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The May Money Talk Portfolio Review

Are we weathering the storm?

So far, not so bad as we're down $14,755 from our April Review, when the overall market was 5% higher.  Options tend to be very volatile, of course and the Volatility Index (VIX) is higher now, which inflates the asking price of the options we sold.  This doesn't matter as long as we're not buying them back at the moment, but it can make our balances look ugly.  

Not that being up 125.8% is "ugly", of course, but we were up 155.3% and it sucks to backslide.  Another problem we have at the moment is our hedges certainly don't kick in on a 5% market drop – so they are not helping but, since I can only adjust this portfolio when I'm live on BNN's Money Talk (here's the April show), I needed hedges that would keep us safe all the way into July, which will be the next time I'm on the show (once a quarter it becomes the Phil Show).

Since our longs were on track to make $83,104 in a flat to slightly down market – we don't mind losing a bit of money on our hedges to take us through a rough quarter – like this one.  As I said on the show, we expected at least a minor correction but there's a fear of missing out (FOMO) as this portfolio was only at $88,922 on Feb 15th, so of course we were going to give back some of those ridiculous gains – but that doesn't invalidate our long-term positions, so we choose to ride out the rough spots.  

As FUNDAMENTAL VALUE INVESTORS we believe that stocks – even the ones we like – can be too expensive, as well as too cheap.  When they are too cheap, we buy them – when they are too expensive, we sell them.  It sounds logical but how many traders actually do it when the time comes?  Unfortunately, we can't make adjustments until July but we can certainly check in our our positions – so let's do that.

  • Nasdaq Ultra-Short ETF (SQQQ) - A hedge we expect to lose on and so far, so good as we're down about $5,850 with just $1,150 in value left.  It's a 3x ETF so, if the Nasdaq drops another 15%, SQQQ goes up 45% to $13.87 and that would make the hedges $7,740 so $6,590 worth of protection here.  We expect to lose the remaining $1,150.  
  • Alaska Airlines (ALK) – Just a short put that nets us in for $51.80.  We're not worried about it.  Expect to gain the full $4,100 so $2,475 left to gain.
  • Russell 2000 Ultra-Short ETF (TZA) – This will become our primary hedge as it's still in the money and has more time.  TZA is a 3x Ultra-Short so a 15% drop in the Russell should give us a 45% pop in TZA but, starting from $9.56, that only gets you to $13.86 and that would pay $5.86 per contract so net $23,440 less the current value of $5,780 means $17,660 worth of protection on this one is accepable as it covers an additional 15% drop in our portfolio.  In a bull market, we expect to lose the remaining $5,780.

  • Bank of Nova Scotia (BNS) – This is one of our new trades from the last show and it's down a bit so far at net $1,400 on the $10,000 spread so $8,600 (614%) upside potential at $55 does not seem like to much of a stretch to count on by December if the markets don't collaps.

  • Caterpillar (CAT) – Had good earnings but tariffs hammered the stock lower but we are still over our goal so the $3,000 paper loss since the last review is just that and we're confident it will come back.  It's a potential $15,000 spread we paid net $800 for and currently the net value is only $4,662 so this trade has another $10,338 left to gain if CAT can hold $130 into Jan 2021.  It's still good as a new trade – even if you missed the first $3,862 (482%) worth of gains!  

  • General Mills (GIS) – Notice we love to buy beaten-down blue chips!  This is an $11,250 spread that's well in the money at net $8,643 and I'm confident enough that we'll collect the remaining $2,607 (30% of the current net) but it's right on the cusp of not being worth it as, clearly, we can do more with $8,643 over 18 months than just 30% so, if we're over $8,643 in July, we'll probably cash this one in and I'd do it now in an uncertain market if my hands weren't tied.  

  • Barrick Gold (GOLD) – Gold (the commodity) can't seem to get things going but $1,294 an ounce is still some very healthy profits for GOLD (the company), who pull it out of the ground for $825 an ounce (higher than it was due to acuisition of less-effiient mines).  This quarter will be worse than last year simply because Gold averaged $1,325 last year in Q1 and more like $1,275 this year so it's likely to be a rocky ride but you can still get into the $12,500 spread for net $1,225 and that makes the upside potential a very nice $11,275 (884%) if GOLD is over $17 (with the aggressive short puts puts) in January.  I do NOT think we'll make it on time, however, so I anticipate rolling this spread which means I will not be counting on any profits from it at the moment.

  • IBM (IBM) – Is our 2019 Trade of the Year so yes, I am confident we will collect our full $7,500 and the current net is $1,177, so well worth sticking with in anticipation of making another $6,323 (537%) and that's obviously still good for a new trade as who doesn't like making 500% on cash in 18 months off a spread that's starting out 95% in the money, right?

  • Limited Brands (LB) – Was our 2018 Trade of the Year along with HBI but this is a re-entry as we cashed the original when they spiked over $35.  Now back to $22.50 we're good for a new trade at a net $1,700 CREDIT on the $40,000 spread so there's $41,700 (2,452%) upside potential and all we have to do is get back over $32.50 by Jan 2021.  I'm pretty confident in that but let's say we strongly expect to make "just" $16,000 on this one at $27.50 and anything else is a bonus.  LB reports earnings next Wednesday (22nd) – break-even is expected for Q1.

  • Alternative Harvest ETF (MJ) – Lovely name but these are POT companies and we love this sector for 2019 and it already loves us at net $7,400, up $6,150 (492%) from our intial $1,250 cash outlay.  At $45, it's a $40,000 spread so there's still $32,600 (440%) left to gain and I'm very confident that an ETF made up of the largest Marijuana Companies in the World can gain another 33% in 18 months so we expect to made the additional $32,600.

  • Micron (MU) – They have been getting hammered with the chip sector but it's a 2021 play so we're not worried.  We're now back at net $2,675 and that makes this position half our losses since the last review BUT now is your chance to get in if you haven't already as it's still a potential $15,000 and I have no reason to think we won't collect the additional $12,325 and that's another 460% from here – so worth sticking with and great fro a new trade.  

  • US Natural Gas Fund (UNG) – Our other new trade from April and already up an even $1,000 off our $850 entry so up 117% in less than a month is not too bad, right?  It's a $7,000 spread now netting $1,850 so $5,150 left to gain is still a nice 278%, even if you missed the initial entry.  

  • Wheaton Precious Metals (WPM) – This was our 2017 Trade of the Year and this one is a triple dip for PSW players and, yet again, it's making us money.  Net is now $8,238, which is up $5,688 (223%) from our $2,550 cash outlay and we're back to our mid-point at $20.27 and it's an $18,750 spread so another $10,512 (127%) left to gain and I'm super-confident in this one so I'd say good for a new trade – even if you missed the first 223% gains.  

So we now have $106,930 that we expect to gain over the next 18 months less $6,930 we expect to lose on our hedges is net $100,000 exactly, which would be up another %88.5 from our current $112,908 but we can do much better and we're very confident in our current positions and we do have hedges and we're hardly using any margin (just $30,000) so we're in very good shape – even if we do have to make adjustments next quarter.  

See how easy it is to make these decisions when you know EXACTLY what to expect from your portfolio!  

For every trade, we have a clear plan and clear targets so that, at any given moment, we know if we are on or off track.  We KNOW how much we expect to make (now $100,000) and we KNOW how much our hedges will make on a 20% market drop ($30,030 at $13.87 on SQQQ and TZA) to offset some of our long losses and that plus our portfolio's $72,885 (64.5%) CASH position means even a severe downturn is unlikely to hurt us very much.

CONTROL.  Control and BALANCE are the keys to successfully managing a portfolio and, if you have those things – you can run a portfolio you only touch once per quarter that still makes market-beating returns.  It's not about active investing – it's about KNOWLEDGEABLE INVESTING!

Join PSW right now and we will turn you into a Knowledgeable Investor! 


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  1. Good morning!  

    Yes, this is today's post as I have a lot of catching up to do on portfolio updates.

    Indexes up about 0.3%, ho-hum…

    • The Atlanta Fed's GDPNow model now sees Q2 GDP growth of 1.1%, down from 1.6% on May 9.
    • This morning's sales, inventories, and industrial production reports points to lower real consumer spending growth and real gross private domestic investment.
    • Previously: NY Fed increases Q2 GDP estimate, Atlanta Fed trims (May. 10 2019)

    • Housing Starts-5.7% to 1.235M vs. 1.200M expected, 1.168M prior (revised from 1.139M).
    • Building permits 1.296M vs. 1.290M expected and 1.288M prior (revised from 1.269M).
    • Initial Jobless Claims -16K at 212K vs. +219K consensus, 228K prior (unrevised).
    • Continuous Claims: -28K to 1.660M vs. 1.680M consensus, 1.684M prior (unrevised).
    • Alongside a forbearance agreement with its lenders, Fred's (NASDAQ:FRED) announces the closing of another 104 stores. The closings will begin today, and all 104 should be shuttered by the end of June.
    • Shares down 10.1% premarket to $0.53.
    • Source: Press Release
    • With the stock down nearly 50% since late last summer, risk/reward is more "balanced," writes analyst Alexandra Walvis, upgrading Macy's (NYSE:M) to Neutral from Sell. She trims the price target to $21 from $23.
    • Macy's yesterday reported Q1 results that topped expectations.
    • "Secular challenges weigh," reminds the still not-bullish Walvis.
    • Shares up 0.55% premarket to $21.80.
    • Walmart (NYSE:WMT) reports comparable sales in the U.S. rose 3.4% in Q1 to match the consensus expectation. A higher average ticket offset a drop in transactions during the quarter.
    • Sam's Club sales increased only 0.3% as reduced tobacco sales this year impacted the comparison to a year ago.
    • E-commerce sales rose 37% during the quarter off strong growth in online grocery and the home/fashion categories. The growth was a deceleration from the blistering +43% pace in Q4.
    • Operating income fell 4.1% or 3.0% on a constant currency basis. The OI drop was better than anticipated with the inclusion of Flipkart factoring in, according to Walmart management. Operating cash flow was $3.6B and free cash flow was $1.4B.
    • Shares of Walmart are up 1.91% premarket to $101.79 vs. a 52-week trading range of $81.78 to $106.21.
    • Previously: Walmart beats by $0.11, misses on revenue (May 16)
    • Walmart (NYSE:WMT) CFO Brett Biggs warned on the impact of tariffs on consumers in an interview this morning.
    • "We will do everything we can to keep prices low, but increased tariffs lead to increased prices," he stated.
    • The stance from Walmart could provide some cover for other retailer such as Dollar General (NYSE:DG), Dollar Tree (NASDAQ:DLTR), TJX Companies (NYSE:TJX), Five Below (NASDAQ:FIVE) and Target (NYSE:TGT) to also pass on their tariff pain to consumers.
    • Walmart grew U.S. comparable sales by 3.4% in Q1 to top the overall pace of retail sales during the quarter across the sector.
    • cbdMD (NYSEMKT:YCBD): Q2 GAAP EPS of $0.00 beats by $0.06.
    • Revenue of $5.67M (+87.1% Y/Y) beats by $1.07M.
    • Press Release
    • Village Farms International (NASDAQ:VFF) says it applauds the passage yesterday by a unanimous vote of House Bill 1325 by the Texas State Senate to establish a Texas Hemp Program.
    • The bill will provide a regulatory and licensing framework for the cultivation and processing of hemp, as well as for products made from hemp, including cannabidiol.
    • HB 1325 will now return to the House of Representatives for consideration of the Senate's amendments to the bill.
    • Source: Press Release
    • The financial industry has been hit with billions of euros in fines worldwide in the last decade for rigging key benchmarks.
    • This morning saw the latest penalties from EU antitrust regulators, which fined Barclays (NYSE:BCS), Citigroup (NYSE:C), JPMorgan (NYSE:JPM), Mitsubishi UFJ Financial (NYSE:MUFG) and Royal Bank of Scotland (NYSE:RBS) a total of €1.07B for rigging the spot foreign exchange market for 11 currencies.
    • Swiss peer UBS (NYSE:UBS) was not penalized as it alerted the two cartels to the European Commission.
    • Many lament the traffic in Los Angeles, but commuters will now have the option to chow downduring the jams when they are in a couple mile radius of a Burger King (NYSE:QSR).
    • The Traffic Jam Whopper is a direct-to-car delivery service, which will use motorcyclists and real-time data to delivery food to those stuck on the road.
    • In efforts to ensure safety and avoid tickets, the Burger King app used to make orders will function using voice commands.
    • U.S. Federal Judge Paul Grimm has ordered the FDA to begin its review of e-cigarettes, calling the agency's delay "so extreme as to amount to an abdication of its statutory responsibilities."
    • FDA Commissioner Scott Gottlieb – who departed last month – previously ruled that e-cig manufacturers would not have to submit their products for review until 2021, saying more time is needed to prepare for regulation.
    • Separately, North Carolina's attorney general has announced the first state lawsuit against Juul (JUUL), which dominates the U.S. vaping market, saying, "we cannot allow another generation of young people to become addicted to nicotine."
    • T. Rowe Price (NASDAQ:TROWsold more than 80% of its Tesla (NASDAQ:TSLA) shares during this year's Q1, holding 1.7M shares as of March 31 vs. 8.9M shares at year-end 2018, according to an SEC filing.
    • TROW's move leaves the fund manager holding the smallest number of TSLA shares since 2013 after ramping up its holdings late last year, even as the stock dropped following Elon Musk's "funding secured" tweet.
    • Because TROW runs both actively managed and passive funds, some of the decline in holdings may have been caused by money flowing out of funds rather than reduced positions.
    • Even as TROW steps back from TSLA, it has continued to pump money into potential competitors in the race to develop autonomous vehicles, including an equity investment in GM's Cruise driverless car unit.
    • Gannett (NYSE:GCI) looks likely to retain all eight board seats in its harsh proxy fight with MNG/Digital First.
    • That's based on unofficial voting so far, according to WSJ reporter Cara Lombardo.
    • It would be the culmination of an activist push by MNG, which pressed a $12/share cash offer for the company even against doubts that it could raise committed financing for the deal. Gannett's market capitalization wrapped the day at roughly $1B.
    • Along the way, MNG trimmed an opposition slate of directors to three from six, and then proxy advisers largely came in on Gannett's side: ISS backed just one dissident nominee, while Glass Lewis and Egan-Jones put their support behind Gannett's slate.
    • President Trump has issued an executive order banning American telecom companies from installing foreign-made equipment that could threaten national security, the White House says.
    • The order instructs Commerce Secretary Wilbur Ross to "prohibit transactions posing an unacceptable risk," and while it doesn't mention one company or country, China's industry leader Huawei jumps to mind.
    • Trump declared the threat to U.S. telecom networks a national emergency.
    • Also likely affected is ZTE (OTCPK:ZTCOF), while beneficiaries of further prohibition are likely Ericsson (ERICup 2.6% after hours) and Nokia (NOKup 0.6%).

  2. There is not many justifications for going higher, but I don't care – I sell premium when we go down and watch it melt when we go up! 

  3. Good morning, All!

    The webinar replay is now available!

  4. Good Morning!


    Optical/semiconductor stocks indicated lower after US moves to block Huawei equipment 


    Positive for Nokia and Ericsson.

  6. Why is NYCB cratering?

  7. NYCB/millard, story yesterday suggested because NY is pursuing various rent control legislation impacting their potential for lending

  8. TUP – Tupperware has lost about half its market cap over the last year, now at about a 7 PE. And they have LEAPS. Thoughts?

  9. Good morning!

    CSCO and WMT have things moving higher – quite the pop now.  Glad we got that dip in /NQ last night and escaped with a small profit on the shorts. 

    Semis/Albo – MU taking it badly, down 3%.

    NYCB/Millard – Those damned Democrats.  Always choosing People over Profits.

    (Bloomberg) — Newly empowered New York Democrats eyeing rent control laws set to expire on June 15 pose a risk to loan growth and credit, Wedbush warned in a note. That helped push shares of New York Community Bancorp and other exposed banks lower in trading Wednesday.

    Republicans had controlled the state’s Senate for the past decade, and had successfully blocked Democratic efforts to change rent regulation laws, analyst Peter Winter wrote in a note. Now, Democrats are in complete control of New York state government and have “introduced nine bills on rent regulation that clearly favor the tenants,” he said.

    That means there’s “potential risk brewing to the multi-family lending business in New York.” The risk comes, he said, not from “a credit perspective, as these loans are conservatively underwritten,” but rather from “potentially weaker loan demand and less refi activity.” That would hurt prepayment income, which in turn would hurt net interest margin, Winter wrote.

    Wedbush downgraded Signature Bank to neutral from outperform and listed the top five banks with exposure to New York City multi-family lending, in order: NYCB, Dime Community Bancshares, Signature Bank, Investors Bancorp and Sterling Bancorp.

    NYCB slid as much as 4.9% to the lowest intraday since January 18, and was one of the worst performers in the KBW Bank Index. Signature Bank sank as much as 5.9%, to the lowest since January 17; Dime Community fell as much as 2.5%, Investors Bancorp as much as 2.4%, and Sterling as much as 2%.

    Lower yields were likely also weighing on interest-rate-sensitive regional banks, which underperformed larger banks.

    And what Mike said. 

    TUP/Dawg – I can't live without it but other people sure can as they've lost 25% of their sales over the past 5 years and about the same in profits.  No growth in revenues projected but at least they gave up and now they are cutting costs so figure $200M in profit and you can buy the company for $1.2Bn so reasonable for no growth and they do pay a 4.5% dividend so maybe as a dividend play?

    Year End 29th Dec 2013 2014 2015 2016 2017 2018 TTM 2019E 2020E CAGR / Avg
    Revenue $m 2,672 2,606 2,284 2,213 2,256 2,070 2,014 1,953 1,980 -5.0%
    Operating Profit $m 403.5 367.7 315.2 354.2 229.1 319.8 309     -4.5%
    Net Profit $m 274.2 214.4 185.8 223.6 -265.4 155.9 157.1 194.7 201.8 -10.7%
    EPS Reported $ 5.16 4.20 3.69 4.41 2.16 4.11 4.18     -4.4%
    EPS Normalised $ 5.29 4.32 3.78 4.12 3.55 4.07 4.15 4.00 4.18 -5.1%
    EPS Growth % +15.6 -18.3 -12.5 +9.0 -13.8 +14.6 +19.6 -1.81 +4.55  
    PE Ratio x           5.64 5.54 5.74 5.49  
    PEG x           n/a n/a 1.26 0.85

    Since, however, the 2021 $22.50 puts can be sold for $4.80 and that's 4 years worth of dividends, I'd start by just doing that sale and seeing how it goes.  Worst case is you are in for net $17.70, which is 24% off the current price – not a bad worst case.  

  10. Butterfly Portfolio Review:  Oh how I love this portfolio!  $168,629 is UP $2,680 since our 4/16 review and up 68.6% overall and while it may be our worst-performing portfolio – if I had to have just one portfolio – this would be it because SLOW AND STEADY WINS THE RACE and this portfolio just chugs along, year after year, with very little drama.  

    It's not like we don't take risks in the Butterfly but we pick stocks BECAUSE they obey their channels so, when they get to the bottom of a channel – we go longer and, when they get to the top of a channel, they go shorter.  Oddly enough, we have more AAPL longs in the Butterfly Portfolio than we do in the LTP at the moment.  

    There's a very simple strategy at work in this portfolio, which has just 5 positions and is using just 1/3 of it's cash and that's SELL PREMIUM, SELL PREMIUM and then SELL MORE PREMIUM.  It's a very low-touch portfolio and our low last week was $161,171 – not much variation – even though we don't use traditional hedges (the positions are self-hedging).  

    • AAPL – Huge changes in the last review, it's essentially a new position as we took our 2021 $120s off the table for $124,500 (much of it profit).  I strongly advise going over those changes (DIS too) as we were preparing for the sell-off in both of those – not because we don't like the stocks – but because, as VALUE INVESTORS, we KNOW what our stocks are worth – even when it's less than the current price. 
    • Now, with AAPL, we can afford to be brave and buy back the 20 short July $200 calls at $4 ($8,000) as it will take us 64 days to collect $4 (less than 0.10/day) even if AAPL stays below $200  but we can sell just 10 Sept $200s for $7.70 ($7,700) if we were so inclined but hopefully AAPL goes higher and, if it doesn't, then we can sell the Sept $180s, now $18.20 or whatever so there's no harm at all in going naked for the weekend and seeing where we stand next week.  Consider the buyback the first leg of a slow roll.

    • DIS – Another one we moved around last week and we did get a bit of a correction but DIS is impressively strong but we'll give it some time to settle down before making more adjustments – as we planned to do after earnings (which were solid).  

    • MDLZ – Heading higher and higher and we're going to be burned on the short May $47 calls, now $5.70 but at least our spread is pretty much in the money.  We sold them for $2 so let's roll just the $3.70 loss and sell 10 Sept $50 calls for $3.90 ($3,900) and, if they fail $50, we'll sell more and, if they are over $52, we get $34,000 for the spread we paid net $4,100 for - less whatever we owe the short callers – that's fine.  

    • OIH – On track for our new, conservative play on them.  I think this is a good bottom though so let's buy back the short July $17 calls for 0.32 ($320) and double down with 25 more 2021 $15 calls at $2.60 ($6,500) which will average us in $50 at $4.025 and we'll sell 20 2021 $17 puts for $3.20 ($6,400) to pay for it.  

    • WHR – We're on track for the short puts and calls to expire worthless but we should take advantage of the tariff drop to sell more puts so let's sell 5 of the Sept $120 puts for $5.10 ($2,550) and wait for a bounce to sell some calls.

    That's it.  Now we sit back and see what happens in a month.  Nice way to make 68%, in 5 months, right?

  11. What’s Our China Endgame?

  12. Options Opportunity Portfolio Review (OOP):  $266,998 is worse than I thought as I forgot we hit $300,689 on 4/18 so we're down $33,691, which is 10% of the Portfolio – so the same as all of them, really, but it's 33.7% of the $100,000 we started with on Jan 2nd so – OUCH!   We knew the excess hedging would hurt if we didn't have a big correction and here we are with the S&P back to 2,890 this afternoon.  Hopefully there are things we can take advantage of with our $101,000 in cash.  

    Our goal in the OOP is to take advantage of OPPORTUNITIES in the maket – usually we jump on stocks that have been unfairly sold off on news we don't consider as bad as the traders who are running out of the stock.  That's why you see a lot of stocks in here with erratic charts – usually they've had some kind of mishap which drew our attention to them.

    • FTR – Earnings were good but outlook still choppy – we just need to be patient.
    • HMNY – Dead money really.
    • HOV – They've held up well since the reverse-split, which is a rarity.  Still no good options to sell yet. 
    • TZA – Big loss on this hedge already, net $19,350 and potential for $60,000 at $14 so $40,000(ish) of coverage.

    • INTC – I think it's a good bottom so let's add 20 of the 2021 $45 ($6.60)/52.50 ($3.60) bull call spreads at $3 ($6,000) and we sold the puts for $4,000 so net $2,000 on the $15,000 spread is a nice way to enter this position.

    • LB – Earnings are on the 22nd.  
    • PLAY – On track
    • SQQQ – Same $60,000 potential at $14 as TZA but net is $28,000(ish) so $32,000 protection here.  
    • AAPL – Not up much today with the Nasdaq flying.  Let's buy back the 10 short July $200 calls at $4.40 and see if we get a move back to $210 before selling covers again.

    • ALK – On track.
    • AXL – Not usually such an exciting stock.  It's a new trade that really hurt us and earnings were even in-line but revenues missed and all of it was worse than last year.  Still, they are guiding $325M in earnings and $11.77 is $1.3Bn so very reasonable price – even if they aren't growing much.  Let's buy back the 30 short 2021 $20 calls for 0.70 ($2,100) and roll our 30 2021 $13 calls ($2.30) to the 2021 $8 calls at $5 for net $2.70 ($8,100), which puts us $4 in the money ($12,000) so it's money well spent on the roll and we'll make some back, hopefully, when we sell more calls (we made almost $6,000 on the first set).  

    • BBBY – Still unloved but I love them, but not enough to spend more money on them mid-channel.  

    • BHC – On track!   

    • C – Almost at goal but net is just $14,000ish out of $30,000 so should be good for a double next year.
    • CDE – I hope this is the bottom.  
    • CHK – On track.  Good for a new trade.

    • FCX – Back to where we started and good for a new trade. 
    • FNSR – On track.
    • GNC – Getting worse.  Earnings 4/25.
    • GOLD – Good for a new trade. 
    • HBI – Already at goal but lots more to be made (100% more).

    • JO – New and good for a new trade.  In fact, let's buy 10 more Sept $30 calls for $3.40 as it's a nice discount
    • KHC – GIS is doing well but KHC can't get it together.  I still like the trade.
    • LB – Earnings next week and we'll see but let's buy back the 15 short 2021 $27.50 calls for $2.85 ($4,275) and sell 5 2021 $22.50 puts for $5.20 ($2,600) as a sort of a pre-roll for the short $27.50 puts.  

    • M – Earnings were good but reaction to them sucked.  Great for a new trade, one of my favorites.  
    • MJ – Too many high-flying IPOs with disappointing earnings but I know what they are going through with red tape and regulations so I still love this one.  We cashed out our 40 long 2021 $20 calls and left the $45s for protection and the short $30s have dropped a bit, but not much but it wasn't our intention to be short after earnings – just into them.  Now we have to roll the 40 2021 $45 calls at $3.20 ($12,800) down to 25 of the 2021 $25 calls at $10.90 ($27,250) AND buy back the 20 short 2021 $30 calls for $16,000) and we'll watch them closely this month but I don't think we need a cover as they should be hitting $40 next Q.

    • MU – Let's roll the 20 2021 $40 calls at $8 ($16,000) to 20 2021 $30 calls at $12.60 ($26,200).

    • NAK – Praying for a permit.
    • NLY – Praying the Fed lowers rates.  Actually, we sold the $8 calls, so we don't care.  
    • OIH – Let's buy back the 10 short July $17 calls for 0.30 ($300) 
    • SIG – A lot of damage off 4/4 earnings and we thought we might be entering too early but now we can add 5 more 2021 $15 calls for $7.80 ($3,900) and see how things go. 

    • SPWR – Over our target but it's a $20,000 spread netting just $12,315 so actually good for a new trade with $7,685 (62% upside in 18 months) and all SPWR has to do is not go lower.  
    • T – Brand new and already profitable.  
    • UNG – Brand new and still good for a new trade.  My arms are tired from banging the table on Natural Gas!  

    • WBA – Very disappointing so far.  Still, only the bottom of our range with 18 months to go.  
    • WPM – My precious!  Actually dropped a lot since last report but still up about $5,000 (was about $10,000) and on track and it's a $22,500 spread (only 1/2 covered) at just net $9,935 so good for a new trade with more than 100% upside and we'll buy back the short June $20 calls for 0.65 ($650) and that's a $2,200 profit for the Q so 6 more of those and we more than pay for the whole spread – isn't that fun.  For now though, too low in the channel so we'll wait to sell again.  

  13. Soybeans doing very nicely.

    Coffee and /NG too – having a great week in the Futures.  

    /RB hit goal at $2.05 as well.  Stop is $2.06 now.   /RBN19 is $2.03.  

  14. I do not see the point in evaluating the % loss against your original investment size.  By that logic if you had been in the market for 20 years and up a few hundred percent a market correction could erase several X your original investment and still not be extreme.

  15. "GNC – Getting worse.  Earnings 4/25"

    Actually they report July 25.


  16. Phil,

    SI is quite down. Is it a good long now?

    Thank you

  17. MDLZ in Butterfly Portfolio , don’t understand commentary about call spread

  18. Appreciate the reviews Phil .. much to digest.

    Thinking of selling AAPL June 2021 $160 or $170c (even 175s almost same premium) calls to cover my 20 2020 $150s as you suggest.

    Then if I did buy the June 2021 160/200 bcs could I be both short and long the 2021 $160s?? Or would I end up buying back my own short $160s and have nothing?

  19. mill / MDLZ spread – definitely perplexing. The challenge of the 'butterfly' is that an underlying that makes a significant channel break out, is like a whack on the side of the head for the short term option premium strategy. Within the channel it's a rinse and repeat option selling operation. But when one of the short sales goes deep ITM it takes a while to recoup the losses. 

    From mid Jan 2015 until Jan 2019 MDLZ was a perfect candidate for the strategy - and then take off. Generating profits through monthly sales is put on hold as one tries to play catch up on recouping the losses on rolling the short sales.

    But it's a powerful strategy when the underlying remains channel surfing.

  20. Loss/Tangled – Well the gains are against the original so I just thought it was right to note the losses that way too.  Just trying to keep things in perspective both ways.  

    GNC/Albo – Silly me, 4/25 is gone already.  This year is flying past for me…  They had pretty good earnings, up from last year at 0.15 Non-GAAP but GAAP was an 0.23 loss and Revenues were $565M, down 7% from last year but also a beat on low expectations.  People buy into turnarounds but then bail after one quarter if everything isn't magically completed.  I think they are heading in the right direction (though not on the chart).

    From the CC:

    We are pleased with our adjusted EBITDA margin improvement that we delivered in the first quarter of 2019. Our international business continued to show strength in the quarter as did our domestic franchise stores, which delivered their positive comp in several years. Sales in our domestic retail business were largely in line with our expectations, but e-commerce underperformed. As we discussed in the last quarter's call, we continue to face headwinds in our Amazon business, and our team is actively engaged with their partners at Amazon working to strengthen the current sales trends. We are also conducting an aggressive search for a Chief Digital Officer.


    Let me give you a quick update on the two strategic partnerships that closed during the first quarter. We are working closely with Harbin Pharmaceutical Group to position our China joint venture for success. Our teams have been hard at work aligning on priorities, solidifying our management team, and executing the first steps of the joint venture business plan. We continue to believe that the Harbin partnership will accelerate our presence and maximize our opportunities for growth in the $25 billion Chinese supplement market.

    In addition, we have transitioned our day-to-day manufacturing and supply chain operations to the newly-formed manufacturing joint venture with International Vitamin Corporation. The GNC and IVC teams are working extremely well together, and we remain confident that our partnership will deliver meaningful efficiencies and allow our team to do what we do best, bringing innovative products to the marketplace.

    With these partnerships up and running, we are intently focused on improving results in our domestic stores. As part of our store portfolio optimization initiative, we closed 87 corporate stores during the first quarter, and our average sales transfer rate from closed stores to nearby locations continues to exceed our 30% target. We continue to see strength in sales of our own brands, and in the first quarter, GNC branded products made a 52% of our domestic sales. This is up from 50% at this time last year. While developing our own products is at the heart of our innovation strategy, we also look for emerging exciting brands with whom we can build strategic relationships.

    That's a lot of stuff they are working on – can't expect it all to be done the same year they start.  

    /SI/Kgab – That was a hell of a fall!  

    So it wasn't /SI in particular so, seeing this, we want to check and see if it's the Dollar's fault.  

    Yep, it is.

    Markets back up too so people aren't panicking into metal.  Tempting though it may be it's kind of a harsh drop so I'd rather wait and see and, if it rallies – just get in on the cross back over $14.60, where we're comfortable – though it cut through it like paper today so I'd rather play the $14.50 line if we get there ($14.515 was the low so far).  Keep in mind, that's a drop from $16 to $14.50 and should be $1.60 to $14.40 if that's the case and then the bounces would be 0.32 to $14.72 (weak) and $15.04 (strong) – those are the lines to watch.  

    Short-term, we fell from $15 to $14.55 which is 3%, which is 2.5% with an overshoot so watch the -2.5% line at $14.625 and the bounce from there is an 0.375 fall so 0.075 bounces to $14.70 and $14.775 – that's your intra-day zone.

    At the moment, I'd rather play /YG long above the $1,285 line – just about to cross it.

    MDLZ/Millard – That's why I usually don't do what-ifs.  Don't worry about the future and just worry about the roll so we're taking the loss on the May $47s and we're rolling the LOSS on that play which is $3.70 of the $5.70 we have to buy them back for.  Then we sell the Sept $50s for $3.90 (more than $3.70) and we still have the $2 in our pockets from selling the May $47s so, if the Sept $50s expire worthless – we're even.  

    Image result for algebra animated gifAAPL/Wing – I wouldn't do that, you just cancel out.  You want to sell to cover but then you want to buy a spread which means really you are too bullish to want to actually cover, right?  This is being caused by you trying to be fancy, of course.  

    You have 20 2020 $150 calls at $44 and you want to "cash out" by selling 20 June 2021 $160 calls for $45 but then you want to buy a June 2021 $160/200 spread.  If you want to buy 20 of those, you are just buying back the calls you sold so why not just cover your 2020 $15s with the June 2021 $200s at $25 and you still have $15 in the $50 spread instead of $20 in the $40 $160/200 spread?

    Good explanation Winston!  

  21. It was strange. I had one SI 14.69 from earlier. I bought one more at 14.5 today. My avarage was 14.595

    I set a sell limit order for one contract at. 14.595. 

    And it was sold one hour ago. If you see the graph Si was never there. What could happen? Somebody accidentally bought it?

    I was lucky

  22. AAPL/Wing – Sorry to rub it in but you asked me this question on 5/1, when we cashed our our AAPL longs in our portfolios.  Those calls were $65.50 at the time and now they are $45 – I can't imagine, even in Canada, that you wouldn't have been better off just taking the profits off the table and not spending over two weeks trying to save on your taxes.  They can only tax you PROFITS – but they aren't profits if you don't take them off the table!

    Oil failing $63!  

    AAPL/Wing – It's hard for me to figure out what you have from your narrative.  I'm guessing you have 20 2020 $150 calls and 20 2021 $140 calls and 10 short July $195s but it baffles me why you need two paragraphs to write what can clearly be described in about 50 characters (the way you've seen me describe things over 1,000 times) to turn things into a guessing game – especially when there are tens of thousands of Dollars at stake in a misunderstanding.  Anyway, assuming that's your position, as I said, we don't look a gift run in the mouth but, on the other hand, why be so deep in the money?   

    So I would cash the 2020 $150 calls at $65.50 ($131,000) and the 2021 $140 calls at $77.50 ($155,000) and pick up 50 of the JUNE 2021 $180 ($50)/220 ($28.25) bull call spreads for $21.50 ($107,500) and I'd roll the short July $195 calls at $21 ($21,000) to 20 short Aug $210 calls at $12.35 ($24,700) so, all in all, you'd be taking $182,200 off the table but you'd still have a $200,000 spread that's mostly in the money 40% covered by calls that, if all goes well, will let you collect about $25,000 for another 5 quarters ($125,000) so hopefully $325,000 more to collect and $182,200 to diversify with.  

    If AAPL goes up, you just roll the short calls (and you can certainly afford to buy more longs) and if AAPL goes down, you can sell puts and widen the spread by rolling the calls $10 lower for $5 whenever there's an opportunity.  Don't forget, 2022 will be out soon and you can always buy a higher spread with just some of the $182,000 you'll have in your pocket.

    Lucky/Kgab – That is lucky.  Maybe someone put in a market order (idiot) and you were the only seller open at the time.  That's why it's good to ask – you never know what's going to fill.  

    By the way, your instincts are great lately.  Timing of that Q on /SI came right at the turn – good job!  

    Luck is being at the right place at the right time and, if you want to get "lucky" then you have to work hard at making sure you are positioned in the right place and then, once in a while, it will be the right time and you'll be "lucky" – thanks to all your hard/smart work!  

    Image result for luck cartoon science

    Image result for luck cartoon science

  23. Phil/STT

    any reason you see for the stock is stay low for multiple days? Nothing in the news.


  24. MDLZ accounting for rolls. Phil, rolls and adjustments are often tricky to keep track of. Unfortunately that '$2 in our pockets from selling the May $47s'  was not real. The short sale started off back in March: "short March $45 calls finished at $2.80 ($47.80) and we sold them for $1.75" — so we started off with $1.75 in our pockets – then we went to $1.05 out of pocket. So the salefof the May 47s for $2 put $0.95 back in our pockets. Then the September roll covers some of the loss, not all.

    Long story short, if you don't keep on top of the rolls, by adjusting your cost basis then some of the 'profits' are illusory. 

    I've done it many times myself.

  25. STT/Pat – I hadn't heard anything bad but maybe they are caught up in that manipulation thing?

    I think, to some extent, the ETF Fee war (declining) is worrying investors and you can see the 4% decline in client pricing – that's not good but they are trading like they are DB – way too low. 


    Well, let's see if there was any progress on our bounce lines.  Yesterday morning, everything was red except the Dow was at the strong bounce line (25,700), so we know they are going all green:

    • Dow 25,200 is the 5% line and the bounce lines are 25,450 (weak) and 25,700 (strong)  
    • S&P 2,860 is the 5% line and the bounce lines are 2,875 (weak) and 2,890 (strong)
    • Nasdaq 7,475 is the 5% line and the bounce lines are 7,540 (weak) and 7,605 (strong) 
    • Russell 1,550 is the 5% line and the bounce lines are 1,565 (weak) and 1,580 (strong)

    Wow, big improvements!  Nothing to be bearish about here – going to make the weekend a tough call.  

    Illusory/Winston – Well I don't go back through the history each time.  The prior losses are reflected in the portfolio's overall balance and we're just trying to make profits moving forward from where we are.  Your point is very valid on the overall position but that would simply be a nightmare to keep track of discussing over 100 positions.  We also cashed out winning short puts for all those failed short calls, didn't we?  I'm pretty sure they were all paired and this isn't even the original spread – we started with 20 2020 $40 calls at $5.40 back on 7/9/18 and cashed them out for a $2 win when we flipped to the current spread so, overall, the position is up very nicely but I don't care about any of that – I'm just trying to make a win out of the current short call if I can…

  26. Phil/STT,

    thanks for the information but which manipulation?


  27. 3M dividend champion is at $171. What do you think of them?

    Thank you

  28. Good morning!  

    Down 0.666% this morning.  Just lack of progress on trade causing it but how on Earth did anyone believe there was progress being made in the first place?

    Manipulation/Pat – Forex.  Many big banks being fined by EU over Forex manipulation – I don't think STT is one of them.

    MMM/Kgab – I generally like them, remind me in chat.  I think, however, we may be in a 2008 situation – in which a lot of things SEEMED cheap in the fall as they dropped 20% or so but then they dropped 40% and 60% after that.  I wouldn't just jump into things because they sold off sharply with this trade stuff still unresolved.