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Monday Market Madness – Up and Down 100 on Trade Rumors Already

This is just silly:

Already this morning, before the market even opens, we've gone up from 28,060 on the Dow at Friday's early close to almost 28,200 at the Asia Close/EU open (3am) and now back to 28,100 and falling and it's all based on whatever Trump tweets or the tea leaves that can be read out of China…  In short, it's ridiculous, which is why we chose not to play (much) this quarter.  

Canada's GDP has slipped to 1.3% in Q3, mathing the US's anemic performance and that's a hard fall from 3.5% in Q2 and that's DESPITE a 3.2% jump in domestic demand – the SAME consumer demand that people are counting on to save the US Economy.  China had some factory growth to report early this morning and that was considered good news but a PMI of 50.2 is 0.3 above contraction – and that's WITH a ton of new stimulus from Beijing.

Trump, meanwhile, added tariffs to steel and aluminum imports from Brazil and Argentina, which should be good for US Steel (X), which we called an over-reaction to one of their facilities flooding on Friday, giving our Members ample opportunity to fill out our positions at great prices.

Oil bounced off $55 on Friday as rumors are that Saudi Arabia is pushing for an extension of the output cuts at this week's OPEC+ summit through June at least.  They don't want to burn their Aramco investors too quickly it seems: "The kingdom needs "stable prices of at least $60 a barrel," said a Saudi oil adviser. "It can’t afford to have a declining oil price as its would hurt domestic investors who have bought into the IPO."  There will be pushback from Russia, who want to keep oil prices low to help Trump win his re-election campaign.  

Disney got even more good news as Frozen II made $124M domestically and $249M internationally, making a new Thanksgiving weekend record for a movie so December is off to a nice start for DIS, which bought Pixar for $7.4Bn in 2006 is certainly getting their money's worth there and now their $4Bn investment in Lucasfilm in 2014 is going to spit out another $1Bn with the next installment of Star Wars in 3 weeks.  

This should also be good for IMax (IMAX), who we also have a long position on in our Earnings Portfolio, which is still playable from last month:

IMAX Long Call 2020 19-JUN 18.00 CALL [IMAX @ $21.50 $0.00] 20 10/31/2019 (200) $8,500 $4.25 $0.10 $4.25     $4.35 $0.00 $200 2.4% $8,700
IMAX Short Call 2020 19-JUN 22.00 CALL [IMAX @ $21.50 $0.00] -20 10/31/2019 (200) $-3,800 $1.90 $-0.05     $1.85 $0.00 $100 2.6% $-3,700
IMAX Short Put 2020 19-JUN 23.00 PUT [IMAX @ $21.50 $0.00] -5 10/31/2019 (200) $-1,525 $3.05 $-0.35     $2.70 $0.00 $175 11.5% $-1,350

Also from October, we had a Top Trade Alert on Coffee (/KC) Futures at $97 per contract and Coffee came just short of $120 for a gain of over $22 per contract at $375 per point is a very nice gain of $8,250 per contract and I would take at least 1/2 off the table with a stop on the rest at +$20 ($117) as we're bound to get some pullback here after a 25% move.  You're welcome!  

In that same Alert we had a trade idea for SunPower (SPWR) and that stock has gone even lower but we expected that and only sold the puts in our Money Talk Portfolio but now that SPWR has come back to $7.50 (because they just raised cash selling shares at $7), I want to add it to our Short-Term Portfolio with the following trade:

  • Sell 10 SPWR 2022 $8 puts for $3.30 ($3,300)
  • Buy 30 SPWR March $6 calls for $1.90 ($5,700) 
  • Sell 30 SPWR March $8 calls for $9 ($2,700) 
  • Buy 30 SPWR 2022 $8 calls for $2.70 ($8,100)
  • Sell 30 SPWR 2022 $12 calls for $1.70 ($5,100)

The net on the spread is $2,700 and, if all goes well, we will make $3,000 on the March spread, leaving us with a net $300 credit on the 30 long 2022 $8/12 spreads that are worth up to $12,000.  We're obligated to buy 1,000 shares of SPWR if they stay below $8 and our net would be $10.70 ($10,700) if everything else went worthless but I like the short-term payoff potential on this one and, if SPWR is at, say $6 and we have to buy 1,000 for $10,700, we simply buy 1,000 more for $6 and our average is $8.35 on 2,000 shares and then we sell more puts and calls.

See, plenty of good things to trade if you keep your eyes open!

Meanwhile, we get PMI and ISM this morning along with Construction Spending and Auto Sales tomorrow along with Redbook Retail, which is very important around the holidays.   Wednesday is PMI and ISM Services and Thursday we have Factory Orders with Non-Farm Payroll and Consumer Sentiment Friday but not much Fed Speak as we have their last meeting of the year next Wednesday.  

Be careful out there.

 


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  1. Good Morning!


  2. Adding new lines!



  3. Not a surprise:

    https://www.axios.com/minimum-wage-job-loss-predictions-not-true-dcda5eac-996d-4539-a07e-12933eef4bca.html

    Eighteen states rang in 2019 with minimum wage increases — some that will ultimately rise as high as $15 an hour — and so far, opponents' dire predictions of job losses have not come true.


  4. A lot of money will be spent on content for streaming:

    https://www.vox.com/recode/2019/11/26/20976319/streaming-war-cost-16-billion-netflix-disney-hbo-warnermedia

    Nathanson pegs the total increase at $16.2 billion — just a little bit short of what Disney itself is spending this year. “This industry’s going to create another Disney,” as Nathanson puts it.


  5. Good morning!


  6. what was the X position and is it  still a good entry?


  7. Phil / SPWR trade – the last strike of $7 – is that accurate? I can't find that contract. ty! 

    Buy 20 SPWR 2022 $7 calls for $1.80 ($3,600)


  8. Good morning!  

    20% line on /ES is 3,120 so we'll see if that holds up on the Big Chart and rejected right at the 30% line on /NQ (8,450) is interesting so let's consider the pullback:

    So clearly we're off a run from 7,500 but there was consolidation at 8,000 so we need to run both sets but I'll save time and say the strong pullback from 8,000 – 8,500 would be 200 points and the weak pullback from 7,500 to 8,500 would be 200 points – both to 8,300 so THAT is the line we expect to be tested but, of that fails, then we've failed to support 8,000 and we look for 8,100 to hold and, if not, we have to question the validity of the whole move over 8,000 as maybe just a spike in the grand scheme of things. 

    Yeah, like that!  cool

    Incomes/StJ – I want to know what's going on in Pitkin?  Wages no surprise – why would it be bad for an economy if the people who live there have more money to spend instead of funneling it off to some far away corporate office as profits?  How was that ever in doubt is what I'd really like to know!  

    Henry Ford figured that one out 100 years ago when he realized his workers couldn't afford the cars he was building – so he paid them more!  

    Streaming/StJ – So hard to beat DIS with the machine they have rolling. They have other strong sources of income, that's why TWX had to merge in with T – they see the writing on the wall.  NFLX does not. 

    NFLX investors get excited when they raise prices but what will the reaction be when they have to lower them to stop bleeding customers next year while spending 14% more on content?  NFLX only made $1.2Bn last year and maybe $1.8Bn this year but they are going to spend $6Bn more on content PER YEAR by 2023 – that's not a good formula.

    X/Millard – We have them in the Butterfly Portfolio and we chose not to adjust is so you can still play this:

    X Long Call 2022 21-JAN 10.00 CALL [X @ $13.40 $0.28] 40 11/26/2019 (781) $23,800 $5.95 $-0.40 $5.95     $5.55 $0.45 $-1,600 -6.7% $22,200
    X Short Call 2022 21-JAN 17.00 CALL [X @ $13.40 $0.28] -30 11/26/2019 (781) $-9,450 $3.15 $-0.37     $2.78 $-0.02 $1,110 11.7% $-8,340
    X Short Put 2022 21-JAN 12.00 PUT [X @ $13.40 $0.28] -20 11/26/2019 (781) $-6,600 $3.30 $0.10     $3.40 $-0.01 $-200 -3.0% $-6,800
    X Short Call 2020 20-MAR 14.00 CALL [X @ $13.40 $0.28] -20 11/27/2019 (109) $-3,200 $1.60 $-0.21     $1.39 $0.14 $420 13.1% $-2,780

    The back position is good for any portfolio.  I was thinking of buying back the short calls on Friday but they only fell to $1.10 so wasn't really worth the effort.  We never expected them to be much over $14 so recent action is just noise. 

    Tariffs also good for CLF, who are blasting off:

    CLF is in the Earnings Portfolio and way up already.  

    CLF Long Call 2022 21-JAN 5.00 CALL [CLF @ $8.25 $0.26] 20 10/22/2019 (781) $5,900 $2.95 $0.95 $2.95     $3.90 $0.20 $1,900 32.2% $7,800
    CLF Short Call 2022 21-JAN 10.00 CALL [CLF @ $8.25 $0.26] -20 10/22/2019 (781) $-2,600 $1.30 $0.12     $1.42 $-0.16 $-240 -9.2% $-2,840
    CLF Short Put 2022 21-JAN 7.00 PUT [CLF @ $8.25 $0.26] -10 10/22/2019 (781) $-2,350 $2.35 $-0.59     $1.77 $-0.14 $585 24.9% $-1,765

    SPWR/Crazy – Nope, not accurate at all, thanks.  Not even sure where that came from.

    Officially, we will go with:

    add it to our Short-Term Portfolio with the following trade:

    • Sell 10 SPWR 2022 $8 puts for $3.30 ($3,300)
    • Buy 30 SPWR March $6 calls for $1.90 ($5,700) 
    • Sell 30 SPWR March $8 calls for $9 ($2,700) 
    • Buy 30 SPWR 2022 $8 calls for $2.70 ($8,100)
    • Sell 30 SPWR 2022 $12 calls for $1.70 ($5,100)

    The net on the spread is $2,700 and, if all goes well, we will make $3,000 on the March spread, leaving us with a net $300 credit on the 30 long 2022 $8/12 spreads that are worth up to $12,000.  We're obligated to buy 1,000 shares of SPWR if they stay below $8 and our net would be $10.70 ($10,700) if everything else went worthless but I like the short-term payoff potential on this one and, if SPWR is at, say $6 and we have to buy 1,000 for $10,700, we simply buy 1,000 more for $6 and our average is $8.35 on 2,000 shares and then we sell more puts and calls!  


  9. Phil – ty.
    The March 8 is for 0.9 I assume…

    Is this a test? 

    ;)


  10. Repost from the weekend:  Follow-up on the AAPL BFLY adjustment.  Phil can you provide the entire history on this position from the tracking software?  It seems to me that this is a hugely profitable position and I wonder whether you should consider closing and starting a new AAPL position where it isn't so large.  This a $200,000 portfolio and having 15 puts and 60 spreads in a high priced stock seems rather large to me.  Can you also check the math on the total spend?  My review suggests $50,450 (rolling the long call will cost $7,000).  Also I have a smaller portfolio with the following AAPL position and I'd appreciate your suggestion as to how to adjust:  2022 210/260 call spread 2x, 2021 180 puts 1x and short the January 2020 225 call 1x.  My over all spend is $1,400 on this position.


  11. Phil//NQ

    Uncanny how you called that. Here we are at 8300.  Love the process.


  12. Phil

    Would you please take look at this today if it’s the right time

    Thanks

     

     

    phil
    November 27th, 2019 at 5:03 pm | Permalink | Tweet thisIgnore this user

    New trades/QC – I would, from scratch, do things differently.  Remind me on Friday and I'll take a close look.

    ·  qcmike
    November 27th, 2019 at 3:15 pm | Permalink | Tweet thisIgnore this user

    Phil

     Are  AAPL  and Dis  ok for new trades ?

    Or wait Jan 2020

    Thanks


  13. Yikes, down 200!  

    Now, catching up on weekend comments:

    CBS/Saguaro – I'm looking at Revenues, not just earnings.  Main-line companies that are steady revenue growers will have variations in profits as they go through investment cycles and, if you are a long-term investor, you don't mind investing now to assure your growth in the future.  There was an excellent article about GM on that subject in Bloomberg recently.  Of course short-term traders only look at profits and think investing is the devil's work – especially when it impacts the company's bottom line this quarter – which is all they care about.  

    Clearly I didn't say CBS is a short-term bet.  In fact, all we did was sell 5 2022 $40 puts for $8 in the STP so we'd remember to keep an eye on them as they work themselves through this investment cycle.  I was simply extolling their long-term virtues in the context of saying I feel very comfortable paying net $32 (20% off the current price) for them as an entry as they do make about $2Bn a year and even $40 is only $15Bn in market cap so let them be steady or even down to $1.5Bn for the next 5 years and if, at some point, people decide to value that are more than 10x – we'll do very well.  

    And no, I'm not a fan of taking on debt to grow earnings unless of course, you are able to borrow cheaply and don't need the money for anything else.  CBS pays out $300M in dividends now and they've trimmed shares by 1/3 so I'd say they saved $200M/yr in dividend payouts by increasing debt by $3Bn – that's not terrible and the stock is simply ridiculously cheap.  When AAPL was $75/share ($10.10 post-split) in 2009, I advocated they buy back every single share at that price (less than $100Bn total).  Same goes with M now and Buffett agrees with me – if your own stock is the best thing you can spend money on – that's OK – my objection is for people who buy their stock when it's too high anyway.  I'm sure CBS things their stock is worth $80 – I bet they bought most of their shares when under $60.  

    UNG/Vidt – We stopped playing /NG because it's tricky now that the export terminals are stabilizing and the new pipelines can potentially deliver gluts to certain places and depress prices.  In fact, the pipeline network allows all sorts of games to be played with the storage numbers so it's a much less predictable market now than it was last year.  Just like driving for gasoline – heating is A factor but not THE factor that predicts pricing.  And yes, you are in trouble!    The Jan $15s are still $2.25 so, depending on what you paid, maybe not so bad to salvage them.   I'd roll them out to 2021 $15s at $4.20 so spending $2 that you can collect back now by selling $20 calls or, if you can't have the naked Jan $22s (0.38) - then waiting until they expire to sell covers.  I don't think the risk is that big to the downside and you might get lucky and catch a bump before you sell.  

    Your spread was too wide (greedy) and you need to adjust as soon as the price of your long calls drops to the net of the spread – otherwise the rolls get too expensive.  

    SKT/Pstas – That's encouraging.

    AAPL/Options – We're up about $100,000 overall and the Butterfly Portfolio is $200,000 so all of the gains are AAPL – essentially.  To that end, I don't mind it being our main position and I don't mind 15 short puts because I don't think it's realistic that AAPL will fall below $200 BUT I STILL PUT STOPS ON, DIDN'T I???  So there's really no risk to the short puts and the spreads are merely a matter of I'd rather buy more long spreads than pay back the short callers and again – only because it's AAPL and I'm super-comfortable with them staying up in our range (though not this morning).

    I'm pretty sure $36,450 is right for our rolling costs and that represents the loss from the short March $210 calls but hopefully we'll get it back over time.  

    As to the other – 2x is not very concrete but let's say x = 10:

    If you have 20 2022 $210/260 bull call spreads at a random price and 10 short 2021 $180 puts at a random price and 10 short Jan $225 calls at a random price that netted $1,400, the net is now ($60,000 - $6,500 – $41,000) = $12,500 so, congrats, it's a nice win – just not what you would have wished for.  

    The potential on the $210/260 spread is $100,000 so 66% more than you have now so no real reason to change it and the rest is just buying back the short puts and calls and deciding what you should be selling and, as noted in the Butterfly Portfolio, I like the short June $260 calls, now $23 and the short June $240 puts, now $9.70 with stops at $11, $13 and $15.  10 short puts are $9,700 and, if you buy them all back at $13 avg, that's $13,000 so the risk is $3,300 but you wouldn't be losing that unless you were collecting $23,000 from the short calls and, if AAPL goes up, the short puts go worthless and you have $9,700 towards your next roll.  

    5% Rule/Jeff – Hey, it's just math, man…  cheeky 

    That's why I laugh at chart people – all their silly BS and I can beat them with a spreadsheet 9 out of 10 times.  

    AAPL/QC – Today is not Friday. frown


  14. Some people are paying attention with the VIX up 20% today!



  15. A Plunge In The Making | Seeking Alpha




  16. VIX/StJ – That is exciting.

    AAPL/QC – Now is a good time…  cheeky

    DIS is too expensive to start a position and I'd like AAPL to be cheaper but hard to say it's too expensive when Options has a 2022 $210/260 bull call spread at $30 that's worth $50.  So that's a base but then we have to consider what we think AAPL will do by Jan, 2022.  I think we should be looking at $60Bn in profits so $1.2Tn in cap but that's where they are now.  Not sure if there will be any exciting revenue streams to make me think 25x is justified but certainly more than 16x – or $1.92Tn means 10% down from here ($235) is a very good floor.  

    So there's another piece of the puzzle, I don't mind selling 2022 $235 puts, which are $24 but I have to also consider a tragedy in which the market drops 20% and AAPL drops 30% to $185 and how do I feel about owing $50 (down 100%) on the short puts or being assigned?  That being the case, I'd go light on the put sale for now and happy to sell more if AAPL drops lower.

    • Sell 5 2022 $225 puts for $20 ($10,000) 

    That puts us in for net $205 – have to be happy with 30% off and only 500 shares, so manageable size, HAPPY to DD or roll to 2x the $185 puts (now $10) if I'm too worried to DD and, since I still collected net $10 per short, I'd be dropping my net to $175 so really, when I say I am happy to sell 5 2022 $225 puts for $20 – it means I don't mind owning 1,000 shares of AAPL at net $175 – though I doubt that will ever happen (and there's always 2023 and 2024).

    That means my issue is, do I have the cash/margin to comfortably deal with that in a market sell-off and, if you have to calculate that – you don't!   Ordinary margin on 10 short 2022 $185 puts at $10 is $14,500 and figure if AAPL sells off 20% it will at least double so $30,000 is about what you need to plan needing in an emergency – not terrible.  

    Now, shorter-term, do we think AAPL is going higher or flat or down.  I think $265 is a stretch so I'd like to sell some short-term calls but never more than 1/3 for AAPL so that, even if I have to roll them to 2x a higher strike – I'm still over-covered in the back.

    March $270s are $12.10, April $13.80 and June $17.65 so forget April for +$1.70 and so the question is, for $5 more for 200 days vs $12 total for 109 days.  So I'd do about 30% better selling 109 days twice so now I have to consider where AAPL will be in 109 days and how sure I am about that.  Obviously, I'm thinking flat or lower but what if it's at $250?  Then I won't be able to sell the next $270s for $12, they'd be more like $6.40 (the current price of March $285s) and that would suck and lower is below what I could sell the Junes for now.  So I'm not sure enough AAPL will hold up to not take the extra money for the extra months – especially on my first sale when I have no profits to fall back on.

    Also, if AAPL goes higher (and we have 2 earnings reports between now and then) then the extra $5.50 in premium we sell now pays to roll the short calls $10 higher when/if we have to.  So that's decided:

    • Sell 7 AAPL June $170 calls for $17.65 ($12,355)

    Now the spread I look up and down for a sweet spot – can we do better than $30 on a $50 spread around that target?  We looked at the 2022 $210/260 spread and the $210s are $73 and the $260s are $43 and my rule of thumb is I'll pay $5 to roll down $10 and the $200s are $78 ($5) and the $190s are $87 ($9) so screw that and we'll take the $200s, which is good because they'll be more liquid anyway (even numbers).

    • Buy 20 AAPL 2022 $200 calls at $78 ($156,000)

    For the sale now, the $250s are $48 (+5) and the $240s are $53 (+$5) and the $270s are $39 (-$4) and the $280s are $33 (-$6) so it's tempting to go with the $270s as it gives us a $20,000 wider spread for $8,000 and that means we can sell a bit more aggressively and certainly make up the $8,000 over 781 days we have to sell (581 after our first sale).  

    But first I should check 2021 to see if there's anything interesting that's around $48 to sell and the $235s are $47 and that's not terrible if we're buying the $200s and the $245s are $40.25 so no way would I take $6 less but I'm not 100% comfortable that AAPL won't pop though I would LOVE to have 2 cracks at selling $40 vs one crack at $48 so I feel like splitting the baby would be the way to go here:

    • Sell 10 AAPL 2021 $235 calls for $40.25 ($40,250)
    • Sell 10 AAPL 2022 $270 calls for $39 ($39,000) 

    Now we have a spread!  It's net $54,395 on what is hopefully going to be a $140,000 spread (at least) and we sold $22,355 in premium for our first 200 days and we have 3 more sales back so ROI on that $54,395 is looking very reasonable.  If all goes well, we'll whittle the net cost down to $0 but, even at net $54,395 – it pays back $85,605 (157%) if AAPL is $6 higher in two years.  

    Also remember, we WANT to sell 5 more puts for another $10,000+ but only if AAPL drops a good $40 to make it worthwhile.  At that same point, the 2021 $270 calls are $27, so there would be the money we lost on the current short puts.  So I like the trade but I would not make the trade because it doesn't pay me 300% so I'm sure there are better places to park my cash while I wait for AAPL to go on sale.

    By the way, it doesn't pay me 300% because I don't think AAPL will be that much higher – not with the degree of confidence I'd need to set up a risky options play on a high-priced stock.  That's why we only have AAPL in the Butterfly Portfolio – where flat would be perfect!  

    Najarian says a lot of long call activity on M at $15 for this week.  Looking for a short squeeze on some kind of announcement.


  17. Thanks Phil


  18. Ruh Ro – Short interest in XRT at record levels. 

    I do think the ordinary consumer (not Macys/Bloomingdales consumers) are definitely hitting a wall and I think XMas will put them over it.  Also, Trump has removed a couple of million non-citizens from the shopping rolls – that's 1% of the population not buying – though probably low-income, so a muted effect. 

    Mall traffic was a disappointment this weekend but:

    Online sales rose more than 19.6%, reaching $7.4 billion on Black Friday, slightly shy of estimates of $7.6 billion, according to data from Adobe Analytics, which tracks transactions at 80 of the top 100 U.S. retailers. On Thanksgiving, it estimated sales grew 14.5% to $4.2 billion.

    Numbers from ShopperTrak, which is part of retail data firm Sensormatic Solutions, showed that visits to stores fell a combined 3% during Thanksgiving and Black Friday compared with the same days in 2018.

    Shopper traffic on Thanksgiving evening increased by 2.3%year-over-year but was dragged down by Black Friday, which fell 6.2% from a year ago.

    Brian Field, senior director of global retail consulting for ShopperTrak, said the traditional pattern of shoppers visiting stores has been disrupted not only by online shopping but by offerings like “buy online and pick up in store,” a growing category, which is not included in store traffic count on Black Friday.

    Preliminary data from analytics firm RetailNext showed net sales at brick-and-mortar stores on Black Friday fell 1.6%, which the firm said is slower than in previous years. No data was yet available for actual spending in stores.

    So there's a whole category of sales/shoppers they don't count at all because there's no check box for what they are doing.  As Twain said: "Lies, damn lies and statistics!"  

    As you can imagine – not good news for AMZN, who need to see faster growth than that to justify what is still 80x earnings.  



  19. Phil; thanks for the help on AAPL.  Sorry I wasn't clearer but I truly meant 1x = 1 contract.  It was all ratable so I got the answer I was looking for and will roll and add a stop loss GTC.  Do you use stop losses often?  Can I also get your thoughts on BUD at these levels and a potential trade idea.  Thanks


  20. Phil;  technical question.

     

    I was evaluating LHX and found something I didn't know.

    There are in the Jan 20  options  

    LHX  calls and puts and also LHX1 calls and puts, the value difference between them is huge, what is it?

    Thanks


  21. BUD/Options – I use stop losses but not hard ones as they often get flushed in crazy after-hours trading so I just keep an eye on things and try to stick to my limits.  As to BUD – They partnered with Tilray and that went nowhere so far but only $100M in that deal.  They have had a lot of trouble growing sales since the merger but profits settling down around $9Bn and you have to pay $155Bn to claim them at $79, which isn't bad and they are probably on the cheap side at the moment.  I always have trouble with BUD as I hate Budweiser and can't imagine why people still drink it now that they know what real beer tastes like but BUD is now InBev too and quite the Global monster:

    But also, yuch!  

    So $80 seems fair and they generally brew and bottle locally so not affected much by tariffs.  2.5% dividend not that exciting so I'd just go artificial with: 

    • Sell 5 BUD 2022 $70 puts for $6.75 ($3,375) 
    • Buy 10 BUD 2022 $70 calls for $15.75 ($15,750) 
    • Sell 10 BUD 2022 $90 calls for $6.50 ($6,500) 

    That's net $5,875 on the $20,000 spread with $14,125 (240%) of upside potential at $90 and, if you get there soon, you can sell a few calls for income along the way.   

    BABA/Advill – I do like them under $200 as that's "only" $529Bn and they are making $11.5Bn so 46x is a real bargain compared to AMZN but I wouldn't pull the trigger unless they got back to $150, which is about $400Bn and more like 35x.  

    It is an amazing site though – anything you can imagine can be made for you (in bulk).

    LHX/Advill – Those are conditional options from some kind of split or merger.  You'd have to call your broker to ask what the rules are but generally illiquid and I would not mess with them. 


  22. CBS/Phil – Thanks again! Still learning a ton :-)


  23. You're welcome Sag, happy to still be able to teach, once in a while.  

    Sky Net is officially on-line:

    Amazon unveils quantum computing service

    Image result for terminator skynet computer

    • AWS (NASDAQ:AMZNunveils the Amazon Braket quantum computing service.
    • The fully managed service gives customers access to quantum hardware from three startups (D-Wave Systems, IonQ, and Rigetti Computing).
    • Rival IBM (IBM -0.9%) has offered cloud service to its own quantum hardware since 2016.
    • Amazon also announces the AWS Center for Quantum Computing adjacent to the California Institute of Technology and the Amazon Quantum Solutions Lab, which connects AWS customers with quantum computing experts from AMZN and select partners.

    These guys are interesting down here:

    Vale updates estimates at investor day

    • Vale (VALE +3.2%) says it expects iron ore production to recover in the coming years from a sharp drop after the Brumadinho dam burst, rising to 390M-400M metric tons in 2022 from 340M mt in 2020 while anticipating $5B in capital spending in 2020-21.
    • In an investor presentation, Vale also guides for 2022 EBITDA of $15.5B-$23.5B and free cash flow of $7B-$14B.
    • Vale also says it will suspend disposals of its Brucutu mine into the Laranjeiras dam for as long as two months, reducing the mine's iron ore production by 1.5M mt/month.
    • Finally, the company says it will set targets on reducing Scope 3 greenhouse gas emissions from its products even after they have been sold, and will target net-zero emissions by 2050.

    I think VALE is solid long-term and way undervalued at $62Bn at $12.15 – especially as they have nice, fat options to play with.  I guess we'll put them in the STP but, eventually, we'll have enough of these to start making an LTP.  Still, for the STP, which is already up 56% but has $150,555 in CASH!!!:

    • Sell 20 VALE 2022 $12 puts for $2.20 ($4,400) 
    • Buy 40 VALE 2022 $10 calls for $3.40 ($13,600)
    • Sell 40 VALE 2022 $15 calls for $1.30 ($5,200) 

    That's net $4,000 on the $20,000 spread that's $8,000 in the money to start with $16,000 (400%) upside potential at $15.  Worst case is owning 2,000 shares of VALE at $12 + $2 (from the $4,000) = $14 and let's say it's $8 (disaster) but then we buy 2,000 more shares for $8 and average $11 and sell 40 2024 $10 calls for $2.50 (ish) and our net is then $8.50 and getting called away at $10 would still be a profit – even without selling puts.  That's why I love these kind of plays when the stock is cheap and the premiums are not!  


  24. Meanwhile, back in reality:  

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    "What we are currently experiencing is the brain death of NATO," France's President Emmanuel Macron declares in a blunt interview

    Imagine if Trump were not President and there was an article that said "Putin is dismantling NATO".  How would you react?  Why is it that Trump can dismantle NATO and people just shrug?  

    Speaking of @realDonaldTrump:

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    I wonder what he will Tweet today?

    Meanwhile, he still doesn't get the concept that using your power and influence to gather information on your enemies is wrong:

    President Trump's re-election campaign said it would bar Bloomberg News journalists from its events in an attempt to retaliate against the media outlet's decision to not investigate Democratic candidates since its owner Michael Bloomberg joined the race

    So Bloomberg won't do what Trump did and Trump considers that "immoral".  

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    I guess we're on the way to this:

     



  25. Interstate fights over water, a staple of the American West, are rising in the East, too, thanks to growing populations, increasing irrigation and climate change.

    1/3 of Americans are wrong:

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    "Of the world’s top hundred websites, Wikipedia is the sole noncommercial site. If the contemporary internet is a city, Wikipedia is the lone public park"

    Oh no, a real crisis! 

    Potato processors are rushing to buy supplies and ship them across North America in order to keep French fries on the menu after cold, wet weather damaged crops in key producers in the U.S. and Canada

    Wall Street analysts are slashing projections for fourth-quarter earnings, making it more likely that a profit recession will hit U.S. companies for the first time in almost four years

    https://awealthofcommonsense.com/2019/12/where-have-all-the-stock-market-returns-come-from-this-decade/

    'The number of active U.S. stock funds holding fewer than 35 stocks has nearly doubled since the start of 2009, while the assets under management in such funds have almost tripled, standing at around $161 billion at the end of October.'

    Remember the "temporary" repo crisis last month?  Still going on and balance sheet back to the year's highs.  

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    'Short positions against the SPDR S&P Retail fund last week hit 441% of the fund’s available shares, twice the percentage of shares investors shorted at the same time last year and the highest level in roughly eight months.'

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    Yikes, ugly finish! 


  26. Funny… I've been trying to buy back short puts in VRAY for a couple of weeks now and could never get a fill. Someone really wanted them just before close, now it's up 30% after hours.


  27. Japan preparing $120 billion stimulus package as recession risks grow




  28. Trump is becoming politically radioactive