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Trillion Dollar Tuesday – Apple Closes in on Historic Valuation

Image result for one million dollars animated gifOne Trillion Dollars! 

That's $1,000,000,000,000 and that means each $195 (the target) share of AAPL would be worth 0.000000000195 of the company – so don't laugh at Crypto traders for working with completely meaningless fractional currencies!  The difference is that AAPL makes $12 per $195 share which is, in theory, your money as a shareholder.  That means your $195 investment is paid back through earnings in 16.25 years while BitCoin, et al, of course, earn nothing at all.  Although, as anyone with a timeshare can tell you – fractional ownership is never as good as you thought it would be…

If AAPL is not worth $1Tn, then the markets are in big trouble as AAPL is about 15% of the Nasdaq and 4% of the S&P 500 so, if they are going to top out here – the whole market could falter.  Even worse, AAPL has climbed just under 20% in the past 3 months while the Nasdaq is up 7.2% and that's not good since 15% of 20% is 3% so AAPL is responsible for 1/2 of the Nasdaq's total gains since last earnings – if that trend reverses – things can get ugly very fast! 

So, step one to figuring out if the market is going to go higher is figuring out whether it's reasonable to pay $1 TRILLION for AAPL stock.  Apple certainly thinks so, the company is in the process of buying back $250Bn worth of it's own stock and the average volume of AAPL is 37M shares or $6.8Bn at the current $185 price so just the additional $100Bn they have announced would make them the sole buyer of stock for 15 days but, in reality, all they need to do is buy 10% of that per day to create a lot of upward pressure on the price so, in effect, AAPL can easily be the biggest buyer of their own stock every business day for the rest of the year.

Image result for apple stock buyback 2018If most companies were doing that, I'd be very unhappy as it's often a waste to buy back your own stock but Apple just repatriated $250Bn in cash from overseas and, frankly, they have nothing better to do with their money.  The average p/e ratio for the rest of the S&P 500, sans AAPL (which brings it way down for all of them) is over 21 times earnings so there are no "bargains" to be had if Apple wants to go shopping.  Take out AAPL's $55Bn in earnings and the p/e of the Nasdaq goes over 30 times what's left of earnings and, once again, there's nothing to buy.

So Apple is "returning" the cash to shareholders by reducing the outstanding share count by 10%, which will then pop your earnings per share from $12 to $13.20, which then drops AAPL's p/e ratio to 14.77 and they STILL have $150Bn in the bank, or 15% of your share price and they are STILL making another $5Bn a month in after-tax profits.  WOW!  How can you not own AAPL?  

We do own AAPL in our Member Portfolios as well as our Hedge Fund but we bought it (most recently) on pullbacks to the $160s – as we close in on that magical Trillion Dollar target at $195, we have to wonder if it's time to sell but the number are still very good and we're hard-pressed to find better places to put our money.  The above chart, from Stockopedia, does not take buybacks into account so those EPS numbers can really take off as Apple reduces their share count. 

Oddly enough, through the magic of options, you can still net into AAPL for $150 by selling the 2020 $160 puts for $10.25 – which means you are getting paid $10.25 (now) in exchange for your promise to buy AAPL for $160 between now and Jan, 2020.  Of course, AAPL may never get that low in which case you just keep the $10.25 and don't get to buy the stock for $160 but $10.25 is more than 5% of the stock price – not bad money for doing nothing. 

We can use that to construct a play on AAPL and let's say we're willing to buy 500 shares for $160 ($80,000), which would ultimately use $40,000 of ordinary margin.  Then we can sell 5 puts without fear as our worst case is getting AAPL for a net 20% discount and we can construct the following spread:

  • Sell 5 AAPL 2020 $160 puts for $10.25 ($5,125)
  • Buy 10 AAPL 2020 $165 calls for $34.50 ($34,500) 
  • Sell 10 AAPL 2020 $195 calls for $19.10 ($19,100) 

That's a net cash entry of $10,275 on the $30,000 spread that's currently $20,000 in the money at $185.  The short puts require $5,717 in ordinary margin but that's well worth it as the upside to this spread at the modest target of $195 is $19,725 (192%), which is a very nice 20-month return.  In fact, if this trade goes well and AAPL is steadily over $185, you should make 10% a month on this position as the value of the premium you sold to others (the short puts and the short calls) diminishes over time – that's the only sure thing in the markets – premium decays!  

With AAPL buying another $100Bn worth of their stock over the next year or so, I certainly like the odds of this play working out HOWEVER, you have to take your obligation to buy 500 shares of AAPL very seriously – if the market crashes, AAPL will not be immune and you may end up owning the stock and having to wait patiently for it to recover over time (hopefully).  

Meanwhile, we're not going to sit and do nothing.  While we are waiting 619 days until Jan 2020 expiration, we can also sell some short-term calls – especially as we don't think AAPL will blast over $195 too quickly as people balk at the Trillion Dollar valuation.  The July calls expire in 73 days and we can sell the July $190s for $4.45 so, if we sell just 3, we collect $1,335 and, if AAPL goes higher, the Sept $200 calls are $3.85, so that's our target and Jan $215 calls are $3.60, so that's our next roll and if we really think AAPL will gain $165Bn in market cap by the end of the year – then we should be making much more aggressive bets!  

Image result for s&p 500 by market cap 2018Since $165Bn is more than the ENTIRE market cap of all but 25 companies on the planet – let's assume AAPL is not going to go up that much, right?  This chart is a bit old as AAPL is up to $939Bn at $185 and AMZN is at $776Bn at $1,600 but you get the idea.  If Apple or the market made that kind of move between now and January – I'd short the crap out of it.  

Anyway, assuming all goes well and you are able to sell those 3 short calls and then do it again about 8 more times while you wait, you'll collect another $10,000(ish) and then it's a net free spread that pays $30,000 in 20 months.  Now does it sound interesing?

Leaning to squeeze another 50% out of your trades is what we teach our Members at Philstockworld.  All part of our "Be The House – NOT the Gambler" school of investing! 

We're seeing a lot of underlying weakness in the indexes but we're sure not blaming AAPL – who have been holding things up this week and last.  Overall, we're still expecting a pullback that brings more companies in-line with AAPL's 16x p/e – not that AAPL will pop $165Bn to catch up with the rest of the idiotic valuations.  

After all, if AAPL is 4% of the S&P then $165Bn x 25 = $4.125 TRILLION!  Where the f*ck do you think that money could possibly come from?  Keep in mind the entire US GDP is less than $20Tn so we're talking 20% GDP growth just to justify that increase.  Nope, that's where I'll put my foot down.

 


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  1. Interersting take on luck vs. algos:

    http://www.dpegan.com/the-skill-of-managing-luck/

    We humans seem to be attracted to a bad process. To the unexpected, the unusual, the low probability. We’re attracted to luck – the more extreme the luck, the better.  We seem to especially relish luck masquerading as skill.[...]

    Skill is boring. Skill is 10,000 hours of practice. Skills is consistency. Skill is a game of inches. Skill is picking battles to win wars. Skill is incremental.

    In contrast, we love upsets and underdogs. The little guy, with less practice, planning, and years of experience wins anyway… because they have heart, or hope, or something.[...]

    Why are we averse to algorithms?

    Berkeley Dietvorst, Cade Massey and Joseph Simmons have been looking into just that. And Berkeley explained to me “We benchmark algorithms to perfect, and humans to mediocre.” If we see an 85% hit rate for an algorithm, we worry about the 15%. When we see a 60% hit rate for a human, we say “that’s better than chance!”.


  2. Some thoughts on market timing:

    http://jimoshaughnessy.tumblr.com/post/173328492169/how-to-arbitrage-human-nature

    History never repeats exactly, but the same types of events continue to occur. Investors who had taken this essential message to heart in the last speculative bubble were the ones least hurt in the aftermath. They understand that today’s events and news are mostly noise, and that only longer periods of time deliver the much more accurate signal. As Pericles said, they “wait for the wisest of all counselors, time.”  

    The same is true after devastating bear markets. Investors behave as irrationally after protracted bear markets as they do after market manias, leaving the equity markets in droves, usually at or near the market’s bottom. By the time they gather enough courage to venture back into equities, a good portion of the recovery has often already happened. Investors who remained on the sidelines in 2009 left between 50 and 75 percent of gains on the table, making it very difficult for them to catch up with the market.

    We are always trying to second guess the market, but the facts are clear—there are no market timers on the Forbes 500 list of the richest people, whereas there are many, many investors.  


  3. Learner – VRX has taken awhile, but it's been worth the wait !

    Glad to see they are changing their name to get rid of the Valeant stigma.


  4. Absolutely albo…  I was scaling in when this went below $15 recently… Glad to see the thesis playout.  I knew the Bausch brand name was really strong and it is good to see management take a pivot to that and get rid of Valeant and all the stigma associated with it.   If Joseph Papa can execute in 2H 2018, this stock might be in the 30s before we know it.   


  5. Good Morning.


  6. We need VRX management to go turnaround HMNY…. 


  7. Phil/AAPL

    good morning!

    Enjoyed the morning read on markets/AAPL.

    I mY do EXACTLY that!.

    However, value notwithstanding, I hate to be at the mercy of markets, economy and something derailing the apple cart…for example, a hot new device that really does everything for me.

    So, let’s take your logic but now if we can find a way to protect that trade somehow if the markets e I will feel much happy! I am working on that and if I come up with something, will share!

    Meanwhile, I enjoy all your work on this site..thank you.


  8. And while CNBC is flouting Buffett’s AAPL purchase, I am willing to bet he is laughing away while selling calls on the stock he bought at 150-155…

    I like your idea 190 July calls…had just sold the 180’s, but will monitor.


  9. Phil

    Do we have a hedge using sds?

     Thanks


  10. Schwab is offering 45% per annum for lending them your HMNY.


  11. MoviePass majority owner Helios & Matheson's stock falls after company issues update on cash balance

     

     

    9:47 AM ET 5/8/18 | MarketWatch

    RELATED QUOTES

     

    10:30 AM ET 5/8/18

    Symbol

    Last

    % Chg

     

    HMNY

     

    1.75

    -17.06%

    Real time quote.

     

     

    MoviePass majority owner Helios & Matheson's stock falls after company issues update on cash balance Shares of Helios and Matheson Analytics Inc. (HMNY) are down 9% in Tuesday morning trading after the company released a filing with a "financial update." Helios and Matheson, which is the majority owner of MoviePass, said in the filing that it had $15.5 million in cash available at the end of April and an additional $27.9 million on deposit. The company said that by the end of April, it had implemented procedures that it believes will curb abuse of the MoviePass program, including technological improvements that will make it harder for subscribers to share their accounts with others as well as a limit that will allow subscribers to see a particular movie only once. However, the company warned that it "will need proceeds from sales of our common stock pursuant to our Equity Distribution Agreement with Canaccord Genuity, or other sources of capital, starting in May 2018." Helios and Matheson also said that if it can't obtain sufficient additional capital, "we may be required to reduce the scope of our planned growth or otherwise alter our business model, objectives and operations, which could harm our business, financial condition and operating results." Shares are down 28% over the past month, while the S&P 500 has gained 2.4%. 


  12. HMNY – I'm out. Fortunately a small bet…..


  13. Phil/CMG  : would like your suggestion for adjusting this position

     +2 Jan 2019 $280 Call @ 63.38 (now 154)

    -2 Jan 2019 $420 Call @14.90 (now 50.6)

    -1 May 2018 $355 Call @ 6.60 (now 70.7)

    -1 Jan 2019 $350 Put @ 40.50 (now 13.55)

    I understand the concept for adjustment (sell long call, roll the May short call) but stuck finding a 2020 BCS to cover the short calls.  Appreciate your help here.


  14. Phil, putting on your PE hat (PSW investments) – hypothetically, would you put your clients money in HMNY at this point? Or, wait for it to go BK and perhaps then a salvage play?


  15. Good morning! 

    Dollar should back off 93 and then we should claw back to green but, on the whole, just watching and waiting for the moment.  

    /KC still $120.50, so another chance to go long there.  /SI back to $16.38 but I'd wait until it's back over $16.40 to go long and then use that for a stop as it went violently below – to $16.10, last week before rocking back to $16.50 so great if you didn't get blasted out but a very sickening ride.

    Big Chart – NYSE @ 12,513 and 200 dma is 12,473 so all is well at the moment but figure Dow – 50 puts the NYSE under.  

    Luck/StJ – Luck is more fun.  I can play poker all day and win 100 hands on statistics and make $2,000 and it feels like a job but if I get one $500 all-in hand where the last card makes me a lucky winner – THAT I will be happy about for weeks.  It's human nature and you have to fight it to be a good trader – or a good poker player…

    Good note on timing, StJ.  

    VRX/Albo – Congrats to all the faithful!  

    HMNY/Learner – Wow, 20% drop on competition. 


  16. Oil taking a dive! 

    All commodities getting hammered.  

    Indexes likely to follow suite to the downside, /TF best short below 1,580 with tight stops above or /NY6,800.


  17. Phil, why not roll your 40 2019 LB 32.5 calls to 40 2020 30 call (2.55) or 27.5 calls (4.40)? Get an extra year for free while lowering strike and can then sell 2020 calls come January? 


  18. Silly me, so much for expecting the markets to stay down for more than 10 seconds.  No harm done as neither crossed under and that's why we wait for that to bet!  

    At $2.08 now, /RB is an interesting long.  

    Actually, it turns out we don't have AAPL in the LTP (just short puts in the STP), so let's add the above trade:

    • Sell 10 AAPL 2020 $160 puts for $10.25 ($10,250)
    • Buy 20 AAPL 2020 $165 calls for $34.50 ($69,000) 
    • Sell 20 AAPL 2020 $195 calls for $19.10 ($38,200) 
    • Sell 5 AAPL July $190 calls for $4.70 ($2,350) 

    That's a net cash entry of $18,200 on the $60,000 spread that's currently $40,000 in the money at $185.  The short puts require $11,434 in ordinary margin but that's well worth it as the upside to this spread at the modest target of $195 is $41,800 (229%), which is a very nice 20-month return.  In fact, if this trade goes well and AAPL is steadily over $185, you should make 10% a month on this position as the value of the premium you sold to others (the short puts and the short calls) diminishes over time – that's the only sure thing in the markets – premium decays!  

    So the numbers improved as we made the 1/4 sale in July – huge difference in net return by playing more conservatively…

    Protect/Maya – That's what the SQQQ's are for. 

    HMNY/Albo – I can't believe they got such crap terms from the merchants.  That's causing a cash-flow issue because they can't recognize the annual subscriptions until they vest.  So they are burning about $200M/yr and they MUST raise money this month to survive.  Kind of dicey!  Anyway, this is nothing that wasn't known last month – just a new round of people to be SHOCKED I guess.  

    Image result for i am shocked animated gif

    SDS/QC – We do not currently have an SDS hedge.  

    Oops, spoke too soon – red again!  

    CMG/Bai – Now THAT is how you lay out a trade!  Thank you!  yes  Well, it's a $140 spread that's now net $103.40 with CMG at $423 and the puts should be worthless so they offset much of the damage from the short puts – not too bad.   I would:

    • Cash the 2 Jan $280 calls for $154 ($30,800) 
    • Roll the 1 short May $355 call ($6,900) to make 3 short Jan $420s ($4,900) for -$2,000
    • Roll the 1 short Jan $350 put ($1,400) to 1 short 2020 $380 puts ($4,000) for +$2,600 
    • Buy 6 2020 $390 ($95)/$440 ($71.50) bull call spreads for net $23.50 ($14,100)

    That puts $17,300 in your pocket and leaves you with 6 of the 2020 $50 spreads that are $30 in the money covering 3 short Jan calls that are at the money.  If all goes well, CMG stays around here and the short calls go worthless and you can then cash out another $15,000 @ $420ish.  That will pay you way more than your original $16,000 intended gain – so worth the wait – especially with $17,300 in pocket already!  

    HMNY/Pstas – We knew it was high risk for the portfolios and risked a loss (down $7K in the OOP is 7%) of a single allocation block at worst.  For PSW Investments, however, there would also be a time sink so we would not put money into something with such an outside chance of success, nor would we buy it for the hedge fund, which does not take "fun" risks (see StJ's notes on luck above). 

    LB/JMD – Not sure what calls those are.  In the OOP we have 2020s and the LTP has 2020s too.  I think you are referring to the Money Talk Portfolio and we can't do anything with that until the next time I'm on the show.  Even then, I don't want to over-complicate things for a TV audience so, if the trade is on track – I'll just let it ride and look for new trades to add.


  19. LOL, train wreck in progress:

    https://talkingpointsmemo.com/livewire/trump-mueller-interview-four-hours

    In an informal, four-hour practice session, Mr. Trump’s lawyers were only able to walk him through two questions, given the frequent interruptions on national-security matters along with Mr. Trump’s loquaciousness, one person familiar with the matter said.

    And the questions were:
    Name?
    Date of birth?

    And they can't use the excuse that he is too busy to prepare – they guy has played golf over 100 times already! 


  20. HMNY – Phil, it seems that the relentless short selling has taken away most options for the company to raise capital.  Looks like the debt market is closed to them, and continuing to issue stock below $2 doesn't seem viable either.  They need a private deep-pocketed partner to infuse some cash.  Probably a long shot, and you can bet that if it happens, current shareholders will be very heavily diluted.


  21. LB

    I have 40 32.5/40 2019 BCS and -20 2019 32.5 puts, probably pulled the trigger when you were first talking about it maybe before the 2020's were out. So… how would you adjust my spread?


  22. albo/HMNY

     

    I thought VZ took a stake in them?


  23. I wonder if the fact that Trump will withdraw from the Iran deal is baked in the the oil prices right now! There are not many good outcomes out of that decision:

    1. Iran decides to renew its nuclear program and gets a nuclear capability
    2. Israel (with our help) resorts to bombing Iran to stop them from achieving (a)
    3. Middle East war ensues!
    4. Oil prices climb over $100 again!
    5. Trump's pals get richer… the rest of us suffer!


  24. Lalalinda -  This is how it came about.  Bet VZ wishes they could have gotten more cash from the deal.

    ~~Helios and Matheson Analytics, the majority owner of MoviePass, announced the acquisition of Moviefone from Verizon’s Oath subsidiary. Under the terms of the deal, Helios and Matheson is paying Verizon $1 million in cash and is granting 2.55 million common shares (worth less than $8 million at HMNY’s current stock price). In addition, Verizon received stock warrants from Helios and Matheson for another 2.55 million shares $14 million worth of shares at an exercise price of $5.50 per share, according to a regulatory filing. Verizon’s ownership of HMNY shares is subject to a lockup until April 4, 2019.


  25. Oil dipping makes me think that Trump will not nuke Iran deal.  Like everything else he'll probably delay his decision for 30 to 60 days to work more with European allies.


  26. Speaking of HMNY and adjustments.  If we're not going to capitulate then we have to adjust:

    In the OOP:

    Long Call 2020 17-JAN 2.50 CALL [HMNY @ $1.57 $-0.54] 25 2/13/2018 (619) $7,750 $3.10 $-2.88 n/a     $0.23 $-0.33 $-7,188 -92.7% $563
    Short Call 2020 17-JAN 7.50 CALL [HMNY @ $1.57 $-0.54] -25 2/13/2018 (619) $-2,625 $1.05 $-0.95     $0.10 $-0.10 $2,375 90.5% $-250
    Short Put 2020 17-JAN 5.00 PUT [HMNY @ $1.57 $-0.54] -15 2/13/2018 (619) $-3,900 $2.60 $1.30     $3.90 $0.21 $-1,950 -50.0% $-5,850
    • We're in for net $1,225 and the 15 2020 $5 puts at $3.90 ($5,850) can be rolled to 35 2020 $2.50 puts at $1.60 ($5,600) for net $250 and very little additional commitment to own the stock.  
    • The 2020 $2.50 calls @ 0.28 can be rolled to the 2020 $1 calls at 0.58 for 0.30 – that's a no-brainer for net $750
    • We can buy back the short $7.50 calls for 0.10 ($250) and we'll wait and see if we get a bounce.  We could sell the $5s to pay for more of the roll if we want to but, for 0.28, I'd rather take the chance of getting a better price.  

    In the LTP, we will make the same roll with our 50 $2.50 calls and we have no short calls.  We will also roll our 20 short 2020 $7.50 puts ($6.10) to 50 short $2.50 puts at $1.65, which is effectively $4.12 – we don't want to over-commit, so we'll take the small loss for now.

    Dilluted/Albo – We expected that to happen from day one.  This is just that shoe dropping.  

    LB/JMD – That is NOT how you lay out a position (see above).  Anyway, given very little information, I'd just roll the Jan $32.50 calls ($4.50) to the 2020 $30 calls ($6.90) for net $2.50 and you're getting the extra year for free.  The put target is fine and, when they start to recover, you can begin selling 10 (1/4) of the shorter-term calls.  Even now, June $35s are $1.35 so $1,350 for 38 days out of 619 you have to sell means you can collect over a dozen of those short sales for $16,200 while you wait.  

    As usual, the question is, why would you not be selling a few short calls almost all the time?

    HMNY/Lala – Yes, VZ owns 10% and will likely buy more.  People act as if VZ can't read books or maybe that they delivered a real asset (MoviePhone) in exchange for stock and warrants in something that is likely to implode the next Q – Because they are that stupid, I guess…  Also, HMNY themselves just spent their cash doubling up their ownership stake in MoviePass.  If anything, I think they may just be using this to play hardball with debt holders to restructure (Trump does that all the time).

    Iran/StJ – I think it's totally baked in at $70 and we'll see $65 if it turns out we're working something out with Iran.  

    Oil/Den – I agree.  Trump wants the Nobel Prize he needs to be diplomatic.  


  27. GOGO / Phil – What's your perspective on GOGO? I'm short 10 May18 $11 Puts @ $2.09 (now $4.80sh) and am thinking about rolling out to Jan20 $8 puts…. thanks, Eric


  28. Selling on Helios and Matheson accelerates

    May 8, 2018 12:56 PM ET|About: Helios and Matheson Analy… (HMNY)|By: Clark Schultz, SA News Editor 

    On a dark day for Helios and Matheson Analytics (NASDAQ:HMNY), Euro Pacific Capital arrives on the scene with an initiation on the MoviePass owner at a Buy rating with a lush price target of $12 (+700% upside potential).

    The upgrade arrives after Helios filed a financial update that made it clear that it may have to cut back on its growth plans if it's unable secure the capital it needs. The company already has an equity distribution agreement with Canaccord Genuity that it expects to utilize.

    Shares of HMNY are down 26% on the day and traded as low as $1.44 earlier.


  29. LB – took a position. Rolled out of JWN and into LB. traded 3% dividend for 7%, and all the upside promise of LB down here. 


  30. DF – nice reaction today to earnings beat.


  31. pstas--great timing on the upgrade…yikes!


  32. i mean initiation ;-(


  33. ROFL!  

    • On a dark day for Helios and Matheson Analytics (NASDAQ:HMNY), Euro Pacific Capital arrives on the scene with an initiation on the MoviePass owner at a Buy rating with a lush price target of $12 (+700% upside potential).
    • The upgrade arrives after Helios filed a financial update that made it clear that it may have to cut back on its growth plans if it's unable secure the capital it needs. The company already has an equity distribution agreement with Canaccord Genuity that it expects to utilize.
    • Shares of HMNY are down 26% on the day and traded as low as $1.44 earlier.
    • Previously: MoviePass owner tumbles after new filing, AMC conference call hit (May 8)

    Not as funny but no big market effect:

    Trump to Withdraw U.S. From Iran Deal

    I don't think that's official yet.  

    GOGO/Eric – I didn't like the way they were executing and competition seemed to be getting stiffer so we did not get back into them.  While I like the concept, I think their margins are being squeezed while their investment costs are climbing as they have to provide faster and faster WiFi to keep up with the next guy who offers a faster, cheaper service.  Too cutthroat.

    DF/Scott – Really coming off the floor.


  34. HMNY/Phil- I assume our HMNY in LTP is already adjusted in 20th April when you mentioned in highlighted blue that our 2.5 calls must be roll to the $1.5 calls and further more after their dilution you mentioned we should DD to add another 50 more calls and target 100 calls. 

    I added to a total of 90 calls $1.5 calls and today you here talking about rolling the 2.5 LTP calls to $1calls….  I think somehow I might have misunderstood you so maybe please you can run me through so I won't get further misunderstanding? and now what should I do with 90 $1.5 calls @ avg of $1.2?


  35. Watching that Google I/O conference, it shows you how far ahead these guys are with AI. They showed a demo of the Google Assistant making an appointment on its own for a haircut, responding to questions, adjusting for time. No human interaction on the caller side and it sounded very natural. I don't even know if the person on the other side knew it was a machine calling. Insane! You gotta be bullish on Google long term.


  36. Apparently, the official notification on Iran is at 2pm.  Trump will get tough:

    Image result for double secret probation animated gif

    HMNY/Dave – Oops, if we already did it then I forgot to log it but same(ish) concept.

    GOOGL/StJ – Such cool stuff, can't wait to play with it.


  37. HMNY/Phil- I too have the $7.5Put that I never got to roll to the $5 Put from the last LTP review/adjustments… so judging that you are rolling the  7.5 puts to 2.5 puts, I guess you never got the fill? what should i do now with my 7.5 puts?


  38. HMNY/Dave – I'd do what we're doing above in the LTP, roll to 2.5x the $2.50 puts and take a bit of a loss for the better position without too much more commitment.


  39. HMNY/Phil- I gotcha and my TOS indicates that the mid point to roll the $7.5Puts to $2.5 Puts is $4.8… Do you think that's a worthwhile price to pay?


  40. There goes oil…. 

    Let's not get facts get in the way of reality in Trump world!


  41. Trump villifying Iran and saying Israel has "conclusively" proven Iran is violating the agreement (which is totally false).

    Silver is flying already! 

    Roll/Dave – Sounds fair.


  42. IMAX  nice big buy of 13,800 Jan 2019 $26 calls for $1.95.  


  43. So much for making new friends! Remember when they complained that Obama was bad for our standings in the world! We just gave the middle finger the France, the UK and Germany. And most the Arab countries. Why would N. Korea sign a treaty with someone who doesn't respect previous deals.


  44. What trashed NLY today?  Oil?


  45. Did Trump just say…

     

    FU IRAN??????


  46. Was going to short oil into close  didnt want to take the  risk though crazy price movement today


  47. This speech was so full of untruth! Even Israeli generals told Netanyahu that the deal was working! The only argument in Trump's mind was that the deal was negotiated by Obama. Can we run a country based on personal feelings! 


  48. Trump is putting on full sanctions but who knows if our allies agree with this?  If they don't – he's taken down our standing in the World another few pegs…

    NLY/Tangled – Jamie Dimon said rates going to 4%. Market would have crashed but it was washed out by all the Iran noise.

    F Iran/Jabob – He just called them pure evil – about 20 years of backstepping on progress with our speaking to them in one shot.  We're right back to "axis of evil" BS.  Speaking of patterns that repeat – next we'll be in a pointless war started for false reasons so Trump can say we shouldn't change leaders during a wartime crisis…


  49. Netanyahu already speaking right on top of Trump (collusion?) backing up everything he said.  

    Oil still down 2.5% at $69 – not impressive.  

    Iran TV says US action is illegal and undermines International Agreements and they are right! 


  50. Even Israeli generals told Netanyahu that the deal was working! 


  51. guess the generals were not very clear???


  52. Can't watch the news anymore – we are ruled by a man child!


  53. Phil/CMCSA – Can you give me your thoughts on Comcast?  News hit that they are going to try to steal Fox from Disney yesterday, and the market doesn't seem to like it.  They seem to be getting really cheap (11.86 forward PE ratio).  


  54. Iran is already spinning this that the US (only) has pulled out of the deal they are still honoring with the rest of the World and they will take us to the World Court to force us to lift sanctions.  If they pull that off – this country will have officially gone from World Leader to laughingstock in 18 months.

    Trump likes to take big gambles and, if he loses, he just BKs the company and moves on.  Unfortunately, that's what he's now doing with America.  

    CMCSA/Palotay – Hard to see why they would do well when all the streaming services are doing well.  However, their numbers are still strong, though nowhere near what they were now that their tax breaks have gone away.  Still, making $2.50/$31 share is nice for a 12.4 p/e but watch out for how 5G rolls out as that may lead to their downfall if people can bypass them entirely.  

    5G takes center stage at CES 2018 with actual deployments later …

    5G Network: 3 Companies to Invest in Before 2020 (QCOM, NOK …

    25 mobile operators already testing “5G” technology | TelecomTV

    These 4 companies will be the big early winners from the $326 billion …

    Still about 2 years to run on wire-lines but if 5G is as good as WiFi – they'll have to have a great reason for you to need more bandwidth (maybe VR?) to get you to keep paying Comcast when you already have a 5G IPhone that can be a hotspot from T or VZ or TMUS/S.  And, don't forget, with T for about $100/month (and less per additional phone) you get DirectTV included – though I guess NFLX is still cheaper with the basic connection ($35/month).  

    Anyway, sector in turmoil and, in this case, I'm not sure the selling is overdone – though it probably is.  I think if CMCSA ($140Bn) were really worried, they would have bought TMUS ($47Bn) or S ($20Bn) themselves.  

    Took a quick $850 per contract off the table on /SI – no sense in being greedy!  


  55. The article mentioned NOK as a play on 5G.  NOK has been a good stock.  A slow mover and not very exciting, but it's up 35% this year.


  56. NOK/Albo – Could be good for a resurrection.   Options make it interesting with a lot of volatility and long-term contracts.

    You can sell the 2020 $7 puts for $1.50 for a net $5.50 entry and pick up the $5 ($1.60)/$7 (0.68) bull call spread for 0.92 so let's say 2x long is net 0.21 per $2 spread that's $1.27 in the money so far (though below the $7 target on the put side).  Over $7, it could be a huge winner.  

    They do pay an 0.24 dividend though so buying for $6.27 and selling the $5s for $1.60 and the $7 puts for $1.50 nets you in for $3.17 with a $1.83 (57%) profit if called away (same as the spread) but a bonus on the dividend.  Both ways are good.  

    Pretty flat into the close.  I think down tomorrow as Dimon's 4% comment gains traction but Powell is an hour into his speech and no big changes so I doubt he said anything market-moving.


  57. Phil/ CMG adjustment – it looks good!  Thank you, you are the master of adjustments!


  58. Phil / Any thoughts on LB earnings next week?


  59. Phil – Thanks on NOK.


  60. Good luck to us:

    https://www.vox.com/world/2018/5/8/17329052/iran-nuclear-deal-trump-winners-losers

    In addition to the lack of strategy behind imposing new sanctions, there’s always the chance that Iran restarts its nuclear program in earnest. After Trump’s speech, Iranian President Hassan Rouhani announced that he was preparing to resume “industrial” uranium enrichment if the Europeans couldn’t convince Iran that staying in the deal was worth it — the kind of prohibited nuclear activity the deal was designed to stop.

    That means Trump might soon find himself in a situation where Iran is racing toward a bomb, forcing him to either let them go nuclear or start a war to stop it — the truly awful choice the Iran nuclear deal was supposed to head off in the first place. There’s no evidence the president has thought through this situation, or what he would do in the event that Iran follows his lead and exits the agreement.

    Before this announcement, Trump didn’t really have to deal with the Iranian nuclear standoff: He could criticize the deal without needing concrete plans for what to put in place in its stead. Now, though, he’s forced to try to come up with a solution to an extremely difficult problem for which all the available options seem ineffective or disastrous. He’s put himself in a tough situation, and he’ll own whatever comes next.

    Bolton always wanted regime change in Iran! Trump's kids won't be going to war.


  61. STJ / Iran – Trump may have put himself in a tough spot…..  but he'll never own up to it….  



  62. /RB was a good call at 2.08. Now 2.15. Bummer I didn’t hold it for very long, took a $500 non greedy exit. 


  63. Daniels’ lawyer: Cohen got $500K from Russian oligarch Viktor Vekselberg



  64. Meet the Renegades of the Intellectual Dark Web



  65. Robert Mueller might die laughing



  66. The Senate just basically admitted Russia rigged the vote totals for Donald Trump



  67. Good morning!  

    Futures blasted higher at the EU open (3am) and are just topping out at 24,450, 2,684 (on the button), 6,850 and 1,598.  

    You can see on the /RTY chart how thin the gains were so I like the risk/reward of shorting here (1,597.50) with a tight stop over 1,600 as it's only a $150 risk vs much more potential reward to the downside.  

    /SI tested our long line again at $16.40 – glad we took the profits yesterday!  /YG came very close to $1,300 – also a good long.  /KC still cheap at $119, /KCU8 is $121.65, /HG back a bit at $3.05.

    Oil at $70.84, /BZ $76.76, /RB $2.156, /NG back to $2.74 and Dollar is hovering at 92.96.

    Saudi Arabia Pledges to Support Oil Markets

    Europe is not higher and Asia was not higher so it's my opinion that Team Trump pulled a favor and got the Futures pumped up so they can say "See, we didn't make the market drop – they loved us pulling out of Iran."  I know it seems petty but it gives them cover to have a strong open because, a year from now, when they use it to make a point – who's going to remember how they got there?

    You're welcome Bai.

    LB/Batman – I think they are oversold so should pop a bit unless last Q really sucked.  On the whole, I don't care what they do as we bought them as a turnaround and they are only 6 months into a 2-year process (like GNC).  When they hit $60, we wisely cashed out from our Sept entries at $35 and now they are back at $35 and maybe in 6 months they'll be $60 again but our target is $50 in 2020 – that's a long time but, if they get 20% over our target again before then – we'll be out again!  

    You're welcome Albo.

    Someone is in BIG TROUBLE!  

    Trump Lawyer Received $500,000 From Firm Linked to Russian Oligarch

    Michael Cohen’s company received $500,000 in 2017 from an investment fund linked to Viktor Vekselberg.  The payments were made to Essential Consultants LLC, a company Mr. Cohen established in Delaware that he also used in October 2016 to make a $130,000 payment to former adult-film actress Stephanie Clifford, known professionally as Stormy Daniels, who had alleged she had a sexual encounter with Mr. Trump in 2006. 

    And the best part is this it the Russian DENIAL:

    Richard Owens of Latham & Watkins, which represents Columbus Nova, said the company “is a management company solely owned and controlled by Americans. After Mr. Trump’s inauguration, the firm hired Michael Cohen as a business consultant regarding potential sources of capital and potential investments in real estate and other ventures.” Mr. Owens added that “reports today that Viktor Vekselberg used Columbus Nova as a conduit for payments to Michael Cohen are false.”

    Several associates of Mr. Vekselberg, the Russian oligarch, have made donations in recent years to Trump-related efforts. Mr. Vekselberg’s cousin, Mr. Intrater, donated $35,000 to a joint fund between the Trump campaign and the Republican National Committee in June 2017, according to Federal Election Commission records. Mr. Intrater also donated $250,000 to Mr. Trump’s inaugural fund.

    So after Trump is in office, the Russians hire his attorney to "consult", paying a company who's only consulting, so far, had been to pay off a porn star and it doesn't occur to either Cohen or Trump that this would look bad – even if it were somehow legitimate?  Cohn collected millions from companies too – all after Trump's election and all horribly illegal if he can't justify how his one-man shop actually performed real services for that money. 

    That's a good job for AI – faking and back-dating legal documents quickly!   That's why the FBI raids offices – kind of late to stage a cover-up when they already have all the records.  

    Image result for nixon cover up cartoon

    Image result for nixon cover up cartoon


  68. API

    • Crude -1.85mm (+1mm exp)

    • Cushing +1.653m

    • Gasoline -2.055mm

    • Distillates -6.674mm – biggest draw since 2004

    Here are the sanctions that will snap back into place now that the US is out of the Iran nuclear deal.

    • "The Iran deal is not dead," declared French Foreign Minister Jean-Yves Le Drian, calling President Trump's withdrawal from the 2015 nuclear accord "an error."
    • European nations will soon meet with Iranian officials as they urged the U.S. not to take steps that would make life harder for countries that still want to stick to the pact.
    • Talks will also be held with oil giant Total (NYSE:TOT) and others with major business and economic stakes in the region.
    • U.S. crude has now topped $71 per barrel, soaring almost 3% overnight, after President Trump abandoned a nuclear deal with Iran and announced the "highest level" of sanctions against the OPEC member.
    • Financial or business activities outlawed by Aug. 6 include exports of airplanes and parts, dollar transactions, trade in gold and other metals, sovereign debt and the auto industry.
    • By Nov. 4, sanctions will ban oil purchases and transactions with the central bank.

    The Purge Expands: Deutsche Bank Planning To Fire Up To 20% Of US Workers. 

    Tesla offers Fremont factory as collateral

    Related image
    • Tesla (NASDAQ:TSLA) has changed the terms of its borrowing agreement with banks to allow it to pledge its Fremont auto factory – the production hub of its Model 3 sedan – as collateral, Thomson Reuters IFR reports.
    • The carmaker has just $543M of the $1.8B credit facility left to use, but banks periodically review the amount they are willing to lend, and Tesla continues to burn through cash.

    TripAdvisor up nearly 20% after earnings, optimistic outlook

    • Q1 non-GAAP net income of $42M or $0.30 per share vs. $35M and $0.24 a year ago. Free cash flow of $159M up from $116M.
    • Hotel revenue of $299M down 5% Y/Y. Non-hotel revenue of $79M up 36%.
    • Hotel adjusted EBITDA of $88M flat Y/Y. Non-hotel adjusted EBITDA of negative $8M vs. $15M a year ago.
    • CFO Ernst Teunissen: “Our good start has made us more positive about our 2018 profitability outlook.”
    • Conference call tomorrow at 8:30 ET
    • Previously: TripAdvisor beats by $0.14, beats on revenue (May 8)
    • TRIP +18.7% after hours. LTRPA +20.5%

    Tech workers are paying $7,000 to freeze their stem cells in hope of extending life.

    SunPower -3.2% as earnings sport light guidance ahead

    • SunPower (NASDAQ:SPWR) has dipped 3.2% in late trading after it topped expectations with Q1 earnings but provided light forward guidance.
    • Non-GAAP revenue fell less than expected, to $398.9M from $429.5M, and EBITDA jumped to $32.3M from a previous $8.6M.
    • The company swung to a gross profit of $10.25M, vs. a year-ago gross loss of $45.6M.
    • Operating cash flow fell to -$233.3M from a previous -$126.9M.
    • GAAP revenue by segment: Residential, $169.4M (up 25.8%); Commercial, $123.3M (up 17%); Power Plant, $99.1M (up 11.4%).
    • For Q2, it's guiding to (non-GAAP) revenue of $375M-$425M (light of consensus for 443.8M), gross margin of 6-8% (below expectations for 9.86%), EBITDA of $10M-$35M (below consensus for $37.5M) and megawatts deployed of 350-380 MW.
    • For the full year, it sees EBITDA of $75M-$125M vs. consensus for $161.8M.
    • Press release

    AT&T confirms it paid Michael Cohen

    • AT&T (NYSE:T) has confirmed it paid $200K to President Trump's personal attorney Michael Cohen for "insights" about the Trump administration, but his shell company "did no legal or lobbying work for us, and the contract ended in December 2017."
    • The disclosure came after Stormy Daniels' lawyer, Michael Avenatti, claimed AT&T, Novartis (NYSE:NVS) and a Russian oligarch had all made payments to Cohen's "Essential Consultants."

    Comcast Sets Stage for Possible Fox Bid, With Eye on Thwarting Disney.

    • Originally rumored to take a senior position at Disney (NYSE:DIS), 21st Century Fox (NASDAQ:FOXA) CEO James Murdoch is planning to strike out on his own upon the closing of a deal to sell much of Fox to the Mouse House, WSJ reports.
    • He would likely start a venture-capital fund to invest in digital and international media businesses.
    • Lachlan Murdoch is expected to become CEO of the remaining Fox company, so-called New Fox.

    Seattle Is Becoming A City That Is Hostile To The Middle Class. 


  69. Wow: