhaustion.  But again, I would wait on the daily to confirm a reversal.

  64. ALbo/STX2  I am looking at the Jan 2017s 13 puts for 1.09 credit.  I sell WHEN I see a reversal on the daily otherwise I wait bc all put premiums will get fatter if I am right that the trend is down (doesn't take a genius).  Big problem I have with STX is their late arrival into NAND tech.  Western Digital is ahead. Couple that with the slow adoption rate of PC and laptop manufacturers to use SSDs as their primary storage device, I see no hurry to get long this thing.

  65. hi phil

    in Canada im hearing that banks and financing instiutions have forced all the oil producers to hedge a lot of future production at wti 45 dollars is this in effect an increase of supply that will push oil down further what do you think?


  66. Hanj – Good advice to wait.  Althugh, I've never been able to scoop stuff up at the bottom.  Think the stock is sufficiently oversold that It's probably a decent play at these levels.  WDC could well be the better play.

  67. Interesting to REID holder

    KBW's high-yielding financial picks

    The average yield in the mortgage REIT sector is 14%, says analyst Bose George – probably warranted given falling book values, though things stabilized in Q1 for at least a few. His favorites are Two Harbors (NYSE:TWO) at 78% of book with a 12% dividend yield, and there's also American Capital Agency (NASDAQ:AGNC), Annaly Capital (NYSE:NLY), Chimera Investment (NYSE:CIM), and MFA Financial (NYSE:MFA).

    BDCs, says Ryan Lynch, have been stung by credit fears and trade at an average 87% of book value. His favorites – Ares Capital (NASDAQ:ARCC) and Hercules Capital (NYSE:HTGC) – both yield near 10%.

    Property & casualty insurers have high "cash-on-cash returns" thanks to share buybacks, says Meyer Shields, with Hartford (NYSE:HIG) and AIG standing out on that front. His favorite stocks, however, are lower yielders like Allstate (NYSE:ALL), National General (NASDAQ:NGHC), and XL Group (NYSE:XL).

    KBW also offers a basket of high yielders through the PowerShares KBW High Dividend Yield Financial ETF (NYSEARCA:KBWD). The fund currently yields 9%, and is higher by 20% in the past three months.

  68. Sorry REIT to much time in the wine cellar but looked at CLF this morning and felt like it! I fell over the Cliff!

  69. This morning I set up an other tree planting with V  BCS Jan18 65/80 for a cost of 8.83 Sold the Jan18 70 put for 6.30 and 1/2 May 27 call sold for .79

  70. Small towns/8800 – Only for the kids!  Generally, I'm a city boy.  

    WATT/Craigs – I know I like the idea but I also know that most of the technology is very wasteful, as it broadcasts power all around the house so a device or two can charge up once in a while – I think that's somewhat liming in appeal but they'll work that out over time (devices that "wake up" the transmitter).  I investigated the matter about two decades ago looking back on Tesla's (Nikola) Wardenclyffe project, which was said to be able to power a whole city from one tower.  At the time, phones needed a lot more power and drained it more quickly and I abandoned the project but the theory is sound and should eventually work with today's power-sipping devices.  

    Now WATT has a pretty rich valuation $185M at $11, for a company that hasn't done anything yet.  They have $30M in the bank and are burning $30M a year and have already diluted buyers twice so it's kind of like investing in a biotech – a bit of a crap shoot – I wouldn't go too crazy on them but fun to take a small position in.  Compared to LQMT, they are a bit behind as LQMT has $5M in cash and burned $7M last year with a $70M valuation and some sales (very small).  LQMT is a bit closer to the light at the end of the tunnel – hopefully not the light from Poltergeist, though…

    AAPL/Hanj – That's why we always leave room to buy more!  

    /TF rejected at 1,120 again – nice shorting spot.  /NQ 4,350, 2,055 on /ES and 17,650 on /YM.  Can't short /NKD as the Dollar is strong over 94. 

    STX/Albo:  Same as before:

    STX/Batman – As we discussed last week, we do have 10 short 2018 $25 puts sold for $5 in the LTP (net $20) and we decided not to change them despite the dip down to our breakeven line.  You're in the same boat so, obviously, I'd be patient and let the stock find a floor before making any decisions.  You're not down anything if you actually intended to buy STX for net $19 – you're on track to owning them at the price you wanted!  devil

    Submitted on 2016/05/02 at 4:00 pm

    STX/DM – No, I don't love them – I just don't hate them enough to dump them.

    Submitted on 2016/05/03 at 4:00 pm

    STX/RS – It will be done falling when it's done – don't catch the knife.

    Oil/Tommy – Sounds about right to me, Banksters screw everything up when they start to panic.  

    REITs/Yodi – So 3 of the top 5 we already have?  Fine by me…  CLF we knew that run in iron ore pricing wouldn't last but $3 is fine by me, we sold $4 puts for $2.80 so anything over $1.20 is a nice win next year.  

  71. CMG coming off the floor again:

    Our LTP position is still playable:

    • Sell 5 2018 $400 puts for $47 ($23,500)
    • Buy 10 2018 $430 calls for $92 ($92,000) 
    • Sell 10 2018 $520 calls for $52 ($52.000) 

    That's net $16,500 on the $90,000 spread that's $25,000 in the money at $455.  Potential profit is $73,500 (445%) and ToS says margin on 5 shorts is $20,000 – so pretty efficient way to make $73,500!  

  72. STX – BTW, Their CEO purchased 200,000 shares at $20.08 last week.  So an entry somewhere around $13-$13.50 still looks good to me.

  73. Phil/CMG – I'm still trying to figure out how assignment works. In this case if you were assigned on CMG you would be forced to deliver 1000 shares of CMG at $430? That would be $430,000! Is this correct?

  74. Occulus Rift – just had a demo of Occulus Rift at a Best Buy.   Quite a step up from Google cardboard.  Cam't wait to try on a fast moving game and on a motion platform and with augmented reality.  The part that blew me away was looking down from a platform onto a futuristic cityscape.  I tried to step out into virtual empty space an nearly fell over from the instant vertigo (demo guy had to catch me).

  75. Entropy You only guaranty the price of 400 puts and 520 callers the stock goes over 520 you responsible to deliver at 520 if the stock goes under 400 you are assigned at 400 the purchse you made for 430 call guaranties that you will never lose if the stock goes up and over 520 as the long call always has a higher delta as the 520 caller.

  76. Yodi/CMG So if I have to deliver at $520 that is $520,000 in CMG stock I must deliver. This requires that I must have at least that much in margin available, correct?

  77. Entropy NO only if you would have sold the 520 caller naked but it is covered by the 430 long call so here no margin. Margin you will pay only when selling the 400 putter where you guaranty to the buyer of the putter that if the stock will go below 400 you would deliever the thock at 400.

  78. any one playing the /ES today one of the most craziest rides

  79. Yodi The $530 is covered by the $420 long caller, so walk me through what happens on assignment of the $530 long call. Does my broker force me to sell my $420 long caller to cover that assignment? If I'm not forced to sell the $420 long call or have margin available to deliver stock then what exactly happens?Thanks for answering my questions.

  80. CMG/Entropy – The 10 long calls and 10 short calls are a closed loop.  You control the calls, so you can't be assigned those (unless you run them through expiration) and, if the short caller demands 1,000 shares from you for $520,000, you can demand 1,000 shares you have on call for $430,000 and you net the $90,000 profit.   On the short puts – you can be assigned 500 shares at $400 $200,000 at any time and your account would be -$200,000 and, if needed, you could then turn around and sell the stock for whatever it's at that day.  If that happened today, you'd collect $227,500 at $455 and would have a $27,500 profit.  

    Occulus/Tangled – Sounds like fun but I don't even wear the 3D glasses for my TV – can't imagine sitting around with a thing on my head for hours but I will check it out.

    /ES/Yodi – Way too crazy to call today.  /TF just popped over 1,120.  

  81. Entropy the 530 is your short leg of the BCS Before you would get assigened the SHORT 530 caller the long call possible will reach a delta of 1 and you can sell the long call for always a higher price. the the short caller

  82. Playing  / ES short at 2055

  83. CMG/Phil Sorry to beat a dead horse but if I had to demand the 1,000 shares I have on call for $430,000 does this require I have at least that amount in margin or is the transaction such that since I am immediately selling it for $520,000 the amount I would have in margin doesn't matter?

  84. Entropy, The long call alway replaces the purchase of the stock. In case of a B/W buy/ wirte you buy the stock and you can sell a call against the stock. With a BCS you buy the long call for a fraction of the stock price and you sell a call against the long call. Difference B/W are much more costly and the stock has no time limit but with calls or puts there is always a limited time

  85. 7 of the world’s best summer music festivals

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  87. The Democratic Army veteran assured followers on Facebook that he wouldn’t let this attack intimidate him<p>Two days ahead of the West Virginia state senate primary, a Democratic candidate attending a campaign event was brutally beaten with brass knuckles in what police — but not the candidate — are …

  88. China is doubling down on efforts to keep unprofitable factories afloat despite for years pledging to curb excess capacity, adding to a glut of basic materials flooding the global economy.<p>The country’s overproduction of steel, aluminum, diesel and other industrial goods has driven down prices and …

  89. <b>Real demand for steel in China dropped at least 7% in April from the year before,</b> according to Citigroup’s Tracy Liao estimates, so it should not be …

  90. Saudi Arabia will probably keep producing crude at near-record levels under its newly appointed oil minister, Khalid Al-Falih, as the world’s largest …

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  93. Latch /ES I think there will be still a stick tonight so be careful

  94. “It’s the end of the supercycle. It’s the end of the great debt cycle.” –Ray Dalio<p>Over the weekend, I sat down with Stig and Preston of <i>The Investors</i> …

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  98. <i>From Goldsqueeze:</i> Just one chart for today – it’s one that I update every so often because I think it’s a worthwhile indicator to follow. The NYSE …

  99. Entropy , You should read up on ''TREE PLANTING“ Never sell your long horse first and lieve you naked in a leap play. It can cost you a lot of money.

  100. Last month, the JPMorgan Chase shareholders’ letter went up online, and the bank’s chief executive, Jamie Dimon, had some harsh words for start-ups selling services that try to improve upon his bank’s offerings.<p>To the Mints and the Acorns and the Pennys and the scores of other services and their …

  101. Entropy Please see how I have set up my play on V today. This is a typical treeplanting play in adition by selling short month 1/2 calls.

  102. Get ready for highly personal, consumer-grade business apps.<p>It just might be the business software world’s biggest love triangle. Two of IBM’s closest partners—Apple and SAP—are getting together with the mutual aim of kick-starting the use of mobile apps in the corporate world.<p>IBM IBM isn’t …

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    <b>House Speaker Paul Ryan said Monday that if Donald Trump wants him to step down as a co-chairman of the GOP convention, he will respect his …

  108. The Federal Reserve’s current monetary policy stance is appropriate, a top U.S. central banker said on Monday, because low rates are helping bring workers back to the labor force without putting too much upward pressure on inflation.<p>But there is only so much the Fed can do, Minneapolis Fed …

  109. Yodi I wouldn't sell my long call first, I understand that. Just had a question of having to execute the 430 long caller if someone asked for the stock at 520. Just wanted to know if that required me actually purchasing 430k worth of CMG if even for just a few minutes in order to sell that back to them for 520.

  110. “Davidson” submits:<p>A flurry of economic measures indicate that the US economy continues to expand even with the Fed placing additional roadblocks to …

  111. <b>China stocks fell sharply again on Monday, reaching eight-month lows, as investors saw hopes for a strong economic recovery fade and worried about</b> …

  112. 0 0<p>In the next 20 years, between 50 percent to 100 percent of the world’s energy production could come from solar.<p>Today, the global oil and natural …

  113. Entropy, Not likely any one will call for the 520 caller if there is still 1 cent of premium in the caller obviously div payments are excluded in the above statement.

  114. Phil/BID – The short calls are making me a bit nervous.  I was thinking about rolling them to the January 2017 $25/30 Put/Call strangle for about even.  Premature?

  115. Something interesting has happened. China earlier this year responded to falling stock prices by borrowing a trillion dollars and spending it on …

  116. Investors should stop paying so much attention to the Federal Reserve’s short-term policy decisions, and instead focus on factors with greater …

  117. You might not remember the originate-to-distribute model, but there’s a good chance you remember its effect on the economy.<p>Originate-to-distribute represented a vast change to the way home lending traditionally worked, and it was all the rage in global finance until 2007, when its shortcomings …

  118. A treatment now pending approval in Europe will be the first commercial gene therapy to provide an outright cure for a deadly disease.<p>The treatment is a landmark for gene-replacement technology, an idea that’s struggled for three decades to prove itself safe and practical.<p>Called Strimvelis, and …

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  120. The nomination of Merrick Garland to fill Antonin Scalia’s seat on the Supreme Court may have slipped from the front page amid all the attention to Donald Trump’s ascension, but the parties are still arguing about it, and something interesting is going on. As Burgess Everett reports, conservative …

  121. Latch you win with your short /ES

  122. Entropy,

    The $430 long call you buy gives you the right, but not the obligation, to buy 1,000 CMG shares @ $430 each (you can call them away from somebody else).

    The $520 short calls gives 'somebody else' the right (but not obligation) to buy 1,000 CMG shares from you @ $520 per share.  If they are called away, your broker will deposit $520,000 in your account and take 1,000 shares away.  Given that you don't have the 1,000 shares, you need to buy them to cover the short position.  You can either buy them at the current market price, or more likely as they won't get called away if the price is less than $520, tell your broker to exercise your long calls, buying the 1,000 shares for $430 each or $430,000.  That of course is not a problem, as you just got $520,000 put into your account, so no need to worry about margins in that case.

  123. smal correction the Short V May27 79 caller was sold this morning for .86 cents and not .79

  124. lotter – Perfect explanation, I understand now! For some reason I wasn't getting the fact that the broker would deposit that $520,000 in my account which I then turn around and use to execute on my long calls. Now I also understand better how efficient these BCS are wrt margin requirements and most importantly worst case scenarios. As it turns out, getting assigned in the call side isn't so bad as long as you have the long calls or own the stock. As for selling puts, that is something I do need to be aware of and would be 200k in this case. Thanks for the education.

  125. Margin/Entropy – I don't have the final word, that's up to your broker and their rules but, USUALLY, they give you a day or so to clean up the trade before making a margin call.  You can try it with 1 and 2 and see how it goes. 

    Closing not looking good but key levels should hold (17,650, 2,050, 4,325 and 1,110).  

    BID/Palotay – Some guy is buying 10%, it's a stamp of approval but not a buyout.  We only have 15 (if you have the OOP play) vs 40 longs so we could roll to 2x or 3x and be fine and our longs would be $24,000 in the money so unless BID is over $35, won't be an issue.  Also, we sold the July $24 calls for $3.50 and now $5.30 so, rather than go through convulsions – why not just buy a few back and take a tiny loss?

    Assigned/Entropy – If someone assigns your short option while there's still premium in it – he's doing you a favor!  

  126. Lotter

    What are the exact moves if the stock price at expiration is $500.  I am assuming the broker just deposits $70,000 in Entropy's account or does he actually have to call his broker to exercise his $430 call and then sell at market? And what if Entropy does not have $430,000 in his account?


  127. $200K/Entropy – There's a reason the broker only takes $20,000 in margin on the short puts – you may "owe" $200,000 for the 500 shares at $400 but you only lose the difference between $400 and the stock price.  Generally the brokers discount 20% of the current price to determine your margin requirement so $450 – $90 = $360 = $40 loss from your $400 entry = $20,000 margin requirement.  If CMG goes lower, your requirement goes up and vice versa but you should never short puts in stocks you don't REALLY want to own so, if $200,000 is a lot to you – don't sell 5 puts or, better yet, stay away from $400 stocks entirely!  

    Assignments/Rvn – At expiration, no, most brokers will automatically clear both legs and you get the net of the long and short calls (if any).  If you are under the long call strike – then it's just worthless.  Though most people do, I don't trust brokers and I'll usually close out spreads late on the last day – I'd rather pay $100 here and there than leave a $400,000 position to chance!  

  128. rvnelson,

    And what Phil said:)

  129. Phil, when you gamble on a future (1), do you tend to get out after its up +$300 or so, regardless if the other 3-4 other indicators are still validating your bet?  I want to get a sense of how 'greedy' you are.  :)  

    Same question for the negative side.  Thanks

  130. Don't look now but my favorite speculative play from last year (and the year before and the year before that, etc.) is finally showing signs of life again! Opko pharmaceuticals had a decent quarter revenuewise and made news with deals to market their next drug coming to market, Rayaldee. So the stock is up over 6% after hours! Yay.

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  136. Tesla’s Talk Isn’t Cheap

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  140. Bernie Sanders proposes raising taxes on virtually every American, no matter how little money they make. But he has long argued that Americans will …

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  145. Albo / LL

    puts – your right ( i read wrong line on my acct) .  I have the '18 10 puts at 2.75, and the jan 60 puts at 6.5…

  146. Albo / LL – JAn 20 puts at 6.5

  147. Hit the 2050 mark on /ES for a gain of $473 on 2 contracts.  My buy trigger of 4325 on /NQ hit and will close at  .25% mark or 4342

    The GOGO puts did not fill at 3.8 today

  148. For all the upbeat forecasts about the growth of solar power, this is a punishing year for the industry. And it won’t improve anytime soon.

  149. From the Dutch tulip craze of 1637 to America’s dot-com bubble at the turn of the century, history is littered with speculative frenzies that ended badly for investors.

  150. China’s passenger-vehicle sales rose for the eighth time in nine months, with General Motors Co. and Toyota Motor Corp. reporting increased deliveries in April as dealers offered discounts to reduce stockpiles.

  151. The yen weakened for a second day after Japan’s Finance Minister said the government can intervene to stabilize foreign-exchange markets if necessary.

  152. Mexican drug cartels operating in the U.S. have a problem: getting the profits home. Sometimes they try sending cash through banks, but that’s grown difficult as the government forces financial institutions to beef up anti-money-laundering efforts. So at least one international organization moved its money on a river of molten gold.

  153. Asian commodity producers dropped amid a slump in oil and industrial metals, while Japanese shares advanced as the yen traded near this month’s low.

  154. Natural gas futures have soared since March on speculation that supplies are finally falling after a decade of gains. Production numbers tell a different story.

  155. “The income gap in this country is a major problem and I agree (with certain exceptions) that those that manage capital, as well as many CEOs, are ridiculously overpaid,” Carl Icahn says in statement.

  156. Sotheby’s sold $144.5 million of Impressionist and modern art, its worst showing at an evening sale in the category in New York since the 2009 recession and the latest evidence of a cooling auction market.

  157. On , major market indices will no longer bundle REITs inside of “financials” as an industry classification. Instead, they will reside in a new category called, surprise, surprise, “real estate.”

  158. South Korea’s won fell for a fourth day against the dollar, heading for the longest losing streak in 11 weeks, as concerns intensified that Asian economic growth will weaken and before the Bank of Korea meets Friday to set interest rates.

  159. PCLN potentially looking ripe for a nice upward swing. How about the Jan 17 1200/1250 BCS for $27?. That spread is already $45 in the money with PCLN currently at $1245. You can start to pay down the debit by selling the June 1300 call for $15. Another one of those sales and its a free trade. $1300 has been a common 'pivot' point over recent months. Ideally I'd like PCLN lower in the channel – but could be worth a punt. Clearly not for the faint of heart.

  160. /ES @ 2067 good for a short? Phil?

  161. Jm2c but I like /rb long here at 1.45 holding until Friday. 

  162. Screw it, short /ES 1 @ 2059

  163. Stop over 2060, chicken

  164. anybody shorting /ES?

  165. Shorted 2066 but am out now.

  166. jomptien the markets seam so directly correlated to price of wti right now that I wouldn't short /es unless wti looses 43

  167. out 260.25 /ES, should nhave listened to myself and shorted at 2067 – what a dick I am

  168. out 260.25 /ES, should nhave listened to myself and shorted at 2067 – what a dick I am

    dollar taking back some gains

  169. /ES long at 2058

  170. out at 2061

  171. Good morning! 

    I don't know why we were rallying or why we're reversing but you can see why I have the portfolios locked down in neutral in this ridiculous market! 

    Europe is happy enough, up 1% led by Italy and Spain, who are happy Greece is "fixed" for the moment. Asia was up a bit across the board and we were up half a point but gave up half of that very suddenly.

    2,070 is right where we started the month and it's where we started April too and a harsh rejection there is interesting:

    Futures/Latch – At all times I'm thinking whether or not I would still make the bet (from the new position).  Once I become unsure, I put my finger on the sell (or buy) button ready to cancel the order – you can see me do this in Webinar replays.  As soon as momentum slows or we get near a resistance point, I note the levels I'm watching and raise all the stops and I keep raising them until I'm forced out.

    OPK/Craigs – We'll see if they can finally break out to a higher range. Lots of resistance at $11-12 now. 

    PCLN/Winston – I like that, I think the US economy is picking up and Asia hasn't blown up yet so, hopefully they can get back on track. 

    /ES/Jomp – No but 2,070 sure was!  Always go for the whole numbers when you can.  The way to play that (and I see you went in at 2,059 and stopped out) is to do that quick stop out and then wait for a cross UNDER 2,060 and, if not 2,060, then 2,070 but stick to the whole numbers so you have a good stop line – that's key (assuming you have a reason to be shorting in the first place other than it's at a line). 

    Yodi's playing it right – take 2 points and run! 

    More to the point – Notice how they all made air turns over the pink lines.  That made the Nasdaq the laggard as it tested the pink line and that made it the best play at that moment.  The short was much easier – everyone got rejected at a whole number line (5s are whole numbers to the RUT):

  172. At /ES I saw the DAX dropping very rapidly and at 2066 I shorted as well /ES