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Thrilling Thursday – 5 Trade Ideas to Make $25,000 in 5 Months

Image result for trump china cartoonThere's a huge move up in the Futures this morning simply because China said they wished to resolve the trade dispute with a "calm" attitude.  I've never seen a market move up and down 1% on words before.

  • “We firmly reject an escalation of the trade war, and are willing to negotiate and collaborate in order to solve this problem with calm attitude,” Gao Feng, spokesman for China’s Ministry of Commerce, says Thursday, according to a CNBC translation of his Mandarin-language remarks.
  • Gao noted the Chinese and U.S. trade delegations have maintained “effective” communication.
  • But he did not confirm U.S. President Donald Trump’s claim on Monday that the Chinese team called the U.S. over the weekend with the desire of reaching a deal soon.

So that's hitting the headlines but, as I'm sure you read in the People's Daily (Government Publication) this morning:

US risks losing big for fighting trade war with China

The trade war has already affected both sides. However, all you need to do is look at the videos of Chinese shoppers crowding the aisles of the Costco store in Shanghai to know that the United States has a lot to gain from greater cooperation with China and a lot to lose if it erects a wall between the world’s two largest economies.

China saying they firmly reject an escalation of the trade war ahead of Trump's plans to escalate the trade war is not submission – it's a warning that they will fight back!   They still don't have actual talks scheduled so it's all up to whether or not Trump puts the tariffs on next week, which retailers say will ruin Christmas. 

This morning, the S&P is basck to our strong bounce line at 2,910 and maybe we get back to 3,000 or even 3,300 on a trade deal but if we get that we'll lose the Fed cut – as there would be no point – the trade war is their premise for cutting. 

I'm very tempted to call for cashing our our Member Portfolios as we re-test the strong bounce lines but it's also cushion that allows us to wait and see how things shake our next week before pulling the plug on our positions but we WILL take advantage of the move up to improve our hedges into the weekend – just in case.  

Meanwhile, last week, in our Live Member Chat Room, we came up with 5 trade ideas that can each make $5,000 between now and January expirations and my point was that, if the market is going to go higher – it's very easy for us to go to cash and pick new trades that will still make plenty of money.  I'm going to post those trades along with the links to our original logic but with updated prices as of yesterdays close so they can all be used today.  

Keep in mind, however, I am not bullish, per se – these are simply trades we can initiate with cash in conjunction with cashing out our portfolios – starting fresh with much smaller positions that will still give us enough profits to have a very merry Christmas.

Our first pick was made in our morning chat session with our Members at 10:37 last Tuesday (8/20):

While it's likely to be a bumpy transition year for VAC, I want to establish a conservative entry position in the Long-Term Portfolio and it's going to be the first in a series I had planned to do called "5 Trade Ideas to Make $25,000 in 5 Months".  

VAC doesn't have very long options but that doesn't matter as we're looking to make Jan trades in this set.  Due to the recent volatility, we can get a good price for short puts and the premiums on the calls are also higher than they should be – we can take advantage of both with this play for the LTP:

  • Sell 5 VAC April $85 puts for $5.70 ($2,850) 
  • Buy 7 VAC Jan $80 calls for $20 ($14,000) 
  • Sell 7 VAC Jan $90 calls for $12.80 ($8,960) 

The net cost of the spread is $2,190 and, if successful, it pays $7,000 at $90 or higher for a gain of $4,810 (219%) in 5 months, though the short puts won't expire until April – it should get us very close to our goal by January.   The ordinary margin requirement of the short puts is $5,280 so a pretty efficient way to make $4,810 in 5 months!  

I don't want to make this a "you should subscribe" thing (although you really should by CLICKING HERE!) but I want to point out that the we caught a good bottom on this one and the original entries were:

  • Sell 5 VAC April $85 puts for $6.75 ($3,375) 
  • Buy 7 VAC Jan $80 calls for $16 ($11,200) 
  • Sell 7 VAC Jan $90 calls for $9 ($6,300)

So that was net $1,525 and, at $2,190, this spread has already gained $665 (43%) in a week.  Aren't options fun?!?

Our second trade idea was later the same morning (8/20) and is in contention for our Trade of the Year for 2020 (we will finalize on Thanksgiving) and that's Walgreens (WBA), which I cannot believe is at $50:

When a stock has been as volatile as WBA, we don't have to play them to win – they just need to not go lower so we're going to engineer a spread that pays us if the stock simply holds $50 into January options expiration (17th):

  • Sell 10 WBA Jan $50 puts for $3.70 ($3,700) 
  • Buy 30 WBA Jan $47.50 calls for $5 ($15,000) 
  • Sell 30 WBA Jan $50 calls for $3.60 ($10,800) 

The net cost of the spread is $500 in cash and the ordinary margin requirement for the short puts is $8,918 and, if WBA is over $50 on Jan 17th, the short puts expire worthless and the spread would be $7,500 in the money for a $7,000 (1,400%) gain in 5 months.  

We are already long WBA in our Long-Term and Options Opportunity Portfolios and make sure you REALLY want to own 1,000 shares of WBA if the market turns down – because it's not likely they'll be exempt from a downturn – despite the great value.  The 2021 $42.50 puts are $3.70, so assume that would be the roll and that's another 15% lower – so not too bad as a worst case.

I love these kinds of trades as the worst case is owning 1,000 shares of WBA for net $42.50 (assuming our roll works out) plus the 0.20 per share cash we put in, so $3 is still almost $7 below the current price.  If we don't get to own WBA that cheaply, our consolation prize is making $7,000 – and then we can do it again and again and again – as long as they want to keep paying us NOT to buy a stock – we are happy to keep taking their money, right?

For our third trade idea, on 8/22, we went back to our 2017 Stock of the Year runner-up, L Brands (LB) who own Victoria's Secret and have gotten very cheap recently as they are in the middle of a difficult restructuring.  

Sometimes we like a company, not because it's likely to go up but because it's unlikely to go any lower.  LB closed 50 Victoria Secrets this year out of 957 so about 5% of the stores and, taking that into account – the decline in sales should not be a surprise.  They added 3 new Pink stores (144 total now) and netted 13 new Bath and Body Works to get that segment up to 1,632 stores (US numbers) so the fluctuations we're seeing in sales and margins will normalize, but obviously not while they are shutting 5% of their stores.

Forgetting the potential upside down the road, how much should we pay for a company that's making $650M a year?  Well, certainly 10x earnings doesn't seem too crazy and that would be $6.5Bn or about 25% above the current price of $19, so $23.75 seems fair as long as there is no additional bad news and, having just had earnings, none is likely to come until November's report.  

Meanwhile, we can take advantage of the opportunity and put our foot down at the $20 line (even though we're a bit below it now) and set up the following options play – the 3rd in our series of 5 Trade Ideas to Make $25,000 in 5 months:

  • Sell 10 LB Jan $17.50 puts for $2.80 ($2,800) 
  • Buy 25 LB Jan $15 calls for $3 ($7,500) 
  • Sell 25 LB Jan $17.50 calls for $1.85 ($4,625) 

That's net $75 on the $6,250 spread so there's $6,175 (8,233%) upside potential if LB can get back over $20 by Jan 17th (option expiration day) and it's an efficient trade as the ordinary margin requirement is just $3,834 so a very good way to make $5,150 into the holidays!  

Later that day (8/22), we came up with Trade Idea #4 is a stock we often buy under $20 – Tenet Healthcare (THC):

We've played THC several times over the years, usually around $15 but we're not going to be so lucky this time but all we're going to do is play them not to go lower than $20 into Jan 17th expirations and we'll be home free with the following trade:

  • Sell 10 THC Jan $20 puts for $2.50 ($2,500) 
  • Buy 20 THC Jan $15 calls for $6.50 ($13,000)
  • Sell 20 THC Jan $20 calls for $3.10 ($7,500) 

That's net $3,000 on the $10,000 spread so $7,000 (233%) upside potential is not as exciting as our other trade ideas but THC is a lot more of a blue chip so possibly the least risky of the set.  Margin is also light, just $2,886 according to TOS in an ordinary margin account.

Our final trade idea came in last Friday's chat room and we went with Tanger Factory Outlets (SKT) a shopping mall REIT we feel is ridiculously undervalued:

#5 of our 5 Trades to Make $25,000 in 5 months is going to be Tanger Factory Outlets (SKT), which took a deeper hit today to $14.29.  I just did a whole Top Trade write-up on them on Aug 1st - $1 higher, so no need to get into that but, for the purposes of this series, the trade idea will be:

  • Buy 50 SKT Jan $12.50 calls for $1.85 ($9,250) 
  • Sell 50 SKT Jan $14 calls for 0.95 ($4,750) 
  • Sell 20 SKT Jan $15 puts for $1.85 ($3,700) 

That's net $800 on the $7,500 spread so $6,700 (837%) of upside potential if SKT is over $15 on Jan 17th.  Since we're selling puts over the current price, the ordinary margin is $5,741, so more than we'd like but, as noted on Aug 1st, I think SKT is ridiculously under-priced.  

Retailers rallied this week on good news and SKT rents to retailers and the CEO has been buying shares at $14.50 and the company just beat expectations and raised guidance and is simply caught up in a rate-drive REIT sell-off that doesn't really apply to their type of business.  I think one more quarter is enough time for buyers to step in on this one.

Remember, the premise of these trades is that we'd be WRONG cashing out our portfolios too early and this would be our consolation prize into the holidays.  If there's a trade deal with China, it should be great for retailers and a rising market should get people to take another look at some of these value plays.  There is, however, nothing bullet-proof about them – if the market heads lower, they will too!  

Still, our Options Opportunity Portfolio, for example, is up from $100,000 to $275,714 (175%) in less than two years so what I'm suggesting is cashing in that $275,000 and putting up just $6,565 in cash and using just $26,659 in margin to make up to $33,603 if all goes perfectly (it won't). 

The logic is that that's a nice, respectable 12.2% gain on what we have now if the market rallies and our positions do well or we end up owning these 5 stocks at low prices to begin a new portfolio next year.  Meanwhile, we eliminate the risk of LOSING the $275,714 we have in our hands.  That seems like a sensible strategy to me!  


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  1. Still a lot of indecision in the market's direction.

  2. From Phil's post this morning, "maybe we get back to 3,000 or even 3,300 on a trade deal but if we get that we'll lose the Fed cut"

    Jim Bianco wrote this morning, "This morning the yield of 30-year Italian bonds fell below the fed funds rate. This means the Fed is now in charge of the single highest interest rate in the developed world."

    Time will tell, but I think the Fed is a box and they have started on an easing cycle which could include more QE, and there will be a rate cut in September.

  3. I was going to post about Uber and Lyft basically ripping of their drivers (based on Jalopnik investigation) but Barry beat me to it:

    Of all the fares Jalopnik examined, Uber kept 35 percent of the revenue, while Lyft kept 38 percent. These numbers are roughly in line with a previous study by Lawrence Mishel at the Economic Policy Institute which concluded Uber’s take rate to be roughly one-third, or 33 percent.

    And they still don't make any money!

    Barry's takeaway: both of these companies are unsustainable at the current pricing structure. I don’t know if self-driving cars is a solution — the owners of those vehicles still have to be paid. Regardless, prices are going to eventually have to go up — way up — in order for Uber and Lyft to run at a breakeven, let alone profitably.

  4. Some people who have inside information are moving to cash:

    Corporate insiders have sold an average of $600 million of stock per day in August, according to TrimTabs Investment Research, which tracks stock market liquidity.

    August is on track to be the fifth month of the year in which insider selling tops $10 billion. The only other times that has happened was 2006 and 2007, the period before the last bear market in stocks, TrimTabs said.

  5. And there is a special place in hell for members of this administration (including good Christians like Mike Pence):

    Severely ill immigrants, including children with cancer, cystic fibrosis, and other grave conditions, are facing deportation under a change in Trump administration policy that immigration advocates are calling cruel and inhumane.

  6. Good Morning!

  7. Is there a special place in hell for the billionaires of the world who do not use their vast wealth to help Severely ill immigrants, including children with cancer, cystic fibrosis, and other grave conditions, or is space in hell limited to politicians?

  8. Why do some stocks have more frequent options and strikes every half dollar than other stocks at the same price?

  9. Lyft & Uber/StJean – to me the primary appeal of either is the tremendous convenience of the app. You know what your fare will be, you pay it online including tip, you can quickly call a driver, you can watch them driving to you, you know their name and rating. And there's the in-car black box to keep the driver and you honest.

    If cab companies would do this, I surmise that they'd get more riders, but if they are doing it I haven't been able to find it. In Korea, though, there's an app called "kakao taxi", and it covers dang near all taxis in the country. Functions as well as the uber/lyft apps – and because of that, neither uber or lyft have been able to get more than a tiny toe-hold in the country.

  10. There is a lot of room in hell for many people Mikezuela! 

  11. Lyft / snow – I think that this is correct. At the moment, the biggest beneficiaries are the users. Drivers don't seem to do well and the companies can't make any money. I am guessing that this equation will change eventually, probably in favor of the companies – higher fares for example.

  12. Lyft/StJean – I can't speak for the general public, but I'd be okay with higher fares. Although it irritates that fares for shared van rides on Prime Time and Super Shuttle are so high. They used to require reservations way in advance, and pickup many hours ahead of when you needed to be someplace like LA airport. Monopolistic behavior – I hope they go down in flames.

  13. Good morning! 

    What a crazy move based on nothing.  I am still very much tempted to take advantage of this and cash out – that's what my gut tells me is the right move but these rallies on NOTHING make me wonder what kind of rally we'd have if something actually does happen and we KNOW Trump considers the stock market to be his report card – so he'll do ANYTHING to get it higher, but having faith in Donald Trump is a rough premise for me to hold onto…

    Big Chart – Well we are breaking up and back towards the 50 dmas so we'll how have to see if that works out but we need to get there quickly to prevent them from curving down towards the 200 dmas, which would set up a future death cross.  

    Fed/Mike – There's a certain unreality to thinking the Fed can just cut when this country is $22Bn in debt and adding 5% to that every year.  That's kind of hard to fund at ZIRP, we're paying a lot for money because money is nervous lending it to us and, frankly, crazy to lend it to a country that is lent by a guy who thinks bankruptcy is a great way to discharge debts.  The way we look at the IMF being stupid enough to lend to Argentina is how some foreigners are starting to feel about lending to US but, as long as the global economy is strong, money has to go somewhere but God help us all if we do have a global recession and money stops flowing.

    Uber/StJ – They are now talking about guaranteeing drivers $21/hr in CA.  

    Lyft driver Edan Alva was in Sacramento Wednesday with a group called Gig Workers Rising that is advocating for the passage of AB5. He says he usually makes between $20 and $25 per hour depending on tips, which, in the Bay Area, is not enough.

    “$21 dollars an hour is an insult to drivers,” Alva said. “There is no way to make ends meet, I can’t afford healthcare insurance for me and my son.”

    Tech Crunch is reporting that Uber is also pushing the $21 dollar an hour minimum wage through a petition urging Uber drivers to move away from AB5.

    Uber driver Rob Lyon said the company needs to figure out a way to pay its drivers more.

    “They have to reward the individual drivers that provide a five star service with a five star paycheck,” Lyon said.

    See, this is where their idiotic rating system gets them in trouble – every driver is a 5-star driver, people just tend to be nice and give drivers 5 stars most of the time but then the drivers get this self-inflated sense of worth just because they managed to drive someone somewhere without messing it up or offending the passenger in a reasonably maintained car (ie, doing their job) and now they think they are worth more because they have 5 stars.  

    While I'm all for better wages, people need to be realistic about the economics of certain jobs.  Uber and Lyft don't make money now, they can't give the drivers more and it's not likely they can pass more along to the passengers and, even if they did, they can't do it and just pass it to the drivers and keep losing Billions of Dollars – that makes no sense either.  

    By having such a large workforce, however, Uber and Lyft have created a powerful voting block among their drivers so they are in trouble though I doubt CA will force them to pay more than minimum wage to the drivers – I think their offer is fair and the drivers need to work hard enough to get tips, not stars.  

    Good trade war summary chart.  

    Wow, we're pinning the pivot points:

    You don't often see R2 broken like that on the indexes – very impressive.  Too bad the SPY volume is just 11.7M, which is good for the open but it could be very easily reversed as this "poll" of buyers has a very small sample size.  

    Image result for sample size some of the people

    Image result for some of the people all of the time

    Hell/Mike – Plenty of room as I understand.  

    Image result for hell population south park

    Why/Tangled – Stocks under $5 with a lot of option demand tend to break into smaller units but it doesn't happen too frequently, usually a move below $2 and huge demand at some point triggers it as the spreads become too wide so the market maker will try to hit the middle.

    Cabs/Snow – NY cabs are fighting back on convenience but they are still very uncomfortable cars made for durability and they have that glass thing in the middle, which I guess some people like but very impersonal vs Uber/Lyft but they are also getting price-competitive so I'm as likely to hail a cab as call an Uber in NYC but, when I'm everywhere else, it's just too easy to punch and address into my phone and step into a car.  I was very close to not buying a car this time around and probably won't next time (if Uber/Lyft survive) as I couldn't possibly spend more using the service than the car and insurance costs.  Add to that the convenience and no parking/valet fees – hard to justify not using them.  

    Image result for average cost of uber ride

    Image result for uber vs owning a car

    Image result for uber vs owning a car

  14. ANF and BBY hammered today:

    • Abercrombie & Fitch (NYSE:ANF) falls in early trading after posting a Q2 loss and setting soft sales guidance.
    • Comparable sales were flat during the quarter vs. +0.2% consensus. U.S. comparable sales rose 2%, while international comparable sales were down 3%. ANF management says trends improved throughout the quarter, enabling it to deliver constant currency revenue growth and meet previously-issued comp and gross profit rate outlook, while continuing to tightly manage expenses.
    • Gross profit fell 90 bps to 59.3% of sales.
    • Looking ahead, the retailer sees full-year sales growth to be in the range of flat to up 2% vs. +2% to +4% consensus and gross profit rate to be down in the range of 50 to 90 basis points from a year ago.
    • Shares of A&F are down 11.69% premarket to $15.03.
    • Previously: Abercrombie & Fitch Co. EPS beats by $0.04, misses on revenue (Aug. 29)

    • Best Buy (NYSE:BBY) is on watch after reporting Q2 EPS ahead of even the highest estimate turned in by analysts.
    • U.S. revenue was up 2.1% during the quarter and U.S. comparable sales increased 1.9% vs. +2.3% consensus. International revenue fell 3.4% to $715M off some weakness in Canada.
    • Domestic gross profit rate came in at 24.0% vs. 23.8% a year ago. The gross profit rate bump was primarily driven by the impact of GreatCall's higher gross profit rate, which was partially offset by higher supply chain costs. Operating margin was 4.0% vs. 3.7% consensus.
    • Looking ahead, Best Buy expects Q3 revenue of $9.65B to $9.75B vs. $9.78B and Q3 EPS of $1.00 to $1.05 vs. $0.94 consensus. Full-year EPS if $5.60 to $5.75 is anticipated vs. $5.71 consensus.
    • Shares of Best Buy are up 3.41% premarket to $71.35. The guidance factors in a "best estimate" of the tariff situation by BBY management.
    • Previously: Best Buy EPS beats by $0.09, misses on revenue (Aug. 29)
    That didn't last long!  
    • Stocks sprint to opening gains after a Chinese commerce ministry official indicated the government would not immediately respond to Pres. Trump's latest round of tariff hikes, sparking hope among investors that China may be moving to ease tensions instead of escalating the trade war; Dow +1.1%, S&P +1.2% and Nasdaq +1.5%.
    • European bourses also enjoy sharp gains, with France's CAC +1.4%, Germany's DAX +1.1%and U.K.'s FTSE +1%; in Asia, Japan's Nikkei and China's Shanghai Composite both finished -0.1%.
    • In the U.S., all 11 S&P 500 sectors trade higher with particular strength in the trade-sensitive information technology (+1.7%), materials (+1.6%) and industrials (+1.5%) sectors, while the utilities (+0.3%) and real estate (+0.4%) groups are up modestly.
    • While equity futures have reacted positively, action in the U.S. Treasury market is subdued, with the two-year yield up a basis point to 1.52% and the 10-year yield 2 bps higher at 1.49%; U.S. Dollar Index +0.2% to 98.37.
    • U.S. WTI crude oil +0.6% to $56.14/bbl.
    • Still ahead: pending home sales
    • U.S. stock index futures are continuing a pre-Labor Day rally as China indicated it wouldn't immediately retaliate against the latest U.S. tariff increases set for Sept. 1. Dow +0.7%; S&P 500 +0.6%; Nasdaq +0.9%.
    • The two countries are also discussing face-to-face talks to be held in the U.S. in September, according to China’s Commerce Ministry, which said it's willing to resolve the trade war with a "calm attitude."
    • On the economic calendar, a second reading of U.S. GDP growth will be released this morning that's expected to be revised down slightly to 2.0%, after showing a 2.1% growth in its earlier estimate.
    • Q2 GDP+2.0% vs. +2.0% consensus and +2.1% prior estimate.

    • Europe should either ask Washington to restore sanctions waivers for Iran's oil or provide a credit line to the Islamic Republic if it wants to save the nuclear deal, the country’s deputy foreign minister, Abbas Araghchi, said in an interview to state TV.
    • Iran has previously said a "third step" of fresh nuclear deal breaches will be taken on Sept. 6 unless a new understanding between Tehran and the European sides is achieved.
    • Argentina is looking to restructure its debt with the IMF and bondholders in an effort to stem a confidence crisis that has upended the country’s financial markets.
    • The nation will now delay $7B of payments on short-term local debt due this year and will seek a "voluntary reprofiling" of $50B of longer-term debt, as well as postponement on the repayment of $44B of loans from the IMF.
    • The move will probably be judged as another sovereign default, although Argentina is at the moment only seeking a voluntary extension of repayment times, rather than "haircutting" interest payments or the size of its debt.
    • ETFs: ARGT
    • A sweeping proposal from the Trump administration would erase Obama-era rules on methane emissions from the oil-and-gas industry, marking the latest attempt to further boost record crude and natural gas production by easing regulations.
    • Some companies have asked for the rollback, while others, including Exxon Mobil (NYSE:XOM) and Royal Dutch Shell (RDS.ARDS.B), have warned that a lack of government-backed minimum requirements to curb emissions could undermine the argument that natural gas is a cleaner fuel.
    • Legal wrangling could lead to years of uncertainty before deregulation would lower costs.
    • Cheniere Energy (NYSEMKT:LNGreceives approval from the Federal Energy Regulatory Commission to begin commercial service on its second liquefaction train at its liquefied natural gas export terminal near Corpus Christi, Tex.
    • Cheniere also has satisfied FERC, based on staff inspections, that rehabilitation and restoration areas affected by construction are proceeding well, the agency says.
    • All six of the export facilities that make up the first wave of major U.S. LNG terminals are now producing LNG, though the bulk of current overall capacity is at Cheniere's two facilities; a second wave of a dozen or so export facilities are under development for startup in the early to mid-2020s.

    • July international trade in goods-2.5% to -$72.34B vs. -$74B consensus and -$74.16 prior (revised).
    • Exports: +$0.9B M/M to $137.3B.
    • Imports: -$0.9B to $209.7B.
    • With the yield on 30-year Treasuries falling below the 1.98% dividend yield from U.S. stocks, investors can now get more income from dividends on S&P 500 shares than on even the longest-dated government debt.
    • "It's a really big deal," said Jonathan Golub, chief U.S. equity strategist for Credit Suisse. "If your primary concern is steady cash to live off then the idea that you can get a better return of capital from equities is important, but also out of sync with what we have been trained over time to think is normal."
    • Still a dilemma? A recession could put dividends at risk, not to mention the danger of a big fall in share prices, which have until recently been setting record highs.
    • Gold bars fraudulently stamped with the logos of major refineries are being inserted into the global market to launder smuggled or illegal gold, Reuters reports, citing refining and banking executives.
    • Bars worth at least $50M stamped with Swiss refinery logos but not actually produced by the facilities have been identified in the last three years by all four top Swiss gold refiners and found in the vaults of JPMorgan Chase, one of the major banks at the heart of the market in bullion, according to the report.
    • At least 1,000 kilobars reportedly have been found – a small share of gold industry production of 2M-2.5M such bars each year, but the forgeries are sophisticated, so thousands more may have gone undetected, says the head of Switzerland's biggest refinery.
    • It is not clear who is making the bars found so far, but executives and bankers believe most originate in China and have entered the market via dealers and trading houses in Hong Kong, Japan and Thailand; once accepted by a mainstream gold dealer in these places, they can quickly spread into supply chains worldwide.

    • Tilray (NASDAQ:TLRYannounces that subsidiary High Park Holdings Ltd. will acquire 420 Investments Ltd, an adult-use cannabis retail operator based in Calgary, Alberta, for C$110M in TLRY Class 2 common stock.
    • 420 operates six locations in Alberta and has 16 additional locations secured in the province.
    • Under the terms of the deal, Tilray will deliver C$70M in Class 2 shares at closing and C$40M subject to the achievement of certain performance milestones. The transaction should close by the end of Q1 2020.
    • Shares up 3% premarket on light volume.
    • Dollar Tree (NASDAQ:DLTR) reports comparable sales rose 2.4% in Q2 to top the consensus mark of +1.9%. Both the Dollar Tree and Family Dollar chains turned a 2.4% comp during the quarter. The company notes that it has delivered 46 consecutive quarters of positive same-store sales and eight consecutive quarters with two-year stacked comps exceeding 6%.
    • Gross margin fell 140 bps to 28.7% of sales during the quarter vs. 29.5% consensus. The decrease in gross profit margin was driven by higher freight costs for both segments, and markdowns and shrink in the Family Dollar segment. Operating margin was 4.7% of sales vs. 5.1% consensus.
    • Looking ahead, the retailer sees full-year sales of $23.57B to $23.79B vs. $23.51B to $23.83B prior and $23.69B consensus. EPS of $4.90 to $5.11 is anticipated vs. $5.14 consensus and $4.77 to $5.07 prior view. The company says its updated outlook does not include the recently announced tariff increases, as the company is working to mitigate the costs.
    • Shares of Dollar Tree are up 5.42% premarket to $105.00.
    • Previously: Dollar Tree EPS beats by $0.01, beats on revenue (Aug. 29)
    • Forever 21 is considering filing for bankruptcy as efforts to restructure its debt run dry, CNBC reports.
    • Its real estate footprint is particularly large, with more than 815 stores globally, and any closures would likely put pressure on the mall owners that lease spaces to the company.
    • Forever 21 is Simon Property Group's (NYSE:SPG) seventh-largest in-line tenant in terms of how much rent it brings the landlord, with 99 stores across its portfolio.
    • Brookfield Property Partners (NASDAQ:BPY) also leases considerable space to the apparel retailer.


  15. Phil / Cash – I'm with you on this one….. not closing everything out, but anything I am not willing to hold past the next recession I'm selling.  The others I have hedged, which I'm looking to add to today or tomorrow.  With the cash I'm generating I'll be looking to add the long term plays, or re-establish the ones I think should recover well after this trade issue is closed.   I firmly believe Trump will close the trade deal with China – it may have bumps along the way but he will close it.  I'm also pretty sure he'll get a crappy deal, or leave us  very marginally better off.  the markets will rocket up….  so question is how many false starts to the closure will we have? and how do we get back into it after ….  May loose the initial surge, but should do ok with catching a portion of it.   AVGO, MU, SWKS, XLNX, AAPL  tech that should too well.  FCX, CLF,  should also do well.   Then of course F in the auto….

  16. CASH!/Phil – man, I'm right with you on your paragraph starting "What a crazy move based on nothing.". Should cash out, but what if….

    So hedges, caution, don't go any deeper into the water even if there's a fat fish there…..

  17. What is the likely outcome here:  I have a small position in NRZ and sold some OCT $14 calls against it for $0.30.  It goes ex-div at the end of Sept and pays $0.50.   So ignoring all other factors the stock will rise from its current $14 to $14.50 at the ex-div  date.   Seems like the call buyer would exercise the calls to get the dividend if I don't close them first?

  18. Tangle NRZyour OCT call has a extrinsic value of .32 the div is .50 so obviously the holder of the call might call on you. If the stock will rise to 14.50 is an other question. You might need to keep an eye on it to roll!!!!

  19. Thanks yodi.  That is my thought too but the variables at these price points hurt my brain.  Seems like there is a stock price below which they would not call because then the loss on the stock exceeds the gain from the dividends and above some price the exercise price is greater than the dividend.  But I have little experience here.

  20. Tangle for .18 cents more the holder of the call will always call for the stock, but on the other hand normally the stock could drop after the div. date by the amount of the div. That is a normality but what is normality in todays market. If you do not wish to land with short stock I would roll, or if you hold the stock you will paid out for the strike price of the caller 14$

  21. /RB/Phil- Are you holding RB into weekend from 1.54?

    There is also 12 cent difference between contract expiring tomorrow and next one. 

  22. Trade deal/Batman – I think the market will pop 10% on a trade deal and I'd hate to miss it but then we have to get out anyway so let's say the STP/LTP at $2.2M can make $500,000 on a 10% rally – We can probably make $500,000 with a brand new $1M portfolio just as easily, without risking $2.2M to do it – that's my logic. 

    NRZ/Tangled – The stock will drop 0.50 when it pays the dividend, if you get called away, it's likely to be the day before/night of the dividend payment so you won't get it.  I agree with the point that locking in 0.30 and having the small hedge beats risking the stock at $13.99 so worst case is you get 0.20 less than the max if called away.  Of course, if you sold the Feb $14 calls for 0.55, you'd be a lot happier if called away.

    /RB/Ravi – No, that's totally take the money and run at $1.575 – pays for a fill-up or two!

    This is why we play /NG long into hurricane season:

    I don't think this storm is going to impact /NG but that doesn't stop people from speculating.  

  23. Walmart’s robot army has arrived

  24. Please cash out the portfolios because I hate to see you so conflicted. You could sell half but that would be messy. You have the 'midas' touch on the portfolio(s) performance(s) - even with the carrying cost of all the hedges – which have not yet really been called into action – your paper portfolio performances must put you in the top 0.1% of stock pickers. It would be a shame to ruin that track record by trying to navigate through this complicated political/economic environment.

  25. Speaking of hedges, it's possible I'll want to cash out the LTP and leave the STP if we get a bigger push up next week but, for now, let's protect the LTP a bit better (now $1,325,545) with our STP (now $822,393):

    • TLT – $146.50, who'd have thunk it?  Might be tilting at windmills but the June $145 puts are $6.60 so I like that roll for net $3.50 ($7,000)
    • Let's close out all the naked short puts.
    • CMG – We could consolidate in the June 2021 $1,020 short calls and, because that's so ridiculous, I find it hard to be worried about the rest.  Over $850 we can just add a June 2021 $900 ($125)/1,100 ($60) bull call spread for $65 to gain $135 upside protection above the short $1,020s.  How crazy would it be if we need that? 

    • DXD – Those short Oct $30 calls were $1.50 last week so let's buy them back for 0.60 as a cheap way to make our long Jan $25s more impactful.  

    • MJ – Here's one I don't want to close but we should adjust.  Let's just DD on the 30 2021 $20 calls at $6.60 ($19,800).  We could sell 30 Jan $25s for $1 using 141 of 505 days so, in theory, we should have an easy time getting at least $4 of the $6.60 back – but not yet.  
    • SDS – We bought these at S&P 3,000 so still ahead a bit.  No need to change.  
    • SQQQ – We just added the 200 Jan $35/45 spread as we cashed out the 2021 $30 calls and the short-term hedge suits us for the weekend but we're up $41,000 on the short Jan $45s so we can lock half of that in AND make our longs much more powerful by buying back 1/2 (100) of the short Jan $45 calls for $2.80 (don't pay more).  

    See, a few tweaks and we're about $200,000 better protected than we were!  

    Image result for tweak animated gif

  26. CMG's been good to me this month – so throwing back some money to the Burrito Gods with this trade:

    Aug 30th (tomorrow) $847.50 / $850 / $852.50 long call butterfly for $0.26. Max loss $0.26, max profit $2.26.

    That $850 level may just have the attraction for the weekly options close out, having said that……..

  27. Thanks for the concern Winston but I think, for now, I'd rather risk taking a hit in the STP if the market goes up but, if we go down, we can start dismantling the LTP while the STP is still making money so I'm willing to give it the weekend as we have to consider the recent gains (now $2,147,938 vs $2,075,462 last week) to be a buffer as well.  We made a lot of bullish adjustments last week to the LTP and they are quickly paying off – if we do luck out and get a trade deal…  well, those aren't opportunities you often get AFTER you already tripled up, right?

    And we also have $202,000 of CMG short Jan $740s in the LTP – that's a hedge too!

  28. BBBY

    Bed Bath & Beyond extending higher amid circulation of renewed M&A chatter.

  29. Phil,

    1. What do you think of selling an out of the money  put spread on SQQQ? Could split it and roll if necessary like you do the calls.

    2. As a new hedge, what do you currently recommend? I already have SQQQ

  30. BBBY/Albo – That's the good thing about picking value stocks sometimes.  

    Put spreads/JMD – It's valid but we don't as it makes the portfolios very confusing.  The best hedge reflects your heaviest investment – like if your wife is a race-car driver and you are an accountant – you need to put the bigger policy on her.  The reason SQQQ is our primary hedge is we have a lot of Nasdaq stocks and also the Nas is higher than the other indexes on the Big Chart AND we agree there are many overbought stocks in the index and the leader stocks seem exhausted.  That makes it a logical primary hedge.  On the other hand, the RUT (TZA) is no longer a hedge of ours because it's already under-performing the other indexes.

  31. Phil

    What did you roll to ?


    TLT – $146.50, who'd have thunk it?  Might be tilting at windmills but the June $145 puts are $6.60 so I like that roll for net $3.50 ($7,000)

  32. GME up 10% today at $4.26  Couldn't resist covering 1/2 with the Jan $5 calls at .80  Too big a premium to ignore..

  33. Now we can take a look at the OOP, as the LTP is pretty-well covered, the Butterfly can take care of itself, the MTP we can't touch until Wednesday anyway and Hemp Boca is down 18% at the moment so fingers crossed is all we can do other than just giving up and taking the loss.

    This is not a review (we did that last week) these are just changes to make rather than just cashing in, which is what I'm inclined to do but willing to give it another week.

    • HMNY – Well, at least it can't get worse!  
    • HOV – Too cheap to sell.  
    • Short puts – All good, I'd actually love to own SPWR again at net $3 – kind of doubt it. 
    • ALK – Since the short calls are up 42.5%, let's buy those back and sell 15 Jan $60 calls for $4.30 ($6,450 as a cover as those can be rolled back to the 2021 $70 calls if they go in the money and, if ALK goes lower – THEN we can sell puts, roll down the long calls and sell more short calls, but with $6,450 in our pockets!  Isn't that smarter than just letting it ride?

    • C – Let's sell 14 Jan $65 calls for $3.80 ($5,320) 
    • DXD – Let's buy back the short Jan $33 calls for $1 and that boosts the power of the calls.  
    • SQQQ – With a quick $17,250 gain on the short Jan $45 calls, let's buy 1/2 (50) and roll the Jan $35 calls at $4.65 to the March $30 calls at $7.25 for net $2.60 ($26,000) .

    • WPM – We were a bit early taking the calls off the table and the short calls are burning us – but now it's a hedge!  
    • AAPL – $195 is high for puts and we did hit $170 in June so let's buy those puts back while we have a nice profit
    • AXL – They are priced like they are going BK but they're not.  We'll just roll the 30 2021 $8 calls at $1.25 ($3,750) down to 50 of the 2021 5 calls at $2.50 ($12,500) and see how next earnings go. 
    • BBBY – Very happy we rolled to the $5 calls.

    Oops, 3:15 and nothing is too urgent so we'll finish tomorrow..  

  34. TLT/QC – Sorry, poorly worded but we have the TLT March $140 puts and I want to roll them TO the June $145 puts for net $3.50 in the STP. 

    GME/Albo – Very nice and smart to cover while the prices are good.

  35. SPWR / Phil – Not sure we don't see these lows again. This has been a roller coaster:

    SPWR SunPower Corporation monthly Stock Chart

  36. Solar is the future and the future is now.  

    They're going to be cyclical, like INTC in the early days, they have to invest and retool every once in a while to keep up but they are early in this up cycle and I think each low will be higher.

    Well, we held the massive gains and it would be surprising if we sell off on the last day of the month but Tuesday is a real crap shoot.

    Volume is still a joke


    Date Open High Low Close* Adj Close** Volume
    Aug 29, 2019 291.72 293.16 290.61 292.58 292.58 52,419,676
    Aug 28, 2019 286.14 289.07 285.25 288.89 288.89 59,696,700
    Aug 27, 2019 289.54 289.95 286.03 286.87 286.87 66,668,900
    Aug 26, 2019 287.27 288.00 285.58 288.00 288.00 72,423,800
    Aug 23, 2019 290.92 292.76 283.47 284.85 284.85 149,161,500
    Aug 22, 2019 293.23 293.93 290.40 292.36 292.36 51,666,400
    Aug 21, 2019 292.48 292.86 291.72 292.45 292.45 49,524,700
    Aug 20, 2019 291.77 292.36 289.95 290.09 290.09 51,596,400
    Aug 19, 2019 292.19 293.08 291.44 292.33 292.33 53,571,800
    Aug 16, 2019 286.48 289.33 284.71 288.85 288.85 83,018,300
    Aug 15, 2019 284.88 285.64 282.39 284.65 284.65 99,556,600

  37. You gotta love Bernie:

  38. I am believer and in fact would not mind them getting cheaper again! Am only short the same puts we have.

  39. And our president doing all he can to help solar lol:

    The Trump administration today announced a new proposal to reverse Obama-era regulations that limit how much methane, a potent greenhouse gas, the oil and natural gas industries are allowed to emit.

  40. Captain Insaneo strikes again:

    President Trump on Wednesday lashed out at Fox News, accusing the conservative network of “heavily promoting the Democrats” and urging his nearly 64 million Twitter followers to “start looking for a new News Outlet.”

    “The New @FoxNews is letting millions of GREAT people down!” Trump wrote in a series of tweets. “We have to start looking for a new News Outlet. Fox isn’t working for us anymore!”

    His tweets followed an interview of Xochitl Hinojosa, the communications director for the Democratic National Committee, in which she discussed next month’s Democratic presidential debate, among other things.

    In his tweets, Trump said Hinojosa had been “spewing out whatever she wanted with zero pushback” from anchor Sandra Smith.

    “HOPELESS & CLUELESS! They should go all the way LEFT and I will still find a way to Win,” Trump wrote.

    Democrats have repeatedly accused Fox News of having far too sympathetic coverage of Trump and his administration, with some likening it to state-run television.

    A Fox News spokesman did not immediately respond to a request for comment on Trump’s tweets.

    Guy Benson, a Fox News contributor, responded to Trump on Twitter, writing, “We don’t work for you.”

    We should start a channel and pretend to be on his side (like the old Colbert Show) so he will start praising us and sending us followers and then flip totally against him next September into the election.

  41. Phil

    Start the channel