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Wednesday Weakovery – Low Volume Rally Gives Us Hope

Quite the bounce.

All it took was a few words from China, Mexico and, of course, the Fed and the market was off to the races again led by the small-cap Russell Index, which is already testing the strong bounce line at 1,510 in the overnights.  We're still waiting for the Nasdaq to make it's weak bounce line at 7,250 but, on the whole, we're glad we kept our longs in play (covered with hedges, of course).  As it stands now, we've got a lot more green on the chart than we had yesterday morning:

  • Dow 26,700 to 24,700 is 2,000 so huge 400-point bounces to 25,100 (weak) and 25,500 (strong)
  • S&P 2,950 to 2,750 is 200 so 40-point bounces (or what I said above) to 2,790 and 2,830
  • Nasdaq 7,850 to 7,100 is 750 so 150-point bounces to 7,250 and 7,400
  • Russell 1,600 to 1,450 is 150 so 30-point bounces to 1,480 and 1,510

That's really about as much progress as you can expect for one day but the underperformance of the Nasdaq is a concern and, as you can see from the daily chart – even the 100-point rally off the bottom isn't enough to put much of a dent in the 850-point drop – so we'll be watching the Nasdaq very closely today to let us know whether we should be looking up or down for our next targets. 

Senate Republicans signaled they were willing to cross the aisle and veto any tariffs Trump wishes to place on Mexico and that encouraged the markets while Mexico, for their part, indicated they would be willing to have "sensible" negotiations but also made it clear they were not going to stop people from legally entering their country.  

Image result for trump emergency cartoonIf the White House says the justification for the tariffs rests on Trump’s declaration of a national emergency from earlier this year, Congress could revive a resolution of disapproval that already passed both chambers but failed to get enough votes in the House to override Trump’s veto. If the White House declares a new national emergency, Congress could pass a new resolution of disapproval — effectively removing the provision Trump would cite to have the power to impose tariffs.

Any measure that could be a check on Trump’s trade policy would need a two-thirds majority in both chambers to override a veto. That means roughly 20 Republican senators and 55 Republican representatives would have to stand up to the president — and their constituents who support him.

Fed Chairman Jerome Powell signaled an openness to cut interest rates if necessary, pledging to keep a close watch on fallout from a deepening set of disputes between the U.S. and its largest trading partners.  Central banks are resuming their first-responder role as the world economy runs into trouble even if they lack the firepower they once had at their disposal.  All this has been taken very positively by the market so far.

Asian equity futures are pointing higher after U.S. stocks jumped the most since January on Powell's comments. Big banks surged as Wells Fargo analyst Mike Mayo said the industry would "party like it's 1995" if rates are cut. Treasury yields rose from multiyear lows as the Fed chairman stopped short of signaling any imminent moves, and the dollar declined.

Oil, however, is still down as yesterday's API Report showed a 3.5Mb build in oil last week and millions more builds in both Gasoline and Distillate  stockpiles – a string of disastrous reports indicating extremely weak demand to kick off summer driving season. 

The Nasdaq has been lagging as Big Tech is facing a probe by the House Judiciary committee regarding potential anti-trust issues as well as looking into "fake news" and other issues that seem to be getting worse, not better, on Social Media.  This will play out over many, many months and we expect the Nasdaq to snap higher as the immediate heat dies down.  Short sellers were already badly burned yesterday and the pain is likely to get worse unless Trump does something else stupid in England this morning.  

Short bets were paying off up until this week

This morning we'll look for failures at our various bounce lines and, if we start seeing rejections, we simply short the laggard, like Dow (/YM) Futures, which we were long on yesterday at 25,000 with a projected target at the weak bounce line at 25,500.  We took the $2,000 per contract profit and ran yesterday but this morning we may get a chance to go short at 25,500 with tight stops ABOVE this time and it's the same very good risk/reward play we took advantage of yesterday.

Play smart, not hard!

 


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  1. Good morning!

    On  my way home, should be there before noon. 

    • Love the /YM short at 25,500 or short the laggard if you see rejections. 
    • Still think Oil can't get worse so I like it over $53 or at $52.50 with tight stops below but yes, I'd play it into the inventory and hope for a pop.
    • /NG, of course, is a long at $2.40 again.

    See you later!


  2. All is well again!


  3. The media is try to sow panic among the people regarding climate change says the EPA chief:

    https://talkingpointsmemo.com/news/epa-andrew-wheeler-blame-media-climate-change-alarm

    In the meantime:

    https://www.cnn.com/2019/06/04/health/climate-change-existential-threat-report-intl/index.html

    Twenty days of lethal heat per year. Collapsed eco-systems. And more than one billion people displaced.

    Those are all probable scenarios that could devastate societies by 2050 if swift and dramatic action isn't taken to curb climate change, according to a think tank report backed by a former Australian military chief.

    But 2050 is not in next year's earnings report so no worries!


  4. Morning, All! 

    Happy Wednesday, All!

    So… with Phil traveling homeward today, I'm pretty sure we won't be having our usual webinar. 


  5. Good Morning!


  6. StJeanluc/ Pollution

    https://www.bloomberg.com/news/articles/2019-06-04/u-s-moves-to-ensure-rare-earth-supply-amid-trade-war-with-china

    Refining rare earth sands in the US should be more of a worry for EPA than the doom scenario from Breakthrough. 


  7. Hi Phil,

    Any opinion on CLR? Thx 




  8. People eat at least 50,000 plastic particles a year, study finds



  9. Oakland in California legalizes magic mushrooms and peyote



  10. GOP senators line up against Trump’s 5% Mexico tariff plan



  11. Apple’s Audacity


  12. wow 22 million build net not much of a pop


  13. One report does not constitute a trend but another red flag, IMO.

    Stocks pare gains as private sector job growth weakest in nine years


  14. I'm back! 

    Holy crap, what a disaster for oil! 

    • EIA Petroleum Inventories: Crude +6.8M barrels vs. -0.9M consensus, -0.3M last week.
    • Gasoline +3.2M barrels vs. +0.6M consensus, +2.2M last week.
    • Distillates +4.6M barrels vs. +0.5M consensus, -1.6M last week.
    • Futures -1.63% to $52.61.

    I don't even know if we can stick with OIH on this trend!

    Dollar found a floor at 96.70.

    /SI rejected right at $15 as Dollar turns up.  

    Not much of a dip but something out of the Dow off 25,500 and now /ES is testing 2,800 again so we'll see what happens.  Nas red again?  

    I miss my command center when I go away – that took a few minutes vs 10 when I'm on the road.


  15. any idea how far down you think wti will go on this news phil does like 50 dollars seam likely


  16. Big Chart – All is not well if the indexes re-fail those 200 dmas – that would be a very bad sign and you can see /ES is already tugging the 50 dma towards a death cross down the road if it stays under 2,850.

    Climate/StJ – I hope, in the very least, future generations find a way to execute these assholes for betraying humanity.  

    EPA/Lionel – There's no worries for the EPA, the EPA is too busy rolling back all the protections placed on the environment (the one they are supposed to Protect) over the past 40 years. 

    84 Environmental Rules on

    the Way Out Under Trump

    These people are selling out the country – they are selling out humanity – and no one seems able to stop them!

    3. Loosened a Clinton-era rule designed to limit toxic emissions from major industrial polluters.

    E.P.A. | Read more

    4. Stopped enforcing a 2015 rule that prohibited the use of hydrofluorocarbons, powerful greenhouse gases, in air-conditioners and refrigerators.

    E.P.A. | Read more

    8. Directed agencies to stop using an Obama-era calculation of the “social cost of carbon” that rulemakers used to estimate the long-term economic benefits of reducing carbon dioxide emissions.

    Executive Order | Read more

    12. Announced intent to withdraw the United States from the Paris climate agreement. (The process of withdrawing cannot be completed until 2020.)

    18. Proposed relaxing Obama-era requirements that companies monitor and repair methane leaks at oil and gas facilities.

    E.P.A. | Read more

    24. Rescinded water pollution regulations for fracking on federal and Indian lands.

    Interior Department | Read more

    26. Withdrew a requirement that Gulf oil rig owners prove they could cover the costs of removing rigs once they have stopped producing.

    Interior Department | Read more

    28. Revoked an Obama-era executive order designed to preserve ocean, coastal and Great Lakes waters in favor of a policy focused on energy production and economic growth.

    Executive Order | Read more

    41. Revoked Obama-era flood standards for federal infrastructure projects, like roads and bridges. The standards required the government to account for sea-level rise and other climate change effects.

    Executive Order | Read more

    43. Revoked a directive for federal agencies to minimize impacts on water, wildlife, land and other natural resources when approving development projects.

    Executive Order | Read more

    48. Restricted most Interior Department environmental studies to one year in length and a maximum of 150 pages, citing a need to reduce paperwork.

    Interior Department | Read more

    60. Rolled back a roughly 40-year-old interprentation of a policy aimed at protecting migratory birds, potentially running afoul of treaties with Canada and Mexico.

    Interior Department | Read more

    64. Narrowed the scope of a 2016 law mandating safety assessments for potentially toxic chemicals, like dry-cleaning solvents and paint strippers. The E.P.A. will focus on direct exposure and exclude air, water and ground contamination.

    E.P.A. | Read more

    65. Reversed an Obama-era rule that required braking system upgrades for “high hazard” trains hauling flammable liquids, like oil and ethanol.

    Transportation Department | Read more

    67. Rejected a proposed ban on chlorpyrifos, a potentially neurotoxic pesticide. In August 2018, a federal court ordered the E.P.A. to ban the pesticide, but the agency is appealing the ruling.

    E.P.A. | Read more

    69. Revoked a rule that prevented coal companies from dumping mining debris into local streams.

    Congress | Read more

    77. Announced intent to stop payments to the Green Climate Fund, a United Nations program to help poorer countries reduce carbon emissions.

    Executive Order | Read more

    These guys are actively trying to kill us! 

    Image result for trump epa cartoon

    Image result for trump epa cartoon


  17. MDLZ review please, SHORT 10 jun19 $45 calls and 10 sept19 $50 calls and 10 sept19 $50 put, LONG 20 Jan21 $55 calls and 20 Jan21 $38 puts


  18. MDLZ 50 day and 200 day avg continue north and diverging


  19. CLR/Sun – Good, solid company you can buy for $14Bn at $38.35 and they are dropping $1Bn to the bottom line so reasonably priced and growing about 10% a year so sure, they are good but it's a rough sector, for sure.  

    Year End 31st Dec 2013 2014 2015 2016 2017 2018 TTM 2019E 2020E CAGR / Avg
    Revenue $m 3,422 4,802 2,680 1,980 3,121 4,710 4,693 4,864 5,552 +6.6%
    Operating Profit $m 1,446 1,843 -224 -313.6 448.8 1,587 1,511     +1.9%
    Net Profit $m 764.2 977.3 -353.7 -399.7 789.4 988.3 941.3 999.7 1,201 +5.3%
    EPS Reported $ 2.07 2.64 -0.96 -1.08 0.20 2.64 2.51     +5.0%
    EPS Normalised $ 2.44 3.72 -0.29 -1.16 0.52 2.87 2.73 2.80 3.36 +3.3%
    EPS Growth % +21.6 +52.2       +453.1 +127.5 -2.62 +20.1  
    PE Ratio x           14.0 14.7 14.4 12.0  
    PEG x           n/a n/a 0.71 1.26
    Profitability

    At this point, US producers are going to have to join OPEC if they want to keep prices up.  We're not producing much more oil but product is backing up all over the place.  There's no way demand will keep pace – unless Trump gets 4 more years to roll back all advances we've made in energy conservation and even that would be tough as people have learned that more efficient cars do save them money – as do energy-saving bulbs.  

    You can sell CLR 2021 $37.50 puts for $7.15 so that's just over $30 on an entry and pays more than 20% of your net obligation so a great place to start and I'd just do that and make sure there's a real bottom before adding a bull call spread.  

    CMG back to $666

    Q Ratio/Pstas – Just tells us the same thing in a different way – we're toppy but we could go higher.

    Q and its Geometric Mean

    Q Ratio and the Market

    Jobs/Pstas – We get NFP Friday.

    Oil/Tommy – /BZ is bouncing off $60 and that's $51 on /CL so I think we find a floor here for at least a bounce but I've been thinking that at $60, $57.50, $55, $52.50 and now $51 so I give up trying to figure out oil at the moment.  OPEC meeting at the month's end and, if that doesn't get a rally – look out below.

    MDLZ/Millard – So it's:

    • 20 2021 $55 calls 
    • 20 short 2021 $38 puts
    • 10 short June $45 calls 
    • 10 short Sept $50 calls 
    • 10 short Sept $50 puts 

    The short $45s are $8, the $50s are $4 and the 2021 $55 calls are $4 so, for whatever reason, you were way too bullish but maybe this is what you're left with after cashing in a long leg.  In any event, The 2021 $38 puts are $1.45 and the Sept $50 puts are $1.05 so I'd close those for $3,950 (ish) and buy back the short calls ($12,000) and spend $8,000 to roll the 2021 $55 calls to the $45 calls.  So that cost you $24,000 (ish) and all you have is 20 2021 $45 calls left.  Then you can sell 10 of the 2021 $50 puts for $4.20 ($8,400) and 20 of the 2021 $52.50 calls for $5.35 ($10,700) and 10 Sept $52.50 calls for $2.40 ($2,400) and 10 Sept $52.50 puts for $1.90 ($1,900).  That's net $23,400 so all those changes cost you net nothing ($600ish) and leave you with 20 of the 2021 $45/52.50 bull call spread and 10 short 2021 $50 put 1/2 covered by 10 short Sept $52.50 puts and calls and then you can just roll the loser each Q until you catch the middle.


  20. Phil, asked yesterday about RH earnings next week. Lots of premium to sell.



  21. “I was afraid that people were going to do stupid things and indeed they have”

    “Corporate debt was $6 trillion in 2010, it’s since grown to $10 trillion, up 65%. That’s not necessarily a disaster, it depends on what they borrowed. But I would point out that during that same period corporate profits grew from $1.7 trillion to $2.2 trillion – that’s cumulative over those eight years. So on a $4 trillion increase in debt, we got $500 billion in corporate profits, but it’s worse than that – the interest cost on the extra $4 trillion in debt only went up 23%, from $475 billion to $565 billion. So think about the horrendous productivity of capital here. You increase your debt 65%, but your interest costs only go up 23% – you would think your profits would explode with that formula – they went up 29%, over eight years, not in one year.”


  22. Thanks Phil, appreciate it….


  23. CMG multiple top certainly looks ominous if you believe in TA – but we don't so it probably doesn't matter. But you would think it would provide some kind of resistance – so unless CMG starts punching through the $700 price point the shorts are fine. As long as you shorted above $700 that is.


  24. RH/JMD – We have played them on and off over the years and I find them to be a good, solid company.  They are still fairly small, with just  83 stores and Whole Foods has 500 so I'd have to say there's a bit of room to grow as that's essentially the customer base (people willing to pay more for quality).  I like their attention to the bottom line while growing and $90.50 is only $1.85Bn so, if they are really going to make $200M next year – that's quite a good deal.

    Year End 02nd Feb 2014 2015 2016 2017 2018 2019 2020E 2021E CAGR / Avg
    Revenue $m 1,551 1,867 2,109 2,135 2,440 2,506 2,606 2,801 +10.1%
    Operating Profit $m 54.9 165.7 185.6 53.0 92.7 256.2     +36.1%
    Net Profit $m 18.2 91.0 91.1 5.40 2.18 150.6 213.6 242.8 +52.6%
    EPS Reported $ 0.45 2.20 2.16 0.13 0.31 5.68     +66.0%
    EPS Normalised $ 0.45 2.31 2.43 0.31 1.12 6.63 8.43 9.51 +71.3%
    EPS Growth %   +413.9 +5.0 -87.2 +261.1 +492.2 +27.1 +12.8  
    PE Ratio x           13.9 10.9 9.69  
    PEG x           0.51 0.86 0.52
    Profitability

    Last Q they made $3/share but that's XMas so more like $8.50 for the year and that's still great and, more importantly, they have beat each of the last 4 Qs, though estimates are getting higher and it's hard to keep up and, in fact, $8.50 is a guide-down from $10 expected before the last earnings, when the company dropped guidance as they saw the economy slowing this year (which was an accurate, good call).  

    So, as much as I like them, recognize they WERE at $50 in the summer of 2017 and $25 the year before, though those were turnaround years (the kind we DO like to invest in) – it does indicate this stock could sell off a lot harder than it has so far so I'd go in looking for more at $75 and more at $50, where I'd put my foot down ($25 no longer realistic) so, in the LTP, since $90.50 is still a lot per share, even if I were willing to make it a $100,000 position, that's only 1,000 shares so I only want to risk being assigned 500 in stage one as I can end up stretched closer to $200,000 if we have to DD twice. 

    So, initially, for the LTP, I would just sell 5 of the RH 2021 $80 puts for $20 ($10,000) as that's net $60 if assigned and, since we know it's a small initial entry, there's no reason not to poke at a bull call spread like 10 2021 $80 ($31)/130 ($16) bull call spreads at $15 ($15,000) so that's net $5,000 on the $50,000 spread so you can't be unhappy if your "small" position makes you $45,000 (900%) and gets called away while a net $90 entry on 500 ($45,000) won't kill us – especially if we could sell more $80 calls for $30 and more $80 puts for $20 then we'd be in 500 at net $40 with the risk of owning 500 more at $80 to average $60 on 1,000 ($60,000), which is 33% below the current price so, if you want to own $60,000 worth of RH at $60 – then this spread is a no-brainer as it pays $45,000 if you don't get that great entry.  

    Keep in mind it's an aggressive spread with an aggressive target where we would LOVE to see RH go lower so we can take up a proper position at net $60 but, just in case it doesn't get cheaper – our backup plan is to make $45,000 and walk away (which is what usually happens to us when we play RH on a dip).

    Debt/Pstas – Yes people forget HOW we grew the market, lots and lots of buybacks financed by debt and, one day, the piper will need to be paid.  

    Image result for pied piper animated gif

    You're welcome Sun.

    CMG/Winston – We may not believe in TA but we KNOW others believe in TA so that's still a factor.  $650 was my target for CMG and still is but more like $600-$675 so it just needs time to settle into a new range, which is very fair for a company that made $9 last year and maybe $13 this year and MAYBE $17 next year, which is still 35 times less than just $600 – but I'm giving them that since the growth is robust but 40x ($680) forward earnings is pushing it and 45x ($765) would be ridiculous – so here we are.


  25. China, Russia seek closer economic ties to counter U.S. pressure as Xi Jinping prepares to meet Putin


  26. Iran’s Supreme Leader Rails Against U.S. Peace Plan



  27. Biden’s strong 2020 lead is worrying his rivals’ supporters


  28. Phil/DXD

    Would you roll the trade you just put up on Friday down in July or out?  Thx. 


  29. All Roads Lead To Hillary Clinton, The ‘Architect’ Of The Coup


  30. DXD/DC – This was the critical 60-day period we were worried about and the July $30s are down to $1 from $1.85 as the VIX calms down and we paid net $1 for 200 ($20,000) so we could roll out to a longer-term $1 spread and leave the naked, short July $34s (now 0.30) with a stop at 0.50 – and that would put us in another $4 spread for $1.50 instead of $1, maybe the Jan $29 ($3)/33 ($2) bull call spread.  The only reason I'm not going to do that is I see a lot of people stretched on margin and without a PM account, this roll would be tough to carry.   

    • Step one of our official roll in the STP is buying back the DXD July $34 calls for 0.35 in the LTP and in the STP. 
    • We will also buy 200 of the DXD Jan $29 ($3)/$33 ($4) bull call spreads for net $1 
    • We will offer to sell 100 (half) the DXD July $30 calls for $1
    • As this is all likely to cost us money, we will sell 10 (more) THC 2021 $23 puts for $7.20 ($7,200) and we'll look for some more puts to sell if the market stays strong. 

    For the OOP

    • Step one of our official roll in the OOP is buying back the DXD July $34 calls for 0.35 in the OOP and in the STP.  
    • We will also buy 50 of the DXD Jan $29 ($3)/$33 ($4) bull call spreads for net $1 
    • We will offer to sell 25 (half) the DXD July $30 calls for $1
    • As this is all likely to cost us money, we will sell 5 THC 2021 $23 puts for $7.20 ($3,600) and we'll look for some more puts to sell if the market stays strong. 

  31. Oil almost back to $52, /RB just under $1.70 but /NG still way down at $2.3666

    Dollar with a big pop back to 97.26 from 96.65 so that's more bullish as the market has gone up anyway.  

    Not Coffee though, it collapsed.  That's why you have to take those nickels off the table!  


  32. That RH trade sounded familiar.  You added to the LTP on 3/29 with :  For the LTP, I'd keep an eye on the 2021 $100 puts, now $27 with an 0.30 delta so selling 5 of those for $30 should be our goal in the LTP to get paid $15,000 for not owning $50,000 worth of RH at net $70


  33. Lookout overhead ! ! !

     Amazon just got permission from the FAA to fly drones.


  34. You said a few days back you next time you would cash out.  Why is "next time" not now?  Because of all the hedges?


  35. RH/Options – Well, for whatever reason we never actually added them.  3 months later is a bit too late to catch up so we'll just do the new one from scratch.  Those 2021 $100 puts are now $32 but I don't like them this time around as the premiums on the $80s were so nice by comparison and the target is more conservative.

    Drones/Albo – I like it.  I'll finally feel like we're in the future.  

    Cashing out/Tangled – Funny you should mention that.  I was just looking at the LTP, back to $1.2M while the STP is hanging onto $670,000 and I think, given another chance to cash out at $2M ($100,000 off our high) – I think I'm going to take it as I think it will take a lot of good luck for us to finish the year higher – unless of course the Fed starts lowering rates – in which case I'd be even more inclined to get out because, as I have said for years – I think the Fed has one more save left in them and, if they blow it on this (keeping us from a normal correction), then we are very screwed down the road. 


  36. Most of indexes up but down volume exceeded up volume. Last of smart money baling. Trump will keep word on tariffs and markets will get their correction.  IMHO.


  37. I think you should have rotating butterfly portfolios.   After one is full another is started and the first one is drawn down as investments in it become no longer viable.  When that one is gone if the second is full a third is started.  So for most of the time there are one growing and one fading.



  38. Let’s Ditch Mitch







  39. Coffee Futures Plunge the Most in Nine Years



  40. U.S. cruise operators stop sailing to Cuba; travelers vent anger…




  41. RH options; Phil, you mention the premiums on the $80 puts are so nice ($20) – so a commitment to own RH at net $60. But what about the delicious $60 puts at $10? I'd go for selling 10 to net in at $50 – so just a slightly larger commitment on the number of shares but at a much conservative net in price?


  42. Good morning! 

    ECB decision was to keep rates steady and, as ridiculous as it seems, that is disappointing to some of the bulls, who want cuts despite record-high markets.  Productivity was good and labor costs were down so actually a good data morning at the moment:

    • The euro rises 0.4% against the U.S. dollar after European Central Bank's Governing Council said it now expects ECB interest rates to stay at their current levels through at least the first half of 2020.
    • That timeframe compares with its last statement that expected to keep rates unchanged through the rest of this year.
    • ECB keeps the benchmark deposit facility interest rate at -0.40%.
    • They'll keep the rates steady for "as long as necessary to ensure the continued  sustained convergence of inflation to levels that are below, but close to, 2% over the medium term," the statement said.
    • As for its new series of targeted longer-term refinancing operations (TLTRO III), the council decides to set the interest rate in each operation that is 10 basis points above the average rate applied in the Eurosystem's main refinancing operations over the life of the respective TLTRO.
    • For banks whose eligible net lending exceeds a benchmark, the rate applied in TLTRO III will be lower and can be as low as the average interest rate on the deposit facility prevailing over the life of the operation plus 10 basis points.
    • Council also intends to continue reinvesting, in full, the principal payments from maturing securities purchased under the asset purchase program for an extended period of time beyond the date when it starts raising key ECB interest rates.
    • Q1 Productivity and Costs+3.4% vs. +3.4% expected, +3.6% prior.
    • Unit labor costs: -1.6% vs. -0.8% expected, -0.9% prior.
    • Initial Jobless Claims flat at 218K vs. +215K consensus, 218K prior (revised).
    • Continuous Claims: +20K to 1.682M vs. 1.660M consensus, 1.662M prior (revised).

    Rotating Butterflies/Tangled – If I felt something wasn't "viable" I'd simply replace it in the portfolio and we add positions as merited but you are missing the point of keeping a nice, simple portfolio that people can manage in a retirement account WITHOUT constant changes.  We just added the MJ trade and we are down $22,000 since our last review but that's still up 46%, which is where we expected to be as planned back in Jan of 2018 – making 30-40% a year.  I said in the last reviews that all of our portfolios were going to take a hit on the pullback and they are – that's not a flaw in the strategy!  

    In the next two weeks we'll either be cashing out or making bullish adjustments.  At the moment, a huge loss on OIH is killing us, losing $8,000 since the last review as oil has collapsed but we have 50 longs in 2021 and we could sell 50 Oct $14s for $1 ($5,000) and 4 sales like that gets our $20,000 loss back but we're waiting to see if they recover.  Learning not to worry and going with the flow is what you are supposed to be learning from the Butterfly Portfolio, not the other way around. 

    ALB/Palotay – I hope they turn around, we have 20 2021 $65 calls in the LTP naked long.  I would have doubled down but the whole market was too iffy to toss in $25,000 more on that one.

    RH/Winston – Since I think RH is too low, I'd rather get paid $20 not to own them for $80 than $10 not to own them for $60 if the stock simply fails to move lower.  If you feel you have to sell the $60 puts (33% below the current price) in order to feel safer at net $50 (44% below the current price) then perhaps you don't REALLY want to own RH at all and shouldn't be selling puts?  To me, the net commitment of $25,000 selling 5 $60 puts for $5,000 vs $30,000 for selling 5 $80 puts for $10,000 isn't enough difference to make me not want to make an extra $5,000 if, as I suspect, I never do get to own it at those prices at all.  Especially since my intent is to DD at those prices which would make the net difference just $2,500 on my 2x position.  

    I don't consider these prices to be random numbers – the reason RH appeals to me during a market sell-off is because I feel the long-term value of the company is well above where it is now ($90) and I'd be willing to make a strong commitment should the market be so foolish as to price it lower.  THAT makes me comfortable taking a small (for the LTP) initial entry – even in an uncertain market – because I have faith in the Fundamentals of this particular stock and, if I had any thoughts that it were going to drop more than 20% from here ($72) – I'd be waiting, not buying.