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TGIF – Quad Witching Today, Window Dressing Next Week

China turned around this morning.  

It's funny because everyone thinks they are "winning" the trade war.  The Chinese Government is planning to cut tariffs on imports to their favored trading partners, which we assume will no longer include the US.  This will disadvantage US exporters to China and encourage Chinese firms and consumers to buy goods and services from other trading partners but it's also a nice tax break so it's boosting the Shanghai this morning, up 2.5% for the day at the close.  

Other than that, the news has been very quiet and we're expecting to drift along into the close today as it's a Quad Witching Day in which quarterly options and futures contracts expire (there are 4 kinds), which is often punchuated by high-volume (what is that?) moves and yesterday was already a busy day on SPY as we punched in a new high at 2,945 and we would have liked to short 2,950 but we'll take a cross below 2,940 on /ES to short that with tight stops:

Date Open High Low Close* Adj Close** Volume
Sep 20, 2018 292.64 293.94 291.24 293.58 293.58 100,288,900
Sep 19, 2018 290.97 291.69 290.83 291.22 291.22 49,080,600
Sep 18, 2018 289.58 291.58 289.55 290.91 290.91 61,930,400
Sep 17, 2018 290.82 290.86 289.03 289.34 289.34 68,244,000
Sep 14, 2018 291.06 291.27 290.00 290.88 290.88 55,079,900
Sep 13, 2018 290.32 291.04 290.00 290.83 290.83 51,034,200

Also at record highs are our Member Portfolios and our Money Talk Portfolio, which we only trade live on the show once each quarter, has finished it's first year (we started last Sept 6th with $50,000) up 81% at $90,495 – that's incredible performance for a low-touch portfolio and, despite the fact that we went to 90% CASH back in July, our remaining positions have gained another 10% over the summer – despite being completely untouched since I was on the show on July 18th:

General Mills was our new trade and, so far, it hasn't gone anywhere so still good for a new trade.  As I did not expect to be on the show again until October, I wanted to have more cash to take advantage of the coming crash and so far, so wrong on my timing but we have another month – so we'll see how things go….

The remaining positions are indeed our "dogs" of the year (so far) as we've cashed out our winners, but we still like the dogs enough to stick with them and we're also well-hedged with the Nasdaq Ultra-Shorts (SQQQ) – just in case this rally ever does fade away.  Mostly we're hedged with CASH and we have $85,740 of it on the sidelines, waiting for SOMETHING to go on sale.  

We have found a few things to add this month with Top Trade Alerts going out on HBI, DLTR, OIH, SDS (hedge) and MJ – and the longs are already gaining ground.  Speaking of grounds, congratulations to those who followed our Tuesday morning Coffee (/KCN9) Futures Trade as we got a nice spike yesterday and took half off the table with a $4,931 gain already for the week.  

Today is likely to be very crazy so it's too dangerous to play the Futures, though it's tempting to short Gasoline (/RB) as it tests $2.04 and Oil (/CL) is at $71 again and also a tempting short but now we're at the front of the November contract cycle and there's not a lot of pressure forcing them to trade at realistic prices and also there's an OPEC meeting (small one) over the weekend and that's going to randomize the outcome – so safer not to play those we do have Oil Ultra-Short (SCO) long positions in our Short-Term Portfolio – to take advantage of the longer down-trend. 

Short Call 2018 21-SEP 18.00 CALL [SCO @ $14.86 $0.00] -20 6/22/2018 (0) $-3,000 $1.50 $-1.48 $0.40     $0.03 - $2,950 98.3% $-50
Short Put 2018 21-SEP 16.00 PUT [SCO @ $14.86 $0.00] -10 6/22/2018 (0) $-1,000 $1.00 $0.15     $1.15 $-0.05 $-150 -15.0% $-1,150
Long Call 2018 16-NOV 15.00 CALL [SCO @ $14.86 $0.00] 40 8/27/2018 (56) $6,800 $1.70 $-0.60     $1.10 $0.10 $-2,400 -35.3% $4,400
Short Call 2018 16-NOV 18.00 CALL [SCO @ $14.86 $0.00] -40 8/28/2018 (56) $-2,800 $0.70 $-0.40     $0.30 - $1,600 57.1% $-1,200

What we have here is the Nov $15/18 bull call spread that we paid net $4,000 for but we then sold $4,000 worth of Sept puts and calls and the short calls will expire worthless and we'll have to pay the short puts back about $1,000 but that's still fantastic as we end up in the $12,000 spread for net $1,000ish.  Notice we sold twice as many calls as puts as we figured SCO would still be down around $16 as of today – we're off by $1 but benefit from being more sure about it not being at $18 yet.  That's how we make money Being the House with options – we sell the risk to other suckers who think they know what SCO will do month to month and now we can sell it again in October and make a profit – whether SCO hits our November target or not.  

It's been a fairly quiet week in the markets but not so much next week as September draws to a close and the Fed will make a policy adjustment on Wednesday (2pm) and also will extend their economic projections out to 2021 for the first time – so that will be interesting.  Ray Dalio, who founded Bridgewater Associates, the world’s biggest hedge fund, this month predicted the U.S. economy is about two years from a downturn. Former Fed Chairman Ben Bernanke shared that view of a possible decline in 2020, when fiscal stimulus wanes like “Wile E. Coyote is going to go off the cliff.”  

I'll be very surprised if the Fed doesn't raise rates at the upcoming meeting but it's also the end of the quarter and "THEY" want to keep the market at record highs – so they can print up pretty charts and graphs to show you how you need to put your money in the markets. 

For our part – we continue to be "CASHY and CAUTIOUS" despite the rally and, with 80% gains in our portfolios already – I don't really think we're missing anything by being careful.  

 


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  1. Time for more lines!


  2. Good Morning!


  3. .

    Hi every one you might say what happened to yodi. Well Phil is showing his pretty face and playing the futures what more is there to do. We are on tour again, heading south for the winter. At present visiting the beautiful city of Brugge and Ostende, pointing south direction France.
    Today I do have still 120 opt. on my list mostly already rolled. They are cherry calls and shorter armchair trades.
    Besides the odd play as well mentioned by Phil I do not have to add more to this questionable market.
    Possible more truth will come out on the next quarter declarations. What can you do then exercise patience.
    Hope you have a nice day while I am attending my option plays.


  4. AT&T (T) was upgraded to Buy from Neutral at UBS this morning, poised to open at three-month highs after the firm highlighted T as trading at all-time low valuations given a mix of EBITDA declines and concerns regarding the company's debt load; firm feels T will return to EBITDA growth in the second half of the year


  5. Good morning!

    Things are still going up but the Dollar just turned up 0.4% so I expect some pullbacks across the board (down with /KC and all bullish futures for the moment, still short /ES).

    Big Chart – Yep, time to draw the lines (really this time).

    Brugge/Yodi – One of my favorite cities!  First time I was there we were just passing through but ended up staying a week because there was so much to see.  Great time of year to head towards Lyon and try the grapes along the way - I'm very jealous!  Love the Pineau des Charentes (reds, of course).   My cousins have a cave in Troo but not much to do there…

    T/Albo – Always good to buy when they are in the low $30s, which I believe we did recently.


  6. Wow, gold and silver got slammed by the Dollar already – very disproportionate drop:

    Copper don't care because China is stimulating:

    Honey badger never cares:

    I'd like to short below the $2.04 line but tight stops over on /RB:

    Might get a short opening at 2,950 but I'll take 2,945:

    So we want to see Dow failing 26,800, Nas failing 7,635 and Rut failing 1,730 to confirm that shorting /ES is a good idea.  If not – don't short!


  7. Yodi,

    First month that I am doing your armchair trade. In the months I was up $3000 with cherry calls but at the moment only 1000. (Everything is high) Maybe I should have close some of them? 
    Do you have a good practice of rolling the options? 

    thanks

    Gabor


  8. Long-Term Portfolio Review (LTP) – Part 1:  Oh this is just silly!  Up another 1% this morning to $908,391 (up 81.7%) is better than we did in our first TWO years in our previous LTP.  Our goal for the year is 20-40% so this is 3 good year's worth of gains or really two nice, compounded years – totally ridiculous for one year.  It's kind of irresponsible not to cash it out at this point but what we will do is spend a bunch of money on more STP hedges to lock in most of these RIDICULOUS gains.

    We did have a bit of good timing as we had that early dip in Jan and then we dove in with our Watch List picks and built up from there.  Also nice timing getting in and out of AAPL, WPM and CMG has certainly boosted our bottom line but on the whole – it's been about this relentless rally that seems like it will never stop going up – which is what makes me so nervous.  All good things come to an end and this too shall pass and we'll have to go back to real trading – not just shooting fish in a barrel.  

    • FMCC – Has fallen back from $1.58 last month but we're in this one anticipating a rule change where the Government stops taking all their profits (still from the bailout) and then a big move higher.  
    • Short Puts – Back in July, we were up $15,000 on our short puts and now we're up $40,909 – that's crazy!  CM is going to expire worthless but I also want to lock in the gains (and lower the amount we have to hedge and raise cash and lower margin) and clear slots by closing out the following:  BRK.B (both of them), BX, CLF, CVS, FB, RCL, SIG.  Not that anything is wrong with any of them but they all have less than 40% to give us between now and next year and we can replace them with short puts that will pay us 100% which is 150% more – so why not take advantage of the rally and cash those out early?
    • ETM – On track and good for a new trade.  
    • FTR – Back on track.
    • NRZ – Way over goal. 
    • SKT – On track and great for a new trade as I can't believe it's still so cheap (pays $1.40 dividend too)

    As I noted in yesterday's Webinar, these are super-diverse positions which is very helpful in keeping our gains steady.  If you are building a portfolio from scratch – keep that in mind.  Notice how few similar types of companies we have – we're not favoring any sector in particular, just selling lots of premium across the board – like any good casino will do!


  9. Good morning, All!

    The webinar replay is now up!

    https://youtu.be/jOX5tVkMiqA


  10. Phils are from Mars, Tangleds are from Venus.  About the Ameritrade money markets you said

    "Overnight/Tangled – I'm saying you're only effectively getting 1/2 of 1% for the year and it's not very much money to worry about taxes so I prefer 1/2 of 1.5% "

    Why  is the APR not 1.54% (assuming the 7 day yield is unchanged)?  This is supposed to apply to all uninvested cash.


  11. Gabor, there is never an iron rule in rolling options. It very much depends how much you still like the stock, especially when selling puts. Cherry calls are not always going worthless, When rolling you need to look at the present value of the stock, where is the stock on the scale. Is the stock paying a div. in the month you roll to? Sometimes I skip that month and roll a month further out.
    How well do you know and feel comfortable with the stock. All these are questions and apply to each stock different. I look at the overall picture when selling cherry calls. Some you lose some you win, but your winning should be 66 to 70 % against you losing.
    The market is at present very unstable. Many times the market reacts to the mood of the CLOWN.
    So you see very unpredictable. Hope this helps.


  12. Long-Term Portfolio Review (LTP) – Part 2:  

    • AAPL – The 5 short Sept $190 calls are $29 ($14,500) but 2021 is out so let's get more drastic and buy back those and cash in our 20 2020 $165 calls at $63 ($126,000) and roll them to 40 2021 $190 ($52)/240 ($30) bull call spreads at $22 ($88,000) and we'll roll 20 short 2020 $195 calls at $41 ($82,000) to 25 short June $200 calls at $31 ($77,500).  All in all, we're spending $19,000 of our cash and we end up with 40 $50 2021 spreads ($200,000) covered by the same short puts (we'll sell 2021s if they dip) and a 2/3 sale of June calls which are 273 days out of 847 so 3 rolls ahead of us.  Moves like THAT, by the way, are how this portfolio makes the big bucks.  This trade started out with 20 $30 spreads ($60,000) that we spent net $20,500 on and now, at around $40,000 in (using the current profits from the same trade), it's a $200,000 spread – that's 40% of our original portfolio money ($500K)!  We started this on May 8th so this is just month 4!  

    As I often point out, when you initiate spreads that have 300% upsides and they take off in the right direction – you offset a large amount of losers with the one winner.  UNFORTUNATELY, AAPL did go straight up from our entry and we never got a chance to buy more but we're still able to work it into a larger trade over time.  

    Meanwhile, our "losing trades" are the ones that get cheaper first, and that's fine with us as we get to buy more cheaper and lower our targets – making them easier to hit down the road.  The key is to manage those initial allocation blocks so that you have plenty of firepower to adjust – because we never know where a bottom is but, if we pick good value stocks – we can take advantage when others are panicking out.

    • ABX – Not in the mood to add more but will go to 2021 if we have to.  At the moment, the 2021 $12 puts are $2.75, so a good roll from the 2020 $15s at $4.75 and we sold them for $2.35 so if we did a 2x roll we'd pick up 0.375 per put so net $2.35/2 = $1.175 + 0.375 = $1.55 so our break-even on 40 short puts would be $10.45 but no hurry.  Likewise, we could roll the 2020 $10 calls ($1.95) to the 2021 $8 ($3.60)/$12 ($1.80) bull call spread for better than even but I think it's too soon to give up and cap the upside.  
    • ALB – We bought back the short calls last time and now we're back to the May highs ($106.50) but I don't see the point to having such deep calls so let's cash the 20 2020 $75 calls at $35 ($70,000) and buy 20 of the 2021 $90 ($30)/$120 ($15) bull call spreads at $15 ($30,000) so we pocket $40,000 leaving us with a free $60,000 spread to play with that's $30,000 in the money.  Well, I guess we should be good landlords and sell 5 (1/4) of the Jan $110s for $4.20 because who doesn't like $2,200?  

    • ALK – At our target already.
    • AMGN – Over our target.  The 5 short Sept $190 calls are $15.50 ($7,750) and we can roll them to 7 short Jan $200 calls at $12.20 ($8,540) and we're still less than half covered.  Let's also buy back the short 2020 $160 puts at $5.70 and wait for a pullback to sell 2021s.

    • ARR – Right where we came in but we're in it for the dividends and the calls aren't worth selling for 0.85 on the April $22.50s.
    • BBBY – Back on track.
    • BHC – Was VRX, way above goal.  
    • BJO – Let's just take the loss and give up on these guys.  We already bought back the short calls for a profit but still a nasty loss overall.
    • C – Over our target.
    • CDE – As with ABX, just have to wait for them to cycle back.  50 2020 $7 calls at 0.90 ($4,500) can be rolled to 50 of the 2021 $3 ($3.25)/7 ($1.45) bull call spreads at $1.80 ($9,000) so we're effectively doubling down and drastically lowering our strike on what is now a $20,000 spread that's half in the money.
    • CHK – Hovering around our goal.

    • CHL – On track.  The Sept calls will be cashed and the short Sept puts will expire worthless (leftover legs from old trade) and now we'll just have the March set.
    • CMG – We got more bearish last time and now a huge winner.  
    • DIS – Short Sept $110s will get paid out and I'd like to wait before selling more short calls.  
    • F – Stupidly low, let's buy back the 15 short 2020 $11.87 calls for 0.40 and, when they go higher, we can sell the 2021s (the $10s are $1.25 and the $12s are 0.70).
    • FCAU – On track
    • FNSR  – Squeezing the channel into earnings (12/5ish) but we have faith and they are on track anyway.

    • GE – Got another downgrade yesterday.  Last Q they had $30Bn in sales and made $2.3Bn from operations but then ended up with "just" $789M in profit so there will be years of rough sledding ahead but, long-term, they are still GE so I'm still for accumulating in the short run.  Our 20 short 2020 $18 puts are now $5.70 ($11,400) so we can roll them to 30 short 2021 $15 puts at $3.50 ($10,500) for not much and the 50 2020 $13 calls at $1.45 ($7,250) can be rolled to 80 2021 $10 ($3.65)/15 ($1.50) bull call spreads at $2.15 ($17,200) so we end up in a $40,000 spread that's $20,000 in the money for less than net $20,000 – despite all the fuss.
    • GIS – Still good for a new trade.


  13. Big wheee on /CL and RB – congrats!  

    Don't be greedy – you never know what OPEC will say.  Obviously $2 will be very supportive on /RB anyway and, falling from $2.05, the weak bounce is $2.01 and that's going to be hard to break.  Likewise $70 on oil should also be a bounce.  

    Venutian/Tangled – I was referring to the fact that you only get the interest overnight, not during the day so it's some part of the 1.54% that you actually collect, not the whole thing.  That's my understanding anyway, maybe your broker is different but I'm pretty sure the "sweeps" take the cash out of your account overnight and invest it but, during the day, it's back in your account earning nothing.


  14. Ahh – I see.  According to Ameritrade assuming the 7 day yield did not change the annual APR would be the same as that yield.  Your cash sits there all the time and automatically moves as needed for trades.


  15. Phil/PSW/Cannabis

    Which one do you think are good companies who are legit and potential to grow?

    thanks as always

    regards


  16. Of course other than CVSI which was recommended by sunil Ram for products not having THC.


  17. It is finally here. Early voting has begun in MN, NJ and IN. 


  18. XLC – S & P is realigning some stocks and creating a new Communication Services ETF.

     

    The holdings in the XLC will consist of the following stocks:  FBGOOGGOOGLCMCSACHTRATVIVZDISTNFLXEAFOXACTLTWTRCBSOMCTTWOFOXVIABDISCKIPGDISHTRIPDISCANWSA, and NWS.

    Apparently these stocks will be moved from XLY and XLK, which will be re-weighted.


  19.  

     

    New iPhone teardown confirms Qualcomm's out as a supplier

    Gadget repair firm iFixit is out with its teardown of the iPhone XS and XS Max.

    Qualcomm (QCOM -0.9%) is missing from the supplier list, which isn’t a surprise since Qualcomm and Apple are involved in a lengthy legal battle over royalty payments.


  20. Long-Term Portfolio Review (LTP) – Part 3:  

    • HBI – On track.
    • HRB – On track 
    • IBM – On track.
    • IMAX – Back to the top of the channel so we'll just roll the 15 short Sept $23 calls ($1.95) to 15 Jan $24 calls at $2.40 to pick up another 0.45 ($675).  We'll cash in our 25 Sept $18 calls at $7 ($17,500) and we'll just pick up 20 of the 2020 $25 ($4.20)/30 ($2.30) bull call spreads for $1.90 ($3,800) as a cover to the short calls and, if IMAX doesn't pull back, we'll simply add more longs and keep rolling.  Meanwhile, it's $14,375 off the table and we still have a $10,000 spread!  

    • LB – Notice the long $20 calls have no premium but the short $30 calls have $5.65 in premium.  That's money that will absolutely come to us over time.  I'd like to buy 50 of the 2021 $27.50 ($7)/$35 ($4.50) bull call spreads for $2.50 ($12,500) and put a stop on our 30 2020 $10 calls at $9.50 ($28,500) so we'll take at least $16,000 off the table if they fall below $30 or, otherwise, we add $37,500 of upside potential if they keep going higher.
    • MO – Almost at goal already. 
    • MT – We have $13,200 tied up in the 20 2020 $30 calls but we can cash that and roll to 40 2021 $25 ($11.50)/32 ($8) bull call spreads at $3.50 ($14,000) so for $700 more we drop to $28,000 in the money on our spread.  Great for a new play as well and I'd sell 10 of the 2021 $30 puts for $4.80 ($4,800) to offset the cost.  

    • NLY – A bit lower than we'd like but we're in it for the dividends.  
    • NYCB – Another dividend play that's a bit low in the channel.
    • OPK – Lots of strife on this one that will take time to resolve.  No harm, no foul so far so we'll wait for better information.
    • PBR – On track.  

    • PZZA – A new one but already booming.  
    • QCOM – Over our target so let's cash in our 15 2020 $55 calls at $20.50 ($30,750) and pick up 20 of the 2021 $67.50 ($14.50)/80 ($9) bull call spreads at $5.50 ($11,000) so we take $19,750 off the table and we still have a 2/3 covered $25,000 spread.  Not bad from a net $2,300 start less than 6 months ago!  
    • SBUX – At goal already – crazy!  
    • SKX – We were supposed to sell the Jan $28 calls when they hit $3 and I forgot.  Now back at $2 I guess we'll still try to sell them at $3 but no less than $1.50

     

     

     

     

     

     

     

    • SPWR – Nice recovery, back on track.  
    • T – Caught a nice bottom on them and on track now.  
    • UCTT – Still waiting for them to improve but no changes until we see earnings.  They just acquired Quantum Global for $342M so it will take a while for them to settle down.  
    • WBA – Already at goal.
    • WPM – Time is our friend on this one as we have to wait patiently for silver to pop.  Our 40 2020 $15 calls are $3.55 ($14,200) and I don't want to sell them unless they go below $3.25 ($13,000) so we risk $1,200 but no worries if they stay over $17.   I want to add 50 of the 2021 $12.50 ($6)/20 ($2.25) bull call spreads at $3.75 ($18,750) so that's our "roll" and hopefully we can eventually get that much for the 2020 $15s to make it an even one

    With all of the 2020 and 2021 move – BE PATIENT!  Stocks move up and down all the time so just simply put a bid in for your price and wait and see if you get it.  Only when you fill one of your legs at a price you offered should you be considering paying more (or collecting less) for the other leg(s) you need to fill.  

    With WPM, for example, it's low in the channels so I'm anxious to buy the long calls for $6 so I'll buy 20 of them (easy fill) and ask for $2.50 for the $20s and I either get that (because WPM goes higher) or it goes lower and my next 20 2021 $12.50s will be cheaper than $6 so, either way, I save some money!  

    Wash rinse, repeat until you fill.


  21. Cannabis/Pat – These companies have no track record and most of the individuals involved are pretty new to the public markets so it's a real wild card – just like dot coms were back in the day.  Also, the analysts are not experts in the field, so how can they possibly have a valid opinion?  That's why I prefer spreading the risk with an ETF like MJ or, as we did with PSWI and New Age, finding a nice, small company that needs cash to grow and hitching along for the ride.  

    S&P moves/Albo – Interesting thing to do now.  I wonder if they are preparing for a pullback?


  22. QCOM/Phil- for the adjustments, after cashing the long calls, do you still keep the short 2020 $70 calls?


  23. Dave QCOM good question will be some what naked





  24. The 35 most mind-blowing lines from Donald Trump’s Las Vegas speech




  25. Youth Vaping Has Soared in 2018, New Data Show




  26. QCOM/Dave – Yes, they become the short calls for the new long-term bull call spread.  There's just 15 of the short 2020 $70s and we have 20 of the $67.50/80 bull call spreads so no worries unless QCOM is over $80 but the point is we expect a pullback so this is a generally bearish bet for the moment. 

    In other words, we took a bullish 2020 $50/70 bull call spread with short $50 puts and, because we are now over our target at $75, we take the $25 and run on the $50s, and, since we think the short $70s are overpriced at $10.60 and we KNOW they are more than 50% premium, we leave them to decay BUT, since we want to be protected, we take a 2021 bull call spread to cover the remaining short calls.

    That's how you can easily flip a bullish position to a bearish one as a stock moves through your channel.


  27. Oil popped right back to $71 but /RB still down at $2.02 – as I said earlier though, not really worth it into the weekend uncertainty.

    Speaking of uncertainty, I said we should put some cash into STP hedges to lock in these insane LTP gains.  LTP now up 83.3% so 1.6% higher (about $8,000) than it was when I did the review (on the unchanged positions) - MADNESS!!!  

    Anyway, in the STP:

    • 100 DXD Jan $28 calls at $1.90 can be rolled to 100 DXD April $27 calls at $2.85 so we're buying $1 in position for 0.95 AND getting 3 more months of protection.
    • 160 SQQQ March $10 calls at $2.35 can be rolled down to 160 March $8 calls at $3.65 for net $1.30 ($20,800) 
    • 80 SQQQ Jan $25 short calls can be bought back for 0.20 ($1,600) 
    • 80 SQQQ March $14 calls can be sold for $1.20 ($9,600) 

    So we're paying for 1/2 the roll by improving our short sale and now we're $3.50 in the money on the hedge vs $1.50 so we bought $32,000 worth of intrinsic value for $10,000!  

    TZA 80 Oct $7 calls at $1.20 ($9,600) can be rolled to 120 TZA Jan $7 calls at $1.35 so 0.15 buys us 3 more months of insurance and we're adding 50% to the hedge.

    MSFT makes less than $5/share so $115 is a bit silly for them so lets add a short position as they would be likely to pull back with the market and, at $875Bn, should have a hard time breaking $100Bn ($135ish).  

    • Sell 5 MSFT Jan $115 calls for $5 ($2,500) 
    • Buy 40 MSFT Jan $120 ($8.20)/115 ($5.30) bear put spreads at $2.90 ($11,600)

    That's net $9,100 on the $20,000 spread that's at the money so any twitch down in MSFT from where it is now and we're good for $11,900 (130%) gains.


  28. Hi Phil PLS check the numbers on MSFT some thing is wrong


  29. Phil; Back in August we added a MU position to the LTP.  40/55 CS plus 42 Puts


  30. Yodi; Agree. MSFT trade would be $2500 for the calls and therefore net $9100 but still potential for  $10,900 gain.  I'm a glass half filled guy so I see a potential loss of $14,000.  Not my type of trade.  


  31. MSFT/Yodi – You're right, it's just $2,500 collected on short calls.  

    MU/Options – I missed that one, will add it for next time.

    MSFT/Options – It's a hedge, they are supposed to lose money!  wink


  32. I was checking out EWU's holdings. #2 and 4 (Shell) are the same company, so let's just add them together and call that #1 (11% of the holdings). The 10 biggest publicly traded companies in the UK by sector:

    Oil (shell), Banking/Finance (HSBC), Oil (BP), Tobacco, 2 x Drugs, Beer, and then finally consumer staples (Unilever).

    So I was thinking about MJ and how it's acceptance as a legal product will eventually play out. It'll eventually be one of those top 10 companies. The human brain loves drugs, just look at UK's top 10, alcohol and (somehow) cigarettes are 2 of the top 10. In fact, I'm surprised coffee (or tea, being the UK) isn't in the top 10.

    Long term investing, IMO, oil is being deprecated by the renewables/electrics. Traditional (read: high fee) finance is being deprecated by low-fee peer-to-peer (read: crypto or "blockchain" if that's your fancy). Legal drugs (alcohol, nicotine, caffeine) will always be in play. MJ is hot but already recently discovered. Investment here may generate huge returns but there's going to be some dead bodies as companies get burned, scams get run, government corruption picks winners and losers, etc. Oil is toast. Traditional finance is bloated and miserable. Renewables is huge, especially as carbon accounting becomes necessary in the courtroom of public opinion. In my personal opinion, we will see an "TLRY" type of moment in the next 5 years relating to some up-start renewable companies just getting going now, except the captive $200B MJ market is more like a $5-20T carbon and transient energy market, so expect it to be much more so a huge surprise when it hits.


  33. Good point on sin stocks, BDC.  

    Indexes weakening a bit into the close.


  34. At 2 in the morning, hundreds of Ted Cruz supporters all woke up to issue the same exact statement on Twitter. Nothing suspicious about this. Nope. These are all just proud, patriotic American citizens, all deep in the heart of Texas.


  35. Well, as we expected, not a very exciting day.  

    Same(ish) volume as yesterday but maybe a big finish but generally flat now that the dust has settled.

    Next week we have window-dressing vs Fed tightening – much more interesting! 

    Have a great weekend, 

    - Phil


  36. Interesting graphic on the increase in BBB bonds. 

    with that many right on the cusp of being not investment grade it seems quite dangerous. If there are a round of downgrades wont many funds that are mandated to only hold investment grade bonds be forced to dump those that drop below BBB?








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  40. ·         ABX is apparently in merger talks w/Randgold Resources according to a blog posting cited by Bloomberg. 


  41. any opinion on the merger (if it happens)?


  42. ABX/Jabob – I don't like it as it's more like ABX buying GOLD so we'll take on massive debt (like FTR) and it's likely to tank the stock.  I do see why they want it as GOLD is heavily focused in Africa, where ABX wants to be and GOLD got very cheap.  The whole thing may also be a ruse to pay off people in Tanzania as ABX-subsidiary Acacia Mining has been in limbo since last year over tax issues and mineral rights.  Resolving that would be a huge plus for ABX. 

    Meanwhile, Futures down a bit over China pulling out of trade talks but not much of a reaction so far.  Oil popped to $71.50 and /RB at $2.04 but I don't want to short yet.  


  43. ABX – They were making progress on their balance sheet / debt and now this merger.  I'm not sure how this is a good thing, other than getting larger and possible then divesting poor operations ….  Really a crazy cycle these companies seem to be in.


  44. ABX/Batman- market seem to like that idea though, premarket it is up 3%


  45. Phil, With the merger news on the wires and premarket spike on ABX — what is your price target for covering the ABX naked longs?