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Quad Witching Friday – Big Futures Gains Likely to Evaporate

The Futures are up again.  

It's very exciting, especially if you took our trade ideas from yesterday's morning Report, which were:

  • Dollar (/DX) long at 93 – out at 93.50 for $500 per contract gains (playable again this morning)
  • Oil (/CL) long at $56.50 – out at $57.50 for $1,000 per contract gains
  • Gasoline (/RB) long at $1.65 – out at $1.675 for $1,000 per contract gains.  
  • Natural Gas (/NG) long at $2.66 – out at $2.71 for $500 per contract gains.  

So Merry Christmas and Happy Hunukkah to you all – now we can go shopping!  I told you it was fun to play the Futures and that's why we don't mind cashing out during uncertain times – it certainly doesn't prevent us from making money.  Even if we drop $1M to the sidelines, making $3,000 a day while we wait for the markets to cool off isn't a bad way to pass the time.  

Today we'll be looking for another chance to short the indexes, if they get back to yesterday's highs but, so far, no takers.  Dow is closest (/YM) but only 24,635, very shy of 24,700 so our only active play at the moment is the Dollar (/DX) long at 93 again though we do still have active long trades on /NGV8 (October Nat Gas contracts) now $2.74 and /KCH8 (March Coffee) now $120.50 – but those aren't day trades.  

One commodity not doing well this winter is chicken wings, with prices down 30% since Football season started and Conservative commenters are blaming NFL protests for spoiling people's appetites but I'd say Republican policies which are destroying the buying power of the Middle Class are having a negative effect on $1/each wings.  The same goes for Buffalo Wild Wings (BWLD), who blamed players taking a knee for hurting their business – where 9 wings are $13.49 and celery is EXTRA.  

I'd short BWLD but Arby's just bought them and we can't short Arby's because they are private.  That's another reason we went to CASH!!! in our portfolios, we're going to have to think carefully about the stocks we take into 2018, when the tax laws change and put even more strain on Middle and Lower-Class Consumers.  Right now, Consumers are very confident but, once they realize how little the tax bill helps them – if at all – that confidence is likely to evaporate very quickly but, for the moment, the timing is right for us to have a very good holiday shopping season.

We'll be shopping for companies that are likely to benefit from the GOP Tax Plan.  CFRA put up a list of potential big winners of the GOP tax plan and Oracle (ORCL) just reported yesterday and is selling off a bit, but we think they are playable here ($47.50) for a nice, long entry:

  • Sell 5 ORCL 2020 $47 puts for $6 ($3,000) 
  • Buy 10 ORCL 2020 $45 calls for $8 ($8,000) 
  • Sell 10 ORCL 2020 $52.50 calls for $4.75 ($4,750) 

That spread is net $250 cash on the $7,500 spread so your potential net profit at $52.50 is $7,250 (2,900%) and your worst case is owning 500 shares of ORCL for net $47.50, which is the current price.  While we limit our upside we have great leverage and we're starting off $2,500 in the money so even a flatline from here will be a nice winner.  Ordinary margin on the play is $2,708 so the return on margin is fantastic as well.

While ORCL may be disappointing the bulls this morning, the growth in their cloud platform to $1.5Bn (up 55% from last year), their large pile of overseas cash and their huge benefit from changes in the tax code should get them back over $50 very quickly – even if they have to buy back their own stock to get there.  

Another good group of companies to look at are the companies that are paying a high effective tax rate.  This table was compiled by Credit Suisse.  Kinder Morgan (KMI) at $17.85 is a good one to look at and Schlumberger (SLB) at $62.50 is still cheap as well, coming off a down year and moving into a better cycle.  Both rely on the energy sector, which I'm down on but KMI is more of a natural gas play, which I'm long on – so let's set up a trade with them as:

  • Sell 10 KMI 2020 $17 puts for $2.35 ($2,350) 
  • Buy 30 KMI 2020 $17 calls for $2.85 ($8,550) 
  • Sell 30 KMI 2020 $20 calls for $1.55 ($4,650) 

Here we are netting $1,550 on the $9,000 spread so the upside potential at $20 is a $7,450 (480%) and worst case is owning 1,000 shares of KMI for net $18.55, which is aggressive as it's more than they are selling for now but I think KMI is way too cheap here, given both the tax advantage and the expected increase in traffic as the US pushes more and more Natural Gas overseas on LNG ships.  Margin on this spread is just $1,603, so another super-efficient way to put that sideline CASH!!! to work for you.

See how easy it is to find new stocks to play?  We'll be putting trades like this in our new portfolios starting January 2nd and you can join in the fun by SUBSCRIBING HERE.  Remember, we are accepting GreenCoins (GRE) for Annual Membership payments – see last week's notes for current prices.  

The new, low tax rates will make it even more fun to make these 480% returns on CASH!!! and the January market sell-off (oops, spoiler alert!) will give us plenty of opportunities to pick up great stocks cheaply.

Have a great weekend, 

- Phil


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  1. More Fintech in 2018:

    It is almost impossible that a panic does NOT occur in 2018 and by panic I mean an all out acquisition spree.

    Luckily for the leading banks their stocks are up and they have the currency to bid on the new fintech leaders. But they should move quickly because Facebook, Apple, Tencent, Alibaba and Google will be looking to make moves as well.

  2. Who is right on Tesla – Chanos or the Druck:

    One of them is right for the wrong reasons and the other is right for the wrong reasons. We just don’t know who’s who yet.

  3. Good Morning.

  4. ?Teva – 20 bucks may be tough to clear….

  5. t-rump wants to "rebuild the FBI" …. a massacre is on the way….:(

  6. ….he's pissed and WILL do something stupid.

  7. FlynnPeachment Baby!

  8. Never a good idea to piss off the largest law enforcement agency in the country I think. You never know what's hiding in the archives there!

  9. Seriously….

  10. Help with TEVA needed

    Back when TEVA was around 11 (last month)

    I sold DEC 15 call for 1.00 – trying to reoup some of my losses figuring it wouldn't make it much past there if at all in a month ( I have Jan 2018 15 calls)

    Now they are 3.20 and expiring today – I am trying to roll higher but can't find a "good" roll to try make up for my 2.20 loss and still capture some potential upside

    Does anyone see a good roll?

  11. Good morning!  

    Now I know what I want for Christmas!  

    Jumping out of a plane freaks me out but jumping into one seems like fun! 

    Still waiting for /YM 24,700 so I can try another short.   

    Big Chart – Nas making an M – not good if it fails the 20 dma, which is the 17.5% line at 6,350 but that's 80 points down from here.  RUT still teasing the 5% line.

    Very tempted to short /XBT (Bitcoin) here at $18,100.  

    Acquisitions/StJ – That's often how these rallies exhaust themselves.  When people were paying $1,000/hr for M&A consulting back in 2006 – I knew it was time to find a new line of work!  

    TSLA/StJ – I would hate to miss a good short again.  I was too greedy last time waiting for $380 and we topped out at $360.  I suppose $340 is the logical top if we're trending lower.

    TEVA/Jabob – It's a shame when they fly higher and we can't buy any more, right?  kiss

    Trump/1020 – He wants his own private goon squad.  

    On his way to Quantico, Va., to speak at the FBI's National Academy, President Trump stopped to tell reporters, "It's a shame what's happened with the FBI," and "you have a lot of very angry people that are seeing it."

    Trump asserted that "we're going to rebuild the FBI" after what he described as "really, really disgraceful" documents, presumably the text messages that the Justice Department provided Congress this week in which a senior agent described candidate Trump as an "idiot" and made other political remarks in the course of the presidential campaign.

    Trump also opened the door to pardoning Michael Flynn, his former national security adviser, who pleaded guilty to lying to the FBI last month.

    "I don't want to talk about pardons with Michael Flynn — yet," Trump said. "We'll see what happens. Let's see."

    Flynn has not yet been sentenced and appears to be a cooperating witness as part of special counsel Robert Mueller's Russia probe. Trump called the investigation a "Democrat hoax," "an excuse for losing the election" and claimed again "there is absolutely no collusion."

    Recently, Trump tweeted that the FBI's reputation was in "Tatters – worst in History!" He called popular former FBI Director James Comey, whom he fired in May, "a liar" and "a leaker." Trump also accused the FBI, without providing any evidence, of illegally wiretapping Trump Tower in 2016. And he continues to cast doubt on a conclusion by the bureau and other intelligence agencies that Russia interfered in last year's presidential election.

    It's like we elected Al Capone President. 

    TEVA/Jeff – That's why we generally stick to 1/2 sells.  The Dec $15s are $3.20 and you have Jan $15s so that was not a good sell in the first place – those are just $3.55.  Essentially, all you end up doing is closing the position for net 0.35 – don't fool yourself into thinking a roll is somehow better.

    As a new, SENSIBLE position on TEVA, I'd go for:

    • Sell 5 2020 $17.50 puts for $4.10 ($2,050)
    • Buy 10 2020 $15 calls for $6.70 ($6,700)
    • Sell 10 2020 $22.50 calls for $3.25 ($3,250) 

    That's net $1,400 on the $7,500 spread so $6,100 (435%) upside potential and you don't have to keep guessing what it will do month to month and risk losing everything when you get it wrong.  TEVA's at $18 now, we're not asking much of it over 2 years. 

  12. SpaceX doing a successful-looking launch of re-used Falcon 9 rocket to supply ISS – very cool.  They are going to attempt to land and recycle the booster yet again.

  13. SpaceX might be the real Musk accomplishment it seems! That's something worth tweeting about….

  14. Trump / Phil – And Al Capone didn't lie as much as Trump:

    In his first 10 months in office, he has told 103 separate untruths, many of them repeatedly. Obama told 18 over his entire eight-year tenure. That’s an average of about two a year for Obama and about 124 a year for Trump.

  15. Phil – TEVA

    Thanks for the info — but I had a typo I have 2019 15 call and they are at 5.20

    does that change anything?  Or close whole position and go with the new spread.

  16. Phil / GE,

    What would be a good entry for GE at this time and do you think it would be a stock of the year for 2018 ?

    Thanks as always 


  17. BDC – damn good picks.

  18. Considering that we are ALL wire tapped now, why would Trump or anyone be surprised? These are private texts being released, right? I know he thinks he's special, but surprise… the NSA knows all.

  19. SpaceX/StJ – I think Musk started TSLA to get funding for SpaceX.  It gave him an excuse to hire engineers and buy space materials and charge the costs to people who invested in making cars. 

    And they stick the landing!   Nice job.

    As to Trump's lies – what's amazing to me is how it doesn't seem to matter to the average American.  The integrity of the office as something that used to be important in this country.  Days gone by, he would have been impeached just for the lies.  

    TEVA/Jeff – I still prefer the new position, difference is you have more than 0.35 to contribute to it.  

    GE/Pat – Failed Stock of the Year competition because there's no indication it will turn up in the next 6 months but, LONG-TERM, I like it down here.  

    • Sell 10 GE 2020 $18 puts for $2.60 ($2,600) 
    • Buy 20 GE 2020 $15 calls for $4.20 ($8,400) 
    • Sell 20 GE 2020 $22 calls for $1.30 ($2,600) 

    That's net $3,200 on the $14,000 spread so $10,800 upside potential at $22 and the reason I'm playing that way is because, since we don't think it's going to go up fast, you can sell 10 March $18 calls for 0.70 ($700) and that's 91 days out of 763 and it only takes 5 sales like that to get your $3,200 back.  Let's say GE pops 10% to $19.70, those calls would be $1.70 in the money so down $1 and you simply roll them to the next short calls that are $1 but, by the time that happens, the spread would be $9,400 in the money.  

    Market blasting higher – as usual. I picked up 2 /YM shorts at 24,685 so far.  

    • Florida Senator Marco Rubio yesterday suggested he was a "no," but the child-care tax credit he was concerned about has reportedly been lifted to $1.4K from $1.1K.
    • Fox News is now reporting Rubio as a "yes."
    • Meanwhile, House Ways & Means head Kevin Brady says the bill is done, and hopes for broad Senate support.
    • Stocks are near session highs, the S&P 500 up 0.65%.

    Wow, we have to start writing more apps:

    Speaking of which, I'm getting together with Mike from TradeExchange on the weekend – that is an App PSWI invested in.  Only getting $5M valuation so far but that's OK as we own 10% of it for $50K!  Gotta call SoftBank and get some real money….

    Remember when this was an FU stock?

    • Argus upgrades Skechers (SKX +3.4%) to a Buy rating off of higher EPS estimates for 2017 and 2018.
    • "We believe a recovery in the company's domestic wholesale business is underway. While wholesale revenue in the U.S. was up just 1.4% in 3Q17, we believe it will improve driven by an improvement in U.S. retail comps," writes lead analyst John Staszak.
    • Staszak is bullish even beyond the one-year time frame. "We expect Skechers to continue to develop innovative products and to expand through new store openings and international distribution agreements. We also expect the company to benefit from rapid growth in emerging markets, especially China and India," he predicts.
    • Source: Analyst note

    I remember when we bought BA for $85 after those battery fires…


    • Boeing (BA +0.2%) adds to its 52-week highs as Morgan Stanley raises its stock price target to $310 from $285, saying "one can make a case for another +50% year" if all the conditions work out.
    • The stock’s 2017 price performance may be "tough to replicate" but upside opportunity remains via tax reform, execution on growth and multiple expansion, says Morgan Stanley's Rajeev Lalwani, who nevertheless rates the shares at Equal Weight.
    • The firm thinks the greatest risk to the narrative in 2018 likely is macro or supply chain driven, as concerns over aviation supply and demand have dissipated for now.
    • Source: Bloomberg First Word


    • via Bloomberg's Lily Katz
    • While analyst Michael Mueller and team don't sound thrilled about REIT prospects their balanced stance for 2018 compares to the cautious outlook issued one year ago. The largest negative: Investors' "risk-on" attitude means money won't be gushing into the defensive REIT sector (VNQIYR).
    • There's also the idea that lower corporate tax rates won't be of that much benefit to REITs (which mostly don't pay corporate taxes).
    • Positives include decent valuations and possibly better tax treatment for dividends.
    • Top ideas in malls: Macerich (NYSE:MAC) and GGP; in strip centers: Retail Properties (NYSE:RPAI) and Federal Realty (NYSE:FRT); in apartments: Camden Property (NYSE:CPT) and Essex Property (NYSE:ESS); in offices: SL Green (NYSE:SLG) and Washington REIT (NYSE:WRE); in net lease: Vereit (NYSE:VER); in industrial: STAG; in health care: HCP.
    • Upgraded to Overweight from Neutral: American Homes 4 Rent (NYSE:AMH), Camden Property (CPT), HCP, Retail Property (RPAI), and STAG.
    • Downgraded to Underweight from Neutral: ACCDCTDREEDREPRFRLPTPSBREXRRLGYRMAX
    • Steel and iron ore names are on watch as Financial Times reports China will remove its export tax on steel products, a move that threatens to flood world markets with cheap steel and increase trade tensions.
    • Removing the tax should make it easier for Chinese steel mills to export since they can still make a profit even if overseas market prices are closer to Chinese prices; China's steel sector is oversupplied, despite policies designed to force mills to retire idle capacity.
    • Nucor (NYSE:NUE) fell nearly 4% in yesterday's trade after guiding Q4 EPS well below consensus at $0.50-$0.55 vs. analyst consensus of $0.76, citing higher imports in 2017 as a culprit.
    • Other potentially relevant tickers include XAKSSTLDMTCMCBHPRIOVALESLX
    • Alaska Air Group (NYSE:ALK) reports traffic increased 9.2% to 4.394B revenue miles in November.
    • Capacity was up 9.3% to 5.215B available seat miles.
    • November load factor -10 bps to 84.2%. YTD load factor +30 bps to 84.5%.
    • Source: Press Release
    • Ryanair (NASDAQ:RYAAY) is down sharply after the airline company agrees to recognize pilot unions across Europe for the first time.
    • The budget carrier was facing a pilot strike right in front of the Christmas holiday.
    • Shares of Ryanair are down 5.77% in London trading on concerns over the additional union-related costs.
    • EU leaders are heading to Brussels for a Euro Summit that will discuss the Economic and Monetary Union and Banking Union.
    • A number of ideas have been explored by the Eurogroup ahead of the meeting, such as putting into operation a common backstop for the Single Resolution Fund, as well as further developing the ESM and Ecofin Council Roadmap of June 2016.

  20. What is sending the Q's flying today?

  21. Actually looks like small caps doing even better.  Tax reform

  22. Wow – What's up with NG?  Has there been any news over the past few days to change long term outlook?

  23. Phil, What is your thoughts on /NG?  It is tapping the $2.60 floor and winter starts next week?  TIA

  24. I still think they should delay tax reform so the market can keep going up, unless one thinks that once passed, the market will go up twice as fast.

  25. ESRX   another old one doing great

  26. Qs/Baron – Same as the others, less taxes (theoretically).  

    /NG/Jeff – No, it's up and down for not much reasons.  Often sells down into weekends and Mondays.  

    /NG/Grass – Well I'm back to 6 @ $2.78 after reducing to 4 on the move up and I'm happy to go to 10 (/NGV8) as it's a long-term hold but I'd have be to adding around $2.60 at this point to make it interesting (as in reduces my net below $2.70).   /NGV8 is running about 0.07 over /NG.

    As I often have to remind people – if you're not going to buy things when they are low – when are you going to buy them?  

    Tax/Baron – Clearly people thing the actual tax reform is still a good catalyst.  

    ESRX/Stock – It's not that complicated, is it?  

    Submitted on 2015/02/25 at 11:29 am

    ESRX/Batman – Not the kind of play I'd make because the stock is up 25% since October, so a bit chasey for my tastes.  The quarter was good but the reason they are down 3% on the news is because it wasn't 35x earnings kind of good, which is where they are priced at the moment.  Revenues were only up 2.1% so I take the earnings bump with a grain of salt – I don't follow them closely enough to know off the top of my head but it smells fishy.  

    The bottom line is they are projecting $5.45 and that does mean $100 is possible but a 20 p/e is the most I'd allow on them and that's WITH very good growth so probably a bit ahead of themselves now means I'd be less aggressive with an entry.  If you can get $18, that's nice on the 2017 $75s (last was $19) but I'd sell the $95s for $8+ (last $8.90) and be happy with net $10 or less on the $20 spread and IFF ESRX goes lower, THEN you can sell puts for a better price and, IF they don't, THEN you'll probably make 100% on your bull call spread without using any margin – nothing wrong with that.  

    Submitted on 2016/01/13 at 12:10 pm

    ESRX/Batman – That's really up in the air.  ANTM sold a unit to ESRX in 2009 and, in that contract, there is supposed to be a review of prices paid and ANTM thinks it should be getting $3Bn a year off and, if they don't get it, they threaten to take their business elsewhere.  Now, the issue is that they CAN'T take their business elsewhere unless ESRX is in breach and then the question is, is not giving ANTM a $3Bn discount a breach of the review process?  Keep in mind, ESRX's ENTIRE annual revenue is $100M and a good portion of it is ANTM but cutting off $3Bn when they only drop $2Bn to the bottom line won't fly either.  So, my bet is ANTM loses in court (probably arbitration) and ESRX keeps the business with minor concessions but they have other customers and if they keep giving "minor" concessions – those earnings estimates will dwindle very fast.  I wouldn't touch them. 

    Submitted on 2016/04/27 at 8:42 pm

    ESRX/Batman – Not sure where you are getting 6.39 from.  $48Bn at $76 and they make $2.4Bn is 20 p/e so even getting to $3Bn (20% growth) is 16.  As you note, there is this wildcard of the massive lawsuit with Anthem that's not going away and either they capitulate and eat margin or they piss off their biggest customer – neither outcome is good and that's why they look cheap – the forward risk is priced in.  

    You're talking $128,000 and I'll assume it's a rational allocation and $64 is a reasonable entry so kudos on that.  I hope 5x means 5 contracts and not 5x 20 or I'd say that's crazy and the same goes for 10x the calls and I guess you are gambling there but $4,000 on the possible settlement and pop over $70 is not crazy for a guy with $128,000 allocation blocks to play with.  Obviously, I object to you buying naked calls and I don't think this issue is likely to resolve by Aug as it's an actual lawsuit and no trail has been scheduled and now it's summer so Oct/Nov at the earliest.

    My attitude on the stock is I hope they either lose the suit or they lose Anthem and the stock tanks and THEN I buy it because Anthem is only 14% of their revenues and not a very profitable 14% at these prices.  Anyway, it's a gamble but I fun one and I'd play long with a 2018 bull call spread and not waste the money trying to guess when they settle but also, I'd probably ditch the short puts unless you REALLY want to own 500 more if it all goes to Hell in the lawsuit

    Submitted on 2017/02/17 at 2:42 pm

    ESRX/8800 – Now that they've double-bottomed at $65, I feel better about the lower limit.  Not sure when you asked but this seems to be my most recent comment:

    Submitted on 2016/08/23 at 12:13 pm

    ESRX/Selozi – They had that big lawsuit issue with Anthem (ANTM), who were their biggest customer and, of course, going to court with your customers is a bit damaging to business.  So, if their p/e were 10, I'd love them as they still have a solid base but, at 19, they are priced for growth that I think will be hard to come by moving forward.  I'm not a big long-term fan of middle-man companies, especially when their customers (insurance companies) are highly sophisticated and always looking to cut costs.  

    That was at $75 and we've had two drops to $65 since and we're doing a small put sale that nets us in for $57 against $7 in projected earnings (which factors in the suit) so p/e 8 fits my criteria and allows for the settlement risk.  Ah, here's what I said to you:

    Submitted on 2016/05/24 at 1:42 pm

    Offsets/8800 – I like F, CAKE and CMG.  ESRX is also good but uncertainty into the election means you can expect a rough ride.  Other stocks that are good for put sales at the moment are MAR, TGT, WAG, AXP, BA, UTX, CAT, TXT, WFM, SVU, BBBY, HPQ, EBAY, AA and FTR – all of those are ones I'm watching for possible value plays. 

    They were $75 then too and, obviously, there were no 2-year, $8 puts to sell at the time.  Keep in mind ESRX was at $90 in 2015, before the lawsuit.  Though it's not settled, the parameters are now more known.

    Submitted on 2017/02/20 at 8:12 am

    ESRX/Learner – Certainly there's a risk, that's why the price is so low vs current earnings.  I think they'll settle somewhere in between and the panic will subside.  "Trump looking into this" means looking to get their palms greased to lay off – that's all.  This is a Banana Republic now, that's how the games are played. 


    Submitted on 2017/04/25 at 7:56 am

    As to ESRX, now down about 8%, we knew they lost ANTM when we bought them, that's why they were cheap.  We sold the 2019 $65 puts for $7.50 for a net $57.50 entry.  Here's a great article on their business model.  ESRX was at $90 before the lawsuit, now $67.50.  Anthem is 25% of their earnings so it's a fair haircut to $65 but that also assumes ESRX will not get a new client to replace ANTM.   Not only that, but they still have the business in 2017, 2018 and 2019 – while they look to replace their client.  

    Meanwile, they beat and earned $1.33 per now $60 share so p/e down around 15 and up to 20 without ANTM, still a good business in 2020 and a great business now.  

    Submitted on 2017/04/26 at 11:52 am

    ESRX/Learner – Now ANTM is saying maybe they will extend.  Bottom line is, no one will give them the deal ESRX is giving them and, no matter how mad ANTM is over the lawsuit (which they lost), it would cost them Billions more to go with another vendor.

    Submitted on 2017/05/12 at 1:03 pm

    ESRX/Jasu – Have to see if $60 does hold but, essentially, this is where we look to add the bull call spread.  The 2019 $65 puts are only $9, not much movement yet and net $57.50 is still a good target for the floor.

    Submitted on 2017/07/26 at 8:04 am

    ESRX/Batman – Still BS'ing about the Anthem contract.  They have offered terms ESRX won't accept and they'll lose them in 2019 (biggest customer) if they don't have a deal by early next year.  The reality is ANTM, who sued ESRX for overbilling (and lost) can't find anyone who will come close to the current prices so they are just being dicks but it's a bad relationship to have with your biggest client.  

    Submitted on 2017/07/26 at 10:23 am

    ESRX/Batman – Oh sure, our call on them was with the assumption they lose ANTM – I think it's more than baked in at this point.  

    Submitted on 2017/09/19 at 1:32 pm

    ESRX/Scott – Yeah, back in the bottom of the channel.  Hopefully it doesn't break but we'll have to wait for the report (10/24) to see what's up.  

    Keep in mind, in the LTP, we just have the 5 short 2019 $65 puts we sold for $5 back in Feb – just dipped a toe in the water to remind us to watch them so we'd actually be thrilled if they get cheaper (and our puts lose money).   From our Watch List:

    ESRX (2/17) – Another beaten-down Pharma that is worth owning.  They made $2.5Bn last year, up from $2Bn the year before and they did $1.4Bn in the last two Qs so pacing towards $3Bn yet you can buy this company for $42Bn (trailing p/e 17) at $70.   We can promise to buy them for $65 and get paid $8 to do it, which is net $57 which is 18.5% off the current price.  In the LTP, I'm just going to do those but you can be aggressive and add the $60 ($17.50)/75 ($9) bull call spread for $8.50 and then it's net 0.50 for the $15 spread that's $10 in the money to start.  ESRX was added to the Long-Term Portfolio (LTP) on 2/17, selling 5 2019 $65 puts for $7.50 ($3,750) to start

    ESRX/Scott – We already sold the short 2019 $65s in the LTP for $7.50 so net $57.50 is our entry point and those puts are over $10 now.  The stock has been very disappointing and now people are freaking out that AMZN will compete with them and they just spent $3.6Bn to buy eviCore.  I still think it will work out – but not anxious to press our luck at the moment. 

    Submitted on 2017/10/26 at 2:55 pm

    ESRX/Baron – They sell a lot of opiods.  In their case, that damage is already long baked-in.  

    Only 2+ years of discussions on that one and 18 months of waiting PATIENTLY for a good entry and then another almost year waiting for it to pay off.  

  27. LOL, QC, those are nice, contradictory articles.   The 2nd one is right in line with my expectations over the long haul and the first is more about technical BS due to rule changes though Vietnam is having a way better crop than last year but last year was a disaster – so it doesn't really say anything about what will happen world-wide.  

  28. We're going tonight:

    • Star Wars: The Last Jedi (DIS +0.5%drew $45M in Thursday evening previews -- the second-highest preview gross of all-time, and boding well for a happy weekend at the Mouse House just after its $52.7B megadeal for Fox assets.
    • That total is behind only the Thursday preview record of $57M logged by Star Wars: The Force Awakens two years ago. It surpassed the $43M that Warner's Harry Potter and the Deathly Hallows: Part 2 drew on its Thursday preview.
    • That suggests domestic tracking is still on track for a $200M opening this weekend, which would mark the fourth-biggest of all time. The record-setter, The Force Awakens, opened with $248M.
    • The new film's two-day international total is a healthy $60.8M across 48 markets; it opened in first place in all of them except for Turkey and South Korea.
    • The film will be open in nearly all international markets this weekend (and is expected to add $225M overseas to its anticipated $200M domestic total); China follows on Jan. 5.

    Go DIS!  

    • The total U.S. rig count fell by 1 to 930 following five consecutive weeks of increases, according to the latest survey from Baker Hughes.
    • The oil rig count declined by 4 to 747 after rising for three straight weeks, while gas rigs climbed by 3 to 183
    • Debt issues (and maturities coming in 2020) mean Windstream (WIN -2.1%) faces the biggest predicament in its space, Barclays says in a note on the sector that starts the company at Underweight.
    • Analyst Amir Rozwadowski has set a $1.50 price target, implying 29% further downside from today's lower price.
    • Windstream has already cut its dividend; meanwhile, Rozwadowski says another dividend cut is next for Frontier Communications (FTR -2%), which it's also launching at Underweight, with a $7 price target (18% downside implied).
    • It had raised CenturyLink (CTL +3.1%) to Equal Weight based on a safer dividend and EBITDA that will likely be steady after the Level 3 (NASDAQ:LVLT) acquisition closing. Price target on CTL stays at $16, vs. current price of $17.

    OK, NOW I know what I want for Christmas:

    Image result for lockheed supersonic business jet
    • Lockheed Martin (LMT +1.4%) says it may return to the passenger jet business via a joint venture with privately owned Aerion Corp., an aerospace firm that says it wants to have a new supersonic business jet in operation by 2025.
    • The proposed 12-passenger AS2 would have a range of 4,750 nautical miles at up to 1.5x the speed of sound, cutting the flying time between London and New York to four and a half hours from seven hours currently; Aerion executives estimate it will cost $4B to develop.
    • The project is one of three aiming to fill the void created when the supersonic Concorde passenger jet quit flying in 2003 following a fatal crash in Paris.
    • HanesBrands (NYSE:HBI) announces changes to its senior secured credit facility that it says will help the company’s long-term global growth and capital allocation strategies.
    • The credit facility changes include lower interest rates, higher capacity and increased flexibility.
    • By the numbers: The HanesBrands enior secured credit facility is increased to $2.25B from $1.925B. The interest rates of the revolver and Term Loan A are decreased 25 bps points, while the rate for the Term Loan B is dropped by 75 bps.
    • Source: Press Release

  29. This story on Trump’s Russia paranoia is terrifying

  30. PFE – At new yearly high. 

    Not unlike watching grass grow.

  31. Americans pessimistic about Trump, country: AP-NORC Poll

  32. Hi Phil.  Holding 10 CELG 2020 80/100  BCS (basis 14.50) and  10 short 2020 80 puts (basis 9).  Stock near 110 today.  Teaching moment:  When is the time to roll the long call?  Thanks.

  33. With Billions at Stake in Tax Debate, Lobbyists Played Hardball

  34. Fact Checker from The Washington Post

  35. Muck - "One of the best theories I've heard, from Linda Moulten Howe"

    Operation Mockingbird at its best, and what Phil said. Regardless of source, dis and mis information are SOP.  The "aliens" will be another false TRUMP card to be played.  In one way or another, the DNA which seeded this planet, came on the solar winds.

    Talking monkeys are the aliens, or we are them.  Your temporal construct is a test in which, eventually some pass, many continue to fail, and the wheel in the sky keeps turning.  Consider these offerings… 

    A Ticket To Ride?, Fermi's Paradox?, Wolf 359? and Out.

  36. Not much of a sell-off.  I made $465 on my 2 /YM shorts.  Better than nothing.  

    CELG/Taihu – Well the 2020 $80s are $39 and the $100s are $26 so $13 out of $20.  Don't see much point in rolling, they are going to make 50% as they stand.  The $80 puts are $5.90 and you could roll them up to the $95 puts at $11 and use that money to roll the short $100s up to the $110s ($21) but why would you do that when this net $7 position is going to return $20, which is a 200% gain from here without taking on more risk for no reason?

    Have a great weekend folks,

    - Phil

  37. Even SGYP wants  a piece of the action

  38. Thanks Phil.

  39. RIG- is there a bull case to be made for these guys?

  40. AP FACT CHECK: Trump and the mirage of overseas profits

  41. The World’s Biggest Arms Companies [Infographic]

  42. Why Blockchain Is Real And Bitcoin Is A Mirage

  43. Glowing Auras and ‘Black Money’: The Pentagon’s Mysterious U.F.O. Program