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PhilstockWorld May Portfolio Review (Members Only)

$1,800,221 – that's up 300% from our $600,000 start on our paired portfolios back on 11/26/13.

We haven't made too many changes in the past 30 days but we still gained a very nice $47,535 since the April Review ($1,752,686) on our paired Long and Short-Term portfollios.  While $47,535 is 8% of our original, it's "only" 2.7% of our April total so yes, we are playing a bit too conservatively for this market – despite putting up some very impressive numbers.  

The S&P 500 was at 2,360 on April 9th and now 2,433, so it's up 3.1%, which means we're now one of those funds that is underperforming the S&P 500, right?  But that's not the purpose of our portfolio strategy – clearly we outperform the S&P over the long haul and that's because our hedges keep us (mostly) from losing money in the downturns.  Being safe from downturns has a price though, when the market is gaining at an 18% annualized pace – we aim for a more conservative average than that.

Since April 9th, we've added new longs on ABX, DIN, EWZ, IMAX, SEE, SKT, TLRD and VZ and, if you are having trouble recognizing some of the symbols – well that's my point – we're running out of cheap stocks to buy at these days, so we either have to drink the Kool-Aid and buy high and hope to sell higher or we can wait PATIENTLY for a pullback that gives us better entries on better stocks.  

Going back to last July's review, when at S&P 2,120 I asked "Are We Too Bullish?", we were at $1,519,454 so we're up about 20% from that total but keep in mind we still trade the LTP like it's a $500,000 portfolio with 80% of our money in CASH!!! and gaining $300,000 on $500,000 is 60% – that's why our growth is slowing now, the way we're plaing it, 20% a year is just fine!  The key is to learn how to CONSISTENTLY get those 20% returns, so they can compound over time.  $500,000 compounded at 20% for 20 years is $19,168,799 – that should be enough to paper anyone's retirement, right?

The trick is to learn how to make that 20% annually without having dips along the way that throw you off track.  That's why we have kept our portfolios running, I want people to see how the long-term performance compounds over time – something we were having trouble getting across when we closed the portfolios just because they doubled up (our old goals).  

It's the hedges that are costing us, of course, our Long-Term Portfolio itself was just over $1M last July so that's up 40% on its own – as it should be with all bullish positions and using our "Be the House – NOT the Gambler" strategy for leverage.  The Short-Term Portfolio, on the other hand, has lost $100,000 (20% of the STP) since last year as hedge after hedge has bitten the dust in this almost endless rally.  That's the running cost of our insurance and it's hard to stay enthusiastic about spending $10,000 a month on protection that seems to never be needed but it's that one time we need it that spells the difference between staying on track towards $19M or having a setback that costs you 2 or 3 years of gains.

What we are seeing here is exactly what is supposed to happen in a bull market, the STP, which dropped $100,000 is effectivelly transferring it's earlier gains (400%) to the LTP, which gained $400,000.  On the way down, it's the STP which makes the outsized gains and the several major dips we've had in the past 3 years are what led the STP to gain that 400% but, since last year, there hasn't been a major dip that lasted long enough for us to cash in gains for the STP (nor take losses in the LTP) – so the money flows back naturally to the LTP.  

Our Options Opportunity Portfolio, on the other hand, is self-contained but follows a very similar strategy to our paired portfolios but it has two major advantages.  Advantage one is that it's smaller so the $150,000 it's gained in the past year is over 100% of the portfolio's value since last July and advantage two is that we often wait for an LTP position to fail and add it to the OOP only when we're already doubling down at a cheaper price – which is still the best time to enter PSW trades! 

Copyright June 17, 2017 www.philstockworld.comThe Butterfly Portfolio is, by design, our slowest mover as our aim here is to be self-contained and not at all exciting – a real retirement strategy.  Last July, the Butterfly Portfolio was at $268,662 and now $354,081 so up $85,415 is 31.2% but, as with our OOP, we sill play it like a $100,000 portfolio and 90% is an impressive gain from where we started in year 3.  As I said last year (and it's still true):

BALANCE is what it's all about folks – if you have balance, you will be happy and your returns will be steady.  There is nothing more important to work on if you want to be an INVESTOR, rather than a trader.  

That brings us our Long-Term Portfolio (LTP) review, which we finally completed on Friday.  As noted above, we just crossed the $1.4M mark from our $500,000 start on 11/26/13 so we're way above track for our $19M goal since $500,000 compounded for 4 years at 20% is "just" $1,036,800.  Again – and I really can't stress this enough – if you practice gaining 20% CONSISTENTLY – you will do better over the long run that almost anyone who goes for 100% gains because the failures, like the successes, are spectacular.  Here's an easy proof with the rate calculator – Buffett began with $2M 60 years ago (1956) and 20% compounded for 60 years is $112 BILLION - and that's how rich Buffett is so, if you want to tie the World's Greatest Investor – do it our way (and try to live another 60 years).  

Actually there's good news on that front because how often do you hear about a dead Billionaire?  When you are that rich these days – they can cure almost anything!  

Long-Term Portfolio Review (LTP) Part 1:  The main point I want to make is this is getting easier, not harder, as time goes on because our mature positions, like the Butterfly Portfolio, simply crank out gains from premiums we sell and dividends we collect.  They've long ago been paid for as we're back to $1,073,540 in CASH!!!, which is twice as much as we started with.  

If you are new at PSW, I would strongly encourage you to go back to our first cash-out review (which summarized all of our trades at the time, after 6 months) and then go forward a year to see how slowly we add things.  Generally we'd sell one or two puts a month and, if the position got cheaper – we'd set up a bullish spread to go with them (assuming we still liked them).  

At the time we had AAPL, ABX, BRCM, BTU, CAKE, CAT, CLF, DBA, DE, EBAY, EGLE, FCX, GLL, HK, HOV, INTC, IRBT, LGF, LULU, MSFT, NLY, RIG, RRD, SHLD, SLW, SPY, T, TASR and TWTR and we were up 19% in 6 months and were worried about a correction (as usual).  Not too different than what we do now with a lot of the same stocks – it's the discipline that's important to develop, not the positions.  "The Man Who Planted Trees" tells you everything you need to know about running a long-term portfolio!  

Step one in building a portfolio is, of course, identifying stocks you want to buy (and once you buy your first one, all the rest need to balance with it!).  Step 2 is NOT BUYING THE STOCK.  That's one people seem to have trouble with.  Why would you buy the stock when you can sell a put and give yourself a discount?  60% of the time, that's how we initiate a position in the LTP.   Even when we we do start with a spread, we keep it small so we can easily double down – TWICE – if the stock gets 20% or 40% cheaper.

If you start with a 20% discount ($100 becomes $80) and then you don't add more unless it's down at least 20% ($80 + $64)/2  = $72 avg on 2x = $144) and then you don't add more unless it's down at least another 20% ($72 + 50)/2 = $61 avg on 4x = $244) you end up with 4x at close to 1/2 of what you would have paid ($400) if you jumped right in at full price.  That's why we're THRILLED when a stock we like gets cheaper – even if we're already "stuck" with shares.  

  • ABX – Loose leg of spread below, we will deal with it later. 
  • AGNC – On track.
  • ATVI – On track. 
  • BBBY – Here's one that got cheaper but still $36.27 and our net is $35.50 so we're still good but I do like BBBY and, rather than commit to more puts, let's just add a bull call spread while they are cheap like 10 2019 $30 ($8.50)/$40 ($3.85) bull call spreads at $4.65 ($4,650) and those pay $10,000 if all goes well and we already collected $4,500 from the short calls so our net cash outlay is now $150 with $9,850 upside potential and we're already $6,270 in the money.  See why I like it when things get cheaper?  Great for a new trade, of course.

  • BRK.B – I WISH these would lose money so we could buy more cheaply!   On track.  
  • CMG – On track.
  • DIN – New, good for a new trade.  
  • DNKN – On track.
  • ESRX – Good for a new trade.  
  • GOGO - We cashed GOGO on 5/31, I forgot it was in the LTP too – will be fixed.  

  • INFN – On track. 
  • KATE – No point in these anymore, let's buy them back and clear a slot.  
  • M – I still like them, good for a new trade.  (not enough to add a spread, though).  
  • MON – On track.  China starting to buy from them – huge.  
  • NLY – We were hoping they'd get cheaper but they didn't.  Our consolation prize is $8,250 for not owning them.  On track. 
  • RH – On track 
  • SBUX – On track. 
  • SEE – On track
  • SKT – Good for a new trade
  • SKX – On track
  • SPWR – On track.
  • TGT – On track
  • TLRD – Good for a new trade
  • TWX – On track
  • VZ – Good for a new trade
  • WATT – Good for a new trade.  

We have 25 short puts and, if they all expire worthless, we'll keep/profit about $90,000 – NOT including the profits we've already made (maybe $40,000).  This is that tree-planting part, every month we find something to sell for about $4,000 and some will become positions and most will simply end up turning into cash, which we use to buy more positions.  After 2 years, we have 24-36 in progress at any given time and it's $50,000+ in bonus profits each year, which is 10% of our original principle.  

It's a totally passive way to make money, very low-maintenance and your worst case is owning good stocks at great discounts, which then drops them down to one of the trades below…

  • ARR – It went up and up and up and we never had a chance to sell the puts.  We'll end up getting called away at $22.50 but, until then, we get the monthly dividends.  

  • CM – They have finally come back down and we can sell 5 of the Dec $80 puts for $5 to net in for $75 because we REALLY would like to own more of this stock (especially since we're losing ARR) and their 0.95 quarterly dividend.  
  • FCX – Very simply, if we have a bull call spread in the LTP is probably because we're waiting for a pullback to sell puts.  We have one here so let's sell 15 of the 2019 $12 puts for $2.25 as we'd be happy to double down on those if FCX tests $9 again.

  • IBM – Let's sell 5 of the 2019 $135 puts for $9.50.  Thrilled to own that stock at net $125.50!  
  • OIH – Not confident in these enough to sell puts.  If oil doesn't recover next month, we may have to take a loss on the spread and get out.  
  • CG – On track
  • CLNS – On track
  • FNF – On track
  • GCI – On track
  • GME – Good for a new trade
  • GNC – Good for a new trade.  
  • HOV – On track.

HOV doesn't pay a dividend but, when it was $1.47, it made more sense to buy the stock than pay a premium for a long call in a bull call spread.  The rest of the ones above pay lovely, lovely dividends of about $6,000/qtr and there's another $24,000/yr (5%) that just rains into our pockets and will rain into the pockets of your children and your grandchildren and your great grandchildren.   Dividend stocks should become more and more of your portfolio as it matures (and as you do) – you should always be looking for good ones to add.  

Think about what we're accomplishing.  In 3 years we have 6 positions throwing off $24,000 and in 6 years we'll be getting $48,000 and in 12 years $96,000 and in 24 years $192,000 – all from our $500,000 initial investment and dividends tend to grow with inflation so $192,000 a year then is the same buying power you wish you had now.  

Slow, consistent investing with clear goals in mind – that's all it takes to build wealth sensibly and reliably! 

Long-Term Portfolio Update (LTP) Part II:  Part I was here, in case you missed it so we'll get right to the 2nd half.  

  • AAPL – Unfortunately, we only had a 1/2 sale on AAPL so we didn't double down like we did in the OOP and Butterfly Portfolios so we're "only" up $32,000 with another $68,000 to go if AAPL is over $130 in 2019.  I'm pretty confident in this one!  

By the way, when you have a trade like this that's miles in the money and not a source of concern, you don't need to hedge it as much as other trades.  Don't waste money hedging things you are not at all worried about – that's silly. 

  • AAXN – Former TASR coming into the home stretch as our Stock of the Decade and still running like a thoroughbred!  Time to buy back the short Jan $22 calls ($4) to get more bullish.  
  • ABX – Good for a new trade.  
  • AMGN – Good for a new trade.  
  • BX – On track.
  • CBI – Is $15 finally the floor or are they teasing?  Let's roll the 2019 $27.50 calls ($1.50) to the $15 calls ($4.45) for $3(ish) and buy back the short $37.50s (0.70) and see what happens.

  • CHK – Good for a new trade and let's buy back the short $10 calls (0.35) as that's up 50% so why look a gift horse in the mouth?  
  • CLF – Another great stock cheap.  Good for a new trade and we'll buy back the $10 calls for 0.75.  
  • DBA – Good for a new trade but time to roll the Jan $19 calls ($1.40) to the 2019 $17 calls ($3.60).
  • DIS - No sense in risking the short July $110 calls, let's buy them back for 0.33.

  • EWZ – Good for a new trade. 
  • EXPE – By not taking $11,500 off the table we can only make another $1,000 by Jan.  Since we know we can find better uses for our money – let's cash this one in.
  • F – Waiting for a move up to sell calls around $12.50.
  • FTR – Waiting for the reverse split to do adjustments.  
  • GILD – Waiting for a move up to sell calls.
  • GM – On track.
  • GPRO – Speculative play not working out.  I have no real love for them so let's kill it except the short $8 puts, those are fine at net $5. 

  • HBI – On track.  
  • IMAX – Hopefully recovering.  Good for a new trade with half as many short puts.  
  • LB – forgot to sell calls at $55 but now we'll see if $50 holds before adjusting. 

  • LL – Remember when no one loved them?  Let's cash these out and put the $24,000 to more productive use.  
  • MU – $14,000 out of $17,500 is on the fence but let's cash it in as it saves us having to hedge it.
  • PSO – Waiting for $10 to sell some calls.  
  • QCOM – On track.
  • SVU – Disaster today.  Nothing worth adjusting though. Good for a new trade as this is where we came in.  

  • TEVA - Let's buy back the short 2019 $35 calls ($2.75) and roll our 10 short 2019 $45 puts ($15) to 15 short 2019 $37.50 puts ($9.80) for about even.  
  • THC – On track.  
  • TWTR – On track. 
  • UNG – Frustrating but we'll hold it.  
  • WPM – Our Stock of the Year is on track for for it's $54,000 gain (up $21,000 so far is "on track").  The short June calls are expiring worthless and we'll wait for a move up to sell some more (just playing the channel for bonus money). 

  • XOM – Finally came off the floor a little, still good for a new trade.  

So there it is – a nice, lazy portfolio to pick up some retirement money with.  When I look at a trade like WPM, which was our Trade of the Year (so we liked it a lot) and we netted in for a $4,450 credit (not including the short puts, which are now a $3,400 bonus) and is on the way to paying us another $50,000 at $25 in 18 months with net $17,150 if we cash it after just 6 months – I wonder why we ever play those small, speculative stocks.  

Sure they are fun but you have to remember fun is not why we invest.  We invest to build wealth and to make sure we have enough money to have fun with the rest of our lives.  It's fine to carve out a small portion of your portfolio for short-term speculation but, long-term, you should be in sensible plays like this one which give you a reliable return.  

180% in 3 years isn't that bad, is it?  cool

Short-Term Portfolio Update:  Since our May 16th update we've dropped another $21,000 as those MoMos are killing us but the LTP profits are nice and safe and that's the main point here.  It's only by happy accident that we're up 305% in the STP as it's supposed to LOSE money as the LTP goes up but our timing was fantastic taking profits on the dips (back in the days when there used to be dips).  And talk about CASH!!! – we have a net $405,515 value but we have $490,475 of it is cash as we sold a lot of MoMo short calls, which are now eating into the profits but I still have faith.

  • JO – Dead trade and I don't like this ETF anymore.  Still like /KCU7 (Coffee Futures) though.  
  • AMZN – Dow $10K on these and we'll have to roll as we get closer to earnings but no hurry as $993 is still ridiculous.
  • FAS – Was doing great but the banks popped on the Dodd-Frank repeal.  Won't change anything and the whole repeal is likely to be massively delayed in the Senate and they'll snap lower.  This is the leftover leg of a bullish spread we already made huge money on.  Just being greedy (and it's become another hedge).  

  • AAPL – Those were just an offset to some hedge – on track. 
  • ABX – Another offset, also on track.
  • GOGO – Another offset – we're good at picking these!  
  • SBUX – Yep, really good!  
  • NFLX – This may end up working out if the short puts expire as it was a net credit on the spread.  If the short calls expire worthless, we'll be golden.  Meanwhile, maybe we'll get lucky next week on the short spread.  

  • SQQQ – So the cost of this hedge (the $40/55) since May is net $6,000 and it's a $150,000 hedge.  That's your monthly cost of insurance.  Just make sure your longs make at least $12,000 in a flat to up market and you'll be fine!  
  • TSLA – F them!  Insanely overvalued cult stock.  I will not capitulate!  

"To the last, I grapple with thee; From Hell's heart, I stab at thee; For hate's sake, I spit my last breath at thee."

Related image

Unfortunately, this white whale is costing us money.  It almost seems unrealistic that our short $335 calls will expire worthless but Emperor Musk has no clothes (or profits) and, one day, all the people will realize it's true and point and laugh….

  • TZA – Our other big hedge.  This one is aggressive and down a bit but, as with SQQQ, it's lost $14,000 since March so $5,000 a month and if the Russell falls 10% and TZA goes up 30% to $21, that's $60,000 back and another 10% fall in the RUT would be $27 for another $60,000 (all profit) – that's how the insurance policy works (and we already bought back the short calls so maybe cost $15,000 less). 

Butterfly Portfolio Review:  It's only been 4 weeks since our last review but the market is crazy and we had a lot of adjustments posted on 6/6 so I wanted to make sure everyone is on the same page ASAP.  First of all, thank goodness for the low VIX as it's giving us our profits on the shorts we sold (most of the money we make in the Butterfly is from premium selling).  The downside is the new shorts we're selling have low premium – which puts more pressure on our targets.  



Note:  I'm skipping the 3 loose items at the top and will discuss them in context of the full trades as I get to them alphabetically.

  • AAPL – Whole new position now and doing well so far.  The changes in AAPL have dramatically upped the cash position in the portfolio, which is  something we wanted to do to guard against a possible market correction (we don't have hedges in this portfolio so CASH!!! is our hedge).  Now we have 60 2019 $140/170 bull call spreads with 20 short $130 puts with a $180,000 potential at $170+, currently valued at net $68,150 so there's $111,850 upside potential on that spread!  We also have 60 short Sept $140s we sold for $17 so $157 is our break-even there but, even if we just give the money back – there goes $102,000 but, ideally, AAPL dips a bit into Sept and then gets back on track next year to maximize our gains.  
  • COST – Essentially a new position after the adjustments so good for a new entry (the 2019 puts are a buy, not a sell – will be fixed).
  • CTSH – We're waiting for a pullback to sell some puts.  

  • DIS – We are right on target for our short July puts and calls and our long trade is mostly in the money – a rare perfect trade this quarter!  
  • GIS – I spoke too soon, also right on target.
  • MSFT – We just rolled the short calls and we're hoping for a bit of a pullback but at least our long spread is in the money (2019 $62.50/70).

  • PG – Another one on track.  Actually it's not as bad as I thought…
  • TGT – Here we are simply long on TGT and waiting for it to come back.  It's crazy how far behind WMT it is.  
  • TXN – Been on a massive run all year (20%) and our short Oct $77.50 calls are the new roll of a painful loss last month bt at least our $72.50/82.50 spread is in the money to take some of the sting out.  
  • VLO – You would think they'd be tanking on low gas but lower oil is good for them.  Here we have June puts and calls that were in the money until this morning – now improving and, per the Valero Rule, that means it's time to go long on /RB!  Meanwhile, we'll be simply looking to sell July $65 puts and calls once these expire.  

  • WMT – WMT is up almost 20% while TGT flatlines.  TGT made $2.7Bn on $70Bn in sales (3.8%) and WMT made $14.3Bn on $485Bn in sales (2.9%) and WMT's market cap is $240Bn while TGT is $30Bn so WMT is priced 8x more than target with only 5.3x more profits and 23% worse margins.  So, either WMT is overpriced or TGT is underpriced – we're playing for a little of both.   The 15 short June $67.50 calls are deep in the money at $11.80 ($17,700) and we will roll them up to 25 Sept $72.50 calls at $7.40 ($18,500) about even.

  • WYNN – So high we didn't even want to sell short puts yet they keep going up.  Hopefully this is it as we already sold the short Jan $130 calls but our spread is $120/145 so we do have room to run.  

So, on the whole, just a bit of excitement as we made adjustments at what we THINK is the top but our main defense is cash – $300,000 worth of it in a $354,000 portfolio.  Even with the AAPL trade we're only using $270,00 of $700,000 in ordinary margin – in a PM account, we have over 80% of our buying power intact.

Options Opportunity Portfolio Review (OOP):  Well, we did it.  AAPL pulling back a bit (right after our June 1st adjustments) was the perfect way to gain ground as we now have 60 short Sept $140 calls that are now up $45,000 leaving us miles over our 8/8 (2-year anniversary) goal with $318,192 – up 218.2% overall and up a wild $33,354 (33%) since our May 5th review.  

The funny thing is, we didn't add any new plays, other than FXP, we simply adjusted some old ones but, as noted last month, the positions we had had the potential to gain $163,373 over the next 18 months – it just so happens conditions allowed us to gain 20% of that this month.  Also, last month was a $7,107 loser so we're really up net $26,247 over 2 months, which is right on track for our usual $10,000/month gains.  

BALANCE is key and yes, as we saw last month, balance doesn't mean you never lose but between balancing our positions and BEING THE HOUSE and selling premium to suckers – we tend to win out over time.  That's why our AAPL adjustment was aimed at selling as much premium as possible – AAPL was high and people were paying far too much for long calls and they have quickly come back down in price – so quickly that I'm not sure I want to let them ride.  

  • USO – I'm less enthusiastic than I was about this one so no adding or rolling but I don't hate it enough to kill it.  
  • UUP – Expires on Friday and a big disappointment but the Fed is meeting Wednesday so I'd rather hope for a move up than take $310 off the table but hope is not a valid investing strategy - so no doubling down.  
  • CHL – Good for a new entry.
  • IMAX – Good for a new entry (silly sell-off).  
  • NLY – On track
  • SONC – Will expire worthless (100% profit) on Friday.
  • WTW – Way better than on track and I can't believe you can still sell those for $1.45.  No reason to take it off the table as we're not at all worried about a 50% pullback.
  • FXP – Some progress but no meltdown in China yet.  
  • SQQQ – One of our hedges.  We doubled down on 6/1 so now it pays $75,000 at $45 but that's 15% down in the Nasdaq from here, so a pretty major correction.  Still, that makes it great protection between now and January, especially as the net cost was just $15,000ish.  

The purpose of our hedges is to lock in our gains, not to "win".  As a rule of thumb, we put about 1/3 of our unrealized long gains into our insurance plays (FXP, SQQQ, TZA) and we HOPE we lose it all, because that means our long plays are doing well.  A key component of this strategy, however, is learning how use our "Be The House - NOT the Gambler" strategy, so you can make money in flat or slightly down markets as well.  

  • TZA – We moved this to a less-aggressive spread than we had but still good for $120,000 if it triggers at $30, though that would be a 33% drop in the Russell so, realistically, it's $60,000 worth of protection we paid $26,000 for (due to losses already incurred).  The current net is only $18,400 so the upside potential at $45 is $41,600 – very reasonable when added to the SQQQ.  
  • AAPL – Big adjustment made on 6/1 and who knew it would pay off so fast.  Even as I'm writing this the Sept $140 calls are back to $9.50 so there goes $4,500 of our gains – expect big volatility from this position!  As our long position is a spread and doesn't need that much protect, if we do get another chance to buy back 20 of the Sept $140 calls for $8 or less – let's do that!  Remember, we only have 60 short calls because we were burned by the first 30 we sold…
  • AAXN (TASR) – Good for a new position.  I like this because it's independent of the market overall as the long-term story is the adoption of cameras by the police.  
  • ABX – We got a great entry in November but they are still stupidly cheap at $16.27 and this is a $14,000 spread that's currently net $4,195 so $9,805 (233%) upside is still pretty darned good as a new trade.  

  • ATI – On track.
  • CDE – On track.
  • CHK – Good for a new trade.  We're counting on hurricane season to shut some production in the gulf and give land-based CHK a nice leg up. 
  • CLF – On track.

  • CSIQ – On track
  • DBA – A bit slow-moving but we still have faith. 
  • DIS – In the money already.  
  • FTR – If FTR were not planning a reverse-split, I would have doubled down at $1.20 but I don't want it to be messy so we're waiting.  I LOVE this stock – it's one of my favorite undervalued, underappreciated companies AND you get a 15% dividend while you wait (10% for us because we came in earlier).  

  • GM – Good for a new trade. 
  • JO – We're not happy with this one but also don't want to throw good money after bad if Coffee doesn't pick up by summer.  
  • M – Another undervalued stock I still like.  Good for a new trade.
  • SGYP – Their main drug, Trulance, is going through all the regulatory hoops and, hopefully, soon comes the part where they start making money.  We bought back the short calls so now we're aggressively long, hoping they justify those original $7 expectations.  

  • SPWR – On track.
  • SVU – On track.  Well, 100% in the money with a long time to go but it's a $7,500 spread and only net $3,125 at the moment and we're not worried about the target so may as well wait and collect another $4,375 (140%) – even though it seems dull.
  • SVXY – We got a nice pop in volatility that turned this one around for us and I still have faith in the trade.
  • TWTR – On track (and what a wild ride to get here).  
  • UNG – That's two natural gas trades (CHK) with the same premise.  UNG is on track.
  • WPM – We already cashed out one, this is what's left and on track.  
  • XOM – Finally took off for us and, fortunately, we were so conservative that we're already 100% in the money and FANTASTIC for a new trade as it pays $5,000 over $80 and the current net is just $2,355 so 100% upside if XOM simply stays over $80.  THAT is what I mean by setting up your trades so you make good money in a flat market (and our break-even is below $75).  

Notice the theme of these trades – they are OPPORTUNITIES we take advantage of when stocks are too high or, more often, too low and we especially take advantage of extended options premiums and sell them to the kind of suckers who thing things always go up or always go down.  We are simply applying value investing techniques against an inefficient pricing system and, as evidenced in our first two years – that's a pretty good way to play the market!  


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  1. did you see ftr friday?

  2. Yes, very annoying if it takes off before we can DD. 

  3. Was likely CTL money going into something similar.  

  4. that was big volume

  5. I'll say!  

  6. i wonder why it was jacked up at the end of the day? It was at 1.30 or 1.31 at 330.

    then BOOM!!!!

  7. I could imagine people liquidating CTL and then having a meeting about what to do with the cash and deciding FTR was a good substitute at a great price.  CTL is 20x more expensive than FTR (10x more market cap) so you trade 1 CTL for 20 FTR and get more bang for your buck (as a percentage of ownership).  

  8. huge volume ctl end of day too

  9. thanks Phil…

  10. Phil – Hope your enjoying the vacation.

    More Where's Your Sign:  Here is a crude model for Oil, pun intended…

    Economy – ; Reflation – ; Oil demand growth = or – vs last year; /CL and /RB Inventory + vs. last year ; Price -

    Baring exogenic shock, lacking upside impetus for prices until demand growth substantially or favorably shrinks inventory growth.

    Along those lines,  Industrial Production which is what demand springs from, is still short of the 2008 pre crisis level.  Worse yet, the current "rebound" or whatever you want to call it, remains short of the 2002 recovery from the dot com implosion. Now that's what I call, ro-BUST economic momentum and Out.

  11. Nat as usual I can't be sure I am understanding what your message means. I think you are saying that oil is not done dropping because demand isn't there and productivity is lagging while the markets remain high with no good reason. Did I get the gist?

  12. Speaking of oil it is amazing how they always get that contract overhang down to manageable levels. With three trading days they only need to unload between 25and 30k per day if I have those facts right and the 21st is the last day. 

  13. Craigs – "Nat as usual I can't be sure I am understanding what your message means. I think you are saying that oil is not done dropping because demand isn't there and productivity is lagging while the markets remain high with no good reason. Did I get the gist?"

    Spot on, you nailed it.  Do with commitment, control what you can, failure and success will guide you and above all, trust your efforts.  Often wrong, but never in doubt.

  14. Trump defiant as pressure grows

  15. Macron Deals a Crippling Blow to France’s Establishment

  16. KC anyone ? Or wait to see if holds 124?

  17. Or 126 with kcu7

  18. And the AAPL pie alamode is being served, I will have a double dip of ice cream please.  Oh wait, I already have many servings. Yummm!