Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!

TGIF – Stocks Slide into the Weekend – What’s Next?

Wheeeee!  

I love a good sell-off – especially when we called it and we're well-prepared.  We were skeptical of the market rally on Monday and, in our PSW Morning Report (which can be delivered to you pre-market for a small fee), I said:

"We'll see if the market is ablfe to get excited about more Trade Talks and we still haven't cracked 1,600 on the Russell (/RTY) but as long as the S&P (/ES) is over 2,800 – all is technically well in the markets…  7,200 on the Nasdaq (/NQ is a good shorting line for today as is 1,590 on /RTY, since that's the 200 dma – tight stops above!"  

30 points is a 1% pullback on the S&P Futures (/ES) and, at $50 per point per contract, it pays $1,500 – making it an excellent portfolio hedge (using $6,600 of margin per contract).  What makes Futures Trading such a valuable tool is that you don't have to wait for the market to open to make an adjustment.  Also, there's very little friction cost (the cost of entering or exiting the trade, including fees) so you can use it to very quickly adjust your portfolio at a moment's notice.  

Generally, at PSW, we don't like to enter a Futures trade unless there is a significant support or resistance line we can use as a stop because Futures contracts tend to move quickly and erratically EXCEPT when they run into significant support or resistance, where they slow down enough for you to catch your breath and see what's real.  Since we are not technical traders but Fundamental ones – having the time to check the news flow is critical in deciding when to get in and out of a Futures trade.  In fact, we took the quick $1,500 gain on Monday and we concentrated on the Russell (/RTY) shorts on Tuesday as I said in that Morning Report:

/RTY 1,568 should be support but, if not, could see 1,550.   Tight stops in any case but I'm happy with these gains!

As you can see, almost all the rejections sent us down 100-200 points so let's not get too bullish as all we got yesterday was a bounce off the fall from 2,820 on Monday to 2,770 yesterday so that's 50 points and that means, per the Fabulous 5% Rule™, that we can expect 10-point bounces to 2,780 (weak) and 2,790 (strong) so now we're watching 2,790 as the fail line and, if we can't hold that, we'll be back to 2,770 and likely on the way to a full 1.25% pullback from 2,800 to 2,765 and, failing that, the next stop is the 2.5% line at 2,730, which we last tested on 2/15.  

Notice how well the 5% Rule is being obeyed.  That also tells us that 2,835 is the 1.25% line but we haven't made that and we are finding resistance at the 0.625% line, which is 2,817.50.  We don't usually bother at that level but it is ineresting that that's exactly where we topped out yesteday, which indicates there is a LOT of technical resistance over 2,800 and it's going to take a lot more than promises of trade progress to get us over that hump. 

Remember, this is not TA, this is Fundamental trading where we take TA into account – simply because so many people follow it but it's the NEWS that drives our decisions, not the charts!  Read the full reports if you want to see the logic backing up the calls and remember, I can only tell you what is likely to happen and how to profit from it – the rest is up to you!  

We are pretty much right where we're supposed to be on /ES and now we'll see if 2,735 holds up against the weak Payroll Report, which is no surprise to us but a shocker to Leading Economorons, who expected 185,000 jobs to be added by got just 20,000 additions in February, which is even worse than we expected with the Government Shutdown dragging things down.  

Keep in mind, this is only the correction we expected.  It's the one we discussed in Wednesday's Live Trading Webinar (replay here) and, if 2,735 holds, then it's a nice opportunity to go long as these are (as I keep saying) self-inflicted wounds and people are simply responding to data as it comes out whereas good Fundamental Investors know what the data is likely to say long before the official reports are issued – THAT'S HOW WE MAKE MONEY!!!

Panic may cause an overshoot but we can calcluate that as well (20% of the drop from 2,800 to 2,730 is 14 points so 2,616 would be the lowest we are likely to see today).  There's a lot of bad data out there as Trump's Government Shutdown had far-reaching repercussions, as did/do the Tariffs.  Here's today's highlights:

That's just TODAY and no, I'm not cherry-picking bad news.  This is what we refer to as "Negative News Flow" and it means we're going to lean bearish in our betting so, unless something changes, we're only playing for the bounces (and probably weak ones) which would be the same 20% of the drop on /ES off 2,735 so +14 is 2,749 for a weak bounce and we'd call it 2,750 as we love round numbers (and big buts), call the unlikely strong bounce 2,765 but (another version) that's still good for a quick $700 per contract – not bad for a Friday! 

Image result for trading robotIt would take some good news to get to the strong bounce line but the weak bounce is simply a reflexive move as the news isn't bad enough that ALL the BuyBots will have turned off – so they simply kick in at levels that our 5% Rule™ predicts because the whole point of the rule is to predict the actions of automated trading programs – which are now over 80% of the market action.  

While the news is terrible – it's nothing we (at PSW) didn't know about because WE PAY ATTENTION and don't buy into all the media hype and market cheerleading that drowns out the real news on a daily basis.  The people who are panicking are the ones who listen to Leading Economorons or wait until AFTER a report is released to positions their portfolios.  Sadly, that describes pretty much everybody…

In fact, last month, on Feb 1st in "Non-Farm Friday – Is America Working? The Liar-In-Chief Says Yes!", I said:

304,000 jobs is almost double the 180,000 expected by leading Economorons BUT, be careful as last month was revised down by 90,000 jobs – from 312,000 to 222,000 and one could imagine how a dishonest President who surrounds himself with a staff that already has 6 convictions with another half-dozen indictments in progress (that we know of) MIGHT have lied about last month and MIGHT be lying about this month too – in order to escape criticism over the shutdown.

Still, until we can prove it to Fox New's satisfaction, we can keep pretending that America is a magical land where you can furlough 800,000 workers and the economy IMPROVES!  The Soviets used to say Russia was a "Workers Paradise" so often that people actually started to believe it and that is the GOP/Fox strategy – they endlessly repeat their talking points until you begin to forget what the truth actually is – even when you are the one suffering from their lies!  

Image result for trump neanderthalI know I come across as Anti-Trump (I am) but I was Anti-Nixon too and, I imagine if I lived in Germany in the 1930s, I would have been Anti-Hitler as well as I'm against anyone who is destroying my country and it's mainly for ECONOMIC reasons when I don't like politicians.  I'm more of a Libertarian as far as policy goes though, Economically, I think Socialism is a better system than Capitalism just like I think it's bad to kill people with the jawbone of an ass and take their stuff – just because you are stronger than them.  Capitalism, in it's pure form, is simply survival of the fittest with money instead of stone axes but the consequences of losing are just as dire for those who don't have the tools to compete.  

Socialism is an Economic System that steers and economy to benefit SOCIETY over the individual but, unlike Communism, it doesn't extinguish or forbid individual accomplishments – it simply mandates a degree of sharing.  We ARE a Socialist Society and pretending we're not and that Socialism is somehow evil or anti-American merely demonstrates how little people understand economics.  We're supposed to have evolved, Socialism is the action of an evolved Society.

Image result for socialism capitalism

Image result for socialism capitalismMeanwhile, if we are going to be bullish this morning, we need to play the S&P as it crosses back OVER the 2,735 line, with tight stops if it fails (risking less than $50 against a possible $700 gain) and we'll look for confirmation from the Nasdaq (/NQ) at the 6,975 line (and it will be hard to get back over 7,000) and 1,515 on the Russell (/RTY) and 25,250 on the Dow (/YM) – unless 2 of the 4 are green – I wouldn't play bullish and, if they stay red – we're going to have to add some more hedges – like the ones from 1/31's Report titled: "Following Up on our Apple Trade + 2 Hedges to Lock in the Gains."

Fortunately, I'll be reviewing the Short-Term Portfolio this morning and that is where we keep our main hedges!  

Have a great weekend, 

- Phil

 


Do you know someone who would benefit from this information? We can send your friend a strictly confidential, one-time email telling them about this information. Your privacy and your friend's privacy is your business... no spam! Click here and tell a friend!



Comments (reverse order)


    You must be logged in to make a comment.
    You can sign up for a membership or log in

    Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

    Click here to see some testimonials from our members!


  1. Phil thanks for your further comment on the ARR trade. I do not wish to carry on too much but only wish to make it clear that with higher div. paying stocks, which have fallen below your purchase price it is not advisable to apply the ARR sample. Yes if you have purchased the ARR at 20 it is acceptable to sell a 17.5 Caller at 2.05, but if you hold the stock at as per comment at 23 it is not wise to sell a 17.5 caller, as and if you are called, you would have a real loss of 3.45!!! So it is my feeling you would be better off to sell a 20 caller, shorter month term, with less premium than losing the stock.



  2. Added $1.5T to the deficit to create 20,000 jobs! Cue more calls for tax cuts (especially on job creators) and lower interest rates (to help real estate developers)!


  3. Mercenaries for hire:

    https://talkingpointsmemo.com/news/trump-wants-countries-hosting-us-troops-pay-large-premiums

    President Trump wants countries hosting American troops to pay the full price of each deployed soldier as well as an additional premium, Bloomberg reported.

    According to several administration officials and others who spoke to Bloomberg, the Trump administration is drafting language that would demand Germany and Japan pay the full price for the troops, as well as 50 percent or more of that cost for the “privilege” of having them there, in Bloomberg’s words.

    Geopolitical interest don't matter!


  4. Good Morning!


  5. Ahhhhhh, the sweet buzz of low-flying helicopters as I sip my iced latte and await an exciting (hopefully) day in the markets. Whenever I hear multiple helicopters buzzing toward NYC this early, you have to think that there are some important folks flying in!!! Surely, things must be getting interesting.


  6. Good morning!

    Powell is coming to put out the fire tonight (10pm) but I think the above longs are good bets now.


  7. Kudlow is spinning on Bloomberg, Trump is spinning on CNBC – too funny….

    Oops, now Trump is saying the Democrats are the anti-Israel Party and the anti-Jewish Party.  I thought there were "very fine people on both sides"?

    Not only was job growth anemic but payrolls popped 0.4% vs 0.1% (fake) last month.  Unemployment is 3.8%, which is good and bad as it means there's no one left to hire anyway.  

    /RB $1.74!  /KC coming back a bit too and look at Silver!  

    Right off our $15 line – congrats to all and DON'T BE GREEDY! 

    Ouch!  

    Honey badger don't care:

    And this was so great:


  8. Phil/ M

    Do we think the Macy’s play is worth riding out with recent news on retail closures etc.

    Getting hammered 


  9. Potter/M : I have a small size M (200 shares) as well. Bought M at $24.90 and sold 2 April $24 Puts and 2 April $26 Calls for total $2.50 in premium. No loss yet overall on the position but the Put could get assigned – still 5 weeks out. Do we just stay put or adjust the position?

    Thanks


  10. vkat Your put still has .80 of premium why do you start worring now? At -+ sero premium you start thinking of rolling!!!


  11. vkat M just simply look at your delta on the puts if it shows 200 than you start rolling. You 125 now!!!


  12. ARR/Yodi – I never said to sell a $17.50 caller for $2 on a $23 stock – that would be silly.  Hopefully I did not give people that impression.  

    Big Chat – Notice how we don't even talk about new lines anymore?  Too many false breakouts.  Still, I think we do need to bump up the Must Hold lines on the Dow, S&P and Nasdaq to account for the tax breaks and that will bring them a little more in-line with the RUT and NYSE but, other than that, I don't have a good reason to change the lines as we're still toppy.  

    $1.5Tn/StJ – As I said, if that's all we get for $1.5Tn, then where is the next rally going to come from?

    Troops/StJ – Do you think people will realize he's a Russian Agent, acting to destroy NATO quickly enough to take action to stop him before we end up in WWIII?  OK, trick question as that's never going to happen in time…  Why on Earth would anyone want to pay 150% of the ridiculously-inflated cost of US troops (and I'm sure he wants to be paid for the bases etc.). 

    There simply is no logical response to Trump's demand other than to say US Troops are no longer welcome in those countries and PRESTO!  Putin wins a massive withdrawal of US Defense forces around the world without firing a shot.  Maybe he'll offer the services Russian troops at a steep discount…  Then Trump could hire millions of low-cost Russian Troops to guard our borders (a GREAT deal) and, before you know it, the guns start pointing in and we're not allowed out!  

    Copters/Soma – Maybe just people Blading to the Hamptons?  

    M/Potter – Yeah, getting ugly but down with Retail and the survivors will gain market share so I'm patient on this one:

    Short Put 2021 15-JAN 30.00 PUT [M @ $23.27 $-0.77] -10 9/26/2018 (680) $-5,250 $5.25 $4.53 $-5.18     $9.78 - $-4,525 -86.2% $-9,775
    Long Call 2021 15-JAN 20.00 CALL [M @ $23.27 $-0.77] 25 1/10/2019 (680) $20,000 $8.00 $-2.65     $5.35 - $-6,625 -33.1% $13,375
    Short Put 2021 15-JAN 25.00 PUT [M @ $23.27 $-0.77] -10 1/14/2019 (680) $-5,900 $5.90 $0.40     $6.30 $0.48 $-400 -6.8% $-6,300

    They are making about $3/share and paying a $1.51 dividend while you wait though that doesn't help us in the options.  However, our net on 25 $20s is $8,850 so $24ish our break-even so $22.83 is certainly no reason to panic.  The 2021 $20s are $5.15 and the $15s are $8.20 so I won't pay $3 to roll $5 so we'll wait and see.  The short puts would put us in 2,000 shares at net $21.925 and we could sell 20 of the 2021 $23 calls for $3.85 ($7,700), which would drop our net to $18.075, called away at $23 with a $10,000 profit and we'd still have the 25 $20 calls so that's probably the adjustment I'd make if I get more worried as we could always collect another $7,000 covering the other calls and then roll out to longer years (or give up).  Meanwhile, we'd pick up $3,000/yr in dividends too.

    So, when I see a lot of ways to adjust that I don't mind owning – I'm content to sit and wait a bit longer.

    M/Vkat – In your case, $24.90 – $2.50 is $22.40 so you're in the money and the short $24 puts are $2 and they can be rolled to the Aug $22 puts ($2.20) for a credit and then (AFTER the short calls expire) you can sell the Aug $23 calls for $2.10 and then your basis is $20.30 and if you keep dropping your basis by 10% every 4 months, you will have a $0 cost basis in 3 years – not even counting the dividends you collect!  


  13. Phil on ARR you right just wanted to clear out any doughs!!!


  14. Phil-/M – Thanks. Makes sense

    yodi/M – Thanks for your comments. I Just started these trades (buy stock like T and M and sell calls/puts just OTM) so trying to get a feel. Can you tell how came up with $0.80 premium? And how can I find delta on the put – you said 125; Is that readily available (I use TD Ameritrade) or calculated? Thanks again.


  15. Vkat no problem we are all here to help!

    0.80 On TOS your put is 24 minus the premuim at market which is 1.90 gives you 22.10. the stock is trading at 22.90 diverence .80.!!!!

    On TOS Activity positions click next to M (pointer down) it opens all your positions on M and you see on your opt -2 April 24 put a delta now of 125.14.

    Let me know if you come clear!


  16. PS if this delta would show 200 you are 100% ITM


  17. Big Chart / Phil – We now have plenty of support/resistance areas to draw new lines if needed as you mention.


  18. Doughs/Yodi – Of course.

    Image result for homer doh animated gif

    Not even weak bounces:

    That brings us to the STP Review…


  19. yodi/M – Thanks for the explanation.


  20. Vkat while being on a roll and seeing you are new at the game I wish to give you another leg to use these deltas especially on sold calls.
    I will take MO as an example. I hold the cherry caller Mar 22 51.5 sold call. The premium is now 3.93 and the stock is trading at 55.29.
    My delta on the 51.5 option is showing now ( two options sold) – 178. Which looks on the surface I am still safe before assignment on the caller until -200. But contrary to any put options sold, where no wise man would call for the stock before 200, here we are a bit different, due to div payments.
    MO pays a div. of .80 on 3/22- So here goes my calculation as follows.
    51.5 plus present market option price of 3.93 = 55.43 minus todays stock trading price of 55.29 =.14 You may think I am OK as there is still .14 of premium. BUT MO is paying 0.80 of div. so I am .80 minus .14 = 0.66 cents over the 100% ITM. So at any time the caller can call on me to deliver the stock at 51.50 as he will gladly pay me .14 cents premium to receive a .80 div.
    Important to watch this when selling cherry calls!!!! The only reason I am not called yet is the div payment is still 14 days away and most call buyers are waiting till the last day to call on you! They to stingy to pay the money before due time!!!!


  21. Phil, do you have experience with or an opinion on Thor Industries (THO)?  Seems like a good value play unless there is a reason to be worried about the RV industry.  Looks like it bottomed out and has formed a good base at $60.  TIA.


  22. Idicor.
    Did read an article on the company the other day. Sales of RV are considerable down, guess people do not have the money to buy luxury items. Further stock's div. of 2.4 % to low for armchair trades and too high for BCS as the div kills the premium. My two cents.


  23. Short-Term Portfolio Review (STP):  $741,198 is up $17,295 (17.3%) since our 2/15 review and we've made no changes since and the LTP at the time was $1,207,011 and now we're at $1,104,096, down $102,915 but that's normal as our hedges don't really kick in unless we drop more than 5% and, if we don't drop more than 5%, the LTP tends to come back quickly. 

    At $1.2M, we expected to give back $400,000 on a downturn and we hedged $200,000 of it in the STP but we didn't want to hedge more as we expected the downturn would stop around the 200 dmas and, as I noted in the Webinar – if we stay above the 200dmas then the 50dmas will cross over them and that will be super-bullish (technically) so anything holding the 200dmas gets more and more bullish the longer it goes on.  

    Of course, I didn't expect this sharp turn down the last few days – I thought we'd keep drifting lower so we'll need to be on our toes but, unless something worse happens – I think we'll hold on.  

    • AAPL – Not worried.
    • CELG – Not worried, almost want to make a bigger trade out of it.
    • DIS – Not at all worried.
    • TWTR – Not worried, also getting interesting at $30 for a bigger trade. 

    Don't forget, the short puts in the OOP are offsets to hedges and, should they turn really bad – they often turn into LTP plays for the longer-run.

    • TNA – Going very well so far.  $80,0000 hedge at net $24,440 so $55,560 upside potential at $35, which is down 42% so a 13% drop in the RUT would hit goal.  

    • CAT – Short time-frame and on track despite the $10 drop this week.  Though I think we'll get the $15,000 (now $0), I don't call it a gain as this portfolio is really looking for a red market and this play offsets the losses if we DON'T get a nice correction.  

    • MJ – Super-confident in this one.  Let's buy back the 2021 $50 calls – as we might hit those – at $3.30 ($4,950), since they are already up 50% and we'll sell more on the next pop.  That leaves us with a lightly covered spread, which I'm fine with.  Again, not counting on the gains as it's an offset to potential losses on the hedges.  

    • SQQQ – A 10% correction would be a 30% pop to $15.60 and our 200 $10 calls would be $122,000.  The net of the spread is now $38,350 so the upside potential at $15.60 is $83,650 and a 20% correction would be up 60% to 19.20 and we trigger the short $17s (but we could roll them) and still under the short $25s and that would be another $72,000 if the market does worse than we think.

    • TZA – Very straightforward here without the cover (which leaves us free to take quick profits if we get a good spike.  30% upside is $13.50, putting our $7 calls $6.50 in the money ($130,000 upside) and 60% is $16.50 and we'd be $9.50 in the money for another $60,000 upside potential.  

    So a 20% correction would pay us $401,210 and I don't think we need more protection than that for the LTP – especially as we already have $741,198 in the STP, mainly in CASH!!! and that's more than we started with in both portfolios so, even if the LTP goes to zero, the STP would be over $1M and that's up 66% from our original $600,000 in the paired portfolios.  It would still suck to lose it but it would also suck to over-hedge out of fear and lose money when the market goes higher so I think we can trust these hedges into the weekend as is.


  24. Great call on /RTY shorts! Flipped mine to long pre-market, flattened out at1526 (looks like I should've shorted again) and done for the day other than adjusting a few options positions.


  25. ARR -  looking at your REIT list they all seem ok for buy and hold with dividends and play with side options except ARR.  It has just had a long price decay since inception.  Do the dividends make up for that?


  26. yodi/M – Thanks. That helps.


  27. THO/Idi – Yes, we played them a few years ago down around $50 but they popped to $100 so we lost interest and cashed out.  Getting back to $50 again was missed and $63.40 is $3.5Bn against a bit less than $300M in sales but business has steady slow growth so not a bad one to play here.  Also, they paid $202M in taxes on $633 in income – unlike most companies – they are paying too much in taxes!  

    Year End 31st Jul 2013 2014 2015 2016 2017 2018 TTM 2019E 2020E CAGR / Avg
    Revenue $m 3,242 3,525 4,007 4,582 7,247 8,329 7,172 7,996 9,678 +20.8%
    Operating Profit $m 222 252.8 292.9 383.3 556.4 633 338.3     +23.3%
    Net Profit $m 152.9 179 199.4 256.5 374.3 430.2 230.5 284.3 368.5 +23.0%
    EPS Reported $ 2.86 3.29 3.79 4.91 7.09 8.63 4.45     +24.8%
    EPS Normalised $ 2.88 3.30 3.79 5.02 7.09 8.63 5.44 6.24 7.67 +24.5%
    EPS Growth % +39.4 +14.5 +15.0 +32.5 +41.2 +21.7 -37.5 -27.7 +22.9  
    PE Ratio x           7.33 11.6 10.1 8.25  
    PEG x           n/a n/a 0.44 0.41
    Profitability

    I'd go for the net $50 entry selling 5 of the THO 2021 $60 puts for $12 (net $48, $6,000) and then pick up 10 2021 $50 ($20)/$75 ($9.50) bull call spreads at $10.50 ($10,500) and then you are in for net $4,500 on the $25,000 spread that's $13,000 in the money to start.  Upside potential is $20,500 (455%) and the margin requirement looks like $4,690 – so it's a nice, efficient trade as well.

    ARR/Tangled – They are diluting to raise capital but I'd rather have them do that than borrow money.  You have to want to ride it out for the long haul and yes, the dividends are 0.19 12 times a year ($2.28) against a $19.47 stock and you can buy it and sell the Oct $17.50 calls for $2.20 (not now but on a move up) and the $20 puts for $2 and that drops your net to $15.27 for the first 8 months and then you just sell more while you are collecting $2.28 a year so, 24 months from now, you should have up to $4.20 x 3 ($12.60) off the price of the stock from puts and calls sold and another $4.56 in dividends so as much as $17.16 off in the first two year would be amazing but, of course, things will go wrong along the way but they don't have to go very right for this to be a huge winner.


  28. ARR – is the idea of bracketing the price like that with puts/calls that if the price stays in that range you will simultaneously get called away and assigned, or would you be more likely to close the positions before expiration?


  29. Roll the losing side, sell more of the other.  


  30. Last question I promise – What confuses me about ARR is that others (e.g. NLY) also dilute to raise capital but the stock price recovers.  Does not seem to be so for ARR.   But in general for such plays would the number of puts and calls sold match the number of shares owned?  I understand these plays for stocks I am betting to rise or fall but still not clear for something like a REIT.


  31. Phil, what is the plan for the 10 short WPM Mar 20 Calls in the OOP? These expire next week. These were an additional call sale to go along with the 30 long Jan 15 Calls and the 15 short 2021 Jan 22.5 Calls.


  32. Trump budget to include $100M for Ivanka’s women’s fund


  33. Puts and calls are generated separately from shares.  They are simply based on bets made as to which way share prices will go (when willing buyers and sellers are paired up).  As far as the price action goes – some people trust the management and like the plan and some don't.  If you trust ARR to use the money wisely to generate more income, then the dilution won't matter for long but, as you know, most traders are short-term traders and they do tend to bail whenever a company undertakes any project that won't pay off by next quarter.  

    ARR is selling 7.2M shares at $20.33 and another 1.08M shares are warranted to the underwriter, also at $20.33 so they take in about $145M initially in exchange for about 15% of the company, which is $1.2Bn at $19.50 they had $222M on hand at the start of the year so a 50% increase in working capital will hopefully steady out earnings at about $2.50/share, which makes anything below $20 seem pretty cheap – even with the dilution.  

    Over the last 5 years, they are underperforming but ignore the 2015 drop (which is why we started liking them down here) and they've been fairly steady, not really worse than any of their peers.

    WPM/Leapster – Depends on next week.  Most likely we'll just roll them along to the next Q if they expire in the money.  It's a 1/3 cover and we sold them for $1 so $22 is no reason to panic and the Sept $22.50s are $1.70 vs $2.10 for the March $20s so we can roll up 12.5% for 0.40 at the moment and we still would have collected net 0.60 for the short Sept $22.50s, which puts our $45,000 spread 100% in the money before we have to pay the short callers a penny.  So, they can't possibly hurt us and I'd rather keep the downside protection (net $2,000) to lock in my net $7,000 gains so far.

    Short Put 2020 17-JAN 20.00 PUT [WPM @ $21.99 $0.35] -10 2/7/2018 (315) $-3,300 $3.30 $-1.97 $-5.25     $1.33 $-0.12 $1,970 59.7% $-1,330
    Long Call 2020 17-JAN 15.00 CALL [WPM @ $21.99 $0.35] 30 3/2/2018 (315) $14,550 $4.85 $2.45     $7.30 $0.28 $7,350 50.5% $21,900
    Short Call 2021 15-JAN 22.50 CALL [WPM @ $21.99 $0.35] -15 12/26/2018 (679) $-3,900 $2.60 $0.90     $3.50 $0.20 $-1,350 -34.6% $-5,250
    Short Call 2019 15-MAR 20.00 CALL [WPM @ $21.99 $0.35] -10 12/26/2018 (7) $-1,000 $1.00 $1.03     $2.03 $0.24 $-1,030 -103.0% $-2,030

    Also, how many times have we seen WPM test the top of the range, only to fail again?  We've been playing the same range for 3 years now….


  34. Phil&Yodi/THO — thank you both for the great advice!



  35. Phil, yodi/CTL – Like T and M – Is CTL a good stock to implement the Buy Stock and sell Call/Put OTM;

    Recently. insiders (CEO and CFO) purchased a good amount of stock recently. 

    How about this: Buy stock for $12.15; Sell May $12 Call for $0.87 and May $12 Put for $0.91 (for total $1.76) + collect a $0.25 dividend in March. Does that sound like a good trade?

    Thanks.


  36. Some attempt to recover into the close, led by energy.

    I think it's because the US Rig count pulled back at 1:15:

    • The total U.S. rig count falls for the third straight week to 1,027, a drop of 11 after shedding 9 rigs during the previous week, Baker Hughes says in its latest weekly survey.
    • U.S. oil rigs fell by 9 to 834, also a third consecutive weekly decline, while gas rigs dropped by 2 to 193.
    • WTI crude oil, already sharply lower on the day, is little changed after the data, now -2.5% to $55.25/bbl.

    And good luck getting this money:

    • Venezuela must pay more than $8B to ConocoPhillips (COP -4.2%) for the country’s seizure of the company’s oil assets in 2007, according to a ruling from a World Bank arbitration tribunal.
    • The award plus an earlier $2B arbitration award makes COP the biggest victor in claims from a wave of nationalizations in Venezuela last decade, but the country still could contest the ruling.
    • The tribunal found the takeover unlawful in 2013 and rejected Venezuela’s request for reconsideration in 2017.
    • COP shares are lower along with most oil and gas names as crude oil prices fall sharply today.

    /ES bottomed out at 2,726.50

    Well, time for me to head to the airport.  I'll see you Monday from California!  Don't forget to set your clocks Sunday….

    Have a great weekend, 

    - Phil


  37. Vkat T and M I support but I am not so sure on CTL burned my fingers on this one before, even that CEO buying the stock.


  38. Got it. Thank you.


  39. Mercenaries/Phil & StJ – they're expanding that game of demanding pay for the soldiers & bases. They already screwed over Korea, and while Korea certainly objected strenuously (except for the conservatives who love the US (& Japan)), in the end the US held the RoK's feet to the fire and got the payment, just like when the THAAD missiles and the F-35s were forced down Korea's throat. *sigh*

    Oh, and Phil – I think California is off that time-change addiction, thank the stars.


  40. 2735 held.  Very impressive how you can call these critical levels, Phil.  Bullish finish…bodes well for Monday.


  41. Snow – Looks like Trump is doing wonder for US-Korean relationship right now! Like Phil said, looks like a Russian agent to us now.


  42. StJ – you got that right, and the head negotiator, Biegun, is screwing things up by talking out of both sides of his mouth – and Korean media has picked it up. Some of the Korean conservatives are dumping blame on President Moon, which makes no sense to me. These are mostly people who like the paradigm of not engaging with the DPRK and believing that the regime will collapse within the next week or so. Given that they've held that belief since 1953, they certainly are firm in their faith.

    The problem in Hanoi was the Michael Cohen hearings. Now that Hanoi fizzled, Kim and Moon are thinking over what to do next, and realizing the sands of time are running out on Trump – i.e., even if he doesn't leave office early, he likely won't run again – and the capriciousness of USA politics makes Kim and Moon reluctant to do much until the changeover. So I expect them to proceed on their own. It's what I would do, and it's what my wife is telling them (and they ignore my wife at their peril).


  43. Trump call for budget cuts sparks new shutdown fears



  44. NK – interesting – a friend of mine in a position to know says that rocket base in the DPRK was already being repaired before the Hanoi summit. The plan was that if the summit was successful, then the DPRK could bring inspectors in and show this base being dismantled (again, as it had been dismantle once some time ago). So, a sort of fake dismantling.



  45. CLT, the other side of the coin!!!!

    CenturyLink (CTL)
    CenturyLink Inc (NYSE:CTL) is a U.S.-based telecom that provides residential and business services around the U.S. Its merger with Level3 also opened it up to enterprise services and global customers in over 60 countries.
    It generally provides a very high dividend — currently around 8% — but that usually comes at the price of the stock, which is off 32% in the past year.
    Most of CTL’s business is in the U.S., in areas outside of major cities, where it may well be the only game in town for exurban and rural customers. That gives it some monopolistic qualities but also means it has to spend on equipment where people want cutting edge service but the populations don’t help CTL recover the costs.
    That isn’t a win-win situation. It either provides lesser quality service to those areas, which in turn makes for dissatisfied customers that actively avoid expanding services with CTL, or spending money on quality service that may take years to recoup since the population isn’t dense enough to make a dent in the short term.
    Its debt-to-equity ratio is 180% and will likely remain much higher than average until it can figure out how to solve this fundamental problem.


  46. Sorry CTL !!!!


  47. Phil – Where are you in Cali?


  48. LA, Marina Del Rey


  49. Dow down 180 and others are flat.  

    Don’t know why yet, just woke up   


  50. Ah, it’s BA:  China grounds entire domestic fleet of Boeing 737 Max Jets after Ethiopian Airlines crash
    https://www.bloomberg.com/news/articles/2019-03-11/fearful-flyers-lose-faith-in-boeing-737-max-after-second-crash?utm_source=twitter&utm_campaign=socialflow-organic&utm_content=asia&cmpid%3D=socialflow-twitter-asia&utm_medium=social

    Thats why we only buy them AFTER a crisis – there’s always one eventually.  


  51. Phil/Dow – Boeing








  52. Good morning! 

    I think I'm adjusted back, we'll see how things go…

    Still, I'm a bit behind as I had it in my head I'd be back Sat but really was back yesterday at 4am and had meetings set up and dinner with Mom (can't cancel that!) so didn't get to anything else yet.  

    QC – I will get to yours in morning chat.

    VXXB/Palotay – Not sure how far back you went but just be aware this can happen:

    Lots of times the VIX is over 20 – just not recently and there's that one time when it went from 20 to 60 – ouch!