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!

Which Way Wednesday – Fed and FedEx Move the Markets

FedEx (FDX) is tumbling and you should care.  

Though smaller in volume than UPS, FedEx ships over 13M packages per day, which means they have their finger right on the pulse of business and, this morning, they missed earnings by 2.5% – but that was after they drastically lowered guidance last quarter (sending the stock 32% lower) and now they are lowering guidance yet again, sending the stock down 7% pre-market.

Weakness in International Shipping is the major problem but FDX says the Government shut-down also contributed to giving them a very poor Q1 – though that's not the excuse for taking down Q2 as well.  Nonetheless, we think this news was already baked in in December and, in fact, on Dec 14th, we sold FDX 2021 Jan $180 puts for $22.22 to net in for $157.78 in our Long-Term Portfolio and it's likely you can do better than that this morning – if you are brave enough. 

Why Did FedEx Cut Its Fiscal 2019 Earnings Outlook?Just because the economy is weak doesn't mean FDX is suddenly a bad company – so it's a great play for long-term investors on a $47Bn company ($45Bn this morning!) that dropped $4.5Bn to the bottom line last year but, even adjusting for one-time tax breaks – they should still be netting about $3Bn in profits in 2019 so $45Bn ($170) is very fair.

FDX is also still working through their $4.8Bn acquisition of TNT Express in Europe – and it was pretty bad timing as the economy began turning down last year as the Brexit fears grew.  

Still, it's not FDX we're worried about but what it says about the broader market, which has mostly ignored the troubles in Europe and the damage that was caused by the Government Shutdown, as well as all the nonsense in Europe and, let's not forget, the continuing trade battle between the US and China.  FDX is down $90 (33%) since Sept and about 40% as of this morning – it's the companies that haven't corrected yet that I'm worried about.  

That brings us to the Fed, who are very likely not to raise rates today (2pm) and we'll be discussing it in today's Live Trading Webinar, which starts at 1pm – and you can register for it right here.  As you can see by this data chart, we've certainly stalled economically since the last Fed Meeting but the Market has raced back to it's highs and Powell and Co. will have to walk a very fine tight-rope to keep policy dovish while not spooking investors with their reasons.

Like the lady says, Invesors have a million reasons to walk away but just one good one seems to get them to stay – we'll see how the day unfolds…


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. Silly me, I forgot to save the post in progress earlier, so it never published.   Sorry about that.

    Good morning!  

  2. Good morning, All!

    Join us for the weekly webinar at 1pm today!

  3. MORL/Albo   Just in case you did not see this. I am sure I do not understand the ramifications but looked important

  4. Good Morning!

  5. UBS/Tangled – That actually happened ages ago.  Most people switched to MRRL   Unlike ETFs, ETNs have a fixed number of notes that can be issued and the popularity of MORL simply caused them to run out of notes to issue (it began in 2012).  Uncertainty around the issue caused some wild fluctuation but they've steadied back around where they were when the nonsense began. 

    Markets deciding FDX does matter.  

    • A weak earnings report from FedEx (NYSE:FDX) and cut in guidance could have broad implications for investors, warns The Wall Street Journal's Charley Grant in today's Heard On The Street Column.
    • FedEx management cited slowing international macroeconomic conditions and weaker global trade growth in dropping its profit forecast for the second straight quarter.
    • "Stock investors have seen the glass as half full, but FedEx’s earnings warrant caution before earnings season begins in earnest next month," writes Grant.
    • On Wall Street, JPMorgan lowers FDX to a Neutral rating from Overweight. Shares of FedEx are down 6.17% in premarket trading to $170.30.
    • Previously: FedEx -4% on weaker global trade trends (March 19)
    • General Mills (NYSE:GIS): Q3 Non-GAAP EPS of $0.83 beats by $0.14; GAAP EPS of $0.74.
    • Revenue of $4.2B (+8.2% Y/Y) misses by $10M.
    • Shares +5.76% PM.
    • Press Release
    • MBA Mortgage Applications
    • Composite Index: +1.6% (W/W) vs. +2.3.
    • Purchase Index: +0.3% vs. +4%.
    • Refinance Index: +4.0% vs. -0.2%.
    • 30 year mortgage rate at 4.55% vs. 4.64%.
    • European Competition Commissioner Margrethe Vestager is expected to hand Google (GOOGGOOGL) a third fine today over anti-competitive practices related to its AdSense advertising service.
    • Google was already fined €6.7B in two previous EU antitrust cases: One for unfairly pushing its apps on smartphone users and one for using its search engine to steer consumers to its own shopping platform.
    • We'll keep you posted. Vestager's news conference on the antitrust case began at 6:30 a.m. ET.
    • Update: The EU has hit Google with a €1.49B for stifling competition in the online advertisement sector.
    • "We see increased risk to our outlook due to elevated maintenance cancellations and the grounding of the MAX 8, in addition to the already higher-than-average level of execution risk tied to the company's delayed Hawaii launch as a result of the partial government shutdown. Until we become more comfortable that the company will be able to ring-fence these three issues, we believe the market will assign a lower multiple to Southwest (NYSE:LUV) shares," analyst Catherine O'Brien writes.
    • Drops price target to $49 from $54, implying 3.4% downside. Goldman rates LUV Sell
    • Theresa May will request a short delay to Brexit today in a letter to the European Union, according to the BBC and Sky News.
    • Risks? A short extension could just postpone a chaotic cliff-edge departure by three months, prolonging the uncertainty and increasing the potential costs for business.
    • EU Brexit negotiator Michel Barnier has also said any delay has to serve a purpose and France said it won’t approve a delay without plans to get a deal through the U.K. Parliament.
    • FTSE 100 -0.3%; Sterling -0.3% to $1.3231.
    • "We are expecting many difficulties this year such as slowing growth in major economies and risks over global trade conflicts," Samsung Electronics (OTC:SSNLF) co-CEO Kim Ki-nam declared during an annual general meeting in Seoul.
    • The company will continue to make bold investments in semiconductor production in the face of stiffening Chinese competition, but Samsung is seeking new growth in areas such as network equipment manufacturing.
    • Lyft (LYFT) won't list on the Nasdaq until the end of March, but one investment firm has already rated the ride-hailing company a Buy.
    • D.A. Davidson has initiated coverage with a $75 price target (shares are expected to be priced between $62 and $68).
    • Analyst Tom White cited Lyft's ability to chip away at UBER, while "deftly maximizing the benefits by aggressively differentiating its brand and mission around socially-conscious values."

  6. Thanks Tangled & Phil.

  7. Sorry was on a call the last 1.5 hours!

  8. Thousands of Firings Expected After Disney Closes Fox Deal

  9. Interesting :

    Microsoft Corp. co-founder Bill Gates, once the world’s richest person, has again eclipsed the $100 billion threshold, joining Inc.’s Jeff Bezos in the exclusive club, according to the Bloomberg Billionaires Index.

    Bill Gates has donated over $40 billion to charities over the years, which if he had held onto in terms of Microsoft stocks, he’s probably easily over $200 billion in net worth today.

  10. Gates/Albo – Not to mention he let Ballmer run MSFT for 10 years – that's -$50Bn or so right there!  blush

    Big draws in inventories but not too much action in oil for some reason:

    • EIA Petroleum Inventories: Crude -9.6M barrels vs. +0.3M consensus, -3.9M last week.
    • Gasoline -4.6M barrels vs. -2.4M consensus, -4.6M last week.
    • Distillates -4.1M barrels vs. -1.1M consensus, +0.4M last week.
    • Futures -0.35% to $59.08.
    • Stocks slip in early trading as investors await the latest policy directive from the FOMC at 2 p.m. ET and Fed Chair Powell's follow-up press conference; Dow -0.4%, S&P -0.2%, Nasdaq -0.1%.
    • The market expects the Fed to leave the Fed funds target range unchanged, reiterate its patient posture and reduce the median estimate of two rate hikes projected for 2019, with hopes for a timetable for ending its balance sheet runoff.
    • European bourses are lower, with Germany's DAX -1.5%, weighed by Bayer, France's CAC -0.4% and U.K.'s FTSE -0.1%; in Asia, Japan's Nikkei +0.2% and China's Shanghai Composite finished flat.
    • In the U.S., FedEx -5.1% after missing quarterly earnings estimates and lowering its full-year EPS guidance below consensus while warning of slowing international macroeconomic conditions and weaker global trade growth trends.
    • Among the S&P 500 sectors, health care (-0.4%), consumer staples (-0.4%) and financials (-0.4%) are particularly weak, while consumer discretionary (flat) and utilities (flat) show relative strength.
    • U.S. Treasury prices edge higher, pushing the two-year yield down a basis point to 2.45% and the 10-year yield down 2 bps to 2.59%; the U.S. Dollar Index +0.1% to 96.47.
    • WTI crude oil -0.5% to $59.04/bbl.

    • Uber (UBERwill expand its trucking business to Europe next month with Uber Freight's debut in the Netherlands.
    • Uber is expected to file for its IPO next month and Freight is one of the company's key growth opportunities alongside food delivery, electric bikes and self-driving vehicles.
    • China's government could limit feed-in tariff subsidies for PV-generated electricity to $448M, an 80% declineDigitimes reports; analysts had anticipated at least unchanged Chinese solar subsidies and no plans to force grid parity until 2022, according to Notable Calls.
    • China has not yet announced 2019 feed-in tariff rates for PV-generated electricity and subsidization rates for electric vehicle purchases, reportedly because it has yet to resolve its trade dispute with the U.S.
    • Partly because unpaid FIT subsidies have become a large financial burden, China's government may limit total 2019 FIT subsidies to 3B yuan ($448M), a ~80% cut from 2018, in order to push development of PV power generation toward grid parity, according to the report.
    • For EV purchases, China cut 2018 subsidization by ~50% from 2017 and likely will further cut 2019 rates by 30%-50%, the report says.
    • Starbucks (SBUX +0.6%) makes a series of announcements ahead of its annual shareholder meeting today in Seattle.
    • The company says it's making a $100M "cornerstone" investment in Valor Siren Ventures to spark innovation in new retail concepts. "We believe that innovative ideas are fuel for the future, and we continue to build on this heritage inside our company across beverage, experiential retail, and our digital flywheel," says CEO Kevin Johnson.
    • Starbucks says it has entered into a $2B accelerated share repurchase program as part its broad commitment to return $25B to shareholders over three years.
    • A deeper commitment to gender equity in pay and sustainable programs are also being made by the company.
    • On the financial front, Starbucks reaffirms ongoing growth algorithm of consolidated revenue growth of 7% to 9% and non-GAAP EPS growth of at least 10%.
    • Shares of SBUX are up 23% over the last 52 weeks to outpace broad market averages.
    • It's done: Walt Disney (DIS +0.4%closed on its $71.3B acquisition of the bulk of Twenty-First Century Fox just after midnight, ushering in a transformation for both companies that will reshape Hollywood, news and sports.
    • The new Disney takes on Fox's film and TV studio along with the FX Networks and National Geographic. It also adds Star India, a giant in Indian television.
    • Disney now officially has 60% of Hulu, with Comcast (CMCSA -1.4%) sitting on 30% and WarnerMedia (T -0.6%) the other 10%. Launch of its key Disney Plus streaming offering is still yet to come.
    • The company has said its new assets could quickly add about $19.3B in annual revenue and $1.6B in profits, along with some $2B in cost savings (which includes eliminating redundancies).
    • Meanwhile Fox embarks on its new journey as Fox Corp. (FOX -4.9%FOXA -5.1%), a leaner company focused on news and live sports. It will hold an investor conference on May 9. In transaction particulars, it paid an $8.5B dividend to Twenty-First Century Fox and received a $2B cash payment for Disney; the "transaction tax" (including expected share of taxes from sports net divestitures) is $6.5B.
    • Still ahead: the long and winding sale of 22 Fox regional sports networks, which Disney must unload as part of the deal.
    • Automakers General Motors (GM -2.8%), Ford (F -2%) and Toyota (TM -0.3%) are playing catch-up with Tesla (TSLA +0.1%) in their ability to send over-the-air updates, according to The Wall Street Journal's Mike Colias.
    • Colias reports that GM aims to unveil its first fully updatable vehicle this year before expanding the capability across its lineup over the next several years, while Ford will offer over-the-air updates on a new electric SUV coming in 2020.
    • Wireless updates are expected to save manufacturers on costs for some easy fixes and potentially build brand trust with consumers if new features are well-received.
    • Suppliers looking to benefit from the OTA push include Harman International Industries (OTC:SSNLF), Continental AG (OTCPK:CTTAFOTCPK:CTTAY) and Aptiv (NYSE:APTV). On the chip side, Nvidia (NASDAQ:NVDA), Intel (NASDAQ:INTC) and NXP Semiconductors (NASDAQ:NXPI) are in the mix.
    • Jefferies says Amazon's (NASDAQ:AMZN) PillPack main-order prescription service gained 20 new state licenses in the first two months of the year, bringing the total to 39 states. And the firm expects Amazon to continue pursuing licenses over the next three to six months.
    • The firm says Amazon “still has to acquire or build more mail pharmacies/grow capacity before being able to go live with a national consumer Rx offering on their app/site."
    • In other Amazon news, the entry-level Kindle gets a slight upgrade with a built-in light and a $10 price hike with the ad-supported version listed at $89.99. Pre-orders start today and shipping starts April 10.


  11. Phil / FDX – Isn't AMZN eating into FDX now that they are running their own shipping? Do you not think this is significant?

  12. AMZN hardly ships anything by FDX – it's UPS that needs to worry about that one.  

  13. Phil;   You missed a change in LTP  from the 2/15 LTP update:  

    FDX – Ah ha!  I do NOT want to own them if they drop 20% so let's kill it!  Also, lots of margin used on these



  14. Phil

    Any trade on MU earnings tonight  ?


  15. Phil, what’s your position in KC? Thanks

  16. FDX/Options – Oh good – I am so wise!  Now we can sell them again though, I now remember, at the time, I was worried about FDX's quarter for all the revealed reasons so I don't want to rush back in.  

    MU/QC – I think not as bad as feared but we're already long in the LTP, so nothing to do but wait for the facts. 

    Long Call 2021 15-JAN 40.00 CALL [MU @ $40.30 $-0.07] 20 2/15/2019 (667) $23,400 $11.70 $-1.65 $11.70     $10.05 $0.00 $-3,300 -14.1% $20,100
    Short Call 2021 15-JAN 55.00 CALL [MU @ $40.30 $-0.07] -20 2/15/2019 (667) $-13,200 $6.60 $-1.50     $5.10 $-0.05 $3,000 22.7% $-10,200
    Short Put 2021 15-JAN 33.00 PUT [MU @ $40.30 $-0.07] -10 2/15/2019 (667) $-4,800 $4.80 $-0.07     $4.73 $0.23 $75 1.6% $-4,725

    /KC/Jomp – I have 4 long at avg of $99.23 on /KCN19, will get back to 2 if we pop back to even.

  17. Phil, selling puts for SIX? They usually bottom around where they are…

  18. From Briefing:

    Markets dropping in recent trade; President Trump speaking with reporters says that he wants to leave China tariffs in place until China complies with the trade deal; considering leaving tariffs in place for a long time.

  19. AAPL/Wing – It's only a 25% cover and the March $175s are now $11.40 but you can roll them to 2x July $195 calls at $6 for better than even and then you are 1/2 covered but still $55 over your long call strike is nothing to complain about! 

    THX Phil .. very helpful, wouldn't have thought of the 2x!

    I did it but first sold the 10 $195c for $6.7 Mar 18 (up day) then today bought back the 175s for $11  (early down swing) so this paid me about $1.2k.  (In MEX even, with bad wifi)!

  20. SIX/Alter – $4Bn for $300M in earnings is not terrible and they paid $96M in taxes so not one of the companies with one-time distortions jacking up their p/e.   I like them as a business and, unlike DIS, they are not very expensive as they have very cheap annual passes (and then they get you on the food) and it tends to steady out the revenues.   Profits go up and down depending on how much they spend buying land and adding rides but management is very, very top-line focused as they can always cut down in spending and rake in the cash. 

    Their CEO is retiring next year and, until that's settled, I doubt they do much.  They pushed back opening two China parks by a year and that's going to hurt them as they can't get away from the sunk costs.  So, on the whole, I would be cautious with an entry and maybe just look to sell something like the 2021 $37.50 puts, which are about $4.20 so net $29.30 is certainly a good place to start!  

    Trump ranting and raving on the White House lawn.

    Great working into the trade, Wing – that's the way to do it!  

    Webinar time

  21. Trump says he rebuilt China?  Hates Kelli Anne's husband, doesn't understand how Mueller, who didn't win an election, gets to report on him although it was Trump's acting AG (Rosenstein) who appointed Mueller 4 months after Trump was elected (Sessions recused himself).  

    File:Appointment of Special Counsel to Investigate Russian Interference with the 2016 Presidential Election and Related Matters.pdf

    A special counsel investigation is subject to oversight by the Attorney General.[33] After questions arose regarding contacts between then-senator Jeff Sessions and Russian ambassador Sergei Kislyak in 2016, one of the first things Sessions did after being appointed attorney general, was to recuse himself from any Justice Department investigations regarding Russian interference in the election.[34]


    Once recused, oversight of any Russia investigation into the 2016 election fell to the Deputy Attorney General Rod Rosenstein, a Trump appointee.

    As part of his oversight, Rosenstein called for a special counsel and appointed Robert Mueller in charge of that special counsel in May 2017[36] with the charter of determining if there was any Russian interference in the 2016 election process, or related matters.[citation needed]

    The special counsel appointment on May 17, 2017, followed a series of events that included President Trump firing the FBI director James Comey on May 9, 2017.

    While the termination letter and several administration officials have stated that Trump fired Comey solely on the recommendations of Attorney General Jeff Sessions and Deputy Attorney General Rod Rosenstein, several other reasons were later offered. Some have cited a Rosenstein-authored memo and Comey's subsequent allegation that Trump asked Comey to drop the FBI investigation into former National Security Advisor Michael Flynn.[37]

    According to "four congressional officials", the dismissal took place just a few days after Comey requested additional resources to step up the Russia investigation (the Justice Department denied that such a request was made).[38][39] On May 9, hours before the dismissal, it was revealed that federal prosecutors issued grand jury subpoenas to Flynn's associates, representing a significant escalation in the FBI's Russia investigation.[40][41]

    In an NBC News interview, Trump stated that when he decided to fire Comey, "I said to myself, I said, 'You know, this Russia thing with Trump and Russia is a made up story."[42] During a May 10 meeting in the Oval Office with Russian Foreign Minister Sergey Lavrov and Russian Ambassador Sergey Kislyak, Trump allegedly told the Russian officials "I just fired the head of the FBI. He was crazy, a real nut job … I faced great pressure because of Russia. That's taken off … I’m not under investigation."[43][44]

    I mean, wow, this is going to make one great Tom Clancy novel one day…

  22. Phil – I see you used Ycharts above for Six Flags.  I love that software.

  23. Brexit not going to end well it seems – EU ready to offer an extension as long as parliament approves the deal! Not sure how they can square that circle… And France, Spain, Belgium and possibly Italy ready to veto the extension because what's another 50 days when the UK has had over 1000 days to come up with a deal and nothing got done! 

  24. Fed signals no rate cuts are coming in 2019

  25. YCharts/Tshroy – Well I used one someone else used, I hardly play with those.

    Brexit/StJ – Really, you think they veto an extension?  Not Italy, they are going to be doing their own exit soon so they'll want to see the UK treated well. 

    Well, the markets are popping over doveish Fed but mostly it's a dead Dollar bounce:

    We expected 95 to be tested – just not today! 

    25,900, 2,840, 7,450 and 1,560 are the shorting lines.  /NQ is below and I like /RTY best to follow but VERY tight stops above.  

    Also I like $1.915 on /RB for shorting but that's already pulling back.

  26. Brexit / Phil – We'll see but you have to think that if a deal could have been reached, it would have been done already. In any case, even the current offer is problematic as the extension is contingent on a positive vote in parliament and even the speaker there said they can't have the same vote twice unless there are meaningful changes to the text. So high noon in London!

  27. FDX bouncing back a bit but I decided I don't like them enough to play the short puts again.  

    In the Webinar, someone pointed out BNS and they are a lovely bank!  

    Year End 31st Oct 2013 2014 2015 2016 2017 2018 TTM 2019E 2020E CAGR / Avg
    Revenue C$m 21,597 23,944 24,049 26,350 27,155 28,775 29,291 31,073 33,079 +5.9%
    Operating Profit C$m 8,347 9,300 9,066 9,398 10,276 11,106 10,805     +5.9%
    Net Profit C$m 6,379 7,071 7,014 7,117 8,005 8,548 8,405 8,963 9,512 +6.0%
    EPS Reported C$ 5.11 5.67 5.67 5.77 6.49 6.82 6.67     +5.9%
    EPS Normalised C$ 5.11 5.67 5.67 5.77 6.49 6.82 6.67 7.24 7.79 +5.9%
    EPS Growth % -1.2 +10.8 +0.03 +1.7 +12.5 +5.1 -1.7 +6.16 +7.72  
    PE Ratio x           10.8 11.0 10.2 9.45  
    PEG x           1.75 1.79 1.32 0.81

    What's not to love?  $67.25Bn at $54.85 and they are dropping $8.7Bn to the bottom line while paying a lovely $2.65 (5%) dividend!  Apparently, on the Toronto Exchange, they have options out to 2021 so they could even be a good Butterfly play for Canadians but, in the US, options only go out until Sept but still worth it so, for the LTP let's:

    • Buy 500 shares of BNS at $54.85 ($27,425) 
    • Sell 5 BNS Sept $55 calls for $2 ($1,000) 
    • Sell 5 BNS Sept $55 puts for $2.80 ($1,400) 

    That's net $25,025 ($50.05/share) and $52.525 if assigned 500 more below $55.  Of course, it's just a 6-month sale so we should be able to drop the net another $5 into next March plus the $2.65 dividend brings us down to net $42.50 if all goes well in our first year.

    As a long-term investment, if we can drop our net (including dividends captured) by even 10% a year – we're 10 years away from having a free stock.  So, let's say we do this with $25,000 today:

    $25,000 buys 500 shares BNS

    • By year 10, we have paid off BNS, still collecting $1,325 in dividends.
    • Year 10, we buy #2 for $25,000, takes 7 year to pay because we collect $9,275 from BNS too.
    • Year 17 we buy #3 for $25,000 but now we have $3,750/yr in dividends from BNS and #2 so 4 years to pay off.
    • Year 21 we buy #4 for $25,000 and collecting $5,000 in dividends, again paid in 4 years 
    • Year 25 we buy #5 for $25,000 and collecting $6,250 in dividends, paid down in 3 years. 
    • Year 28 we buy #6 for $25,000 and collecting $7,500 in dividends, paid down in 2 years
    • Year 30 we buy #7 for $25,000 and collecting $8,750 in dividends, paid down in two years.  

    So, 30 years from now we have 7 positions worth $175,000 paying $10,000 in dividends – all because we put $25,000 to work today in very boring blue-chip dividend stocks like this one.  You just need to keep picking stocks that pay 5% (easy to find) that you can sell 10% puts and calls against.  The nice thing is that the stocks and dividends will tend to keep up with inflation for you as well. 

    Of course, it may not go perfectly and once in a while you may get assigned on the put side but it's a great thing to do for each child/grandchild you have if you can afford it so that, down the road, you can leave them something that will deliver them a nice, quarterly income for the rest of their lives.  

    Just $25,000 now can provide your kid with an extra $10,000 a year for life (with no knowledge of stocks required) and, of course, the nice $175,000 nest egg. 

  28. Wheee on /RTY already!  

  29. Phil  Who is the real indicator. NAS is fighting in opposite direction of Rut,. Is the  RUT tug boat strong enough to pull other indexes into correction territory? I'm sitting on 200 June SQQQ calls at 9 and 10. I'm thinking I need to stretch them out to January.  Your thoughts?



    Micron prelim Q2 $1.71 vs $1.66 S&P Capital IQ Consensus Estimate; revs $5.84 bln vs $5.82 bln S&P Capital IQ Consensus Estimate.

  31. Actually, I did the math wrong as we're knocking off $5,000 a year from the stocks and the assumption is that we stop collecting put and call money from the old stocks but, even cautiously, we could pull in another $2,000 per stock held but that would make the numbers much, much higher.  I got caught up in thinking I don't want the kids to have to mess around with options but we sure can for as long as we have control – so no reason not to do that!  

    CM is another Canadian bank I like at $84.35 and they also pay 5% ($4.22) so we could:

    • Buy 300 shares of CM at $84.35 ($25,305) 
    • Sell 3 Sept $85 calls for $3 ($900) 
    • Sell 3 Sept $85 puts for $4.60 ($1,380) 

    That one is net $23,025 and we sell another $2,250 into next March and collect $1,266 in dividends and, at the end of year 1 our basis is down to $19,509 ($65.03/share) – that's good progress!  

    Don't forget, just because our basis goes down, it doesn't change what we collect if the stock doesn't go down.  

    So keep in mind that spending an extra $25,000 on a vacation or a fancier car or a room in your house that you don't need is costing your kid $500,000 in dividends from 30-80, not to mention the $175,000 stock portfolio the dividends would be coming from that they could pass on to their children too!  

  32. Nas/Den – The Nas is simply a reflection of AAPL so it's a terrible indicator of what's really happening.  The S&P and NYSE are the big boats and DIA, Nas and RUT are the tugs and none of them are strong enough by themselves, you have to see things lining up to get a real correction.  As to SQQQ, if the roll is cheap, then do it.  SQQQ June $10s are $1.10 and the Jan $10s are $2 so 0.90 for the roll is a lot (10% of the option price) so I'd offset that by selling the Jan $20 calls at 0.85 as it would take a 33% drop in the Nas for SQQQ to get to $20 and, between now and then, I'm sure you can add another cover if you feel the need so why spend so much money if it's not necessary?

    MU/Albo – We shall see…

    Wow, am I really the only guy in America who knows how to read a Fed statement?  

  33. How One of the Worst-Ever Quarters Is Hurting Investment Banking

  34. How to Blow $700 Billion

  35. WPM beat their own raised estimate! Interesting they just starting getting streams for Palladium which has gone from $900/oz in August to over $1,500 currently. Their contracted cost only $205…

  36. Up 69% – Nice!

  37. Phil, what is your position in KC now? Also what month are you in now? I’m in July and just double down. My basis is 99.20 now. Thanks

  38. Good morning!

    /KCN19/Jomp – I’m about the same with 4 long and will be back to 2 on a pop.