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Will We Hold It Wednesday – S&P 2,915 Again

"Here come those tears again

Just when I was getting over you

Just when I was going to make it through

Baby here we stand again

Like we've been so many times before


Even though you looked so sure" – J Browne

While it's been fun watching the Dow 30 blast higher, the S&P 500 has been struggling to get back to where we were at the end of August when I warned on "Toppy Tuesday – S&P 2,900 so it’s 3,000 or Bust!" as well as "Will We Hold It Wednesday – Record Highs Edition" and we were shorting the S&P (/ES) Futures at 2,915 and we got another entry yesterday as we topped out at 2,917 just before 3pm.  

At the time, we were shorting Gasoline (/RB) at $2.10 and now it's $2, which was good for gains of $4,200 per contract if you rode it out all the way (we were in and out several times since) and we shorted Oil (/CL) at $70 (and we're short again now) and went long on Coffee (/KCN9) as it tested $100, which worked at the time but now it's down to $94 so a lot of things are not improving – including the Nasdaq, which is down from 7,700 to 7,500 (2.5%) while the S&P has bounced back.

As the song asks – what's different this time?  Aren't we just setting ourselves up for more heartache as we're teased yet again by the record highs?  I believe there's a better chance in profiting from a re-test of 2,860 (our 30% Line on the Big Chart) than there is of seeing 2,920 so it's a very nice risk/reward play as stopping out at 2,921 is a $300 per contract loss while 2,870 (which we hit last time) is a $2,500 per contract gain.  Futures trading is all about looking for risk/reward scenarios that are massively in your favor and then trying not to be wrong more than 80% of the time!  

Our Index shorts are based on the fact that we think the market is fully valued here as well as our feeling that many risk factors are being ignored and it won't take much of an incident to panic traders out of positions – when they will find there are very, very few buyers willing to take their high-priced stocks off their hands at anywhere near the prices they've been paying.  

We still have PLENTY of long positions and, in fact, we've just started doing our September Portfolio Reviews as September options expire on Friday and, while we have no TECHNICAL reason to take them off the table, as long as those 50-day moving averages hold up – we're also making sure we are well-hedged – just in case.  Being well-hedged includes dabbling in the Futures on the short side, as the only reason we'd be losing is if our long positions are doing better. 

Despite the market essentially going nowhere in the past month, our Options Opportunity Portfolio gained 6% since our Aug 21st review and our Money Talk Portfolio is up 10% since July but off it's August highs by about 5% but that's a portfolio we only adjust quarterly, live on TV – so we're unable to take full advantage of these market gyrations like we do with our Live Trading Portfolios.  Nonetheless, the Money Talk Portfolio is now done with it's first year with a 78.6% gain – from $50,000 to $89,287 and that's not bad – especially considering that we now have $85,740 in CASH!!! on the sidelines, which makes me very happy!

Since we cashed out all our winners, ALL of these "losers" are good for new trades so you can build a portfolio like this using net $3,547 in cash and, if you don't sell the 50 short WPM Jan $22 calls, it would take up just $1,275 more cash but leave you with tons of margin to play with as well.  So, after one year running the Money Talk Portfolio, new people can still get in on the ground floor – though the ground is 78.6% higher than it was before…

Meanwhile, on a higher note, some of our Members have also been playing around in the very hot marijuana market through PSW Investments, who recently acquired a stake in New Age Ventures, who own Jade House Genetics – a medical marijuana specialist.  We've been watching with fascination this month as Tilray (TLRY), a company that was literally FORMED this year and jumped onto the US exchanges as a marijuana grower and, as of this morning, is trading at over 13x the IPO price ($17), at $227.50, which is DESTROYING the shorts – including the venerable Citron Research.

TLRY benefits from being the Nasdaq's first cannabis stock as well as the fact that they got regulatory approval to export their products to Germany but, as a reality check, only had $20M in total revenue last year and lost $7.5M making that happen.  They raised $135M in the IPO but that doesn't translate into 10x revenues (and hopefully not 10x losses) and even their IPO was only projecting 50% revenue growth in 2018 and still losing $5M.

 

If you are looking for exciting growth, look at the cannabis sector.  It's an embedded $200Bn annual market and only $20Bn worth of the sales are legal at the moment and US companies, like New Age, who are fighting a state by state battle to win distribution liscenses, will also have access to the same International markets as Tilray while Tilray, for the moment, is restricted from selling into the US market.  

I certainly don't want to chase high-flyers like TLRY after they popped but I sure wouldn't short them – even with their now $14Bn valuation because the market is out there – the trick, I believe, is to find early stage companies and get a bit of the action in several of those.  In the case of Tilray, 100% of the Class 1 stock is still held by Privateer Holdings, who have 3 votes per share and the Class 2 shares they are selling get 1 vote per share, insuring Privateer complete control of the company going forward.  

When you are investing in one of these companies – it's far, far better to be in on those Class 1 rounds!  

 


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  1. Good morning, All!

    We're rescheduling our usual Wednesday webinar. Instead we'll be doing it tomorrow, Thursday, at 1pm.

    I'll post the webinar link tomorrow morning.


  2. Good morning,

    ES/Phil- shorted ES at 2915 too but stopped out at 2917… so where's the next line if it blast pass 2917 again :D

    Is yesterday the first time market was green into close when tariffs are announced? I believe it's the first session that traded that way…  


  3. Good Morning!


  4. Good morning! 

    Tilray officially opened at $213 and now $217 after dipping to $180 - so crazy!  I don't even like the growing side of the business as it's a fairly easy to reproduce crop and New Age's experiences in CA indicate that there are often times when growers (who HAVE to harvest several times a year) are stuck dumping product and there hasn't been a shortage to drive up prices in ages.  That will not improve as we had 146 people with $20M each applying for 7 licenses in NJ alone.

    The way we're playing it is we are the manufacturer who turns the raw pot into extracts that are more popular on the retail end.  The process requires a lot of expertise so the people trying to get licenses must either have it in-house (few people like that in the US) or work with a manufacturer on the team – that's us!   So we don't care who wins, we have a very good chance of being their back-end manufacturers.

    We're also negotiating to be technical consultants on writing up proposals – something we can get paid to do!  

    New Age may end up doing the growing in some states as our biggest problem outside of CA is that there are not yet enough growers to insure us enough supply (10 pounds makes a liter) to allow us to make a steady supply of extracts.  As I noted, growing isn't hard – especially when quality isn't a big issue (we just want the THC and CBDs).  Meanwhile, looks like KO is going to be a customer for CBD oils!  

    Coke eyes cannabis-infused wellness drinks as market for CBD …

    That's a massive expansion in our potential market!  That's why I love the manufacturing end.  We'll also be getting into hemp products as that's what our waste is – hemp stripped of THC and CBD should be approved for sale even in non-liberal states.  It's a very exciting sector but once someone hits the markets – the easy money will have been made and you will be about 100x behind the original investors so I recommend finding a fund that does the legwork and makes the investments for you – spreading the risk around.  

    PSW Investments will be starting a new fund for that purpose next year – hopefully in Q2 but there's no major rush, this is like thinking you're missing out on the last good oil investment in 1890 – there will be PLENTY more to come! 

    /ES/Dave – The idea is to re-short on a cross below.  If you are going to go in to get stopped out and then quit – you may as well just light the money on fire!  Also, don't play the short while the index is moving up, catch it when it's crossing back below or, if you think it's going to fail your line – set a very tight stop above and THEN wait for it to cross back under.

    You can't have unrealistic stopping expectations.  /ES popped from 2,912 to 2,917 this morning, which is where it topped out yesterday so, for one thing, over 2,918 would be the stop (a new high) but not 2,917 and, of course, if you jump on a big, bullish candle like that to short without waiting for some red candles to form – again – burn the money because at least you'll get to enjoy the heat…

    Even if you are short-term trading, there's still a channel you have to identify and respect and, if you can't CLEARLY identify a trading channel you want to play – DON'T TRADE!!!  

    Meanwhile, Dow up 150, Nas down 10.  Move along folks, nothing to see here….  

    Dollar hitting goaaaaaaaaaaallllllllllllllll at 94.40 – non-greedy exits have been our friend!  

    Oil coming back to $70 ahead of inventories – time to go to work!  


  5. Phil/DXD

    Where would you roll DXD Oct. $28 calls.  Bought at $1.68 as a smallish hedge for Dow stocks I own.


  6. Phil, in OOP are we going to sell long CNG calls now against our 2020 2.50 calls?


  7. DXD/DC – I hope it was a spread.  Buying naked calls is generally just more money burning.  Oct $28s are still $1.15 so not too terrible but try something like the Nov $28 ($1.55)/31 (0.55) bull call spread at $1 because DXD is now $28.98 so, if you take $5,000 in a $100,000 portfolio, you have a $15,000 hedge so + $10,000 if DXD goes up 8%, which would be a 4% drop in the Dow so you'd be well-covered at the cost of 5% of your potential gains and the only way you lose money on the hedge is if the Dow goes higher, so just make sure your longs will make at least $5,000 in 58 days in a flat or up market.

    CNG/Coulter – I didn't know we had that in the OOP, nor do I know what it is?  


  8. New Age – if an Oregon grower or connection is needed I'd recommend contacting these folks:

    https://www.phoenixrisingfarmoregon.com/about-us

    They've been in the business for a long time and have come up with several award-winning strains over the years. The farm is certified organic. As I understand it, they were very active in getting marijuana legalized for recreational use in the state and are very familiar with the laws and lawmakers in the area. They're nice folks from NJ who've been out in the Humboldt county/southern Oregon region for years. If they can't help, one of the neighbors in the area probably can – the whole area is a weed paradise. 


  9. MJ (ETF) owns some TLRY – not sure at what price but I bet it's not priced into them yet.

    The investment seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the Prime Alternative Harvest Index. The fund will invest at least 80% of its total assets, exclusive of collateral held from securities lending, in the component securities of the index and in ADRs and GDRs based on the component securities in the index. The index is concentrated in the Pharmaceuticals and Tobacco industries and tracks the performance of the exchange-listed common stock (or corresponding ADRs or GDRs) of companies across the globe. The fund is non-diversified.

     

    Top 10 Holdings (57.46% of Total Assets)

    Get Quotes for Top Holdings

    Name Symbol % Assets
    Canopy Growth Corp WEED.TO 10.72%
    Cronos Group Inc CRON.TO 8.94%
    Aurora Cannabis Inc ACB.TO 8.32%
    GW Pharmaceuticals PLC ADR GWPH.L 5.91%
    CannTrust Holdings Inc TRST.TO 4.97%
    Emerald Health Therapeutics Inc EMH.TO 3.97%
    The Green Organic Dutchman Holdings Ltd Ordinary Shares TGOD.TO 3.88%
    OrganiGram Holdings Inc OGI.TO 3.83%
    HEXO Corp HEXO.TO 3.71%
    Tilray Inc TLRY.TO 3.21%

    TLRY is now $19Bn and MJ at $43 is valued at $450M but if they own 3.2% of TLRY, that's $608M right there.  Not apples to apples, of course but they do have options so let's see if we can make some money in the STP, where we could use an offsetting long and, if it doesn't work out, I still don't mind moving it to an LTP play.

    • Buy 20 MJ 2021 $35 calls for $12 ($24,000) 
    • Sell 15 MJ 2021 $50 calls for $7 ($10,500) 
    • Sell 10 MJ 2021 $30 puts for $6 ($6,000) 

    That's net $7,500 on the $30,000 spread and we have room to risklessly sell 5 short calls whenever we wish and, for example, the Jan $45s are $3 so there's a potential $1,500 using 4 months of our 27-month trade.  We're going to wait though.  If TLRY sells high – I expect MJ to get a nice repricing but if TLRY fails to hold $180, then we sell those MJ Jan $3s!  

    Worst case is we end up owning 1,000 shares of MJ in the LTP at net $37.50 less whatever we sell along the way!  

    This is an STP play, not an LTP play!  

    Oregon/Ati – Thanks but we're not into cold-calling yet as we are generally booked solid with top-level discussions around the country.  I'm sitting down with Ken (New Age CEO) to discuss time and project-management issues this week as our biggest headache is that there are too many great opportunities to pursue and we have to allocate our resources mindfully.


  10. sorry GNC


  11. GNC/Coulter – Well, we're likely to get a retrace off $4 and, since the run is from $2.75, then 20% (weak) would be 0.25 back to $3.75 but, if that holds, then super-bullish.  At the moment, the $2020 $5 calls are $1.05 and that's not too sexy so I'd rather wait and see if $3.75 holds or if we just break over $4 than cover just because we're testing $4.


  12. Phil / MJ – The spread price is hard to get,   on the callers


  13. Phil/DXD

    Thank you!  One of these a hedge will pay off.  They are annoying just like paying any other insurance bill!


  14. Oops, got caught up in the STP review and forgot about oil.  I'm going to blame the fasting…  blush

    It's funny as I often forget to eat breakfast and lunch but it's only 11:20 and I can't eat until 7 and I'm starving already…

    EIA was much better than API with draws in oil and /RB and only small build in Distillates so $70.50 so far and $2.015 is where we're at.  I'd love to see /BZ test $80 as that would be a good rejection point on /CL (probably $71) but I don't want to miss the /CL short as rollovers are tomorrow and they still have 70Mb to get rid of.

    EIA Petroleum Inventories

    • EIA Petroleum Inventories: Crude -2.1M barrels vs. -2.7M consensus, -5.3M last week.
    • Gasoline -1.7M barrels vs. -0.1M consensus, +1.3M last week.
    • Distillates +0.8M barrels vs. +0.7M consensus, +6.2M last week.
    • Futures +0.70% to $70.08.

    So I'd say yes to shorting /CLX8 at $70.50 with tight stops and try again at $71 or back below $70.50 and wash, rinse repeat until it works.

    MJ/Batman – Just ask your price and be patient.


  15. Phil – doesnt that say that Tilray makes up 3.21% of MJs portfolio? not that they own 3.21% of TIlray?

    regardless, good catch, it doesnt look like MJ is pricing in the Tilray move yet


  16. SunPower upgraded at Credit Suisse after solar tariff exemption.


  17. Phil,

    What do you think of Manpower Group?

    Thank you

    Gabor


  18. Tilray/CRS – You're right, good catch.  Since they own it in .TO though, it seems they got them nice and early so maybe they do own a lot.  Not sure how often they revalue those assets.   On ETF.com, it says TLRY is now 8% of the fund.  If that data is two weeks old, then that 8% could be 40%.  

    Here's one that says they hold 442,240 shares.  At $233 share (up another 50% this morning!) that's $103M so let's say that's the most likely scenario.  Still, it's a gain of $90M in the month in a $450M fund so 20% off the one stock but their whole basket is off to the races…

    MAN/Kgab – Not a very "me too" stock, is it?   I agree that staffing should start to do better as labor is tight but I'm not sure how much of a thing that business still is with LNKD and all.  Still, they put up a pretty steady $22Bn in sales and drop $500-550M to the bottom line so $5.5Bn is a reasonable price for them but I wouldn't play them for growth – just setting up something steady over time like:

    Year End 31st Dec 2012 2013 2014 2015 2016 2017 TTM 2018E 2019E CAGR / Avg
    Revenue $m 20,678 20,251 20,763 19,330 19,654 21,034 22,282 22,633 23,364 +0.3%
    Operating Profit $m 411.7 511.9 719.9 688.9 750.8 788.2 828.7     +13.9%
    Net Profit $m 197.6 288 427.6 419.2 443.7 545.4 594.4 566.3 576.2 +22.5%
    EPS Reported $ 2.47 3.62 5.30 5.40 6.27 6.90 7.69     +22.8%
    EPS Normalised $ 2.79 4.30 5.30 5.40 6.27 7.22 8.11 8.57 8.83 +20.9%
    EPS Growth % -12.3 +53.9 +23.3 +1.8 +16.2 +15.2 +17.9 +18.7 +3.05  
    PE Ratio x           12.3 10.9 10.3 10.0  
    PEG x           0.66 0.58 3.39 0.96
    Profitability

    • Sell 5 March $80 puts for $5 ($2,500) 
    • Buy 10 March $80 calls for $10.00 ($10,000) 
    • Sell 10 March $90 calls for $5 ($5,000) 

    That's net $2,500 on the $10,000 spread that's $5,000 in the money and you only have to wait 6 months to see if you get a 300% gain so fun!  

    Demand for Skilled Talent Set to Grow Globally in the Last Quarter: Employers Report Positive Hiring Intentions in 43 of 44 Countries

     


  19. Short-Term Portfolio Review (STP):  We added the AMZN shorts, but that's the only change since our 8/27 review, when we were at $225,802 and now we're at $232,125 which is up 132.1% for the year and up $6,323 for the month (6.3%) as our TSLA and AMZN shorts more than offset the losses from our hedges (and we cashed out AAPL too).     

    Now we have $173,350 in CASH!!! and, as calculated last month, about $200,000 in protection for our LTP – which we only pray is going to be enough….  With the STP, anything near even is fantastic as we're only seeking to protect our much larger (5x) LTP positions so, primarily, we look for trade ideas that do well in a down market but, occasionally, like MJ above – we go for a fun trade too.

    • Short puts – None I'm really worried about but let's kill ABX as it serves no purpose and we have plenty of short puts on them in the LTP so let's take a loss, clear the slot and move on.
    • IQ – Crazy-assed stock and too scary to sell calls against but, if it firms up here, it's a base worth staying in for as we're in the spread for just net $3.50 anyway.

    • AMZN – Already scratching out some gains despite the broad market rally.  Best case is $15,000 and currently about $6,000 so we can hang on for another $9,000 as I still think over $2K is ridiculous for them.
    • CELG – Good for a new trade but why are they in the STP?  I guess it was the short time-frame on the bull call spread and they did nail earnings but then fell back.  Still, I think it's a good goal and the price of the $90 calls ($4.55) is still well above the net of the bull call spread ($3.30), which means we can still roll the $90s and salvage our investment money and I'm not worried about the puts so – no reason to adjust for now.
    • DXD – Oddly the long calls are up but the short calls shot up in value too so we have a huge negative on paper here but, over time it will fade back to normal.  

    • SCO – The short Sept calls will expire worthless and the Sept $16 puts are $1.20 and can be rolled to 10 Jan $15 puts at $1.90 and that puts $700 in our pocket for picking up $1 in position (options are fun!). 
    • SQQQ – We're in for net $2 and we're $2 in the money so nothing wrong with this spread!  
    • TSLA – We should collect the full $9,000 on this one and it's net $7,000 but not worried enough to give up the next $2,000 potential by cashing in early. 
    • TZA – No reason to leave the short Oct $13s open at 0.02 ($75) and we may as well salvage our Oct $7s at $1.27 ($10,160) and pick up 100 April $7 ($1.60)/11 (0.55) bull call spreads at $1.05 ($10,500) for about even but we've added 25% more protection on what is now a $40,000 spread that's $12,000 in the money.

    I will quickly add more hedges if the indexes begin to fail but the Dow is up another 180 points today so what is fail?


  20. Jack Ma, who Trump used as a prop during the election said he does not support Trump's trade policies and will not invest Billions in the US to create 1M jobs.  Poof!


  21. Poof!  :)


  22. Butterfly Portfolio Update:  We did nothing in the last review (8/16) other than selling another short set on MDLZ yet now we're at $134,434, up $4,477 (4.5%) for the month and we have $87,120 in cash and, though we're "only" up 34% for the year, this is by far my favorite portfolio as it is slow and steady and just grinds out the cash – even in a tough market with low premiums like this one!  

    You don't NEED excitement in your investing – the money you make lets you do exciting things.  We made only one move over the summer in this portfolio because we are BALANCED and because we are BEING THE HOUSE – NOT the Gambler though we still adjust more bearish in the top of a channel and more bullish at the bottom – it's just not a big deal if we don't.

    • AAPL – Earnings are before Nov expiration but we can sell the Oct $215 calls for $7.80, so it would be a crime not to do that!   Let's just sell 4 for $3,120 and see how they go.
    • DIS – Looks like we nailed it with the short Sept $110 calls so there's $2,940 we collected since 7/20 against a net $8,000 spread so 36% back in two months is a nice little business (or casino game) to own, right?  We rode out a spike against us because it was a 1/2 sale and it all worked out in the end.  DIS has earnings early Nov so if we sell Nov contracts that's a concern.  The Oct $110s only pay $2 and that's not enough to take the risk so I guess we go to Jan and sell 5 $115 calls for $2.45 and 5 $105 puts for $2.40 so that's $2,450 collected for another 4 months but, after earnings, we have lots of room to adjust and sell more.

    • MDLZ – A bit over our goal on the short calls and puts, but another month to go.  Of course, our long play was only net $3,500, not including sales revenues and, at $43, it's $6,000 in the money so, if we lose $500 at $44 (as we sold $1.50 in premium) because our longs are $2,000 more in the money – I think we'll be able to live with that!  It's hard to get used to having positions which you are bound to lose some parts of pretty much all the time – you have to learn to look at the overall picture and think of it like a business which has revenues AND expenses and all you need to do is try to keep the revenues coming in and keep the expenses low enough and you will continue to make nice profits…

    • OIH – Took a little dip but now it's recovering right back to our $25 target.  Nothing much to do but sit back and wait for Oct expirations.

    Once again, not much to do at all.  As noted above, when you pay net $3,500 for the MDLZ 18-month longs and then you sell $1,250 in premium every 2 months, that means you have an expectation in your business of collecting 9 x $1,250 = $11,250.  Now, you won't "win" every time on your target but you will ALWAYS collect the premium so, over the course of 9 picks, you have $11,250 of wiggle room to be wrong on 5 contracts so about $2 in either direction on any given month won't hurt you and we have room for 2 2x rolls before we're fully covered so we have an EXCELLENT chance of making much more than the $3,500 we laid out AND if MDLZ finishes above $40, we get a bonus $2,000 per Dollar above up to a $14,000 maximum as a bonus.

    MDLZ is still good for a new trade and, if you've never tried one of these before – it's a great place to start as you'll do almost nothing for 15 remaining months and it would be very disappointing if you don't triple your money! 

    That's why, whenever someone says what portfolio do I recommend for retirement incomes – I say "Butterfly"!  


  23. TLRY/Phil- what about short plays via selling some calls?


  24. TTLRY – Phil, the Oct $80 puts I sold yesterday are looking pretty safe today.

    But who knows with this crazy stock ?


  25. AKS has been on a nice run.  Closed out some of the AKS Jan 4 puts I sold on Sept 7.

    Up 55%.


  26. The Butterfly portfolio has two problems (especially for us older folks):  It takes a really long time to build up to a full portfolio; Keeping it going after you "retire".


  27. XOM –  found in an old account 300 XOM shares.

    I would like to keep them and sell calls/puts against it. How to determine the best strikes/expiry dates is their a rule of dumb ? 

    Thx


  28. Wow. Big move down in TLRY! I think this is the crypto crew pumping and dumping. If you follow some of the crypto boards, these guys are all over TLRY and ACBFF.


  29. TLRY vol is leaking. Just when I thought ZYNE might catch a break!


  30. TLRY, wow, what craziness


  31. TLRY/Dave – Well it's up $70 for the day at $224 after testing $300 so how exactly were you thinking of risking everything you own on a coin flip?  

    TLRY/Albo – I wouldn't have even sold the puts but some people like to play with fire, right?

    AKS/Albo – I'm surprised they lagged for so long.

    Long Time/Tangled – Er, we started this one in Jan and it's up 34% for the year.  What kind of returns do you need in your retirement account?   As to keeping it going – yes, you have to show up once a month and make adjustments (most months).  If that's too much effort then you need to stick to money managers (PSWI has a lovely hedge fund) that will do it for you.

    XOM/Youri – Well, selling puts means you want to buy more.  First things first, is XOM in a good, tradeable channel?

    Well, it's so-so but I'd say $75-90 is a range.  So we want to sell more calls closer to $90 and more puts closer to $75 (if you want to sell both).  

    XOM is $360Bn at $85 and makes about $4.70/share and pays a 4% dividend ($3.28) 

    Year End 31st Dec 2012 2013 2014 2015 2016 2017 TTM 2018E 2019E CAGR / Avg
    Revenue $m 451,509 420,836 394,105 239,854 200,628 237,162 252,139 318,673 330,948 -12.1%
    Operating Profit $m 49,881 40,301 34,082 12,883 936 12,074 15,227     -24.7%
    Net Profit $m 44,880 32,580 32,520 16,150 7,840 19,710 20,950 19,613 24,215 -15.2%
    EPS Reported $ 9.70 7.37 7.59 3.85 1.88 3.23 3.51     -19.7%
    EPS Normalised $ 9.70 7.37 7.59 3.85 1.88 3.23 3.51 4.61 5.62 -19.7%
    EPS Growth % +15.1 -24.0 +3.0 -49.3 -51.2 +72.4 +26.8 +42.5 +21.8  
    PE Ratio x           25.9 23.8 18.1 14.9  
    PEG x           0.61 0.56 0.83 3.29
    Profitability

    We don't think oil is going to go up or down too much ($50-80) so their earnings shouldn't be shocking so now we have to consider how we can make the most money with 300 shares of XOM ($25,500).

    You can make more money selling quarterly calls than yearly.  The 2021 $85 calls (850 days) are $8.30 and the Jan $85 calls (121 days) are $2.80 so 7 of those would be $19.60 – double what you make selling just the long-term calls, which makes it worth the extra effort.

    Still for puts I prefer the cushion of a longer-term so you could sell 3 Jan $85 calls for $2.80 ($840) and doing that 7 times will get you $1,960 (7.6%) back with the only danger being you get called away and you can (as long as you're willing to DD) sell 3 2021 $77.50 puts for $6.85 ($2,055) and there's another 8% return.  

    Yawn.

    Or, you could cash your $25,500 and sell the 3 2021 $77.50 puts for $2,055 and pick up 15 of the 2021 $77.50 calls for $12.35 ($18,525) and sell 10 of the $90 calls for $6.50 ($6,500) and 5 of the Jan $85 calls for $2.80 ($1,400) and that's net $10,625 so you have $15,000 left in your pocket to play with and your $10,625 spread pays $15,000 at $85 and $22,500 at $90 and you have 6 more $1,400 sales ahead for another $8,400 so possibly $30,000ish back on just $10,000 of your $25,000 doing it my way – or you can just cover your stock and make about 8% a year including the dividend…

    Crypto/Soma – Sure, a lot of those guys are just fad chasers – they'll jump into anything that seems hot and pot stocks are the hotness in the market at the moment.  Now, imagine if we can come up with a "Pot Chain Coin"?  


  32. TLRY oh my, 300.00 to 151.40 in 52 minutes. Now THAT'S what you call volatility.


  33. Butterfly – I failed completely in communicating my issues.  Probably not a conversation that can be done by text messeging.


  34. TLRY halted me thinks.


  35. It's amazing that they don't halt these things sometimes.  

    The people who actually own the company must be laughing their asses off as it was a $1Bn company at best when they went for the IPO – and that was only after assuming their $100M company could raise $100M and use it to 10x their business.  Everything else, the other $19Bn – is completely unrealistic speculation.

    Communications breakdown/Tangled – Well, we can catch up on it when you're back at a desk.


  36. Phil -  Imagine how the TLRY insiders feel watching the stock go to $300 and being in the lock up.

    BDC – Yes that's huge volatility.  And because of that, the puts I sold yesterday are higher today, even with the stock up 38%.  Looks like I declared victory way too early !


  37. And sinking more in the aftermarket.


  38. TLRY/Soma – About time, there's going to be blood on the streets!  

    Lock up/Albo – Yeah, that's a really frustrating thing to have happen to you.


  39. TLRY this year looks like GBTC last year. It is the Musical Chairs du jour.


  40. Have a great dinner Phil!  :)


  41. TLRY so maybe its time to sell those MJ Jan $3s tomorrow?

    MJ hanging tough at $40 after hours though


  42. XOM – Phil Thx! I knew you would come up with selling the shares and the whole new set up :-)



  43. Is sugar really bad for you?



  44. Phil / NXPI – taking on the chin…. down at 90 and at the $90 range it was at prior to QCOM buyout offer.  I like this company based on the markets they serve, and the significant IP they own, along with strong FCF.   Not sure if the bottom has formed but I do think they can hit Ann EPS below

    2018 – $7.58

    2019 – $8.6

    2020 – $9.6

    and with a 13 to 15 multiple a $120 Share price is not unreasonable.  I know we have some in the ports ( I have '20 $185 Put ( 9.6). looking to add a BCS of 2021

    Jan '21 $185 ( 22)

    Jan '21 $115 ( 10.2)

    What do you think?


  45. Inside Italy’s Shadow Economy


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  49. Good morning!

    Breakfast meeting ran long so see you in the next post.  Dow up 80 pre-market so everything must be AWESOME!  

    NXPI/Batman – Please ask again in the morning post.