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Tepid Tuesday – Waiting on the Fed


Another day until the Fed's pronouncement but already we seem to be drifting aimlessly along with all of our indexes flatlining since yesterday's pumped-up close.  Bloomberg had a nice run-down of the status of the major Central Banks – unfortunately in the context of how totally screwed we all are after 8 years of ZIRP financing where all roads lead to inversion and, most likely, Recession.  

At the same time equities are boiling over at record highs, Team Trump is doing its best to take the shakels off the Banksters by rolling back Dodd-Frank which, as noted by Business Insider's Pedro da Costa, risks "another Lehman Brothers but on a larger scale."  That's right, the banks are even bigger now than they were then.  Simon Johnson, who was Chief Economist for the IMF agrees with what I said on Friday, stating that the latest proposal is "a dangerous plan for financial deregulation [where] the primary beneficiaries would be the big banks."

The current Vice-Chairman of the Federal Reserve, Stanlely Fischer warned the President that rolling back reforms poses a serious risk to the entire Financial System:

"We seem to have forgotten that we had a financial crisis which was caused by behavior in the banking and other parts of the financial system and it did enormous damage to this economy.  Millions of people lost their jobs, millions of people lost their houses."

"The strength of the financial system is absolutely essential to the ability of the economy to continue to grow at a reasonable rate, and taking actions which remove the changes that were made to strengthen the structure of the financial system is very dangerous."

When did this country decide to enter into a suicide pact?  We're tearing down the regulations that protect us from harm and destroying the environment while breaking off long-standing relations with our allies – and it's only Day 144 – not even a baseball season!  I'll be George Steinbrenner would have fired Trump by now.  As noted by Seth Meyers, Trump has yet to score a significant win, he is mainly focused on tearing down the accomplishments of others.  What baseball team would keep a guy like that?

 Will Trump also end up tearing down the economy his predecessor built back from the ruins of the Bush Administration?  Well, dismantling Dodd Frank is a good way to start that process as "never again" becomes "any time now."  

Meanwhile, congratulations to those of you who played along with our Nasdaq (/NQ) longs from yesterday morning's PSW Report (a total waste of $3 here) as we topped out this morning at EXACTLY our predicted weak bounce line at 5,740, which was good for one-day gains $800 per contract – you are welcome.  

Notice we went 40 points lower before going 40 points higher.  According to our 5% Rule™, that's just a normal overshoot and the fact that it was 40 points on the nose and then 20 points before moving higher only served to confirm our hypothesis.  Today, since we did squeak our 5,740, we'll be looking for the strong bounce line at 5,780 (see predictive chart in yesterday's report) for another $800 per contract gain for you.  We need to take and hold that strong bounce line into the Fed on Wednesday in order to be bullish over the weekend but I'm actually expecting a failure – we'll have to see. 

Waiting and seeing turned out to be hugely profitable for our Options Opportunity Portfolio, which you can follow over at Seeking Alpha, as we gained $33,354 (33%) for the month – albeit after losing 7% the previous month.  We knew our positions would snap back and 10% is our average monthly gain so back on track and, as you can see, very much in cash and using very little of our $600,000 in ordinary margin – keeping us very flexible even as our current positions have the potential to gain well over $200,000 (200%) between now and Jan 2019.

We only added one position over the last 30 days because we didn't see anything that compelling to buy and, more importantly, we were perfectly balanced – making money in up or down markets (by Being the House, of course), so we weren't exactly looking for reasons to mess around with it – especially after our May loss (our first of the year).  Now that we're back on track we'll be back on the hunt for more Options Opportunities (hence the name of the portfolio) – especially as we're quickly coming up on the next earnings season.  

One add-on to the OOP that we forgot to make official was our Brazil ETF (EWZ) trade idea from our May 19th Report, when I had pre-called the Temer scandal in an interview with China Global Television that played out exactly as we expected it to this past week.  EWZ, meanwhile, has gone exactly nowhere so our trade idea still stands and today we'll make it official for the OOP (adjusted to today's prices):

  • Sell 5 EWZ 2019 $25 puts for $2.30 ($1,150) 
  • Buy 10 EWZ 2019 $25 calls for $10.35 ($10,350) 
  • Sell 10 EWZ 2019 $35 calls for $5.10 ($5,100) 

That's net $4,100 on the $10,000 spread that's over $8,000 in the money to start.  The upside potential is $5,900 which would be a 143% return on your money and your worst-case downside would be owning 500 shares of EWZ for net $33.20/share ($16,600).   The ordinary margin on the short puts is just $780 so it's a very margin-efficient play as well.

That's how we're able to make such extraordinary returns with such small cash outlays.  Yes there are the risks of assignment but, realistically, Brazil is not going to zero and, even if it drops 50% (super-unlikely), that's still $17 and our loss is 500 x $16.20 = $8,100 so not really outsized compared to the potential reward – especially considering how much more likely one is than the other.  

Don't be put off by long time-frames on the trades – they are there to protect us, to allow us to ride out moves against us and adjust along the way.  Long time-frames for the options don't stop you from making quick profits.  For example, the GM trade idea we mentioned in the May 4th Report was:

  • Sell 10 GM 2019 $32 puts for $4.25 ($4,250)
  • Buy 25 GM 2019 $28 calls for $7.25 ($18,125)
  • Sell 25 GM 2019 $35 calls for $3.60 ($9,000)

It's only been one month out of 20 (5%) but that trade, which is in our Options Opportunity Portfolio, now nets $6,775  with the short puts at $3.60 ($3,600) and the spread at net $4.15 ($10,375) for a gain already of $1,900 (38%) – getting off to a good start but the potential payout from our net $4,875 entry is $17,500 so, on the whole, the trade is generally on track as it should be making 20% a month if all goes well.  Even at $6,775, this is still a great trade with $10,725 (158%) of upside potential – only 100% less than if you came in with us on day one but, then again – you saved $90 by not subscribing for the month!  

Even in this crazy market, there are plenty of great opportunities if you know how to look for them – and how to play them!  


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  1. Phil – Other people might be shy so I'll go first: I wanted to tell you how much of a privilege it is to learn from your every day. You are a shining beacon in the life of so many investors. You have assembled probably the best group of people in the history of financial blogging and you, yourself have done more to help investors in the last 6 months than all previous financial advisors combined.

  2. :-)

  3. And somehow we should make friends with Russia and these news don't worry the current administration:

    Russia's US election meddling was much more widespread than the public has been told, according to a report from Bloomberg. Hackers attacked vote systems in 39 states, accessed campaign finance databases in one state and tried to delete or alter voter data in Illinois. While officials don't believe the attackers changed any results, the situation was serious enough that President Obama took the unusual step of complaining to the Kremlin on "red phone" back channels.

    I wonder why!

  4. Good Morning.

  5. ?Ok, I'll go second. Phil, you're the best!…. did I miss something?….

  6. FTR – Trades ex-divd by .04 today.

  7. I'm with you on that JeanLuc.  I have been around for many years now, was a modest inexperienced investor when I started, and I can honestly say I would not be at the point in my portfolio I am today without the guidance of Phil and JeanLuc and Yodi and all the others I've had the pleased of learning from and, on a few occasions meeting, over the years.  Truly been a great experience. 

  8. Phil

     I thank you for the years of being my teacher, always took the time to answer my questions.

     You are the BEST !

  9. Thank you Phil we appreciate all the work you put in to teach us valuable lessons about investing. 

  10. tsla wtf!

  11. thanks albo!

  12. Muck – "remember it is the elite in charge of the central banks that have brought us down this path and who will buy up the assets at bankruptcy prices when it all falls down. Put the blame where it is due and if you want to stick with politicians, the fact is the R's and D's have colluded to place us in the hole we are in. Pick sides, like the NFL the owners will be laughing all the way to the bank, win or loose. "It's a big club, and you ain't in it."  George Carlin"

    Definition of a value extraction strategy in action.  Carlin was spot on.  "I've got a good mind to go out and join a club and beat you over the head with it." – Groucho Marx in Duck Soup

    "Why don't you join a club and hit yourself over the head with it" – Moe Howard

  13. Quite a reversal in tech so far !

  14. Phil, Nice little dip in NGV7; you still recommend an entry at $3 or  wait for a lower entry?

  15. DJ Ron Baron: Tesla will Hit $1,000 by 2020 — Barron's Blog 

    Jun 13, 2017 09:29:00 (ET)


    By Crystal Kim

    Ron Baron, CEO of Baron Capital, thinks the sun will continue to shine on Tesla ( TSLA). On CNBC's Squawk Box Tuesday morning, the billionaire investor said that shares could climb to about $500-$600 in 2018 and $1,000 in 2020.

    Baron has a starkly different view of the car company than Kynikos Associates' Jim Chanos, who has been short selling the stock.

    Shares climbed more than 2% in pre-market trading to around $367. Taking the midpoint of Baron's price-target range for next year that implies an upside of more than 50%; his 2020 price target implies upside of more than 170%.

    By then, Baron said he expects the company to be generating some $70 billion in revenue and $10 billion in operating profits. Tesla expects to be selling a million cars annually by then.

    Tesla is the fifth largest holding in the $252 million Baron Opportunity fund ( BIOPX). The fund first bought the stock in June 2014 and now has a little over a 5% weighting. So far this year the fund has blown the S&P 500 and mid-cap growth fund peers out of the water. It has returned 26% — minus its 1.41% fee — beating the S&P's 9.5% and 99% of peer funds. In the last three years, however, the fund returned just 8% annually, lagging the market.

    Baron predicts that in 13 years the stock market will double. Investors will make much of this, but remember, both the Nasdaq and the S&P have more than doubled in the last 13 years through the end of May.

  16. @jabo

    He says the same think on CNBC every two months.  Shameless pumper.  Reason it's going up though is the other shameless pumper Adam Jonas who raised his worst case scenario from 50 to 175 and most bullish case at 511.

  17. good morning

    oh Phil u r a blessing :-)

  18. Good morning! 

    Big Chart – Well, everyone is over but the the Nas now.  NYSE 11,765 is well over 11,650 so it's only the Nas that has to clear 5,780 and we can give up on this bear foolishness….  Still, nothing changes until after the Fed tomorrow.  

    Speaking of tomorrow, would you rather I skip the webinar and be on-line all day from my hotel (after my NYMEX interview) or race home after the interview to make the webinar so we can do the Fed live?  Either way, it will be exhausting for me and I can't decide which I prefer.  

    Wow, thanks StJ.  And you have been the most amazing help along the way, both challenging and insightful and I don't thank you often enough for that.  Boy, I can see why Trump likes this stuff…  cool

    Thanks Rperi, QC, Pat and all of your for being here and supporting this little venture.  It's an honor and a privilege, as they say.  

    /NGV7/Jasu – Well, I was in for 2 long at $3.06, now 4 long at $3.03 avg and I really do like the $3 line but tight stops if that fails as it can get ugly.  The same goes for $1.475 on /RB and $45.50 on /CL but, with /CL, we try again at $45, of course.

    Seeing /NG below $3 is worrying so be very careful.  

    When we have a sharp dip like that and we are fairly certain it's over 300,000 barrels of global supply – of which, MAYBE 50,000 barrels would ever hit the US shores – you know it's silly and it's good to jump in against it as soon as the down slide stops (with tight stops).  Those are very likely to reverse as soon as the bots (who trade off keywords faster than the speed of thought) are done running their sell program. 

    TSLA/Jabob – The 2019 $370 ($72)/$500 ($32) bull call spread is just $40 and you can buy 1 for $4,000 and it pays $13,000 (+275%) if TSLA is halfway to $1,000 by Jan 2019.  I've said this to you before but, if you are worried about losses on short-term shorts, long-term longs make very sensible offsets.  You can even sell $230 puts for $21.50 to offset more than half the cost but I'd be a lot more worried about the puts going in the money than TSLA hitting $1,000! 

    Barron owns 1.5M shares of TSLA at about $200 each so of course he's talking up the stock – he talks up the stock every time it needs a boost and every time they put him on every channel and treat him like some independent analyst.  Also, not really a guy you want to follow, though he has $18.5Bn under management:

    Performance of Baron Partners Fund

    Year Return (%) S&P500 (%) Excess Gain (%)
    2016 4.04 11.96 -7.9
    2015 -2.71 1.38 -4.1
    2014 10.26 13.69 -3.4
    10-Year Cumulative 81 (6.1%/year) 95.7 (6.9%/year) -14.7 (-0.8%/year)

    And that's WITH 1.5M shares of TSLA giving him a huge boost!  We are going to get so rich with our hedge fund!  cheeky

    And what Rustle said!  

    NoKo released that kid from jail finally.  Rodman is truly our most effective ambassador!  

  19. Phil –  I have 1 long /DX @ 97.50.  What do you think, should I hold it into the Fed?  

    What will happen if the raise rates to the /DX.  Does it go up?

    On another note, /KC @ buy point again.

  20. just back from Sicily—-beautiful island

  21. ZYNE – ok PSW members….speaking of cannabis…. rustle brought to my attention a small company named Zynerba (ZYNE).  Think GW Pharma, but the drug is given as a patch, not oral.  The other notable difference is GW is in the pediatric indications for epilepsy, ZYNE is in adults with refractory epilepsy.  Drug should work, but…..yes, but, are there differences between adults and kids?  Data for ZYNE are due out in Aug timeframe, so Nov 17.5/25 BCS is $3.  

  22. Dollar/Burr – I'm still long around 97 on a couple of contracts, expecting to see at least 98.50 one day – but don't know when.  I don't see the Fed saying anything to weaken the Dollar, they'd have to completely reverse recent statements. 

    Welcome back Savi!  We can only dream of having your lifestyle.  cool  How's your daughter?  Embedded with the Resistance?

  23. thx Phil..

    can't buy a TSLA call spread or sell a tsla put..i think it is against my religion!

  24. StJ — could not agree more on the PSW community and Phil.  Been here almost 10 yrs…..and while my production has fallen off due to my day job and growing kids….I still read and look at comments every day.

  25. Phil when commenting about Nat Gas and falling below $3, are you referring to the front month or the NGV7 you are in? NGV7 came right upto $3 and so far it has held, so I am thinking that is what you might have been looking at. Right?

  26. Greetings Phil,

    You are the financial equivalent of Christ himself. Words cannot express the esteem in which you are held by the entire community worldwide. You are more revered than the Pope and certainly with a larger following. It is beyond description the esteem in which I and everyone who has ever read your blog hold you. Your words of wisdom will henceforth reverberate through the ages.

    I stand in awe

  27. Wow, you guys are keeping that praising ball rolling with enthusiasm I see! 

  28. Phil--until you get out of your slump I am not going to kiss your tuchus like everyone else is doing on this board today ;-)

    Still, I really do appreciate your hard work and dedication.

    And when FTR recovers and TSLA drops below 300… I will join the crowd! :-0

  29. Thanks for asking about my daughter --I hate talking about her ;-) —she turned down a job with CNN and joined a start up called Crooked Media in LA( all Obama alum)--they do podcasts and I think the main one is Pod Save America—there is no charge to join in—please check it out

    Sicily was fab but would u believe it we land during G-7 and our fearless leader was there too—talk about my timing ;-(

  30. XCO, an oil and gas stock reversed 1-15 today.  Stock is down 10%  A common occurrence on reverse splits.  FTR begins trading on July 10 on a 1-15 basis.  Could be interesting.

  31. vote to skip the webinar and be online

  32. man are they pumping tsla today on cnbc

  33. FTR is actually trading up sharply today, when you account for the .04 dividend reduction.

  34. scottmi/OMER  wheeee!

  35. FTR – I'm thinking of selling some Aug '18 1.50 short calls to cover some of my position…. they are only .07 ish.   July is a strong month for FTR usually, but with the reverse split I think it will be a net wash and sort of hold under 1.5 

  36. "On behalf of the entire senior staff ( PSW membership)  around you [PHIL ], we thank you for the opportunity and the blessing that you've give us to serve your agenda and the American people,"

    sound familiar?

  37. Speaking of lifestyles - Good time to go over my vacation schedule:

    I'm flying to Paris June 29th, arrive 30th so normal day Thursday and maybe late on Friday, depending how soon I can settle down and work but don't expect a full day.

    Monday is July 3rd, most likely I will skip (but there will be a post) as it's a travel day for us, 4th is a holiday and Wednesday is another travel day but I expect to work pre-market and end of day.

    July 6th and 7th should be normalish.

    The following Monday (10th), will be another light day and Tuesday is a travel day but I expect all to be normal the rest of that week (other than my time-shift from London). 

    Back in the command center on the 17th.  

    If this schedule doesn't kill me, it will likely accelerate my plans to move to Europe (but still a good 5 years off).  

    5,740 being tested from above already.  

    ZYNE/Pharm – Sounds good and I recommend SpongeBob when small children are patching, or Fairly Oddparents or Phinneas and Ferb (especially Perry the Platypus) .

    Image result for perry the platypus doofenshmirtz animated gif 

    Image result for fairly odd parents animated gif

    Personally, I'd rather go for the Nov $15 ($7.50)/$22.50 ($5) bull call spread at $2.50 as you are starting out in the money so it's all upside with a lower target and still a nice $5 (200%) gain to be had.  As with all Biotech plays, I treat them like coin flips but, if they go down for silly reasons, THEN maybe a put sale.  Right now the Nov $10 puts are $1.80 and the $5 puts are 0.70 so, if I could get $1.20 for the $5 puts, I'd consider that a goo deal for an offset to the spread.  

    /NG/Craigs – I was talking about our /NGV7 position and the $3 line but the $3 line on /NG (front month) is more significant.  If we're below that 2 days in a row, I'd be very concerned.  

    Blasphemy/CSL – Thanks but now you can't go to Pakistan – you may get the death penalty!  angel

    Well Jabob, you really can kiss my ass in Macy's window when those guys turn around!  cheeky

    Crooked Media/Savi – That's cool, I will check it out although I am no fan of podcasts in general.  Trump must figure you are following him around at this point.  

    FTR/Albo – I can't wait.  Hope it isn't too expensive by then.  

    Voting/Stock – Well, low turnout so far so you are winning by a 1-0 landslide in our exit polling at the moment.  

    Pumping/Jabob – And it's working, look how many people were able to sell to suckers since the open:

    FTR/Batman – I'd HATE to get burned on a surprise bump so I'm just planning to DD at $12 (post-split 0.80ish) – if they fall that far (doubful) and, otherwise, sell whatever new calls seem appropriate.  

    Familiar/Stock – Sounds canned and hollow.  

  38. Phil/ZYNE,

    How did you arrive at the condition that if the $5 puts are at $1.20 then you would sell those? What logic did you use?

    Also I vote for you being online instead of live webinar. hopefully this is little less hectic than the other option.


  39. If M recovers I probaby should kiss your ass in the Macy's window!

  40. Comparing Phil to Christ might be a little much.  I don`t think Phil could walk over the ocean to Paris.  Maybe a comparison to Budda might be more appropriate because of his Zen chill attitude towards the craziness that is `the markets“

  41. Scottmi/OMER  here's why: 

    Omeros Corporation has added a news release to its Investor Relations website.

    Title: FDA Grants Breakthrough Therapy Designation to Omeros' MASP-2 Inhibitor OMS721 for the Treatment of IgA Nephropathy


  42. CDN/Christ  Agreed – Phil is more like the Apostle Paul – doesn't give a f#@k what others think as long as he is speaking the truth.  Definitely Apostle Paul.

  43. Hanj & Scott – Nice winner for you guys !

  44. albo/thanks  Price target is $75.  No kidding.  A double is minimum for me.

  45. Still some opportunities out there. I don't like banks except for GS – which is a unique company in a category of its own. They print their own get out of jail cards. Senior management is sitting in the board room already drinking champagne and toasting Dodd & Frank. I like the following with GS currently at $224:

    Buy Jan 19 210/230 BCS for $11. Sell Sept 17 230 calls for $7.20. So net $3.80 on the $20 spread that is $14 ITM. You happily roll those calls until the cows come home. You could also sell the Sept 17 205 puts for $3.40, and then you have an insane combination which nets you into the spread for $0.40. 

    If one can't make money off a position like that, then it may be time to find another hobby.

  46. CMCT  Did anyone get in this from yesterday?  I am selling today already – +15% roundtrip in a day – I will take it.

  47. Took the money and ran on that pop in /RB. I'll wait for the next dip to get another one. 

  48. OMER Breakthrough therapy = nothing.  Hot air.  Just a headline.  Sorry, that's like saying they granted IND approval for testing in humans….when in fact, it is not even in humans yet.  

  49. Phil/NG – Before it blasts back off and outside your concern of 2 days below $3 -- if it hovers or stays above $3 over the next several months — is it one of those 'beat on the table' ideas for the October /NG strategy? 

     If someone is keeping count, Online over the Webinar

    And, to StJ comments earlier – I concur.   Uh, but, I must confess… He is more like RainMan than Christ. 

  50. Savi – I love Pod Save America. The guys are so good and so funny! Good luck to your daughter.

  51. Pharm/OMER thanks!  But I will take it anyway since I view it as the FDA is now advising OMER as to the best track for approval – and this is only one of their drugs in the pipeline.  While I agree that the headline doesn't move the needle from a revenue/profit standpoint, if we have seen anything over the last 6 months is that perception trumps (see what I did there? haha) reality.  I will trade this like any other, technicals.

  52. IRBT — I have been in this one since Phil originally recommended.

    Currently stock is $99.15  -- Dec 70/80 Bull Call spread is $8.00  Yields 25% in 6 months = 50% yr.

  53. FU Ron Baron!!!!!!

  54. Count me as a vote for online as well since I haven't been able to do webinar lately 

  55. Phil


     I vote for you being online instead of live webinar.

  56. Much to our consternation and in line with our continued Natterings, the type of bank lending which has positive economic impact C&I (commercial and industrial, as opposed to mortgage and market lending, which does not) has fallen off a cliff. 

    Further Central Bank tightening will only push this into negative territory, that much faster.  With the fed raising the short end,  I have my suspicions as to why commercial whales have gone net long ED eurodollar (betting on lower LIBOR rates) to the tune of $3T notional.  

    Global Industrial Production and import volume growth peaked and through contraction are headed into a trough. With the US and Euro-peon lenders falling into negative growth, 98% of global C&I lending is being generated by China, and they can't even keep up enough to support their collapsing house of debt/GDP cards.

    Our Q1 GDP read +1.2 might be the largest this year, Q2 should clock in around 1% with the shit hitting the fan in the second half of this year. If the stock market corrects, economy stalls further and/or there is a dearth of cash, there may be flight to safety in longer duration bonds (lowering long end rates at the same time).

    What does borrowing at higher short rates and lending at lower long rates mean? Spread and margin compression for banks, viz. further contraction in lending and available funds.  This could affect volatility, the dollar and equities.  

    And now for the bigger picture, in the direction we are headed in at current velocity, a potential crash landing later this year and Out.

  57. I vote for the webinar, get live commentary.

  58. My vote, ONLINE ONLINE ONLINE ONLINE FU SEMINAR (at least this time and Out.)

  59. I was reading stocktwits earlier, always gives me a laugh on TSLA, and someone said Ron Baron from Barron's loves TSLA.  It's not even spelled the same way.

  60. OMER/Hanj – nice indeed! I've been in with a small diagonal, working beautifully! Was thinking I would close it (short side expires june) but now just may roll the short leg out for credit into a vertical.  Will add to position when see what may settle down to. Nice to see this breakout from consolidation!

  61. Nat

    today somebody buys 124,700 December FXE $113 calls for .76 to .80

  62. my vote is for online too

  63. STJ—thanks --great to hear that

    spread the word the more followers the better for them

  64. Phil, what's the best way to play for a rise in nat gas during the hurricane season?

  65. Stock/Nat Gas – Phil mentioned the OOP CHK play yesterday.

  66. Jabo – "Phil--until you get out of your slump I am not going to kiss your tuchus like everyone else is doing on this board today ;-) "

    Thank you for my ROFLMAO of the day.  As for Rainman, Ap Paul, Buddha or the Nazarene, well with all Phil does, he's more than a bird, more than a plane, more than some pretty face beside a train, and I'm sure it aint easy being he.  Thanks and Out.

  67. Winston, I like your GS play. Are you in it?

  68. Phil/  Do you recommend this trade still or a better one on UNG

    Buy 20 UNG Jan $6 calls at $2.05
    Sell 20 UNG Jan $8 calls at $.95
    Sell 5 LNG Jan 19 $40.00 puts at $.450

  69. Pharm/BCLM – Is this still one of your top picks or has anything changed?  What combo do you like here?

  70. thanks rustle..

    seems like everyone is pounding the table on them today.

  71. Superman/Naybob – ah.. brought to mind my very favorite "Superman" song, by Grace Hearn & Michael Savage from their "Messy Blue Ending" album. Find it if you can (or just find and buy the CD). Sadly, not on youtube, but this song from the album will introduce their sound:  

  72. jelu – I was already in the BCS from a couple of weeks back. I may add, but I already have some covers in place (they have been rolled a fair few times). As for selling the puts my instincts say hold fire as I have been consistently wrong on when this market is going to pull back. But if I did not have any existing GS positions I would certainly take this trade. I'm actually long GS 170/190 and 170/200 BCS from way back. They are part covered with July 17, 200 short calls – which I am happy to roll. I tend to look at my positions from a macro points of view. Money I make on BCS, short puts and short calls are all in a pot which gives me fire power to leverage and reposition. I accept that sometimes I may get 'offside' – but then it is only a question of money to get me back 'onside'.

  73. Stocky – "today somebody buys 124,700 December FXE $113 calls for .76 to .80"

    It's a relative play, betting that liquidity issues spawn the dollar carry, pulling the dollar down.

  74. ZYNE/Pat – Given that I wouldn't mind owning the company for a toss (as I like the idea) and the $5 puts are now 0.70 and the $10 puts are $1.80, then somewhere between the two is all I'm going to reasonably expect to see on the $5s so that becomes the target price.  As to why the $5s, because if I sell the $10s for $1.80 that's net $8.20, which is much more than net $3.80 and I'd much rather start at $3.80 than $8.20 if I'm going to own a biotech which I only own because it disappointed people and my puts were assigned, right?  

    And yes, online won't be as crazy a day so I guess we'll move the Webinar to Thursday.  

    M/Jabob – As long as my ass is kissed, I will be pleased!  cool

    Comparisons/CDN – Hmm, fat guy who sits around pontificating or skinny guy who eschews material things and wonders in the desert?  I think I made that choice long ago!  

    jesus buddha websize

    Such important matters we discuss….

    Paul/Hanj – "I am not saying this because I am in need, for I have learned to be content whatever the circumstances. I know what it is to be in need, and I know what it is to have plenty. I have learned the secret of being content in any and every situation, whether well fed or hungry, whether living in plenty or in want." - Philippians 4:11-13

    Speaking of winners, /NQ tapped out shy of goal number 2, making another run at it but not looking good despite Dow 21,270.

    GS/Winston – I'd like them more if they were cheaper but we may never see $200 again.

    CMCT/Hanj – Very nice, great call, thanks!  



    CMCT  Thinly traded so only for those who want <1000 shares but it just declared a nice speical divvie of $1.98.  Even with the move up today that leaves plenty on the table.

    /RB/Jeff – I agree, I've reduced back to 2 and now with much lower basis.  

    /NG/Joseph – Keep in mind this is A LOT of money at $100/penny but consider the odds of something unexpected (fresh supply, low demand) taking the price down 0.50 vs the odds of something unexpected (hurricane, strong demand, more exports, loss of supply) taking the price up 0.50 or much more.  Given that we KNOW exports are up and we don't see any major negatives ahead – the odds seem to favor a bullish bet and, since we're low in the channel – even if it were just 55/45 it's worth betting 100 times and ending up +10 but it's probably 60/40 at least and that's +20 so if we play to win or loss $100 100 times over the next 6 months (going long on any daily dip) and we come out +20, that's a $2,000 gain.  If we then manage our trades correctly and let the occasional clear winners run while making sure our losers don't get out of control, we can easily double or triple those returns.  You can't win if you don't play and I simply try to pick plays where the odds are in our favor.  

    "Guessing what the pitcher is going to throw is eighty percent of being a successful hitter. The other twenty percent is just execution."  - HANK AARON

    "No matter how good you are, you're going to lose one-third of your games. No matter how bad you are, you're going to win one-third of your games. It's the other third that makes the difference." - TOMMY LASORDA,

    IRBT/Zten – Sorry I let them go.  Turned out to be a great pick for stock of the Century, even with the split.

    GDP/Naybob – You are WAY below current consensus of 3%.  I think a miss but not a 66% miss. 

    Nat gas/Stock – Well /NGV7 for sure, just $3.01 at the moment.  UNG is not a great ETF, too much decay so LNG or CHK are the other options, both in our portfolios.   LNG is strong and CHK is weak so I'd go CHK:

    An adjustment to our OOP play for current prices would be:

    • Sell 20 CHK 2019 $5 puts for $1.30 ($2,600) 
    • Buy 20 CHK 2019 $3 calls for $2.50 ($5,000)
    • Sell 20 CHK 2019 $7 calls for 0.90 ($1,800) 

    That's net $600 on the $8,000 spread that's $4,000 in the money with $7,200 (900%) upside at $7+.  Worst case is owning $10,600 worth of CHK ($5.30), so about the current price.  

    LOL!  Uber is renaming their War Room the Peace Room!  Quick, get the Nobel Prize ready… (and fire that PR firm)


  75. Scotty – Grace & Mike  - AKA Hand 2 Mouth – Good stuff.

  76. Phil/Phillipians  AMEN brother! And, HAHAHAHAHA – "fat guy pontificating"  - only here do we discuss those topics that are a no-no elsewhere: politics? check.  religion? check.  jabobeast lives in his mommy's basement? check.

  77. FU hanjongin!!!!

  78. ;-)

  79. Jabo/hahaha  It's ok.  I've been in your mommy's basement also, as well as other parts of the house.  hahahahaha!!!

  80. yeah… you probably picked up her garbage too

  81. Cheap GS / that's why I like the fallback plan of always cashing out the long calls when they drop to the price paid for the spread. In the case that GS would fall, then I would be happy to cash out and establish a new spread where I would get that sub $200 price. That's why I hesitate to sell puts as it gives me less flexibility on the way down.

  82. jabo/hahahahaha  Thats funny!

  83. ETSY – Has traded  7300 Sept 15 calls today.  Apparently, somebody agrees with me that they are likely to get bought out.  (And soon according to their play.)

    I'm short a bunch of 2019 $5 and $10 puts.  Hope they're right.

  84. Gin – "Jabo/hahaha  It's ok.  I've been in your mommy's basement also, as well as other parts of the house."

    Jabo – "yeah… you probably picked up her garbage too"

    Momma told me that's not the way to have fun.

  85. Ubermench/Naybob:

    "Once upon a time, in some out of the way corner of that universe which is dispersed into numberless twinkling solar systems, there was a star upon which clever beasts invented knowing. That was the most arrogant and mendacious minute of "world history," but nevertheless, it was only a minute. After nature had drawn a few breaths, the star cooled and congealed, and the clever beasts had to die.

    One might invent such a fable, and yet he still would not have adequately illustrated how miserable, how shadowy and transient, how aimless and arbitrary the human intellect looks within nature. There were eternities during which it did not exist. And when it is all over with the human intellect, nothing will have happened." – Neitzche

    UNG/Rookie – See CHK above.  

    Superman/Scott – I like Laurie Anderson's version.  

    I always liked this monologue on the subject:

    ETSY/Albo – A guy on Fiver says he can build me ETSY for $5.

  86. ETSY – Phil I don't follow.  What does that mean ?

  87. SuperAnderson/Phil – Hah! a new song I can torture my kids with and again reaffirm their belief that their dad is just weird when it come to music and movies I find like: Rubber  ;-)

  88. AAH !  Never mind – Fiveer.

  89. Phil – superman song — egads! Horrible, where do you find this stuff??….some mother's basement? :)

  90. Oh, markets? rolling out some in the money calls covering IRBT, monitoring expiring short puts like IMAX $25s, and T $37s..   BORING.. but it's working for me.

  91. Scotty – Rubber – sounds like somebody read Alan Dean Foster's 1986 "Into The Out Of"

    Warning: If you dare to read it,  afterwards you can't decide if your having more problems with toilets or with the tire bits on the roads/highways. And make's you never want to kick a tire on the side of the road and Out.

  92. Scott – Congratulations for still being in IRBT. 

    Doing the same thing on part of my CTL position.  I don't want to lose the locked in 8.75% yield.

  93. IRBT/Albo – totally outran me earlier. one of those bite the bullet rolls…  from June 35s up to Dec 70s. Why? pretty sure 70 is secure and if not roll again then and let go, is at least an additional 9% good to me for 6 months commit. The price of success?

  94. Write up for TV tomorrow:

    So far, in our new educational series, we've put $10,100 to work and we're up $840 (8%) in our first two months.

    Last time I was on (5/30) we talked about hedging the Nasdaq Futures using /NQ as it crossed the 5,800 line with tight stops ($100 loss) and again at the 5,900 line and the first time it didn't work and we lost $100 and the 2nd time it didn't work, and we lost $100 but the 3rd time, at 5,900 – it did work spectacularly well and we got a 200-point drop that paid $4,000 per contract for a net $3,800 per contract gain:

    We also discussed using a bear put spread on the Nasdaq ETF (QQQ), buying 10 Jan $147 puts for $9.50 ($9,500) and selling 10 Jan $136 puts for $5.05 ($5,050) for net $4,450 on the $11,000 spread.  

    QQQ fell about $4 since the 30th and the spread is now net $5.50 ($5,090) for a $640 gain (14%) so far against the 2.5% drop in the Nasdaq.  That's one example of getting good leverage.  

    We wanted to discuss leverage today so let's talk about how we can limit our risk while still having good upside with a speculative play on the Pharmacy play, Zynerba Pharmaceuticals (ZYNE).  

    ZYNE makes transdermal delivery systems (skin patches) for cannaboid therapeutics (pot) to help treat epilepsy and they are conducting a Phase II trial that, if it goes well in August, could lead to explosive growth.  Or it could fail and they die – so it's the kind of play where we want to limit our losses.  

    Rather than buying the stock for $18, we can instead go past our expected August event and buy a bull call spread that limits our downside risk:

    • Buy 4 ZYNE Nov $15 calls for $7.50 ($3,000) 
    • Sell 4 ZYNE Nov $22.50 calls for $5 ($2,000) 

    That puts us in the $3,000 spread for net $1,000 and our loss is limited to the $1,000 we put in yet our upside potential is $2,000 (200%) at $22.50.  In order to make $2,000 at $22.50 you would need approximately 400 shares of stock for $7,200 and limiting your loss to $1,000 would mean you would have to set a stop at $15.50 and phama stocks are very volatile.

    Using the spread does cap your gains but it limits your losses and gives you great leverage (7:1 in this case).  Not only that but, because you are buying 4 $15 calls for $1,000 ($2.50 each), your break-even is $17.50, which is 0.50 below the current price – giving you a discount to buying the stock right from the start.

  95. Phil – late to check in here today – catching up on all the comments.

    Just want to say thank you for all the advice and teachings…

    Wait and watch on the markets, although feels like the calm before the storm.

    Rolling my butterflies, only concern is MSFT – but that is for July 21 

    and as you always say - patience. 

    These days, it might take no more than a day for things to reset quickly - as we know from Friday.





  96. NGV7 just looks so weak and trying to break the $3 channel. It's a 'mind the gap' scary ride to $2.5.  What was happening in early 2016 to bring it to $2.43? Is the 5% rule in play here?  Finally, with a recession looming over the horizon, won't the demand narrative take a hit?

  97. Hi Phil, it's been such a great privilege to serve your amazing agenda. Thanks so much for the tremendous opportunity! 

  98. Jeff curious where you stopped out on RB ? I got out at 1.49 with $500 profit but feel like I was impatient now at 1.50. 

  99. online over webinar

  100. ~~Shale Gas Giants Battle for Dominance as U.S. Supplies Surges

    ~~The two biggest shale gas deposits in the U.S. are producing a record amount of the power-plant fuel, signaling that a fight for market share will intensify as supply outstrips demand

  101. Craigs, I stopped out at 1.4930, so you did better than I – nice job!! 

    I don't worry too much about missing the run after I stop out anymore, I decide where I'm getting out up front and then do it when/if it hits my target. 

    I plan to watch and see what it does. If we get back to 1.485 I'll get interested again. 

  102. Keebler Elf is already lying his ass off in his opening to Congress.

  103. Frontier Communications tenders up to $800 mln for for certain series of notes

    Font size: A | A | A


    3:48 AM ET 6/13/17 |

    This consists of the following securities: 

    8.875% Senior Notes due 2020; 8.500% Senior Notes due 2020; 9.250% Senior Notes due 2021; 6.250% Senior Notes due 2021; 7.125% Senior Notes due 2019; 8.125% Senior Notes due 2018 

  104. Craig's, you did better on the profit as I had a higher entry – just to clarify.

  105. the TSLA blip is over. Back to running for 500

  106. IMAX – btw, the expiring $25 puts were sold on 5/31 for .97 which is 3.8% of full-margin requirement of $2,500 (or actual reserve needed as I would like to have them put to me). 3.8% in 17 days is a whopping 83% annualized return on those tied up funds. If I don't get the shares, can't wait to write some more!   ..and thank you, Phil, for the endless coaching on not just options, but on valuations and value stocks. Especially the rule about selling puts only for shares you REALLY WANT AT THAT PRICE!

  107. Sessions is shoveling deep in this intro.  He has contradicted himself and Trump on a few instances already.  Hope the Senators can pick up on it.  A good trial lawyer would immediately.

  108. Torture/Scott – LOL, I do that too but I HOPE there's no more to Rubber than that trailer.  As I have girls, I never send them a title I don't want them to Google!   When we are on trips we all have turns picking songs and that one is both long and annoying – I use it as payback if they play rap.  

    Superman/Latch – There was a very cool hippie chick who lived next to me in college and she loved Laurie Anderson and I loved hanging out with her so I learned to like it too!  That music is kryptonite to Conservatives for some reason…

    Reset/Learner – Yes, very much watch and wait until tomorrow, at least.  Watching Sessions testify now (he seems outraged).  And thanks.

    /NG/Latch – The 5% Rule doesn't tell you where something is going, only where it's likely to stop along the way.  It's like me saying if you are driving up from NYC to the Catskills, there's a good chance you'll stop at the Red Apple Rest, because it's right on the way and it's 30 miles from any other food or bathroom in either direction.  IF you are going that way, THEN it is likely I can predict your behavior – that's all.  

    Image result for red apple rest

    How famous is it?

    Image result for red apple rest ny

    Despite the Red Apple Rest closing down, I don't think there's a recession looming when there are Help Wanted signs everywhere.  Something big would have to derail us and there are plenty of Black Swans flapping around but none seem ready to land.  I'm just expecting a correction this year, nothing more.  

    Thanks Ilene but "serve your agenda" makes it sound a bit sinister!  devil  It's thanks to you and Greg running the rest of the site so well that I have time to concentrate my best efforts in the chat room – thanks from all of us for that!  

    /RB/Craigs – Notice above I said I was REDUCING my longs.  That's the best way to go, scale back out and then play from your new position (assuming you are still bullish, of course).

    Sessions says he will defend his honor – like he's a Southern Bell!  Then he goes on an anti-drug rant which has nothing at all to do with why he's there.  

    IMAX/Scott – You are very welcome.  

  109. Phil – RB – any thought on why it is struggling to break and stay above 1.50? 4th weekend is around the corner :)

  110. /RB/Bulls – Because traders aren't total idiots.  After the 4th, then what?  They don't want to be stuck with a lot of product ahead of no more catalysts and a glut that is not abating.  

    Click for
    Current Session Prior Day Opt's
    Open High Low Last Time Set Chg Vol Set Op Int
    Jul'17 46.01 46.51 45.56 46.44 15:04
    Jun 13

    0.38 694649 46.08 290323 Call Put
    Aug'17 46.22 46.71 45.79 46.65 15:04
    Jun 13

    0.35 289693 46.32 396386 Call Put
    Sep'17 46.42 46.92 46.03 46.87 15:04
    Jun 13

    0.33 84327 46.56 253258 Call Put
    Oct'17 46.64 47.10 46.23 47.05 15:04
    Jun 13

    0.32 31131 46.75 99822 Call Put
    Nov'17 46.91 47.29 46.45 47.24 15:04
    Jun 13

    0.31 33759 46.96 104762 Call Put
    Dec'17 47.02 47.47 46.65 47.41 15:04
    Jun 13

    0.30 69526 47.15 308479 Call Put
    Jan'18 47.46 47.65 46.92 47.58 15:04
    Jun 13

    0.29 16999 47.34 80073 Call Put
    Feb'18 47.44 47.80 47.05 47.80 15:04
    Jun 13

    0.29 10486 47.50 37815 Call Put

    That's a LOT of front-month (4 months = 1.04Bn barrels) contracts and then a whopping 308M already in Dec is going to become a problem in Sept, when they start rolling into it.  

    Wow, TSLA back to $375!  

  111. BLCM…absolutely into them.  Selling Nov 15 C and 7.5 Ps. I have the stock for net 12.75. Been selling calls and puts against it.

  112. I assume in general they move together, what is the correlation between CL and RB?

  113. Jeff I understood. Phil I was concerned about RB I guess and having watched many times as a position reversed while I sat staring and thinking it was coming back my way, or couldn't get my order in to stop out before a hard won profit evaporated, I say again, I have trouble knowing when to finish a trade. I kept thinking oil was going higher today (as it is  now) only to see it fail 46.40 several times . At least today I was smart enough to only give back about $100 of my $500 profit there . The problem with not having conviction or Phil money! I still expect it to be back at $50 after big "surprise " draws in the inventory this week or next as it may still be too soon to pop for July 4. 

  114. looks like tsla will hit another new alltime high this week,,, dangit!!!!

  115. Rubber/Phil – it's an awesome movie (if you like that kind of thing)! my youngest watched it with us when he was 14 (turning 17 this summer). Nothing 'inappropriate" that would have had him leave the room! he has since shared with a couple of his friends from school.. who are appropriately amazed at the strangest movie they could never have imagined. Also, my son's name is Robert (which we don't learn about the tire, actually, until the closing credits!) which was an added tickle. ;-)

  116. Foster/Naybob – I've read a few Foster titles back in the days way back.. but not that one. Thanks, if I see it at my favorite bookshop (which is any local, small, quirky, used bookshop) i'll grab it.

  117. Phil – Nietzsche - yeah I hear ya, in the big scheme of things, but at least we got to be "here" for the time being.  As long as when I wake, if I can draw a deep breath with eyes closed, and my elbows don't hit wood, it's all good in the hood, as the alternative or promised "there" seems much less attractive.

    Outward stretches the quest for truth. Stars without end. Timeless infinities. A billion, billion galaxies. Man's imagination reaches out and out, while betimes the farthest reaches of knowledge are found in the smallest places. There is a theory that Earth and sun and galaxy and all the known universes are only a dust mote on some policeman's uniform in some gigantic super-world. Couldn't we be under some super-microscope, right now? Wolf 359 – a concept used in A Ticket To Ride? and Fermi's Paradox

    Phil – Your Super, Man.  And Out.

  118. Phil 5%  ~~The 5% Rule doesn't tell you where something is going, only where it's likely to stop along the way

    A gem bullet point – thanks

  119. Phil//  Since there isn't much of a catalyst to propel gasoline/crude after July 4th and as the supply outstrips demand any suggestion for oil short for those who are not playing the futures? Maybe USO short! THanks.

  120. Correlation/Bulls – If you make more gasoline, you use more oil so pretty direct but the amount of oil that's shipped is in speculation of future gasoline use so they can diverge quite a lot at any given time.  

    Oil/Craigs – It's not July 4th that matters at the moment, it's the expiration of the July contract on I think the 21st, which would be 6 sessions after today and, with 290,000 open barrels, they have 270,000 to get rid of including today is 38,000 a day so we should track whether they are doing well or poorly each day to figure out how much rollover pressure they will have in the coming week. 

    Wolf/Naybob – All we are is dust in the wind, my friend.  

    Although, as a positive guy, I'm more of a Zaphod fan - bad news for you when I die but I'm pretty sure this whole thing is in my head…

    OK kids – I'm off to NYC, will be on TV in the morning and then working from Trump Tower – belly of the beast and all that.  

    Oil short/Rookie – I'm looking for longs at the moment but, after the 4th, then we'll look for shorts.  

  121. I was out most of the day and missed the thank Phil day… I have no desire to kiss anyone's butt (but I won't judge if you do, just please keep it private) I will however keep paying my dues which is my way of saying you're worth every penny… maybe more depending on who's team happens to be in power at the time :) D's you understand, R's throw you curve balls, harder to hit those homeruns.

  122. /RB back to 1.485.  Bought 1.

  123. Well API says another build! 2.8 million barrels of crude and 1.8 of gasoline. 

  124. Really glad I didn't have a position into api today. EIA will be very interesting tomorrow 

  125. Phil, that was my impression of Reince Priebus - so, yeah, a little sinister. smiley

  126. Hospitals Are Dramatically Overpaying for Their Technology

  127. O Superman/Phil – oldest son just returned home from college yesterday. He wasn't impressed with Anderson's song and countered with Lazyboy:

  128. Crisis in the Gulf

  129. Trump, in Zigzag, Calls House Republicans’ Health Bill ‘Mean’

  130. Wall Street Veteran Leads Search for Next Fed Chief

  131. Trump Pondered Firing Mueller; His Aides Pushed Back

  132. Trump’s Personal Lawyer Boasted That He Got Preet Bharara Fired

  133. The Fire reported in London today is a social housing tower block run by a council which looks after an area of London where the average price of a property is $10 million.  For several years the residents association has been warning it was a massive fire risk … This is the end game when the rich/elite/ etc ignore the masses.  You don't need a Hunger Games when you can just put poor people in death trap homes and wait for nature to take its course (Flint anyone?).  Phil's right when he says you need to be rich to survive.

  134. more new highs for TSLA…dangit!!!

  135. Good morning!

    Terrible fire in London – you don't need terrorism when we are so terrible to each other.  As Malsg notes, for many years people have been saying the building is a fire trap and needed to be brought up to code but that would inconvenience the ultra-wealthy people who live in the area as it would have cost them about $10 each to give people decent living conditions in their own neighborhood.  One of these days, people will rise up and revolt….

    As we feared, /NG did not have good support under $3 and down to $2.93 now with /NGV7 at $2.96.  I've got 6 long at $3 and hoping to get back to $2 even.  The API report took it down along with oil and /RB.  Oil $46 is a good long, /RB $1.48 is good too but this is for quick money as there are still a ton of contracts to roll.

    Lazyboy/Scott – Wow, so now we're just our parents telling them to turn that crap off and ranting about how, in our day, people used to play actual drums and a record player was not an instrument…

    TSLA $380!

    Asia was flat and Europe, like our Futures, is up slightly ahead of the Fed.  Testing 1,430 on /TF – there's no reality here anymore, we'll just have to go with the flow.  /NQ right at the strong bounce goal at 5,780 but the money that flowed out of tech just went right back into other stocks as there is literally nothing else to do with money other than buy equities (or Bitcoins).  

    Watch /NKD at 20,000, above that is bullish.