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Thursday Thud – First Quarter Ends With Dow Down 1,000 Points

Down 1,000 points isn't so bad.  

Well, it's bad if we consider that we were up 2,000 in January (26,600) so down 3,000 since then is 11.3% but let's say we claw back to 24,000 this morning – that would be down almost exactly 10% and you don't want the -10% line to act as resistance on the way back up – that gets very ugly, technically.  

Of course, nothing it technically uglier than failing the 200-day moving average and, so far, we have narrowly avoided that by bouncing off 23,500 but, if we call that a 2,000-point drop from the 50 dma, which was 25,500 when we were up there (since dragged lower), then we expect to see 400-point bounces to 23,900 (weak) and 24,300 (strong) – and we're a long, long way from 24,300 so it's a weak finish to Q1, at best. 

Today is the last day of the quarter because tomorrow is a holiday and Monday is spring break (I'll be in Florida) so the volume is very low and nothing the markets do today or even next week are going to matter much.  If we can't claw back over 24,300 by the end of next week – it's not going to happen.

Next week is still sleepy for earnings as well and April 13th is the official kick-off for earnings season, with CitiGroup (C), First Horizon (FHN), First Republic (FRC), JP Morgan (JPM), PNC (PNC) and Wells Fargo (boo!) all reporting that Friday the 13th morning – good luck to all of us!  We did very well shorting XLF into January earnings but, like the market, we're down 10% from there so it's a bit tricker to call now – I think we'll just wait and see if that $27 line holds but, if not, another 10% down should do the trick.

So, to decide whether or not we should be bullish, we look at our big banks and decide whether or not they are likely to rise or fall on earnings and that then will give us our premise for what is likely to happen as earnings season kicks off.  We will call that The Big Bank Theory! 

  • It's early in our data-gathering cycle but C, for example, is a $175Bn bank at $68.26 and they lost $6.6Bn last year on $63Bn in revenues.  That, however, was due to a one-time $23Bn tax expense for "repatriating" the money they've been hiding overseas so now they are sitting on $413Bn in cash.  Anyway, net/net let's say they actually made $4-5Bn and let's be nice and say $16Bn and we divide 175 by 16 and that's 11 times ordinary earnings – not over priced.
  • JPM did not move money around and they dropped $24.4Bn to the bottom line on $94Bn in revenues and that's AFTER paying our $58Bn in salaries and bounuses (and sales and office expenses) – it's good to be the king!  You can buy that kingdom for $368Bn at $108/share and $368/24.4 = 15x earnings, which is normal for a bank.  
  • WFC (boo!) for whatever reason, only paid $5Bn in taxes despite earning the same $24Bn JP Morgan did.  Revenues were $97Bn and you can take over this criminal (allegedly) operation for $251Bn but I'm going to subtract $5Bn for tax evasion (apparently) and call earnings $19Bn and 251/19 = 13, which is in-line with their peers.  
  • PNC can big put under the tree for just $70Bn at $150 per share and they had $18Bn in revenues and paid just $102M in taxes on declared income of $5.3Bn (must be nice!).  Even if we call it $4Bn without cheating, 70/4 is just 17.5 so not over-priced either.

So the financials are not likely to bring the markets lower and we'll do similar studies on all the S&P sectors to determine what we expect as Q1 earnings season begins.  We also have to think ahead as to whether rising rates are hurting their margins but, so far, it seems like we should be adding more CitiGroup to our Long-Term Portfolio!  Our current position was added on Feb 2nd and it is:

Long Call 2020 17-JAN 72.50 CALL [C @ $68.26 $-0.02] 15 2/1/2018 (659) $22,500 $15.00 $-7.50 n/a     $7.50 $-1.20 $-11,250 -50.0% $11,250
Short Call 2020 17-JAN 85.00 CALL [C @ $68.26 $-0.02] -15 2/1/2018 (659) $-13,650 $9.10 $-5.20     $3.90 $-0.43 $7,800 57.1% $-5,850
Short Put 2020 17-JAN 70.00 PUT [C @ $68.26 $-0.02] -10 2/1/2018 (659) $-6,700 $6.70 $3.55     $10.25 $0.37 $-3,550 -53.0% $-10,250

We're comfortable with the short put target at $70, so no need to change that but it would be silly to ignore the opportunity to improve our spread.  The net cash outlay for this position was just $2,150 and there's a $6,800 margin requirement on the short puts so we can certainly add some cash as follows:

  • Roll the 15 2020 $72.50 calls at $7.50 ($11,250) to 25 2020 $62.50 calls at $12.50 ($31,250)
  • Roll the 15 short 2020 $85 calls at $3.90 ($5,850) to 20 2020 $77.50 calls at $6 ($12,000) 
  • Sell 10 May $70 calls for $2 ($2,000) 

Our net cash outlay for the roll is $11,850 plus our original $2,150 puts us in what is now a $62,500 spread for an even $14,000 so our upside potential is now $48,500 (346%) at $77.50 vs our original potential $16,600 gain.  So, what happened here?  Well this is how we structure our Long-Term Portfolio – if the stock had gone up, or even stayed flat - our initial, small entry would have made a nice return.  Since the stock went down almost 20% and we still like it, we're THRILLED to increase our allocation to $14,000, which is still only 1/4 of a full allocation block ($50,000) but call it $20,000 with the margin so we're almost half-pregnant on this one (and of course it's good as a new trade as well).

Following our strategy on this "losing" trade, we are able to drastically lower our target strike while also drastically increasing our potential reward.  Not only that but our long spread has 659 days to play out and the well-covered May calls we sold are using just 50 of those days so 12 $2,000 sales from now ($24,000) and we will have much more than paid back our $14,000 outlay.  

That's the strategy we were discussing in yesterday's Live Trading Webinar so this was a good opportunity to go over an example in detail.  With our early-round entries, we almost prefer the market takes a dip and "forces" us to build larger, lower positions as it really amplifies our returns – IF things improve down the road.  If not, the hedges are key and the hedge we added yesterday was:

As an additional hedge, at the moment, I like for the STP:

  • Sell 4 WHR 2020 $125 puts for $12.50 ($5,000)
  • Buy 50 SQQQ May $16 calls for $3.90 ($19,500) 
  • Sell 50 SQQQ May $20 calls for $2.20 ($11,000) 

That's net $3,500 on the $20,000 spread that's almost all in the money to start and the only way to lose is if the Nas goes up quite a bit from here which, with all these headwinds, doesn't seem too likely.

That should be very easy to buy this morning as SQQQ should open lower and I don't think Whirlpool (WHR) is going anywhere.  WHR is simply a stock we'd like to own if it gets cheaper (now $151) so promising to buy 400 shares for $125 (17% discount) puts $5,000 in our pocket but it could be any stock you REALLY want to buy if it gets cheaper (see our Watch List for dozens of possibilities).  

Other than that, we expect a bit of a sell-off into the close but too tricky to bet at the moment.

Have a great holiday weekend, 

- Phil

 


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  1. Good morning All!

    The webinar replay is now available!

    https://youtu.be/DGg7CSFbALA


  2. Happy birthday Phil. Enjoy the long weekend and spring break. Did you decide to fly or drive to Florida?


  3. I guess it's up to earnings now to confirm the direction.


  4. Happy Birthday Phil as you enter a new life cycle without Mondays!

    Image result for can't do 55


  5. Happy birthday Phil!  Wishing you all the best for the year ahead!


  6. From Bloomberg this morning:

    "Canada’s gross domestic product unexpectedly shrank in January, as the economy faces a broad slowdown after surging last year.

    Gross domestic product contracted 0.1 percent during the month, Statistics Canada reported Thursday in Ottawa, weighed down by sharp drops in oil production and real estate activity. Economists were anticipating a 0.1 percent gain.

    After leading the Group of Seven in growth last year, the report is consistent with what is widely expected to be a sharp drop off in Canadian economic growth this year as highly indebted households pare spending. That should keep some pressure off the Bank of Canada as it contemplates when to raise interest rates again."  

    This also will have a negative impact on the US economic outlook.

     

     

     


  7. Happy birthday, Phil !

    CTL – CenturyLink: Temasek Holdings increases active stake to 9.7% following recent purchase of 10,472,724 shares .

    GME trading lower in pre-market following earnings. Started an initial position.  Bought some stock at $12.65.   Will sell some OTM calls after the market opens.  Guessing the huge dividend will continue.


  8. The gloom and doom of our own making:

    https://www.bloomberg.com/graphics/2018-republicans-growing-deficit/

    Trump has repeatedly blamed his predecessor, former President Barack Obama, for an increase in the debt during his tenure. But by 2016, Obama’s last year in office, the deficit had declined to $585 billion from post-recession highs. By 2019 under current law, the federal government will be adding trillion-dollar deficits each year under Trump, according to the CRFB.

    “This will be the first time we’ve had deficits like that of our own making,” Goldwein said. “Not driven by a war, not driven by a recession, just driven by policymakers that are unwilling to pay for the things that they want.”



  9. People who sacrificed for our freedom are the next target for looting:

    https://talkingpointsmemo.com/livewire/shulkin-i-was-ousted-over-privatization

    Shulkin wrote that certain successes at the VA have prompted some within the agency to push harder for privatization. Shulkin said he opposed this, which earned him enemies.

    “They saw me as an obstacle to privatization who had to be removed. That is because I am convinced that privatization is a political issue aimed at rewarding select people and companies with profits, even if it undermines care for veterans,” he wrote.

    Because private healthcare is just so cost effective in this country!


  10. Phil

     

    Happy birthday, you're catching up with me!


  11. Good Morning Phil!

    Many Happy Returns of the Day! Wish you a long healthy, happy and prosperous life.

    Regards



  12. Happy Birthday!


  13. Happy Birthday Phil


  14. Phil,

    All the best for a Very Happy Birthday

                                        


  15. happy bday phil


  16. Happy Birthday Phil!

     

    Is the C adjustment official for LTP or just an example to further explain the strategy?


  17. Good morning! 

    I have stated my concerns with Amazon long before the Election. Unlike others, they pay little or no taxes to state & local governments, use our Postal System as their Delivery Boy (causing tremendous loss to the U.S.), and are putting many thousands of retailers out of business!

    I don't disagree with him on this one though AMZN uses UPS but let's not suddenly expect facts from the President…

    Florida/Mike – Had to fly because I have to be in Whistler next week so was likely to be too exhausting to rush back from FL and jump right on a plane to Vancouver.   Had a mini road trip to DC last week – that was exhausting but at least we got to stop in Philly for cheesesteaks.  

    By the way, I'm out of here about 11:30, flight is at 1:55 so I'll likely add news and check in from airport but limited on my IPad only.

    Monday is my first non-working Monday (I retired from Mondays and will retire from Fridays in 5 years) but it only means don't count on me to be here Mondays.  I'm sure I'll almost always have a post and usually drop by in chat.

    The main reason I'm killing Mondays is so I can travel more and also make more business appointments during the week – I need a workday people can count on to make appointments with me now that PSW Investments and the Hedge Fund are taking off.  

    Big Chart – Don't mean a thing if NYSE can't take back 12,400.  

    Chicago PMI just disappointed, no 12,400 today!  

    24,000 is a good short on /YM


  18. Bought some GME t $12.25.

    Sold the Jan 2020 $13 calls for 2.65.

    Will look to add some puts on further weakness.


  19. Welcome to the Club – Happy Birthday Phil!  :)


  20. Happy Birthday Phil!  Double Nickle day!


  21. Amazon / Phil – As usual, no facts from Trump indeed:

    https://talkingpointsmemo.com/livewire/trump-vilifies-amazon

    Despite reportedly being briefed on the matter in multiple meetings, Trump has the “perception,” according to an Axios source, that the online retailer is costing the U.S. Postal Service money. The Postal Service actually makes a profit from Amazon. In 2013, the Postal Service added Sunday deliveries in several large cities because the demand for Amazon packages made it worthwhile to do so.     


  22. Phil, Happy B-Day !

    I read an Article at Citron Research about BB (Blackberry) suggesting how underapriciated this company is. Pointing out QNX and its growuthpotential as well as existing customer's base. Even suggesting they might be a buyout target.

    Any thoughts


  23. Happy Birthday!


  24. Thanks for the birthday wishes guys and a very merry unbirthday to all of you!  

    Mondays/StJ – I think, if all goes well, I should get about 2,000 extra days to do something with.  Hopefully I don't squander them…

    Canada/Den – Contracting?  That's double-plus ungood!  

    CTL/Albo – The race continues:

    Debt/StJ – It's like we're doing a Thelma and Louise with the economy and no one seems to notice, no one seems to care…

    Image result for thelma and louise animated gif

    By the way, that chart is badly outdated re. valuations.  

    C/Dave – The above is an official adjustment for the LTP (and also good as a new trade).

    GME/Albo – Yes, very surprising how badly the stock reacted to earnings. 

    • The Bloomberg Consumer Comfort Index remained at 56.8 for the week ending on March 25.
    • The State of the Economy index fell to 58.7 from 59.7.
    • The Personal Finance index rose to 63.8 from 62.9.
    • The Buying Climate index was level at 47.8.

    Petrobras hedges ~15% of its oil production for 2018

    • Petrobras (NYSE:PBR) says it hedged 128M barrels, or ~15%, of its oil production scheduled for this year.
    • PBR says it purchased put options in February and March with an average strike price of $65/bbl through the end of 2018, and an average cost of $3.48/bbl.
    • The company says it maintains its preference for exposure to the price cycle but an occasional derivative protection strategy may be applicable depending on the business environment and prospects of accomplishing its business plan.

    Gold closing out 3rd straight quarterly gain

    • Bulls have prevailed as the yellow metal has its best run since 2011 and ETF holdings hit a multi-year high.
    • Risk of trade wars and rising geopolitical tensions have both helped drive investors into gold. Referring to President Trump's picks of John Bolton and Mike Pompeo to his cabinet, ANZ Bank says, “The new appointees bring a significantly more hawkish stance on foreign policy. While the obvious impact will be increasing safe-haven buying in gold, we see growing geopolitical risks raising concerns of supply-side issues in the oil market, too.”
    • Gold is trading at $1,325 up 4.2% since the start of the year, and up 16% since the beginning of 2017
    • U.S. Steel (NYSE:X+2% premarket after Longbow analyst Chris Olin says the company's tubular segment could benefit from new data that shows both domestic mill shipments and market prices trending slightly above expectations.
    • Olin says the oil country tubular goods distributor’s index showed channel expectations at the highest since early 2017, "which should support positive industry momentum for the rest of the year."
    • Underlying energy tubular consumption appears to be up 75% Y/Y, while the spot price for welded products is up 21% Y/Y, the analyst says; among distributors, 35% reported supply shortages in January and 90% expected higher mill prices over the next few months.
    • Other potentially related tickers include SLXAKSNUESTLDRSMTCLFCMCWOR.
    • Source: Bloomberg First Word

    CVS sued in Ohio for revealing HIV status of up to 6,000 people

    • Three HIV-positive plaintiffs have filed a lawsuit against CVS Health (CVS +1%) for inadvertently revealing the HIV status of up to 6,000 Ohio residents in a mailing to their homes. The suit seeks class action status and a jury trial to award damages to those affected.
    • According to the lawsuit, last summer the company sent membership cards and information about procuring HIV medicines through CVS programs via regular mail to ~6,000 people participating in the Ohio HIV Drug Assistance Program. A reference code ending in "HIV" was visible above the recipient's name and address.
    • One of the plaintiffs lives in a small town where he is "concerned" about his mail carrier knowing his HIV status and the effect it may have on him if the information was widely known.
    • The company promptly removed the reference code after it became aware of the issue.

  25. Phil – I heard you say yesterday on the webinar that you think FTR will go $12.  I'll make a gentleman's bet with you that CTL sees $22 before FTR sees $12.


  26. And perhaps, that's after CTL goes ex-divd by $.54 several times. 


  27. Happy B-Day Phil! And thanks for your teaching and mentoring.


  28. Phil / CBI – way under takeout price…..  anything come up on earning relative to Q2 closure?


  29. Happy Birthday Phil!  


  30. Happy birhday Phil!


  31. Happy birthday Phil!

     

    I cant wait for the day I don’t have to work Mondays. Depending on how PSWI and the PSW hedge fund perform, I’m hoping that day comes sooner than later :)


  32. Happy Birthday Phil!


  33. BB/State – They have a lot of good IP still, especially security stuff.

    Bet is on Albo.  

    CBI/Batman – It seems to me you'll get 2.47221 shares of MDR $5.86 for each share of CBI $13.84 but it's hard to figure out if you end up diluting a bit on the merger.  For me, I just like the combined entity but it will take quite a while for it to shake out – probably the rest of this year before people get comfortable with the combined entity.  

    Mondays/Japar – We're working on it.  While I'm down in Florida I'll be meeting with Funn people and the Hedge Fund is up about 3% already (and 90% cash), despite the rocky quarter – so well on track for a nice year once we get a chance to put more money to work.  


  34. From one old man to an other Happy birthday Phil!!!!!


  35. Happy Birthday Phil!  This is fun for you so you are doing something fun today, right?  Enjoy.


  36. window dressing this morning?


  37. Thanks Yodi, I can only aspire to be as cool as you when I grow up!  

    Fun/Seer – I already know I'd be bored stiff if I didn't have something this challenging to do every day.  I tried retiring 20 years ago – it sucked!  After 20 years of thought, I decided cutting Mondays and then Fridays was the way to go.  When I'm 65, maybe I'll ditch Wednesdays…

    Dressing/Jabob – I'm surprised by this move but look at the volume:

    Date Open High Low Close* Adj Close** Volume
    Mar 29, 2018 261.12 263.49 260.29 262.57 262.57 32,562,735
    Mar 28, 2018 260.75 262.64 258.58 259.83 259.83 144,709,200
    Mar 27, 2018 266.17 266.77 258.84 260.60 260.60 129,941,400
    Mar 26, 2018 262.13 265.43 259.41 265.11 265.11 141,956,100
    Mar 23, 2018 264.17 264.54 257.83 258.05 258.05 183,534,800
    Mar 22, 2018 267.91 268.87 263.36 263.67 263.67 148,785,900
    Mar 21, 2018 270.90 273.27 270.19 270.43 270.43 78,709,600
    Mar 20, 2018 270.94 271.67 270.18 270.95 270.95 59,757,300
    Mar 19, 2018 273.35 274.40 268.62 270.49 270.49 109,208,400
    Mar 16, 2018 274.50 275.39 274.14 274.20 274.20 100,343,700

    Could still all reverse.  Topped out at good old 2,640 on /ES.  

    Also, let's keep in mind where the bounce lines are:

    • Dow 24,350 (weak) and 24,550 (strong)
    • S&P 2,666 (weak and satanic) and 2,688 (strong) 
    • Nasdaq 6,850 (weak) and 6,950 (strong) 
    • Russell 1,565 (weak) and 1,580 (strong)

    Anything going on below the weak bounce lines is just noise – part of a consolidation for a move lower.  


  38. Holy crap, 11:30 already?  

    I have to get going – have a fantastic holiday everyone!

    - Phil


  39. Enjoy the rest of your day Phil!


  40. safe travels


  41. Many happy returns Phil. Good luck with the travels. Just got back and the airports are truly a mess!!


  42. Happy B’day Phil!


  43. Anyone on site doing anything with the cannabis stocks? With legalization in Canada and Australia it is a crowded field. Just starting to  investigate, but did well with GWPH so thinking it is an explosive field..Thinking the US will eventually get on the train nationally.


  44. The 5-year chart on SHYG suggests it's worth the risk for 5.48% yield


  45. let's just call it an even 5.5% yield. For Phil…. ;)


  46. max pain on TSLA 285 today. Go tsla!


  47. Cannabis- I have been monitoring this for a while now and it really is still the wild west. There are many stocks to choose from but most/all are highly speculative. A few I looked at had some rather shady operators with dicey backgrounds. Given the uncertain legal and regulatory status established firms are standing pat for now but recognize opportunity down the road. I expect that not only tobacco but alcohol industry companies will eventually move in. Constellation Brands (STZ) has taken a minority position in Canadian grower Canopy Growth. Another angle has been taken by Scott's Miracle Grow (SMG) providing grower supplies (fertilizer, etc.) 

    My view is the business will eventually devolve into a highly regulated commodity business. There are already over supply issues in CA an CO resulting in falling wholesale pricing. Here in CA taxes on pot sales are very high and the licensing / testing and general heavy handed state oversight leaves a lot of industry participants operating in a marginal situation. Furthermore, the state of CA sets policy but counties and municipalities are free to deny market access. By some accounts, the black market is alive and well.

    Notwithstanding the impediments, there is a lot of cash sloshing around the industry so there is money to be made but a selective approach is prudent. I made very, very good profits on Livewire Ergogenics (LVVV). I knew the people involved and like their story (concentrating on infused edibles and plant clones). My focus going forward  is on emerging firms who take a "value-added"/differentiation strategy otherwise, you are just another "me too" concern that will be whipsawed by fluctuating market prices. 

    FWIW, I talked to one retail operator who told me that most market participants completely missed the boat when CA legalization came to pass as customer preferences are for infused edibles and beverages rather than weed. 

    As to LVVV, I still hold a small position which is completely house money. They, like everyone else in the industry have big plans which could result in big profits but execution in this environment will be an ongoing challenge. I will post any news/developments of interest and hope others follow suit. There certainly will be some gems to be found. 

    MJ Business Daily is a good info source and you can get on their free email list. 


  48. Phil

    Good morning!

    Oh, and a very Happy Birthday! No need to remind YOU to have fun!!

    Lets do a Vegas conference???


  49. Pstas – nice summary on cannabis there. Also holding LVVV with some house money, thanks to your comment on it a while back :) .  It is totally the wild west here in Canada with cannabis companies with more shooting up every day it seems.  There will definitely be a consolidation happening and I worry about over supply.  The big players are Canopy and Aurora here in Canada.  Personally I have a little bit of money spread out between 5 different Canadian companies, one of which is Aurora.  Also like Cannabis Wheaton Income Corp……which is more like WPM is for silver mining. 


  50. Ultyguy- interesting perspective from north of the border. 

    What are the symbols for Aurora and Cannabis Wheaton?


  51. Well, I’m on the plane – barely.

    Hopefully there will be WiFi.  .  


  52. If we did not have TSA pre-check, we never would’ve made it. Very crowded.


  53. Hi Phil,

    Happy birthday.. Have a great time with break.


  54. We haven't talked in a while Phil (I guess you have trained me well), Happy Birthday!  Enjoy your Monday's off.


  55. Aurora is acb and cannabis wheaton is cbw.  I believe both only trade on cdn exchanges only at the moment.  if you are using yahoo finance the symbols are acb.to and cbw.v


  56. Happy Birthday Phil!!  Sorry I'm late to the party.  Have a great time in Florida ~


  57. Happy Birthday, Phil!


  58. Phil – Happy Birthday, Old Man!


  59. Phil – I'm surprised they gave a suspicious looking character like you a TSA pre-check.

    Must have been your lady companions. 8-)


  60. Happy Birthday Phil! 


  61. pstas-Thanks for the info. Already have your LVVV-thought it sounded promising. Am into twmjf (canopy) and mpxef. Will be easing into ACNNF which is an Australian company which will export worldwide. This is very interesting as it is evolving into auxiliary business's. ITHUF is a NY dispenser which delivers to Manhattan, Brooklyn and Staten Island. Looked into the ETF's but saw they had ARENA and ScottMG in it. No other larger company's so far. The symbols are HMLSE & MJ if anyone wants to know. Thanks again and have great holiday weekend.


  62. In the US, Cannabis Wheaton trades as CBWTF. I like that one and also GLNNF, Glance Technology, who have a restaurant payment app, but are developing a payment system for cannabis and (of course) some blockchain something or other.


  63. That's an unreal trend:

    https://www.motherjones.com/kevin-drum/2018/03/more-good-news-for-rich-people/

    But let's make sure that people on food stamp are not committing fraud!


  64. Working the Odds.

    Having still some good time available, while sitting in the warming sun of southern Spain, preparing to move north to the still cold environment of Germany, I am playing with some odds on an oil stock BPT.

    Reading up on the stock, it has profited on the rising oil prices, somehow however the stock could be dwindling down to zero. Despite rising oil prices, the acreage that BP Prudhoe Bay holds has seen declining production rates recently. When the trust dissolves, shareholders will no longer receive dividend payments, and the value of their shares will fall to zero.

    Having said that, this might not be happening within the next 6 to 12 month.

    The upswing from 20$ to 23.90 on closing Thursday is a bit high, but still workable.

    Buy the stock and sell the Sep. 22.5 straddle for 5.65. To cover you from any major down turn I decided to purchase as well the 17.5 Sep. put for 1.30, reducing the credit of the straddle to 4.35.

    My combined monthly income shows a whopping 4% per month even that I have reduced the div. payment from 1.23 to .85 cents per quarter.

    By changing the straddle to Jun. you will only receive 2.35, by still deducting the 1.30 Sep. long put from the 3.65 Jun. straddle. Here we even show a combined monthly return of 4.72%.

    However take in to consideration that the stock might go further up, and some hungry call buyer might call on you to deliver the stock at 22.50. Leaving you in case of the Jun. short call, with .25 extrinsic value and in case of the Sep. call with .40 extrinsic value.

    To make it more clear for newbies to follow. You paid for the stock 23.90 less the Jun. caller of 1.65 = 22.25.  In case you chose the Sep. 22.5 caller you received 1.80. 23.90 – 1.80 = 22.10. In both cases you will receive 22.50 per stock in cash.

    I have not taking the 1.30 cost of the long put in to consideration, which we pay for insurance.

    Based on calculations your breakeven, by buying the 17.5 put will be 18$ should the stock fall below 18 even to zero, your max. loss with remain at about 85.00 per one option play.

    With other words, the buy of 100 stock and one set of straddles and the purchase of one put.

    Obviously you can do this play without the insurance and you increase the combined monthly return by at least 2% for the Jun play and by 1% for the Sep. play.

    To me this is a hot seat armchair trade and not right for the OLDER or weak at heart. So don’t bet the farm.


  65. Looking at the FTR bet of Phil, the odds are against you Phil, but as a gambler you might be a winner.

    Both CTL and FTR are real DOGS. Both owe me money!

    Frontier Communications has a long history of having top dividend yields, but unfortunately, those payouts haven't been large enough to offset the massive losses of shareholder capital that the telecom company has cost investors over the years. Frontier's share price has plunged by 85% in just the past year alone, and given its performance in past years, the stock has cost its longtime shareholders even more.

    Frontier declared a quarterly dividend of $0.60 per share that got paid to investors at the end of December. That works out to a mouth-watering 29% dividend yield based on the current share price. But that payout is actually a greater-than-60% reduction from what Frontier paid as recently as early 2017, masked in part by the fact that the company did a 1-for-15 reverse stock split. With ongoing subscriber losses and few signs of any imminent recovery, dividend investors can't afford to rely on Frontier's payouts continuing indefinitely into the future.


  66. They already suspended them. 

     Although I paid eight dollars, the Wi-Fi on the plane was useless.   It was not GOGO.  

     Delray beach is gorgeous, the weather is perfect and the town is great.

    Our hotel is the one on the left right next to the beach (Marriott)  but we book it for  tonight and tomorrow and we were going to crash at my moms last night but my brother has the flu, so we grabbed this room at the Residence Inn a few doors down.    For $400 a night in one bedroom suite for the kitchen, this thing is really good deal!  


  67. Looks fantastic!  Heading down to Hilton Head tomorrow ourselves to get away from the Masters crowd about to move on in for the week.   But first, a short pit stop up to Raleigh to see some Rangers hockey.

    Have a great week everyone!  


  68. I've previously made my case for why I think crypto could be worth $2-6Q in some long time-horizon reference frame (decades). 

    Where we are now though looks like a familiar bear cycle. 

    11/13 – $15.2B

    8/15 –  $3.8B (-75%)

    1/18 – $795.8B (+21,121%)

    Applied forward:

    10/19 – $196.3B, 2/22 – $41.6T

    Slow, steady accumulation (or long time hold, if you've already accumulated previously) through most of 2019, and then the next 800+ day crypto bull cycle runs through early 2022, should history repeat itself for the fifth time. Note that $46T is only $0.046Q, so even then you haven't "missed the boat," amazingly.


  69. Also, of course, the whole thing could go to $0 tomorrow. It just hasn't yet.


  70. BDC, what do you mean by $0.046Q?


  71. Phil, I could not miss your remakes re hotel Delray Beach. Many moons ago I did have my residence at Jupiter Beach Fl. It just amazes me how times have changed and the value of money. 400$ per night good deal. I rent here in Spain near the beach a compsite 8,5 x 8.5 meters incl. water drainage toilets and hot showers for 10$ a night. Must say the electric is extra. For us about 50$ a month.

    An apartment in the small town of Miramar 6 KM away from the City of Gandia and 80 KM south of Valencia cost about 500€ a week.

    “Apartments are just 40 meters from the beach of Miramar. At the same distance bus station line Gandia-Madrid is. The place has an outpatient clinic (public health care), a tourist office and a police station. The monitored by lifeguards wide sandy beach is very shallow into the sea. Miramar is visited in the summer usually from families. The spatial structure consists of apartments, there is only a small hotel. The place is quiet with a few small grocery stores, restaurants and shops for daily needs. There is an open-air cinema and a small park with music on weekends. Evening entertainment can be found in the 6 km distant Gandia.”

    As I remember Delray Beach, it was at least 10 standards lower than Jupiter Beach, not to forget the Bush family lives in part of Jupiter Beach.

    What however shocks me most is, the prices you and some other members quote, do have no relationship to the income and living conditions of the average US citizen.

    Obviously I could say that to Europe as well, the other day I saw a penthouse quoted in Berlin for 12,000 € per night. Berlin is nice when sometimes the sun shines, but at present I would not even change my present campsite with that penthouse in Berlin!!!

    It just makes you think what is the value of money???? You can say, that some of us, even trading as we do, it does not hurt to spend 400$ a night, but think of it, how does a man thinks, who earns 1500 $ a month in the US? Or even hear in Europe where many Families I know, have an income between 2,500 and 3,500 € a month.

    I can say that I am thankful every day for what I have learned and achieved for myself and being a member of PSW for many years (lost count of the years!). The secret is with our club, you should not follow the herd but learn out of your mistakes and the mistakes of others.

    All you girls and guys out there have a nice Easter.


  72. On the lighter side of things I am looking at KMI, a stock which has fallen more than 18% this year, as a potential new armchair trade. The stock has cut it's quarter div. from .51 to .125 cents per quarter. Still a nice 3.2% return. To start in small steps (not the farm) buy the stock at 15 or below and sell the Sept 15/17 strangle at 1.55. Break even 13.45/18.55. If you still more bearish on the stock you could do the 14/15 strangle at 1.79 with a breakeven of 12.20/16.80. The 15/17 strangle gives a combined monthly return of just under 2%, as the 14/15 gives a 2.25 %. But in the later stage you will miss out on the greater deal of capital gain. In case you not sure take half 14/15 and half 15/17. The most daring play is obviously the 15/15 straddle at 2.24 paying 2.76% per month. Break even 12.76/17.24, good break evens high return NO capital gain.

    But as now usual the world might have changed by Monday!!!!


  73. Delray/Yodi – I don’t think Jupiter is a thing anymore, this seems to be the place to be (Trump’s palace is down the road).  If you want to be shocked by prices, try having teenagers. I gave the girls $100 to get two bathing seats, thinking that would be plenty  and they called me from the stores and told me they couldn’t even buy one for hundred dollars.

     Jackie wanted to get some shorts and I walked a mile of stores with her and the average price was over $100 for a pair of denim shorts and I saw plenty in the $200-$300 range. Needless to say we decided to wait until we are back at grandmas house so we can go to a normal mall. 

    As hard as it is to believe that anyone would pay these kind of prices, you see people walking around town with bags full of the stuff. I think it’s worse than Rodeo Drive in Beverly Hills!

     The restaurants however are great and no worse than New York City. Unfortunately the rents are so high that some of my old favorite restaurants have been forced out. It’s a bad trend.  





  74. Lead Barron's article:

    Marijuana Stocks Could Be a Buzzkill

     

    Rubin’s New Leaf Data Services has a Cannabis Benchmarks index, which tracks weekly spot prices in more than a dozen markets, including Colorado, Washington state, and California. The volume-weighted index found that in states where weed is legal, spot prices dropped 20% over the course of 2016. The average in 2017 was 13% below 2016’s.

    Prices were stable in the first year or so of legalization in Colorado and Washington, while supply caught up with demand. But then, cannabis behaved like other crop commodities; prices dropped in a supply glut. Canada’s market should also be well-supplied. There were four licensed producers when Health Canada began handing out licenses. Today, there are 94.

    The potential for a supply glut is underscored by the claims of many producers that they are each building the world’s biggest grow house.


  75.  

     

     

     

     

     

    Marijuana Stocks Could Be a Buzzkill

    Link to article:


  76. Good morning!

    Futures just started turning down – not quite sure why. but maybe China Manufacturing:

    China's manufacturing PMI hits 4-month low at 51.0

    • Caixin China's general manufacturing PMI dipped to four-month low at 51.0 in March, down from 51.6 in February signaling only a marginal improvement in overall operating conditions at the end of the first quarter.
    • Output and new orders grew only modestly, with growth in export orders slumping to a 10-month low even as fears grow of a possible trade war between the United States and China.
    • However, many businesses appear to believe the weakness in orders was one-off as optimism about the one-year outlook picking up to the highest in a year citing greater investment, improved market conditions and new products that will help to boost demand.

    China hits U.S. with tariffs on 128 products

    • In response to the Trump administration's recently implemented tariffs on steel and aluminum, China has retaliated with tariffs on imports of 128 American-made products.
    • The tariffs, which are hitting such products as wine and frozen pork, are as high as 25% and go into effect Monday.
    • "We hope that the United States will rescind its measures that violate World Trade Organization rules as quickly as possible" said the Chinese Ministry of Commerce in an online statement.
    • “Even though China and the U.S. have not publicly said they are in a trade war, the sparks of such a war have already started to fly,” said an editorial in the Chinese tabloid Global Times, per Reuters.
    • China initially threatened the tariffs last month.

    If Chinese Manufacturing is hurting, all the more likely they retaliate more harshly to any tariffs Trump imposes on them.  Is the last paragraph optimism or denial.  The same can be asked about this idiot:

    Tesla(TSLA) bankrupt? Elon Musk cracks jokes after worst month in 7 years

     

    Tesla Goes Bankrupt Palo Alto, California, April 1, 2018 — Despite intense efforts to raise money, including a last-ditch mass sale of Easter Eggs, we are sad to report that Tesla has gone completely and totally bankrupt. So bankrupt, you can't believe it.

     

    I'm sure all the shareholders who lost 25% last month were super-amused. 

    Also off the rails this weekend:

    Trump vows to kill DACA deal

    • Over a series of tweets on Easter Sunday, President Trump suggested that there will be no deal to legalize the status of 800,000 so-called Dreamers, who were brought to the U.S. as children by their undocumented parents.
    • “Border Patrol Agents are not allowed to properly do their job at the Border because of ridiculous liberal (Democrat) laws like Catch & Release. Getting more dangerous," he wrote.
    • The tweets continued, “Caravans’ coming. Republicans must go to Nuclear Option to pass tough laws NOW. NO MORE DACA DEAL!”
    • DACA refers to Deferred Action for Child Arrivals, a policy established by the Obama administration in 2012 that allows Dreamers to apply for work permits and to receive deferred action from deportation.