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Whipsaw Wednesday – The View from Dow 22,000

Wheeeeeee – This is fun!  

Dow 22,000 is our shorting spot (predicted last week) and we hit that that yesterday after Apple (AAPL) announced their earnings and popped $10 after hours, adding 85 points to the Dow.  This gave institutional sellers the perfect cover to dump everything else and the index is back below 21,950, despite Apple's help.  50 points on the Dow (/YM) Futures is $250 (you're welcome) but we can do much better than that and we will be taking advantage of today's pop to add to our hedges (while it's cheap) and that's for Members Only but, for you, the cheapskate reader, we can give you a new hedging idea using the Dow Ultra-Short (DXD), which is a 2x inverse ETF:

  • Buy 100 DXD Oct $11 calls for 0.45 ($4,500)
  • Sell 100 DXD Oct $13 calls for 0.12 ($1,200) 
  • Sell 5 AAPL 2019 $120 puts for $4 ($2,000) 

DXD is at $11.24 so in the money and $13 is $1.66 away or 15% so a 7.5% drop in the Dow will pay you back $2 x 10,000 options (100 per contract) or $20,000 and the net cost of the spread is $1,300.  That's a profit of $18,700 (1,438%) if the Dow drops 7.5%, and stays down, into the October expirations.  You are obligating yourself to buy 500 shares of AAPL at $120 ($60,000) so make sure you REALLY want to own AAPL if it drops 20% but, chances are your will be safe with that bet if the Dow stays up and, if the Dow falls and puts AAPL in the money, then you have an extra $20,000 to buy the shares with!  

Meanwhile, we could not be more pleased with the AAPL options we do have.  AAPL is the largest holding in our Options Opportunity Portfolio and we had already gained $15,800 on our net $5,600 credit position so up $21,400 but that's nothing as our profit potential for AAPL is $185,600 so we're merely "on track" to our goal of $170.  No wonder the Options Opportunity Portfolio is up 200% in two years!  

We will have to roll out the short callers but, for now, they serve as protection for our long-term gains.  We also have AAPL in our Long-Term Portfolio and our Butterfly Portfolio, which is not surprising as AAPL was our pick for Stock of the Year in 2013, 2014 and 2015 – when it was a whole lot cheaper than it is today and it remains our largest holding, despite the fact that we keep taking profits and cutting back our positions.  In fact, just yesterday, in our Live Member Chat Room, we added this AAPL play ahead of earnings:  

As a new trade, I really love that AAPL 2019 $140 ($21.50)/$175 ($8) bull call spread for $13.50.  It's a great way to get into AAPL at $150.  If AAPL goes up, then you are on track to getting $35 back (+159%) and, if it goes down, then you can sell puts and widen the spread.  

Although it was a nice, conservative way to play Apple, it's well on track for a 159% gain already.  That spread required no margin, just $1,350 cash per contact (100 options per contract) and you will get back $3,500 if AAPL is over $175 in January of 2019.  Options are not complicated AND we didn't have to tie up $15,000 on 100 shares of stock AND we limited our downside risk (can't lose more than $1,350) – aren't options great?  

Futures are great too, as evidenced by our $7,400 net gain on Oil Futures (/CL) after a very bumpy ride.  For those of you who came in late, reading yesterday morning's PSW Report, the shorting line was $50 and a move to $48.50 was good for gains of over $1,500 per contract for the day.  This, however, was our trade from last Wednesday's Webinar and, although it made $21,240 for the day, the net gain after a week was "only" $7,400 and we took it off the table a bit higher at $48.50, where we called for a bounce in our Live Chat Room.

If you go back to last Thursday's morning Report, you can see why we had the conviction to stick with our short oil positions, adding to them on the way up but it was rough sledding and a real nail-biter as we crested $50.  As our Member Craigs620 said:

CL -Phil it amazes me how you call these right more often than not but that was indeed a rough ride. Thanks for reassuring yesterday so I could hang in for most of that ride. I stopped out at 48.90 with a nice profit as I just couldn't handle the thought of a quick spike up.

This morning, we're back to shorting oil again at $49.20 (our strong bounce line) and we'll see what happens at the 10:30 inventory report but very tight stops over $49.25 – if oil is still weak, it shouldn't be over that line.  The Dollar is still in the doldrums and we like it long here (92.75 on /DX) and, for the Futures-challenged, you can buy the Dollar ETF (UUP) Sept $24 calls for 0.35, which make a quick 0.65 (185%) if UUP is back over $25 but I'd get 1/2 out at 0.70 and then it's a free ride on the other half.

President Trump could buy $3.5Bn worth of those UUP calls, then resign and probably get $20B back for a gain of $16.5Bn – just a suggestion…

Appple will give us a hell of a boost at the open but then we'll see what sticks.  Likely big funds will take this opportunity to start selling off shares while AAPL supports the indexes so look for the Russell (/TF) to sell off first, followed by the large caps.  


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  1. Dow seems to be somewhat disconnected but it's really a BS index!

  2. Phil – I am flying to Argentina where I'll be for 10 days on a business trip. A taste of winter in August… And some good steaks. I'll probably post the lines in the evening when I have some time off.

  3. Morning everyone! The webinar replay is now available!

  4. STJ – Safe travels.

  5. Good Morning.

  6. go ftr!!!

  7. what happened to imax this morning?

  8. teva dropping too

  9. imax down to 52 week low?

  10. amc news crushing imax i guess

  11. I keep shorting CL at 49.20 but keep getting stopped out at 49.25…


    Font size: A | A | A


    9:34 AM ET 8/2/17 | CFRA

    SNPMarketScopeResearchNotes2017-08-02 09:34:45.000FTRFRONTIER COMMUNICATIONS CORPORATIONA. Zino-CFACFRA KEEPS HOLD OPINION ON SHARES OF FRONTIER COMMUNICATIONS CORP.We cut our 12-month target to $17 from $30, on near-peer EV/EBITDA of 5.4X our '18 view. We widen our '17 loss per share estimate to $4.27 from $3.90 and '18's to a $2.33 loss from $1.50 loss. FTR posts Q2 loss per share of $1.10, wider than the $1.09 loss estimate. While sales fell 2.2% from Q1 and we see further legacy declines hurting revenue, we are encouraged by EBITDA margin stabilization. Despite FTR's attractive dividend yield of 15% and a manageable payout ratio of 23% (dividend cut 62% in Q2), we are cautious about its leveraged balance sheet and debt maturities ahead.|US;FTR|526|US|85229

  13. Hooray FTR!!!  Boo IMAX!!!

    Phil / IMAX- is this an opportunity to take advantage of the AMC sell-off and buy more IMAX or could there be serious earnings issues with IMAX as well?  Thanks!

  14. go JO!!!!

  15. emailmike--i bought more at 19.70

    seems like an overrreaction but would love to hear Phil's opinion

  16. Good morning! 

    Big Chart – If the RUT starts moving back over 1,440, it's lights out for the bears.  

    Have a great trip StJ and thanks so much for the charts.  I love those steaks!  Also, we need to speak when I get back – potential business opportunity in France I'm looking at for PSW Investments.  

    FTR/Jabob – I thought you were mad at them last night?  


    Guess hoping FTR would do a GNC squeeze was too much to ask for. What a pos

    This is what I mean about not letting the stock PRICE dictate your opinion of things.  We (Batman and I) liked the earnings, thought they were making good progress and seemed on track.  That being the case, we don't give a crap what the "market reaction" is to earnings.  Traders are idiots.  Analysts are idiots.  You need to invest in things you understand, hang out with people who have insights and IGNORE THE BS.

    IMAX/Jabob – AMC earnings making people think movies are dying.   Just another chance to buy, on the whole.  

    As expected, nice dip on /TF to start the day.  

    Nas came down hard and fast too:

    /CL/Rcs – Don't take the stops so literally, if it's just jittering above the way it is, don't stop out.  

    Looks like $49.30 is holding so that line can be used or $49.275 if you want to keep it to a smaller los but we've had the same moves below $49.20 as we've had above.  If you take a quick loss, then take a quick profit that makes up for it and, when you are even, reset and start again with wider stops.

    IMAX/Mike – You know me well.  It's not because of anything they did today, AMC is down 25%!  

    AMC said late Tuesday that it expects total revenue for the three months to the end of June to be around $1.2 billion and a net loss of between $178.5 million and $174.5 million, or $1.36 to $1.34 per diluted share. It reports its second quarter earnings on Aug. 7.


    The loss is attributed to a $202.6 million pre-tax impairment charge related to AMC's National CineMedia, LLC investment, because the market value of its investment in NCM declined significantly below its carrying value. The expected results are also reflect a 4.4% fall in U.S. box office.

    The loss comes at a tricky time for AMC and its Chinese parent company Dalian Wanda, which is reportedly being investigated by Chinese regulators for the funding of its foreign acquisitions. It is believed that the State Administration of Foreign Exchange recently began reviewing loan guarantees for highly acquisitive companies, including Dalian, Anbang Insurance Group Co, Fosun International Ltd and HNA Group Co.


    AMC shares fell 10% on July 17, after it was reported by the Wall Street Journal that regulators had ordered the China's biggest banks to stop making loans to Dalian Wanda to finance foreign acquisitions

    Gosh, they can't figure out why people aren't paying $20 for a ticket and another $20 for popcorn and a soda?  What idiots!  

  17. guess it wasn't too much to ask for after all ;-)

  18. IMAX – established my Dec 18/22 BCS today – great opportunity. 

  19. Bitcoin forks off Bitcoin cash. The value of Bitcoin is about the same (~2700) and bitcoin cash that budded off is ~675 = 3,375.

  20. Looks like LL keeps pushing up! Not bad for 14 entry!

    And I might even need to re-enter FTR. Heavens!

  21. IMAX- Thanks Phil, buying more seemed like a good idea (based on my years of reading PSW!!) but definitely wanted to hear your thoughts first.

  22. Feels like today is the start of the selloff

  23. Oil shorts ? Phil you still holding Crude Oil shorts ? 

  24. EIA Petroleum Inventories

    EIA Petroleum Inventories: Crude -1.5M barrels vs. -3.0M consensus, -7.2M last week.

    Gasoline -2.5M barrels vs. -0.6M consensus, -1.0M last week.

    Distillates -0.2M vs. -0.5M consensus, -1.9M last week.

    Futures -0.37% to $48.98.

  25. stockbern – selloff, why is that?

  26. Phil – is it worth taking a look at shorting the CL or RB after the report today? I know oil Gasoline had a bigger draw than expected but it dipped at the same time as CL.

  27. France / Phil – Meeting in AC when I get back. The CEO of my company will be around as well and he is looking at investors. Maybe kill 2 birds with one stone.

  28. StJ – what are you up to?

  29. Interesting, oil is a draw but still selling off – shows you what BS $50 was.  Indexes getting hammered to but I think that's about China Trade Crackdown rumors. 

    • EIA Petroleum Inventories: Crude -1.5M barrels vs. -3.0M consensus, -7.2M last week.
    • Gasoline -2.5M barrels vs. -0.6M consensus, -1.0M last week.
    • Distillates -0.2M vs. -0.5M consensus, -1.9M last week.
    • Futures -0.37% to $48.98.

    Bitcoin/BDC – So net net it's a bonus for for Bitcoin owners.  

    You're welcome EMike.  

    Oil/Pat – Of course but just 2

    /CL/Bulls – I wouldn't chase it – was a nice dip but the report was actually a little bullish.  

    AC/StJ – You know I don't say no to that!  

  30. Bitcoin/bonus – yes, simply a 20%+ boost!

  31. ftr … no tease please!

  32. Jabob… Oh geez, no tease, short squeeze please…



  33. mkuc--hilarious! ;-)

  34. it's the bee's kneez

  35. FTR     damn somebody is buying a lot of Feb $19 puts

  36. See, oil ripped back up, fortunately, I was happy with a $1,000 gain and cashed out.

    No tease/Jabob – Could have sold a lot of those T-shirts in my High School.

    I'm out of here at 1pm guys, will be having normal(ish) hours in Florida tomorrow and Friday.

    Indexes bouncing, AAPL $157.15.  Dollar 92.65.

    • Records fell across the board at the open behind a more than 6% post-earnings advance for Apple.
    • Apple still holds a 4.4% gain, but the Nasdaq is now lower by 0.6% and the S&P 500 down 0.3%. The Dow – which powered through 22K at the open – remains marginally in the green, but has slipped back below 22K.
    • In tech, Google, Microsoft, and Facebook are all down nearly 1%. Netflix is lower by 2.1% and Amazon by 0.45%.
    • Leading the S&P 500 into the red is energy (XLE -1%) as oil again takes up residence below $50 per barrel.
    • The comments aren't a huge surprise given his dovish leanings of late, but just in case anyone hasn't been paying close attention, St. Louis Fed President Jim Bullard says soft inflation data means he wouldn't be supportive of any more moves in the near term.
    • Source: Bloomberg headline
    • More details as they arrive

    • The pace of U.S. car and light truck sales fell off to a 16.73M vehicles pace in July, down from 17.8M a year ago.
    • A significant factor in the decline is the decision by major automakers to reduce the level of daily rental fleet sales amid the rise of Uber (Private:UBER), Lyft (Private:LYFT) and other ride sharing services. The strategy is expected to help lift automotive margins, even if volume numbers are lower, and falls in line with broad global strategy to highlight the bottom line over volume.
    • ALG estimates the average transaction price for a new light vehicle rose 2.1% to $32,989 in July. Average incentive spending per unit grew by $160 to $3,565.
    • Gaining U.S. market share during the month were Toyota (NYSE:TM) and Subaru (OTCPK:FUJHY), which both showed positive sales growth. The Detroit Three (GMFFCAU) all posted sharp drops for the month, but analysts expect a better result for August and September off a calendar benefit (extra selling day in Aug., extra weekend in Sept.) and continued strong demand for higher trim level trucks and SUVs.
    • The auto sector will stay in the spotlight today after the market closes when Tesla (NASDAQ:TSLA) reports Q2 earnings. While consensus estimates are for Tesla to report revenue of $2.51B, EPS of -$1.88 and an automotive gross margin rate of 24.33% — it's the Model 3 production and delivery guidance which could steer shares. Bloomberg reports that options volatility implies a 7% move in Tesla shares up or down after the company spills numbers.
    • Related ETF: CARZ.

    • Cinemark (CNK -4.6%), Regal Entertainment (RGC -3.9%), Eros International (EROS -4.7%), Reading International (RDI -2.7%) and IMAX (IMAX -8.5%) are all slumping after a painful earnings report and guidance cut is turned in by AMC Entertainment (AMC -24.5%).
    • MoffettNathanson was well-ahead of the sector disruption with its downgrade of CNK and RGC earlier this summer. The boutique firm cited the increased risk of studios moving into premium video on-demand, analysis that takes on extra weight after AMC's cut in EBITDA forecast.
    • "We continue to expect at least one of the major studio (either Universal, Warner Bros. or Fox) to grow frustrated enough by waiting to reach a mutually beneficial deal with exhibitors and move forward with their own PVOD press release by 4Q 2017, if not sooner," wrote MoffettNathanson.
    • The question of which exhibition partners agree to take part of an early release window and at what split could be crucial for the sector.
    • Previously: AMC Entertainment tanks on Q2 earnings warning (Aug. 1)
    • Sluggish RevPAR growth, softening forward group booking growth, and increasing costs have Goldman cautious on the hotel REITs, says analyst Stephen Grambling.
    • In this, Goldman is making a distinction between REITs (think DRHLHOHSTPEBSHOPK) and C-Corps (think MAR and HLT). The C-Corps, says Grambling, have the ability to "maintain their earnings algorithms."
    • Grambling and team downgrade Pebblebrook (PEB -2.9%) and LaSalle (LHO -1.8%) to Sell as their large exposure to urban markets puts them most at risk to a further slowdown in corporate spending.
    • Source: Bloomberg's Lily Katz
    • Time Warner (TWX +0.1%) has opened the regular session up modestly after Q2 earnings beat on top and bottom lines and its buyout by AT&T (NYSE:T) continues to proceed without hiccups.
    • Gains at the film studio boosted overall revenues 5.5% though the company marked increases across the board. And improvement there and at HBO mitigated an decline in Turner operating income.
    • Adjusted EPS was up 3% to hit $1.33.
    • Subscription revenues were up 13% for Turner and up 8% for HBO.
    • Revenue by segment: Turner, $3.1B (up 3.1%); Home Box Office, $1.48B (up 0.6%); Warner Bros., $2.99B (up 12.4%).
    • Operating income by segment: Turner, $1.05B (down 7.1%); Home Box Office, $531M (up 10.4%); Warner Bros., $223M (down 27.8%).
    • Adjusted operating income by segment: Turner, $1.03B (down 9.1%); Home Box Office, $546M (up 13.5%); Warner Bros., $261M (up 20.3%).
    • Cash from continuing operations was $2.5B (up 25%), and free cash flow rose 22% to $2.3B.
    • Press Release
    • Groupon (NASDAQ:GRPN) is 3.1% lower premarket after revenues declined and fell short of Street expectations in its Q2 report.
    • "Our focus is to maximize gross profit, which may come at the expense of revenue," the company says in its statement. "This emphasis includes an increasing shift toward offerings in our higher margin, more differentiated Local category, from our Goods category."
    • EBITDA came in at $53.3M, beating an expected $39.3M.
    • Revenue breakout: Third-party and other, $315.9M (up 7.2%); Direct, $346.8M (down 19.2%).
    • For the full year, it still expects gross profit of $1.3B-$1.35B, and is raising the bottom end of the range for expected EBITDA, now to $215M-$240M (above consensus for $214.7M).
    • Conference call to come at 10 a.m. ET.
    • Press Release
    • Fears about a delay in the new iPhone have faded after upbeat management commentary, says RBC's Amit Daryanani, putting Apple (NASDAQ:AAPL) on track to be the first $1T company. Impressive guidance, says Daryanani, suggests the release could come at the end of September. He keeps the stock at Outperform and raises the price target to $176 from $168.
    • JPMorgan's Rod Hall says the better iPhone outlook is likely thanks to two new LCD model 7s he expects will be shipping in September. The stock, he says, is now rebounding to "pre-delay" levels. He too is at Overweight and lifts the price target to $176 from $165.
    • Piper Jaffray's Michael Olsen is thinking along similar lines, and boost his PT to $190 from $158.
    • The growth cycle has been fully priced in, says Mizuho's Abhey Lamba, sticking with a Neutral rating and $150 price target.
    • Shares are up 6.6% premarket to $159.90.
    • Analyst comments via Bloomberg
    • Previously: Apple call: comments on China slump, Trump factory quote, no iPhone news (Aug. 1)
    • Previously: Apple beats earnings estimates, Services up 22%; shares +5.9% (Aug. 1)
    • Q2 core earnings of $112.1M or $0.60 per share vs. $96M and $0.51 in Q1. Dividend is $0.50.
    • June 30 GAAP book value of $16.54 per share up from $16.20 three months earlier. Last night's close of $18.90 is a 14% premium to book.
    • Economic return on book value for quarter of 5.2%.
    • Company purchased about $377M in loans in Q2, and committed to buy another $620M. Both would bring loan purchases for the year to $5.1B. One MBS sponsored for $377M, with $1.3M of expenses incurred.
    • Previously: Chimera Investment misses by $0.03, misses on revenue (Aug. 2)
    • CIM flat premarket
    • Secretary of State Rex Tillerson said neither he nor President Donald Trump is "very happy" about new sanctions on Russia that Congress has voted to put in place, but "all indications are he will sign that bill."
    • The remarks seemed to contrast with those of Vice President Mike Pence, who said the bill showed Trump and Congress are speaking "with a unified voice."

  37. stockbern-- i hope they expire worthless! ;-)

  38. Phil / chasing – thanks for the advice. sometimes the best move is not to make any moves :)

  39. Phil do you still remember my ILMN Jan 18 115/145 up 12% today to 192.80 !

  40. Phil with oil output still rising and the EIA showing total inventory rising 1.1 million barrels, don't you think the downward move in CL will resume soon?

  41. Did FTR announce anything about the dividends going forward?


  42. ftr not sure if they talked about it but they did announce the next one--hope they continue

    Ex-Dividend Date


    Dividend Payable Date



  43. Phil are you still shorting oil at 49.50 again?

  44. Phil – PSO has been holding above $8 steady now.  I bought them at 12.40 from a trade here, but I think that got closed out.  They pay a 7.8% div.  What do you think?  Should I add here to lower my cost basis?

  45. FTR -  $0.60 quarterly, 15.10% annual dividend

  46. ILMN/Yodi – That was well-timed. 

    Oil/Craigs – I think it will trend back down but it's over $49.20 and under $49.50 so no reason to short it unless it crosses back under or tests $49.50 (tight stops over and try again at $50).  

    FTR/Jeff – I did not hear mention of a change.  They seem to have no issue servicing it and they have refinanced a lot of debt at lower rates – if this continues, we may have a winner. 

    2,475 to 2,465 is a 10-point drop so bounces are 2 points to 2,467 and 2,469 – looks like strong is failing. 

    Nas bounce is weak. RUT too:

    Oil/Craigs – No because I'm leaving but I'd take a poke if I were able to pay attention.

    PSO/Burr – They are doing a lot of stuff.  They sold part of Random House to Bertelsmann and they should have no problem paying the dividend (0.85) and they are buying back 45M shares out of an 800M float (5%) so I get the feeling they've been letting their stock tank so they could do the buyback.  Bertelsman is valuing Random House at $3.5Bn and PSO still owns 25% of it but now they will generate less income from RH, probably about -10% of their profits.  In a good year, they could make $500M (10%) against their $7Bn valuation so reasonable if they stop messing around.  I wouldn't pay them to make great gains but to play them not to go BK, which is how they are priced – is a nice way to hold them and collect the 10% dividends.

    I wouldn't add shares though, I'd sell the March $10 puts for $1.75 to net in for $8.25 (5% discount) as it's only 226 days away so you're selling about 10% a year in premium or you DD at $8.25 and average $10.30 and THEN you can sell $7.50 calls ($1.60) along with the puts for $3.35 and that would drop your net to $6.95/8.475 but, if you don't REALLY want to own 4x at $8.475, you might want to stick to half sales for now.  

  47. CBI/Phil  I am holding 10x of the Jan $30 put and $25/30  BCS, which is down $15K and no premium left in anything.  It just fell too far too fast for me to adjust so I've just been sitting on it. I think they may be way undervalued, but I don't see any way of saving my positions. I am inclined to buy back the short calls @ $.30 and hold the long 25s to expiration. Would you agree and what would you do  with the short puts?  The Jan 19 20s look pretty good so maybe a roll there? Any BCS to recommend?  Thanks!

  48. LB dropping again?

  49. FTR -  Just when you get a little excitement on it, someone comes in and kills it.  Sad face ( I don't know how to do Emoticons)

  50. CBI/Jet – Well the Jan $30 puts are now $12.50 and the $25 calls are 0.75 and you say down $15K so that means you lost 100% of the price of the puts and another $2,500 on the spread or something like that?  I don't see the point of PAYING 0.30 to the very, very far out of the money short $30s while you hold the very far out of the money $25s with your fingers crossed, do you?

    I would roll the Jan $30 puts ($12.50) to the 2019 $22.50 puts ($7.50) at the same 10.  You'll eat $5,000 but at least it's a realistic strike on the other $7,500 and you've reduced the margin req.

    Then I'd take the 0.75 for the Jan $25 calls and roll those to 20 of the 2019 $20 ($3.70)/25 ($2.30) bull call spreads at $1.40, which will cost you $650 + $1,400.  

    The short Jan $30s are pointless so buy them back (0.45) and sell 10 (1/2) Oct $20s for $1.25 ($1,250) for net $800 back in pocket.

    Now you have 20 of the 2019 $20/25 bull call spreads, which pay back $10,000 if all goes well and 10 short $22.50 puts that pay $7,500 if all goes well and the short Oct $20s that pay $1,250 if all goes not too well.  

    Of course you will sell $1,250 each Q for 5 more Qs ($6,250) so potential to collect $23,750 and you are down $15,000 and it will cost you $6,250 to make the adjustments so $21,250 means you stand to make $2,500 if PSO is back over $25 by Jan 2019 but doesn't get there so quickly or suddenly that your short callers hurt you.

    As long as you are happy with the target, it's a good adjustment.  When we get behind, we play to get even – not ahead!  

    LB/Jabob – Another opportunity that's just sitting there.  

    FTR/CDN – I'm thrilled to see them holding $15! 

  51. OK guys, have to head to the airport, will be on tomorrow from Florida.

  52. safe travels Phil!

  53. FTR Dividend – it was announced at $0.60 on 7/26.  That is in line.  Ex date is 9/13 with pay date on 9/29.

  54. TSLA tease today… hope it gets clobbered AH

  55. Yodi – learning from you and Phil -  here is a novice attempt at your armchair trade (TM – yodi) for LB.

    thoughts from both of you appreciated. 


    Buy LB @ $45. 

    Sell Jan 2018 $45.50 Calls ($3.60) and Puts ($5.00) for  a total of $8.60. 

    Collect $1.20 in dividends until Jan 2018.  LB gives $0.60 per quarter in dividends (div yield is 5%)

    This translates to $9.8 in cash for 6 months or a return of  3.3% per month. If assigned, our net is (excluding divs) $40.7 for twice the shares and now our dividend yield is even higher.  








  56. Learner / IMAX – I was looking the March 18 /22 BCS. any reason you did not do that one?

  57. batman – I did the 18/22 BCS as below… 

    August 2nd, 2017 at 10:11 am | Permalink | Tweet thisIgnore this user

    IMAX – established my Dec 18/22 BCS today – great opportunity. 


  58. I will scale into the March if required.. 

  59. Trump signs Russia sanctions bill but blasts Congress

  60. Learner, LB How low can you go. The stock was 100$ in Nov. 2016 44.95 now. Stock is fashion Victoria's Secret one of. Same type as M. I Entered a play at 1/3/17 at a stock price of 31$ 23.12 today, So I do not have very much confidence in the rag trade, especially as they are Block and mortar shops.

    LB PE 11.83 div. 5.35 %, entering your suggested play in to my formula looks good with a monthly return of 3.9%. You receive an option premium of 8.80$ reducing your risk considerable and bringing your break even to 36.15. While I am writing my reply the stock is down to 44.79. I would enter the first position in small doses like 200 stock at most and see how it goes.

  61. Thanks Yodi, y, I agree – small positions first.  Although I think this brick and mortar aversion has gone to the extreme, especially with products like LB that one wants to see in the store and try out before purchase. As Phil has alluded earlier, LB is more specialized,,, the risk of it going the 'M' way might be lower… I hope it is! 

  62. crazy crazy as "Bitcoin Cash" shakes out on the market:

    fascinating to watch.

  63. Bricks and mortar  vs Online/   Read an article claiming Amazon is not to blame nearly as much as everyone thinks. Online is only 8.5% of total retail sales which is up 4 fold in last 10 years but still a small piece.  Article claims that  income levels haven't risen in last 10 years and that many discretionary dollars have disappeared due to flows to cell phones and health care costs. Something had to give.  Also of note, America has 4 times the square footage of any developed country in the world. Something there has to give as well.  The ship will right size on both fronts

  64. Trump admin waives environmental laws to allow border wall construction

  65. 2. U.S. public opinion on the future use of gene editing

  66. Even with the initial position, per PSW rules, I am selling front month puts, so if I get the position assigned, I am getting it at a discount and then go into the armchair strategy.  Otherwise, keep the premium and try next opportunity. 

  67. LB Look at the last quarter income April 2017! all negative cash flow!

    Net Income Applicable To Common Shares





  68. Selling puts at present market conditions needs to be very much taken under the loop! I have closed a substancial amount of puts especially up to 2018.

  69. Yodi,  their business is highly seasonal, TTM ending Q4 2017, they made +$1.0 billion in FCF.  Comparing Q1 2018 (-148 million) to Q12017 (-248 million) on a yoy basis, the free cash flow trend is improving (less negative) as they have streamlined their capex and cash flow from operations (-43 million q12017 to +7 million q12018) is also improving.     Yes, selling puts under current market conditions – well aware.. I am only selling puts where the underlying assignment is what I want – sufficient dividend yields and armchair potential. 

  70. Learner nice to see you did some good ground work!!! I agree obviously they would sell much more over Christmas than in Mar. or April.

  71. FU TSLA!!!!

  72. TSLA.  Sadness in Shortsville again

  73. cdn… we will see

  74. @rustle – thoughts on TSLA – you have got this one right more often… what would you recommend for new positions? 

  75. That’s why we didn’t short them into earnings – not worth the risk.

    Meanwhile, Our flight was cancelled and we have to wait 5 hours. ????????????????

    Oh, and the bags are in limbo! Good thing the boat isn’t until Sat.

  76. biodsl

    stockbern – selloff, why is that?

    good earnings continue to be sold off and it feels like is money looking for an excuse to lighten up into the seasonal weak period and coming volatility, plus what Winston , Yodi and others discussed last week about closing some positions

  77. OPEC’s ‘Catch-22’: How to Unwind Its Deal to Cut Oil Output

  78. “Idiosyncratic and Transitory Factors” Holding Down Inflation: New Definition of Transitory

  79. Struggling Americans Once Sought Greener Pastures—Now They’re Stuck

  80. Senate Republicans Rebuff Donald Trump’s Health-Care Push

  81.  Good morning!

    Just got to my moms house.   Unfortunately, our bags did not. Try not to ask me anything too complicated in the morning. 

  82. TEVA wtf?

  83. Teva Reports Second Quarter 2017 Financial -9- 

    Aug 03, 2017 06:30:00 (ET)

    — Revenues of $5.7 billion

    — GAAP EPS loss of $5.94

    — Non-GAAP EPS of $1.02

    — 2017 business outlook revised to non-GAAP EPS of $4.30 – $4.50

    — Teva announces second quarter 2017 dividend of 8.5 cents,down 75% from 34
    cents in the first quarter of 2017

  84. Did you pack extra underwear and toothbrush? 

  85. Ok guys  as Phil is still looking for underwear change  want to comment abut a sector  I has been looking  down, the EV cars, are mainstream  and some countries already announced  Internal combustion engines (ICE), all this cars runs on batteries and mst of the actual chemistries moves around Lithium.

    The safest bet for playing this is buying a company  that  has mines of the mineral, it looks that there are no public companies in this, most of the mineral is accumulated in Bolivia and China.

    Albemarle Corp. it´s the only reasonable bet into the Lithium mining, sells lithium compounds for batteries  companies,   what is your opinion?

  86. ~~TEVA (Baa2/BBB/BBB; N/N/S; Underweight Cash) reported 2Q’17 EPS of $1.02, missing estimates by 4 cents. The company lowered its 2017 EPS guidance to $4.30-$4.50 (prior $4.90-$5.30). TEVA posted revenues of $5.7 bn, up 12.9% y/y and adj EBITDA of $1.4 bn down 8.8% y/y.

    TEVA stock is down 8.23% pre-market.

    2Q’17 2Q’16 % Change
    Sales $5,686 $5,038 12.9%
    R&D $486 $375 29.6%
    Adj EBITDA* $1,413 $1,549 -8.8%
    EPS $1.02 $1.25
    Cash $599 $6,984
    Debt $35,052 $10,918

    LTM 6/30/17 LTM 6/30/16 % Change
    Sales $23,371 $19,552 19.5%
    Adj EBITDA* $6,111 $6,271 -2.6%
    Cash $599 $6,984
    Debt $35,052 $10,918

    * D&A for 2Q’17 from 2Q’16

    * TEVA posted revenues of $5.7 bn, up 12.9% y/y and adj EBITDA of $1.4
    bn down 8.8% y/y.
    * Generic medicine segment sales increased 20% y/y to $3.1 bn,
    reflecting the inclusion of the Actavis Generics business.
    * Specialty medicine segment sales were down 9% y/y to $2.1 bn. The
    decrease in specialty medicines revenues compared to the second
    quarter of 2016 was primarily due to lower sales of our CNS and
    oncology products, partially offset by a payment of $75 million which
    we received in connection with our agreement to sell our royalties
    and other rights in Ninlaro® (ixazomib) to a subsidiary of Takeda.
    * Copaxone sales decreased 10% y/y to $1.0 bn. Copaxone® revenues in
    the United States, were $843 million, a decrease of 12% compared to
    the second quarter of 2016, mainly due to lower volumes of
    Copaxone® 20 mg/mL as well as negative net pricing effects despite a
    price increase of 7.9% for both Copaxone® products in January 2017.
    At the end of the second quarter of 2017, according to June 2017 IMS
    data, our U.S. market shares for the Copaxone® products in terms of
    new and total prescriptions were 26.5% and 28.8%, respectively.
    Copaxone® 40 mg/mL accounted for over 85% of total
    Copaxone® prescriptions in the U.S.

  87. Good morning!

    Of course I have clothes and a toothbrush at my mommy's house – don't I always hedge?

    Why her internet is so slow is another question.

    Indexes are flat and Russell is worrying at 1,410.  

    Oil back up around $50 but hard to short into the weekend – especially with the Saudis positively freaking out that they have to pump it up for Aramco.  This whole BS with Qatar is being pushed to create additional uncertainty in supply.

    I have to look at TEVA but certainly disappointing.  On the other hand, still making $4.50 per $30 (or $27) share.  What matters is their future prospects.

    BOE just tanked the Pound, not much effect on the Dollar:

  88. Phil / underwear:


    Ok…LOL,  you got it!!.  still a comment about ALB  will be appreciated.enjoy your tumultuous cruise …I will have this in november which is more "classic"

    It´s the cost of a plane with 14 days  "all included" but wine and cocktails.


  89. Windstar is awesome, been a while but I was really impressed.