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Wednesday Run-Up, Will This Rally Never End?

Image result for superman stock marketUp, up and away!  

It’s Super Market!  Strange index from another reality, who ignores bad news and achieves p/e multiples far beyond those of rational markets. Super Market, who can break resistance on low volume, move higher without consolidation and who – disguised as a genuine Price Discovery Mechanism, an actual indicator of the true-value of listed companies – Instead fights a never-ending battle with rational thinking and negative data because, in America, the market is only allowed to go one way!  

Ths morning, global markets are following the Nikkei higher as Abe was re-elected and the Nikkei popped 1.6% – as if it were some kind of surprise – even though Abe's party just clinched a 2/3 majority in Parliament 2 weeks ago so who didn't know he'd be re-elected too?  Apparently 1.6% of the Nikkei's worth of people is the correct answer.  Any excuse, of course, is a good excuse to rally the markets these days.  There was a terrorist attack in NYC yesterday with 8 people killed and 16 wounded and the markets still rallied into the close – just before Wall Street traders had to step over the bodies on the way home from work.  

Silver and gold blasted higher, allowing us to close out our long Silver (/SI) Trade Idea from last week's Live Trading Webinar with a lovely $6,490 gain and it's a good thing we weren't greedy as my call this morning (6:26) in our Live Member Chat Room was:

Good pop on /SI, $17.03 – taking profits there as it partly makes up for /RB losses.

Silver has since dropped back a bit, to $16.96 but Gasoline (/RB) is persistantly annoying at $1.755 and we're in at an average of $1.729 on our shorts so a loss of $1,092 per contract at the momnent ($420 per penny).  We'll have to see how the EIA report goes at 10:30 but the API Report last night showed a huge 7.69Mb draw in Gasoline, which is ridiculous as it would indicate a 15% jump in gasoline demand in a week – that's very unlikely.  It may take a while to get the real story though we have seen a massive uptick in exports.  Oil (/CL) at $55 is a good short too, but very tight stops over that line to limit the losses.  

Image result for gasoline exportsFrom a Global perspective, gasoline is still cheap in the US, with Europeans spending closer to $6 per gallon and even Canada, due to taxes, pays $3.92/gallon on average (nice chart here) and Mexico is at $3.75 and Brazil is $4.65 – and there's 200M people there you know!  So no wonder, given the choice to sell gas in the US market or export it – they US refiners have been shipping it out of the country, causing Americans to pay more – despite our local surplus of supply.  

This used to be considered a threat to our energy security but, thanks to the GOP Congress, the law has been changed and exports are allowed.  In addition to almost 1M barrels per day of Gasoline Exports, we export another 1M barrels per day of oil, which seems insane as we import 7Mb/d but some are able to buy low and sell high – so the barrels go out of the country and the prices go higher ($55 this morning).  

Image result for gasoline exports 2017That's double what we were shipping out last year and, if they can finish those "vital" pipelines, they'll be able to double up exports again and then we'll begin to consistently see Europe-like prices for gasoline and oil (Brent Crude is $61.50 this morning).  Trump has already given the order to completely deregulate oil and gas exports and production in a policy he calls "energy dominance."  Sadly, the only thing that's dominated is your wallet!  

This is another wonderful way we (the Top 1%) can extract money from the bottom 99% because we can invest in energy companies that profit from the sky-high prices – just like the good old days under Bush!  Sure we may pay a bit more at the pump ourselves but my Range Rover only costs $75 to fill up at $3/gallon and my 1,000 shares of Exxon (XOM) pay me a $3,000 dividend – so it's like a 50% discount on gasoline for the year!  We also have the refiner, Valero (VLO) in our Butterfly Portfolio – and look how well that's doing:

That one is up net $13,337 and that pays for a year's worth of car payments too.  It's still good for a new trade as the current net cash outlay is just $6,527 and it's a $30,000 spread so potential gain of $23,473 (359%) in 14 months if all goes well.  So all we have to do is jack up oil and gas prices so the little people pay $10-20 more each time they fill up and we get a free car and gas – it's a win-win, right?  It's a win for us, obviously, and a win for the little people as there are far, far worse ways we can screw them over if we want to.

Image result for next fed chairmanSpeaking of screwing the poor, it's Fed Day and no, we're not going to raise your borrowing rates yet but we're going to because we (in the Top 1%) will soon be cashing in our stocks and that means we'll be demanding more interest if you want to use some of our cash pile.  Don't complain, you voted for this – we're in charge now!  President Trump is going to announce his choice for a new Fed Chair and, though we don't expect a rate rise today (2 pm), they are coming but, for now, party on markets – party like it's 1999!  

Meanwhile, we'll be pressing our hedges, using about 1/3 of our unrealized gains to lock them in – just in case the market hits some kryptonite at some point.  The Russell (/TF) is back to our 1,515 shorting line and that's been very good to us and 23,450 on the Dow (/YM) Futures is also a good shorting spot ahead of the Fed.  Keep tight stops above and watch out for the Fed meeting at 2pm – we'll be covering that live in this afternoon's Webinar, which starts at 1pm, EST.

Be careful out there!  


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  1. Morning, All!

    Join us for today's webinar at 1pm!

  2. FU TEVA!!!!!!

    Allergan (AGN) expects sale of Teva Pharmaceutical shares to begin in next few days — Bloomberg 
    Wednesday, November 01, 2017 12:15:18 PM (GMT)

    Headlines only; comments coming from AGN conference call

    Note AGN holds ~100M Teva shares or ~9.9% of outstanding according to FactSet data

  3. Phil,

    With all the exports do you feel /CL and /RB should be this high? We've talked about fair value of oil should be $50

  4. Phil--why would the AGN CEO say that they expect to start selling their TEVA shares in the next few days?

  5. Phil-


    Any position in /NGV8?  You haven't mentioned it lately.



  6. Allergan confirms will begin Teva share sale in 'next several days' Allergan (AGN) expects to complete the selling of Teva (TEVA) shares in 2018.

    Read more at:

  7. Phil, what are your positions on NG. I know you have March and October 2018 longs but what is your basis and how many contracts on each? Thanks and sorry if I missed it earlier

  8. Good Morning.

  9. FU FTR!!!!

  10. Apparently FTR only sounded good until the bell rung.

  11. FTR is winning… dangit!

  12. FTR – Nice flush….  

  13. FTR going bankrupt today.  I''ll tell you, this is nuts the entire market.  I am getting beat every day.

  14. Baron--imagine if they removed their dividend.. what a POS

  15. FTR – Picked up a little more at 10.20….. :)

  16. Phil / X (US steel)

    Looks like they had a good quarter and 2019 strike 25 puts are selling for $4 with the stock already touching $29 it looks like a great deal on paper but wanted to get your thoughts on it.

    Thanks as always


  17. 1020/FTR

    me too and $10 puts to go with

  18. Phil/FTR

    double down here?


  19. FTR

    so 10 was bad

  20. Good morning!  

    That about sums it up for this market.  No grounding in reality at all with these values and the media has flip-flopped from questioning the valuations last Q (when they were 10% lower) to now explaining them away in that "Everything is Awesome" flow of logic – right before they cut to news of the latest Trump indictment or terrorist attack.  

    It reminded me so much of this time in 2007 I went back and read my 11/1/07 post, which said:

    I wonder what everyone is so worried about all of a sudden?

    Well, take your pick I guess, you can use the cartoon above as a dartboard to pick something to worry about each day.  I predicted this post-Fed crash on Monday but it came a little faster and harder than I thought (I had declared Monday to be Jan 13th, 2000 – 5 days before the crash) but, looking at the banking sector's performance, it seems our problems may be deeper and more horrible than I thought.

    I had a dozen calls and mails and 40 IM's yesterday from traders saying "What's happening?" as they were too busy dumping things to bother to find out why they were doing it.  By the end of the day I was just snapping back with the reply "Reality."

    As I've mentioned before, it's been beaten into us for 2 years to buy on the dips and that will be a very hard habit to break if the market turns truly bearish.  Until we see some real strength OR weakness, it is going to be far safer to go with the flow, rather than trying to get ahead of the turns.  If we get a real change of sentiment, all news can become bad news quickly!  

    Are we doomed?  Economically – absolutely!  But will the markets react that way before a recession slaps them in the face?  That's hard to say.  Obviously our government is doing everything in their power to boost the markets but the fact that it's the COMMODITY markets they help first has left us on a very shaky foundation and the bubble grows ever larger and there simply isn't enough air left in the Federal lungs to grow this thing any larger.   Let's watch for the true commodities like copper, nickel and steel to fall first, then oil but not gold as all this financial instability will send Asian investors flying to their favorite metal.

    So, 10 years later, we still have to go with the flow until we get some clear sell signals but every time I look at the LTP, I have the urge to cash it all in!  

    Good day to see if we get a real breakout on the Russell but already a nice, quick $250 gain at 1,510 from our first short.  

    Exports/Japar – The exports are the "demand" story and yes, it may be enough to support prices up here as it's not likely to change.  It's also why we are long on /NG, but those exports will take all of next year to ramp up.  The thing about gasoline exports is they already have the infrastructure in place to ship it out.  

    AGN/Jabob – That was announced a year ago. I"m surprised they aren't already done selling.

    /NGV8/Jeff – No, not since yesterday at 1:45!   

    /NGV8/Jomp -  I have 4 long at $2.95 avg.

    FRT/Jabob – Wow, I'm with you today, WTF?

    Must have been one bad conference call!  Slide show looked fine

     X/Pat – Yes, unexpectedly good on them.  Shorting the 2019 $25 puts is a good way to establish.  If we ever get an infrastructure bill, it should boost them too.  CBI an even better bargain and riding on X's coattails a bit.

    FTR/1020 – Well I guess you had to do that one…

    FTR/Pat – I think it's too soon to call and, of course, if you didn't already sell puts, you can just sell the 2020 $10 puts for $6, which is as good as doubling down at $4 but and you get $6 in your pocket instead of taking $10 out.  

  21. FTR – I think someone big has thrown in the towel….twice the daily volume already…..

  22. I really hope FTR wins the FU stock of the year. TEVA earnings are tomorrow. They got killed after their last earnings. I really need them to recover to end the FU stock damages. Dangit!

  23. 9.18 WTF?

  24. FTR $9.40

    TEVA $13.90 – Looks like AGN is selling all of it now.  They bought 10% of TEVA at about $45 so $4.5Bn and they are down about $3.5Bn – hasn't helped their stock either. 

    We have 30 TEVA 2019 $25 puts in the LTP and those are now $12  and we could sell AGN $140 puts for the same price instead.  

    Indexes rolling over.  2,580 on /ES is the lagging short. 

    Lined up with 23,425, 6,255 and 1,502.50

  25. Oil with a good draw but nothing like API – should sell off there as well:

    • EIA Petroleum Inventories: Crude -2.4M barrels vs. -1.8M consensus, +0.9M last week.
    • Gasoline -4.0M barrels vs. -1.5M consensus, -5.5M last week.
    • Distillates -0.3M barrels vs. -2.1M consensus, -5.2M last week.
    • Futures +1.16% to $55.01.

  26. The prices on the FTR puts doesn't really inspire confidence! I guess you could gamble some pocket change at this time. The risk reward is not that bad at these prices! Not for me though…

  27. FTR has been trading like a BK since we bought it. Every drop was supposedly a great risk/reward. Is this time different? I hope so. I have 10--15 call spreads that look like they will be worthless now. What a disaster. Wonder if it will be a goose egg.

  28. Phil – RB – When is the end to this climb? Thanksgiving is just around the corner.

  29. The market doesn't seem to really believe QCOM is going to lose 1/3 of their revenue because of AAPL. They are barely down since the rumors.

  30. FTR/StJ, Jabob – There was nothing in yesterday's earnings or CC that deserved this – very strange.  

    /RB/Bulls – There's no telling now, that's why it was tight stops on the upside

    Submitted on 2017/10/27 at 11:10 am

    /RB stubbornly high and /CL popped to $53.23 (I still have /RB short, not /CL)

    Submitted on 2017/10/27 at 2:42 pm

    /RB/Japar – I have 3 short at $1.703 at the moment.  Probably won't go to 4 with the weekend coming and back to 1 if we get a dip, which I doubt.

    Submitted on 2017/10/30 at 1:28 pm

    /RB/Latch – Well I just missed a chance to get back to 1 short even at $1.703 but I don't mind being 3 short for the week.  

    Submitted on 2017/10/31 at 3:12 pm

    /RB/Japar – 4 short at $1.706.  Down $4k at $1.73 frown  I missed two different chances to lighten up even – very poorly played.  


    /RB/Pat – I just added a few more to bring my avg to $1.72 with tight stops over $1.75.

    So it's playing out about as rough as expected and, at the moment, after a few in and outs, I have 6 short at $1.7297167 and I'm down about $9K but, fortunately, I made $6K on /SI and took that off so I'll be happy when I get $3K back on /RB at this point.  

    If you can't afford to run up losses like that, then DON'T scale into futures as this can happen very quickly.  As we discussed in last week's webinar – TIGHT STOPS keep you out of trouble and, even with scaling – if I had been paying attention I'd have a way better position now but I'm really too busy to play the futures properly.  

    It's a good example of doing what I say, not what I do as playing with tight stops at $1.73(ish) gave 4 good opportunities that made $500-$1,200, which is a lot better than I did scaling in (so far).

    /TF back at 1,500!  

    Germany/Scott – That's funny and does not bode well for the future of electric companies.  One more democratic administration promoting solar and they've probably had it.  

    • Crude oil surges to its highest levels since mid-2015, as new data shows OPEC has significantly improved compliance with its pledged supply cuts.
    • A Reuters survey says OPEC's October production fell by 80K bbl/day to 32.78M bbl/day, meaning compliance to the cartel's pledged supply curbs was 92%, up from 86% in September.
    • Analysts and traders also expect Russia to stick to its agreement to curb its oil output by 300K bbl/day from 11.247M bbl/day reached in October 2016.
    • Also helping: U.S. crude stockpiles fell by 5.1M barrels and gasoline supplies slid by 7.7M barrels last week, according to the latest data from the American Petroleum Institute.
    • At last check, U.S. WTI +1.2% at $55.02/bbl, and Brent +1% at $61.55/bbl, helping boost the Energy Select SPDR ETF +1.3%.
    • ISM Manufacturing Index58.7 vs. 59.5 consensus and 60.8 prior.
    • Employment 59.8 vs. 60.3 prior.
    • Prices 68.5 vs. 71.5
    • New Orders 63.4 vs. 64.6
    • Production 61.0 vs. 62.2
    • Macy's (NYSE:M) breaks higher on some rekindled talk of activist investor action. The sharp declines in mall retailers this year has created some edgy trading off of similar activist investor chatter.
    • Shares of Macy's are up 3.68% in early trading and are making a run at the $20 threshold.
    • Barrick Gold (NYSE:ABX) is downgraded to Sector Perform from Outperform with an $18 price target, cut from $21, at RBC, which says the miner’s main de-leveraging and operational objectives essentially have been achieved.
    • RBC's Stephen Walker thinks investors now will shift their ABX focus to capital allocation priorities, JV partnerships and resolution of the Tanzania issues; the firm also believes share buybacks and dividend increases are unlikely near-term, and expects excess capital to be directed to new mine developments such as Goldrush, Alturas and Donlin Gold.
    • RBC also upgrades Goldcorp (NYSE:GG) to Outperform from Sector Perform, as the firm expects shares to re-rate higher on free cash flow growth potential in H2 2018.

    QCOM/Jet – Analyst from 10 years ago: "Don't worry, they will be able to sell to all of Apple's MP3 competitors out there…."  Oops…  

  31. FTR is truly unbelievable. The quarter seemed to be on track. The most hated stock ever! Add that to my very bad earnings season--GNC, CBI, ABX, CDE, CMG, CLF.  Terrible two weeks :-(

  32. jelutuck--I hope TEVA will not follow suit tomorrow with those dog with fleas stocks.

  33. Frustrating how a small position turns into a large position when a short put goes bad.

  34. Jabo, I hear ya. Luckily my position in TEVA is very small and I got in later than most of you. I just have a few short 2019 $15 puts so I can improve that one easily.

  35. EVTC 

    Sold a few $12.50 puts, had to do something.

  36. QCOM/Phil. Not sure I get your point…

  37. The biggest problem with Phil's trading style is that gains usually accrue slowly as premium erodes but losses pile up quickly even if only a few positions go bad. Managing the losers seems to be a constant headache.

  38. Yes, that's 5.5Mb/PER DAY of oil and products we are exporting!  

    On the bright side, Jabob, they don't have much further left to fall!  

    Puts/Jet, Jabob – What are you guys doing with the positions on the way down?  

    Took the money and ran on /CL at $54.20 as it looked bouncy.  That puts me even on /RB so I have no tolerance for going back over $1.75 now.  

    QCOM/Jet – I'm saying that when IPod had competitors (like IPhone does now – and they are so cute!), a chip-maker may have felt that losing Apple wasn't the end of the world but those competitors were in a shrinking market and, eventually, almost completely extinct.  That's where QCOM is now, foolishly pissing AAPL off and thinking there are other fish in the sea.

    Losers/Jet – On the Futures, sure and, as to regular positions, that's why hedging is essential.  If you are going to sell short puts, you either have to REALLY want to (and be able to) own the stock at the net strike or you should just stick to bull spreads without the offsets.  

  39. what did i do?

    I added, averaged down, swapped into FTRPR, etc..

    unfortunately, these FU stocks have been demolished. especially after earnings.

    so adding and averaging down has been a killer to my portfolio.

    especially, with FTR that has crashed big time. 

    Dumbest thing ever was not taking the hit when they reverse split (or announced it).

    I hope TEVA will be the opposite. 

  40. Our President, ever the statesman in a time of crisis:

    The terrorist came into our country through what is called the "Diversity Visa Lottery Program," a Chuck Schumer beauty. I want merit based.


  41. Phil; For those of use not trading futures, are you still bearish on /cl and /RB through the end of the year?

  42. QCOM / Phil – Are you predicting that Android will disappear the way MP3 players did? They still have over 80% of the market and not really shrinking. 

  43. Are there many people on PSW that even trade futures? Successfully? Curious.

    Phil, I know you love trading futures but it sure seems to take up a lot of your valuable time? 

    It seems like almost all of the PSW members have been pretty silent about them?

  44. DJ Another Headache for Teva Shareholders 

    Nov 01, 2017 11:47:00 (ET)


    By Charley Grant

    This wasn't what Teva Pharmaceutical Industries shareholders wanted to hear.

    Drug maker Allergan , the largest owner of Teva shares, will soon begin selling its nearly 10% stake in the generic drug maker, Allergan finance chief Tessa Hilado said on Wednesday's conference call with analysts. She expects to finish by the end of next year.

    That Allergan is selling comes as no surprise — the shocker is that they haven't begun yet. Teva's stock is down nearly 60% over the past three months and there was speculation part of the reason was Allergan moving the market. They had said in August that the company wasn't interested in owning Teva stock, which they acquired in a deal with Teva last year, for the long term. Allergan is Teva's largest shareholder by far. No other investor's stake exceeds two percent.

    At least Teva won't have to wait long to try and brighten the mood: it is set to report third quarter results on Thursday.

  45. FTR – Dec $9 puts going for 1.25…!

  46. I don’t trade futures as I live in Arizona 3 hours behind East coast and I don’t want to sit at the computer all the time. I’m a Long Term investor so daily trades are not for me. I would prefer no futures as I think it distracts from the basic PSW philosophy of investing    

  47. FTR – a Jan 2020 8/5 short put spread is quoted for 2.90 on $300 margin… yields 43.7% annualized return on your used margin.

  48. txchili

    I just moved to Mesa from NC, 3 hour difference.  I was up anyway there so here I'm done by 1 pm and in the pool with raspberry margarita courtesy of Superstition Market

  49. CTL

    ~~ CTL – CenturyLink completes acquisition of Level 3 (LVLT)

    Added more CTL.  Now have a double position.  Think today's price action is related to arbitrage.  Believe that the 12% dividend is now very secure, which makes it a compelling value !   JMHO.

  50. I came here mostly for the futures trading calls. I think it is fun (most of the time) and a great way to hedge. Just my two cents.

  51. FTRPR – huge hit today.

  52. …but only 18% compared to 24% knock on FTR itself. ouch.

  53. Folks, I have been here (unless MrM is still around) for a very long time.  There are many trading styles and ways to do things.  Opt has his style, I have mine, Phil his.  Overall, the LTP and OOP are the best ways to manage a portfolio with small amounts in the rest.  There are always a few dogs in the portfolio, but overall, things should be on the upside.  That being said, as we all know, trading is at our own risk.  This site is eyes on all aspects of the market, with some very intelligent people to help out along the way.  I have lost on some, many my own.  Overall, though, I have to admit, there is nothing else like it out there.

  54. By the way, in case anyone cares about the truth anymore:

    Trump appeared off base in his criticism of Schumer. The program originated in part in a bill introduced by the New York Democrat in 1990; but Schumer was also among a group of lawmakers who later sought to drop the visa protocols assailed by Trump.

    Still, Schumer was singled out as the brains behind the program and therefore, critics said, bears responsibility for the attack.

    And who was President in 1990 who signed the bill???

    FTR/Jabob – At some point, you have to bite the bullet and DD again if you plan to stay in it.  Hoping it will go back to $20 or whatever is not a good strategy.  Or, if you don't have faith (though I've said this before), just get out and try to make money elsewhere.  In the LTP, we only have 4,000 shares of FTR at $80,000 which is not even 5% of the portfolio, doubling down at $10 would cost us $40,000 more but we already sold 40 of the 2020 $10 puts for $20,000 so net $60,000 and then a DD at $40,000 would be $100,000 for 8,000 shares so $12.50/share and the short puts and then we can sell 40 2020 $8 calls (1/2 cover) for $2 ($8,000) and, if they pay the $2.40 dividend, we'll collect $19,200 x 2 years = $38,400 so our return over 2 years on net $92,000 (still not 10% of the portfolio and not 5% of the buying power)  would be 41.7%.  That's all we ever bought the stock for in the first place – to be a good dividend-payer.  Any gains it makes are going to be a bonus.  

    As long as they don't go BK, in 6 years we'll have collected back 100% of our money and then the value of the stock and any future dividends are just a bonus.  

    Oil/Options – I would not be short oil or gasoline after the 15th (into Thanksgiving) and then it's Christmas so no, not a good time to play it short.

    Android/StJ – Yes, I think the IWatch will sneak up and take a lot of share and then AAPL will keep adding features and lowering prices until they squeeze out the competition – like they did with IPod 

    Image result for ipod market share history mp3

    Image result for ipod market share history mp3


  55. iPods…I have a touch!  But…that figure is from 2006.  That time, the early adopter won. Phones will be around for a long time, and I don't see AAPL cornering that market.

  56. AGN…quite a reversal….

  57. FTR/Scott – Interesting way to play it.  

    Thanks Pharm.  Everything in moderation is a good way to go.

    Phones/Pharm – That's what BBRY and MOT and ERIC and a bunch of others were saying 5 years ago.  Because of the contract business, it's a slower cycle for AAPL to wipe out the competition but they are following the same plan Cook had when he ran the IPod division – keep putting out top-line models to make money but drop the price on older stuff to squeeze out competitors.  People don't realize that the stand-alone watch is now a very low-cost phone for poorer countries.  The watch and the IPhone SE are both $349 now, probably $199 in 2019 – that's essentially free with any Telco plan.  

  58. CTL – Part of the selling could also be in sympathy with FTR.

  59. Pharm's  CAR-T picks    KITE ( acquired ), JUNO ( flying today and earnings tonight)  and BLCM  (still playable )

  60. CTL looks interesting but not a lot of good sentiment, rumors about lawsuit, earnings issues, etc.  Good day to buy though if not waiting for earnings; there is some big lot buying.

  61. Pharm, right, and we all have some of our own picks too, I was looking at some recent winners for me:


    loser: FGP (for now, this one will turn around). :) PLX… (completely out for good)

  62. Phil;  From 9/14 you added to the STP the following trade but haven't entered it on the Optons summary.  Just want to make sure you apply the same adjustment as you suggested for the OOP:                              In the OOP, let's add: 

    Buy 20 SCO Nov $33 calls for $4 ($8,000) 

    Sell 20 SCO Nov $39 calls for $1.80 ($3,600) 

    Sell 10 SCO Nov $35 puts for $3 ($3,000) 

    That's net $1,400 on the $12,000 spread that makes money as long as oil is under $50 in November.  Upside potential is $10,600 (757%) in 64 days.  That should pay for our Christmas shopping and also makes a nice market hedge. 

    In the STP, let's do the same spread but with 50 bull call spreads and 25 short puts.  

  63. I doubt you will be get dividends for much longer with FTR. 

    I have doubled down and it has cost me 10s of thousands with this POS company.

  64. CTL

    Buy 100 shares and then the Jan $18 put and call sell for a total of $3.00

  65. That Crazy Talk About Robert Mueller

  66. A Capital Consumed by Talk of Scandal and Suspicion

  67. CTL

    Plus a .54 div end of Nov.

  68. Former Trump adviser’s guilty plea could rattle White House

  69. HFC/bdc – way to go!

  70. will we hold 9? unreal!

  71. No :-(

  72. Hi Pharm! I'm still here shadowing, not doing much chatting. I'm past my 10,000 hours and working on 20, and still learning, and failing, a lot.  Like Phil I can't get the logical part of my brain around this rally so I've mostly sat it out, or shorted it to my dismay.

  73. What does the VIX say? No worries mhan.

  74. TEVA actually looks like it is basing, but my computer is stressing out, making that little spinning  cursor motion all the time.

  75. I miss you MrM!  :)   Shorts…I have short shorts.  Mine use to be the long ones basketball players wear, but I have lost them over time…. 

    No change to the fed rate.  Up we go.

  76. Baron--TEVA will move tomorrow. Hope and pray they don't pull a FTR!

  77. "inflation for items other than food and energy remained soft" says the Fed…

    So, the standard of living items are getting more expensive.  Humm…..

  78. CTL

    Anyone like my idea, (or not) of buying shares and selling Jan $18 put and call for $3

  79. Baron2   No opinion, just be prepared that the puts might be exercised

  80. BDC…PLX crying If anyone remembers Sprint ION….where one could get TV, Phone and Internet….well, that's PLX.  Ahead of their time.  New technology will win out.

  81. Phil/ futures

    Couldn't join webinar, pls post any futures trades. Thx

  82. with all the FTR hoopla forgot about webinar

  83. Pharm / PLX – that's one of many pharma dogs sitting in my account, down 82%. Are you suggesting they might actually survive?

  84. Baron – I look at CTL differently.  I would buy the stock and sell the puts, but not the calls.  I am looking at a stock which will pay me 12%, hopefully for years.  If I'm right about the dividend now being secure, it's just a matter of time before the stock appreciates so the yield is much lower.  If the market decides it should trade at an 8% yield, I'll also have 50% appreciation.  Again, IMHO.













  85. CTL/Albo – i'd possibly join you if I hadn't been a CTL customer for too many years. Finally cut the cord from them about 1.5 years ago. Whole region where I live LOATHES them. Not one customer has a good thing to say about them.

  86. Albo/CTL

    Understood, but with earnings coming up I was just looking to eliminate/minimize downside risk and if it gets taken from me I made almost 20% for 3 months.

  87. So the Fed was pretty much a non-issue.  

    In its statement, the Fed said the hurricanes were likely to temporarily disrupt economic activity, employment and inflation but that the storms “are unlikely to materially alter the course of the national economy in the medium term.”

    The central bank’s vote was unanimous.

    Robust household spending, upbeat consumer sentiment, a strong labor market and better growth overseas are likely to offer support for Fed officials inclined toward another rate increase this year to ensure the economy doesn’t overheat. While U.S. employers shed 33,000 jobs in September—largely attributed to the recent hurricanes—the statement noted that the unemployment rate “declined further.” The unemployment rate dropped to 4.2% in September, the lowest level since 2001.

    Ms. Yellen also said recently that progress on average hourly earnings was “encouraging.”

    Boston Fed President Eric Rosengren said in an October interview that if the economy performs as expected, “December seems like a reasonable time” for another rate rise.

    Atlanta Fed President Raphael Bostic told reporters in September, “I am at this point looking—feeling pretty comfortable about the idea that we will be looking to move rates come December.”

    SCO/Options – That's right, I didn't log it in the STP.  The adjustment would be the same.  The Nov $33 calls are down to 0.40 so it's all about whether or not we can roll the short $35 puts, now $5, to be worthless over time.  The April $28 puts are $3, so a roll to 25 of those might be the way to go and then we'll see if it's worth adding a new bull call spread.  The Apr $27s are cheap at $5.15 and the $31 calls are $3.85 so $1.30 for that spread is pretty tempting.  Since we started at $1,400 and we spend net $5,000 on the put roll and another net 0.90 ($4,500) on the spread change (leaving the short Nov $39s to expire worthless), we'd then be in 50 April $27/31 bull call spreads at net $10,900 so still a double if SCO can get back over $31.  Not a terrible adjustment.  

    FTR/Jabob – So the management is lying?  If you think that, why stay in? 

    Hola MrM!  

    Futures/Ravi – Got out of /RB as it bounced so just long /KCH8 and /NGV8 at the moment.  

  88. Computer circle/Baron

    Its called "The Circle of Death"

  89. I don't think they are lying. I just think the dividend will get cut if they don't improve. Why pay such a high dividend? I am surprised they did not cut it this quarter. 

  90. Scott – I agree with your assessment.  CTL's management has done a terrible job.  However, the company now has Jeff Storey from LVLT as it's COO.  By all accounts he is an extremely able executive, who I believe will take over as CEO in a short period of time.  The merger with LVLT makes CTL a much more attractive stock, IMHO.

    Baron, I think your play will work out nicely.  CTL's earnings most likely will be bad.  I think they should be baked in at this point, but I could be wrong.

  91. ALTR – ipo this morning, off to a good start.

  92. CTL

    Could sell Jan $17 put and $19 call for $2

  93. Hola Philip!  Do you think DX will go much past 95 on this run? EUR looks to be basing and I'd like to get long at some point…

  94. Someone must think QCOM will have good earnings tonight!

  95. One final tidbit on CTL, then I promise I'll shut up !

    This recent comment from Southeastern Asset Management, one of LVLT's largest shareholders, on the new CTL : 

    " The prospective cash flow from the combination

    with Level 3 should easily cover CTL’s current dividend which

    was otherwise in question given its declining legacy land

    line business.  We anticipate that the deal will close and believe the new CTL will be the

    preeminent global fiber network solutions company with an

    extraordinarily capable management team, including Level 3

    CEO Jeff Storey."

  96. CAA – wow!  c'mon HOV… waiting..

  97. Dividend/Jabob – Well we discussed that in the Webinar.  They feel they owe it to the "widows and orphans" who depend on the stock's income AND they don't need the money – everything is being paid on schedule and their cash is still growing.  This is what amazes me the most:

    FU FTR!!!!!

    The stock was at $48 (pre split) back then, now it's at $9 and you say you hated it every step of the way.  Why are you still in it?  There are 48 "FU FTRs" in 12 months and that's not including other negative comments about the company.  Surely there must be some stock you actually like that you can invest in instead?  It's one thing to stick with a stock you do like as it drops but FTR was HIGHER ($51) in Dec but then back to $45 in March and then down and down and down.  If you hated them for 4 months before they started dropping, why on Earth did you not get out after 4 20% drops?  

    Meanwhile, on Dec 13th, they paid $1.575 per new share and again on March 13th and then we split and it went to 0.60 on June 13th and Sept 14th so that's $4.35 so, even if you paid $45 and didn't sell any calls and didn't double down, that's still 10% collected in dividends in the past 12 months. 

    /DX/MrM – It depends who Trump picks going forward.  Anyone even a bit hawkish and the Dollar will pop over 95 but I doubt that as Trump likes his record highs.  

    Failed those strong bounce lines on the indexes.   That makes it iffy for tomorrow.  

  98. INTC – last qtr been on most monster run since tech crash.

  99. If I had your crystal ball I would have been out at 45.

    Of course, that is where you were saying that it was a great value.

  100. die TSLA

  101. LB up

  102. Phil, I am going to come to Jabo's defense here. You are a fundamental analyst and have made a ton of great recommendations. One of the reason we all pay money to participate in your site is to get good recommendations. FTR was a horrible pick. A hundred monkeys could have thrown darts all day at the WSJ stock listing page and made better picks. It doesn't make you a poor analyst, you are still the best in my book, but that company was (and may still be) horrible. It went down so fast that any adjustments made just increased the leverage to make steeper losses. Just admitting that it was a poor recommendation might help. It is going to be a long-term learning experience for many of us, I just wish it weren't such a costly one.

  103. BLUE….November 1, 2017, Cantor Fitzgerald increased the price target for Bluebird from $39 to $58.   LOL.  Current price is $142.95.  Hit an intraday high of $162.  Morons.

  104. Futures – "It seems like almost all of the PSW members have been pretty silent about them?"

    Never jinx a good thing.

    FTR – In-laws in the Cali acquisition just switched from VZ to FTR, can record six different shows simultaneous on the HD DVR, love the new service, cost less for the next two years.  What could go wrong?

    Aside from double digit revenue and subscriber declines, they exited Q3 with $286M of cash and cash equivalents compared with $522M at the end of 2016.  That's a huge cut in liquidity which probably spooked some weak hands.  Good news is that should be replenished from the free cash flow increase.

    Free Cash Flow – FTR's average annual free cash flow over seven years had been $612M, but then..

    2013: $861M
    2014: $582M
    2015: $438M
    2016: $265M

    Thats a -70% decline in four years. Q32017, Free cash flow in the reported quarter was $182M compared with $168M Yoy. Napkin math 182 x 4 = 728M.

    For 2017, they expect adjusted free cash flow in the range of $730-$750M, which will also go a long way to alleviating liquidity concerns, while paying down the $17.7B in debt which is the 800 pound elephant shitting in the middle of the room.

    They are in a sector like TEVA, which exhibits secular erosion, viz. increased competition,  alternatives or substitutes, and lower prices with the potential for reduced market share.  With FTR, free and cheaper streaming is eating TV revenue while alternative wireless is eating internet access revenue.

    More relevant, both are serial acquirers who have bloated their debt with acquisitions.  The amount of SGA, acquisition, integration, restructuring and other associated costs which affect operating cost, income and free cash flow, are IMPORTANT to note. 

    The TIMING thereof, must be observed closely for financial statement IMPACTS and the associated knee jerk reactions. Patience must be exhibited if your in for The Long Run. Late for my IV. Out.

  105. I think TSLA said they burned $1.4Bn last Q!

    • Tesla (NASDAQ:TSLA): Q3 EPS of -$2.92 misses by $0.62.
    • Revenue of $2.98B (+29.6% Y/Y) beats by $40M.
    • Shares -2.8%.
    • Press Release

    $45/Jabob – Our plan was always to DD at $20 and $12.  Now they are below $12 but, as I said, we're collecting so much dividends, who cares, as long as they keep paying it.  

    Sucks about LB, really getting away now.  

    • So much for those Black Monday anniversary stories. According to Bloomberg, the CBOE Volatility Index in October recorded the lowest monthly average in its history.
    • Chart here
    • U.S. auto sales surprised in October with a slight gain after research firms such as Kelley Blue Book and Edmunds forecast a decline.
    • Ford (F +0.9%), Honda (HMC +2.3%), Nissan (OTCPK:NSANY +0.2%), Toyota (TM +0.4%), Subaru (OTCPK:FUJHY) and Volkswagen (OTCPK:VLKAY +4.1%) all reported gains for October – showing off some strength beyond just hurricane replacement business in Florida and Texas. Though sales fell for General Motors (GM +0.5%), the automaker held on to retail market share of 17%.
    • Underlying economic factors such as low gas prices, a high level of consumer confidence and an unemployment rate of around 4% are being cited as demand drivers. Despite the solid month, analysts forecast sales in 2017 will be below last year's level amid the gentle maturation of the automobile industry cycle.
    • BHP Billiton (NYSE:BHP) said it plans to step up copper exploration and expansions ahead of rising demand for the metal in electric vehicles and renewable energy.
    • "We want more copper resources in our portfolio. And we believe the most valuable pathway to achieving this is through exploration, the drill bit," says Danny Malchuk, president of operations at BHP's Minerals Americas.
    • BHP is looking at discoveries in Ecuador, Chile, Peru, the southwest of the U.S. and Australia, Malchuk says.
    • Miners are spending billions of dollars on their existing copper mines just to keep supply steady, as they dig ever deeper for supplies, which likely will lead to a deficit in supply by the beginning of the next decade, according to Malchuk.
    • Nickel prices surge to their highest in more than two years, sparked by rising optimism over demand for electric and hybrid vehicles.
    • Nickel jumped as much as 6% to $13,030/metric ton on the LME, the highest since June 2015 and adding to yesterday’s 5.3% gain after Trafigura joined Glencore (OTCPK:GLCNFOTCPK:GLNCY) with bullish forecasts.
    • Batteries likely will use more nickel and less cobalt in the future, Trafigura chief economist Saad Rahim tells Bloomberg, forecasting demand for nickel sulphate, a key ingredient in lithium-ion batteries, to increase by 50% to 3M tons by 2030.
    • Global nickel producers include VALEBHPRIOOTCPK:AAUKFOTCPK:AAUKY
    • The Cheesecake Factory (NASDAQ:CAKE): Q3 EPS of $0.56 misses by $0.04.
    • Revenue of $555.39M (-0.8% Y/Y) misses by $10.29M.
    • Shares -3.62%.
    • Press Release

    Facebook +2% as Q3 revenues, profits blow out expectations

    • Facebook (FB +1.4%) is up 2% after hours following a Q3 earnings report where it beat revenue expectations by nearly $500M and posted earnings per share more than 24% above consensus.
    • No doubt mindful of his company's presence on Capitol Hill this week, CEO Mark Zuckerberg said the company is focused on a safe platform: "We're serious about preventing abuse on our platforms. We're investing so much in security that it will impact our profitability. Protecting our community is more important than maximizing our profits."
    • Revenues overall jumped 47% to $10.33B. Mobile ad revenue made up 88% of total, up from 84% of total a year ago.
    • Net income, meanwhile, rose 79% to $4.7B.
    • Average daily active users came to 1.37B in September (up 16%); monthly active users were 2.07B, also up 16%.
    • Conference call to come at 5 p.m. ET.
    • Press release
    • Fitbit (FIT +1.7%) has gained 1.4% in postmarket trading after its Q3 earnings beat on top and bottom lines though revenues slipped from last year in its key American market.
    • Net loss was $113M on a GAAP basis and just $3M on a non-GAAP basis. EBITDA was $6M, beating an expected EBITDA loss of $4.4M.
    • On a sequential basis, U.S. revenues grew 23% while EMEA contracted 18%; APAC grew 63% and Americas outside the U.S. grew 4%.
    • Products from the last 12 months (Alta HR and Ionic) made up 32% of revenue; average selling price was up 12% Y/Y to $104.72 per device.
    • Revenue by geography, Y/Y: United States, $244.2M (down 32.4%); Americas excluding U.S., $25.3M (down 2.6%); Europe, Middle East and Africa, $88.7M (up 9.6%); APAC, $34.4M (down 3.7%).
    • For Q4, it's guiding to revenues of $570M-$600M (vs. consensus for $572.7M), EPS of -$0.03 to $0.01 (above expectations for -$0.04) and EBITDA of -$1M to $18M (above an expected -$4.8M).
    • For full fiscal 2017, it's guiding to revenues of $1.615B-$1.645B (vs. consensus for $1.617B) and EPS of -$0.27 to -$0.23 (above an expected -$0.32).
    • Conference call to come at 5 p.m. ET.
    • Press Release
    • FireEye (NASDAQ:FEYE) shares are down 11.3% aftermarket with a Q3 report that beat EPS and revenue estimates and featured mostly in-line guidance with a notable FY17 EPS miss.  
    • Q4 guidance features revenue from $190M to $196M (consensus: $195.91M) with loss per share from $0.03 to $0 (consensus: -$0.01). The company expects billings from $210M to $230M, non-GAAP gross margin of about 75%, operating margin around -1% to 1%, and cash flow from operations of $16M to $25M.
    • FY17 guidance: revenue, $739M to $745M (consensus: $741.81M); billings, $736M to $756M; EPS, -$0.19 to -$0.16 (consensus: -$0.21); cash flow from operations, $1M to $10M; capital expenditures, $40M to $45M. 
    • Key metrics: Billings, $201.7M (-6% Y/Y); non-GAAP gross margin, 74% (flat); operating margin, -2% (+12%); cash flow from operations, $12.5M. 
    • Press release     
    • Previously: FireEye beats by $0.03, beats on revenue (Nov. 1)
    • GoPro (NASDAQ:GPRO): Q3 EPS of $0.15 beats by $0.13.
    • Revenue of $329.81M (+37.1% Y/Y) beats by $16.71M.
    • Shares -11.15%.
    • Press Release
    • Hanesbrands (NYSE:HBI): Q3 EPS of $0.60 in-line.
    • Revenue of $1.8B (+2.3% Y/Y) in-line.
    • Press Release
    • Pershing Square's Bill Ackman has finally thrown in the towel on his firm's short position in Herbalife (HLF -1.2%), covering shares after extended losses. Instead, he has opened a separate bet exclusively in put options that will limit the risk to 3% of the firm's capital.
    • Mr. Ackman initially reported his short position in the nutritional and health products company in late 2012 claiming the stock would eventually be worthless once authorities realized that it was running an illegal pyramid scheme.
    • Authorities never completely came around to his view and bargain-hunting investors steadily drove the price northward. Shares are up ~50% this year, for example, aided by the company's share repurchases.
    • Q3 core earnings (excluding premium amortization adjustment) of $367.3M or $0.30 per share vs. $332M and $0.30 in Q2. PAA was a $0.04 cost during quarter. Dividend is $0.30.
    • Book value per share of $11.42 rises from $11.19 three months earlier. Today's close of $11.52 is a dime above Sept. 30 book value.
    • Economic return for the quarter of $0.53 per share or 4.7% on book value.
    • Economic leverage up 50 basis points during quarter to 6.9x.
    • Net interest spread (excluding PAA) of 1.15% down four basis points from Q2.
    • Conference call tomorrow at 10 ET
    • Source: Press Release
    • NLY flat after hours
    • Qualcomm (NASDAQ:QCOM): Q4 EPS of $0.92 beats by $0.11.
    • Revenue of $5.9B (-4.4% Y/Y) beats by $100M.
    • Shares -0.9%.
    • Press Release
    • Shake Shack (NYSE:SHAK) trades higher after posting a mixed Q3 report.
    • Same-shack sales fell 1.6% during the quarter vs. -2.6% consensus.
    • Traffic fell 3.8% during the quarter, partially offset by pricing and menu mix.
    • Adjusted EBITDA +20% Y/Y to $18.2M.
    • Restaurant level operating margin came in at 27.2% of sales during Q3.
    • The company sees FY17 of $354M to $355M vs. $355M consensus.
    • Previously: Shake Shack beats by $0.02, misses on revenue (Nov. 1)
    • SHAK +3% AH to $38.25.

    Yelp beats by $0.07, beats on revenue

    • Yelp (NYSE:YELP): Q3 EPS of $0.29 beats by $0.07.
    • Revenue of $222.38M (+19.4% Y/Y) beats by $1.63M.
    • Shares -13%.
    • Press Release

  106. jelutuck--thanks for the support ;-)  

    It amazes me that the only time Phil will admit to a bad pick is when it goes BK like BTU and GTAT.

    I have been on this site for years. Phil is great and works his tail off.

    Unfortunately, many of us aren't as good as him at selling puts and calls and knowing exactly when to sell them when a FU stock tanks or has a short term rally. 

    I lucked out with RIG and GNC to not take huge losses. 

    I did not luck out with CLF when it tanked from the 20s to 1+. 

    I made a little back but the BK risk seemed to much to hang in there.

    When I hear Phil say TEVA could go BK or FTR could go BK it definitely makes me think twice about adding to positions. The same happened with CLF too.

    So FTR could pay their dividends and recover (I hope) but that does not mean it was not a horrible call at 45. 

    Same can be said about TEVA.

    I do not expect Phil to never lay an egg with some of his picks.

    But as Nat said, these companies loaded up with debt for their mistimed takeovers and I don't really care what a low P/E they could have when they are buried in debt and their revenues will be decreasing.

    Again, I am not saying they are not great bargains here. Hopefully, they will recover in time. I will gladly eat crow and promise not to write FU again on this site if they do.

    But to say this is what we we hoping for seems crazy to me.

    If so, let me know another stock we are hoping that will drop 60-90% so I could take the other side! 

    Sorry for the rant Phil. It just sucks to be in these losers all year and get hammered even more after adjustments (even if you do not agree with the adjustments and would have been selling calls all the way down).

  107. Phil--you don't have to write how the doubling up on TEVA and FTR could have been worked. 

    I know. 

    1/4 position then add when down 40% then double down after another 40%.

    All great if that is how you play it and then it recovers. 

    My concern is will they recover and keep paying.

    Of course, my biggest mistake was position size. But I have stated that many times.

  108. Is It just me or does it seem like after earnings stocks are moving big percentages. Either something is up or down 8+% and not a lot in between.

  109. Go LB!  Great call on this one Phil.

  110. Dathan – Mathematical expectancy.  More tomorrow.

  111. Nattering / FTR – do you have a handle of the impact of the preferred shares being converted next year.  I understand the that the conversion will help FCF, but when the shares convert there will be a dilutive affect on the stock, and depending on the conversation rate / stock price, the will still have to pay some of that.  If you understand this please explain.   I brought this up on the conference call today as well.

  112. FTR - Frontier Communications Corp., 11.125% Mandatory Convertible Preferred Stock, Series A, liquidation preference $100 per share. The preferred shares are mandatorily convertible on 6/29/2018 into a variable number of Frontier Communications Corp. (NYSE: FTR) common shares based on the then current price of the common shares for 20 consecutive trading days immediately prior to the conversion date. The conversion settlement rate will be 17.0213 shares per unit if the then current market price is equal to or greater than $5.875 and 20.0000 shares per unit if the market price is equal to or less than $5.00. For market prices between those values the settlement rate will be $100 divided by the market value. The last reported sale price of the common stock on 6/4/2015 was $5.00 per share. The preferred shares are convertible any time at the holder’s option into 17.0213 shares of common stock.

  113. FTR/Jet – We started out with a very small, speculative position and went in heavy BECAUSE they dropped so significantly in price.  From the first time we doubled down, at $1.60 per old share ($24), the plan was to DD again at 0.80 ($12).  Along the way we sold some calls and offset some of the losses and, of course, collected our dividends.  Compared to our many winners, it's a horrible stock – at the moment, but if I didn't feel it would turn around LONG-TERM, I would have cut and run.  On the contrary, however, I think this is a fantastic opportunity to own a great dividend-payer at a ridiculously cheap price.

    I might still be wrong, but I sure don't feel wrong when the company dropped $356M in cash flow for Q3.  

    So if you want to explain to me why this company is "horrible" – go right ahead and maybe you'll convince me to stop banging the table on them but it's not at all constructive to sit on the sidelines screaming FU soley because the PRICE doesn't move the way you want it in any given period of time.  That doesn't help anyone learn anything, does it?  

    I will explain this again, since no one seems to get it – this is a now $9 stock with a $2.40 dividend that is likely NOT going BK, which means they will keep paying the dividend and that means that, every 4 years, without selling any puts and calls, you get 100% of your money back or, if you bought 1x at $40 and 2x at $20 and 4x at $10 then you are in for $17.14 and $2.40 dividends going forward are "only" 14% of what you laid out but, of course,  you can sell the 2020 $10 calls for $1.50 and the $8 puts for $4.50 so that's net $11.14/10.57 without even bothering to make any monthly sales.  

    Size/Jabob – Well how about a more constructive conversation about what your position actually is and we can consider ways it could be adjusted.  

    For example if you bought 1,000 shares at $40 and 2,000 at $20 and 4,000 at $10 then that's in for $120,000 on 7,000 shares is $17.14/share and, at $9, you are down $8.14, less any dividends collected should be down about $6 but, rather than hold the stock, you can just take the loss ($42,000) and pocket back $21,000 and sell 100 2020 $8 puts for $4.50 ($45,000) so now all you need is for FTR to be over $8 and you get back 75% of the loss or, new worst case, you get re-assigned 10,000 shares at net $3.50 ($35,000) and, if they are still paying the dividend, that's $24,000/yr going forward.  

    Here's the original position from the LTP:

    November 3rd, 2016 at 10:33 am | (Unlocked) | Permalink

    FTR/Pstas – Yikes, picky, picky.  That was a massive acquisition and those take time.  Even so, they are valuing $4-$4.25, that's more than $3.50 but a nasty cut from their $8.50 – $9 prior.  Anyway, that's how we get great bargains – by ignoring these kind of calls (when they are wrong, of course). 

    November 3rd, 2016 at 3:52 pm | (Unlocked) | Permalink 

    • FTR – $3.15 now, have to wait for them to stop dropping but I want to double down.

    So that was our original commitment in the LTP, $13,600, not $40,000!  NOW it's a full allocation of about net $50,0000, two double downs later.  This is EXACTLY how we are supposed to scale into a stock that's falling and no, we didn't KNOW it was going to drop so much but, as I said above, when it was $20 and we first doubled down, we said we would look to DD again at $12 (0.80 at the time).

    Maybe I'm wrong (but I still can't see why I am with these numbers) or maybe they are just going through a down cycle like TMUS did when they did a build-out:

    It's a shame they can't turn around instantly but, as you say, I have called a lot of these undervalued plays over the years so it would be nice to be given the benefit of the doubt while we wait for this to come back around but I'm really not in the mood for 3 years of "what a horrible stock" followed by 5 years of "can you find another one like FTR". 

    If you think it's a bad stock – GET OUT!!!  It's not going to be all better next Q or the Q after that or the one after that or in 2018.  

    I'm sorry that FTR didn't rocket back to $20 after earnings and I'm especially sorry if you had the impression that they would – because that means I didn't do my job correctly.  Yes, I said they may go BK – THAT'S WHY THEY ARE CHEAP!!!  That does not mean we won't follow-through with our plan and increase our position down here because, in my opinion, the potential rewards far outweigh the risk and, in the $300,000 OOP, the position is down $16,000 and yes, I'm willing to lose $16,000 more and the same goes for $50,000 in the LTP because, with 8,000 shares, we could be collecting $20,000 a year in dividends forever after and THAT is worth a risk.

  114. The worst thing about FTR is that I didn't sell enough calls when it was 12, thinking it would go higher and I could do better.

  115. Phil / FTR preferred  - Back to FTR on Preferred conversion.  So they are under 5 / sh so that means the preferreds convert at 20 per unit.  So 19.3M Preferred stock turn into 386M shares of common.  so prior to conversion they pay $11.125 / preferred shares as dividend.  So $217M / year on preferred.  After June the preferred will convert to common at 20X per unit which is 386M shares now paying 2.4/ sh of dividend.  So now they are paying $926M on the just converted shares. That means that this is not only a huge dilution and there are  corrent outstanding shares = 78.5M so roughly 5X dilution but they will need to pay an additional $540M dollars a year in dividends on top of their $188M they are currently repaying.  

    So payout prior to conversion is 217(preferred) + 188 ( reg dividend) = $405 M after conversion dividend will pay $1.1B per year of dividends.

    Phil, my question now is are my assumptions above correct, and if they are, does the FCF allow them to pay for this and support their capital expenses?    

  116. phil,if you did not have any position in ftr,would you now enter a position at the current price and how would that be structured,thanks

  117. Batman, if your numbers are right, that dividend is toast.

  118. Phil / FTR preferred - I did not account for the 1:15 split…  so that means the 19.3M Preferred will be converted on a  1.333X ( not 20)- so 19.3M sh convert to 25.7M common these will pay out roughly $62M / yr in common dividend therefore the net looks like:


    So payout prior to conversion is 217(preferred) + 188 ( reg dividend) = $405 M after conversion dividend will be roughly 250M.  Is this assumption correct?

  119. Batman, that’s way better. The dividend payout will actually be lower after conversion.

  120. Jet   I pulled a summary off the prospectus and went through the conversions.  If this is right. There is no reason for this to have tanked.  The earnings call was fine.   I think. With cost savings next year and this conversion they will generate closer to 1.1 B adjusted fcf    This should be heading to 15 or  20. Not 8.   I must be missing something.  

  121. Phil/FTR

    You laid out a good case for why BK probably is not likely soon.

    Of course, we have to watch out for any significant change in their financials, including FCF, meeting debt obligations.

    I have 4000 shares at an average of $16,( the last 2000 having been bought at $11.70) and I have 20 of the $13 puts, sold for $6.

    (All of above in an account of over $1M) to give you perspective of my allocation.

    I will admit that I did not see the drop from $12 today, and in fact I tried to sell half my position last night AH at $12.30 but it did not fill…( I wasn’t greedy cos’ that was the last price before my order was placed)

    The easiest thing to do is to leave everything as is and collect the dividend.

    If you agree with that, my question is: what is my fall back position if they cut the dividend to $0.30? Or worse, lower than 0.30?

  122. Futures – "It seems like almost all of the PSW members have been pretty silent about them?"

    Nat – may be good for some….but in my case I am wiped out. RB and TF got me last month.  No more futures trading for me until Phil bangs the table on something

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  128. FU TEVA!!!!!

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  132. ~~TEVA (Baa3/BBB-/BBB-; N/S/N; Underweight Cash) reported 3Q’17 EPS of $1.00, missing estimates by 5 cents. The company lowered its 2017 EPS guidance to $3.77-$3.87 (prior $4.30-$4.50). TEVA posted revenues of $5.6 bn, up 0.8% y/y and adj EBITDA of $1.5 bn down 1.4% y/y. Increased price erosion and volume declines in U.S. Generics business including increased competition to largest product, the Concerta® authorized generic.

    TEVA stock is down 6% pre-market.

                          3Q’17           3Q’16     % Change
    Sales                $5,610          $5,563         0.8%
    R&D                    $545            $663       -17.8%
    Adj EBITDA*          $1,485          $1,465         1.4%
    EPS                   $1.00           $1.31
    Cash                   $680          $1,557
    Debt                $34,702         $36,855

                    LTM 9/30/17     LTM 9/30/16     % Change
    Sales               $23,418         $20,292        15.4%
    Adj EBITDA*          $6,398          $6,107         4.8%
    Cash                   $680          $1,557
    Debt                $34,702         $36,855

    * D&A for 3Q’17 from 3Q’16

    * TEVA posted revenues of $5.6 bn, up 0.8% y/y and adj EBITDA of $1.5
      bn down 1.4% y/y.
    * Generic medicine segment sales decreased 8% y/y to $3.0 bn.
    * Specialty medicine segment sales were down 1% y/y to $2.0 bn. U.S.
      specialty medicines revenues were $1.5 billion, down 4% compared to
      the third quarter of 2016. European specialty medicines revenues were
      $447 million, an increase of 10%, or 5% in local currency terms,
      compared to the third quarter of 2016. ROW specialty revenues were
      $94 million, up 12%, in both dollar and local currency terms,
      compared to the third quarter of 2016.
    * Copaxone sales decreased 12% y/y to $987 mn.

    Conference call 8:00 a.m.
    (866) 869-2321

  133. Phil,

    I’m looking for a new hedge. Need to protect about 25k, so I’m looking at TZA Jan 13-18 call spread for about .60. 10 of them would give me roughly 5k downside  protection. I’m sure you’ll have something better, so what do you think for a new hedge?