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Walless Wednesday – Trump Whimps Out, Dems Stand Firm

President Trump aimed to create a sense of crisis with his national address, while Democrats also appealed to their base in their response. WSJâ??s Gerald F. Seib explains.Pretty, pretty please?  

Mommy and Daddy had to put up a unifed front last night and tried to explain to Donald, using very small words, why he couldn't have a great big wall to play with.  The wall would be "expensive and ineffective" Pelosi said.  “Democrats and the president both want stronger border security. However, we sharply disagree with the president about the most effective way to do it,” said Schumer.  Donald also said the Santa Mexicans were going to pay for his wall and that turned out not to be true and Mommy and Daddy said we simply can't afford a $30Bn wall this year ($5.7Bn is just the downpayment to get started). 

Not only that but, once you get the wall home, it's expensive to keep as you need 2,500 miles worth of guards and then there's the repair bills – which we don't pay on the other infrastructure we already bought.  It's like when you let a kid take care of a goldfish before trusting him with a puppy and President Trump has given us a very dead goldfish as far as infrastructure goes and now, rather than repair roads, bridges, damns or power-lines, Trump wants a new wall to play with but, as responsible parents, we already know it's only going to end up neglected like all his other toys. 

Of course, Trump's temper tantrum which is ruining the lives of 830,000 Federal Workers and the Millions of Americans who depend on their services, is not just about the wall.  “This president just used the backdrop of the Oval Office to manufacture a crisis, stoke fear, and divert attention from the turmoil in his administration,” Schumer said.  Democrats have urged President Trump and Congressional Republicans to support legislation that would reopen the government while they continue the debate over border security.  “President Trump must stop holding the American people hostage, must stop manufacturing a crisis, and must reopen the government,” Speaker Pelosi said.

This was the first speech of Trump's Presidency from the Oval Office and, though it started out sort of Presidential, it quickly veered back to the usual fearmongering and completely made-up nonsense that comes out of any child's mouth when they are caught doing something they shouldn't be doing.  To sum up Trump's speech: "Scary immigrants are coming to kill you! Drugs are coming over the border!"

As noted by Rick Wilson, Trump admitted that the idea of a glorious concrete wall from the Pacific to the Gulf of Mexico is deader than that lemur he glues on his head every morning. It will, at most, be a fence. This is not what Trump’s supporters voted for. They voted for his sales pitch of a 30-foot concrete wall with laser moats, robot alligators, and minefields, all paid for by Mexico.  This speech was supposed to be about forcing the national dialogue to stay on the border wall. No such luck. He reeked of defeat, clearly didn't want to be there, and it showed. 

Image result for trump lame duckTrump is meeting today with the House and Senate Republicans, in an attempt to prevent them from defecting and voting with the Democrats to end his shutdown.  He'd better be a lot more convincing than he was last night or we may have an historic event where enough Republicans vote against the President to override his veto – and that would make Trump the lamest duck that ever sat in the oval office.  

On the whole, this is good for the markets as the shutdown will end, not because Trump gets his wall, but because he will be defeated in his idiotic quest and you can thank Schumer and Pelosi for coming across as responsible adults who will no let Donald get away with the crazy sort of nonsense Paul Ryan and Mitch McConnel have been allowing Trump to get away with for the past two years.

The National Academy of Sciences just did a study on immigrants and crime and their conclusion, based on actual EVIDENCE, is the exact opposite of what Trump is saying:

CRIME CONCLUSIONS: The National Academy of Sciences examined numerous academic studies on crime rates by immigrants and concluded they are less likely than the native-born population to commit crimes. It also concluded that neighborhoods with greater concentrations of immigrants have lower rates of crime and violence than comparable nonimmigrant neighborhoods. The study didn’t examine crime rates specifically among undocumented immigrants. Overall, crime rates fell in the U.S. as the size of the unauthorized immigrant population rose in the past two decades.

Also, as it turns out, there are only 11M unauthorized immigrants in the US TOTAL – Trump says THOUSANDS are coming across the boader every day.  Even 2,000 x 365 = 730,000 a year so we know that number is complete BS too.  And, if "thousands" of illegals come into our country every day – what was so special about one caravan of immigrants trying to APPLY for entry into our country?  Why were they screaming about it for the months leading up to the election and, since then, nothing at all?  

Seems a bit suspicious, don't you think?  

Another bit of negative fallout from the shutdown that's hurting investors is the shutdown of the SEC, which means no one can get the go-ahead for IPOs so nothng scheduled for January is actually going to happen and then there will be a backlog – even when the shutdown ends – and then IPOs will be bunched too close together so some will have to be pulled and that means a lot of bridge financing will fall apart, which then stops other deals from moving forward.  It's a mess…

It also means that companies that NEED the IPO money to move projects forward will instead, take a loss for the quarter and that's likely to make it harder for them to raise capital at the same valuation in Q2.  Not only do the companies not progress but the vendors they buy things from don't get orders they were counting on.  IPOs bring a lot of fresh capital into the markets from the sidelines – it's a bad time of year not to have any.  

Meanwhile, without much happening, the markets continue to drift towards our predicted bounce lines.  We have the Fed Minutes at 2pm but the Fed stance has clearly gotten more doveish since then, in light of our little market meltdown.  We're just going to keep watching but it's very encouraging that, since Monday morning's PSW Report, we've been able to add green highlights to the Dow, Nasdaq, NYSE and the Russell so we just need the S&P to confirm and we're at 2,583 this morning – so not too far and we're almost looking good again.

  • Dow 27,000 to 21,600 is 5,400 points so 1,080-point bounces to 22,680 (weak) and 23,760 (strong) 
  • S&P 2,950 to 2,360 is 590 points so 120-point bounces to 2,480 (weak) and 2,600 (strong) 
  • Nasdaq 7,700 to 6,160 is 1,540 points so 300-point bounces to 6,460 (weak) and 6,760 (strong) 
  • NYSE 13,200 to 10,560 is 2,640 points so 528-point bounces to 11,058 (weak) and 11,586 (strong) 
  • Russell 1,750 to 1,400 is 350 points so 70-point bounces to 1,470 (weak) and 1,540 (strong)

Our stop on Thursday's Nasdaq (/NQ) longs is 6,600 (up $8,000 per contract) as we don't want to be greedy and we've switched to the Russell (/RTY) Futures at the 1,400 line, looking for $3,500 per contract at 1,470 if all goes well.  The Russell is what we call a "Lagger", it's the tug boat that's not falling in line with the rest and once the big ship (/ES) gets over the strong bounce line – it's inevitable that the lagging /RTY will pop back over it's weak bounce line (as long as the other tug boats hold their lines, of course).  


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  1. Good morning, All!

    Join us for the weekly webinar at 1pm!

  2. Good Morning!

  3. First time that we had to have a rebuttal after an Oval Office address because the President for the first time as well is a pathological liar!

  4. Phil, reading through the daily outrage in respect to your nino, I really cannot understand that the majority of Republican are just the same morons as the nino himself.
    Why don’t they get rid of him and get on with normal business?

  5. Wall / Phil – some congresswoman from Texas was making the point that the wall would be well inside the USA territory so could not stop asylum seekers who would simply cross the border, look for a border patrol and ask for asylum which legally we cannot deny (but do anyway illegally). 

    And good luck getting the land needed for the wall using eminent domain… Plenty of 2nd amendment supporters along that border who won't give up their land.

  6. Winston / CMG – I've got them at an EPS of 8.6 / 11.2 and 14.5 -for '18 '19 ….  with a 30 X multiple this has them at 420 to 430  sh price target – MAX….    this is fairly aggressive but they  have not had a clean year relative to health scare – I think new CEO will improve this but the model assumes this.  I"m selling some short callers at 520 for March…. we'll see how earnings go

  7. GM and HNY PSW members…..just saw that US trade talks with China are going to be released tomorrow morning Bejing time. They are noting it is positive….

  8.  MORL

    MORL declared a distribution of $0.64 for the month (not qtr).

    The MORL ex-date is Jan 11 and payment day is Jan 23.

  9. Here is one for you Phil….

  10. HNY 2 U 2 Pharmboy!  :)

  11. Thanks Batman for the CMG valuation metrics.

    And thanks Phil for the CMG write up. Just one outstanding question from last night's exchange:

    Phil / CMG – thanks. As to DD the longs, do you mean roll the current 20, long Jan 2021, $480s – to the Jan 2021 $440s (which would cost currently $20 – so gaining $40 in strike for $20, or would you layer on a Jan 2021, $480 / $520 for $24 - so gaining $40 upside for $24?. Those examples are just to keep the comparison basis similar.

    Which leads me to another question (which I don't know why I have never asked before?): which is better, gain the advantage of going closer to ITM but not increasing the exposure in number of contracts, OR, increasing the number of contracts by an additional layering?

    Layering reduces the ratio of BCS to short covers (good), but increases size and exposure (bad)

    Rolling the long calls down keeps the short cover ratio the same (neutral to bad), but keeps position size the same (good).

    I know the right answer is 'it depends'. But I like to push you for deciding the toss. Up until now, I have mostly gone for layering on additional BCS, but with some of these MOMOs they have a habit of outrunning you as your position size gets bigger. I seem to remember you advising with runaway short covers the idea is to reduce overall position size, not increase it.

  12. Good morning!  

    No photo description available.

    Making steady progress to those strong bounce lines.  Dollar down 0.666% to help out.

    Expectations of a doveish Fed but it's the minutes of a meeting so what's going to change?

    • Wall Street eyes a potential sixth gain in the past seven sessions, amid rising optimism that the U.S. and China can reach a compromise in their trade dispute; Dow and Nasdaq both +0.7%, S&P +0.5%.
    • "Lately it seems to have gotten so bad for China domestically that it may have no choice but to make a trade deal in favor of the U.S., which could be a boon to U.S. and global equity markets," Ed Yardeni writes.
    • European markets are higher, with France's CAC +1.3%, Germany's DAX +1.2% and U.K.'s FTSE +0.9%; in Asia, Japan's Nikkei +1.1% and China's Shanghai Composite +0.7%.
    • In U.S. earnings news, Constellation Brands -9.3% after the company lowered its fiscal 2019 guidance.
    • An early look at the S&P 500 sectors shows information technology (+1.1%) and energy (+0.8%) leading the advance while the communication services (-0.4%), utilities (-0.3%) and real estate (-0.3%) groups lag.
    • At 2:00 p.m. ET, the FOMC will release the minutes from its December policy meeting, preceded by speeches from Chicago Fed Pres. Evans and Boston Fed Pres. Rosengren, both 2019 FOMC voting members.
    • U.S. Treasury prices are mixed, with the two-year yield down a basis point to 2.58% and the 10-year yield up a basis point to 2.73%; the U.S. Dollar Index -0.3% to 95.61.
    • WTI crude oil continues its new year rally, +3.3% to $51.45/bbl amid U.S.-China trade talk optimism.
    • Also still ahead: EIA petroleum inventories

    Why/Yodi – I don't know how it is in Germany but, in the US, the Republican party is not a party of people who are looking to help the country, they are looking to help themselves and their donors, so they do what the donors say and the donors want tax breaks and they want tariffs and they want all the environmental regulations rolled back and they don't want to pay for health care or to care for the poor and they certainly don't want free and equal education because they know their kids aren't smart enough to compete on an even playing field (Trump is a prime example).

    Trade talks/Pharm – What does that mean?  The minutes from the meeting?  Strange thing to do mid-negotiations. 

    Oil diving on huge builds – here we go again! 

    • EIA Petroleum Inventories: Crude -1.7M barrels vs. -2.4M consensus, flat last week.
    • Gasoline +8.1M barrels vs. +3.4M consensus, +6.9M last week.
    • Distillates +10.6M barrels vs. +1.9M consensus, +9.5M last week.
    • Futures +2.5% to $51.08.

    And that was a holiday week! 

  13. Wages/Pharm – I don't know how people live on that.

    CMG/Winston – That's the problem with hypotheticals.  Here's where we are in the LTP:

    Short Call 2020 17-JAN 580.00 CALL [CMG @ $500.87 $3.50] -10 8/27/2018 (373) $-48,800 $48.80 $-3.20 $-272.07     $45.60 - $3,200 6.6% $-45,600
    Short Call 2019 18-JAN 485.00 CALL [CMG @ $500.87 $3.50] -20 11/14/2018 (9) $-39,500 $19.75 $4.15     $23.90 $0.90 $-8,300 -21.0% $-47,800
    Long Call 2021 15-JAN 480.00 CALL [CMG @ $500.87 $3.50] 20 11/20/2018 (737) $180,000 $90.00 $31.25     $121.25 - $62,500 34.7% $242,500
    Short Call 2021 15-JAN 540.00 CALL [CMG @ $500.87 $3.50] -20 11/20/2018 (737) $-133,000 $66.50 $27.45     $93.95 $1.60 $-54,900 -41.3% $-187,900

    So we have the 2021 $480/540 spread covering the short Jan $485s and, as it stands now, at $500 we'd owe back $15 and it's a winner and a non-issue.  Even at $520, we owe $35 but we sold them for $20 so down $15 means we only need to roll to $15 short calls, not $35s – it would simply mean that in the sale cycle from 11/20 to 1/20 we failed to profit on the short calls (but our long spread would be mostly in the money).  

    I was only saying that WORST case, if CMG blasts over $540 and there is no easy roll, we would just DD on the $480/540 spread or add a $500/580 spread (whatever) and then we could do a 2x roll of the short calls (or 1.5x preferably) but that also depends on WHEN it happens and what kind of VIX we have and a dozen other things.  It's like chess, the more moves ahead you look the more variables you introduce until there's no point in trying to analyze it until you get closer to the end game.

    You ask what is better but there's no better without knowing where the stock is, what the conditions are, where the rest of the market is, where the sector is, what the earnings are, etc. – you can't just say "this is what you do when this happens".  The idea is to develop a strong toolbox so that, no matter what the situation requires, you have the right tools and the knowledge to use them.

    It also depends on how big the position is and how much margin you have.  In the LTP, CMG is back to being a smaller position than it was so we have room to mess around. 

    Speaking of the LTP – Up 61% now at $800,000 and we flipped the STP more bullish so that's now over $600,000 so $1.4M combined is way better than our previous highs!  

  14. wooohooo! new highs!

  15. with UVXY down into the 60's we might enter a period now where the market drifts up/sideways for 6 months. A big dump could be out in September or later. Need to be patient and have dry powder.

  16. Biodieselchris and Phil.  Hello guys.  I hope everyone's New Year is going good.  Have you had any luck working UVXY.  I have had zero luck working VIX options.  The VIX options seem disconnected from the market to me.  UVXY options seem to have ok levels of open interest which should show liquidity for the options as well as activity.  I am looking to hedge a long Vega position. Phil, Do you have any thoughts about UVXY?  TIA.

  17. CMG: Thanks Phil – understood. 

  18. Look at FMCC over the last few days. Wow.

  19. CHK – Up 15% today.

  20. UVXY / Robert – I used to play with UVXY, mainly selling calls against it but I have lost interest in the leverage VIX instruments. That became such a crowded trade that that killed themselves in the end (and margin requirements). Now I only play with VXX/VXXB, again selling calls and collecting premium from the inevitable decay.

  21. Kicking right back off that dip, back to day's highs.  Oil jumped right back p too, $52.50 now after testing $50.50 – crazy moves.  

    UVXY/Robert – I don't touch it, too silly.  The options don't do what you think because you are betting on where the VIX will be on expiration day and today's volatility has little to do with the price of a position in 2 or 3 weeks.  UVXY simply buys 3 months worth of Futures so they have the same issue though a little smoother as it doesn't tend to move up and down as violently.  They are the kinds of things that seem like they'd be good to play and then, after wasted months, you realize they aren't.  That's from experience.  

    FMCC/Soma – If the Government gives them back control, they can really fly.

    CHK – Another random number generator. 

    And look at GE testing $9!

    IBM (Stock of the Year) train leaving the station too – no wonder our LTP is up so much…

    HBI (Stock of Last Year) finally coming back:

    We made those major adjustments at the lows:

    In the LTP, we have:

    Short Put 2020 17-JAN 18.00 PUT [HBI @ $12.86 $-0.12] -30 8/31/2018 (395) $-7,950 $2.65 $3.10 $-2.07     $5.75 $0.00 $-9,300 -117.0% $-17,250
    Long Call 2021 15-JAN 10.00 CALL [HBI @ $12.86 $-0.12] 50 11/20/2018 (759) $26,500 $5.30 $-1.45     $3.85 $-0.16 $-7,250 -27.4% $19,250
    Short Call 2019 18-APR 16.00 CALL [HBI @ $12.86 $-0.12] -30 11/19/2018 (121) $-3,000 $1.00 $-0.65     $0.35 $-0.00 $1,950 65.0% $-1,050

    This is our second entry on HBI, our first entry was profitable so we're only down $8,875 overall:

    30 HBI 2019 18-APR 16.00 CALL SC $ 1,050.00 11/19/2018 $ 3,000.00   30
    $ 1,950.00 65.0 %
    50 HBI 2021 15-JAN 10.00 CALL LC $ 26,500.00 11/20/2018 $ 18,000.00   29
    $ -8,500.00 -32.1 %
    30 HBI 2020 17-JAN 18.00 PUT SP $ 18,300.00 8/31/2018 $ 7,950.00   110
    $ -10,350.00 -130.2 %
    50 HBI 2020 17-JAN 20.00 CALL SC $ 3,000.00 8/31/2018 $ 7,250.00 11/20/2018 81
    $ 4,250.00 58.6 %
    50 HBI 2020 17-JAN 13.00 CALL LC $ 25,000.00 8/31/2018 $ 19,000.00 11/26/2018 87
    $ -6,000.00 -24.0 %
    15 HBI 2020 17-JAN 20.00 PUT SP $ 3,150.00 3/20/2018 $ 5,550.00 7/20/2018 122
    $ 2,400.00 43.2 %
    25 HBI 2020 17-JAN 23.00 CALL SC $ 3,000.00 3/15/2018 $ 5,250.00 8/15/2018 153
    $ 2,250.00 42.9 %
    25 HBI 2020 17-JAN 15.00 CALL LC $ 14,500.00 3/15/2018 $ 19,625.00 7/20/2018 127
    $ 5,125.00 35.3 %
    Total Gain/Loss for HBI
    $ -8,875.00 -9.4 %

    They pay an 0.60 dividend so it's getting interesting to own the stock at this level which means we'll be happy to sell more puts for the LTP and the 2021 $15 puts are $4.20 so 50 of those ($21,000) will be the roll from the 30 short 2020 $18 puts at $6 ($18,000) and the 2021 $10 calls are still in the money at $3.60 and we'll just buy back the 30 short April $16 calls for now at 0.25 ($750) as earnings (2/7ish) might push them up fast since they are priced like they are going BK.  

    So we're actually putting $2,250 in our pocket on this change and our net exposure goes from owning 3,000 at $18 ($54,000) to owning 5,000 at $15 ($75,000) so not too much commitment and, if we do get assigned, we can sell 50 of the 2021 $15 calls for $1.60 ($18,000) and drop our net back to $57,000 anyway, which would be $11.40 per share and make the 0.60 dividend better than 5% while we wait to see if we get called away for $75,000 at $15.  

    In the OOP, we have a far smaller put commitment:

    Short Put 2020 17-JAN 18.00 PUT [HBI @ $12.59 $-0.18] -5 3/15/2018 (394) $-1,300 $2.60 $3.30 $-1.86     $5.90 $0.20 $-1,650 -126.9% $-2,950
    Long Call 2021 15-JAN 13.00 CALL [HBI @ $12.59 $-0.18] 20 10/18/2018 (758) $9,000 $4.50 $-2.23     $2.28 $-0.06 $-4,450 -49.4% $4,550
    Short Call 2021 15-JAN 20.00 CALL [HBI @ $12.59 $-0.18] -20 10/19/2018 (758) $-3,600 $1.80 $-1.03     $0.78 $0.12 $2,050 56.9% $-1,550

    We're already in 2021 her and I'm not paying 0.78 to buy back the $20 calls but I will roll the 5 short 2020 $18 puts at $6 ($3,000) to 10 of the 2021 $15 puts at $4.20 ($4,200) and roll the 20 2021 $13 calls ($2.35) to 20 2021 $10 calls ($3.60) for $1.25 ($1,250) so here it's costing us $50 cash to improve the position and we're committing to own $15,000 worth of HBI, worst-case.

    They were down that day for what we considered no good reason so we reviewed the Fundamentals, checked our premise, and decided to improve our positions.  

    As I often say, it's not a problem with the system – it's how the system is supposed to work and yes, some positions end up going down and staying down – we've had plenty of dogs over the years but when your winners generate 300-500% returns on cash, you can offset more than a few losers – even if you are just 50/50 in your picking ability.  

    If you are not going to buy low – when will you buy?  It's a simple system, we take a cheap initial entry, usually selling puts so our net entry is even lower than the current price, then if it goes up, we win.  If it stays flat, we win and if it goes down, we check our premise and THEN, IF we still like them, we take a bigger, more aggressive position and dig in for the long haul. 

    That means a lot of our major positions are down from where we started and again, it's not a bug, it's a feature!  We buy more stock AFTER the stock drops 20-40% and sometimes even more if they drop again because we generally only get into companies we are fairly sure we want to own for the long-haul so going on sale shouldn't make us run away – it's our cue to buy more!  

    Meanwhile – I still gotta have more cowbell!  

    Image result for more cowbell

  22. Wonder if we'll see any resistance when the $NDX hits the underside of the 50 DMA (from a purely technical standpoint). 65 more points or so and we'll be there.

  23. is wti a good short here phil

  24. im guessing because 52.50 was five percent I should have been lightning fast and shorted there for the 1 percent retrace

  25. WTI/Tommy – Off that inventory, I'd say yes but too crazy now with OPEC cutting back and trade issues.  That's why I haven't been playing it much other than those SCO short calls we left in the OOP, wich have flipped +$20,000 for us, thank goodness! 

    We just played /NG but that ran its course so now's simply not a good time otherwise. 

    Almost Webinar time!

    • Crude oil prices roar back after earlier paring gains as government data showed U.S. crude stocks fell less than expected last week, with the WTI benchmark topping $50/bbl for the first time since mid-December on continued optimism over U.S.-China trade talks and Saudi production cuts; WTI +4.9% to $52.23/bbl, Brent +4.3% to $61.26/bbl.
    • "Oil has yet to have a losing session in 2019, and the near-term path of least resistance is still higher based on momentum and near-term technicals," according to the Sevens Report. "However, the longer-term outlook is still unclear as production/export cuts won't be enough to curb another bout of broad market volatility."
    • But PVM Oil analyst Stephen Brennock warns against excessive optimism, saying "buyers have placed all their betting chips on the U.S. and China resolving their trade spat" and noting that a failure to secure a meaningful breakthrough would spark a turnaround in sentiment.

  26. Minting $CASH$ selling short-term AAPL and TSLA put spreads.  Happy Trading!

  27. Here a typical example of when to roll or buy back to cherry caller.
    I hold the stk of BPT in my armchair trade. Stock is trading today at 27.02 I sold the Jan 25 caller now trading for 2.30. The stock pays a div 15th Jan of 1.00. So where do I have to watch out for?
    25.00 plus 2.30 = 27.30 less stock 27.02 = still .28 cents of premium great. But watch out! They pay 1.00 div so someone will pay you the .28 cents to get the bal. of .72 cents. Here your caller is more than 100% ITM. Time to roll or close!!!!

  28. PS. I need to roll BPT to Mar. 30 caller as Feb as well as Mar. 25 caller has an exentric premium less than 1.00!

  29. Nuclear Power Is Economically Obsolete

  30. Trump to halt U.S. relief funds for California wildfires

  31. news on FTR or just down for no real reason?

  32. crs

    I am pretty sure they got slapped with a downgrade yesterday or the day before.

  33. Thanks dclarck

  34. FTR – There has also been some negative stories on them.

  35. TSLA:  Bought  back the 300/290 18Jan put spread for .60 for  65% gain.  Will wait for a bit of a pullback, then reload.  

  36. TSLA / iflan – I like the trades. Can you tell us how you choose the strikes? And how far do you go as far as expirations are concerned. I was thinking of selling single puts but for stocks like TSLA, the vertical does limit the risk greatly (and the margin).

  37. stjeanluc:  I look for a delta of approximately 15 for the short strike.  This gives the short strike about a 90% likelihood of staying out of the money by expiration.  I set the long strike  generally 5 to 10 points away from the short.   I don't ever hold till expiration.  I buy the contract back at 50 to 60% profitability.    

  38. As to expiration, I like 15 to 30 days.   

  39. In the Webinar, we liked a GS play we can add to the LTP:

    • Sell 5 GS 2021 $140 puts for $12.50 ($6,000) 
    • Buy 10 GS 2021 $150 calls for $44 ($44,000) 
    • Sell 10 GS 2021 $200 calls for $19 ($19,000) 

    That's net $19,000 on the $50,000 spread that's half in the money to start and it's such a high-probability trade that there's no sense in not doing it.

    Year End 31st Dec 2012 2013 2014 2015 2016 2017 TTM 2018E 2019E CAGR / Avg
    Revenue $m 41,664 40,874 40,085 39,395 37,850 42,828 50,899 36,155 36,457 +0.6%
    Operating Profit $m 11,207 11,737 12,357 8,778 10,304 11,132 12,881     -0.1%
    Net Profit $m 7,475 8,040 8,477 6,083 7,398 4,286 5,993 9,861 9,538 -10.5%
    EPS Reported $ 14.1 15.5 17.1 12.1 16.3 19.8 25.0     +6.9%
    EPS Normalised $ 14.6 16.4 18.7 18.4 16.9 20.1 25.7 25.1 25.1 +6.6%
    EPS Growth % +186.6 +12.5 +13.8 -1.8 -7.7 +18.8 +27.7 +24.6 -0.052  
    PE Ratio x           8.72 6.82 7.00 7.00  
    PEG x           0.35 0.28 n/a 0.82

    Last year, GS took a $5Bn tax charge in Q4 as they repatriated some cash (they have $120Bn on hand) and this year I think they'll drop $10Bn to the bottom line against a $65Bn valuation at $175 so miles below fair value.  They have an outstanding issue with Malaysia over the scam they were running but, like every other time they get busted – it will likely be resolved with a wrist slap.  

  40. flan – the 300's are long puts and the 290's are short puts?

  41. Thanks a lot iflan! I usually look for a delta of 10 when selling for premium only so you are not far off. Sounds good to me. Might be interesting to make a list of candidates for such trades. I was playing around a bit with AAPL for example and a move like the one we have seen in the last 3 months would have made life difficult. You can roll down and in time but that was brutal…

  42. somavision;  The 300s are sold short, the 290s purchased long ( to lower margin and protect from downside risk);  this creates the credit spread on the puts.

  43. stjeanluc:  it's working well for AAPL right now because some bad news was cooked in recently by T. Cooks pre-earnings announcement.  Thus, AAPL is tending to float upward right now,.  

  44. At the moment it is, but back in Q4, that would have been rough sledding. I guess the trick is also to keep an eye on price support levels. 

  45. So I'm watching TSLA pull back some EOD.  If it pulls back enough to suit me we'll put on another trade in the last 5 to 10 minutes.  

  46. Phil – Looks like Brexit is now on a new path to insanity. It's incredible how both the UK and US are on a path to self destruction at the same time!

  47. TSLA trade:   Sell 25 Jan bull put spread. 285/275 for .75 credit.  

  48. That trade did NOT go through.  Always better that way.  Do your trades on your terms, or not at all.  See you tomorrow!

  49. Thanks flan!

  50. Good note Iflan, thanks.  

    Nasty sell-off into the close. 

  51. Congress Summons Mnuchin to Explain Russian Sanctions Removal

  52. LOL, up 15%.

  53. Submitted on 2018/12/13 at 12:52 pm

    BBBY/Albo – Just another stupidly cheap stock making $1.90 per $11.74 share.  Last Q4 they made $1.48 and this Q1 they made 0.32 and Q2 they made 0.36 so they would have to get CRUShed below $1.32 TOTAL for the next 2 Qs not to make $2.  As I often have to say – I don't care what other idiots are doing – this is a good company at a great price.   

    Submitted on 2018/12/14 at 10:25 am

    BBBY/Pirate – There's another one.  As I was saying yesterday, analysts are idiots and the people who follow them are sheep so why on earth would you go by a chart that simply shows you which way the sheep are stampeding?

    I decide to get into or out of a trade at a certain VALUE and the chart is just a useful way to see where a buying or selling trend seems to be running out of steam but it doesn't tell you ANYTHING about the future movement of a company – it only shows you what a bunch of idiots THINK the future is – kind of like asking all the fans in a stadium who's going to win the game and then running to Vegas to bet your life on it since you took a "flawless" poll.

    BBBY/Ravi – You have 1,000 shares at $30,000 and the stock is $12 so you need a 150% gain to get even.  How is covering going to help you?   Realistically, you are down $18,000 less whatever you sold puts for so hopefully $3 so down $15,000 and the question is, how can you make $15,000 back on BBBY?   Well buying the stock for $12 and selling the 2021 $15 calls for $2 drops you net to $28 called away at $15 with a $13,000 loss – so you might get even that way in 20-30 years.  However, you can cash your $18,000, sell 20 of the 2021 $15 puts for $5.50 ($11,000) where all you are promising to do is own 2,000 shares for $15 vs the 1,000 you now own for $28 so really – you are promising nothing and being handed $11,000 to play with.  Now you can take that $11,000 and buy 40 of the 2021 $10 ($4)/17.50 ($1.80) bull call spreads at $2.20 ($8,800) so you still pocket $2,200 ($1.10 per $15 share if assigned) and now you have a $30,000 spread that's $2 ($8,000) in the money to start and NOW you are on your way to making your money back.  You can also sell 10 Feb $12.50 calls for $1.25 ($1,250) to start making some money while you wait.  10 sales like that will bring you $12,500 closer to your goal.

  54. Phil – Thanks for holding our feet to the fire on BBBY !  

  55. albo / phil – only reinforces what i'm learning here. so good. thank you.

  56. wonders of the world never cease to amaze

    in Mississauga a five to ten pound chunk of ice fell out of the sky 

    it passed clean through the roof and ceiling of a house and landed on the floor of a closet in the bedroom where a woman was sleeping

    the house is located on flight path of planes landing at Toronto airport its possible it fell from a plane

  57. Asian markets settle after rallying on US-China trade hopes

  58. Trump’s border visit comes as shutdown talks fall apart

  59. Trump Walks Out of Shutdown Talks, Calls Them ‘Total Waste of Time’

  60. Average Hourly Pay And Benefits In The United States