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Fed Fired Thursday – Sessions Gone, Powell Speaks

Image result for trump nixon cartoonNow Trump has gone full Nixon.  

Trump finally fired his whipping boy, Jeff Sessions and, while we may forget it because he's become a National joke, thanks in large part to the way Trump has demeaned him for two years, he is/was the Attorney General of the United States of America and firing him is a big deal. And Trump's reasons for firing him are very similar to Nixon's reason for firing AG Archibald Cox in the summer of '73 — to derail an investigation into the President's corrupt dealings

Like Nixon, Trump is placing a loyal stooge in Sessions' place (one who is not technically qualified to be the AG, in fact). Acting AG, Matthew Whitaker, was hand-picked by Trump and was once a US Attorney in Iowa but then joined the board of World Patent Marketing in 2014 saying:

“As a former US Attorney, I would only align myself with a first class organization. World Patent Marketing goes beyond making statements about doing business ‘ethically’ and translates them into action.”

The Federal Trade Commission last year accused World Patent Marketing Inc., of Miami Beach, Fla., of scamming would-be inventors by charging them thousands of dollars to patent and promote their inventions. The company “provided almost no service in return” and threatened people who complained, the regulator said.

The FTC alleged that the scheme, which it said was promoted through “bogus ‘success stories’ and testimonials,” began in early 2014. The agency found that consumers lost about $26 million; some allegedly ended up in debt or lost their life savings.

World Patent Marketing promotional videos and photos show Mr. Whitaker reviewing invention ideas with the company’s founder, and the FTC included in court exhibits an email from Mr. Whitaker acting on behalf of the company and threatening a customer who complained with potential “serious civil and criminal consequences.” The August 2015 email was reviewed by The Wall Street Journal.

Image result for trump sessions cartoonUsually something like that in an attorney's past would immediately derail any chance they had of becomming the Attorney General of the United States of America but this is the Trump Administration where consumer scams, tax frauds and sexual harassment are resume highlights for those who serve the President.

None of that matters today. It took a full year for Nixon to finally resign after his "Saturday Night Massacre" so firing the AG was an effective strategy that bought Nixon another year before he finally fell as he had the US Justice Department (on his side) and was able to ignore subpeonas for tapes, etc. for quite a while.  And, don't forget, the Republicans in the Senate and Congress finally got Fed up with Nixon while the current GOP Senate pretty much has Trump's back so it's likely going to take an election to remove Trump at this point – even if Mueller does get to finish his investigation (now doubtful).

Image result for powell trump cartoonStill, Trump hasn't been bad for the markets so now it's up to the Fed to keep the party going and we have a rate decision from the FOMC at 2pm this afternoon and Powell has become another whipping boy for Trump to blame his problems on and it's not that likely he will stand up to the President and raise rates now that he's seen what Trump is willing to do to those that displease him.  

Nothing has really changed in the markets and we're still fundamentally overbought and that mild correction hasn't changed anything nor did earnings justify higher values than the very high ones we're already trading at so generally, we remain well-hedged – certainly into today's Fed decision and then over the weekend while Trump is possibly going to have Whitaker fire Mueller or curtail the investigation which would then lead to a not-yet-in-control-of-congress Democratic melt-down.

And Russia and China Trade and Saudi Arabia and Italy and California shootings and Inflation and Debt….  Yep, we'll be keeping those hedges…

 


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  1. Good Morning


  2. Phil – good discussions after hours/this morning (at the end of yesterday's post).

    One point on 'value' – while it is straightforward to come up with a theoretical 'value' of a stock – the significance of that 'value' figure is very different if you are holding the stock or if you are holding an options position. Holding the stock means you are not under any time limit in terms of being right with your 'value' estimate. You could be right in 6 months or in 6 years. But when you are trading options then you are now qualifying that 'value' estimate by saying the it will reach that figure by a specific date – within the length of the options contract you have bought or sold. It just means that actively managing positions where naked short positions are held is critical. Yes – rolling works in your favour – but takes you only so far because if you are wrong then you inevitably run out of time or money. 

    I think the above puts a very different spin on the concept of value.


  3. I guess we are back to buying dips!


  4. QCOM – Down sharply. Q3 results beat but weak 4Q guidance is weighing on the stock.

    But once it settles down will most likely create a good buying opportunity as their 5G outlook is very positive.  


  5. GE / Winston – I never quite understood the fascination with Jack Welsh. His methods can only work so long and today we see the results. I think that he was lucky for a while and that help build his reputation. But not an example of leadership I would use anywhere.


  6. QCOM / Albo – I love the dips!


  7. Good Morning.


  8. As far as FTR is concerned, everybody has to come to their own conclusions – I never liked the company so I am not on board but if you jumped in at any time, you can also jump out at any time and take the loss or stick it out and take the pain. I hope it recovers but really the big lesson is to keep these positions small. I know that the advice is to not exceed 10% of your portfolio with a single position, but IMO it's not a good rule. That 10% should be adjusted based on the quality of the company. Making AAPL 10% of your portfolio seems reasonable, but anyone who invested 10% of their portfolio in SHLD would be crazy! Just my 2 cents.


  9. FTR

    "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price."

    Warren Buffett


  10. Looking at a Tree play on COF Jan 21 BCS 82.5/92.5 for 5.30 sell 1/2 Jan 21 80 put for 7.50 and sell 1/2 Dec 18 92.5 call for 1.62.

    Comments please


  11. what is your opinion on oil in the short term?


  12. Good morning!  

    Value/Winston – If you look at an option as static that expires on a certain date and there's nothing you can do about it then yes, worse than a stock but, without that artificial restriction – much better than a stock.  

    With the FTR example, we bought 2,500 shares of FTR for $7.15 on Jan 2nd and we sold 25 2020 $8 calls for $1.25 and we sold 25 2020 $8 puts for $4.00.  That netted us into the position for $1.90 and, had we been called away at $8 (10% higher than the stock was), we would have made $6.10 (320%). 

    CLEARLY it's not likely we'll just buy things and make 320% so SOMETHING must be wrong with the stock that's causing such extreme prices.  We fully expected to be assigned 2,500 more shares at $8 and end up with 5,000 at an average of $4.95.  In the case of FTR, we didn't save enough money buying a call but, had we bought the $4 calls for $5, they are now $1.40 and we'd simply roll them to the 2021 $4 calls at $2 so we'd spend 0.60 of the $3 we saved by not buying the stock and then again in 2022, 2023, 2024, etc – it would take until 2027 before we spent the same money we would have saved by not actually buying the stock and we have the same effective ownership.  The reason we chose not to do that was they were still paying a dividend at the time – that's the only reason we bought the stock.

    If I buy AAPL stock for $209 and it goes up 20%, I get $250ish but if I buy the AAPL 2021 $190 ($46)/$250 ($21) bull call spread for $25, I make 100% at $250.  Since I'm only laying out $25 and not $209, I can spend 2x and make $50 at $250 rather than $41 and I still have $159 to play with while I wait. 

    Not only that but, without going into detail, you KNOW we lose less money if AAPL drops 20% with the options, certainly not $42 out of $50!  

    So it's better to the upside and better to the downside so your issue is then timing but the AAPL 2020 $190s are $37 and the $250s are $11.50 so net $25.50 so we could just roll the whole spread to 2021 or we could roll the $190s to the 2021 $190s and pay the extra $11 for the extra year in anticipation of selling other 2021 calls for more than $11 once the 2020s expire.  If you think of the LONG-term ownership of the stock, the only difference here is that I'm going to take $11 of the $159 I didn't spend buying the stock to buy another year of the stock.

    So it's better going up (but with a max gain cap – though you can roll that too) and it's better going down and you keep 75% of the money in your pocket on essentially the same exact bet (that AAPL will go up 20% in two years).   

    Somebody yesterday Winston said you should have a colored box and you should – except for this one issue that is, unfortunately, the opposite of what I try to get across to people – to learn to take that long-term view and learn that we WANT the positions to go lower so we can buy more because, if we're doing it right, we're only taking a 1/4 position most of the time so making 100% on a 4x position (4 quarters) is better than making 300% on a 1/4x position (3 quarters).

    It's not terrible when our initial attempt to make 300% goes off without a hitch but the big money in our portfolios generally comes from chasing those "bad trades".  Also, I can buy AAPL for $209  and I'm a little worried about the price so I'm a little nervous at 1x but, if it drops to $184, I'm THRILLED to roll and DD so now I have a 2x 2021 $170/230 spread that I'm super-confident about instead and, if AAPL drops to $160, do you think I'll be upset to have 4x of a 2022 $150/200 bull call spread?  

    How much does it cost you to buy AAPL for $150 now – it costs $69 (in theory) because it's at $209.  We're spending $25 to buy the $190/250 bull call spread and we'd spend another $25 to be in 2x the $170/230 spread and another $50 to be in 4x the 2022 $150/200 spread so we'd still be in the 2022 $150 calls for $25, not $69 – I really don't consider that a negative but you might if you think whatever the chart says is all the value AAPL has but I'll be very happy to hold those $150s and spend $11 to roll to 2023 and $11 to roll to 2024, etc.  Overall, all I'm doing is EVENTUALLY getting to the same $69 it would have cost me to buy AAPL at $150 now only it will take me about 5 years for that to happen and how is that worse than if I spent $69 now and stuck with them while AAPL went lower?  

    Big Chart – ALL BETTER!  Well, not the RUT so that's the best long to play if you need one and not the NYSE, which is below the Must Hold line but, otherwise – much better….

    Oil testing $61 again.

    QCOM/Albo – I agree, 5G is going to be the thing for the next few years.

     

    COF/Yodi – Not very cheap but a good long-term hold.  

    Oil/Jabob – I think, with Thanksgiving in two weeks, that oil is a bit cheap at $61.50 (now $61.20) and /BZ should hold $71.50 and, if not, bounce off $70 to higher than $71.50 so that makes this a good bottom call with a bit of conviction and I already said I think /RB at $1.65 is a no-brainer into the holiday.


  13. Dipping into the Soviet era tactics of manipulating images – what country do we live in:

    https://talkingpointsmemo.com/edblog/white-house-releases-doctored-video-to-back-up-attack-on-acosta

    This was followed by revoking Acosta’s access to the White House. Half in jest I put together a close up of the video to illustrate how preposterous the whole thing was. Sanders later shared a doctored clip of the incident which was apparently produced by Infowars, the white supremacist conspiracy site, to further the smear. At a minimum, the doctored video was shared by Infowars a couple hours before it was distributed by the White House.


  14. Acosta/StJ – Wow, and don't forget that girl Acosta is accused of touching works for the White House and looks like she was hovering and looking for a chance to get him to bump into her.  The entire press corp should boycott the White House – but they won't.   

    Ministry of Truth (Minitrue)—This government ministry is concerned with creating propaganda, controlling the media, manipulating historical documents, and producing Newspeak dictionaries. It is where Winston Smith works and is responsible for supplying the citizens of Oceania with various forms of media, which support Big Brother and the Party's agenda.

     

    The Ministry of Truth is involved with news media, entertainment, the fine arts and educational books. Its purpose is to rewrite history to change the facts to fit Party doctrine for propaganda effect. For example, if Big Brother makes a prediction that turns out to be wrong, the employees of the Ministry of Truth correct the record to make it accurate. This is the "how" of the Ministry of Truth's existence. Within the novel, Orwell elaborates that the deeper reason for its existence, the "why", is to maintain the illusion that the Party is absolute. It cannot ever seem to change its mind (if, for instance, they perform one of their constant changes regarding enemies during war) or make a mistake (firing an official or making a grossly misjudged supply prediction), for that would imply weakness and to maintain power the Party must seem eternally right and strong.

    Minitrue plays a role as the news media by changing history, and changing the words in articles about events current and past, so that Big Brother and his government are always seen in a good light and can never do any wrong. The content is more propaganda than actual news.



  15. Video – What a waste of time. 

    trump girl signaled to take mic from rude reporter, trump girl rebuffed, looks at boss 'Now what do I do?'

    This Is Not News!


  16. StJ  / technology

     

    Quote of the Day

     

    “What’s really interesting about these technologies is how quickly they went from ‘Whoa, this is really cool’ to ‘Holy crap, this is subverting democracy.’ ”

    —Hany Farid, a photo forensics expert, explains to The New Yorker how advances in digital imagery and deepfakes could deepen the fake news crisis.


  17. That is the danger for sure Advill… Look at Facebook and Twitter!


  18. jabo   what?  no comments on LB


  19. stockbern—very happy to see it recovering…but don't jinx it!


  20. Phil,

    Are you thinking $63 maybe $64 into Thanksgiving for /CL?


  21. Not news/1020 – It's news when the POTUS uses it as an excuse to revoke press privileges from  reporter he doesn't like.  It's intimidation aimed at the whole press corps for people who think it's OK to ask the President difficult questions.  For Acosta, his network will be behind him but, for a lot of those reporters – that's their jobs they will lose if they stand up to Trump.

    LB is turning up nicely. Earnings are next week but guided up today:

    MarketWatch4 hours ago

    Victoria's Secret parent L Brands expects earnings to exceed expectations, shares rise 7%

    L Brands Inc. , whose portfolio of brands includes Victoria's Secret and Bath & Body Works, reported sales of $860.5 million for the four weeks ending Nov. 3, up 8% from the previous year. Same-store sales rose 4% for the period. And for the 13 weeks ending Nov. 3, the company reported sales of $2.78 billion, up 6% from last year. L Brands, is scheduled t

    • L Brands (NYSE:LB) reports sales increased 8% in October to $860.5M.
    • Comparable sales were up 4% during the month, led by an 11% jump for the Bath & Body Works business.
    • Following the monthly sales update, L Brands says it now expects Q3 EPS of $0.15 vs. prior guidance of $0.00 to $0.05 and $0.05 consensus. Full Q3 earnings are due out on November 20.

    /CL/Sun – Well, notice into Labor day we went from $60 in March to $72.50 in May and then $65 in June to $75 on July 4th and $65 in Aug to $70 for Memorial Day so it would be odd to be lower than $62.50 into Thanksgiving and I think $65 is very doable.  Also notice last Nov we made $4 from the early Nov low:

    Speaking of 6 Sigma:

    • Outshining its U.S. nemesis, Siemens (OTCPK:SIEGY +0.2%) is reaping the first rewards of its longstanding restructuring efforts, meeting its targets for the fiscal year.
    • While short-term costs weighed on net profit, which was flat at €6.12B (because of charges related to job cuts at its power and gas business), its latest report suggests it has been faster and more successful at addressing its challenges.
    • Siemens raised its fiscal-year dividend by €0.10 to €3.80 a share and announced a €3B share buyback program that will run until November 2021. That compares with General Electric (GE-0.5%), which last month slashed its quarterly dividend to a token penny a share.
    • In August, Siemens said it would also combine its current five industrial businesses to three, a structure that will increase autonomy and carry more responsibility for meeting financial targets.
    • CEO Joe Kaeser additionally listed the medical technology unit Siemens Healthineers, moved Siemens' wind-power business into a JV with Spanish rival Gamesa and is planning to merge its trains activities with France's Alstom

    Well-timed market booster:

    • Morgan Stanley analyst Katy Huberty raises her Apple (NASDAQ:AAPL) target from $226 to $253 following an AlphaWise survey signaled a long Services growth runway.
    • Huberty says the survey of U.S. and China smartphone users increases confidence in sustained 20% or higher annual Services growth and margin expansion. 
    • Key quote: “While the market read announced changes to Apple financial disclosures negatively last week, we view it as a corroborating data point that Apple is approaching a services-led margin inflection, similar to when Amazon began breaking out AWS revenue and profits in 1Q15.” 
    • Apple shares are down 0.7% to $207.83.  
    • Previously: Analysts unimpressed with Apple ending unit reports (Nov. 2)
    • Previously: Apple down 7% on soft guidance (Nov. 1)

    Mortgages log single best day YTD as markets await Fed statement

    • Bloomberg Barclays MBS Index had best YTD single-day excess vs. Treasuries Wednesday, up 19 basis points to bring month-to-date measure to +0.08%.
    • Agency MBS gross issuance fell to $97B from $102B in October while net issuance eased to $25B from $34B M/M, according to a Nomura MBS analysts note.
    • Investors will be searching Fed's policy statement 2PM for clues on any change in stance this afternoon as rate hike isn't expected until December.
    • Source: Bloomberg First Word.
    • Dow -0.1%, S&P 500 -0.3% and Nasdaq -0.5% as 10-year Treasury yield slips 2 basis points to 3.22%.
    • D.R. Horton (NYSE:DHI) posts fiscal Q4 EPS of $1.22--4 cents higher than consensus and up from 82 cents a year ago.
    • Q4 home closings rose 11% to 14,674 homes from 13,165.
    • Q4 net sales orders increased 11% to 11,509 homes from 10,333 homes; value of net sales orders up 10% to $3.4B from $3.1B.
    • Homebuilding revenue up 8% to $4.4B from $4.1B.
    • Cancellation rate of 26% ticked up from 25% in year-ago quarter.
    • With home prices and interest rates rising, affordability has affected demand, especially at higher price points, D.R. Horton Chairman Donald R. Horton says.
    • DHI -0.1% in premarket trading.
    • "We are pleased with our current product offerings and positioning to meet demand in the current market, and we will adjust to future changes in market conditions as necessary," he adds.
    • Homes in inventory at Sept. 30, 2018 increased 13% to 29,700 homes from a year ago.
    • Conference call 8:30AM ET.
    • Previously: D. R. Horton beats by $0.04, beats on revenue (Nov. 8)

    • Square (NYSE:SQslumps 6.1% in premarket trading as Morgan Stanley says the mobile payment company's weaker margin outlook could "embolden" shorts.
    • The results provided "something for everyone" as Morgan Stanley raised its short-term estimates but trimmed its longer term outlook.
    • Morgan Stanley raised its Q4 revenue and adjusted EBITDA estimates on strong subscription/services, but reduced its FY2019 margin expansion outlook to +215 basis points from prior view of +340 bps due to increased investment.
    • Source: Bloomberg First Word.
    • Analyst ratings: 15 buys, 18 holds, 2 underperform/sells.
    • Previously: Square slips 4.5% after Q4 guidance disappoints (Nov. 7)
    • The U.S. WTI oil benchmark extends its recent decline to enter a bear market, as its 20% drop from recent high ends its longest bull market since 2008: WTI -1.2% at $60.94/bbl, Brent -0.9%at $71.40/bbl.
    • Record U.S. crude output and signals from Iraq, Abu Dhabi and Indonesia that production will grow more quickly than expected next year have pushed the price of both WTI and Brent oil to multi-month lows.
    • Offsetting news that China's October crude imports hit a record 9.61M bbl/day was yesterday's report showing U.S. production reached a new record high of 11.6M bbl/day and expectations of breaking through 12M bbl/day by mid-2019.
    • Cheniere Energy (NYSEMKT:LNG): Q3 GAAP EPS of $0.26 beats by $0.02.
    • Revenue of $1.82B (+30.0% Y/Y) beats by $330M.
    • Shares +0.5% PM.
    • Press Release
    • Poland's PGNiG says it has struck a 24-year deal for liquefied natural gas with Cheniere Energy (NYSEMKT:LNG) to start next year, Poland's second long-term deal for U.S. LNG in as many months as it seeks to cut its energy dependence on Russia.
    • At a ceremony in Warsaw attended by Poland Pres. Duda and U.S. Secretary of State Perry, PGNiG said the price for the U.S. gas is 20%-30% lower than Poland pays its current supplier in Russia.
    • The deal comes just three weeks after PGNiG struck two 20-year deals with subsidiaries of U.S.-based Venture Global LNG for deliveries that will start in 2022, when Poland’s existing deals with Russia’s Gazprom (OTCPK:OGZPY) expire.
    • The LNG supplies from Cheniere and Venture Global will be delivered to the LNG terminal in the new Baltic port of ?winouj?cie that local officials see as a game changer in Poland’s drive to diversify its energy sources.
    • Poland’s concerns have been raised by the start of work on the Nord Stream 2 gas pipeline, which will link Russia with Germany via the Baltic Sea and allow it to supply western Europe while circumventing Poland and Ukraine.

    • Tesla (NASDAQ:TSLA) moves forward for the first time with a split CEO-Chairman setup following the Elon Musk settlement with the SEC. New chairman Robyn Denholm's experiece includes being a CFO at Telstra as well as stints at Juniper Networks, Sun Microsystems and Toyota. She moves into the chairman position at the EV automaker immediately.
    • Another wildcard on Tesla was delivered in this morning from the Macquarie desk. The firm tells clients that Tesla could qualify for inclusion in the S&P 500 Index as early as Q2 of next year if trailing profits hold up. Tesla checks all the S&P 500 inclusion boxes except for trailing 12-month GAAP profitability, according to the Macquarie analyst team. In general, stocks get a boost when the S&P 500 comes calling, although there's no clear-cut way no know if S&P would push Tesla to the front of the line.
    • TSLA +0.32% premarket to $349.28.
    • Starbucks (NASDAQ:SBUX) has big plans for Japan, including opening 300 new stores in the next three years and launching a series of e-commerce initiatives.
    • The restaurant company is partnering with Line on mobile payments and Uber Eats on delivery.
    • Starbucks also has a Reserve Roastery set to debut in Tokyo in February in the upscale Nakameguro district.
    • Last quarter, Starbucks saw same-store sales in Japan rise 3%.
    • SBUX -0.63% premarket to $67.73 after closing just a shade off its 52-week high yesterday.
    • Previously: Starbucks teams with UberEats in Japan (Nov. 8)
    • Shares of Wynn Resorts (NASDAQ:WYNN) are down 14.3% premarket after the company warns during the earnings conference call (transcript) of a "slowdown" at its Macau property.
    • "So what we've seen post-Golden Week has been a slowdown. And we've seen it, in particular, in the premium end of the business, premium mass, premium slots, and VIP," CEO Matthew Maddox stated.
    • Later in the call, Maddox mentioned some other weak spots with a slowdown. "You're seeing it somewhat in Singapore, that the Baccarat market in Las Vegas also experiences somewhat of a slowdown," he noted.
    • Also swinging lower in premarket action are Las Vegas Sands (NYSE:LVS) with a 6.8% dropand Melco Resorts & Entertainment (NASDAQ:MLCOoff 9.2%. MGM Resorts (NYSE:MGM) is down 4.0%, while Studio City International (NYSE:MSC) is inactive, but in harm's way.
    • Previously: Wynn Resorts +4% after EBITDA gain (Nov. 7)
    • Axon Enterprise (NASDAQ:AAXN+4.8% premarket after JPMorgan raised the stock to Overweight from Neutral with an unchanged price target of $68.
    • Shares plunged over 15% yesterday following the company's soft revenue guidance, but JPMorgan expects the dip in growth to be temporary and will speed up in 2019.
    • Previously: Axon Enterprise beats by $0.08, beats on revenue (Nov. 06 2018)
    • RBC Capital maintains an Outperform rating on Qualcomm (NASDAQ:QCOM) after earnings and lowers the target from $77 to $71.
    • Analyst Amit Daryanani notes cost containment in the quarter was offset by soft smartphone demand and all eyes are on the Apple litigation. Qualcomm said the preliminary judicial ruling this week doesn’t alter its discussions with the FTC and its antitrust case. 
    • Other snips: UBS from $67 to $64 (Neutral), Deutsche Bank from $70 to $65 (Hold), and Barclays from $95 to $87 (Overweight). 
    • Qualcomm shares are down 6.8% premarket to $58.90.  
    • Previously: Qualcomm beats by $0.07, beats on revenue (Nov. 7)
    • Previously: Qualcomm -2.7% on Q4 beats, downside revenue guide (Nov. 7)

    • Amazon (NASDAQ:AMZN) Web Services and Cisco (NASDAQ:CSCO) are teaming up on a product that will let developers build apps in the cloud or data centers and move easily between the two.
    • Cisco Hybrid Solutions for Kubernetes on AWS will become available next month for $65K a year. 
    • The product will utilize Amazon’s container deployment service on its data center servers and Cisco’s management software that runs on servers, which are both based on the open-source Kubernetes software. 
    • Cisco already has hybrid options through partnerships with Google and Microsoft, but Amazon is the cloud market leader. 
    • Cisco shares are up 0.3% premarket and Amazon is down 0.3%

  22. Phil:  I asked the question below yesterday, please respond when you can.  Since there is a reasonable argument for a rise in the price of oil going into Thanksgiving, I am hoping to be able to do an even roll to the Nov 23 18.5 calls (right now .20 debit) to give myself a better chance of having the short calls expire worthless.  Your thoughts, any other ideas?  My short Nov 18 calls are about $1.20 today.

    JohnC1 
    November 7th, 2018 at 2:31 pm | Permalink | Tweet thisIgnore this user

    Phil:  I closed out an SCO position a while ago, but left the short Nov 16 $18 calls in place, expecting them to expire worthless.  I had a $.55 credit.  The calls are now about a $1.00.  I'd appreciate any ideas you might have for dealing with this.  Thanks.


  23. If I started a news agency this guy would be my reporter. He'd be very poite. He'd wait patiently for answers, and patiently re-ask the question if he did not receive an answer. He would hold that mic in a vice-grip too. If Dump pulled his shit, he would be given "the stare." Trump is a coward and a weakling like all bullies are. He assaults women and hides behind his perceived privileged status. He intimidates underlings and questioners alike – how dare they ask questions?!?. A guy like this puts Cheeto Chucky in his place. It's a sad, animalistic might-makes-right imperative, but our entire situation is sad, and sometimes you gotta fight fire with fire.


  24. Phil : I sold some TSLA Dec 300 2018 calls for $44 earlier this year.  Need to roll.  Jan 20 350's can be had for additional $20 credit. What do you think? I don't think TSLA is a $400 stock especially with the tariff troubles they may have in China impacting sales. Inclusion in S&P is a wild card but that looks like it is dependent on some consecutive  profitable quarters,


  25. biodieselchris 

     

    I like your idea  !


  26. SCO/John – Sorry if I missed it.  Generally, once I skip your question and answer one after it – it means I missed it so feel free to ask again.  SCO is at $19 and we think oil is bottoming and you do have until next week.  I'd just roll out to Dec $19s at $1.60 because why not collect 0.40 more and add $1 in position?  It's hard for oil to stay below $60 and $50 much harder and you get to roll $1 per month – should work out eventually.

    Dollar blasting higher at 96.25 – up half a point for the day but up almost 1% off yesterday's low.  That's keeping /CL under $61, /BZ $71 and /RB $1.643

    TSLA/Den – That's a long time to give them to burn you.  The Dec $300s are $61.50 so you're only down $17.50 so why not just roll the loss to Dec (pre-earnings) $360s ($20.80) and see how those go.  If all goes well, you make back your loss and you're even and THEN you can sell something safer like Jan $400s for $12, etc.  I'd rather collect $12 4 times during the year if I can sell all premium with a $50 (15%) cushion than sell at the money calls once on a stock that's this volatile.  


  27. Phil:  I had some INFN put to me today at $7.  What are your thoughts on INFN these days?  I can sell the Jan 2020 calls for .50, maybe .55, or I can patiently wait to get a better price on the calls, or I can take my lumps and close out the position.  Thank you.


  28. My short LB $40 puts are profitable today even though they were out of the money back when they were first sold. LB is lower and they've still made money – gotta love options! :D


  29. Phil/Press  My point was the 'act' for which Acosta had his 'privileges' pulled is not 'the' story. 

    It was the fact that a disliked reporter had his press privileges pulled for no good reason…. :(


  30. INFN/John – I never loved INFN in the first place.  They are an OK niche player but they don't make any money and lost way too much of it last year for me to want to own them now.  We played them last year, selling the 2018 $8 puts for $1.75, which netted us in for $6.25 but we pulled them on 10/20 as I didn't want to risk our gains into earnings.  The Nov earnings sucked and I think we never got interested again.

    Loving options/Ati- I certainly do!  It's amazing what people are willing to pay in premium sometimes.  

    OK, pre-Fed let's call it 26,176, 2,805, 7,156 and 1,580 with NYSE at 12,630 – Dollar seems to think they are still hiking but no speech after the release indicates to me that they are not.

    Acosta/1020 – I agree and the lack of outrage is amazing.


  31. No hikes – shocking!  

    Essentially nothing at all changed since last statement other than Business Spending turning down a bit.  No indication of what their intent is.

    Should be enough to hold us up but nothing very exciting and we're already way up so just sit back and see where it shakes out.


  32. Not much of a futures pop but I'm fading it a little. Dollar is really on fire.


  33. HBI    seeing 2000 Jan2021 $15 puts trade though not sure which direction.  Also, 400 $17 puts which appear to be a roll from the Jan'19 $20's 


  34. Hi Phil.  Have you looked at TWLO recently?  Huge last quarter, popped 33% on earnings,  with high revenue growth expected. Thinking of a 2020 75/110 BCS, or, instead, selling 2020 70 puts @10.50 and watch it?  Thoughts, please. Thanks.


  35. Quick 100 points on /YM – can finally buy one of those egg McMuffins that Phil is always talking about!


  36. Dollar/Ati – We are the only ones hiking at all (other than hyperinflation countries).

    CNBC just said there's a think-tank being paid by the Saudis to determine what happens if OPEC breaks up.  That knocked oil back down.  Not sure why, OPEC hasn't been very effective anyway.  

    • Not much surprise that the Federal Reserve's FOMC is keeping the target range of the fed funds rate at 2%-2.25%.
    • Statement notes that the labor market continues to strengthen and inflation remains near 2%, its target, with indicators of longer-term inflation expectations little changed.
    • Still sees "further gradual increases" in the fed funds rate target range consistent with "sustained expansion of economic activity"--translate to another hike's due in December.
    • No press conference for this announcement.
    • U.S. 10-year Treasury yield little changed, down about 1 basis point to 3.22%.
    • Dollar index +0.2%.
    • Dow +0.1%, S&P -0.2%, and Nasdaq -0.5%
    • Volkswagen (OTCPK:VWAGY) plans to sell electric cars for less than €20K ($22.8K), according to Reuters.
    • The Volkswagen MEB electric car is expected to discussed at a Volkswagen supervisory board meeting on November 16. The MEB platform was unveiled by the German automaker in September.
    • The company is being forced to react to the tougher emissions laws in place in Europe.
    • The U.S. Centers for Disease Control and Prevention reports that ~14% of American adults (~34.3M) smoked cigarettes in 2017, the lowest level in history and significantly below the 42.4% proportion in 1965.
    • It also reports that e-cigarette use declined slightly compared to 2016 in adults (more than compensated by the tremendous jump in teen use, however).
    • 47M Americans still use some form of tobacco product. Cigarettes and e-cigs represent the most common combination.
    • Gordon Haskett lowers RH (RH -3%) to a Hold rating from Accumulate on concerns over the retailer's upside.
    • Analyst Chuck Grom and team have a "hard time envisioning a high-end backdrop that improves from current levels."
    • The firm's price target goes to $135 from $172.
    • In an update on its approach specifically to terrorism-related content, Facebook (FB -2.6%) says that in Q2 it took action on 9.4M pieces of content tied to ISIS, Al-Qaeda and affiliates — and that in Q3, overall takedowns dropped to 3M with more effective tools.
    • That's vs. 1.9M pieces flagged in Q1. Most of the removals were old material surfaced using specialized techniques, Facebook says.
    • "In both Q2 and Q3 we found more than 99% of the ISIS and al-Qaeda content ultimately removed ourselves, before it was reported by anyone in our community," Facebook says in its item.
    • Meanwhile, EU antitrust Margrethe Vestager tells Bloomberg that she and her team have no probe into Facebook's taxes and no plans to start one. “I read this in the paper but the answer is no,” shes says.
    • “We have no current plan to do so but of course cannot predict what we will do in the future," she adds.
    • Previously: Facebook quadrupling size of Dublin HQ (Nov. 08 2018)
    • Previously: Facebook blocks accounts for Russia links; Zuckerberg to skip Canada-UK hearing(Nov. 07 2018)
    • Gannett (NYSE:GCI) has slipped 3.1% after its revenues fell short in Q3 amid ongoing advertising challenges, and the company trimmed full-year guidance.
    • Revenues overall dipped 4.4% to $711.7M; that's a $32.6M drop, inclusive of $2.4M in negative foreign exchange impact. Same-store day-adjusted operating revenues fell 8.1%.
    • Digital was a bright spot, with total digital revenues up 8.4% to $266.1M (37% of the total). Digital ad & marketing services revenues rose 7.7% to $199.4M.
    • EBITDA fell to $70.1M from $73.9M.
    • Revenue by segment: Publishing, $616.4M (down 6.7%); ReachLocal, $109.6M (up 16.8%).
    • EBITDA by segment: Publishing, $72.7M (down 16.8%); ReachLocal, $17.34M (up 232%).
    • Cash flow from operations was up to $60.9M from a prior $34.1M, mainly due to timing of pension contributions. Capital expenditures were about $16.3M, and cash balance was $108.6M and net debt at $229.4M.
    • For 2018, it's guiding to revenues of $2.9B-$2.94B (down from $2.95B-$3B); EBITDA of $325M-$330M (down from previous $337M-$345M) and capex of $60M-$65M.
    • Previously: Gannett beats by $0.02, misses on revenue (Nov. 08 2018)
    • Press release
    • Cheniere Energy (LNG +5.4%) surges after reporting better than expected Q3 earnings and revenues while raising 2018 EBITDA guidance and projecting further growth in 2019.
    • Cheniere says Q3 revenues rose 30% Y/Y to $1.82B, primarily driven by the timing of completion of trains at the SPL project and the length of each train's operations within the periods being compared.
    • The company says it exported 65 cargoes of liquefied natural gas during Q3, up from 44 in the year-earlier quarter.
    • Cheniere raises its guidance for FY 2018 adjusted EBITDA to $2.45B-$2.55B from $2.3B-$2.5B previously, and sees 2019 adjusted EBITDA of $2.9B-$3.2B with a run rate of $4.4B-$4.9B.
    • Cheniere says it expects the fifth LNG train at its Sabine Pass terminal in Louisiana to come online in Q1 2019 and to commence operations at its Corpus Christi LNG export terminal in early 2019.

    HBI/Stock – Another one I'm glad we own artificially.  They've gone nowhere since Aug, when we bought on the dip but we have 50 2020 $13/20 bull call spreads and 30 short $18 puts we sold for $2.65 so net $15.35 on the short end and we're $3.90 in the money on the calls ($5,850) and we paid net $9,800 vs tying up $85,000 had we bought the stock or $78,000 had we sold the calls against the stock.  

    The 2020 $13s are still $4.50 and the 2021 $13s are $4.70 so we have to take $1,000 of the $68,000 we saved in order to hold the stock for another year – oh the pain!!!  

    Good call Ati! 

    HBI/Stock – That doesn't sound like the LTP or the OOP.  I thought I was all caught up on changes before I left.

    TWLO/Taihu – No I haven't but I'll look on Sunday/Monday when I'm home of you remind me.

    Dollar is flying – 96.55 now.  Oil $60.60, /BZ $70.60, /RB $1.645.


  37. Just down a tiny bit from pre-Fed.  We'll see how tomorrow goes but all good so far.


  38. LB/Phil – last Thursday you said to remind you @ $35, hitting $37 today, re: selling long calls in the OOP? on the 2020 $20/?? BCS, Short $35 puts. Thx.


  39. Hello Phil and all.  I have been a fan of yours and your site for a long time.  I had a question about hedging portfolio value against a declining vix with a portfolio that is vega positive.    I do a lot of work with Index options like SPX with calendar / diagonal spreads and long put / call spreads as well.  Most of the trades end up being vega positive.  What would you suggest to balance the vega of the portfolio.  I have studied the VIX options but find these options really hard to work.  Thanks in advance.


  40. LB/Air – But today they raised guidance!  Still, we shouldn't be greedy so let's sell some calls tomorrow. 

    There's another example of one we stuck with and doubled down and now making money.   So now we have a much bigger position at a much lower strike than we started with and they finally turned around.  We still have the original $35 short puts (2020) as we never really lost faith in our target (even though everyone else seemed to).   Those have swung from a huge negative to a positive in the OOP and LTP – making us a ton of money since early Sept.

    Welcome Robert!  VIX options suck because the ViX isn't real.  There's no actual VIX to play, it's just a current measure of volatility at the moment so, essentially, you are engaging in parimutuel betting – like people at a race track betting on horses.  You pick a strike and the odds are determined based on how many people are betting on your strike and other strikes and the outcome – on any given day – is a fairly random outcome.  

    Not only that but each individual stock has it's own internal volatility measure that is independent of the broader VIX – so the whole concept of vega balancing is very tricky at the best of times. 

    If you are betting SPX and want to hedge, I much prefer SPY or SDS for hedges.  Also, we teach people NOT to pay premiums and to look for ways to SELL the premium on positions – which keeps our portfolios generally vega negative – making more money in a low VIX environment.  

    If you are worried about the vega decreasing – when does that happen?  When the S&P goes higher, right?  So look for a hedge that pays you on a positive S&P move.

    Let's say you're worried about losing $10,000 before you can pull or adjust your bets:  You can set up a simple SPY (now $280.50) spread like buying 10 Jan $275 calls for $11 ($11,000) and selling 10 Jan $285 calls for $4.80 ($4,800) and that's net $6,200 on the $15,000 spread so your upside is $8,800 if SPY moves up $4.50 (2%).

    The deltas on the legs are 0.62/0.40 so your net delta is 0.22 so a $5 move down in SPY will cost you $2.20 x 10 = $2,200 so, as long as you are going to make more than that if the VIX stays high (S&P lower) then it's very low-cost insurance for the next 2+ months.  

    Another thing we like to do with a spread like that is sell an offset.  Generally that's puts on a stock we'd REALLY like to own if it gets cheaper (and SPY goes lower) to offset what we'd lose on the spread.  So let's say you think IBM is a good deal at $123 and, if it went to $110, you'd REALLY like to buy 500 shares.  Then you can sell 5 of the 2021 $110 puts for $11.25 ($5,625) and now your hedge is almost free $15,000 protection and all you've done is promise to buy IBM at a 10% discount.

    You could also sell SPY puts, of course if you are dead set against actually owning stocks – whatever makes you happy but, even without the offset, it's a good hedge.


  41. VKTX   getting close to buy range again. I think Pharm said accumulate under $10 or $11. No options. 



  42. Meat Has a Replacement But No One Knows What to Call It


  43. Thousand Oaks bar patrons scrambled in fear as gunman killed 12



  44. Now I Know Why They Said I Lied



  45. hi Phil.  That was an interesting read between you and Winston yesterday.

    I own aapl in a i.r.a. 2020 160/200 b.c.s. @ 16.00 now 27.00

    I am thinking of rolling into 2021 175/250 b.c.s @32.00.

    This is my largest holding so a bit cautious, but confident in aapl around 200 OR

    maybe just sit tight the 14 mos to exp. and then enter new b.c.s. for 2021-2022.

    This seems like it might be right time to capture some aapl upside.Any suggestions will be appreciated.

    Thanks. have a good day.


  46. Good morning! 

    Futures down 0.666% as they digest the Fed.  JPM cut their target on GE to $6 from $10 (coming from a guy who's always been very negative).  Gotta feel bad for CNBC people, who are all sitting with completely worthless options (along with many others) – they seemed good as gold at the time…

    Sunday is AliBaba's "Singles Day" where they claimed $100Bn in sales last year – even though their total sales for the year were $35Bn (be careful, their financials are in Yuan).  Still, they are given a very real $383Bn market cap in $9Bn in profits.  I guess it's way better than AMZN ($3Bn), which is $858Bn – even after the pullback.

    So BABA may make for a fun gamble at $145, the Nov $145 calls are about $3 and they could pop 10% on good reports of Singles Day. 

    AAPL/Tstep – If you are bullish on AAPL, there's really no need to be so deep in the money so it's a good roll but the 2020 $160s are $58 and the 2021 $175s are $54 so why not just make that roll and let the 2020 $200s ($31) burn off more of their $23 in premium before rolling them.  If you can roll them to the 2021 $250s ($22) now for $9, then at some point it's very reasonable to believe you'll get an even roll – saving you a lot of money.  Keeping the short $200 calls gives you much more protection and AAPL is not likely to spike up on you but, even if it does, so will the price of the 2021s and worst case is you end up in more like another $50 spread (without spending more money) than a $75 spread.

    Oil $59.67 this morning with Brent $69.53 and /RB $1.612 – catastrophe in the energy sector!  

    Dollar up at 96.60 but it's not really the Dollar's fault as that's where it closed yesterday.


  47. FNSR

    https://finance.yahoo.com/news/ii-vi-incorporated-acquire-finisar-100703031.html

    “I-VI Incorporated (IIVI), a global leader in engineered materials and optoelectronic components, and Finisar Corporation (FNSR), a global technology leader in optical communications, today announced that they have entered into a definitive merger agreement under which II-VI will acquire Finisar in a cash and stock transaction with an equity value of approximately $3.2 billion.”

    “The transaction values Finisar at $26.00 per share, or approximately $3.2 billion in equity value and represents a premium of 37.7% to Finisar’s closing price on November 8, 2018.”


  48. Wow, that's nice!  FNSR is another silly value play we added to on the way down – when will we ever learn?  In the LTP, we got very aggressive and we're going to make a fortune with:

    Short Put 2020 17-JAN 17.00 PUT [FNSR @ $18.88 $0.95] -20 1/3/2018 (434) $-6,200 $3.10 $-0.23 $-1.98     $2.88 - $450 7.3% $-5,750
    Long Call 2020 17-JAN 10.00 CALL [FNSR @ $18.88 $0.95] 50 6/15/2018 (434) $47,250 $9.45 $0.30     $9.75 - $1,500 3.2% $48,750
    Short Call 2020 17-JAN 22.00 CALL [FNSR @ $18.88 $0.95] -20 6/18/2018 (434) $-6,500 $3.25 $0.05     $3.30 - $-100 -1.5% $-6,600

    Yes, sometimes the "value plays" we chase go lower but, just as often, we're right and the rewards far outweigh the risk – if you maintain appropriate allocation levels.  

    Looks like we'll get back $78,000 from our naked 30 longs and $24,000 from our covered longs (buyer is only a bit over our fair value estimate) and that's pretty good for a net $34,550 position!  Congrats to all who played! 


  49. phil previous aapl comment. was concerned on i.r.a. restictions-called broker and trade lines up o.k.

    Oh,have fnsr in oop acct. so thanks again.